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Exhibit 4.5
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF SERIES B
PREFERRED STOCK OR COMMON STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT").
SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS MADE
PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.
WARRANT TO PURCHASE
SERIES B PREFERRED STOCK OF
INTEGRATED TELECOM EXPRESS, INC.
(Subject to Adjustment)
THIS CERTIFIES THAT, for value received, Taiwan Special
Opportunities Fund II, a Cayman Island Company, or its permitted registered
assigns (the "HOLDER") is entitled, subject to the terms and conditions of
this Warrant, at any time after October 6, 1999 (the "EFFECTIVE DATE"), and
before 5:00 p.m. Pacific Time on October 6, 2004 (the "EXPIRATION DATE"), to
purchase from Integrated Telecom Express, Inc., a Delaware corporation (the
"COMPANY"), Three Hundred Seventy-Five Thousand (375,000) shares of Warrant
Stock of the Company at a price per share of four dollars ($4.00) (the
"PURCHASE PRICE"). Both the number of shares of Warrant Stock purchasable
upon exercise of this Warrant and the Purchase Price are subject to
adjustment and change as provided herein.
1. CERTAIN DEFINITIONS. As used in this Warrant, the following terms shall
have the following respective meanings:
"COMMON STOCK" shall mean the Company's Common Stock.
"FAIR MARKET VALUE" of a share of Warrant Stock as of a particular date
shall mean:
(a) If the Common Stock is traded on a securities
exchange or the Nasdaq National Market, the Fair Market Value shall be deemed to
be the product of: (i) the average of the closing prices of the Common Stock of
the Company on such exchange or market over the ten (10) business days ending
immediately prior to the applicable date of valuation and (ii) the number of
shares of Common Stock into which each of shares of Series B Preferred is
convertible at the time of such exercise;
(b) If the Common Stock is actively traded
over-the-counter, the Fair Market Value shall be deemed to be the product of:
(i) the average of the closing bid and asked prices of the Common Stock over the
ten (10) trading-day period ending immediately prior to the
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applicable date of valuation and (ii) the number of shares of Common Stock
into which each of shares of Series B Preferred is convertible at the time of
such exercise;
(c) If there is no active public market for the Common
Stock, the Fair Market Value shall be the value thereof, as agreed upon by the
Company and the Holder; PROVIDED, HOWEVER, that if the Company and the Holder
cannot agree on such value, such value shall be determined by an independent
valuation firm experienced in valuing businesses such as the Company and jointly
selected in good faith by the Company and the Holder. Fees and expenses of the
valuation firm shall be paid by the Company.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"IPO" shall mean the Company's first firm commitment underwritten
public offering of the Common Stock pursuant to a registration statement under
the Securities Act of 1933, as amended, filed with the SEC.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, trust or other entity or organization, including any
governmental authority or political subdivision thereof.
"REGISTERED HOLDER" shall mean any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"SEC" shall mean the United States Securities and Exchange Commission.
"SERIES B PREFERRED" shall mean the Series B Preferred Stock.
"WARRANT" shall mean this Warrant and any warrant delivered in
substitution or exchange therefor as provided herein.
"WARRANT STOCK" shall mean the Series B Preferred of the Company and
any other securities at any time receivable or issuable upon exercise of this
Warrant.
2. EXERCISE OF WARRANT.
2.1. PAYMENT. Subject to compliance with the terms and conditions
of this Warrant and applicable securities laws, this Warrant may be exercised,
in whole or in part at any time or from time to time, on or before the
Expiration Date by the delivery (including, without limitation, delivery by
facsimile) of the form of Notice of Exercise attached hereto as EXHIBIT 1 (the
"NOTICE OF EXERCISE") duly executed by the Holder, at the principal office of
the Company, surrendering:
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash, by check or by wire transfer, (ii)
by cancellation by the Holder of any indebtedness of the Company to the Holder
or (iii) by any combination of (i) and
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(ii), of an amount equal to the product obtained by multiplying the number of
shares of Warrant Stock being purchased upon such exercise by the then
effective Purchase Price (the "EXERCISE AMOUNT"), except that if the Holder
is subject to HSR Act Restrictions (as defined in Section 2.5 below), the
Exercise Amount shall be paid to the Company within five (5) business days
after the termination of all HSR Act Restrictions.
2.2. NET ISSUE EXERCISE. In lieu of the payment methods set forth
in Section 2.1(b) above, the Holder may elect to exchange all or some of the
Warrant for shares of Warrant Stock equal to the value of the amount of the
Warrant being exchanged on the date of exchange. If the Holder elects to
exchange this Warrant as provided in this Section 2.2, the Holder shall tender
to the Company the Warrant for the amount being exchanged, along with written
notice of the Holder's election to exchange some or all of the Warrant, and the
Company shall issue to the Holder the number of shares of the Warrant Stock
computed using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Warrant Stock to be issued to the
Holder;
Y = the number of shares of Warrant Stock purchasable under
the amount of the Warrant being exchanged (as adjusted to the
date of such calculation);
A = the Fair Market Value of one share of Warrant Stock; and
B = the Purchase Price (as adjusted to the date of such
calculation).
All references herein to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 2.2. Upon receipt of a written
notice of the Company's intention to raise capital by selling shares of Common
Stock in an IPO (the "IPO NOTICE"), which notice shall be delivered to the
Holder at least thirty (30) days before the anticipated date of the filing with
the SEC, the Holder shall promptly notify the Company whether or not the Holder
will exercise this Warrant pursuant to this Section 2.2 prior to consummation of
the IPO. Notwithstanding whether or not an IPO Notice has been delivered to the
Holder or any other provision of this Warrant to the contrary, if the Holder
decides to exercise this Warrant while a registration statement is on file with
the SEC in connection with the IPO, this Warrant shall be deemed exercised on
the consummation of the IPO and the Fair Market Value of a share of Warrant
Stock will be the price at which one share of Common Stock was sold to the
public in the IPO. If the Holder has elected to exercise this Warrant pursuant
to this Section 2.2 while a registration statement is on file with the SEC in
connection with an IPO and the IPO is not consummated, then the Holder's
exercise of this Warrant shall not be effective unless the Holder confirms in
writing the Holder's intention to go forward with the exercise of this Warrant.
2.3. "EASY SALE" EXERCISE. In lieu of the payment methods set forth
in Section 2.1(b) above, when permitted by law and applicable regulations
(including Nasdaq and NASD rules), the Holder may pay the Purchase Price through
a "same day sale" commitment from the Holder
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(and if applicable a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer")), whereby the Holder
irrevocably elects to exercise this Warrant and to convert the Warrant Shares
receivable into shares of Common Stock and to sell a portion of the shares of
Common Stock so purchased to pay for the Purchase Price and the Holder (or,
if applicable, the NASD Dealer) commits upon sale (or, in the case of the
NASD Dealer, upon receipt) of such shares to forward the Purchase Price
directly to the Company.
2.4. STOCK CERTIFICATES; FRACTIONAL SHARES. As soon as practicable
on or after any date of exercise of this Warrant pursuant to this Section 2, the
Company shall issue and deliver to the Person or Persons entitled to receive the
same a certificate or certificates for the number of whole shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share equal to such fraction of the current Fair Market Value of one whole
share of Common Stock as of the date of exercise of this Warrant. No fractional
shares or scrip representing fractional shares shall be issued upon an exercise
of this Warrant.
2.5. HSR ACT. The Company hereby acknowledges that exercise of this
Warrant by the Holder may subject the Company or the Holder to the filing
requirements of the HSR Act and that the Holder may be prevented from exercising
this Warrant until the expiration or early termination of all waiting periods
imposed by the HSR Act ("HSR ACT RESTRICTIONS"). If on or before the Expiration
Date the Holder has sent a Notice of Exercise to the Company and the Holder has
not been able to complete the exercise of this Warrant prior to the Expiration
Date because of HSR Act Restrictions, the Holder shall be entitled to complete
the process of exercising this Warrant in accordance with the procedures
contained herein within five (5) business days following termination of the HSR
Act Restrictions.
2.6. PARTIAL EXERCISE; EFFECTIVE DATE OF EXERCISE. In case of any
partial exercise of this Warrant, the Company shall cancel this Warrant upon
surrender hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Warrant Stock purchasable hereunder. The
partial exercise of this Warrant shall be exercisable in units of a minimum of
100,000 shares. This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above. However, if the Holder is subject to HSR Act filing
requirements, this Warrant shall be deemed to have been exercised on the date
immediately following the date of the expiration of all HSR Act Restrictions.
The Person entitled to receive the shares of Warrant Stock issuable upon
exercise of this Warrant shall be treated for all purposes as the holder of
record of such shares as of the close of business on the date the Holder is
deemed to have exercised this Warrant.
3. VALID ISSUANCE; TAXES. All shares of Warrant Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
and the Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof; provided, however, that the
Company shall not be required to pay any tax or other charge imposed in
connection with any transfer involved in the issuance of any certificate for
shares of Warrant Stock in any name other than that of the Registered Holder of
this Warrant, and in such case the Company shall not be required to issue or
deliver any stock certificate or security until such tax or other charge has
been paid, or it has been established to the Company's reasonable satisfaction
that no tax or other charge is due.
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4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares
of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock
or other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of any
of the following events:
4.1. ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR
COMBINATIONS OF SHARES. The Purchase Price shall be proportionally decreased and
the number of shares of Warrant Stock issuable upon exercise of this Warrant (or
any shares of stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Warrant Stock or Common Stock. The Purchase Price of this
Warrant shall be proportionally increased and the number of shares of Warrant
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Warrant Stock or
Common Stock.
4.2. ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR OTHER
SECURITIES OR PROPERTY. If the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Warrant Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
or Common Stock payable in (a) securities of the Company or (b) assets
(excluding cash dividends paid or payable solely out of retained earnings),
then, in each such case, the Holder of this Warrant on exercise hereof at any
time after the consummation, effective date or record date of such dividend or
other distribution, shall receive, in addition to the shares of Warrant Stock
(or such other stock or securities) issuable on such exercise prior to such
date, and without the payment of additional consideration therefor, the
securities or such other assets of the Company to which such Holder would have
been entitled upon such date if such Holder had exercised this Warrant on the
date hereof and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares or all other
additional stock available by it as aforesaid during such period giving effect
to all adjustments called for by this Section 4.
4.3. RECLASSIFICATION. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 3. No adjustment shall be made pursuant to this Section 3.3 upon any
conversion or redemption of the Warrant Stock which is the subject of Section
3.5.
4.4. ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR
CONSOLIDATION. In case of any reorganization of the capital stock of the Company
(other than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), or any merger or consolidation of the Company
with or into another Person, or the sale of all or substantially all the assets
of the Company then, and in each such case, as a part of such reorganization,
merger, consolidation,
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sale or transfer, lawful provision shall be made so that the Holder of this
Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Purchase
Price then in effect, the number of shares of stock or other securities or
property of the successor Person resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the shares deliverable upon
exercise of this Warrant (assuming conversion of all Warrant Stock to Common
Stock) would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant (and the Warrant
Stock receivable had been converted to Common Stock) had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 3.
The foregoing provisions of this Section 3.4 shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and
to the stock or securities of any other Person that are at the time
receivable upon the exercise of this Warrant. If the per-share consideration
payable to the Holder hereof for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made
in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable
after that event upon exercise of this Warrant.
4.5. CONVERSION OF WARRANT STOCK. If all or any portion of the
authorized and outstanding shares of Warrant Stock are redeemed or converted or
reclassified into other securities or property pursuant to the Company's
Articles of Incorporation or otherwise, or the Warrant Stock otherwise ceases to
exist, then, in such case, the Holder of this Warrant, upon exercise hereof at
any time after the date on which the Warrant Stock is so redeemed or converted,
reclassified or ceases to exist (the "TERMINATION DATE"), shall receive, in lieu
of the number of shares of Warrant Stock that would have been issuable upon such
exercise immediately prior to the Termination Date, the shares of Common Stock
that would have been received if this Warrant had been exercised in full and the
Warrant Stock received thereupon had been simultaneously converted immediately
prior to the Termination Date, all subject to further adjustment as provided in
this Warrant. Additionally, the Purchase Price shall be immediately adjusted to
equal the quotient obtained by dividing (a) the aggregate Purchase Price of the
maximum number of shares of Warrant Stock for which this Warrant was exercisable
immediately prior to the Termination Date by (b) the number of shares of Common
Stock for which this Warrant is exercisable immediately after the Termination
Date, all subject to further adjustment as provided herein.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the
Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer or Controller of the Company shall compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.
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6. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to
the Company of the ownership of and the loss, theft, destruction or mutilation
of this Warrant, and of indemnity reasonably satisfactory to it, and (in the
case of mutilation) upon surrender and cancellation of this Warrant, the Company
shall execute and deliver in lieu thereof a new Warrant of like tenor as the
lost, stolen, destroyed or mutilated Warrant.
7. RESERVATION OF WARRANT STOCK. The Company hereby covenants that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Warrant Stock, Common Stock or other shares of
capital stock of the Company as are from time to time issuable upon exercise of
this Warrant, and, from time to time, will take all steps necessary to amend its
Articles of Incorporation to provide sufficient reserves of shares of Warrant
Stock issuable upon exercise of this Warrant and Common Stock issuable upon
conversion of the Warrant Stock. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights, except encumbrances or restrictions arising under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Warrant Stock upon
the exercise of this Warrant and for shares of Common Stock upon conversion of
Warrant Stock.
8. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and all
rights hereunder may be transferred, to any individual, corporation,
partnership, trust, unincorporated organization or any other entity or
organization not in direct competition with the Company, in whole or in part, on
the books of the Company maintained for such purpose at the principal office of
the Company referred to above, by the Registered Holder hereof in person, or by
duly authorized attorney, upon surrender of this Warrant properly endorsed and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. Whether or not a proposed transferee is a direct competitor
of the Company will be determined in good faith by the Board of Directors. Upon
any permitted partial transfer, the Company will issue and deliver to the
Registered Holder a new Warrant or Warrants with respect to the shares of
Warrant Stock not so transferred. Each taker and holder of this Warrant, by
taking or holding the same, consents and agrees that when this Warrant shall
have been so endorsed, the Person in possession of this Warrant may be treated
by the Company, and all other Persons dealing with this Warrant, as the absolute
owner hereof for any purpose and as the Person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; PROVIDED,
HOWEVER, that until a transfer of this Warrant is duly registered on the books
of the Company, the Company may treat the Registered Holder hereof as the owner
for all purposes.
9. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees
that, absent an effective registration statement filed with the SEC under the
Securities Act of 1933, as amended (the "1933 ACT"), covering the disposition or
sale of this Warrant or the Warrant Stock issued or issuable upon exercise
hereof or the Common Stock issuable upon conversion of Warrant Stock, as the
case may be, and registration or qualification under applicable state securities
laws, such Holder will not sell, transfer, pledge, or hypothecate any or all
such
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Warrants, Warrant Stock, or Common Stock, as the case may be, unless either
(a) the Company has received an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that such registration
is not required in connection with such disposition or (b) the sale of such
securities is made pursuant to SEC Rule 144.
10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants: (a) that any shares of
stock purchased upon exercise of this Warrant shall be acquired for
investment only and not with a view to, or for sale in connection with, any
distribution thereof; (b) that the Holder has had such opportunity as such
Holder has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the merits and
risks of its investment in the Company; (c) that the Holder is able to bear
the economic risk of holding such shares as may be acquired pursuant to the
exercise of this Warrant for an indefinite period; (d) that the Holder has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the purchase of this Warrant
and the shares purchasable pursuant to the terms of this Warrant and of
protecting its interests in connection therewith; (e) that the Holder is an
accredited investor within the meaning of Rule 501 of Regulation D,
promulgated under the 1933 Act, as presently in effect; (f) that the Holder
understands that the shares of stock acquired pursuant to the exercise of
this Warrant will not be registered under the 1933 Act (unless otherwise
required pursuant to exercise by the Holder of the registration rights, if
any, previously granted to the Registered Holder) and will be "restricted
securities" within the meaning of SEC Rule 144 and that the exemption from
registration under Rule 144 will not be available for at least one year from
the date of exercise of this Warrant, subject to any special treatment by the
SEC for exercise of this Warrant pursuant to Section 2.2, and even then will
not be available unless a public market then exists for the stock, adequate
information concerning the Company is then available to the public, and other
terms and conditions of Rule 144 are complied with; and (g) that all stock
certificates representing shares of stock issued to the Holder upon exercise
of this Warrant or upon conversion of such shares may have affixed thereto a
legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
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11. NO RIGHTS OR LIABILITIES AS SHAREHOLDERS. This Warrant shall not
entitle the Holder to any voting rights or other rights as a shareholder of
the Company. In the absence of affirmative action by such Holder to purchase
Warrant Stock by exercise of this Warrant or Common Stock upon conversion
thereof, no provisions of this Warrant, and no enumeration herein of the
rights or privileges of the Holder hereof shall cause such Holder hereof to
be a shareholder of the Company for any purpose.
12. REGISTRATION RIGHTS. All shares of Common Stock issuable upon
conversion of the shares of Warrant Stock issuable upon exercise of this
Warrant shall be "Registrable Securities" or such other definition of
securities entitled to registration rights pursuant to the Shareholders'
Agreement, dated as of the date hereof, between the Company and the investors
listed on Schedule A thereto, and are entitled, subject to the terms and
conditions of that agreement, to all registration rights granted to holders
of Registrable Securities thereunder.
13. NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as follows: if to the Purchaser, Taiwan Special Opportunities
Fund II, c/o TCW/YFY Investment Partners (Taiwan), Ltd., 16F, 169, Sec. 4,
Jen Ai Road, Taipei, Taiwan, Attention: Franny Lee, Vice President, with a
copy to Lin & Liu International Law Offices, 16F, 169, Sec. 4, Jen Ai Road,
Taipei, Taiwan, Attention: Jimmy Lin or as subsequently modified by written
notice, and if to the Company, Integrated Telecom Express, Inc., 2710 Walsh
Avenue, Santa Clara, California 95051, Attention: Richard Forte, with a copy
to Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94043,
Attention: Carmen Chang.
14. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
15. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.
16. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the
Registered Holder of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company: (a) will not increase the par value
of any shares of stock issuable upon the exercise of this Warrant above the
amount payable therefor upon such exercise and (b) will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Warrant Stock upon
exercise of this Warrant.
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17. NOTICES OF RECORD DATE. In case:
17.1. the Company shall take a record of the holders of its
Warrant Stock, Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant or conversion of Warrant Stock),
for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock
of any class or any other securities or to receive any other right; or
17.2. of any consolidation or merger of the Company with or into
another Person, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of
all or substantially all of the assets of the Company to another Person in
which holders of the Company's stock are to receive stock, securities or
property of another Person; or
17.3. of any voluntary dissolution, liquidation or winding-up of
the Company; or
17.4. of any redemption or conversion of all outstanding Common
Stock or Warrant Stock;
then, and in each such case, the Company will mail or cause to be mailed to
the Registered Holder of this Warrant a notice specifying, as the case may
be, (a) the date on which a record is to be taken for the purpose of such
dividend, distribution or right or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation, winding-up, redemption or conversion is to take place, and the
time, if any is to be fixed, as of which the holders of record of Warrant
Stock, Common Stock (or other stock or securities as at the time are
receivable upon the exercise of this Warrant or conversion of the Warrant
Stock), shall be entitled to exchange their shares of Warrant Stock, Common
Stock (or such other stock or securities), for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall
be delivered at least thirty (30) days prior to the date therein specified.
18. SEVERABILITY. If any term, provision, covenant or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
19. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
20. SUCCESSORS OR ASSIGNS. The terms of this Warrant shall be binding
upon and shall inure to the benefit of any successors or assigns of the
Company and of the holder or holders hereof and of the Warrant Stock issued
or issuable upon the exercise hereof.
21. ENTIRE AGREEMENT. This Warrant and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
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<PAGE>
22. NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Warrant enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holder of this Warrant
or otherwise conflicts with the provisions hereof. The rights granted to the
Holder hereunder do not in any way conflict with and are not inconsistent
with the rights granted to holders of the Company's securities under any
other agreements, except rights that have been waived.
23. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
24. ACCEPTANCE OF THE TERMS AND CONDITIONS. Receipt of this Warrant by
the Holder hereof shall constitute acceptance of and agreement to the
foregoing terms and conditions.
[The remainder of this page is intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as
of the Effective Date.
Taiwan Special Opportunities Fund II INTEGRATED TELECOM EXPRESS, INC.
------------------------------------
By: /s/ T.J. Huang By: /s/ Richard H. Forte
-------------------------------- --------------------------------
T.J. Huang Richard H. Forte
----------------------------------- -----------------------------------
Name Name
President Chief Executive Officer
----------------------------------- -----------------------------------
Title Title
(SIGNATURE PAGE TO THE WARRANT
OF
INTEGRATED TELECOM EXPRESS, INC.)
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<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
INTEGRATED TELECOM EXPRESS, INC. WARRANT NO. ___
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of INTEGRATED TELECOM EXPRESS, INC., as provided for therein, and
(check the applicable box):
/ / Tenders herewith payment of the exercise price in full in the form of
cash or a certified or official bank check in same-day funds in the
amount of $____________ for _________ such securities.
/ / Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________
of such securities, according to the following calculation:
X = Y (A-B) ( ) = (____) [(_____) - (_____)]
------- ---------------------------
A (_____)
Where:
X = the number of shares of Warrant Stock to be issued to the
Holder;
Y = the number of shares of Warrant Stock purchasable under
the amount of the Warrant being exchanged (as adjusted to the
date of such calculation);
A = the Fair Market Value of one share of Warrant Stock; and
B = the Purchase Price (as adjusted to the date of such
calculation).
/ / Elects the Easy Sale Exercise option pursuant to Section 2.3 of the
Warrant, and accordingly requests delivery of a net of ______________
of such securities.
Please issue a certificate or certificates for such securities in the name
of, and pay any cash for any fractional share to (please print name, address
and social security number):
Name:
------------------------------------
Address:
------------------------------------
Signature:
------------------------------------
Note: The above signature should correspond exactly with the name on the
first page of this Warrant Certificate or with the name of the assignee
appearing in the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
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