EXHIBIT 99.3
SECURED PROMISSORY NOTE
$1,000,000.00 May 9, 2003
FOR VALUE RECEIVED, the undersigned, Kronos Advanced Technologies, Inc., a
Nevada corporation ("Borrower") and Kronos Air Technologies, Inc., a Nevada
corporation, promise to pay to the order of FKA Distributing Co. d/b/a HoMedics,
Inc., a Michigan corporation ("Lender"), at the office of the Lender in the
State of Michigan, One Million and 00/100 ($1,000,000.00) Dollars (U.S.) as set
forth herein. Interest on the unpaid principal balance from the date of this
Note shall accrue at the rate of 6% per annum until maturity, whether by
acceleration or otherwise, or until Default, as later defined, and after that at
a default rate equal to the rate of interest otherwise prevailing under this
Note plus 3% per annum (but in no event in excess of the maximum rate permitted
by law). Interest shall be calculated for the actual number of days the
principal is outstanding on the basis of a 365/366 day year. No payments shall
be required under this Note until August 1, 2004 [the first payment date of that
certain Secured Promissory Note in the amount of $2,400,000, dated May 8, 2003
executed by Borrower in favor of Lender (the "$2,400,000 Note")]. Interest
accrued during such period shall become part of the principal balance of the
Note and shall be included as principal for purposes of calculating
amortization. Payment installments of principal and accrued interest due under
this Note shall begin on August 1, 2004 and continuing on the first day of each
November, February, May and August until paid in full over the remaining period
of this Note. The entire remaining unpaid balance of principal and accrued
interest shall be payable on the fifth (5th) anniversary of the $2,400,000 Note.
If this Note is issued on or after the first anniversary date of the $2,400,000
Note, payments shall be made in equal quarterly installments beginning on the
first day of the first quarter month (August, November, February or May)
immediately following the issue date, and continuing until the fifth (5th)
anniversary of the $2,400,000 Note. A late installment charge equal to 5% of
each late installment may be charged on any installment payment not received by
the Lender within 10 calendar days after the installment due date, but
acceptance of payment of this charge shall not waive any Default under this
Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned to the Lender, and any and all modifications, renewals or extensions
of it, whether joint or several, contingent or absolute, now existing or later
arising, and however evidenced (collectively "Indebtedness") are secured by and
the Lender is granted a security interest in all property of the undersigned
from time to time in the possession of the Lender and by any other collateral,
rights and properties described in each and every mortgage, security agreement,
pledge, assignment and other security or collateral agreement which has been, or
will at any time(s) later be, executed by the undersigned to or for the benefit
of the Lender (collectively "Collateral").
If the undersigned (a) fail to pay this Note or any of the Indebtedness when due
(after the expiration of the 30 day grace period as set forth in that certain
Master Loan and Investment Agreement dated May 8, 2003 among the parties
("Master Loan Agreement")), by maturity, acceleration or otherwise; or (b) fail
to comply (after the expiration of the 30 day grace period as set forth in the
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Master Loan Agreement) with any of the terms or provisions of any agreement
between the undersigned and the Lender; or (c) become insolvent or the subject
of a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition proceeding, ceases doing business as a going
concern, dissolves or, is the subject of a dissolution, merger or consolidation;
or (d) if any warranty or representation made by the undersigned in connection
with this Note or any of the Indebtedness shall be discovered to be false or
misleading in any material respect; (e) or if there is any termination, notice
of termination, or breach of any guaranty, pledge, collateral assignment or
subordination agreement relating to all or any part of the Indebtedness; or (f)
if there is any failure by the undersigned to pay when due (after the expiration
of the 30 day grace period as set forth in the Master Loan Agreement) any of its
indebtedness (other than to the Lender) in excess of $25,000 or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there is filed
or issued a levy or writ of attachment or garnishment or other like judicial
process upon the undersigned or any of the Collateral, then the Lender, upon the
occurrence of any of these events (each a "Default"), may at its option declare
any or all of the Indebtedness to be immediately due and payable, sell or
liquidate all or any portion of the Collateral, set off against the Indebtedness
any amounts owing by the Lender to the undersigned, charge interest at the
default rate provided in the document evidencing the relevant Indebtedness and
exercise any one or more of the rights and remedies granted to the Lender by any
agreement with the undersigned or given to it under applicable law. All payments
under this Note shall be in immediately available United States funds, without
setoff or counterclaim.
This Note shall bind the undersigned, its successors and assigns.
The undersigned waive presentment, demand, protest, notice of dishonor, notice
of demand or intent to demand, notice of acceleration or intent to accelerate,
and all other notices, and agree that no extension or indulgence to the
undersigned or release shall affect the obligations of any of the undersigned.
The undersigned agree to reimburse the holder or owner of this Note for any and
all costs and expenses (including without limit, court costs, legal expenses and
reasonable attorney fees, whether inside or outside counsel is used, whether or
not suit is instituted and, if suit is instituted, whether at the trial court
level, appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or incurred
in any other matter or proceeding relating to this Note.
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The undersigned acknowledge and agree that there are no contrary agreements,
oral or written, establishing a term of this Note and agrees that the terms and
conditions of this Note may not be amended, waived or modified except in a
writing signed by an officer of the Lender expressly stating that the writing
constitutes an amendment, waiver or modification of the terms of this Note. As
used in this Note, the word "undersigned" means each maker signing this Note. If
any provision of this Note is unenforceable in whole or part for any reason, the
remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE UNDERSIGNED AND THE LENDER ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS
A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE
OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
KRONOS ADVANCED TECHNOLOGIES, INC.,
A NEVADA CORPORATION
By: /s/ Daniel R. Dwight
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Name: Daniel R. Dwight
Its: President and CEO
KRONOS AIR TECHNOLOGIES, INC.,
A NEVADA CORPORATION
By: /s/ Daniel R. Dwight
--------------------------------------
Name: Daniel R. Dwight
Its: President and CEO
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