Kronos Advanced Technologies, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
June 12, 2007
Xxxxxxxx X. Xxxxxxxxx
_____________________
_____________________
Re: Kronos Advanced Technologies, Inc. (the "Company")
Dear Xx. Xxxxxxxxx:
This Agreement (the "Agreement") will confirm the understanding between
the Company and Xxxxxxxx X. Xxxxxxxxx ("Optionholder") with respect to certain
matters described below.
1. Optionholder hereby acknowledges that it is in the best interest of
the Company to obtain long-term funding from one or more third
parties.
2. Optionholder understands that AirWorks Funding LLLP and other
individuals and entities (the "Lenders") are contemplating and
negotiating a proposed financing with the Company (the "New
Financing").
3. In connection with the Company obtaining the New Financing, the
Lenders have requested that Optionholder agree to certain terms and
conditions as set forth herein.
4. Optionholder hereby agrees that it shall not exercise, sell, assign,
convey or otherwise transfer any rights of conversion it has with
respect to any securities that are exercisable or convertible
(directly or indirectly) into the common stock of the Company, par
value $0.001 per share, or any other capital stock of the Company,
including, without limitation, any options or warrants held by the
Optionholder, until December 31, 2007, except as may be required by
separation or divorce agreements. Exhibit A attached hereto sets forth
all shares, options, warrants or other convertible securities of the
Company held by the Optionholder on the date hereof.
5. Optionholder hereby acknowledges that it has received and had an
opportunity to review the Funding Agreement of even date herewith by
and among the Company and Lenders, the Secured Convertible Promissory
Notes of even date herewith made by the Company in favor of Lenders,
the Security Agreement of even date herewith by and among the Company,
Kronos Air Technologies, Inc. and Lenders, and the Registration Rights
Agreement of even date herewith by and among the Company and Lenders
(collectively, the "Transaction Documents"). Optionholder hereby
irrevocably and forever waives all claims, obligations, causes of
action, costs (including attorneys' fees) and demands of every kind
and nature, whether asserted or unasserted, known or unknown, both at
law and in equity, which Optionholder may now have, have ever had or
may hereafter have with respect to any "event of default,"
anti-dilution right or protection, or any other right Optionholder may
have under the securities held by Optionholder that arises directly as
a result of, or is triggered by, the execution, delivery and
performance of the Transaction Documents by the parties thereto. This
letter agreement is not intended to modify or reduce any economic
rights of Optionholder.
Xxxxxxxx X. Xxxxxxxxx
June 12, 2007
Page 2 of 3
6. This letter may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which shall constitute
one and the same instrument. This letter shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier, scanned file or otherwise,
copies of this letter. The terms of this letter supersede the terms of
any other verbal or written agreement between the parties with respect
to the subject matter hereof existing prior to the date hereof. In the
event of any litigation arising hereunder or under that certain
convertible promissory note dated as of April 27, 207 made by the
Company in favor of Optionholder (the "Note") or under a related
security interest, the prevailing party or parties shall be entitled
to recover its or their reasonable attorneys' fees and court costs
from the other party or parties, including the costs of bringing such
litigation including all appeals thereon and collecting upon any
judgments. This letter shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
legal representatives, trustees, successors and assigns. Each Lender
shall have the right and privilege, and is hereby authorized, in its
own name and on its own behalf or on behalf of others for whose
benefit this Agreement is made, to institute and prosecute any suit at
law or in equity in any court having jurisdiction of the subject
matter, to interpret and enforce this Agreement or any of its terms
and provisions, including, but not limited to, suits for specific
performance, mandamus, receivership and injunction. Each party has the
right, power and capacity to execute and deliver this Agreement and to
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by each party and the performance by each party of its
obligations hereunder and the consummation of the transactions
provided for herein have been duly authorized and approved by all
necessary action, if any, of such party. This Agreement has been duly
executed and delivered by each party and constitutes the valid binding
agreement of each party, enforceable against such party in accordance
with its terms.
7. This Agreement shall be governed by and construed under the laws of
the State of New York, without giving effect to principles of
conflicts of laws thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Xxxxxxxx X. Xxxxxxxxx
June 12, 2007
Page 3 of 3
If the foregoing accurately reflects our understanding regarding this
matter, please indicate your agreement and acceptance by signing in the space
provided below and returning an executed copy of this letter to us.
Sincerely yours,
KRONOS ADVANCED TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: COO
AGREED AND ACCEPTED:
/s/ Xxxxxxx X. Sun
-------------------
Xxxxxxx X. Sun, as attorney-in-fact for Xxxxxxx X.
Xxxxxxxxx
cc: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
Attention: Xxxxxxx Xxxxxx, Esq.
Attachment
Exhibit A
Optionholder's Securities
See attached.
