SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 4, 1998
ALLIANCE SEMICONDUCTOR CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-22594 77-0057842
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
3099 North First Street, San Jose, California 95134-2006
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 383-4900
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Item 5. Other Events
On March 4, 1998, the Registrant ("Alliance") entered into an agreement
(the "Agreement") for the sale by Alliance of 35 million shares (the "Shares")
of stock of United Semiconductor Corporation ("USC"), for a purchase price of
1.05 billion New Taiwan Dollars (approximately US$32.84 million at exchange
rates prevailing on March 4, 1998). The sale is subject to certain conditions
precedent, including receipt of approval from certain Taiwan regulatory
authorities.
Under the terms of the Agreement, if at any time a "Liquidity Event"
occurs, Alliance will be entitled to receive, in addition to the initial payment
of 1.05 billion New Taiwan Dollars, a contingent payment of up to 19 New Taiwan
Dollars per Share, or up to an additional 665 million New Taiwan Dollars. Upon
occurrence of a Liquidity Event, Alliance may elect to receive its contingent
payment with respect to all or a portion of the Shares; provided that Alliance
may only receive one contingent payment with respect to each Share; and provided
further that Alliance may not request to receive a contingent payment with
respect to fewer than five million Shares. Subject to the foregoing, Alliance
may request contingent payments with respect to different portions of Shares in
connection with different Liquidity Events.
A "Liquidity Event" is defined as an event by which United
Microelectronics Corporation ("UMC"), or its successor(s) with respect to USC
shares, will have the opportunity to receive value from transfer of its
ownership of shares of stock in USC in an arm-length transaction other
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than by way of transfer to employees for incentives, whether or not UMC or its
successor(s) in fact participates in such opportunity. A Liquidity Event will
include, for example, completion of a public offering of USC securities on a
recognized securities exchange; a sale of USC stock owned by UMC or by a UMC
successor in an arms-length transaction; or a sale of all or substantially all
of the assets of USC. For purposes of the Agreement, a "successor" of UMC will
be any entity which succeeds to and/or acquires from UMC, in the aggregate, more
than 5 million shares of USC common stock under circumstances in which such
transaction does not qualify as a Liquidity Event; there may be multiple
successors to UMC under the Agreement, and there may be multiple Liquidity
Events as to each separate successor.
USC, a Taiwan corporation located in Hsin-Chu, Taiwan, is a foundry
joint venture between Alliance, UMC and S3 Incorporated that was formed in 1995.
Alliance paid approximately 1.95 billion New Taiwan Dollars for its 18.99%
equity interest in USC. As a result of the sale of shares pursuant to the
Agreement, Alliance's percentage ownership in USC will decrease to 15.49%.
Alliance maintains its right to purchase up to approximately 25% of the
manufacturing capacity of USC.
Risk Factors
All statements in this Report reflecting Alliance's anticipation of
receiving funds are forward-looking; the risk factors set forth below could
cause actual results to differ materially from those in the forward-looking
statements. The parties must obtain approval from Taiwan government authorities
(including the Hsin-Chu Science-Based Industrial Park authorities and the Taiwan
Securities and Futures Commission) in order for funds to be transferred to
Alliance pursuant to the Agreement. Alliance does not currently anticipate any
difficulty in obtaining such approval, but there can be no assurance that such
approval will not be delayed or withheld, either with respect to the initial
payment or with respect to any contingent payment. Additionally, there is a risk
that the party or parties obliged to make payment (initial or contingent) to
Alliance may, due to reasons of credit or otherwise, be unwilling or unable to
make payment to Alliance when due (assuming that requisite government approval
for such payments is obtained). Moreover, payments to be made to Alliance
pursuant to the Agreement will be calculated in New Taiwan Dollars. The exchange
rate of the New Taiwan Dollar to the U.S. dollar is subject to material change,
particularly in light of the uncertainties caused by the current financial and
economic conditions in Asia; there can be no assurance that on the date or dates
Alliance receives payments pursuant to the Agreement (assuming that requisite
government approval for such payments is obtained and the obligor(s) makes such
payments), the New Taiwan Dollar will not have materially deteriorated in value
against the U.S. dollar as compared to the rate prevailing on March 4, 1998
(approximately 32 New Taiwan Dollars to one U.S. dollar). The forward-looking
statements in this Report speak only as of March 19, 1998 (the date this Report
is filed with the Securities and Exchange Commission). The Company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to reflect any
change in the Company's expectations with regard thereto or to reflect any
change in events, conditions or circumstances on which any such forward-looking
statement is based, in whole or in part.
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Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
10.1* Sale and Transfer Agreement dated as of March 4, 1998.
* Confidential treatment has been requested for a
portion of this document. Confidential portions
omitted have been filed separately with the
Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIANCE SEMICONDUCTOR CORPORATION
Dated: March 19, 1998 By: /s/ Charles Alvarez
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Charles Alvarez, Vice President --
Finance and Administration, and
Chief Financial Officer
CONFIDENTIAL
SALE AND TRANSFER AGREEMENT
THIS SALE AND TRANSFER AGREEMENT (this "Agreement") is entered into as
of March 4, 1998, by and between Alliance Semiconductor Corporation, a
corporation organized under the laws of Delaware ("Alliance") and [*], a
corporation organized under the laws of the Republic of China [*].
Alliance [*] own shares of stock in United Semiconductor Corporation
("USC"), a joint venture between S3 Incorporated ("S3"), UMC and Alliance
pursuant to a Stock Purchase Agreement, dated as of June 30, 1996, as amended
(the "Stock Purchase Agreement").
Alliance desires to sell and transfer to [*], and [*] desires to
arrange the purchase from Alliance, all of Alliance's right, title and interest
in and to Thirty-Five Million (35,000,000) shares of USC common stock (the
"Shares").
For the consideration and on the terms and conditions set forth below, the
parties agree as follows:
1. Sale and Transfer. Upon receipt of: (a) the consideration set forth in
Section 2 below; and (b) a copy of the consent set forth below signed by S3,
Alliance shall be deemed to have sold, assigned, transferred and conveyed to
[*], free and clear of all liens charges and encumbrances, all of Alliance's
right title and interest in the Shares.
2. Consideration.
2.1 Cash Payment. As soon as mutually agreeable following March 28, 1998, but in
no event later than April 15, 1998, [*] shall deliver to Alliance, by wire
transfer to an account specified by Alliance, the amount of Thirty New Taiwan
Dollars (NT$30.00) per Share, for a total cash payment of One Billion Fifty
Million New Taiwan Dollars (NT$ 1,050,000,000). Upon receipt of these funds,
Alliance will make prompt payment of all amounts then due UMC and/or USC for
foundry services, and will tender to [*] the certificates representing the
Shares.
2.2 Contingent Payment. If, at any time after the date of this Agreement, a
"Liquidity Event," as defined below, occurs with respect to shares of USC stock,
then, in addition to the Cash Payment set forth in Section 2.1 above, [*] also
will pay to Alliance the Contingent Payment calculated as follows:
(a) Until such time as the Contingent Payment to Alliance has been made
with respect to all of the Shares, within 15 days of each Liquidity Event, UMC
shall notify Alliance in writing of the price per share of USC stock in New
Taiwan Dollars achieved upon the Liquidity Event (the "Liquidity Price Per
Share"). In the case of a public offering of USC shares of stock, the Liquidity
Price Per Share shall be calculated as set forth in the immediately following
paragraph of this Section 2.2(a). In the case of all other Liquidity Events, the
Liquidity Price per Share shall be the price paid for USC shares of stock upon
the closing of each such Liquidity Event.
If UMC (or its successor in interest) is required under the laws of the
Republic of China to sell a certain percentage of USC shares in a public
offering of USC shares (the "Mandatory Sale Percentage") at a certain price (the
Mandated Price Per Share), and Alliance elects to treat such a mandatory sale as
a Liquidity Event, then the Liquidity Price Per Share for such shares shall be
the Mandated Price Per Share, provided that in no such case shall the Liquidity
Price Per Share paid to Alliance be less than the offering price for such shares
of stock at the time of the public offering. Notwithstanding the foregoing, to
the extent that UMC or any successor sells more than the Mandatory Sale
Percentage of USC shares in such a public offering, the Liquidity Price Per
Share for all shares so sold in excess of the Mandatory Sale Percentage shall be
calculated based on the average closing price during the initial ten day period
following the public offering. For example, if UMC is required to sell 40
Million USC shares in the initial public offering and UMC further sells an
additional 40 Million USC shares beyond those it is required to sell, and if
Alliance elects to treat the mandatory sale as a Liquidity Event, then the
Liquidity Price Per Share for the 40 Million shares
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Confidential Treatment Requested. In this document, [*] denotes information for
which confidential treatment has been requested. Confidential portions omitted
have been filed separately with the Securities and Exchange Commission, pursuant
to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
<PAGE>
CONFIDENTIAL
which are mandated for sale shall be the price at which UMC is required to sell
such shares, and the Liquidity Price Per Share for the additional 40 Million
shares shall be the average closing price during the initial ten day period
following the public offering.
If USC pays or makes a dividend or other distribution in
common stock, without consideration, on any class of capital stock of USC, or
shall effect a subdivision of the outstanding shares of common stock into a
greater number of shares of common stock (by stock split, reclassification or
otherwise than by payment of a dividend in common stock or in any right to
acquire common stock), or if the outstanding shares of common stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of common stock, then the number of Shares and the Liquidity Price Per
Share used to calculate the Contingent Payment shall be proportionately
decreased or increased, as appropriate, with the objective that neither party
shall benefit from a stock dividend, combination or subdivision in a manner
which adversely impacts the Contingent Payment the other would receive or pay.
(b) Alliance will inform [*] in writing within fifteen (15) days from
its receipt of notice of Liquidity Event, whether Alliance elects to receive its
Contingent Payment based on such Liquidity Event for a portion or all of the
Shares, and/or whether Alliance instead elects to reserve its Contingent Payment
for all or a portion of the Shares for a later Liquidity Event; provided however
(i) once Alliance receives a Contingent Payment for a portion of the Shares, it
may not request and will not be entitled to further or additional Contingent
Payments for such portion, and (ii) Alliance will not be entitled under this
Agreement to receive Contingent Payments for more than 35 Million shares of USC
stock, and (iii) Alliance may not request to receive any Contingent Payment for
portions of the Shares fewer than Five Million shares under this Agreement, but,
subject to the foregoing, Alliance may request Contingent Payments with respect
to different portions of the Shares in connection with different Liquidity
Events.
(c) If Alliance elects to receive its Contingent Payment for a specific
Liquidity Event, the Contingent Payment for the Shares involved shall be
calculated as follows:
Contingent Payment Per Share = [*]
provided that the Contingent Payment Per Share shall be subject to a
cap or maximum equal to Nineteen New Taiwan Dollars (NT$19.00), so that
the total amount paid to Alliance for each Share (NT $30 Per Share plus
Contingent Payment Per Share) will not exceed Forty Nine New Taiwan
Dollars (NT $49.00) per Share.
For each specific Liquidity Event as to which Alliance elects to receive a
Contingent Payment, the Contingent Payment will be equal to the following:
multiply (the Contingent Payment Per Share for such Liquidity Event) times (the
number of Shares as to which Alliance elected to receive the Contingent Payment
with respect to that Liquidity Event).
(d) If the Liquidity Event is a public offering of USC shares, then the
Contingent Payment will be paid to Alliance on or before the date that is the
earlier of (i) the termination date of any lock-up period applicable to
UMC-owned shares of USC; and (ii) the date that is six (6) months after the
Liquidity Event. As to all other Liquidity Events, the Contingent Payment will
be paid to Alliance on or before the date that is 60 days after the Liquidity
Event.
(e) For purposes of this Agreement, a "Liquidity Event" shall mean any
event by which UMC, or its successor will have the opportunity to receive value
from transfer of its ownership of shares of stock in USC in an arms length
transaction other than by way of transfer to employees for incentives, whether
or not UMC or its successor, in fact, participates in such opportunity. A
Liquidity Event will include, for example, completion of a public offering of
USC securities on a recognized securities exchange; a sale of USC stock owned by
UMC (or by a UMC successor) in an arms-length transaction; or a sale of all or
substantially all or the assets of USC. For purposes of this Agreement, a
"successor" and/or "successor in interest" of UMC will be any entity which
succeeds to and/or acquires from UMC, in the aggregate, more than 5 million
shares of USC common stock under circumstances in which such transaction does
not qualify as a Liquidity Event under the terms of this Agreement; provided
that where any such successor does not acquire all of UMC's shares of stock in
USC, then there may be multiple successors and there may be multiple Liquidity
Events as to each separate successor.
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Confidential Treatment Requested. In this document, [*] denotes information for
which confidential treatment has been requested. Confidential portions omitted
have been filed separately with the Securities and Exchange Commission, pursuant
to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
<PAGE>
3. Consent. [*] assumes responsibility for obtaining any and all consents which
may be required from S3 Incorporated as to the sale of Shares and will indemnify
and hold Alliance harmless from and against any claim by S3 that such consents
were not obtained.
4. Miscellaneous. Paragraphs 6.1 through 6.3 of the Stock Purchase Agreement,
together with paragraph 9.9 of the Foundry Venture Agreement, are incorporated
by reference as if set forth fully in this Agreement, in each case with this
Agreement substituted for the Stock Purchase Agreement and Foundry Venture
Agreement.
The parties' duly authorized representatives as shown below have signed
and committed them to this Agreement as of the date first set forth above.
ALLIANCE SEMICONDUCTOR [*]
CORPORATION
By /s/ N. Damodar Reddy
-------------------------- By [*]
N. Damodar Reddy, President -----------------------
[*]
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Confidential Treatment Requested. In this document, [*] denotes information for
which confidential treatment has been requested. Confidential portions omitted
have been filed separately with the Securities and Exchange Commission, pursuant
to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
