Exhibit 10.5


 


SUBSCRIPTION AGREEMENT


 


This Subscription Agreement (this “Agreement”)
has been entered into by and between the purchaser set forth on the Omnibus Signature Page hereof (the “Purchaser”)
and Parasol Investments Corp. (to be renamed “SmartKem, Inc.” upon consummation of the Share Exchange (as defined
below)), a Delaware corporation (the “Company”) in connection with the private placement offering (the
 “Offering”) by the Company.


 


R E C I T A L S


 


A.       The
Company is offering a minimum of 5,000,000 shares of the Company’s common stock, par value $0.0001 per share (“Common
Stock”), at a purchase price of $2.00 per share (the “Per Share Purchase Price”), for
an aggregate purchase price of $10,000,000 (the “Minimum Offering Amount”), and a maximum of 11,500,000
shares of Common Stock at the Per Share Purchase Price for an aggregate purchase price of $23,000,000 (the “Maximum
Offering Amount”). The Company may also sell an additional 1,250,000 shares of Common Stock at the Per Share Purchase
Price for an aggregate Purchase Price of $2,500,000 to cover over-subscriptions (the “Over-Subscription Option”),
in the event the Offering is oversubscribed. (References herein to “dollar” or “$” are to United States
Dollars.)


 


B.      
The Company is also offering to certain Purchasers whose purchase of shares of Common Stock in the Offering would otherwise
result in the Purchaser, together with its Affiliates and certain related parties, beneficially owning more than 4.99% (or, at
the election of the Purchaser, 9.99%) of our outstanding Common Stock immediately following the Closing (as defined below) in
which the Purchaser participates, the opportunity to purchase, if any such Purchaser so chooses, Pre-Funded Warrants in the form
of Exhibit A attached hereto (the “Pre-Funded Warrants”), in lieu of shares of Common Stock that would
otherwise result in such Purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the Purchaser, 9.99%)
of the Company’s outstanding Common Stock, at a purchase price of $1.99 per Pre-Funded Warrant (the “Warrant
Purchase Price”). Each Pre-Funded Warrant will be exercisable for one share of our Common Stock (the “Warrant
Shares”) at an exercise price of $0.01 per Warrant Share (the “Exercise Price”).. For
each Pre-Funded Warrant sold by the Company in the Offering, the number of Shares being offered will be decreased on a one-for-one
basis. “Beneficial ownership” will be determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), based on the number of shares of Common Stock outstanding at
the Closing in which such Purchaser participates and the number of shares of Common Stock issuable by the Company at such Closing
pursuant to this Agreement and the Other Subscription Agreements. “Affiliate” means, with respect to
any person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such person, as such terms are used in and construed under Rule 144 under the Securities Act (“Rule
144”). With respect to the Purchaser, any investment fund or managed account that is managed on a discretionary
basis by the same investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser.


 






    	 	 	 



     


    

 


C.       The
Initial Closing (as defined below) of no less than the Minimum Offering Amount, including the Minimum Insider Investment (as defined
below) is contingent upon, and shall be consummated simultaneously with, the closing of a share exchange in accordance with the
terms of that certain Share Exchange Agreement, dated as of the Initial Closing Date (as defined below) (the “Share
Exchange Agreement”), by and between the Company and SmartKem Limited, a U.K company (“SmartKem”),
pursuant to which SmartKem will become a wholly owned Subsidiary of the Company (the “Share Exchange”),
and pursuant to which all of the outstanding capital stock of SmartKem will be exchanged for shares of the Company’s Common
Stock, all outstanding SmartKem enterprise management incentive options (“EMI Options”) will be accelerated
and will become exercisable, and any other SmartKem securities exercisable for or convertible into capital stock will be either
cancelled or assumed by, or exchanged for new securities to acquire Common Stock of, the Company, at the same ratio at which outstanding
shares of capital stock of SmartKem are exchanged, with appropriate adjustments to the per share exercise or conversion price
thereof, and otherwise on their original terms and conditions. The total number of shares of the Company’s Common Stock
that will be issued to pre-Share Exchange shareholders of SmartKem or reserved for issuance upon exercise of pre-Share Exchange
options, stock appreciation rights and any other convertible securities of SmartKem will be 15,000,000 shares. As of the Closing,
the Company is expected to have an Equity Incentive Plan (the “EIP”) reserving 2,275,000 shares of Common
Stock (assuming the exercise of all outstanding SmartKem EMI Options), covering any other pre-Share Exchange SmartKem options
to be assumed by, or exchanged for options of, the Company, as well as for the future issuance, at the discretion of the Company’s
board of directors (the “Board of Directors”) of options and other incentive awards to officers, key employees, consultants
and directors of the Company and its Subsidiaries. The number of shares initially reserved for issuance under the EIP will be
increased annually on the first day of each year beginning in 2022, at the discretion of the Board of Directors, in an amount
up to four percent (4%) of the shares of stock outstanding (on an as-converted basis) on the last day of the immediately preceding
year. Holders of Common Stock of the Company prior to the Share Exchange will retain in the aggregate 2,500,000 shares of Common
Stock after the Share Exchange. On or before the consummation of the Share Exchange, the Company will change its name to “SmartKem,
Inc.”





 


D.       The
Securities (as defined below) subscribed for pursuant to this Agreement have not been registered under the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder (the “Securities Act”) or any state
or foreign securities Law. The Offering is being made on a reasonable best efforts basis to “accredited investors,”
as defined in Regulation D under the Securities Act, in reliance upon the exemption from securities registration afforded by Section 4(a)(2)
of the Securities Act and Rule 506(b) of Regulation D. For purposes of this Agreement, “Law” or “Laws”
means any federal, state, local or foreign or provincial statute, law (including, for the avoidance of doubt, any statutory, common,
or civil law), ordinance, rule, regulation, order, injunction, decree or agency requirement having the force of law or any undertaking
to or agreement with any Governmental Authority (as defined below).


 


E.         The
parties intend to treat the Share Exchange, together with the Initial Closing and the Subsequent Closing, if relevant, as part
of a transaction that is described in Section 351(a) of the Internal Revenue Code of 1986, as amended (the “Code”)
to the extent property is exchanged for stock as described therein.


 






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AGREEMENT


 


The Company and the
Purchaser hereby agree as follows:


 


1.     
Subscription.


 


(a)               
Purchase and Sale of the Securities.


 


(i)           
Subject to the terms and conditions of this Agreement, the Purchaser agrees to purchase, and the Company agrees to sell
and issue to the Purchaser, that number of Shares and/or Pre-Funded Warrants set forth on the Purchaser’s Omnibus Signature
Page attached hereto at the Per Share Purchase Price or the Warrant Purchase Price, respectively, for a total aggregate purchase
price for the Securities as set forth on such Omnibus Signature Page (the “Purchase Price”). The minimum
subscription amount for each purchaser in the Offering is $25,000 (or 12,500 Shares). The Company may accept subscriptions for
less than $25,000 from any purchaser in the Offering in its sole discretion. Current officers, directors, shareholders of SmartKem
and their respective friends and family (“Insider Investors”) will purchase a minimum aggregate amount
of $5,000,000 of Securities in the Offering (the “Minimum Insider Investment”). For the purposes of
this Agreement, “Securities” means the Shares and the Pre-Funded Warrants issued and sold to the Purchaser
hereunder in the Offering at the Initial Closing (as defined below) and at any Subsequent Closing (as defined below).


 


(ii)           
In connection with the Offering, the Company has entered or will enter into other subscription agreements in the same form
and containing the same terms and conditions as this Agreement for Securities (“Other Securities”) (each,
an “Other Subscription Agreement”) with purchasers in the Offering other than the Purchaser (collectively,
 “Other Purchasers”).


 


(b)               
Subscription Procedure; Closing.


 


(i)           
Initial Closing. Subject to the terms and conditions of this Agreement, the initial Closing of the Offering shall
take place upon the satisfaction (or waiver as provided herein) of the conditions set forth in Section 5 and Section 6 of this
Agreement (other than those conditions that by their nature will be satisfied at the Closing, but subject to the satisfaction
(or waiver as provided herein) of such conditions) or at such other time and place as is mutually agreed to by the Company and
the Placement Agent (as defined below) contingent upon and simultaneously with the
closing of the Share Exchange (the “Initial Closing” and the date that the Initial Closing occurs, the
 “Initial Closing Date”). The Company shall provide written notice to the Purchaser of the date of the
Initial Closing at least three (3) Business Days prior to the Initial Closing. (For the purposes of this Agreement, “Business
Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the general
transaction of business.)


 


(ii)Subsequent
Closings. If the Maximum Offering Amount is not sold at the Initial Closing, at any time prior to March 5, 2021, or at such
later date as the Company and Placement Agent may mutually agree, without notice to or consent from the Purchaser or any Other
Purchaser, subject to the satisfaction (or waiver as provided herein) of the conditions set forth in Section 5 and Section 6 of
this Agreement (other than those conditions that by their nature will be satisfied at the Closing, but subject to the satisfaction
(or waiver as provided herein) of such conditions) (each a “Subsequent Closing” and collectively the
 “Subsequent Closings” and the date that a Subsequent Closing occurs, a “Subsequent Closing
Date”), the Company may sell additional Securities up to the Maximum Offering Amount, and if there are over-subscriptions,
additional Securities may be sold in connection with the Over-Subscription Option (collectively, the “Subsequent Closing
Securities”) to such persons, including the Purchaser, as may be approved by the Company and who are reasonably
acceptable to the Placement Agent. Any Subsequent Closing Securities issued and sold to the Purchaser pursuant to this Section 1(b)(ii)
shall be deemed to be “Securities” for all purposes under this Agreement. To the extent that any Securities
are to be issued and sold to the Purchaser at a Subsequent Closing, the Company shall provide written notice to the Purchaser
of the date of any Subsequent Closing at least three (3) Business Days prior to such Subsequent Closing.


 






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The Initial
Closing and the Subsequent Closings, if any, shall be known collectively herein as the “Closings” or
individually as a “Closing.” The Initial Closing Date and the Subsequent Closing Dates are each referred
to herein as a “Closing Date”. Closings may take place remotely via the exchange by electronic transmission
of documents and signatures.


 


(iii)           
Subscription Procedure. To complete a subscription for Securities, the Purchaser must fully comply with the subscription
procedure provided in subparagraphs (A) through (D) of this paragraph (iii) on or before the applicable Closing Date:


 


(A)             
Subscription Documents. At or before the applicable Closing, the Purchaser shall review, complete and execute the
Omnibus Signature Page to this Agreement and the Registration Rights Agreement substantially in the form of Exhibit B
attached hereto (the “Registration Rights Agreement”), the Selling Securityholder Questionnaire
(as defined in the Registration Rights Agreement), the Investor Profile, Anti-Money Laundering Form and Accredited Investor Certification,
attached hereto following the Omnibus Signature Page (collectively, the “Subscription Documents”), and
deliver the Subscription Documents to the party indicated thereon at the address set forth under the caption “How to
subscribe for Securities in the private offering of Parasol Investments Corp.” below. Executed documents may be delivered
to such party by facsimile or .pdf sent by electronic mail (e-mail).


 


(B)             
Purchase Price. At or before the applicable Closing, the Purchaser shall deliver to Delaware Trust Company, in its
capacity as escrow agent (the “Escrow Agent”), under an escrow agreement among the Company, SmartKem,
the Placement Agent and the Escrow Agent (the “Escrow Agreement”) the full Purchase Price set
forth on the Purchaser’s Omnibus Signature Page attached hereto, by certified or other bank check or by wire transfer
of immediately available funds, pursuant to the instructions set forth under the caption “How to subscribe for Securities
in the private offering of Parasol Investments Corp.” below. Such funds will be held for the Purchaser’s benefit
in the escrow account established for the Offering (the “Escrow Account”), without interest
or offset.


 






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(C)             
Termination. This Agreement shall terminate automatically and be of no further force and effect, and any amounts
deposited into the Escrow Account by or on behalf of the Purchaser shall be returned to the Purchaser or its designee promptly,
without interest or offset, if (i) the Purchaser and the Company agree in writing to terminate this Agreement prior to the applicable
Closing, (ii) the subscription has been revoked in full by the Purchaser in accordance with
Section 8, (iii) in the Purchaser’s sole and absolute discretion, upon written notice to the Company, if any
representation or warranty of the Company set forth in Section 3 hereof shall be or shall have become inaccurate or the
Company shall have breached or failed to perform any of its covenants or other agreements set forth in this Agreement, which inaccuracy,
breach or failure to perform would give rise to the failure to satisfy any of the conditions set forth in Section 6(a)
or Section 6(b) of this Agreement and which inaccuracy, breach or failure to perform cannot be cured by the Company or,
if capable of being cured, is not cured within two (2) Business Days of the Purchaser’s notice to the Company thereof; or
(iv) the Share Exchange Agreement is terminated pursuant to its terms. The Company shall promptly (and in any event within one
(1) Business Day) provide the Purchaser with written notice of the termination of the Share Exchange Agreement.


  


(D)             
Company Discretion. The Purchaser understands and agrees that, prior to the execution and delivery of this Agreement
by the Company, the Company in its sole discretion reserves the right to accept or reject this subscription for Securities, in
whole or in part. The Company and the Purchaser shall have no obligation hereunder until the Company shall execute and deliver
to the Purchaser an executed copy of this Agreement.


 


2.      
Placement Agent. GP Nurmenkari Inc. (the “Placement Agent”), a U.S.-registered
broker-dealer, has been engaged by the Company as the Company’s exclusive placement agent, on a commercially reasonable
 “best efforts” basis, for the Offering. The Placement Agent will be paid at each Closing from the Offering proceeds
a total cash commission of eight percent (8.0%) of the aggregate gross Purchase Price paid by the Purchaser and all Other Purchasers
in the Offering at that Closing (the “Cash Fee”) and will receive non-transferrable warrants to purchase
a number of shares of Common Stock equal to 8% of the number of shares of Common Stock sold in the Offering at that Closing plus
the number of Warrant Shares issuable upon exercise of Pre-Funded Warrants sold in the Offering at that Closing, other than Securities
sold to Insider Investors, with a term of five years from the Initial Closing Date and an exercise price of $2.00 per share (the
 “Placement Agent Warrants”). The Company will also pay certain expenses of the Placement Agent in connection
with the Offering. Any sub-agent of the Placement Agent that introduces investors to the Offering will be entitled to
share in the Cash Fee and Placement Agent Warrants attributable to those investors pursuant to the terms of an executed sub-agent agreement.


 


3.      
Representations and Warranties of the Company. Except (i) as set forth in the Disclosure Schedule delivered
to the Purchaser prior to or concurrently with the execution of this Agreement (the “Disclosure Schedule”),
or (ii) as qualified in the Delivered Super 8-K (as defined below) delivered to the Purchaser in accordance with Section 6(j)
of this Agreement (but excluding any disclosures (whether contained under the heading “Risk Factors,” in any “forward-looking
statements” disclaimer or in any other section) to the extent they are cautionary, predictive or forward-looking in nature),
the Company hereby represents and warrants to the Purchaser, as of the date hereof and as of each applicable Closing Date, the
following (provided that, as used in this Section 3, the term “Subsidiaries” shall be construed to include
SmartKem as of each applicable Closing Date and, provided, further, that representations and warranties referencing the “Delivered
Super 8-K” prior to the filing of the Super 8-K with the SEC shall be deemed to be based on the assumption that the Share
Exchange has been consummated in accordance with the terms described in the Draft Super 8-K):


 






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(a)               
Organization and Qualification. The Company and each of its Subsidiaries is a corporation or limited liability company,
as the case may be, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation
or formation, and has the requisite corporate or limited liability company power to own, lease and operate its properties and
to carry on its business as currently conducted and as described in the Delivered Super 8-K. The Company and each of its Subsidiaries
is duly qualified as a foreign corporation or limited liability company, as the case may be, to do business and is in good standing
in every jurisdiction in which the nature of the business as currently conducted and as described in the Delivered Super 8-K makes
such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a
Material Adverse Effect. For purposes of this Agreement, “Material Adverse Effect” means any event,
circumstance, development, condition, occurrence, state of facts, change or effect that, individually or in the aggregate with
any other event, circumstance, development, condition, occurrence, state of facts, change or effect, has or would reasonably be
expected to (x) prevent or materially delay or materially impair the ability of the Company or its Subsidiaries to carry out its
obligations under this Agreement or (y) have any material adverse effect on the business, properties, assets, liabilities, operations
or condition (financial or otherwise), results of operations or future prospects of the Company and its Subsidiaries, taken as
a whole; provided, however, that for purposes of clause (y), none of the following shall be deemed in themselves,
either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there
has been or would reasonably be expected to have a “Material Adverse Effect”: (i) general financial, credit, capital
market or regulatory conditions or any changes therein (provided, however, that such effects do not affect the Company
and its Subsidiaries taken as a whole disproportionately as compared to the Company’s competitors), (ii) any effects alone
or in combination that arise out of, or result from, directly or indirectly from the announcement, pendency, execution or performance
of this Agreement, the transactions contemplated hereby or any action contemplated by this Agreement, (iii) acts of God, war (whether
or not declared), disease, including the COVID 19 pandemic, the commencement, continuation or escalation of a war, acts of armed
hostility, sabotage or terrorism or other international or national calamity or any material worsening of such conditions (provided,
however, that such changes do not affect the Company or its Subsidiaries disproportionately as compared to the Company’s
competitors), (iv) any matter disclosed in the Disclosure Schedule or the Delivered Super 8-K (excluding any disclosures (whether
contained under the heading “Risk Factors,” in any “forward looking statements” disclaimer or in any other
section) to the extent they are cautionary, predictive or forward-looking in nature); (v) any failure by the Company or its Subsidiaries
to meet any projections, budgets or estimates of revenue or earnings (it being understood that the facts giving rise to such failure
may be taken into account in determining whether there has been a Material Adverse Effect (except to the extent such facts are
otherwise excluded from being taken into account by this proviso)), (vi) changes affecting the industry generally in which the
Company or its Subsidiaries operates (provided, however, that such changes do not affect the Company or its Subsidiaries
disproportionately as compared to the Company’s competitors), or (vii) changes in Law or U.S. generally accepted accounting
principles (“GAAP”) (provided, however, that such changes do not affect the Company or
its Subsidiaries disproportionately as compared to the Company’s competitors). For purposes of this Agreement, “Subsidiary”
means, with respect to the Company, any corporation, partnership, limited liability company, joint venture or other legal entity
of any kind of which (i) 50% or more of the capital stock or other equity interests or voting power are, directly or indirectly,
controlled, owned or held by, or (ii) that is, at the time any determination is made, controlled (whether by voting power, Contract
(as defined below) or otherwise) by, in each case, the Company (either alone or through or together with one or more of its other
Subsidiaries); provided, that for all purposes of the representations and warranties of the Company set forth in this Agreement,
whether made as of the date hereof or as of the applicable Closing Date, SmartKem and its Subsidiaries shall be deemed to be Subsidiaries
of the Company regardless of whether the Share Exchange has been consummated.


 






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(b)               
Authorization, Enforcement, Compliance with Other Instruments. (i) The Company and each of its Subsidiaries
party thereto has the requisite corporate or limited liability company power and authority to enter into and perform its obligations
under this Agreement, the Registration Rights Agreement, the Escrow Agreement and the Share Exchange Agreement (collectively with
all other documents, certificates or instruments executed and delivered in connection with the transactions contemplated hereby
or thereby, the “Transaction Documents”) and to consummate the transactions contemplated
thereby, including to issue the Securities, in accordance with the terms hereof and thereof; (ii) the execution and delivery
by the Company and each of its Subsidiaries party thereto of each of the Transaction Documents and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities, have been, or will
be at the time of execution of such Transaction Document, duly authorized by the Board of Directors or other applicable governing
body of the Company or such Subsidiary, and no further action, proceeding, consent, waiver or authorization is, or will be at
the time of execution of each such Transaction Document, required by or from the Company or any such Subsidiary, its respective
board of directors or other governing body or its respective stockholders or equity holders; (iii) this Agreement has been,
and at the Closing each of the other Transaction Documents will be when delivered at the Closing, duly executed and delivered
by the Company and each of its Subsidiaries party thereto; and (iv) this Agreement and the other Transaction Documents, when
delivered at the Closing or at the closing of the Share Exchange, as applicable, will constitute the valid and binding obligations
of the Company and its Subsidiaries party thereto enforceable against the Company and its Subsidiaries party thereto in accordance
with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies and, with respect to any rights to indemnity or contribution contained in the Transaction Documents, as such
rights may be limited by state or federal laws or public policy underlying such laws.


 


(c)               
Capitalization. As of the date hereof and without giving effect to the Share Exchange, the authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share
(the “Preferred Stock”) and there are 5,000,000 shares of Common Stock outstanding and no shares of
Preferred Stock outstanding. Immediately following the effective time of the Share Exchange, but immediately before the Initial
Closing, the authorized capital stock of the Company will consist of 300,000,000 shares of Common Stock and 10,000,000 shares
of Preferred Stock, and the Company will have 12,725,000 shares of Common Stock issued and outstanding (assuming the exercise
of the EMI Options), no shares of Preferred Stock issued and outstanding, and options to purchase 402,586 shares of Common Stock
issued and outstanding under the EIP. All of the outstanding shares of Common Stock and of the capital stock of each of the Company’s
Subsidiaries have been duly authorized, validly issued and are fully paid and non-assessable and free of preemptive or similar
rights and other Liens. All of the issued and outstanding capital stock of each Subsidiary of the Company are owned, directly
or indirectly, by the Company, free and clear of any Liens. Immediately after giving effect to the Share Exchange and the Closing
of the Minimum Offering Amount or the Maximum Offering Amount (in each case, assuming no sales pursuant to the Over-Subscription
Option), the pro forma outstanding capitalization of the Company will be as set forth under “Pro Forma Capitalization”
in Schedule 3c (assuming no Pre-Funded Warrants are sold in the Offering). Immediately after giving effect
to the Share Exchange and the Closing: (i) no shares of capital stock of the Company or any of its Subsidiaries will be subject
to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company; (ii) except for Pre-Funded
Warrants sold in the Offering and except as set forth on Schedule 3c(ii), there will be no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible, exercisable or exchangeable into, any shares of capital stock of the Company or any of its Subsidiaries, or any Contracts
by which the Company or any of its Subsidiaries is or may become bound or pursuant to which the Company or any of its Subsidiaries
is otherwise obligated to issue additional shares of capital stock of the Company or any of its Subsidiaries; (iii) there
will be no outstanding debt securities of the Company or any of its Subsidiaries other than indebtedness as set forth in Schedule
3c(iii); (iv) other than pursuant to the Registration Rights Agreement or as set forth in Schedule 3c(iv),
there will be no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the Securities Act; (v) there will be no outstanding registration statements of the Company
or any of its Subsidiaries, other than pursuant to the Registration Rights Agreement; (vi) except as set forth in Schedule
3c(vi), there will be no securities or instruments of the Company or any of its Subsidiaries containing anti-dilution
or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be
triggered by the issuance of the Securities as described in this Agreement; (vii) no co-sale right, right of first
refusal or other similar right will exist with respect to the Securities or the issuance and sale thereof and (viii) no shares
of Common Stock shall be reserved for issuance, other Warrant Shares issuable upon the exercise of the Pre-Funded Warrants and
other than 2,275,000 shares of Common Stock reserved for issuance under the EIP (assuming the exercise of all of the EMI Options).
The Company has made available to the Purchaser true and correct copies of the Company’s Certificate of Incorporation, as
in effect as of the Initial Closing, and the Company’s Bylaws, as in effect as of the Initial Closing, and the terms of
all securities exercisable for Common Stock and the material rights of the holders thereof in respect thereto other than stock
options issued to officers, directors, employees and consultants. Except for the interests in the Company’s Subsidiaries,
neither the Company nor any of its Subsidiaries owns any equity interest or other interest of any nature in, or any interest convertible,
exchangeable, or exercisable for, equity interests or other interests of any nature in any other person.


 






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(d)               
Issuance of Securities. (i) The Shares that are being issued to the Purchaser hereunder, when issued, sold and delivered
in accordance with the terms and upon payment the consideration set forth in this Agreement, will be duly and validly issued,
fully paid and non-assessable, and free of preemptive or similar rights, Taxes and other Liens with respect to the issuance thereof,
and restrictions on transfer other than restrictions on transfer under the Transaction Documents, applicable state and federal
securities Laws and Liens created by or imposed by the Purchaser. (ii) The Pre-Funded Warrants that are being issued to the Purchaser
hereunder, when issued, sold and delivered in accordance with the terms and upon payment the consideration set forth in this Agreement,
will constitute legal, valid and binding obligations of the Company, enforceable in accordance with their term and free of preemptive
or similar rights, Taxes and other Liens with respect to the issuance thereof, and restrictions on transfer other than restrictions
on transfer under the Transaction Documents, applicable state and federal securities Laws and Liens created by or imposed by the
Purchaser. (iii) The Warrant Shares, when issued and delivered upon exercise of any Pre-Funded Warrants purchased by the Purchaser
hereunder in accordance with the terms thereof and upon payment the exercise price set forth therein, will be duly and validly
issued, fully paid and non-assessable, and free of preemptive or similar rights, Taxes and other Liens with respect to the issuance
thereof, and restrictions on transfer other than restrictions on transfer under the Transaction Documents, applicable state and
federal securities Laws and Liens created by or imposed by the Purchaser. (iv) Assuming the accuracy of each of the representations
and warranties of the Purchaser herein, the offer, issuance and sale by the Company of the Securities to the Purchaser is exempt
from registration under the Securities Act.


 


(e)               
No Conflicts. The execution, delivery and performance of each of the Transaction Documents by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby, including issuance and sale of the Securities
in accordance with this Agreement, have not and will not (i) result in a violation of the Certificate of Incorporation or
the Bylaws (or equivalent constitutive document) of the Company or any of its Subsidiaries; (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any Contract
to which the Company or any Subsidiary is a party, except for those which would not reasonably be expected to be material to the
business of the Company and its Subsidiaries, taken as a whole, or (iii) result in a violation of any Law applicable to the
Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected, except for
those which would not reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any Subsidiary is in violation of or in default under, any provision of its Certificate of Incorporation
or Bylaws or any other constitutive documents. Neither the Company nor any Subsidiary is in violation of any term of or in default
under any Contract, judgment, decree or order or any Law applicable to the Company or any Subsidiary, which violation or breach
has been or would reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as a whole.
Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities
Laws, neither the Company nor any of its Subsidiaries is required to obtain any Authorization of, or provide any notice to or
make any filing or registration with, any Governmental Authority in order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement or the other Transaction Documents in accordance with the terms hereof or thereof, other
than (i) the filings required pursuant to Section 9(i), (ii) the filing of the registration statement contemplated by the Registration
Rights Agreement and (iii) the filing of a Notice of Exempt Offering of Securities on Form D with the Securities and Exchange
Commission (the “SEC”) under Regulation D. Except as set forth on Schedule 3e, neither
the execution and delivery by the Company of the Transaction Documents, nor the consummation by the Company of the transactions
contemplated hereby or thereby, will require any notice, consent or waiver under any Contract to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary is bound or to which any of their assets or businesses is subject, except
for any notice, consent or waiver the absence of which would not reasonably be expected, individually or in the aggregate, to
be material to the business of the Company and its Subsidiaries, taken as a whole. All notices, consents, authorizations, orders,
filings and registrations which the Company or any of its Subsidiaries is required to deliver or obtain pursuant to the preceding
two sentences have been or will be delivered or obtained or effected, and shall remain in full force and effect, on or prior to
the Closing.


 






    	 	8	 



     


    




 


(f)                
Absence of Litigation. Except as set forth on Schedule 3f, there is no, and since January 1,
2019 (the “Lookback Date”) there has not been any, action, suit, claim, inquiry, notice of violation,
arbitration, petition, charge, citation, summons, subpoena, proceeding (including any partial proceeding such as a deposition)
or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity, before
or by any Governmental Authority (an “Action”) pending or threatened in writing or, to the knowledge
of the Company, threatened orally, against or affecting the Company or any of its Subsidiaries or any of their respective officers
or directors or any of their respective assets or businesses, which has or would be reasonably likely to (i) adversely affect
the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement
or any of the other Transaction Documents or (ii) be material to the business of the Company and its Subsidiaries, taken as a
whole. For the purpose of this Agreement, the knowledge of the Company means the knowledge of the officers of the Company (for
the avoidance of doubt, after giving effect to the Share Exchange) and SmartKem, in each case, both actual or knowledge that they
would have had upon reasonable inquiry of the personnel of the Company or SmartKem, as applicable responsible for the applicable
subject matter. Neither the Company nor any of its Subsidiaries is, and since the Lookback Date has not been, subject to any judgment,
decree, or order which has been, or would reasonably be expected to be material to the business of the Company and its Subsidiaries,
taken as a whole.


 


(g)               
Acknowledgment Regarding Purchaser’s Purchase of the Securities. The Company acknowledges and agrees that
the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further acknowledges that the Purchaser are not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by the Purchaser or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities.


 


(h)               
No General Solicitation. Neither the Company, nor any of its Affiliates, nor, to the knowledge of the Company, any
person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities.


 


(i)                
No Integrated Offering. Neither the Company, nor any of its Affiliates, nor to the knowledge of the Company, any
person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would eliminate the availability of the exemption from registration under Rule 506(b)
of Regulation D or afforded by Section 4(a)(2) of the Securities Act in connection with the Offering of the Securities contemplated
hereby or cause this Offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities
Act.


 



    	 	9	 



     


    




 


(j)                
Employee Relations. Since the Lookback Date, there has been no actual or threatened in writing, or to the knowledge
of the Company, threatened orally, labor dispute, work stoppage, request for representation, union organizing activity, or unfair
labor practice charges involving the employees of the Company or any of its Subsidiaries. Neither Company nor any Subsidiary is
party to any collective bargaining agreement. The Company’s and/or its Subsidiaries’ employees are not members of
any union, and the Company believes that its and its Subsidiaries’ relationship with their respective employees is good.


 


(k)               
Intellectual Property Rights. Except as set forth on Schedule 3k, the Company and each of its
Subsidiaries exclusively owns, possesses, or has valid and enforceable rights to use, license, and exploit all Intellectual Property
used in, necessary or advisable for the conduct of the Company’s and its Subsidiaries’ business as currently conducted
and as described in the Delivered Super 8-K, except for a failure to own, possess or have such rights that would not reasonably
be expected to result in a Material Adverse Effect. There are no unreleased liens or security interests which have been filed,
or which the Company has received notice of, against any of the Intellectual Property owned by the Company. All Intellectual Property
owned by the Company or its Subsidiaries, and all Contracts pursuant to which the Company or its Subsidiaries license Intellectual
Property, are valid and enforceable, and the Company and its Subsidiaries are in full compliance with all such Contracts except
as would not reasonably be expected to result in a Material Adverse Effect. Furthermore, except as has not been and would not
reasonably be expected to result in a Material Adverse Effect, since the Lookback Date: (A) to the Company’s knowledge,
there has been no infringement, misappropriation or violation by third parties of any such Intellectual Property of the Company
or its Subsidiaries; (B) there has been no Action pending or threatened in writing (or to the Company’s knowledge, threatened
orally) by others challenging the Company’s or any of its Subsidiaries’ ownership of or any rights in or to any such
Intellectual Property; (C) the Intellectual Property owned by the Company and its Subsidiaries and, to the Company’s
knowledge, the Intellectual Property licensed to the Company and its Subsidiaries, has not been adjudged invalid or unenforceable,
in whole or in part, and there has been no Action pending or threatened in writing (or to the Company’s knowledge, threatened
orally) by others challenging the validity, enforceability or scope of any such Intellectual Property; (D) there has been
no Action pending or threatened in writing (or to the Company’s knowledge, threatened orally) by others that the Company
or any of its Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights
of others, and neither the Company nor any of its Subsidiaries has received any written notice of such Action; and (E) to
the Company’s knowledge, no employee of the Company or any of its Subsidiaries has violated any term of any employment Contract,
patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to
such employee’s employment with the Company or any of its Subsidiaries or actions undertaken by the employee while employed
with the Company or any of its Subsidiaries. The Company and its Subsidiaries have complied in all material respects with 37 C.F.R.
§1.56. The consummation of the transactions contemplated hereby or by the other Transaction Documents will not result
in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other person
in respect of, the Company or any of its Subsidiaries’ right to own, use or hold for use any Intellectual Property as owned,
used or held for use in the conduct of the Company’s and its Subsidiaries’ business as currently conducted and as
described in the Delivered Super 8-K, except as would not reasonably be expected to be material to the business of the Company
and its Subsidiaries, taken as a whole. The rights of the Company and each of its Subsidiaries in their Intellectual Property
are valid, subsisting and enforceable, except as would not reasonably be expected to be material to the business of the Company
and its Subsidiaries, taken as a whole. The Company and each of its Subsidiaries has taken reasonable steps to maintain their
Intellectual Property and to protect and preserve the confidentiality of all of their Trade Secrets. To the Company’s knowledge,
there has not been any disclosure or access to any Trade Secrets of the Company and each of its Subsidiaries by any unauthorized
person. The Company and each of its Subsidiaries have taken and continue to take commercially reasonable measures, at least consistent
with prevailing industry practice, to ensure that all personal information in their possession, custody or control is protected
against loss and against unauthorized, access, use, modification, disclosure or other misuse. “Intellectual Property”
shall mean any and all rights title and interest in, arising out of, or associated with any intellectual or intangible property,
whether protected, created or arising in any jurisdiction throughout the world, including the following: (a) issued patents and
patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions,
reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority issued indicia
of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”);
(b) trademarks, service marks, brands, certification marks, logos, trade dress, slogans, trade names, and other similar indicia
of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications
for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of
authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing
(“Copyrights”); (d) internet domain names and social media account or user names (including “handles”),
whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content
and data thereon or relating thereto, whether or not Copyrights; (e) mask works, and all registrations, applications for registration,
and renewals thereof; (f) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof;
(g) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical
information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary
information and all rights therein (“Trade Secrets”); (h) computer programs, operating systems, applications,
firmware and other code, including all source code, object code, application programming interfaces, data files, databases, protocols,
specifications, and other documentation thereof; (i) rights of publicity; and (j) all other intellectual or industrial property
and proprietary rights.


 






    	 	10	 



     


    

 


(l)                
Environmental Laws.


 


(i)           
Except as would not reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as
a whole: (x) the Company and each Subsidiary is in compliance and has complied with all applicable Environmental Laws (as defined
below); (y) the Company or its applicable Subsidiary is in possession of all Authorizations required pursuant to Environmental
Laws to conduct their respective businesses as currently conducted and as described in the Delivered Super 8-K and (z) the Company
or its applicable Subsidiary is in material compliance with all terms and conditions of such Authorizations. There is no Action
pending or threatened in writing (or to the Company’s knowledge, threatened orally) relating to any violation or noncompliance
with any Environmental Law involving the Company or any Subsidiary. For purposes of this Agreement, “Environmental
Law” means any national, state, provincial or local Law, statute, rule or regulation or the common law relating
to the environment or occupational health and safety, including without limitation any statute, regulation, administrative decision
or order pertaining to (A) treatment, storage, disposal, generation and transportation of Hazardous Substances; (B) air,
water and noise pollution; (C) groundwater and soil contamination; (D) the release or threatened release into the environment
of industrial, toxic or hazardous materials or substances, or solid or hazardous waste, including without limitation emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (E) the protection of wild life,
marine life and wetlands, including without limitation all endangered and threatened species; (F) storage tanks, vessels,
containers, abandoned or discarded barrels, and other closed receptacles; (G) health and safety of employees and other persons;
and (H) manufacturing, processing, using, distributing, treating, storing, disposing, transporting or handling of Hazardous
Substances. As used above, the terms “release” and “environment” shall have the meaning set forth in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.


 


(ii)           
None of the Company or any of its Subsidiaries has any liability or obligation under any Environmental Law with respect
to any release, spill, emission, leaking, pumping, pouring, emptying, leaching, escaping, dumping, injection, deposit, discharge
or disposing of any Hazardous Substance in, onto or through the environment, except as would not reasonably be expected to have
a Material Adverse Effect. “Hazardous Substances” means all materials, wastes, or substances defined
by, or regulated under, any Environmental Laws, including as a hazardous waste, hazardous material, hazardous substance, extremely
hazardous waste, restricted hazardous waste, contaminant, pollutant, toxic waste, or toxic substance, and specifically including
petroleum and petroleum products, asbestos, radon, lead, toxic mold, radioactive materials, and polychlorinated biphenyls.


 


(m)             
Authorizations; Regulatory Compliance. The Company and each of its Subsidiaries holds, and is operating in compliance
with, all authorizations, licenses, permits, approvals, clearances, registrations, exemptions, consents, certificates, waivers,
filings, qualifications and orders of each applicable entity or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to United States federal, state or local government or foreign, or other governmental,
including any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial or arbitral
authority thereto (each a “Governmental Authority”) and supplements and amendments thereto (collectively,
 “Authorizations”) required for the conduct of its business as currently conducted and as described in
the Delivered Super 8-K, or that are otherwise material to the business of the Company and its Subsidiaries, in all applicable
jurisdictions, except as would not reasonably be expected to be material to the business of the Company and its Subsidiaries,
taken as a whole. All Authorizations held by the Company or its Subsidiaries are valid and in full force and effect. Neither the
Company nor any of its Subsidiaries is in material violation of any terms of any such Authorizations; and neither the Company
nor any of its Subsidiaries has received written notice from any Governmental Authority of any revocation or modification of any
such Authorization, or written notice (or to the Company’s knowledge, oral notice) that such revocation or modification
is being considered, except to the extent that any such revocation or modification would not be reasonably expected to be material
to the business of the Company and its Subsidiaries, taken as a whole. The Company and each of its Subsidiaries is in compliance,
and has since the Lookback Date been in compliance, with all applicable federal, state, local and foreign Laws, including such
Laws applicable to the manufacture, distribution, import and export of regulated products and component parts, except as would
not reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as a whole. Neither the Company
nor any of its Subsidiaries has received written notice (or to the Company’s knowledge, oral notice) of any ongoing claim,
action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority or
third party alleging that any product operation or activity is in material violation of any Laws or any Authorizations. The Company
and each of its Subsidiaries has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments thereto as required by any Laws or any Authorizations and all such
reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments, to the Company’s
knowledge, were complete, correct and not misleading on the date filed in all material respects (or were corrected or supplemented
by a subsequent submission). Neither the Company nor any of its Subsidiaries has, either voluntarily or involuntarily, initiated,
conducted, or issued or caused to be initiated, conducted or issued, any other notice or action relating to any alleged product
defect or violation and, to the Company’s knowledge, no third party has initiated or conducted any such notice or action
relating to any of the Company’s products in development. Neither the Company nor any of its Subsidiaries is a party to
any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, or
similar agreements, or has any reporting obligations pursuant to any such agreement, plan or correction or other remedial measure
entered into with any Governmental Authority.


 






    	 	11	 



     


    

 


(n)               
Title. Neither the Company nor any of its Subsidiaries owns any real property. Except as set forth on Schedule
3n, each of the Company and its Subsidiaries has good and marketable title to all of its personal property and other tangible
assets (i) purportedly owned or used by them as reflected in the Delivered Super 8-K, or (ii) necessary for the conduct of their
business as currently conducted and as described in the Delivered Super 8-K, free and clear of any legal or equitable, specific
or floating, lien (statutory or otherwise), restriction, mortgage, deed of trust, pledge, lien, security interest, restrictive
covenant, or other adverse right, charge, claim or encumbrance of any kind or nature whatsoever (collectively, “Liens”),
except for Liens which would not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule
3n, with respect to properties and assets it leases, each of the Company and its Subsidiaries is in compliance with such
leases and holds a valid leasehold interest free of any Liens, except for such Liens which would not reasonably be expected to
have a Material Adverse Effect.


 


(o)               
Tax Status. The Company and each Subsidiary has filed (taking into account any valid extensions) all federal, state,
local and foreign income and all other material returns, declarations, reports, elections, designations, or information returns
or statements made to a Governmental Authority relating to Taxes, including any schedules or attachments thereto and any amendments
thereof (collectively, “Tax Returns”) required to be made or filed by it or with respect to it by any
jurisdiction to which it is subject. Such Tax Returns accurately reflect, in all material respects, the Tax liabilities of the
Company and its Subsidiaries (other than Taxes not yet due and payable). The Company and each Subsidiary has timely paid all income
Taxes and all other material Taxes and other material governmental assessments and material charges, shown or determined to be
due on such returns, reports and declarations, except those being contested in good faith and for which the Company and its Subsidiaries
have adequately reserved and accrued for in accordance with GAAP. The Company has reserved and accrued on its books provisions
in accordance with GAAP amounts that are reasonably adequate for the payment of all material taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid Taxes in any material amount claimed to be due
from the Company or any Subsidiary by the taxing authority of any jurisdiction. There are no, and since the Lookback Date there
have been no, pending or threatened in writing (or to the Company’s knowledge, threatened orally) Actions by the taxing
authority of any jurisdiction against the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries
is a party to, or otherwise bound by, any Tax indemnity, Tax sharing or Tax allocation agreement (but not including any agreement
whose primary subject matter is not Taxes) (a “Tax Agreement”). The Company is not a “United States real
property holding corporation” within the meaning of Section 897(c) of the Code. For purposes of this Agreement, “Tax”
or “Taxes” means (i) any and all U.S. federal, state, local, or non-U.S. taxes, assessment, levy or
other charges, including net or gross income, gross receipts, net proceeds, estimated, sales, use, ad valorem, value added, franchise,
license, withholding, payroll, employment, excise, property (including both real and personal), unclaimed property remittance/escheat,
deed, stamp, alternative or add-on minimum, occupation, severance, unemployment, social security, workers’ compensation,
capital, premium, windfall profit, environmental, custom duties, fees, transfer and registration taxes, and any governmental charges
in the nature of a tax imposed by a Governmental Authority, (ii) any liability for the payment of any amounts of any of the foregoing
types as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement
or arrangement whereby liability for payment of such amounts was determined or taken into account with reference to the liability
of any other person and (iii) any liability for the payment of any amounts as a result of being a party to any Tax Agreement.


 






    	 	12	 



     


    

 


(p)               
Certain Transactions. Except as set forth on Schedule 3p, none of the direct or indirect equity holders,
shareholders, controlling persons, partners, managers, members, officers, directors, employees, general or limited partners or
assignees (each, a “Related Party”) of the Company or any Subsidiary is presently, or has since the
Lookback Date been, a party to any Contract or transaction with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any Contract providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner. All transactions that would be required to be disclosed
by the Company pursuant to Item 404 of Regulation S-K promulgated under the Securities Act are disclosed in the SEC Reports
or the Delivered Super 8-K in accordance with Item 404 of Regulation S-K.


 


(q)               
Rights of First Refusal. Except as set forth on Schedule 3q, the Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not
limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.


 


(r)                
Insurance. The Company and its Subsidiaries have insurance policies of the type and in amounts customarily carried
by organizations conducting businesses or owning assets similar to those of the Company and its Subsidiaries, and in any event
maintain insurance policies in amounts as required by applicable Law or any Contract to which the Company or its Subsidiaries
is a party or to which any of its assets or businesses is subject. All such insurance policies are in full force and effect and
binding and enforceable in accordance with their terms, and all premiums due and payable thereon have been timely paid in full.
Neither the Company nor any of its Subsidiaries is in default with respect to its obligations under any such insurance policy,
nor has there been any failure to give any notice or present any claim under any such insurance policy in due and timely fashion
except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and
its Subsidiaries, taken as a whole. There is no material claim pending under any such policy as to which coverage has been questioned,
denied or disputed by the underwriter of such policy and there has been no notice of cancellation of nonrenewal of any such insurance
policy received by the Company or any of its Subsidiaries. Since the Lookback Date, no limits on any insurance policy of the Company
or any of its Subsidiaries have been exhausted, materially eroded or materially reduced.


 






    	 	13	 



     


    

 


(s)                
SEC Reports. The Company has timely filed or furnished , as applicable, all reports, proxy statements, schedules,
forms, statements, certifications and other documents (including exhibits and all other information incorporated by reference
therein) required to be filed or furnished by the Company under the Exchange Act (together with the Super 8-K, the “SEC
Reports”) since the Lookback Date (or such shorter period since the Company was first required by Law or regulation
to file such material). The Super 8-K when filed will comply, and the other SEC Reports at the time they were filed complied,
in all material respects with the Securities Act or the Exchange Act, as applicable. There are no Contracts, or any material changes
or amendments thereto, or any waivers of any material right thereunder, that are required to be described in the SEC Reports or
the Delivered Super 8-K that were not described, in all material respects, as required in the SEC Reports or the Delivered Super
8-K. There are no Contracts, or any material changes or amendments thereto, or any waivers of any material right thereunder, that
are required to be filed as exhibits to the Super 8-K will not have been filed as required therein. There are no outstanding or
unresolved comments in comment letters received from the SEC staff with respect to the SEC Reports. None of the SEC Reports is
the subject of an ongoing SEC review. There are no SEC inquiries or investigations, other governmental inquiries or investigations
or internal investigations pending or threatened in writing (or, to the Company’s knowledge, threatened orally), in each
case regarding any accounting practice of the Company.


 


(t)                
Financial Statements.


 


(i)    
(A) The audited consolidated financial statements of SmartKem as of and for the fiscal years ended December 31, 2020 and
December 31, 2019 and the unaudited pro forma consolidated financial statements of the Company (after taking into effect the Share
Exchange) (including, in each case, the notes thereto) included in the Delivered Super 8-K comply in all material respects with
GAAP and the rules and regulations of the SEC with respect thereto as in effect at the time of filing and (B) true and complete
copies of the consolidated audited financial statements of SmartKem and its Subsidiaries consisting of the balance sheets
of the Company and its Subsidiaries as at December 31, 2020 and December 31, 2019 and the related statements of income and
retained earnings, owners’ equity and cash flow for the years then ended including, in each case, the notes thereto, have
been made available to the Purchaser (the financial statements referenced in the foregoing clauses (i) and (ii), the “Financial
Statements”). The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis
during the periods involved and include all adjustments (consisting only of normal recurring accruals) that are necessary for
a fair presentation of the consolidated financial condition of the entities or business to which they relate as of the date thereof,
and fairly present in all material respects the financial position of SmartKem and its Subsidiaries taken as a whole, or the Company
and its consolidated Subsidiaries taken as a whole, as applicable, as of and for the dates thereof and the results of operations
and cash flows for the periods then ended. The pro forma financial information and the related notes, if any, included in the
Delivered Super 8-K have been properly compiled and prepared in accordance with the applicable requirements of the Securities
Act and fairly present in all material respects the information shown therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred
to therein.


 






    	 	14	 



     


    

 


(ii)  
The Company (A) maintains a standard system of accounting established and administered in accordance with GAAP and (B)
has established and maintains a system of internal controls over financial reporting designed to provide reasonable assurance
regarding the reliability of the financial reporting and the preparation of the Financial Statements for external purposes in
accordance with GAAP. There (x) are no significant deficiencies or weaknesses in any system of internal accounting controls used
by each of the Company’s Subsidiaries, (y) has not since the Lookback Date been any fraud or other unlawful act on the part
of any of management or other employees of the Company and each of its Subsidiaries who have a role in the preparation of Financial
Statements or the internal accounting controls used by the Company and each of its Subsidiaries related to such preparation or
controls and (z) has not since the Lookback Date been any claim or allegation regarding any of the foregoing.


 


(iii) Neither the
Company nor any of its Subsidiaries has any liabilities (whether accrued, absolute, contingent or otherwise) other than (A) liabilities
disclosed on the audited balance sheet (including the notes thereto) or the interim balance sheet (including the notes thereto)
and (B) liabilities that have been incurred since the date of the latest balance sheet of the Company and the latest balance sheet
of SmartKem included in the Financial Statements in the ordinary course of business, which liabilities, individually or in the
aggregate, are not material to the business of the Company and its Subsidiaries (taken as a whole).


 


(iv) 
To the knowledge of the Company, BDO LLP (the “Auditor”), whose report will be filed with the
SEC and included in the Super 8-K, is an independent registered public accounting firm with respect to the Company as required
by the Exchange Act and the rules and regulations promulgated thereunder and the rules and regulations of the Public Company Accounting
Oversight Board. The Auditor has not, during the periods covered by the Financial Statements provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act.


 


(u)               
Material Changes.  Except for the transactions contemplated hereby or in the Share Exchange Agreement,
since the date of the latest balance sheet of the Company and the latest balance sheet of SmartKem included in the financial statements
contained in the Delivered Super 8-K, except as set forth on Schedule 3(u), (i) there have been no events,
occurrences or developments that have had or would reasonably be expected to have a Material Adverse Effect with respect to the
Company or SmartKem, (ii) there have not been any changes in the assets, financial condition, business or operations of the
Company or SmartKem from that reflected in the financial statements contained in the Delivered Super 8-K except changes in the
ordinary course of business which have not been, either individually or in the aggregate, materially adverse to the business,
properties, financial condition, results of operations or future prospects of the Company or SmartKem, (iii) none of the Company
or SmartKem or any of their respective Subsidiaries has altered its method of accounting or the manner in which it keeps its accounting
books and records, and (iv) none of the Company or SmartKem or any of their respective Subsidiaries has declared or made
any dividend or distribution of cash or other property to its stockholders or equity holders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock
issued to employees of the Company). The Company and its Subsidiaries, individually and on a consolidated basis, are not as of
the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Initial Closing, will not be
Insolvent (as defined below). “Insolvent” means, with respect to the Company, on a consolidated basis
with its Subsidiaries, (i) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than
the amount required to pay the Company’s and its Subsidiaries’ total indebtedness, (ii) the Company and its Subsidiaries
are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured or (iii) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond
their ability to pay as such debts mature.


 






    	 	15	 



     


    

 


(v)               
Disclosure Controls. The Company has established and maintains disclosure controls and procedures (as defined in
Rules 13a-14 and 15d-15 under the Exchange Act) and such controls and procedures are effective in ensuring
that material information relating to the Company, including its Subsidiaries, is made known to the principal executive officer
and the principal financial officer.


 


(w)             
Sarbanes-Oxley. The Company is, and has been since the Lookback Date, to the extent applicable, in compliance in
all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it.


 


(x)               
Off-Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company
or any Subsidiary and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company
in the Delivered Super 8-K and is not so disclosed.


 


(y)               
Foreign Corrupt Practices. Neither the Company and its Subsidiaries, nor any of their respective directors, managers,
officers, agents or employees or other person acting on behalf of the Company or its Subsidiaries, has: (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political
activity, (ii) made any unlawful payment or offered anything of value to foreign or domestic government officials or employees
or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution
made by the Company or any of its Subsidiaries (or, to the Company’s knowledge, made by any person acting on their behalf)
which is in violation of Law or (iv) violated any applicable anti-terrorism Law or regulation, nor have any of them otherwise
taken any action which would reasonably cause the Company or any of its Subsidiaries to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, the UK Bribery Act of 2010, as amended, or any applicable Law of similar effect.


 


(z)               
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge,
any director, manager, officer, agent, employee or Affiliate of the Company or any Subsidiary is, or is acting under the direction
of, on behalf of or for the benefit of a person that is, or is owned or controlled by a person that is, currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.


 


(aa)            
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in
compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, and other applicable money laundering Laws and applicable rules and regulations thereunder (collectively,
the “Money Laundering Laws”), and no Action by or before any Governmental Authority involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or threatened in writing (or to the Company’s knowledge,
threatened orally).


 






    	 	16	 



     


    

 


(bb)           
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid
to the Company’s placement agent in connection with the placement of the Securities.


 


(cc)            
Privacy and Data Security.


 


(i)           
“Business Privacy and Data Security Policies” means all of the Company’s or one of its
Subsidiaries’ present, internal or public-facing policies, notices, and statements concerning the privacy, security, or
Processing of Personal Information in the conduct of the Business. “Personal Information” means any
information that identifies or, alone or in combination with any other information, could reasonably be used to identify, locate,
or contact a natural person, including name, street address, telephone number, email address, identification number issued by
a Governmental Authority, credit card number, bank information, customer or account number, online identifier, device identifier,
IP address, browsing history, search history, or other website, application, or online activity or usage data, location data,
biometric data, medical or health information, or any other information that is considered “personally identifiable information,”
 “personal information,” or “personal data” under applicable Law, and all data associated with any of the
foregoing that are or could reasonably be used to develop a profile or record of the activities of a natural person across multiple
websites or online services, to predict or infer the preferences, interests, or other characteristics of a natural person, or
to target advertisements or other content to a natural person. “Privacy Laws” means all applicable Laws,
orders, writs, judgments, injunctions, decrees, stipulations, determinations or awards entered by or with any Governmental Authority,
and binding guidance issued by any Governmental Authority concerning the privacy, security, or Processing of Personal Information
(including Laws of jurisdictions where Personal Information was collected), including, as applicable, data breach notification
Laws, consumer protection Laws, Laws concerning requirements for website and mobile application privacy policies and practices,
Social Security number protection Laws, data security Laws, and Laws concerning email, text message, or telephone communications.
Without limiting the foregoing, Privacy Laws include the Health Insurance Portability and Accountability Act of 1996, as amended
and supplemented by the Health Information Technology for Economic and Clinical Health Act of the American Recovery and Reinvestment
Act of 2009, the General Data Protection Regulation (Regulation (EU) 2016/679), and all other similar international, federal,
state, provincial, and local Laws. “Processing” means any operation performed on Personal Information,
including the collection, creation, receipt, access, use, handling, compilation, analysis, monitoring, maintenance, storage, transmission,
transfer, protection, disclosure, destruction, or disposal of Personal Information.


 






    	 	17	 



     


    

 


(ii)           
The Company and each of its Subsidiaries, and, to the Company’s knowledge, all vendors, processors, or other third
parties acting for or on behalf of the Company or any of its Subsidiaries in connection with the Processing of Personal Information
or that otherwise have been authorized to have access to Personal Information in the possession or control of the Company or any
of its Subsidiaries, comply and at all times since the Lookback Date have complied, with all of the following in the conduct of
its business as currently conducted and as disclosed in the Delivered Super 8-K: (A) Privacy Laws; (B) rules of self-regulatory
organizations; (C) industry standards, guidelines, and best practices; (D) the Business Privacy and Data Security Policies; and
(E) all obligations or restrictions concerning the privacy, security, or Processing of Personal Information under any Contract
to which the Company or any of its Subsidiaries is a party or otherwise bound as of the date hereof, in each case, except for
violations that, individually or in the aggregate, have not been and would not reasonably be expected to be material to the business
of the Company and its Subsidiaries, taken as a whole.


 


(iii)           
Neither the consummation of the Share Exchange nor the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, does or will: (A) conflict with or result in a violation or breach of any Privacy Laws
or Business Privacy and Data Security Policies (as currently existing or as existing at any time during which any Personal Information
was collected or Processed by or for the Company or any of its Subsidiaries in the conduct of its business as now being conducted);
or (B) require the consent of or notice to any person concerning such person’s Personal Information, in each case, except
as has not been and would not reasonably be expected to have a Material Adverse Effect.


 


(iv)           
Since the Lookback Date, (A) no Personal Information in the possession or control of the Company or any of its Subsidiaries,
or to the Company’s knowledge, held or Processed by any vendor, processor, or other third party for or on behalf of the
Company or any of its Subsidiaries, in the conduct of its business has been subject to any data or security breach or unauthorized
access, disclosure, use, loss, denial or loss of use, alteration, destruction, compromise, or Processing (a “Security
Incident”), and (B) neither the Company nor any of its Subsidiaries has notified and, to the Company’s knowledge,
there have been no facts or circumstances that would require the Company or any of its Subsidiaries to notify, any Governmental
Authority or other person of any Security Incident in the conduct of its business, in each case, except as has not been and would
not reasonably be expected to have a Material Adverse Effect.


 


(v)           
Since the Lookback Date, neither the Company nor any of its Subsidiaries has received any notice, request, claim, complaint,
correspondence, or other communication in writing (or to the Company’s knowledge, orally) from any Governmental Authority
or other person, and to the Company’s knowledge there has not been any audit, investigation, enforcement action (including
any fines or other sanctions), or other Action relating to, any actual, alleged, or suspected Security Incident or violation of
any Privacy Law involving Personal Information in the possession or control of the Company or any of its Subsidiaries, or held
or Processed by any vendor, processor, or other third party for or on behalf of the Company or any of its Subsidiaries, in the
conduct of its business, in each case, except as has not been and would not reasonably be expected to be material to the business
of the Company and its Subsidiaries, taken as a whole.


 






    	 	18	 



     


    

 


(vi)           
In the conduct of its business, the Company and each of its Subsidiaries has at all times since the Lookback Date implemented
and maintained, and required all vendors, processors, and other third parties that Process any Personal Information for or on
behalf of the Company or any of its Subsidiaries to implement and maintain, all security measures, plans, procedures, controls,
and programs, including written information security programs, to (A) identify and address internal and external risks to the
privacy and security of Personal Information in their possession or control; (B) implement, monitor, and improve adequate and
effective administrative, technical, and physical safeguards to protect such Personal Information and the operation, integrity,
and security of its software, systems, applications, and websites involved in the Processing of Personal Information; and (C)
provide notification in compliance with applicable Privacy Laws in the case of any Security Incident, in each case, except as
has not been and would not reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as
a whole.


 


(dd)           
Brokers’ Fees. Except as set forth on Schedule 3(dd), neither of the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, except for the payment of fees to the Placement Agent as described in Section 2
above.


 


(ee)            
Disclosure Materials. The SEC Reports and the Disclosure Materials, at the time filed or furnished, were (or in
the case of the Super 8-K, will be) true and correct in all material respects and did not or will not contain an 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 the light of the circumstances under which they were made, not misleading. For the purposes of this Agreement, “Disclosure
Materials” means the Confidential and Non-Binding Summary Term Sheet of the Company previously provided
to the Purchaser, and any roadshow presentation delivered to the Purchaser in connection with the contemplated purchase of the
Securities, each as amended from time to time, relating to the Offering and any supplement or amendment thereto, and any disclosure
schedule or other information document, including the Disclosure Schedule, delivered to the Purchaser prior to its execution of
this Agreement, and any such document delivered to the Purchaser after its execution of this Agreement and prior to the closing
of the Purchaser’s subscription hereunder, including the Delivered Super 8-K.


 


(ff)              
Investment Company. The Company is not required to be registered as, and is not an Affiliate of, and immediately
following the Closing will not be required to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.


 


(gg)           
Reliance. The Company acknowledges that the Purchaser is relying on the representations and warranties (as modified
by the disclosures on the Disclosure Schedule or the Delivered Super 8- K (excluding any disclosures (whether contained
under the heading “Risk Factors,” in any “forward-looking statements” disclaimer or in any other section)
to the extent they are cautionary, predictive or forward-looking in nature) made by the Company hereunder and that such representations
and warranties (as modified by the Disclosure Schedule or the Delivered Super 8-K (excluding any disclosures (whether
contained under the heading “Risk Factors,” in any “forward-looking statements” disclaimer or in any other
section) to the extent they are cautionary, predictive or forward-looking in nature) are a material inducement to the Purchaser
purchasing the Securities. The Company further acknowledges that without such representations and warranties of the Company made
hereunder, the Purchaser would not enter into this Agreement with the Company.


 






    	 	19	 



     


    

 


(hh)           
Bad Actor Disqualification. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii)
of the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s
knowledge, any Company Covered Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3),
is applicable. “Company Covered Person” means, with respect to the Company as an “issuer”
for purposes of Rule 506 promulgated under the Securities Act, any person listed in the first paragraph of Rule 506(d)(1). The
Company represents that it has exercised reasonable care to determine the accuracy of the representation made by the Company in
this paragraph.


 


(ii)              
Anti-Dilution. There are no securities or instruments issued by or to which the Company is a party as of the date
hereof or as of the Closing containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities
in connection with the Offering or pursuant to any other Subscription Agreement entered into in connection with the Offering.


 


(jj)              
Other Purchasers. The Company has not entered into any side letter or similar agreement with any Other Purchaser
in connection with such Other Purchaser’s direct or indirect investment in the Company other than the applicable Other Subscription
Agreement. Each Other Purchaser will enter into the applicable Other Subscription Agreement and no other side letters or similar
agreements with respect to its investment in the shares of Common Stock in connection with the Offering. Each Other Subscription
Agreement is in the same form and contains the same terms and provisions as this Agreement. Notwithstanding the provisions of
this Section 3(jj), the Company has entered into side letters with one or more Other Purchasers in the U.K. regarding compliance
with certain U.K. tax and other requirements arising primarily pursuant to U.K. law which do not alter the economic terms of the
Other Subscription Agreements with such Other Purchasers.


 


(kk)           
Leased Real Property. There are no pending or, to the knowledge of the Company, any threatened condemnation proceedings,
lawsuits or other Actions relating to any real property leased by the Company or any of its Subsidiaries or any of the buildings,
structures and facilities located thereon (the “Leased Real Property”) or other matters affecting adversely
the current use, occupancy or value thereof. The Company and its applicable Subsidiaries enjoy quiet possession under all leases
for each parcel of Leased Real Property (each, a “Lease”) and no Leased Real Property under any such
Lease is subject to any Lien, easement, right-of-way, building or use restriction, exception, variance, reservation or limitation,
as might, in any material respect, interfere with or impair the present and continued use thereof by the Company or its Subsidiaries
in the usual and normal conduct of the business of the Company and its Subsidiaries.


 


(ll)              
Material Contracts.


 


(i)                
“Material Contracts” means any written or oral agreement, contract, commitment, arrangement,
subcontract, license, sublicense, lease, sublease, sales order, purchase order, indenture, mortgage, note, bond, letter of credit,
warrant, instrument, obligation, or understanding (collectively, including all amendments, supplements and modifications thereto,
 “Contracts”) to which the Company or any of its Subsidiaries is a party or by which any of their respective
assets or businesses are bound (other than the Pre-Funded Warrants):


 






    	 	20	 



     


    

 


(A) 
that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under
the Securities Act);


 


(B) 
that is a joint venture, alliance, partnership or similar agreement that is material to the operation of the Company and
its Subsidiaries, taken as a whole;


 


(C) 
that provides for payments to the Company or any of its Subsidiaries or includes future payment obligations of the Company
or its Subsidiaries outside of the ordinary course of business, in each case, in excess of $100,000 annually;


 


(D) 
that creates a Lien on any material asset of the Company or any of its Subsidiaries;


 


(E)  
that evidences indebtedness of the Company or any of its Subsidiaries;


 


(F)  
that contains an exclusivity clause that restricts the Company or any of its Subsidiaries or a covenant not to compete
in any line of business with any person in any geographical area that restricts the Company or any of its Subsidiaries or that
otherwise restricts the Company or any of its Subsidiaries from freely providing products or services to any customer or potential
customer, or that restricts the right of the Company or any of its Subsidiaries to sell to or purchase from any other person;


 


(G) 
that relates to the acquisition or disposition of any business (whether by merger, sale of stock or assets or otherwise)
at any time since the Lookback Date other than those related to the Company’s efforts to seek the acquisition of an operating
company prior to the acquisition of SmartKem;


 


(H) 
that is with any Related Party of the Company or any of its Subsidiaries;


 


(I)    
that grants to the counterparty a right of first refusal, first offer or first negotiation outside of the ordinary course
of business of the Company, except for any such preemptive or similar rights in favor of the equityholders of SmartKem that will
be terminated or extinguished in connection with the Share Exchange;


 


(J)    
that grants the other party or any third party “most favored nation” status or any similar rights;


 


(K) 
that is a Lease;


 


(L)  
other than in the ordinary course of business, (i) that grants any person a right to use Intellectual Property of the Company
or any of its Subsidiaries or (ii) that grants the Company or any of its Subsidiaries to use the Intellectual Property of another
person;


 






    	 	21	 



     


    

 


(M) that
provides for indemnification to or from any person with respect to liabilities relating to the business of the Company or its
Subsidiaries or any former businesses of the Company or its Subsidiaries or any predecessor thereof; or


 


(N) 
that is otherwise material to the business of the Company and its Subsidiaries, taken as a whole.


 


(ii)  
Each Material Contract is the legal, valid and binding obligation of the Company or one of its Subsidiaries that is a party
thereto, and is enforceable against the Company or one of its Subsidiaries, as applicable, and, to the knowledge of the Company,
the counterparties, in accordance with its terms, other than, in all cases, Material Contracts that have expired, been terminated
or superseded in accordance with their terms following the date hereof. Neither the Company or any of its Subsidiaries, nor to
the knowledge of the Company, any counterparty, is in violation, breach or default under any such Contract or has improperly terminated,
revoked or accelerated any Material Contract and no event or condition exists or has occurred which, with the giving of notice
or the lapse of time or both, would, under any Material Contract, (A) constitute a breach or default by the Company or any of
its Subsidiaries, or to the knowledge of the Company, a counterparty, (B) give to the counterparty any rights of termination,
acceleration or cancellation of, (C) result in any obligation imposed on the Company or any of its Subsidiaries thereunder or
a loss of a benefit in favor of the Company or any of its Subsidiaries thereunder, (D) allow the imposition of any fees or penalties
on the Company or any of its Subsidiaries thereunder, require the offering or making of any payment or redemption by the Company
or any of its Subsidiaries thereunder or (E) give rise to any increased, guaranteed, accelerated or additional rights or entitlements
to the counterparty thereunder, in each case, except for (i) such breaches, defaults and events which would not reasonably be
expected to have a Material Adverse Effect, and (ii) any Material Contracts that will expire or terminate in accordance with their
terms in connection with or as contemplated by or directly related to the Share Exchange Agreement and the transactions contemplated
thereby, including to the extent applicable, Contracts with the stockholders or investors of the Company or any of its Subsidiaries,
indemnification agreements with each of their respective directors or officers, employment, consulting agreements or equity award
agreements with each of their employees or other service providers. None of the Company or any of its Subsidiaries has received
any written notice of the intention of any person to terminate, fail to renew or materially and adversely modify any Material
Contract.


 


(mm)       
Employee Benefits.


 


(i)    
 “Benefit Plan” means any plan, program, arrangement or agreement that is a pension, profit-sharing,
savings, retirement, employment, consulting, severance pay, termination, executive compensation, incentive compensation, deferred
compensation, bonus, stock purchase, stock option, phantom stock or other equity-based compensation, change-in-control, retention,
salary continuation, vacation, sick leave, disability, death benefit, group insurance, hospitalization, medical, dental, life
(including all individual life insurance policies as to which the Company is the owner, the beneficiary, or both), Code Section
125 “cafeteria” or “flexible” benefit, employee loan, educational assistance or fringe benefit plan, program,
arrangement or agreement, whether written or oral, including, without limitation, any (A) “employee benefit plan”
within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder (“ERISA”) or (B) other employee benefit plans, agreements, programs, policies,
arrangements or payroll practices, whether or not subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by this Agreement or otherwise), which the Company or any of
its Subsidiaries sponsors or maintains for the benefit of its current or former officer, director, employee, leased employee,
consultant or agent (or their respective beneficiaries), or with respect to which the Company or any of its Subsidiaries has,
or could reasonably be expected to have, any direct or indirect present or future liability.


 






    	 	22	 



     


    

 


(ii)  
Each Benefit Plan has been established, maintained and operated in all respects in accordance with its terms and in compliance
with all applicable provisions of applicable Laws, including Section 409A of the Code and the regulations and other guidance issued
thereunder, in each case, except as has not been and would not reasonably be expected to have, a Material Adverse Effect. There
are no investigations by any Governmental Authority, termination proceedings or other claims (except routine claims for benefits
payable under the Benefit Plans) or Actions pending in writing (or to the Company’s knowledge, orally) against any Benefit
Plan or asserting any rights to or claims for benefits under any Benefit Plan that would reasonably be expected to give rise to
any material liability. No non-exempt “prohibited transaction” (within the meaning of Section 406 of ERISA and Section
4975 of the Code) has occurred or is reasonably expected to occur with respect to any Benefit Plan. No Benefit Plan is (A) subject
to Section 412 of the Code, Title IV of ERISA or Section 302 of ERISA (including a “multiemployer” plan within the
meaning of Section 3(37) of ERISA), (B) a “multiple employer plan” as defined in Section 413(c) of the Code, or (C)
a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA. No Benefit Plan is subject
to the Laws of any jurisdiction other than the United States.


 


(iii) Neither the
execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby shall, in connection with
any other event(s), (i) result in any payment or benefit becoming due to any current or former employee, contractor or director
of the Company or its Subsidiaries or under any Benefit Plan, (ii) increase any amount of compensation or benefits otherwise payable
to any current or former employee, contractor or director of the Company or its Subsidiaries or under any Benefit Plan, (iii)
result in the acceleration of the time of payment, funding or vesting of any benefits to any current or former employee, contractor
or director of the Company or its Subsidiaries or under any Benefit Plan, (iv) limit the right to merge, amend or terminate any
Benefit Plan (except any limitations imposed by applicable Law, if any), or (v) give rise to any “excess parachute payment”
as defined in Section 280G(b)(l) of the Code, any excise tax owing under Section 4999 of the Code or any other amount that would
not be deductible under Section 280G of the Code.


 


4.      
Representations, Warranties and Agreements of the Purchaser. The Purchaser represents and warrants to, and
agrees with, the Company, as of the date hereof and as of the applicable Closing Date, the following:


 


(a)               
The Purchaser has the knowledge and experience in financial and business matters necessary to evaluate the merits and risks
of its prospective investment in the Company, and has carefully reviewed and understands the risks of, and other considerations
relating to, the purchase of Securities and the tax consequences of the investment. The Purchaser has adequate means of providing
for its current and anticipated financial needs and contingencies and is able to bear the economic risks of the investment for
an indefinite period of time and has no need for liquidity of the investment in the Securities, and upon any exercise of the Pre-Funded
Warrants, the Warrant Shares. The Purchaser can afford the loss of his, her or its entire investment.


 






    	 	23	 



     


    

 


(b)               
The Purchaser is acquiring the Securities, and upon any exercise of the Pre-Funded Warrants, the Warrant Shares, for investment
for his, her or its own account and not with the view to, or for resale in connection with, any distribution thereof. The Purchaser
understands and acknowledges that the Offering and sale of the Securities, and upon any exercise of the Pre-Funded Warrants, the
Warrant Shares, have not been registered under the Securities Act or any state securities Laws, by reason of a specific exemption
from the registration provisions of the Securities Act and applicable state securities Laws, which depends upon, among other things,
the bona fide nature of the investment intent as expressed herein. The Purchaser further represents that he, she or it does not
have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third
person with respect to any of the Securities, and upon any exercise of the Pre-Funded Warrants, the Warrant Shares, other than
with respect to an Affiliate of the Purchaser. The Purchaser understands and acknowledges that the Offering of the Securities,
and upon any exercise of the Pre-Funded Warrants, the issuance of the Warrant Shares, will not be registered under the Securities
Act nor under the state securities laws on the ground that the sale of such securities to the Purchaser as provided for in this
Agreement and in the Pre-Funded Warrants and the issuance of securities hereunder and thereunder is exempt from the registration
requirements of the Securities Act and any applicable state securities laws. The Purchaser is an “accredited investor”
as defined in Rule 501 of Regulation D as promulgated by the SEC under the Securities Act for the reason(s) specified on the Accredited
Investor Certification attached hereto as completed by the Purchaser. The Purchaser resides in the jurisdiction set forth on the
Purchaser’s Omnibus Signature Page affixed hereto. If the Purchaser is, with respect to the Company, (i) a predecessor of
the Company; (ii) an affiliated issuer; (iii) a director, executive officer, other officer participating in the offering, general
partner or managing member of the Company; (iii) any beneficial owner of 20% or more of the Company's outstanding voting equity
securities, calculated on the basis of voting power; (iv) any promoter connected with the Company in any capacity at the time
of such sale; (v) any investment manager of the Company if the Company is a pooled investment fund; (vi) any person that has been
or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the Offering; (vii) any
general partner or managing member of any such investment manager or solicitor; or (viii) any director, executive officer or other
officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such
investment manager or solicitor (each such category, a “Covered Person”), the Purchaser has not taken
any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.


 


(c)               
The Purchaser (i) if a natural person, represents that he or she is the greater of (A) 21 years of age or (B) the
age of legal majority in his or her jurisdiction of residence, and has full power and authority to execute and deliver this Agreement
and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation,
partnership, limited liability company, association, joint stock company, trust, unincorporated organization or other entity,
represents that such entity is duly organized, validly existing and in good standing under the Laws of the state or jurisdiction
of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation
of applicable Law or its charter or other organizational documents, such entity has full power and authority to execute and deliver
this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase
and hold the Securities and the Warrant Shares, if any, the execution and delivery of this Agreement has been duly authorized
by all necessary action, this Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and
binding obligation of such entity; or (iii) if executing this Agreement in a representative or fiduciary capacity, represents
that he, she or it has full power and authority to execute and deliver this Agreement in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom
the Purchaser is executing this Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform pursuant to this Agreement and make an investment
in the Company, and represents that this Agreement constitutes a legal, valid and binding obligation of such entity. The execution
and delivery of this Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling
document to which the Purchaser is a party or by which it is bound, except for any violation or conflict that, individually or
in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on the ability of the Purchaser
to perform its obligations under this Agreement and the other Transaction Documents or to consummate any transactions contemplated
hereby or thereby.


 






    	 	24	 



     


    

 


(d)               
The Purchaser understands that Securities, and upon any exercise of the Pre-Funded Warrants, the Warrant Shares, are being
offered and sold to him, her or it in reliance on specific exemptions from the registration requirements of United States federal
and state securities Laws and that the Company is relying in part upon the truth and accuracy of, and the Purchaser’s compliance
with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of the Purchaser to acquire such securities. The Purchaser
further acknowledges and understands that the Company is relying on the representations and warranties made by the Purchaser hereunder
and that such representations and warranties are a material inducement to the Company to sell the Securities to the Purchaser.
The Purchaser further acknowledges that without such representations and warranties of the Purchaser made hereunder, the Company
would not enter into this Agreement with the Purchaser.


 


(e)               
The Purchaser understands that, other than as expressly provided in the Registration Rights Agreement, the Company does
not currently intend to register the or the Warrant Shares, if any, under the Securities Act at any time in the future; and the
undersigned will not immediately be entitled to the benefits of Rule 144 with respect to the Securities or the Warrant Shares,
if any. The Purchaser understands that no public market exists for the Company’s Common Stock and that there can be no assurance
that any public market for the Common Stock will exist or continue to exist. The Company’s Common Stock is not approved
for quotation on OTC Markets or any other quotation system or listed on any exchange.


 


(f)                
The Purchaser has received, reviewed and understood the information about the Company, including all Disclosure Materials
provided to it by the Company and/or the Placement Agent (at the Company’s direction), and has had an opportunity to discuss
the Company’s business, management and financial affairs with the Company’s management. The Purchaser understands
that such discussions, as well as any Disclosure Materials provided by the Company and/or the Placement Agent (at the Company’s
direction), were intended to describe the aspects of the Company’s business and prospects and the Offering which the Company
believes to be material, but were not necessarily a thorough or exhaustive description and except as expressly set forth in this
Agreement (as modified by the disclosures on the Disclosure Schedule or the Delivered Super 8-K (excluding any disclosures
contained under the heading “Risk Factors,” any disclosures of risks included in any “forward looking statements”
or disclosures that are cautionary, predictive or forward-looking in nature)), the Company makes no representation or warranty
with respect to the completeness of such information and makes no representation or warranty of any kind with respect to any information
provided by any entity other than the Company. Some of such information may include projections as to the future performance of
the Company, which projections may not be realized, may be based on assumptions which may not be correct and may be subject to
numerous factors beyond the Company’s control. The Purchaser acknowledges that he, she or it is not relying upon any person
or entity, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.


 






    	 	25	 



     


    

 


(g)               
The Purchaser acknowledges that neither the Company nor the Placement Agent is acting as a financial advisor or fiduciary
of the Purchaser (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby
and thereby, and no investment advice has been given by the Company, the Placement Agent or any of their respective representatives
or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby.


 


(h)               
As of the applicable Closing, all actions on the part of the Purchaser, and its officers, directors and partners, if applicable,
necessary for the authorization, execution and delivery of this Agreement and the Registration Rights Agreement and the performance
of all obligations of the Purchaser hereunder and thereunder shall have been taken, and this Agreement and the Registration Rights
Agreement, assuming due execution by the parties hereto and thereto, constitute valid and legally binding obligations of the Purchaser,
enforceable in accordance with their respective terms, except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally,
the enforcement of creditors’ rights and remedies.


 


(i)                
The Purchaser represents that neither it nor, to its knowledge, any person or entity controlling, controlled by or under
common control with it, nor any person having a beneficial interest in the Purchaser, nor any person on whose behalf the Purchaser
is acting: (i) is a person listed in the Annex to Executive Order No. 13224 (2001) issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism); (ii) is named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Foreign
Assets Control; (iii) is a non-U.S. shell bank or is providing banking services indirectly to a non-U.S. shell
bank; (iv) is a senior non-U.S. political figure or an immediate family member or close associate of such figure;
or (v) is otherwise prohibited from investing in the Company pursuant to applicable U.S. anti-money laundering, anti-terrorist
and asset control Laws, regulations, rules or orders (categories (i) through (v), each a “Prohibited Purchaser”).
The Purchaser (A) agrees to provide the Company, promptly upon request, all information that the Company reasonably deems necessary
or appropriate to comply with applicable U.S. anti-money laundering, anti-terrorist and asset control Laws, regulations, rules
and orders and (B) consents to the disclosure to U.S. regulators and law enforcement authorities by the Company and its Affiliates
and agents of such information about the Purchaser as the Company reasonably deems necessary or appropriate to comply with applicable
U.S. anti-money laundering, anti-terrorist and asset control Laws, regulations, rules and orders. If the Purchaser is a financial
institution that is subject to the USA Patriot Act, the Purchaser represents that it has met all of its obligations under the
USA Patriot Act. The Purchaser acknowledges that if, following its investment in the Company, the Company reasonably believes
that the Purchaser is a Prohibited Purchaser or is otherwise engaged in suspicious activity or refuses to promptly provide information
that the Company requests, the Company has the right or may be obligated to prohibit additional investments, segregate the assets
constituting the investment in accordance with applicable regulations or immediately require the Purchaser to transfer the Securities
and the Warrant Shares, if any. The Purchaser further acknowledges that neither the Purchaser nor any of the Purchaser’s
Affiliates or agents will have any claim against the Company or SmartKem for any form of damages as a result of any of the foregoing
actions.


 






    	 	26	 



     


    

 


(j)                
If the Purchaser is an Affiliate of a non-U.S. banking institution (a “Foreign Bank”),
or if the Purchaser receives deposits from, makes payments on behalf of, or handles other financial transactions related to a
Foreign Bank, the Purchaser represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other
than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the
Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection
by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not
provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated
Affiliate.


 


(k)               
The Purchaser or its duly authorized representative realizes that because of the inherently speculative nature of businesses
of the kind conducted and contemplated by the Company, the Company’s financial results may be expected to fluctuate from
month to month and from period to period and will, generally, involve a high degree of financial and market risk that could result
in substantial or, at times, even total losses for investors in securities of the Company. The Purchaser has considered the risk
factors in the Delivered Super 8-K before deciding to invest in the Securities.


 


(l)                
The Purchaser is not subscribing for Securities as a result of or subsequent to any advertisement, article, notice or other
communication, published in any newspaper, magazine or similar media or broadcast over television, radio, or the internet, or
presented at any seminar or meeting, or any solicitation of a subscription by a person not previously known to the Purchaser in
connection with investments in securities generally.


 


(m)             
The Purchaser acknowledges that no U.S. federal or state agency or any other government or governmental agency has passed
upon the Securities or the Warrant Shares or made any finding or determination as to the fairness, suitability or wisdom of any
investments therein.


 


(n)               
Other than consummating the transactions contemplated hereunder, the Purchaser has not directly or indirectly, nor has
any individual or entity acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases or sales,
including Short Sales (as defined below), of the securities of the Company during the period commencing at the time the Purchaser
was first contacted by the Company or any other individual or entity representing the Company (including the Placement Agent)
regarding the transactions contemplated hereunder. Notwithstanding the foregoing, in the case of a Purchaser being a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfolio
managers do not communicate or share information with, and have no direct knowledge of the investment decisions made by, the portfolio
managers managing other portions of the Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares
to borrow in order to effect Short Sales or similar transactions in the future. For purposes of this Agreement, “Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but
shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).


 






    	 	27	 



     


    

 


(o)               
The Purchaser is aware that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of the
Securities or the Warrant Shares, if any, and other activities with respect to the Securities or the Warrant Shares, if any, by
the Purchaser, and will comply with such anti-manipulation rules of Regulation M.


 


(p)               
All of the information concerning the Purchaser set forth herein, and any other information furnished by the Purchaser
in writing to the Company or a Placement Agent for use in connection with the transactions contemplated by this Agreement, is
true, correct and complete in all material respects as of the date of this Agreement, and, if there should be any material change
in such information prior to the Purchaser’s purchase of the Securities, the Purchaser will promptly furnish revised or
corrected information to the Company.


 


(q)               
The Purchaser has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by the Transaction Documents. With respect to such matters, the Purchaser relies
solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The
Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result
of this investment or the transactions contemplated by the Transaction Documents.


 


(r)                
If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended), the Purchaser hereby represents that it has satisfied itself as to the observance in all material respects
of the Laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Agreement,
including (a) the legal requirements within its jurisdiction for the purchase of the Securities; (b) any foreign exchange
restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the
income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of
the Securities or the Warrant Shares, if any. The Purchaser’s subscription and payment for and continued beneficial ownership
of the Securities or the Warrant Shares, if any, will not violate any applicable securities or other Laws of the Purchaser’s
jurisdiction.


 


(s)                
The Purchaser represents that it is not a “foreign person” for purposes of Section 721 of the Defense Production
Act of 1950 (as amended) or the rules or regulations promulgated thereunder (including 31 C.F.R. Part 800 and 31 C.F.R. part 801);
provided, however, that if the Purchaser is a “foreign person” for such purposes, it agrees that it
will not (i) obtain any control rights over the Company, including the ability to determine, direct, or decide important matters
affecting the Company; (ii) have access to any material nonpublic technical information in the possession of the company; (iii)
obtain membership or observer rights on the Board of Directors or the right to nominate an individual to a position on the Board
of Directors; or (iv) have any involvement, other than through voting of shares, in substantive decision making of the Company
regarding the use, development, acquisition or release of the Company’s technology.


 






    	 	28	 



     


    

 


(t)                
(For ERISA plans only) The fiduciary of the Employee Retirement Income Security Act of 1974 (“ERISA”)
plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined
in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other
fiduciary responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the decision to invest in the Company;
(b) is independent of the Company or any of its Affiliates; (c) is qualified to make such investment decision; and (d) in
making such decision, the Purchaser fiduciary or Plan has not relied primarily on any advice or recommendation of the Company
or any of its Affiliates.


 


(u)               
If the Purchaser is a Covered Person, neither the Purchaser nor, to the Purchaser’s knowledge, any of its directors,
executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners
or managing members is subject to any Disqualification Events, except for Disqualification Events covered by Rule 506(d)(2)(ii)
or (iii) under the Securities Act, and disclosed reasonably in advance of the applicable Closing in writing in reasonable
detail to the Company.


 


(v)               
The Purchaser understands that there are substantial restrictions on the transferability of the Securities and the Warrant
Shares, if any, and that the certificates or book-entry positions representing the Securities and the Warrant Shares, if any,
shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer
of such certificates or other instruments):


 


THE SECURITIES REPRESENTED BY
THIS BOOK-ENTRY POSITION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER
SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN
EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS OR (3) SOLD PURSUANT
TO RULE 144 UNDER THE SECURITIES ACT.


 






    	 	29	 



     


    

 


In addition, if the Purchaser is an Affiliate
of the Company, certificates or book-entry positions evidencing the Securities or the Warrant Shares, if any, issued to the Purchaser
may bear a customary “Affiliates” legend.


 


Any fees (with respect to the Company's
transfer agent (the “Transfer Agent”), counsel or otherwise) associated with the removal of such legend(s)
shall be borne by the Company.


  


The Company shall be obligated to promptly
reissue unlegended certificates upon the request of any holder thereof  at such time as the securities evidenced by such
certificates or book entry positions are sold pursuant to (x)Rule 144 or another applicable exemption from the registration requirements
of the Securities Act has been satisfied or (y)  an effective  registration statement and in accordance with
the plan of distribution set forth in such registration statement ,provided that the Company’s counsel and its transfer
agent have received an opinion (in the case of (x)) and a certificate(in the case of (y)) in such form as the Company’s
counsel reasonably requests that such securities have been disposed of pursuant to clause (x) or (y) above, as applicable. Under
the foregoing circumstances, the Company shall cause its transfer agent to issue unlegended shares, within one (1) Trading Day
after the transfer agent’s receipt of such opinion or certification, via DWAC or as otherwise requested by the holder.


  


(w)          
If the Purchaser is an individual, then the Purchaser resides in the state or province identified in the address of the
Purchaser set forth on such Purchaser’s Omnibus Signature Page to this Agreement; if the Purchaser is a partnership, corporation,
limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business
is identified in the address or addresses of the Purchaser set forth on such Purchaser’s Omnibus Signature Page to this
Agreement.


 


(x)             The
Purchaser understands that the Company prior to the Share Exchange has been a “shell company” as defined in Rule 12b-2 under
the Exchange Act, and that upon filing with the SEC of the Super 8-K reporting the consummation of the Share Exchange
and related transactions and the transactions contemplated by this Agreement, and otherwise containing “Form 10 information”
discussed below, the Company will reflect therein that it is no longer a shell company. Pursuant to Rule 144(i), securities issued
by a current or former shell company (that is, the Securities and the Warrant Shares, if any) that otherwise meet the holding
period and other requirements of Rule 144 nevertheless cannot be sold in reliance on Rule 144 until one year after
the Company (a) is no longer a shell company; and (b) has filed current “Form 10 information“ (as defined
in Rule 144(i)) with the SEC reflecting that it is no longer a shell company, and provided that at the time of a proposed sale
pursuant to Rule 144, the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and
has filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable,
during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other
than Form 8-K reports. As a result, the restrictive legends on certificates or book-entry positions for the
Securities and the Warrant Shares, if any, cannot be removed except in connection with an actual sale (i)meeting the foregoing
requirements or (ii)pursuant to an effective registration statement.


 


(y)               
The Purchaser, if and to the extent that it purchases Securities in any Subsequent Closing, represents that it (i)(A) has
a substantive, pre-existing relationship with the Company or (B) had direct contact by the Company or a Placement
Agent outside of the Offering, and (ii)  did not contact the Company or a Placement Agent or become interested in the Offering
as a result of reading or otherwise being aware of the Super 8-K or any press release or any other public disclosure
disclosing the terms of the Offering.


 






    	 	30	 



     


    

 


(z)               
To effectuate the terms and provisions hereof, the Purchaser hereby appoints GP Nurmenkari Inc. as its attorney-in-fact
for the purpose of carrying out the provisions of the Escrow Agreement, including, without limitation, taking any action on behalf
of, or at the instruction of, the Purchaser and executing any release notices required under the Escrow Agreement and taking any
action and executing any instrument that GP Nurmenkari Inc. may deem necessary or advisable (and lawful) to accomplish the purposes
hereof, in each case, subject to and in accordance with the terms of this Agreement. All lawful acts done under the foregoing
authorization are hereby ratified and approved, and neither GP Nurmenkari Inc. nor any designee nor agent thereof shall be liable
for any acts of commission or omission, for any error of judgment, for any mistake of fact or law except for acts of fraud, gross
negligence or willful misconduct. This power of attorney, being coupled with an interest, is irrevocable while the Escrow Agreement
remains in effect.


 


5.      
Conditions to Company’s Obligations at Closing. The Company’s obligation to complete the
sale and issuance of the Securities and deliver the Securities to the Purchaser and to consummate the other transactions contemplated
hereby at the Initial Closing and, if applicable, a Subsequent Closing, shall be subject to the satisfaction or written waiver
by the Company (in whole or in part) of the following conditions, to the extent such condition can be waived, in its sole discretion,
on or prior to the Initial Closing Date and each Subsequent Closing Date, as applicable (provided, that any waiver by the
Company of the condition set forth in Section 5(f) shall require the prior written consent of the Purchaser):


 


(a)               
Receipt of Payment. The Company shall have received payment, by certified or other bank check or by wire transfer
of immediately available funds, in the full amount of the Purchase Price for the number and kind of Securities being purchased
by the Purchaser at the Initial Closing and, if applicable, a Subsequent Closing.


 


(b)               
Receipt of Executed Transaction Documents. The Purchaser shall have executed and delivered to the Company the Omnibus
Signature Page, Accredited Investor Certification, the Investor Profile and the Anti-Money Laundering Information Form and the
Selling Securityholder Questionnaire (as defined in the Registration Rights Agreement).


 


(c)               
Representations and Warranties. The representations and warranties made by the Purchaser in Section 4 hereof
shall be true and correct in all respects as of the date of this Agreement and as of such Closing Date with the same force and
effect as if they had been made on and as of such Closing Date (except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all respects as of such
earlier date), except for the failure of any such representation or warranty to be so true and correct as would not, individually
or in the aggregate, have a material adverse effect on the ability of the Purchaser to consummate the transactions contemplated
hereby.


 






    	 	31	 



     


    

 


(d)               
Performance. The Purchaser shall have performed or complied with in all material respects all obligations and covenants
herein required to be performed by the Purchaser on or prior to the applicable Closing.


 


(e)               
Effectiveness of the Share Exchange Transactions. The Share Exchange and each of the other transactions contemplated
by the Share Exchange Agreement shall have been effected and consummated.


 


(f)                
Minimum Offering. In connection with the Initial Closing only, the Company shall have received proceeds from the
Offering equal to or greater than the Minimum Offering Amount (inclusive of the Minimum Insider Investment).


 


(g)               
Qualifications. All Authorizations of, or notices to, any Governmental Authority that are required in connection
with the transactions contemplated by this Agreement, including the lawful issuance and sale of the Securities pursuant to this
Agreement at each Closing except for Blue Sky law permits and qualifications that may be properly obtained after such Closing
and filing of a Notice of Exempt Offering of Securities on Form D with the SEC under Regulation D which may be filed no later
than 15 calendar days after the “date of first sale” in the Offering.


 


6.                  
Conditions to Purchaser’s Obligations at the applicable Closing. The Purchaser’s obligation to
accept delivery of the Securities and to pay for the Securities to be issued to the Purchaser hereunder at the Initial Closing
and, if applicable, a Subsequent Closing, and to consummate the other transactions contemplated hereby, shall be subject to the
satisfaction or written waiver by the Purchaser (in whole or in part) of the following conditions, to the extent such condition
can be waived, in its sole discretion, on or prior to the Initial Closing Date and each Subsequent Closing Date, as applicable:


 


(a)               
Representations and Warranties. (i) The representations and warranties made by the Company (as modified by the disclosures
on the Disclosure Schedule or in the Delivered Super 8-K (excluding any disclosures (whether contained under the heading
 “Risk Factors,” in any “forward-looking statements” disclaimer or in any other section) to the extent
they are cautionary, predictive or forward-looking in nature) set forth in Sections 3(a), 3(b), 3(c), 3(d), 3(e), 3(h), 3(i),
and 3(dd) hereof (collectively, the “Company Fundamental Representations”) shall be true and correct
in all respects as of the date of this Agreement and as of such Closing Date with the same force and effect as if they had been
made on and as of such Closing Date (except to the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct in all respects as of such earlier date) and (ii)
the other representations and warranties made by the Company in Section 3 shall be true and correct in all material respects
(without giving effect to any limitation as to “materiality” or “Material Adverse Effect” or similar qualifier)
as of the date of this Agreement and as of such Closing Date with the same force and effect as if they had been made on and as
of such Closing Date (except to the extent any such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material respects as of such earlier date).


 


(b)               
Performance. The Company shall have performed or complied with in all material respects all obligations and covenants
herein required to be performed by it on or prior to the applicable Closing.


 






    	 	32	 



     


    

 


(c)               
Receipt of Executed Transaction Documents. The Company shall have duly executed and delivered to the Placement Agent
on behalf of the Purchaser the Registration Rights Agreement and the Escrow Agreement.


 


(d)               
Effectiveness of the Share Exchange Transactions. The Share Exchange and each of the other transactions contemplated
by the Share Exchange Agreement shall have been effected and consummated.


 


(e)               
Minimum Offering. In connection with the Initial Closing only, the Company shall have received proceeds from the
Offering equal to or greater than the Minimum Offering Amount (inclusive of the Minimum Insider Investment).


 


(f)                
Equity Incentive Plan. The Board of Directors and the stockholders of the Company shall have duly adopted the EIP
as described in Recital B above.


 


(g)               
Certificate. At each applicable Closing, an executive officer of the Company shall have duly executed and delivered
or caused to be delivered to the Placement Agent a certificate addressed to the Purchaser and the Placement Agent certifying as
to the satisfaction of the conditions set forth in Section 6(a) and Section 6(b) as of the applicable Closing Date


 


(h)               
Good Standing. The Company and each of its Subsidiaries is a corporation or other business entity duly organized,
validly existing, and in good standing under the Laws of the jurisdiction of its formation.


 


(i)                
Judgments. No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Governmental Authority, shall have been issued, and no action
or proceeding shall have been instituted by any Governmental Authority, enjoining or preventing the consummation of the transactions
contemplated hereby.


 


(j)                
Delivery of Super 8-K and Share Exchange Agreement. The Company shall have delivered to the Purchaser, at least
two (2) Business Days prior to the Closing, (A) (1) in the case of Purchasers participating in the Initial Closing, a substantially
complete draft of the Current Report on Form 8-K describing the Share Exchange, the Offering and the related transactions, including
 “Form 10 information” (as defined in Rule 144(i)(3) under the Securities Act) (the “Draft Super 8-K”),
or (2) in the case of Purchasers participating in any subsequent Closing, the Current Report on Form 8-K describing the Share
Exchange, the Offering and the related transactions, including “Form 10 information” as filed by the Company with
the Securities and Exchange Commission (the “SEC”) within four (4) Business Days after the closing of
the Share Exchange and the Initial Closing of the Offering (the “Super 8-K”), including any audited
and interim unaudited financial statements of SmartKem and pro forma financial information reflecting the Share Exchange, as required
by Item 9.01 of SEC Form 8-K(the Draft Super 8-K or Super 8-K, as the case may be, so delivered to the Purchaser, the “Delivered
Super 8-K”), (B) upon request of the Purchaser a copy of any exhibit to the Draft 8-K or the Super 8-K, as applicable
(in the form filed or intended to be filed with the SEC) , and (C) a substantially complete draft of the Share Exchange Agreement
and each other material transaction document contemplated by or related to the Share Exchange Agreement, including the disclosure
schedules thereto. For the avoidance of doubt, such delivery shall be deemed to have been effected to the extent such document
has been filed with the SEC pursuant to its Electronic Data Gathering and Retrieval System.


 






    	 	33	 



     


    

 


(k)               
Legal Opinion. Lowenstein Sandler LLP, legal counsel for the Company,
shall deliver an opinion addressed to the Purchaser and the Placement Agent, dated as of the applicable Closing Date, in form
and substance reasonably acceptable to the Placement Agent.


 


(l)                
Lock-Up Agreements. All holders of shares of Common Stock issued in exchange for all of the equity securities of
SmartKem in the Share Exchange (each a “Restricted Holder”) shall have entered into lock-up agreements with the Company
and the Placement Agent, with customary terms and conditions reasonably satisfactory to the Company and the Placement Agent with
a term of at least one (1) year, whereby they will agree to certain restrictions on the sale or disposition (including pledge)
of all of the Common Stock held by (or issuable to or acquired by) them (other than any Securities and Warrant Shares, if any,
purchased by a Restricted Holder in the Offering).


 


(m)             
Compliance with Laws. The transactions contemplated by this Agreement and the other Transaction Documents, including
the sale and issuance of the Securities, shall be legally permitted by all Laws and regulations to which the Company is subject
or which are otherwise applicable to the transactions contemplated by the Transaction Documents.


 


(n)               
Qualifications. All Authorizations of, or notices to, any Governmental Authority that are required in connection
with the transactions contemplated by this Agreement, including the lawful issuance and sale of the Securities pursuant to this
Agreement at each Closing, shall have been delivered or obtained and effective as of such Closing except for Blue Sky law permits
and qualifications that may be properly obtained after such Closing and filing of a Notice of Exempt Offering of Securities on
Form D with the SEC under Regulation D which may be filed no later than 15 calendar days after the “date of first sale”
in the Offering.


 


(o)               
No Material Adverse Effect. There shall have been no Material Adverse Effect.


 


(p)               
Delivery of Securities. At the applicable Closing, to the extent requested by the Purchaser, the Company shall have
delivered or caused to be delivered to the Purchaser evidence of the book-entry issuance of the Shares purchased by such Purchaser
and, if applicable, a certificate representing the number of Pre-Funded Warrants purchaserd by such Purchaser as set forth on
the applicable Purchaser’s Omnibus Signature Page, duly executed, to the extent applicable, by the proper officers of the
Company and registered in the name of the Purchaser or its designee.


 






    	 	34	 



     


    

 


		7.	Indemnification.



 


(a)               
In addition to the indemnity provided to the Purchaser in the applicable Registration Rights Agreement, the Company agrees
to indemnify and hold harmless the Purchaser and its Affiliates, and its and their respective directors, officers, stockholders,
equityholders, members, managers, partners, employees, attorneys, consultants, representatives and agents (and any other persons
with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title),
each person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, stockholders, equityholders, members, managers, partners, employees, attorneys, consultants,
representatives and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding
a lack of such title or any other title) of such controlling person (collectively, the “Purchaser Indemnitees”),
from and against all losses, liabilities, claims, damages, costs, fees, charges, Taxes, judgements, fines, penalties and expenses
whatsoever (including, but not limited to, amounts paid in settlement and any and all out-of-pocket expenses, including attorneys’
fees and expenses, incurred in investigating, preparing or defending against any litigation commenced or threatened) (collectively,
 “Indemnified Liabilities”) arising out of or relating to: (i) the inaccuracy, violation or breach of
any of the Company’s representations or warranties made in Section 3 of this Agreement; (ii) any breach or failure to perform
by the Company of any of its covenants and obligations contained herein or (iii) any Action brought or made against such Purchaser
Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out
of, relating to or resulting from (A) the execution, delivery, performance or enforcement of the Transaction Documents or the
Share Exchange Agreement or the transactions contemplated hereby or thereby, including the issuance of the Securities and the
Share Exchange or (B) the status of the Purchaser as an investor in the Company pursuant to the transactions contemplated hereby
or by the other Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
that is permissible under applicable Law. The liability of the Company under this paragraph shall not exceed the total Purchase
Price paid by the Purchaser hereunder, except in the case of fraud.


 


(b)               
The Company shall have the right to control the investigation and defense of any Action for which a Purchaser Indemnitee
may be entitled to indemnification hereunder with counsel reasonably satisfactory to such Purchaser Indemnitee, at the sole cost
and expense of the Company, upon written notice to the applicable Purchaser Indemnitee; provided, that (i) such notice
contains confirmation that the Company has agreed to indemnify the Purchaser Indemnitee (subject to the limitations on indemnification
set forth herein) for the Indemnified Liabilities arising out of, relating to or resulting from such Action and (ii) the Company
shall not be entitled to assume or control the investigation and defense, if (A) such claim seeks non-monetary, equitable or injunctive
relief or alleges any violation of criminal Law or (B) the Indemnitor is also a party and the Indemnitee determines in good faith
after consultation with counsel that there may be one or more legal defenses available to such Indemnitee that are different or
additional to those available to the Indemnitor. If the Company assumes the investigation and defense of such Action in accordance
herewith, the Purchaser Indemnitee may retain separate co-counsel at its sole cost and expense and participate in the investigation
and defense of such Action.


 


(c)               
Notwithstanding anything to the contrary herein, without the prior written consent of the Purchaser Indemnitee, the Company
shall not, and shall not cause or permit any of its Subsidiaries or its or their respective Related Parties to, negotiate, consent
to or enter into any settlement, or consent to the entry of any judgment, with respect to any Action for which such Purchaser
Indemnitee may be entitled to indemnification hereunder, unless such settlement (i) includes an unconditional release of such
Purchaser Indemnitee from all liability arising out of such proceeding, (ii) does not require any admission of wrongdoing by any
Purchaser Indemnitee, and (iii) does not obligate or require any Purchaser Indemnitee to take, or refrain from taking, any action.


 






    	 	35	 



     


    

 


(d)               
The Purchaser acknowledges on behalf of itself and each Purchaser Indemnitee that, other than (i) for Actions seeking specific
performance of the obligations under this Agreement; or (ii) in the case of a breach or violation of this Agreement by the Company
which has resulted from either (A) intentional fraud or (B) a deliberate act or failure to act with actual knowledge
that the act or failure to act constituted or would result in a breach or violation, in each case, the sole and exclusive remedy
of the Purchaser and the Purchaser Indemnitees with respect to any and all claims relating to this Agreement shall be pursuant
to the indemnification provisions (including the limitations thereof) set forth in this Section 7.


 


8.      
Revocability; Binding Effect. The subscription hereunder may be revoked, in whole or in part, prior to the
Initial Closing or any Subsequent Closing, as applicable, in the sole discretion of the Purchaser, for any reason or no reason,
provided that written notice of revocation is sent and is received by the Company or a Placement Agent at least one (1) Business
Day prior to the Initial Closing Date or the applicable Subsequent Closing Date. The Purchaser hereby acknowledges and agrees
that this Agreement shall survive the death or disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal representatives and permitted assigns. If the Purchaser
is more than one person, the obligations of the Purchaser hereunder shall be joint and several and the agreements, representations,
warranties and acknowledgments herein shall be deemed to be made by and be binding upon each such person and such person’s
heirs, executors, administrators, successors, legal representatives and permitted assigns.


 


		9.	Miscellaneous.



 


(a)               
Modification. This Agreement shall not be amended, modified or waived except by an instrument in writing
signed by the Company and the holders of at least a majority of the Securities and Other Securities (with all outstanding Pre-Funded
Warrants being deemed to have been exercised in full); provided that this Agreement may not be amended and the observance of any
term hereof may not be waived with respect to any Purchaser without the written consent of such Purchaser if such amendment or
waiver on its face materially and adversely affects the rights of such Purchaser under this Agreement in a manner that is different
than the other Purchasers. Any amendment, modification or waiver effected in accordance with this Section 9(a) shall be binding
upon the Purchaser and each transferee of the Securities or the Warrant Shares, if any, each future holder of all such Securities
or Warrant Shares, if any, and the Company, its successors and assigns.


 


(b)               
Third-Party Beneficiary. The Placement Agent shall be an express third party beneficiary of the representations
and warranties of the Company and the Purchaser included in Sections 3 and 4 of this
Agreement. 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, except as otherwise set forth in
Section 7 and this Section 9(b).


 


(c)               
Notices. Any notice, consents, waivers or other communication required or permitted to be given hereunder
shall be in writing and will be deemed to have been delivered: (i) upon receipt, when personally delivered; (ii) upon
receipt when sent by certified mail, return receipt requested, postage prepaid; (iii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party; (iv) when
sent, if by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the
sending party and the sending party does not receive an automatically generated message from the recipient’s e- mail
server that such e-mail could not be delivered to such recipient); or (v) one (1) Business Day after deposit with
a nationally recognized overnight courier service with next day delivery specified, in each case, properly addressed to the party
to receive the same. The addresses, facsimile numbers and email addresses for such communications shall be:


 






    	 	36	 



     


    

 


		(i)	if to the Company, at



 


Parasol Investments Corp. (to
be renamed SmartKem, Inc.)





2255 Glades Road, Suite 324A





Boca Raton, Florida 33431





Attention: Ian Jacobs, CEO





Email: ian@montrosecapital.com


 


with copies (which
shall not constitute notice) to:


 


Sichenzia Ross Ference LLP





1185 Avenue of the Americas





New York, NY 10036





Attention: Barrett S. DiPaolo





Facsimile:   212-930-9725





E-mail: bdipaolo@srf.law


 


and


 


Lowenstein Sandler LLP





1251 Avenue of the Americas





New York, NY 10020





Attention: Jack Hogoboom





Email: jhogoboom@lowenstein.com


 


or


 


		(ii)	if to the Purchasers, at the
                                         address set forth on each such Omnibus Signature Page hereof



 


(or, in either case, to such other address
as the party shall have furnished in writing in accordance with the provisions of this Section).


 


(d)               
Assignability. This Agreement and the rights, interests and obligations hereunder are not transferable
or assignable by the Purchaser, other than an assignment of the rights, interests and obligations hereunder in connection with
any transfer of the Securities or the Warrant Shares, if any, by a Purchaser to a Permitted Assignee (as such term is defined
in the Registration Rights Agreement). For the avoidance of doubt, nothing in this Section 9(d) is intended to, or shall have
the effect of, restricting or otherwise impairing any transfer of the Securities or the Warrant Shares, if any, by the Purchaser.


 






    	 	37	 



     


    

 


(e)               
Applicable Law. This Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby shall be governed by and construed in accordance with the Laws of the State of New York, without reference
to the principles thereof relating to the conflict of Laws. Any litigation based hereon, or arising out of, under or in connection
with, this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby shall be brought and
maintained exclusively in the United States District Court for the Southern District of New York or the Supreme Court of the State
of New York for New York County, New York. Each party irrevocably consents to the service of process of any of the aforementioned
courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid,
return receipt requested, to such party's address set forth in Section 9(c), such service to become effective ten (10) days after
such mailing.


 


(f)                
WAIVER OF JURY TRIAL.   EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.


 


(g)               
Form D; Blue Sky Qualification. The Company agrees to timely file a Form D with respect to the Securities and to
provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser at such Closing
under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of the Purchaser.


 


(h)               
Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.


 


(i)                
Securities Law Disclosure; Publicity. By 9:00 a.m., New York City time, on the trading day immediately
following the Initial Closing, the Company shall issue a press release (the “Press Release”) disclosing
all material terms of the Offering. The Company will also file the Super 8-K (and including as exhibits to such Super 8-K, the
material Transaction Documents (including, without limitation, this Agreement and the Registration Rights Agreement)) as soon
as practicable following the closing date of the Share Exchange but in no event more than four (4) Business Days following the
closing date of the Share Exchange. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser
or an Affiliate of the Purchaser, or include the name of the Purchaser or an Affiliate of the Purchaser in any press release or
filing with the SEC (other than the Registration Statement) or any regulatory agency or principal trading market, without the
prior written consent of the Purchaser, except (i) as required by federal securities Law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents
with the SEC or (ii) to the extent such disclosure is required by applicable Law, request of the staff of the SEC or of any
regulatory agency or principal trading market regulations, in which case the Company shall provide the Purchaser with prior written
notice of such disclosure permitted under this sub-clause (ii). From and after the filing of the Super 8-K, no Purchaser
shall be in possession of any material, non-public information received from the Company or any of its respective officers,
directors, employees or agents or any other person acting on its behalf in connection with the Offering that is not disclosed
in the Super 8-K unless the Purchaser shall have executed a written agreement with the Company regarding the confidentiality and
use of such information or is otherwise subject to confidentiality restrictions. The Purchaser, severally and not jointly with
the Other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in this Section 9(i), the Purchaser will maintain the confidentiality of all disclosures made to it
in connection with such transactions (including the existence and terms of such transactions), except to the extent such disclosure
(x) is made to the Purchaser Parties in connection with the transactions contemplated hereby or (y) is required by applicable
Law. In addition, the Purchaser acknowledges that it is aware that United States securities laws may restrict persons
who have material, non-public information about a company from purchasing or selling any securities of such company while in possession
of such information. The provisions of this Section 9(i) are in addition to and not in replacement of any other confidentiality
agreement, if any, between the Company and the Purchaser.


 






    	 	38	 



     


    

 


(j)                
Non-Public Information. Except for information (including the terms of this Agreement and the transactions
contemplated hereby) that will be disclosed in the Super 8-K and filed with the SEC, the Company shall not and shall
cause each of its officers, directors, employees, agents and other representatives, not to, provide the Purchaser with any material, non-public information
regarding the Company without the express prior written consent of the Purchaser.


 


(k)               
Entire Agreement. This Agreement, together with the Registration Rights Agreement and each other Transaction Document,
and all exhibits, schedules and attachments hereto and thereto, including the Disclosure Schedule and any confidentiality agreement
between the Purchaser and the Company, constitute the entire agreement between the Purchaser and the Company with respect to the
Offering and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof.


 


(l)                
Share Certificates. If the Securities or the Warrant Shares, if any, are certificated and any certificate or instrument
evidencing any such securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to the Company and the Company’s transfer agent of such loss,
theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement
to indemnify and hold harmless the Company and its transfer agent for any losses in connection therewith or, if required by such
transfer agent, a bond in such form and amount as is required by the transfer agent. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement securities.
If a replacement certificate or instrument evidencing any such securities is requested due to a mutilation thereof, the Company
may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.


 


(m)             
Expenses. Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, whether
or not the transactions contemplated hereby are consummated. Without limiting the foregoing, the Company shall pay all Transfer
Agent fees, stamp taxes and other Taxes and duties levied in connection with the sale and issuance of the Offering, and the Company
shall file all necessary Tax Returns and other documentation with respect to such fees, Taxes and duties, and the Company shall
pay all fees and expenses of its counsel in connection with the issuance of any opinion required by Section 6(k) above and of
any opinion to the Transfer Agent for the removal of any legend on the Securities or the Warrant Shares, if any.


 






    	 	39	 



     


    

 


(n)               
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature
pages that contain copies of an executed signature page such as in .pdf format shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile or by e-mail of a document in .pdf format shall be deemed to be their original signatures for
all purposes.





 


(o)               
Severability. Each provision of this Agreement shall be considered separable and, if for any reason any provision
or provisions hereof are determined to be invalid or contrary to applicable Law, such invalid or contrary provision shall be replaced
with a valid provision that as closely as possible reflects the parties’ intent with respect thereto, and invalidity or
illegality shall not impair the operation of or affect the remaining portions of this Agreement.


 


(p)               
Headings. Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this
Agreement as set forth in the text.


 


(q)               
Multiple Closings. The Purchaser understands and acknowledges that there may be multiple Closings for the Offering.


 


(r)                
Additional Information; Further Assurances. The Purchaser hereby agrees to furnish the Company such other information
as the Company may reasonably request prior to the applicable Closing with respect to its subscription hereunder. Each party hereto
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 hereto may reasonably request in order to effect
the transactions contemplated hereby and to accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.


 


(s)                
Survival. The parties, agree that, if the Closing occurs, (i) the Company Fundamental Representations shall survive
the execution and delivery of this Agreement for a period of three (3) years from the Initial Closing Date and (ii) the other
representations and warranties of the Company and the representations and warranties of the Purchaser contained in this Agreement
shall survive the execution and delivery of this Agreement for a period of one (1) year from the Initial Closing Date and in each
case, shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the
Purchaser or the Company. The covenants and agreements contained in this Agreement (including the covenants and agreements set
forth in Section 7 hereof) shall survive the Closing and delivery of the Securities in accordance with their terms or, if no term
is specified, such covenants and agreements shall survive indefinitely. Notwithstanding anything herein to the contrary, in no
event shall the Purchaser have any liability to the Company or to any other person in connection with the Offering other than
pursuant to this Agreement.


 






    	 	40	 



     


    

 


(t)                
Omnibus Signature Page. This Agreement is intended to be read and construed in conjunction with the
Registration Rights Agreement. Accordingly, pursuant to the terms and conditions of this Agreement and the Registration Rights
Agreement, it is hereby agreed that the execution by the Purchaser of this Agreement, in the place set forth on the Omnibus Signature
Page below, shall constitute agreement to be bound by the terms and conditions hereof and the terms and conditions of the Registration
Rights Agreement, with the same effect as if each of such separate but related agreement were separately signed.


 


(u)               
Public Disclosure. Neither the Purchaser nor any officer, manager, director, member, partner, stockholder,
employee, Affiliate, Affiliated person or entity of the Purchaser shall make or issue any press releases or otherwise make any
public statements or make any disclosures to any third person or entity with respect to the transactions contemplated herein and
will not make or issue any press releases or otherwise make any public statements of any nature whatsoever with respect to the
Company without the Company’s express prior approval (which may be withheld in the Company’s sole discretion), except
to the extent such disclosure is required by Law, request of the staff of the SEC or of any regulatory agency or principal trading
market regulations.


 


(v)               
Potential Conflicts. The Placement Agent, its sub-agents, legal counsel to the Company, the
Placement Agent or SmartKem and/or their respective Affiliates, principals, representatives or employees may now or hereafter
own shares or other securities of the Company.


 


(w)             
Independent Nature of the Purchaser’s Obligations and Rights. For avoidance of doubt, the obligations of the
Purchaser under this Agreement, the other Transaction Documents and any other agreements delivered in connection herewith are
several and not joint with the obligations of any Other Purchaser in connection with the Offering, and the Purchaser shall not
be responsible in any way for the performance of the obligations of any Other Purchaser in connection with the Offering. Nothing
contained herein and no action taken by the Purchaser shall be deemed to constitute the Purchaser as a partnership, an association,
a joint venture, or any other kind of entity, or create a presumption that the Purchaser is in any way acting in concert or as
a group with any Other Purchaser in connection with the Offering with respect to such obligations or the transactions contemplated
by this Agreement or any other Transaction Document or any Other Subscription Agreement. Except as specifically set forth herein,
the Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other party to be joined as an additional party in any proceeding
for such purpose.


 


(x)               
Waiver of Conflicts. Each party to this Agreement acknowledges that each of Sichenzia Ross Ference LLP,
counsel to the Company prior to the Share Exchange, Lowenstein Sandler LLP, counsel to SmartKem, and the Company post-Share Exchange,
Lucosky Brookman LLP, counsel to the Placement Agent, may have in the past performed and may continue to or in the future perform
legal services for certain of the Purchasers in matters unrelated to the transactions described in this Agreement, including financings
and other matters. Accordingly, each party to this Agreement hereby (a) acknowledges that they have had an opportunity to
ask for information relevant to this disclosure; (b) acknowledges that Sichenzia Ross Ference LLP, Lowenstein Sandler LLP
and Lucosky Brookman LLP represented the Company, SmartKem and the Placement Agent, respectively, in the transaction contemplated
by this Agreement and has not represented any individual Purchaser in connection with such transaction; and (c) gives its
informed consent to Sichenzia Ross Ference LLP’s, Lowenstein Sandler LLP’s and Lucosky Brookman LLP’s representation
of certain of the Purchasers in such unrelated matters and to Sichenzia Ross Ference LLP’s, Lowenstein Sandler LLP’s
and Lucosky Brookman LLP’s representation of the Company, SmartKem and the Placement Agent, respectively, in connection
with this Agreement and the transactions contemplated hereby. Further, each party to this Agreement hereby acknowledges that Lowenstein
Sandler LLP anticipates that it will advise the Company following the Share Exchange.


 






    	 	41	 



     


    

 


(y)               
Adjustments. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common
Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in any
Transaction Document to a number of Securities or the Per Share Purchase Price or the Warrant Purchase Price, as applicable, shall
be deemed to be amended to appropriately account for such event.


 


(z)               
Remedies. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed by them in accordance with the terms hereof and that each party hereto may be entitled to seek
protective orders, injunctive relief and other remedies available at Law or in equity (including, without limitation, seeking
specific performance or rescission of purchases, sales and other transfers). The parties hereto agree not to raise any objections
to the availability of the equitable remedy of specific performance to prevent or restrain breaches of this Agreement by the Purchaser
or the Company, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened
breaches of, or to enforce compliance with, the respective covenants and obligations of the Purchaser and the Company, as applicable,
under this Agreement all in accordance with the terms of this Section 9(z). Neither the Purchaser nor the Company, as applicable,
shall be required to provide any bond or other security in connection with seeking an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this Agreement, all in accordance with the terms of
this Section 9(z).


 


(aa)            
Recourse. Notwithstanding anything that may be expressed or implied in this Agreement or in any other Transaction
Document, and notwithstanding the fact that the Purchaser may be partnerships or limited liability companies, the Company hereto
covenants, agrees and acknowledges that no recourse under this Agreement or any Transaction Document shall be had against any
the Purchaser’s future, present or former Affiliates, or the Purchaser’s or its Affiliates’ respective future,
present or former officers, directors, managers, employees, partners, equityholders, controlling persons, members, agents, attorneys,
representatives, successors or permitted assigns (the “Purchaser Parties”) (other than the Purchaser
and its successors and Permitted Assignees under this Agreement), whether by the enforcement of any assessment or by any legal
or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability
whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Purchaser Parties, as such, for any obligation
or liability of any party under this Agreement or any other Transaction Document for any claim based on, in respect of or by reason
of such obligations or liabilities or their creation; provided, however, nothing in this Section 9(aa) shall relieve
or otherwise limit the liability of the Purchaser or any of its successors or Permitted Assignees, for any breach or violation
of its obligations under such agreements, documents or instruments. The liability limitation provision in this Section 9(aa) shall
survive termination of this Agreement.


 


(bb)           
Use of Proceeds. The Company shall use the net proceeds from the Offering to fund demonstrator products, to scale
up manufacturing processes and customer support in developing applications, and for working capital and other general corporate
purposes.


 


[Signature page follows.]


 






    	 	42	 



     


    

 



 


IN WITNESS WHEREOF, the Company has duly
executed this Agreement as of the day of                           ,
2021.


 


 


 


	 	PARASOL INVESTMENTS CORP.  
	 	(to be renamed “SmartKem, Inc.”)
	 	 
	 	 
	 	By:	                       
	 	Name:
	 	Title:
	 	 
	 	 
	 	SMARTKEM LIMITED
	 	 
	 	 
	 	By:	 
	 	Name:
	 	Title:



 






    	 	43	 



     


    




  


Parasol Investments Corp. (to be renamed
 “SmartKem, Inc.”) 


OMNIBUS SIGNATURE PAGE TO 


SUBSCRIPTION AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT


 


The undersigned, desiring to: (i) enter
into the Subscription Agreement, dated as of , 2021 (the “Subscription Agreement”), between the undersigned, Parasol
Investments Corp. (to be renamed “SmartKem, Inc.”), a Delaware corporation (the “Company”),
and the other parties thereto, in the form furnished to the undersigned, (ii) enter into the Registration Rights Agreement
(the “Registration Rights Agreement”), among the undersigned, the Company and the other parties thereto,
in the form furnished to the undersigned, and (iii) purchase the Company’s Securities as set forth in the Subscription Agreement
and below, hereby agrees to join the Subscription Agreement and the Registration Rights Agreement as a party thereto, with all
the rights and privileges appertaining thereto, and to be bound in all respects by the terms and conditions thereof. The undersigned
specifically acknowledges having read the representations section in the Subscription Agreement entitled “Representations
and Warranties of the Purchaser” and hereby represents that the statements contained therein are complete and accurate with
respect to the undersigned as a Purchaser.


 


IN WITNESS WHEREOF, the Purchaser hereby executes the Subscription
Agreement and the Registration Rights Agreement.


 


	Dated:                                                                	, 2021	 	 	 	 
	 	 	 	 	 	 
	                                                    	×	$2.00	 =	$                                          	 
	Number of Shares	 	Purchase Price per Share	 	Total	 
	 	 	 	 	 	 
	                                                    	×	$1.99	 =	$                                          	 
	Number of Pre-Funded Warrants	 	Purchase Price per	 	Total 	 
	 		Warrant Share	 	$                                          	 
	 		 	 	Total Purchase Price to be Paid	 






 




	PURCHASER (individual)	 	PURCHASER (entity)
	 	 	 
	 	 	 
	Signature	 	Name
    of Entity
	 	 	 
	 	 	By: 	                        
	Print Name	 	 	Signature
		 	       
	 	 	Print Name: 	 









	Signature
    (if Joint Tenants or Tenants in Common)	 	Title:	                   
	 	 	 
	Address of Principal
    Residence:	 	Address
    of Executive Offices:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Social Security
    Number(s):	 	IRS
    Tax Identification Number:
	 	 	 
	 	 	 
	Telephone Number:	 	Telephone
    Number:
	 	 	 
	 	 	 
	Facsimile Number:	 	Facsimile
    Number:
	 	 	 
	 	 	 
	E-mail Address:	 	E-mail Address:
	 	 	 



 





	1 	Will
    reflect the Closing Date. Not to be completed by Subscriber.


 






    	 	 	 



     


    




 


PARASOL INVESTMENTS CORP. (TO BE
RENAMED “SMARTKEM, INC.”)


 


ACCREDITED INVESTOR CERTIFICATION





(all Investors must INITIAL where
appropriate)


  


By initialing you certify that:


 


For Individual Investors Only


 


	 Initial	 	I have
    a net worth, or joint net worth with my spouse or spousal equivalent, of more than US$1,000,000. (“Net worth”
    means the excess of total assets at fair market value (including personal and real property, but excluding the estimated
    fair market value of your primary home) over total liabilities. "Total liabilities" excludes any mortgage on
    the primary home in an amount of up to the home's estimated fair market value as long as the mortgage was incurred more than
    60 days before the Securities are purchased, but includes (i) any mortgage amount in excess of the home's fair market value
    and (ii) any mortgage amount that was borrowed during the 60-day period before the closing date for the sale of the Securities
    for the purpose of investing in the Securities.  “Spousal equivalent” means a cohabitant occupying a
    relationship generally equivalent to that of a spouse. “Joint net worth” is the aggregate net worth of a person
    and spouse or spousal equivalent; assets do not need to be held jointly to be included in the calculation.)
	Initial	 	I have had  an
    individual income in excess of US$200,000 in each of the two most recent calendar years, or joint income with my spouse or
    spousal equivalent in excess of US$300,000 in each of those years, and have a reasonable expectation of reaching the same
    income level in the current calendar year.  (“Income” means annual adjusted gross income, as reported
    for federal income tax purposes, plus (i) the amount of any tax-exempt interest income received; (ii) the amount of losses
    claimed as a limited partner in a limited partnership; (iii) any deduction claimed for depletion; (iv) amounts contributed
    to an IRA or Keogh retirement plan; (v) alimony paid; and (vi) any gains excluded from the calculation of adjusted gross income
    pursuant to the provisions of Section 1202 of the Internal Revenue Code of 1986, as amended.)
	Initial	 	I hold in good standing
    one of the following professional licenses: the General Securities Representative license (Series 7), the Private Securities
    Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65).
	Initial	 	I am a director or
    executive officer of SmartKem Limited or Parasol Investments Corp.
	 	 	 
	For Non-Individual Investors
    (Entities)
	 	The
    investor is:
	Initial	 	A bank, as defined
    in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A)
    of the Securities Act, whether acting in an individual or a fiduciary capacity.
	Initial	 	A broker or dealer
    registered under Section 15 of the Securities Exchange Act of 1934, as amended.
	Initial	 	An investment adviser
    registered pursuant to Section 203 of the Investment Advisers Act of 1940 or registered pursuant to the laws of a state.
	Initial	 	An investment adviser
    relying on the exemption from registering with the SEC under Section 203(l) or (m) of the Investment Advisers Act of 1940.
	Initial	 	An insurance company,
    as defined in Section 2(a)(13) of the Securities Act.
	Initial	 	An investment company
    registered under the Investment Company Act of 1940 or a business development company, as defined in Section 2(a)(48) of that
    act.
	Initial	 	A Small Business Investment
    Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act
    of 1958.
	Initial	 	A Rural Business Investment
    Company as defined in Section 384A of the Consolidated Farm and Rural Act.
	Initial	 	A plan established
    and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions
    for the benefit of its employees, if the plan has total assets in excess of US$5 million.
	Initial	 	An employee benefit plan within the meaning
    of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is being made by a plan fiduciary,
    as defined in Section 3(21) of such act, and the plan fiduciary is either a bank, a savings and loan association, an insurance
    company, or a registered investment adviser, or if the employee benefit plan has total assets in excess of US$5 million, or
    if the employee benefit plan is a self-directed plan in which investment decisions are made solely by persons that are accredited
    investors.



 






    	 	 	 



     


    

 


	Initial	 	A private
    business development company, as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
	Initial	 	A corporation, Massachusetts
    or similar business trust, partnership, or limited liability company or an organization described in Section 501(c)(3) of
    the Internal Revenue Code of 1986, as amended, that was not formed for the specific purpose of acquiring the Securities, and
    that has total assets in excess of US$5 million.
	Initial	 	A trust with total
    assets in excess of US$5 million not formed for the specific purpose of acquiring the Securities, whose purchase is directed
    by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act.
	Initial	 	An entity in which
    all of the equity owners (whether entities themselves or natural persons) are accredited investors and meet the criteria listed
    in either this Section 5 or Part I, Section 6 of this Questionnaire. Please also see "Additional Questions for Certain
    Accredited Investors" below.
	Initial	 	An entity of a type
    not listed above, that is not formed for the specific purpose of acquiring the Securities and owns investments in excess of
    US$5 million. For purposes of this clause, "investments" means investments as defined in Rule 2a51-1(b) under the
    Investment Company Act of 1940.
	Initial	 	A family office, as
    defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, that (i) has assets under management in excess
    of US$5 million; (ii) is not formed for the specific purpose of acquiring the Securities and (iii) has a person directing
    the prospective investment who has such knowledge and experience in financial and business matters so that the family office
    is capable of evaluating the merits and risks of the prospective investment.
	Initial	 	A family client, as
    defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, of a family office meeting the requirements of
    the immediately preceding clause and whose prospective investment in the Issuer is directed by that family office pursuant
    to subclause (iii) of the immediately preceding clause.



 


Accredited Investor Certification Page
2


 






    	 	 	 



     


    

 





PARASOL INVESTMENTS CORP. (TO BE
RENAMED “SMARTKEM, INC.”)


 


Investor Profile





(Must be completed by Investor)


 


Section A - Personal Investor Information


 


	Investor Name(s): 	 
	 	 
	Individual executing Profile or Trustee: 	 
	 	 
	Social Security Numbers / Federal I.D. Number: 	 



 





	Date of Birth:	 	 	Marital Status: 	 






	Joint Party Date of Birth:	 	 	Investment Experience (Years): 	 






	Annual Income:	 	 	Liquid Net Worth: 	 



 


	Net Worth*: 	 	 	 	 
	Tax Bracket:	_____ 15% or below	_____ 25% - 27.5%	_____ Over 27.5%	 



  


	Home Street Address: 	 
	 	 






	Home City, State & Zip Code: 	 







 


	Home Phone: 	 	    Home Fax: 	 	    Home Email: 	 



 


	Employer: 	 	 	 	 	 



 


	Employer Street Address: 	 	 	 	 	 



 


	Employer City, State & Zip Code: 	 	 	 	 	 



 


	Bus. Phone: 	 	    Bus. Fax: 	 	    Bus. Email: 	 



 	Nature of Business (type of sector or industry): 	                                   	 Title/Position:	 




 


	Outside Broker/Dealer: 	 	 	 	 	 






 


Section B –Form of Payment
 – Check or Wire Transfer


 


 ____
Check payable to Delaware Trust Company, as Escrow Agent for Parasol Investments Corp. and SmartKem Limited, Acct. # 79-4429


 ____
Wire funds from my outside account according to instructions of the Subscription Agreement.


 ____ The funds for this investment
are rolled over, tax deferred from __________ within the allowed 60 day window.


 Please check if you are a FINRA
member or affiliate of a FINRA member firm: ____


 


	 	 	
	 	 	 
	Investor Signature	 	Date



  


		*	“Net worth” means
                                         the excess of total assets at fair market value (including personal and real property,
                                         but excluding the estimated fair market value of your primary home) over total
                                         liabilities. "Total liabilities" excludes any mortgage on the primary home
                                         in an amount of up to the home's estimated fair market value as long as the mortgage
                                         was incurred more than 60 days before the Securities are purchased, but includes (i)
                                         any mortgage amount in excess of the home's fair market value and (ii) any mortgage amount
                                         that was borrowed during the 60-day period before the closing date for the sale of the
                                         Securities for the purpose of investing in the Securities. “Spousal equivalent”
                                         means a cohabitant occupying a relationship generally equivalent to that of a spouse.
                                         “Joint net worth” is the aggregate net worth of a person and spouse or spousal
                                         equivalent; assets do not need to be held jointly to be included in the calculation.



 






    	 	 	 



     


    

 


ANTI MONEY LAUNDERING REQUIREMENTS


 


The USA PATRIOT Act


 


The USA PATRIOT Act is designed to detect,
deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage
firms and financial institutions. Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money
laundering programs.


 


To help you understand these efforts,
we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.


 


What is money laundering?


 


Money laundering is the process of disguising
illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection
with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.


 


How big is the problem and why is it
important?


 


The use of the U.S. financial system by
criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department,
one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.


 


What are we required to do to eliminate
money laundering?


 


Under rules required by the USA PATRIOT
Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent
audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with such laws.
As part of our required program, we may ask you to provide various identification documents or other information. Until you provide
the information or documents we need, we may not be able to effect any transactions for you.


 






    	 	 	 



     


    

  


ANTI-MONEY LAUNDERING INFORMATION FORM





The following is required in accordance
with the AML provision of the USA PATRIOT ACT.


 (Please fill out and return with
requested documentation.)


 


	INVESTOR NAME:	 	 	 
	 	 	 	 
	LEGAL ADDRESS:	 	 	 
	 	 	 	 
	SSN# or TAX ID#	 	 	 
	OF INVESTOR:		 	 
	 	 	 	 
	YEARLY INCOME:  	 	 	 
	 	 	 	 
	NET WORTH:  		 	*



 


* “Net worth” means
the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market
value of your primary home) over total liabilities. "Total liabilities" excludes any mortgage on the primary home
in an amount of up to the home's estimated fair market value as long as the mortgage was incurred more than 60 days before the
Securities are purchased, but includes (i) any mortgage amount in excess of the home's fair market value and (ii) any mortgage
amount that was borrowed during the 60-day period before the closing date for the sale of the Securities for the purpose of investing
in the Securities. “Spousal equivalent” means a cohabitant occupying a relationship generally equivalent to that of
a spouse. “Joint net worth” is the aggregate net worth of a person and spouse or spousal equivalent; assets do not
need to be held jointly to be included in the calculation.


 


INVESTMENT
OBJECTIVE(S) FOR ALL INVESTORS:  __________________________


 


ADDRESS OF BUSINESS OR OF EMPLOYER:_________________________________


 


                                                                             _____________________________________       


 


FOR INVESTORS WHO ARE INDIVIDUALS:
AGE:  _____________________________


 


FOR INVESTORS WHO ARE INDIVIDUALS:
OCCUPATION: _____________________________


 


FOR INVESTORS WHO ARE ENTITIES:
Business Sector/Industry): __________________________





 


BANK SECRECY ACT (BSA)
REQUIREMENT





 


Identify and complete for each of the 25% or more beneficial
owner(s) of the entity as defined below:1


 


Name: ______________________________________                         Percent
of Ownership: ________


 


Home Address (No PO Box):__________________________________________________________


 


Phone Number: _________________ Email Address: ________________________________


 


Title (if applicable): ___________________________________________________________


 


Social Security Number: ___________________                           Date
of Birth: ________________


 


Please provide documents to verify
the identity of the beneficial owner(s), including a current valid issued government id for each beneficial owner identified above.











 


		1	Beneficial Owner:
                                         each individual, if any, who directly or indirectly, through any contract, arrangement,
                                         understanding, relationship or otherwise owns 25% or more of the equity interests of
                                         a legal entity investor: (A) a single individual with significant responsibility to control,
                                         manage or direct a legal entity investor, including, (i) an executive officer or senior
                                         manager (e.g. Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
                                         Managing Member, General Partner, President, Vice President or Treasurer) or (ii) any
                                         other individual who regularly performs similar functions or (B) if a trust owns directly
                                         or indirectly, through any contract, arrangement, understanding, relationship or otherwise,
                                         25% or more of the equity interests of a legal entity investor, the beneficial owner
                                         shall mean the trustee. It is the ultimate beneficial owner(s) that must be identified
                                         and not nominees.



 






    	 	 	 



     


    

 


IDENTIFICATION & DOCUMENTATION
AND SOURCE OF FUNDS:


 


		1.	Please submit a copy of non-expired
                                         identification for the authorized signatory(ies) on the investment documents, showing
                                         name, date of birth, address and signature. The address shown on the identification
                                         document MUST match the Investor’s address shown on the Investor Signature Page.



 


	Current Driver’s License	or	Valid
    Passport	or	Identity
    Card


(Circle one or more)





 


		2.	If the Investor is a corporation, limited
                                         liability company, trust or other type of entity, please submit the following requisite
                                         documents: (i) Articles of Incorporation, By-Laws, Certificate of Formation, Operating
                                         Agreement, Trust or other similar documents for the type of entity; and (ii) Corporate
                                         Resolution or power of attorney or other similar document granting authority to signatory(ies)
                                         and designating that they are permitted to make the proposed investment.



 


		3.	Please advise where the funds were derived
                                         from to make the proposed investment:



 


 


	Investments	Savings	Proceeds of Sale	Other ____________


(Circle one or more)


 





 


 


 


 


Signature:  _______________________________________


 


Print Name:  _____________________________________


 


Title (if applicable):  _______________________________


 


Date:  __________________________________________