Purchase Agreement: Terms & Conditions

GENERAL NOTICE

THIS AGREEMENT AND ANY TOKENS WHEN ISSUED PURSUANT TO IT (THE “TOKENS”) ARE NOT BEING OFFERED IN ANY STATE OR OTHER JURISDICTION WHERE THE OFFER OR SALE THEREOF IS NOT PERMITTED. EACH HOLDER OF THIS AGREEMENT, BY ITS ACCEPTANCE HEREOF REPRESENTS THAT (A) IT IS AN “ACCREDITED INVESTOR” (AS DEFINED IN REGULATION D UNDER THE U.S. SECURITIES ACT) OR (B) IT IS NOT A “U.S. PERSON” AND IS ENTERING INTO THIS AGREEMENT IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH ACQUISITION IS MADE.

NOTICE TO RESIDENTS OF THE UNITED STATES

THE OFFER AND SALE OF ANY TOKENS WHEN ISSUED HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES. NEITHER THIS AGREEMENT (NOR ANY INTEREST OR PARTICIPATION THEREIN), NOR THE TOKENS, MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AN EXEMPTION FROM THE SECURITIES LAWS OR IN A TRANSACTION NOT SUBJECT THERETO.

THE REGULATORY TREATMENT OF THIS AGREEMENT (AND ANY TOKENS WHEN ISSUED) UNDER THE U.S. COMMODITY EXCHANGE ACT (“CEA”) IS NOT CERTAIN. THE COMMODITY FUTURES TRADING COMMISSION (“CFTC”) MAY TAKE THE POSITION THAT THIS AGREEMENT OR ANY TOKENS WHEN ISSUED ARE SUBJECT TO ITS JURISDICTION UNDER THE CEA. IF THIS OCCURS, THEN THIS AGREEMENT MAY BE INVALIDATED AND THE PARTIES HERETO MAY BE SUBJECT TO ENFORCEMENT ACTIONS AND/OR PENALTIES.

THE HOLDER OF ANY TOKENS WHEN ISSUED AGREES THAT, PRIOR TO THE EXPIRATION OF A 12- MONTH HOLDING PERIOD FOLLOWING THE DATE OF PAYMENT BY THE HOLDER FOR THE TOKENS, THAT IT SHALL OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE TRANSFER TOKENS ONLY (I) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (II) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING IN ACCORDANCE WITH RULE 144, IF AVAILABLE), AND, IN EACH CASE, IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR ANY OTHER APPLICABLE JURISDICTION. IN ADDITION, THE COMPANY IS ENTITLED TO REQUIRE, PRIOR TO ANY OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (III), THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO THE COMPANY. THE RESTRICTIONS IN THIS PARAGRAPH ARE REFERRED TO HEREIN AS THE “TRANSFER RESTRICTIONS.”

FOLLOWING THE EXPIRATION OF THE 12-MONTH LOCK-UP PERIOD, ANY AFFILIATE OF THE COMPANY (OR PERSON WHO HAS BEEN AN AFFILIATE OF THE COMPANY WITHIN THE IMMEDIATELY PRECEDING THREE MONTHS) SHALL OFFER, SELL OR OTHERWISE TRANSFER TOKENS ONLY PURSUANT TO THE TRANSFER RESTRICTIONS.

THE HOLDER OF ANY TOKENS WHEN ISSUED FURTHER ACKNOWLEDGES AND AGREES THAT TRANSFERABILITY OF THE TOKENS MAY BE REQUIRED TO BE FURTHER RESTRICTED, NOTWITHSTANDING THE PROVISIONS OF RULE 144, IF THE COMPANY DETERMINES, IN ITS SOLE DISCRETION, THAT EXISTING UNITED STATES FEDERAL SECURITIES LAWS, REGULATIONS OR REGULATORY GUIDANCE REQUIRES SUCH RESTRICTIONS. ADDITIONAL RESTRICTIONS ON THE TOKENS COULD INCLUDE, WITHOUT LIMITATION, REQUIREMENTS TO TRANSFER ONLY TO APPROVED OR WHITE-LISTED ACCOUNTS, RESTRICTIONS ON APPROVED WALLETS, AND PROHIBITIONS OR RESTRICTIONS ON TRANSFERS ON ANY EXCHANGES, IF ANY, WHERE THE TOKENS MAY BE LISTED IN THE FUTURE.

THE HOLDER OF THIS AGREEMENT (OR ANY TOKENS WHEN ISSUED) BY ITS ACCEPTANCE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD TOKEN CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN TO WHICH SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) APPLIES (INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT), AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE PLAN ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN, OR PLAN, A GOVERNMENTAL PLAN (AS DEFINED I SECTION 3(32) OF ERISA), A CHURCH PLAN (AS DEFINED IN SECTION 3(33) OF ERISA) THAT HAS NOT MADE AN ELECTION UNDER SECTION 410(D) OF THE CODE, OR A NON-U.S. PLAN, OR (2)(A) THE HOLDER IS, OR IS USING, THE ASSETS OF A GOVERNMENTAL PLAN, A CHURCH PLAN THAT HAS NOT MADE AN ELECTION UNDER SECTION 410(D) OF THE CODE, OR A NON-U.S. PLAN AND (B) THE ACQUISITION AND HOLDING OF THIS AGREEMENT WILL NOT CONSTITUTE A VIOLATION UNDER ANY APPLICABLE PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT REGULATE SUCH PLAN’S INVESTMENTS.

NOTICE TO RESIDENTS OF CANADA 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS AGREEMENT MUST NOT TRADE THIS AGREEMENT BEFORE THE DATE THAT THE ISSUER BECOMES A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY. 

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

THIS DOCUMENT IS NOT A PROSPECTUS FOR THE PURPOSES OF DIRECTIVE 2003/71/EC (THE “PROSPECTUS DIRECTIVE”). THIS AGREEMENT IS NOT BEING OFFERED IN ANY MEMBER STATE OF THE EEA OTHER THAN IN CIRCUMSTANCES THAT DO NOT REQUIRE THE PUBLICATION OF A PROSPECTUS PURSUANT TO THE PROSPECTUS DIRECTIVE. 

SOLELY FOR THE COMPANY’S PRODUCT APPROVAL PROCESS, THE TARGET MARKET ASSESSMENT IN RESPECT OF THIS AGREEMENT HAS LED TO THE CONCLUSION THAT (I) THE TARGET MARKET FOR THIS AGREEMENT IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY, EACH AS DEFINED IN DIRECTIVE 2014/65/EU (“MiFID II”); AND (II) ALL CHANNELS FOR DISTRIBUTION OF THIS AGREEMENT TO ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ARE APPROPRIATE. ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THIS AGREEMENT (A “DISTRIBUTOR”) SHOULD TAKE INTO CONSIDERATION THE COMPANY’S TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MiFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THIS AGREEMENT (BY EITHER ADOPTING OR REFINING THE COMPANY’S TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.

THIS AGREEMENT IS NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF:  (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF MiFID II; OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE 2002/92/EC, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MiFID II; OR (III) NOT A QUALIFIED INVESTOR AS DEFINED IN THE PROSPECTUS DIRECTIVE.  CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (THE “PRIIPS REGULATION”) FOR OFFERING OR SELLING THE TOKENS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE TOKENS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION. IT IS A CONDITION OF YOU RECEIVING AND RETAINING THIS DOCUMENT THAT YOU WARRANT THAT YOU ARE A QUALIFIED INVESTOR.

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

TO THE EXTENT THAT THE TOKENS ARE TRANSFERABLE SECURITIES IN THE UNITED KINGDOM, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT (AND ANY INVESTMENT ACTIVITY TO WHICH IT RELATES WILL BE ENGAGED ONLY WITH): (I) INVESTMENT PROFESSIONALS (WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS AMENDED (THE “FPO”)); (II) PERSONS OR ENTITIES OF A KIND DESCRIBED IN ARTICLE 49 OF THE FPO; (III) CERTIFIED SOPHISTICATED INVESTORS (WITHIN THE MEANING OF ARTICLE 50(1) OF THE FPO); AND (IV) OTHER PERSONS TO WHOM THIS DOCUMENT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). 

THIS DOCUMENT HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON. ANY INVESTMENT TO WHICH THIS DOCUMENT RELATES IS AVAILABLE ONLY TO (AND ANY INVESTMENT ACTIVITY TO WHICH IT RELATES WILL BE ENGAGED ONLY WITH) RELEVANT PERSONS. THIS DOCUMENT IS DIRECTED ONLY AT RELEVANT PERSONS. PERSONS WHO ARE NOT RELEVANT PERSONS SHOULD NOT TAKE ANY ACTION BASED UPON THIS DOCUMENT AND SHOULD NOT RELY ON IT. IT IS A CONDITION OF YOU RECEIVING AND RETAINING THIS DOCUMENT THAT YOU WARRANT TO THE COMPANY, ITS MANAGERS AND ITS OFFICERS THAT YOU ARE A RELEVANT PERSON.

NOTICE TO RESIDENTS OF FRANCE

THIS DOCUMENT HAS NOT BEEN PREPARED, AND IS NOT DISTRIBUTED, IN THE CONTEXT OF A PUBLIC OFFERING OF FINANCIAL SECURITIES IN FRANCE WITHIN THE MEANING OF ARTICLE L. 411-1 OF THE FRENCH CODE MONÉTAIRE ET FINANCIER.  CONSEQUENTLY, NO FINANCIAL SECURITIES HAVE BEEN OFFERED OR SOLD OR WILL BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, TO THE PUBLIC IN FRANCE, AND ANY OFFERING MATERIAL MAY NOT BE, AND WILL NOT BE, DISTRIBUTED OR CAUSED TO BE DISTRIBUTED TO THE PUBLIC IN FRANCE OR USED IN CONNECTION WITH ANY OFFER TO THE PUBLIC IN FRANCE.

OFFERS, SALES AND DISTRIBUTIONS OF SECURITIES WILL BE MADE ONLY TO QUALIFIED INVESTORS (INVESTISSEURS QUALIFIÉS) ACTING FOR THEIR OWN ACCOUNT, ALL AS DEFINED IN, AND IN ACCORDANCE WITH, ARTICLES L. 411-2, D. 411-1, D. 744-1 D. 754-1, AND D. 764-1 OF THE FRENCH CODE MONÉTAIRE ET FINANCIER AND APPLICABLE REGULATIONS THEREUNDER.

PROSPECTIVE INVESTORS ARE INFORMED THAT (I) NO PROSPECTUS HAS BEEN AND WILL BE SUBMITTED TO THE CLEARANCE OF THE FRENCH FINANCIAL MARKET AUTHORITY (“AMF”), (II) IN COMPLIANCE WITH ARTICLES L. 411-1, D. 411-1, D. 744-1, D. 754-1, AND D. 764-1 OF THE FRENCH CODE MONÉTAIRE ET FINANCIER, ANY QUALIFIED INVESTOR SHOULD BE ACTING FOR ITS OWN ACCOUNT, AND (III) THE DIRECT OR INDIRECT DISTRIBUTION OR SALE TO THE PUBLIC OF SECURITIES MAY ONLY BE MADE IN COMPLIANCE WITH ARTICLES L. 411-1, L. 411-2, L. 412-1, AND L. 621-8 THROUGH L. 621-8-3 OF THE FRENCH CODE MONÉTAIRE ET FINANCIER. 

NOTICE TO RESIDENTS OF GERMANY

IN THE FEDERAL REPUBLIC OF GERMANY THIS DOCUMENT IS DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS WITHIN THE MEANING OF THE PROSPECTUS DIRECTIVE, THAT PROFESSIONALLY OR COMMERCIALLY PURCHASE OR SELL SECURITIES OR INVESTMENT PRODUCTS (VERMÖGENSANLAGEN) WITHIN THE MEANING OF THE GERMAN INVESTMENT PRODUCT ACT (VERMÖGENSANLAGENGESETZ) FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS.  NO SECURITIES PROSPECTUS (WERTPAPIERPROSPEKT) OR INVESTMENT PRODUCT PROSPECTUS (VERMÖGENSANLAGENVERKAUFSPROSPEKT) HAS BEEN OR WILL BE FILED WITH THE GERMAN FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BAFIN) OR OTHERWISE PUBLISHED IN THE FEDERAL REPUBLIC OF GERMANY.  NO PUBLIC OFFER OR DISTRIBUTION OF COPIES OF ANY DOCUMENT RELATING TO THE TOKENS INCLUDING THIS DOCUMENT, WILL BE MADE IN THE FEDERAL REPUBLIC OF GERMANY EXCEPT WHERE AN EXPRESS EXEMPTION FROM COMPLIANCE WITH THE PUBLIC OFFER RESTRICTIONS UNDER THE GERMAN SECURITIES PROSPECTUS ACT AND THE INVESTMENT PRODUCT ACT APPLIES.

NOTICE TO RESIDENTS OF SWITZERLAND

THIS DOCUMENT (AND ANY OTHER OFFERING OR MARKETING MATERIAL WITH RESPECT TO THE INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT RELATES) MAY BE DISTRIBUTED OR MADE AVAILABLE IN, INTO OR FROM SWITZERLAND ONLY TO QUALIFIED INVESTORS WITHIN THE MEANING OF THE SWISS COLLECTIVE INVESTMENT SCHEMES ACT (“CISA”), ITS IMPLEMENTING ORDINANCE AND REGULATORY GUIDANCE (EACH SUCH PERSON A “QUALIFIED INVESTOR”).  THIS DOCUMENT (NOR ANY OTHER OFFERING OR MARKETING MATERIAL WITH RESPECT TO THE INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT RELATES) HAS NOT BEEN AND WILL NOT BE FILED WITH, OR APPROVED BY, ANY SWISS REGULATORY AUTHORITY.  THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SUBSCRIBE FOR, BUY OR OTHERWISE ACQUIRE ANY TOKENS AND IT DOES NOT CONSTITUTE A PROSPECTUS PURSUANT TO THE CISA, THE SWISS CODE OF OBLIGATIONS OR THE LISTING RULES OF ANY TRADING VENUE IN SWITZERLAND. ANY INVESTMENT TO WHICH THIS DOCUMENT RELATES IS AVAILABLE ONLY TO (AND ANY INVESTMENT ACTIVITY TO WHICH IT RELATES WILL BE ENGAGED ONLY WITH) QUALIFIED INVESTORS. 

NOTICE TO RESIDENTS OF SINGAPORE

THE OFFER OR SALE OF THIS AGREEMENT DOES NOT RELATE TO A COLLECTIVE INVESTMENT SCHEME THAT IS AUTHORIZED UNDER SECTION 286 OF THE SECURITIES AND FUTURES ACT (THE “SFA”) OR RECOGNIZED UNDER SECTION 287 OF THE SFA, CHAPTER 289 OF SINGAPORE. THIS DOCUMENT IS NOT AND HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE AND, ACCORDINGLY, STATUTORY LIABILITY UNDER THE SFA IN RELATION TO THE CONTENT OF PROSPECTUSES DOES NOT APPLY, AND YOU SHOULD EXERCISE CAUTION IN RELATION TO THE OFFER AND CONSIDER CAREFULLY WHETHER THE PURCHASE OF THIS AGREEMENT IS SUITABLE FOR YOU. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.

THIS DOCUMENT AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THIS AGREEMENT MAY NOT BE CIRCULATED OR DISTRIBUTED, NOR MAY THIS AGREEMENT BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN TO AN ACCREDITED INVESTOR, AS SUCH TERM IS DEFINED IN THE SFA.

NOTICE TO RESIDENTS OF CHINA

PERSONS DOMICILED IN OR PURCHASING FROM THE PEOPLE’S REPUBLIC OF CHINA (EXCLUDING THE SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAU, AND TAIWAN) MAY BE EXCLUDED FROM PURCHASING, EITHER DIRECTLY OR INDIRECTLY, THE TOKENS.

NOTICE TO RESIDENTS OF HONG KONG

THIS AGREEMENT MAY NOT BE OFFERED OR SOLD IN HONG KONG BY MEANS OF ANY DOCUMENT OTHER THAN (I) IN CIRCUMSTANCES THAT DO NOT CONSTITUTE ANY OFFER TO THE PUBLIC WITHIN THE MEANING OF THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG (“CWUMPO”) OR THAT DO NOT CONSTITUTE AN INVITATION TO THE PUBLIC WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571 OF THE LAWS OF HONG KONG) (“SFO”), OR (II) TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SFO AND ANY RULES MADE UNDER THE SFO, OR (III) IN OTHER CIRCUMSTANCES THAT DO NOT RESULT IN THIS MEMORANDUM BEING A “PROSPECTUS” AS DEFINED IN THE CWUMPO, AND NO ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THIS AGREEMENT MAY BE ISSUED NOR MAY BE IN THE POSSESSION OF ANY PERSON FOR THE PURPOSE OF ISSUE (IN EACH CASE WHETHER IN HONG KONG OR ELSEWHERE), THAT IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC IN HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO INSTRUMENTS THAT ARE OR ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE OF HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” IN HONG KONG AS DEFINED IN THE SFO AND ANY RULES MADE UNDER THE SFO.

NOTICE TO RESIDENTS OF SOUTH KOREA

THIS AGREEMENT IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF SECURITIES IN SOUTH KOREA UNDER THE FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT OF SOUTH KOREA (THE “FISCMA”).  FOR THE PURPOSE OF THIS NOTICE, THE EXPRESSION “OFFERING” IN RELATION TO ANY SECURITIES UNDER FISCMA MEANS THE INVITATION OF SUBSCRIPTION FOR NEWLY ISSUED SECURITIES TO MORE THAN 50 RETAIL INVESTORS.

NEITHER THE COMPANY NOR ANY PLACEMENT AGENT MAY MAKE ANY REPRESENTATION WITH RESPECT TO THE ELIGIBILITY OF ANY PERSON TO ACQUIRE TOKENS PURSUANT TO THIS AGREEMENT UNDER THE LAWS OF SOUTH KOREA, INCLUDING, WITHOUT LIMITATION, THE FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT AND THE FOREIGN EXCHANGE TRANSACTION ACT AND REGULATIONS THEREUNDER.

THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE FISCMA, AND THE TOKENS MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED, DIRECTLY OR INDIRECTLY, OR OFFERED OR SOLD TO ANY PERSON FOR RE-OFFERING OR RE-SALE, DIRECTLY OR INDIRECTLY, IN SOUTH KOREA OR TO ANY RESIDENT OF SOUTH KOREA.

NOTICE TO PROSPECTIVE PURCHASERS IN AUSTRALIA

NEITHER THIS AGREEMENT, NOR ANY OTHER DISCLOSURE DOCUMENT IN RELATION TO THE OFFER OR SALE OF THIS AGREEMENT NOR RIGHTS UNDER THIS AGREEMENT, HAS BEEN, WILL BE, OR NEEDS TO BE, LODGED WITH THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION. THIS AGREEMENT IS NOT A PRODUCT DISCLOSURE STATEMENT UNDER DIVISION 2 OF PART 7.9 OF THE CORPORATIONS ACT 2001 (CTH) (“AUSTRALIAN CORPORATIONS ACT”) NOR IS IT A PROSPECTUS UNDER CHAPTER 6D OF THE AUSTRALIAN CORPORATIONS ACT, AND THIS AGREEMENT HAS NOT BEEN, AND WILL NOT BE, REGISTERED AS A MANAGED INVESTMENT SCHEME UNDER THE AUSTRALIAN CORPORATIONS ACT.

ANY INVITATION OR OFFER OF THIS AGREEMENT IS MADE IN AUSTRALIA ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED BY THE AUSTRALIAN CORPORATIONS ACT (“PROFESSIONAL INVESTORS”), AND CAN ONLY BE ACCEPTED BY A RECIPIENT IF THE RECIPIENT IS A PROFESSIONAL INVESTOR. NO INVITATION TO ACQUIRE OR OFFER OF THIS AGREEMENT WILL BE MADE, NO RIGHTS UNDER THIS AGREEMENT WILL BE ISSUED OR ARRANGED TO BE ISSUED, AND NO PERSONAL ADVICE WILL BE GIVEN NOR WILL RECOMMENDATIONS TO ACQUIRE THIS AGREEMENT (OR RIGHTS UNDER THIS AGREEMENT) BE MADE, THAT WOULD REQUIRE THE PROVISION OF A PROSPECTUS UNDER CHAPTER 6D.2 OR A PRODUCT DISCLOSURE STATEMENT UNDER DIVISION 2 OF PART 7.9 OF THE AUSTRALIAN CORPORATIONS ACT, OR THE PROVISION OF A FINANCIAL SERVICES GUIDE OR A STATEMENT OF ADVICE UNDER DIVISION 2 OR 3 OF PART 7.7 OF THE AUSTRALIAN CORPORATIONS ACT. 

NO PERSON REFERRED TO IN THIS DOCUMENT HOLDS AN AUSTRALIAN FINANCIAL SERVICES LICENCE. 

NEITHER THIS AGREEMENT, THE OFFERS CONTAINED HEREIN NOR ANY OTHER DISCLOSURE DOCUMENT IN RELATION TO THIS AGREEMENT CAN BE PARTIALLY OR WHOLLY DISTRIBUTED, PUBLISHED, REPRODUCED, TRANSMITTED OR OTHERWISE MADE AVAILABLE OR DISCLOSED BY RECIPIENTS TO ANY PERSON IN AUSTRALIA OTHER THAN PROFESSIONAL INVESTORS.

NOTICE TO RESIDENTS OF TAIWAN

THIS AGREEMENT MAY BE MADE AVAILABLE OUTSIDE TAIWAN FOR PURCHASE OUTSIDE TAIWAN BY TAIWAN RESIDENT INVESTORS, BUT IT IS POSSIBLE THAT IT MAY NOT BE OFFERED OR SOLD IN TAIWAN.

NOTICE TO RESIDENTS OF ISRAEL

THIS DOCUMENT DOES NOT CONSTITUTE A PROSPECTUS UNDER THE ISRAELI SECURITIES LAW OF 1968 (THE “ISRAELI SECURITIES LAW”), AND HAS NOT BEEN REVIEWED, FILED WITH OR APPROVED BY THE ISRAELI SECURITIES AUTHORITY OR ANY OTHER ISRAELI GOVERNMENT OR REGULATORY BODY.  THIS DOCUMENT, ANY INVESTMENT ACTIVITY TO WHICH IT RELATES AND ANY OFFERING OF THE TOKENS IN ISRAEL IS AND WILL BE EXCLUSIVELY DISTRIBUTED OR MADE TO, AND DIRECTED AT, QUALIFIED INVESTORS, AS DEFINED IN SCHEDULE 1 OF THE ISRAELI SECURITIES LAW.  PERSONS WHO ARE NOT QUALIFIED INVESTORS SHOULD NOT TAKE ANY ACTION BASED UPON THIS DOCUMENT AND SHOULD NOT RELY ON IT.

NOTICE TO RESIDENTS OF RUSSIA

INFORMATION CONTAINED HEREIN IS NOT AN OFFER, OR AN INVITATION TO MAKE OFFERS, TO SELL, PURCHASE, EXCHANGE OR OTHERWISE TRANSFER SECURITIES OR FOREIGN FINANCIAL INSTRUMENTS IN THE RUSSIAN FEDERATION TO OR FOR THE BENEFIT OF ANY RUSSIAN PERSON OR ENTITY, EXCEPT “QUALIFIED INVESTORS” (AS DEFINED UNDER RUSSIAN SECURITIES LAWS) TO THE EXTENT PERMITTED UNDER RUSSIAN SECURITIES LAWS.  THIS DOCUMENT IS NOT AN ADVERTISEMENT IN CONNECTION WITH THE “PLACEMENT” OR “PUBLIC CIRCULATION” (AS BOTH TERMS ARE DEFINED UNDER RUSSIAN SECURITIES LAW) OF ANY SECURITIES, AND ANY FINANCIAL INSTRUMENTS DESCRIBED HEREIN ARE NOT INTENDED FOR “PLACEMENT” OR “PUBLIC CIRCULATION” IN THE RUSSIAN FEDERATION, IN EACH CASE UNLESS OTHERWISE PERMITTED UNDER RUSSIAN SECURITIES LAWS.  NEITHER ANY FINANCIAL INSTRUMENTS DESCRIBED HEREIN NOR A PROSPECTUS RELATING TO SUCH FINANCIAL INSTRUMENTS HAS BEEN OR WILL BE REGISTERED WITH THE CENTRAL BANK OF THE RUSSIAN FEDERATION.

NOTICE TO RESIDENTS OF THE CAYMAN ISLANDS

THIS DOCUMENT DOES NOT CONSTITUTE A PUBLIC OFFER OF SECURITIES, WHETHER BY WAY OF SALE OR SUBSCRIPTION, IN THE CAYMAN ISLANDS.

NOTICE TO RESIDENTS OF CUBA, IRAN, NORTH KOREA, SYRIA, VENEZUELA AND THE CRIMEA REGION

THE TOKENS ARE NOT BEING OFFERED OR DISTRIBUTED TO ANY RESIDENT OF OR ANY PERSON LOCATED OR DOMICILED IN CUBA, IRAN, NORTH KOREA, SYRIA, VENEZUELA, THE CRIMEA REGION OR ANY OTHER COUNTRY OR TERRITORY THAT IS THE SUBJECT OF COUNTRY-WIDE OR TERRITORY-WIDE SANCTIONS.

 

CROWN STERLING LIMITED, LLC

PURCHASE AGREEMENT FOR SOFTWARE AS A SERVICE

Purchase Amount:

As Set Forth on Purchase Confirmation at the Company’s Website, which is incorporated herein by reference

Number of Security Tokens:

As Set Forth on Purchase Confirmation at the Company’s Website, which is incorporated herein by reference

Security Token Description:

Cryptographic security tokens functional with CrownEncrypt™ and CrownRNG™

Transfer Restriction:

The tokens will be non-transferrable, except for transfers to the Company or its subsidiaries, including transfers made in connection with the use of the CrownEncrypt™ service or transfers made in compliance with applicable U.S and foreign securities laws

Use Restriction:

First anniversary of Settlement Date, unless required to be extended, in the Company’s sole discretion 

THE PARTIES HERETO AGREE THAT in exchange for the payment by the undersigned purchaser (the “Purchaser”) of the amount noted above (the “Purchase Amount”, which shall in no event be less than US$4,950 (or the Bitcoin (“BTC”) equivalent thereof as defined herein) nor more than US$50,000 (or the BTC equivalent thereof as defined herein), unless waived by the Company) on or before the tenth calendar date following the date hereof (the “Effective Date”), Crown Sterling Limited, LLC (the “Company”), hereby agrees to deliver to Purchaser certain cryptographic security tokens described above (“Tokens”), subject to the terms and conditions set forth in this purchase agreement for software as a service, as may be amended, restated and/or modified from time to time in accordance with the provisions hereunder (this “Services Agreement”). The Tokens shall constitute the provision of goods and/or services as at the date that this Services Agreement forms a binding agreement between the Parties only to the extent that Tokens have been delivered to Purchaser. The Purchase Amount denominated in BTC shall be calculated according to the US dollar equivalent of the average of fifteen (15) days’ closing price at 4:02 p.m. (San Francisco time) on coinmarketcap.com on the date immediately prior to the date of payment. 

The purchaser of Tokens pursuant to this Services Agreement is referred to herein as a “Purchaser”.  

All Tokens issued or to be issued by the Company will be limited in number to an aggregate of 10 million outstanding at any one time and are designed to be used in micropayments for the Company’s encryption services only in the consumer market for such services. Subject to any requirements of law, in order to mitigate cybersecurity and privacy risks, the Company does not plan to retain any user-specific or user-identifiable information on its own servers in connection with data encrypted by Purchaser by the use of Tokens. The parties hereto stipulate that the success or failure of the Company’s efforts to commercialize the enterprise and OEM markets for the Company’s services are not expected to have any direct effect on the Company’s services to the consumer market or the value of Tokens. The Company will not “burn” or take Tokens out of circulation, or take or omit to take any other action with the intended purpose, to support the value of outstanding Tokens.

1.  Events

  • Token Launch.
    • The Company will use its commercially reasonable efforts to cause the Token Launch to occur. The Company shall not issue more than 20% of Tokens sold to Purchaser prior to December 31, 2020, and the balance of Tokens sold to Purchaser, if issued by the Company, shall be issued only after December 31, 2020. Purchaser shall have a right to request a refund only prior to the expiration of December 31, 2020 (Los Angeles time), subject at all times to a return fee of 20% of the aggregate purchase price of Tokens being returned.
    • If there is a Token Launch before the expiration or termination of this Services Agreement, the Company will (subject to Section 6(f)) distribute to Purchaser a number of Tokens equal to the Number of Tokens set forth on the purchase confirmation that is incorporated herein by reference, subject to Section 1(a)(i) All Tokens issued pursuant to this Services Agreement shall initially be subject to the Use Restriction. Purchaser shall be able to view issued Tokens at any time in the manner provided by the Company.
  • Settlement and Delivery. In connection with, as a condition to, and prior to the distribution of Tokens by the Company to Purchaser pursuant to Section 1(a):
    • Purchaser will execute and deliver to the Company any and all other transaction documents related to this Services Agreement as are reasonably requested by the Company, including verification of accredited investor status pursuant to Rule 506(c) of Regulation D under the U.S. Securities Act of 1933 (“Securities Act”) or non-U.S. person status under Regulation S of the Securities Act. To the extent that the Company determines, in its sole discretion, that it is necessary, prior to completion of the sale of Tokens, the Company reserves the right to request Purchaser to go through “Know Your Customer” and “Anti-money Laundering” procedures to provide the Company with requested personal details in light of the applicable laws and regulations in connection with the sale of Tokens. Purchaser shall provide such information promptly upon such request and acknowledges and accepts that the Company may refuse to proceed with the sale of Tokens or withhold delivery of Tokens to Purchaser until such requested information has been provided to the satisfaction of the Company. Failure to provide such information accurately by Purchaser will prevent Purchaser from receiving the allocation of Tokens;
    • Purchaser shall send payment in U.S. dollars or in the Bitcoin equivalent thereof in immediately available funds for the Tokens purchased under this Services Agreement to an account designated by the Company’s website page at the time of purchase. If Purchaser tenders BTC in payment for the Tokens, Purchaser shall transfer such amount of BTC to the wallet designated by the Company for receipt of BTC; provided, that such transfer would be considered effected only if there are at least six (6) confirmations on the Bitcoin blockchain for BTC; and
    • The Company will provide to Purchaser, at the email address provided by Purchaser on the signature page of this Services Agreement, an email with a link to download the wallet to receive Tokens and a network address to which Purchaser’s Tokens will be sent following the Token Launch.

Notwithstanding the foregoing, but subject to Section 6(f), the Company will issue the applicable Tokens to Purchaser subject to the Use Restriction. The Company may, in its sole discretion, amend, modify or waive the Use Restriction.

  • Cutback. The Company reserves the right, prior to the Deadline Date, to return all or a portion of any Purchase Amount paid by any Purchaser plus an interest cost thereon calculated by reference to the prime rate of interest as published on the most recent Monday by The Wall Street Journal for a period of time closest to the number of days that have elapsed from the Effective Date to the date that such portion of the Purchase Amount shall be repaid to Purchaser, and in such event any such Purchaser and the Company shall execute a new Services Agreement reflecting the revised Purchase Amount, if any, paid by such Purchaser and a corresponding reduction in the number of Tokens that are subject to this Services Agreement.
  • Rescission at Company’s Option.
    • If the Company determines in its sole and absolute discretion that both (x) Purchaser is not an “accredited investor” within the meaning of the Securities Act and Rule 506 promulgated thereunder and (y) Purchaser is either a “U.S. person” or is not purchasing in an “offshore transaction” (as such terms are defined in Regulation S under the Securities Act), then the Company shall return the Purchase Amount to Purchaser and this Services Agreement shall terminate if no Dissolution Event shall have occurred at that time; provided, that if any Dissolution Event shall have occurred, then the provisions of Section 1(e) shall apply.
    • Subject always to Section 1(e), if the Company determines in its sole and absolute discretion to terminate the Token Launch, then the Company shall return to Purchaser an aggregate amount equal to the Purchase Amount plus an interest cost thereon calculated by reference to the prime rate of interest as published on the most recent Monday by The Wall Street Journal for a period of time closest to the number of days that have elapsed from the Effective Date to the date that the Purchase Amount shall be repaid to Purchaser, upon which this Services Agreement shall terminate.
  • Dissolution Event. If there shall be a Dissolution Event before the Token Launch, Purchasers shall be general unsecured creditors of the Company and the Company shall pay an amount equal to the Purchase Amount (the “Returned Purchase Amount”), due and payable to Purchaser immediately prior to, or concurrent with, the completion of the Dissolution Event, to the extent funds are available after payment shall have been made to secured creditors and creditors preferred by law, and prior to paying any amounts to any equity holders of the Company. If immediately prior to the completion of the Dissolution Event, the assets of the Company that remain legally available for distribution to Purchasers (the “Refunded Purchasers”), as determined in good faith by the Company’s Board of Managers, are insufficient to permit the payment to the Refunded Purchasers of their respective Returned Purchase Amounts, then the remaining assets of the Company legally available for distribution (after payment has been made to all secured creditors and all creditors preferred by law) shall be distributed with equal priority among all of the Company’s general unsecured creditors and Purchasers pro rata among the Refunded Purchasers in proportion to the Returned Purchase Amounts they would otherwise be entitled to receive pursuant to this Section 1(e). Any distributed amounts shall be in U.S. dollars.
  • Termination. This Services Agreement will expire and terminate upon the earliest to occur of: (i) the distribution of Tokens to Purchaser pursuant to Section 1(a); (ii) rescission at the Company’s option pursuant to Section 1(d); (iii) the payment, or setting aside for payment, of amounts due to Purchaser pursuant to Section 1(e); and (iv) the Deadline Date, if the Token Launch has not occurred as of such date; provided, that in the case of clause (iv), the Company shall have the obligation to repay to Purchasers the aggregate amount of all Purchase Amounts within 90 days following the Deadline Date as if the Company had experienced a Dissolution Event. The Company has the right to extend the Deadline Date by sixty (60) days in its sole Sections 4, 5 and 6 of this Services Agreement shall survive any termination of this Services Agreement.
  • Reorganization. The Company currently contemplates that it may, either before or after the Token Launch, effect a corporate reorganization that may include the creation of a parent, subsidiary or other holding structure (a “Reorganization”) and that may involve a non-US company, foundation or trust becoming the issuer (or deemed issuer) of Tokens pursuant to this Services Agreement. In the event that the Company effects a Reorganization, you agree, notwithstanding anything to the contrary contained herein, that subject only to the assumption of the Services Agreement by any new, related entity in such Reorganization, that you will be bound by the terms and conditions of the Reorganization.

2.   Definitions

(a)           “Change of Control” means: (i) a sale, conveyance or other disposition of all or substantially all of the Company’s assets other than to an Excluded Entity; or (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, limited liability company or other entity other than an Excluded Entity. Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its purpose is to: (x) change the jurisdiction of the Company’s incorporation; or (y) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities immediately before such transaction.

(b)           “Deadline Date” means July 31, 2021.

(c)            “Disqualified Jurisdiction” means any geographic area in which use of cryptographic security tokens is prohibited by applicable law, decree, regulation, treaty, or administrative act or requires registration as a money transmitting business, including without limitation the People’s Republic of China, the Republic of Korea, India and Vietnam.

(d)           “Dissolution Event” means: (i) a voluntary termination of operations of the Company; (ii) a general assignment for the benefit of the Company’s creditors; or (iii) any other liquidation, dissolution or winding up of the Company (excluding, for the avoidance of doubt, a Change of Control), whether voluntary or involuntary.

(e)           “Excluded Entity” means a corporation or other entity of which the holders of voting capital stock of the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities outstanding immediately after such transaction.

(f)             “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any entity exercising legislative, judicial or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality, and any court, tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

(g)           “Laws” means laws, statutes, ordinances, rules, regulations, judgments, injunctions, orders and decrees.

(h)           “Person” means a natural person or legal entity or other non-natural person, including a Governmental Authority.

(i)             “Restricted Period” means any time before the first anniversary of the Settlement Date, and any extension thereof if determined necessary in the Company’s sole discretion.

(j)             “Services Agreement” means this agreement or any other agreement pursuant to which Tokens are sold and purchased, similar in form and content to this agreement.

(k)            “Settlement Date” means the date on which payment made by Purchaser for Tokens purchased hereunder is received by the Company in immediately available funds.

(l)             “Token Launch” means the bona fide issuance of Tokens to Purchaser to access Crown Sterling’s encryption services. No more than 20% of Tokens subject to this Agreement shall be delivered prior to December 31, 2020, after which the balance of the Tokens shall be delivered as soon as practicable thereafter.

(m)          “Transaction” means the sale to Purchaser by the Company of the Tokens.

(n)           “Use Restriction” means the restriction on Purchaser’s ability, during the Restricted Period, to offer, sell, assign, transfer, pledge, encumber or otherwise transfer tokens only (i) to the Company or any of its subsidiaries, including a transfer to the Company or any of its subsidiaries as a result of the use of the Token for connection with the use of the CrownEncrypt™ service, (ii) pursuant to a registration statement that has been declared effective under the Securities Act or (iii) pursuant to any other available exemption from the registration requirements of the Securities Act (including in accordance with Rule 144, if available), and, in each case, in compliance with applicable securities laws of any U.S. state or any other applicable jurisdiction. At any time the Company shall be entitled to require, prior to any offer, sale or transfer pursuant to clause (iii), the delivery of an opinion of counsel, certification or other information satisfactory to the Company. FOR THE AVOIDANCE OF DOUBT, ANY USE OR SALE OF A TOKEN SHALL BE SUBJECT TO COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS AND THE COMPANY MAY EXTEND THE PERIOD OF THE USE RESTRICTION BEYOND THE ONE YEAR ANNIVERSARY OF THE SETTLEMENT DATE IF DETERMINED NECESSARY FOR COMPLIANCE WITH APPLICABLE LAWS.

3. Company Representations

  • The Company is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.
  • The execution, delivery and performance by the Company of this Services Agreement is, to the Company’s knowledge, within the power of the Company and, other than with respect to the actions to be taken when Tokens are to be distributed to Purchaser, has been duly authorized by all necessary actions on the part of the Company. Subject to Section 6(f), this Services Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To the knowledge of the Company, it is not in violation of: (i) its current operating agreement; or (ii) any material indenture or contract to which the Company is a party or by which it is bound, where, in each case, such violation, individually, or together with all such violations, would reasonably be expected to have a material adverse effect on the rights of Purchaser under this Services Agreement.
  • Subject to Section 6(f), to the knowledge of the Company, the performance by the Company of this Services Agreement does not and will not: (i) materially violate any judgment, statute, rule or regulation applicable to the Company as currently in effect; (ii) result in the acceleration of any material indenture or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien upon any material property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.
  • No consents or approvals are required in connection with the execution of this Services Agreement (excluding for this purpose the issuance of Tokens), other than: (i) the approval of the Company’s Board of Managers; and (ii) any qualifications or filings under applicable securities laws.
  • To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without conflict or infringement of the rights of, others. The name of the Token is not necessarily a proprietary trade name of the Company.
  • No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Company covered person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.

4. Limitations on Liability

  • THE SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY (“COMPANY’S WARRANTIES”) AND SUCH OTHER COVENANTS, UNDERTAKINGS AND INDEMNITIES EXPRESSLY SET OUT IN SECTION 3 OF THIS SERVICES AGREEMENT ARE THE ONLY REPRESENTATIONS, WARRANTIES, UNDERTAKINGS OR OTHER ASSURANCES OF ANY KIND GIVEN BY OR ON BEHALF OF THE COMPANY TO PURCHASER AND ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED BY LAW, TRADE, CUSTOM, USAGE OR OTHERWISE ARE HEREBY EXPRESSLY EXCLUDED BY THE COMPANY.
  • THE COMPANY’S AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS SERVICES AGREEMENT, WHETHER ARISING OUT OF OR RELATED TO BREACH OF CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE TOTAL OF THE AMOUNTS PAID TO THE COMPANY UNDER THIS SERVICES AGREEMENT.
  • NEITHER THE COMPANY NOR ANY OF ITS MANAGERS, DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL BE LIABLE FOR ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOST REVENUES, LOST PROFITS OR DIMINUTION IN VALUE OR ANY OTHER SIMILAR DAMAGES OR LOSSES, IN EACH CASE ARISING OUT OF, RELATING TO OR RESULTING FROM THIS SERVICES AGREEMENT.
  • NO RECOURSE UNDER OR UPON ANY OBLIGATION, COVENANT OR AGREEMENT CONTAINED IN THIS SERVICES AGREEMENT SHALL BE HAD AGAINST ANY PAST, PRESENT OR FUTURE MEMBER, STOCKHOLDER, OFFICER, MANAGER, DIRECTOR OR EMPLOYEE, AS SUCH, OF THE COMPANY OR OF ANY SUCCESSOR, EITHER DIRECTLY OR THROUGH THE COMPANY OR ANY SUCCESSOR, UNDER ANY RULE OF LAW, STATUTE OR CONSTITUTIONAL PROVISION OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR BY ANY LEGAL OR EQUITABLE PROCEEDING OR OTHERWISE, ALL SUCH LIABILITY BEING, BY ACCEPTANCE HEREOF AND AS PART OF THE LEGAL CONSIDERATION GIVEN BY PURCHASER TO THE COMPANY IN EXCHANGE FOR TOKENS, EXPRESSLY WAIVED AND RELEASED.
  • THE COMPANY MAKES NO WARRANTY WHATSOEVER (EXPRESS OR IMPLIED) WITH RESPECT TO THE TOKENS, INCLUDING ANY: (i) WARRANTY THAT THE TOKENS WILL BE ISSUED; (ii) WARRANTY OF MERCHANTABILITY; (iii) WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (iv) WARRANTY OF TITLE; OR (v) WARRANTY AGAINST INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY, WHETHER ARISING BY OPERATION OF LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE. EXCEPT AS EXPRESSLY SET FORTH HEREIN, PURCHASER ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY REPRESENTATION OR WARRANTY MADE BY THE COMPANY, OR ANY OTHER PERSON ON THE COMPANY’S BEHALF. UNLESS OTHERWISE EXPLICITLY AGREED BY THE COMPANY IN WRITING, IF ANY TOKENS ARE DISTRIBUTED PURSUANT TO THIS SERVICES AGREEMENT, THEY WILL BE DISTRIBUTED AS IS.
  • THE COMPANY SHALL NOT BE LIABLE IN ANY WAY OR IN ANY EVENT IN RESPECT OF ANY CLAIM UNDER THIS SERVICES AGREEMENT IF SUCH CLAIM WAS NOT MADE IN THE PERIOD COMMENCING FROM THE SETTLEMENT DATE TO THE DATE FALLING TWELVE (12) MONTHS AFTER THE SETTLEMENT DATE (SUCH PERIOD BEING THE “CLAIM PERIOD”). ANY CLAIM OR INDEMNITY CLAIM THAT HAS BEEN MADE BEFORE THE EXPIRATION OF THE CLAIM PERIOD SHALL, IF IT HAS NOT BEEN PREVIOUSLY SATISFIED IN FULL, SETTLED OR WITHDRAWN, BE DEEMED TO HAVE BEEN WITHDRAWN AND SHALL BECOME FULLY BARRED AND UNENFORCEABLE ON THE EXPIRATION OF THE PERIOD OF SIX (6) MONTHS COMMENCING FROM THE DATE ON WHICH SUCH CLAIM WAS MADE, UNLESS PROCEEDINGS IN RESPECT THEREOF SHALL HAVE BEEN COMMENCED AGAINST THE COMPANY AND FOR THIS PURPOSE PROCEEDINGS SHALL NOT BE DEEMED TO HAVE BEEN COMMENCED UNLESS THEY SHALL HAVE BEEN ISSUED AND SERVED UPON THE COMPANY.
  • PURCHASER SHALL NOT BE ENTITLED TO RECOVER OR OTHERWISE OBTAIN REIMBURSEMENT OR RESTITUTION FROM THE COMPANY UNDER THIS SERVICES AGREEMENT MORE THAN ONCE IN RESPECT OF THE SAME DAMAGE SUFFERED.
  • FOR THE AVOIDANCE OF DOUBT, NOTHING IN THIS SECTION 4 SHALL LIMIT PURCHASER’S OBLIGATION (AT LAW, IN EQUITY OR OTHERWISE) TO MITIGATE ITS LOSS IN RESPECT OF ANY CLAIM UNDER THIS SERVICES AGREEMENT, AND PURCHASER SHALL NOT BE ENTITLED TO RECOVER DAMAGES IN RESPECT OF ANY CLAIM (AS THE CASE MAY BE) IF, AND TO THE EXTENT THAT, PURCHASER SHALL HAVE ALREADY RECOVERED DAMAGES IN RESPECT OF THE SAME FACT OR SUBJECT MATTER.

5. Purchaser Representations and Warranties

  • Purchaser has full legal capacity, power and authority to execute and deliver this Services Agreement and to perform its obligations hereunder. If Purchaser is an entity, Purchaser is duly organized and validly existing under the applicable Laws of the jurisdiction of its organization. This Services Agreement constitutes a legal, valid and binding obligation of Purchaser, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. Purchaser’s purchase of the Tokens complies, and Purchaser will comply, with all applicable Laws, including without limitation any foreign exchange or regulatory restrictions applicable to such purchase and any governmental or other consents that may need to be obtained, in any jurisdiction in which Purchaser purchases or sells Tokens, and the Company shall have no responsibility therefor.
  • Purchaser has been advised to treat this Services Agreement as a “security”, as defined in the Securities Act and the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and that offers and sales of Tokens have not been registered under any country’s securities laws and, therefore, should not be resold except in compliance with the applicable country’s laws. Purchaser is purchasing Tokens for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. Purchaser has such knowledge and experience in financial and business matters that Purchaser is capable of evaluating the merits and risks of such purchase, is able to incur a complete loss of such purchase without impairing Purchaser’s financial condition and is able to bear the economic risk of such purchase for an indefinite period of time. Purchaser is either (i) an “accredited investor” as such term is defined in Rule 501 of Regulation D under the Securities Act or (ii) it is not a “U.S. person” within the meaning of the Securities Act and is acquiring the Tokens in an “offshore transaction” within the meaning of Regulation S under the Securities Act and, in the case of either the immediately preceding clause (i) or (ii), any accredited investor questionnaire and other supporting documentation or information provided to the Company regarding Purchaser’s status as an accredited investor or status as not a “U.S. person” purchasing in an offshore transaction is true and correct. Purchaser is knowledgeable of, or has been independently advised as to, the applicable securities laws in the jurisdiction in which Purchaser is resident and represents that such Purchaser will not be in violation of any such laws by Purchaser’s execution, delivery and performance of this Agreement.
  • Purchaser hereby represents that such Purchaser has sufficient knowledge and experience in business and financial matters to be able to evaluate the risks and merits of its purchase of Tokens and is able to bear the risks thereof. Purchaser is aware of Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire Tokens. Purchaser has been afforded the opportunity to ask such questions and obtain documents and information as it deems necessary to make a decision regarding the Transaction and has received all information it has requested in connection with making such decision. Purchaser has made its own purchase decision, relying exclusively on its own independent review and consultations with its own investment, legal, tax, accounting and other advisors and has not relied on any information provided by, or representations made by the Company or the Company’s employees, representatives or agents, or on the absence of any such information or representations. Purchaser is not relying on the Company or any of its affiliates or associated persons for any legal, tax or accounting advice and Purchaser is using Purchaser’s own advisors for Purchaser’s legal, tax and accounting advice in connection with the Transaction. Purchaser has had an opportunity to have this Services Agreement (including all schedules hereto) reviewed by counsel of its own choosing and to discuss the contents of this Services Agreement (including all schedules hereto) with such counsel and Purchaser fully understands the terms and provisions of this Services Agreement. Purchaser has conducted, to its satisfaction, its own independent investigation of the condition, operations and business of the Company based in part on the documents and information made available to Purchaser or its representative and, in making its determination to proceed with the Transaction, Purchaser has relied on the results of its own independent investigation and Purchaser has adequate information concerning the Transaction to make an informed decision regarding the purchase of Tokens.
  • Purchaser has a sufficient understanding of the functionality, usage, storage, transmission mechanisms, and other material characteristics of cryptographic security tokens, token storage mechanisms (such as token wallets), blockchain and distributed ledger technology, and blockchain-based and decentralized software systems to understand the terms of this Services Agreement and to appreciate the risks and implications relating to this Services Agreement and Tokens. Purchaser understands that the purchase of Tokens involve risks, all of which Purchaser fully and completely assumes, including, but not limited to, the risk that: (i) the technology associated with Tokens and the blockchain will not function as intended; (ii) Tokens will fail to attract sufficient interest from a substantial portion of the consumer marketplace; (iii) the Company and/or Tokens may be subject to investigation and disciplinary or punitive actions from Governmental Authorities; (iv) no guarantees that the price per Token determined by the market will be equal to or higher than the price paid therefor by Purchaser pursuant to this Services Agreement and (v) no guarantee that the Company or any other person will be successful in getting Tokens listed on any exchange, alternative trading system (“ATS”) or multilateral trading facility (“MTF”) or that any such exchange, ATS or MTF has any liquidity for trading Tokens. Purchaser understands and expressly accepts that Tokens will be created and delivered to Purchaser at the sole risk of Purchaser on an “AS IS” basis. Purchaser understands and expressly accepts that Purchaser has not relied on any representations or warranties made by the Company outside of this Services Agreement, including, but not limited to, conversations of any kind, whether through oral or electronic communication, or any white paper.
  • Purchaser (i) does not view the purchase of Tokens as a common venture and has no expectation of gain or profits to be derived from the entrepreneurial or managerial efforts of the Company or any other person, (ii) enters this Services Agreement with the predominant expectations that (x) he, she or it, as the case may be, will not rely upon the successful development and Token Launch arising from the efforts of the Company and its employees to develop and market CrownEncrypt™ and related sale of Tokens in order to realize profit; and (y) the Company will make actual delivery of Tokens to Purchaser, if at all, only upon the Token Launch.
  • PURCHASER ACKNOWLEDGES AND ASSUMES THE RISKS DISCLOSED AND EXPLAINED IN FURTHER DETAIL ON SCHEDULE A HERETO ASSOCIATED WITH THE WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER ACKNOWLEDGES AND ASSUMES ALL RISK AND LIABILITY FOR THE RESULTS OBTAINED BY THE USE OF ANY TOKENS AND REGARDLESS OF ANY ORAL OR WRITTEN STATEMENTS MADE BY THE COMPANY, BY WAY OF TECHNICAL ADVICE OR OTHERWISE, RELATED TO THE USE OF THE TOKENS.
  • Purchaser understands and agrees that Purchaser has no right against the Company or any other Person except in the event of the Company’s breach of this Services Agreement or intentional fraud.
  • PURCHASER IS NOT ENTITLED, AS A HOLDER OF TOKENS, TO VOTE OR RECEIVE DIVIDENDS OR OTHER PAYMENTS, OR BE DEEMED THE HOLDER OF SECURITIES OF THE COMPANY FOR ANY PURPOSE, NOR WILL ANYTHING CONTAINED HEREIN BE CONSTRUED TO CONFER ON PURCHASER, AS SUCH, ANY OF THE RIGHTS OF A SECURITY HOLDER OF THE COMPANY OR ANY RIGHT TO VOTE FOR THE ELECTION OF MANAGERS OR UPON ANY MATTER SUBMITTED TO THE MEMBERS OF THE COMPANY AT ANY MEETING THEREOF, OR TO GIVE OR WITHHOLD CONSENT TO ANY CORPORATE ACTION OR TO RECEIVE NOTICE OF MEETINGS, OR TO RECEIVE SUBSCRIPTION RIGHTS OR OTHERWISE. OTHER THAN AS EXPRESSLY PROVIDED HEREIN WITH RESPECT TO RETURNED PURCHASE AMOUNTS, PURCHASER IS NOT A CREDITOR OF THE COMPANY AND ANY AMOUNT PAID TO THE COMPANY IS NOT A LOAN TO WHICH PURCHASER HAS A RIGHT OF REPAYMENT.
  • Purchaser understands and agrees that (x) the Company will treat this Services Agreement as a prepaid forward contract for U.S. federal, state and local income tax purposes, and Purchaser will not take any position on any tax return, report, statement or other tax document that is inconsistent with such treatment and (y) Purchaser bears sole responsibility for any taxes as a result of the matters and transactions that are the subject of this Services Agreement (other than any net income taxes of the Company), and any future acquisition, ownership, use, sale or other disposition of Tokens held by To the extent permitted by law, Purchaser agrees to indemnify, defend and hold the Company and any of its affiliates, employees or agents (including developers, auditors, contractors and founders) harmless from any claim, liability, assessment or penalty with respect to any taxes (other than any net income taxes of the Company) associated with or arising from Purchaser’s purchase or distribution of Tokens hereunder, or the use or ownership of Tokens.
  • Purchaser understands and agrees that Purchaser will have no legal or equitable rights, interests or claims in or to any specific property or assets of the Company as a result of this Services Agreement. To the extent that Purchaser acquires a right to receive any payment from the Company in connection with this Services Agreement, such right shall be no greater than the right of an unsecured general creditor of the Company.
  • PURCHASER REPRESENTS AND WARRANTS THAT IT UNDERSTANDS THAT IN THE EVENT OF A TOKEN LAUNCH THE VALUE OF THE TOKENS MAY FALL OR
  • Purchaser accepts, agrees with, undertakes, represents and warrants to the anti-money laundering and counter financing of terrorism representations and warranties set forth on Schedule B
  • Purchaser is not a resident of, or (if applicable) is not domiciled in, any Disqualified Jurisdiction or purchasing Tokens from a location in any Disqualified Jurisdiction.
  • Purchaser is not (i) a citizen or resident of, or located in, a geographic area that is subject to U.S. or other applicable sanctions or embargoes or (ii) an individual, or an individual employed by or associated with an entity, that is identified on the U.S. Department of Commerce’s Denied Persons or Entity List, the U.S. Department of Treasury’s Specially Designated Nationals or Blocked Persons Lists, or the U.S. Department of State’s Debarred Parties List. If Purchaser’s country of residence or other circumstances change such that the above representations are no longer accurate, Purchaser will immediately notify the Company.
  • Purchaser has received a copy of the current White Paper prepared in relation to the Tokens, attached hereto as Exhibit A, and has carefully read it. Purchaser acknowledges and consents that the White Paper may change during the time leading up to the Settlement Date. Purchaser acknowledges that the Company has the sole and absolute discretion in revising the characteristics of Tokens. Notwithstanding anything to the contrary in this Services Agreement, Purchaser acknowledges, agrees and warrants that the Company shall not have any obligation to provide or to procure the provision of any refund to Purchaser under this Services Agreement in the event of any amendment to the White Paper including but not limited to amendments to Token characteristics, other than those that relate to (i) security of encryption, (ii) number of Tokens to be issued, (iii) price per transaction for encryption and random number generator service and (iv) the length of time that Tokens are valid for use with CrownEncrypt™ and CrownRNG™.
  • Purchaser will not use Tokens in connection with any activity that violates applicable laws in any relevant jurisdiction, including, but not limited to, use of Tokens in connection with transactions that violate U.S. federal or state securities or commodity laws.
  • Purchaser will at all times maintain control of Purchaser’s wallet where any Tokens are stored, and Purchaser will not share or disclose the account credentials associated with such wallet with any other party. If Purchaser transfers Tokens into another wallet or vault, Purchaser will likewise at all times maintain control of such other wallet or vault and will not share or disclose the account credentials associated with such other wallet or vault with any other party.
  • Purchaser has been advised that this Services Agreement has not been approved for trading by the U.S. Commodity Futures Trading Commission (“CFTC”). Purchaser represents that it is not entering into this Services Agreement on the basis that it is a contract of sale of a commodity for future delivery (or option on such a contract), a swap or any other instrument subject to the U.S. Commodity Exchange Act (“CEA”).
  • Purchaser represents and warrants that it is not, nor is any person or entity controlling, controlled by or under common control with Purchaser, acting, directly or indirectly: 

(1)       in contravention of any applicable laws and regulations, including anti-money laundering regulations or conventions; 

(2)       on behalf of terrorist or terrorist organizations, including those persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) or on any lists or resolutions issued by the United Nations (whether through the Security Council or otherwise) pursuant to which dealings with persons specified therein are prohibited, restricted or discouraged, as such lists may be amended from time to time; 

(3)       for a senior foreign political figure, any member of a senior foreign political figure’s immediate family or any close associate of a senior foreign political figure unless the Company, after being specifically notified by Purchaser in writing that it is such a person, conducts further due diligence and determines that Purchaser shall be permitted to purchase Tokens; or 

(4)       as trustee, agent, representative or nominee for a foreign shell bank, 

(each such person in (1) to (4), a “Prohibited Person”). 

  • Purchaser represents and warrants that to the extent Purchaser has any beneficial owners it has carried out due diligence to establish the identities of such beneficial owners and, based on the evidence it holds of the identities of such beneficial owners, Purchaser reasonably believes that no such beneficial owner is a Prohibited Person.  
  • Purchaser agrees that to the extent Purchaser has any beneficial owners: 

(1)       it will maintain evidence of the identities of such beneficial owners for at least five years after the date of Purchaser’s complete redemption of Tokens sold by the Company; and 

(2)        it will make available such evidence and any additional evidence that the Company may require upon request in accordance with applicable regulations. 

  • Purchaser acknowledges that if any of the representations, warranties or agreements in this Section 5ceases to be true or if the Company no longer reasonably believes that it has satisfactory evidence as to their truth, the Company may be obligated to take certain actions relating to Purchaser’s holding of Tokens.  Such action may include disclosing Purchaser’s identity to OFAC or other Governmental Authority. Purchaser acknowledges and agrees that if the Company is required to take any such action, it shall have no claim against the Company for any form of damages as a result of any of such actions.
  • Neither Purchaser nor any of its subsidiaries or any director, officer, employee, agent, affiliate or representative of Purchaser or any of its subsidiaries, is a Person that is, or is owned or controlled by a Person that is:

(1)          the subject of any sanctions administered or enforced by OFAC, the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s Treasury (“HMT”), Russia, Canada, The Netherlands, the United Kingdom or any other EEA member state or other relevant sanctions authority (collectively, “Sanctions”), nor

 

(2)          located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Cuba, Iran, North Korea, Syria, Venezuela and the Crimea Region).

 

  • Neither Purchaser (nor any of Purchaser’s subsidiaries if Purchaser is a legal entity) has engaged in, is now engaged in, or will engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
  • Purchaser acknowledges and agrees that the Company is relying on Purchaser’s representations, warranties and agreements herein as a condition to proceeding with the Transaction. Without such representations, warranties and agreements, the Company would not engage in the Transaction.

6. Miscellaneous

  • This Services Agreement, together with the purchase confirmation used by Purchaser at the website for the sale of Tokens, sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior or contemporaneous disclosures, discussions, understandings and agreements, whether oral or written, between them. Any provision of this Services Agreement may be amended, waived or modified only upon the written consent of the Company and Purchaser.
  • Any notice required or permitted by this Services Agreement will be deemed sufficient when sent by email to the relevant address listed on the signature page, as subsequently modified by written notice received by the appropriate party. Purchaser hereby consents to the Company’s giving of any notice in connection with the Tokens upon and after the Token Launch by electronic transmission in any manner contemplated by Section 232 of the General Corporation Law of the State of Delaware.
  • Subject at all times to Section 1(g), neither this Services Agreement nor the rights contained herein may be assigned, by operation of law or otherwise, by either party without the prior written consent of the other; provided, however, that this Services Agreement and/or the rights contained herein may be assigned without Purchaser’s consent by the Company to (i) any other entity that directly or indirectly, controls, is controlled by or is under common control with the Company or (ii) any foundation, trust or nonprofit entity that shall be formed or incorporated by the officers or directors of the Company or at their direction, in each case now or hereafter existing; and provided, further, that the Company may assign this Services Agreement in whole, without the consent of Purchaser, in connection with a reincorporation to change the Company’s domicile.
  • In the event any one or more of the provisions of this Services Agreement is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Services Agreement operate or would prospectively operate to invalidate this Services Agreement, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this Services Agreement and the remaining provisions of this Services Agreement will remain operative and in full force and effect and will not be affected, prejudiced or disturbed
  • Purchaser shall, and shall cause its affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably requested by Company to carry out the provisions of this Services Agreement and give effect to the transactions contemplated by this Services Agreement, including, without limitation, to enable the Company or the transactions contemplated by this Services Agreement to comply with applicable Laws.
  • Without limiting the other provisions of this Services Agreement, the Company shall not be liable or responsible to Purchaser, nor be deemed to have defaulted under or breached this Services Agreement, for any failure or delay in fulfilling or performing any term of this Services Agreement, including without limitation the Token Launch or issuing Tokens when and to the extent such failure or delay is caused by or results from acts beyond the affected party’s reasonable control, including, without limitation: (i) acts of God; (ii) flood, fire, earthquake, pandemic or explosion; (iii) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, or other civil unrest; (iv) compliance with Laws; or (v) action by any Governmental Authority.
  • This Services Agreement and all matters arising therefrom or relating thereto shall be governed by the laws of the State of Delaware.
    • Any dispute under this Services Agreement will be resolved through arbitration, not through the court system. All arbitration will be conducted in Orange County, California, USA, unless both parties agree otherwise in writing in a specific case. All arbitration will be conducted before a single arbitrator following the Rules of Comprehensive Arbitration before the Judicial Arbitration and Mediation Service (“JAMS”). The prevailing party shall be entitled to recover reasonable attorney’s fees and costs. The language of arbitration will be English. Except as required by law, neither a party nor the arbitrator may disclose the existence, content or results of any arbitration without the prior written consent of the other parties.
    • Within thirty days after a final award by the single arbitrator, either party may appeal the award for reconsideration by a three-arbitrator panel. If there is an appeal, the other party may cross-appeal within thirty days after notice of the appeal. The panel will reconsider all aspects of the initial award that are appealed, including related findings of fact.
    • Any award by the individual arbitrator that is not subject to appeal, and any panel award on appeal, shall be final and binding, except for any appeal right under the U.S. Federal Arbitration Act, and may be entered as a judgment in any court of competent jurisdiction.
    • NO ARBITRATION SHALL PROCEED ON A CLASS, REPRESENTATIVE OR COLLECTIVE BASIS. No party may join, consolidate or otherwise bring claims for or on behalf of two or more individuals or unrelated corporate entities in the same arbitration unless those persons are parties to a single transaction. An award in arbitration shall determine the rights and obligations of the named parties only, and only with respect to the claims in arbitration, and shall not (x) determine the rights, obligations or interests of anyone other than a named party or resolve any claim of anyone other than a named party, or (y) make an award for the benefit of, or against, anyone other than a named party. No administrator or arbitrator shall have the power or authority to waive, modify or fail to enforce this paragraph, and any attempt to do so, whether by rule, policy, arbitration decision or otherwise, shall be invalid and unenforceable. Any challenge to the validity of this paragraph shall be determined exclusively by a court and not by the administrator or any arbitrator. If this paragraph shall be deemed to be unenforceable, then any proceeding in the nature of a class action shall be handled in court, not in arbitration.

 

 

SCHEDULE A

RISK FACTORS

A PURCHASE OF TOKENS PURSUANT TO THE SERVICES AGREEMENT INVOLVES A HIGH DEGREE OF RISK.

Purchasers should consider carefully the risks described below, among others, together with all of the other information contained in this document, and the White Paper, which is attached hereto as Exhibit A, before making a purchase decision. The following risks entail circumstances under which the Company’s business, financial condition, results of operations and prospects could materially suffer, which could impact the utility of Tokens. The following discussion is not an exhaustive list of the risks associated with the purchase of Tokens pursuant to this Services Agreement and does not necessarily reflect the relative importance of the various risks.

  1. PURCHASE RISKS 

You can lose all of your purchase consideration.

The Company believes that encryption’s primary value is the value that any particular user assigns to it. Any Purchaser who expects the value of CrownEncrypt™ to increase the value of Tokens may find that any increase in value depends on the technology becoming more widely adopted in an economic phenomenon known as “network effect.” Contrary to the Company’s expectations, the utility and value of an encryption technology may come to depend on more people using that encryption technology. For example, it is possible that there will be greater demand and need for Tokens only if users find that more people or institutions they correspond with via the Internet use encryption based on CrownEncrypt™, and thus more opportunities to use their Tokens will arise. CrownEncrypt™ has not yet been adopted and there is no assurance that either CrownEncrypt™ or Tokens will become widely adopted. Therefore, a Purchaser should expect that the value to Purchaser of their purchase of Tokens may not be as large as expected in the event that CrownEncrypt™ does not become widely adopted. Thus, Purchasers are putting capital at risk without any certainty that they will ever realize expected value from widespread adoption of CrownEncrypt™.

Further, even if CrownEncrypt™ becomes widely adopted and the Company distributes Tokens to other purchasers and future users, there is no assurance that any secondary market for Tokens will develop, or if a secondary market does develop, that it will remain throughout the time that Purchaser owns Tokens. Additionally, there is no guarantee that Tokens will have any value independent of their use to access CrownEncrypt™, retain any such value or increase in value, nor will Tokens ever receive any dividends or distributions. The use of CrownEncrypt™ will depend on the future financial viability of the Company to provide the services that Tokens pay for. Accordingly, the value of any purchase of Tokens may vary substantially over time and is subject to loss, including possible loss of the entire amount purchased other than in transactions for the stated purposes of encryption and random number generator services. Accordingly, Purchasers should only purchase Tokens if they can afford to hold their Tokens for as long as it takes to use them and if Purchaser can afford the potential loss due to the CrownEncrypt™ services being discontinued before all Tokens are used.

There is no existing trading market for Tokens.

The Tokens are new Digital Assets for which there is no established public or private market or trading venue. There can be no assurance that a secondary market will develop or, if a secondary market does develop, that it will provide the holders with liquidity to trade their Tokens or that it will continue for the life of the Tokens. The liquidity of any market for the Tokens will depend on a number of factors, including, but not limited to: (i) the number of Token holders; (ii) widespread adoption of CrownEncrypt™ and the performance of that service compared to other encryption services; (iii) the market for similar Digital Assets; (iv) the interest of traders in making a market in Tokens; (v) regulatory developments in the digital token or cryptocurrency industries; and (vi) legal restrictions on transfer including by reason of securities laws. 

The Company is an early stage company. 

As with any prepaid service, use of Tokens could be affected by the Company’s ability to remain in business. The Company has a limited or no operating history on which to base an evaluation of its business and prospects. The Company’s business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such as the blockchain industry, which includes, but is not limited to, risks related to issuance of tokens. Furthermore, the Company’s business includes participation in the highly scrutinized space of token issuance and therefore may face regulatory and execution challenges. There can be no assurance that the Company will succeed in addressing these risks, and its failure to do so could have a material adverse effect on its business, financial condition, results of operations and prospects in order to remain in the business of providing services purchased by use of Tokens. 

Purchasers will not have access to complete information regarding the Company’s services or financial condition. 

Purchasers may not be able to obtain all of the information they want regarding Tokens, CrownEncrypt™ and CrownRNG™, on a timely basis or at all. It is possible that a Purchaser may not be aware on a timely basis of material adverse changes that have occurred that impact their purchase of Tokens. As a result of these limitations, a Purchaser may not have accurate or complete information about Tokens, or the CrownEncrypt™ or CrownRNG™ services.

The Company will have no obligation to provide reports to Purchasers, including with respect to the development and operation of CrownEncrypt™ or  CrownRNG™, or the financial performance of the Company.

Purchasers need independent advice.

The Company has consulted with counsel, accountants and other experts regarding the operations of the Company and its options to raise financing, as well as the issuance of Tokens. Each prospective Purchaser should consult his or her own legal, tax and financial advisors regarding the desirability of a purchase of Tokens.

The Company is front-loading its pre-commercial sale of Tokens for its services in order to raise capital for operations as an alternative to dilutive equity financing and as an alternative to incurring indebtedness, the latter of which would cause the Company to be highly leveraged and would likely bear a high rate of interest, which the Company cannot be certain of having the ability to repay due to the pre-commercial stage of its operations. Financing of startups, including the Company, involves a high degree of risk. Purchases of Tokens pursuant to the Services Agreement may involve an even higher degree of risk because Purchasers have neither the rights of equity holders nor creditors’ rights or seniority in the Company’s capital structure after the Token Launch.

Financial and operating risks confronting startups are significant. The Company is not immune to these. The startup market in which the Company competes is highly competitive and the percentage of companies that survive and prosper is small. Startups often experience unexpected problems in the areas of product development, marketing, financing and general management, among others, which frequently cannot be satisfactorily resolved. In addition, startups may require substantial amounts of financing, which may not be available through institutional private placements, the public markets or otherwise and the Company cannot be certain that subsequent sales of Tokens to finance its operations would be sufficient to maintain itself as a going concern. Failure to maintain itself as a going concern could adversely affect the Company’s ability to provide encryptions services in exchange for the Tokens.

The Services Agreement may not be transferred.

The terms of the Services Agreement prohibit transfer of the Services Agreement and impose limitations on transfers of Tokens. As a result, Purchasers will be required to remain a party to the Services Agreement until the delivery of all of the Tokens, which may occur as late as July 31, 2021, or the termination of the Services Agreement pursuant to the provisions set forth therein. Consequently, Purchasers must be prepared to bear the risk of a purchase pursuant to the Services Agreement until the termination of the Services Agreement pursuant to the terms set forth herein.

Purchasers will have no control over the operation of CrownEncrypt™ and the Company.

CrownEncrypt™ is expected to be deployed in conjunction with certain software programs and to encrypt transactions and information. Because of this less centralized model, the Company has limited control over commercial uptake of CrownEncrypt™ once launched. In addition, Purchasers are not and will not be entitled to vote or receive dividends or other payments from the Company nor will they be deemed to be the holders of equity securities of the Company for any purpose, nor will anything be construed to confer on Purchasers any of the rights of a member of the Company with any right to vote for the election of its Managers or upon any matter submitted to members at any meeting thereof, nor to give or withhold consent to any company action or to receive notice of meetings, or to receive subscription rights or otherwise.

There may be occasions when certain individuals involved in the development and launch of CrownEncrypt may encounter potential conflicts of interest, such that said party may avoid a loss, or even realize a gain, when other Purchasers are suffering losses.

There may be occasions when certain individuals involved in the development and launch of CrownEncrypt™ may encounter potential conflicts of interest in connection with Tokens and/or the launch of commercial service of CrownEncrypt™, such that said party may avoid a loss, or even realize a gain when other Purchasers are suffering losses. Purchasers may also have conflicting investment, tax and other interests with respect to Token purchases, which may arise from the terms of the Services Agreement, the commercial services of CrownEncrypt™, the timing of the launch of such services or other factors. Decisions made by the key employees of the Company on such matters may be more beneficial for some Purchasers than for others.

II.    LEGAL, TAX AND REGULATORY RISKS

The regulatory regime governing Digital Assets is still developing. 

Regulation of Digital Assets (including the Tokens), offerings of Digital Assets, blockchain technologies and Digital Asset exchanges, ATS, MTF and other trading venues are currently undeveloped and likely to rapidly evolve, and vary significantly among non-U.S. and U.S. federal, state and local jurisdictions and are subject to significant uncertainty. Various legislative and executive bodies in the United States, South Korea, China and Singapore, among other countries, are currently considering, or may in the future consider, laws, regulations, guidance or other actions that may severely impact the Company and Digital Assets. Failure by the Company to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including criminal and civil penalties and fines. The U.S. Internal Revenue Service has taken the view that cryptocurrencies and tokens are “property” and that exchanges thereof for either fiat currency (e.g., U.S. dollars) or other property is a taxable exchange. New or changing laws and regulations or interpretations of existing laws and regulations would likely have numerous material adverse consequences, including, but not limited to: (i) Purchasers’ ability to characterize their Tokens as an investment for either (or both) securities law and tax purposes; (ii) the value of Tokens; (iii) the ability to distribute Tokens by resale or otherwise; (iv) the liquidity and market price of Tokens; (v) Purchasers’ ability to access marketplaces on which to trade Tokens; (vi) the Company’s ability to operate as a going concern; (vii) the taxable nature of transactions involving Tokens and (viii) the necessity to modify the structure, rights and transferability of Tokens. Therefore, there can be no assurance that any new or continuing regulatory scrutiny or initiatives, or tax policy, will not have a material adverse impact on the value of Tokens, or otherwise impede the Company’s activities.

Regulatory developments in the U.S. and foreign jurisdictions may necessitate that the Company take steps to restrict the Tokens in a way that prevents them from becoming tradable on Digital Asset exchanges, ATS, MTF and other trading venues, which may have a material adverse impact on the value of the Tokens and on the ability of the Tokens to be widely adopted for use in connection with the Company’s CrownEncrypt™ product.

The Company has the exclusive right, in its sole discretion, to address and remediate any of the operational, legal or regulatory risks presented as of the date hereof or hereafter. In the exercise of such rights, it is possible that the Company may determine that the launch of CrownEncrypt™ and Tokens is not feasible. Accordingly, there is a material risk that CrownEncrypt™ fails to achieve adoption and Purchasers may not receive Tokens that have value commensurate to Purchasers’ expectations.

CrownEncrypt has not been commercially adopted and may fail to achieve significant market penetration. 

CrownEncrypt™, though functional, has not been commercially deployed or adopted and will require time to determine if it can achieve significant market share in encryption and random number generator services. The Company may have to make changes to the specifications of CrownEncrypt™ or Tokens for any number of legitimate reasons or the encryption and random number generator services may fail to realize widespread adoption, either due to competing services or the realization that services offered by the Company do not provide sufficient value to the marketplace to induce adoption on a commercial scale. The encryption and random number generator services, or Tokens, even if successfully deployed, may not meet Purchaser expectations at the time of delivery. Furthermore, despite good faith efforts to develop and launch the encryption and random number generator services, it is still possible that the encryption and random number generator services will experience malfunctions or otherwise fail to be adequately deployed or maintained, which may negatively impact the market perception of such services and Tokens.

Tokens will be usable only for consumer services, but the Company does not plan to use the proceeds of Token sales to make further investments to develop or market a consumer-focused encryption or random number generator service. Therefore the success or failure of CrownEncrypt™ to achieve market acceptance among consumers is expected to be largely beyond the Company’s influence or control and the Company presently has no intent to expend further investment on developing that market. If CrownEncrypt™ is not successful in demonstrating to users its utility and value, there may not be sufficient demand for Tokens for the Company in the event that any Purchaser wants to resell them. As a result, and if Purchaser does not ultimately require the use of the number of Tokens purchased pursuant to this Services Agreement, Purchaser may lose some or all of his or her entire purchase amount of Tokens. 

Regulatory determinations may make Tokens illegal in certain jurisdictions or for certain categories of Purchasers. 

It is possible that current or future regulations could make the Company and/or Tokens illegal in some jurisdictions, or for some categories of purchasers if they are characterized as investors, which could possibly result in a winding up of the Company, or a decrease in value of the Company or Tokens. Because the Tokens have not been formally classified by regulatory agencies, it is possible that subsequent determinations by regulators may prevent certain individuals or entities from using or holding one or more of the Tokens in the future. Such a determination could materially reduce the demand for Tokens. 

Depending on the facts of a transaction, Tokens might be classified as a “security” under federal and/or state securities laws. If the Tokens are considered securities then their offer and sale must be registered unless an exemption is available or if sales are in transactions not subject to securities laws, all of which also could significantly inhibit adoption and the value of the Tokens, as well as increase the compliance costs of the Company. Depending on what regulatory classification(s) may be made, there may be other securities law issues under the Exchange Act, U.S. Investment Advisers Act of 1940, U.S. Investment Company Act of 1940, CEA, or other U.S. state or federal statutes or regulations. By contrast, if Tokens are not characterized as securities, it would not be possible for a Purchaser to avail himself or herself of the protections or remedies under securities laws. 

Application of Securities Laws to the Tokens. 

The Company is offering the Tokens issuable pursuant to this Prepaid Services Agreement in a manner intended by the Company to be compliant with the restrictions on offers and sales of securities pursuant to the Securities Act. The Company’s hypothesis in offering Tokens is that in the future the Tokens will not be “securities” as defined by federal, state and foreign securities laws or, to the extent that they are securities, exemptions from registration under these laws (or transactions not subject to these laws) will be available for use by the Company and Token holders, or a compliance regime can be developed to make the use of Tokens fully compliant with all applicable laws, rules and regulations. That hypothesis has not yet been subjected to the crucial test of confirmation by any regulatory or judicial authority. Upon analysis, it may prove to be incorrect or unverifiable, in which case it is expected that the Tokens could only be used if they are either not securities or else are securities transferred in transactions that are either exempt from registration under the securities laws, or in transactions not subject thereto, and if all compliance processes, including under the Exchange Act, can be developed and integrated into the use of the Tokens. 

The Company may choose to seek an interpretative or no-action letter or other assurances or some other reaction from the U.S. Securities and Exchange Commission (“SEC”) and/or CFTC staff regarding the proper characterization of the Tokens. There is no assurance, however, that the SEC and/or CFTC staff will entertain such a request, or respond to such a request, let alone respond favorably. The Company intends to take the current views of the SEC and other regulators into account in determining the proper characterization and use of Tokens and the optimal means of structuring the offering, sale, use and trading of the Tokens. 

Failure to obtain a favorable interpretive letter or no-action letter from the SEC or CFTC staff would leave the SEC or CFTC (as the case may be) free to bring an action against the Company undertaken to enforce the SEC’s or CFTC’s (as the case may be) view of the law as applied to the offering or the Tokens or other facts that come to its attention. Even if the SEC or CFTC staff were to provide assurances that it does not disagree with the characterization of the Tokens propounded by the Company, private parties such as offerees and purchasers of the Tokens would not be bound by the SEC’s or CFTC’s views and could assert claims against the Company if disappointed with their purchase of Tokens. Such claims could conceivably include rescission rights and fraud claims grounded in the securities laws. Alternatively, it is also possible that the Tokens at some point would not be considered securities, and any claim for damages or rescission under the securities laws would not be available. 

In addition, state and foreign securities regulators could bring actions against the Company, seeking to vindicate their own views of the proper application of their laws to offers, sales and any resales of Tokens. 

The results of defending and resolving any and all such possible disputes are impossible to predict but could amount to millions of dollars in defense costs alone. The amounts of damages or other cash awards payable in resolving such disputes are likewise impossible to predict but could conceivably amount to the entirety of the funds raised by the Company, and more. Sanctions other than rescission and awards of actual damages could include injunctions and other equitable relief, plus, particularly in the case of claims brought by the government, civil money penalties, fines and exemplary or punitive damages.

Application of the CEA to Tokens. 

The regulatory treatment of this Services Agreement under the CEA is not certain. If Tokens are not securities, then they may be a non-security commodity under the CEA and other laws, rules and regulations governing derivatives that are administered and enforced by the CFTC. The CEA as administered by the CFTC imposes significant burdens on many participants involved in transactions in commodity futures, options on futures, swaps or other derivatives or transactions regulated by the CFTC (collectively, commodity interests), potentially including the Company and Purchasers. Compliance with these laws, rules and regulations might be impractical or impossible. The CFTC might not characterize Tokens consistently with the Company’s views, which might lead to enforcement action by the CFTC or other negative outcomes for Purchasers, including the failure of the Token Launch and/or restricting some or all U.S. persons from accessing the use of Tokens on a blockchain. 

Federal and state Laws regulating money services businesses. 

The Company may be treated as a money transmitter under the U.S. Bank Secrecy Act (“BSA”) and so be required to register with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) as a money services business. The Company may have to comply with state money transmitter regulations as well. 

If registration with FinCEN is required, then failure to register is a federal crime. If the Company is required to register, it will be required to develop an effective anti-money laundering program including policies, procedures and internal controls to verify customer identification; file reports; create and maintain records; file suspicious activity reports under certain circumstances; report transactions in currency; and respond to law enforcement requests. The Company would also be required to designate a compliance officer and obtain independent reviews to monitor and maintain an adequate program. 

Compliance with these state and federal requirements can be expensive, and failure to comply has resulted in substantial fines and other negative consequences for banks and other companies. The Company’s compliance with these rules could be subject to special scrutiny, given the negative publicity associated with some other actors involved in transactions in digital currency and tokens. We cannot guarantee that any programs and policies we adopt in accordance with such state and federal money transmitter laws will be deemed compliant by all applicable regulatory authorities. In the event our controls fail or we are found to be out of compliance for other reasons, we could be subject to monetary damages, civil and criminal money penalties, litigation and damage to our global brand reputation. 

The tax treatment of this Services Agreement, the rights contained therein and the Token distribution are uncertain and there may be adverse tax consequences for Purchasers. 

Although the Company intends to treat the Services Agreement as a current sale of Tokens to Purchasers, the tax characterization of the Token sales, the rights contained in the Services Agreement and the Token distribution are uncertain and highly fact-sensitive. Each Purchaser must seek its own tax advice in connection with a purchase of Tokens. A purchase of Tokens pursuant to the Services Agreement may result in adverse tax consequences to Purchasers based upon various factors. 

If the Tokens are characterized as “virtual currency” for income purposes, then, under a notice issued by the IRS in 2014, the general rules applicable to property transactions would apply. See Notice 2014-21, 2014-16 I.R.B. It is possible that the United States or other jurisdictions will levy substantial or prohibitive taxes on Tokens, thus greatly devaluing them and reducing their adoption in the consumer marketplace. Each Purchaser should consult with and must rely upon the advice of its own professional tax advisors with respect to the United States and non-U.S. tax treatment of a purchase of Tokens, the rights contained in the Services Agreement and the Token distribution. 

State Laws regulating Digital Assets. 

Some states, including New York, either have adopted or are considering adoption of statutes or regulations that specifically regulate digital currencies. In 2015, the New York State Department of Financial Services (“NYDFS”) finalized a rule that requires most businesses involved in digital currency business activity in or involving New York, excluding merchants and consumers, to apply for a license, commonly known as a “BitLicense,” from the NYDFS and to comply with anti-money laundering, cyber security, consumer protection and financial and reporting requirements, among others. As an alternative to the BitLicense in New York, firms can apply for a charter to become limited purpose trust companies qualified to engage in digital currency business activity. 

Other states have considered or are considering regimes similar to the BitLicense framework. As currently drafted, the Bitlicense statutes do not preempt the necessity to comply with the money transmitter license requirements of each state, although the reporting, record keeping and BSA and anti-money laundering requirements may be the same. The process of ascertaining the applicability of state laws in all or most states will be expensive and time consuming. There are very significant penalties for violation in some states. Failure to obtain a state license in states where a license is required can be a crime. Accordingly, to the extent the Company is subject to one or more of the above requirements it would likely have a material and adverse impact on the Company and the value of your Tokens. 

Under certain circumstances, the SEC might assert that a Purchaser has aided and abetted a violation by the Company of the U.S. securities laws. 

A person who has knowledge of a violation by the Company of the U.S. securities laws and provides substantial assistance in furtherance of the violation, for example, by participating in an unregistered offer and sale of securities not subject to a valid exemption and in a transaction subject to the securities laws, could be found liable for aiding and abetting a violation the Securities Act. Thus, the SEC could seek actions against Purchasers if the Token is deemed to be a security and additional exposure from private claimants could also result.

III.     MARKET RISKS

The prices of Digital Assets are volatile.

The prices of Digital Assets change rapidly. Currently, there is relatively modest use of Digital Assets in the retail and commercial marketplace compared to use by speculators, which contributes to price volatility of Digital Assets. This volatility makes it difficult to use Digital Assets for ordinary, non­speculative transactions. 

Despite the Company’s intent to create a Digital Asset to be used in commercial transactions, the price of Digital Assets may be affected by many factors outside the Company’s control such as supply and demand; availability and access to Digital Asset service providers (such as payment processors), exchanges, miners or other Digital Asset users and market participants; perceived or actual network or instrument security vulnerability; changes in regulation in the U.S. or other countries, inflation levels; fiscal policy; monetary policy; political, natural and economic events, and many other factors. The volatility of Digital Assets’ prices generally could impede the adoption and demand for Tokens, which could negatively impact the value of your Tokens.

Purchases of Tokens, including this offering, involve a very high degree of risk.

Financial and operating risks confronting start-ups are always significant. The Company, and by proxy, Tokens, should be considered even riskier than a traditional start-up. The market in which Tokens will compete when CrownEncrypt™ and CrownRNG™ are deployed is highly competitive and the percentage of tokens and other Digital Assets that survive and prosper will likely be small. For CrownEncrypt™ and CrownRNG™ to become successful, there must be widespread adoption of it by the consumer market, which is beyond the control of the Company and Purchasers. Accordingly, the possibility of failure is high.

IV.    OPERATIONAL RISKS

Risks involved with creation of a new encryption standard.

CrownEncrypt™ and CrownRNG™ have not yet been deployed by the Company and will require significant consumer adoption in order to enhance the value of Tokens beyond the purchase price paid by Purchasers pursuant to the Services Agreement. Specifically, Tokens and the encryption and random number generator services rely on new technology, and neither the Company nor its management team has created a product like this before. Further, CrownEncrypt™ and CrownRNG™, even if successfully deployed, may not garner sufficient user interest such that Tokens acquire any value beyond their initial sale price.

The Company’s ability to provides its encryption services depends on intellectual property and its ability to protect and enforce its rights to its intellectual property.

Crown Sterling depends on its intellectual property, and the Company’s failure to maintain its right to use such intellectual property or the failure of Crown Sterling to protect its intellectual property could have a material adverse effect on the successful development of CrownEncrypt™ and the adoption of Tokens.

The Company relies on patent, trade secret, trademark and copyright law to protect its intellectual property. The Company’s patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope and enforceability of a particular patent. Accordingly, the Company cannot assure Purchaser that any of the patents that the Company has filed or other patents that third parties license to the Company will not be invalidated, circumvented, challenged, rendered unenforceable, or licensed to others or that any of the Company’s pending or future patent applications will be issued with the breadth of claim coverage the Company seeks, if issued at all.

Tokens’ competitive position depend in part upon the Company’s ability to obtain or maintain certain proprietary intellectual property used in the Tokens. This may be achieved, in part, by prosecuting claims against others whom the Company believes are infringing its rights and by defending claims of intellectual property infringement brought by third parties. Although the Company is not currently engaged in any material intellectual property litigation, in the future the Company may commence lawsuits against third parties if the Company believes that its rights have been infringed, or the Company may become subject to lawsuits alleging that it has infringed on the intellectual property rights of third parties.

For example, to the extent that the Company has previously incorporated third-party technology and/or know-how into certain products for which the Company does not have sufficient license rights, the Company could incur substantial litigation costs, be forced to pay substantial damages or royalties, or be forced to cease sales in the event any owner of such technology or know-how were to challenge the Company’s subsequent sale of such products (and any progeny thereof).

In addition, to the extent that the Company discovers or has discovered third-party patents that may be applicable to Tokens or any other products or processes under development by the Company, the Company may need to take steps to avoid claims of possible infringement, including obtaining non-infringement or invalidity opinions and, when necessary, re­designing or re-engineering products. However, the Company cannot assure Purchaser that these precautions will allow the Company to successfully avoid infringement claims. The Company’s involvement in intellectual property litigation could result in significant expense to the Company, adversely affect the use of Tokens and divert the efforts of the Company’s technical and management personnel, whether or not such litigation is resolved in the Company’s favor. The risk to Purchasers includes the possibility of the Company’s other business activities being adversely affected to a degree that affects the Company’s ability to continue as a going concern and therefore its ability to provide CrownEncrypt™ services in exchange for payment by use of Tokens. In the event of an adverse outcome in any such litigation, the Company may, among other things, be required to:

  • pay substantial damages;
  • cease the use or sale of products that infringe upon other patented intellectual property; 
  • expend significant resources to develop or acquire non-infringing intellectual property; 
  • discontinue processes incorporating infringing technology; or 
  • obtain licenses to the infringing intellectual

The Company cannot assure Purchaser that the Company would be successful in any such development or acquisition or that any such licenses would be available upon reasonable terms, if at all. Any such development, acquisition or license could require the expenditure of substantial time and other resources and could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company’s failure to protect its existing intellectual property rights may result in the loss of exclusivity or the right to use its technologies. If the Company does not adequately ensure its freedom to use certain technology, the Company may have to pay others for rights to use their intellectual property, pay damages for infringement or misappropriation, and/or be enjoined from using such intellectual property.

The Company has not conducted formal evaluations to confirm whether its technology and products do not or will not infringe upon the intellectual property rights of third parties. As a result, the Company cannot be certain that its technology and products do not or will not infringe upon the intellectual property rights of third parties. If infringement occurred, the Company’s development, sale and distribution of such technology or products may be disrupted.

Effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in certain foreign countries. For instance, it may be difficult for the Company to enforce certain of its intellectual property rights against third parties who may have inappropriately acquired interests in the Company’s intellectual property rights by filing unauthorized trademark applications in foreign countries to register the Company’s marks because of their familiarity with the Company’s business in the United States.

Some of the Company’s proprietary intellectual property is not protected by any patent or patent application, and, despite the Company’s precautions, it may be possible for third parties to obtain and use such intellectual property without authorization. The Company has generally sought to protect such proprietary intellectual property in part by confidentiality agreements and, if applicable, inventors’ rights agreements with strategic partners and employees, although such agreements have not been put in place in every instance. The Company cannot guarantee that these agreements adequately protect the Company’s trade secrets and other intellectual property or proprietary rights. In addition, the Company cannot assure Purchaser that these agreements will not be breached, that the Company will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships. Furthermore, the steps that the Company has taken and may take in the future may not prevent misappropriation of the Company’s solutions or technologies, particularly in respect of officers and employees who are no longer employed by the Company or in foreign countries where laws or law enforcement practices may not protect the Company’s proprietary rights as fully as in the United States.

The Digital Asset market is extremely competitive, and other services have been and may be developed that are the same or similar to CrownEncrypt™ and Crown RNG™.

The Company is developing technology in a highly competitive and increasingly saturated industry. It is possible that competitive services could be established or developed that utilize the same or similar methodologies underlying CrownEncrypt™ and CrownRNG™, and attempt to implement services that are materially similar to those offered by the Company. CrownEncrypt™ and CrownRNG™ may be forced to compete with these competitive services, which could negatively impact the adoption of Tokens, which would likely adversely impact the value of Tokens or the Company and therefore its ability to continue offering its encryption and random number generator services.

CrownEncrypt™ and CrownRNG™ may not be widely adopted and may have limited users.

Tokens are intended for use only in the consumer market for CrownEncrypt™ and CrownRNG™. The OEM and enterprise markets are expected to remain separate to the consumer market for the Company’s services in the sense that OEM and Enterprise customers will be billed differently to the consumer market and services delivered to them differently to the consumer market. The success or failure of the Company’s services in the OEM and enterprise markets are irrelevant to the consumer market, and thus can neither harm nor help the consumer market. It is possible that CrownEncrypt™ and CrownRNG™ will not be used by a large number of individuals in the consumer market or that there will be limited public interest in the use of the Company’s encryption or random number generator services more generally. Such a lack of use or interest could negatively impact the value of Tokens beyond their initial sale value.

The Company may be forced to cease operations or take actions that result in a Dissolution Event.

It is possible that, due to any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of Digital Assets or fiat currencies, the inability by the Company to establish a viable business in the OEM and Enterprise markets, the failure of commercial relationships, regulatory issues or intellectual property ownership challenges, the Company may no longer be viable to operate, and may dissolve or take actions that result in a Dissolution Event. There can be no assurance that, following a Dissolution Event, any other company would continue providing the CrownEncrypt™ or CrownRNG™ services, or that Tokens would be useful in purchasing from such other service provider, or even if Tokens could be used, that they would have the same purchasing power in respect to those services.

The Company may be subject to litigation and other claims. 

The Company, as an independent legal entity, may be subject to lawsuits or proceedings initiated by government entities or private parties. Any legal expenses and/or liabilities will be borne by the Company.

The Company may be accused of infringing intellectual property rights of third parties.

The Company has not evaluated whether its technology does not or will not infringe upon the intellectual property rights of any third party and may be subject to claims of alleged infringement of the intellectual property rights of third parties. Such claims, even if not meritorious, may result in significant expenditure of financial and managerial resources, payment of damages or settlement amounts, and reduced confidence in the Company’s viability and the ability of users to hold and transfer Tokens. Additionally, the Company may become subject to injunctions prohibiting it from using software, business processes, trademarks or other intellectual property that it currently uses or may need to use in the future, or requiring the Company to obtain licenses from third parties when such licenses may not be available on terms feasible or acceptable to the Company.

Risks associated with developing a new technology.

CrownEncrypt™ and CrownRNG™ use new technology. There can be no assurance that such technology will be free of defects or accepted by the marketplace. Thus, even if CrownEncrypt™ and CrownRNG™ become commercially deployed, Tokens may be subject to the risk of theft, loss, malfunction or reputational risk, any of which can significantly degrade the value of such instrument.

V.   RISKS SPECIFIC TO TOKENS

Destruction of Tokens.

Tokens are intended to be accessible only by a party who possesses both the unique public and private keys relating to the local or online digital wallet in which such Tokens are held. To the extent private keys holding the Company’s or Purchasers’ Tokens are lost, destroyed or otherwise compromised, the Company may be unable to access the related Tokens and such private keys are not capable of being restored by the Company. Any loss of private keys relating to digital wallets used to store Tokens could materially adversely affect a purchase of Tokens. Further, Tokens are typically transferred digitally, through electronic media not controlled or regulated by any entity. To the extent a Token is transferred erroneously to the wrong destination, Purchaser may be unable to recover the Tokens or their value. Such loss could materially adversely affect the Tokens and result in the complete loss of Purchaser’s Tokens.

Token transactions are generally irrevocable.

One of the values of distributed ledger and blockchain technology is that they create a permanent, public record of Token transactions. The potential drawback to this, however, is that even if a transaction turns out to have been in error, or as a result of theft of Tokens, such a transaction is not reversible. Consequently, the Company may be unable to replace missing Tokens or seek reimbursement for any erroneous transfer or theft of Tokens. To the extent that the Company is unable to seek redress for such action, error or theft, such loss could adversely affect a purchase of Tokens. Additionally, Purchasers may lose all of their Tokens if a transaction was made in error or if the Tokens were stolen.

Bad actors or hackers.

Bad actors or hackers may launch attacks to steal, compromise or secure Tokens, such as by attacking source code of a blockchain on which the Tokens are used, exchange servers, third-party platforms, cold and hot storage locations or software, or Token transaction history or by other means. For example, in February 2014, Mt. Gox suspended withdrawals because it discovered hackers were able to obtain control over the exchange’s Bitcoin by changing the unique identification number of a Bitcoin transaction before it was confirmed by the Bitcoin network. Furthermore, Flexcoin, a so-called Bitcoin bank, was hacked in March 2014 when attackers exploited a flaw in the code governing transfers between users by flooding the system with requests before the account balances could update, resulting in the theft of 896 Bitcoins. In January 2018, hackers reportedly stole approximately $530 million in cryptocurrencies from Coincheck, a Japanese cryptocurrency exchange. If CrownEncrypt™ and CrownRNG™ become widely adopted, Tokens may become a more appealing target of hackers, malware, cyber-attacks or other security threats. An attack or a breach of security could result in a loss of private data, unauthorized trades, violation of applicable privacy and other laws, significant legal and financial exposure, damage to reputation and a loss of confidence in security measures, any of which could have a material adverse effect on the Company and the value of Tokens. Any such attack or breach could adversely affect the ability of the Company to operate, which could indirectly materially adversely affect the value of Tokens. Any breach of data security that exposes or compromises the security of any of the private digital keys used to authorize or validate transactions, or that enables any unauthorized person to generate any of the private digital keys, could result in unauthorized transactions and would have a material adverse effect on the Company and potentially the value of Tokens. Further, if transactions on a blockchain settle on the trade date and generally are irrevocable it would likely be impossible to reverse unauthorized transactions. There can be no assurance that such security measures will be effective. Additionally, there exists the possibility that while acquiring or disposing of Tokens, the Company unknowingly engages in transactions with bad actors who are under the scrutiny of government investigative agencies. As such, the Company’ systems or a portion thereof may be taken off-line pursuant to legal process such as the service of a search and/or seizure warrant on the Company.

Digital Assets’ prices, including those of Tokens, are subject to manipulation.

Bad actors can use a number of manipulative trading strategies such as spoofing, wash trading and trading in coordination with other bad actors to artificially influence the price of Digital Assets. Bad actors can also attack one or more Digital Asset exchanges. If an exchange is taken offline, it would likely result in reduced liquidity making it easier to manipulate price of one or more Digital Assets. It is possible that one or more actors may manipulate the price of Tokens if they are listed on an asset exchange, which may adversely impact the value of Purchaser’s Tokens.

Tokens may not become listed on a Digital Asset exchange.

Following the popularity of token and “coin” offerings in 2018, many Digital Asset exchanges instituted more stringent criteria for listing Digital Assets on their exchanges. These criteria are subject to subjective interpretation by the managers of the Digital Asset exchange, and there can be no assurance that Tokens will be accepted for listing and trading on any such exchange. Further, the Digital Asset exchanges themselves have come under regulatory scrutiny as to whether they should be required to register with the SEC as a securities exchange. If the SEC increases its scrutiny of trading platforms, it could lead to a reduction in the number of venues on which Digital Assets are traded, including the ability to exchange any other particular Digital Asset or fiat currency for Tokens, even if Tokens are ever listed. It is not possible to know in advance whether a Digital Asset exchange, ATS, MTF or trading platform will accept Tokens for listing, or if so, whether Tokens can remain listed, or whether the trading platform can provide a meaningful opportunity to exchange Tokens for fiat currency or the particular Digital Asset sought by a trader.

 

SCHEDULE B

Anti-money laundering & Counter Financing of Terrorism (AML/CFT) and Additional Representations and Warranties

Purchaser accepts, agrees with, undertakes, represents and warrants to the Company, (with the intent that the provisions of this clause shall continue to have full force and effect into perpetuity) as follows:

  1. That Purchaser acknowledges that, in order to comply with measures aimed at the prevention of money laundering and terrorism financing, the Company and/or any of its delegates or agents, may require verification of the identity of Purchaser and the source of Purchaser’s purchase monies. Purchaser undertakes to provide: (a) such information and documentation as the Company and/or any of its delegates or agents may request to verify any information about Purchaser in compliance with applicable anti­money laundering laws and regulations; and (b) any further information and documentation as the Company and/or any of its delegates or agents may request from time to time to ensure ongoing compliance with applicable laws and regulations, or any other related policies, best practice guidelines and regulations as implemented by the Company at its sole discretion, from time to time. Purchaser acknowledges that neither the Company nor any of its delegates or agents shall be liable for any loss arising as a result of a failure to distribute Tokens to Purchaser if such information and documentation as has been requested has not been provided by Purchaser;
  2. That Purchaser understands and agrees that the Company prohibits the purchase of Tokens by any persons or entities that are acting, whether directly or indirectly, (a) in contravention of any U.S., other national, international or other money laundering regulations or conventions, or (b) on behalf of terrorists, terrorist organizations or other high­risk entities, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization for Economic Cooperation and Development, Financial Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities and Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, Financial Crimes Enforcement Network (“FinCEN”), countries listed by Transparency International (www.transparency.org) as being vulnerable to corruption, or any country or organization, all as may be amended from time to time, (c) for a senior foreign political figure, any member of a senior foreign political figure’s immediate family or any close associate of a senior foreign political figures, or (d) for a foreign shell bank (each of (a) to (d) a “Prohibited Purchaser”), in each case unless the Company, after being specifically notified by Purchaser in writing that Purchaser may be a Prohibited Purchaser, conducts further enhanced due diligence, performs appropriate verification checks on Purchaser to ensure their legitimacy and reliability and determines that such purchase shall be permitted;
  3. That Purchaser is not a Prohibited Purchaser, that Purchaser is not a Prohibited Purchaser in any future purchase of Tokens, and that Purchaser will promptly notify the Company of any change in its status or the status of any ultimate beneficial owners for whom Purchaser is purchasing Tokens on behalf of;
  4. That any information submitted by Purchaser to the Company for the conduct of AML/CFT checks shall be within the Company’s requested time frame, up-to-date, complete, truthful and accurate as of the date of this Services Agreement, and shall continue to be so at any time that Purchaser holds any Tokens;
  5. That Purchaser will, as soon as practicable, notify and update the Company in writing of any development or change in circumstance that may have a material effect on any of the matters pertaining to Purchaser referred to in this Schedule B;
  6. That in the event the Company determines, at its sole discretion, that any Purchaser is a Prohibited Purchaser, it may, without further reference to Purchaser, take any action necessary to terminate the interests of Purchaser in the Services Agreement or Tokens, and Purchaser shall have no claim against the Company for any form of damages whatsoever as a result of the same;
  7. That the Company may release confidential information about Purchaser and, if applicable, any ultimate beneficial owner(s) of a Services Agreement or Tokens to any proper authorities in any jurisdiction, if the Company, in its sole discretion, determines that it is in the best interests of the Company in light of relevant rules and regulations concerning Prohibited Purchasers, money-laundering, terrorism financing or any other illicit purpose;
  8. That Purchaser only uses fiat currency or digital currencies as lawfully acquired, to make payment for the Tokens, that such currency is not derived from or related to any unlawful activities conducted by Purchaser, including but not limited to money laundering or terrorist financing, and that Purchaser does not acquire Tokens to finance, engage in, or otherwise support any money-laundering, terrorism financing or other illicit purpose;
  9. That to the extent that Purchaser has any beneficial owners: (a) it has carried out thorough due diligence to establish the identities of such beneficial owners; (b) based on such due diligence, Purchaser reasonably believes that no beneficial owner is a Prohibited Purchaser; (c) it holds the evidence of the identities and status of its beneficial owners and will maintain all such evidence for at least five years; and (d) it will make available such evidence and any additional evidence that the Company and/or any of its delegates or agents may require upon request in accordance with applicable regulations;
  10. That neither Purchaser, nor any person having a direct or indirect beneficial interest in Purchaser or the Tokens being acquired by Purchaser, or any person for whom Purchaser is acting as agent or nominee in connection with the Services Agreement, is the subject of sanctions administered or enforced by any country or government (collectively, “Sanctions”) nor is organized or resident in a country or territory that is the subject of country-wide or territory­wide Sanctions;
  11. That Purchaser is in full compliance with all anti money laundering laws and regulations that are in force, and the purchase of the Tokens by Purchaser will not be in breach of any laws and regulations that are in force in any relevant jurisdiction;
  12. That Purchaser, in knowledge that the Company may be relying upon its submissions acknowledgements, representations and statements contained therein without performing further verification, will completely, truthfully and accurately comply with, perform any action and fulfill any instructions and requests from the Company in order for the Company to comply with any anti-money laundering or customer due diligence policies, best practice guidelines and regulations as implemented by the Company at its sole discretion, from time to time;
  13. If any of the representations, warranties or covenants above ceases to be true or if the Company and/or its delegates or agents no longer reasonably believe that it has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary, the Company and/or its delegates or agents may, in accordance with applicable regulations, be obligated to: (a) take certain actions relating to Purchaser’s holding of Tokens; (b) report such action; and (c) disclose Purchaser’s identity to OFAC or other Governmental Authority. In the event that the Company and/or its delegates or agents is required to take any such action, Purchaser understands and agrees that it shall have no claim against the Company and/or its delegates or agents for any form of damages as a result of any of such actions; and
  14. Purchaser acknowledges and understands that if, as a result of any information or other matter that comes to his attention, any person knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to his attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to the relevant Governmental Authorities.

Exhibit A

Crown Sterling General Notices