WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING OF SKYBRIDGE FINTECH LTD.
Action by Written Consent of Stockholders Pursuant to Section 228 of the Delaware General Corporation Law
Effective as of January 12, 2024
Entity: Skybridge Fintech Ltd., a Delaware corporation (the "Company")
Employer Identification Number: 83-2147605
Delaware File Number: 6384291
Registered Address: 1400 Market Street, Suite 2200, Wilmington, Delaware 19801
RECITALS
The undersigned, being holders of the requisite number of outstanding shares of capital stock of Skybridge Fintech Ltd., a corporation organized and existing under the laws of the State of Delaware (the "Company"), hereby consent to and adopt the following resolutions, effective as of January 12, 2024, in lieu of a special meeting of the stockholders of the Company, pursuant to Section 228 of the Delaware General Corporation Law (the "DGCL").
WHEREAS, no prior notice of a meeting is required for action by written consent under Section 228 of the DGCL; provided, however, that prompt written notice of the corporate action taken without a meeting shall be given to those stockholders of the Company who have not executed this Written Consent, in accordance with Section 228(e) of the DGCL;
WHEREAS, the Board of Directors of the Company (the "Board"), by Unanimous Written Consent of the Board of Directors dated January 10, 2024 (the "Board Consent"), has unanimously approved and recommended to the stockholders of the Company for their approval each of the actions set forth in this Written Consent, and has determined that each such action is in the best interests of the Company and its stockholders;
WHEREAS, the Company is a Delaware corporation engaged in the business of providing cloud-based payments orchestration and embedded lending platform services for mid-market e-commerce companies, operating as a financial technology and software-as-a-service enterprise;
WHEREAS, the Company's capitalization consists of approximately 48,500,000 shares of capital stock outstanding on a fully diluted basis, comprising (i) shares of Common Stock held by the founders and certain employees, advisors, and other holders, (ii) shares of Series A Preferred Stock held by Crestpoint Seed Partners, L.P. ("Crestpoint"), (iii) shares of Series B Preferred Stock held by Halcyon Growth Equity, L.P. ("Halcyon"), and (iv) shares of Series C Preferred Stock held by Ridgeline Ventures Fund III, L.P. ("Ridgeline Fund III") and Beacon Hill Capital Partners, LLC ("Beacon Hill"), among other holders, all as more fully set forth in the Company's Amended and Restated Certificate of Incorporation, as amended to date;
WHEREAS, the Board has determined that it is in the best interests of the Company to obtain bridge financing through the issuance of convertible promissory notes (as described herein) and to enter into the related agreements and documents described herein in connection therewith; and
WHEREAS, the undersigned stockholders hold a sufficient number of outstanding shares of each class and series of capital stock of the Company to approve the actions set forth herein under the Company's Amended and Restated Certificate of Incorporation, the Amended and Restated Investors' Rights Agreement, and the DGCL.
NOW, THEREFORE, the undersigned stockholders of the Company hereby adopt the following resolutions:
SECTION 1: APPROVAL OF THE CONVERTIBLE NOTE BRIDGE FINANCING
1.1 Authorization of Convertible Note Issuance
RESOLVED, that the stockholders of the Company hereby approve and ratify the issuance by the Company of convertible promissory notes (each, a "Note" and collectively, the "Notes") in an aggregate principal amount of up to Sixty Million Dollars ($60,000,000) (the "Bridge Financing"), upon and subject to the following terms and conditions:
(a) Interest Rate. The Notes shall bear interest at a rate of six percent (6.00%) per annum (600 basis points), computed as simple interest on a 365-day year basis, accruing from the date of issuance of each Note until such Note is converted or repaid in full.
(b) Maturity Date. The Notes shall mature on January 15, 2026, which is twenty-four (24) months from the anticipated closing date of the Initial Closing (as defined below) (the "Maturity Date"), unless earlier converted or repaid in accordance with their terms.
(c) Purchasers. The Notes shall be issued and sold to the following purchasers (collectively, the "Purchasers") in the following respective principal amounts and proportions:
(d) Closings. The Bridge Financing shall be consummated in up to two (2) closings: (i) an initial closing (the "Initial Closing") in an aggregate principal amount of Forty-Five Million Dollars ($45,000,000), to occur promptly following the satisfaction or waiver of the conditions set forth in the Note Purchase Agreement (as defined below), and (ii) a final closing (the "Final Closing") in an aggregate principal amount of the remaining Fifteen Million Dollars ($15,000,000), to occur on or prior to a date that is sixty (60) days following the date of the Initial Closing, or such later date as the Company and the Purchasers may agree.
1.2 Approval of Conversion Terms
RESOLVED, that the stockholders of the Company hereby approve the following conversion terms applicable to the Notes:
(a) Automatic Conversion upon a Qualified Financing. The Notes shall automatically convert into equity securities of the Company upon the closing of a Qualified Financing. For purposes of this Written Consent and the Transaction Documents, a "Qualified Financing" shall mean a Series D or later equity financing of the Company in which the Company raises at least Eighty Million Dollars ($80,000,000) in aggregate new equity capital from investors in a bona fide arms'-length transaction or series of related transactions.
(b) Conversion Price. Upon a Qualified Financing, the outstanding principal amount and all accrued and unpaid interest on each Note shall convert into the equity securities issued in the Qualified Financing at a conversion price per share (the "Conversion Price") equal to the lower of:
(i) eighty percent (80%) of the price per share paid by investors in the Qualified Financing (reflecting a twenty percent (20%) conversion discount) (the "Discount Price"); or
(ii) the price per share implied by a pre-money valuation of the Company of Seven Hundred Fifty Million Dollars ($750,000,000) on a fully diluted basis (the "Valuation Cap"), which cap-implied price per share is approximately Fifteen Dollars and Forty-Six Cents ($15.46), calculated as $750,000,000 divided by 48,500,000 fully diluted shares outstanding as of the date hereof (the "Cap Price").
(c) Mechanics of Automatic Conversion. Upon the automatic conversion of the Notes in connection with a Qualified Financing, all outstanding principal and accrued and unpaid interest under the Notes shall convert into the equity securities issued in the Qualified Financing at the Conversion Price, without any further action on the part of the Company or any holder of the Notes. The Company shall deliver to each Purchaser such certificates, instruments, or book-entry evidence as may be required to evidence the equity securities issued upon conversion.
(d) Optional Conversion at Maturity. In the event that no Qualified Financing has occurred on or prior to the Maturity Date, each holder of a Note may, at such holder's sole election, elect to:
(i) convert the outstanding principal amount of such holder's Note, together with all accrued and unpaid interest thereon, into shares of the Company's capital stock at the Cap Price (i.e., the price per share implied by the $750,000,000 Valuation Cap on a fully diluted basis); or
(ii) demand repayment in cash by the Company of the outstanding principal amount of such holder's Note, together with all accrued and unpaid interest thereon, payable within thirty (30) days of such demand.
(e) Change of Control. In the event of a Change of Control of the Company (as such term is defined in the Note Purchase Agreement) occurring prior to the conversion of the Notes, each holder of a Note shall be entitled to receive, at such holder's election, the greater of:
(i) an amount equal to two times (2.0x) the outstanding principal amount of such holder's Note, plus all accrued and unpaid interest thereon (the "Change of Control Premium"); or
(ii) the amount that would be payable to such holder upon conversion of such holder's Note at the Cap Price, as if the Note had been converted immediately prior to the consummation of the Change of Control, and such holder had received its pro rata share of the aggregate consideration payable to holders of the equity securities of the Company in connection with the Change of Control.
1.3 Approval of Reservation of Shares
RESOLVED, that the stockholders of the Company hereby approve the reservation by the Company of a sufficient number of shares of the Company's capital stock (or, if necessary, the creation of a new series of preferred stock, as applicable) to permit the conversion of all of the Notes and all accrued and unpaid interest thereon in full, including without limitation any shares of capital stock issuable upon conversion at the Cap Price or at the discount Price, as applicable. The officers of the Company are hereby authorized and directed to take any and all actions and to file any and all certificates, instruments, or other documents with the Secretary of State of the State of Delaware or any other applicable governmental authority as may be necessary or advisable to effect such reservation or creation of shares.
SECTION 2: APPROVAL OF THE NOTE PURCHASE AGREEMENT
RESOLVED, that the stockholders of the Company hereby approve the Note Purchase Agreement (the "NPA") by and among the Company and the Purchasers, substantially in the form presented to the stockholders and approved by the Board of Directors on January 10, 2024, pursuant to which the Notes shall be issued and sold to the Purchasers in connection with the Bridge Financing.
The NPA includes, among other things, (i) customary representations and warranties of the Company regarding its organization, capitalization, authority, financial condition, absence of litigation, intellectual property, compliance with laws, and other matters, (ii) customary representations and warranties of each Purchaser regarding its status as an accredited investor, investment intent, and other matters, (iii) conditions to the Initial Closing and the Final Closing, (iv) affirmative and negative covenants of the Company, including without limitation a Most Favored Nation provision (the "MFN Provision") granting each Purchaser the right to receive adjustment to the terms of such Purchaser's Note in the event that the Company subsequently issues convertible promissory notes, simple agreements for future equity (SAFEs), or similar instruments on terms more favorable than those set forth in the Notes, and (v) customary indemnification provisions in favor of the Purchasers and their respective affiliates, officers, directors, partners, members, managers, employees, and agents.
The NPA further provides for (a) the reimbursement by the Company, at or promptly following the Initial Closing, of the reasonable and documented legal fees and out-of-pocket expenses of Whitfield, Pratt & Soo LLP, counsel to the Purchasers, in an aggregate amount not to exceed One Hundred Twenty-Five Thousand Dollars ($125,000), and (b) the payment by the Company of a flat escrow fee to Granite Trust Company, N.A. (the "Escrow Agent") in the amount of Seven Thousand Five Hundred Dollars ($7,500) in connection with the establishment and administration of the escrow account contemplated by the Escrow Agreement (as defined below).
SECTION 3: APPROVAL OF THE SUBORDINATION AGREEMENT
RESOLVED, that the stockholders of the Company hereby approve the Subordination Agreement (the "Subordination Agreement") among Kelvantis Lending Corp. ("Kelvantis"), as senior lender under that certain Loan and Security Agreement dated August 15, 2022 by and between Kelvantis and the Company, the Purchasers, as subordinated noteholders, and the Company, pursuant to which the Notes and all obligations thereunder shall be expressly subordinated in right of payment and priority to the Company's existing Fifteen Million Dollar ($15,000,000) venture debt facility with Kelvantis (the "Senior Indebtedness"), which venture debt facility matures on August 15, 2025.
The Subordination Agreement sets forth the terms and conditions under which the Purchasers' rights to receive payments on account of the Notes shall be subordinated to Kelvantis's rights to receive payments on account of the Senior Indebtedness, including restrictions on the Company's ability to make payments of principal, interest, or other amounts on the Notes during the continuation of an event of default under the Senior Indebtedness, and the agreement of the Purchasers to turn over to Kelvantis any payments received on the Notes in contravention of the subordination provisions. The stockholders acknowledge that the execution and delivery of the Subordination Agreement is a condition to the Initial Closing under the NPA.
SECTION 4: APPROVAL OF AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
RESOLVED, that the stockholders of the Company hereby approve Amendment No. 1 to the Amended and Restated Investors' Rights Agreement dated as of March 22, 2022 (the "IRA"), by and among the Company and the investors party thereto (the "IRA Amendment"), in substantially the form presented to the stockholders and approved by the Board of Directors on January 10, 2024. The IRA Amendment adds each of the Purchasers as a party to the IRA and grants to each Purchaser (i) information rights, including the right to receive the Company's annual and quarterly financial statements, annual budgets and operating plans, and such other information as is provided to existing Major Investors (as defined in the IRA), and (ii) pro rata participation rights in connection with the Bridge Financing and any subsequent Qualified Financing, entitling each Purchaser to purchase its pro rata share of any new securities offered by the Company, subject to customary exceptions and carve-outs. The IRA Amendment further provides that the Purchasers shall be subject to the confidentiality and other obligations set forth in the IRA to the same extent as existing parties thereto.
SECTION 5: APPROVAL OF AMENDMENT NO. 1 TO RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
RESOLVED, that the stockholders of the Company hereby approve Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement dated as of March 22, 2022 (the "ROFR/Co-Sale Agreement"), by and among the Company, the investors party thereto, and the founders and key holders party thereto (the "ROFR/Co-Sale Amendment"), in substantially the form presented to the stockholders and approved by the Board of Directors on January 10, 2024. The ROFR/Co-Sale Amendment adds each of the Purchasers as a party to the ROFR/Co-Sale Agreement and extends to each Purchaser (i) a right of first refusal with respect to any proposed transfer of shares of the Company's capital stock by a founder or key holder, and (ii) co-sale rights entitling each Purchaser to participate on a pro rata basis in any such proposed transfer, in each case on the same terms and conditions as those afforded to existing investor parties to the ROFR/Co-Sale Agreement in connection with the Bridge Financing.
SECTION 6: APPROVAL OF THE ESCROW AGREEMENT
RESOLVED, that the stockholders of the Company hereby approve the Escrow Agreement (the "Escrow Agreement") among the Company, the Purchasers, and Granite Trust Company, N.A., as escrow agent (the "Escrow Agent"), in substantially the form presented to the stockholders and approved by the Board of Directors on January 10, 2024. The Escrow Agreement governs the deposit, investment, and release of the closing funds for the Bridge Financing through Escrow Account No. 4401-7829-SBF maintained by the Escrow Agent. The closing funds shall be deposited by the Purchasers into the escrow account prior to the applicable closing and shall be released to the Company upon satisfaction or waiver of all conditions to closing under the NPA, as jointly confirmed by written instructions from the Company and the requisite Purchasers to the Escrow Agent.
SECTION 7: APPROVAL OF RELATED TRANSACTION DOCUMENTS
RESOLVED, that the stockholders of the Company hereby approve each of the following additional transaction documents in connection with the Bridge Financing (which documents, collectively with the NPA, the Notes, the Subordination Agreement, the IRA Amendment, the ROFR/Co-Sale Amendment, and the Escrow Agreement, are referred to herein as the "Transaction Documents"):
(a) The form of Convertible Promissory Note, attached as Exhibit A to the NPA, setting forth the detailed terms and conditions of each Note, including provisions relating to interest, conversion, repayment, subordination, events of default, and remedies;
(b) The Schedule of Purchasers, attached as Schedule 1 to the NPA, setting forth the name, address, and principal amount of Notes to be purchased by each Purchaser at the Initial Closing and the Final Closing;
(c) The Company Disclosure Schedule to the NPA, setting forth exceptions and qualifications to the representations and warranties of the Company contained in the NPA;
(d) Any joinder agreements necessary or appropriate to add additional Purchasers or to permit the participation of additional investors at the Final Closing, including without limitation a Joinder Agreement for Northstar Innovation Fund II, L.P. to the extent required under the NPA;
(e) Any amendments to the Schedule of Purchasers reflecting the participation of additional or substitute Purchasers at the Final Closing, including any reallocation of the aggregate principal amount among the Purchasers; and
(f) Such other documents, instruments, certificates, and agreements as the officers of the Company deem necessary, advisable, or appropriate to consummate the Bridge Financing and the transactions contemplated by the Transaction Documents.
SECTION 8: AUTHORIZATION OF OFFICERS TO EXECUTE AND DELIVER
RESOLVED, that each of Arjun Mehta, Chief Executive Officer and Co-Founder, David Lindstrom, Chief Financial Officer, and Priya Ramanathan, General Counsel, of the Company, and each of them acting individually and without the need for any other signature or approval, is hereby authorized, empowered, and directed, in the name and on behalf of the Company, to negotiate, execute, and deliver the Transaction Documents and any and all other certificates, instruments, agreements, and documents, and to take any and all actions, as any such officer deems necessary, advisable, or appropriate to consummate the Bridge Financing and the transactions contemplated thereby, with such changes, modifications, amendments, supplements, or deletions as any such officer may approve (such approval to be conclusively evidenced by such officer's execution and delivery thereof), and that the execution and delivery by any such officer of any such Transaction Document or other document, instrument, certificate, or agreement shall be conclusive evidence of such officer's approval of the terms thereof and of the Company's authorization of the transactions contemplated thereby.
SECTION 9: RATIFICATION OF PRIOR ACTS
RESOLVED, that all actions heretofore taken by any officer, director, employee, agent, or other authorized representative of the Company in connection with the negotiation, preparation, or execution of any of the Transaction Documents, or otherwise in connection with the Bridge Financing and the transactions contemplated thereby, are hereby ratified, confirmed, approved, and adopted in all respects as the valid and binding acts and deeds of the Company, as though each such action had been taken with the prior approval of the stockholders of the Company.
SECTION 10: AUTHORIZATION OF REGULATORY AND SECURITIES FILINGS
RESOLVED, that the officers of the Company are hereby authorized, empowered, and directed to prepare, execute, file, and deliver, in the name and on behalf of the Company:
(a) A Notice of Exempt Offering of Securities on Form D with the Securities and Exchange Commission (the "SEC") pursuant to Regulation D under the Securities Act of 1933, as amended, in connection with the offer and sale of the Notes to the Purchasers;
(b) Any required blue sky, state securities, or similar notice filings, registrations, or exemption applications in each jurisdiction in which such filings are required in connection with the offer and sale of the Notes, including without limitation the States of Delaware, Massachusetts, Illinois, California, and Washington, and any other jurisdictions in which any Purchaser is resident or domiciled;
(c) Any other filings, notices, applications, registrations, or reports with any federal, state, local, or foreign governmental authority or regulatory body as may be required by applicable law, rule, or regulation in connection with the Bridge Financing and the transactions contemplated by the Transaction Documents; and
(d) Any amendments, supplements, or updates to any of the foregoing filings as may be required or advisable from time to time.
SECTION 11: NOTICE TO NON-CONSENTING STOCKHOLDERS
RESOLVED, that the officers of the Company are hereby authorized and directed to deliver, or to cause to be delivered, prompt written notice of the actions taken by this Written Consent to those stockholders of the Company who have not executed this Written Consent, in accordance with Section 228(e) of the DGCL, and to take any and all actions and to prepare, execute, and deliver any and all documents or notices as may be required or advisable in connection therewith.
SECTION 12: GENERAL AUTHORITY
RESOLVED, that the officers of the Company, and each of them acting individually, are hereby authorized and empowered, in the name and on behalf of the Company, to do and perform any and all acts and things, and to execute, deliver, file, and record any and all documents, instruments, certificates, and agreements, that any such officer deems necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions and to consummate the transactions contemplated thereby, and that all actions heretofore or hereafter taken by any officer of the Company in furtherance of the foregoing resolutions are hereby ratified, confirmed, and approved in all respects.
SECTION 13: EFFECTIVENESS; COUNTERPARTS
This Written Consent may be executed in one or more counterparts (including by facsimile, ".pdf" transmission, or other form of electronic signature compliant with the federal ESIGN Act and the Delaware Uniform Electronic Transactions Act), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Written Consent shall be effective as of January 12, 2024 (the "Effective Date"), and the actions authorized herein shall have the same force and effect as if taken at a duly called and held special meeting of the stockholders of the Company at which a quorum was present and acting.
This Written Consent shall be filed with the minutes of the proceedings of the stockholders of the Company and shall be maintained among the permanent corporate records of the Company.
Pursuant to Section 228(e) of the DGCL, the Company shall give prompt written notice of the taking of the corporate action without a meeting set forth herein to those stockholders of the Company who have not consented in writing to such action.
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SIGNATURE PAGE TO WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING OF SKYBRIDGE FINTECH LTD.
IN WITNESS WHEREOF, the undersigned stockholders have executed this Written Consent as of the date set forth below, to be effective as of January 12, 2024.
Series A Preferred Stockholder
CRESTPOINT SEED PARTNERS, L.P.
By: Crestpoint Seed Management, LLC, its General Partner
By: ________
Name: Daniel P. Sorensen
Title: Managing Partner
Date: January 12, 2024
SIGNATURE PAGE TO WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING OF SKYBRIDGE FINTECH LTD.
Series B Preferred Stockholder
HALCYON GROWTH EQUITY, L.P.
By: Halcyon Growth Management, LLC, its General Partner
By: ________
Name: Robert "Rob" Castillo
Title: Partner
Date: January 12, 2024
SIGNATURE PAGE TO WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING OF SKYBRIDGE FINTECH LTD.
Series C Preferred Stockholders
RIDGELINE VENTURES FUND III, L.P.
By: Ridgeline Ventures Management IV, LLC, its General Partner
By: ________
Name: Catherine "Kate" Drummond
Title: Managing Partner
Date: January 12, 2024
BEACON HILL CAPITAL PARTNERS, LLC
By: ________
Name: Joanna Falkner
Title: Managing Director
Date: January 12, 2024
SIGNATURE PAGE TO WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING OF SKYBRIDGE FINTECH LTD.
Common Stockholders (Founders)
________________________________________
Arjun Mehta
Title: CEO & Co-Founder
In his capacity as a holder of shares of Common Stock of the Company
Date: January 12, 2024
________________________________________
Elena Vasquez
Title: CTO & Co-Founder
In her capacity as a holder of shares of Common Stock of the Company
Date: January 12, 2024
CONFIRMATION OF REQUISITE APPROVAL
The undersigned, Priya Ramanathan, General Counsel of the Company, hereby confirms and certifies that the foregoing Written Consent of Stockholders in Lieu of Special Meeting of Skybridge Fintech Ltd. has been executed by holders of the number of outstanding shares of each class and series of capital stock of the Company required to approve each of the actions set forth herein, as determined in accordance with (i) the Company's Amended and Restated Certificate of Incorporation, as amended to date, (ii) the Amended and Restated Investors' Rights Agreement dated as of March 22, 2022, as amended to date, and (iii) the applicable provisions of the Delaware General Corporation Law, including without limitation Sections 228 and 242 thereof. This Written Consent constitutes the valid and binding action of the requisite stockholders of the Company, and no additional votes or consents are required for the adoption of the resolutions contained herein.
________________________________________
Priya Ramanathan General Counsel Skybridge Fintech Ltd.
Date: January 12, 2024
| Purchaser | Principal Amount | Percentage of Total |
| Ridgeline Ventures Fund IV, L.P. | $30,000,000 | 50.00% |
| Beacon Hill Capital Partners, LLC | $15,000,000 | 25.00% |
| Northstar Innovation Fund II, L.P. | $10,000,000 | 16.67% |
| Halcyon Growth Equity, L.P. | $5,000,000 | 8.33% |
| Total | $60,000,000 | 100.00% |