[AIRTRAX LETTERHEAD]
31 May 2005
RE: Airtrax, Inc. ("Airtrax")
To The Purchasers Listed on the Signature Pages Hereto:
Pursuant to the Registration Rights Agreement and Joinder to the
Registration Rights Agreement entered into as of November 22 and November 23,
2004, respectively (the "Registration Rights Agreement") in connection with your
purchase of shares of common stock, no par value per share, and warrants to
purchase common stock of Airtrax, you were granted certain registration rights
by Airtrax. In addition, pursuant to Section 2(a)(i) of the Registration Rights
Agreement, Airtrax agreed that in the event that a registration statement was
not filed within 45 days of November 22, 2004 (a "Non-Registration Event") it
would pay you, in cash, an amount equal to two (2%) percent of the aggregate
amount invested by you for each 30-day period or pro rata for any portion
thereof, thereafter, during the pendency of such Non-Registration Event.
Further, pursuant to Section 2(c)(i) of the Registration Rights Agreement,
Airtrax agreed that in the event that a registration statement was not declared
effective by the Securities and Exchange Commission (the "SEC") within 90 days
of November 22, 2004 (a "Blackout Period"), it would pay you, in cash, an amount
equal to two (2%) percent of the aggregate amount invested by you for each
30-day period or pro rata for any portion thereof, thereafter, during the
pendency of such Blackout Period.
Airtrax filed the registration statement on February 11, 2005, resulting in
a 36-day Non-Registration Event, and as of the date hereof, the registration
statement has not been declared effective by the SEC, resulting in a 100-day
Blackout Period. Accordingly, ▇▇▇▇▇▇▇ has agreed to pay to Excalibur Limited
Partnership ("Excalibur") out of the proceeds of a certain private placement
between Airtrax and Excalibur, the amounts listed in Schedule A, representing
the liquidated damages payable to you for said Non-Registration Event and
Blackout Period. It is acknowledged and agreed that Excalibur shall in turn pay
such liquidated damages to you, after retaining its portion of such liquidated
damages which are set forth in Schedule A. In addition, you agree that upon your
receipt of the funds, Airtrax will have satisfied its obligations for the
payment of liquidated damages for the Non-Registration Event and Blackout Period
through June 30, 2005.
You agree to indemnify and hold harmless Airtrax and its officers,
directors, members, employees and agents, successors and assigns, and each other
person, if any, who controls Airtrax within the meaning of the 1933 Act, against
any losses, claims, damages or liabilities, joint or several, to which you may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon Excalibur's failure
to pay you your portion of the liquidated damages as set forth on Schedule A.
Accordingly, Airtrax is hereby requesting that you execute and return this
letter in order to confirm that that you agree to accept the cash payment
required pursuant to Sections 2(a)(i) and 2(c)(i) of the Registration Rights
Agreement and acknowledge and agree that Excalibur will be solely liable for
paying such cash payment to you out of the proceeds of the current financing
between Airtrax and Excalibur.
Please note that this proposal is limited to only the periods covered
herein, and in no way will be deemed a waiver or limitation of any rights that
you have pursuant to the Registration Rights Agreement.
AIRTRAX, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
AGREED AND ACKNOWLEDGED:
EXCALIBUR LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and General Partner
▇▇▇▇▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: President
WHALEHAVEN CAPITAL FUND
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
SCHEDULE A
------------
LIQUIDATED DAMAGES
------------------
Excalibur Limited Partnership 400,000 8,000.00 24,000.00
11/22/2004 1,600.00 3,200.00
9,600.300 27,200.00 36,800.00
11/23/2004 100,000 2,000.00 6,000.00
333.33 800.00
2,333.33 6,800.00 9,133.33
45,933.33
▇▇▇▇▇▇▇▇▇▇▇ Limited Partnership 325,000 6,500.00 19,500.00
11/22/2004 1,300.00 2,600.00
7,800.00 22,100.00 29,900.00
11/23/2004 112,000 2,240.00 6,720.00
373.33 896.00
2,613.33 7,616.00 10,229.33
40,129.33
Whalehaven Capital Fund 175,000 3,500.00 10,500.00
11/22/2004 700.00 1,400.00
4,200.00 11,900.00 16,100.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ 200,000 4,000.00 12,000.00
11/23/2004 666.67 1,600.00
4,667.67 13,600.00 18,226.67
