Document:

Exhibit 10.18

 

February 23, 2021

 

Octopus Investments Limited

33 Holborn, London EC1N 2HT

 

Re: Certain Investor Rights

 

Ladies and Gentlemen:

 

This letter will confirm our agreement that
Octopus Titan VCT plc (company number 06397765) (the “Octopus VCT Investor”), Octopus Investments Nominees Limited
(company number 05572093) (the “Octopus EIS Investor”) and Octopus Investments Limited (company number 03942880)
(the “Octopus Manager” and, together with the Octopus VCT Investor and the Octopus EIS Investor, the “Octopus
Investors”) the Octopus Investors hereby agree, subject to the terms and conditions of this letter, to purchase an aggregate
of 1,000,000 shares of common stock, par value $0.0001 per share (the “Common Stock”), of SmartKem, Inc. f/k/a
Parasol Investments Corporation), a Delaware corporation (the “Company”), at a purchase price of $2.00 per share (in
each case subject to adjustment in the case of stock splits, reverse splits, combinations or similar transactions after the date
hereof) for an aggregate purchase price of $2,000,000 (the “Share Purchase”). The obligation of the Octopus
Investors to consummate the Share Purchase shall be contingent upon:

 

		(1)	the Share Purchase occurring no earlier than July 1, 2021 or such date as is one year from the end of the Company’s last
fiscal year;

 

		(2)	the aggregate gross assets of the Company plus all of its Subsidiaries being less than £15 million immediately prior
to the investment by the Octopus Investors and being less than £16 million immediately after the investment by the Octopus
Investors;

 

		(3)	the Company having a UK permanent establishment pursuant to sections 180A and 302A of the UK Income Tax Act 2007 (“ITA”)
at the time of the investment by the Octopus Investors; and

 

		(4)	the Common Stock to be issued to the Octopus Investors constituting qualifying holdings pursuant to Chapter 4 of Part 6 ITA
and eligible shares pursuant to section 285(3A) ITA at the time of the investment by the Octopus Investors and HM Revenue &
Customs (“HMRC”) being able to issue compliance certificates pursuant to s.204 ITA in relation to such Common
Stock.

 

In connection with the Share Purchase, the Octopus
Investors will enter into a subscription agreement, substantially in the form of the subscription agreement executed by
investors in the private placement by the Company of shares of its Common Stock (or pre-funded warrants in lieu thereof) (the
 “Offering”) (the “Subscription Agreement”), with such changes therein or modifications
thereto as the Octopus Investors and the Company may agree to reflect the completion of the Offering and the consummation of
the share exchange (the “Exchange”) contemplated by the Share Exchange Agreement by and among the Company,
SmartKem Limited, a corporation incorporated under the laws of England and Wales with company number 06652152
(“SmartKem”) and the shareholders of SmartKem and matters related thereto. In addition, the Octopus
Investors and the Company shall enter into a registration rights agreement covering the shares of Common Stock issued in the
Share Purchase, substantially in the form of the registration rights agreement executed by investors in the Offering (the
 “Registration Rights Agreement”), with such changes therein or modifications thereto as the Octopus
Investors and the Company may agree to reflect the completion of the Offering and the Exchange and matters related thereto
and as provided in paragraph (8) below.

 

     

     

    

 

In addition to its rights and obligations under the Subscription
Agreement and the Registration Rights Agreement (collectively, the “Transaction Documents”), the Company hereby
agrees with the Octopus Investors from and after the Closing Date (as defined below) as follows (each capitalized term used and
not defined herein shall have the meaning ascribed to such term in the Transaction Documents):

 

		(1)	The Company shall not use the proceeds of the Share Purchase for the purpose of the acquisition of any shares, business, trade,
intangible assets employed for the purposes of a trade or goodwill employed for the purposes of a trade by the Company and/or any
Subsidiary, or for repaying any loan, borrowing or other indebtedness.

 

		(2)	The Company undertakes to the Octopus Investors that at all times on and after the closing date of the Share Purchase (the
 “Closing Date”) it will not, and will procure that each member of the Company and any subsidiaries of it from
time to time (the “Group”) will not, do anything or omit to do anything which may result in the Common Stock
purchased by Octopus VCT Investor in the Share Purchase to cease to be “qualifying holdings” under Chapter 4 of Part
6 ITA and/or “eligible shares” as defined in section 285(3A) ITA or impact HMRC’s ability to authorize the Company
to issue compliance certificates under section 204 ITA in relation to the Common Stock subscribed for by the Octopus EIS Investor
(the “EIS Shares”), and in particular, but without limitation, will:

 

1.1.         
not seek and will not accept any investment from any person which is or may be any aid which was received by the recipient
pursuant to a measure approved by the European Commission as compatible with Article 107 of the Treaty on the Functioning of the
European Union in accordance with the principles laid down in the European Commission’s Guidelines on State aid to promote
risk finance investment (as those guidelines may be amended or replaced from time to time) (“State Aid Funding”)
or investment from a venture capital trust (as defined in Part 6 of ITA) or an investor seeking to claim tax relief pursuant to
either the Seed Enterprise Investment Scheme (under Part 5A of ITA), the Enterprise Investment Scheme (under Part 5 of ITA) or
Tax Relief for Social Investments (under Part 5B of ITA) subsequent to Closing;

 

1.2.         
not carry on any excluded activity (as set out in sections 290, 291 and 300-310 ITA);

 

1.3.         
use the proceeds of the Share Purchase solely for the purposes of the business and within the period of 24 months beginning
on the Closing Date employ all such sums in the business;

 

1.4.         
not enter into negotiations, or execute any agreement (whether conditional or otherwise), for the provision of finance,
which is or may be, State Aid Funding; and

 

1.5.         
 not submit to HMRC, either by the Company or any Subsidiary, any form, certificate or document seeking to claim tax relief
on an investment in the Company pursuant to either the Seed Enterprise Investment Scheme (under Part 5A of ITA) or the Enterprise
Investment Scheme (under Part 5 of ITA) or Tax Relief for Social Investments (under part 5B of ITA),

 

unless the Octopus Investors have given
their prior written consent.

 

     

     

    

 

		(3)	At all times on and after the Closing Date, the Company and its Subsidiaries shall not (unless agreed by a majority of the
Board and the Octopus Manager) contravene any of the provisions of Part 6 ITA and sections 151A and 151B of the Taxation of Chargeable
Gains Act 1992 (“TCGA”) (in each case as inserted and/or amended by the Finance Acts 1994 to 2020 inclusive
and the Finance (No 2) Act 2015 and Finance (No 2) Act 2017 (the “FA”)) (the “VCT Provisions”)
and/or the provisions of Part 5 of ITA and of sections 150A, B and C of the TCGA (in each case as inserted and/or amended by the
FA) (the “EIS Provisions”).

 

		(4)	The Company will, for so long as the Octopus Investors hold any Common Stock and unless the obligations in this clause have
been waived in writing by the Octopus Manager, maintain a permanent establishment in the UK which satisfies the requirements of
sections 180A and 302A ITA (a “Permanent Establishment”). No change to any of the arrangements which are required
to constitute a Permanent Establishment and which the Company has in place as at the date of the investment by the Octopus Investors
shall be made without the prior written consent of the Octopus Manager.

 

		(5)	Upon request from the Octopus Manager and/or Shoosmiths LLP, the Company will as soon as reasonably practicable after such
request make such applications as may be required to enable the holders of the EIS Shares to obtain the reliefs in respect of income
tax and capital gains tax available to certain subscribers of shares pursuant to the EIS Provisions (the “EIS Reliefs”)
in respect of the EIS Shares and will distribute to such holders of EIS Shares the certificates confirming such reliefs have been
obtained as soon as practicable after their receipt from HMRC.

 

		(6)	VCT Warranties. From and after the Closing Date, the Company hereby represents and warrants to the Octopus Investors
that:

 

		(i)	(a)no monies have been invested in the Company or any Subsidiary (whether or not it was a
Subsidiary of the Company at the time of investment) or any company which is a former Subsidiary of the Company (at a time when
it was a Subsidiary of the Company) or any company or person who has previously operated a trade which has been transferred to
the Company or any Subsidiary or any former Subsidiary of the Company:

(i)       in respect
of which the investor has claimed, or is intending to claim, tax relief on that investment under the Seed Enterprise Investment
Scheme (under Part 5A of ITA) or the Enterprise Investment Scheme (under Part 5 of ITA) or the Tax Relief for Social Investments
(under Part 5B of ITA); or

 

(ii)       by venture
capital trusts (as defined in Part 6 of ITA); and

 

     

     

    

 

(b)       neither
the Company nor any Subsidiary of the Company (whether or not it was a Subsidiary of the Company at the time of receipt of any
State Aid Funding) nor any company which it is a former Subsidiary of the Company (where such State Aid Funding was received at
a time when it was a Subsidiary of the Company) nor any company or person who has previously operated a trade which has been transferred
to the Company or any Subsidiary or any former Subsidiary of the Company has received any State Aid Funding.

 

		(ii)	The Company knows of no reason why the Company should not at the Closing Date comply with the
requirements of the VCT Provisions and the EIS Provisions.

 

		(iii)	The Company confirms as of the Closing Date that the factual information contained in, and the
documents cross-referred to in, the document entitled ‘Proposed Investment into Parasol Investment Corporation – VCT
and EIS Checklist’ prepared by Shoosmiths LLP and dated on or around the date of this letter is accurate in all respects
and the Company knows of no inaccuracy or omission (material or otherwise) which, if it were to be corrected or provided, would
affect the decision of HMRC that the Company is a qualifying company for the purpose of section 180 ITA, that HMRC would be able
to authorise the Company to issue certificates under section 204 ITA in relation to the EIS Shares and that the Common Stock to
be issued to the Octopus VCT Investor pursuant to this Agreement would constitute a qualifying holding under Chapter 4 of Part
6 of ITA and would be “eligible shares” as defined in section 285(3A) ITA.

 

		(7)	Indemnification for Breach of VCT Warranty. In giving the warranties set out in paragraph (6) above (the “VCT
Warranties”) the Company understands and acknowledges that a breach of the VCT Warranties may cause the Octopus VCT Investor
being a venture capital trust (as defined in Part 6 of ITA) to have its status as a venture capital trust withdrawn by HMRC which
may result directly in significant costs and losses to the Octopus VCT Investor, the shareholders of the Octopus VCT Investor and/or
the Octopus Manager (including, without limitation, costs incurred in negotiations with or legal action against HMRC to prevent
such a withdrawal of status and/or loss of ongoing profit to the Octopus Manager as a result of the termination of its fund management
agreements with the Octopus VCT Investor). The Company hereby agrees from and after the Closing Date to indemnify, defend and hold
harmless the Octopus Investors and each of their respective Affiliates, and its and their respective directors, officers, stockholders,
equityholders, members, managers, partners, employees, attorneys, consultants, representatives and agents (and any other persons
with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each
person who controls an Octopus Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, stockholders, equityholders, members, managers, partners, employees, attorneys, consultants,
representatives and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding
a lack of such title or any other title) of such controlling person, from and against all losses, liabilities, claims, damages,
costs, fees, charges, Taxes, judgements, fines, penalties and expenses whatsoever (including, but not limited to, amounts paid
in settlement and any and all out-of-pocket expenses, including attorneys’ fees and expenses, incurred in investigating,
preparing or defending against any litigation commenced or threatened) arising out of or relating to: the inaccuracy, violation or breach of
any of the Company’s representations or warranties and any covenants or agreements of the Company set forth in this letter.

 

     

     

    

 

		(8)	The parties agree that the definition of “Permitted Assignees” in Registration Rights Agreement shall include the
following:

 

		(i)	a “Member of the same fund group” if the Holder is a fund, partnership, company, syndicate or other entity whose
business is managed by a Fund Manager (an “Investment Fund”) or is a nominee of that Investment Fund:

 

		(1)	any beneficiary or member of or participant or partner in any such Investment Fund or the holders of any unit trust which is
a participant or partner in or member of any Investment Fund (but only in connection with the dissolution of the Investment Fund
or any distribution of assets of the Investment Fund pursuant to the operation of the Investment Fund in the ordinary course of
business);

 

		(2)	any other Investment Fund managed or advised by that Fund Manager or a member of the same group as that Fund Manager;

 

		(3)	any parent undertaking or subsidiary undertaking of that Fund Manager, or any subsidiary undertaking of any parent undertaking
of that Fund Manager; or

 

		(4)	any parent undertaking, subsidiary undertaking, trustee, nominee or custodian of such Investment Fund and vice versa.

 

The Company acknowledges that the Octopus Investors will rely
on the representations set forth in this letter for purposes of the Subscription Agreement.

 

On the date hereof the Company shall pay the Octopus Manager’s
reasonable legal and administrative costs subject to a maximum of £13,500 plus VAT and disbursements in respect of Shoosmiths
LLP, £2,250 plus VAT and disbursements in respect of Philip Hare & Associates LLP, and $40,000 plus disbursements in
respect of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

 

This letter may not be modified except by a written agreement
signed by the parties. Each signatory below represents he or she is authorized to bind the party indicated to this letter. This
letter may be signed in counterparts, and original signatures sent and received electronically (e.g., by email with PDF attached
or by DocuSign) are binding.

 

[Signature Page Follows]

 

     

     

    

 

	 	Very truly yours,
	 	 
	 	SMARTKEM, INC.
	 	 
	 	By:
	 	Name:
	 	Title:

 

	ACCEPTED AND AGREED:	 
	 	 
	OCTOPUS TITAN VCT PLC	 
	 	 
	By:	 
	Name:	 
	Title:	 
	Address:	 
	 	 
	OCTOPUS INVESTMENTS NOMINEES
    LIMITED	 
	 	 
	By:	 
	Name:	 
	Title:	 
	Address:	 
	 	 
	OCTOPUS INVESTMENTS LIMITED	 
	 	 
	By:	 
	Name:	 
	Title:	 
	Address:	 

 

[Signature Page to Side Letter]Document

Exhibit 4.3

DESCRIPTION OF THE REGISTRANT’S SECURITIES 
REGISTERED PURSUANT TO SECTION 12 OF THE 
SECURITIES EXCHANGE ACT OF 1934 

As of February 24, 2021, Zovio Inc has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our Common Stock.
Description of Common Stock
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 Third Amended and Restated Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.3 is a part. We encourage you to read our Certificate of Incorporation, our Bylaws and the applicable provisions of the Delaware General Corporation Law, for additional information.
Authorized Capital Shares
Our authorized capital stock will consist of 300,000,000 shares of common stock, $0.01 par value per share (“Common Stock”), and 20,000,000 shares of undesignated preferred stock, $0.01 par value per share. The outstanding shares of our Common Stock are fully paid and nonassessable.
Voting Rights
The holders of Common Stock are entitled to one vote per share on any matter to be voted upon by stockholders. All shares of Common Stock rank equally as to voting and all other matters. The shares of Common Stock have no preemptive or conversion rights, no redemption or sinking fund provisions, are not liable for further call or assessment and are not entitled to cumulative voting rights.
Dividend Rights
The holders of Common Stock are entitled to receive ratably any dividends when and as declared from time to time by the board of directors out of funds legally available for dividends. We have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the Common Stock in the foreseeable future.
Liquidation Rights
Upon a liquidation or dissolution of our company, whether voluntary or involuntary, creditors with preferential liquidation rights will be paid before any distribution to holders of our Common Stock. After such distribution, holders of Common Stock are entitled to receive a pro rata distribution per share of any excess amount.
Undesignated Preferred Stock
The board of directors has the authority to issue undesignated preferred stock without stockholder approval, subject to applicable law and listing exchange standards. The board of directors may also determine or alter for each class of preferred stock the voting powers, designations, preferences and special rights, qualifications, limitations or restrictions as permitted by law. The board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the Common Stock.
Listing
Our Common Stock is traded on The Nasdaq Stock Market LLC under the trading symbol “ZVO.”

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