Exhibit 4.2





 


NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY
IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


FORM OF WARRANT


 


SMARTKEM, INC. (F/K/A PARASOL INVESTMENTS
CORP.)


 


PRE-FUNDED WARRANT TO PURCHASE COMMON
STOCK


 


Warrant No.:_________


Number of Shares of Common Stock:_____________


Date of Issuance: [___], 2021 (“Issuance Date”)


 


        SmartKem,
Inc. (f/k/a Parasol Investments Corp.), a company organized under the laws of Delaware (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or after
[___] (the “Initial Exercisability Date”), until exercised in full (the “Termination Date”),
______________ (_____________) fully paid non-assessable shares of Common Stock (as defined below), subject to adjustment as provided
herein (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant to Purchase
Common Stock (including any Pre-Funded Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this
 “Warrant”), shall have the meanings set forth in Section 16. This Warrant is one of the Pre-Funded Warrants
to Purchase Common Stock (the “Warrants”) issued by the Company pursuant to the terms of the Subscription Agreement,
dated February __, 2021 (the “Subscription Date”).


 






    	 	 



     


    

 


1.         
   EXERCISE OF WARRANT.


 


(a)    Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section
1(f)), this Warrant may be exercised by the Holder at any time or times on or after the Initial Exercisability Date, in whole or
in part, by delivery (whether via facsimile, electronic mail or otherwise) of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of the Holder's election to exercise this Warrant. Within one (1) Trading
Day following the delivery of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the Exercise
Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant is being exercised
(the “Aggregate Exercise Price”) in cash by wire transfer of immediately available funds or, if the provisions
of Section 1(d) are applicable, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)). The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder,
nor shall any ink-original signature or medallion guarantee (or other type of guarantee or notarization) with respect to any Exercise
Notice be required. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining
number of Warrant Shares and the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Exercise
Notice is delivered to the Company. On or before the first (1st) Trading Day following the date on which the Holder has delivered
the applicable Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of
receipt of the Exercise Notice, in the form attached to the Exercise Notice, to the Holder and the Company's transfer agent (the
 “Transfer Agent”). So long as the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise,
if applicable) on or prior to the first (1st) Trading Day following the date on which the Exercise Notice has been delivered to
the Company, then on or prior to the earlier of (i) the second (2nd) Trading Day and (ii) the number of Trading Days comprising
the Standard Settlement Period, in each case following the date on which the Exercise Notice has been delivered to the Company,
or, if the Holder does not deliver the Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) on or prior to
the first (1st) Trading Day following the date on which the Exercise Notice has been delivered to the Company, then on or prior
to the first (1st) Trading Day following the date on which the Aggregate Exercise Price (or notice of a Cashless Exercise) is delivered
(such earlier date, or if later, the earliest day on which the Company is required to deliver Warrant Shares pursuant to this Section
1(a), the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in
The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, and there is an effective registration
statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder and such Warrant Shares have
been sold by the Holder either pursuant to the registration statement or pursuant to Rule 144, credit such aggregate number of
Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with
DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program (“FAST”) or if there is no registration statement covering the issuance to or the
resale of the Warrant Shares by such Holder and such Warrant Shares have not been sold by the Holder pursuant to Rule 144, issue
and dispatch by overnight courier to the physical address or email address as specified in the Exercise Notice, a certificate or
evidence of a credit of book-entry shares, registered in the name of the Holder or its designee, for the number of Warrant Shares
to which the Holder is entitled pursuant to such exercise (which certificate or evidence shall contain the restrictive legend set
forth above). The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect
to the issuance of Warrant Shares via DTC, if any, including without limitation for same day processing. Upon delivery of the Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record and beneficial owner of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the
Holder's DTC account or the date of delivery of the certificates or evidence of a credit of book-entry shares evidencing such Warrant
Shares, as the case may be. If this Warrant is physically delivered to the Company in connection with any exercise pursuant to
this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number
of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three
(3) Trading Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares issuable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional Warrant
Shares are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded
down to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent) which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The Company's obligations to issue and deliver Warrant Shares in accordance
with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination; provided, however,
that the Company shall not be required to deliver Warrant Shares with respect to an exercise prior to the Holder’s delivery
of the Aggregate Exercise Price (or notice of a Cashless Exercise) with respect to such exercise. The Holder and any assignee,
by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase
of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may
be less than the amount stated on the face hereof.


 






    	 	 



     


    

 


(b)   Exercise
Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of $0.01 per Warrant Share, was pre-funded
to the Company on or prior to the Initial Exercise date and, consequently, no additional consideration (other than the nominal
exercise price of $0.01 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this
Warrant.  The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate Exercise
Price under any circumstance or for any reason whatsoever, including in the event this Warrant shall not have been exercised prior
to the Termination Date.  The exercise price per share of Common Stock under this Warrant shall be $0.01, subject to adjustment
hereunder (the “Exercise Price”).


 


(c)    Company's
Failure to Timely Deliver Securities. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 1(b) above pursuant
to an exercise on or before the Share Delivery Date (other than any failure due solely to any action or inaction by the Holder
with respect to such exercise), and if after such date the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. In addition to the foregoing
rights, if the Company fails to deliver the applicable number of Warrant Shares upon an exercise pursuant to Section 1 by the applicable
Share Delivery Date, then the Holder shall have the right to rescind such exercise in whole or in part and retain and/or have the
Company return, as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an exercise shall not affect the Company’s obligation to make any payments that have accrued prior
to the date of such notice pursuant to this Section 1(c) or otherwise


 


 (d)   Cashless
Exercise. Notwithstanding anything contained herein to the contrary, if on or after the 180th day following the
Initial Exercisability Date, a registration statement covering the issuance or resale of the Notice Warrant Shares is not available
for the issuance or resale, as applicable, of such Notice Warrant Shares, the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (a “Cashless Exercise”):


 






    	 	 



     


    

 


Net Number = (A x B) - (A x C)


B


 


 For purposes of the foregoing formula:


 


        A= 
the total number of shares with respect to which this Warrant is then being exercised.





 


 B=  as applicable:
(i) the Weighted Average Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise
Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading
Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading
Day, (ii) at the option of the Holder, either (y) the Weighted Average Price on the Trading Day immediately preceding the date
of the applicable Exercise Notice or (z) the Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a Trading Day and
is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours”
on a Trading Day) pursuant to Section 1(a) hereof or (iii) the Weighted Average Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant
to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.


 


        C=  
$0.01, as adjusted hereunder.


 


If Warrant Shares are
issued in such a cashless exercise, the Company acknowledges and agrees that in accordance with Section 3(a)(9) of the Securities
Act of 1933, as amended, the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant
Shares. The Company agrees not to take any position contrary to this Section 1(d).  Without limiting the rights of a
Holder to receive Warrant Shares on a “cashless exercise,” and to receive the cash payments contemplated pursuant to
Sections 1(c) and 4(b), in no event will the Company be required to net cash settle a Warrant exercise.


 


(e)    Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 11.


 






    	 	 



     


    

 


(f)    Beneficial
Ownership. Notwithstanding anything to the contrary contained herein, the Company shall not effect the exercise of any portion
of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions
of this Warrant and any such exercise shall be null and void and treated as if never made, to the extent that after giving effect
to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99%
(the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including,
without limitation, any convertible notes or convertible preferred stock or warrants, including the other Warrants) beneficially
owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without
exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public
filing with the Securities and Exchange Commission (the “SEC”), as the case may be, (y) a more recent public
announcement by the Company or (z) any other written notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice
from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the
extent that such Exercise Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section
1(f), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased
pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”)
and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the
Reduction Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1)
Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which
the Reported Outstanding Share Number was reported. In the event that the issuance of Common Stock to the Holder upon exercise
of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934
Act), the number of shares so issued by which the Holder's and the other Attribution Parties' aggregate beneficial ownership exceeds
the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance
of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder
for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase
in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company
and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder
of Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant
to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for
any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 1(f) to the extent necessary to correct this paragraph or any portion of this
paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f)
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in
this paragraph may not be waived and shall apply to a successor holder of this Warrant.


 






    	 	 



     


    

 


 (g)   Required
Reserve Amount.  So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance
under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as
shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Warrants then outstanding
(without regard to any limitations on exercise.


  


2.            ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of
Warrant Shares shall be adjusted from time to time as follows. If the Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced
and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Subscription Date
combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased
and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(c) shall become effective
at the close of business on the date the subdivision or combination becomes effective.


 


3.         
   RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if, on or after the
Subscription Date and on or prior to the Termination Date, the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness
or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that to the extent that the Holder's right to participate in any such Distribution would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution
or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).


 






    	 	 



     


    

 


4.            PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.


 


(a)     
       Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time on
or after the Subscription Date and on or prior to the Termination Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise
of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however,
that to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(and shall not be entitled to beneficial ownership of such Common Stock as a result of such Purchase Right (and beneficial ownership)
to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase
Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).


 


(b)     
      Fundamental Transaction. The Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4(b), including agreements to deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including,
without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for the Company (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise
of this Warrant prior to the applicable Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard
to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition
to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares
of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder
will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Termination Date, in lieu of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) (collectively, the
 “Corporate Event Consideration”) which the Holder would have been entitled to receive upon the happening of
the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant). The provision made pursuant to the preceding sentence shall
be in a form and substance reasonably satisfactory to the Requisite Holders. The provisions of this Section 4(b) shall apply similarly
and equally to successive Fundamental Transactions and Corporate Events.


 






    	 	 



     


    

 


5.            NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all of the provisions of this Warrant and take all action as may be required
to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the Warrants, the number of shares of Common Stock as shall from time to time
be necessary to effect the exercise of the Warrants then outstanding (without regard to any limitations on exercise).


 


6.           WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder,
solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon
the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights,
or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the
due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on
the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether
such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall
provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously
with the giving thereof to the stockholders.


 


7.      
      REISSUANCE OF WARRANTS.


 


(a)   Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section
7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.


 


(b)   Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form (but without the obligation to post a bond) and, in the case of mutilation, upon surrender
and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.


 


(c)    Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time of such surrender.


 






    	 	 



     


    

 


(d)   Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying
the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date,
and (iv) shall have the same rights and conditions as this Warrant.


 


8.           NOTICES. Whenever notice is required to be given under this Warrant, including, without limitation, an Exercise
Notice, unless otherwise provided herein, such notice shall be given in writing, (i) if delivered (a) from within the domestic
United States, by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid,
electronic mail or by facsimile or (b) from outside the United States, by International Federal Express, electronic mail or facsimile,
and (ii) will be deemed given (A) if delivered by first-class registered or certified mail domestic, three (3) Business Days after
so mailed, (B) if delivered by nationally recognized overnight carrier, one (1) Business Day after so mailed, (C) if delivered
by International Federal Express, two (2) Business Days after so mailed and (D) at the time of transmission, if delivered by electronic
mail to each of the email addresses specified in this Section 8 prior to 5:00 p.m. (New York time) on a Trading Day, (E) the next
Trading Day after the date of transmission, if delivered by electronic mail to each of the email addresses specified in this Section
8 on a day that is not a Trading Day or later than 5:00 p.m. (New York time) on any Trading Day and (F) if delivered by facsimile,
upon electronic confirmation of delivery of such facsimile, and will be delivered and addressed as follows:


 


(i) 
             if to the Company, to:


 


SmartKem Limited


Manchester Technology Center,
Hexagon Tower


Delaunays Road, Blackley


Manchester


M9 8GQ


Attention: Robert Bahns,


Chief Financial Officer


Email: r.bahns@smartkem.com


 


(ii) 
          if to the Holder, at such address or other contact information delivered by the Holder to the Company or as
is on the books and records of the Company.


 






    	 	 



     


    

 


The Company shall provide
the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description
of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes
a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances
or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders
of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to
the Holder. It is expressly understood and agreed that the time of exercise specified by the Holder in each Exercise Notice shall
be definitive and may not be disputed or challenged by the Company.


 


9.       
     AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended
or waived and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.


 


10.         GOVERNING
LAW; JURISDICTION; JURY TRIAL. This Warrant shall be governed by and construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of
the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of
New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to the Company at the address set forth in Section 8(i) above or such other address as the Company subsequently delivers to the
Holder and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other court ruling in favor of the Holder. If either party shall commence an action, suit
or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.


 






    	 	 



     


    

 


11.          DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile
or electronic mail within two (2) Business Days of receipt of the Exercise Notice or other event giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three (3) Business Days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile or electronic mail (a) the disputed
determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder
or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error.


 


12.           REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition
to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company
to comply with the terms of this Warrant. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this
Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity
of showing economic loss and without any bond or other security being required.


 


13.           TRANSFER.
This Warrant and the Warrant Shares may be offered for sale, sold, transferred, pledged or assigned only in compliance with applicable
law. Any purported transfer in violation of applicable law shall be null and void, ab initio.


 


14.         SEVERABILITY;
CONSTRUCTION; HEADINGS. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person
as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.


 






    	 	 



     


    

 


15.          CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:


 


(a)    “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


 


(b)   “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Subscription Date, directly or indirectly managed or advised
by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated
with the Holder's and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of
the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.


 


(c)    “Bid
Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply,
the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of any market makers for such security as reported in the OTC Link or “pink sheets” by
OTC Markets Group Inc. as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular
time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the
fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 11. All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during such period.


 






    	 	 



     


    

 


(d)   “Bloomberg”
means Bloomberg Financial Markets.


 


(e)    “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.


 


(f)   “Closing
Bid Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended
hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price
or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively,
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or,
if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices,
or the ask prices, respectively, of any market makers for such security as reported in the OTC Link or “pink sheets”
by OTC Markets Group Inc. If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 11. All such determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or other similar transaction during the applicable calculation period.


 


(g)   “Common
Stock” means (i) the Company's Common Stock, par value $0.0001 per share, and (ii) any capital stock into which such
Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.


 


(h)    
 “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.


 


(i)    
 “Eligible Market” means The Nasdaq Capital Market, the NYSE American LLC, The Nasdaq Global Select Market, The
Nasdaq Global Market, The New York Stock Exchange, Inc., and any market maintained by OTC Markets Group Inc.


 






    	 	 



     


    

 


(j)    
 “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase,
tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock,
(y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making
or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B) that
the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock not
held by all such Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject
Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory
short form merger or other transaction requiring other stockholders of the Company to surrender their Common Stock without approval
of the stockholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 


(k)   
 “Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.


 


(l)   “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.


 






    	 	 



     


    

 


(m) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity
whose common stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Holder, any
other market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person or such entity
designated by the Holder or in the absence of such designation, such Person or entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.


 


(n)   “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.


 


(o)   “Principal
Market” means any Eligible Market on which the Common Stock is then listed or on which quotations are published


 


(p)    “Requisite
Holders” means the holders of the Warrants representing a majority of the shares of Common Stock underlying the Warrants
then outstanding.


 


 


(q)    “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, for the Company’s
primary trading market or quotation system with respect to the Common Stock that is in effect on the date of receipt of an applicable
Exercise Notice.


 


(r)    
 “Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.


 


(s)   
 “Successor Entity” means one or more Person or Persons (or, if so elected by the Holder, the Company or Parent
Entity) formed by, resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected
by the Holder, the Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.


 


(t)   
 “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market
on which the Common Stock is then traded.


 


(u)    “Weighted
Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time
as such market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest
closing ask price of any of the market makers for such security as reported in the OTC Link or “pink sheets” by OTC
Markets Group Inc. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 11 with the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification
or other similar transaction during the applicable calculation period.


 


[Signature Page Follows]


 






    	 	 



     


    

 


IN WITNESS WHEREOF, the
Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.


 


	 	SmartKem, Inc.
	 	 
	 	By:	      
	 	Name:
	 	Title:



  






    	 	 



     


    

 


EXHIBIT A


 


EXERCISE NOTICE


 


TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS


PRE-FUNDED WARRANT TO PURCHASE COMMON
STOCK


 


SMARTKEM, INC.


 


The undersigned holder hereby exercises
the right to purchase _________________ shares of Common Stock (“Warrant Shares”) of SmartKem, Inc. (f/k/a/
Parasol Investments Corp.), a company organized under the laws of Delaware (the “Company”), evidenced by the
attached Pre-Funded Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.


 


1. Form of Exercise Price. The holder intends
that payment of the Exercise Price shall be made as:


 


____________ a “Cash Exercise” with
respect to _________________ Warrant Shares; and/or


 


____________ a “Cashless
Exercise” with respect to _______________ Warrant Shares.


 


2. Payment of Exercise Price. In the event
that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the
holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of
the Warrant.


 


3. Delivery of Warrant Shares. The Company
shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.


 


4. Confirmation. The Holder confirms that
the representations and warranties made by the Holder in the Subscription Agreement are true and correct as of the date of this
Exercise Notice.


 


Date: _______________ __, ______


 


	 Name of Registered Holder	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 





 






    	 	 



     


    

 


ACKNOWLEDGMENT


 


The Company hereby acknowledges this Exercise
Notice and hereby directs its Transfer Agent to issue the above indicated number of shares of Common Stock on or prior to the applicable
Share Delivery Date.


 


 


	 	SmartKem, Inc. 
	 	 
	 	By:	       
		Name:
	 	Title: