Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the existing venture debt facility between Skybridge Fintech Ltd. and Kelvantis Lending Corp. to identify the covenant restrictions, consent and waiver requirements, and subordination obligations that are implicated by the Company's proposed issuance of $60,000,000 in aggregate principal amount of convertible promissory notes to an investor syndicate l

II. Background A. The Kelvantis Venture Debt Facility On August 15, 2022, Skybridge Fintech Ltd. entered into a Loan and Security Agreement with Kelvantis Lending Corp. (the "LSA"), pursuant to which Kelvantis extended a term loan facility to the Company in the aggregate principal amount of $15,000,000. The LSA is the primary debt instrument governing Skybridge's outstanding senior secured indebtedness and establishe

III. Analysis of Key LSA Covenants We have conducted a comprehensive review of the LSA and its schedules, exhibits, and related ancillary documents. Set forth below is our analysis of the key covenants and provisions of the LSA that are implicated by the proposed convertible note bridge financing. A. Negative Covenant — Restrictions on Additional Indebtedness The most directly implicated provision of the LSA is the n

Section 7.2 of the LSA contains a negative covenant prohibiting Skybridge from creating, incurring, assuming, or permitting to exist any lien, security interest, mortgage, pledge, charge, or encumbrance on any of its assets or property, other than "Permitted Liens" as defined in the LSA. The proposed Convertible Notes are unsecured obligations of the Company. The term sheet expressly provides that no liens, security

Section 7.5 of the LSA contains restrictions on the Company's ability to make investments, loans, advances, and capital contributions, as well as restrictions on the declaration or payment of dividends and other distributions on the Company's capital stock. We have reviewed these provisions in the context of the proposed convertible note bridge financing. The issuance of the Convertible Notes does not involve the pay

Article VIII of the LSA sets forth the events of default under the facility. The events of default are customary for a venture lending arrangement and include, among other things: (a) failure to make any payment of principal, interest, fees, or other amounts when due under the LSA or any other Loan Document; (b) breach of any representation or warranty made by the Company in the LSA or any other Loan Document; (c) br

IV. Subordination Requirements A. Overview Both the LSA and the proposed term sheet for the convertible note bridge financing contemplate that the Convertible Notes will be subordinated to the existing Kelvantis venture debt facility. From Kelvantis's perspective, subordination is a condition to its consent — Kelvantis will require assurance that its senior secured position is preserved and that the noteholders' clai

V. Form and Scope of Required Lender Consent A. Form of Consent Kelvantis's consent to the proposed convertible note bridge financing should be documented in a formal written consent and waiver letter (the "Consent Letter") executed by a duly authorized officer of Kelvantis Lending Corp. The Consent Letter should be a standalone document, separate from (but cross-referenced in) the Subordination Agreement, and should

VI. Timeline and Process Recommendations Based on the anticipated closing date of the bridge financing on or about January 15, 2024, and allowing for the time required to negotiate and finalize the consent and subordination documentation, we recommend the following timeline and process for obtaining Kelvantis's consent. Immediate Next Steps

1. Informal Discussions with Kelvantis. We recommend that Skybridge management — specifically, David Lindstrom (CFO) — initiate informal discussions with Theodore "Ted" Marsh, Relationship Manager at Kelvantis, as soon as practicable following receipt of this memorandum. The purpose of these preliminary discussions is to preview the proposed convertible note bridge financing for Kelvantis, gauge Kelvantis's general r

2. Preparation of Formal Consent Request Letter. Calderwood & Harkness LLP will prepare a formal consent request letter to Kelvantis, addressed to Ted Marsh (with copies to Kelvantis's legal department and outside counsel, if applicable). The consent request letter will include (a) a description of the proposed convertible note bridge financing, including the principal amount, interest rate, maturity, conversion term

3. Assembly of Financial Information Package. Skybridge should assemble a comprehensive financial information package for Kelvantis's review, including the audited and reviewed financial statements, management-prepared financials, and projections described in Section V.C above. This package should be ready for delivery concurrently with or shortly after the formal consent request letter. Target Timeline We note that

VII. Risk Assessment We have identified and assessed the following key risks associated with the Kelvantis consent process: Risk of Consent Refusal: Low. We assess the risk that Kelvantis will refuse to grant consent as low. The proposed convertible note bridge financing, viewed from Kelvantis's perspective as a senior secured lender, is a transaction that enhances, rather than impairs, Kelvantis's credit position. S