SECURITY AGREEMENT
Exhibit
5
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 000 Xxxxxx
Xxxxxx, Xxx 000, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the “Debtor”)
and
Kronos Air Technologies, Inc. a Nevada corporation with its chief executive
office and principal place of business located at 00000 XX 00xx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000 (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;
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(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.
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(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 00-0000000,
(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 00-0000000
(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.
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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 §
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
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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.
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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
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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.
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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.
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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]
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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.
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KRONOS
ADVANCED TECHNOLOGIES, INC.
By: /s/
Xxxxxxx X. Xxxxxx
Name: Xxxxxxx
X. Xxxxxx
Title: COO
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KRONOS
AIR TECHNOLOGIES, INC.
By:
/s/ Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
COO
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AIRWORKS
FUNDING LLLP
By:
Compass Partners, LLC, its general partner
By: /s/
Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx
X. Xxxxxxx
Title: President
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SANDS
BROTHERS VENTURE CAPITAL LLC
By: /s/
Xxxxx X. Xxxxx
Name: Xxxxx
X. Xxxxx
Title: COO
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SANDS
BROTHERS VENTURE CAPITAL II LLC
By: /s/
Xxxxx X. Xxxxx
Name: Xxxxx
X. Xxxxx
Title: COO
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SANDS
BROTHERS VENTURE CAPITAL III LLC
By:
/s/ Xxxxx X. Xxxxx
Name: Xxxxx
X. Xxxxx
Title: COO
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SANDS
BROTHERS VENTURE CAPITAL IV LLC
By:
/s/ Xxxxx X. Xxxxx
Name: Xxxxx
X. Xxxxx
Title: COO
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CRITICAL
CAPITAL GROWTH FUND, L.P.
By:
Critical Capital, L.P., its General Partner
By:
Critical Capital Corporation, its General Partner
By:
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx
X. Xxxxx
Title: Chairman
By: /s/
Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx
X. Xxxxxxxx
Title: President
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By:
/s/ Xxxx Xxxx
Name:
Xxxx Xxxx
Title:
Manager
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