Exhibit 10.16


 


INDEMNIFICATION
AGREEMENT


 


This Indemnification
Agreement (“Agreement”) is made as of __, 20__ by and between SmartKem, Inc., a Delaware corporation (the “Company”),
and _____________ (“Indemnitee”).


 


RECITALS


 


WHEREAS, highly competent
persons have become more reluctant to serve publicly-held corporations as directors or officers or in other capacities unless they
are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the corporation and due to the fact that such exposure
frequently bears no relationship to compensation paid to such officers and directors;


 


WHEREAS, the Company
and Indemnitee recognize that plaintiffs often seek damages in such large amounts and the costs of litigation may be so enormous
(whether or not the case is meritorious), that the defense and/or settlement of such litigation is often beyond the personal resources
of directors and officers;


 


WHEREAS, the Company’s
Bylaws provide for the indemnification of the officers and directors of the Company to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the “DGCL”). The Bylaws expressly provide that the indemnification provisions
set forth therein are not exclusive and contemplate that contracts may be entered into between the Company and its directors and
officers with respect to indemnification;


 


WHEREAS, Section 145
of the DGCL empowers the Company to indemnify its officers, directors, employees and agents by agreement and to indemnify persons
who serve, at the Company’s request, as the directors, officers, employees or agents of other corporations or enterprises;


 


WHEREAS, Section 102(b)(7) of
the DGCL allows the Company to include in its Certificate of Incorporation a provision limiting or eliminating the personal liability
of a director for monetary damages in respect of claims by shareholders and corporations for breach of certain fiduciary duties,
and the Company has so provided in its Certificate of Incorporation that each director shall be exculpated from such liability
to the maximum extent permitted by law;


 


WHEREAS, the Company,
after reasonable investigation, has determined that the liability insurance coverage presently available to the Company may be
inadequate in certain circumstances to cover all possible exposure for which Indemnitee should be protected.


 


WHEREAS, the uncertainties
relating to such insurance and to indemnification have increased the difficulty of attracting and retaining highly competent persons
to serve as directors and officers. The Board has determined that the increased difficulty in attracting and retaining such persons
is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future;


 


WHEREAS, it is reasonable,
prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such
persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified;


 


WHEREAS, this Agreement
is a supplement to and in furtherance of the Company’s Certificate of Incorporation and Bylaws and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
and


 


WHEREAS, Indemnitee
does not regard the protection available under the Company’s Certificate of Incorporation, Bylaws and insurance as adequate
in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the Company on the condition that he be so indemnified;


 






     


     


    

 


NOW, THEREFORE, in
consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:


 


Section 1. Services
to the Company. Indemnitee agrees to serve as a director or officer of the Company or, at the request of the Company, as a
director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual
obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement
to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any
of its subsidiaries or any other corporation, limited liability company, partnership, joint venture, trust employee benefit plan
or other enterprise of which Indemnitee was serving at the Company’s request as a director, officer, employee, agent or fiduciary)
and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries
or any other corporation, limited liability company, partnership, joint venture, trust employee benefit plan or other enterprise
of which Indemnitee was serving at the Company’s request as a director, officer, employee, agent or fiduciary), if any, is
at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided
in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any other corporation, limited
liability company, partnership, joint venture, trust employee benefit plan or other enterprise of which Indemnitee was serving
at the Company’s request as a director, officer, employee, agent or fiduciary). The foregoing notwithstanding, this Agreement
shall continue in force after Indemnitee has ceased to serve as an officer or director of the Company.


 


Section 2. Definitions.
As used in this Agreement:


 


(a) A “Change
in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following
events:


 


i. Acquisition of
Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly,
of securities of the Company representing thirty-five percent (35%) or more of the combined voting power of the Company’s
then outstanding securities;


 


ii. Change in Board.
During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv))
whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;


 


iii. Corporate Transactions.
The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51%
of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation
and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;


 


iv. Liquidation.
The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets; and


 


v. Other Events.
There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined
below), whether or not the Company is then subject to such reporting requirement.


 






     


     


    

 


For purposes of this Section 2(a), the following terms
shall have the following meanings:


 


(A) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.


 


(B) “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall
exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the
Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.


 


(C) “Beneficial
Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial
Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger
of the Company with another entity.


 


(b) “Corporate
Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or
of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise
which such person is or was serving at the request of the Company.


 


(c) “Disinterested
Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.


 


(d) “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating,
being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses
incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and
other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of
Section 13(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of
Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines against Indemnitee.


 


(e) “Independent
Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses
of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities
and damages arising out of or relating to this Agreement or its engagement pursuant hereto.


 






     


     


    

 


(f) “Proceeding”
shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company
or otherwise and whether of a civil, criminal, administrative legislative, or investigative nature, including any appeal therefrom,
in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of the fact
that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or of any action on his part
while acting as director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company
as a director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust
or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for
which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by
an Indemnitee to enforce his rights under this Agreement.


 


Section 3. Indemnity
in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3
if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in
the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified
to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein,
if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company
and, in the case of a criminal proceeding had no reasonable cause to believe that his conduct was unlawful.


 


Section 4. Indemnity
in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions
of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified
to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or on his behalf
in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made
under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a
court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the
Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnification.


 


Section 5. Indemnification
for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the
fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful,
on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee
is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not
wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection
with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this
Section and without limiting the foregoing, if any Proceeding is disposed of, on the merits or otherwise (including a disposition
without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was
liable to the Company, (iii) a plea of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee
did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company
and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s
conduct was unlawful, Indemnitee shall be considered for purposes of this Agreement to have been successful with respect thereto.


 


Section 6. Indemnification
For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable
law and to the extent that Indemnitee is, by reason of his Corporate Status, a witness or otherwise participates in any Proceeding
to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.


 






     


     


    

 


Section 7. Additional
Indemnification.


 


(a) Notwithstanding
any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law
if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with the Proceeding.


 


(b) For purposes
of Section 7(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include,
but not be limited to:


 


i. to the fullest extent
permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL, and


 


ii. to the fullest
extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase
the extent to which a corporation may indemnify its officers and directors.


 


Section 8. Exclusions.
Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity
in connection with any claim made against Indemnitee:


 


(a) for which payment
has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect
to any excess beyond the amount paid under any insurance policy or other indemnity provision; or


 


(b) for any Proceedings
with respect to which final judgment is rendered against Indemnitee for payment of (i) an accounting of profits made from
the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Exchange Act (as defined in Section 2(a) hereof) or similar provisions of state statutory law or common law, or (ii) any
reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits
realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including
any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale
by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), or


 


(c) any Proceeding
involving the enforcement of non-compete and/or non-disclosure agreements or the non-compete and/or non-disclosure provisions of
employment, consulting or similar agreements the Indemnitee may be a party to with the Company or any subsidiary of the Company
or any other applicable foreign or domestic corporation, partnership, joint venture, trust or other enterprise, if any; or


 


(d) except as provided
in Section 13(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers,
employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.


 


Section 9. Advances
of Expenses. The Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection
with any Proceeding, and such advancement shall be made within thirty (30) days after receipt by the Corporation of (i) a
statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final
disposition of any Proceeding, and (ii) an undertaking by or on behalf of Indemnitee to repay such amount or amounts, only
if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Corporation
as authorized by this Agreement or otherwise. Such undertaking shall be accepted without reference to the financial ability of
Indemnitee to make such repayment. Advances shall be unsecured and interest free. Advances shall include any and all reasonable
Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. This Section 9 shall not apply to any claim made by Indemnitee
for which indemnity is excluded pursuant to Section 8 or to any Proceeding for which the Company has assumed the defense thereof
in accordance with Section 10(b) of this Agreement.


 






     


     


    

 


Section 10. Procedure
for Notification and Defense of Claim.


 


(a) Indemnitee shall
notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of
Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. The written
notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding.
To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein
or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such action, suit or proceeding.
The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to
Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver
by Indemnitee of any rights under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has requested indemnification.


 


(b) In the event
the Company shall be obligated to pay the Expenses of Indemnitee with respect to a Proceeding, as provided in this Agreement, the
Company shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon delivery
of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and retention
of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently
incurred by Indemnitee with respect to the same Proceeding, provided that (1) Indemnitee shall have the right to employ Indemnitee’s
own counsel in such Proceeding at Indemnitee’s expense and (2) if (i) the employment of counsel by Indemnitee has
been previously authorized in writing by the Company, (ii) counsel to the Company or Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position, or reasonably believes that a conflict is likely to arise, on any significant
issue between the Company and the Indemnitee in the conduct of such defense or (iii) the Company shall not, in fact, have
employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at
the expense of the Company, except as otherwise expressly provided by this Agreement.


 


(c) The Company
will be entitled to participate in the Proceeding at its own expense.


 


Section 11. Procedure
Upon Application for Indemnification.


 


(a) Upon written
request by Indemnitee for indemnification pursuant to Section 10(a), a determination, if required by applicable law, with
respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have
occurred after the date of this Agreement, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered
to Indemnitee; or (ii) if a Change in Control shall not have occurred after the date of this Agreement, (A) by a majority
vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors
designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are
no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Disinterested Directors, by the stockholders
of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable
advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees
and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall
be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.


 






     


     


    

 


(b) In the event
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof,
the Independent Counsel shall be selected as provided in this Section 11(b). If a Change in Control shall not have occurred
after the date of this Agreement, the Independent Counsel shall be selected by the Board, and the Company shall give written notice
to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred after
the date of this Agreement, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to
the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such
written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless
and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days
after the submission by Indemnitee or the Company, as the case may be, of a written objection, no Independent Counsel shall have
been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent
Counsel under Section 11(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of
this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).


 


Section 12. Presumptions
and Effect of Certain Proceedings.


 


(a) In making a
determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination
shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement
if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the
Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection
with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the
Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any
action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee
has not met the applicable standard of conduct.


 


(b) Subject to Section 13(e),
if the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee
is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be
deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading,
in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided,
however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional
time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing
provisions of this Section 12(b) shall not apply (i) if the determination of entitlement to indemnification is to
be made by the stockholders pursuant to Section 11(a) of this Agreement and if (A) within fifteen (15) days after
receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination
is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose
of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such
determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 11(a) of this Agreement.


 






     


     


    

 


(c) The termination
of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect
the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.


 


(d) Reliance
as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith
if Indemnitee’s action is based on the records or books of account of the Company or other corporation, limited liability
company, partnership, joint venture, trust employee benefit plan or other enterprise of which Indemnitee was serving as a director,
officer, employee, agent or fiduciary, including financial statements, or on information supplied to Indemnitee by the officers
of the Company or other corporation, limited liability company, partnership, joint venture, trust employee benefit plan or other
enterprise of which Indemnitee was serving as a director, officer, employee, agent or fiduciary in the course of their duties,
or on the advice of legal counsel for the enterprise or on information or records given or reports made to the Company or other
corporation, limited liability company, partnership, joint venture, trust employee benefit plan or other enterprise of which Indemnitee
was serving as a director, officer, employee, agent or fiduciary by an independent certified public accountant or by an appraiser
or other expert selected with the reasonable care by the Company or other corporation, limited liability company, partnership,
joint venture, trust employee benefit plan or other enterprise of which Indemnitee was serving as a director, officer, employee,
agent or fiduciary. The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.


 


(e) Actions of
Others. The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Company or
other corporation, limited liability company, partnership, joint venture, trust employee benefit plan or other enterprise of which
Indemnitee was serving as a director, officer, employee, agent or fiduciary shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.


 


Section 13. Remedies
of Indemnitee.


 


(a) Subject to Section 13(e),
in the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled
to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this
Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a) of
this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification
is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within ten (10) days
after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or
7 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification,
or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement
void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee
the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication
by a court of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option,
may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a);
provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to
enforce his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such
adjudication or award in arbitration.


 






     


     


    

 


(b) In the event
that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all
respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13 the Company shall have the
burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.


 


(c) If a determination
shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13,
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law.


 


(d) The Company
shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced
pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable
and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
It is the intent of the Company that the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation,
enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the
Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred
by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under
this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless
of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.


 


(e) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding.


 


Section 14. Non-exclusivity;
Survival of Rights; Insurance; Subrogation.


 


(a) The rights of
indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation,
the Company’s By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration
or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in
respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.
To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement
of Expenses than would be afforded currently under the Company’s Certificate of Incorporation, the Company’s By-laws
and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every
other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other right or remedy.


 


(b) To the extent
that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance
with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under
such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director
and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The Company and the Indemnitee shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies. If at any date (i) such insurance ceases to cover acts and omissions
occurring during all or any part of the period of Indemnitee’s Corporate Status or (ii) neither the Company nor any
of its subsidiaries maintains any such insurance, the Company shall ensure that Indemnitee is covered, with respect to acts and
omissions prior to such date, for at least six years (or such shorter period as is available on commercially reasonable terms)
from such date, by other directors and officers liability insurance, in amounts and on terms (including the portion of the period
of Indemnitee’s Corporate Status covered) no less favorable to Indemnitee than the amounts and terms of the liability insurance
maintained by the Company on the date hereof.


 






     


     


    

 


(c) In the event
of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery
of Indemnitee with respect to any insurance policy, who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.


 


(d) The Company
hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided
by a fund or other entity with which Indemnitee is associated or its affiliates (collectively, the “Fund Indemnitors”).
The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and
any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred
by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee
and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent
legally permitted and as required by the terms of this Agreement and the certificate of incorporation, bylaws or other organizational
agreement or instrument of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights
Indemnitee may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund
Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind
in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with
respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors
shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery
of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries
of the terms of this Section 14(d).


 


(e) Subject to Section 14(d),
the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement
is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.


 


(f) The Company’s
obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director,
officer, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit
plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses
from such other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise.


 


Section 15. Severability.
If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation,
each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable
to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary
to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.


 






     


     


    

 


Section 16. Enforcement.
The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby
in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is
relying upon this Agreement in serving as a director or officer of the Company.


 


Section 17. Entire
Agreement. Supersedes Prior Agreements. This Agreement constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties
hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance
of the Certificate of Incorporation of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish
or abrogate any rights of Indemnitee thereunder.


 


Section 18. Modification
and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions
of this Agreement nor shall any waiver constitute a continuing waiver.


 


Section 19. Notice
by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification
or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company
of any obligation which it may have to the Indemnitee under this Agreement or otherwise except to the extent the Corporation is
prejudiced in its defense of such action, suit or proceeding as a result of such failure.


 


Section 20. Notices.
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been
directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which
it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication
shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has
been received:


 


(a)   If to Indemnitee,
at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the
Company.


 


(b)   If to the
Company to


SmartKem, Inc.


Manchester Technology
Center, Hexagon Tower


Delaunays Road, Blackley


Manchester, M9 8GQ
UK


Attention: Chairman
of the Board


 


or to any other address as may have been furnished to Indemnitee
by the Company.


 


Section 21. Contribution.
To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred
by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses,
in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received
by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or
(ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transaction(s).


 






     


     


    

 


Section 22. Applicable
Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect
to any arbitration commenced by Indemnitee pursuant to Section 13(a) of this Agreement, the Company and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement
shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state
or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive
jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement,
(iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably
Corporation Services Company as its agent in the State of Delaware as such party’s agent for acceptance of legal process
in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such
party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding
in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought
in the Delaware Court has been brought in an improper or inconvenient forum.


 


Section 23. Identical
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to
be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.


 


Section 24. Miscellaneous.
Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.


 


IN WITNESS WHEREOF,
the parties have caused this Agreement to be signed as of the day and year first above written.


 


	SMARTKEM, INC.	 
	 	 	 
	By: 	                     	 






	Name: 	 	 
	Title: 	 	 


 


	INDEMNITEE	 
	 	 
	 	 
	Name: 	 	 
	 	 	 
	Address: