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September 21, 2006
RESPONSE OF THE OFFICE OF INTERNATIONAL CORPORATE FINANCE
DIVISION OF CORPORATION FINANCE
Re: |
SanDisk Corporation (SanDisk)
Incoming letter dated September 21, 2006
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Based on the facts presented, the Division will not recommend enforcement action to the Commission if SanDisk, in reliance on your opinion of counsel that the exemption under
Section 3(a)(10) of the Securities Act of 1933 is available, issues its common stock (SanDisk Shares) to holders of ordinary shares of msystems Ltd. (msystems and msystems Shares), its SanDisk Derivative Securities to holders of msystems Derivative Securities, and the right to receive SanDisk Shares to holders of msystems Convertible Notes, all pursuant to the plan of arrangement (the Plan), without registration under the Securities Act. In reaching this position, we have noted that:
- the Israeli District Court (Israeli Court) will conduct a hearing on the fairness of
the Plan to the holders of msystems Shares, msystems Derivative Securities, and
msystems Convertible Notes;
- the Israeli Court will approve the fairness of the terms and conditions of the Plan to
the holders of msystems Shares, msystems Derivative Securities, and msystems
Convertible Notes, before SanDisk issues SanDisk Shares, SanDisk Derivative
Securities, or the right to receive SanDisk Shares pursuant to the Plan;
- all prospective recipients of SanDisk Shares, SanDisk Derivative Securities, and
the right to receive SanDisk Shares under the Plan will receive notice of the hearing
regarding the Plan and will have the opportunity to be heard at the hearing; and
- msystems will have advised the Israeli Court before the hearing that, if the Israeli Court
approves the terms and conditions of the Plan, its sanctioning of the Plan will
constitute the basis for the issuance of the SanDisk Shares, SanDisk Derivative
Securities, and regarding msystems Convertible Note holders, the right to receive
SanDisk Shares, under the Plan without registration under the Securities Act, in
reliance on the exemption from registration provided by Securities Act
Section 3(a)(10).
The Division is also of the view that recipients of the SanDisk Shares may resell these securities as follows:
- Persons who are not affiliates of SanDisk or msystems before completion of the
Plan, and who are not affiliates of SanDisk after completion of the Plan, may resell
the SanDisk Shares they receive under the Plan without regard to Securities Act
Rule 144 or 145(c) and (d).
- Persons who are affiliates of SanDisk or msystems before completion of the Plan,
but who are not affiliates of SanDisk after completion of the Plan, may resell
the SanDisk Shares they receive under the Plan in accordance with Securities Act
Rule 145(d)(1), (d)(2) or (d)(3). However, when computing the holding period of the
Section 3(a)(10) securities for purposes of Rule 145(d)(2) or (d)(3), such persons may
not "tack" the holding period of the securities exchanged for the Section 3(a)(10)
securities in the Section 3(a)(10) exempt transaction.
- Persons who are affiliates of SanDisk or msystems before completion of the Plan
and are affiliates of SanDisk after completion of the Plan may resell the
SanDisk Shares they receive under the Plan in the manner permitted by
Securities Act Rule 145(d)(1).
These positions are based upon the representations made in your letter to the Division. Any different facts or conditions might require a different conclusion. Moreover, regarding whether the Section 3(a)(10) exemption from registration is available for the SanDisk Shares, SanDisk Derivative Securities, or the right to receive SanDisk Shares, to be issued under the Plan, this response expresses the Division's position on enforcement action only and does not express any legal conclusion on the question presented.
Sincerely,
Elliot B. Staffin
Special Counsel
Incoming Letter:
The Incoming Letter is in Acrobat format.
http://www.sec.gov/divisions/corpfin/cf-noaction/sandisk092106.htm
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