SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of June 19, 2007 (this "Agreement"),
is by and among Kronos Advanced Technologies, Inc., a Nevada corporation with
its chief executive office and principal place of business located at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Debtor") and Kronos Air
Technologies, Inc. a Nevada corporation with its chief executive office and
principal place of business located at ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Subsidiary" and collectively with the Debtor, the "Pledgors"), and
AirWorks Funding LLLP, a Georgia limited liability limited partnership,
("AirWorks"), Sands Brothers Venture Capital LLC, a New York limited liability
company ("Sands I") Sands Brothers Venture Capital II LLC, a New York limited
liability company ("Sands II"), Sands Brothers Venture Capital III LLC, a New
York limited liability company ("Sands III"), Sands Brothers Venture Capital IV
LLC, a New York limited liability company ("Sands IV"), Critical Capital Growth
Fund, L.P., a Delaware limited partnership and a debenture licensed U.S. Small
Business Investment Company ("CCGF") and RS Properties I LLC, a Delaware limited
liability company ("RS Properties"). AirWorks, Sands I, Sands II, Sands III,
Sands IV, CCGF and RS Properties are collectively referred to herein as the
"Secured Parties."
WHEREAS, pursuant to those certain Secured Convertible Promissory
Notes, dated June 19, 2007 (the "Notes"), the Secured Parties loaned to the
Debtor the principal amount of $18,159,000 or so much thereof as may be advanced
by the Secured Parties to the Debtor pursuant to the terms thereof;
WHEREAS, the Subsidiary is a direct subsidiary of the Debtor and has
determined that its execution, delivery and performance of this Agreement
directly or indirectly benefits, and is within the corporate purposes and in the
best interest of, it;
WHEREAS, the Secured Parties would not have advanced funds to the
Debtor under the Notes without Debtor's and Subsidiary's execution and delivery
of this Agreement;
WHEREAS, in order to secure the Debtor's obligations under the Notes,
the Pledgors have agreed to execute and deliver this Agreement; and
WHEREAS, this Agreement is subject to the terms and conditions of that
certain Intercreditor Agreement of even date herewith by and among the Secured
Parties.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Pledgors, the Pledgors hereby agree with the Secured Parties
as follows:
Section 1. Definitions.
(a) For the purposes of this Agreement:
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all governmental bodies and all
orders, rulings and decrees of all courts and arbitrators.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks in New York, New York are authorized or required by law to close.
"Collateral" means the following properties, assets and rights of each
of the Pledgors, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof: all personal and fixture
property of every kind and nature, including, without limitation, all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts, chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
intellectual property (including, without limitation, patents), securities of
United States Persons and all other investment property, supporting obligations,
any other contract rights or rights to the payment of money, insurance claims
and proceeds, tort claims, and all general intangibles, and all products and
proceeds of the foregoing, in any form, including insurance proceeds and all
claims against third parties for loss or damage to or destruction of or other
involuntary conversion of any kind or nature of any or all of the other
Collateral.
"Event of Default" means the occurrence or existence of an Event of
Default under any Note.
"Lien", as applied to the property of any Person, means any security
interest, lien, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, charge, conditional sale or other title retention agreement, or other
encumbrance of any kind covering any property of such Person, or upon the income
or profits therefrom or any agreement to convey any of the foregoing or any
other agreement or interest covering the property of a Person which is intended
to provide collateral security for the obligation of such Person.
"Obligations" means, individually and collectively:
(i) all obligations of either of the Pledgors owing to the Secured Parties under
or with respect to this Agreement or, only with respect to the Debtor, the
Notes; and
(ii) all renewals, substitutions, modifications, extensions and supplements to
any of the foregoing.
"Permitted Liens" means:
(i) Liens securing taxes, assessments and other governmental charges or levies
not yet due and payable or the claims of, or obligations owing to, materialmen,
mechanics, carriers, warehousemen or landlords for labor, materials, supplies or
rentals incurred in the ordinary course of business but not yet due and payable;
(ii) Liens consisting of deposits or pledges made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or similar legislation;
(iii) Liens which in the sole judgment of the Secured Parties do not materially
detract from the value of the Collateral;
(iv) Liens in favor of the Secured Parties;
(v) Liens in favor of FKA Distributing Co.; and
(vi) Purchase money security interests and Liens to secure the Debtor's
performance of equipment leases arising in the ordinary course of business;
provided that such Liens do not extend to any property or assets which is not
acquired property (in the case of purchase money security interest) or is not
leased property (in the case of equipment leases) subject to such purchase or
lease.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"UCC" means the Uniform Commercial Code of the State of New York, as in
effect from time to time.
(b) Unless otherwise set forth herein to the contrary, all terms not otherwise
defined herein and which are defined in the UCC are used herein with the
meanings ascribed to them in the UCC. However, if a term is defined in Article 9
of the UCC differently than in another Article of the UCC, the term has the
meaning specified in Article 9 of the UCC.
Section 2. Grant of Security. To secure the prompt and complete payment,
observance and performance when due (whether at stated maturity, by acceleration
or otherwise) of all of the Obligations, each of the Pledgors hereby
collaterally assigns and pledges to the Secured Parties, and grants to the
Secured Parties a security interest and Lien in and to, the Collateral. The
Secured Parties acknowledge that the attachment of their security interest in
any commercial tort claim as original collateral is subject to the Debtor's
compliance with Section 4(a).
Section 3. Authorization to File Financing Statements. Each of the Pledgors
hereby irrevocably authorizes the Secured Parties at any time and from time to
time to file in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of such Pledgor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC or Article 9 of the Uniform Commercial Code of such other
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC or the analogous part of Article 9 of the Uniform Commercial Code of
such other jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment. Each Pledgor agrees to furnish any such
information to the Secured Parties promptly upon request.
Section 4. Other Actions. Further to ensure the attachment, perfection and
priority of, and the ability of the Secured Parties to enforce, the Secured
Parties' security interest in the Collateral, each Pledgor agrees, in each case
at such Pledgor's own expense, to take the following actions with respect to the
following Collateral:
(a) Commercial Tort Claims. If such Pledgor shall at any time hold or acquire a
commercial tort claim, such Pledgor shall immediately notify the Secured Parties
in a writing signed by such Pledgor of the brief details thereof and grant to
the Secured Parties in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Secured Parties.
(b) Actions as to any and all Collateral. Such Pledgor agrees to take any other
action reasonably requested by the Secured Parties to ensure the attachment,
perfection and, priority of, and the ability of the Secured Parties to enforce,
the Secured Parties' security interest in any and all of the Collateral,
including, without limitation, the execution and delivery of patent security
agreements (substantially in the form attached hereto as Exhibit A) for filing
with the United States Patent and Trademark Office and fully executed deposit
control agreements in form and substance reasonable acceptable to the Secured
Parties with respect to any deposit accounts of the Pledgors.
Section 5. Representations and Warranties Regarding Legal Status.
(a) The Debtor represents and warrants to the Secured Parties as follows: (a)
the correct legal name of the Debtor is set forth in the introductory paragraph
of this Agreement, and the Debtor does not conduct and, during the five-year
period immediately preceding the date of this Agreement, has not conducted,
business under any trade name other than Technology Selection, Inc., TSET, Inc.
and as set forth in the introductory paragraph of this Agreement, (b) the
Internal Revenue Service taxpayer identification number of the Debtor is
▇▇-▇▇▇▇▇▇▇, (c) the Debtor is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and (d) the Debtor's
place of business is accurately set forth in the introductory paragraph hereof.
(b) The Subsidiary represents and warrants to the Secured Parties as follows:
(a) the correct legal name of the Subsidiary is set forth in the introductory
paragraph of this Agreement, and the Subsidiary does not conduct and, during the
five-year period immediately preceding the date of this Agreement, has not
conducted, business under any trade name other than as set forth in the
introductory paragraph of this Agreement, (b) the Internal Revenue Service
taxpayer identification number of the Subsidiary is ▇▇-▇▇▇▇▇▇▇ (c) the
Subsidiary is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Nevada, and (d) the Subsidiary's place
of business is accurately set forth in the introductory paragraph hereof.
(c) Each of the Pledgors represents and warrants to the Secured Parties (i) it
is a corporation duly organized and in good standing under the laws of its state
of incorporation, and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on its financial condition, results of
operation or business or the rights of Secured Parties in or to any of the
Collateral; (ii) the execution, delivery and performance of this Agreement and
the transactions contemplated hereunder (A) are all within its corporate or
other powers, (B) have been duly authorized, (C) are not in contravention of law
or the terms of its certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which it is a party or by which it or its property are bound and (D) will not
result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any its property; and (iii) this Agreement constitutes the legal, valid and
binding obligations of such Pledgor enforceable against such Pledgor in
accordance with the terms hereof.
Section 6. Covenants Regarding Legal Status. Each of the Pledgors covenants with
the Secured Parties as follows: (a) without providing at least 15 Business Days
prior written notice to the Secured Parties, such Pledgor will not change its
name, its place of business or, if more than one, chief executive office, or its
mailing address or organizational identification number if it has one, and (b)
without providing at least 15 Business Days prior written notice to the Secured
Parties, such Pledgor will not change its type of organization, jurisdiction of
organization or other legal structure.
Section 7. Representations and Warranties Regarding Collateral, Etc. Each of the
Pledgors further represents and warrants to the Secured Parties as follows: (a)
such Pledgor is the owner of the Collateral pledged by it, free from any Lien,
except for Permitted Liens, (b) none of the Collateral pledged by it constitutes
or is the proceeds of "farm products" as defined in ss. 9-102(a)(34) of the UCC,
(c) none of the account debtors or other persons obligated on any of the
Collateral pledged by it is a governmental authority covered by the Federal
Assignment of Claims Act or like federal, state or local statute or rule in
respect of such Collateral, (d) such Pledgor does not hold any commercial tort
claim, and (e) to the best of such Pledgor's knowledge, such Pledgor has at all
times operated its business in compliance in all material respects with all
Applicable Laws.
Section 8. Covenants Regarding Collateral Generally. Each of the Pledgors
further covenants with the Secured Parties as follows: (a) other than Permitted
Liens, such Pledgor shall not pledge, mortgage or create, or suffer to exist any
Lien in the Collateral in favor of any Person, (b) such Pledgor shall keep the
Collateral in good order and repair and will not use the same in violation of
any Applicable Law or any policy of insurance thereon, (c) such Pledgor shall
permit the Secured Parties, or their designees, to inspect the Collateral at any
reasonable time upon reasonable prior notice, wherever located, (d) such Pledgor
shall not sell, transfer or otherwise dispose, or offer to sell, transfer or
otherwise dispose, of the Collateral or any interest therein except for (i)
sales and leases of inventory in the ordinary course of business and (ii) so
long as no Event of Default has occurred and is continuing, sales or other
dispositions of obsolescent items of equipment in the ordinary course of
business consistent with past practices and (e) the equipment constituting
Collateral shall remain personal property and such Pledgor shall not permit any
such equipment to be or become a part of or affixed to any real property.
Section 9. Rights and Remedies. Upon the occurrence and during the continuance
of an Event of Default, the Secured Parties, without any other notice to or
demand upon the Pledgors, shall have in any jurisdiction in which enforcement
hereof is sought, in addition to the rights and remedies of the Secured Parties
under the UCC and any additional rights and remedies as may be provided to the
Secured Parties in any jurisdiction in which Collateral is located or
enforcement is sought, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Parties may, so
far as the Pledgors can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Secured
Parties may in their discretion require the Pledgors to assemble all or any part
of the Collateral at such location or locations within the jurisdiction(s) of
each Pledgor's principal office(s) or at such other locations as the Secured
Parties may reasonably designate. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Secured Parties shall give to the Pledgors at least five
(5) Business Days prior written notice of the time and place of any public sale
of Collateral or of the time after which any private sale or any other intended
disposition is to be made. Each of the Pledgors hereby expressly acknowledges
that five (5) Business Days prior written notice of such sale or sales shall be
reasonable notice. In addition, each of the Pledgors waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any of
the Secured Parties' rights and remedies hereunder, including, without
limitation, the Secured Parties' right following an Event of Default to take
immediate possession of the Collateral and to exercise their rights and remedies
with respect thereto.
Section 10. No Waiver by Secured Parties, Etc. The Secured Parties shall not be
deemed to have waived any of their rights and remedies in respect of the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Secured Parties. No delay or omission on the part of the Secured Parties
in exercising any right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
All rights and remedies of the Secured Parties with respect to the Obligations
or the Collateral, whether evidenced hereby or by any other instrument or
papers, shall be cumulative and may be exercised singularly, alternatively,
successively or concurrently at such time or at such times as the Secured
Parties deem expedient.
Section 11. Suretyship Waivers by Pledgors. Each of the Pledgors waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of each description. With
respect to both the Obligations and the Collateral, each of the Pledgors assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of or failure to perfect any security
interest in any Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such manner
and at such time or times as the Secured Parties may deem advisable. The Secured
Parties shall not have any duty as to the collection or protection of the
Collateral or any income therefrom, the preservation of rights against prior
parties, or the preservation of any rights pertaining thereto beyond any duties
imposed by Applicable Law. Each of the Pledgors further waives any and all other
suretyship defenses.
Section 12. Marshalling. The Secured Parties shall not be required to marshal
any present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the rights and remedies of the Secured Parties
hereunder and of the Secured Parties in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, each of the Pledgors hereby agrees that it will not invoke any Applicable
Law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Secured Parties' rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each of the Pledgors hereby irrevocably waives
the benefits of all such laws.
Section 13. Proceeds of Dispositions; Expenses. The Pledgors, jointly and
severally, agree to pay to the Secured Parties on demand any and all expenses,
including attorneys' fees and disbursements, incurred or paid by the Secured
Parties in protecting, preserving or enforcing the Secured Parties' rights and
remedies under or in respect of any of the Obligations or any of the Collateral.
After deducting all of said expenses, the residue of any proceeds of collection
or sale or other disposition of Collateral shall, to the extent actually
received in cash, be applied to the payment of the Obligations in such order or
preference as the Secured Parties may determine, proper allowance and provision
being made for any Obligations not then due. Upon the final payment and
satisfaction in full of all of the Obligations and after making any payments
required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the UCC, any excess shall
be returned to the Pledgors. In the absence of final payment and satisfaction in
full of all of the Obligations, the Pledgors shall remain liable for any
deficiency.
Section 14. Pledgors Remain Liable. Anything herein to the contrary
notwithstanding (a) each Pledgor will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, to the
same extent as if this Agreement had not been executed; (b) the exercise by the
Secured Parties of any of their rights hereunder will not release any Pledgor
from any of its duties or obligations under any such contracts or agreements
included in the Collateral; and (c) no Secured Party will have any obligation or
liability under any contracts or agreements included in the Collateral by reason
of this Agreement, nor will any Secured Party be obligated to perform any of the
obligations or duties of any Pledgor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
Section 15. Postponement of Subrogation, etc. Each Pledgor hereby agrees that it
will not exercise any rights against any other Pledgor which it may acquire by
reason of any payment made hereunder, whether by way of subrogation,
reimbursement or otherwise, until the full satisfaction of all Obligations. Any
amount paid to any Pledgor on account of any payment made hereunder prior to the
full and complete satisfaction of the all the Obligations shall be held in trust
for the benefit of the Secured Parties and shall immediately be paid to the
Secured Parties. In furtherance of the foregoing, at all times prior to the full
and complete satisfaction of all of the Obligations, each Pledgor shall refrain
from taking any action or commencing any proceeding against any other Pledgor
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Agreement to any Secured Party.
Section 16. Power of Attorney. Each Pledgor hereby irrevocably designates and
appoints each of the Secured Parties as such Pledgor's true and lawful
attorney-in-fact, and authorizes the Secured Parties, in Pledgor's or each
Secured Party's name, to: (a) at any time an Event of Default exists or has
occurred and is continuing (i) demand payment on receivables or other
Collateral, (ii) enforce payment of receivables by legal proceedings or
otherwise, (iii) exercise all of such Pledgor's rights and remedies to collect
any receivable or other Collateral, (iv) sell or assign any receivable upon such
terms, for such amount and at such time or times as the Secured Parties deems
advisable, (v) settle, adjust, compromise, extend or renew an account, (vi)
discharge and release any receivable, (vii) prepare, file and sign such
Pledgor's name on any proof of claim in bankruptcy or other similar document
against an account debtor or other obligor in respect of any receivables or
other Collateral, (viii) notify the post office authorities to change the
address for delivery of remittances from account debtors or other obligors in
respect of receivables or other proceeds of Collateral to an address designated
by Secured Parties, and open and dispose of all mail addressed to such Pledgor
and handle and store all mail relating to the Collateral; (ix) at any time to
take control in any manner of any item of payment in respect of receivables or
constituting Collateral or otherwise received in or for deposit in any deposit
accounts maintained by such Pledgor or otherwise received by the Secured
Parties, (x) have access to any lockbox or postal box into which remittances
from account debtors or other obligors in respect of receivables or other
proceeds of Collateral are sent or received, (xi) endorse such Pledgor's name
upon any items of payment in respect of receivables or constituting Collateral
or otherwise received by the Secured Parties and deposit the same in Secured
Parties' account for application to the Obligations, (xii) endorse such
Pledgor's name upon any chattel paper, document, instrument, invoice, or similar
document or agreement relating to any receivable or any goods pertaining thereto
or any other Collateral, including any warehouse or other receipts, or bills of
lading and other negotiable or non-negotiable documents, and (xiii) sign such
Pledgor's name on any verification of receivables and notices thereof to account
debtors or any secondary obligors or other obligors in respect thereof and (b)
do all acts and things which are necessary, in the Secured Parties'
determination, to fulfill such Pledgor's obligations under this Agreement and
the other Transaction Documents. Each Pledgor hereby releases each Secured Party
and its officers, employees and designees from any liabilities arising from any
act or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of such Secured Party's own gross
negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
Section 17. Right to Cure. The Secured Parties may, but are not required to, at
any time an Event of Default exists or has occurred and is continuing (a) upon
notice to any Pledgor, cure any material default by such Pledgor under any
material agreement with a third party that materially affects the Collateral,
its value or the ability of the Secured Parties to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of the Secured Parties
therein or the ability of such Pledgor to perform its obligations hereunder or
under the other Transaction Documents, (b) pay or bond on appeal any judgment
entered against any Pledgor, (c) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect to the
Collateral and (d) pay any amount, incur any expense or perform any act which,
in the Secured Parties' judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of the Secured Parties
with respect thereto. The Secured Parties may add any amounts so expended to the
Obligations and charge the applicable Pledgor therefor, such amounts to be
repayable by such Pledgor on demand. The Secured Parties shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of any Pledgor. Any
payment made or other action taken by the Secured Parties under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
Section 18. Governing Law; Consent to Jurisdiction; Jury Trial Waiver. THIS
AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Each of the parties hereto hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of New York, New York County and the United
States District Court of New York, New York County and waives trial by jury in
any action or proceeding with respect to this Agreement. EACH PLEDGOR HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF SUCH PLEDGOR AND SECURED PARTIES IN
RESPECT OF THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE.
Section 19. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or consent to any departure by either of the Pledgors herefrom shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 20. Notices. Unless otherwise provided herein, communications provided
for hereunder shall be in writing and shall be mailed, couriered, telecopied or
delivered, to any party at its address for notices set forth in the Funding
Agreement (and in the case of the Subsidiary, to the address of the Debtor set
forth in the Funding Agreement), or, as to each party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and other communications to the Pledgors or the Secured Parties
shall be deemed given when delivered personally, mailed by certified mail
(postage pre-paid and return receipt requested), sent by overnight courier
service or faxed (transmission confirmed), or otherwise actually received.
Section 21. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provisions shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
Section 22. Relationship with Intercreditor Agreement. ANYTHING HEREIN TO THE
CONTRARY NOTWITHSTANDING, THE LIENS AND SECURITY INTERESTS SECURING THE
OBLIGATIONS AND THE EXERCISE OF ANY RIGHT OR REMEDY WITH RESPECT THERETO ARE
SUBJECT TO THE PROVISIONS OF THAT CERTAIN INTERCREDITOR AGREEMENT DATED AS OF
JUNE ___, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM
TIME TO TIME, THE "INTERCREDITOR AGREEMENT"), AMONG SANDS I, SANDS II, SANDS
III, SANDS IV AND CCGF, AS FIRST LIEN CREDITORS, AND AIRWORKS FUNDING LLLP AND
RS PROPERTIES I LLC, AS SECOND LIEN CREDITORS. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS
OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
Section 23. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which, taken
together, shall constitute one and the same instrument.
Section 24. Miscellaneous. The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each of
the Pledgors and its successors and assigns (including, without limitation,
trustees and liquidators), and shall inure to the benefit of the Secured Parties
and their successors and assigns (including, without limitation, trustees and
liquidators).
[Signatures on Next Page]
IN WITNESS WHEREOF, each of the Secured Party and the Pledgors has
caused this Agreement to be duly executed and delivered under seal by its duly
authorized officer as of the day first above written.
KRONOS ADVANCED TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: COO
KRONOS AIR TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: COO
AIRWORKS FUNDING LLLP
By: Compass Partners, LLC, its general
partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SANDS BROTHERS VENTURE CAPITAL LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: COO
SANDS BROTHERS VENTURE CAPITAL II LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: COO
SANDS BROTHERS VENTURE CAPITAL III LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: COO
SANDS BROTHERS VENTURE CAPITAL IV LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: COO
CRITICAL CAPITAL GROWTH FUND, L.P.
By: Critical Capital, L.P., its General
Partner
By: Critical Capital Corporation, its
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
RS PROPERTIES I LLC
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Manager