Crown Reserve Acquisition Corp. I

Item 1.01 Entry into a Material Definitive Agreement. Business Combination Agreement On March 30, 2026, Crown Reserve Acquisition Corp. I, a Cayman Islands exempted company (“SPAC” or the “Company”), CRAC Merger Sub Inc., a Delaware corporation and a wholly owned direct subsidiary of SPAC (“Merger Sub”), and Carvix, Inc., a Delaware corporation (“Carvix”), entered into a Business Combination Agreement (the “Business Combination Agreement”). Capitalized terms used but not defined in this Current Report have the meanings given to them in the Business Combination Agreement. Domestication and Structure Subject to the terms and conditions of the Business Combination Agreement, (i) the Company will effect a domestication to Delaware (the “Domestication”), (ii) immediately thereafter, Merger Sub will merge with and into Carvix (the “Merger”), with Carvix surviving as a wholly owned subsidiary of the Company (as domesticated), and (iii) the parties intend that the Domestication qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code and that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The post-closing board of directors will consist of five members: four nominated by Carvix (including one independent director approved by the Sponsor) and one nominated by Crown Reserve’s Sponsor (who will be an independent director approved by Carvix). The two independent directors will be mutually agreed upon by the parties. Carvix’s existing management team will continue to lead the combined company following closing. Consideration; Earnout At the effective time of the Merger (the “Effective Time”), each share of Carvix common stock issued and outstanding immediately prior to the Effective Time (other than dissenting shares and treasury shares) will be cancelled and converted into the right to receive (a) at the Effective Time, 50,000,001 shares of the Company’s common stock, in the aggregate, allocated among Carvix stockholders as set forth in the Company Allocation Schedule, and (b) the contingent right to receive earnout consideration in the form of up to 50,000,100 shares of the Company’s common stock, as described below. During a four-year earnout period covering fiscal years beginning January 1, 2027 (each, a “Payment Year”), certain Carvix equityholders immediately prior to the Effective Time who are identified as Eligible Company Equityholders may earn up to an aggregate of 50,000,100 additional shares of the Company’s common stock (the “Company Earnout Shares”), split equally between (i) an EBITDA component with annual targets of $10.38 million, $14.95 million, $21.84 million and $21.84 million, respectively, and (ii) a revenue component with annual targets of $276.8 million, $351.71 million, $436.88 million and $436.88 million, respectively. The earnout features base annual opportunities for each of Payment Year 1 to 3, “catch-up” mechanics in Payment Year 2 to 4, and a Payment Year 4 true-up within component caps, with equitable anti-dilution adjustments for stock splits and similar changes. In addition, the Sponsor may earn up to 1,000,000 shares of the Company’s common stock per year in Payment Year 1 to 3 (up to 3,000,000 “Sponsor Earnout Shares” in the aggregate) upon achievement of corresponding annual milestones. Any Sponsor Earnout Shares issued will be separate from and in addition to the Company Earnout Shares, and the issuance of any such Sponsor Earnout Shares will not reduce the total number of issuable Company Earnout Shares. Each SPAC founder share will convert on a one-for-one basis into SPAC common stock in connection with the Domestication and Closing. Pursuant to the SPAC Founders Stock Letter (described below), the Sponsor irrevocably waives any anti-dilution or conversion ratio adjustment rights that would otherwise be triggered by the Private Placements, the Merger or other transactions contemplated by the Business Combination Agreement. Representations, Warranties and Covenants The parties to the Business Combination Agreement contains customary representations, warranties and covenants of the this type, including covenants regarding (i) conduct of business prior to Closing, (ii) exclusivity and non-solicitation, (iii) preparation and filing of the S-4/Proxy Statement, (iv) efforts to maintain Nasdaq listing, (v) obtaining necessary approvals, (vi) preparation of audited financial statements, (vii) public announcements, (viii) D&O indemnification and tail coverage, and (ix) post-Closing governance through an Investor Rights Agreement to be entered into at Closing. Conditions to Closing Consummation of the transactions is subject to customary conditions, including, among others, (i) the requisite approval by the Company’s stockholders of the proposals described in the Business Combination Agreement, (ii) delivery of the Carvix stockholder written consent sufficient to constitute the requisite Carvix stockholder approval, (iii) the Domestication, (iv) the SEC declaring effective the Registration Statement on Form S-4, (v) approval for listing on Nasdaq of the shares of the Company’s common stock to be issued in the transactions (including the earnout shares), (vi) expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, if required, (vii) satisfaction of the Company’s net tangible asset or “penny stock” condition, and (viii) the Company’s having at Closing at least the “Minimum Cash Amount,” after giving effect to redemptions, payment of transaction expenses and repayment of indebtedness, each as more fully described in the Business Combination Agreement. Termination The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Effective Time, including: (a) by mutual written consent of SPAC and Carvix; (b) by either SPAC or Carvix if the Effective Time shall not have occurred on or prior to September 30, 2026 (the “Outside Date”), unless the breach of the terminating party was the principal cause of the failure of the Closing to occur by such date; (c) by either SPAC or Carvix if any governmental order has become final and nonappealable and has the effect of making the consummation of the Transactions illegal or otherwise prohibiting the consummation of the Transactions; (d) by either SPAC or Carvix if the Required SPAC Proposals fail to receive the requisite vote for approval at the SPAC Stockholders' Meeting; (e) by SPAC, in the event of a failure by Carvix to timely deliver the Written Consent, subject to a five (5) Business Day cure period; (f) by SPAC, upon a breach of any representation, warranty, covenant or agreement by Carvix that would cause the applicable closing conditions not to be satisfied, subject to a thirty (30) day cure period; (g) by Carvix, upon a breach of any representation, warranty, covenant or agreement by SPAC or Merger Sub that would cause the applicable closing conditions not to be satisfied, subject to a thirty (30) day cure period; or (h) by SPAC, if Carvix shall have failed to deliver the audited financial statements to SPAC as required by the Business Combination Agreement. If the Business Combination Agreement is validly terminated, it shall become void and there shall be no liability under the Business Combination Agreement on the part of any party thereto, except as set forth in the confidentiality provisions, the effect of termination provisions and the general provisions of the Business Combination Agreement, or in the case of termination subsequent to fraud or a willful material breach of the Business Combination Agreement by a party thereto. A copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Business Combination Agreement and the Business Combination does not purport to be complete and is qualified in its entirety by reference thereto. The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The Business Combination Agreement is being filed to provide investors with information regarding its terms. It is not intended to provide any other factual information about the parties to the Business Combination Agreement. In particular, the representations, warranties, covenants and agreements contained in the Business Combination Agreement, which were made only for purposes of the Business Combination Agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Business Combination Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors, security holders and reports and documents filed with the SEC. Investors and security holders are not third-party beneficiaries under the Business Combination Agreement and should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Business Combination Agreement. In addition, the representations, warranties, covenants and agreements and other terms of the Business Combination Agreement may be subject to subsequent waiver or modification. Other Agreements SPAC Founders Stock Letter Concurrently with signing, Crown Acquisition Sponsor LLC (the “Sponsor”) executed a SPAC Founders Stock Letter in favor of SPAC and Carvix pursuant to which the Sponsor agreed, among other things, to vote its founder shares in favor of the required SPAC proposals, to be subject to customary transfer restrictions, to waive any anti-dilution or conversion ratio adjustments applicable to the founder shares in connection with the Domestication, the Merger and the Private Placements, to comply with SPAC non-solicitation restrictions, and to enter into a lock-up at Closing on terms consistent with the Business Combination Agreement (providing for a lock-up period expiring on the earlier of (i) six months after consummation of the PIPE financing, and (ii) eighteen months after Closing). The foregoing description of the SPAC Founders Stock Letter does not purport to be complete and is qualified in its entirety by the terms and conditions of the SPAC Founders Stock Letter, a copy of which is attached as Exhibit 10.1 hereto, and the terms of which are incorporated herein by reference. Stockholder Support Agreement Concurrently with signing, SPAC, Carvix and certain key Carvix stockholders entered into a Stockholder Support Agreement pursuant to which such stockholders agreed, among other things, to execute and deliver a written consent approving the Business Combination Agreement and the transactions, vote their shares in favor of the approvals, and comply with transfer restrictions and exclusivity undertakings until the earlier of Closing or termination of the Business Combination Agreement. The agreement identifies the signatories and their holdings and provides that the signatories collectively own a sufficient number of shares to deliver the Requisite Company Stockholder Approval. The foregoing description of the Stockholder Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Stockholder Support Agreement, a form of which is attached as Exhibit 10.2 hereto, and the terms of which are incorporated herein by reference. Investor Rights Agreement At Closing, SPAC (as domesticated), the Sponsor, Carvix founders and certain other holders will enter into an Investor Rights Agreement covering governance matters (including initial Board composition) and registration rights. The agreement provides that earnout shares issued to Eligible Company Equityholders and Sponsor Earnout Shares will constitute “Registrable Securities” with SPAC agreeing to keep a shelf registration statement effective and to update or supplement it within 30 business days following issuance of each tranche of earnout shares. The foregoing description of the Investor Rights Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Investor Rights Agreement, a form of which is attached as Exhibit 10.3 hereto, and the terms of which are incorporated herein by reference. Additional Information In connection with the Business Combination, the Company and Carvix (as co-registrants) intends to file jointly with the SEC a Registration Statement on Form S-4 (the “Registration Statement”), which will include a preliminary prospectus and preliminary proxy statement. The Company will mail a definitive proxy statement/final prospectus and other relevant documents to its stockholders. This communication is not a substitute for the Registration Statement, the definitive proxy statement/final prospectus or any other document that the Company will send to its stockholders in connection with the Business Combination. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE ADVISED TO READ, WHEN AVAILABLE, THE PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE COMPANY’S SOLICITATION OF PROXIES FOR ITS SPECIAL MEETING OF STOCKHOLDERS TO BE HELD TO APPROVE THE BUSINESS COMBINATION (AND RELATED MATTERS) BECAUSE THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE BUSINESS COMBINATION AND THE PARTIES TO THE BUSINESS COMBINATION. The definitive proxy statement/final prospectus will be mailed to stockholders of the Company as of a record date to be established for voting on the Business Combination. Stockholders will also be able to obtain copies of the definitive proxy statement/prospectus and other documents, without charge, once available, at the SEC’s website www.sec.gov No Offer or Solicitation This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote in any jurisdiction pursuant to the Business Combination or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act. No securities commission or securities regulatory authority in the United States or any other jurisdiction has in any way passed upon the merits of the Business Combination or the accuracy or adequacy of this communication. Participants in the Solicitation The Company, Carvix and their respective directors, executive officers, other members of management, and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies of the Company’s stockholders in connection with the Business Combination. Investors and security holders may obtain more detailed information regarding the names and interests in the Business Combination of the Company’s directors and officers in the Company’s filings with the SEC including the Registration Statement to be filed with the SEC by the Company, which will include the proxy statement of the Company for the Business Combination, and such information and names of Carvix’s directors and executive officers will also be in the Registration Statement filed with the SEC by the Company, which will include the proxy statement of the Company for the Business Combination.