San Jose, Calif.--March 20, 1998--Alliance Semiconductor Corp.announced that it has agreed to sell 35 million shares of UnitedSemiconductor Corp. (USC)--approximately 18 percent of the almost 190million shares owned by Alliance--for the sum of 1.05 billion NewTaiwan Dollars (approximately U.S. $32.8 million based on the exchangerates prevailing March 4, 1998).
In addition, Alliance has the potential to receive up to anadditional 665 million New Taiwan Dollars if a "liquidity event," suchas an initial public offering of USC, occurs at any time in thefuture. Alliance paid approximately 383 million New Taiwan Dollars forthe shares to be sold.
USC is a joint venture between Alliance, United MicroelectronicsCorp. (UMC), and S3, Inc., in which Alliance investedapproximately 1.9 billion New Taiwan Dollars for an equity interest ofapproximately 19 percent. USC operates a semiconductor manufacturingfacility in Hsin-Chu, Taiwan.
Through the agreement to sell 35 million shares of USC, Alliancewill maintain an approximately 15.5 percent equity ownership positionof USC and maintain the right to purchase up to 25 percent of themanufacturing capacity of the facility.
Under the terms of the agreement, Alliance will sell 35 millionshares (the "Shares") of stock of USC, for a purchase price of 1.05billion New Taiwan Dollars. If at any time a "liquidity event" occurs,Alliance will be entitled to receive, in addition to the initialpayment of 1.05 billion New Taiwan Dollars, a contingent payment of upto 19 New Taiwan Dollars per Share, or up to an additional 665 millionNew Taiwan Dollars.
Upon occurrence of a liquidity event, Alliance may elect toreceive its contingent payment with respect to all or a portion of theshares provided that Alliance may only receive one contingent paymentwith respect to each share and provided further that Alliance may notrequest to receive a contingent payment with respect to fewer thanfive million shares.
Subject to the foregoing, Alliance may request contingentpayments with respect to different portions of shares in connectionwith different liquidity events. A "liquidity event" is defined as anevent by which UMC, or its successor(s) with respect to USC shares,will have the opportunity to receive value from transfer of itsownership of shares of stock in USC in an arm-length transaction otherthan by way of transfer to employees for incentives, whether or notUMC or its successor(s) in fact participates in such opportunity.
A liquidity event will include, for example, completion of apublic offering of USC securities on a recognized securities exchange;a sale of USC stock owned by UMC or by a UMC successor in anarms-length transaction; or a sale of all or substantially all of theassets of USC.
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