-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WJdZn/oftGytinj+iBsUpZ/P/ZlJMIEQYCB737V7mfB+++CR+IfmiJ5OLT9VCLKw fwJWp7zRO8XHYfKBy/4gyQ== 0001013762-06-000458.txt : 20060227 0001013762-06-000458.hdr.sgml : 20060227 20060227162418 ACCESSION NUMBER: 0001013762-06-000458 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060213 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060227 DATE AS OF CHANGE: 20060227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRTRAX INC CENTRAL INDEX KEY: 0001081372 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL TRUCKS TRACTORS TRAILERS & STACKERS [3537] IRS NUMBER: 223506376 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16237 FILM NUMBER: 06646905 BUSINESS ADDRESS: STREET 1: 870B CENTRAL AVENUE CITY: HAMMONTON STATE: NJ ZIP: 08037 BUSINESS PHONE: 609-567-7800 MAIL ADDRESS: STREET 1: 870B CENTRAL AVENUE CITY: HAMMONTON STATE: NJ ZIP: 08037 FORMER COMPANY: FORMER CONFORMED NAME: MAS ACQUISITION IX CORP DATE OF NAME CHANGE: 19990308 8-K 1 february2720068k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 13, 2006 Airtrax, Inc. ------------- (Exact name of registrant as specified in its charter) New Jersey 0-25791 22-3506376 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 200 Freeway Drive Unit One, Blackwood, NJ 08012 ----------------------------------------------- (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code (856) 232-3000 Copies to: Richard A. Friedman Eric A. Pinero, Esq. Sichenzia Ross Friedman Ference LLP 1065 Avenue of the Americas New York, New York 10018 Phone: (212) 930-9700 Fax: (212) 930-9725 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On February 13, 2006, we completed a private placement of our 8% Series D Unsecured Convertible Debentures (the "Debentures") and Stock Purchase Warrants (the "Warrants") to certain accredited investors pursuant to that certain Subscription Agreement (the "Subscription Agreement") dated as of February 13, 2006 under which we sold an aggregate of $391,200 principal amount Debentures convertible into shares of our common stock, no par value (the "Common Stock"), and warrants to purchase 250,769 shares of our Common Stock to certain accredited investors who are parties to the Subscription Agreement (the "Investors") for an aggregate purchase price of $391,200. The Debentures mature on February 13, 2007. Provided there then exists no event of default by us under the Debentures, the principal of and any accrued but unpaid interest due under the Debentures on the maturity date shall automatically be converted into shares of Common Stock on the maturity date at the then applicable conversion price. The Debentures pay simple interest quarterly accruing at the annual rate of 8%, either in the form cash or shares of our Common Stock, at our election, which shall be valued and computed based upon the conversion price of the Debentures. The Debentures are convertible into shares of our Common Stock at a conversion price equal to $1.56. We may in our discretion require, after 90 days from the closing date, that the Investors convert all or a portion of the Debentures at a price equal to$1.56 per share. In addition, we issued 250,769 Warrants to the Investors, representing an amount of Warrants equal to 100% of the quotient of (i) the principal amount of the Debentures issued at the closing date divided by (ii) the conversion price of the Debentures. The Warrants are exercisable at a price equal to $2.50, from the date of issuance until 5 years after the closing date. The Investors are be entitled to "piggy-back" registration rights of the shares of common stock issuable upon conversion of the Debentures and exercise of the Warrants pursuant to the Subscription Agreement on registration statements (other than on Form S-8, S-4 or similar Forms) filed by us. We claim an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the Investors were accredited investors and/or qualified institutional buyers, the Investors had access to information about us and their investment, the Investors took the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities. Item 2.03 Creation of a Direct Financial Obligation. See Item 1.01 above. Item 3.02 Unregistered Sales of Equity Securities. See Item 1.01 above. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. Exhibit Number Description - ------- ------------------------------------------------------------------------ 10.1 Form of Subscription Agreement of Airtrax, Inc. dated as of February 13, 2006. 10.2 Form of 8% Series D Unsecured Convertible Debenture of Airtrax, Inc. 10.3 Form of Stock Purchase Warrant of Airtrax, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Airtrax, Inc. Date: February 27, 2006 /s/ Peter Amico --------------------------------------- Peter Amico Chief Executive Officer EX-10 2 ex101.txt - -------------------------------------------------------------------------------- INVESTOR FINANCIAL QUESTIONNAIRE - -------------------------------------------------------------------------------- Before you make an investment, you must complete this questionnaire. Please check the appropriate box below and sign this questionnaire before a notary. We require that this be returned with your Subscription Agreement for your purchase of 8% Series D Unsecured Convertible Debentures and Stock Purchase Warrants of Airtrax, Inc. (the "Company"). Information will be held in strict confidence and used solely to ensure that all prospective investors are qualified under the relevant sections of the Securities Act of 1933. [ ] I am a natural person who has had individual income of more than US$200,000 in each of the most recent two years, or joint income with my spouse in excess of US$300,000 in each of the most recent two years and reasonably expect to reach that same income level for the current year ("income" for purposes hereof should be computed as follows: individual adjusted gross income as reported, or to be reported, on a federal income tax return, increased by (i) any deduction of long-term capital gains under section 1202 of the Internal Code of 1936 (the "Code"), (ii) any deduction or depletion under Section 611 et. seq. of the Code, (iii) any exclusion for interest under Section 103 of the Code and (iv) any losses of a partnership as reported in Schedule E of Form 1040; [ ] The Subscriber is a natural person whose individual net worth (i.e. total assets in excess of total liabilities), or joint net worth with my spouse, will at the time of purchase of the Common Shares be in excess of $1,000,000; [ ] The Subscriber is an investor satisfying the requirements of Section 501(a)(1)(2) or (3) of Regulation D promulgated under the Securities Act of 1933, which includes, but is not limited to, a self-directed employee benefit plan where investment decisions are made solely by persons who are "accredited investors" as otherwise defined in Regulation D; [ ] The Subscriber is a trust, which trust has total assets in excess of $5,000,000.00 which was not formed for the specific purpose of acquiring the Common Shares offered hereby and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Common Shares; [ ] The Subscriber is a director or executive officer of the Company; [ ] The Subscriber is an entity (other than a trust) in which all of the equity owners meet the requirements of at least one of the above paragraphs; or [ ] The Subscriber is not a resident of the United State of America, but acknowledges he/she meets or exceeds at least one of the minimum financial requirements set forth above. I represent that I have reviewed the Company's information as filed with the US Securities and Exchange Commission, and that I understand the merits and the risks involved in this offering, including, but not limited to, that some of the proceeds may be used for the Filco receivership or as Company operating capital, the Company is currently in registration, and that the SEC may demand rescission by the Company of the entire purchase price, plus interest, that I have sufficient knowledge and experience in similar programs or investments to evaluate the merits and risks of an investment in the Company (or that I have retained an attorney, accountant, financial advisor or consultant as my purchaser representative); that because of my background, employment experience, family or financial situation or economic bargaining power, I have received and have had access to material and relevant information enabling me to make an informed investment decision, and that all information I have requested has been furnished to me; and that I am able to bear the economic risk of loss of the entire investment which I may make in the Company. By, _______________ PRINT NAME: ________________________________________ Investor Signature With a current address of___________________________________________________ In the City of____________________________, State/Province of ______________, Country of_______________ DATE:_________________________________________ IN WITNESS WHEREOF, I have hereunto witnessed the signature of the above Investor; By,___________________________________________ ______________________ ____________________________ Witness Signature Date - -------------------------------------------------------------------------------- AIRTRAX, INC. SUBSCRIPTION AGREEMENT - -------------------------------------------------------------------------------- 1. Subscription. Subject to the terms and conditions hereof, ___________________, the undersigned Investor ("Investor") hereby subscribes to purchase (i) $____________ of Airtrax, Inc.'s 8% Series D Unsecured Convertible Debentures, convertible into shares of the Company's common stock at a price equal to $1.56 per share beginning 90 days after the closing date of the offering and ending one year after the closing date (the "Debentures") and (ii) warrants to purchase _____________ (____________) shares of the Company's common stock, exercisable for a period of five (5) years at an exercise price equal to $2.50 per share ("Warrants"). 2. Private Placement. The parties acknowledge that this offering has been made and this Subscription Agreement has been entered into as a private placement negotiated between the parties. The issuance is considered exempt under Section 4(2) of the Securities Act of 1933. 3. Knowledge of Financial and Business Status of Company. Investor acknowledges that he/she has met in person or telephonically with management immediately prior to this investment, and has reviewed the Company's information as filed with the US Securities and Exchange Commission, and that he/she understand the merits and the risks involved in this offering, including, but not limited to, that some of the proceeds may be used for the Filco receivership or as Company operating capital, the Company is currently in registration, and that the SEC may demand rescission by the Company of the entire purchase price, plus interest. 4. Representations and Warranties. In consideration of the sale of such Debentures and Warrants, intending to be legally bound and intending the Company to rely thereupon, Investor hereby represents, warrants, and covenants, to the Company as follows: Neither the Company nor any person acting on behalf of the Company has offered to sell, offered for sale or sold the Debentures and Warrants by means of general solicitation or general advertising. Investor has not received, paid or given, directly or indirectly, any commission or remuneration for or because of any sale or the solicitation of any sale of the Debentures and Warrants. Company represents and warrants that the shares of common stock underlying the Debentures and Warrants are restricted under SEC Rule 144, and Investor is aware of restricted sale provisions that make up Rule 144. Investor has been offered full access to all underlying documents in connection with this transaction as well as such other information as Investor has deemed necessary or appropriate for a prudent and knowledgeable investor to evaluate the purchase of the Debentures and Warrants. Investor acknowledges that the Company has made available to Investor the opportunity to obtain additional information from, to ask questions of, and receive satisfactory answers from the officers of the Company concerning the terms and conditions of the private placement and to verify the information given. Investor is satisfied that there is no material information concerning the condition, properties, operations and prospects of the Company of which Investor is unaware. In making his or her investment decision, Investor has relied solely upon his or her independent investigation of the investment. Investor is aware that an investment in the Debentures and Warrants is a highly speculative investment that involves a substantial degree of risk. Investor warrants that he/she has such sufficient requisite knowledge and experience in business and financial matters that Investor is capable of evaluating the merits and risks of an investment in the Company, which is a development stage business. Investor understands that the Company is relying on Investor's representations for the purposes of confirming Investor's suitability as an investor in the Company. Investor is aware that the Debentures and Warrants and the shares of common stock underlying the Debentures and Warrants have not been registered under the Securities Act of 1933 (the "Act"), and that Investor must therefore bear the economic risk of the investment indefinitely because the Debentures and Warrants and the shares of common stock underlying the Debentures and Warrants cannot be sold unless subsequently registered under the Act or under an available exemption from registration. Investor agrees not to sell his/her Debentures and Warrants and the shares of common stock underlying the Debentures and Warrants without registration under the Act and applicable state securities laws unless in a transaction exempt therefrom. The Debentures and Warrants for which Investor hereby subscribes are being acquired for investment purposes, solely for Investor's own account and not on behalf of other persons, and not with a view to or for the resale, distribution, subdivision, or fractionalization thereof; Investor has no present plans to enter into any contract, undertaking, agreement, or arrangement for any such resale, distribution, subdivision, or fractionalization thereof. Investor agrees that he or she will not sell, assign, pledge, give, transfer or otherwise dispose of any or all of the Debentures and Warrants or any interest therein unless and until Investor has complied with all applicable provisions of federal and state securities laws. Investor has reviewed his or her financial condition and commitments. Based upon such review, Investor is satisfied that he or she has adequate means of providing for his or her financial needs and possible contingencies as well as those of any dependents, and that he or she does not have any current or foreseeable future need for liquidity of the funds being utilized in the purchase of the Debentures and Warrants. Investor is capable of bearing the economic risk of the investment in the Debentures and Warrants for the indefinite future. At this time, Investor has assets or sources of income that, if taken together, are more than sufficient so that Investor could bear the risk of loss of its, his or her entire investment in the Debentures and Warrants. Investor is aware that this transaction is a "private placement" and has not been reviewed by the United States Securities and Exchange Commission or by any state securities authorities. No agency, federal or state, has passed upon the fairness or merits of this investment. Neither this Subscription Agreement nor Investor's rights hereunder, may be assigned, sold or transferred in any manner and this Subscription Agreement may not be altered, amended or revoked without the prior written consent of the Company. Investor is a bona fide resident as set forth next to Investor's signature, such location is Investor's principal residence, and Investor is at least 18 years of age. Investor understands and agrees that if Investor's subscription is accepted, Investor will be required to execute such additional documents as may be necessary to effect the issuance of the Company's Debentures and Warrants which Investor has purchased. The foregoing representations, warranties and covenants are true and accurate as of the date hereof and shall be true and accurate as of the date of completion of the Private Placement. If such representations and warranties shall not be true and accurate in any respect prior to completion of the Private Placement, Investor shall give written notice of such fact to the Company, specifying which representations and warranties are not true and accurate and the reasons therefore. 5. Piggy-Back Registration Rights. The Investor will be entitled to "piggy-back" registration rights of the shares of common stock issuable upon conversion of the Debentures and exercise of the Warrants pursuant to this subscription agreement on registration statements (other than on Form S-8, S-4 or similar Forms) filed by the Company; provided however, that if the Company is unable to procure a waiver from the investors in the Company's October 2005 Securities Purchase Agreement to permit the Company to register the shares of common stock issuable upon conversion of the Debentures and exercise of the Warrants pursuant to this subscription agreement on the registration statement for said investors, the shares underlying the Debentures and Warrants will be registered by the Company on the next registration statement it files with the SEC (other than on Form S-8, S-4 or similar Forms). 6. Indemnification. Investor acknowledges that he understands the meaning and legal consequences of the representations and warranties contained herein, and Investor hereby agrees to indemnify and hold harmless the Company, its directors, officers and representatives, and any person controlling the Company within the meaning of Section 15 of the Act, from and against any and all claim, loss, damage, expense and liability whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending any litigation commenced or threatened or any claim whatsoever) based upon, due to or arising out of a breach of any representation or warranty or covenant of the undersigned contained in this Subscription Agreement or in the Financial Questionnaire or of any false representation by Investor. 7. Miscellaneous. (a) This Subscription Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations and understandings which are deemed to have been merged herein. No representations were made or relied upon by either party, other than those expressly set forth herein. (b) This writing shall be amended only by a further writing. No agent, employee, or other representative of any party is empowered to alter any of the terms hereof, including specifically this Paragraph, unless done in writing and signed by both parties. (c) Whenever required by the context hereof: the masculine gender shall be deemed to include the feminine and neuter; and the singular member shall be deemed to include the plural. Time is expressly declared to be of the essence of this Agreement. This Agreement shall be deemed to have been mutually prepared by all parties and shall not be construed against any particular party as the draftsman. The invalidity of any one or more of the words, phrases, sentences, clauses, sections or subsections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part hereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, sections or subsections contained in this Agreement shall be declared invalid by a court of competent jurisdiction, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, section or sections, or subsection or subsections had not been inserted. (d) The validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of New York. Venue and jurisdiction of any controversy or claim arising out of, or relating to this Subscription Agreement, or the breach thereof, that cannot be resolved by negotiation, shall be in the County of New York, State of New York. In any legal action or other proceeding involving, arising out of or in any way relating to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees, costs, and expenses of litigation. (e) The failure of any party to object to, or to take affirmative action with respect to, any conduct of any other party which is in violation of the terms of this Agreement shall not be construed as a waiver of such violation or breach, or of any future breach, violation, or wrongful conduct. No delay or failure by any party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver or exhaustion of that or any other right, unless otherwise expressly provided herein. (f) Headings in this Subscription Agreement are for convenience only and shall not be used to interpret or construe its provisions. (g) This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (h) The provisions of this Subscription Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors and assigns. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the undersigned has executed and delivered this Subscription Agreement dated this day of______________, in the year 2006. By, _______________________________________PRINT NAME: ---------------------- (Signature of INVESTOR) With a current address of ___________________________________________________ In the City of____________________________, State/Province of _______________, Country of_______________ ACCEPTED: AIRTRAX, INC. By, __________________ Its:____________________________ Signature of Officer Title: President DATE,___________________________________________ - -------------------------------------------------------------------------------- SECURITIES ISSUANCE INSTRUCTIONS - -------------------------------------------------------------------------------- The undersigned, as a condition to purchase up 250,000 Shares (the "Securities") of Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), hereby certifies to the Company as follows: 1. I, Richard Lippe (Purchaser Name) am purchasing the Securities on this ________day of May , in the year 2005, in my own name and for my own account (or for a trust account if I am a trustee), and no other person has any interest in or right with respect to the Securities, nor have I agreed to give any person any such interest or right in the future. 2. I am acquiring the Securities for investment and not with a view to or for sale in connection with any distribution of the Securities. I recognize that the Securities have not been registered under the Federal Securities Act of 1933, that any disposition of the Securities is subject to restrictions imposed by federal and state law and that the certificates representing the Securities will bear a restrictive legend. I also recognize that I cannot dispose of the Securities absent registration and qualification, or an available exemption from registration and qualification, and that no undertaking has been made with regard to registering or qualifying the Securities in the future. I understand that the availability of an exemption in the future will depend in part on circumstances outside my control and that I may be required to hold the Securities for a substantial period. I understand that the United States Securities and Exchange Commission has made no finding or determination relating to the fairness for investment of the Securities offered by the Company and that the Commission has not and will not recommend or endorse the Securities. 3. I have not seen or received any advertisement or general solicitation with respect to the sale of the Securities. 4. I believe, by reason of my business or financial experience that I am capable of evaluating the merits and risks of this investment and of protecting my own interests in connection with this investment. 5. I acknowledge that during the course of this transaction and prior to purchasing the Securities I have been provided with financial and other written information about the Company, I have been given the opportunity by the Company to obtain such information and ask such questions concerning the Company, the Securities, and my investment as I felt necessary, and to the extent I availed myself of such opportunity, I received satisfactory information and answers. If I requested any additional information, which the Company possessed or could acquire without unreasonable effort or expense and which was necessary to verify the accuracy of the financial and other written information furnished to me by the Company, that additional information was provided to me. In reaching the decision to invest in the Securities, I have carefully evaluated my financial resources and investment position and the risks associated with this investment, and I acknowledge that I am able to bear the economic risks of this investment. I further acknowledge that my financial condition is such that I am not under any present necessity or constraint to dispose of the Securities to satisfy any existent or contemplated debt or undertaking. Please PRINT below the exact information regarding the Purchaser: INDIVIDUAL Richard Lippe ________________________________________________________________________________ Individual Name(s) ________________________________________________________________________________ Street Address, City, State/Province and Postal Code ________________________________________________________________________________ Signature (All record holders should sign) (____)____________Telephone Number (____)_______________Fax Number CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY ________________________________________________________________________________ Name of Entity ________________________________________________________________________________ Address to Which Correspondence should be Directed ________________________________________________________________________________ Type of Entity (i.e., corporation, partnership etc) ________________________________________________________________________________ State/Province of Formation of Entity By:____________________________________Printed:_________________________________ Its:____________________________________ Title (____)____________Telephone Number (____)_______________Fax Number If Securities are being subscribed for by an entity, the Certificate of Signatory below must be completed. CERTIFICATE OF SIGNATORY To be completed if Securities are being subscribed for by an entity. I, _________________________________, am the ________________________________ of _________________________________________________________(the "Entity "). I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and Securities Issuance Instructions to purchase and hold the Securities, and certify that the Subscription Agreement and Securities Issuance Instructions have been duly and validly executed on behalf of the Entity and constitute legal and binding obligations of the Entity. IN WITNESS WHEREOF, I have hereto set my hand this ____day of ________________, 20_____. __________________________________ Signature EX-10 3 ex102.txt 8% SERIES D UNSECURED CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. D-___ US $__________ AIRTRAX, INC. 8% SERIES D UNSECURED CONVERTIBLE DEBENTURE DUE FEBRUARY 13, 2007 THIS DEBENTURE is issued by Airtrax, Inc., a corporation organized and existing under the laws of the State of New Jersey (the "Company") and is designated as its 8% Series D Unsecured Convertible Debenture Due February 13, 2007 (the "Debenture"). FOR VALUE RECEIVED, the Company promises to pay to ___________________ or permitted assigns (the "Holder"), the principal sum of ___________________ DOLLARS (US $________) on February 13, 2007 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 8% per annum accruing from the Issue Date. Accrual of interest shall commence on the Issue Date and continue until payment in full of the principal sum and all accrued interest has been made or duly provided for. Interest shall be payable quarterly, on March 31, June 30, September 30 and December 31 of each year (with the first installment of interest due and payable on March 31, 2006), and shall be computed on the basis of a 365-day year for the actual number of days elapsed. If any interest payment date or the Maturity Date is not a business day in the State of New Jersey, then such payment shall be made on the next succeeding business day. The interest on this Debenture is payable, at the Company's option, in cash or shares of Common Stock of the Company at the address last appearing on the Debenture register of the Company (the "Debenture Register") as designated in writing by the Holder from time to time. The number of shares of Common Stock to be paid as interest shall be valued and computed based upon the Conversion Price. Provided there then exists no Event of Default under this Debenture, the principal of and any accrued but unpaid interest due under this Debenture on the Maturity Date shall automatically be converted into shares of Common Stock on the Maturity Date at the Conversion Price, such shares to be delivered to the registered holder of this Debenture and addressed to such holder at the last address appearing on the Debenture Register. This Debenture is subject to the following additional provisions: (1) Tax Withholding. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. (2) Transfer Restrictions. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Act, and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinion(s) of counsel reasonably acceptable to the Company and/or its counsel that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. (3) Conversion. ---------- (a) Holders Right to Convert. The Holder of this Debenture is entitled, at its option, to convert at any time commencing 90 days after the Issue Date, the principal amount of this Debenture or any portion thereof, together with accrued but unpaid interest, into shares of Common Stock of the Company ("Conversion Shares") at a conversion price for each share of Common Stock ("Conversion Price") of $1.56. (b) Mandatory Conversion. At any time commencing 90 days after the Issue Date, the Company is entitled, at its option, to force conversion of all of a portion the Debenture which remains unconverted, plus accrued but unpaid interest, at a price equal to the Conversion Price. In addition, on the Maturity Date, all of the Debenture which remains unconverted, plus accrued but unpaid interest, shall automatically be converted into Common Stock at a price equal to the Conversion Price. (4) Sufficient Shares Reserved. The Company shall at all times prior to the conversion in full or payment in full of this Debenture reserve a sufficient number of shares of Common Stock to permit the Holder to convert the entire principal amount of this Debenture at the Conversion Price. The Company shall initially reserve at least 100% of the number of shares of Common Stock issuable to Holder as of the Closing Date. The Company shall take all actions necessary to give effect to the preceding sentence, including, without limitation, amending its Certificate of Incorporation to authorize additional shares of Common Stock, if necessary. (5) Conversion Procedures. --------------------- (a) Conversion shall be effectuated by surrendering this Debenture to the Company (if such Conversion will convert all outstanding principal) together with the form of conversion notice attached hereto as Exhibit A (the "Notice of Conversion"), executed by the Holder of this Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of issuance to the date of conversion shall be paid in cash or shares of Common Stock as set forth above. No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable shall be rounded up to the nearest whole share. The date on which Notice of Conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder faxes the Notice of Conversion duly executed to the Company. Facsimile delivery of the Notice of Conversion shall be accepted by the Company at facsimile number (856) 227-9168, Attn.: Peter Amico, President. Certificates representing Common Stock upon conversion will be delivered to the Holder within five (5) Trading Days from the date the Notice of Conversion is delivered to the Company. Delivery of shares upon conversion shall be made to the address specified by the Holder in the Notice of Conversion. (b) The Company understands that a delay in the issuance of shares of Common Stock upon a conversion beyond the five (5) Trading Day period described in Section 5(a) could result in economic loss to the Holder. Nothing herein shall limit Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver Common Stock to the holder, including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days from the date the Notice of Conversion is delivered to the Company, the Holder will be entitled to revoke the relevant Notice of Conversion by delivering a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion, and in such event no late payments shall be due in connection with such withdrawn conversion. (6) Debenture is an Unconditional Obligation. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. (7) Debenture Unsecured. This Debenture is unsecured, but it shall be senior in right of payment at any time to any and all unsecured indebtedness of the Company owed to any officer, director or other affiliate. (8) Merger; Consolidation; Sale of Assets. If the Company merges or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger, consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof shall have the right to convert any or all of the Debenture by delivering a Notice of Conversion to the Company within ten (10) days of receipt of notice of such Sale from the Company, which notice the Company shall be required to give. (9) Governing Law; Jurisdiction. This Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the State of New York or the state courts of the State of New York in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. (10) Default. Any one of the following shall constitute an "Event of Default": (a) The Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of ten (10) business days, during such time the Company shall have an opportunity to cure; or (b) Any of the representations or warranties made by the Company herein, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Warrant shall be false or misleading at the time made and which deficiency has had or could reasonably be expected to have a material adverse effect on the Holder or its investment in the Company; or (c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, and such transfer is otherwise lawful, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture and such legend removal is otherwise lawful, and any such failure shall continue uncured for five (5) business days; or (d) The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under this Debenture and such failure shall continue uncured for a period of fifteen (15) business days after written notice of such failure; or (e) The Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or (f) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or (h) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or (i) The Company shall have its Common Stock suspended or delisted from trading on the Principal Market for in excess of five (5) Trading Days. Upon the occurrence of an Event of Default, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default may, at the option of the Holder, be made in shares of Common Stock of the Company which number of shares shall be calculated based upon at the closing sale price of the Common Stock on the date the Debenture becomes due and payable. Such payment of shares shall be made within ten (10) Trading Days of such demand. (11) No Rights as Stockholder. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. (12) Additional Conversion Restrictions. In no event shall any holder be entitled to convert this Debenture for shares of Common Stock in excess of that number of shares of Common Stock that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 9.99% of the outstanding shares of the Common Stock of the Company following such conversion. For purposes of this Section 14, 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 conversion of the Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of any remaining, unconverted portion of this Debenture and (ii) exercise or conversion of the unexercised or unconverted portion of any other Securities (including, without limitation, any warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 14, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Section 14, in determining the number of outstanding shares of Common Stock a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of any holder, the Company shall immediately confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of portions of the Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Section 14 applies, the determination of whether the Debenture is convertible (in relation to other securities owned by a Holder) and of which portion of this Debenture is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder's determination that the Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a holder to convert the Debenture at such time as such conversion will not violate the provisions of this Section 14. The Holder may waive the provisions of this Section 14 as to itself (and solely as to itself) upon not less than 61 days' prior notice to the Company, and the provisions of this Section 14 shall continue to apply until such 61st day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Section 14, but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully paid and nonassessable. [The next page is the signature page.] IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its officer thereunto duly authorized. Dated: February 13, 2006 AIRTRAX, INC. By: /s/ Peter Amico ---------------------------------- Name: Peter Amico Title: President EXHIBIT A --------- NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Debenture) The undersigned hereby irrevocably elects to convert $ ________________ of the principal amount of the above Debenture No. ___ into Shares of Common Stock of Airtrax, Inc. (the "Company") according to the conditions hereof, as of the date written below. Date of Conversion _____________________________________________________________ Applicable Conversion Price ___________________________________________________ Accrued Interest________________________________________________________________ Number of Shares to be Issued _________________________________________________ Name of Holder _________________________________________________________________ Signature of Holder ____________________________________________________________ Address for Delivery of Shares or DTC Account Number for Electronic Delivery of Shares: ______________________________ ________________________________________________________________________________ ________________________________________________________________________________ EX-10 4 ex103.txt NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF (AND THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON) EXCEPT PURSUANT TO REGULATION S OF THE SECURITIES ACT, AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase up to _______________ Shares of Common Stock of Airtrax, Inc. THIS CERTIFIES that, for value received, _______________, or permitted assigns (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof (the "Initial Exercise Date") and on or prior to 5:00 P.M. Eastern Standard Time on the date ending five (5) years from the Initial Exercise Date (the "Termination Date"), but not thereafter, to subscribe for and purchase from Airtrax, Inc., a corporation incorporated under the laws of the State of New Jersey (the "Company"), up to _______________ (_______) shares (the "Warrant Shares") of Common Stock, no par value, of the Company (the "Common Stock"). The per share purchase price of the Warrant Shares (the "Exercise Price") shall be US$2.50. 1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, 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. 2. 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, 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). 3. Exercise of Warrant. Except as provided in Section 4 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date, and before 5:00 P.M. Eastern Standard Time on the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the 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 Exercise Price for the shares thereby purchased by wire transfer or cashier's check drawn on a United States or Canadian bank, the Holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the Holder hereof within five (5) business days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become the holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 4. Call Option of the Company. The Company shall have the option to call all or a portion of this Warrant so long as the closing bid price of the Company's Common Stock is greater than 150% of the Exercise Price on the trading day immediately preceding the call date. 5. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the Exercise Price. 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, 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 the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 7. Further Assurances. The Company will take all action that may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock, free from all taxes, liens and charges with respect to the issue thereof, on the exercise of all or any portion of this Warrant from time to time outstanding. 8. Transfer, Division and Combination. (a) Subject to compliance with any applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued. (b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. As to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 8. (d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants. 9. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. 10. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall include the posting of a bond only if required by the Company's transfer agent and if the Holder is not the purchaser of this Warrant or an affiliate of such purchaser), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 11. 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 Saturday, Sunday or legal holiday. 12. Voluntary Adjustment by the Company. The Company may, at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 13. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as provided in Section 12, the Company shall promptly mail by registered or certified mail, return receipt requested, to the Holder of this Warrant notice of such adjustment or adjustments setting forth the number of Warrant Shares (and Other Property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and Other Property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. 14. Notice of Corporate Action. If at any time: (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right; or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation; or (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to the Holder (i) at least 30 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (x) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, (y) the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (z) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or Other Property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company. 15. Authorized Shares. (a) 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 such reasonable action 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 Principal Market upon which the Common Stock may be listed. (b) The Company shall not by any action, including, without limitation, amending its 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 the Holder against impairment. Without limiting the generality of the foregoing, the Company will (i) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (ii) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. (c) Before taking any action which would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any and all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price. (d) Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 16. Miscellaneous. (a) Jurisdiction. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract and be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the State of New York or the state courts of the State of New York in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions (b) Restrictions. The Holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. (d) Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. (e) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (f) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. (g) Indemnification. The Company agrees to indemnify and hold harmless the Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, reasonable attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against the Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements have resulted from the Holder's bad faith or willful misconduct in its capacity as a shareholder or warrantholder of the Company. (h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. (i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. (j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. (k) 9.9% Limitations. Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon exercise hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially owned by such holder at such time (other than by virtue of the ownership of securities or rights to acquire securities (including the Warrant Shares) that have limitations on the holder's right to convert, exercise or purchase similar to the limitation set forth herein), together with all shares of Common Stock deemed beneficially owned (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) by the Holder's "affiliates" at such time (as defined in Rule 144 of the Securities Act) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Exchange Act, exists, would exceed 9.9% of the total issued and outstanding shares of the Common Stock (the "Restricted Ownership Percentage"), unless, at the time such additional shares of Common Stock may be acquired by the Holder upon any exercise pursuant to the terms hereof, Holder has already exceeded the Restricted Ownership Percentage. Each Holder shall have the right (x) at any time and from time to time to reduce its Restricted Ownership Percentage immediately upon notice to the Company and (y) at any time and from time to time, upon at least sixty one (61) days' advance written notice to the Company, to increase its Restricted Ownership Percentage. [The next page is the signature page.] IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant to be executed by its officer thereunto duly authorized. Dated: February 13, 2006 AIRTRAX, INC. By: /s Peter Amico --------------------------- Name: Peter Amico Title: President NOTICE OF EXERCISE To:________________________________ ___________________________________ ___________________________________ [name and address of transfer agent ___________________________________ and Airtrax, Inc.] __________________ and Airtrax, Inc. (1) The undersigned hereby elects to purchase ________ shares of Common Stock (the "Common Stock"), of Airtrax, Inc. pursuant to the terms of the attached Warrant, and (check one) [ ] tenders herewith payment of the exercise price in full OR [ ] tenders the Warrant for cashless exercise, together with all applicable transfer taxes, if any. (2)......Calculation of cashles exercise, if applicable: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (3) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: _______________________________ (Name) _______________________________ (Address) _______________________________ Dated: ___________________ , _____ ___________________________ Signature ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________ whose address is ________________________________________________________________________________ ________________________________________________________________________________ Dated: ______________, _______ Holder's Signature:____________________________________ Holder's Address: ____________________________________ ____________________________________ Signature Guaranteed: ___________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in an fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. -----END PRIVACY-ENHANCED MESSAGE-----