Exhibit 10.1

 

CONVERTIBLE NOTE PURCHASE AGREEMENT

 

This Convertible Note Purchase Agreement (this “Agreement”) is dated as of June
2, 2020, by and among [●] (the “Purchaser”), and Crown ElectroKinetics Corp., a
Delaware corporation with offices located at 1110 NE Circle Blvd., Suite 1075,
Corvallis, Oregon 97330 (“Crown” or the “Company”).

 

WHEREAS, Crown is desirous of receiving an investment amount of up to the
aggregate sum of [●] Dollars ($[●]) from the Purchaser (the “Investment
Amount”);

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and/or Rule 506 promulgated thereunder, Crown desires to
issue and sell to Purchaser, and Purchaser desires to purchase from Company,
securities of such Company as more fully described in this Agreement; and

 

WHEREAS, the Purchaser desires that the Company grant it a Warrant (the
“Warrant”) for the purchase of a calculable number of shares of common stock at
a calculable price per share on terms and conditions that the Purchaser and the
Company are willing to accept.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Note (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.6.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Board of Directors” means the board of directors of Crown.

 

“Business Day” means any day except any Saturday, any Sunday, any day that is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

“Closing Date” means the Business Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto in connection
with the Closing, and all conditions precedent to (i) the Purchaser’s
obligations to pay the Subscription Amount as to the Closing and (ii) the
Company’s obligations to deliver the Securities as of the Closing, in each case,
have been satisfied or waived.

 

Redwood 43000 NPA September 29 2017

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“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

“Closing Shares” means 100,000 shares of the Company’s Common Stock to be sold
and issued to the Purchaser at the Closing in connection with the Purchaser’s
purchase of a Note in the principal amount of Two Hundred Fifty Thousand and
00/100ths Dollars.

 

“Closing Statement” means the Closing Statement provided by Crown to Purchaser.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Company Counsel” means Pryor Cashman LLP.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.

 

“Equity Incentive Plan” means a Company’s existing equity incentive plan, as
amended.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP” means United States generally accepted accounting principles.

 

“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in
excess of $250,000 (other than trade accounts payable or for services provided
incurred in the ordinary course of business) and (y) the present value of any
lease payments in excess of $250,000 due under leases required to be capitalized
in accordance with GAAP.

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

 

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right, or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

 

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Note” means the 12% Senior Convertible Promissory Note due, subject to the
terms therein, twelve (12) months from date of issuance, issued by Crown to
Purchaser hereunder, in the form of Exhibit A attached hereto.

 

“Parent” shall have the meaning ascribed to such term in Section 4.2.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.9.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Securities” means the Closing Shares, the Note and the Warrant.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act.

 

“Transaction Documents” means this Agreement, the Note and the Warrant.

 

“Warrant” means that certain Common Stock Purchase Warrant of the Company
granted to the Holder at the Closing, the form of which Warrant is attached
hereto as Exhibit B.

 

ARTICLE II.
PURCHASE AND SALE

 

2.1 Purchase. The Purchaser will pay the Investment Amount in exchange for the
sale and issuance of the Note, the Closing Shares and the Warrant to the
Purchaser on the date hereof (hereinafter the “Closing”). The Company and the
Purchaser agree that the Investment Amount paid by the Purchaser pursuant to
this Agreement shall be for all of the Securities acquired by the Purchaser
pursuant to this Agreement, and the Company and the Purchaser agrees to allocate
the Investment Amount among the Securities for U.S. federal and applicable state
income tax purposes as set forth on Schedule 2.1 (the “Allocation”). The Company
and the Purchaser shall not take any position inconsistent with the Allocation
for income tax purposes unless otherwise required by law.

 

2.2 Deliveries. On the Closing Date (except as noted or amended by mutual
agreement),

 

(a) Crown shall deliver or cause to be delivered to the Purchaser the following:

 

(i) this Agreement duly executed by Crown;

 

(ii) the Note duly executed by Crown;

 

(iii) the Warrant duly executed by Crown;

 

(v) the Closing Shares; and

 

(vi) such other documents, certificates, instruments, and other writings as
Purchaser’s counsel may reasonably request.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(b) Purchaser shall deliver or cause to be delivered to the Crown the following:

 

(i) this Agreement duly executed by Purchaser; and

 

(ii) such other documents, certificates, instruments, and other writings as
Crown’s counsel may reasonably request.

 

2.3 Closing Conditions.

 

(a) The obligations of Crown hereunder in connection with the Closing are
subject to the following conditions being satisfied:

 

(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchaser contained herein (unless, as of
a specific date therein, in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Purchaser required to be
performed at or prior to the applicable Closing Date shall have been performed;
and

 

(iii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

 

(b) The obligations of the Purchaser hereunder in connection with the Closing
are subject to the following conditions being satisfied:

 

(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of Crown contained herein (unless, as of a
specific date therein, in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants, and agreements of Crown required to be
performed at or prior to the applicable Closing Date shall have been performed;

 

(iii) the delivery by Crown of the items set forth in Section 2.2(a) of this
Agreement; and

 

(iv) there shall have been no Material Adverse Effects with respect to the
Company since the date hereof.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the
“Disclosure Schedules,” which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to the Purchaser as of the date hereof.

 

(a) Subsidiaries. The Company represents and warrants that it has no
subsidiaries.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(b) Organization and Qualification. Crown is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company is not in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. The Company is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document; (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company; or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.

 

(c) Authorization; Enforcement. Crown has the requisite power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
each of the other Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of such Company and no
further action is required by such Company, its Board of Directors,
stockholders, or members, as applicable, in connection herewith or therewith.
This Agreement and each other Transaction Document to which it is a party has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally; (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies; and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(d) No Conflicts. The execution, delivery and performance of Crown of this
Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s certificate or articles of
incorporation, bylaws or other organizational or charter documents; (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
(except Liens in favor of the Purchaser) upon any of the properties or assets of
the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which such Company is a party or by
which any property or asset of the Company is bound or affected; or (iii)
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(e) Filings, Consents, and Approvals. Crown is not required to obtain any
consent, waiver, authorization, or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local, or other
governmental authority or other Person in connection with the execution,
delivery, and performance by the Company of the Transaction Documents.

 

(f) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid, and non-assessable, free and clear
of all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents.

 

(g) Capitalization. The capitalization of Crown is as set forth on Schedule
3.1(g) of the Disclosure Schedules, which Schedule 3.1(g) of the Disclosure
Schedules shall also include the number of shares of Common Stock owned
beneficially, and of record, by Affiliates of the Company as of the date hereof.
Crown has not issued any capital stock other than as listed on Schedule 3.1(g)
of the Disclosure Schedules, other than pursuant to the exercise of employee
stock options under any applicable Equity Incentive Plan, the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of Closing. Other than with regard to Exempt
Issuances (as that term is defined in Section 5(c) of the Note), no Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Securities and
securities issued to employees, officers or directors, or former employees,
officers or directors and other service providers or former service providers of
each Company pursuant to such Equity Incentive Plan or otherwise, there are no
outstanding options, warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents. The issuance and sale of the Securities will not obligate any
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchaser) and will not result in a right of any holder of that
Company’s securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and non-assessable,
have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder or other equity holder, as applicable, the
Board of Directors or others is required for the issuance and sale of the
Securities. Other than as set forth on Schedule 3.1(g) of the Disclosure
Schedules, there are no stockholders’ agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(h) SEC Filings. The Company has timely filed or otherwise furnished (as
applicable) all registration statements, prospectuses, forms, reports,
definitive proxy statements, schedules, statements and documents required to be
filed or furnished by it under the Securities Act or the Exchange Act, as the
case may be, together with all certifications required pursuant to the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) (such documents and any
other documents filed by the Company with the Commission, as have been
supplemented, modified or amended since the time of filing, collectively, the
“Company SEC Documents”). As of their respective filing dates the Company SEC
Documents (i) did not (or with respect to Company SEC Documents filed after the
date hereof, will not) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading and (ii) complied in all material respects with the
applicable requirements of the Exchange Act or the Securities Act, as the case
may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the
Commission thereunder. To the knowledge of the Company, none of the Company SEC
Documents is the subject of ongoing Commission review or outstanding Commission
comment. All of the audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the Company
SEC Documents (collectively, the “Company Financial Statements”) (A) have been
or will be, as the case may be, prepared from, are in accordance with, and
accurately reflect the books and records of the Company in all material
respects, (B) have been or will be, as the case may be, prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of interim financial
statements, for normal and recurring year-end adjustments that are not material
in amount or nature and as may be permitted by the Commission on Form 10-Q, Form
8-K or any successor or like form under the Exchange Act) and (C) fairly present
in all material respects the consolidated financial position and the
consolidated results of operations, cash flows and changes in stockholders’
equity of the Company as of the dates and for the periods referred to therein.

 

(i) Material Changes. (i) There has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect; (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company Financial Statements pursuant to
GAAP; (iii) the Company has not altered its method of accounting; (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock; and (v) the Company has not
issued any equity securities to any officer, director or Affiliate except for
the issuance of the Securities contemplated by this Agreement, or the Exempt
Issuances. No event, liability, fact, circumstance, occurrence, or development
has occurred or exists or is reasonably expected to occur or exist with respect
to the Company or its business, properties, operations, assets, or financial
condition that would be required to be disclosed by the Company.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(j) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, or any of its respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”), which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect, and neither the Company, nor any director
or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim
of breach of fiduciary duty.

 

(k) Labor Relations. No labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the
Company’s employees is a member of a union that relates to such employee’s
relationship with the Company, and the Company is not a party to a collective
bargaining agreement, and the Company believes that its relationships with its
employees are good. To the knowledge of the Company, no executive officer of the
Company is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company to any
liability with respect to any of the foregoing matters. The Company is in
compliance with all U.S. federal, state, local, and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(l) Compliance. Except as set forth in Schedule 3.1(l) of the Disclosure
Schedules, the Company: (i) is not in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company under), nor has the Company
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is not in
violation of any judgment, decree or order of any court, arbitrator or other
governmental authority or (iii) is not and has not been in violation of any
statute, rule, ordinance or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have
or reasonably be expected to result in a Material Adverse Effect.

 

(m) Regulatory Permits. The Company possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses, as
applicable or on Schedule 3.1(m) of the Disclosure Schedules, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company has
received any notice of proceedings relating to the revocation or modification of
any Material Permit.

 

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(n) Title to Assets. The Company has good and marketable title in fee simple to
all real property owned by it and good and marketable title in all personal
property owned by it that is material to the business of the Company, in each
case free and clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and (ii) Liens for
the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is
neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company are held by it under valid, subsisting, and
enforceable leases with which the Company is in compliance.

 

(o) Intellectual Property. The Company has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights as described on Schedule 3.1(o) of the Disclosure
Schedules as necessary or required for use in connection with their business as
presently conducted and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”). The Company
has not received a notice (written or otherwise) that any of the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement. The Company has not received a written notice of a claim or otherwise
has any knowledge that the Intellectual Property Rights violate or infringe upon
the rights of any Person, except as could not have or reasonably be expected to
not have a Material Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The
Company has taken reasonable security measures to protect the secrecy,
confidentiality, and value of all of its intellectual properties, except where
failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(p) Transactions with Affiliates and Employees. Except as set forth in Schedule
3.1(p) of the Disclosure Schedules and for the Exempt Issuances, none of the
officers or directors of the Company and, to the knowledge of the Company, none
of the employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers, and directors),
including any contract, agreement or other arrangement, providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered; (ii) reimbursement for expenses incurred on behalf of the
Company; and (iii) other employee benefits, including stock option or stock
award agreements under the Equity Incentive Plan.

 

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(q) Internal Controls; Sarbanes-Oxley Act. The Company has designed and
maintains a system of internal controls over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting for the
Company. The Company (i) has designed and maintains disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
ensure that material information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s
rules and forms and is accumulated and communicated to the Company’s management
as appropriate to allow timely decisions regarding required disclosure and
(ii) has disclosed to the Company’s auditors and the audit committee of the
Company’s board of directors (and made summaries of such disclosures available
to Purchaser) (A) any significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting that are
reasonably likely to adversely affect in any material respect the Company’s
ability to record, process, summarize and report financial information and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting. The Company is in compliance in all material respects with
all effective provisions of the Sarbanes-Oxley Act. Neither the Company nor, to
the knowledge of the Company, any director, officer, auditor, accountant or
representative of the Company has received or otherwise had or obtained
knowledge of any substantive complaint, allegation, assertion or claim, whether
written or oral, that the Company has engaged in questionable accounting or
auditing practices. No current or former attorney representing the Company has
reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company, or any of the Company’s
officers, directors, employees or agents, to the current Company’s board of
directors or any committee thereof or to any current director or executive
officer of the Company. To the knowledge of the Company, no employee of the
Company has provided or is providing information to any law enforcement agency
regarding the commission or possible commission of any crime or the violation or
possible violation of any applicable legal requirements of the type described in
Section 806 of the Sarbanes-Oxley Act by the Company. Neither the Company nor,
to the knowledge of the Company, any director, officer, employee, contractor,
subcontractor or agent of the Company, has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against an employee of
the Company in the terms and conditions of employment because of any lawful act
of such employee described in Section 806 of the Sarbanes-Oxley Act.

 

(r) Certain Fees. Other than as set forth on Schedule 3.1(r) of the Disclosure
Schedules, no brokerage or finder’s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchaser shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.

 

(s) Private Placement. Assuming the accuracy of the Purchaser’s representations
and warranties set forth in Section 3.2, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchaser as contemplated hereby.

 

(t) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

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(u) Registration Rights. Other than with regard to the Exempt Issuances, no
Person has any right to cause any Company to affect the registration under the
Securities Act of any securities of the Company.

 

(v) [Reserved.]

 

(w) [Reserved.]

 

(x) Disclosure. The Company understands and confirms that the Purchaser will
rely on the representations herein in effecting transactions in securities of
the Company. All of the disclosures furnished by or on behalf of the Company to
the Purchaser regarding the Company, and their business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that the Purchaser has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.

 

(y) No Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act which would require the registration of any
such securities under the Securities Act.

 

(z) No General Solicitation. Neither the Company nor any person acting on behalf
of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to the Purchaser within the meaning of Rule 501 under the Securities
Act.

 

(aa) Foreign Corrupt Practices. The Company has not to its knowledge, nor any
agent or other person acting on behalf of the Company: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds; (iii) failed to disclose fully any contribution made by the
Company (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law; or (iv) violated in any material respect
any provision of FCPA.

 

(bb) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(bb)
of the Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm is registered with the Public Company Accounting Oversight
Board.

 

(cc) No Disagreements with Accountants and Lawyers. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the Company and the accountants and lawyers formerly or presently
employed by the Company.

 

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(dd) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by the Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities. The Company further represents to the
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

 

(ee) [Reserved.]

 

(ff) Stock Option Plans. Each stock option granted by each Company under the
Equity Incentive Plan was granted (i) in accordance with the terms of the Equity
Incentive Plan and (ii) with an exercise price at least equal to the fair market
value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted under the Equity
Incentive Plan has been backdated. The Company has not knowingly granted, and
there is no and has been no Company policy or practice to knowingly grant, stock
options prior to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material information regarding
the Company or their financial results or prospects.

 

(gg) Office of Foreign Assets Control. Neither the Company, and to the Company’s
knowledge, no director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”).

 

(hh) U.S. Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Code, and the Company shall so certify upon the Purchaser’s request.

 

(ii) Bank Holding Company Act. Neither the Company nor any of Affiliates is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to
regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Affiliates owns or controls,
directly or indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by
the Federal Reserve. Neither the Company nor any of its Affiliates exercises a
controlling influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.

 

(jj) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company (i) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

 

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(kk) Seniority. Except as set forth in Schedule 3.1(kk) of the Disclosure
Schedules, as of the Closing Date, no Indebtedness or other claim against the
Company is senior to the Note in right of payment, whether with respect to
interest or upon liquidation or dissolution, or otherwise, other than
indebtedness secured by purchase money security interests (which is senior only
as to underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby).

 

(ll) [Reserved.]

 

(mm) Money Laundering. The operations of the Company are and have been conducted
at all times in compliance with applicable financial record-keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and
regulations thereunder (collectively, the “Money Laundering Laws”), and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary with
respect to the Money Laundering Laws is pending or, to the knowledge of the
Company or any Subsidiary, threatened.

 

(nn) Related Party Transactions. All related party transactions have been
consummated in accordance with all applicable laws and governing agreements,
including, without limitation, those laws applicable to the diversion of a
corporate opportunity of each Company or any of Affiliate of such Company or any
Affiliate of any principal of that Company. In each instance, the particular
related party transaction has been approved by a majority of the disinterested
directors of the Company, after full disclosure has been made to each board
member of the pertinent facts of the proposed transaction. Each such related
party transaction has been consummated on terms and conditions that are equal or
more favorable to the Company than a transaction with an unaffiliated third
party knowing all the facts and under no compulsion to consummate such
transaction.

 

Purchaser acknowledges and agrees that the representations contained in Section
3.1 shall not modify, amend or affect the Company’s rights to indemnification or
to rely on Purchaser’s representations and warranties contained in this
Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the
transactions contemplated hereby.

 

3.2 Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as
follows (unless as of a specific date therein):

 

(a) Organization; Authority. Purchaser is either an individual or an entity duly
incorporated or formed, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company, or similar action, as applicable, on the part of the Purchaser. Each
Transaction Document to which the Purchaser is a party has been duly executed by
the Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally; (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies; and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

13 

 

 

(b) Own Account. Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling the
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
the Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of the Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities in compliance with applicable federal and state securities laws).
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.

 

(c) Purchaser Status. At the time Purchaser was offered the Securities, it was,
and as of the date hereof it is an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) Experience of Such Purchaser. Purchaser, either alone or together with its
representatives, has such knowledge, sophistication, and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

 

(e) General Solicitation. Purchaser is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine, or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.

 

(f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, Purchaser has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with
Purchaser, executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that
Purchaser first received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material terms of the
transactions contemplated hereunder and ending immediately prior to the
execution hereof. Notwithstanding the foregoing, in the case of Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. Other than to disclosures to Purchaser’s financial,
accounting and legal advisors, Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

14 

 

 

The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect Purchaser’s rights to
indemnification or to rely on the Company’s representations and warranties
contained in this Agreement or any representations and warranties contained in
any other Transaction Document or any other document or instrument executed
and/or delivered in connection with this Agreement or the consummation of the
transactions contemplated hereby.

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

(a) The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, transfers to an
Affiliate of the Purchaser, transfers to the Company or in connection with a
pledge as contemplated in Section 4.1(b), the Company may reasonably request the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. The Company shall bear the costs of each such opinion.

 

(b) The Purchaser agrees to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

15 

 

 

The Company acknowledges and agrees that Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and, if required under the terms of such arrangement, Purchaser
may transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party, or pledgor shall
be required in connection therewith. Further, no notice shall be required of
such pledge. At the Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities.

 

4.2 [Reserved.]

 

4.3 [Reserved.]

 

4.4 Integration. The Company shall not sell, offer for sale, or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities.

 

4.5 [Reserved.]

 

4.6 Stockholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, or the Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchaser.

 

4.7 [Reserved.]

 

4.8 Use of Proceeds. The Company shall use the net proceeds hereunder as working
capital.

 

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16 

 

 

4.9 Indemnification of Purchaser. Subject to the provisions of this Section 4.9,
the Company, will indemnify and hold Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants, or agreements made by each Company in this Agreement or
in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties, or covenants under the
Transaction Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such Purchaser Party of
state or federal securities laws or any conduct by such Purchaser Party which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to such Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel,
a material conflict on any material issue between the position of the Company
and the position of such Purchaser Party, in which case the Companies shall be
responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will be liable to any Purchaser Party under this
Agreement (y) for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (z) to the extent, but only to the extent that a loss, claim, damage
or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants, or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents. The
indemnification required by this Section 4.9 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.

 

ARTICLE V.
MISCELLANEOUS

 

5.1 Public Company Event; Go-Public Financing. As soon as practicable following
the Closing, the Company shall engage the services of an investment bank,
reasonably acceptable to it and to the Purchaser for the purpose of becoming
subject to Section 13 or 15(d) of the Exchange Act within 45 days of the date
hereof through the filing of its Registration Statement on Form S-1 with the
Securities and Exchange Commission and, thereafter, prosecuting the Registration
Statement to effectiveness (the “Public Company Event”) and using commercially
reasonable efforts to cause its class of common stock to be listed on the Nasdaq
Stock Market. Following the consummation of the transactions contemplated
herein, but prior to the filing of the Registration Statement, the Company will
use commercially reasonable efforts to obtain such additional debt or equity
financing as may be required to effectuate the Public Company Event. Upon the
consummation of the Public Company Event, the Company will have approximately 13
million shares of its Common Stock issued and outstanding.

 

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17 

 

 

5.2 Fees and Expenses. The Company shall deliver to the Purchaser, prior to the
Closing, a completed and executed copy of the Closing Statement, attached hereto
as Annex A. Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants, and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Purchaser.

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits, and schedules.

 

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto at or prior to 12:00 noon (New York
City time) on a Business Day; (ii) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Business Day or later than 12:00 noon (New York City time) on any
Business Day; (iii) the second (2nd) Business Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service; or (iv) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the
signature pages attached hereto.

 

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented, or amended except in a written instrument signed by the Company
and the Purchaser. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Purchaser (other than by merger). The Purchaser
may assign any or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers any Securities.

 

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18 

 

 

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, New York County, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If either party shall commence an action, suit, or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation, and prosecution of such action or proceeding.

 

5.10 Survival. The representations and warranties contained herein shall survive
the Closings and the delivery of the Securities.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to each other party, it being understood that the parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page was an original thereof.

 

5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

 

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19 

 

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any
of the Securities is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Purchaser and Company
will be entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at law
would be adequate.

 

5.16 Payment Set Aside. To the extent that Company makes a payment or payments
to Purchaser pursuant to any Transaction Document or Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to Company, a
trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then, to the extent of any such restoration, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

 

5.17 Usury. To the extent it may lawfully do so, Company hereby agrees not to
insist upon or plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
claim, action or proceeding that may be brought by Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date thereof forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to the Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by the Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at the Purchaser’s election.

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

20 

 

 

5.18 [Reserved.]

 

5.19 Liquidated Damages. Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

5.20 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

 

5.21 Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments thereto.

 

5.22 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

(Signature Pages Follow)

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

21 

 

 

IN WITNESS WHEREOF, the Company has caused this Convertible Note Purchase
Agreement to be duly executed by its authorized signatories as of the date first
indicated above.

 

CROWN ELECTROKINETICS CORP.

 

By:                                                                          

Name: Doug Croxall

Title: Chief Executive Officer

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

22 

 

 

[PURCHASER SIGNATURE PAGES TO

CONVERTIBLE NOTE PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Convertible Note Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

  

Name of Purchaser: [●]

 

Signature of Authorized Signatory of Purchaser:
                                                                                 

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

E-mail Address of Authorized Signatory:

 

Address for Notice to Purchaser:

 

 

 

 

Attention: 

Email:

 

With a copy to (which shall not constitute notice) to:

 

 

 

Closing Principal Amount: $[●]

 

Closing Subscription Amount: $[●]

 

EIN Number:

 

 

CROWN CONVERTIBLE NOTE PURCHASE AGREEMENT

23