Cardiol Therapeutics details drug supply deals
Cardiol Therapeutics Inc. discloses key manufacturing, development, and supply agreements plus amendments and an assignment of its API supply contract to Purisys LLC.
Rhea-AI Filing Summary
Cardiol Therapeutics Inc. (CRDL) furnished a Form 6-K providing a set of key commercial agreements and amendments. The company filed an exclusive Master Services Agreement with Dalton Pharma Services covering pharmaceutical development and manufacturing services, including detailed provisions on cGMP vs non-cGMP production, product rejection procedures, and dispute resolution using independent third-party testing.
Cardiol also filed a Development Agreement with Clinical Academic Research Organization, S.A. de C.V. (CARO), outlining development activities, governance of changes to the development plan, monthly status reporting, regulatory-cooperation obligations, and a compensation structure that includes CARO Compensation Warrants in lieu of regular invoicing until warrants are exercised. Additional exhibits provide an Exclusive Supply Agreement with Noramco, Inc. and multiple amendments and a payment extension, including scheduled raw-material payments for active pharmaceutical ingredient production, confirmation that the underlying supply agreement otherwise remains in force, and an amendment that will be null and void if a referenced Shoppers agreement is not signed by May 31, 2020. A notice of assignment states that Noramco has assigned all of its rights, liabilities, and obligations under the Exclusive Supply Agreement to Purisys LLC, an affiliate, effective December 30, 2019.
Positive
- None.
Negative
- None.
Filing Explained
The disclosed supply terms set two payments of 1.2 million dollars for 700 kilograms of API, but payment and issuance status remain unreported.
Form 6-K is an interim report through which a foreign private issuer furnishes material information published in its home market. Here, Cardiol furnishes historical agreements and amendments rather than reporting a newly executed September 2026 transaction; the filing does not report payment, warrant exercise, or share issuance.
The supply terms state that Cardiol was to pay
The Dalton services agreement separately states that no Class A common shares constitute consideration for services. The CARO development agreement instead provides for compensation warrants and says CARO will not invoice Cardiol until it elects to exercise those warrants; no exercise or resulting share issuance is disclosed here.
Key Figures
Key Terms
cGMP technical
Exclusive Supply Agreement regulatory
CARO Compensation Warrants financial
Force Majeure regulatory
Confidential Information regulatory
Regulatory Authority regulatory
FAQ
What does Cardiol Therapeutics Inc. (CRDL) disclose in this Form 6-K?
What is the nature of CRDL’s Master Services Agreement with Dalton Pharma Services?
How is CARO compensated under the Development Agreement with Cardiol Therapeutics Inc. (CRDL)?
What payment obligations are described in the Noramco supply agreement amendments for CRDL?
What change is made to CRDL’s supplier under the Exclusive Supply Agreement?
Does the 6-K mention any condition tied to a Shoppers agreement for CRDL?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2026
Commission File Number: 001-40712
Cardiol Therapeutics Inc.
(Name of registrant)
602-2265 Upper Middle Road East
Oakville, Ontario L6H 0G5
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
¨ Form 20-F x Form 40-F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CARDIOL THERAPEUTICS INC. | |||
| (Registrant) | |||
| Date: September 10, 2026 | By: | /s/ Christopher Waddick | |
| Name: | Christopher Waddick | ||
| Title: | Chief Financial Officer | ||
Form 6-K Exhibit Index
| Exhibit Number |
Document Description | |
| 99.1 | Master Services Agreement, effective as of June 12, 2017 | |
| 99.2 | Development Agreement, dated August 29, 2018 | |
| 99.3 | Amendment No 1. to Supply Agreement, dated December 7, 2018 | |
| 99.4 | Amendment No 3. to Supply Agreement, dated July 2, 2019 | |
| 99.5 | Amendment No 4. to Supply Agreement, dated September 11, 2019 | |
| 99.6 | Amendment No 5. to Supply Agreement, dated October 28, 2019 | |
| 99.7 | Amendment No 6. to Supply Agreement, dated November 12, 2019 | |
| 99.8 | Notice of Assignment to Supply Agreement, dated January 31, 2020 |
Exhibit 99.1
Certain identified information has been excluded
from the exhibit pursuant to Item 601(a)(6) of Regulation S-K due to personal privacy
concerns. Redacted information is indicated by: [***]
EXCLUSIVE MASTER SERVICES AGREEMENT
This MASTER SERVICES AGREEMENT (the “Agreement”) is entered into on April 17, 2018 and is effective as of June 12th, 2017 (the “Effective Date”)
By and between,
Dalton Chemical Laboratories, Inc. o/a Dalton Pharma Services, a corporation incorporated under the laws of the Province of Ontario, Canada whose principal operations are located at: 349 Wildcat Road, Toronto, ON, M3J 253, Canada together with its subsidiaries and affiliates (as defined below), (hereinafter referred to as “CONTRACTOR”)
and
Cardiol Therapeutics Inc., a corporation incorporated under the laws of Ontario whose principal operations are located at: 2275 Upper Middle Road East, Suite 101, Oakville, ON, L6H 0C3, Canada, together with its subsidiaries and affiliates, (hereinafter referred to as “COMPANY”)
COMPANY and CONTRACTOR are hereinafter referred to individually as “Party” and collectively as “Parties”
WHEREAS COMPANY is a healthcare company involved in the research, development, sales, and marketing of therapies for the treatment of human diseases; and
WHEREAS CONTRACTOR is a leading contract services company with expertise in pharmaceutical discovery, development, formulation, synthesis, manufacturing, filling, analysis and related services (the “Services”); and
WHEREAS, the CONTRACTOR has agreed to provide certain Services to COMPANY on the terms and conditions set out in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1.0 Definitions
| a) | “Agreement” shall mean this Master Services Agreement (MSA) with its Appendices and Work Orders, including all documents (as amended from time to time between the Parties). |
| b) | “API” means a molecule as defined in Appendix A. |
| c) | “Appendix” means an appendix to this Agreement and each appendix will be subject to the terms and conditions of this Agreement unless scope specific terms and conditions are outlined therein. |
| d) | “Affiliate” shall mean with respect to a Party or a Third Party, any individual, corporation, company, firm, limited liability company, partnership, trust, joint venture or other entity which Controls, is Controlled by, or is under common Control with such Party or Third Party or entity. “Control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the issued share capital or the legal power to direct or cause the direction of the general management and policies of the Party In question. |
Page 1 of 22
| e) | “cGMP Product” shall mean all Product which is defined in individual Purchase Orders, Work Order(s) and/or this Agreement to be manufactured in accordance with cGMP. |
| f) | “Company's Property” is defined in Section 4.1. |
| g) | “Day(s)” shall mean calendar days, unless otherwise expressly stated in this Agreement. |
| h) | “Development Work” means R&D work (typically research and exploratory in nature) as defined in COMPANY-approved Work Orders and includes unvalidated processes or test methods. |
| i) | “Effective Date” means the effective date of this Agreement. |
| j) | “Field” means the API, intermediates or derivatives thereof, compositions comprising any of the foregoing (alone or in combination(s)), manufacturing, developing processes for manufacturing and arty and all uses of any of the forgoing. |
| k) | “Manufacturing Costs” shall mean all costs required to reproduce and release cGMP Product. |
| l) | “Product” shall be any entity or composition of matter in the Field as defined in Section 2.2. |
| m) | “Project' means a project with the characteristics specified in Section 2.2. |
| n) | “Purchase Order” shall mean any document governed by this Agreement specifying the Project, Product and/or Work Product to be conducted and delivered. |
| o) | “Quality Agreement” shall mean a separate document that defines both specific quality parameters for a Project or Product and which party is responsible for the execution of those parameters and is signed by both Parties. |
| p) | “Services” means any services provided by the CONTRACTOR relating to API and as may be further described in a Work Order, and shall include manufacturing API, intermediates or derivatives thereof, Products comprising API, intermediates or derivatives thereof and developing processes for manufacturing any of the foregoing. |
| q) | “Specification(s)” shall mean the mutually agreed upon specifications, instructions, and processes with respect to the Project and defined in the relevant Work Order. |
| r) | “Territory” shall mean the world. |
| s) | “Third Party” shall mean any person or entity other than the CONTRACTOR, COMPANY and their respective Affiliates. |
| t) | “Validated Manufacturing Process” shall mean steps or processes with established scientific evidence that a process is capable of delivering consistent product quality and is designated as “validated” in a Work Order. |
| u) | “Work Order” shall mean any document governed by this Agreement specifying the work and Services to be fulfilled under this Agreement. Work Order(s) shall be approved in writing and signed by both Parties. |
| v) | “Work Order Changes” shall mean mutually agreed upon amendments to the Work Order. |
| w) | “Work Product” means a thing, document, product or service as defined in a Work Order for a Project and may relate to or include Services performed, such as Development Work or batch manufacture and includes all deliverables, Product and the output or results of Development Work. |
Page 2 of 22
| 2. | PERFORMANCE OF SERVICES |
| 2.1. | CONTRACTOR shall provide Services within and pertaining to the Field exclusively to COMPANY. CONTRACTOR shall not provide Services or Product or Work Product or rights to any Intellectual Property in or pertaining to the Field to any third party nor commercialize same directly or indirectly itself. In consideration of this covenant of exclusivity, COMPANY shall allot and issue shares in the COMPANY to CONTRACTOR, as indicated in Appendix B, hereto. |
| 2.2. | The Services shall be undertaken on a project basis for development projects and commercial activities shall be undertaken on a Product basis. In respect of each project (a “Project”) or product (a “Product”), CONTRACTOR and COMPANY shall agree in writing upon objective(s), scope, price, specifications, deliverables Work Product, milestones and timelines for the Services. Each Project shall be described in Work Order attached to this Agreement. For greater certainty it is agreed that CONTRACTOR shall undertake the work described in one or more Work Orders added to this Agreement and agrees that the defined deliverables will meet the agreed level of quality, as set forth in this Agreement and the most current executed Quality Agreement, including the Work Orders. CONTRACTOR will perform the Services in a professional, competent and timely manner, in accordance with the terms and conditions of this Agreement and applicable laws, rules and regulations. In the event of a conflict between the provisions of a Work Order and the provisions of this Agreement, the provisions of this Agreement will prevail unless expressly stated otherwise in the Work Order, signed by the Parties. |
| 2.3. | This Agreement shall remain in force from the Effective Date unless terminated by COMPANY pursuant to Section 7. To the extent that COMPANY requires Services (including the manufacture of a Product, as defined in Work Order with respect to a Project, approved for sale to the public), CONTRACTOR shall be the exclusive provider of same on the condition that CONTRACTOR has the capabilities to so provide at no more than fair market value and any negotiated discounts under requisite terms and conditions in compliance with applicable laws. The Parties acknowledge that industry practice or certain jurisdictions or government authorities may require that COMPANY obtain the Services from another entity or from more than one entity (for example for regulatory approval, to ensure commercial supply of a Product to the public, legal procurement requirements, or to otherwise comply with applicable laws), in which case COMPANY is free to obtain the Services from another entity but to the extent possible CONTRACTOR shall be the preferred provider of said Services. |
| 2.4. | In consideration of the performance of the Services with respect to this MSA and any individual Project, COMPANY will pay CONTRACTOR the amount specified in the Work Order with respect to such Project within the time period specified or pursuant to the principles set out in Appendix B for “Consideration for Services”. Any expenses, individually or collectively, exceeding this amount by more than $1,000 must be mutually agreed upon in writing by the Parties prior to such expenses being incurred, and documented In a written Work Order. All prices to be indicated in one or more Work Orders will be in Canadian Dollars (CDN), unless otherwise specified, and be exclusive of all applicable taxes. Changes in scope for initiated projects will be captured in a Work Order revisions or additional Work Orders and will reflect the agreed upon scope of services and pricing. |
| 2.5. | CONTRACTOR shall not subcontract any of the Services hereunder without the prior express written permission of COMPANY. For any Services hereunder that are subcontracted, CONTRACTOR will be responsible for the Services in the same manner as if CONTRACTOR were providing the Services directly (i.e., not subcontracting the Services), except in cases where COMPANY selects the subcontracted service provider itself or the services must be subcontracted based on capability different from originally quoted. In such cases any additional vendor qualification costs shall be billed to the COMPANY, or COMPANY shall take the financial responsibility for any errors or deficiencies of the COMPANY-selected subcontractor. |
Page 3 of 22
| 2.6. | CONTRACTOR will arrange for shipment of Product to a destination specified by COMPANY at COMPANY's request using a mutually agreed designated carrier and shipment guidelines/protocol provided by COMPANY. Delivery of Products shall be on terms equivalent to EXW (Incoterms (2010)) and all carrier expenses or shipping related expenses (such as duty, taxes or customs fees) shall be the responsibility of COMPANY. |
| 2.7. | Upon expiration of any raw materials, API or other COMPANY materials or Product, CONTRACTOR shall notify COMPANY of such expiration and COMPANY shall determine if the expired matter shall be disposed of by CONTRACTOR, retested by CONTRACTOR or returned to COMPANY at COMPANY's cost as detailed in a Work Order. Any raw materials, API, components or other materials purchased by CONTRACTOR exclusively for use in COMPANY Project that are not paid for by COMPANY shall be invoiced at cost plus 15% to COMPANY upon expiration, in addition to any applicable disposal fees. |
| 2.8. | Storage fees shall apply to all Product, raw materials, API, Components, equipment or other COMPANY material that is stored at CONTRACTOR after 30 days with no further work-scope signed for their future scheduled use. Such fees will be as detailed in a written Work Order and will be at COMPANY's cost. |
| 2.9. | Dispensing fees shall apply to requests by COMPANY for CONTRACTOR to dispense any COMPANY Product or materials. Such fees will be as detailed in a written Work Order and will be at COMPANY's cost. |
| 3. | PROJECT LIAISON |
| 3.1. | The CONTRACTOR and COMPANY will each designate a liaison to facilitate communication. Each Party may change its liaison at any time by written notice to the other Party. The CONTRACTOR agrees to meet periodically at the reasonable request of COMPANY to hold informal meetings on the progress of the Services with respect to Projects. If the frequency or duration of meetings exceeds a reasonable amount upon discussion with COMPANY, upon prior written notice to COMPANY, CONTRACTOR may charge COMPANY for additional time requirements to meet these requirements. COMPANY may visit the CONTRACTOR and its facilities with reasonable notice and agreement with CONTRACTOR during business hours to: (a) observe the progress of the Services, (b) inspect the work being done and materials being used, and (c) consult with CONTRACTOR's personnel concerning the Services. COMPANY right to request audit to be per the terms of the most current executed Quality Agreement. Any visits to CONTRACTOR facilities by additional third parties at COMPANY request, must be subject to confidentiality terms and may be subject to additional fees. The CONTRACTOR will provide safe and proper facilities for said representatives of COMPANY to accomplish any and all of the foregoing. |
Page 4 of 22
| 4. | CONTRACTOR'S RESPONSIBILITIES WITH RESPECT TO COMPANY'S PROPERTY |
| 4.1. | The CONTRACTOR agrees that property, including but not limited to Products, formulated Products, related equipment and/or materials, and any other materials or information (including Confidential Information as hereinafter defined): (i) provided by COMPANY or (ii) prepared for COMPANY during the course of the provision of Services, including any and all Work Product and the Intellectual property rights therein, or (iii) developed by either party in or pertaining to the Field (collectively “COMPANY's Property”) are owned by COMPANY. |
| 4.2. | The CONTRACTOR will: |
| i. | provide secure locations for storage of COMPANY's Property; |
| ii. | abide by instructions provided by COMPANY for use of the COMPANY'S Property; and |
| iii. | provide COMPANY with prompt notification of adverse events, if any, associated with COMPANY's Property. |
| 4.3. | The CONTRACTOR shall use COMPANY's Property only to perform the Services and shall use any Product solely in accordance with the provision of the Services outlined in the Work Order with respect to the relevant Project, or as otherwise Instructed in writing by COMPANY. |
| 4.4. | The CONTRACTOR shall receive written approval from COMPANY prior to the disposal or relocation of any COMPANY Property. Any fees associated with the disposal or removal of COMPANY Property shall be paid by the COMPANY and documented in a Work Order. |
| 5. | PRODUCT WARRANTY OBLIGATIONS |
| 5.1. | CONTRACTOR hereby warrants to COMPANY as follows with respect to each Product (as defined in Work Orders with respect to a Project) supplied hereunder and each Work Product: |
| (i) | Validated Process or Validated Tests — Product shall conform to the mutually agreed upon Specification(s) with respect to the Project as defined in the relevant Work Order and its amendments and subject to the terms in Sections 5.2, 5.3 and 5.4. For clarity, it is a material breach of warranty if a Validated Process is demonstrated to cause a Product to be out of Specification. Any deficiencies in the Product resulting from CONTRACTOR's compliance with the COMPANY's instructions, specifications and processes shall be the responsibility of COMPANY. The COMPANY acknowledges and agrees that should the Product meet Specifications and so long as CONTRACTOR performs the Services substantially in accordance with the Work Order (“substantially” means that there may be minor deviations that cannot be demonstrated to have caused the Product to be out of the Specifications for the Product), this Agreement, the applicable Quality Agreement and all applicable laws, regulatory and governmental requirements mutually agreed by the Parties, that COMPANY is obligated to pay for the Services performed; |
| (ii) | Conformity with Laws — Each Product and Work Product conforms to applicable laws, regulatory and governmental requirements; |
Page 5 of 22
| (iii) | Free from Defects — Each Product and Work Product is free from any defects in workmanship or materials. In the case of materials, CONTRACTOR shall verify that all materials comply with the applicable Specifications prior to use; and |
| (iv) | Industry Standards — Each Product and Work Product conforms to generally accepted industry standards. |
| 5.2. | Unvalidated Processes or Test Methods — CONTRACTOR does not warrant that Product shall be within specification for unvalidated processes or tests. COMPANY acknowledges and agrees that should the (unvalidated) Product fail to meet Specifications, but so long as CONTRACTOR performs the Services substantially in accordance with the Work Order (“substantially” means that there are minor deviations that cannot be demonstrated to have caused the Product to be out of the Specifications for the Product), this Agreement, the applicable Quality Agreement and all applicable laws, regulatory and governmental requirements mutually agreed by the Parties, that COMPANY is obligated to pay for the Services performed. |
For processes or Projects not developed at CONTRACTOR's premises, COMPANY must provide all available development and validation reports prior to transfer for CONTRACTOR's review. If upon CONTRACTOR's review or upon execution of the provided process, the provided information is not deemed to be sufficient to reliably support the process as provided, CONTRACTOR reserves the right to require further development be performed at COMPANY's expense as mutually agreed by both parties or that all activities be conducted at COMPANY's risk, requiring full payment for Services irrespective of outcome. CONTRACTOR does not assume responsibility for yields or meeting provided Specifications for newly transferred Projects.
Performance of non-cGMP activities shall be defined in detail in the Work Order, but are not subject to the terms of a Quality Agreement. Non-GMP materials cannot be defined as suitable for human use nor can they be documented by CONTRACTOR as such. Non-cGMP materials are produced by methods agreed to by both parties but may not necessarily follow cGMP procedures. CONTRACTOR cannot assure sterility of materials produced in non-cGMP environment/methods and therefore cannot define the materials as sterile in any documentation.
| 5.3. | COMPANY may accept or reject any and all Products that are In material breach of the warranties set out in Sections 5.1 and 5.2 and hold CONTRACTOR liable for all replacement cost of defective Product (excluding API cost) plus reasonable incidental transportation (unless COMPANY has requested shipment under quarantine prior to release testing results being available. In such cases CONTRACTOR shall not be responsible for reasonable incidental transportation costs). In any event, there should be no claims against CONTRACTOR for any amount greater than the contract value for the specific scope of work. |
5.3.1 In the event that COMPANY shall reject any or all of the Products delivered by CONTRACTOR under this Agreement, COMPANY shall specify in writing the reason or reasons for such rejection (“Rejection Notice”) within 30 days after the COMPANY receives release test results for the Product (Including but not limited to initial Products) (“Notice Period”). If the CONTRACTOR does not receive the Rejection Notice during the Notice Period, the Products shall be deemed accepted by COMPANY.
Page 6 of 22
5.3.2 Within fifteen (15) business days of receiving a Rejection Notice, CONTRACTOR shall respond stating whether (i) it accepts the rejection or (ii) it disputes the rejection, in which case the Parties shall, after good faith negotiation as to whether the rejection is justified, refer such dispute to a mutually acceptable independent third party with the appropriate expertise to assess the conformity or non-conformity of the rejected Product(s) to Specifications and the applicable Quality Agreement. Such independent third party shall be qualified and shall also have the methods validated/verified prior to use. The independent third party shall test the applicable Product(s) and shall determine whether such Product(s) met or did not meet the applicable Specifications and/or shall review the relevant batch records and other relevant documentation to determine whether such Product was processed In accordance with the applicable Quality Agreement and shall also make a determination as to whether any failure was caused by defective, adulterated or misbranded API or other Material (including, but not limited to failure of API or other Materials to meet applicable Specifications or to have been manufactured in accordance with cGMP) or was caused during shipment to COMPANY or COMPANY's designee. The Parties agree that such third party's determination shall be final and binding upon the Parties. The Party against whom the independent third party rules shall bear the costs of testing and review by such independent third party. If such third party determines that COMPANY's rejection of Product was incorrect, COMPANY shall pay for both the initially rejected Product and any replacement produced at COMPANY's request.
In the event that COMPANY rightfully rejects a Product after a Validated Manufacturing Process has been demonstrated to cause the material breach of warranty, COMPANY shall have, in its sole discretion, the right to elect either replacement of the rejected portion of the Product batch as soon as possible at no further cost to COMPANY (excluding API cost), or to receive a refund of a pro rata portion of the amount paid for Manufacturing Costs by COMPANY with respect to such Product based on the percentage of such Product that is unusable. The remedy under the foregoing sentence shall be COMPANY's sole remedy for failure of Product(s) to meet Specifications or to have been processed in accordance with the Quality Agreement and the other terms of this Agreement.
In the event that CONTRACTOR fails to remedy, or acknowledges an inability to remedy the breach of the warranties identified by COMPANY, COMPANY shall be entitled to terminate this Agreement in accordance with Section 7.
| 5.4. | Development Work carried out by CONTRACTOR shall be paid in full for the scope of work defined in a Work Order upon completion irrespective of outcome unless a negative outcome is the result of CONTRACTOR'S gross negligence or willful misconduct or failure to substantially comply with the Work Order and Its amendments (if applicable). In such case, CONTRACTOR shall forfeit any portion of fees relating to the Project affected by such grossly negligent acts or willful misconduct or failure to substantially comply with a Work Order and its amendments. Development work is not guaranteed to be successful. If the defined scope of development work is conducted by CONTRACTOR and it is determined that additional work is required to achieve the defined objective, CONTRACTOR shall provide COMPANY with a proposal outlining the intended additional activities and pricing for COMPANY agreement in a Work Order prior to proceeding with additional work. |
| 5.5. | In the event that CONTRACTOR is in material breach of the warranties set out in Sections 5.1 and 5.2, and such breach has not been remedied in accordance with Sections 5.3 or 5.4 or CONTRACTOR acknowledges an inability to meet such warranties, CONTRACTOR shall, at the discretion of COMPANY, release to COMPANY, any requested raw materials (at CONTRACTOR cost if not already paid for by COMPANY) or work-in-progress so that COMPANY may complete the manufacture of the Product at an alternate site of its choice. COMPANY shall not be charged (or will be reimbursed if already paid) for any Services CONTRACTOR provided resulting in such breach subject to the terms outlined in Sections 5.1, 5.2, 5.3 and 5.4. |
Page 7 of 22
| 5.6. | In the event that COMPANY exercises its rights under Section 5.3 or 5.5, CONTRACTOR shall provide all reasonable assistance to COMPANY. |
| 5.7. | The CONTRACTOR further warrants to the COMPANY that CONTRACTOR has not, nor has any of its employees, agents, or contractors who may provide Services under this Agreement, been (i) debarred or proposed to be debarred under, or convicted of a crime for which a person or entity can be debarred under, Section 306(a) or 306(b) of the United States Generic Drug Enforcement Act of 1992 or under 42 U.S.C. Section 1320a-7 or (ii) sanctioned by, suspended, excluded, or otherwise deemed ineligible to participate in any federal health care program including Medicare and Medicaid, or any other federal procurement or non-procurement programs. CONTRACTOR further warrants that should CONTRACTOR or any of its employees, agents or contractors be debarred, investigated for debarment, convicted or sanctioned under Section 306(a) or 306(b) as described above, CONTRACTOR shall immediately notify COMPANY. |
| 6. | QUALITY |
| 6.1. | If a Project will be subject to cGMP regulations or U.S. FDA, Health Canada, ICH, SCC, EMEA or other such regulations or guidelines, these requirements will be outlined in a separate Quality Agreement to outline the roles and responsibilities for such regulatory compliance, prior to the initiation of cGMP work. Quality Agreement shall apply to cGMP activities only. |
| 6.2. | COMPANY may elect to qualify CONTRACTOR, which from time to time could require on-site review activities. COMPANY will schedule, with reasonable prior notice, such activities in consultation with CONTRACTOR so that the necessary resources are made available. Such qualification assumes a two person, two day audit per year. Additional audits or qualifications may be subject to additional fees based on duration or frequency and will be mutually agreed by the Parties. COMPANY may also require additional audits or inspections from regulatory bodies which will be subject to additional fees if they exceed one regulatory body audit annually. The standards to which the audit is performed will reflect the current stage of development and the quality systems applicable therein. For non-cGMP projects, it is assumed that no regulatory audits shall apply. |
| 6.3. | COMPANY shall provide CONTRACTOR with reasonable prior notice to any regulatory filing or product related activity that may result in on-site review activities, or CONTRACTOR may refuse such review. The Parties shall discuss Product status relative to pending review activities including scheduling of review activities. |
| 6.4. | CONTRACTOR shall be responsible for maintaining, at its expense, facility or other licenses or permits, and regulatory (EMA, U.S. FDA and TGA) and government approvals necessary for the performance of Services. Should COMPANY define new regulations, requirements or markets, not originally defined above CONTRACTOR shall perform a gap analysis of its current practices, facilities etc. against any new requirements chosen by COMPANY or applicable regulator with respect to COMPANY's Product(s). COMPANY and CONTRACTOR shall discuss and mutually agree to any capital or process/system costs that arise as a result of implementing such changes and which Party shall bear such costs. Should the cost of maintaining licenses or permits and regulatory and government approvals applicable to COMPANY projects or scopes of work increase, the Parties shall negotiate responsibility for these costs in good faith. These changes shall not be reasonably withheld if requested changes are commercially reasonable for both Parties. |
Page 8 of 22
| 7. | TERMINATION |
| 7.1. | COMPANY may, upon thirty (30) days' written notice to CONTRACTOR, terminate this Agreement at its sole discretion. Unless otherwise agreed to, upon termination of this Agreement by COMPANY, CONTRACTOR will be reimbursed for the total estimated price with respect to any Project activities that are completed or partially completed as well as any non-cancellable orders as of the date of notice of the termination. Notwithstanding the foregoing, CONTRACTOR shall not be reimbursed for any completed or partially completed Projects that are in material breach of Sections 5.1 and 5.2. In addition, allocation of any additional costs to CONTRACTOR related to capacity reservation shall be mutually agreed upon by both parties. COMPANY shall also be entitled to terminate one or more Projects without terminating the Agreement (a “Partial Termination”) in which case CONTRACTOR will be reimbursed for the total estimated price with respect to any Project activities completed or partially completed provided that such Project is not in breach of Sections 5.1. and 5.2 as of the date of notice of the Partial Termination. Upon completion of this Agreement or its termination, the CONTRACTOR will return, or arrange for return, to COMPANY, within 30 days, all COMPANY Property, all documentation (other than one copy of the documentation for regulatory or archival purposes provided that such documentation shall remain subject to CONTRACTOR's confidentiality obligations to Company), samples (defined as including any material derived from a test system for examination or analysis including, but not limited to, preparations, specimens, etc.), and/or supplies generated by the CONTRACTOR or furnished by COMPANY and given to the CONTRACTOR. However, at COMPANY's option, COMPANY may, with written instruction, direct the CONTRACTOR to dispose of any Property instead of return Property to COMPANY, such destruction to be certified in writing by the CONTRACTOR. Any order to destroy any Company Property must be made in writing by COMPANY and CONTRACTOR shall not proceed with disposal of any COMPANY Property until such written notice is received. In the event of a Partial Termination the obligation to return or to arrange for return of COMPANY Property or Samples, shall be interpreted in relation to the relevant Project or Projects only. COMPANY shall pay CONTRACTOR all disposal or shipping charges, as selected by COMPANY, as related to the termination. This may Include, but is not limited to, items such as equipment, materials, consumables, samples or product. |
| 7.2. | Upon termination by COMPANY, CONTRACTOR shall return, or arrange for return, to COMPANY, within thirty (30) days of termination, all property of COMPANY provided to the CONTRACTOR, any reports relating to the provision of the Services, all documentation, and/or any materials furnished by COMPANY and given to the CONTRACTOR in connection with the Services (CONTRACTOR may retain one copy for regulatory or archival purposes provided that such copy shall remain subject to CONTRACTOR's confidentiality obligations to Company). However, at COMPANY's option, COMPANY may, with written instruction, direct the CONTRACTOR to dispose of any Property instead of return Property to COMPANY, such disposal to be certified in writing by the CONTRACTOR. Any order to destroy any Company Property must be made in writing by COMPANY and CONTRACTOR shall not proceed with destruction of any COMPANY Property until such written notice is received. If COMPANY shall require CONTRACTOR to undertake any past termination activities the Parties shall negotiate the terms of a settlement proposal which shall include reasonable fees relating to such post termination activities that shall be undertaken by CONTRACTOR at the reasonable request of COMPANY. |
Page 9 of 22
| 8. | LIABILITY AND INSURANCE |
| 8.1. | CONTRACTOR will exercise commercially reasonable professional efforts, to ensure the accuracy of the advice, information, and documentation provided in connection with the performance of the Services. |
| 8.2. | During the term of this Agreement, CONTRACTOR will maintain product liability insurance in an amount of not less than CAN$1 million and errors & omissions liability insurance in an amount of not less than CAN$4 million, such insurance to be on terms acceptable to COMPANY acting reasonably, and COMPANY shall be an additional insured thereunder. |
| 8.3. | The CONTRACTOR warrants and represents that any advice given by its servants or agents or the use of any documentation provided in connection with the Services will not Infringe third party rights. |
| 8.4. | The Services will be performed by CONTRACTOR's employees at its facilities, unless the Parties agree in writing and in advance that Services will be performed at a sub-CONTRACTOR's facility. CONTRACTOR shall be solely responsible for any loss, damage, injury, or death arising from its performance of the Services and shall indemnify and hold COMPANY and its agents (collectively, “COMPANY Indemnitees”) harmless from any liability or expense, including reasonable attorney fees, for any loss or damage to property and/or death or Injury to person(s), including COMPANY's employees and agents, and animals, or from claims, actions, suits or proceedings therefrom, arising from CONTRACTOR's performance of the Services. The aforementioned obligations shall apply regardless of whether liability without fault is imposed or sought to be imposed, except to the extent that the foregoing is void or otherwise unenforceable under applicable law, and except to the extent that such loss, damage, injury, liability, death, or claim is the result of a COMPANY Indemnitee's negligence or willful misconduct. |
| 8.5. | COMPANY shall be solely responsible for any loss, damage, injury, or death arising from its performance of its obligations under the Agreement and shall indemnify and hold CONTRACTOR and its agents (“CONTRACTOR Indemnitees”) harmless from any liability or expense, including reasonable attorney fees, for any loss or damage to property and/or death or injury to person(s), including CONTRACTOR's employees and agents, and animals, or from claims, actions, suits or proceedings therefrom, arising from COMPANY's performance of its obligations under the Agreement. The aforementioned obligations shall apply regardless of whether liability without fault is imposed or sought to be imposed, except to the extent that the foregoing is void or otherwise unenforceable under applicable law, and except to the extent that such loss, damage, Injury, liability, death, or claim is the result of a CONTRACTOR Indemnitee's negligence or willful misconduct. |
Page 10 of 22
| 9. | REPRESENTATIONS AND WARRANTIES |
| 9.1. | Each party represents and warrants that: |
| a) | it is a duly incorporated, organized and subsisting corporation and has all requisite powers, capacities, licenses and permissions under its governing legislation and the other laws applicable to it, and under its articles of incorporation, bylaws and governing resolutions to develop and/or manufacture the Product; and to enter into, exercise its rights and perform and comply with all other obligations under this Agreement; |
| b) | all actions, conditions and tangible items, have been taken, fulfilled or produced with respect thereto, that are required by law, contract or otherwise; |
| c) | this Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding obligation of it enforceable against it in accordance with its terms; |
| d) | it is not a party to any agreement under the terms of which it Is prohibited or restricted from entering into any of the obligations assumed, liabilities imposed, or restrictions accepted by it under this Agreement; and |
| e) | the execution and delivery of this Agreement and the performance by it of its responsibilities, obligations and covenants hereunder will not result in the violation of any statute, order, decree, judgment, ordinance, regulation or law applicable to it or by which any of its assets may be bound. |
| 9.2. | CONTRACTOR represents and warrants that its performance of the Services, which utilizes information other than COMPANY's Confidential Information, will not infringe any subsisting claim of a third party domestic or foreign patent right or any copyright or violate any third-party trade secret right, or other intellectual property right or contractual right. CONTRACTOR shall defend, at its expense, all suits, actions or proceedings in which COMPANY and/or CONTRACTOR Indemnitee(s) is / are made a defendant for such infringement or violation resulting from the possession, sale or offer for sale of the Product and shall pay and discharge all judgment or decrees rendered against an Indemnitee in such suits, actions or proceedings with respect to such infringement or violation. COMPANY shall provide CONTRACTOR with prompt written notice of any such suits, actions or proceedings or written threats thereof and shall provide CONTRACTOR all information available to COMPANY, for such defense and shall accord CONTRACTOR the full opportunity and authority to assume sole defense thereof, including settlements and appeals provided that any settlement which effects the interests of COMPANY or its agents or customers, in selling, offering for sale, importing and using the Product shall not be entered into without COMPANY's prior written consent. CONTRACTOR shall also have the right to obviate any such suit, action or proceeding or threat thereof by procuring the right for COMPANY and its agents and customers to sell, offer for sale, and import the Product. COMPANY extends a like warranty to CONTRACTOR with respect to infringement or trade secret violation by CONTRACTOR in complying with COMPANY's written instructions, specifications or processes for the Product. |
Page 11 of 22
| 10. | CONFIDENTIALITY |
| 10.1. | All information and materials (including all information related to or arising from the Services) shall be considered confidential information of the COMPANY for the purpose of this Agreement, irrespective of whether communicated orally or in writing by COMPANY or obtained through observations by or on behalf of CONTRACTOR, at the offices or other premises of COMPANY, or otherwise (the “Confidential Information”). CONTRACTOR shall be entitled to disclose or allow access to Confidential Information to its officers, employees, and its representatives, or agents who have been approved by COMPANY in writing and who have a need to know or have access to Confidential Information, only if such persons are subject to restrictions on the disclosure of Confidential Information comparable to those contained in this Agreement. The Confidential Information will be kept confidential and will not be disclosed or made available to any person, without COMPANY's prior consent, except to the extent that the Confidential Information: |
| a) | is or becomes public knowledge otherwise than through default on the part of CONTRACTOR or any of its representatives; or |
| b) | is already lawfully in the possession of CONTRACTOR prior to its disclosure to CONTRACTOR by COMPANY (as evidenced by CONTRACTOR's written record); or |
| c) | hereafter becomes lawfully available to CONTRACTOR and is not subject to any confidentiality obligation to COMPANY (or a person owing a duty of confidence to COMPANY in respect of such information); or |
| d) | Confidential Information, which can be demonstrated as independently developed or acquired by CONTRACTOR without reference to or reliance upon confidential information defined in this agreement, and as evidenced by CONTRACTOR's written records. |
| 10.2. | Information shall not be exempted under clause 10.1 from the restriction under this Agreement by reason only that some or all of its features (but not the combination and principle thereof) are or become public knowledge or are in the possession of or become available to CONTRACTOR as mentioned in such clause. |
| 10.3. | CONTRACTOR will use the Confidential Information only in relation to the provision of the Services, and in particular, will not make commercial use of any part of the Confidential Information for any purpose whatsoever. CONTRACTOR agrees that the Confidential Information is owned by COMPANY. |
| 10.4. | Notwithstanding the restrictions of this Section, CONTRACTOR may disclose the Confidential Information as is required pursuant to competent judicial or governmental administrative orders provided that CONTRACTOR shall provide COMPANY with prompt written notice of such order before such disclosure so that COMPANY may seek a protective order or other appropriate remedy. CONTRACTOR shall consent to COMPANY obtaining any protective order or other appropriate remedy that COMPANY, or any of its Affiliates may seek for the purpose of preventing disclosure of any of the Confidential Information. In the event that COMPANY does not obtain such protective order or other remedy, CONTRACTOR shall furnish only that portion of the Confidential Information which CONTRACTOR is advised by written opinion of its legal counsel is legally required and CONTRACTOR shall use reasonable efforts to obtain reliable assurance that the Confidential Information shall be accorded confidential treatment by such court or government agency. |
Page 12 of 22
| 10.5 | CONTRACTOR agrees to take all reasonable steps to maintain the Confidential Information confidential and secure (including all steps that CONTRACTOR takes to protect its own confidential information). |
| 10.6. | Upon request, CONTRACTOR agrees to promptly deliver to COMPANY any documentation in its possession, in any form or medium, which contains any of the Confidential Information, whether such documentation was received from COMPANY or produced by or on behalf of CONTRACTOR, provided, however, that CONTRACTOR shall be entitled to retain a copy of the documentation in order to verify compliance with this Agreement. |
| 10.7. | The parties hereby acknowledge and agree that money damages would not be a sufficient remedy for any breach of confidentiality and the Company shall be entitled to seek injunctive or other equitable relief to remedy any such breach or threatened breach. Such remedy shall not be deemed to be the exclusive remedy of any breach but shall be in addition to any other rights and remedies available at law or equity or this Agreement. |
| 11. | INTELLECTUAL PROPERTY RIGHTS |
| 11.1. | All intellectual property, including but not limited to data, discoveries, know how, inventions, improvements, formulae, ideas, devices, compounds, materials, writings, or other intellectual property together with the notes, records, data, reports, sketches, plans, memoranda, protocols, domain names, trademarks, copyright and other tangible information relating thereto including all Work Product, whether or not subject to protection under patent or copyright laws (collectively “Intellectual Property”), which are conceived, developed and/or made by or for CONTRACTOR during the course of the Services or in or pertaining to the Field shall be the exclusive property of COMPANY, except for cases outlined below, and herein assigns or confirms assignment of same to the COMPANY. Further CONTRACTOR shall or shall cause authors of any copyright to waive any moral rights in favour of the COMPANY, its Affiliates, successors and heirs. COMPANY shall have the sole right to file patent applications (including filings in foreign countries), and to prosecute and maintain patents on any Intellectual Property resulting from CONTRACTOR's work under this Agreement, and CONTRACTOR agrees that exclusive rights to the Intellectual Property in the Territory shall reside with COMPANY. CONTRACTOR shall promptly notify COMPANY of any developed Intellectual Property and shall cause all those working under the CONTRACTOR to do the same. The term “CONTRACTOR Know-How” shall mean information and data, in any form, that CONTRACTOR has determined to be necessary to DEVELOP and MANUFACTURE Product, which has been disclosed to and approved by COMPANY, as the same may be modified from time to time by agreement of the parties hereto. For the avoidance of doubt, CONTRACTOR shall own all rights, titles, and interests of any independent Improvement to CONTRACTOR Know-How that was made, discovered or conceived solely by or on behalf of CONTRACTOR (or its Affiliates) during the Term and that is: (i) not based on or derived from COMPANY Know-How (or arty other Intellectual Property rights of COMPANY or any of its Affiliates) or any Confidential Information of COMPANY; and (ii) severable from the Product, COMPANY KNOW-HOW (and any other Intellectual Property Rights of COMPANY or any of its Affiliates) and Confidential Information of COMPANY (i.e., an improvement that can be exploited independent of the Product and without otherwise infringing upon or misappropriating or using any COMPANY Know-How (or any other Intellectual Property rights of COMPANY or any of its Affiliates) or any Confidential Information of COMPANY or any of its Affiliates); and (iii) was not paid for the COMPANY; and (iv) is outside and unrelated to the Field, For clarity, any discovery or discoveries made, discovered or conceived by or on behalf of COMPANY (or its Affiliates) or jointly by the Parties (or their respective Affiliates) shall not be considered for any purpose to be an independent improvement but shall instead be Intellectual Property of COMPANY. |
Page 13 of 22
| 11.2. | CONTRACTOR shall, at COMPANY's request and expense, execute all documents necessary to perfect the obligations in Section 11.1 and/or to enable COMPANY to make applications for domestic or foreign patents relating to the Intellectual Property, including documents of title, assist in prosecution of any foreign or domestic patent applications, and assist in securing, defending or enforcing any such title and right thereto, and shall cooperate with COMPANY, its designees, its attorneys or agents, in any claims or litigation concerning COMPANY or related companies with respect to the Intellectual Property. CONTRACTOR herein does appoint and shall cause its personnel or other persons involved in creating Intellectual Property to do so, appoint the COMPANY (or its counsel or agents) with the power to execute any such documents on its behalf, if it is not possible to locate or timely have the documents executed by the CONTRACTOR or its personnel or said other persons. Company shall promptly notify Contractor upon exercising said power. |
| 11.3. | CONTRACTOR shall ensure that any CONTRACTOR personnel or any other persons involved in creating Intellectual Property, shall have no claims relating to such Intellectual Property and shall cooperate with COMPANY, at COMPANY's request and expense, in securing, defending or enforcing any such title and right relating to the Intellectual Property, to cooperate with COMPANY, its designees, its attorneys or agents in any claims or litigation concerning COMPANY or its Affiliates with respect to the Intellectual Property, to assist in prosecution of any foreign or domestic patent applications relating to the Intellectual Property, and to review and execute domestic and foreign patent applications, and other proper documents and papers (including but not limited to documents of title) to facilitate the securing and maintaining of domestic and foreign patent protection relating to the Intellectual Property. |
| 11.4. | CONTRACTOR shall grant, and hereby does grant to COMPANY, to the extent that it is free so to do, an irrevocable, non-exclusive, worldwide, royalty-free perpetual license to use all patents, registered designs, copyrights, trademarks, and other intellectual property rights which CONTRACTOR has the right to license where such patents, registered designs, copyright, know-how, or other intellectual property are either (a) incorporated into the Product; or (b) need to be licensed to COMPANY in order to enable COMPANY to use and practice lawfully any Intellectual Property in the Territory. |
| 11.5. | The CONTRACTOR will not take any steps to oppose or contest the validity of any patents or patent applications or any other intellectual property rights of COMPANY, relating to the Confidential Information or the Intellectual Property. |
Page 14 of 22
| 12. | NOTICES |
| 12.1. | Notice required or provided for by the terms of this Agreement shall be in writing and shall be delivered by prepaid registered mail, return receipt requested; personally by hand; courier; by email; or by facsimile transmission, in each case addressed to the Party or Parties to whom it is to be given at the address or facsimile number shown below or at such other address or facsimile number as the Party to whom such notice is to be given shall have last notified the other Party in accordance with the provisions of this Section: |
In the case of CONTRACTOR at:
Dalton Chemical Laboratories Inc. o/a Dalton Pharma Services
349 Wildcat Road
Toronto, Ontario, M3J 253
Attention: Peter Pekos
Fax No.: *******
*******
And in the case of COMPANY at:
Cardiol Therapeutics Inc.
2275 Upper Middle Rd. E. Suite 101
Oakville, Ontario L6H 0C3
Attention: David Elsley
*******
Any such notice or other document shall:
| (i) | if delivered by hand, courier, or email be deemed to have been given and received at the place of receipt on the date of delivery, provided that if delivery is other than during business hours (9:00 a.m. to 5:00 p.m., local time) in the place of receipt, such notice shall be deemed to have been given and received at the place of receipt on the first business day thereafter; |
| (ii) | if mailed, be deemed to have been given and received at the place of receipt on the earlier of the date of actual receipt and ten (10) business days after the date of mailing. In the event of postal disruption, such notices or documents must be delivered by means other than by mail; and |
| (iii) | if transmitted by facsimile, and provided that the sender has received confirmation of receipt, be deemed to have been received on the same day if transferred during business hours (9:00 a.m. to 5:00 p.m., local time) in the place of receipt, and be deemed to have been given and received at the place of receipt on the next business day in the place of receipt following the day of sending, if transferred after business hours in the place of receipt. |
| 13. | ASSIGNMENT |
| 13.1. | This Agreement may not be assigned by CONTRACTOR without the prior written consent of the other party which will not be unreasonably withheld. COMPANY may assign with notice to the Contractor. Any assignment or transfer by a Party other than in accordance with the terms hereof shall be void and shall entitle the other Party to terminate this Agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve either Party of responsibility for the performance of any obligation which accrued prior to the effective date of such assignment. |
Page 15 of 22
| 14. | WAIVER |
| 14.1. | The failure on the part of either Party hereto to exercise or enforce any right conferred upon it under this Agreement shall not be deemed to be a waiver of any such right to bar the exercise or enforcement thereof at any time or times thereafter. |
| 15. | LAW |
| 15.1. | This Agreement shall be interpreted and enforced under the laws of the Province of Ontario and the federal laws of Canada applicable therein. Subject to Section 16, the Parties shall attorn to the exclusive jurisdiction of the Courts of Ontario. |
| 16. | ARBITRATION |
| 16.1. | The parties recognize that disputes, controversies or claims arising out of or in connection with, or relating to, this Agreement, or the performance, breach, termination or validity thereof (a “Dispute”) may arise from time to time during the course of this Agreement. In the event of such a dispute, controversy or claim either party may, by notice to the other party, have such issue referred to their respective designees according to the following escalation path: |
| Escalated to the following level at the Parties | ||
| Days from original notice | CONTRACTOR | COMPANY |
| Ten (10) business days | Natalie Lazarowych, Ph.D. – Director of Project Management | David Elsley, MBA President & CEO |
| Twenty-five (25) business days | Peter Pekos M.Sc. – President & CEO | David Elsley, MBA–— President & CEO |
| 16.2. | If this discussion does not result in a resolution of the Dispute within thirty-five (35) business days, or any extension thereof agreed by the Parties in writing, either Party may invoke the formal arbitration provisions of this Section of the Agreement. |
| 16.3. | Any dispute, controversy or claim arising out of or in connection with, or relating to, this Agreement, or the performance, breach, termination or validity thereof shall be finally settled by arbitration. The arbitration shall be conducted in accordance with the Ontario Arbitration Act, 1991 by one or more arbitrators appointed in accordance with the applicable rules. The arbitration shall be conducted in Toronto, Ontario in English. Except for breach of confidentiality, misappropriation of intellectual property or other circumstances where injunctive relief may be granted by a court of law, arbitration is the exclusive remedy for any party with respect to any dispute arising under or relating to this Agreement or the subject matter hereof, except that a party may resort to a court of competent jurisdiction to enforce the provisions of this Section or to enforce any decision rendered in arbitration under this Section of the Agreement. Provided that the parties have exercised all of their rights and obligations under Section 16.1 and 16.2 of the Agreement, the process of arbitration hereunder shall be initiated by one Party giving the other Party written notice, in accordance with the provisions of this Agreement, of initiation of arbitration. The arbitration shall be conducted by arbitrator(s) having no financial or personal interest in the business affairs of either Party. Absent agreement or an award In the arbitration to the contrary, the arbitration fees and expenses shall be paid in equal shares by the parties. The arbitrator shall have the authority to award any remedy or relief that a court or a judge of the Ontario Courts could order or grant in accordance with this Agreement. The decision of the arbitration panel shall be final and binding on the Parties, is non-appealable, and may be enforced in any court of competent jurisdiction. The arbitration shall be kept confidential and the existence of the proceedings and the elements of it shall not be disclosed beyond the arbitrator, the Parties, their counsel and any person necessary to the conduct of the proceedings, except as may be lawfully required in judicial proceedings relating to the arbitration or otherwise. |
Page 16 of 22
| 16.4. | At all times, except as set forth below, notwithstanding the existence of a dispute with respect to a particular Project, the Parties shall continue to perform their respective obligations in accordance with the provisions of this Agreement. Where there is a dispute as to the amount of the monies owing by COMPANY to CONTRACTOR pursuant to a Project, the portion of the amount owing that is not contested, disputed or challenged shall be paid when due but without prejudice to the rights of the Parties to contest, dispute or challenge the disposition of the remaining portion of the monies claimed thereunder. Until the resolution of the dispute with respect to which the amount of monies owing to CONTRACTOR is being contested, disputed or challenged, CONTRACTOR shall be relieved from any further obligation to deliver Services with respect to the disputed portion of such Project, and other than a Project that involves the delivery to COMPANY of Products for clinical trials. |
| 17. | SEVERABIIITY |
| 17.1. | Whenever possible, each provision of this Agreement shall be interpreted in the manner to be effective and valid under applicable law, but if any provision of this Agreement should be prohibited under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of the Agreement. The Parties agree to renegotiate such invalid or unenforceable provision in good faith in order to provide a reasonably acceptable alternative consistent with the basic purpose of this Agreement. |
| 18. | FORCE MAJEURE |
| 18.1 | Except as to payments required under this Agreement, neither Party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party's performance hereunder if such default or delay is caused by events beyond such party's reasonable control including, but not limited to, acts of God, regulation or law or other action or failure to act of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or failure of suppliers, public utilities or common carriers; provided, however, that the Party seeking relief hereunder shall immediately notify the other party of such cause(s) beyond such party's reasonable control. The Party that may invoke this Section shall use all reasonable endeavors to reinstate its ongoing obligations to the other. If the cause(s) shall continue unabated for one hundred twenty (120) days, then the Parties shall meet to discuss and negotiate in good faith what modifications to this Agreement should result from this force majeure. |
Page 17 of 22
| 19. | ENTIRE AGREEMENT |
| 19.1. | This Agreement, and the related Appendices, and the most recently executed Quality Agreement constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes any prior agreement, understanding, or arrangement between the Parties, whether oral or in writing. No representation, undertaking, or promise shall be taken to have been given or be implied from anything said or written in negotiations between the Parties prior to this Agreement except as expressly stated in this Agreement. Neither Party shall have any remedy in respect of any untrue statement made to it upon which it has relied in entering into this Agreement (unless such untrue statement was made fraudulently). This Agreement can only be amended upon written consent of the parties. |
| 20. | FURTHER ASSURANCES |
| 20.1. | The Parties shall do and execute all such further acts and things as are reasonably required to give full effect to the rights given and the transactions contemplated by this Agreement. |
| 21. | INDEPENDENT CONTRACTOR; NO THIRD-PARTY BENEFICIARIES |
| 21.1. | For the purpose of this Agreement and all Services to be provided hereunder, each Party shall be, and shall be deemed to be, an independent CONTRACTOR and not an agent or employee of the other party. Neither Party shall have authority to make any statements, or representations or commitments of any kind, or to take any action, which shall be binding on the other Party, except as may be explicitly provided for herein or authorized by the other Party in writing. Nothing in this Agreement, either express or implied, shall confer on any person other than a Party to this Agreement or a Party's permitted successors and assigns, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement. |
| 22. | SURVIVAL |
| 22.1. | The following provisions shall survive the termination of this Agreement regardless of the cause of termination, as well as other items which by their intent or meaning are intended to so survive: 2.1, 4.1, 4.3, 5, 6, 7, 8, 9, 10, 11, 14, 15, 16, 17, 19, 20, 21 and 22. |
THE NEXT PAGE IS THE SIGNING PAGE.
Page 18 of 22
Agreed to for and on behalf of Dalton Chemical Laboratories Inc. o/a Dalton Pharma Services
| Name: [Redacted - Personal Information] | ||
| Position: President & CEO | ||
| Signature: [Redacted - Personal Information] | ||
| Date: | April 17, 2018 | |
| Agreed to for and on behalf of Cardiol Therapeutics Inc. | ||
| Name: [Redacted - Personal Information] | ||
| Position: President & CEO | ||
| Signature: [Redacted - Personal Information] | ||
| Date: | April 17, 2018 | |
Page 19 of 22
APPENDIX A
There is no diagram here
Page 20 of 22
APPENDIX B
Consideration for Exclusivity of Section 2.1
| 1. | In consideration of the CONTRACTOR's covenant of exclusivity to the COMPANY, the COMPANY agrees to allot and issue to the CONTRACTOR 200,000 Class A common shares of the COMPANY (the “Exclusivity Share?) within 45 business days of the Effective Date. |
| 2. | The CONTRACTOR shall also earn and be entitled to receive, and the COMPANY shall issue to the CONTRACTOR, a total of an additional 200,000 Class A common shares of the Company (the “Invention Bonus Shares”) if and when the CONTRACTOR discovers and/or develops a proprietary methodology for formulating cannabinoids (the “Proprietary Methodology”) for which the COMPANY, in its sole discretion, elects to file a patent application resulting in the issuance of a patent or otherwise pursue as a means of manufacturing cannabinoids in support of its research and commercial development programs. The CONTRACTOR acknowledges and agrees that the COMPANY is obliged to issue the Invention Bonus Shares ONLY if a U.S. patent for the Proprietary Methodology is granted to the COMPANY (the date of grant of such patent being the “Patent Grant Date”), unless the COMPANY, in its sole discretion, elects, and notifies the CONTRACTOR in writing of its election (the date of providing such notice being the “Notice Date”), to keep the Proprietary Methodology as a trade secret and not proceed with filing a patent application for the Proprietary Methodology. The Invention Bonus Shares shall be issued within 45 business days of either the Patent Grant Date or the Notice Date, as the case may be. |
| 3. | The CONTRACTOR represents and warrants that it is, and that on the date of receipt of any of the Exclusivity Shares or the Invention Bonus Shares it will be, an “accredited investor” (as such term is defined in National Instrument 45-106 Prospectus Exemptions of the Canadian Securities Administrators) by virtue of being a person that has net assets of at least Cdn$5,000,000 as shown on its most recently prepared financial statements. The CONTRACTOR represents and warrants that it is acquiring the Exclusivity Shares or the Invention Bonus Shares, as the case may be, as principal for the CONTRACTOR'S own account and not for the benefit of any other person. The CONTRACTOR is aware that: (a) the COMPANY is not a “reporting issuer” or the equivalent in any jurisdiction and, accordingly, the Exclusivity Shares and the Invention Bonus Shares will be subject to an indefinite hold period under applicable securities laws; (b) the Exclusivity Shares and the Invention Bonus Shares are not listed on any stock exchange and no public market exists for the Class A common shares of the COMPANY; and (c) the Exclusivity Shares and the Invention Bonus Shares are subject to transfer restrictions contained in the COMPANY'S constating documents. |
| 4. | The CONTRACTOR agrees that in the event the COMPANY should at any time propose to qualify its Class A common shares for sale to the public, the CONTRACTOR will execute in respect of all Exclusivity Shares and Investment Bonus Shares, if any, held by it such standard escrow agreement as may be required by the applicable securities regulators as a condition precedent to accepting a prospectus of the COMPANY qualifying the distribution of its Class A common shares for sale to the public, and the CONTRACTOR shall deposit such aforementioned Class A common shares into escrow in accordance with the escrow agreement. |
Page 21 of 22
Consideration for Services
Fees and payments for Services shall be set out in each Work Order. For clarity, none of the Class A common shares constitutes consideration for Services.
Page 22 of 22
Exhibit 99.2
Certain identified information has been excluded
from the exhibit pursuant to Item 601(a)(6) of Regulation S-K due to personal privacy
concerns. Redacted information is indicated by: [***]
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is entered into as of August 29th, 2018 (the “Effective Date”)
BETWEEN:
CARDIOL THERAPEUTICS INC., a Canadian corporation
(“Cardiol”)
- and -
CLINICAL ACADEMIC RESEARCH ORGANIZATION, S.A. DE
C.V., a Mexican corporation
(“CARO”)
RECITALS
| A. | Cardiol is a nanotherapeutics company focused on the research and development of proprietary drug formulations for the treatment of heart failure (collectively, the “Compounds”). |
| B. | CARO Is a company dedicated to providing clinical and scientific experimentation and consulting, as well as performing development activities by itself or through third-party providers. |
| C. | Cardiol desires to work with CARO for further research and development of the Compounds. |
| D. | This Agreement is intended to provide the terms and conditions under which Cardiol and CARO will collaborate for the development of the Compounds. |
1
NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions
As used in this Agreement the following terms shall have the following definitions:
| (a) | “Affiliate” means, with respect to a Party, any person or entity directly or indirectly controlling, controlled by, or under common control with, such Party. For purposes of this Agreement, the term “controlled” (including the terms “controlled by” and “under common control with”) as used in this context, means the direct or indirect ability or power to direct or cause the direction of management policies of a person or entity or otherwise direct the affairs of such person or entity, whether through ownership of equity, voting securities, beneficial interest, by contract or otherwise. A Party shall be presumed to control a person or entity if the Party owns fifty percent (50%) or more of the voting equity interests of such person or entity. |
| (b) | “Agreement” means this Development Agreement, together with all exhibits and schedules hereto and any amendments to or restatements of this agreement. |
| (c) | “Applicable Laws” means all laws, ordinances, rules, regulations, guidelines, and policies of any kind whatsoever of any governmental (including international, foreign, federal, state, provincial, and local) or regulatory body, including all laws, ordinances, rules, regulations, guidelines, and policies promulgated by any Regulatory Authority applicable to the activities contemplated by this Agreement. |
| (d) | “business day” means any day that is not a Saturday, Sunday or statutory holiday in the Town of Oakville, in the Regional Municipality of Halton, Province of Ontario, Canada, or in the City of Monterrey, Nuevo Leon, Mexico. |
| (e) | “Calendar Quarter” means, as applicable, the three (3) month period ending on March 31, June 30, September 30, or December 31. The initial Calendar Quarter will be deemed to begin on the Effective Date and end on the expiration of that Calendar Quarter in which the Effective Date falls. |
| (f) | “Cardiol” means Cardiol Therapeutics Inc., one of the Parties to this Agreement, including its Affiliates. |
| (g) | “CARO” means Clinical Academic Research Organization, S.A. de C.V., one of the Parties to this Agreement, and its Affiliates. |
| (h) | “CARO Compensation Warrants” has the meaning ascribed to that term in Section 3.1. |
| (i) | “CARO’s Property” shall have the meaning set forth in Section 8.2. |
| (j) | “Compounds” shall have the meaning set forth in the Recitals. |
2
| (k) | “Confidential Information” means Information received (whether disclosed in writing, electronically, orally, or by observation) by one Party (the “Receiving Party”) from the other Party (the “Disclosing Party”) either before the Effective Date in connection with the transactions contemplated by this Agreement, or thereafter, that the Disclosing Party reasonably considers proprietary and confidential unless in each case such Information, as shown by competent evidence: |
| (i) | was known to the Receiving Party or to the public prior to the Disclosing Party’s disclosure, as demonstrated by contemporaneous written records; |
| (ii) | became known to the public, after the Disclosing Party’s disclosure hereunder, other than through a breach of the confidentiality provisions of this Agreement by the Receiving Party or any person to whom such Receiving Party disclosed such Information; |
| (iii) | was subsequently disclosed to the Receiving Party by a person having a legal right to disclose, without any restrictions, such Information or data; or |
| (iv) | was developed by the Receiving Party independently of the Disclosing Party’s Confidential Information by persons who have had no access to the Disclosing Party’s Confidential Information as demonstrated by contemporaneous written records of Receiving Party. |
The terms and conditions of this Agreement shall be deemed the Confidential Information of both Parties.
| (l) | “Development Activities” means those activities related with the methodology done by CARO directly and indirectly in relation to the Compounds that Cardiol is developing for the treatment of heart failure and other medical purposes, including CARO’s scientific experimentation, research activities, medical drug development activities, medical drug formulation, and discovery, as set out in the Development Plan. |
| (m) | “Development Plan” means the Development Plan for the Compounds, attached as Exhibit A to this Agreement. |
| (n) | “Disclosing Party” shall have the meaning set forth in Section 1.1(k). |
| (o) | “Dispute(s)” shall have the meaning set forth in Section 14.3. |
| (p) | “Effective Date” shall have the meaning set forth at the head of this Agreement. |
| (q) | “Force Majeure” shall have the meaning set forth in Article 14. |
| (r) | “Force Majeure Party” shall have the meaning set forth in Article 14. |
| (s) | “Government or Public Official” means any officer or employee or anyone acting in an official capacity on behalf of: a government or any department or agency thereof; a public international organization (such as the United Nations, the International Monetary Fund, the International Red Cross, and the World Health Organization), or any department, agency or institution thereof; or a government-owned or controlled company, institution, or other entity, including a government-owned hospital or university. |
3
| (t) | “Incorporated CARO Property” shall have the meaning set forth in Section 8.2. |
| (u) | “Information” means any and all data, information and Materials, related to the products or business of a Party including but not limited to, the Materials, any methodology, trade secrets, know-how, Intellectual Property Rights, drug product candidates, compounds, chemical structures, results or reports in written, electronic, or other form disclosed by a Party in connection with this Agreement or to which the other Party will be provided direct or indirect access under or pursuant to this Agreement, or which is generated by or on behalf of CARO in connection with its Development Activities. |
| (v) | “Intellectual Property Rights” means any and all Intellectual property rights (whether applied for, issued, registered, or unregistered), including patents, patent-applications, know-how, trademarks, design rights, utility models, applications for and rights to apply for any of the same, rights to prevent passing off, copyright, database rights, topography rights and any other rights in any invention, discovery, or process in any jurisdiction in the world. |
| (w) | “Materials” means any biological or chemical compounds or materials, assays, Cardiol’s drug product candidates, including Compounds, or other materials that are used by CARO to engage in Development Activities. |
| (x) | “Nano4Heart” means an association specialized in nanomedicine targeted for cardiovascular diseases, such as heart failure. Nano4Heart gathers scientific researchers in the aforementioned areas, and it will participate in the development activities as an authorized Third party consultant in accordance with Section 2.2(a). |
| (y) | “Party” shall mean either Cardiol or CARO, as the context may require and “Parties” shall mean both Cardiol and CARO. |
| (z) | “Receiving Party” shall have the meaning set forth in Section 1.1(k). |
| (aa) | “Regulatory Action” shall have the meaning set forth in Section 10.2. |
| (bb) | “Regulatory Authority” means any governmental regulatory body having jurisdiction over drug development or the Development Activities. |
| (cc) | “Shares” means fully participating, voting, Class A Common Shares in the capital stock of Cardiol. |
| (dd) | “TecSalud” means the strategic alliance that exists between Funded& Santos y de la Garza Evia, I.B.P. and Escuela de Medicina y Ciencias de la Salud of Instituto Tecnológico y de Estudios Superiores de Monterrey. |
| (ee) | “Third Party” means a person or entity that is not a Party to this Agreement nor an Affiliate of a Party to this Agreement. |
| (ff) | “Third-Party Consultant” means a non-Affiliate, non-CARO-employee, individual consultant retained by CARO In accordance with Section 2.2(c) to perform certain Development Activities in accordance with the Development Plan. |
4
| (gg) | “Third-Party Vendor” means a non-Affiliate vendor retained by CARO in accordance with Section 2.2(c) to perform development activities in accordance with the Development Plan, or any advisory on behalf of CARO. |
| (hh) | “Work Product” means the results of Development Activities engaged in by CARO or its Affiliates or Third-Party Consultants or Third-Party Vendors in the course of implementing the Development Plan and providing any advice, including inventions, reports, analysis, data, findings, summaries, Intellectual Property Rights, and documentation as further described in this Agreement and the Development Plan. |
1.2. Rules of Construction
| (a) | Elements of this Agreement. When a reference is made in this Agreement to a Recital, an Article, a Section, a Schedule, an Attachment, or an Exhibit, such reference is to a Recital, Article or Section of, or a Schedule, Attachment, or Exhibit to, this Agreement, unless otherwise indicated. |
| (b) | Meaning of “include” and variations thereof. Whenever the words “include,” “Includes” or “including” are used in this Agreement, they shall be understood to be followed by the words “without limitation.” |
| (c) | Use of pronouns. Pronouns, including “he,” “she” and “it,” when used in reference to any person, shall be deemed applicable to entities or individuals, male or female, as appropriate in any given case. |
| (d) | Headings. Article, Section, and other headings contained in this Agreement are for reference purposes only and are not Intended to describe, interpret, define, or limit the scope, extent, or intent of any provision of this Agreement. |
| (e) | Currency. Unless otherwise specifically expressed in U.S. dollars, all amounts expressed as dollars (or $) refer to the lawful currency of Canada. |
| (f) | Variations on terms. Standard variations on defined terms (such as the plural form of a term defined in the singular form and the past tense of a term defined in the present tense) shall be deemed to have meanings that correlate to the meanings of the defined terms. |
| (g) | Obligations of good faith and commercial reasonableness. The Parties shall use commercially reasonable efforts to collaborate with one another and otherwise to perform their obligations hereunder, except to the extent that a Party is expressly authorized to act otherwise (such as a provision authorizing a Party to make a decision in its sole discretion). Each Party will make and implement decisions and allocate resources designed to advance progress with respect to the objectives set forth in the Development Plan, and to ensure that it meets its obligations with respect to, such plan and budget. Each Party will respond to meeting requests in a timely matter and will agree upon deadlines for action items and decision making. When in-person meetings cannot be conducted in a timely fashion, timely communication will be made via teleconferences, webcasts, or emails such that the development of Compounds is enabled and not disadvantaged. |
5
ARTICLE 2
DEVELOPMENT ACTIVITIES
2.1. Activities of CARO
| (a) | CARO shall engage in the Development Activities in accordance with the Development Plan and this Agreement. As part of its Development Activities, CARO will investigate and will perform scientific experimentation, research activities, medical drug development activities, medical drug formulation, and discovery as set out in the Development Plan. |
| (b) | CARO may, as part of the Development Activities, manage Third Party providers of development activities in support of the Development Plan. |
| (c) | CARO will engage in the Development Activities in accordance with: |
| (i) | Applicable Laws; and | |
| (ii) | other clear arrangements agreed to in writing and signed by the Parties’ legal representatives. |
| (d) | In engaging in the Development Activities, CARO will utilize, to the extent practicable, CARO’s or TecSalud’s own research practices and development management processes, policies, guidelines, and quality requirements. |
2.2. Management of Third Parties
The Parties anticipate that the involvement of Third Parties is likely to be limited to Third-Party Vendors of Materials. CARO will manage any Third-Party Vendors and Third Party Consultants who assist with the Development Activities, as follows:
| (a) | Authorized Third Party Vendors and Third Party Consultants. Cardiol acknowledges and authorizes CARO to utilize Nano4Heart as a Third-Party Consultant and TecSalud as a Third-Party Vendor, each of which will assist CARO In the execution of the Development Activities. |
| (b) | Recommendation of other Third Parties. CARO may recommend to Cardiol other Third-Party Vendors and Third-Party Consultants, in addition of the parties stated in Section 2.2(a), that have special expertise to provide as part of the Development Activities under the Development Plan. The Parties will competitively bid any project whose total cost is greater than fifty thousand dollars ($50,000) to multiple Third-Party Vendors or Third-Party Consultants, as applicable. CARO’s recommendation will take into consideration factors such as the Third Party’s experience, stability, equipment and facilities, technical capabilities, qualified processes and their alignment with regulatory standards and local laws, commitment to timelines, contingency planning capabilities, communication plans, pricing relative to industry benchmarks, and other contractual terms relative to industry standards. The Parties shall collaborate in making the final selection of Third-Party Vendors and Third-Party Consultants. CARO shall share costs and other Information with Cardiol concerning such Third-Party Vendors and Third-Party Consultants on an “open book” basis. |
6
| (c) | Negotiation of Third-Party Contracts. CARO will require that each Third-Party Vendor and Third-Party Consultant enter into an appropriate confidential disclosure agreement prior to sharing any Confidential Information with such Third Party. All Third-Party Vendors and Third-Party Consultants will be retained pursuant to written agreements unless CARO and Cardiol expressly agree to the contrary in writing. All terms and conditions negotiated by CARO, including without limitation pricing, fees and expenses payable to such Third-Party Vendors and Third-Party Consultants, shall be subject to agreement by the Parties. CARO will not engage any Third Party for any reason without the prior consent of Cardiol. |
| (d) | Monitoring Performance. CARO will use its commercially reasonable efforts to monitor performance of all Third-Party Vendors and Third-Party Consultants in accordance with the terms of the agreements with such Third-Party Vendors and Third-Party Consultants and in accordance with the Development Plan and the usual practices of CARO’s development unit applicable to development of CARO’s own products. However, CARO does not guarantee the performance of any Third-Party Vendor or Third-Party Consultant, and provided that CARO is not in material breach of the standard set forth in the preceding sentence, and notwithstanding any provision in this Agreement to the contrary, CARO shall have no liability on account of any action or inaction of any such person. |
2.3. Regulatory
| (a) | Cardiol will be responsible for making all necessary regulatory filings in Canada with the Regulatory Authority related to the Development Plan and will have all Canadian regulatory responsibilities and related liabilities. |
| (b) | CARO will be responsible for making all necessary regulatory filings in Mexico with the Regulatory Authority related to the Development Plan and will have all Mexican regulatory responsibilities and related liabilities. Cardiol will be responsible for making all necessary regulatory filings outside Mexico with Regulatory Authorities outside Mexico related to the Development Plan and will have all regulatory responsibilities and related liabilities outside Mexico. |
| (c) | Each Party shall be responsible for obtaining and complying with all applicable governmental licenses, authorizations, permits, and the like required in connection with the performance of its share of the Development Activities. |
2.4. Development Timeline and Changes to Development Plan
| (a) | Development Timeline. The current estimated timelines for the Development Activities contemplated by the Development Plan are set forth in Exhibit A. |
| (b) | Development Compensation. The CARO Compensation Warrants and the Shares to be issued upon the exercise of such warrants are acknowledged by both Parties to be fair and sufficient compensation for the Development Activities of CARO. |
7
| (c) | Changes to Development Plan. Changes to the approved Development Plan will require approval by Cardiol if they include any of the following: |
| (i) | Delay or acceleration in a major milestone by greater than or equal to one (1) month; |
| (ii) | Material change in the scientific approach to the research and development; | |
| (iii) | Change in regulatory strategy; or | |
| (iv) | Any other change that is required to be approved by Cardiol pursuant to this Agreement. |
Any change, addition, or deletion to any development milestone or milestone documentation or the Development Plan shall require the prior approval of Cardiol. Such changes will be captured in a change control log maintained by CARO that will be available to Cardiol. The change control log must be approved and signed by both parties’ authorized representatives.
2.5. Data and Information Management
| (a) | Materials. Materials, documents, and Information necessary for engaging in the Development Activities shall be provided either by Cardiol or procured by CARO on behalf of Cardiol as set out in the Development Plan. Materials will be used only for purposes of the Development Plan. |
| (b) | CARO shall submit the following regular reports to Cardiol: |
| Report | Frequency | Content Summary |
| Development Status Report |
Monthly |
Progress report on the overall Development Plan by functional area, identifying any issues, risks, and contingency plans |
| Change Control Log |
As needed | Category of change control, reason for change, trigger met, revised plan |
| (c) | In addition to the scheduled reports above, CARO shall communicate with Cardiol any material findings on key aspects of the Compounds, such as safety, toxicity, and efficacy, as soon as available and practicable. After notification, the Parties shall consult together to determine appropriate actions or changes to the Development Plan to Implement such actions or changes. |
| (d) | Maintenance and Wind-Up Activities Upon Conclusion of Activities. At the conclusion of the Development Activities hereunder, CARO and Cardiol will agree upon appropriate asset maintenance and wind-up activities such as archival of reports and data, storage of samples, filing of regulatory notifications (if any), and such others as may be advisable. |
8
2.6. Discontinuation of Development Activities
| (a) | In the event either Party believes, in good faith, that the continued performance of the Development Activities may be commercially unwise, jeopardize safety, or otherwise be unethical or illegal, such Party shall immediately consult with the other Party concerning the appropriate course of action. If the Parties are unable to agree promptly upon an appropriate course of action, either Party shall have the right to terminate its portion of the Development Activities or terminate this Agreement in accordance with Section 5.1(b). |
| (b) | If CARO terminates this Agreement for any reason except breach of contract by Cardiol, or terminates the Development Activities prior to achievement of all milestones in the Development Plan, then any unexercised CARO Compensation Warrants that are not related to Development Activities and milestones in the Development Plan that have been attained up to the time of termination of this Agreement, shall be deemed terminated, null and void as of termination of this Agreement. |
| (c) | If Cardiol terminates this Agreement for any reason (including breach of contract by CARO), or requires CARO to terminate the Development Activities prior to achievement of all milestones in the Development Plan, then the CARO Compensation Warrants issued to CARO that can be invoiced for Development Activities completed up to the time of termination shall be considered to have been earned notwithstanding such termination. The Compensation Warrants that cannot be exercised (because Invoices for Development Activities not completed cannot be issued) will be deemed terminated, null and void as of termination. |
ARTICLE 3
COMPENSATION
3.1. Compensation for Development Activities
| (a) | Cardiol will immediately upon execution of this Agreement do the following: |
| (i) | Cardiol shall issue to CARO Eight Hundred and Twenty Four Thousand (824,000) warrants (the “CARO Compensation Warrants”), each warrant having the following qualifications: |
| (A) | an expiry date of August 31, 2022 or such earlier date as may be specified by a relevant stock exchange; |
| (B) | an exercise price of four ($4.00) Dollars per Share; and |
| (C) | each of the CARO Compensation Warrants entitles CARO to purchase one Share for the exercise price mentioned in Section 3.1(a)(i)(B). |
| (ii) | Cardiol shall allot and set aside for CARO Eight Hundred and Twenty Four Thousand (824,000) Shares currently representing approximately 3.2% of the currently outstanding Class A common shares of Cardiol, calculated on a fully diluted basis. CARO’s ultimate exercise of the CARO Compensation Warrants and its acquisition upon exercise of one Share per warrant shall constitute partial consideration for CARO’s Development Activities, which the Parties value at Three Million (US$3,000,000) Dollars. |
9
| (b) | Cardiol shall also pay to CARO, on or before November 30, 2018 the amount of US$400,000 in cash. |
| (c) | The Parties acknowledge that the aggregate of the Compensation Warrants and the cash payment mentioned in Section 3.1(b) constitutes full payment of all Development Activities, including CARO’s invoice for US$475,741.50 dated 2018-09-05 for Development Activities of the Development Plan. |
| (d) | Cardiol acknowledges that the Shares to be acquired through CARO’s exercise of the CARO Compensation Warrants shall be fully paid and non-assessable. |
| (e) | CARO acknowledges that the issuance of the CARO Compensation Warrants and the acquisition of Shares upon exercise of such warrants constitute full payment for its Development Activities, both past and future, under the Development Plan, except for the amount of the potential extra costs mentioned in Section 3.2 below. |
| (f) | Subject to Section 3.2 below, Cardiol acknowledges that CARO shall not issue invoices for any of CARO’s Development Activities under the Development Plan (other than the invoice referred to in Section 3.1(b)) until such time as CARO, in its discretion, wishes to exercise CARO Compensation Warrants. When CARO wishes to exercise any of its CARO Compensation Warrants, it shall carry out the following steps: |
| (i) | CARO shall provide Cardiol with notice in writing that it wishes to exercise a certain number of its CARO Compensation Warrants, specifying, at its own discretion, that number; |
| (ii) | CARO shall provide Cardiol with one or more invoices, tied to completed milestones in the Development Plan, and the aggregate amount of the invoices shall constitute payment in full of the aggregate exercise prices of the warrants being exercised, in accordance with Section 3.1(f)(i), on the following basis: |
V/4 = N, where
V is the aggregate amount of the invoices issued by CARO in respect of a particular milestone, expressed in Canadian dollars; and
4 is the exercise price, expressed in Canadian dollars, per warrant and
N is the number of CARO Compensation Warrants being exercised, as well as the number of Shares to which CARO is entitled to be issued upon exercise of those warrants
10
| (g) | Cardiol shall, following each issuance of Shares to CARO, confirm to CARO in writing: |
| (i) | the number of CARO Compensation Warrants CARO has exercised; | |
| (ii) | the number of CARO Compensation Warrants remaining to be exercised; and | |
| (iii) | the aggregate number of Shares issued to CARO to date. |
| (h) | CARO acknowledges that, until such time as Cardiol becomes a public company, there is no market for any of the Shares or for the CARO Compensation Warrants, and that each certificate for the CARO Compensation Warrants shall contain a legend on its face stating that such warrants cannot be traded until after the appropriate public company lock-up period, as determined by the stock exchange or Cardiol’s underwriters, has lapsed. CARO further acknowledges that once the CARO Compensation Warrants have lapsed, they cannot be exercised for the acquisition of Shares. CARO covenants to provide Cardiol with one week’s written notice of its intention to sell Shares, so that Cardiol will have an opportunity to manage public perceptions in connection with the sale. |
| (i) | Cardiol acknowledges that Nano4Heart as an authorized Third-Party Consultant will be paid for its “in kind” work by CARO with the Shares received once the CARO Compensation Warrants are exercised by CARO, and Cardiol hereby authorizes CARO to proceed with such payment method to Nano4Heart. |
3.2. No Invoices
CARO will not provide invoices to Cardiol until such time as it elects to exercise CARO Compensation Warrants.
ARTICLE 4
TERM AND TERMINATION OF THE AGREEMENT
4.1. Term
This Agreement shall take effect on the Effective Date and shall continue until terminated in accordance with Article 5 (“Term”).
ARTICLE 5
TERMINATION
5.1. Right to Terminate
This Agreement may be terminated as follows:
| (a) | By either Party if the other Party commits a material breach of this Agreement and the breaching Party fails to remedy the material breach within sixty (60) days following its receipt from the non-breaching Party of written notice of such breach and the non-breaching Party’s intention to terminate this Agreement pursuant to this Section 5.1(a); and |
11
| (b) | By either Party by giving thirty (30) days’ written notice to the other Party of the effective date of such termination in the event that such Party, acting reasonably and in good faith, determines that the continued performance of Development Activities contemplated by this Agreement would (i) constitute a potential or actual violation of Applicable Law or any policy of a Party adopted by such Party in good faith to ensure compliance with Applicable Law, (ii) constitute a potential or actual violation of any regulatory, medical, or scientific standard of integrity or ethics, or (iii) potentially jeopardize patient safety; provided that during such thirty- (30) day notice period, the Parties shall discuss in good faith possible changes to the Development Activities to avoid the situations described in clauses (i), (ii), and (iii) and, unless and until the Parties enter into an amendment reflecting such changes, CARO shall not be required to engage in Development Activities that would result In the situations described in clauses (i), (ii,) and (iii). |
5.2. Effect of Termination
If this Agreement is terminated:
| (a) | Wrap Up of Development Activities. Upon the effective date of a termination notice (as provided in Section 5.1), CARO will: |
| (i) | immediately commence the orderly wrap up and cessation of Development Activities as soon as practicable; |
| (ii) | if requested by Cardiol, use commercially reasonable efforts to transfer the applicable Development Activities to Cardiol or a Third Party designated by Cardiol as expeditiously as practicable and in accordance with all Applicable Laws. Cardiol and CARO shall cooperate with each other during such termination to preserve the value of the underlying Work Product and to comply with Applicable Laws, provided that Cardiol shall approve in writing the specific activities and tasks to be carried out by Cardiol and CARO pursuant to this sentence, such approval not to be unreasonably withheld, conditioned or delayed. |
| (b) | Return and Delivery of Confidential Information, Materials, and Reports. In the event of termination of this Agreement for any reason, CARO shall promptly return to Cardiol (or destroy, in accordance with prior written instructions to do so by Cardiol and certify such destruction) all Confidential Information of Cardiol and Materials provided or made available to CARO or generated by CARO in connection with the Development Activities. Likewise, Cardiol shall promptly return to CARO (or destroy, in accordance with prior written instructions to do so by CARO and certify such destruction) all Confidential Information of CARO in possession of Cardiol. Not later than thirty (30) days following the termination of this Agreement for any reason other than material breach by Cardiol, CARO shall deliver to Cardiol all statistical data, all statistical reports, all data entries, and all the documentation, reports, and findings produced as a result of Development Activities engaged in by CARO under this Agreement, together with all Information and documentation anticipated by Section 2.5(d). In the event of non-payment by Cardiol, such data, reports and findings shall not be delivered until CARO has received all payments required under this Agreement. On termination of this Agreement for any reason, CARO shall only retain any Information to the extent and for the duration required by any Applicable Laws. CARO, however, reserves the right to retain, at its own cost and subject to the confidentiality provisions herein, copies of all materials, data, reports, and documentation produced as a result of Development Activities engaged in by CARO that may be needed to satisfy regulatory requirements, to resolve Disputes regarding Development Activities, and to comply with CARO’s internal document retention policies. |
12
ARTICLE 6
WARRANTIES
6.1. CARO Warranties.
| (a) | CARO warrants to Cardiol that: |
| (i) | Development Activities will be performed in all material respects in accordance with: |
| (A) | the terms of this Agreement; |
| (B) | the standard of care usually and reasonably expected for Development Activities, including adherence to Good Laboratory Practice (GLP) promulgated by the Organization for Economic Co-operation and Development and applicable Regulatory Authorities in the six (6) months following the signature of this Agreement; and |
| (C) | all Applicable Laws; |
| (ii) | CARO shall use commercially reasonable efforts in meeting the timelines relating to Development Activities as set forth in the Development Plan; and |
| (iii) | CARO has not been debarred under the U.S. Generic Drug Enforcement Act or other similar law and that it will not knowingly employ any person or entity that has been so debarred to engage in Development Activities under this Agreement. |
| (b) | Notwithstanding Section 6.1(a), but subject to the requirements of Section 2.2(d), CARO makes no representation or warranty with respect to the performance by any Third-Party Vendors or Third-Party Consultants. |
6.2. Cardiol Warranties
| (a) | Cardiol warrants to CARO that Cardiol is the legal and beneficial owner and has full title to and interest in the Materials, or is otherwise licensed to use the Materials; and |
| (b) | to the best of the knowledge of Cardiol after having made due inquiry, CARO’s performance of its obligations under this Agreement, provided they are undertaken in accordance with this Agreement, and CARO’s use or possession of the Materials for the purposes of, and in the manner contemplated under, this Agreement, will not infringe the rights (including Intellectual Property Rights) of any Third Party. |
13
ARTICLE 7
LIABILITIES
7.1. Limitation of Damages
Neither Party shall have any liability (including without limitation, contract, negligence, tort, and strict liability) to the other Party or its Affiliates for any loss of profits, opportunities, or goodwill or any type of indirect, consequential or punitive damages in connection with this Agreement, this provision shall not limit any liability of either Party for any material breach of Article 9 or any willful material breach of Article 8.
ARTICLE 8
INVENTIONS AND PROPRIETARY INFORMATION
8.1. Cardiol Intellectual Property
Subject to Section 8.2, CARO agrees:
| (a) | to promptly disclose and assign (and hereby does assign) to Cardiol as Cardiol’s property all Work Product and Intellectual Property Rights that CARO creates, develops, or conceives, solely or in conjunction with others, that: |
| (i) | are based on or involve any Confidential Information or other Information of Cardiol; |
| (ii) | arise from engaging in the Development Activities or carrying out the Development Plan; |
| (iii) | relate to, constitute, result from, or include the work CARO is performing for Cardiol; or |
| (iv) | are otherwise made through the use of any time, facilities, or Materials of Cardiol or that are paid for or reimbursed by Cardiol; |
| (b) | that if for any reason the assignment of Work Product in Section 8.1(a) is ineffective, all Work Product developed by CARO in engaging in Development Activities (including any documentation produced and/or Intellectual Property Rights created or developed) under this Agreement shall be deemed to be owned fully and exclusively by Cardiol; |
| (c) | to execute all necessary documents and provide Cardiol proper assistance (at Cardiol’s expense) sufficient to enable patent, copyright, or other legal protections to be obtained by Cardiol for any such inventions or innovations as described in Sections 8.1(a) or (b), and to make and maintain reasonably detailed accurate records of any such inventions or Innovations; and |
14
| (d) | not to utilize in the course of Development Activities any proprietary or confidential information of others or any inventions of Cardiol that are not included within the scope of this Agreement. |
8.2. CARO’s Property
Cardiol acknowledges that CARO possesses certain inventions, processes, know-how, trade secrets, improvements, other intellectual properties, Intellectual Property Rights, and other assets including, but not limited to, analytical methods, procedures and techniques, procedure manuals, personnel data, financial information, computer technical expertise and software, that have been developed by CARO independent of any Materials, any Confidential Information or other Information of Cardiol or any activities and that relate exclusively to CARO’s business or operations (collectively “CARO’s Property”). Cardiol and CARO agree that, if it is necessary to use any of CARO’s Property for proper fabrication, use, development or commercialization of the Work Product or to incorporate any of CARO’s Property into the Work Product (“Incorporated CARO Property”), CARO hereby grants to Cardiol a non-exclusive, fully paid-up, worldwide license to use Incorporated CARO Property only as necessary for further developing, improving, and commercializing the Work Product, limited to all intellectual property developed by CARO’s team of cardiology investigation. Cardiol shall have no right to use any Incorporated CARO Property for any other reason or purpose whatsoever.
8.3. Third Party Agreements
CARO shall require that all of its employees, and all agents, contractors, Third-Party Vendors, and Third-Party Consultants are parties to appropriate agreements containing confidentiality and invention assignment provisions consistent with the terms of this Agreement.
ARTICLE 9
CONFIDENTIAL INFORMATION
9.1. Mutual Obligations
Each Party agrees, except as required as part of the performance of this Agreement or as permitted pursuant to any other agreement between the Parties:
| (a) | not to disclose any Confidential Information belonging to the other Party to any person (other than on a need-to-know basis to such directors, employees, or other persons engaged in activities required for the performance of the obligations set out in this Agreement who have entered legally binding written obligations at least as protective as those set out in this Article 9); |
| (b) | not to use any Confidential Information belonging to the other Party for any purpose other than in accordance with this Agreement or in accordance with any other agreement between the Parties; and |
| (c) | to take all reasonable steps necessary to prevent the unauthorized disclosure and/or use of any Confidential Information belonging to the other Party. |
15
ARTICLE 10
REGULATORY COMPLIANCE
10.1. Compliance with Applicable Laws
| (a) | Cardiol and CARO each agree that it will perform this Agreement, and will handle and retain any Materials in material compliance with all Applicable Laws. |
| (b) | Cardiol represents and warrants that: |
| (i) | it will not require CARO to perform any assignments or tasks in a manner that would violate any Applicable Law, CARO policy, or CARO quality requirements; |
| (ii) | it will cooperate with CARO in taking any actions that CARO reasonably believes are necessary to comply with any regulatory obligations that have been transferred to CARO. |
| (c) | Cardiol specifically acknowledges that CARO maintains, and from time to time revises, comprehensive policies and procedures intended to ensure compliance with Applicable Laws and CARO’s ethical standards, and that in no event shall CARO be required to engage in any activities inconsistent with such policies, procedures, and standards. CARO intends to conduct all activities to be conducted by CARO on behalf of Cardiol for non-regulated work under this Agreement in accordance with the established practices and policies of CARO. |
10.2. Regulatory Actions
If any Regulatory Authority:
| (a) | contacts CARO with respect to any Development Activities of CARO under this Agreement; |
| (b) | conducts, or gives notice of its intent to conduct with respect to any Development Activities of CARO under this Agreement, an inspection at a CARO site at which work Is being performed that directly involves any Development Activities of CARO under this Agreement; or |
| (c) | takes, or gives notice of its intent to take, any other Regulatory Action alleging improper or inadequate research practices (including the issuance of a notice of inspectional observations or a warning letter) with respect to any activity of CARO that directly involves any Development Activities of CARO under this Agreement, |
CARO shall notify Cardiol within two (2) business days of such contact or notice, or sooner if reasonably practicable and if necessary to provide Cardiol an opportunity to be present at, or otherwise participate in, any such inspection or Regulatory Action to the extent that it directly involves any Development Activities of CARO under this Agreement, subject to such restrictions, including protection of Confidential Inform and know-how of CARO, as CARO may deem advisable. In addition, if CARO becomes aware of any such regulatory contacts, inspections, or other actions (each, a “Regulatory Action”) relating to Third-Party Vendors or Third-Party Consultants that relates to any Development Plan activities, CARO will, if reasonably practicable, provide Cardiol notice of the same. Subject to the terms of any applicable agreements with Third-Party Vendors or Third-Party Consultants, to the extent reasonably practicable, Cardiol shall have the right to be present at, or otherwise participate in, any meetings, conference calls, or other actions with any Regulatory Authority that involve Development Plan activities or relating to services of Third-Party Vendors or Third-Party Consultants and to be present at any inspection of facilities of Third-Party Vendors or Third-Party Consultants, subject to such restrictions, including protection of Confidential Information and know-how of CARO and Third-Party Vendors or Third-Party Consultants, as CARO may deem advisable. CARO and Cardiol agree to cooperate in the response to any Regulatory Action.
16
10.3. Disclosures
Each Party agrees that, during an inspection or other Regulatory Action concerning a Development Plan activity in respect of which CARO is engaging in Development Activities, it will not disclose Information and Materials that are not required to be disclosed to such agency, without the prior consent of the other Party.
10.4. Expenses
As between the Parties hereto, the expenses of CARO (and Cardiol, if applicable) incurred in connection with a Regulatory Action shall be borne as follows:
| (a) | if and to the extent that the Regulatory Action relates to the activities required to implement the Development Plan itself, including without limitation any activities specified in this Agreement for such Development Plan, such expense shall be borne by Cardiol, and |
| (b) | if and to the extent that the Regulatory Action relates to the general clinical research practices of CARO, such expense shall be borne by CARO. |
ARTICLE 11
INDEPENDENT CONTRACTOR STATUS
11.1. CARO
It is understood and agreed that CARO is an independent contractor and that CARO employees will not have any rights to any of Cardiol’s benefits or any other compensation from Cardiol, nor for any purposes be deemed or intended to be an employee of Cardiol. CARO agrees to make any payments or withholding required by statute, social security laws, and any related statutes or regulations, for CARO employees. It is further understood that, except to the extent otherwise expressly contemplated elsewhere in this Agreement, CARO is not an agent of Cardiol and Cardiol is not an agent of CARO, and neither Party is authorized to bind the other Party with respect to any Third Party.
17
ARTICLE 12
NON-SOLICITATION AND NO HIRE
12.1. Cardiol Obligations
Cardiol agrees that, for the duration of this Agreement and for two (2) years thereafter, it will not directly solicit for hire or hire any employee of CARO involved in the Development Activities to Cardiol without the prior written consent of CARO.
12.2. CARO Obligations
CARO agrees that, for the duration of this Agreement and for two (2) years thereafter, it will not directly solicit for hire or hire any employee of Cardiol without the prior written consent of Cardiol.
ARTICLE 13
OTHER ACTIVITIES
13.1. Waiver of Conflicts of Interest
| (a) | This Agreement shall not prevent either Party from using any publicly available research results or other Information (including any publicly available information of the other Party) to the same extent as Third Parties generally are legally permitted to do. |
| (b) | Each Party shall inform its key personnel assigned to the performance of this Agreement of the limitations on use of Confidential Information of the other Party and instruct such personnel to comply with such restrictions, and where appropriate, adopt other measures to minimize the potential for misuse of Information. |
| (c) | CARO and Cardiol have discussed the CARO personnel expected to be assigned to engage in Development Activities, including the extent to which any such personnel are expected to simultaneously participate in activities on behalf of CARO that may involve similar technologies or products that may be competitive with the Compounds (provided that CARO shall not be obligated to disclose any Confidential Information relating to such activities). |
| (d) | The burden of proof that Confidential Information has been misappropriated shall fall upon the Party alleging breach of confidence. |
13.2. Adherence to CARO Procedures
CARO’s research and Development Activities are conducted in accordance with CARO’s standard operating procedures and policies. Cardiol acknowledges that CARO reserves the right to adhere to such procedures and policies with respect to Development Activities related to the Development Plan, and Cardiol agrees to cooperate with CARO in the application of such procedures and policies to the Development Plan; provided, however, that:
| (a) | CARO shall upon request, discuss with Cardiol the material features of such standard operating procedures and policies; and |
18
| (b) | no portion of such standard operating procedures or policies shall conflict materially with any of the provisions of this Agreement and, in the event of any such conflict, the provisions of this Agreement shall control, unless such operating procedures and policies are put in place due to mandatory regulatory changes. |
13.3. Anti-Bribery Commitments
| (a) | In connection with any activities of the Parties under this Agreement, the Parties confirm that they have not given, offered, promised, or authorized, and will not give, offer, promise, or authorize, any payment, benefit, or gift of money, or anything else of value, directly or through a Third Party, to: |
| (i) | any Government or Public Official; |
| (ii) | any political party, party official, or candidate for public or political office; |
| (iii) | any person while knowing or having reason to know that all or a portion of the value will be given, offered or promised, directly or indirectly, to anyone describe in terms 13.3(a)(i) or (ii) above; or |
| (iv) | any owner, director, employee, representative, or agent of any actual or potential customer of the Parties, for purposes of influencing any act or decision of such individual in his official capacity, inducing such individual to do or omit to do any act in violation of the individual’s duty, inducing the individual to use the individual’s official influence with a government to affect or influence an act or decision of the government, or to secure any improper advantage in order to assist in obtaining or retaining business. |
| (b) | The Parties shall comply with all applicable anti-bribery laws of any jurisdiction, including any record keeping requirements of such laws, in the countries where the Parties have their principal places of business and where they conduct any activities under this Agreement. |
ARTICLE 14
FORCE MAJEURE
14.1. Waiver of Liability
If either Party is affected by any extraordinary, unexpected, and unavoidable event such as acts of God, floods, fires, riots, war, terrorism, labor disturbances, failures of sources of supply, infectious diseases of animals, or by the reason of any law, order, proclamation, regulation, ordinance, demand or requirement of the relevant government or any authority or representative thereof, or by reason of any other cause whatsoever (provided that in all such cases the Party claiming relief on account of such event can demonstrate that such event was extraordinary, unexpected, and unavoidable by the exercise of reasonable care) (“Force Majeure”), it shall notify the other Party as soon as practicable of the nature and extent thereof and take all reasonable steps to overcome the Force Majeure as quickly as possible and to minimize the loss occasioned to the other Party. Such notice will identify the requirements of this Agreement or such of its obligations as may be affected, and, subject to the provisions below, to the extent so affected, said obligations will be suspended during the period of such disability. The Party prevented from performing hereunder (the “Force Majeure Party”) will use reasonable efforts to remove such disability as quickly as possible and will continue performance whenever such causes are removed.
19
14.2. Remedies in the Event of Force Majeure
Subject to compliance with the provisions of Section 14.1, an incident of Force Majeure shall not constitute a breach of this Agreement and the time for performance shall be extended accordingly. However, if the Force Majeure event prevents the Force Majeure Party from performing its obligations for more than thirty (30) days:
| (a) | the Parties may enter into discussions with a view to alleviating its effects and, if possible, agreeing on such alternative arrangements as may be reasonable in the circumstances; or |
| (b) | the Party that is not the Force Majeure Party may immediately, on written notice to the Force Majeure Party, terminate this Agreement pursuant to Article 5 hereof. |
14.3. Dispute Resolution
| (a) | There is a high level of trust between the current management of CARO and the current management of Cardiol. Therefore, if any dispute, controversy, or difference arises relating to this Agreement (“Dispute(s)”), prior to instituting any legal proceeding on account of such Dispute, the Parties will attempt in good faith to settle such Dispute first by negotiation and consultation between themselves, Including referral of such Dispute to the President of each Party, who will attempt in good faith to resolve the Dispute within thirty (30) days following reference of the Dispute to them. If such executives are unable to resolve such Dispute or agree upon a mechanism to resolve such Dispute within such thirty (30) day period, then the Parties shall be free to pursue arbitration, as set out in Section 14.3(b). |
| (b) | Any Dispute, controversy, or claim arising out of or relating to this Agreement including any question regarding its existence, interpretation, validity, breach, or termination or the business relationship created by it shall be referred to and finally resolved by under the Rules of Arbitration of the International Chamber of Commerce (the “ICC Rules”) in force on the date the Dispute is submitted for arbitration, by a sole arbitrator appointed in accordance with the ICC Rules. The arbitrator shall apply Mexican law in resolving any Disputes. Without prejudice to the application of the ICC Rules, Cardiol and CARO agree that the taking of evidence in any arbitration commenced pursuant to this clause shall be conducted according to the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration. The place of the arbitration shall be Monterrey, Nuevo Leon, Mexico, and the language of the arbitration shall be English. The fees and expenses of the arbitrator, as well as the administrative fees of the ICC, shall be borne equally (50/50) by the Parties. Cardiol and CARO shall each bear Its own costs, expenses, and attorneys’ fees incurred in connection with the arbitration. |
| (c) | The Dispute resolution provisions of this Section 14.3 are intended to encompass all possible claims between Cardiol and CARO, including Disputes related to this Agreement, its negotiation, performance, non-performance, interpretation, termination, or the relationship between Cardiol and CARO established by this Agreement. Cardiol and CARO agree that the award issued by the sole arbitrator shall be final and binding upon the parties to the Dispute and shall not be subject to appeal. Cardiol and CARO also agree that a judgment recognizing and enforcing the arbitrator’s award may be entered in any court with jurisdiction, and irrevocably submit to the jurisdiction of any such court over the Parties or their assets for purposes of recognizing and enforcing the award. |
20
| (d) | The provisions of Sections 14.3(a), (b) and (b) above shall not preclude either Party from seeking immediate injunctive relief in the event such Party believes that irreparable harm will occur. |
14.4. Notices
Any notices required or permitted to be given hereunder by either Party shall be in writing and shall be deemed given on the date received if delivered personally or by a reputable overnight delivery service, or three (3) business days after the date postmarked if sent by registered or certified mail, return receipt requested, to the following address:
| (a) | If to Cardiol: 2275 Upper Middle Rd East, Suite 101, Oakville, ON, Canada, L6H 0C3 –Email to: ******* and ******* and ******* |
| (b) | If to CARO: Avenida Eugenio Garza Sada No. 427, Int. 2, Col. Altavista, Monterrey, N.L., Mexico, C.P. 64840 – Email to: *******, ******* and *******. |
ARTICLE 15
GENERAL PROVISIONS
15.1. Insurance
| (a) | Each of CARO and Cardiol shall maintain at its own expense full insurance coverage for itself and its employees and agents. |
| (b) | The insurance of CARO shall include: |
| (i) | commercial general liability insurance covering (i) claims for damages because of bodily injury (including death), personal injury, advertising injury, and property damage arising out of acts or omissions of its employees and agents, (ii) claims in respect of deliverables, products, and completed operations (with no exclusions for cannabis or cannabis derivatives), each case with minimum indemnity limits of one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) in the aggregate and including coverage for contractual liabilities; and |
| (ii) | errors and omissions insurance covering medical malpractice services of the type performed by CARO under this Agreement, with minimum indemnity limits of one million dollars ($1,000,000) per event and three million dollars ($3,000,000) general aggregate. |
21
| (c) | CARO shall ensure that Cardiol is added to its insurance policy mentioned in Section 15.1(b)(i) as a named insured. | |
| (d) | Each of the above policies of insurance: |
| (i) | shall cover claims arising out of the performance of this Agreement that are made within a period of not less than three (3) years after its expiration or earlier termination; and |
| (ii) | shall be primary to any liability insurance carried by such Party which insurance shall be excess and non-contributory for claims and losses arising out of the performance of this Agreement. |
| (e) | Maintenance of insurance coverage shall not relieve an insuring Party of any responsibility under this Agreement for damages in excess of insurance limits or otherwise. |
15.2. Governing Law
This Agreement and the obligations of the Parties shall be governed by and construed in accordance with the substantive laws of Mexico, without regard to any principles of conflicts of laws that would result in the application of the laws of any other state or jurisdiction, as to all matters, including, but not limited to, matters of validity, construction, effect, and performance.
15.3. Assignment
| (a) | Other than what its already authorized in Sections 2.2(a) and 3.1(i), neither Party will assign any right or delegate any obligation under this Agreement without the prior written consent of the other Party, not to be unreasonably withheld; provided, however, that either Party may, without such consent, but with notice to the other Party, assign this Agreement, in whole or in part: |
| (i) | in connection with the transfer or sale of all or substantially all of its assets or the line of business to which this Agreement relates; |
| (ii) | to a successor entity or acquirer in the event of a merger, consolidation, or change of control involving such Party; or |
| (iii) | to any Affiliate. |
| (b) | Any purported assignment in violation of the Section 15.3(a)(i) will be void. |
| (c) | Any permitted assignee will assume the rights and obligations of its assignor under this Agreement and any permitted assignment shall not release the assigning Party from its obligations under this Agreement. |
15.4. Publication and Publicity
Results of the Development Activities may not be published or referred to, in whole or in part, by CARO without the prior express written consent of Cardiol. Except to the extent required under Applicable Laws, neither Party will use the other Party’s name in connection with any publication or promotion without the other Party’s prior written consent.
22
15.5. Invalidity
If any parts or part of this Agreement are held to be invalid, the remaining parts of the Agreement will continue to be valid and enforceable.
15.6. Waiver
The failure to enforce any right or provision herein shall not constitute a waiver of that right or provision. Any waiver of a breach of a provision shall not constitute a waiver of any subsequent breach of that provision.
15.7. Survival
The expiration or termination of this Agreement shall not affect the rights of either Party that accrue prior to expiration or termination or any rights or obligations of the Parties under the following sections of this Agreement, each of which shall survive such expiration or termination: Article 1, Sections 2.5(d) and 5.2, Article 7, Sections 8.1 and 8.2, Article 9, Article 10, Article 11, Article 12, Article 13 and Article 15. Termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.
15.8. Entire Agreement
This Agreement (including all Exhibits) contain the complete understanding of the Parties with respect to the subject matter hereof and supersede any prior written or oral agreements regarding such subject matter. In making this Agreement, neither Party relies on any promise, action, or statement made by the other Party, other than those contained in this Agreement and its exhibits. In the event of a conflict between the provisions of the exhibits to this Agreement and the provisions of this Agreement itself, the conflicting provision of the Agreement shall control over the language in the exhibit, unless otherwise agreed by the Parties.
15.9. Amendments
No amendment, waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless it is in writing and signed by a duly authorized representative of each Party.
15.10. Counterparts
This Agreement may be executed in multiple counterparts, and all such counterparts shall constitute one and the same agreement.
23
THE NEXT PAGE IS THE SIGNING PAGE.
SIGNED BY THE PARTIES AS OF THE EFFECTIVE DATE:
| CARDIOL THERAPEUTICS INC. | |||
| By: | [Redacted - Personal Information] | ||
| Name: | [Redacted - Personal Information] | ||
| Title: | CEO | ||
| CLINICAL ACADEMIC RESEARCH ORGANIZATIONAL, S.A. DE C.V. | |||
| By: | [Redacted - Personal Information] | ||
| Name: | [Redacted - Personal Information] | ||
| Title: | Authorized Representative | ||
| By: | |||
| Name: | |||
| Title: | |||
| WITNESS: | |||
| By: | [Redacted - Personal Information] | ||
| Name: | [Redacted - Personal Information] | ||
| WITNESS: | |||
| By: | [Redacted - Personal Information] | ||
| Name: | [Redacted - Personal Information] | ||
24
Development Plan — CARO - TecSalud - nano4heart – Cardiol
Novel therapeutics for Heart Failure treatment
25
Exhibit 99.3
AMENDMENT TO EXCLUSIVE SUPPLY AGREEMENT
December 7, 2018
Re: Amendment to Exclusive Supply Agreement
Reference is made to the Exclusive Supply Agreement (the “Agreement”) dated September 28, 2018 between Noramco, Inc., and Cardiol Therapeutics Inc. This amendment (the “Amendment”) confirms our agreement respecting the amendment of certain provisions of the Agreement. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Agreement.
The Agreement is hereby amended as follows:
| 1. | Reference to “December 1, 2018” in the first sentence of Subsection 1.1.2 (Exclusivity in the Territory) of the Agreement is deleted and replaced with “December 21, 2018”. |
All other terms of the Agreement shall continue in full force and effect. This Amendment shall be governed by and construed, interpreted and performed in accordance with the substantive law of Delaware.
This Amendment may be executed in counterparts. This Amendment may be delivered electronically by email of a signed PDF copy.
| Yours truly, | ||
| CARDIOL THERAPEUTICS INC. | ||
| Signature: | ||
| Print Name: [Redacted - Personal Information] | ||
| Title: CEO | ||
| Confirmed and agreed to by Noramco, Inc., this 6th day of December 2018. | ||
| NORAMCO, INC. | ||
| Signature | [Redacted - Personal Information] | |
| Print Name: [Redacted - Personal Information] | ||
| Title: VP Global Business Development and Innovation | ||
Exhibit 99.4
AMENDMENT NO. 3 TO EXCLUSIVE SUPPLY AGREEMENT
THIS IS AMENDMENT No. 3 to an Exclusive Supply Agreement dated September 28, 2018, as amended on December 7, 2018 (collectively, the “Agreement”) by and between Noramco, Inc., a Georgia corporation, with offices at 500 Swedes Landing Road, Wilmington, Delaware 19801, USA (“Noramco”), and Cardiol Therapeutics Inc., an Ontario corporation located at 2275 Upper Middle Road East, Suite 101, Oakville, ON, Canada, L6H 0C3 (“Buyer”). Noramco and Buyer may be referred to herein each as a “Party” or together as the “Parties”, as the context may require. All capitalized words and phrases herein will have the meanings ascribed thereto in the Agreement except if otherwise defined in this Amendment.
WHEREAS Section 1.1.4 of the Agreement requires Buyer to purchase certain raw materials from Noramco in tranches and with certain payments and timelines;
AND WHEREAS Noramco is willing to amend the Agreement on the terms set out in this Amendment.
NOW THEREFORE in consideration of good and valuable consideration, the receipt and sufficiency whereof is mutually acknowledged, the Parties agree with one another to modify the Agreement as follows:
| 1. | Section 1.1.4 shall be modified to read as follows: |
| “1.1.4 Initial Raw Materials Order. Buyer shall pay Noramco, $1,200,000 on September 15th 2019, and $1,200,000 on or before November 30th, 2019, for the purchase of raw materials for the production of 700KG of API as per Section 1.1.5.3. Amounts paid for raw materials will be credited towards Buyer’s future purchases of API.” |
| 2. | In all other respects, the Agreement remains in force and unamended. |
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute this Amendment as of the 2nd day of July, 2019.
| CARDIOL THERAPEUTICS INC. | NORAMCO, INC. | |||
| Signature: | [Redacted - Personal Information] | Signature: | [Redacted - Personal Information] | |
| Print Name: | [Redacted - Personal Information] | Print Name: | [Redacted - Personal Information] | |
| Title: | CEO | Title: | Chief Innovation Officer | |
Exhibit 99.5
AMENDMENT NO. 4 TO EXCLUSIVE SUPPLY AGREEMENT
THIS IS AMENDMENT No. 4 to an Exclusive Supply Agreement dated September 28, 2018, as amended on December 7, 2018, December 11, 2018 and July 2, 2019 (collectively, the “Agreement”) by and between Noramco, Inc., a Georgia corporation, with offices at 500 Swedes Landing Road, Wilmington, Delaware 19801, USA (“Noramco”), and Cardiol Therapeutics Inc., an Ontario corporation located at 2275 Upper Middle Road East, Suite 101, Oakville, ON, Canada, L6H 0C3 (“Buyer”). Noramco and Buyer may be referred to herein each as a “Party” or together as the “Parties”, as the context may require. All capitalized words and phrases herein will have the meanings ascribed thereto in the Agreement except if otherwise defined in this Amendment.
WHEREAS Section 1.1.4 of the Agreement requires Buyer to purchase certain raw materials from Noramco in tranches and with certain payments and timelines;
AND WHEREAS Noramco is willing to amend the Agreement on the terms set out in this Amendment.
NOW THEREFORE in consideration of good and valuable consideration, the receipt and sufficiency whereof is mutually acknowledged, the Parties agree with one another to modify the Agreement as follows:
| 1. | Section 1.1.4 shall be modified to read as follows: |
| “1.1.4 Initial Raw Materials Order. Buyer shall pay Noramco, $1,200,000 on September 22nd, 2019, and $1,200,000 on or before November 30th, 2019, for the purchase of raw materials for the production of 700KG of API as per Section 1.1.5.3. Amounts paid for raw materials will be credited towards Buyer’s future purchases of API.” | |
| 2. | In all other respects, the Agreement remains in force and unamended. |
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute this Amendment as of the 11 day of September, 2019.
| Cardiol Therapeutics Inc. | Noramco, Inc. | |||
| Signature: | [Redacted - Personal Information] | Signature: | [Redacted - Personal Information] | |
| Print Name: | [Redacted - Personal Information] | Print Name: | [Redacted - Personal Information] | |
| Title: | CEO | Title: | President & CEO | |
Exhibit 99.6
PAYMENT EXTENSION AGREEMENT
THIS PAYMENT EXTENSION AGREEMENT is dated as of the date set out below
BETWEEN:
NORAMCO, INC., a Georgia corporation, with offices at 500 Swedes Landing Road, Wilmington, Delaware 19801, USA (“Noramco”)
- and -
CARDIOL THERAPEUTICS INC., an Ontario corporation located at 2275 Upper Middle Road East, Suite 101, Oakville, ON, Canada, L6H 0C3 (“Buyer”)
BACKGROUND:
| · | Noramco and Buyer (the “Parties”) entered into an Exclusive Supply Agreement dated September 28, 2018, which was amended on December 7, 2018, December 11, 2018, July 2, 2019 and September 11, 2019 (collectively, the “Agreement”); | |
| · | Section 1.1.4 of the Agreement requires Buyer to purchase certain raw materials from Noramco in tranches and with certain payments and timelines; | |
| · | The Parties wish to extend the times for the two payments mentioned in Section 1.1.4 of the Agreement on the terms set out in this Payment Extension Agreement. |
Now therefore in consideration of good and valuable consideration, the receipt and sufficiency whereof is mutually acknowledged, the Parties agree with one another as follows:
| 1. | The times for the two payments under Section 1.1.4 of the Agreement shall be extended to November 3, 2019 and November 30, 2019 respectively. |
| 2. | In all other respects, the Agreement remains in force and unamended. |
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute this Payment Extension Agreement as of the 28 day of October, 2019.
| Cardiol Therapeutics Inc. | Noramco, Inc. | |||
| Signature: | [Redacted - Personal Information] | Signature: | [Redacted - Personal Information] | |
| Print Name: | [Redacted - Personal Information] | Print Name: | [Redacted - Personal Information] | |
| Title: | CEO | Title: | President & CEO | |
Exhibit 99.7
AMENDMENT NO. 6 TO EXCLUSIVE SUPPLY AGREEMENT
THIS IS AMENDMENT No. 6 to an Exclusive Supply Agreement dated September 28, 2018, as amended on December 7, 2018, December 11, 2018, July 2, 2019, September 11, 2019, and October 28, 2019 (collectively, the “Agreement”) by and between Noramco, Inc., a Georgia corporation, with offices at 500 Swedes Landing Road, Wilmington, Delaware 19801, USA (“Noramco”), and Cardiol Therapeutics Inc., an Ontario corporation located at 2275 Upper Middle Road East, Suite 101, Oakville, ON, Canada, L6H 0C3 (“Buyer”). Noramco and Buyer may be referred to herein each as a “Party” or together as the “Parties”, as the context may require. All capitalized words and phrases herein will have the meanings ascribed thereto in the Agreement except if otherwise defined in this Amendment.
WHEREAS the definitions used in this Amendment are the same as those used in the Agreement;
AND WHEREAS the Agreement requires Buyer to purchase API from Noramco in tranches and with certain Minimum Quantities, payments and timelines;
AND WHEREAS Noramco is willing to amend the Agreement on the terms set out in this Amendment.
NOW THEREFORE in consideration of good and valuable consideration, the receipt and sufficiency whereof is mutually acknowledged, the Parties agree with one another to modify the Agreement as follows:
| (a) | Provided that Buyer enters into a supply agreement with Shoppers Drug Mart Limited and/or its affiliates (“Shoppers”), no later than May 31, 2020, for the supply to Shoppers of Products containing API, the Buyer will have exclusivity throughout the entire Term of the Agreement for all Products sold to retail pharmacies in Canada and Mexico (“Retail Exclusivity”). There will be no requirement for the Buyer to purchase API in any Minimum Quantity pursuant to Section 1.1.5 of the Agreement to maintain Retail Exclusivity. |
| (b) | The requirement for the Buyer to purchase API in any Minimum Quantity or Minimum Quantities pursuant to Section 1.1.5 of the Agreement will remain in effect in order for the Buyer to maintain its exclusivity in markets other than Retail Exclusivity. |
| (c) | Notwithstanding Section 1.1.5 of the Agreement, as amended, Noramco shall offer Buyer and charge Buyer the best available Price per unit of weight that is offered to any Noramco customer for API anywhere in Canada or Mexico, calculated on an EXW basis. |
1
| (d) | Nothing in the foregoing in this Amendment affects or modifies the existing obligations of Buyer to purchase from Noramco 100 percent of Buyer’s requirements for API for use in Products. |
| (e) | Noramco and Buyer mutually acknowledge that the other of them is in full compliance with the Agreement as of the date of this Amendment and that there exists no breach in the Agreement as of the date of execution hereof. | |
| (f) | This Amendment shall be null and void if the Agreement with Shoppers referred to in (a) above is not signed by May 31, 2020. | |
| (g) | In all other respects, the Agreement remains in force and unamended. |
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute this Amendment as of the 12 day of November, 2019.
| CARDIOL THERAPEUTICS INC. | NORAMCO, INC. | |||
| Signature: | [Redacted - Personal Information] | Signature: | [Redacted - Personal Information] | |
| Print Name: | [Redacted - Personal Information] | Print Name: | [Redacted - Personal Information] | |
| Title: | President and CEO | Title: | President and CEO | |
2
Exhibit 99.8
NOTICE OF ASSIGNMENT
January 31, 2020
Cardiol Therapeutics, Inc.,
2275 Upper Middle Road East, Suite 101
Oakville, ON
Canada, L6H 0C3
Re: Exclusive Supply Agreement, dated September 28, 2018, as amended, between Cardiol Therapeutics, Inc. and Noramco, Inc. (the “Agreement”).
Dear Contract Manager,
Please be informed that the above referenced Agreement, effective December 30, 2019, is assigned and transferred to Purisys LLC, a limited liability company organized under the laws of the State of Delaware, USA, with offices at 1550 Olympic Drive, Athens, GA 30601 (“Purisys”). Purisys is an affiliate of Noramco LLC fka Noramco, Inc.
This letter shall serve as notice that pursuant to Section 21 of the Agreement, Noramco, Inc. has assigned all of its rights, liabilities, and obligations under the Agreement to Purisys.
Should you have any questions regarding this matter, please contact Tim Jones, Purisys VP Global Pharmaceuticals and Medical OTC, at [Redacted - Personal Information]
Very truly yours,
| By: | [Redacted - Personal Information] | |
| [Redacted - Personal Information] | ||
| VP Global Pharmaceuticals and Medical OTC | ||
| PURISYS LLC | ||
