Exhibit 10.3

THE OFFER AND SALE OF THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY AND ITS TRANSFER AGENT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION
WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY
WITH THE PROVISIONS HEREIN, AND UPON FORECLOSURE OR TRANSFER OF THE SECURITIES,
SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS CONTAINED
HEREIN.

SMITH MICRO SOFTWARE, INC.

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No. 2016-        

Original Issue Date: September 6, 2016                      

Smith Micro Software, Inc., a Delaware corporation (the “Company”), hereby
certifies that, for value received, or its permitted registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of 850,000
shares of common stock, $0.001 par value per share (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such shares, the “Warrant
Shares”) at an exercise price per share equal to $2.74 per share (as adjusted
from time to time as provided in Section 9 herein, the “Exercise Price”), at any
time and from time to time on or after the date hereof (the “Original Issue
Date”) and through and including 5:30 P.M., New York City time, on the five
(5) year anniversary of the Original Issue Date (the “Expiration Date”), and
subject to the following terms and conditions:

This Warrant is granted in connection with that certain Note and Warrant
Purchase Agreement, dated September 2, 2016, by and among the Company and the
Purchasers identified therein (the “Purchase Agreement”). This Warrant and the
Warrant Shares issuable pursuant to this Warrant shall be deemed Registrable
Securities for purposes of the Registration Rights Agreement.

1. Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Purchase Agreement.

 

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2. Registration of Warrants. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder (which shall include the initial
Holder or, as the case may be, any registered assignee to which this Warrant is
permissibly assigned hereunder) from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

3. Registration of Transfers. Subject to compliance with all applicable
securities laws, the Company shall register the transfer of all or any portion
of this Warrant in the Warrant Register, upon surrender of this Warrant, with
the Form of Assignment attached as Schedule 2 hereto duly completed and signed,
to the Company at its address specified in the Purchase Agreement and
(x) delivery, at the request of the Company, of an opinion of counsel reasonably
satisfactory to the Company to the effect that the transfer of such portion of
this Warrant may be made pursuant to an available exemption from the
registration requirements of the Securities Act and all applicable state
securities or blue sky laws and (y) delivery by the transferee of a written
statement to the Company certifying that the transferee is an “accredited
investor” as defined in Rule 501(a) under the Securities Act, to the Company at
its address specified in the Purchase Agreement. Upon any such registration or
transfer, a new Warrant to purchase Common Stock in substantially the form of
this Warrant (any such new Warrant, a “New Warrant”) evidencing the portion of
this Warrant so transferred shall be issued to the transferee, and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations in respect of the New Warrant that the Holder has
in respect of this Warrant. The Company shall prepare, issue and deliver at its
own expense any New Warrant under this Section 3.

4. Exercise and Duration of Warrant.

(a) All or any part of this Warrant shall be exercisable by the registered
Holder in any manner permitted by Section 10 of this Warrant at any time and
from time to time on or after the Original Issue Date and through and including
5:30 P.M., New York City time, on the Expiration Date, subject to the conditions
and restrictions contained in this Warrant. At 5:30 P.M., New York City time, on
the Expiration Date, the portion of this Warrant not exercised prior thereto
shall be and become void and of no value and this Warrant shall be terminated
and no longer outstanding.

(b) The Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached as Schedule 1 hereto (the “Exercise
Notice”), completed and duly signed, and (ii) payment of the Exercise Price for
the number of Warrant Shares as to which this Warrant is being exercised (which
may take the form of a “cashless exercise” if so indicated in the Exercise
Notice and if a “cashless exercise” may occur at such time pursuant to
Section 10 below). The date on which the Exercise Notice is delivered to the
Company (as determined in accordance with the notice provisions hereof) is an
“Exercise Date.” Within two (2) days on which the NASDAQ exchange is open for
trading (a “Trading Day”) following the delivery of the Exercise Notice (the
“Payment Deadline”), the Holder shall make payment with respect to the Exercise
Price for the number of Warrant Shares as to which this Warrant is being

 

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exercised; provided that the Company’s obligations to deliver such Warrant
Shares shall be delayed on a day-for-day basis each day after the Payment
Deadline such payment of the Exercise Price is not paid. The Holder shall not be
required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within three (3) Trading Days of the date the
final Exercise Notice is delivered to the Company. Execution and delivery of the
Exercise Notice shall have the same effect as cancellation of the original
Warrant and issuance of a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares, if any.

5. Delivery of Warrant Shares.

(a) Subject to Section 4(b), upon exercise of this Warrant, the Company shall
promptly (but in no event later than 5:30 P.M., New York City time, on the
second (2nd) Trading Day after the Exercise Date (or the third (3rd) Trading Day
if the last of the Exercise Notice, the Exercise Price (if applicable) and
opinion of counsel referred to below in this Section 5(a) (if applicable) is
delivered after 5:00 P.M., New York City time, on the Exercise Date) (such time,
the “Delivery Deadline”) issue or cause to be issued and cause to be delivered
to or upon the written order of the Holder and in such name or names as the
Holder may designate (provided that, if the Registration Statement is not
effective and the Holder directs the Company to deliver a certificate for the
Warrant Shares in a name other than that of the Holder or an Affiliate of the
Holder, it shall deliver to the Company on the Exercise Date an opinion of
counsel reasonably satisfactory to the Company to the effect that the issuance
of such Warrant Shares in such other name may be made pursuant to an available
exemption from the registration requirements of the Securities Act and all
applicable state securities or blue sky laws), (i) a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends, or (ii) an
electronic delivery of the Warrant Shares to the Holder’s account at the
Depository Trust Company (“DTC”) or a similar organization, unless in the case
of clause (i) and (ii) a registration statement covering the resale of the
Warrant Shares and naming the Holder as a selling stockholder thereunder is not
then effective or the Warrant Shares are not freely transferable without volume
and manner of sale restrictions pursuant to Rule 144 under the Securities Act,
in which case such Holder shall receive a certificate for the Warrant Shares
issuable upon such exercise with appropriate restrictive legends. The Holder, or
any Person permissibly so designated by the Holder to receive Warrant Shares,
shall be deemed to have become the holder of record of such Warrant Shares as of
the Exercise Date with respect thereto. If the Warrant Shares can be issued
without restrictive legends, the Company shall, upon the written request of the
Holder, use its best efforts to deliver, or cause to be delivered, Warrant
Shares hereunder electronically through DTC or another established clearing
corporation performing similar functions, if available. In the case of a dispute
as to the determination of the Exercise Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number of
Warrant Shares that are not disputed.

(b) If by the Delivery Deadline, the Company has failed to comply with
Section 5(a), and if after such Delivery Deadline and prior to the receipt of
such Warrant Shares, the Holder purchases (in an open market transaction) shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such

 

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exercise (a “Buy-In”), then the Company shall, within three (3) Trading Days
after the Company receives the Holder’s written request and in the Holder’s sole
discretion, either:

(i) at the option of the Holder, reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the
number of shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations hereunder; or

(ii) promptly honor its obligation to deliver to the Holder such Warrant Shares
and pay cash to the Holder in an amount equal to the excess (if any) of Holder’s
total purchase price (including brokerage commissions, if any, that are
reasonably documented in Holder’s written request) for the shares of Common
Stock so purchased in the Buy-In over the product of (A) the number of shares of
Common Stock purchased in the Buy-In, times (B) the Closing Sale Price on the
date the Warrant was exercised.

(c) To the extent permitted by law, the Company’s obligations to issue and
deliver Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same.
Nothing herein shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver the Warrant Shares upon exercise of the
Warrant as required pursuant to the terms hereof.

6. Charges, Taxes and Expenses. Issuance and delivery of the Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of the Warrant Shares, all of which taxes and expenses
shall be paid by the Company; provided, however, that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the registration of Warrant Shares or the Warrants in a name other than that
of the Holder or an Affiliate thereof. The Holder shall be responsible for all
other tax liabilities that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.

7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity and surety bond, if
requested by the Company.

8. [Intentionally Omitted].

9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 9.

 

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(a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes
a distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides its outstanding shares of Common Stock into a larger
number of shares, or (iii) combines its outstanding shares of Common Stock into
a smaller number of shares, then in each such case, the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately before such event and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustments made pursuant to clause (i) of this paragraph
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

(b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a distribution
of Common Stock covered by the preceding paragraph) or (iii) rights or Warrants
to subscribe for or purchase any security, or (iv) any other asset, including
cash dividends (in each case, “Distributed Property”), then, upon any exercise
of this Warrant that occurs after the record date fixed for determination of
stockholders entitled to receive such distribution, the Holder shall be entitled
to receive, in addition to the Warrant Shares otherwise issuable upon such
exercise (if applicable), the Distributed Property that such Holder would have
been entitled to receive in respect of such number of Warrant Shares had the
Holder been the record holder of such Warrant Shares immediately prior to such
record date without regard to any limitation on exercise contained therein.

(c) Sales of Common Stock at less than the Exercise Price. From the date hereof
until the end of the term of this Warrant, if the Company sells or issues shares
of Common Stock at a price, or warrants, options, convertible debt or equity
securities, excluding shares of Common Stock issued in connection with a merger,
acquisition or consolidation, employee stock options, other stock awards
pursuant to an employee benefit plan or arrangement, or equity securities issued
in connection with standard non-convertible debt transactions, with an exercise
price per share or a conversion price which is less than the Exercise Price then
in effect (such securities, the “Additional Securities”), the Exercise Price
shall be adjusted immediately thereafter so that the Exercise Price shall be
multiplied by a fraction:

(i) the numerator of which shall be the number of shares of Common Stock
outstanding immediately before such sale or issuance, plus the number of shares
of Common Stock which the aggregate consideration received by the Company for
the total number of Additional Securities would purchase at a price per share
equal to the Exercise Price; and

(ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such sale or issuance.

Such adjustment shall be made successively whenever such an issuance is made. An
adjustment pursuant to this Section 9(c) shall not result in any change in the
number of Common Stock issuable upon exercise of this Warrant.

 

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(d) Fundamental Transactions.

(i) In the case of any Fundamental Transaction, upon any exercise of this
Warrant occurring simultaneously with or subsequent to the closing of such
Fundamental Transaction, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, without regard to any
limitation in Section 13 on the exercise of this Warrant, the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 13 on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any Successor Entity in a Fundamental
Transaction in which the Company is not the survivor to assume in writing all of
the obligations of the Company under this Warrant.

(ii) For purposes of this Section 9(d), the following definitions shall apply:

“Fundamental Transaction” means that (A) the Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) another Person completes a purchase, tender or exchange offer that is
accepted by the holders of more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the Person or Persons
making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganize, recapitalize or
reclassify its Common Stock (other than as a result of a subdivision or
combination of shares of Common Stock covered by Section 9(a) above) or (B) any
“person” or “group” (as these terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and outstanding shares of
Common Stock.

 

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“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common shares or common stock or
equivalent equity security is quoted or listed on a trading market or stock
exchange (a “Principal Trading Market”), or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public
market capitalization as of the date of consummation of the Fundamental
Transaction.

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

“Successor Entity” means, if applicable, the Person formed by, resulting from or
surviving any Fundamental Transaction or, for the purposes of Section 9(d)(ii),
the Person with which such Fundamental Transaction shall have been entered into.

(e) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a) of this Section 9, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the increased or decreased number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior to
such adjustment.

(f) Calculations. All calculations under this Section 9 shall be rounded down to
the nearest whole cent or the nearest whole share, as applicable.

(g) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to
this Section 9, the Company at its expense will, at the written request of the
Holder, promptly compute such adjustment, in good faith, in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted number or type
of Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s transfer agent.

(h) Notice of Corporate Events. If, while this Warrant is outstanding, the
Company (i) declares a dividend or any other distribution of cash, securities or
other property in respect of its Common Stock, including, without limitation,
any granting of rights or Warrants to subscribe for or purchase any capital
stock of the Company, (ii) enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then, except if such notice and the contents thereof shall be deemed to
constitute material non-public information, the Company shall deliver to the
Holder a notice of such transaction at least five (5) Trading Days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction;
provided, however, that the failure to deliver such notice or any defect therein
shall not affect the validity of the corporate action required to be described
in such notice. To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information regarding the Company or any of its

 

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subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K.

10. Payment of Exercise Price. The Holder may pay the Exercise Price in
immediately available funds by wire transfer to an account designated by the
Company or, alternatively, in its sole discretion, satisfy its obligation to pay
the Exercise Price through a “cashless exercise”, in which event the Company
shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y [(A-B)/A]

where:

“X” equals the number of Warrant Shares to be issued to the Holder;

“Y” equals the total number of Warrant Shares with respect to which this Warrant
is being exercised;

“A” equals the arithmetic average of the Closing Sale Prices of the shares of
Common Stock (as reported by Bloomberg Financial Markets) for the five
(5) consecutive Trading Days ending on the date immediately preceding the
Exercise Date (the “Fair Market Value”); and

“B” equals the Exercise Price then in effect for the applicable Warrant Shares
at the time of such exercise.

For purposes of this Warrant, “Closing Sale Price” means, for any security as of
any date, the last trade price for such security on the Principal Trading Market
for such security, as reported by Bloomberg Financial Markets, or, if such
Principal Trading Market begins to operate on an extended hours basis and does
not designate the last trade price, then the last trade price of such security
prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial
Markets, or if the foregoing do not apply, the last trade price of such security
in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg Financial Markets, or, if no last trade price
is reported for such security by Bloomberg Financial Markets, the average of the
bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC. If the Closing
Sale Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Sale Price of such security on such date shall
be the fair market value as determined in good faith by the Board of Directors
of the Company. The Board of Directors’ determination shall be binding upon all
parties absent demonstrable error. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

11. Registration Rights. The Holder of this Warrant is entitled to the benefit
of certain registration rights with respect to the Warrant and the Warrant
Shares issuable upon the exercise of this Warrant pursuant to the Registration
Agreement, and the registration rights with respect to the Warrants and the
Warrant Shares issuable upon the exercise of this Warrant by any

 

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subsequent Holder may only be assigned in accordance with the terms and
provisions of the Registration Agreement.

12. Rule 144. For purposes of Rule 144 promulgated under the Securities Act, it
is intended, understood and acknowledged that the Warrant Shares issued in a
“cashless exercise” transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Purchase Agreement (provided that the Commission continues to take the position
that such treatment is proper at the time of such exercise).

13. [Intentionally Omitted]

[OR]

13. Limitations on Exercise. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to ensure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
the Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.99% (the “Maximum
Percentage”) of the total number of then issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise) unless Holder gives 61 days’ notice to the Company of its intention to
exceed this 9.99% limit. For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (i) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Person and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company beneficially owned by the Holder and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
Warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein; provided that in no event shall the aggregate
number of shares beneficially owned by the Holder and its affiliates, calculated
in accordance with Section 13(d) of the Exchange Act, exceed 9.99%. Except as
set forth in the preceding sentence (other than the proviso thereto), for
purposes of this paragraph (including the proviso in the immediately preceding
sentence), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act; it being acknowledged by the Holder that the
Company is not representing to such Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance therewith. To
the extent that the limitation contained in this Section 13 applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by such
Holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm

 

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the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 13, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of the Holder, the Company shall within one (1) Trading
Day confirm in writing to such Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares Common Stock shall be
determined after giving effect to the conversion or exercise of securities of
the Company, including the Warrants, by the Holder and its affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 13 to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
limitation.

14. No Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
that would otherwise be issuable, the number of Warrant Shares to be issued
shall be rounded down to the next whole number and the Company shall pay the
Holder in cash the fair market value (based on the Closing Sale Price) for any
such fractional shares.

15. Notices. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in the Purchase Agreement prior to 5:30 P.M., New
York City time, on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in the Purchase Agreement on a day that is not a
Trading Day or later than 5:30 P.M., New York City time, on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service specifying next business day delivery, and
(iv) upon actual receipt by the Person to whom such notice is required to be
given, if by hand delivery. The address and facsimile number of a Person for
such notices or communications shall be as set forth in the Purchase Agreement
unless changed by such Person by three (3) Trading Days’ prior written notice to
the other Persons in accordance with this Section 15.

16. Warrant Agent. The Company shall serve as Warrant agent under this Warrant.
Upon fifteen (15) days’ notice to the Holder, the Company may appoint a new
Warrant agent. Any corporation into which the Company or any new Warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new Warrant agent shall be a party or any corporation to which
the Company or any new Warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor Warrant
agent under this Warrant without any further act. Any such successor Warrant
agent shall promptly cause notice of its succession as Warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register.

 

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17. Miscellaneous.

(a) No Rights as a Stockholder. The Holder, solely in such Person’s capacity as
a holder of this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, amalgamation, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (except upon
exercise of this Warrant) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.

(b) Authorized Shares.

(i) The Company covenants that during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all reasonable actions as may
be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the Trading Market upon which the Common Stock may be listed. The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).

(ii) Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending its
certificate or articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities 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 actions as
may be necessary or appropriate to protect the rights of Holder as set forth in
this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction

 

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thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.

(c) Successors and Assigns. Subject to the restrictions on transfer set forth in
this Warrant, and compliance with applicable securities laws, this Warrant may
be assigned by the Holder. This Warrant may not be assigned by the Company
without the written consent of the Holder except to a Successor Entity in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure
to the benefit of the Company and the Holder and their respective successors and
permitted assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this Warrant.

(d) Amendment and Waiver. Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Holder of this
Warrant.

(e) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.

(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE
COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE DELAWARE COURT OF CHANCERY (OR, IF (BUT ONLY IF) THE DELAWARE COURT OF
CHANCERY SHALL BE UNAVAILABLE, ANY OTHER COURT OF THE STATE OF DELAWARE OR ANY
FEDERAL COURT SITTING IN THE STATE OF DELAWARE), FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF
THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE
HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE
PURCHASE AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL
BY JURY.

 

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(g) Headings. The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

(h) Severability. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby, and the Company and the Holder will
attempt in good faith to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.

 

SMITH MICRO SOFTWARE, INC. By:  

 

Name:   Steven M. Yasbek Title:   Chief Financial Officer

 

[Signature Page to Warrant]

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SCHEDULE 1

FORM OF EXERCISE NOTICE

[To be executed by the Holder to purchase shares of Common Stock under the
Warrant]

Ladies and Gentlemen:

(1) The undersigned is the Holder of Warrant No.                      (the
“Warrant”) issued by Smith Micro Software, Inc., a Delaware corporation (the
“Company”). Capitalized terms used herein and not otherwise defined herein have
the respective meanings set forth in the Warrant.

(2) The undersigned hereby exercises its right to purchase                 
Warrant Shares pursuant to the Warrant.

(3) The Holder intends that payment of the Exercise Price shall be made as
(check one):

 

  ¨ Cash Exercise

 

  ¨ “Cashless Exercise” under Section 10 of the Warrant

(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of
$         in immediately available funds to the Company in accordance with the
terms of the Warrant.

(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder
Warrant Shares determined in accordance with the terms of the Warrant.

(6) By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (as determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 13 of the Warrant to which this
notice relates.

 

Dated:                                                                         
Name of Holder:                                                         
By:                                     
                                         Name:
                                                                         Title:
                                                                          

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)

 

[Signature Page to Warrant]

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SCHEDULE 2

FORM OF ASSIGNMENT

[To be completed and executed by the Holder only upon transfer of the Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                     (the “Transferee”) the right represented by the within
Warrant to purchase                  shares of Common Stock of Smith Micro
Software, Inc. (the “Company”) to which the within Warrant relates and appoints
                     attorney to transfer said right on the books of the Company
with full power of substitution in the premises. In connection therewith, the
undersigned represents, warrants, covenants and agrees to and with the Company
that:

 

(a) the offer and sale of the Warrant contemplated hereby is being made in
compliance with Section 4(a)(1) of the United States Securities Act of 1933, as
amended (the “Securities Act”) or another valid exemption from the registration
requirements of Section 5 of the Securities Act and in compliance with all
applicable securities laws of the states of the United States;

 

(b) the undersigned has not offered to sell the Warrant by any form of general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;

 

(c) the undersigned has read the Transferee’s investment letter included
herewith, and to its actual knowledge, the statements made therein are true and
correct; and

 

(d) the undersigned understands that the Company may condition the transfer of
the Warrant contemplated hereby upon the delivery to the Company by the
undersigned or the Transferee, as the case may be, of a written opinion of
counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that such transfer
may be made without registration under the Securities Act and under applicable
securities laws of the states of the United States.

 

Dated:       (Signature must conform in all respects to name of holder as
specified on the face of the Warrant)       Address of Transferee

In the presence of: