Filed Pursuant to Rule 424(b)(3)
Registration No. 333-282359
Prospectus Supplement No. 5
(to Prospectus dated November 12, 2024)
1,015,383
COMMON SHARES OF Damon INC.
Offered
by the Selling Securityholders
This prospectus supplement
is being filed to update and supplement information contained in the prospectus dated November 12, 2024 (the “Prospectus”)
related to the resale of up to 1,015,383 common shares, no par value (“common shares”), of Damon Inc., a British Columbia
corporation previously known as Grafiti Holding Inc. (“Damon”), by our shareholders identified in this prospectus, or their
permitted transferees (the “Registered Shareholders”), with the information contained in our Current Report on Form 8-K, filed
with the Securities and Exchange Commission (the “SEC”) on December 23, 2024 (the “Current Report”). Accordingly,
we have attached the Current Report to this prospectus supplement.
This prospectus supplement
updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in
combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction
with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should
rely on the information in this prospectus supplement.
Our common shares are traded
on the Nasdaq Global Market under the symbol “DMN”. On December 20, 2024, the closing price of our common shares was $0.55
per share.
Investing in our securities
involves risks. See “Risk Factors” beginning on page 6 of the Prospectus and in any applicable prospectus supplement.
Neither the Securities and
Exchange Commission nor any other regulatory body have approved or disapproved these securities, or passed upon the accuracy or adequacy
of this prospectus supplement. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is December
23, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 20, 2024
DAMON INC.
(Exact name of registrant as specified in its charter)
| British Columbia |
|
001-42190 |
|
N/A |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(I.R.S. Employer
Identification No.) |
|
704 Alexander Street
Vancouver. BC |
|
V6A 1E3 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (408) 702-2167
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
| Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
| Common Shares |
|
DMN |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into
a Material Definitive Agreement.
On
December 20, 2024, Damon Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase
Agreement”) with Streeterville Capital, LLC (the “Investor”). Under the agreement, the Company agreed to issue and sell
to the Investor one or more pre-paid purchases at an aggregate purchase price of up to $10,000,000 (the “Total Committed Amount”)
for the purchase of the Company’s common shares. As consideration for the Investor’s commitment, the Company also agreed to
issue 343,053 common shares to the Investor (the “Commitment Shares”).
Each
pre-paid purchase includes an original issue discount of 7% and accrues interest at an annual rate of 8%. For the initial pre-paid purchase,
which closed on December 20, 2024 (the “Initial Closing Date”), the Investor paid $2,000,000, creating in an initial principal
balance of $2,140,000.
Pursuant to the Securities
Purchase Agreement and a registration rights agreement entered into on the same date (the “Registration Rights Agreement”),
the Company will file a registration statement on Form S-1 under the Securities Act of 1933, as amended (the “Securities Act”),
to register the resale of a required number of common shares, including the Commitment Shares and common shares issuable pursuant to the
pre-paid purchases (the “Registration Statement”). If the Registration Statement is not declared effective within 60 days
of the Initial Closing Date, the outstanding balance of the pre-paid purchase will automatically increase by 2%, with further increases
of 2% for each subsequent 30-day period that the Registration Statement remains ineffective. If the Registration Statement is declared
effective within 90 days of the Initial Closing Date and no default has occurred, and if requested by the Company, the Investor will fund
$1,000,000 for a second pre-paid purchase.
Within a committed two-year
period, and subject to certain specified conditions, the Company may request the issuance of additional pre-paid purchases to the Investor,
with each purchase amount no less than $250,000, provided that the total outstanding balance of all pre-paid purchases does not exceed
$3,000,000.
The proceeds from the pre-paid
purchases are expected to be used for working capital and other corporate purposes. However, $100,000 from the initial pre-paid purchase
funding, and 15% of the funding from subsequent pre-paid purchases, shall be used to repay the indebtedness under the secured promissory
note issued to the Investor in June 2024 with an original principal amount of $6,470,000.
Following the funding of each
pre-paid purchase, the Investor has the right, but not the obligation, to purchase from the Company its common shares not exceeding (i)
the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company’s outstanding common shares. The
purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP during the ten consecutive trading
days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the “Minimum Price”
as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing. Under the Securities Purchase Agreement, the Company agrees
to seek shareholder approval for the issuance of common shares up to the Total Commitment Amount (the “Required Shareholder Approval”).
Until such approval is obtained, the Company will not request additional pre-paid purchases that may cause the total amount of common
shares issuable to exceed the limits set under Nasdaq Listing Rule 5635(d) (the “Exchange Cap”).
The outstanding pre-paid purchases,
unless reduced by the Company’s sale of common shares to the Investor as described, will remain outstanding and may be repaid in
cash at the Company’s option. There is no maturity date for the outstanding balance of the pre-paid purchases. However, if the Company
fails to obtain the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange
Cap must be repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company’s common shares
falling below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of
the shares under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest
until the outstanding balance is fully repaid or the triggering event conditions are resolved. In an event of default as specified in
the pre-paid purchase, the Investor may accelerate repayment, requiring the outstanding balance to become immediately due, with a 10%
increase to the principal and interest accruing at a rate of 18% per annum.
The foregoing description
of the Securities Purchase Agreement and the Registration Rights Agreement does not purport to be complete and is qualified in its entirety
by the full text of the respective agreements. Copies of the Securities Purchase Agreement and the Registration Rights Agreement are attached
as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation
or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
To the extent required, the
information included in Item 1.01 of this current report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
To the extent required, the
information included in Item 1.01 of this current report on Form 8-K with respect to the pre-paid purchases, the Commitment Shares and
the common shares issuable under the pre-paid purchases is hereby incorporated by reference into this Item 3.02. The offer and sale of
these securities were not registered under the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of
the Securities Act, on the basis that these securities are issued to an institutional accredited investor and the Company did not engage
in any general solicitation in connection with such offer and sale.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| * | Certain schedules have been omitted pursuant to Item 601(a)(5)
of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules upon request by the Securities
and Exchange Commission. |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
DAMON, INC. |
| |
|
|
| Date: December 23, 2024 |
By: |
/s/ Bal Bhullar |
| |
Name: |
Bal Bhullar |
| |
Title: |
Chief Financial Officer |
Exhibit
10.1
Securities Purchase Agreement
This
Securities Purchase Agreement (this “Agreement”), dated as of December 20, 2024, is entered into by and between
Damon Inc., a British Columbia corporation (“Company”), and Streeterville
Capital, LLC, a Utah limited liability company, its successors and/or assigns (“Investor”). Capitalized terms
used but not otherwise defined herein will have the meanings set forth in Section 12.
A. Company
and Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the Securities
Act of 1933, as amended (the “1933 Act”), and the rules and regulations promulgated thereunder by the United States
Securities and Exchange Commission (the “SEC”).
B. Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement: (i) one or more
Pre-Paid Purchases, in form substantially similar to that attached hereto as Exhibit A (each, a “Pre-Paid Purchase”),
in the aggregate purchase amount of up to $10,000,000.00 (the “Commitment Amount”), for the purchase of shares of common
stock, no par value per share, of Company (the “Common Shares”), upon the terms and subject to the limitations and
conditions set forth in such Pre-Paid Purchase; and (ii) 343,053 Common Shares to be delivered by Company to Investor at Closing (as defined
below) bearing a customary restrictive legend under the 1933 Act (the “Commitment Shares”).
D. This
Agreement, the Pre-Paid Purchase(s), the Registration Rights Agreement (as defined below), and all other certificates, documents, agreements,
resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended from time to
time, are collectively referred to herein as the “Transaction Documents”.
E. For
purposes of this Agreement: “Purchase Shares” means all Common Shares issuable pursuant to the Pre-Paid Purchases;
and “Securities” means the Pre-Paid Purchase(s), the Commitment Shares and the Purchase Shares.
NOW, THEREFORE, in
consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Company and Investor hereby agree as follows:
1. Purchase
and Sale of Securities.
1.1. Purchase
of Initial Pre-Paid Purchase and Commitment Shares. Company shall issue and sell to Investor and Investor shall purchase from Company
the Initial Pre-Paid Purchase (as defined below) and the Commitment Shares. In consideration thereof, Investor shall pay the Initial Purchase
Price (as defined below) to Company for the Initial Pre-Paid Purchase and the Commitment Shares. Company shall issue the Initial Pre-Paid
Purchase and the Commitment Shares to Investor at Closing.
1.2. Form
of Payment. On the Closing Date, Investor shall pay the Initial Purchase Price to Company via wire transfer of immediately available
funds against delivery of Pre-Paid Purchase #1 in the original principal amount of $2,140,000.00 (the “Initial Pre-Paid Purchase”)
and the Commitment Shares.
1.3. Closing
Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 8 and Section 9 below, the date of the
issuance and sale of the Initial Pre-Paid Purchase pursuant to this Agreement (the “Closing Date”) shall be December
20, 2024, or another mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the “Closing”)
shall occur on the Closing Date by means of the exchange by email of signed .pdf documents, but shall be deemed for all purposes to have
occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.
1.4. Collateral
for Pre-Paid Purchases. The Pre-Paid Purchases shall be unsecured.
1.5. Original
Issue Discount. The Initial Pre-Paid Purchase carries an original issue discount of $140,000.00 (“OID”). The OID
for the Initial Pre-Paid Purchase will be included in the initial principal balance of the Initial Pre-Paid Purchase. The “Initial
Purchase Price”, therefore, shall be $2,000,000.00, computed as follows: $2,140,000.00 initial principal balance, less the OID.
The OID for subsequent Pre-Paid Purchases after the Initial Pre-Paid Purchase will be seven percent (7%) of the amount set forth in the
applicable Request (as defined below) and each subsequent Pre-Paid Purchase will accrue interest at the rate of eight percent (8%) per
annum.
1.6. Request
for Pre-Paid Purchase. The parties hereby agree that Company may, at its sole and absolute discretion, at any time and from time to
time during the Commitment Period, subject to the satisfaction of the conditions set forth in Annex I attached hereto,
request a Pre-Paid Purchase in an amount less than the Maximum Purchase Amount and greater than the Minimum Purchase Amount from Investor
by providing a written notice of such request to Investor (each, a “Request”). The closing of each Pre-Paid Purchase
shall take place on or before the third (3rd) Trading Day (as defined in the Initial Pre-Paid Purchase) following the date
of such Request, or such earlier date as may be agreed by Investor (the date of the closing of each Pre-Paid Purchase shall be referred
to as the “Pre-Paid Purchase Date”). Subject to the satisfaction of the conditions set forth in Annex I attached
hereto as of such Pre-Paid Purchase Date, Investor shall pay to Company the amount set forth in such Request (which amount shall
serve as the purchase price of such Pre-Paid Purchase) in immediately available funds to an account designated by Company in writing on
each Pre-Paid Purchase Date (except in respect of the Initial Pre-Paid Purchase, which shall be paid at Closing) immediately following
delivery of the applicable fully executed Pre-Paid Purchase in a form substantially similar to the Initial Pre-Paid Purchase except as
noted in this Section 1.6, and transmit notification to Company that such funds transfer has been requested, and Company will issue
the applicable Pre-Paid Purchase using the same form as the Initial Pre-Paid Purchase. With respect to each Pre-Paid Purchase issued hereunder
after the Initial Pre-Paid Purchase: (i) the Floor Price (as defined in the applicable Pre-Paid Purchase) of such Pre-Paid Purchase will
be twenty percent (20%) of the Nasdaq Minimum Price on the Trading Day immediately prior to the Pre-Paid Purchase Date; and (ii) the Fixed
Price (as defined in the applicable Pre-Paid Purchase) of such Pre-Paid Purchase will be one hundred twenty percent (120%) of the Nasdaq
Minimum Price on the Trading Day immediately prior to Pre-Paid Purchase Date. Each Pre-Paid Purchase will be considered a separate instrument
with a separate outstanding balance and holding period. Notwithstanding anything to the contrary contained herein, including but not limited
to the stipulation under Section 11.2, Company may determine, at its sole and absolute discretion, that it no longer wishes to request
a Pre-Paid Purchase. For avoidance of any doubt, Company shall be under no obligation whatsoever to request any Pre-Paid Purchases other
than the Initial Pre-Paid Purchase.
1.7. Pre-Paid
Purchase #2. So long as: (a) the Initial Registration Statement (as defined below) has been declared effective by the SEC within ninety
(90) days of the Closing Date, and (b) no Event of Default (as defined in the Initial Pre-Paid Purchase) shall have occurred under the
Initial Pre-Paid Purchase, Investor will fund $1,000,000.00 to Company for the purchase of Pre-Paid Purchase #2; provided, that Company
requests such funding within two (2) Trading Days of the effective date of the Initial Registration Statement.
2. Investor’s
Representations and Warranties. Investor represents and warrants to Company that as of the Closing Date: (i) this Agreement has been
duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance with
its terms; and (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the 1933
Act.
3. Company’s
Representations and Warranties. Company represents and warrants to Investor that as of the Closing Date: (i) Company is a corporation
duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate
power to own its properties and to carry on its business as now being conducted; (ii) Company is duly qualified to do business and is
in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary;
(iii) Company has registered its Common Shares under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “1934
Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the
Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly authorized by Company and all necessary
actions have been taken; (v) this Agreement, the Initial Pre-Paid Purchase, the Registration Rights Agreement and the other Transaction
Documents have been duly executed and delivered by Company and constitute the valid and binding obligations of Company enforceable in
accordance with their terms; (vi) the execution and delivery of the Transaction Documents by Company, the issuance of the Securities in
accordance with the terms hereof, and the consummation by Company of the other transactions contemplated by the Transaction Documents
do not and will not conflict with or result in a breach by Company of any of the terms or provisions of, or constitute a default under
(a) Company’s formation documents or bylaws, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which Company is a party or by which it or any of its properties or assets are bound, including, without limitation,
any listing agreement for the Common Shares, or (c) any existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal, state or foreign regulatory body, administrative agency, or other governmental body having
jurisdiction over Company or any of Company’s properties or assets; (vii) no further authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of Company
is required to be obtained by Company for the issuance of the Securities to Investor or the entering into of the Transaction Documents;
(viii) none of Company’s filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; (ix) the Company has filed all reports, schedules, forms, statements and other documents required
to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing and
has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension; (x) there is no
action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of Company,
threatened against or affecting Company before or by any governmental authority or non-governmental department, commission, board, bureau,
agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a material adverse effect
on Company or which would adversely affect the validity or enforceability of, or the authority or ability of Company to perform its obligations
under, any of the Transaction Documents; (xi) Company has not consummated any financing transaction that has not been disclosed in a periodic
filing or current report with the SEC under the 1934 Act; (xii) Company is not, nor has it been at any time in the previous twelve (12)
months, a “Shell Company,” as such type of “issuer” is described in Rule 144(i)(1) under the 1933 Act; (xiii)
with respect to any commissions, placement agent or finder’s fees or similar payments that will or would become due and owing by
Company to any person or entity as a result of this Agreement or the transactions contemplated hereby (“Broker Fees”),
any such Broker Fees will be made in full compliance with all applicable laws and regulations and only to a person or entity that is a
registered investment adviser or registered broker-dealer; (xiv) Investor shall have no obligation with respect to any Broker Fees or
with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may be due in
connection with the transactions contemplated hereby and Company shall indemnify and hold harmless each of Investor, Investor’s
employees, officers, directors, stockholders, members, managers, agents, and partners, and their respective affiliates, from and against
all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses suffered in respect of
any such claimed Broker Fees; (xv) neither Investor nor any of its officers, directors, stockholders, members, managers, employees, agents
or representatives has made any representations or warranties to Company or any of its officers, directors, employees, agents or representatives
except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by
the Transaction Documents, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors,
members, managers, employees, agents or representatives other than as set forth in the Transaction Documents; (xvi) Company acknowledges
that the State of Utah has a reasonable relationship and sufficient contacts to the transactions contemplated by the Transaction Documents
and any dispute that may arise related thereto such that the laws and venue of the State of Utah, as set forth more specifically in Section
13.2 below, shall be applicable to the Transaction Documents and the transactions contemplated therein; (xvii) Company acknowledges that
Investor is not registered as a ‘dealer’ under the 1934 Act; (xviii) Company has performed due diligence and background research
on Investor and its affiliates and has received and reviewed the due diligence packet provided by Investor; and (xix) Company agrees that
each Pre-Paid Purchase issued hereunder will be deemed to be a security under the 1933 Act for all purposes and agrees not to take a contrary
position in any document, statement, setting, or situation. Company, being aware of the matters and legal issues described in subsections
(xvii) and (xviii) above, acknowledges and agrees that such matters, or any similar matters, have no bearing on the transactions contemplated
by the Transaction Documents and covenants and agrees it will not use any such information or legal theory as a defense to performance
of its obligations under the Transaction Documents or in any attempt to avoid, modify, reduce, rescind or void such obligations.
4. Company
Covenants. Until all of Company’s obligations under all of the Transaction Documents are paid and performed in full, or within
the timeframes otherwise specifically set forth below, Company will at all times comply with the following covenants: (i) so long as Investor
beneficially owns any of the Securities and for at least twenty (20) Trading Days thereafter, Company will remain in good standing with
Nasdaq, subject to such grace periods for regaining compliance as may be available under applicable Nasdaq rules, and timely file on the
applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will take
all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in accordance
with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) when issued, the Commitment
Shares and the Purchase Shares will be duly authorized, validly issued, fully paid for and non-assessable, free and clear of all liens,
claims, charges and encumbrances; (iii) the Common Shares shall be listed or quoted for trading on NYSE, NYSE American, or Nasdaq; (iv)
trading in Company’s Common Shares will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on
Company’s principal trading market; (v) Company shall have delivered to Investor a fully executed Irrevocable Letter of Instructions
to Transfer Agent (the “TA Letter”) substantially in the form attached hereto as Exhibit C acknowledged and
agreed to in writing by Company’s transfer agent (the “Transfer Agent”) by December 31, 2024; (vi) Company will
not make any Restricted Issuance (as defined below) without Investor’s prior written consent, which consent may be granted or withheld
in Investor’s sole and absolute discretion; and (vii) Company shall not enter into any agreement or otherwise agree to any covenant,
condition, or obligation that locks up, restricts in any way or otherwise prohibits Company: (a) from entering into a variable rate transaction
with Investor or any affiliate of Investor, or (b) from issuing Common Shares, preferred stock, warrants, convertible notes, Pre-Paid
Purchases, other debt securities, or any other Company securities to Investor or any affiliate of Investor. For purposes hereof,
the term “Restricted Issuance” means the issuance, incurrence or guaranty of any debt obligations, other than trade
payables in the ordinary course of business, or the issuance of any securities that (1) have or may have conversion rights of any kind,
contingent, conditional or otherwise, in which the number of shares that may be issued pursuant to such conversion right varies with the
market price of the Common Shares; (2) are or may become convertible into Common Shares (including without limitation convertible debt,
warrants or convertible preferred shares), with a conversion price that varies with the market price of the Common Shares, even if such
security only becomes convertible following an event of default, the passage of time, or another trigger event or condition; (3) have
a fixed conversion price, exercise price or exchange price that is subject to being reset at some future date at any time after the initial
issuance of such debt or equity security (A) due to a change in the market price of Company’s Common Shares since the date of the
initial issuance or (B) upon the occurrence of specified or contingent events directly or indirectly related to the business of Company
(including, without limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not including
any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction),
or such debt security contains a fixed conversion price with a provision to increase the outstanding balance upon a breach or default;
or (4) are issued or will be issued in connection with a Section 3(a)(9) exchange, a Section 3(a)(10) settlement, or any other similar
settlement or exchange, other than with Investor, BHI (as defined below) and their respective affiliates. For the avoidance of doubt,
direct offerings of Common Shares without variable price features, warrants issued without variable price features, the issuance of shares
pursuant to an equity line of credit or other similar arrangement with Breabeacon Holdings Inc. (“BHI”) or any affiliate
of BHI, and the issuance by Company of shares of Common Shares in an At-the-Market Offering shall not be deemed a Restricted Issuance
(for purposes of this section “At-the-Market Offering” means an offering by Company of newly issued shares of Common
Shares, which are incrementally sold into a trading market through a broker-dealer at the market price).
5. Additional
Covenants. Company covenants with Investor as follows, which covenants are for the benefit of Investor during the Commitment Period:
5.1. Registration
Statement.
(a) The
Registration Statement. Company will file, in accordance with the provisions of the 1933 Act and the rules and regulations thereunder,
with the SEC within twenty (20) days from the Closing Date a registration statement on Form S-1 (the “Initial Registration Statement”)
registering at least 18,000,000 Common Shares for the Commitment Shares and issuances pursuant to the Pre-Paid Purchases, including a
base prospectus, with respect to the issuance and sale of securities by Company, including Common Shares, which contains, among other
things a Plan of Distribution section disclosing the methods by which Company may sell the Common Shares. Except where the context otherwise
requires, the Initial Registration Statement, as amended when it becomes effective, including all documents filed as part thereof or incorporated
by reference therein, and including any information contained in a Prospectus subsequently filed with the SEC pursuant to Rule 424(b)
(a “Prospectus”) under the 1933 Act or deemed to be a part of the Initial Registration Statement pursuant to Rule 430B
of the 1933 Act, is herein called the “Registration Statement.” Company covenants to file one or more Registration
Statements as necessary to have sufficient Common Shares registered to accommodate the full Commitment Amount. Following effectiveness
of the Initial Registration Statement, Company will use reasonable best efforts to maintain the effectiveness of the Registration Statement
at all times Investor owns any of the Securities.
(b) Initial
Disclosure. Promptly after the execution of the Initial Pre-Paid Purchase, Company shall file with the SEC a current report on Form
8-K or such other appropriate form as determined by counsel to Company (the “Current Report”), relating to the transactions
contemplated by this Agreement disclosing all information relating to the transaction contemplated hereby required to be disclosed therein.
(c) Delivery
of Final Documents. Company shall furnish to Investor without charge, (i) at least one copy of each Registration Statement as declared
effective by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by
reference, all exhibits and each preliminary prospectus, (ii) at the request of Investor, at least one copy of the final prospectus included
in such Registration Statement and all amendments and supplements thereto (or such other number of copies as Investor may reasonably request)
and (iii) such other documents as Investor may reasonably request from time to time in order to facilitate the disposition of the Common
Shares owned by Investor pursuant to a Registration Statement. Filing of the foregoing with the SEC via its EDGAR system shall satisfy
the requirements of this Section.
(d) Amendments
and Other Filings. Company shall (i) prepare and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the related prospectus used in connection with such Registration Statement, and (ii) all Periodic
Reports as may be necessary to keep such Registration Statement effective at all times during the Commitment Period.
(e) Blue-Sky. To the extent legally required, Company shall use its commercially reasonable efforts to, if required by Applicable Laws, (i) register and qualify the Common Shares covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Commitment Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Commitment Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Common Shares for sale in such jurisdictions. Company shall promptly notify Investor of the receipt by Company of any notification with respect to the suspension of the registration or qualification of any of the Common Shares for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
5.2. Listing
of Common Shares. As of each Purchase Notice Date, Company will use its commercially reasonable efforts to cause the Shares to be
listed on the Principal Market.
5.3. Notice
of Certain Events Affecting Registration; Suspension of Right to Request a Pre-Paid Purchase. Company will promptly notify Investor,
and confirm in writing, upon its becoming aware of the occurrence of any of the following events in respect of a Registration Statement
or related Prospectus (in each of which cases the information provided to Investor will be kept strictly confidential): (i) except for
requests made in connection with SEC investigations, receipt of any request for additional information by the SEC or any other federal
or state governmental authority during the period of effectiveness of the Registration Statement or any request for amendments or supplements
to the Registration Statement or related Prospectus; (ii) the issuance by the SEC or any other federal governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Common Shares for
sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose; (iv) the happening of any event that
makes any statement made in the Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related
Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that
in the case of the related Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading, or of the necessity to amend the Registration Statement or supplement a related Prospectus to comply with the 1933 Act
or any other law; (v) Company’s reasonable determination that a post-effective amendment to the Registration Statement would be
appropriate and Company will promptly make available to Investor any such supplement or amendment to the related Prospectus. Investor
shall not deliver to Company any Purchase Notice, and Company shall not sell any Shares pursuant to any pending Purchase Notice, during
the continuation of any of the foregoing events (each of the events described in the immediately preceding clauses (i) through (v), inclusive,
a “Material Outside Event”). Company shall be obligated to cure any Material Outside Event within ten (10) Trading
Days. Notwithstanding anything to the contrary contained herein this paragraph, consistent with Section 5.8, the Company may not disclose
to the Investor any material information not yet publicly available or disclosed to other shareholders.
5.4. Market
Activities. Company will not, directly or indirectly, take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the manipulation of the price of any security of Company under Regulation M of the 1934 Act.
5.5. Current
Report. From and after the filing of the Current Report with the SEC, Company shall have publicly disclosed all material, nonpublic
information delivered to Investor (or Investor’s representatives or agents) by Company or any of its subsidiaries, or any of their
respective officers, directors, employees, agents or representatives (if any) in connection with Company and any of its subsidiaries.
Company understands and confirms that Investor will rely on the foregoing representations in effecting resales of Purchase Shares under
the Registration Statement.
5.6. Use
of Proceeds. The proceeds from Pre-Paid Purchases paid to Company by Investor or from the sale of the Purchase Shares by Company to
Investor shall be used by Company in the manner as will be set forth in the Registration Statement (and any post-effective amendment thereto)
thereto filed pursuant to this Agreement, and in accordance with the terms and conditions of this Agreement. Company also covenants and
agrees that: (a) $100,000.00 of the amount funded under the Initial Pre-Paid Purchase will be used to make a prepayment on that certain
Secured Promissory Note in the original principal amount of $6,470,000.00 issued by Company (f/k/a Grafiti Holding, Inc.) in favor of
Investor on June 26, 2024 (the “Prior Note”); and (b) fifteen percent (15%) of each amount funded under a Pre-Paid
Purchase after the Initial Pre-Paid Purchase will be paid to Investor as a prepayment under the Prior Note.
5.7. No
Frustration. Company shall not enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction
in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of Company to perform
its obligations under the Transaction Documents to which it is a party, including, without limitation, the obligation of Company to deliver
the Purchase Shares to Investor in respect of a Purchase Notice.
5.8. Material
Non-Public Information. Company covenants and agrees that, other than with Investor’s prior consent, it shall refrain from disclosing,
and shall cause its officers, directors, employees and agents to refrain from disclosing, any material non-public information (as determined
under the 1933 Act, the 1934 Act, or the rules and regulations of the SEC) to Investor without also disseminating such information to
the public within a reasonable time period thereafter, unless prior to disclosure of such information Company identifies such information
as being material non-public information and provides Investor with the opportunity to accept or refuse to accept such material non-public
information for review.
5.9. Exchange
Cap. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents, Company and Investor
agree that the total cumulative number of Common Shares issued to Investor under all Pre-Paid Purchases together with all other Transaction
Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (the “Exchange Cap”), except that such limitation
will not apply following Approval (defined below). Within 120 days of the Effective Date, Company will seek stockholder approval of all
Pre-Paid Purchases that have been or may be issued hereunder covering the full Commitment Amount and the issuance of Purchase Shares under
all Pre-Paid Purchases in excess of the Exchange Cap (the “Approval”). If Company is unable to obtain such Approval
at an initial meeting of stockholders: (a) it will continue seeking Approval every 90 days until the Approval is obtained; and (b) any
remaining Pre-Paid Purchase Outstanding Balance after reaching the Exchange Cap must be repaid in cash. For the avoidance of doubt, failure
to obtain the Approval shall not be considered a breach of this Agreement.
5.10. East
West/BHI Funding Obligations. The parties agree that, for the avoidance of doubt, any amounts funded by Investor to Company under
this Agreement will reduce the funding obligations of East West Capital LLC (“East West”) and BHI in accordance with
the provisions of Section 1 of those certain Secured Promissory Notes issued by Grafiti Holding, Inc. in the aggregate original principal
amount of up to $16,770,000 in favor of East West and BHI on November 13, 2024.
6. Termination.
So long as no Pre-Paid Purchases are outstanding and Investor owns no Purchase Shares, Company will have the right to terminate this Agreement
upon ten (10) days prior written notice to Investor.
7. Indemnification.
7.1. Indemnification
by Company. In consideration of Investor’s execution and delivery of this Agreement and acquiring the Pre-Paid Purchases hereunder,
and in addition to all of Company’s other obligations under this Agreement, Company shall defend, protect, indemnify and hold harmless
Investor and its officers, directors, managers, members, partners, employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement) and each person who controls Investor within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act (collectively, the “Investor Indemnitees”) from and against any and
all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable and documented expenses
in connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred
by Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement for the registration of the Purchase Shares as originally filed or in any amendment
thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading;
provided, however, that Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to Company by or on behalf of Investor specifically for inclusion therein; (b)
any material misrepresentation or breach of any material representation or material warranty made by Company in this Agreement or any
other certificate, instrument or document contemplated hereby or thereby; or (c) any material breach of any material covenant, material
agreement or material obligation of Company contained in this Agreement or any other certificate, instrument or document contemplated
hereby or thereby. To the extent that the foregoing undertaking by Company may be unenforceable under Applicable Laws, Company shall make
the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable
Laws. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section
6.1 (Indemnification by Company) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
7.2.
Indemnification by Investor. In consideration of Company’s execution and delivery of this Agreement, and in addition to all
of Investor’s other obligations under this Agreement, Investor shall defend, protect, indemnify and hold harmless Company and all
of its officers, directors, shareholders, employees and agents (including, without limitation, those retained in connection with the transactions
contemplated by this Agreement) and each person who controls Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred
by Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement for the registration of the Purchase Shares as originally filed or in any amendment
thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading;
provided, however, that Investor will only be liable for written information relating to Investor furnished to Company by or on behalf
of Investor specifically for inclusion in the documents referred to in the foregoing indemnity, and will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to Investor
by or on behalf of Company specifically for inclusion therein; (b) any misrepresentation or breach of any representation or warranty made
by Investor in this Agreement or any instrument or document contemplated hereby or thereby executed by Investor; or (c) any breach of
any covenant, agreement or obligation of Investor contained in this Agreement or any other certificate, instrument or document contemplated
hereby or thereby executed by Investor. To the extent that the foregoing undertaking by Investor may be unenforceable under Applicable
Laws, Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible
under Applicable Laws. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under
this Section 6.2 (Indemnification by Investor) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
7.3. Notice
of Claims. Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee or Company Indemnitee,
as applicable, shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying
party will not relieve it of liability under this Section 6 except to the extent the indemnifying party is prejudiced by such failure.
The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to
the indemnifying party and Investor Indemnitee or Company Indemnitee, as the case may be; provided, however, that an Investor Indemnitee
or Company Indemnitee shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of not
more than one counsel for such Investor Indemnitee or Company Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such counsel of Investor Indemnitee or Company Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnitee or Company Indemnitee
and any other party represented by such counsel in such proceeding. Investor Indemnitee or Company Indemnitee shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to Investor Indemnitee or Company Indemnitee which relates to such action
or claim. The indemnifying party shall keep Investor Indemnitee or Company Indemnitee reasonably apprised as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior written consent of Investor Indemnitee or Company Indemnitee,
consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a release from all liability in respect to
such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights
of Investor Indemnitee or Company Indemnitee with respect to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received and payment therefor is due.
8. Conditions
to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Initial Pre-Paid Purchase to Investor
at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:
8.1. Investor
shall have executed this Agreement, the Initial Pre-Paid Purchase and the Registration Rights Agreement and delivered the same to Company.
8.2. Investor
shall have delivered the Initial Purchase Price to Company in accordance with Section 1.2 above.
9. Conditions
to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Initial Pre-Paid Purchase at the
Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions
are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:
9.1. Company
shall have executed this Agreement and the Initial Pre-Paid Purchase and delivered the same to Investor.
9.2. Company
shall have issued the Commitment Shares to Investor.
9.3. Company
shall have executed a Registration Rights Agreement in substantially the form attached hereto as Exhibit B (the “Registration
Rights Agreement”) and delivered the same to Investor.
9.4. Company
shall have delivered to Investor a fully executed Officer’s Certificate substantially in the form attached hereto as Exhibit
D evidencing Company’s approval of the Transaction Documents.
9.5. Company
shall have delivered to Investor a fully executed Share Issuance Resolution substantially in the form attached hereto as Exhibit E
to be delivered to the Transfer Agent.
9.6. Company
shall have delivered to Investor fully executed copies of all other Transaction Documents required to be executed by Company herein or
therein.
10. Reservation
of Shares. On the date hereof, Company will reserve 8,000,000 Common Shares from its authorized and unissued Common Shares to provide
for all issuances of Common Shares under this Agreement and all Pre-Paid Purchases (the “Share Reserve”). Company further
agrees following receipt of the Approval to add additional Common Shares to the Share Reserve in increments of 100,000 shares as and when
requested by Investor if as of the date of any such request the number of shares being held in the Share Reserve is less than three (3)
times the number of Common Shares equal to the Pre-Paid Purchase Outstanding Balance divided by the Purchase Share Purchase Price (as
defined in the Pre-Paid Purchases). Company shall further require the Transfer Agent to hold the Common Shares reserved pursuant to the
Share Reserve exclusively for the benefit of Investor and to issue such shares to Investor promptly upon Investor’s delivery of
a Purchase Notice under the Pre-Paid Purchase. Finally, Company shall require the Transfer Agent to issue Common Shares pursuant to the
Pre-Paid Purchase to Investor out of its authorized and unissued shares, and not the Share Reserve, to the extent Common Shares have been
authorized, but not issued, and are not included in the Share Reserve. The Transfer Agent shall only issue Common Shares out of the Share
Reserve to the extent there are no other authorized shares available for issuance and then only with Investor’s written consent.
11. Most
Favored Nation. So long as any Pre-Paid Purchase is outstanding, upon any issuance by Company of any security (including Pre-Paid
Purchases issued after the Initial Pre-Paid Purchase) with any term or condition more favorable to the holder of such security or with
a term in favor of the holder of such security that was not similarly provided to Investor in the Transaction Documents, then Company
shall notify Investor of such additional or more favorable term and such term, at Investor’s option, shall become a part of the
Transaction Documents for the benefit of Investor. Additionally, if Company fails to notify Investor of any such additional or more favorable
term, but Investor becomes aware that Company has granted such a term to any third party, Investor may notify Company of such additional
or more favorable term and such term shall become a part of the Transaction Documents retroactive to the date on which such term was granted
to the applicable third party. The types of terms contained in another security that may be more favorable to the holder of such security
include, but are not limited to, terms addressing floor prices, fixed purchase prices, conversion discounts, conversion lookback periods,
interest rates, original issue discounts, stock sale price, warrant coverage, warrant exercise price, and anti-dilution/conversion and
exercise price resets. Notwithstanding the foregoing, this most favored nation right shall not be triggered in connection with any sales
or issuances pursuant to an equity line of credit or At-the-Market Offering.
12. Certain
Definitions.
12.1. “Applicable
Laws” means all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and
codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation (i)
all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable
laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt
Practices Act of 1977, and (iii) any sanctions laws.
12.2. “Commitment
Period” means the period beginning on the Closing Date and ending on the earlier of: (i) the date that is two (2) years from
the Closing Date, and (ii) the date Company has sold $10,000,000.00 in Pre-Paid Purchases hereunder. Notwithstanding the foregoing, in
the event that a definitive agreement that contemplates a Change of Control is entered into after the Closing, the Commitment Period for
any Pre-Paid Purchases shall automatically terminate immediately prior to the consummation of such Change of Control. The Company
may waive this condition subsequent, at its sole discretion. For the purposes of this section, the term “Change of Control”
shall mean the transfer (whether by tender offer, merger, stock purchase, consolidation or other similar transaction), in one transaction
or a series of related transactions, to a person or group of affiliated persons of the Company’s securities if, after such transfer,
such person or group of affiliated persons would hold more than 50% of outstanding voting securities of the Company, or would otherwise
have the power to control the Company or to direct the operations of the Company. For the avoidance of doubt, the termination of the Commitment
Period will not affect Company’s obligations with respect to Pre-Paid Purchases issued prior to the termination of the Commitment
Period.
12.3. “Maximum
Purchase Amount” means $3,000,000.00 less the Pre-Paid Purchase Outstanding Balance, rounded down to the nearest $1,000.00.
12.4. “Minimum
Purchase Amount” means $250,000.00.
12.5. “Nasdaq
Minimum Price” means the lower of: (i) the Closing Trade Price (as defined in the Initial Pre-Paid Purchase) on the Trading
Day immediately preceding the applicable measurement date; or (ii) the average Closing Trade Price for the five (5) Trading Days immediately
preceding the applicable measurement date.
12.6. “Periodic
Reports” shall mean the Company’s (i) Annual Reports on Form 10-K, (ii) any quarterly report to be filed on Form 10-Q,
(iii) any current report to be filed on Form 8-K, and (iv) all other reports required to be filed by the Company with the SEC under applicable
laws and regulations (including, without limitation, Regulation S-K); provided that all such Periodic Reports shall include,
when filed, all information, financial statements, audit reports (when applicable) and other information required to be included in such
Periodic Reports in compliance with all applicable laws and regulations.
12.7. “Pre-Paid
Purchase Outstanding Balance” means the aggregate outstanding balance of all outstanding Pre-Paid Purchases.
12.8. “Principal
Market” means the Nasdaq Global Market; provided however, that in the event Company’s Common Shares are ever listed or
traded on the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, or the Nasdaq Global Select Market, then the “Principal
Market” shall mean such other market or exchange on which Company’s Common Shares are then listed or traded.
12.9. “Purchase
Notice” means a written notice in the form of Exhibit A to the Pre-Paid Purchase delivered by Investor to Company requiring
Company to sell Purchase Shares to Investor.
12.10. “Purchase
Notice Date” means each date Investor delivers to Company a Purchase Notice.
13. Miscellaneous.
The provisions set forth in this Section 13 shall apply to this Agreement, as well as all other Transaction Documents as if these terms
were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section
13 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.
13.1. Arbitration
of Claims. The parties shall submit all Claims (as defined in Exhibit F) arising under this Agreement or any other Transaction
Document or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to binding
arbitration pursuant to the arbitration provisions set forth in Exhibit F attached hereto (the “Arbitration Provisions”).
For the avoidance of doubt, the parties agree that the injunction described in Section 13.3 below may be pursued in an arbitration that
is separate and apart from any other arbitration regarding all other Claims arising under the Transaction Documents. The parties hereby
acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other
provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration
Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration Provisions.
13.2. Governing
Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Utah. Each party consents to and expressly agrees that the exclusive venue for
arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates
shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant to the Arbitration
Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding the terms (specifically
including any governing law and venue terms) of any transfer agent services agreement or other agreement between the Transfer Agent and
Company, such litigation specifically includes, without limitation any action between or involving Company and the Transfer Agent under
the TA Letter or otherwise related to Investor in any way (specifically including, without limitation, any action where Company seeks
to obtain an injunction, temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Common Shares to Investor
for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or
federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof,
(iii) agrees to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain an injunction,
temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Common Shares to Investor for any reason) outside of
any state or federal court sitting in Salt Lake County, Utah, and (iv) waives any claim of improper venue and any claim or objection that
such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction
or to any claim that such venue of the suit, action or proceeding is improper. Finally, Company covenants and agrees to name Investor
as a party in interest in, and provide written notice to Investor in accordance with Section 13.10 below prior to bringing or filing,
any action (including without limitation any filing or action against any person or entity that is not a party to this Agreement, including
without limitation the Transfer Agent) that is related in any way to the Transaction Documents or any transaction contemplated herein
or therein, including without limitation any action brought by Company to enjoin or prevent the issuance of any Common Shares to Investor
by the Transfer Agent, and further agrees to timely name Investor as a party to any such action. Company acknowledges that the governing
law and venue provisions set forth in this Section 13.2 are material terms to induce Investor to enter into the Transaction Documents
and that but for Company’s agreements set forth in this Section 13.2 Investor would not have entered into the Transaction Documents.
13.3. Specific
Performance. Company acknowledges and agrees that Investor may suffer irreparable harm in the event that Company fails to perform
any material provision of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly
agreed that Investor shall be entitled to one or more injunctions to prevent or cure breaches of the provisions of this Agreement or such
other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other
remedy to which Investor may be entitled under the Transaction Documents, at law or in equity. Company specifically agrees that: (a) following
an Event of Default (as defined in the Initial Pre-Paid Purchase) under any Pre-Paid Purchase, Investor shall have the right to seek and
receive injunctive relief from a court or an arbitrator prohibiting Company from issuing any of its Common Shares or preferred stock to
any party unless the Pre-Paid Purchase Outstanding Balance is being paid in full simultaneously with such issuance; and (b) following
a breach of Section 4(vii) above, Investor shall have the right to seek and receive injunctive relief from a court or arbitrator invalidating
such lock-up. Company specifically acknowledges that Investor’s right to obtain specific performance constitutes bargained for leverage
and that the loss of such leverage would result in irreparable harm to Investor. For the avoidance of doubt, in the event Investor seeks
to obtain an injunction from a court or an arbitrator against Company or specific performance of any provision of any Transaction Document,
such action shall not be a waiver of any right of Investor under any Transaction Document, at law, or in equity, including without limitation
its rights to arbitrate any Claim pursuant to the terms of the Transaction Documents, nor shall Investor’s pursuit of an injunction
prevent Investor, under the doctrines of claim preclusion, issues preclusion, res judicata or other similar legal doctrines, from pursuing
other Claims in the future in a separate arbitration.
13.4. Calculation
Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any determination or arithmetic calculation under
the Transaction Documents, including without limitation, calculating the Outstanding Balance, Market Price, VWAP (each, as defined in
the Initial Pre-Paid Purchase) or the number of Purchase Shares (each, a “Calculation”), Company or Investor (as the
case may be) shall submit any disputed Calculation via email or facsimile with confirmation of receipt (i) within two (2) Trading Days
after receipt of the applicable notice giving rise to such dispute to Company or Investor (as the case may be) or (ii) if no notice gave
rise to such dispute, at any time after Investor learned of the circumstances giving rise to such dispute. If Investor and Company are
unable to agree upon such Calculation within two (2) Trading Days of such disputed Calculation being submitted to Company or Investor
(as the case may be), then Investor will promptly submit via email or facsimile the disputed Calculation to Unkar Systems Inc. (“Unkar
Systems”). Investor shall cause Unkar Systems to perform the Calculation and notify Company and Investor of the results no later
than ten (10) Trading Days from the time it receives such disputed Calculation. Unkar Systems’ determination of the disputed Calculation
shall be binding upon all parties absent demonstrable error. Unkar Systems’ fee for performing such Calculation shall be paid by
the incorrect party, or if both parties are incorrect, by the party whose Calculation is furthest from the correct Calculation as determined
by Unkar Systems. In the event Company is the losing party, no extension of the Delivery Date (as defined in the Initial Pre-Paid Purchase)
shall be granted and Company shall incur all effects for failing to deliver the applicable shares in a timely manner as set forth in the
Transaction Documents. Notwithstanding the foregoing, Investor may, in its sole discretion, designate an independent, reputable investment
bank or accounting firm other than Unkar Systems to resolve any such dispute and in such event, all references to “Unkar Systems”
herein will be replaced with references to such independent, reputable investment bank or accounting firm so designated by Investor.
13.5. Counterparts.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
13.6. Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.
13.7. Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule
of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
13.8. Entire
Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes
any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets
or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction
Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any
affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there
is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents
shall govern.
13.9. Amendments.
No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.
13.10. Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to
an executive officer named below or such officer’s successor, or by facsimile (with successful transmission confirmation which is
kept by sending party), (ii) the earlier of the date delivered or the third Trading Day after deposit, postage Pre-Paid, in the United
States Postal Service by certified mail, or (iii) the earlier of the date delivered or the third Trading Day after mailing by express
courier, with delivery costs and fees Pre-Paid, in each case, addressed to each of the other parties thereunto entitled at the following
addresses (or at such other addresses as such party may designate by five (5) calendar days’ advance written notice similarly given
to each of the other parties hereto):
If to Company:
Damon Inc.
Attn: Bal Bhullar
704 Alexander
Street
Vancouver, BC
V6A 1E3
Canada
If to Investor:
Streeterville Capital, LLC
Attn: John M. Fife
297 Auto Mall Drive #4
St. George, Utah 84770
With a copy to (which copy shall not constitute notice):
Hansen Black Anderson Ashcraft PLLC
Attn: Jonathan Hansen
3051 West Maple Loop Drive, Suite 325
Lehi, Utah 84043
13.11. Successors
and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to a third party, including its affiliates, in whole or in part, without the need to obtain Company’s
consent thereto. Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder, whether directly
or indirectly, without the prior written consent of Investor, and any such attempted assignment or delegation shall be null and void.
13.12. Survival.
The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and hold harmless Investor
and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or
alleged breach by Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants
and obligations under this Agreement, including advancement of expenses as they are incurred.
13.13. Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
13.14. Investor’s
Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative
and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may
have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute,
and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient.
13.15. Attorneys’
Fees and Cost of Collection. In the event any suit, action or arbitration is filed by either party against the other to interpret
or enforce any of the Transaction Documents, the unsuccessful party to such action agrees to pay to the prevailing party all costs and
expenses, including reasonable attorneys’ fees incurred therein, including the same with respect to an appeal. The “prevailing
party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted
by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in
favor of and against both parties, then the arbitrator shall determine the “prevailing party” by taking into account the relative
dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief. Nothing
herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading.
If (i) any Pre-Paid Purchase is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration
or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect
amounts due under the Pre-Paid Purchases or to enforce the provisions of the Pre-Paid Purchases, or (ii) there occurs any bankruptcy,
reorganization, receivership of Company or other proceedings affecting Company’s creditors’ rights and involving a claim under
the Pre-Paid Purchases; then Company shall pay the costs incurred by Investor for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, reasonable attorneys’ fees,
expenses, deposition costs, and disbursements.
13.16. Waiver.
No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to
any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a
party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
13.17. Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES
HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE
STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.
13.18. Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other
Transaction Documents.
13.19. Voluntary
Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed
for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and
fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the
right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without any duress or undue
influence by Investor or anyone else.
13.20. Document
Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments,
documents, and items and records governing, arising from or relating to any of Company’s loans, including, without limitation, this
Agreement and the other Transaction Documents, and Investor may destroy or archive the paper originals. The parties hereto (i) waive
any right to insist or require that Investor produce paper originals, (ii) agree that such images shall be accorded the same force and
effect as the paper originals, (iii) agree that Investor is entitled to use such images in lieu of destroyed or archived originals for
any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed
facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or any other Transaction Document shall be deemed to be of
the same force and effect as the original manually executed document.
[Remainder of page intentionally left blank;
signature page follows]
IN WITNESS WHEREOF, the undersigned
Investor and Company have caused this Agreement to be duly executed as of the date first above written.
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INVESTOR: |
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Streeterville Capital, LLC |
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By: |
/s/ John M. Fife |
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John M. Fife, President |
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COMPANY: |
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Damon Inc. |
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By: |
/s/ Bal Bhullar |
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Bal Bhullar, Chief Financial Officer |
[Signature
Page to Securities Purchase Agreement]
| ATTACHED EXHIBITS: |
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| Exhibit A |
Initial Pre-Paid Purchase |
| Exhibit B |
Registration Rights Agreement |
| Exhibit C |
Irrevocable Transfer Agent Instructions |
| Exhibit D |
Officer’s Certificate |
| Exhibit E |
Share Issuance Resolution |
| Exhibit F |
Arbitration Provisions |
annex
I
CONDITIONS PRECEDENT TO INVESTOR’S OBLIGATION
TO PURCHASE A PRE-PAID PURCHASE
The obligation of Investor to purchase from Company
a Pre-Paid Purchase hereunder on each Pre-Paid Purchase Date is subject to the satisfaction, as of the date of each Request for a Pre-Paid
Purchase and each Pre-Paid Purchase Date, of each of the following conditions, provided that these conditions are for Investor’s
sole benefit and may be waived by Investor at any time in its sole discretion by providing Company with prior written notice thereof:
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(a) |
Company shall have duly executed and delivered to Investor each of the Transaction Documents to which it is a party. |
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(b) |
Beginning on February 1, 2025 and for each calendar month thereafter, Company shall have reduced the outstanding balance of the Prior Note by an average of at least $500,000 per calendar month. |
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(c) |
Company has received the Approval to issue any Purchase Shares in excess of the Exchange Cap with respect to all Pre-Paid Purchases, and the Approval remains effective as of each applicable Pre-Paid Purchase Date. |
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(d) |
There is an effective Registration Statement pursuant to which Investor is permitted to utilize the prospectus thereunder to sell all of the Purchase Shares issuable pursuant to such Pre-Paid Purchase. The Current Report shall have been filed with the SEC and Company shall have filed with the SEC in a timely manner all reports, notices and other documents required under the 1934 Act and applicable SEC regulations during the twelve-month period immediately preceding the applicable Pre-Paid Purchase Date. Upon request, Investor shall have received an opinion of counsel to Company, in the form reasonably acceptable to Investor, with respect to the effectiveness of the Registration Statement. |
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(e) |
No Material Outside Event shall have occurred and be continuing. |
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(f) |
The 20-day and 60-day median and average trading volume must be greater than or equal to $500,000, as reported by Bloomberg, L.P. |
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(g) |
Company shall be in full compliance with the Share Reserve requirements in Section 10 of the Agreement. |
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(h) |
The number of Common Shares that remain available for issuance under the Registration Statement shall be at least 200% of the maximum number of Common Shares issuable pursuant to all outstanding Pre-Paid Purchases (taking into account all Pre-Paid Purchases that will be outstanding upon the closing of the Pre-Paid Purchase requested and calculated based on the Purchase Share Purchase Price as of the date of determination without taking into account any of the limitations set forth herein). |
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(i) |
All of the Purchase Shares issuable pursuant to the applicable Pre-Paid Purchase shall have been duly authorized by all necessary corporate action of Company. All Purchase Shares relating to all prior Pre-Paid Purchases required to have been received by Investor under each Pre-Paid Purchase shall have been delivered to Investor in accordance with such Pre-Paid Purchase. |
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(j) |
Company shall have delivered to Investor a certificate evidencing the incorporation and good standing of Company as of a date within ten (10) days of the Pre-Paid Purchase Date. |
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(k) |
The board of directors of Company has approved the transactions contemplated by the Transaction Documents and the applicable Pre-Paid Purchase; said approval has not been amended, rescinded or modified and remains in full force and effect as of the date hereof, and a true, correct and complete copy of such resolutions duly adopted by the board of directors of Company shall have been provided to Investor. |
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(l) |
Each and every representation and warranty of Company shall be true and correct in all material respects (other than representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the date of the Pre-Paid Purchase Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions set forth in each Transaction Document required to be performed, satisfied or complied with by Company at or prior to the applicable Pre-Paid Purchase Date. |
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(m) |
Trading in the Common Shares shall not have been suspended by the SEC, the Principal Market or FINRA, Company shall not have received any final and non-appealable notice that the listing or quotation of the Common Shares on the Principal Market shall be terminated on a date certain (unless, prior to such date certain, the Common Shares is listed or quoted on any subsequent Principal Market), nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified Company in writing that DTC has determined not to impose any such suspension or restriction). |
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(n) |
Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Purchase Shares. |
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(o) |
To Company’s knowledge, no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents. |
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(p) |
Since the date of execution of this Agreement, no event or series of events shall have occurred that has resulted in or would reasonably be expected to result in a material adverse effect, or an Event of Default. |
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(q) |
The Pre-Paid Purchase Outstanding Balance shall be less than $1,500,000.00. |
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(r) |
The market capitalization of Company must be greater than or equal to $10,000,000.00 |
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(s) |
Company shall have notified the Principal Market of the issuance of all of the Purchase Shares hereunder, in accordance with the Principal Market’s customary process for the listing of additional shares. |
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(t) |
Company shall have delivered to Investor a compliance certificate executed by the chief executive officer of Company certifying that Company has complied with all of the conditions precedent to the applicable Pre-Paid Purchase set forth herein and which may be relied upon by Investor as evidence of satisfaction of such conditions without any obligation to independently verify. |
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(u) |
Company and its subsidiaries shall have delivered to Investor such other documents, instruments or certificates relating to the transactions contemplated by this Agreement or the Pre-Paid Purchases as Investor or its counsel may reasonably request. |
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(v) |
The Purchase Shares would be available for immediate resale by Investor in Investor’s brokerage account. |
Exhibit
A
PRE-PAID PURCHASE #1
| December __, 2024 |
U.S. $2,140,000.00 |
FOR VALUE RECEIVED, Damon
Inc., a British Columbia corporation (“Company”), promises to pay to Streeterville
Capital, LLC, a Utah limited liability company, or its successors or assigns (“Investor”), $2,140,000.00 and
any interest, fees, charges, and late fees accrued hereunder in accordance with the terms set forth herein and to pay interest on the
Outstanding Balance at the rate of eight percent (8%) per annum from the Purchase Price Date until the same is paid in full. All interest
calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound daily and shall be payable in accordance with the terms of this Pre-Paid Purchase #1 (this “Pre-Paid Purchase”),
which is issued and made effective as of the date set forth above (the “Effective Date”). This Pre-Paid Purchase is
issued pursuant to that certain Securities Purchase Agreement dated December __, 2024, as the same may be amended from time to time, by
and between Company and Investor (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment
1 attached hereto and incorporated herein by this reference.
This Pre-Paid Purchase carries
an original issue discount of $140,000.00 (“OID”). The OID is included in the initial principal balance of this Pre-Paid
Purchase and is deemed to be fully earned and non-refundable as of the Purchase Price Date. The Initial Purchase Price (as defined in
the Purchase Agreement) shall be payable as set forth in the Purchase Agreement.
1. Payment;
Prepayment; Effectiveness of Registration Statement.
1.1. Payment. All
payments owing hereunder shall be in lawful money of the United States of America or Purchase Shares, as provided for herein, and
delivered to Investor at the address or bank account furnished to Company for that purpose. All payments shall be applied first to
(a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter, to
(d) principal.
1.2. Prepayment. So
long as no Event of Default (as defined below) has occurred, Company shall have the right, exercisable on not less than ten (10)
Trading Days prior written notice to Investor to prepay the Outstanding Balance (less such portion of the Outstanding Balance for
which Company has received a Purchase Notice (as defined below) from Investor where the applicable Purchase Shares have not yet been
delivered) of this Pre-Paid Purchase, in part or in full, without penalty, in accordance with this Section 1.2. Any notice of
prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to Investor in accordance with the
notice provisions set forth in the Purchase Agreement and shall state: (i) that Company is exercising its right to prepay this
Pre-Paid Purchase, and (ii) the date of prepayment, which shall be not less than ten (10) Trading Days from the date of the Optional
Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), Company shall make payment
of the Optional Prepayment Amount (as defined below) to or upon the order of Investor as may be specified by Investor in writing to
Company. For the avoidance of doubt, Investor shall be entitled to exercise its purchase rights in Section 3 until the Optional
Prepayment Date. If Company exercises its right to prepay this Pre-Paid Purchase, Company shall make payment to Investor of an
amount in cash equal to 110% multiplied by the then Outstanding Balance of this Pre-Paid Purchase being prepaid (the
“Optional Prepayment Amount”). In the event Company delivers the Optional Prepayment Amount to Investor prior to
the Optional Prepayment Date, the Optional Prepayment Amount shall not be deemed to have been paid to Investor until the Optional
Prepayment Date. In the event Company delivers the Optional Prepayment Amount without an Optional Prepayment Notice, then the
Optional Prepayment Date will be deemed to be the date that is ten (10) Trading Days from the date that the Optional Prepayment
Amount was delivered to Investor and Investor shall be entitled to exercise its purchase rights set forth herein during such ten
(10) Trading Day period. In addition, if Company delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to Investor within ten (10) Trading Days following the Optional Prepayment Date, Company shall forever forfeit its right
to prepay this Pre-Paid Purchase.
1.3. Effectiveness of
Registration Statement. In the event the Initial Registration Statement (as defined in the Purchase Agreement) has not been
declared effective by the United States Securities and Exchange Commission within sixty (60) days of the Effective Date, then the
Outstanding Balance will automatically increase by two percent (2%) on such 60th day and continue to increase by two
percent (2%) for each thirty (30) days that the Initial Registration Statement is not declared effective.
2. Security. This
Pre-Paid Purchase is unsecured.
3. Investor
Purchases.
3.1. Purchases;
Mechanics. Upon the terms and subject to the conditions of this Pre-Paid Purchase, Investor, at its sole discretion, shall have
the right, but not the obligation, to purchase from Company, and Company shall issue and sell to Investor, Purchase Shares by the
delivery to Company of Purchase Notices as provided herein.
(a) Purchase
Notice. At any time following the earlier of (i) six (6) months from the Purchase Price Date and (ii) the effectiveness of the
Initial Registration Statement, Investor may, by providing written notice to Company in the form set forth on Exhibit
A attached hereto (each, a “Purchase Notice”), require Company to issue and sell Purchase Shares to
Investor, in accordance with the following provisions:
(i)
Investor shall, in each Purchase Notice, indicate the portion of the Outstanding Balance that Investor elects to apply to the purchase
of Purchase Shares pursuant to this Pre-Paid Purchase (each, a “Purchase”, and such amount, the “Purchase
Amount”), in its sole discretion, and the timing of delivery; provided that the Purchase Amount shall not exceed
the Outstanding Balance, or result in Investor exceeding the limitation set forth in Section 3.1(b).
(ii) Each Purchase Notice shall be delivered to Company in accordance with the notice provisions set forth in the Purchase Agreement.
(iii)
Each Purchase Notice shall set forth the Purchase Amount, the Purchase Share Purchase Price, the number of Purchase Shares to be
issued by Company and purchased by Investor, and the remaining Outstanding Balance following the Closing (as defined below) of the Purchase.
(iv)
Any Purchase Shares issued hereunder must be issued free trading to Investor pursuant to: (1) an effective Registration Statement
(as defined in the Purchase Agreement); or (2) an applicable exemption from registration (e.g., Rule 144).
(b) Ownership
Limitation. Notwithstanding anything to the contrary contained in this Pre-Paid Purchase or the other Transaction Documents (as
defined in the Purchase Agreement), Company shall not effect any issuance of Purchase Shares pursuant to this Pre-Paid Purchase to
the extent that after giving effect to such issuance would cause Investor (together with its affiliates) to beneficially own a
number of Common Shares exceeding 9.99% of the number of Common Shares outstanding on such date (including for such purpose the
Common Shares issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial
ownership of Common Shares will be determined pursuant to Section 13(d) of the 1934 Act (as defined in the Purchase Agreement). The
Maximum Percentage is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Investor.
3.2.
Closings. The closing of each Purchase and each sale and purchase of Purchase Shares (each, a “Closing”)
shall take place as soon as practicable on or after each Purchase Notice Date in accordance with the procedures set forth below:
(a)
Promptly after receipt of a Purchase Notice with respect to each Purchase (and, in any event, not later than two (2) Trading Day
after such receipt), Company will, or will cause its transfer agent to, electronically transfer such number of Purchase Shares to be purchased
by Investor (as set forth in the Purchase Notice) by crediting Investor’s account or its designee’s account at DTC through
its DWAC system or by such other means of delivery as may be mutually agreed upon by the parties hereto, and transmit notification to
Investor that such share transfer has been requested. Promptly upon receipt of such notification, Investor shall pay to Company the aggregate
purchase price for the Purchase Shares (as set forth in the Purchase Notice) by offsetting the Purchase Amount against an equal amount
outstanding under this Pre-Paid Purchase (first towards accrued and unpaid interest, if any, and then towards outstanding principal as
shown in such Purchase Notice). No fractional shares shall be issued, and any fractional amounts shall be rounded to the nearest whole
number of shares. To facilitate the transfer of the Purchase Shares by Investor, the Purchase Shares will not bear any restrictive legends
so long as there is an effective Registration Statement or an available exemption from registration covering such Purchase Shares (it
being understood and agreed by Investor that notwithstanding the lack of restrictive legends, Investor may only sell such Purchase Shares
in compliance with the requirements of the Securities Act (including any applicable prospectus delivery requirements)).
(b)
In connection with each Closing, each of Company and Investor shall deliver to the other all documents, instruments and writings
expressly required to be delivered by either of them pursuant to this Pre-Paid Purchase in order to implement and effect the transactions
contemplated herein.
4. Triggering Events;
Events of Default and Remedies.
4.1. Triggering
Event. If, at any time prior to this Pre-Paid Purchase being paid in full: (a) the VWAP is less than the Floor Price for at
least five (5) Trading Days during a period of seven (7) consecutive Trading Days (a “Floor Price Trigger”), or
(b) Company has issued seventy-five percent (75%) or more of the Common Shares available under the Exchange Cap (as defined in the
Purchase Agreement) (an “Exchange Cap Trigger;” and together with the Floor Price Trigger, each a
“Trigger”) (the last such day of each such occurrence, a “Trigger Date”), then Company shall
make monthly cash repayments of amounts outstanding under this Pre-Paid Purchase beginning on the third (3rd) Trading Day
after the Trigger Date and continuing on the same day of each successive calendar month until the entire Outstanding Balance shall
have been paid or until the payment obligation ceases in accordance with this section. Each monthly payment shall be in an amount
equal to the sum of (i) $350,000.00, and (ii) all outstanding accrued and unpaid interest in respect of this Pre-Paid Purchase as of
each payment date. The obligation of Company to make monthly cash payments hereunder shall cease (with respect to any payment that
has not yet come due) if at any time after the Trigger Date (i) the VWAP is greater than 120% of the Floor Price for a period of
five (5) consecutive Trading Days, in the case of a Floor Price Tigger, or (ii) the Exchange Cap no longer applies, in the case of
an Exchange Cap Trigger, unless a subsequent Trigger occurs.
4.2. Event of
Default. The following are events of default under this Pre-Paid Purchase (each,
“Event of Default”): (a) Company fails to pay any principal, interest, fees, charges, or any other amount when due
and payable hereunder; (b) a receiver, trustee or other similar official shall be appointed over Company or a material part of its assets
and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; (c)
[intentionally omitted]; (d) Company makes a general assignment for the benefit of creditors; (e) Company files a petition for relief
under any bankruptcy, insolvency or similar law (domestic or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed
against Company; (g) Company fails to observe or perform any covenant set forth in Section 4 or Section 5 of the Purchase Agreement; (h)
the occurrence of a Fundamental Transaction without Investor’s prior written consent; (i) Company fails to timely establish and
maintain the Share Reserve (as defined in the Purchase Agreement); (j) Company fails to deliver any Purchase Shares in accordance with
the terms hereof; (k) any money judgment, writ or similar process is entered or filed against Company or any subsidiary of Company or
any of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) calendar days unless otherwise consented to by Investor; (l) Company fails to be DWAC Eligible; (m) Company or any subsidiary of
Company, breaches any covenant or other term or condition contained in any Other Agreement in any material respect; (n) Company defaults
or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Company contained herein or in any other
Transaction Document (as defined in the Purchase Agreement) in any material respect, other than those specifically set forth in this Section
4.2 or Section 4 or Section 5 of the Purchase Agreement; (o) any representation, warranty or other statement made or furnished by or on
behalf of Company to Investor herein, in any Transaction Document, or otherwise in connection with the issuance of this Pre-Paid Purchase
is false, incorrect, incomplete or misleading in any material respect when made or furnished; (p) a non-management supported preliminary
proxy is filed against Company; (q) Company effectuates a reverse split of its Common Shares without twenty (20) Trading Days prior written
notice to Investor; and (r) Company, any subsidiary of Company, or any pledgor, trustor, or guarantor of this Pre-Paid Purchase breaches
any covenant or other term or condition contained in any Other Agreements.
4.3. Default
Remedies. At any time and from time to time following the occurrence of any Event of Default, Investor may accelerate this
Pre-Paid Purchase by written notice to Company, with the Outstanding Balance becoming immediately due and payable in cash at the
Mandatory Default Amount. Notwithstanding the foregoing, upon the occurrence of any Event of Default described in clauses (b)
– (f) of Section 4.2, an Event of Default will be deemed to have occurred and the Outstanding Balance as of the date of the
occurrence of such Event of Default shall become immediately and automatically due and payable in cash at the Mandatory Default
Amount. At any time following the occurrence of any Event of Default, upon written notice given by Investor to Company, interest
shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred at an interest rate equal to
the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law (“Default
Interest”). Notwithstanding the foregoing, and for the avoidance of doubt, Investor may continue making Purchases pursuant
to Section 3 at any time following an Event of Default until such time as the Outstanding Balance is paid in full. In connection
with acceleration described herein, Investor need not provide, and Company hereby waives, any presentment, demand, protest or other
notice of any kind, and Investor may immediately and without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by
Investor at any time prior to payment hereunder and Investor shall have all rights as a holder of the Pre-Paid Purchase until such
time, if any, as Investor receives full payment pursuant to this Section 4.2. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon. Nothing herein shall limit Investor’s right to pursue any
other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to Company’s failure to timely deliver Purchase Shares pursuant to a Purchase as required pursuant to the
terms hereof.
5. Unconditional
Obligation; No Offset. Company acknowledges that this Pre-Paid Purchase is an unconditional, valid, binding and enforceable
obligation of Company not subject to offset, deduction or counterclaim of any kind. Company hereby waives any rights of offset it
now has or may have hereafter against Investor, its successors and assigns, and agrees to make the payments or Purchases called for
herein in accordance with the terms of this Pre-Paid Purchase.
6. Waiver. No
waiver of any provision of this Pre-Paid Purchase shall be effective unless it is in the form of a writing signed by the party
granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision
or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or
consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
7. Rights Upon
Issuance of Securities.
7.1. Subsequent Equity
Sales. If Company or any subsidiary thereof, as applicable, at any time this Pre-Paid Purchase is outstanding, shall sell, issue
or grant any Common Shares, option to purchase Common Shares, right to reprice, preferred shares convertible into Common Shares,
debt, warrants, options or other instruments or securities which are convertible into or exercisable or exchangeable for Common
Shares to any party including Investor (collectively, the “Equity Securities”) other than Exempt Issuances at an
effective price per share less than the then effective Fixed Price (such issuance is referred to herein as a “Dilutive
Issuance”), then, the Fixed Price shall be automatically reduced and only reduced to equal such lower effective price per
share, provided that the Fixed Price shall in no event be less than the Floor Price. If the holder of any Equity Securities so
issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options, or rights per share which are issued in connection with such Dilutive
Issuance, be entitled to receive Common Shares at an effective price per share that is less than the Fixed Price, such issuance
shall be deemed to have occurred for less than the Fixed Price on the date of such Dilutive Issuance, and the then effective Fixed
Price shall be reduced and only reduced to equal such lower effective price per share. Such adjustments described above to the Fixed
Price shall be permanent (subject to additional adjustments under this section), and shall be made whenever such Equity Securities
are issued. Company shall notify Investor, in writing, no later than the Trading Day following the issuance of any Equity Securities
subject to this Section 7.1, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price, or other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarity, whether or
not Company provides a Dilutive Issuance Notice pursuant to this Section 7.1, upon the occurrence of any Dilutive Issuance, on the
date of such Dilutive Issuance the Fixed Price shall be lowered to equal the applicable effective price per share regardless of
whether Company or Investor accurately refers to such lower effective price per share in any subsequent Purchase Notice.
7.2. Adjustment of
Fixed Price upon Subdivision or Combination of Common Shares. Without limiting any provision hereof, if Company at any time on
or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of
its outstanding Common Shares into a greater number of shares, the Fixed Price in effect immediately prior to such subdivision will
be proportionately reduced. Without limiting any provision hereof, if Company at any time on or after the Effective Date combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding Common Shares into a smaller number of
shares, the Fixed Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant
to this Section 7.2 shall become effective immediately after the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 7.2 occurs during the period that a Market Price is calculated hereunder, then the
calculation of such Market Price shall be adjusted appropriately to reflect such event.
7.3. Other Events.
In the event that Company (or any subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect Investor from dilution or if any event occurs of the type contemplated by the provisions
of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features), then Company’s board of directors shall in
good faith determine and implement an appropriate adjustment in the Fixed Price so as to protect the rights of Investor, provided
that no such adjustment pursuant to this Section 7.3 will increase the Fixed Price as otherwise determined pursuant to this
Section 7, provided further that if Investor does not accept such adjustments as appropriately protecting its interests
hereunder against such dilution, then Company’s board of directors and Investor shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be
final and binding and whose fees and expenses shall be borne by Company.
8. Opinion of
Counsel. In the event that an opinion of counsel is needed for Purchases under this Pre-Paid Purchase, Investor has the right to
have any such opinion provided by its counsel.
9. Governing Law;
Venue. This Pre-Paid Purchase shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Pre-Paid Purchase shall be governed by, the internal laws of the State of Utah,
without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set
forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.
10. Arbitration of
Disputes. By its issuance or acceptance of this Pre-Paid Purchase, each party agrees to be bound by the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
11. Cancellation.
After repayment of the entire Outstanding Balance, this Pre-Paid Purchase shall be deemed paid in full, shall automatically be
deemed canceled, and shall not be reissued.
12. Amendments.
The prior written consent of both parties hereto shall be required for any change or amendment to this Pre-Paid Purchase.
13. Assignments.
Company may not assign this Pre-Paid Purchase without the prior written consent of Investor. This Pre-Paid Purchase and any Purchase
Shares issued upon Purchase of this Pre-Paid Purchase may be offered, sold, assigned or transferred by Investor without the consent
of Company.
14. Notices.
Whenever notice is required to be given under this Pre-Paid Purchase, unless otherwise provided herein, such notice shall be given
in accordance with the subsection of the Purchase Agreement titled “Notices.”
15. Liquidated
Damages. Investor and Company agree that in the event Company fails to comply with any of the terms or provisions of this
Pre-Paid Purchase, Investor’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of
the parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant
factors. Accordingly, Investor and Company agree that any fees, balance adjustments, Default Interest or other charges assessed
under this Pre-Paid Purchase are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated
damages (under Investor’s and Company’s expectations that any such liquidated damages will tack back to the Purchase
Price Date for purposes of determining the holding period under Rule 144).
16. Severability.
If any part of this Pre-Paid Purchase is construed to be in violation of any law, such part shall be modified to achieve the
objective of Company and Investor to the fullest extent permitted by law and the balance of this Pre-Paid Purchase shall remain in
full force and effect.
[Remainder of page intentionally left blank;
signature page follows]
IN WITNESS WHEREOF, Company
has caused this Pre-Paid Purchase to be duly executed as of the Effective Date.
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COMPANY: |
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Damon Inc. |
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By: |
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Bal Bhullar, Chief Financial Officer |
| ACKNOWLEDGED, ACCEPTED AND AGREED: |
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| INVESTOR: |
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| Streeterville Capital, LLC |
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| By: |
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John M. Fife, President |
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[Signature Page to Pre-Paid
Purchase #1]
ATTACHMENT 1
DEFINITIONS
For purposes of this
Pre-Paid Purchase, the following terms shall have the following meanings:
A1.
“Common Shares” means shares of Company’s common stock, no par value.
A2.
“DTC” means the Depository Trust Company or any successor thereto.
A3.
“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer program.
A4.
“DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.
A5.
“DWAC Eligible” means that (a) Company’s Common Shares are eligible at DTC for full services pursuant
to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system; (b) Company has been approved
(without revocation) by DTC’s underwriting department; (c) Company’s transfer agent is approved as an agent in the DTC/FAST
Program; (d) the Purchase Shares are otherwise eligible for delivery via DWAC; and (e) Company’s transfer agent does not have a
policy prohibiting or limiting delivery of the Purchase Shares via DWAC.
A6.
“Default Effect” means multiplying the Outstanding Balance as of the date the applicable Event of Default occurred
by ten percent (10%) and then adding the resulting product to the Outstanding Balance as of the date the applicable Event of Default occurred,
with the sum of the foregoing then becoming the Outstanding Balance under this Pre-Paid Purchase as of the date the applicable Event of
Default occurred.
A7.
“Exempt Issuance” means (i) Common Shares or options issued to employees, consultants, officers or directors
of Company pursuant to Company’s equity incentive plan or pursuant to the compensation agreements previously authorized by the Board
of Directors, (ii) Common Shares issuable pursuant to an equity line of credit or an “At the Market Offering” (as defined
in the Purchase Agreement), and (iii) Common Shares or securities convertible into Common Shares issued or issuable to the Investor or
its affiliates pursuant to any exchange or settlement of debt for equity securities of the Company in reliance upon the exemption from
registration under Section 3(a)(9) or Section 3(a)(10) of the Securities Act.
A8.
“Fixed Price” means $1.50.
A9.
“Floor Price” means $[__]1.
A10. “Fundamental
Transaction” means that (a) (i) Company or any of its subsidiaries shall, directly or indirectly, in one or more
related transactions, consolidate or merge with or into (whether or not Company or any of its subsidiaries is the surviving
corporation) any other person or entity, (ii) Company or any of its subsidiaries shall, directly or indirectly, in one or more
related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its
respective properties or assets to any other person or entity, (iii) Company or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange offer that
is accepted by the holders of more than 50% of the outstanding shares of voting stock of Company (not including any shares of voting
stock of Company held by the person or persons making or party to, or associated or affiliated with the persons or entities making
or party to, such purchase, tender or exchange offer), (iv) Company or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby
such other person or entity acquires more than 50% of the outstanding shares of voting stock of Company (not including any shares of
voting stock of Company held by the other persons or entities making or party to, or associated or affiliated with the other persons
or entities making or party to, such stock or share purchase agreement or other business combination), (v) Company or any of
its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the
Common Shares or Common Shares, other than an increase in the number of authorized shares of Company’s Common Shares or Common
Shares, (vi) Company transfers any material asset to any Subsidiary, affiliate, person or entity under common ownership or control
with Company, or (vii) Company pays or makes any monetary or non-monetary dividend or distribution to its shareholders; or
(b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and
outstanding voting stock of Company. For the avoidance of doubt, Company or any if the subsidiaries entering into a definitive
agreement that contemplates a Fundamental Transaction will be deemed to be a Fundamental Transaction unless such agreement contains
a closing condition that this Pre-Paid Purchase is repaid in full upon consummation of the transaction.
| 1 | Will equal 20% of Nasdaq Minimum Price prior to Closing |
Attachment 1 to Pre-Paid Advance #1, Page 1
A11.
“Mandatory Default Amount” means the Outstanding Balance following the application of the Default Effect.
A12.
“Market Price” means 90% of the lowest daily VWAP during the ten (10) consecutive Trading Days immediately prior
to the Purchase Notice Date, but in any event not lower than the Floor Price.
A13.
“Other Agreements” means, collectively, all existing and future agreements and instruments between, among or
by Company (or it subsidiary), on the one hand, and Investor (or an affiliate), on the other hand.
A14.
“Outstanding Balance” means as of any date of determination, the Initial Purchase Price, as reduced or increased,
as the case may be, pursuant to the terms hereof for payment, Purchases, offset, or otherwise, accrued but unpaid interest, collection
and enforcements costs (including attorneys’ fees) incurred by Investor, transfer, stamp, issuance and similar taxes and fees related
to Purchases, and any other fees or charges incurred under this Pre-Paid Purchase.
A15.
“Purchase Notice Date” means the date the applicable Purchase Notice is delivered by Investor to Company.
A16.
“Purchase Price Date” means the date the Initial Purchase Price is delivered by Investor to Company.
A17.
“Purchase Shares” Common Shares purchased pursuant to this Pre-Paid Purchase.
A18.
“Purchase Share Purchase Price” means a price per share equal to the lower of (a) the Fixed Price, and (b) the
Market Price.
A19.
“Trading Day” means any day on which Company’s principal market is open for trading.
A20.
“VWAP” means the volume weighted average price of the Common Shares on the principal market for a particular
Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.
[Remainder of page intentionally
left blank]
Attachment 1 to Pre-Paid Advance #1, Page 2
EXHIBIT A
Streeterville Capital, LLC
PURCHASE NOTICE
On behalf of Streeterville Capital, LLC (“Investor”),
the undersigned hereby certifies, with respect to the purchase of Common Shares of Damon Inc. (“Company”) issuable
in connection with this Purchase Notice, delivered pursuant to that certain Pre-Paid Purchase #1, dated as of December __, 2024 (as amended
and supplemented from time to time), as follows:
| A. | Purchase Notice Date: ____________ |
| B. | Purchase Amount: ____________ |
| C. | Fixed Price: ____________ |
| D. | Market Price: _______________ |
| E. | Purchase Share Purchase Price (lower of C and D): ____________ |
| F. | Number of Purchase Shares Due to Investor: ____________________ |
| G. | Outstanding Balance Following Purchase: ____________ |
INVESTOR’S DTC PARTICIPANT #:
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:
CONTACT PERSON:
NUMBER AND/OR EMAIL:
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Investor: |
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Streeterville Capital, LLC |
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By: |
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John M. Fife, President |
Exhibit
10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as of December 20, 2024, is entered into by and between DAMON INC., a
British Columbia corporation (the “Company”), and STREETERVILLE CAPITAL, LLC, a
Utah limited liability company (together with its permitted assigns, the “Investor”). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement by and
between the parties hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the
“Purchase Agreement”).
WHEREAS:
The Company has agreed, upon
the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor up to Ten Million Dollars ($10,000,000.00)
of Pre-Paid Purchases (as defined in the Purchase Agreement) for the purchase of Purchase Shares (as defined in the Purchase Agreement)
and to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities
Act”), and applicable state securities laws.
NOW, THEREFORE, in
consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the
following terms shall have the following meanings:
a. “Business
Day” is any day that is not a Saturday, Sunday or a day on which banks in New York, New York are closed.
b. “Person”
means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
c. “Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or more
registration statements of the Company in compliance with the Securities Act and/or pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering
of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).
d. “Registrable
Securities” means (i) all of the Purchase Shares which have been, or which may, from time to time be issued, including without
limitation all of the shares of common stock, no par value per share (“Common Stock”), which have been issued or will
be issued to the Investor under the Purchase Agreement and the Pre-Paid Purchases (without regard to any beneficial ownership limitation
or restriction on purchases therein), and (ii) the Commitment Shares (as defined in the Purchase Agreement), and shares of Common Stock
issued to the Investor as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise.
e. “Registration
Statement” means one or more registration statements, as supplemented by any prospectus supplement or amendment thereto, of the
Company covering the sale of the Registrable Securities.
2. REGISTRATION.
a. Registration. The
Company shall file with the SEC an initial Registration Statement within twenty (20) calendar days from the date of this Agreement covering
at least 18,000,000 shares of Registrable Securities (the Initial Registration Statement”) so as to permit the resale of such
Registrable Securities by the Investor, including but not limited to under Rule 415 under the Securities Act at then prevailing market
prices (and not fixed prices), subject to the aggregate number of authorized shares of the Company’s Common Stock then available
for issuance in its Certificate of Incorporation. The Initial Registration Statement shall register only Registrable Securities.
The Investor and its counsel shall have a reasonable opportunity to review and comment upon the Initial Registration Statement
and any amendment or supplement to such Initial Registration Statement and any related prospectus prior to its filing with the SEC, and
the Company shall give due consideration to all reasonable comments. The Investor shall furnish all information reasonably requested
by the Company for inclusion therein. The Company shall use its reasonable best efforts to have the Initial Registration Statement declared
effective as soon as practicable, and any amendment declared effective by the SEC at the earliest possible date. The Company shall use
reasonable best efforts to keep each Registration Statement effective, including but not limited to pursuant to Rule 415 promulgated
under the Securities Act and available for the resale by the Investor of all of the Registrable Securities covered thereby at all times
until the earlier of (i) the date on which the Investor shall have sold all the Registrable Securities and the full Commitment Amount
(as defined in the Purchase Agreement) has been drawn down by the Company pursuant to a Registration Statement and (ii) the date on which
the Purchase Agreement is terminated (the “Registration Period”). Each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they
were made, not misleading. In the event that (i) the Initial Registration Statement or New Registration Statement (as defined below)
becomes stale after the initial effectiveness of such Registration Statement or New Registration Statement and (ii) the Investor still
has ownership of any of the Registrable Securities that the Investor cannot then sell without restriction pursuant to Rule 144 promulgated
under the Securities Act, the Company shall immediately file one or more post-effective amendments to facilitate the SEC’s declaration
of effectiveness with respect to such Initial Registration Statement or New Registration Statement.
b. Rule
424 Prospectus. The Company shall, as required by applicable securities regulations, from time-to-time file with the SEC, pursuant
to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with sales
of the Registrable Securities under the Registration Statement. The Company shall file such initial prospectus covering the Investor’s
sale of the Registrable Securities within three (3) Business Days of the date that the Registration Statement is declared effective by
the SEC. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing
with the SEC, and the Company shall give due consideration to all such comments. The Investor shall use its reasonable best efforts to
comment upon such prospectus within one (1) Business Day from the date the Investor receives the final pre-filing version of such prospectus.
c. Sufficient
Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover
all of the Registrable Securities, the Company shall amend the Registration Statement or file a new Registration Statement (a “New
Registration Statement”), so as to cover all of such Registrable Securities (subject to the limitations set forth in Section
2(a)) as soon as practicable, but in any event not later than twenty (20) Business Days after the necessity therefor arises, subject to
any limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act as well as the Exchange Cap (as defined in the
Purchase Agreement). The Company shall use its reasonable best efforts to cause such amendment and/or New Registration Statement to become
effective as soon as practicable following the filing thereof. In the event that any of the Purchase Shares are not included in the Registration
Statement, or have not been included in any New Registration Statement and the Company files any other registration statement under the
Securities Act (other than on Form S-4, Form S-8, or with respect to other employee related plans or rights offerings) (“Other
Registration Statement”) then the Company shall include in such Other Registration Statement first all of such Purchase Shares
and second any other securities the Company wishes to include in such Other Registration Statement
d. Offering. If the staff
of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be
used for resales by the Investor under Rule 415 at then-prevailing market prices (and not fixed prices), or if after the filing of the
initial Registration Statement with the SEC pursuant to Section 2(a), the Company is otherwise required by the Staff or the SEC to reduce
the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce the number of Registrable
Securities to be included in such initial Registration Statement until such time as the Staff and the SEC shall so permit such Registration
Statement to become effective and be used as aforesaid. In the event of any reduction in Registrable Securities pursuant to this paragraph,
the Company shall file one or more New Registration Statements in accordance with Section 2(c) until such time as all Registrable Securities
have been included in Registration Statements that have been declared effective and the prospectus contained therein is available for
use by the Investor, provided, however, that this obligation shall cease at the end of the Registration Period. Investor understands that
the SEC Staff may require that the Investor and any underwriters, broker-dealers or agents that participate in the sale of Registrable
Securities under the Registration Statement be deemed “underwriters” within the meaning of Section 2(11) of the Securities
Act. Notwithstanding any provision herein or in the Purchase Agreement to the contrary, the Company’s obligations to register Registrable
Securities (and any related conditions to the Investor’s obligations) shall be qualified as necessary to comport with any requirement
of the SEC or the Staff as addressed in this Section 2(d).
3. RELATED
OBLIGATIONS.
With respect to the Registration
Statement and whenever any Registrable Securities are to be registered pursuant to Section 2 including on any New Registration Statement,
the Company shall use its reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a. The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any Registration
Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective
at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until
such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in such registration statement.
b. Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any Registration Statement, a copy of the prospectus
included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance
of doubt, any filing available to the Investor via the SEC’s live EDGAR system shall be deemed “furnished to the Investor”
hereunder.
c. The
Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under
such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii)
prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions
as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
d. As
promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening
of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment
to such registration statement and/or take any other necessary steps (which, if in accordance with applicable SEC rules and regulations,
may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and
to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and deliver a copy of such supplement
or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly
notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when
a registration statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to
the Investor by email on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements
to any registration statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a registration statement would be appropriate.
e. The
Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration
statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
f. The
Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market (as defined in the
Purchase Agreement). The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.
g. The
Company shall cooperate with the Investor to facilitate the timely preparation and delivery of the Registrable Securities (not bearing
any restrictive legend) either by DWAC, DRS, or in certificated form if DWAC or DRS is unavailable, to be offered pursuant to any registration
statement and enable such Registrable Securities to be in such denominations or amounts as the Investor may reasonably request and registered
in such names as the Investor may request.
h. The
Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.
i. If
reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement
or post-effective amendment as soon as practicable upon notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any registration statement.
j. The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
k. Within
one (1) Business Day after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies
to the Investor) confirmation that such registration statement has been declared effective by the SEC substantially in the form attached
hereto as Exhibit A. Thereafter, if requested by the Investor at any time, the Company shall require its counsel to deliver to
the Investor a written confirmation whether or not the effectiveness of such registration statement has lapsed at any time for any reason
(including, without limitation, the issuance of a stop order) and whether or not the registration statement is current and available to
the Investor for sale of all of the Registrable Securities.
l. The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.
m. Notwithstanding
anything to the contrary in this Agreement, the provisions in this Agreement and the Company’s obligations thereunder are subject
to compliance with the Exchange Cap.
4. OBLIGATIONS
OF THE INVESTOR.
a. The
Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any
registration statement hereunder. The Investor shall furnish to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request.
b. The
Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of
any registration statement hereunder.
c. The
Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described
in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant
to any registration statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Investor has entered into a contract
for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f)
or the first sentence of Section 3(e) and for which the Investor has not yet settled.
5. EXPENSES
OF REGISTRATION.
All reasonable expenses, other
than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements
of counsel for the Company, shall be paid by the Company.
6. INDEMNIFICATION.
a. In
the event any Registrable Securities are included in any Registration Statement under this Agreement, to the
fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person, if
any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor and
each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (each, an “Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement,
any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating
to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any
material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about
the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not inure
to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the
superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.
b. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that
an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the reasonable fees and expenses of one
counsel to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation
by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.
The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense
of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.
c. The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
d. The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS
AND DISCLOSURE UNDER THE SECURITIES ACT.
With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”),
at all times while the Purchase Agreement is in effect the Company agrees, at the Company’s sole expense, to:
a. make
and keep public information available, as those terms are understood and defined in Rule 144;
b. use
its commercially reasonable efforts to file with the SEC in a timely manner, subject to statutory extension periods, all reports and other
documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements
and the filing of such reports and other documents is required for the applicable provisions of Rule 144;
c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
d. take
such additional action as is reasonably requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to
Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the
Company’s transfer agent as may be reasonably requested from time to time by the Investor and otherwise fully cooperate with Investor
and Investor’s broker to effect such sale of securities pursuant to Rule 144.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
Neither the Company nor the
Investor shall assign this Agreement or any of their respective rights or obligations hereunder without the prior written consent of the
other party; provided, however, that any transaction, whether by merger, reorganization, restructuring, consolidation, financing
or otherwise, whereby the Company remains the surviving entity immediately after such transaction shall not be deemed an assignment.
10. AMENDMENT
OF REGISTRATION RIGHTS.
No provision of this Agreement
may be amended or waived by the parties from and after the date that is one Business Day immediately preceding the initial filing of the
Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended
other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
11. MISCELLANEOUS.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities,
the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by email (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the
same. The addresses for such communications shall be the addresses provided in the Purchase Agreement or at such other address and/or
email address and/or to the attention of such other person as the recipient party has specified by written notice given to each other
party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s email account containing
the time, date, recipient email address, as applicable, and an image of the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of personal service, in accordance with clause (i), (ii) or (iii)
above, respectively.
c. The
corporate laws of the State of Utah shall govern all issues concerning this Agreement. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of Utah. Each party hereby irrevocably submits to the exclusive
jurisdiction of the State of Utah for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any
provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
d. This
Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Agreement and the Purchase Agreement supersede all prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
e. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties hereto.
f. The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
g. This
Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by e-mail in a “.pdf”
format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
h. Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
i. The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
j. This
Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed as of day and year first above written.
| |
COMPANY: |
| |
|
| |
DAMON INC. |
| |
|
| |
By: |
/s/ Bal Bhullar |
| |
|
Bal Bhullar, Chief Financial Officer |
| |
|
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INVESTOR: |
| |
|
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STREETERVILLE CAPITAL, LLC |
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|
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By: |
/s/ John M Fife |
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|
John M. Fife, President |
[Signature Page to Registration
Rights Agreement]
EXHIBIT
A
TO REGISTRATION RIGHTS AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______, 2024
[Transfer Agent]
[Address]
Re: Effectiveness of Registration Statement
Ladies and Gentlemen:
We are counsel to DAMON
INC., a British Columbia corporation (the “Company”), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of December 20, 2024 (the “Purchase Agreement”), entered into by and
between the Company and Streeterville Capital, LLC, a Utah limited liability company (the “Investor”) pursuant to which
the Company has agreed to issue to the Investor Pre-Paid Purchases for the purchase of shares of the Company’s common stock, no par value
(the “Common Stock”), in an amount up to Ten Million Dollars ($10,000,000.00) (the “Purchase Shares”),
in accordance with the terms of the Purchase Agreement. In connection with the transactions contemplated by the Purchase Agreement, the
Company has registered with the U.S. Securities & Exchange Commission the following shares of Common Stock:
| (1) | __________ Purchase Shares to be issued to the Investor upon purchase from the Company by the Investor
from time to time in accordance with the Purchase Agreement; and |
| (2) | __________ Commitment Shares (as defined in the Purchase Agreement) (the “Commitment Shares”). |
Pursuant to the Purchase
Agreement, the Company also has entered into a registration rights agreement, of even date with the Purchase Agreement with the Investor
(the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Purchase
Shares and Commitment Shares under the Securities Act of 1933, as amended (the “Securities Act”). In connection with
the Company’s obligations under the Purchase Agreement and the Registration Rights Agreement, on [_____], 2024, the Company filed a Registration
Statement (File No. 333-[_________]) (the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the resale of the Purchase Shares and Commitment Shares.
In connection with the foregoing,
we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration
Statement effective under the Securities Act at [_____] [A.M./P.M.] on [__________], 2024 and we have no knowledge, after telephonic inquiry
of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose
are pending before, or threatened by, the SEC and the Purchase Shares and Commitment Shares are available for resale under the Securities
Act pursuant to the Registration Statement and may be issued without any restrictive legend.
| |
Very truly yours, |
| |
[Company Counsel] |
| |
|
| |
By:____________________ |
| cc: | Streeterville Capital, LLC |
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