CLOSING BINDER
Convertible Note Bridge Financing
$60,000,000 Aggregate Principal Amount of Convertible Promissory Notes
Issuer: Skybridge Fintech Ltd.
Lead Investor: Ridgeline Ventures Fund IV, L.P.
Date of Initial Closing: January 15, 2024 Date of Final Closing: January 26, 2024
Prepared by:
Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022
Matter No.: 1009-00001
Binder Compiled: January 30, 2024
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INTRODUCTION AND BINDER LEGEND
This closing binder (this "Binder") contains copies of executed transaction documents, ancillary agreements, corporate approvals, closing certificates, legal opinions, regulatory filings, and related correspondence delivered in connection with the $60,000,000 convertible note bridge financing (the "Financing") by Skybridge Fintech Ltd., a Delaware corporation (the "Company"), pursuant to the Note Purchase Agreement dated January 15, 2024 (the "Note Purchase Agreement" or "NPA") among the Company and the Purchasers named therein (collectively, the "Purchasers").
Document Organization. The documents contained in this Binder are organized by category across twelve (12) numbered tabs. Each tab corresponds to a discrete category of closing deliverables, and individual documents within each tab are identified by sub-tab reference numbers (e.g., Tab 1.1, Tab 1.2, etc.). Cross-references within this table of contents and the Master Document Index at the end of this Binder use this tab numbering convention throughout.
Conformed Copies. Unless otherwise indicated, all documents contained herein are conformed copies of the executed originals. Executed originals have been delivered to the respective parties or are held by the Company, in each case in accordance with the terms of the Note Purchase Agreement and applicable ancillary agreements. Where a document is included in draft or unsigned form (such as memoranda prepared by counsel), that status is noted in the document description.
abbreviations. The following abbreviations are used throughout this Binder and the accompanying Master Document Index:
Page References. The "Pages" column in the Master Document Index reflects the number of pages in each conformed copy as included in this Binder. Page counts are provided for reference and compilation purposes.
Questions. Any questions concerning the contents of this Binder or the underlying transaction should be directed to Victoria Chambers, Partner, or Leonard Ashford, Of Counsel, Calderwood & Harkness LLP, 600 Lexington Avenue, New York, NY 10022, telephone (212) 555-4800.
PARTIES SUMMARY
The following table sets forth information regarding the parties to, and certain other persons involved in, the Financing:
KEY TRANSACTION TERMS SUMMARY
The following is a summary of the principal terms of the Financing for reference purposes only. This summary is qualified in its entirety by reference to the Note Purchase Agreement and the form of Convertible Promissory Note, copies of which are included at Tabs 1.1 and 1.2, respectively.
KEY DATES
The following timeline sets forth the principal dates relevant to the Financing:
TAB 1 — TRANSACTION AGREEMENTS
Tab 1.1 — Note Purchase Agreement — Execution Version
Document: Note Purchase Agreement dated January 15, 2024
Parties: Skybridge Fintech Ltd. (as the Company) and the Purchasers listed on Schedule 1 thereto, namely: Ridgeline Ventures Fund IV, L.P., Beacon Hill Capital Partners, LLC, Northstar Innovation Fund II, L.P., and Halcyon Growth Equity, L.P.
Description: The Note Purchase Agreement is the governing agreement for the issuance and sale by the Company of an aggregate of $60,000,000 in principal amount of Convertible Promissory Notes. The NPA sets forth the terms and conditions of the Financing, including the representations and warranties of the Company and the Purchasers, the conditions to closing at each of the Initial Closing and the Final Closing, the covenants of the Company (including affirmative and negative covenants during the period the Notes remain outstanding), the mechanics for conversion of the Notes upon a Qualified Financing (defined as an equity financing resulting in gross proceeds to the Company of at least $80,000,000), the treatment of the Notes upon a Change of Control (entitling the holders to a payment of 2.0x outstanding principal plus accrued interest), and miscellaneous provisions including the Most Favored Nation provision applicable to any subsequent convertible notes or SAFEs. The conversion mechanics provide for conversion at a price per share equal to the lesser of (a) 80% of the price per share paid by new investors in the Qualified Financing (reflecting the 20% conversion discount) and (b) the price per share derived by dividing the $750,000,000 valuation cap by the Company's fully diluted capitalization immediately prior to such Qualified Financing. The Notes bear interest at 6.00% per annum (simple interest, 365-day year) and mature on January 15, 2026. The NPA is governed by the laws of the State of Delaware.
Tab 1.2 — Form of Convertible Promissory Note — Execution Version
Document: Form of Convertible Promissory Note (Exhibit A to the Note Purchase Agreement) dated January 15, 2024
Description: The form of Convertible Promissory Note, attached as Exhibit A to the Note Purchase Agreement, is the instrument evidencing the convertible promissory note obligations of the Company to each Purchaser. Each Note sets forth the principal amount of the obligation, the interest rate of 6.00% per annum (simple interest, calculated on the basis of a 365-day year and actual days elapsed), the maturity date of January 15, 2026, and the conversion and repayment mechanics as further described in the NPA. The Notes are unsecured obligations of the Company, subordinated in right of payment to the Company's existing venture debt facility with Kelvantis Lending Corp. pursuant to the Subordination Agreement (Tab 2.1). Individual executed Notes were issued to each Purchaser in the principal amount of such Purchaser's commitment as set forth on Schedule 1 to the NPA.
Tab 1.3 — Schedule of Purchasers — Execution Version
Document: Schedule 1 to the Note Purchase Agreement
Description: Schedule 1 to the Note Purchase Agreement sets forth the identity of each Purchaser, the principal amount of such Purchaser's commitment, the percentage of the aggregate commitment represented by such Purchaser's commitment, and each Purchaser's address for notices and wire transfer instructions. The Schedule of Purchasers as of the date of the NPA is as follows:
Tab 1.4 — Company Disclosure Schedule
Document: Disclosure Schedule delivered by the Company on January 14, 2024
Description: The Disclosure Schedule sets forth the Company's schedule of exceptions to the representations and warranties made by the Company under the Note Purchase Agreement. The Disclosure Schedule is organized by section reference to the NPA and includes, among other things, disclosures relating to: the Company's capitalization and outstanding securities (including outstanding stock options and warrants); material contracts and agreements to which the Company is a party or by which it is bound; intellectual property owned, licensed, or used by the Company in the operation of its business; pending or threatened litigation, claims, or proceedings; regulatory matters and governmental approvals; tax matters; employee benefit plans; environmental matters; and other matters for which exceptions to the Company's representations and warranties were required or deemed advisable by the Company and its counsel. The Disclosure Schedule was delivered to the Purchasers and their counsel prior to the Initial Closing and is incorporated by reference into the NPA.
Tab 1.5 — Amended Schedule of Purchasers — Reflecting Final Closing
Document: Amended Schedule 1 to the Note Purchase Agreement dated January 26, 2024
Description: The Amended Schedule of Purchasers was prepared and delivered in connection with the Final Closing on January 26, 2024 to update Schedule 1 to the Note Purchase Agreement to reflect the completion of both the Initial Closing and the Final Closing and the full funding of the $60,000,000 aggregate commitment across all four Purchasers. The Amended Schedule confirms the respective commitment amounts, funding dates, and principal amounts of the Notes issued to each Purchaser, with no changes to the commitment amounts or percentages as originally set forth on Schedule 1. The Amended Schedule reflects that Ridgeline Ventures Fund IV, L.P. funded its full $30,000,000 commitment at the Initial Closing; Beacon Hill Capital Partners, LLC funded $10,000,000 at the Initial Closing and the remaining $5,000,000 at the Final Closing; Northstar Innovation Fund II, L.P. funded its full $10,000,000 commitment at the Final Closing (pursuant to the Joinder Agreement at Tab 5.1); and Halcyon Growth Equity, L.P. funded its full $5,000,000 commitment at the Initial Closing.
TAB 2 — SUBORDINATION AGREEMENT
Tab 2.1 — Subordination Agreement — Execution Version
Document: Subordination Agreement dated January 15, 2024
Parties: Kelvantis Lending Corp. (as senior lender under the existing venture debt facility), the Purchasers (as subordinated noteholders under the Convertible Promissory Notes), and Skybridge Fintech Ltd. (as the borrower/issuer)
Description: The Subordination Agreement sets forth the terms pursuant to which the Convertible Promissory Notes issued under the Note Purchase Agreement are subordinated in right of payment to the Company's obligations under the existing $15,000,000 venture debt facility governed by the Loan and Security Agreement dated August 15, 2022 between Kelvantis Lending Corp. and Skybridge Fintech Ltd. (the "Senior Debt"). Pursuant to the Subordination Agreement, each Purchaser agrees that, until all Senior Debt has been paid in full and all commitments thereunder terminated, the obligations evidenced by the Convertible Promissory Notes (including all principal and accrued interest) are subordinated and junior in right of payment to the Senior Debt. The Subordination Agreement includes customary standstill provisions restricting the Purchasers' ability to exercise remedies under the Notes during the pendency of the senior debt, subject to certain exceptions. The execution and delivery of the Subordination Agreement was a condition to the Initial Closing under the NPA and was required as a condition to the Kelvantis Lender Consent and Waiver (Tab 8.1). The Subordination Agreement is governed by the laws of the State of Delaware.
TAB 3 — AMENDMENTS TO EXISTING INVESTOR AGREEMENTS
Tab 3.1 — Amendment No. 1 to Amended and Restated Investors' Rights Agreement — Execution Version
Document: Amendment No. 1 to the Amended and Restated Investors' Rights Agreement dated January 15, 2024
Parties: Skybridge Fintech Ltd. and the holders of the requisite number of Registrable Securities required to approve such amendment under the terms of the Amended and Restated Investors' Rights Agreement
Description: Amendment No. 1 to the IRA amends the Amended and Restated Investors' Rights Agreement of Skybridge Fintech Ltd. to add each of the Purchasers under the Note Purchase Agreement as parties thereto with the rights and obligations of "Investors" under the IRA. Following the effectiveness of this amendment, each Purchaser is entitled to information rights (including the right to receive annual and quarterly financial statements, annual budgets, and other periodic information from the Company), pro rata participation rights with respect to future equity financings (subject to the terms and conditions set forth in the IRA), and such other rights as are provided to Investors under the IRA. The amendment was approved by the Company and by holders of the requisite percentage of Registrable Securities as specified in the IRA, and its execution and delivery was a condition to the Initial Closing under the NPA.
Tab 3.2 — Amendment No. 1 to Right of First Refusal and Co-Sale Agreement — Execution Version
Document: Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement dated January 15, 2024
Parties: Skybridge Fintech Ltd. and the holders of the requisite number of shares required to approve such amendment under the terms of the Right of First Refusal and Co-Sale Agreement
Description: Amendment No. 1 to the ROFR/CoSA amends the Right of First Refusal and Co-Sale Agreement of Skybridge Fintech Ltd. to add each of the Purchasers under the Note Purchase Agreement as parties thereto with the rights and obligations of "Investors" under the ROFR/CoSA. Following the effectiveness of this amendment, each Purchaser is entitled to exercise rights of first refusal with respect to proposed transfers of shares by Key Holders (as defined in the ROFR/CoSA) and co-sale rights with respect to any such transfers, in each case in accordance with the terms and conditions set forth in the ROFR/CoSA. The amendment was approved by the Company and by holders of the requisite percentage of shares as specified in the ROFR/CoSA, and its execution and delivery was a condition to the Initial Closing under the NPA.
TAB 4 — ESCROW DOCUMENTS
Tab 4.1 — Escrow Agreement — Execution Version
Document: Escrow Agreement dated January 15, 2024
Parties: Skybridge Fintech Ltd. (as the Company), the Purchasers (as the depositors), and Granite Trust Company, N.A. (as the Escrow Agent)
Contact at Escrow Agent: Angela Petrov, Vice President, Corporate Trust & Escrow Services, Granite Trust Company, N.A.
Description: The Escrow Agreement governs the deposit, investment, and release of closing funds in connection with the Financing. Pursuant to the Escrow Agreement, the Purchasers deposited their respective commitment amounts into Escrow Account No. 4401-7829-SBF maintained at Granite Trust Company, N.A. (the "Escrow Account"), to be held and released in accordance with joint written instructions from the Company and the Purchasers upon satisfaction of the conditions to closing under the NPA. The Escrow Agreement provides for investment of escrowed funds in specified permitted investments (money market funds and short-term U.S. Treasury obligations) during the period prior to release. The Company's flat escrow fee of $7,500 was payable to Granite Trust Company upon execution of the Escrow Agreement and was borne solely by the Company. The Escrow Agreement contains customary provisions regarding the Escrow Agent's duties, liabilities, indemnification, and resignation or removal.
Tab 4.2 — Wire Transfer Instructions Letter
Document: Letter dated January 14, 2024 from Skybridge Fintech Ltd. to Granite Trust Company, N.A.
From: David Lindstrom, Chief Financial Officer, Skybridge Fintech Ltd.
To: Angela Petrov, Vice President, Corporate Trust & Escrow Services, Granite Trust Company, N.A.
Description: The Wire Transfer Instructions Letter sets forth the wire transfer instructions for the disbursement of closing funds from Escrow Account No. 4401-7829-SBF to the Company's operating account maintained at Harborview Savings Bank (a division of Pemberton Enterprises). The letter includes the Company's bank name, ABA routing number, account number, account name, and reference information to be included with each wire transfer. The letter was delivered to Granite Trust Company in advance of the Initial Closing to facilitate the prompt release and transfer of escrow funds upon receipt of joint release instructions.
Tab 4.3 — Escrow Release Instructions — Initial Closing
Document: Joint Written Instruction dated January 15, 2024
Parties: Skybridge Fintech Ltd. and the Purchasers, directed to Granite Trust Company, N.A.
Description: Joint written instruction directing Granite Trust Company, N.A., as Escrow Agent, to release $45,000,000 in escrow funds from Escrow Account No. 4401-7829-SBF for the Initial Closing. The instruction specifies the amounts to be released corresponding to the Initial Closing funding by each Purchaser as follows:
The instruction directs Granite Trust to wire the released funds to the Company's operating account in accordance with the Wire Transfer Instructions Letter (Tab 4.2), net of the $7,500 escrow fee payable to Granite Trust.
Tab 4.4 — Escrow Release Instructions — Final Closing
Document: Joint Written Instruction dated January 26, 2024
Parties: Skybridge Fintech Ltd. and the Purchasers, directed to Granite Trust Company, N.A.
Description: Joint written instruction directing Granite Trust Company, N.A., as Escrow Agent, to release $15,000,000 in escrow funds from Escrow Account No. 4401-7829-SBF for the Final Closing. The instruction specifies the amounts to be released corresponding to the Final Closing funding by each Purchaser as follows:
The instruction directs Granite Trust to wire the released funds to the Company's operating account in accordance with the Wire Transfer Instructions Letter (Tab 4.2). Following the release of Final Closing funds, the Escrow Account was fully drawn and closed in accordance with the terms of the Escrow Agreement.
TAB 5 — FINAL CLOSING DOCUMENTS
Tab 5.1 — Joinder Agreement — Northstar Innovation Fund II, L.P.
Document: Joinder Agreement dated January 26, 2024
Executed by: Northstar Innovation Fund II, L.P., by Northstar Capital Management LLC, its general partner
Signatory: Wei-Lin Chang, Managing Partner
Description: The Joinder Agreement was executed by Northstar Innovation Fund II, L.P. in connection with the Final Closing on January 26, 2024. Pursuant to the Joinder Agreement, Northstar became a "Purchaser" under the Note Purchase Agreement and a party to each of the transaction documents and ancillary agreements to which the Purchasers are parties, including the Subordination Agreement (Tab 2.1), Amendment No. 1 to the IRA (Tab 3.1), and Amendment No. 1 to the ROFR/CoSA (Tab 3.2). Northstar agreed to be bound by all of the terms and conditions of such agreements as if it had been an original party thereto. In connection with its joinder, Northstar funded its full $10,000,000 commitment to the Escrow Account, and a Convertible Promissory Note in the principal amount of $10,000,000 was issued to Northstar. Northstar represented and warranted that it is an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, and made the other Purchaser representations set forth in the NPA.
Tab 5.2 — Closing Funds Flow Memorandum
Document: Funds Flow Memorandum dated January 14, 2024
Prepared by: Calderwood & Harkness LLP, in consultation with David Lindstrom, CFO, Skybridge Fintech Ltd.
Description: The Funds Flow Memorandum sets forth a detailed flow of funds for both the Initial Closing and the Final Closing of the Financing. The memorandum identifies: (a) the wire amounts to be transmitted by each Purchaser to the Granite Trust escrow account (Escrow Account No. 4401-7829-SBF); (b) the timing and conditions for release of escrowed funds; (c) the wire amounts to be released from escrow to the Company's operating account at each closing; and (d) the deduction of the $7,500 flat escrow fee payable to Granite Trust Company from the Initial Closing release. The summary of funds flows is as follows:
Initial Closing — January 15, 2024:
Final Closing — January 26, 2024:
Aggregate Net to Skybridge (both closings): $59,992,500
TAB 6 — CORPORATE APPROVALS
Tab 6.1 — Unanimous Written Consent of the Board of Directors — Executed
Document: Unanimous Written Consent of the Board of Directors of Skybridge Fintech Ltd. dated January 10, 2024
Description: The Unanimous Written Consent of the Board of Directors of Skybridge Fintech Ltd. was executed by all members of the Board of Directors on January 10, 2024, in lieu of a special meeting of the Board, pursuant to Section 141(f) of the Delaware General Corporation Law. The Board consent authorizes the following actions in connection with the $60,000,000 convertible note bridge financing:
(a) approval of the terms of the Financing, including the issuance and sale of up to $60,000,000 in aggregate principal amount of Convertible Promissory Notes to the Purchasers;
(b) approval of the Note Purchase Agreement, in substantially the form presented to the Board, and authorization of the Company's execution and delivery thereof;
(c) approval of the form of Convertible Promissory Note attached as Exhibit A to the Note Purchase Agreement, and authorization of the Company's issuance thereof to the Purchasers;
(d) approval of the Subordination Agreement among the Company, the Purchasers, and Kelvantis Lending Corp., and authorization of the Company's execution and delivery thereof;
(e) approval of Amendment No. 1 to the Amended and Restated Investors' Rights Agreement and Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement, and authorization of the Company's execution and delivery thereof;
(f) approval of the Escrow Agreement among the Company, the Purchasers, and Granite Trust Company, N.A., and authorization of the Company's execution and delivery thereof;
(g) authorization of Arjun Mehta, Chief Executive Officer, David Lindstrom, Chief Financial Officer, and Priya Ramanathan, General Counsel and Secretary, individually or collectively, to execute and deliver all documents and instruments, and to take all actions, necessary or advisable to consummate the Financing and the transactions contemplated thereby; and
(h) ratification of all prior actions taken by the officers and agents of the Company in connection with the Financing.
Tab 6.2 — Written Consent of Stockholders in Lieu of Special Meeting — Executed
Document: Written Consent of Stockholders in Lieu of Special Meeting of Skybridge Fintech Ltd. dated January 12, 2024
Description: The Written Consent of Stockholders was executed by holders of the requisite number of outstanding shares of the Company's capital stock on January 12, 2024, in lieu of a special meeting of stockholders, pursuant to Section 228 of the Delaware General Corporation Law. The stockholder consent approves the following actions:
(a) the issuance by the Company of up to $60,000,000 in aggregate principal amount of Convertible Promissory Notes to the Purchasers under the Note Purchase Agreement, including the conversion of such Notes into shares of the Company's capital stock upon the terms set forth therein; and
(b) the Company's execution and delivery of Amendment No. 1 to the Amended and Restated Investors' Rights Agreement and Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement.
The stockholder consent was executed by holders representing a sufficient percentage of the outstanding voting power of the Company to constitute the requisite stockholder approval under the Company's Amended and Restated Certificate of Incorporation, the Amended and Restated Investors' Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and the DGCL.
Tab 6.3 — Section 228 Notice to Non-Consenting Stockholders
Document: Notice dated January 15, 2024
Description: Notice to non-consenting stockholders of Skybridge Fintech Ltd. pursuant to Section 228(e) of the Delaware General Corporation Law. The notice informs all stockholders who did not execute the Written Consent of Stockholders dated January 12, 2024 (Tab 6.2) of the corporate actions taken by written consent without a meeting. The notice identifies the actions approved (the convertible note issuance and amendments to existing investor agreements), the date on which written consent was obtained, and the effective date of such actions. The notice was distributed to all non-consenting stockholders of record in accordance with the requirements of Section 228(e) of the DGCL.
TAB 7 — CLOSING CERTIFICATES
Tab 7.1 — Secretary's Certificate of the Company
Document: Secretary's Certificate of Skybridge Fintech Ltd. dated January 15, 2024
Signed by: Priya Ramanathan, Secretary, Skybridge Fintech Ltd.
Description: The Secretary's Certificate was delivered by the Secretary of the Company at the Initial Closing and certifies as to the following:
(a) the truth, correctness, and completeness of the attached copy of the Amended and Restated Certificate of Incorporation of Skybridge Fintech Ltd. as currently in effect and on file with the Secretary of State of the State of Delaware;
(b) the truth, correctness, and completeness of the attached copy of the Bylaws of Skybridge Fintech Ltd. as currently in effect;
(c) the truth, correctness, and completeness of the attached copy of the Unanimous Written Consent of the Board of Directors dated January 10, 2024 (Tab 6.1) authorizing the Financing and the transactions contemplated thereby;
(d) the incumbency and specimen signatures of each officer of the Company authorized to execute and deliver the transaction documents on behalf of the Company, including Arjun Mehta (Chief Executive Officer), David Lindstrom (Chief Financial Officer), and Priya Ramanathan (General Counsel and Secretary); and
(e) that no proceedings for the dissolution, liquidation, or winding up of the Company have been commenced or are contemplated.
Tab 7.2 — Officer's Certificate — Representations & Warranties Bring-Down
Document: Officer's Certificate of Skybridge Fintech Ltd. dated January 15, 2024
Signed by: Arjun Mehta, Chief Executive Officer, and David Lindstrom, Chief Financial Officer
Description: The Officer's Certificate was delivered at the Initial Closing as a condition to closing under the Note Purchase Agreement. The certificate confirms and certifies that the representations and warranties of the Company contained in the Note Purchase Agreement are true and correct in all material respects as of January 15, 2024 (the date of the Initial Closing), with the same force and effect as though such representations and warranties had been made on and as of such date (except for representations and warranties that speak as of a specific earlier date, which are certified to be true and correct in all material respects as of such earlier date). The certificate further confirms that the Company has performed and complied in all material respects with all agreements and conditions required by the NPA to be performed or complied with by the Company on or prior to the Initial Closing.
Tab 7.3 — Officer's Certificate — Use of Proceeds
Document: Officer's Certificate of Skybridge Fintech Ltd. dated January 15, 2024
Signed by: David Lindstrom, Chief Financial Officer
Description: The Officer's Certificate regarding use of proceeds was delivered at the Initial Closing and certifies the Company's intended use of the aggregate proceeds from the $60,000,000 convertible note bridge financing. The certificate states that the proceeds of the Financing will be used by the Company for general corporate purposes, working capital, and continued product development, in each case pending the Company's planned Series D equity financing, which the Company anticipates initiating in the third or fourth quarter of 2024. The certificate confirms that no portion of the proceeds will be used, directly or indirectly, for any purpose that would violate any applicable law, regulation, or the terms of the Company's existing agreements, including the Loan and Security Agreement with Kelvantis Lending Corp.
Tab 7.4 — Good Standing Certificate — Delaware Secretary of State
Document: Certificate of Good Standing for Skybridge Fintech Ltd.
Issued by: Secretary of State of the State of Delaware
DE File Number: 6384291
Date Obtained: January 11, 2024
Description: Short-form Certificate of Good Standing issued by the Secretary of State of the State of Delaware confirming that Skybridge Fintech Ltd. (File Number 6384291) is a corporation duly organized and in good standing under the laws of the State of Delaware. The certificate confirms that all franchise taxes due and owing have been paid and that the Company has not been voided, dissolved, or otherwise terminated. The certificate was obtained within five (5) business days prior to the Initial Closing, as required by the conditions to closing under the Note Purchase Agreement.
TAB 8 — LENDER CONSENT
Tab 8.1 — Kelvantis Lending Corp. — Lender Consent and Waiver Letter
Document: Lender Consent and Waiver Letter
Form: Prepared by Calderwood & Harkness LLP on behalf of Skybridge Fintech Ltd.
Executed by: Kelvantis Lending Corp.
Signatory: Theodore "Ted" Marsh, Relationship Manager, Kelvantis Lending Corp.
Date Received: January 12, 2024
Description: The Lender Consent and Waiver Letter was executed and delivered by Kelvantis Lending Corp. in its capacity as senior lender to the Company under the Loan and Security Agreement dated August 15, 2022 between Kelvantis Lending Corp. and Skybridge Fintech Ltd. (the "LSA"). The consent letter provides:
(a) Kelvantis's consent to the issuance by the Company of up to $60,000,000 in aggregate principal amount of Convertible Promissory Notes to the Purchasers under the Note Purchase Agreement, notwithstanding any negative covenant in the LSA restricting the incurrence of additional indebtedness;
(b) Kelvantis's consent to the execution and delivery by the Company of the Subordination Agreement (Tab 2.1), pursuant to which the Convertible Promissory Notes are expressly subordinated in right of payment to the obligations of the Company under the LSA;
(c) a waiver of any event of default or potential event of default under the LSA that would otherwise arise from or be triggered by the Company's incurrence of the additional indebtedness represented by the Convertible Promissory Notes or the Company's entry into the NPA, the Subordination Agreement, or any of the other transaction documents; and
(d) a confirmation that, after giving effect to the Financing and the execution of the Subordination Agreement, the existing $15,000,000 venture debt facility under the LSA remains in full force and effect, and no other amendments, modifications, or waivers of the LSA are required in connection with the Financing.
The receipt of the Kelvantis Lender Consent and Waiver Letter was a condition to the Initial Closing under the Note Purchase Agreement.
TAB 9 — LEGAL OPINION
Tab 9.1 — Legal Opinion of Calderwood & Harkness LLP
Document: Legal Opinion of Calderwood & Harkness LLP dated January 15, 2024
Addressed to: Ridgeline Ventures Fund IV, L.P., Beacon Hill Capital Partners, LLC, Northstar Innovation Fund II, L.P., and Halcyon Growth Equity, L.P.
Description: The Legal Opinion of Calderwood & Harkness LLP was delivered at the Initial Closing as a condition to closing under the Note Purchase Agreement. The opinion letter, addressed to each of the Purchasers, covers the following matters:
(a) Due Organization and Valid Existence. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease, and operate its properties and to conduct its business as presently conducted.
(b) Authorization. The execution and delivery of the Note Purchase Agreement, the Convertible Promissory Notes, and the other transaction documents by the Company, and the performance by the Company of its obligations thereunder, have been duly authorized by all necessary corporate action on the part of the Company, including approval by the Board of Directors and, to the extent required, the stockholders of the Company.
(c) Enforceability. The Note Purchase Agreement and each Convertible Promissory Note constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to customary enforceability exceptions relating to bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally, and to general principles of equity.
(d) No Conflicts. The execution and delivery of the transaction documents by the Company, and the performance by the Company of its obligations thereunder, do not and will not (i) violate the Amended and Restated Certificate of Incorporation or Bylaws of the Company, (ii) violate any applicable law, rule, or regulation, or (iii) result in a breach of, or constitute a default under, any material agreement or instrument to which the Company is a party or by which it is bound.
(e) Securities Law Exemption. The offer and sale of the Convertible Promissory Notes by the Company to the Purchasers are exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to Rule 506(b) of Regulation D promulgated thereunder, subject to customary assumptions and qualifications regarding the Purchasers' representations as to accredited investor status and the Company's compliance with the conditions of Rule 506(b).
The opinion letter contains customary assumptions, qualifications, and limitations, and is subject to the exceptions and qualifications set forth therein. Reliance on the opinion is limited to the addressees and may not be relied upon by any other person without the prior written consent of Calderwood & Harkness LLP.
TAB 10 — REGULATORY FILINGS
Tab 10.1 — Form D Filing (SEC) — Initial Closing
Document: SEC Form D filed with the U.S. Securities and Exchange Commission
Filing Date: January 16, 2024
Issuer: Skybridge Fintech Ltd.
Description: Notice of sale of securities on Form D filed with the SEC pursuant to Rule 503 of Regulation D under the Securities Act of 1933, as amended. The Form D reports the sale of Convertible Promissory Notes by Skybridge Fintech Ltd. in reliance on the exemption from registration provided by Rule 506(b) of Regulation D in connection with the Initial Closing of $45,000,000 on January 15, 2024. The filing identifies the Company as the issuer, describes the securities as convertible promissory notes, reports the total offering amount, and identifies the Purchasers participating in the Initial Closing.
Tab 10.2 — Form D Amendment (SEC) — Final Closing
Document: Amendment to Form D filed with the U.S. Securities and Exchange Commission
Filing Date: January 29, 2024
Issuer: Skybridge Fintech Ltd.
Description: Amendment to the Form D originally filed on January 16, 2024, updating the total offering amount to reflect the completion of the Final Closing on January 26, 2024 and the aggregate offering amount of $60,000,000 across both the Initial Closing and the Final Closing. The amendment adds Northstar Innovation Fund II, L.P. as an additional purchaser in connection with the Final Closing and updates the total amount sold and the number of investors. The filing was made in accordance with Rule 503(a) of Regulation D, which requires an amendment to Form D to be filed within 15 calendar days after the first sale of securities in a new state or after a material change in the information previously reported.
Tab 10.3 — Blue Sky / State Notice Filings Memorandum
Document: Memorandum dated January 18, 2024
Prepared by: Nina Reyes, Associate, Calderwood & Harkness LLP
Description: Internal memorandum prepared by Calderwood & Harkness LLP identifying the state "blue sky" notice filing requirements applicable to the offer and sale of the Convertible Promissory Notes. The memorandum analyzes the exemption from state securities registration relied upon for each applicable jurisdiction, identifies the required state notice filings, and tracks filing deadlines and current filing status for the following jurisdictions:
The memorandum further notes that the California state notice filing in connection with Northstar Innovation Fund II, L.P.'s participation was required to be made within 15 calendar days following the Final Closing on January 26, 2024.
TAB 11 — CORRESPONDENCE
Tab 11.1 — Letter: C&H to WPS — Transmitting Initial Draft NPA and Note
Document: Letter dated December 11, 2023
From: Leonard Ashford, Of Counsel, Calderwood & Harkness LLP
To: Graham Whitfield, Partner, Whitfield, Pratt & Soo LLP
Description: Letter from Company counsel transmitting initial drafts of the Note Purchase Agreement and the form of Convertible Promissory Note on behalf of Skybridge Fintech Ltd. for review and comment by Whitfield, Pratt & Soo LLP, counsel to the Lead Investor (Ridgeline Ventures Fund IV, L.P.) and the other Purchasers. The letter requests that WPS distribute the drafts to the Purchasers' respective internal counsel and business teams and consolidate comments for a unified set of investor mark-ups. The letter also proposes a timeline for the negotiation and execution of the transaction documents, targeting an initial closing in mid-January 2024.
Tab 11.2 — Letter: C&H to Kelvantis Lending Corp. — Request for Lender Consent
Document: Letter dated December 15, 2023
From: Calderwood & Harkness LLP (on behalf of Skybridge Fintech Ltd.)
To: Theodore "Ted" Marsh, Relationship Manager, Kelvantis Lending Corp.
Description: Letter from Company counsel requesting that Kelvantis Lending Corp. provide its consent and waiver under the Loan and Security Agreement dated August 15, 2022 in connection with the proposed $60,000,000 convertible note bridge financing. The letter describes the proposed Financing, explains that the Convertible Promissory Notes will be expressly subordinated to the Company's obligations under the existing $15,000,000 venture debt facility pursuant to a Subordination Agreement to be entered into among Kelvantis, the Company, and the Purchasers, and requests that Kelvantis consent to the incurrence of such additional subordinated indebtedness and waive any resulting default or potential default under the LSA. The letter encloses a draft of the proposed form of Lender Consent and Waiver Letter and a draft of the proposed Subordination Agreement for Kelvantis's review and comment.
Tab 11.3 — Letter: C&H to Granite Trust Company — Escrow Deposit Instructions
Document: Letter dated January 14, 2024
From: Calderwood & Harkness LLP (on behalf of Skybridge Fintech Ltd.)
To: Angela Petrov, Vice President, Corporate Trust & Escrow Services, Granite Trust Company, N.A.
Description: Letter from Company counsel transmitting the executed Escrow Agreement (Tab 4.1) to Granite Trust Company, N.A. and providing escrow deposit instructions in connection with the Initial Closing of the Financing. The letter confirms the establishment of Escrow Account No. 4401-7829-SBF, instructs Granite Trust to accept wire deposits from the Purchasers in the aggregate amount of $45,000,000 for the Initial Closing, and references the Escrow Agreement and the Company's Wire Transfer Instructions Letter (Tab 4.2) for the mechanics and conditions of release. The letter requests confirmation from Granite Trust upon receipt of each deposit and advises that joint release instructions will be delivered on the date of the Initial Closing (January 15, 2024).
Tab 11.4 — Letter: C&H to Skybridge — Closing Confirmation & Post-Closing Obligations Reminder
Document: Letter dated January 30, 2024
From: Victoria Chambers, Partner, Calderwood & Harkness LLP
To: Arjun Mehta, Chief Executive Officer, and Priya Ramanathan, General Counsel and Secretary, Skybridge Fintech Ltd.
Description: Letter from Company counsel confirming the successful completion of the $60,000,000 convertible note bridge financing following the Final Closing on January 26, 2024. The letter confirms that all conditions to closing under the Note Purchase Agreement have been satisfied, all transaction documents have been duly executed and delivered, all closing funds have been released from escrow and received by the Company, and the Financing has been fully consummated in accordance with the terms of the NPA. The letter further serves as a reminder of the Company's post-closing obligations, including:
(a) the delivery of the Section 228(e) notice to non-consenting stockholders (Tab 6.3), which was required to be delivered promptly following the effectiveness of the stockholder consent;
(b) the filing of the Form D amendment with the SEC to update the total offering amount and add Northstar Innovation Fund II, L.P. as a purchaser (Tab 10.2), which was required to be filed within 15 calendar days of the Final Closing;
(c) the completion of state blue sky / notice filings in applicable jurisdictions, including the California filing in connection with Northstar's participation (Tab 10.3);
(d) the ongoing reporting and information delivery obligations of the Company under the Amended and Restated Investors' Rights Agreement, as amended; and
(e) the anticipated timeline for the Company's planned Series D equity financing, which the Company and Calderwood & Harkness LLP expect to initiate in Q3–Q4 2024, and a recommendation that the Company begin preliminary planning and diligence preparation in advance of such financing.