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 United
Microelectronics Corporation, a corporation organized under the laws of the
Republic of China ("UMC").
Alliance and UMC 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 UMC, and UMC 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 UMC
or a UMC controlled investment company (such as Hsun Chieh Investment
Corporation), 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, UMC (or the UMC controlled
investment company) 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 UMC (or the UMC controlled investment company as UMC may direct) 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, UMC (directly or by the UMC controlled investment company) 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.
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 UMC 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.
3. Consent. UMC 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 UNITED MICROELECTRONICS
CORPORATION CORPORATION
By /s/ N. Xxxxxxx Xxxxx By /s/ Xxxxxx X. Xxxxxx
-------------------------- -----------------------
N. Xxxxxxx Xxxxx, President Xxxxxx X. Xxxxxx,
CEO International Operations
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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.
