PROXY
THIS PROXY (this "Proxy"), 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 a Voting Agreement of even
date herewith (the "Voting Agreement") pursuant to which each Security Holder
has agreed to vote (i) in favor of a slate of directors of the Company's board
of directors as proposed by AirWorks Funding LLLP ("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 (as below defined) to convert the entire
amount of the Financing (as below defined) into shares of common stock of the
Company as provided in the Funding Agreement (as below defined), (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., or refrain from taking, certain actions to allow the Company to
obtain secured convertible debt financing from 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") pursuant to the terms of that certain Funding Agreement of even
date herewith (the "Funding Agreement");
WHEREAS, each Security Holder owns securities of the Company and
desires to enter into this Proxy pursuant to which he, she or it agrees, among
other things, that Richard E. Perlman may vote all of the Subject Shares (as
defined in the Voting Agreement) held by such Security Holder in favor of the
actions contemplated by the Voting Agreement; and
WHEREAS, the Lenders would not provide the Financing in the absence of
this Proxy, and the Security Holders hereby acknowledge that each of them will
derive a benefit as a result of the Financing.
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. Proxy. By executing this Proxy, each Security Holder hereby irrevocably
appoints Richard E. Perlman, the attorney, agent and proxy for the undersigned
and in the name, place and stead of the undersigned, in respect of any of the
matters set forth in clauses (i) through (vi) of the first "Whereas" clause
above set forth, to vote or, if applicable, to give written consent, with
respect to all the Subject Shares owned by such Security Holder which such
Security Holder is or may be entitled to vote at any meeting of the Company held
after the date hereof, whether annual or special and whether or not an adjourned
meeting, or, if applicable, to give written consent with respect thereto. This
proxy is coupled with an interest, shall be irrevocable and binding on any
successor in interest of each Security Holder and shall not be terminated by
operation of law upon the occurrence of any event, including the death or
incapacity of any Security Holder. The proxy granted hereby and set forth herein
shall operate to revoke any prior proxy as to the Subject Shares heretofore
granted by any Security Holder. This proxy shall terminate on the Expiration
Date (as defined in the Voting Agreement). This proxy has been executed in
accordance with Section 78.355 of the Nevada Revised Statutes.
2. General Provisions.
(a) Amendments. This Proxy 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 Proxy to a Section, such
reference shall be to a Section of this Proxy unless otherwise indicated. The
headings contained in this Proxy are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Proxy. Wherever the
words "include, or "including" are used in this Proxy, they shall be deemed to
be followed by the words "without limitation."
(d) Counterparts. This Proxy 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 Proxy (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 Proxy 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.
3. Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Proxy (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.
4. Severability. In the event that any provisions of this Proxy or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Proxy 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 Proxy with a valid and enforceable provision that will
achieve, to the fullest extent possible, the original intent of the parties.
5. Fiduciary Duties. Each Security Holder is signing this Proxy 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 Proxy 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.
***************
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/ Richard F. Tusing
-----------------------------
Name: Richard F. Tusing
Title: COO
Address: 464 Common Street, Suite 301
Belmont, MA 02478
STOCKHOLDERS:
Security Holder Subject Shares
- --------------- --------------
Options to Purchase Shares
Shares of Stock Held of Stock Held by Security
by Security Holder Holder
/s/ Daniel R. Dwight 1,201,926 7,191,206
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Daniel R. Dwight
Address: 464 Common Street, Suite 301
Belmont, MA 02478
/s/ James McDermott 294,118 638,459
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James McDermott
Address: 464 Common Street, Suite 301
Belmont, MA 02478
/s/ Milton Segal - 573,500
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Milton Segal
Address: 464 Common Street, Suite 301
Belmont, MA 02478
/s/ Richard Tusing 852,752 3,391,756
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Richard Tusing
Address: 464 Common Street, Suite 301
Belmont, MA 02478
/s/ Igor Krichtafovitch 1,053,000 4,955,726
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Igor Krichtafovitch
Address: 15241 NE 90th Street
Redmond, WA 98052
/s/ Richard A. Sun 4,587,400 -
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Richard A. Sun
Address: 10182 Castlewood Lane
Oakton, VA 22124
/s/ Richard A. Sun 601,500 -
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Richard A. Sun, as attorney-in-fact for
Fredric R. Gumbinner
Address: 11200 Sorrel Ridge Lane
Oakton, VA 22124