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Exhibit 4.1
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO AIRTRAX, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.
Principal Amount
$__________ Issue
Date: May __, 2008
SECURED
CONVERTIBLE NOTE
FOR VALUE RECEIVED,
AIRTRAX, INC., a New Jersey corporation (hereinafter called
“Borrower”), hereby promises to pay to
___________________ (the “Holder”) ____________
($________), on October __, 2008 at the offices of Grushko
& Mittman, P.C. 551 Fifth avenue, Suite 1601 New York, NY
10176 (the “Maturity Date”), if not retired
sooner.
ARTICLE I
GENERAL PROVISIONS
1.1
Payment Grace
Period . The Borrower shall have a three(3)
day grace period to pay any monetary amounts due under this
Note, after which grace period and during the pendency of any
other Event of Default (as defined below) a default interest
rate of fifteen percent (15%) per annum shall apply to the
amounts owed hereunder.
1.2
Conversion
Rights . The Conversion Rights set forth in
Article II shall remain in full force and effect from the date
hereof and until the Note is paid in full or otherwise
satisfied regardless of the occurrence of an Event of
Default. The Note shall be payable in full on the
Maturity Date, unless previously converted into Common Stock
in accordance with Article II hereof; provided, that if an
Event of Default has occurred, the Holder may extend the
Maturity Date up to an amount of time equal to the pendency of
the Event of Default. Such extension must be on
notice in writing.
1.3
Interest
Rate . Simple interest payable on
this Note shall accrue at the annual rate of eight percent
(8%) and be payable monthly commencing June 30, 2008, and on
the Maturity Date, accelerated or otherwise, when the
principal and remaining accrued but unpaid interest shall be
due and payable, or sooner as described below.
ARTICLE II
CONVERSION RIGHTS
The
Holder shall have the right to convert the principal and any
interest due under this Note into Shares of the Borrower's
Common Stock, $0.001 par value per (“Common
Stock”) as set forth below.
2.1.
Conversion into
the Borrower's Common Stock .
(a) The
Holder shall have the right from and after the date of the
issuance of this Note and then at any time until this Note is
fully paid, to convert any outstanding and unpaid principal
portion of this Note subject to the availability of adequate
shares of the Company’s common stock being available for
issue (“Adequate Authorized Shares”), at the
election of the Holder (the date of giving of such notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares of Common Stock as such stock exists on
the date of issuance of this Note, or any shares of capital
stock of Borrower into which such Common Stock shall hereafter
be changed or reclassified, at the conversion price as defined
in Section 2.1(b) hereof (the "Conversion Price"), determined
as provided herein. Upon delivery to the Borrower
of a completed Notice of Conversion, a form of which is
annexed hereto, Borrower shall issue and deliver to the Holder
within three (3) business days after the Conversion Date (such
fifth day being the “Delivery Date”) that number
of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. At the
election of the Holder, the Borrower will deliver accrued but
unpaid interest on the Note, if any, through the Conversion
Date directly to the Holder on or before the Delivery
Date. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined
by dividing that portion of the principal of the Note to be
converted by the Conversion Price.
(b)
Subject
to adjustment as provided in Section 2.1(c) hereof, the Conversion
Price per share shall be $0.05 subject to adjustment as described
herein.
(c)
The Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 2.1(a), shall be subject to adjustment from time to
time upon the happening of certain events while this
conversion right remains outstanding, as follows:
A.
Merger, Sale of
Assets, etc . If the Borrower at any time
shall consolidate with or merge into or sell or convey all or
substantially all its assets to any other corporation, this
Note, 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. 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.
B.
Reclassification,
etc . If the Borrower 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 Note, 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.
C.
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..
D.
Share
Issuance . So long as this Note is
outstanding, if the Borrower shall issue or agree to issue
any shares of Common Stock for a consideration less than the
Conversion Price in effect at the time of such issue, then,
and thereafter successively upon each such issue, the
Conversion Price shall be reduced to such other lower issue
price. For purposes of this adjustment, the
issuance of any security 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 an
adjustment to the Conversion Price upon the issuance of the
above-described security and again upon the issuance of
shares of Common Stock upon exercise of such conversion or
purchase rights if such issuance is at a price lower than the
then applicable Conversion Price. The reduction of
the Conversion Price described in this paragraph is in
addition to other rights of the Holder described in this
Note.
(d) Whenever
the Conversion Price is adjusted pursuant to Section 2.1(c)
above, the Borrower shall promptly mail to the Holder a notice
setting forth the Conversion Price after such adjustment and
setting forth a statement of the facts requiring such
adjustment.
2.2.
Method of
Conversion . This Note may be converted by
the Holder in whole or in part as described in Section 2.1(a)
hereof. Upon partial conversion of this Note, a new
Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Borrower
to the Holder for the principal balance of this Note and
interest which shall not have been converted or
paid.
2.5.
Maximum
Conversion . The Holder shall not be
entitled to convert on a Conversion Date that amount of the
Note in connection with that number of shares of Common Stock
which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and
its affiliates on a Conversion Date, (ii) any Common Stock
issuable in connection with the unconverted portion of the
Note, and (iii) the number of shares of Common Stock
issu
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