VOTING AND SUPPORT AGREEMENT
THIS VOTING AND SUPPORT AGREEMENT (this "Agreement"), dated as of June
19, 2007, is made and entered into by and among Kronos Advanced Technologies,
Inc., a Nevada corporation ("Company"), and each of the undersigned holders of
securities of the Company who are signatories hereto (each, a "Security
Holder").
WHEREAS, contemporaneously with the execution of this Agreement, the
Company and each Security Holder have entered into letter agreements pursuant to
which each Security Holder has agreed to take, or refrain from taking, certain
actions to allow the Company to obtain secured convertible debt financing from
AirWorks Funding LLLP ("AirWorks") and other individuals and entities (AirWorks
and such other individuals and entities are collectively referred to herein as,
the "Lenders") in an amount up to $18,159,000 (the "Financing");
WHEREAS, the Financing was made pursuant to, among other documents, the
Funding Agreement and the Security Agreement of even date herewith by and among
the Company and the Lenders (the "Funding Agreement" and the "Security
Agreement") and the Secured Convertible Promissory Notes of even date herewith
made by the Company in favor of AirWorks and the Lenders (the "Notes"); and
WHEREAS, each Security Holder owns securities of the Company and
desires to enter into this Agreement pursuant to which he, she or it agrees,
among other things, to vote all of the Subject Shares (as defined in Section
1(c)) held by such Security Holder in favor of the actions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and of the promises,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
1. Representations and Warranties of Security Holder. Each Security Holder
hereby represents and warrants to the Company as of the date hereof, as follows:
(a) Organization. Such Security Holder (to the extent such Security Holder is
not a natural person) is duly organized, validly existing and in good standing
under the laws of the state of its organization.
(b) Authority. Such Security Holder has all requisite power and authority (if
not a natural person) or capacity (if a natural person) to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by such Security Holder and constitutes a
valid and binding obligation of such Security Holder in accordance with its
terms. The execution and delivery of this Agreement does not and compliance with
the terms hereof will not (i) conflict with, result in any violation of, or
constitute (with or without notice or lapse of time or both) a default under,
any provision of any trust agreement, loan or credit agreement, bond, note,
mortgage, indenture, lease or other contract or agreement to which such Security
Holder is a party or applicable to the Subject Shares held by such Security
Holder, (ii) require any filing with, or permit, authorization, consent or
approval of, any federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic or foreign, or (iii) violate any judgment, order,
writ, injunction, decree, law, statute, rule or regulation applicable to such
Security Holder or the Subject Shares held by such Security Holder.
(c) The Subject Shares. Such Security Holder is the record and beneficial owner
(as such term is defined in Rule 13d-3 of the Securities Exchange Act of 1934)
of, and has good and marketable title to, the number of shares of the Company's
common stock, $0.001 par value per share (the "Company Stock"), set forth
opposite his, her or its name on the signature page hereto (such shares of the
Company's common stock, together with any other shares of capital stock of the
Company acquired by such Security Holder after the date hereof and during the
term of this Agreement, by conversion of the Notes, purchase, exercise of stock
options or otherwise, collectively referred to herein as the "Subject Shares"),
free and clear of any liens or other encumbrances whatsoever. Such Security
Holder does not own, of record or beneficially, any shares of the Company's
capital stock other than the Subject Shares held by such Security Holder; and,
such Security Holder does not have any voting rights with respect to any shares
of the Company's capital stock other than the Subject Shares held by such
Security Holder, pursuant to any voting agreement or otherwise. As of the date
hereof and for so long as this Agreement remains in effect, except for this
Agreement or as otherwise permitted by this Agreement, such Security Holder has
full legal power, authority and right to vote all of the Subject Shares held by
such Security Holder in favor of the approval and authorization of the actions
contemplated hereby (collectively, the "Proposed Actions") without the consent
or approval of, or any other action on the part of, any other person or entity.
Without limiting the generality of the foregoing, such Security Holder has not
entered into any voting agreement (other than this Agreement) with any person or
entity with respect to any of the Subject Shares held by such Security Holder,
granted any person or entity any proxy (revocable or irrevocable) or other power
of attorney with respect to any of the Subject Shares held by such Security
Holder, deposited any of the Subject Shares held by such Security Holder in a
voting trust or entered into any arrangement or agreement with any person or
entity limiting or affecting his, her or its legal power, authority or right to
vote the Subject Shares held by such Security Holder on any matter.
2. Voting of Shares.
(a) Subject to the provisions of Section 9, and without in any way limiting any
Security Holder's right to vote the Subject Shares held by such Security Holder
in his, her or its sole discretion on any other matters that may be submitted to
a shareholder vote, consent or other approval (including by written consent) in
a manner that is not inconsistent with such Security Holder's obligations under
this Agreement, each Security Holder hereby irrevocably and unconditionally
agrees that, during the period beginning on the date hereof and ending on the
earlier to occur of (Y) the date on which all of the matters set forth in
Sections 2(a)(1)-(5) below have been approved by the stockholders of the Company
or (Z) August 1, 2008 (the "Expiration Date"), at any meeting of the
stockholders of the Company called to vote upon (1) a slate of directors of the
Company's board of directors as proposed by AirWorks, subject to the composition
of such slate's compliance with all applicable laws and regulations, (2)
adjusting the size of the Company's board of directors such that upon the
election of the slate of directors proposed by AirWorks, such directors hold a
majority of the seats on the Company's board of directors, (3) approving an
amendment to the Company's articles of incorporation to increase the Company's
authorized common stock to a number of shares necessary to allow the Lenders to
convert the entire amount of the Financing into shares of the common stock of
the Company as provided in the Notes and in the Funding Agreement, (4)
reincorporating the Company in Delaware, subject to the Company's board of
director's recommendation of such action and/or (5) a reverse stock split
proposed by AirWorks or the Company's board of directors, the approval of any of
the foregoing or any rescission or withdrawal of such approval, or at any
adjournment thereof, or in any other circumstances upon which a vote, consent or
other approval (including written consent) with respect to such actions, each
Security Holder shall vote (or cause to be voted) the Subject Shares held by
such Security Holder:
(i) in favor of a slate of directors of the Company's board of directors as
proposed by AirWorks, subject to the composition of such slate's compliance with
all applicable laws and regulations;
(ii) in favor of adjusting the size of the Company's board of directors such
that upon the election of the slate of directors proposed by AirWorks, such
directors hold a majority of the seats on the Company's board of directors;
(iii) in favor of approving an amendment to the Company's articles of
incorporation to increase the Company's authorized common stock to a number of
shares necessary to allow the Lenders to convert the entire amount of the
Financing into shares of common stock of the Company as provided in the Notes
and the Funding Agreement;
(iv) in favor of reincorporating the Company in Delaware, subject to the
Company's board of director's recommendation of such action;
(v) in favor of a reverse stock split proposed by AirWorks or the Company's
board of directors; and
(vi) against any action or transaction that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to discourage the
consummation of any of the foregoing.
3. Covenants of the Security Holder. Each Security Holder covenants and agrees
that, until the Expiration Date, he, she or it will:
(a) subject to the provisions of Section 5, not sell, transfer (including by
testamentary succession or otherwise by operation of law), pledge, hypothecate,
encumber, assign, tender or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
pledge, hypothecation, encumbrance, assignment, tender or other disposition of,
any of the securities of the Company or Subject Shares held by such Security
Holder or any right, title or interest therein; and
(b) other than as expressly contemplated by this Agreement, not grant any powers
of attorney or proxies or consents in respect of any of the securities of the
Company or Subject Shares held by such Security Holder, deposit any of the
securities of the Company or Subject Shares held by such Security Holder into a
voting trust, enter into a voting agreement with respect to any of the
securities of the Company or the Subject Shares held by such Security Holder or
otherwise restrict his, her or its ability freely to exercise all voting rights
with respect to the securities of the Company or Subject Shares held by such
Security Holder, or commit any other act that could restrict or otherwise affect
his, her or its legal power, authority and right to vote the securities of the
Company or Subject Shares held by such Security Holder.
4. Certain Events. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Stock, or the acquisition of additional shares of
Company Stock or securities of the Company by each Security Holder, the number
of securities of the Company or Subject Shares held by such Security Holder
shall be adjusted appropriately and this Agreement and the obligations hereunder
shall attach to any additional securities of the Company or shares of Company
Stock of the Company issued to or acquired by such Security Holder.
5. Assignment. Each Security Holder agrees that this Agreement and the
obligations hereunder shall attach to the securities of the Company and Subject
Shares held by such Security Holder and shall be binding upon any person or
entity to which legal or beneficial ownership of or the right and ability to
vote the securities of the Company or Subject Shares held by such Security
Holder shall pass, whether by operation of law or otherwise, including such
Security Holder's successors. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Security Holder, on
the one hand, without the prior written consent of the Company nor by the
Company, on the other hand, without the prior written consent of such Security
Holder. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
6. General Provisions.
(a) Amendments. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
(b) Notice. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to each party hereto
at his, her or its address set forth below such party's name on the signature
page hereto (or at such address for a party as shall be specified by like
notice).
(c) Interpretation. When a reference is made in this Agreement to a Section,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include, or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
(d) Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
(e) Entire Agreement; No Third Party Beneficiaries. This Agreement (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
7. Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement (including the provisions of
Section 2) were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to specific performance and injunctive relief to prevent any threatened breach
of this Agreement.
8. Severability. In the event that any provisions of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement shall
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the fullest extent possible, the original intent of the parties.
9. Fiduciary Duties. Each Security Holder is signing this Agreement solely in
such Security Holder's capacity as an owner of his, her or its respective
securities of the Company and/or Subject Shares, and nothing in this Agreement
shall prohibit, prevent or preclude such Security Holder from taking or not
taking any action in his, her or its capacity as an officer of director of the
Company, to the extent any such action is not in conflict with provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
COMPANY:
Kronos Advanced Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and CEO
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STOCKHOLDERS:
Security Holder Subject Shares
--------------- ----------------
Options to Purchase Shares
Shares of Stock Held of Stock Held by Security
Security Holder Holder
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,201,926 7,191,206
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 294,118 638,459
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ - 573,500
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▇▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 852,752 3,391,756
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ Igor Krichtafovitch 1,053,000 4,955,726
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Igor Krichtafovitch
Address: ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇