Full Press Release Details
8,437,500 Common Shares
UNDERWRITING AGREEMENT
As representative of the
several underwriters
1 Post Office Square, Suite 3000
Boston, Massachusetts 02109
Ladies and Gentlemen:
Cardiol Therapeutics
Inc., a corporation organized under the laws of the Province of Ontario, Canada (the "Company"), confirms its
agreement with Canaccord Genuity LLC ("Canaccord") and each of the other Underwriters named in Schedule A
hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Canaccord is acting as representative (in such capacity, the
"Representative"), with respect to (i) the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of common shares in the capital of the Company ("Common
Shares") set forth in Schedule A hereto and (ii) the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 1,265,625
additional Common Shares. The aforesaid 8,437,500 Common Shares (the "Initial Securities") to be purchased
by the Underwriters and all or any part of the 1,265,625 Common Shares subject to the option described in
Section 2(b) hereof (the "Option Securities") are herein called, collectively, the
The Company has filed a final
short form base shelf prospectus (such final short form base shelf prospectus together with all documents incorporated therein by reference,
is hereinafter referred to as the "Canadian Base Prospectus"), dated July 12, 2024, qualifying the distribution
of up to U.S.$150,000,000 aggregate principal amount of common shares, debt securities, warrants, subscription receipts, units and other
securities of the Company identified therein (collectively, the "Shelf Securities") with the Ontario Securities Commission
(the "Reviewing Authority") and the other Canadian Qualifying Authorities (as defined below); the Reviewing Authority
has issued a receipt under National Policy 11-202 - Process for Prospectus Reviews in Multiple Jurisdictions (a "Receipt")
in respect of the Canadian Base Prospectus. The Company is qualified to distribute the Shelf Securities in each of the provinces and territories
of Canada, other than Qu bec (collectively, the "Canadian Qualifying Jurisdictions") under the Canadian Base
Prospectus pursuant to Canadian Securities Laws (as defined below), including the rules and procedures established pursuant to National
Instrument 44-101 - Short Form Prospectus Distributions and National Instrument 44-102 - Shelf Distributions
(together, the "Canadian Shelf Procedures"). The Canadian preliminary prospectus supplement relating to the offering
of the Securities, which excludes certain pricing information and other final terms of the Securities and which has been filed with the
Reviewing Authority in accordance with the Canadian Shelf Procedures and the other Canadian Securities Laws on October 8, 2024,
together with the Canadian Base Prospectus, including all documents incorporated therein by reference, is hereinafter referred to as the
"Canadian Preliminary Prospectus"; and the Canadian final prospectus supplement relating to the offering of the Securities,
which includes the pricing and other information omitted from the Canadian Preliminary Prospectus, to be dated the date hereof and filed
with the Reviewing Authority in accordance with the Canadian Shelf Procedures, together with the Canadian Base Prospectus, including all
documents incorporated therein by reference, is hereinafter referred to as the "Canadian Final Prospectus."
The Company meets the general
eligibility requirements for use of Form F-10 under the U.S. Securities Act of 1933, as amended, and the rules and regulations
of the U.S. Securities and Exchange Commission (the "Commission") thereunder (collectively, the "Securities
Act") for the purposes of the offering of Securities. The Company has filed with the Commission a registration statement on
Form F-10 (No. 333-280713) in respect of the Shelf Securities and has filed an appointment of agent for service of process upon
the Company on Form F-X (the "Form F-X") with the Commission in conjunction with the filing of such registration
statement (such registration statement, including the Canadian Base Prospectus with such deletions therefrom and additions thereto as
are permitted or required by Form F-10 and the applicable rules and regulations of the Commission and including the exhibits
to such registration statement and all documents incorporated by reference in the prospectus contained therein, are hereinafter referred
to as the "Registration Statement"); the base prospectus relating to the Shelf Securities contained in the Registration
Statement at the time the registration statement became effective, including all documents incorporated therein by reference, is hereinafter
referred to as the "U.S. Base Prospectus"; the U.S. preliminary prospectus supplement relating to the offering of the
Securities filed with the Commission pursuant to General Instruction II.L of Form F-10 under the Securities Act on October 8,
2024, including all documents incorporated therein by reference, together with the U.S. Base Prospectus (which consists of the Canadian
Base Prospectus with such deletions therefrom and additions thereto as are permitted or required by Form F-10 and the applicable
rules and regulations of the Commission, and all documents incorporated therein by reference therein), is hereinafter referred to
as the "U.S. Preliminary Prospectus"; and the U.S. final prospectus supplement relating to the offering of the Securities
to be filed with the Commission pursuant to General Instruction II.L of Form F-10 under the Securities Act, including all documents
incorporated therein by reference, together with the U.S. Base Prospectus (which consists of the Canadian Base Prospectus with such deletions
therefrom and additions thereto as are permitted or required by Form F-10 and the applicable rules and regulations of the Commission,
and all documents incorporated therein by reference therein), is hereinafter referred to as the "U.S. Prospectus".
As used herein, "Base
Prospectuses" shall mean, collectively, the Canadian Base Prospectus and the U.S. Base Prospectus, "Preliminary Prospectuses"
shall mean, collectively, the Canadian Preliminary Prospectus and the U.S. Preliminary Prospectus; and "Final Prospectuses"
shall mean, collectively, the Canadian Final Prospectus and the U.S. Final Prospectus. Any reference in this Agreement to the Registration
Statement, the Base Prospectuses, the Preliminary Prospectuses or the Final Prospectuses shall be deemed to refer to and include the documents
incorporated by reference therein as of the date hereof. The terms "supplement," "amendment," and
"amend" as used herein with respect to the Registration Statement, the Base Prospectuses, the General Disclosure Package
(as defined below), the Preliminary Prospectuses or the Final Prospectuses shall include all documents subsequently filed or furnished
by the Company with or to the Canadian Qualifying Authorities (as defined below) and the Commission pursuant to the U.S. Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act"), that are deemed to be
incorporated by reference therein.
As used in this Agreement:
means 7:30 a.m. New York City time, on October 9, 2024 or such other time as agreed by the Company and the Representative.
road show" means a "bona fide electronic road show" as defined in Rule 433(h)(5) under the Securities
Act that has been made available without restriction to any person.
"Canadian Securities
Laws" means all applicable securities laws in each of the provinces and territories of the Canadian Qualifying Jurisdictions
and the respective rules, regulations, instruments, blanket orders and blanket rulings under such laws together with applicable published
policies, policy statements and notices of the applicable securities commission or securities regulatory authority in each such jurisdiction.
Package" means the U.S. Preliminary Prospectus together with the pricing information, each identified in Schedule B-1
hereto, and the Issuer General Use Free Writing Prospectuses, if any, identified in Schedule B-2 hereto, all considered together.
"Issuer Free Writing
Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 of the Securities Act ("Rule 433"),
including without limitation any "free writing prospectus" (as defined in Rule 405 of the Securities Act ("Rule 405"))
relating to the Securities that is (i) required to be filed with the Commission by the Company, (ii) a "road show that
is a written communication" within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission,
or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the
Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the Company's records pursuant to Rule 433(g).
Free Writing Prospectus" means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors,
as evidenced by its being specified in Schedule B-2 hereto.
Free Writing Prospectus" means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
Section 1. Representations
| (vi) | Independent Accountants . The accountants who certified the financial statements and supporting schedules included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Final Prospectuses are (i) independent public accountants as required by the Securities Act and the Public Company Accounting Oversight Board, and (ii) independent with respect to the Company as required by applicable Canadian professional standards; and in the period of three years prior to the date hereof, there has not been any reportable event (within the meaning of NI 51-102) between the Company and such accountants. | |
| (vii) | Audit Committee . The Company has a validly appointed audit committee whose composition and responsibilities satisfy the requirements of Section 10A of, and Rule 10A-3 under, the Exchange Act and National Instrument 52-110 Audit Committees . |
| (xxvi) | Licenses and Permits . (a) The Company has provided the Underwriters with copies of all material documents and correspondence relating to the current licenses (the " Licenses ") issued by Health Canada (" HC ") pursuant to the Cannabis Act (Canada) and the regulations promulgated thereunder to Dalton Chemical Laboratories, Inc., operating as Dalton Pharma Services (" Dalton "). To the knowledge of the Company, Dalton is in compliance, in all material respects, with the terms and conditions of all such Licenses and Dalton has advised the Company that it does not anticipate any variations or difficulties in renewing such Licenses or any other required license or permit. The offering of the Securities (including the proposed use of proceeds of the offering) will not have any material adverse impact on the Licenses or, to the knowledge of the Company, require Dalton to obtain any new License under the Cannabis Act. (b) The Company is not required to obtain any permits or licenses (other than the Licenses issued to Dalton) pursuant to the Cannabis Act (Canada) or any other permits from HC or any similar federal, provincial or municipal regulatory body or self-regulatory body in connection with the current and proposed conduct of its business. | |
| (xxvii) | Title to Property . The Company and its subsidiaries have good and marketable title to all real property owned by them and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (A) are described in the Registration Statement, the General Disclosure Package and the Final Prospectuses or (B) do not, singly or in the aggregate, materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or its subsidiaries; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or its subsidiaries holds properties described in the Registration Statement, the General Disclosure Package or the Final Prospectuses, are in full force and effect, and neither the Company nor any such subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease. |
| (xxxvii) | Research and Development Activities . (a) All product research and development activities, including quality assurance, quality control, testing, and research and analysis activities, conducted by the Company in connection with their business is being conducted, in all material respects, in accordance with best industry practices and in compliance, in all material respects, with all industry, laboratory safety, management and training standards applicable to the Company's current and proposed business, and all such processes, procedures and practices, required in connection with such activities are in place as necessary and are being complied with, in all material respects. (b) All product candidates developed, tested, investigated, fabricated, manufactured, packaged, labelled, stored, transported, handled, imported, exported or distributed by or on behalf of the Company, and all of the services performed by the Company in relation to the product candidates that are subject to the jurisdiction of HC, the Canadian provincial Ministries of Health, the FDA, the EMA or any comparable Regulatory Authority are in material compliance with all applicable legal requirements, including those regarding (if and as applicable) non-clinical testing, clinical research, good manufacturing practices, good laboratory practices, labeling, packaging, record-keeping, adverse event reporting and reporting of corrections and removals. (c) The descriptions in the Registration Statement, the General Disclosure Package and the Final Prospectuses of the research results are consistent in all material respects with such results and no other studies or other clinical trials whose results are known to the Company are materially inconsistent with or otherwise materially call into question the results described or referred to in the Registration Statement, the General Disclosure Package and the Final Prospectuses. | |
| (xxxviii) | Payment of Taxes . All federal, provincial and foreign income tax returns of the Company and its subsidiaries required by law to be filed have been filed (in Canada, the United States and otherwise) and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid (except for any failure to so pay that would be immaterial), except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. All tax returns, declarations, remittances and filings required to be filed by the Company and its subsidiaries have been filed with all appropriate Governmental Entities, all such returns, declarations, remittances and filings are complete and accurate in all material respects and no material fact or facts have been omitted therefrom which would make any of them misleading and no assessment in connection therewith has been made against the Company or any of its subsidiaries. To the knowledge of the Company, there are no issues or disputes outstanding with any Governmental Entity respecting any taxes that have been paid, or may be payable, by the Company or any of its subsidiaries. There are no agreements, waivers or other arrangements with any taxation authority providing for an extension of time for any assessment or reassessment of taxes with respect to the Company or any of its subsidiaries. The Company and its subsidiaries have each established on their books and records reserves that are adequate for the payment of all taxes not yet due and payable and there are no liens for taxes on the assets and properties of the Company or any of its subsidiaries (other than liens for taxes that are not yet due and payable or that are being contested in good faith), and, to the knowledge of the Company, there are no audits pending of the tax returns of the Company or any of its subsidiaries (whether federal, state, provincial, local or foreign) and there are no claims which have been asserted relating to any such tax returns, which audits and claims, if determined adversely, would result in the assertion by any governmental agency of any material deficiency. All scientific research and experimental development (" SR&ED ") tax incentives applied for by the Company or any of its subsidiaries are bona fide and the Company has no knowledge that Canada Revenue Agency will disallow, reassess or reduce any SR&ED incentives applied for by or previously granted to the Company or any of its subsidiaries. |
and Delivery to Underwriters; Closing.
Section 3. Covenants
The Company covenants with
each Underwriter as follows:
The Company and the Underwriters, on a