Kronos Advanced Technologies, Inc.
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June 5, 2007
Eagle Rock Group, LLC
Kronos Advanced Technologies, Inc.
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Re: Kronos Advanced Technologies, Inc. (the "Company")
Ladies and Gentlemen:
This Agreement (the "Agreement") will confirm the understanding between
the Company and Eagle Rock Group, LLC ("Optionholder") with respect to certain
matters described below.
1. The Company and Optionholder hereby acknowledge that the Company may
be unable to meet its financial obligations and, as such, may have no
alternative but to cease its operations unless it obtains 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. 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 as a result
of, or is triggered by, the execution, delivery and performance of the
Transaction Documents by the parties thereto.
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, 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. Except for the amounts expressly set
forth herein, none of the parties hereto shall be liable to any other
party for any amounts whatsoever. Optionholder 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
Optionholder and the performance by Optionholder 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 Optionholder. This Agreement has been duly executed and
delivered by Optionholder and constitutes the valid binding agreement
of Optionholder, enforceable against Optionholder 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.
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
AGREED AND ACCEPTED:
Eagle Rock Group, LLC
By: Eagle Rock Advisors, LLC, its manager
By:____________________________________________________
Name:
Title: Managing Director
cc: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Attachment
Exhibit A
Optionholder's Securities
See attached.
