THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE SHARES OF
COMMON STOCK
Warrant to Purchase 3,515,625
Shares
(subject to adjustment as set forth herein)
Exercise Price $0.40 Per
Share
(subject to adjustment as set forth herein)
VOID AFTER 5:00 P.M., MOUNTAIN
TIME, ON
July 28, 2013
THIS CERTIFIES that, for value received, THOMAS
P. GRAINGER, and his successors and assigns (the
“HOLDER”) is entitled, upon the terms hereof, and
subject to the exercise conditions and limitations set forth in
Section 17, at any time and from time to time on and after the
date hereof (the “COMMENCEMENT DATE”), and on and prior
to 5:00 p.m. Mountain Time on the fifth anniversary of the date of
issuance hereof (the “EXPIRATION DATE”), but not
thereafter, to subscribe for and purchase from SMART MOVE, INC., a
Delaware corporation (the “COMPANY”), 3,515,625 shares
(the “WARRANT SHARES”) of common stock, $0.0001 par
value per share (“COMMON STOCK”), of the Company. The
purchase price of one share of Common Stock under this Warrant
shall be the Exercise Price, as defined below and as may be
adjusted from time to time pursuant to the terms hereof. The
Exercise Price and the number of shares for which this Warrant is
exercisable shall be subject to adjustment as provided herein. This
Warrant is being issued in connection with the Purchase Agreement
dated on or about the date hereof (the “PURCHASE
AGREEMENT”) entered into between the Company, the Holder and
the other Purchasers named therein (if any).
1. DEFINITIONS. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed
thereto in the Purchase Agreement. As used in this Warrant, the
following terms shall have the following respective
meanings:
“CHANGE IN CONTROL TRANSACTION” will
be deemed to exist if (i) there occurs any consolidation,
merger or other business combination of the Company with or into
any other corporation or other entity or person (whether or not the
Company is the surviving corporation), or any other corporate
reorganization or transaction or series of related transactions in
which in any of such events the voting stockholders of the Company
prior to such event cease to own 50% or more of the voting stock,
or corresponding voting equity interests, of the surviving
corporation after such event (including without limitation any
“going private” transaction under Rule 13e-3
promulgated pursuant to the Exchange Act), (ii) any tender
offer by the Company under Rule 13e-4 promulgated pursuant to
the Exchange Act for 20% or more of the Company’s Common
Stock, (iii) any person (as defined in Section 13(d) of the
Exchange Act), together with its affiliates and associates (as such
terms are defined in Rule 405 under the Act), beneficially
owns or is deemed to beneficially own (as described in
Rule 13d-3 under the Exchange Act without regard to the 60-day
limit on the exercise period) in excess of 50% of the
Company’s voting power, (iv) there is a replacement of
more than one-half of the members of the Company’s Board of
Directors which is not approved by those individuals who are
members of the Company’s Board of Directors on the date
thereof, or (v) in one or a series of related transactions,
there is a sale or transfer of all or substantially all of the
assets of the Company, determined on a consolidated
basis.
“CONVERTIBLE SECURITIES” means any
convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common
Stock.
“EXCHANGE
ACT” shall mean the Securities Exchange Act of 1934, as
amended.
“EXERCISE
DATE” shall have the meaning set forth in
Section 4.2.1.
“EXERCISE
PRICE” means $0.40 per share.
“PRINCIPAL MARKET” shall mean the
American Stock Exchange or such other market or exchange on which
the Common Stock is then principally traded.
“SECURITIES ACT” shall mean the
Securities Act of 1933, as amended.
“TRADING
DAY” shall mean a day on which there is trading on the
Principal Market.
2. TITLE OF WARRANT. The Company shall
register this Warrant, upon records to be maintained by the Company
for that purpose, in the name of the record holder hereof 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, and the Company shall not be affected by notice to
the contrary except as provided herein.
Prior to the expiration hereof and subject to
compliance with applicable securities laws, this Warrant and all
rights hereunder are transferable, in whole or in part, provided
that the amount assigned shall be for the right to purchase at
least 10,000 Warrant Shares, at the office or agency of the Company
by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed
hereto properly endorsed. The term “HOLDER” shall refer
to the Holder or any subsequent transferee of this Warrant. If this
Warrant is duly assigned in accordance with the terms hereof, then
the Company agrees, upon the request of the assignee, to amend or
supplement promptly any effective registration statement covering
the Warrant Shares so that the such assignee is added as a selling
stockholder thereunder, subject to such assignee providing the
information required for such amendment or supplement and provided
that no unreasonable change may be required to the description of
the intended methods of distribution as set forth in the
Registration Statement by virtue of such transfer.
3. AUTHORIZATION OF SHARES. The Company
covenants that all shares of Common Stock which may be issued upon
the exercise of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant and payment of
the Exercise Price as set forth herein will be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously
with such issue or otherwise specified herein).
4.1 EXERCISE PROCEDURE. Subject to the terms of
Section 1.1 and Section 17.1, 17.2 and 17.3 hereof, the
purchase rights represented by this Warrant may be made at any time
and from time to time, in whole or in part, on or after the
Commencement Date but before 5:00 p.m. Mountain Time on the
Expiration Date, by (i) delivering the Notice of Exercise
annexed hereto duly completed and executed (which may be by
facsimile) to the Company at the principal office of the Company
(or such other office or agency of the Company as it may designate
by notice in writing to the registered holder hereof at the address
of such holder appearing on the books of the Company), and upon
payment of the full Exercise Price of the shares thereby purchased,
whereupon the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased.
Subject to subsection (b) below, payment of the Exercise Price
of the shares shall be by certified check or cashier’s check
or by wire transfer (of same day funds) to an account designated by
the Company in an amount equal to the Exercise Price multiplied by
the number of shares being purchased. The Company and the Holder
expressly agree that if on the date of any exercise election by
Holder under this Warrant a registration statement pursuant to the
1933 Act covering the resale of the WARRANT SHARES that are the
subject of the Exercise Notice by the Holder is not available for
the resale of such WARRANT SHARES, the Holder may exercise its
right to receive Common Stock on a net basis such that, without any
payment of funds by the Holder, the Holder receives that number of
shares of Common Stock equal to: (A) the WARRANT SHARES
multiplied by: (B) the ratio of (i) the “Market
Price” defined below less the EXERCISE PRICE; divided by
(ii) the Market Price. “Market Price” means, the
average of the daily closing prices for a share of the
Company’s Common Stock in the PRINCIPAL MARKET for the ten
(10) consecutive trading days before such date excluding any
trades which are not bona fide arm’s length
transactions.
4.2 ISSUANCE OF WARRANT SHARES AND UNEXERCISED
WARRANTS. In the event that this Warrant is not exercised in full,
the number of Warrant Shares shall be reduced by the number of such
Warrant Shares for which this Warrant is exercised and/or
surrendered, and the Company, at its expense, shall within five
(5) Trading Days, issue and deliver to or upon the order of
the Holder a new Warrant of like tenor in the name of the Holder or
as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, reflecting such adjusted number of
Warrant Shares.
4.2.1 All exercises of this Warrant are subject
to the provisions of Section 17 hereof. Any exercise permitted
hereunder will be deemed to occur as of the date of receipt by the
Company of a validly executed Notice of Exercise (or such later
date as may be indicated on such Notice of Exercise) (such date
being referred to herein as the “EXERCISE DATE”) and
payment as required hereunder, whereupon certificates for shares of
Common Stock subject to such Notice of exercise and then
purchasable hereunder shall be delivered to the Holder hereof
within five (5) Trading Days after the Exercise Date;
provided, that if prior to such date the Company has not received
the Warrant or an affidavit of lost Warrant, then such delivery may
be extended until one Trading Day after receipt of such Warrant or
affidavit by the Company. The Holder may withdraw its Notice of
Exercise under Section 4(a) or 4(b) at any time thereafter, in
whole or in part, if the Company fails to timely deliver the
applicable certificates to the Holder as provided in this
Warrant.
4.2.2 In lieu of delivering physical
certificates representing the Warrant Shares issuable upon
conversion of this Warrant, provided the Company’s transfer
agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer
(“FAST”) program, upon request of the holder, the
Company shall use its commercially reasonable best efforts to cause
its transfer agent to electronically transmit the Warrant Shares
issuable upon exercise to the holder, by crediting the account of
the holder’s prime broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system. The time
periods for delivery described above shall apply to the electronic
transmittals through the DWAC system. The Company agrees to
coordinate with DTC to accomplish this objective.
5. NO FRACTIONAL SHARES OR SCRIP. No
fractional Warrant Shares or scrip representing fractional Warrant
Shares shall be issued upon the exercise of this Warrant. Any
fractional share or scrip shall be rounded up to the nearest whole
number.
6. CHARGES, TAXES AND EXPENSES. Issuance of
certificates for shares of Common Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any
issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall
be paid by the Company (other than income, franchise or similar
taxes) and such certificates shall be issued in the name of the
holder of this Warrant or in such name or names as may be directed
by the holder of this Warrant; PROVIDED, HOWEVER, that in the event
certificates for shares of Common Stock are to be issued in a name
other than the name of the holder of this Warrant, this Warrant
when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof;
and PROVIDED FURTHER, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer
involved in the issuance of any Warrant certificates or any
certificates for the Warrant Shares in a name other than the name
of the holder.
7. CLOSING OF BOOKS. The Company will at no
time close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.
8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE.
Subject to Sections 11 and 12 of this Warrant and the
provisions of any other written agreement between the Company and
the Holder, prior to the exercise of this Warrant as provided
herein, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Warrant Shares or any other
securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights. However, at the time of the
exercise of this Warrant pursuant to Section 4 hereof, the
Warrant Shares so purchased hereunder shall be deemed to be issued
to such Holder as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been
exercised.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION
OF WARRANT; DENOMINATION. In the event that any holder notifies the
Company that its Warrant(s) have been lost, stolen or destroyed,
then replacement Warrant(s) identical in all respects to the
original Warrant(s) (except for any registration number and any
adjustments to Exercise Price or the number of Warrant Shares
issuable hereunder pursuant hereto, if different than that shown on
the original Warrant(s)) shall be delivered to the holder by the
Company within five (5) Trading Days, provided that such
holder executes and delivers to the Company an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such Warrants. This Warrant is
exchangeable for an equal aggregate number of Warrants of different
denominations, as requested by the holder surrendering the same. No
service charge will be made for such registration, replacement,
transfer or exchange.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If
the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken
or such right may be exercised on the next succeeding day not a
legal holiday.
11. EFFECT OF CERTAIN EVENTS. The Company
shall not consummate a Change in
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