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Exhibit 10.11    
    

THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR
(B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE. 

KRONA ACQUISITION CORPORATION

SECURED PROMISSORY NOTE  

May    ,
2007

Seattle, Washington 

        FOR
VALUE RECEIVED, KRONA ACQUISITION CORPORATION, a Delaware corporation, ("Borrower") promises to pay to the order
of                        ("Lender") the principal amount
of                        
($            ), together with interest on the unpaid principal amount at the rate of Ten Percent (10%) per annum based on a 365-day year, all upon the terms set forth below. This
secured promissory note (the "Note") is issued pursuant to that certain Financing Agreement, dated as of May    , 2007, executed by Borrower, Paulson Investment Company, Inc., as
placement agent and High Capital Funding, LLC, as lead investor (the "Financing Agreement"), with Lender's signature either affixed thereon on incorporated by reference as evidenced by Lender's
signature on the accompanying Subscription Agreement. This Note is subject to the terms and conditions of the Financing Agreement. To the extent that any of the terms specifically set forth in the
Financing Agreement is inconsistent with the
provisions of this Note specifically relating to such matters, the Financing Agreement shall govern with respect to such inconsistencies. To the extent relevant to this Note, the terms of the
Financing Agreement are incorporated herein by reference as though fully set forth herein. This Note is one of a series of notes, aggregating up to Two Million Five Hundred Thousand Dollars
($2,500,000.00) in principal amount of notes being offered and sold pursuant to the Financing Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in
the Financing Agreement. 

        1.    Maturity.    Accrued interest shall be paid in arrears on a quarterly basis, beginning June 30, 2007 and
every three months thereafter. Except as otherwise provided herein, the principal hereunder shall become due and payable in full on October 31, 2007 (the "Maturity Date"), except that in the
event of the closing of a Qualified Offering before the Maturity Date, the principal amount and accrued and unpaid interest shall become due and payable Three (3) business days following the
closing of such Qualified Offering. The foregoing notwithstanding, Paulson Investment Company, Inc., the placement agent for the Notes Offering (the "Placement Agent"), shall have the right to
extend the October 31, 2007 Maturity Date for up to Three (3) One (1)-month periods (the "Extended Maturity Date"), on such terms as the Placement Agent shall determine. Any amounts that
remain unpaid after the Maturity Date or the Extended Maturity Date, if so extended, shall thereafter bear interest at the rate of Eighteen Percent (18%) per annum. 

        2.    Prepayment.    Borrower may prepay any or all amounts due under this Note at any time without penalty. Any
partial prepayment shall be applied first to interest and the remaining balance of such payment, if any, to principal. 

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        3.    Method of Payment.    Any payment of principal or interest hereunder shall be made by certified or bank
cashier's check unless Holder has provided Borrower with appropriate wire instructions, in which event, the payment shall be made by wire transfer of "same day" funds. For the purpose of any interest
calculation, payment shall be deemed made when the check is sent by overnight delivery or when the wire is sent. Any partial payment shall be applied first to accrued and unpaid interest and
thereafter to a reduction of principal. If this Note, or any payment hereunder, falls due on a Saturday, Sunday or a day that is a public holiday in the State of California, any payment due hereunder
shall be made on the next succeeding business day and such additional time shall be included in the computation of any interest payable hereunder. 

        4.    Security.    Repayment of this Note shall be secured by a lien on all tangible and intangible assets of the
Borrower and its consolidated subsidiaries as described in that certain Security Agreement and the Security and Pledge Agreement executed contemporaneously herewith. 

        5.    Conditional Right to Convert.    If no Qualified Offering shall have occurred by the Maturity Date or the final
Extended Maturity Date, as the case may be, Lender or any permitted assignee of Lender as described below ("Holder") shall have the right, at any time thereafter until all principal of, and accrued
but unpaid interest on, the Note shall have been paid, to convert the principal and/or the unpaid interest into shares of the Company's Common Stock on the following terms: 

        a.     If
the Company's Common Stock is traded on a securities exchange or in the over-the-counter market in the United States, Holder shall have the
right to convert up to One-eighteenth (1/18th) of the principal of this Note, plus accrued and unpaid interest, each month for Eighteen (18) months, commencing on the first day of
the month following the Maturity Date or the final Extended Maturity Date, whichever is later, at a conversion price equal to the lesser of (i) Three Dollars ($3.00) or (ii) Seventy
Percent (70%) of the average of the closing bid prices of the Company's Common Stock, as reported on such exchange or in the over-the-counter market, for the Five
(5) trading days ending on the last trading day immediately preceding the giving of written notice of conversion by Holder. 

        b.     If
the Company's Common Stock is not traded on a securities exchange or in the over-the-counter market in the United States, Holder shall have the
right to convert all or any portion of the principal and/or accrued interest on this Note, at any time, or from time to time after the Maturity Date or the final Extended Maturity Date, if applicable,
at a conversion price equal to Three Dollars ($3.00). 

provided, however, that no fractional shares will be issued and fractional shares will be rounded down to the nearest full share. Upon receipt by
Borrower of Holder's notice of each such election, the Note shall represent the right to receive the Common Stock into which that portion of the Note has been converted, and Borrower's right and
obligation to repay that portion of the Note shall be extinguished. 

        6.    Anti Dilution Adjustments.    The number and kind of securities or other property into which this Note may
become convertible shall be subject to adjustment as follows: 

        a.     If
a split or a reverse split shall have occurred with respect to the Common Stock, the conversion rate shall be appropriately adjusted to cause the Holder to receive,
upon conversion, a number of shares of Common Stock representing the same percentage of the equity of the Company to which the Holder would have been entitled on such conversion if the split had not
occurred. 

        b.     If
a dividend or other distribution shall be made in favor of the Common Stock, appropriate adjustment shall be made so that, upon conversion of the Note, the Holder
shall receive, in addition to the Common Stock otherwise obtainable on such conversion, the cash, securities or other property that it would have received had the Note been so converted immediately
prior to the split, dividend or distribution. 

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        c.     If
the Common Stock shall, as the result of a merger or otherwise, be converted into the right to receive other securities or property, appropriate adjustment shall be
made so that, upon conversion of the Note, the Holder shall receive, in lieu of Common Stock, the securities and/or property that it would have received as a result of the merger or other such
transaction had the Note been so converted immediately prior to the record date therefor. 

        7.    Default.    In the event of an occurrence of any event of default specified below, the principal of, and all
accrued and unpaid interest on, the Note shall become immediately due and payable without notice, except as specified below: 

        a.     Borrower
fails to make any payment hereunder when due, which failure has not been cured within Ten (10) days following such due date. 

        b.     Any
defined event of default occurs under any contract or instrument pursuant to which Borrower has incurred any liability for borrowed money in excess of One Hundred
Thousand Dollars ($100,000.00), which event of default has not been waived within Five (5) business days following such occurrence, and which event of default is reasonably likely to materially
affect the Company's business. 

        c.     Borrower
files a petition to take advantage of any insolvency act; makes an assignment for the benefit of its creditors; commences a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself of a whole or any substantial part of its property; files a petition or answer seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United States of America or any state. 

        d.     A
court of competent jurisdiction enters an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of Borrower or of the whole or
any substantial part of its properties, or approves a petition filed against Borrower seeking reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable
law or statute of the Untied States of America or any state; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction assumes custody or control
of Borrower or of the whole or any substantial part of its properties; or there is commenced against Borrower any proceeding for any
of the foregoing relief and such proceeding or petition remains undismissed for a period of Thirty (30) days; or if Borrower by any act indicates its consent to or approval of any such
proceeding or petition. 

        e.     If
(i) any judgment remaining unpaid, unstayed or undismissed for a period of Sixty (60) days is rendered against Borrower which by itself or together with
all other such judgments rendered against Borrower remaining unpaid, unstayed or undismissed for a period of Sixty (60) days, is in excess of One Hundred Thousand Dollars ($100,000.00), or
(ii) there is any attachment or execution against Borrower's properties remaining unstayed or undismissed for a period of Sixty (60) days which by itself or together with all other
attachments and executions against Borrower's properties remaining unstayed or undismissed for a period of Sixty (60) days is for an amount in excess of One Hundred Thousand Dollars
($100,000.00). 

        8.    Cumulative Remedies.    The remedies of Lender as provided herein, in the Security Agreement and in the Security
and Pledge Agreement, or any one or more of them, or in law or in equity, shall be cumulative and concurrent, and may be pursued singularly, successively or together at Lender's sole discretion, and
may be exercised as often as occasion therefore shall occur. 

        9.    Successors and Assigns.    The Note is transferable and assignable by Lender or any subsequent permitted
assignee subject to the requirement that any such assignment or transfer be, in the opinion of Borrower's counsel, in compliance with applicable federal and state securities laws. The assignee shall
be referred to herein as a "Holder." All covenants, agreements and undertakings in the 

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Note
by or on behalf of any of the parties shall bind and inure to the benefit of the respective successors and assigns of the parties whether so expressed or not. 

        10.    Notices.    Any and all notices, requests, consents and demands required or permitted to be given hereunder
shall be in writing and shall be deemed given and received (i) upon personal delivery, (ii) upon the first business day following the receipt of confirmation of facsimile transmission to
the telefax number or email as indicated below, (iii) upon delivery by overnight courier, prepaid and delivered on a business day; or (iv) upon the third business day after deposit in
the United States mail, by certified or registered mail, postage prepaid and addressed as follows: 

	To Lender:	 	[to the address and facsimile provided in Subscription Agreement between the Lender and the Borrower executed in connection with the purchase and sale of this Note]
	

To Borrower:	
 	

Krona Acquisition Corporation

(to be renamed Sygence Corporation)

5151 Beltline Rd, Suite 1100

Dallas, TX 75254

Attn: George Noga

Fax: (214) 269-2901

E-mail: gnoga@syngence.com

Either
party may change by notice the address to which notices to that party are to be addressed. 

        11.    Waivers/Forebearance/Amendment.    Borrower hereby waives presentment for payment, demand, protest and notice
of protest for nonpayment of the Note and consents to any extension or postponement of the time of payment or any other indulgence. Lender shall not be deemed, by any act or omission, to have waived
any of its rights or remedies hereunder unless such waiver is in writing and signed by Lender and then only to the extent specifically set forth in such writing. A waiver with reference to one event
shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. No delay or omission of Lender to exercise any right, whether before or after a default
hereunder, shall impair any such right or shall be construed to be a waiver of any right or default, and the acceptance at any time by Lender of any past-due amount shall not be deemed to
be a waiver of the right to require prompt payment when due of any other amounts then or thereafter due and payable. Notwithstanding the foregoing, any provision of this Note may be waived or amended
upon the written consent of the Borrower and the consent of the holder of this Note. The Note may only be amended or modified by written agreement signed by Borrower and Holder. 

        12.    Expenses.    In the event that Holder brings legal action against Borrower, or Borrower brings legal action
against Holder, to enforce or otherwise determine the meaning or enforceability of the Note or any provision hereof, each party shall bear its own expenses, including attorney fees, directly
attributable to such action. However, in any action for breach of the Note, including nonpayment, the prevailing party in any such dispute shall be entitled to recover all reasonable costs and
attorney fees incurred in connection with such action. In addition, Borrower shall be entitled to recover from Lender all reasonable costs of collection, including without limitation, legal fees and
expenses incurred in any bankruptcy and/or state insolvency proceeding. 

        13.    Choice of Law.    The Note shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the State of Delaware. The parties agree that venue for any suit, action, proceeding or litigation arising out of or in relation to this Note will be in any federal
or state court in Wilmington, Delaware having subject matter jurisdiction, and the parties hereby submit to the jurisdiction of that Court. 

        WITH
RESPECT TO ANY CLAIM OR ACTION ARISING UNDER THIS NOTE, EACH PARTY HEREBY (A) IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS 

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OF
THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT LOCATED IN THE CITY OF WILMINGTON, STATE OF DELAWARE, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS NOTE WILL BE DEEMED TO PRECLUDE THE LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER JURISDICTION. 

        IN
WITNESS WHEREOF, this Note has been executed and delivered on the date specified on the first page hereof by the duly authorized representative of Borrower. 

	 	 	KRONA ACQUISITION CORPORATION

a Delaware corporation
	

 	
 	

By:	
 	

    

	 	 	Its:	 	 

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Exhibit 10.12    
    

KRONA ACQUISITION CORPORATION
  929 19TH AVENUE EAST

SEATTLE, WA 98112

effective as of
 April 10, 2007  

 
 

FINANCING AGREEMENT    
    

	Issuer:	 	Krona Acquisition Corporation ("Krona" or the "Company")
	

Investors:	
 	

Up to 35 "accredited" investors, as defined in Regulation D of the Securities Act of 1933, including High Capital Funding, LLC ("HCF" or "Lead
Investor"). HCF and the other investors are referred to herein as the "Investors." The number of investors may
exceed 35 only with the prior consent of the Company and the Placement Agent (as defined below). See signature pages hereto for names,
addresses, and the amount of Notes (as defined below) being purchased by the Investors. The Investors have read and agree to the terms contained in Exhibit A to this Financing Agreement ("Financing Agreement").
	

Issue:	
 	

A minimum of $1,800,000, up to a maximum of $2,500,000, in up to 250 units of $10,000, in exchange for promissory notes ("Notes") and securities ("Equity
Consideration Certificates") of the Company. Fractional units above the $10,000 minimum may be issued upon mutual agreement of the Company and the Placement Agent (as defined below).
	

Interest:	
 	

10% per annum payable quarterly commencing on the last day of the quarter in which the Notes are issued, and at the final Maturity Date (as defined below). Default interest will be 18%. See
Exhibit B.
	

Maturity:	
 	
(a)  The entire principal amount of the Notes and all accrued and unpaid interest thereon is due and payable on the earlier of (i) October 31, 2007 or (ii) the third
business day following the completion of an underwritten public offering or a private placement of equity securities by the Company resulting in gross proceeds of $5 million or more (a
"Qualified Offering") (the "Maturity Date"). The Notes will be prepayable at any time
without premium or penalty.
	

 	
 	
(b)  The Placement Agent (as defined below), upon the written request of the Company, shall have the right to extend the
Maturity Date for up to three one-month periods, on such terms as the Placement Agent shall determine, in its sole discretion. The
Placement Agent shall provide written notice to each Investor within five business days of the granting of an extension of the Maturity Date, which notice shall set forth the terms of such extension.
	

Equity Considerations:	
 	
(a)  Each Investor shall receive an Equity Consideration Certificate in
the form of Exhibit C hereto in an amount calculated as provided in (b) and (c), below. The Equity
Consideration Certificate will entitle the Investor to receive either "Primary Equity Consideration" or
"Alternate
	

 	
 	

 

1

 

	

 	
 	
Equity Consideration," both as defined below and sometimes referred to herein as the "Equity Consideration."
	

 	
 	
(b)  The Primary Equity Consideration shall consist, except as otherwise provided below, of securities identical to the
securities issued and sold in the Company's next Qualified Offering. The number of such securities or packages or units of such securities to
be received by each Investor shall be the result obtained by dividing 100% of the original principal amount of the Note purchased by such Investor by the price of the security, or package or unit
of securities, sold by the Company in the Qualified Offering (the "Primary Equity Consideration"). Solely in the event that the Company's next Qualified Offering is (i) a public offering resulting in a trading market for the securities sold and (ii) for units consisting of
stock and warrants or other rights to purchase stock, the Primary Equity Consideration shall consist of the stock portion of such units and the number of shares included in the Primary Equity Consideration shall be the result obtained by dividing 120% of the original principal amount of the Note purchased by such Investor by the
price of the security, or package or unit of securities, sold by the Company in the Qualified Offering. The Equity
Consideration shall be delivered to the Holders (as defined below) within three business days following the Qualified
Offering closing.
	

 	
 	
(c)  The Alternate Equity Consideration shall consist of that number of shares of common stock of the Company as shall equal the principal amount of the Notes divided by $3.00, plus an equal number of non-callable warrants exercisable at $4.00 per share for a period of seven years from such issuance, and which
shall have a cashless exercise feature if, at any time after one year from the First Closing, the underlying shares of common stock are not covered by an effective registration statement with a
current prospectus available. The number of Alternate Equity Consideration securities shall be adjusted, pro rata, on account of any stock splits, reverse stock splits, stock dividends paid on
common stock, etc., which occur after the date of issuance of the Equity Consideration Certificate and prior to the issuance of the Alternate Equity
Consideration. The Alternate Equity Consideration shall be issued to the Holders (as defined below) on the first
business day following the later of October 31, 2007 or the final extended Maturity Date, if a Qualified Offering shall not have occurred
by such date.
	

 	
 	
(d)  The Investors shall have the right for a period of one year and one month from the issuance of the Alternate Equity Consideration to exchange such Alternate Equity Consideration for belated Primary Equity
Consideration in what would have been considered a Qualified Offering but for its occurrence after the Maturity Date or the final extended Maturity Date.
	

Purchase Price:	
 	

The aggregate purchase price of each Note and the Equity Consideration Certificate related to such Note shall be the original principal amount of
	

 	
 	

 

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the Note. For federal income tax purposes, the Company will allocate 75% of the purchase price to the Note and 25% of the purchase price to the Equity Consideration Certificate. The portion allocated to the Equity Consideration
Certificate will be treated as "original issue discount" and will be reportable as interest income over the term of the Notes.
	

Security:	
 	

Repayment of the Notes shall be secured by a lien on all tangible and intangible assets of the Company, and any subsidiary or subsidiaries
formed prior to the payment in full of the Notes, to be evidenced by a Security Agreement from the Company and, in the event the Company
acquires or forms a subsidiary or subsidiaries prior to payment in full of the Notes, each such subsidiary, satisfactory in form and substance to the Lead
Investor. The Company represents and warrants that it will cause each such after-acquired or formed subsidiary to become a party to the Security Agreement concurrently with such acquisition or formation. In addition, the Company represents and warrants that, in the event it acquires or
forms one or more subsidiaries prior to payment in full of the Notes, it will amend the Security and Pledge Agreement to perfect the pledge of 100% the capital stock of each such subsidiary owned
by the Company, such agreement to be satisfactory in form and substance to the Lead Investor.
	

Document Preparation	
 	

In lieu of reimbursing HCF for the cost of preparing the legal
	

Securities:	
 	

documents for this transaction, the Company shall issue to HCF an Equity Consideration Certificate, having a face value of $10,000
("Document Preparation Securities"). The Document Preparation Securities shall be in all respects identical to the Equity Consideration Certificates with identical attendant rights.
	

Placement Agent:	
 	
(a)  Paulson Investment Company, Inc. (the "Placement Agent") has been retained as placement agent on a best efforts
basis. The Placement Agent fee is 10% of the gross proceeds to the Company, payable in cash on the Closing
Date(s) (as defined below). The Company will also reimburse the Placement Agent for its out-of-pocket expenses
incurred in connection with this offering, including $10,000 of attorneys' fees, and will indemnify the Placement Agent, its officers, directors, agents, employees and controlling persons, against
certain liabilities.
	

 	
 	
(b)  The Company has received a letter of intent from the Placement Agent to act as the lead underwriter for a $10-$15 million public offering of units, which is expected to include a share of common stock and a warrant ("Public Offering").
	

Expenses:	
 	

Except as set forth in "Document Preparation Securities" and "Placement Agent" above, the parties shall each be responsible for their own
expenses in connection with this transaction.
	

Transfer and Assignment:	
 	
Investors shall have the right, subject to applicable securities laws, to transfer and/or assign the Notes, the Equity Consideration Certificates, the Primary Equity Consideration, the Alternate Equity Consideration,
	

 	
 	

 

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and the Document Preparation Securities, provided, however, that the Equity Consideration Certificates and any Alternate Equity Consideration may be transferred or assigned only to an Accredited Investor until such securities may be sold under Rule 144 or pursuant to an effective registration statement with a
current prospectus available. Any Investor and any permitted transferee or assignee of any of the foregoing securities is a "Holder" or
collectively "Holders."
	

Escrow:	
 	

All subscriptions shall be payable to the Company and shall be held in a non-interest-bearing escrow account at Wells Fargo Bank (the "Escrow Agent") which shall be under the sole control of the Placement Agent.
	

 	
 	
(a)  The First Closing shall be on the second business day following the receipt by the Escrow
Agent of at least $1,800,000 from Investors subscribing for the Notes, together with written instructions signed
by the Placement Agent and the Company directed to the escrow account administrator stating that all Closing
Conditions set forth in this Financing Agreement have been satisfied or waived.
	

 	
 	
(b)  Additional closings (the "Additional Closings") shall be held on the second business day following the receipt by the
escrow account administrator of written instructions signed by the Placement Agent, the Lead Investor and the Company stating that all Closing Conditions set forth in this Financing Agreement have been satisfied
or waived.
	

 	
 	
(c)  At the First Closing (and each Additional Closing, as provided for
below) the Escrow Agent shall transfer the Closing Proceeds, to the Company, and the
Placement Agent (and/or its counsel) shall deliver the Notes and the Equity Consideration
Certificates to the Investors. Additional closings ("Additional Closings") may be held as agreed among the
Company and the Placement Agent, provided that no Additional Closings shall be held
after April 30, 2007 without the written consent of the Placement Agent. The First Closing and any Additional
Closings may be referred to as the "Closing" or "Closings."
	

 	
 	
(d)  The Escrow Agent shall promptly return to the Investors all escrowed funds, without interest thereon, remaining on
deposit after May 10, 2007 (which date may be extended in writing by the Placement Agent for up to one-month).
	

Closing Conditions:	
 	

The First Closing and each Additional Closing is subject to the receipt by the Placement Agent (and/or its counsel) of the following:
	

 	
 	
(a)  Executed Notes for the Closing Proceeds,
	

 	
 	
(b)  Executed Equity Consideration Certificates with a face value equal to the Closing
Proceeds,
	

 	
 	
(c)  Executed Security Agreement and a Security and Pledge Agreement
from the Company,
	

 	
 	

 

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(d)  Evidence of filing of a UCC-1 to perfect the security interest created under the Security Agreement;
	

 	
 	
(e)  Legal opinion in form and substance satisfactory to the Lead Investor, in its sole discretion, as provided for in
"Jurisdiction/Choice of Law" below.
	

Registration Rights:	
 	
(a)  Promptly upon consummation of a public Qualified Offering (but in no event later than 30 days after the closing of
such public offering), the Company shall (1) file a registration statement (the "Registration Statement") relating to the resale of
the securities comprising the Equity Consideration, including any warrants, shares of common stock underlying any such warrants, or convertible securities forming a part of the Equity Consideration (the "Registrable Securities"), (ii) use its commercial best efforts to cause the Registration
Statement to become effective within 30 days after filing, if the Registration Statement is not reviewed by the staff of the Securities and Exchange Commission
("Staff') or within 90 days after filing, if the Registration Statement is reviewed by the Staff and (iii) use its commercial best efforts to cause the Registration Statement (or an equivalent
successor registration statement covering the resale of such securities) to remain effective with a current prospectus available until all Registrable Securities may be sold under Rule 144
(k). If any sale under Rule 144 requires a legal opinion, the cost thereof will be borne by the Company. For the avoidance of doubt, the use of commercial best efforts shall not require the
Company to maintain a current prospectus during a maximum of two non-consecutive periods of not more than 15 business days each in any rolling 12 month period during which the Company has, lawfully and for good business reasons, not disclosed to the public information that would be required to be included in a current prospectus.
	

 	
 	
(b)  If the Company fails to satisfy the requirements of (a) above, it shall pay, as liquidated damages related to any
such failure, a 2% late registration fee (i.e., 2% of the principal amount of the related Note(s)) per month or part thereof that such failure continues ("Late
Fee"). The Late Fee shall be payable in common stock, which shall be registered for resale in the Registration Statement ("Late Registration Shares"); provided however, that no Late Fee shall be payable for any period during which an underwriter's lockup
is in effect, or that all of the Registrable Securities may be sold under Rule 144 (without volume limitation). If less than all of the Registrable Securities can be sold under Rule 144
as a result of the Rule 144 volume limitation, the 2% late registration fee shall apply only to the shares whose resale is so limited and not to the shares that may be sold. The Late Registration
Shares shall be valued at 70% of the average of the closing price of the common stock for the five trading days preceding the date of issuance of such common stock.
	

Conversion Right:	
 	

In the event there is no Qualified Offering of the Company's common stock and/or warrants by October 31, 2007 or the final extended
Maturity Date, the Holders shall have the right to convert the principal and/or
	

 	
 	

 

5

 

	

 	
 	

unpaid interest of the Notes into shares of common stock until payment in full of all amounts due under the Notes as follows:
	

 	
 	
(a)  The conversion price shall be the lesser $3.00 or if the shares are trading in a U.S. securities market, 70% of the average of the closing bid price of the Company's common stock as reported by Nasdaq or other national securities exchange or in the over-the-counter market for the five trading days ending on the last trading day immediately preceding the giving of
written notice of conversion by the Investor.
	

 	
 	
(b)  If the shares are trading in a U.S. securities market, each Holder shall have the right to convert up to 1118th of
the principal of such Investor's Note, plus accrued and unpaid interest, each month for 18 months, on a cumulative basis, commencing on the first day of the month following the Maturity Date or the final extended Maturity Date.
	

 	
 	
(c)  If the shares are not trading in a U.S. securities market, each Holder shall have the right to convert such
Holder's Note at any time, or from time to time, at a price of $3.00.
	

Lock-up:	
 	

In the event the Company proposes to complete an underwritten public offering subsequent to the First Closing, each Investor will execute a lock-up agreement for a period of not more than one year from the public offering closing and containing such other terms, conditions and provisions as may be required by the managing
underwriter of such offering; provided, however, in no event shall the Investors be subject to a lock-up agreement that is more restrictive than that agreed to by the Company's officers, directors, and holders of 5% or more of the Company's common stock.
	

SEC Reporting:	
 	

Once the Company becomes subject to the reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Company will use its commercial best efforts to maintain the registration of its common stock under Section 12(b) or 12(g) of the Exchange Act, and will file all reports required by the
Exchange Act in a timely manner until the later of (i) payment in full of the Notes, or (ii) the expiration, or exercise or
conversion in full, of any warrants or convertible securities forming a part of the Equity Consideration.
	

Use of Proceeds:	
 	

Acquisition of assets and working capital.
	

Events of Default:	
 	

To include breach of any of the representations and warranties and covenants contained in any of the Further Documents (as defined below).
	

Jurisdiction/Choice of Law:	
 	

All transaction documents shall be governed by and construed under the laws of the state of Delaware as applied to agreements entered into and to be performed entirely within the state of Delaware, without giving effect to principles of conflicts of
law. The parties irrevocably consent to the jurisdiction and venue of the state and federal courts located in
	

 	
 	

 

6

 

	

 	
 	

Wilmington, Delaware in connection with any action relating to this transaction. At or prior to the First Closing and any Additional Closing
the Investors shall receive a legal opinion from Company counsel in form and substance satisfactory to the Lead Investor as to (a) the due formation and existence of the Company (under Delaware law), (b) the validity and
enforceability of the this Financing Agreement (under Delaware law), the Security Agreement (under Delaware law), including specifically that
neither this Financing Agreement, nor the Notes, violate any laws of the state of Delaware relating directly or indirectly to the maximum rate
of interest that may be charged in this transaction, subject to standard carve-outs for equitable remedies and insolvency laws, (c) the valid authorization to issue the Equity Consideration (under Delaware law), (d) the issuance and validity of the Notes, (under Delaware
law), and (e) the computation of the holding period of the shares issuable on conversion of the Notes and the securities included in the
Equity Consideration under Rule 144 ("Legal Opinion"). The Legal Opinion shall be
updated and reissued at each Additional Closing.
	

Binding Agreement:	
 	

All parties executing this Financing Agreement including Exhibit A, shall be legally bound by the above terms and shall execute such further documents ("Further
Documents"), including without limitation the Note (Exhibit B), the Equity Consideration Certificate (Exhibit C)
, the Security Agreement (Exhibit D) and the Security and Pledge Agreement (Exhibit E.), all substantially in the forms attached
hereto. If there are any inconsistencies between this Financing Agreement (exclusive of Exhibits B through E) and any such Further Documents executed in connection with this transaction, the terms of this Financing Agreement shall govern. This Financing Agreement may be
signed in two or more counterparts, all of which taken together shall constitute an original. Facsimile signatures shall be deemed to be original signatures.

[Signatures
follow on next page.] 

7

 

	Company

KRONA ACQUISITION CORPORATION	 	 
	

By:	

/s/ JOHAN LIEDGREN
	
 	

Date: May 18, 2007
	 	(signature)	 	 
	

Johan Liedgren, Chairman
	
 	

 
	(name and title)	 	 
	
Placement Agent

PAULSON INVESTMENT COMPANY, INC.	
 	

 
	

By:	

/s/ BARBARA JAMES
	
 	

Date: May 18, 2007
	 	(signature)	 	 
	

Barbara James, Asst Corp. Secretary
	
 	

 
	(name and title)	 	 
	
Lead Investor

High Capital Funding, LLC	
 	

 
	

By:	

/s/ FRED A. BRASCH
	
 	

Date: May 18, 2007
	 	(signature)	 	 
	

Fred A. Brasch, CFO
	
 	

 
	(name and title)	 	 

333
Sandy Springs Circle, Suite 230

Atlanta, GA 30328

Attn: Fred A. Brasch, CFO 

Tel:
404 257-9150

Fax: 404 257-9125

Email: fredbrasch@mindspring.com

Tax ID#/SS#: 13-3921591 

With
copy to: 

David
A. Rapaport, EVP & GC

333 Sandy Springs Circle, Suite 230

Atlanta, GA 30328 

Tel:
404 257-9150

Fax: 404 257-9125

Email: drapaport@highcapus.com 

8

QuickLinks

Exhibit 10.12

FINANCING AGREEMENT

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