Exhibit 10.19


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION
THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


 


WARRANT TO PURCHASE


 


SHARES OF PREFERRED STOCK


 


OF


 


TRAQ
WIRELESS, INC.,

a Delaware corporation


 


(Void after December 31, 2013)


 


This
certifies that VENTURE LENDING & LEASING IV, LLC, a Delaware limited
liability company or assigns (the “Holder”), for value received, is
initially entitled to purchase from TRAQ WIRELESS, INC., a Delaware corporation
(the “Company), the Initial Number (as hereinafter defined) of fully
paid and nonassessable shares of the Company’s preferred stock of the series
specified hereinafter (the “Preferred Stock”), for cash at a purchase
price per share (the “Stock Purchase Price”) equal to, at Holder’s option, (i) $1.00 (the “Series 2
Price”), or (ii) the Next Round Price (hereinafter defined).


 


If
the Holder opts to have the Stock Purchase Price be equal to the Series 2
Price, or if the Next Round (as hereinafter defined) has not occurred prior to
the exercise hereof, then this Warrant shall be exercisable for the Initial
Number of shares of the Company’s Series 2 Preferred Stock.  If the Holder opts to have the Stock Purchase
Price be equal to the Next Round Price, then this Warrant shall be exercisable
for the Initial Number of shares of the class and series of convertible
preferred stock or other security sold or issued by the Company in the Next
Round.


 


This
Warrant is issued in connection with Supplement No.2 of even date herewith to
that certain Loan and Security Agreement dated as of July 28, 2005 (as
amended, restated and supplemented from time to time, the “Loan Agreement”)
between the Company and Venture Lending & Leasing IV, Inc., an
affiliate of Holder (“Lender”). 
Capitalized terms used herein and not otherwise defined in this Warrant
shall have the meanings ascribed to them in the Loan Agreement unless the
context would otherwise require.


 


For
purposes of this Warrant, “Next Round” means the next bona fide round of
equity financing (including the conversion of any outstanding amounts from
short term debt financing) after the completion of the Company’s Series 2
preferred stock round in which the Company issues any equity securities, and
includes any other options, warrants, or other convertible securities or
similar consideration issued or delivered in connection with such equity
financing to investors in such round (or to the lenders in the case of any such
short term debt financing).


 


For
purposes of this Warrant, “Next Round Price” means the lowest price per
share paid by an investor for the Company’s securities issued in the Next Round
including for this purpose the value of all consideration given by an investor
for such equity securities; provided that if the Next Round is consummated
pursuant to the conversion of outstanding debt from short term debt financing,
then the Next Round Price of the securities shall be the effective per share
conversion or exercise price for the Company’s equity securities issued or
issuable to the lenders in such Next Round, taking into account the value of
all equity securities, if any, issued to the lenders in connection with such
debt financing and all equity securities issued pursuant to the conversion of
such debt.


 


The
number of shares purchasable hereunder shall be the number obtained by dividing
(A) Forty-eight Thousand Dollars ($48,000), by (B) the Stock Purchase
Price.  If in any case such number
includes a fraction, the 


 

















 


fraction
shall be adjusted downward to the closest whole number of shares (the “Initial
Number”).  In addition, the Initial
Number of shares of Preferred Stock issuable under this Warrant shall be
increased automatically from time to time upon the funding of each Additional
Growth Capital Loan, by that number of shares equal to 0.02 times the original
principal amount of such Additional Growth Capital Loan, divided by the Stock
Purchase Price.


 


Promptly
after the Termination Date, the Company shall deliver a supplement to this
Warrant, in substantially the form of Exhibit “C” attached hereto,
specifying (i) the actual number and type of shares of the Company’s stock
issuable upon exercise of this Warrant and (ii) the initial Stock Purchase
Price; provided, however, that the failure of the Company to deliver
such supplement shall not affect the rights of the Holder of this Warrant to
receive such number of shares upon exercise of this Warrant.  The Stock Purchase Price and the number of
shares purchasable hereunder are subject to further adjustment as provided in Section 4
of this Warrant.


 


This
Warrant may be exercised at any time or from time to time up to and including
5:00 p.m. (Pacific time) on December 31, 2013 (the “Expiration
Date”), upon surrender to the Company at its principal office at 8300 North
MoPac Expressway, Suite 310, Austin, TX 78759 (or at such other location
as the Company may advise Holder in writing) of this Warrant properly endorsed
with the Form of Subscription attached hereto as Exhibit “A”
duly completed and signed and upon payment in cash or by check of the aggregate
Stock Purchase Price for the number of shares of Preferred Stock for which this
Warrant is being exercised determined in accordance with the provisions
hereof.  The Stock Purchase Price and the
number of shares purchasable hereunder are subject to adjustment as provided in
Section 4 of this Warrant.


 


This
Warrant is subject to the following terms and conditions:


 


1.             Exercise; Issuance of
Certificates; Payment for Shares.


 


(a)           Unless an election is made pursuant
to clause (b) of this Section 1, this Warrant shall be exercisable at
the option of the Holder, at any time or from time to time, by delivery of this
Warrant properly endorsed with the Form of Subscription duly completed and
signed on or before the Expiration Date for all or any portion of the shares of
Preferred Stock (but not for a fraction of a share) which may be purchased
hereunder by payment in full by cash, certified check or wire transfer of the
Stock Purchase Price multiplied by the number of shares to be purchased.  In the event, however, that pursuant to the
Company’s Certificate of Incorporation, as amended, an event causing automatic
conversion of the Company’s Preferred Stock shall have occurred prior to the
exercise of this Warrant, in whole or in part, then this Warrant shall be
exercisable for the number of shares of Common Stock of the Company into which
the Preferred Stock not purchased upon any prior exercise of this Warrant would
have been so converted (and, where the context requires, reference to “Preferred
Stock” shall be deemed to be or include such Common Stock, as may be
appropriate).  The Company agrees that
the shares of Preferred Stock purchased under this Warrant shall be and are
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which the Form of Subscription
shall have been delivered and payment made for such shares.  Subject to the provisions of Section 2,
certificates for the shares of Preferred Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the Company’s
expense within a reasonable time after the rights represented by this Warrant
have been so exercised.  Except as provided
in clause (b) of this Section 1, in case of a purchase of less than
all the shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant of Warrants of like
tenor for the balance of the shares purchasable under this Warrant surrendered
upon such purchase to the Holder hereof within a reasonable time.  Each stock certificate so delivered shall be
in such denominations of Preferred Stock as may be requested by the Holder
hereof and shall be registered in the name of such Holder or such other name as
shall be designated by such Holder, subject to the limitations contained in Section 2.


 


(b)           The Holder, in lieu of exercising
this Warrant by the cash payment of the Stock Purchase Price pursuant to clause
(a) of this Section 1, may elect, at any time on or before the
Expiration Date, to surrender this Warrant, properly endorsed with the Form of
Subscription duly completed and signed, and receive that number of shares of
Preferred Stock equal to the quotient of: (i) the difference between (A) the
Per Share Price (as hereinafter defined) of the Preferred Stock, less (B) the
Stock Purchase Price then in effect, multiplied by the number of shares of
Preferred Stock the Holder would otherwise have been entitled to purchase
hereunder pursuant to clause (a) of this Section 1 (or such lesser
number of shares as the Holder may designate in the case of a partial 


 

















 


exercise
of this Warrant); over (ii) the Per Share Price.  Election to exercise under this section (b) may
be made by delivering a signed Form of Subscription, duly completed and
signed, to the Company via facsimile, to be followed by delivery of this
Warrant.


 


For
purposes of clause (c) of this Section 1, “Per Share Price” means:


 


(i)            If this Warrant is exercised on the
date of the Company’s initial public offering of Common Stock, and if the
Company’s registration statement relating to such public offering has been
declared effective by the Securities and Exchange Commission, then the Per
Share Price shall be the product of (A) the initial “Price to Public” of
the Common Stock specified in the final prospectus with respect to the offering
and (B) the number of shares of Common Stock into which each share of
Preferred Stock exercised is convertible at the date of calculation;


 


(ii)           If this Warrant is exercised after,
and not on the date of the Company’s initial public offering of Common Stock,
and if the Company’s Common Stock is traded on a securities exchange or quoted
on The Nasdaq National Market or actively traded over-the-counter:


 


(1)           If the Company’s Common Stock is
traded on a securities exchange or quoted on The Nasdaq National Market, the
Per Share Price shall be deemed to be the product of (A) the closing price
of the Company’s Common Stock as quoted on The Nasdaq National Market or listed
on any exchange, whichever is applicable, as published in the Western Edition
of The Wall Street Journal for the trading day immediately prior to the
date of the Holder’s election hereunder and, (B) the number of shares of
Common Stock into which each share of Preferred Stock exercised is convertible
on such date; or


 


(2)           If the Company’s Common Stock is
actively traded over-the-counter, the Per Share Price shall be deemed to be the
product of (A) the closing bid or sales price, whichever is applicable, of
the Company’s Common Stock for the trading day immediately prior to the date of
the Holder’s election hereunder and (B) the number of shares of Common
Stock into which each share of Preferred Stock exercised is convertible on such
date;


 


(iii)          If neither (i) nor (ii) is
applicable, the Per Share Price of Preferred Stock shall be determined in good
faith by the Board of Directors of the Company based on relevant facts and
circumstances at the time of the net exercise under Section l(b),
including in the case of a Corporate Event (as defined in Section 4.3
below) the consideration receivable by the holders of Preferred Stock in such
Corporate Event and the liquidation preference, if any, then applicable to the
Preferred Stock.


 


2.             Limitation on Transfer.


 


(a)           This Warrant, the Preferred Stock
issuable upon exercise of this Warrant, shares of the Company’s Common Stock
issued upon conversion of such Preferred Stock and any other securities issued
in respect to the Preferred Stock or Common Stock issued upon conversion of the
Preferred Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event shall not be transferable except upon the
conditions specified in this Section 2, which conditions are intended to
insure compliance with the provisions of the Securities Act of 1933, as amended
(the “Securities Act”).  Each
holder of this Warrant or the Preferred Stock issuable hereunder will cause any
proposed transferee of the Warrant or Preferred Stock to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Section 2.  Notwithstanding the
foregoing and any other provision of this Section 2, Holder may freely
transfer all or part of this Warrant or the shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the shares, if any) at any time to any lender transferee of a
portion of the loan commitment of Venture Lending & Leasing IV, Inc.
under the Loan Agreement, by giving the Company notice of the portion of the
Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this warrant to the
Company for reissuance to the transferees(s) (and Holder, if
applicable).  Each transferee shall agree
to be bound by the provisions of this Warrant prior to the effectiveness of
such transfer.


 

















 


(b)           Each certificate representing (i) this
Warrant, (ii) the Preferred Stock, (iii) shares of the Company’s
Common Stock issued upon conversion of the Preferred Stock and (iv) any
other securities issued in respect to the Preferred Stock or Common Stock
issued upon conversion of the Preferred Stock upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of this Section 2 or unless
such securities have been registered under the Securities Act or sold under Rule 144)
be stamped or otherwise imprinted with a legend substantially in the following
form (in addition to any legend required under applicable state securities
laws):


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION
THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION
THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


 


(c)           The Holder of this Warrant and each
person to whom this Warrant is subsequently transferred (by acceptance of such
transfer) represents, warrants and covenants to the Company that it
acknowledges that, this Warrant and the securities issuable upon its exercise
have not been registered under the Securities Act, and agrees not to offer for
sale, sell, pledge, distribute, transfer or otherwise dispose of this Warrant
or any securities issued upon its exercise except pursuant to (i) an
effective registration statement under the Securities Act, (ii) Rule 144(k) under
the Securities Act or (iii) an opinion of counsel, reasonably satisfactory
to counsel for the Company, that an exemption from such registration is
available.  Notwithstanding the
foregoing, in no event shall the number of transfers of this Warrant exceed
three (3) transfers.


 


3.             Shares to be Fully Paid;
Reservation of Shares.  The Company
covenants and agrees that all shares of Preferred Stock which may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
free from all preemptive rights of any stockholder and free of all taxes, liens
and charges with respect to the issue thereof. 
The Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized and reserved, for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this Warrant, a
sufficient number of shares of authorized but unissued Preferred Stock, or
other securities and property, when and as required to provide for the exercise
of the rights represented by this Warrant. 
The Company will take all such action as may be necessary to assure that
such shares of Preferred Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
domestic securities exchange upon which the Preferred Stock may be listed;
provided, however, that the Company shall not be required to effect a
registration statement under federal or state securities laws with respect to
such exercise except as listed in Section 8.  The Company will not take any action which
would result in any adjustment of the Stock Purchase Price (as described in Section 4
hereof) (i) if the total number of shares of Preferred Stock issuable
after such action upon exercise of all outstanding warrants, together with all
shares of Preferred Stock then outstanding and all shares of Preferred Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of
shares of Preferred Stock then authorized by the Company’s Certificate of
Incorporation, (ii) if the total number of shares of Common Stock issuable
after such action upon the conversion of all such shares of Preferred Stock
together with all shares of Common Stock then outstanding and then issuable
upon exercise of all options and upon the conversion of all convertible
securities then outstanding would exceed the total number of shares of Common
Stock then authorized by the Company’s Certificate of Incorporation or (iii) if
the par value per share of the Preferred Stock would exceed the Stock Purchase
Price.


 


4.             Adjustment of Stock Purchase
Price and Number of Shares.  The
Stock Purchase Price and the number of shares purchasable upon the exercise of
this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 4; provided,
however, that no adjustment will be made pursuant to this Section 4 to the
extent that such adjustment would be duplicative of any adjustment set forth in
the Company’s Certificate of Incorporation as in effect on the date of such
adjustment.  Upon each adjustment of 


 

















 


the
Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled
to purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing the product
thereof by the Stock Purchase Price resulting from such adjustment.


 


4.1           Subdivision or Combination of
Stock.  In case the Company shall at
any time subdivide its outstanding shares of Preferred Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Preferred Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.


 


4.2           Dividends in Preferred Stock,
Other Stock, Reclassification.  If at
any time or from time to time the holders of Preferred Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor, Preferred Stock or any shares of stock by way of dividend or other
distribution, then and in such case, the Holder hereof shall, upon the exercise
of this Warrant, be entitled to receive, in addition to the number of shares of
Preferred Stock receivable thereupon, and without payment of any additional
consideration therefor, the amount of Preferred Stock or any shares of stock
which such Holder would hold on the date of such exercise had he been the
holder of record of such Preferred Stock as of the date on which holders of
Preferred Stock received or became entitled to receive such shares and/or all
other additional stock.


 


4.3           Reorganization, Reclassification, Consolidation,
Merger or Sale.  If any capital
reorganization of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in
such a way that holders of Preferred Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Preferred Stock (a “Corporate
Event”), then, as a condition of such Corporate Event, lawful and adequate
provisions shall be made whereby the holder hereof shall thereafter have the
right to purchase and receive (in lieu of the shares of the Preferred Stock of
the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Preferred Stock equal to the number of shares of
such stock immediately theretofor purchasable and receivable upon the exercise
of the rights represented hereby.  In any
such case, appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock
Purchase Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, as nearly as may be
possible, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. 
The successor corporation (if other than the Company) resulting from
such consolidation or the corporation purchasing such assets shall assume the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase.


 


4.4           Sale or Issuance Below Purchase
Price.  The other antidilution rights
applicable to the shares of series Preferred Stock purchasable hereunder are
set forth in the Company’s Certificate of Incorporation, as amended through the
date hereof (the “Charter”).  Such
antidilution rights shall not be restated, amended, modified or waived in any
manner without the Holder’s prior written consent if the effect of such
restatement, amendment, modification or waiver on the Holder hereof would be
more adverse to the Holder hereof than, and substantially dissimilar to, its
effect on the other holders of the same series of the Company’s Preferred Stock.  Notwithstanding the foregoing, the holder
shall not be subject to any “pay to play” terms or conditions (i.e. terms or
conditions that require the Holder to purchase securities in a future round of
equity financing or else lose the benefit of antidilution protection applicable
to the shares of Preferred Stock issuable upon the exercise of this Warrant or
have such shares of preferred stock automatically convert to common stock or
convert to another class and series of the Company’s capital stock) whether
currently in force or adopted by the Company after the issuance of this
Warrant.  The Company shall promptly
provide the Holder hereof with any restatement, amendment, modification or
waiver of the Charter promptly after the same has been made.  If in connection with any non-public offering
of equity securities of the Company after the original date of issuance of this
Warrant at a price per share lower than the Stock Purchase Price then in effect
(such offering being referred to herein as a “Down Round”); and the
holders of a requisite percentage of shares of Preferred Stock waive any
anti-dilution protections that would otherwise have 


 

















 


been
available to such stockholders under the Charter on account of the issuance of
securities in the Down Round, the Company shall afford the Holder the
opportunity to purchase in such Down Round along with the other investors up to
that number of shares of equity securities of the Company to be sold through
the Down Round as will enable the Holder to own immediately after completion of
the Down Round the same percentage of the equity securities of the Company (on
a fully diluted basis) as the Holder owned and/or had the right to purchase
under this Warrant immediately prior to commencement of the Down Round offering.  In this regard, the Company shall provide
written notice of the Down Round to the Holder reasonably in advance of a
proposed Down Round, which notice shall state, to the extent then known by the
Company, the number and type of shares of equity securities proposed to be sold
through the Down Round and the per share price, and shall establish a deadline,
not less than 10 days after the giving of such notice, by which the Holder must
deliver its written election to purchase shares in the Down Round.  The per share price payable by the Holder in
the Down Round shall be the same per share price payable by the lead investor
in the Down Round.


 


4.5           Notice of Adjustment.  Upon any adjustment of the Stock Purchase
Price, and/or any increase or decrease in the number of shares purchasable upon
the exercise of this Warrant the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company.  The notice, which may be substantially in the
form of Exhibit “B” attached hereto, shall be signed by the
Company’s chief executive officer or other authorized officer of the Company
and shall state the Stock Purchase Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.


 


4.6           Other Notices.  If at any time:


 


(a)           the Company shall declare any cash
dividend upon its Preferred Stock;


 


(b)           the Company shall declare any
dividend upon its Preferred Stock payable in stock or make any special dividend
or other distribution to the holders of its Preferred Stock;


 


(c)           the Company shall offer for
subscription pro rata to the holders of its Preferred Stock any additional
shares of stock in connection with a Down Round or additional shares of stock
of any class or other rights;


 


(d)           there shall be any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another entity;


 


(e)           there shall be a voluntary or
involuntary dissolution, liquidation or winding-up of the Company; or


 


(f)            the Company shall take or propose to
take any other action, notice of which is actually provided to holders of the
Preferred Stock (except the voting of Preferred Stock on matters other than
items (a) through (d) listed above);


 


then,
in any one or more of said cases, the Company shall give, by first class mail,
postage prepaid, addressed to the Holder of this Warrant at the address of such
Holder as shown on the books of the Company, (i) at least 10 days’ prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend or distribution or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, or other
action and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, or other
action, at least 10 days’ written notice of the date when the same shall take
place (unless the proposed transaction has not been announced publicly, in
which case such notice shall be given to Holder as soon as announced publicly
or when otherwise provided to the Company’s stockholders).  Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend
or distribution, the date on which the holders of Preferred Stock shall be
entitled thereto.  Any notice given in
accordance with the foregoing clause (ii) shall also specify the date on 


 

















 


which
the holders of Preferred Stock shall be entitled to exchange their Preferred
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action as the case may be.


 


5.             Issue Tax.  The
issuance of certificates for shares of Preferred Stock upon the exercise of
this Warrant shall be made without charge to the Holder of this Warrant for any
issue tax in respect thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the then Holder of this Warrant being exercised.


 


6.             Closing of Books. 
Unless required by applicable law, the Company will at no time close its
transfer books against the transfer of this Warrant or of any shares of
Preferred Stock issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.


 


7.             No Rights as Stockholder; Limitation of Liability.  Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof any rights of a stockholder, as
such, including the right to vote or to consent as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company.  Without limiting the generality of the
foregoing, no dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised.  No provisions hereof, in the
absence of affirmative action taken by the Holder to purchase shares of
Preferred Stock or automatic exercise of this Warrant pursuant to the terms
hereof, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.


 


8.             [Intentionally
omitted]


 


9.             Registration Rights.  The Holder hereof shall be entitled, with
respect to the shares of Preferred Stock issued upon exercise hereof or the
shares of Common Stock or other securities issued upon conversion of such
Preferred Stock as the case may be, to certain of the registration rights and
related obligations, including without limitation any market standoff
obligations, set forth in Section 1 of the Amended and Restated Investors
Rights Agreement dated as of July 22, 2005, as such agreement may be
further amended from time to time (the “Rights Agreement”), to the same
extent and on the same terms and conditions as possessed by the investors
thereunder with the following exceptions and clarifications: (i) the
Holder will have no demand registration rights; (ii) the Holder will be
subject to the same provisions regarding indemnification as contained in the
Rights Agreement; and (iii) the registration rights are freely assignable
by the Holder of this Warrant in connection with a permitted transfer of this
Warrant or the shares issuable upon exercise hereof.  The Company shall take such action as may be
reasonably necessary to assure that the granting of such registration rights to
the Holder does not violate the provisions of the Rights Agreement or any of
the Company’s charter documents or rights of prior grantees of registration
rights and such grant of registration rights shall be evidenced by the
execution of an additional signature page to the Rights Agreement by
Holder and Holder shall thereby become a party to the Rights Agreement in
accordance with the terms and conditions set forth therein.


 


10.           Rights and Obligations Survive
Exercise of Warrant.  The rights and
obligations of the Company, of the Holder of this Warrant and of the holder of
shares of Preferred Stock issued upon exercise of this Warrant, contained in Section 6
and 9 shall survive the exercise of this Warrant.


 


11.           Modification and Waiver.  This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.


 


12.           Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder hereof or the
Company shall be made in writing and deemed to have been given (i) upon
receipt if delivered personally or by courier (ii) upon confirmation of
receipt if by telecopy or (iii) three business days after deposit in the
US mail, with postage prepaid and certified or registered, to Holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant.


 

















 


13.           Binding Effect on Successors.  This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company’s assets.  All of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the Holder
hereof.  The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the Holder
hereof but at the Company’s expense, acknowledge in writing its continuing
obligation to the Holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Common Stock) to which
the Holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, that the failure of the Holder hereof
to make any such request shall not affect the continuing obligation of the
Company to the Holder hereof in respect of such rights.


 


14.           Descriptive Headings and Governing
Law.  The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant.  This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of California, without giving effect to the its principles
regarding conflicts of law.


 


15.           Lost Warrants or Stock
Certificates.  The Company represents
and warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or any stock certificate issued upon exercise thereof and, in the
case of any such loss, theft or destruction upon receipt of an indemnity
agreement reasonably satisfactory to the Company, or in the case of mutilation,
upon surrender and cancellation of this Warrant or any stock certificate issued
upon exercise thereof, the Company will issue and deliver a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate at Holder’s expense.


 


16.           Fractional Shares.  No fractional shares shall be issued upon any
exercise of this Warrant.  The Company
shall, in lieu of issuing any fractional share, pay the Holder entitled to such
fraction a sum in cash equal to such fraction multiplied by the then effective
Stock Purchase Price.


 


17.           Representations of Holder.  With respect to this Warrant, Holder
represents and warrants to the Company as follows:


 


17.1         Experience.  It is experienced in evaluating and investing
in companies engaged in businesses similar to that of the Company; it
understands that investment in this Warrant involves substantial risks; it has
made detailed inquiries concerning the Company, its business and services, its
officers and its personnel; the officers of the Company have made available to
Holder any and all written information it has requested; the officers of the
Company have answered to Holder’s satisfaction all inquiries made by it; in
making this investment it has relied upon information made available to it by
the Company; and it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of investment in
the Company and it is able to bear the economic risk of that investment.


 


17.2         Investment.  It is acquiring this Warrant for investment
for its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof.  It understands that this Warrant, the shares
of Preferred Stock issuable upon exercise thereof and the shares of Common
Stock issuable upon conversion of the Preferred Stock, have not been registered
under the Securities Act, nor qualified under applicable state securities laws.


 


17.3         Rule 144.  It acknowledges that this Warrant, the
Preferred Stock and the shares of Common Stock issuable upon conversion of the
Preferred Stock must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available.  It has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act.


 


17.4         Access to Data.  It has had an opportunity to discuss the
Company’s business, management and financial affairs with the Company’s
management and has had the opportunity to inspect the Company’s facilities.


 

















 


17.5         Accredited Investor.  It is an “accredited investor” within the
meaning of Rule 501 of Regulation D of the Securities Act.


 


17.6         Market Standoff Agreement.  It agrees that in connection with the initial
public offering of the Company’s securities that, upon the request of the
Company or the underwriters managing any new underwritten public offering of
the Company’s securities, not to sell, make any short sale of, loan, grant an
option for the purchase of, or otherwise dispose of any Registrable Securities
(as defined in the Rights Agreement) other than those included in the
registration without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time as may be requested
by the Company or such managing underwriters (not to exceed 180 days) from the
effective date of such registration; provided, that the executive officers and
directors of the Company, as well as any holder of at least five percent (5%)
of the then outstanding Common Stock (treating all outstanding shares of
preferred stock on an as-converted to Common Stock basis), shall have agreed to
be bound by substantially the same terms and conditions.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of the market standoff period.


 


17.7         Tax Liability.  The Holder has reviewed the federal, state,
local and foreign tax consequences of the transactions contemplated by
acquiring this Warrant and the issuance of equity securities hereunder
(including any tax consequences that may result now or in the future under
recently enacted tax legislation), and has had the opportunity to consult with
the Holder’s tax advisors regarding such consequences.  The Holder acknowledges that it is not
relying on any statements or representations of the Company or any of its
agents in regard to such tax consequences and understands that the Holder (and
not the Company) shall be responsible for its own tax liability that may arise
as a result of the transactions contemplated by the issuance of this Warrant
(and the underlying shares of capital stock of the Company).  The Holder acknowledges that the Company has
no obligation in regard to the future conduct of its business, to act or
refrain from acting in any manner, regardless of the loss of any tax benefit to
the Holder in connection with the purchase, ownership, or sale of the Warrant
(or the underlying shares of capital stock of the Company), that may result
from such action or inaction.


 


18.           Additional Representations and
Covenants of the Company.  The
Company hereby represents, warrants and agrees as follows:


 


18.1         Corporate Power.  The Company has all requisite corporate power
and corporate authority to issue this Warrant and to carry out and perform its
obligations hereunder.


 


18.2         Authorization.  All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance by the Company of this Warrant has been
taken.  This Warrant is a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.


 


18.3         Offering.  Subject in part to the truth and accuracy of
Holder’s representations set forth in Section 16 hereof, the offer,
issuance and sale of this Warrant is, and the issuance of Preferred Stock upon
exercise of this Warrant and the issuance of Common Stock upon conversion of
the Preferred Stock will be exempt from the registration requirements of the
Securities Act, and are exempt from the qualification requirements of any
applicable state securities laws; and neither the Company nor anyone acting on
its behalf will take any action hereafter that would cause the loss of such
exemptions.


 


18.4         Stock Issuance.  Upon exercise of this Warrant, the Company
will use its best efforts to cause stock certificates representing the shares
of Preferred Stock purchased pursuant to the exercise to be issued in the names
of Holder, its nominees or assignees, as appropriate as soon as practicable at
the time of such exercise.  Upon
conversion of the shares of Preferred Stock into shares of Common Stock, the
Company will issue the Common Stock in the names of Holder, its nominees or
assignees, as appropriate.


 


18.5         Certificates and By-Laws.  The Company has provided Holder with true and
complete copies of the Company’s Certificate of Incorporation, By-Laws, and
each Certificate of Designation or other charter 


 

















 


document
setting, forth any rights, preferences and privileges of Company’s capital
stock, each as amended and in effect on the date of issuance of this Warrant.


 


18.6         Conversion of Preferred Stock.  As of the date hereof, each share of the
Preferred Stock is convertible into one share of the Common Stock.


 


18.7         Financial and Other Reports.  From time to time until the earlier of the
Expiration Date or the complete exercise of this Warrant, the Company shall
furnish to Holder (i) within 90 days after the close of each fiscal year
of the Company an audited balance sheet and statement of changes in financial
position at and as of the end of such fiscal year, together with an audited
statement of income for such fiscal year; and (ii) within 45 days after
the close of each of the first three (3) quarters of each fiscal year of
the Company, an unaudited balance sheet and statement of cash flows at and as
of the end of such quarter, together with an unaudited statement of income for
such quarter.  The Company need not
comply with the reporting requirement of this Section so long as the
Company is otherwise providing to the Holder’s affiliate the periodic financial
information required under Section 5.2 of the Loan Agreement.


 


[Signature Page Follows]


 














 


[Signature Page to Warrant]


 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
officers, thereunto duly authorized this 7th day of June 2006.


 


	
  TRAQ
  WIRELESS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Richard S. Pontin

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT “A”


 


FORM OF SUBSCRIPTION


 


(To be signed only upon exercise of Warrant)


 


To:


 


o            The
undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, (1) [See Below]
                                  
(          )shares (the “Shares”)
of Stock of
                
and herewith makes payment of
                      
Dollars ($          )
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to,
                    ,
whose address is
                              .


 


o            The undersigned
hereby elects to convert
           percent
(      %) of the value of the Warrant pursuant to
the provisions of Section l(b) of the Warrant.


 


The
undersigned acknowledges that it has reviewed the representations and
warranties contained in Section 17 of this Warrant and by its signature
below hereby makes such representations and warranties to the Company.


 


	
   

  	
  Dated

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  	
   

  



 


 


 


 


 






(1)                                  Insert here the number of
shares called for on the face of the Warrant (or, in the case of a partial
exercise, the portion thereof as to which the Warrant is being exercised), in
either case without making any adjustment for additional Preferred Stock or any
other stock or other securities or property or cash which, pursuant to the
adjustment provisions of the Warrant, may be issuable upon exercise.


 

















 


EXHIBIT “B”


 


ASSIGNMENT


 


FOR
VALUE RECEIVED, the undersigned, the holder of the within Warrant, hereby
sells, assigns and transfers all of the rights of the undersigned under the
within Warrant, with respect to the number of shares of Preferred Stock covered
thereby set forth herein below, unto:


 


	
  Name
  of Assignee

  	
   

  	
  Address

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
  Dated

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  



 

















 


EXHIBIT “C”


 


[On letterhead of the
Company]


 


Reference
is hereby made to that certain Warrant dated June 7, 2006, issued by TRAQ
WIRELESS, INC., a Delaware corporation (the “Company”), to VENTURE LENDING &
LEASING IV, LLC, a Delaware limited liability company (the “Holder”).


 


[IF
APPLICABLE] The Warrant provides that the actual number of shares of the
Company’s capital stock issuable upon exercise of the Warrant and the initial
exercise price per share are to be determined by reference to one or more
events or conditions subsequent to the issuance of the Warrant.  Such events or conditions have now occurred or
lapsed, and the Company wishes to confirm the actual number of shares issuable
and the initial exercise price.  The
provisions of this Supplement to Warrant are incorporated into the Warrant by
this reference, and shall control the interpretation and exercise of the
Warrant.


 


[IF
APPLICABLE] Notice is hereby given pursuant to Section 4.5 of the Warrant
that the following adjustments) have been made to the Warrant:  [describe adjustments, setting forth details
regarding method of calculation and facts upon which calculation is based].


 


This
certifies that the Holder is entitled to purchase from the Company
                                        
(                    )
fully paid and nonassessable shares of the Company’s
                
Stock at a price of
                                                                
Dollars
($              )
per share (the “Stock Purchase Price”). 
The Stock Purchase Price and the number of shares purchasable under the
Warrant remain subject to adjustment as provided in Section 4 of the
Warrant.


 


Executed
this          day of
                            ,
200      .


 


	
   

  	
  TRAQ
  WIRELESS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: