Document:

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. THE OMISSIONS HAVE BEEN INDICATED BY “(   ).”

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Strictly Private & Confidential 
Mr R Bahns 
Manchester Technology Center 
Hexagon Tower 
Blackley 
Manchester 
M9 8GQ 
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25 May 2021 
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Dear Mr Bahns 
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Contract Variation relating to the Framework Agreement dated 23 February 2021 between CPI Innovation Services Limited (“CPIIS”) and SmartKem Limited (“SmartKem”) (the “Agreement”) 
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This letter is to confirm our recent discussions regarding the Agreement. CPIIS and SmartKem agree to a three year commitment, to uplift the Annual Minimum Spend to (           ) and include a clause to pro rata said uplift in the event of a delay to the installation or commissioning of CPIIS’ new Tool (as defined below). 
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By their signatures to this letter, CPIIS and SmartKem agree that the clauses below shall be amended as follows:
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	Clause No. 
	Original 
	Amended 

	Preamble 
	SMARTKEM LIMITED (company number 06652152) whose registered office is at Optic Technium Ffordd William Morgan, St Asaph Business Park, St Asaph, Clywd LL17 0JD (the Customer). 
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	SMARTKEM LIMITED (company number 06652152) whose registered office is Manchester Technology Center, Hexagon Tower, Blackley, Manchester M9 8GQ (the Customer). 

	1 
	Annual Minimum Spend means the Customer’s obligation to spend under this Agreement on Services with CPIIS: during the first Year of the Term, a minimum of (       ); during the second Year of the Term, a minimum of (         ); and during the third Year of the Term, a minimum of  (        ) ; in each case before the relevant Annual Take or Pay Date under Clause 4.2, and as adjusted under Clause 4.3; 
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	Annual Minimum Spend means the Customer’s obligation to spend under this Agreement on Services with CPIIS: during the first Year of the Term, a minimum of   (         ); during the second Year of the Term, a minimum of  (        ) ; and during the third Year of the Term, a minimum of  (       ); in each case before the relevant Annual Take or Pay Date under Clause 4.2, and as adjusted under Clause 4.3; 

	1 
	Annual Take or Pay Date means in respect of the first Year of the Minimum Term, 19 February 2022; in respect of the second Year of the Minimum Term, 19 February 2023; in respect of the optional third Year 
	Minimum Term, 19 February 2023; and in respect of the third Year, 19 February 2024; 

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		of the Maximum Term, 19 February 2024;
	
	1 
	Term means a minimum period of 2 Years from the Commencement Date (“Minimum Term”) and a maximum period of 3 Years from the Commencement date (“Maximum Term”) together the Term; 
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	Term means 3 Years from the Commencement date; 

	Schedule 5: Operations and Project Management Incorporating Service Level Agreement 
Service Level Agreement (page 18) 

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Additional bullet under Critical Tool Table: 
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(                                                                    )
 ​

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Defined terms in this letter have the meanings given to them in the Agreement. 
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Please sign this letter where applicable below to acknowledge receipt and confirm your agreement to the variations above. 
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Yours sincerely 
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(                           )
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Director of Electronics 
For and on behalf of 
CPI Innovation Services Limited 
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Signed for and on behalf of SmartKem Limited 
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Name: Robert Bahns
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Signature: /s/ R Bahns
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Date: 26-May-21

​drma_ex46.htm

EXHIBIT 4.6
  
 DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED
  
 PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
  
 The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our amended and restated certificate of incorporation (the “Certificate of Incorporation”) and our amended and restated bylaws (the “Bylaws”), each of which is incorporated herein by reference as an exhibit to the Annual Report on Form 10-K filed with the Securities and Exchange Commission, of which this Exhibit 4.X is a part. We encourage you to read our Certificate of Incorporation, our Bylaws and the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”) for additional information.
  
 Authorized Capitalization
  
 We have 100,000,000 shares of capital stock authorized under our amended and restated certificate of incorporation, consisting of 90,000,000 shares of common stock with a par value of $0.0001 per share and 10,000,000 shares of preferred stock with a par value of $0.0001 per share. As of March 28, 2022, there were 8,328,629 shares of common stock outstanding. In addition, as of March 28, 2022, we had outstanding options to purchase an aggregate of 1,000,326 shares of our common stock under the 2021 Plan, at a weighted average exercise price equal to $3.96 per share. Our authorized but unissued shares of common stock and preferred stock are available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded in the future.
  
 Common Stock
  
 Holders of our common stock are entitled to such dividends as may be declared by our board of directors out of funds legally available for such purpose. The shares of common stock are neither redeemable nor convertible. Holders of common stock have no preemptive or subscription rights to purchase any of our securities.
  
 Each holder of our common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock is entitled to cumulate votes in voting for directors.
  
 In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets, which are legally available for distribution, after payments of all debts and other liabilities. All of the outstanding shares of our common stock are fully paid and non-assessable. The shares of common stock offered by this prospectus will also be fully paid and non-assessable.
  
 Preferred Stock
  
 Our board of directors has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more classes or series and to fix the designations, rights, preferences, privileges and restrictions thereof, without further vote or action by the stockholders. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such class or series, any or all of which may be greater than the rights of common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of our company or other corporate action. Immediately after completion of this offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of preferred stock.
  
 	 
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 Warrants 
  
 We have warrants outstanding consisting of warrants (the “Warrants”) issued in connection with our initial public offering (the “IPO”). The Warrants entitle the registered holders to purchase common stock at a price equal to $7.00 per share, subject to adjustment as discussed below, immediately following the issuance of such Warrants and terminating at 5:00 p.m., New York City time, five years after the closing of this offering.
  
 The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including in the event of a stock dividend or recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuances of shares of common stock at prices below its exercise price.
  
 Exercisability. The Warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance. The Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of common stock purchased upon such exercise. Each Warrant entitles the holder thereof to purchase one share of common stock. Warrants are not exercisable for a fraction of a share and may only be exercised into whole numbers of shares. In lieu of fractional shares, we will, pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price and round down to the nearest whole share. Unless otherwise specified in the Warrant, the holder will not have the right to exercise the Warrants, in whole or in part, if the holder (together with its affiliates) would beneficially own in excess of 4.99% (or 9.99% at the holder’s election) of the number of our shares of common stock outstanding immediately after giving effect to the exercise, as such percentage is determined in accordance with the terms of the Warrant. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon at least 61 days’ prior notice from the holder to us.
  
 Exercise Price. The exercise price per share of common stock purchasable upon exercise of the Warrants is $7.00 per share, and is subject to adjustments for stock splits, reclassifications, subdivisions, and other similar transactions. In addition to the exercise price per share of common stock, and other applicable charges and taxes are due and payable upon exercise.
  
 Warrant Agent; Global Certificate. The Warrants are issued in registered form under a warrant agency agreement between a warrant agent and us. The Warrants will initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.
  
 Transferability.  Subject to applicable laws, the Warrants may be transferred at the option of the holders upon surrender of the Warrants to the warrant agent, together with the appropriate instruments of transfer.
  
 Exchange Listing. The Warrants are listed on the Nasdaq Capital Market under the symbol “DRMAW.” There is no established public trading market for the Warrants being offered in this offering, and we do not expect a market to develop. Without an active trading market, the liquidity of Warrants will be limited.
  
 Adjustments; Fundamental Transaction. The exercise price and the number of shares underlying the Warrants are subject to appropriate adjustment in the event of stock splits, stock dividends on our common shares, stock combinations or similar events affecting our common shares. In addition, in the event we consummate a merger or consolidation with or into another person or other reorganization event in which our common shares are converted or exchanged for securities, cash or other property, or we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets or we or another person acquire 50% or more of our outstanding common shares (each, a Fundamental Transaction), then following such Fundamental Transaction the holders of the Warrants will be entitled to receive upon exercise of the Warrants the same kind and amount of securities, cash or property which the holders would have received had they exercised the Warrants immediately prior to such Fundamental Transaction. Any successor to us or surviving entity will assume the obligations under the warrants. Additionally, as more fully described in the Warrant, in the event of certain Fundamental Transactions, the holders of the Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Warrants on the date of consummation of such transaction.
  
 	 
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 Rights as a Shareholder. Except by virtue of such holder’s ownership of our common stock, the holder of a Warrant does not have rights or privileges of a shareholder, including any voting rights, until the holder exercises such Warrant.
  
 Stock Options 
  
 As of March 28, 2022, we had reserved the following shares of common stock for issuance pursuant to stock options under the 2021 Plan described below:
  
 ·         1,000,326 shares of our common stock reserved for issuance under stock option agreements issued pursuant to the 2021 Plan with a weighted-average exercise price of $3.96 per share; and
  
 ·         731,173 shares of our common stock reserved for future issuance under the 2021 Plan
  
 Anti-Takeover Effects of Delaware law and Our Certificate of Incorporation and Bylaws
  
 The provisions of Delaware law, our Certificate of Incorporation and our may have the effect of delaying, deferring or discouraging another party from acquiring control of us.
  
 Section 203 of the Delaware General Corporation Law
  
 We are subject to Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
  
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	 before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

  
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	 upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

  
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	 on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholder, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

  
 In general, Section 203 defines business combination to include the following:
  
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	 any merger or consolidation involving the corporation and the interested stockholder;

  
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	 any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

  
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	 subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

  
 	 
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	 any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or

  
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	 the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.

  
 In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.
  
 Certificate of Incorporation and Bylaws
  
 Our Certificate of Incorporation and Bylaws provide for:
  
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	 authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

  
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	 limiting the removal of directors by the stockholders;

  
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	 requiring a supermajority vote of stockholders to amend our bylaws or certain provisions our certificate of incorporation;

  
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	 prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

  
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	 eliminating the ability of stockholders to call a special meeting of stockholders;

  
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	 establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings;

  
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	 establishing Delaware as the exclusive jurisdiction for certain stockholder litigation against us; and

  
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	 a classified board of directors.

  
 Potential Effects of Authorized but Unissued Stock
  
 We have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate corporate acquisitions or payment as a dividend on the capital stock.
  
 	 
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 The existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. In addition, the board of directors has the discretion to determine designations, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock, all to the fullest extent permissible under the DGCL and subject to any limitations set forth in our certificate of incorporation. The purpose of authorizing the board of directors to issue preferred stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from acquiring, a majority of our outstanding voting stock.
  
 Choice of Forum
  
 Unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any stockholder to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company or the Company’s stockholders, creditors or constituents, (iii) any action asserting a claim against the Company or any director or officer of the Company arising pursuant to, or a claim against the Company or any director or officer of the Company, with respect to the interpretation or application of any provision of, the DGCL, our certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine, except for, in each of the aforementioned actions, any claims to which the Court of Chancery of the State of Delaware determines it lacks jurisdiction. This provision will not apply to claims arising under the Exchange Act, the Securities Act or for any other federal securities laws which provide for exclusive federal jurisdiction. However, the exclusive forum provision provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Therefore, this provision could apply to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and that asserts claims under the Securities Act, inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. There is uncertainty as to whether a court would enforce such an exclusive forum provision with respect to claims under the Securities Act.
  
 Whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
  
 Transfer Agent and Registrar
  
 The name, address and telephone number of our stock transfer agent is Direct Transfer, LLC, 500 Perimeter Park Dr., Suite D, Morrisville, NC 27560, (919) 744-2722.
  
 National Securities Exchange Listing
  
 Our common stock and Warrants are listed on the Nasdaq Capital Market under the symbols “DRMA” and “DRMAW,” respectively.
  
 	 
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