Form 8-K - Current report

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 6, 2024

 

Conduit Pharmaceuticals Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		001-41245		87-3272543
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

4995 Murphy Canyon Road, Suite 300 San Diego, California		92123
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: [phone]

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		CDT		The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50		CDTTW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

Item 1.01

Entry into a Material Definitive Agreement.

 

On August 6, 2024, Conduit Pharmaceuticals Inc. (the “Company”) entered into a Senior Secured Promissory Note (the “Note”) and a Security Agreement (the “Security Agreement”, and collectively with the Note, the “Debt Agreements”) with Nirland Limited (the “Purchaser”), pursuant to which the Company issued and sold to the Purchaser the Note in the original principal amount of $2,650,000, inclusive of a $500,000 original issuance discount. Of the total amount of the Note, $1,675,000 was issued upon execution of the Note and the balance of $475,000 will be paid after the Closing Common Stock, defined herein, has been registered for resale, and such resale registration statement has been declared effective by the Securities and Exchange Commission. In connection with the Note, the Company has agreed to issue to the Purchaser 12,500,000 shares of the Company’s common stock (the “Closing Common Stock”).

 

The Note bears interest at a rate of 12% per annum, accruing daily on a 365-day basis, payable monthly in arrears as cash, or accrued at the Purchaser’s discretion. The Note matures on August 5, 2025. The Company has certain obligations to mandatorily prepay the Note, and any accrued interest, with portions of any proceeds received in connection with future financings. The Company may prepay the outstanding principal and accrued interest on the Note with no fee. Until the Note is no longer outstanding, the Purchaser has a right of first refusal to participate, in an amount up to 100%, with certain exceptions, in any future equity or debt offering of the Company.

 

The Note is secured by all assets of the Company and its subsidiary. The Note is guaranteed by the subsidiary of the Company, as well as personally by Dr. Andrew Regan, a member of the Company’s Board of Directors. The Note contains customary default provisions for a transaction of this nature. Upon an event of default, the interest rate of the Note will increase to 18%, until such time as the default is remedied.

 

The Security Agreement and form of Note are attached as Exhibits 10.1 and 4.1, respectively. The description of the terms of the Debt Agreements are not intended to be complete and are qualified in their entirety by reference to such exhibits.

 

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation Under an Off balance Sheet Arrangement of a Registrant.

 

The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.

 

Item 3.02

Unregistered Sales of Equity Securities.

 

The Company issued the Closing Common Stock pursuant to the exemption from the registration requirements of the Securities Act available under Section 4(a)(2). The issuance of the Closing Common Stock has not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. The description of the Closing Common Stock under Item 1.01 of this Form 8-K is incorporated by reference herein.

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits.

 

	Exhibit No.		Description
	4.1		Form of Senior Secured Promissory Note
	10.1		Security Agreement, dated August 6, 2024, between Nirland Limited and Conduit Pharmaceuticals Inc.
	104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document).

 

 

 

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 hereunto duly authorized.

 

Date: August 7, 2024	CONDUIT PHARMACEUTICALS INC.
	By:	/s/ Dr. David Tapolczay
	Name:	Dr. David Tapolczay
	Title:	Chief Executive Officer

 

 

Exhibit 4.1

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE PROVISIONS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

Up to $2,650,000

August __, 2024

 

SENIOR SECURED PROMISSORY NOTE

 

For value received, Conduit Pharmaceuticals Inc., a Delaware corporation (the “Company”), and each subsidiary of the Company listed on the signature page hereto (together with the Company, the “Makers” and each a “Maker”), jointly and severally, promise to pay to Nirland Limited, a company organized under the laws of Guernsey (the “Holder”), the principal sum of up to Two Million Six Hundred Fifty Thousand Dollars ($2,650,000) (the “Maximum Principal Amount”), inclusive of the OID (defined in Section 2 below), as may be outstanding from time to time pursuant to the terms of this Senior Secured Promissory Note (this “Note”), together with all accrued and unpaid interest thereon as set forth below, on August __, 2025 (the “Maturity Date”).

 

1. Interest; Payments; Voluntary Prepayment. Interest on the unpaid principal balance of this Note shall accrue at the rate of twelve percent (12%) per annum, computed based on a calendar year and actual days elapsed, and shall be payable, at the option of the Holder, (a) monthly in arrears or (b) in a single installment at maturity. The entire unpaid principal amount then outstanding and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date. Payment of principal and interest hereunder shall be made by wire transfer in United States Dollars to an account designated in writing by the Holder for that purpose. The Company may prepay all or any portion of this Note without penalty or fee at any time upon ten (10) business days’ prior written notice to the Holder. All payments of principal and interest shall be in lawful money of the United States of America. All payments shall be applied first to accrued and unpaid interest, and thereafter to principal.

 

2. Purchase Schedule; Original Issue Discount. The Holder shall purchase this Note from the Company as follows:

 

2.1. Original Issue Discount. This Note includes an original issue discount of $500,000 (the “OID”).

 

2.2. Initial Purchase. On the date hereof (the “Closing Date”), the Holder shall pay the Company in immediately available United States Dollars a payment of $1,675,000 (the“Initial Purchase”) by wire transfer to an account designated in writing by the Company; provided that such Initial Purchase may be reduced by the unpaid portion, if any, of the legal and due diligence fee owed by the Company to the Holder in an amount not to exceed $25,000.

 

 

 

2.3. Final Payment. Within two (2) business days of the date when the Resale Registration Statement (defined in Section 8 below) becomes effective, the Holder shall pay the Company in immediately available United States Dollars a payment of $475,000 by wire transfer to an account designated in writing by the Company.

 

3. Security Interest; Seniority; Guaranty. The Makers have executed a Security Agreement (the “Security Agreement”) in favor of the Holder on even date herewith. The obligations of the Makers to the Holder under this Note are senior to all other obligations of the Makers and are secured by a perfected first-priority security interest in the Collateral (as defined in the Security Agreement) in favor of the Maker pursuant to the terms set forth in the Security Agreement.

 

4. Use of Proceeds. The proceeds received by the Company pursuant to the issuance of this Note shall be used for working capital and other general corporate purposes.

 

5. Representations and Warranties. Each Maker hereby represents and warrants to the Holder on the date hereof as follows:

 

5.1. Existence. Each Maker is a duly formed, validly existing and in good standing under the laws of its jurisdiction of organization.

 

5.2. Power and Authority. Each Maker has the requisite power and authority, and the legal right, to execute and deliver this Note and the Security Agreement and to perform its obligations hereunder and thereunder.

 

5.3. Authorization; Execution and Delivery. The execution and delivery of this Note and the Security Agreement by each Maker and the performance of its obligations hereunder and thereunder have been duly authorized by all necessary corporate action in accordance with all applicable laws. Each Maker has duly executed and delivered this Note and the Security Agreement.

 

5.4. Enforceability. This Note and the Security Agreement are valid, legal, and binding obligations of each Maker, enforceable against each Maker in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

5.5. No Approvals. No consent or authorization of, filing with, notice to, or other act by, or in respect of, any governmental authority or any other person is required in order for each Maker to execute, deliver, or perform any of its obligations under this Note or the Security Agreement.

 

5.6. No Violations. The execution and delivery of this Note and the Security Agreement and the consummation by each Maker of the transactions contemplated hereby and thereby do not and will not (a) violate any law applicable to such Maker or by which any of its properties or assets may be bound; or (b) constitute a default under any material agreement or contract by which such Maker may be bound.

 

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6. Mandatory Prepayments. In the event a Maker completes any public or private equity or debt financing, including without limitation, any variable rate transactions, at-the-market offerings, equity lines of credit, preferred equity, convertible debt and other loans or any type of securities offerings (each an “Offering”), then the Company shall be required to mandatorily prepay, any amounts that may be then outstanding under this Note, within two (2) business days following the closing of such Offering, in an amount of no less than 75% of the net proceeds received from such Offering (excluding any proceeds funded by the Holder or any affiliate of the Holder pursuant to the exercise of its participation right under Section 7 or otherwise).

 

7. Right of First Refusal. The Company hereby grants the Holder a right of first refusal for so long as this Note is outstanding to participate and provide the proceeds to be received by the Company from any proposed Offering, excluding any proposed Offering that is marketed as a “public offering” pursuant to the rules and regulations of The Nasdaq Stock Market LLC. The Company shall submit a fully executed term sheet setting forth the terms, conditions and pricing of any such proposed Offering. The Holder shall have the right, but not the obligation, to participate in such proposed Offering in an amount up to 100% of such proposed Offering on the same terms, conditions and pricing set forth in term sheet. The Holder shall have seven (7) business days following receipt of such term sheet to exercise its right of first refusal by committing to such participation in a writing setting forth the amount and terms of its participation, which terms must be at least as favorable as those set forth in the term sheet. If the Holder does not deliver an executed commitment to the Company in accordance with the preceding sentence within seven (7) business days of receiving the term sheet for the proposed Offering, the Holder shall be deemed to have declined its right to participate in the proposed Offering.

 

8. Closing Fee; Resale Registration. In connection with the issuance of this Note, the Company shall pay the Holder a one-time nonrefundable closing fee through the issuance of 12,500,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”). The Company shall use its commercially reasonable efforts to register for resale the Shares as follows:

 

8.1. Defined Terms. For purposes of this Section 8, the following capitalized terms are defined as follows:

 

(a) the term “Resale Registration Statement” shall mean a registration statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such other form as is then available to the Company) to register for resale the Registrable Shares required to be filed by Section 8.1(b) below, and shall include any preliminary prospectus, final prospectus, exhibit or amendment included in or relating to such registration statements;

 

(b) the term “Registrable Shares” means the Shares; provided, however, that the Shares shall cease to be a Registrable Share upon the earliest to occur of the following: (i) a Resale Registration Statement registering such security under the Securities Act of 1933 (the “Securities Act”) has been declared or becomes effective and such security has been sold or otherwise transferred by the Holder pursuant to and in a manner contemplated by such effective Resale Registration Statement; (ii) such security is sold pursuant to Rule 144 under circumstances in which any legend borne by such security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Company; (iii) the first date such security is eligible to be sold pursuant to Rule 144 without any limitation as to volume of sales, holding period and without Holder complying with any method of sale requirements or notice requirements under Rule 144; or (iv) such security shall cease to be outstanding following its issuance; and

 

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(c) the term “Effectiveness Deadline” means the 60^th day following the Closing Date (or, in the event the United States Securities and Exchange Commission (the “SEC”) reviews or has written or verbal comments to the Resale Registration Statement, the 90^th day following the Closing Date); provided, however, that in the event the Company is notified by the SEC that the Resale Registration Statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline shall be no later than the fifth (5^th) business day following the date of such notification.

 

8.2. Registration Procedures. Provided that the Company is qualified for the use of a Resale Registration Statement, the Company shall file promptly (and, in any event, within 30 days of the Closing Date (the “Filing Deadline”)) a Resale Registration Statement providing for the registration of, and the sale on a continuous or delayed basis of, all Registrable Shares then held by the Holder pursuant to Rule 415 under the Securities Act. Upon filing the Resale Registration Statement, the Company shall use its best efforts to cause such Resale Registration Statement to be declared effective by the Effectiveness Deadline, keep such Resale Registration Statement effective with the SEC at all times, re-file such Resale Registration Statement upon its expiration, and cooperate in any amendment or supplementation of the prospectus related to the Resale Registration Statement as may be reasonably requested by the Company or as otherwise required, until such time as all Registrable Shares that could be sold under the Resale Registration Statement have been sold or are no longer outstanding.

 

8.3. Rule 415; Cutback. If the SEC prevents the Company from including any or all of the Registrable Shares in a Resale Registration Statement due to limitations on the use of Rule 415 under the Securities Act or requires the Holder to be named as an “underwriter,” the Company shall use its commercially reasonable efforts to persuade, consistent with applicable law, the SEC that the offering contemplated by the Resale Registration Statement is a valid secondary offering and not an offering “by or on behalf of the registrant” as described in Rule 415 and that the Holder is not an “underwriter.” In the event that, despite the Company’s commercially reasonable efforts and compliance with the terms of this Section 8.3, the SEC refuses to alter its position, the Company shall (i) remove from the Resale Registration Statement only such portion of the Registrable Shares (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Shares, in each of (i) and (ii), as the SEC requires to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name the Holder as an “underwriter” in such Resale Registration Statement without the prior written consent of the Holder. The Holder acknowledges that it shall not have suffered any losses as to any Cut Back Shares until the date that is five (5) trading days following the date that the Company is eligible to bring effective the registration of such Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares). From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 8 shall again be applicable to such Cut Back Shares; provided, however, that the Filing Deadline for the Resale Registration Statement including such Cut Back Shares shall be ten (10) trading days after such Restriction Termination Date, and the Company shall use its commercially reasonable efforts to cause such Resale Registration Statement to become effective as promptly as practicable, but in any event, by the Effectiveness Deadline (provided, however, that for purposes of a Resale Registration Statement registering such Cut Back Shares, references to the “Closing Date” contained in the definition of “Effectiveness Deadline” shall instead be to the “Restriction Termination Date”). Any failure by the Company to file a Resale Registration Statement by the Filing Deadline or to cause such Resale Registration Statement to become effective by the Effectiveness Deadline shall not otherwise relieve the Company of its obligations to file or cause to become effective the Resale Registration Statements as set forth in this Section 8.

 

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8.4. Prospectus Suspension. The Holder acknowledges that there may be times when the Company must suspend the use of the prospectus forming a part of the Resale Registration Statement until such time as an amendment to the Resale Registration Statement has been filed by the Company and declared effective by the SEC, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). The Holder hereby covenants that it will not sell any Registrable Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Holder notice of the suspension of the use of said prospectus and ending at the time the Company gives the Holder notice that the Holder may thereafter effect sales pursuant to said prospectus; provided, (i) that such suspension periods shall in no event exceed (A) on more than two occasions, a period of more than thirty (30) consecutive trading days or (B) more than an aggregate total of sixty (60) trading days, in each case in any 12 (twelve) month period, and (ii) the Company’s board of directors has reasonably determined that, in order for such Resale Registration Statement not to contain a material misstatement or omission, an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly or annual report under the Exchange Act.

 

9. Other Covenants. For so long as the amount outstanding under this Note exceeds 25% of the Maximum Principal Amount, the Makers covenant as follows:

 

9.1. Without the prior written consent of the Holder, the Company shall not enter into any Variable Rate Transaction unless this Note is paid in full in connection with such Variable Rate Transaction. For purposes of this Section 9.1, “Variable Rate Transaction” means a transaction in which a Maker issues or sells any equity or debt securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Company’s shares of Common Stock at any time after the initial issuance of such equity or debt securities.

 

9.2. The Company will not issue any shares of capital stock to their officers, directors, employees or any other related parties except (a) as part of a bona fide equity financing to which the Holder has consented or (b) pursuant to an equity incentive plan or similar plan approved by the Company’s board of directors.

 

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10. Events of Default. The term “Event of Default,” whenever used herein, shall mean any of the following:

 

10.1. The Makers fail to make any payment to the Holder when due and payable hereunder and such nonpayment continues for five (5) business days;

 

10.2. Any Maker is in violation of any covenant, representation or warranty contained herein (other than the covenant to pay when due any amounts due hereunder) or under the Security Agreement, and such violation continues for thirty (30) days after notice from the Holder of such violation;

 

10.3. Any Maker enters into an assignment for the benefit of creditors generally, applies for the appointment of a trustee or receiver for all or part of its assets or properties or commences any proceedings under any bankruptcy, reorganization, arrangement, insolvency, dissolution or other liquidation law of any jurisdiction (or the Company’s board of directors approves any of the foregoing actions); or any such application is filed, or any such proceedings are commenced, against any Maker, and such Maker indicates its approval, consent or acquiescence thereto; or an order is entered appointing such trustee or receiver, or adjudicating such Maker bankrupt or insolvent, or approving the petition in any such proceedings, and such order remains in effect for sixty (60) days.

 

11. Remedies.

 

11.1. If an Event of Default described in Section 10.1 or 10.2 above occurs, the Holder may declare the entire unpaid principal amount then outstanding and all accrued and unpaid interest thereon to be immediately due and payable, and such principal and interest shall thereupon immediately become due and payable without presentment, notice, protest or demand of any kind (all of which are expressly waived by the Makers), and the Holder may take any and all actions available to it, at law or in equity, to collect and otherwise enforce this Note.

 

11.2. If an Event of Default described in Section 10.3 above occurs, the entire unpaid principal amount then outstanding and all accrued and unpaid interest thereon shall immediately become due and payable with no action on the part of the Holder or any other party, and such principal and interest shall thereupon immediately become due and payable without presentment, notice, protest or demand of any kind (all of which are expressly waived by the Makers), and the Holder may take any and all actions available to it, at law or in equity, to collect and otherwise enforce this Note.

 

11.3. Following an Event of Default and during the continuance thereof, the interest rate shall be increased to eighteen percent (18%) or to the maximum extent permitted by applicable law.

 

12. Severability. If any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, in whole or in part, or if any one or more of the provisions of this Note operate or would prospectively operate to invalidate this Note, then in either of those events, such provision or provisions only shall be deemed null and void and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced or disturbed thereby.

 

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13. Waiver of Notice. Each Maker hereby waives presentment, demand, notice of demand, protest, notice of protest and notice of nonpayment and any other notice required to be given under the law to such Maker, in connection with the delivery, acceptance, performance, default or enforcement of this Note.

 

14. Amendments and Waivers. This Note may not be amended or superseded except through a written document signed by the Holder and each Maker. The observance of any term of this Note may be waived only upon the written consent of the party entitled to the benefit of the provision proposed to be waived. Each Maker agrees that any failure to act or failure to exercise any right or remedy on the part of the Holder shall not in any way affect or impair the obligations of the Makers or be construed as a waiver by the Holder of, or otherwise affect, any of the Holder’s rights under this Note.

 

15. Headings. The headings of the various sections and subsections herein are for reference only and shall not define, modify, expand, or limit any of the terms or provisions hereof.

 

16. Governing Law; WAIVER OF JURY TRIAL. This Note shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of choice of law or conflict of law. EACH PARTY HERETO WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE.

 

17. Notices. All notices, requests, demands, and other communications to be delivered hereunder shall be in writing and shall be delivered by hand or mailed, by recognized overnight mail services or registered or certified mail, postage prepaid, to the address specified for such party on the signature page hereto.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Note as of the date first above written.

 

CONDUIT PHARMACEUTICALS INC.
as the Company
By:
Name:
Title:
CONDUIT UK MANAGEMENT LTD.
as a subsidiary of the Company
By:
Name:
Title:
AGREED AND ACKNOWLEDGED
FOR PURPOSES OF SECTION 8:
NIRLAND LIMITED
as the Holder
By:
Name:
Title:

 

[Signature Page to Senior Secured Promissory Note]

 

 

Exhibit 10.1

 

Security AGREEMENT

 

This Security Agreement (this “Agreement”) is dated as of August 6, 2024, by Conduit Pharmaceuticals Inc., a Delaware corporation (the “Grantor”) in favor of Nirland Limited, a company organized under the laws of Guernsey (the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution of this Agreement, the Grantor issued and delivered to the Secured Party that certain Senior Secured Promissory Notes of even date herewith (the “Secured Promissory Note”);

 

WHEREAS, it is a condition precedent to the obligation of the Secured Party to purchase the Secured Promissory Note that the Grantor shall have executed and delivered this Agreement to the Secured Party;

 

NOW, THEREFORE, in consideration of the premises and to induce the Secured Party to enter into the Secured Promissory Note, the Grantor hereby agrees with the Secured Party as follows:

 

Article I - Defined Terms

 

Section 1.1 Definitions.

 

(a) Capitalized terms used herein without definition are used as defined in the Secured Promissory Note.

 

(b) Terms used herein without definition that are defined in the UCC have the meanings given to them in the UCC.

 

(c) The following terms shall have the following meanings:

 

“Collateral” has the meaning specified in Section 2.1.

 

“Excluded Account” shall mean any deposit account, investment account, disbursement account or lockbox account which is (a) an account used solely and exclusively for payroll, payroll taxes, pension funds, 401(k) and other employee wage and benefits payments, (b) an account used solely and exclusively for withheld income taxes and federal, state or local employment taxes, (c) a segregated deposit account constituting, and used exclusively as, a tax account, fiduciary account or trust account, or (d) zero balance disbursement accounts.

 

 

“Excluded Collateral” shall mean, collectively, (a) assets in which pledges or security interests in favor of the Secured Party are prohibited by applicable law, rule or regulation (including any requirement to obtain the consent of any governmental authority or third person, unless such consent has been obtained) (in each case after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law or principles of equity); (b) any license or agreement or any property subject to such license or agreement, in each, to the extent that a grant of a security interest therein would violate or invalidate such license or agreement or create a right of termination in favor of any other party thereto or otherwise require consent thereunder from a third party (in each case after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law or principles of equity); (c) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein, or the assignment thereof, would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law; and (d) Excluded Accounts; provided, however, that “Excluded Collateral” shall not include any proceeds, products, substitutions or replacements of Excluded Collateral (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Collateral).

 

“Secured Obligations” means the obligations and liabilities of the Grantor hereunder and under the Secured Promissory Note and any other present or future indebtedness, obligations or liabilities of the Grantor to the Secured Party, whether direct or indirect, absolute or contingent, joint or several, secured or unsecured, matured or unmatured, liquidated or unliquidated, arising under or in connection with any agreement, instrument, document or transaction between the Grantor and the Secured Party, and any amendments, modifications, extensions, renewals, refinancings, replacements or substitutions thereof.

 

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of Delaware.

 

Article II - GRANT OF SECURITY INTEREST

 

Section 2.1 Collateral. For the purposes of this Agreement, all of the following property now owned or at any time hereafter acquired by the Grantor or in which the Grantor now has or at any time in the future may acquire any right, title or interests is collectively referred to as the “Collateral”:

 

(a) all accounts receivable of the Grantor;

 

(b) all deposit accounts of the Grantor;

 

(c) all intellectual property of the Grantor;

 

(d) all books and records pertaining to foregoing; and

 

(e) to the extent not otherwise included, all proceeds, products, substitutions or replacements of the foregoing;

 

provided, however that, notwithstanding the foregoing, no lien or security interest is hereby granted on any Excluded Collateral; provided, further, that if and when any property shall cease to be Excluded Collateral, a lien on and security interest in such property shall automatically be deemed granted therein.

 

Section 2.2 Grant of Security Interest in Collateral. The Grantor, as collateral security for the prompt and complete payment and performance when due of the Secured Obligations, hereby pledges to the Secured Party, and grants to the Secured Party, a lien on and security interest in, all of its right, title and interest in, to and under the Collateral.

 

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Article III - Representations and Warranties

 

To induce the Secured Party to enter into the Secured Promissory Note, the Grantor represents and warrants the following to the Secured Party:

 

Section 3.1 Title; No Other Liens; Perfection and Priority. Except for the lien granted to the Secured Party pursuant to this Agreement, the Grantor owns each item of the Collateral (other than Excluded Collateral) free and clear of any and all liens or claims of others and has rights in or the power to transfer the Collateral. The security interest granted pursuant to this Agreement constitutes a valid and continuing perfected security interest in favor of the Secured Party in all Collateral (solely to the extent perfection may be achieved under the UCC by the filing of a UCC-1 financing statement with the Secretary of State of the State of Delaware).

 

Article IV – COVENANTS

 

The Grantor agrees with the Secured Party as follows:

 

Section 4.1 Maintenance of Perfected Security Interest. The Grantor shall (i) not use or permit any Collateral to be used in violation of any law or any policy of insurance covering the Collateral and (ii) not enter into any agreement restricting the right or ability of the Grantor or the Secured Party to sell, assign, convey or transfer any Collateral. Grantor shall not create, incur, assume or suffer to exist any lien, security interest, charge, encumbrance or other adverse claim on or with respect to any Collateral, except for the lien granted to the Secured Party pursuant to this Agreement and any other liens expressly permitted by the Secured Party in writing. The Grantor shall maintain the security interest created by this Agreement as a perfected security interest (solely to the extent perfection may be achieved under the UCC by the filing of a UCC-1 financing statement with the Secretary of State of the State of Delaware), and shall to take any and all actions necessary or requested by the Secured Party to perfect, protect, preserve and enforce the security interest in the Collateral, including delivering any instruments, certificates, documents or notices, executing any agreements or amendments, obtaining any consents or waivers, and paying any fees or taxes. Notwithstanding any other provision herein to the contrary, the Grantor shall not be required to take any actions to perfect the security interest in any Collateral granted hereunder except filing (or authorizing the filing of) a UCC-1 financing statement with the Secretary of State of the State of Delaware.

 

Article V - Remedial Provisions

 

Section 5.1 UCC Remedies. During the continuance of an Event of Default (as defined in the Secured Promissory Note), the Secured Party may exercise, in addition to all other rights and remedies granted to it in this Agreement, all rights and remedies of a secured party under the UCC or any other applicable law. Secured Party may exercise its rights and remedies under this Agreement or any other agreement, instrument or document between the Grantor and the Secured Party without prior notice or demand to the Grantor, except as required by applicable law, and that the Grantor waives any right to notice or hearing prior to the Secured Party’s taking possession or control of, or selling or otherwise disposing of, any Collateral, to the fullest extent permitted by applicable law.

 

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Section 5.2 Accounts and Payments.

 

(a) If required by the Secured Party at any time during the continuance of an Event of Default, any payment of accounts, when collected by the Grantor, shall be promptly delivered to the Secured Party in the exact form received, duly indorsed by the Grantor to the Secured Party. Until so turned over, such payment shall be held by the Grantor in trust for the Secured Party.

 

(b) Anything herein to the contrary notwithstanding, the Grantor shall remain liable under each account. The Secured Party shall not have any obligation or liability under any agreement giving rise to an account by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating thereto, and the Secured Party shall not be obligated in any manner to perform any obligation of the Grantor under or pursuant to any agreement giving rise to an account, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

 

Section 5.3 Proceeds to be Turned over to and Held by Secured Party. After the occurrence and during the continuance of an Event of Default, promptly upon receipt by the Grantor, all proceeds of any Collateral received by the Grantor hereunder in cash or cash equivalents be turned over to the Secured Party in the exact form received (with any necessary endorsement).

 

Section 5.4 Deficiency. The Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of any Collateral are insufficient to pay the Secured Obligations.

 

Article VI - The SECURED PARTY

 

Section 6.1 Authorization to File Financing Statements. The Grantor authorizes the Secured Party and its counsel and representatives, at any time and from time to time, to file or record financing statements and amendments thereto.

 

Section 6.2 Duty; Obligations and Liabilities. The Secured Party’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Secured Party deals with similar property for its own account. The powers conferred on the Secured Party hereunder are solely to protect the Secured Party’s interest in the Collateral and shall not impose any duty upon the Secured Party to exercise any such powers. The Secured Party shall not be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Grantor or any other person or to take any other action whatsoever with regard to any Collateral. The Secured Party shall be accountable only for amounts that it receives as a result of the exercise of such powers, and shall not be responsible to the Grantor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. At any time while the Secured Promissory Note remains outstanding, the Secured Party shall have the right to appoint a collateral agent, to act on its behalf with respect to this Agreement and any other rights or duties the Secured Party may have, and that any such appointed collateral agent shall have all powers, rights, duties and obligations as though they were an original party to this Agreement and acting in such capacity, and on behalf of the Secured Party.

 

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Article VII – Miscellaneous

 

Section 7.1 No Waiver by Course of Conduct. The Secured Party shall not by any act, delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Secured Party would otherwise have on any future occasion.

 

Section 7.2 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in a writing duly executed by the Secured Party and the Grantor.

 

Section 7.3 Notices. All notices, requests, demands and other communications (each of which shall be in writing) shall be delivered to the parties hereto, as applicable, at the addresses and in the manner set forth in the Secured Promissory Note and to the notice information included on the signature page hereto.

 

Section 7.4 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of the Grantor and shall inure to the benefit of the Secured Party and its successors and assigns; provided, however, that the Grantor may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Secured Party.

 

Section 7.5 Counterparts. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or by electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

Section 7.6 Severability. Any provision of this Agreement being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of this Agreement or any part of such provision in any other jurisdiction.

 

Section 7.7 Governing Law. The laws of the State of Delaware shall govern all matters arising out of, in connection with or relating to this Agreement, including, without limitation, its validity, interpretation, construction, performance and enforcement.

 

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IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to be duly executed and delivered as of the date first above written.

 

	CONDUIT PHARMACEUTICALS INC., as the Grantor
	By:	/s/ David Tapolczay
	Name:	David Tapolczay
	Title:	CEO

 

	NIRLAND LIMITED, as the Secured Party
	By:	/s/ Stefano Grace
	Name:	Stefano Grace
	Title:	Authorized Representative   Address for Notices: [e-mail] [e-mail] Nirland Limited The Old Stables, Rue A L’Or St Peter Port, Guernsey GY1 1Qg Channel Islands, British Isles

 

[Signature Page to Security Agreement]

 

Cover	Aug. 06, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 06, 2024
Entity File Number	001-41245
Entity Registrant Name	Conduit Pharmaceuticals Inc.
Entity Central Index Key	0001896212
Entity Tax Identification Number	87-3272543
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	4995 Murphy Canyon Road
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92123
City Area Code	(760)
Local Phone Number	471-8536
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Common Stock, $0.0001 par value per share
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	CDT
Security Exchange Name	NASDAQ
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50
Title of 12(b) Security	Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50
Trading Symbol	CDTTW
Security Exchange Name	NASDAQ

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