8% SERIES C 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. C-__ US $_______
AIRTRAX, INC.
8% SERIES C UNSECURED CONVERTIBLE DEBENTURE
DUE OCTOBER 18, 2007
THIS DEBENTURE is issued by Airtrax, Inc., a corporation organized and
existing under the laws of the State of New Jersey (the "Company"), pursuant to
an 8% Series C Unsecured Convertible Debenture and Warrants Purchase Agreement
dated October 18, 2005 (the "Purchase Agreement"), and is designated as its 8%
Series C Unsecured Convertible Debenture Due October 18, 2007 (the "Debenture").
This Debenture has been executed and delivered pursuant to the Purchase
Agreement and is subject to the terms and conditions of the Purchase Agreement,
which are, by this reference, incorporated herein and made a part hereof. In
the event of any conflict between the terms of this Debenture and the Purchase
Agreement, the Purchase Agreement shall control. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for such terms in the
Purchase Agreement.
FOR VALUE RECEIVED, the Company promises to pay to ________________ or permitted
assigns (the "Holder"), the principal sum of _______________ (US $_________) on
October 18, 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; provided, however, that if the Common Stock of the
Company is trading at a closing bid price of less than $2.00 on the Maturity
Date, the Maturity Date shall be extended to April 18, 2008. 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 December 31, 2005), 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. Interest shall be payable in shares of Common Stock only if there is then
in effect a registration statement under the Securities Act of 1933 which allows
for the immediate resale by the Holder of the Debenture of the shares being
issued as interest.
The number of shares of Common Stock to be paid as interest shall be
valued and computed based upon the lower of (i) the applicable
Conversion Price or (ii) eighty five (85%) percent the average closing price for
the Company's Common Stock for the 10 trading days prior to the payment due
date. 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 then applicable 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 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 $2.00.
(b) Mandatory Conversion. So long as a Registration Statement
covering the resale of all the shares of Common Stock issued or issuable upon
conversion of this Debenture is effective (but only for so long as such
Registration Statement is required to remain effective), at the option of the
Company, upon at least three (3) (and not more than ten (10)) Trading Days'
notice, the Company may force conversion of the Debenture subject to
satisfaction of the following conditions:
i. The closing bid price of the Company's Common Stock on
its Principal Market must be above $4.00 per share (as adjusted for any stock
splits, stock dividends or similar transactions) for at least ten (10)
consecutive Trading Days immediately preceding the date of notice of the forced
conversion; and
ii. The average daily trading volume of the Company's
Common Stock on its Principal Market must be at least 150,000 shares (as
adjusted for any stock splits, stock dividends or similar transactions) during
the ten (10) consecutive Trading Days immediately preceding the date of notice
of the forced conversion.
In addition, subject to the foregoing conditions set forth in subsections 3(b)i.
and 3(b)ii. above and subject to the foregoing notice provisions, the Company
shall also have the right to force conversion of up to that portion of principal
and accrued interest under the Debenture for which the number of shares of
Common Stock issuable thereunder could then be sold during a 90-day period
without restriction pursuant to Rule 144 of the Securities Act of 1933, as
amended.
(4) Company Redemption Rights. So long as a Registration Statement
covering the resale of all the shares of Common Stock issued or issuable upon
conversion of this Debenture is effective (but only for so long as such
Registration Statement is required to remain effective), the Company shall have
the right to deliver to the Holder a written notice of the Company's intent to
redeem any portion or the entire outstanding amount of this Debenture upon at
least five (5) Trading Days (and not more than ten (10)) Trading Days' prior
written notice (such date hereinafter the "Redemption Date"), at a price equal
to 120% of the principal balance and accrued interest thereon that are requested
to be redeemed under the redemption notice on such redemption date. The Company
shall make the redemption payment to the Holder within five (5) Trading Days of
the Redemption Date (the "Redemption Payment Date"). If the Company shall fail
to make payment in full to the Holder by the Redemption Payment Date for any
reason, then the redemption notice shall be void. The Holder shall have the
right to convert any portion or the entire amount outstanding under this
Debenture at any time prior to the Redemption Payment Date. Notwithstanding
receipt of a notice of redemption from the Company, the Holder shall at all
times prior to the Redemption Date maintain the right to convert all or any
portion of the Debenture in accordance with Section 3(a) and any portion of the
Debenture so converted after receipt of a notice of redemption and prior to the
Redemption Date set forth in such notice shall be deducted from the principal
amount of the Debenture which is subject to redemption.
(5) 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.
3
(6) Most Favored Nation Provisions.
(a) Share Issuance. The Conversion Price shall be subject
to adjustment in accordance with this Section 6 and as otherwise provided in the
Purchase Agreement. Other than the Excepted Issuances, if at any time until the
Debentures have been repaid (either in cash or Common Stock) or converted in
full, the Company shall offer, issue or agree to issue any common stock or
securities convertible into or exercisable for shares of common stock (or modify
any of the foregoing which may be outstanding) ("New Issue Securities") to any
person or entity at a price per share or conversion or exercise price per share
which shall be less than the Conversion Price in respect of the Conversion
Shares, without the consent of each Holder holding the Debenture, then the
Conversion Price of the outstanding Debentures shall be adjusted, on a full
ratchet basis, to reflect the issue price or conversion or exercise price of the
New Issue Securities. The average Purchase Price of the Conversion Shares shall
be calculated separately for the Conversion Shares and Warrant Shares. The
foregoing calculation and issuance shall be made separately for Conversion
Shares received upon conversion and separately for Warrant Shares. The Holder is
granted the registration rights described in Section 2(b) of the Registration
Rights Agreement in relation to such additional shares of Common Stock except
that the Scheduled Filing Date and Scheduled Effective Date vis- -vis such
additional common shares shall be, respectively, the sixtieth (60th) and one
hundred and twentieth (120th) date after the closing date giving rise to the
requirement to issue the additional shares of Common Stock.For purposes of the
issuance and adjustment described in this paragraph, the issuance of any
security of the Company carrying the right to convert such security into shares
of Common Stock or of any warrant, right or option to purchase Common Stock
shall result in the issuance of the additional shares of Common Stock upon the
issuance of such convertible security, warrant, right or option and again at any
time upon any subsequent issuances of shares of Common Stock upon exercise of
such conversion or purchase rights if such issuance is at a price lower than the
Conversion Price in effect upon such issuance. The rights of the Holder set
forth in this Section 6(a) are in addition to any other rights the Investor has
pursuant to this Agreement, the Debenture, the Warrant, any Transaction
Document, and any other agreement referred to or entered into in connection
herewith.
(b) Merger, Sale of Assets, etc. If the Company at any time
shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Debenture, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or other
securities and property as would have been issuable or distributable on account
of such consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser.
4
Without limiting the generality of the foregoing, the anti-dilution provisions
of this Section shall apply to such securities of such successor or purchaser
after any such consolidation, merger, sale or conveyance.
(c) Reclassification, etc. If the Company at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Debenture, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of securities as would
have been issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.
(d) Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.
Whenever the Conversion Price is adjusted pursuant to this Section 6, the
Company shall promptly mail to the Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
(7) 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.
5
(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 7(a) could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay liquidated
damages to the Holder for late issuance of shares of Common Stock upon
conversion of $1,000 for each occurrence of a failure to deliver the shares
within the five (5) Trading Day Period described in Section 7(a) and for each
subsequent 5-Trading Day Period that such failure to deliver continues. The
Company shall pay any payments incurred under this Section 7(b) in immediately
available funds within five (5) business days upon demand. 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.
(8) 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.
(9) 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.
(10) 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.
6
(11) 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 Agreement 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.
(12) 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, in the Purchase Agreement, the Registration Rights Agreement, 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 Purchase Agreement 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 or the
Registration Rights Agreement, 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, the Purchase Agreement
or the Registration Rights Agreement 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 the Purchase Agreement, the Registration Rights
Agreement or this Debenture and such failure shall continue uncured for a period
of fifteen (15) business days after written notice of such failure (it being
understood that if the Company cannot achieve or maintain the effectiveness of
the Registration Statement but continues to use its best efforts to achieve such
effectiveness and otherwise complies with the terms of the Registration Rights
Agreement, its failure to achieve or maintain effectiveness of the Registration
Statement shall not be deemed a breach for purposes of this subsection (d), so
long as the Company makes timely payment of the liquidated damages provided for
in the Registration Rights Agreement); 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
7
(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.
(j) A Registration Default shall have occurred on the part of
the Company as such term is defined in the Registration Rights Agreement and
same shall continue for a period of ninety (90) days after the date of such
Registration Default.
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, and if not paid within such
period, the Company shall pay the Holder liquidated damages in cash of 2% per
month of such amount until paid, pro-rated for any partial months.
(13) 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.
8
(14) 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.]
9
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its officer thereunto duly authorized.
Dated: October 18, 2005
AIRTRAX, INC.
By: /s/ Peter Amico
---------------------
Name: Peter Amico
Title: President
10
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:______________________________
_______________________________________________________________________________
_______________________________________________________________________________