KELVANTIS LENDING CORP. 350 Park Avenue, 18th Floor New York, NY 10022
January 12, 2024
Skybridge Fintech Ltd. 1400 Market Street, Suite 2200 Wilmington, DE 19801
Attention: Arjun Mehta, Chief Executive Officer
Priya Ramanathan, General Counsel
With a copy to:
Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022
Attention: Leonard Ashford, Esq.
Re: Consent and Waiver Under Loan and Security Agreement dated August 15, 2022 — Convertible Note Bridge Financing
Ladies and Gentlemen:
Reference is hereby made to that certain Loan and Security Agreement, dated as of August 15, 2022 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the "Loan Agreement"), by and between Kelvantis Lending Corp., a Delaware corporation (the "Lender" or "Kelvantis"), and Skybridge Fintech Ltd., a Delaware corporation (the "Borrower" or the "Company"). The Loan Agreement provides for a venture debt facility in favor of the Borrower in the original principal amount of Fifteen Million Dollars ($15,000,000), with a stated maturity date of August 15, 2025.
The Borrower has informed the Lender that the Borrower proposes to enter into a Note Purchase Agreement (the "NPA"), dated on or about January 15, 2024, by and among the Borrower and certain purchasers identified therein (collectively, the "Purchasers"), including Ridgeline Ventures Fund IV, L.P., Beacon Hill Capital Partners, LLC, Northstar Innovation Fund II, L.P., and Halcyon Growth Equity, L.P.
The Borrower has further informed the Lender that, pursuant to the NPA, the Borrower proposes to issue convertible promissory notes (the "Notes") in an aggregate principal amount of up to Sixty Million Dollars ($60,000,000), bearing interest at the rate of 6.00% per annum (600 basis points), payable in accordance with the terms thereof, with a maturity date of January 15, 2026. The Notes will be convertible into equity securities of the Borrower upon the occurrence of a Qualified Financing (as defined in the NPA) at a conversion price equal to the lower of (a) a twenty percent (20%) discount to the price per share paid by the investors in such Qualified Financing, or (b) a price per share implied by a pre-money valuation cap of Seven Hundred Fifty Million Dollars ($750,000,000).
In connection with the foregoing, the Borrower intends to enter into a Subordination Agreement (the "Subordination Agreement"), dated on or about January 15, 2024, by and among Kelvantis, the Purchasers, and the Borrower, pursuant to which the Notes and all obligations of the Borrower thereunder will be fully subordinated in right of payment and priority to the obligations of the Borrower under the Loan Agreement (the NPA, the Notes, and the Subordination Agreement are referred to herein collectively as the "Bridge Financing Documents").
The Borrower has requested that Kelvantis (i) consent to the issuance of the Notes and the incurrence of the indebtedness represented thereby, (ii) consent to the execution, delivery, and performance by the Borrower of the Bridge Financing Documents, and (iii) waive any Default or Event of Default (each as defined in the Loan Agreement) that would arise under the Loan Agreement solely as a result of the foregoing transactions.
Capitalized terms used but not otherwise defined in this Consent and Waiver Letter (this "Letter") shall have the respective meanings ascribed to such terms in the Loan Agreement.
In consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Kelvantis hereby agrees as follows:
Section 1: Consent
1.1 Consent to Issuance of Notes and Additional Indebtedness
Kelvantis hereby consents to the issuance by the Borrower of the Notes pursuant to the NPA in an aggregate principal amount not to exceed Sixty Million Dollars ($60,000,000). Without limiting the generality of the foregoing, Kelvantis hereby consents to the incurrence by the Borrower of the indebtedness represented by the Notes, notwithstanding any restriction on additional indebtedness contained in the Loan Agreement, including without limitation Section 7.04 thereof (Negative Covenant — Limitation on Indebtedness) and any related provisions restricting the Borrower's ability to create, incur, assume, guarantee, or otherwise become or remain liable with respect to any indebtedness not expressly permitted under the Loan Agreement.
The consent granted pursuant to this Section 1.1 is limited solely and specifically to the Notes and the indebtedness described herein, as issued and incurred in accordance with the terms of the NPA as provided to Kelvantis prior to the date hereof. This consent does not extend to any other indebtedness of the Borrower, whether now existing or hereafter arising, or to any amendment, modification, restatement, extension, renewal, or refinancing of the Notes, in each case, without the prior written consent of Kelvantis. For the avoidance of doubt, the aggregate principal amount of the Notes authorized hereunder shall not exceed $60,000,000, and any issuance of additional Notes or any increase in the principal amount of the Notes beyond such amount shall require the separate prior written consent of Kelvantis.
1.2 Consent to Execution of Bridge Financing Documents
Kelvantis hereby consents to the execution, delivery, and performance by the Borrower of each of the Bridge Financing Documents, including without limitation the NPA, the Notes, and the Subordination Agreement, in each case in substantially the form previously provided to and reviewed by Kelvantis prior to the date hereof. The Borrower is authorized to perform its obligations under the Bridge Financing Documents and to consummate the transactions contemplated thereby, subject to the terms and conditions of this Letter.
In addition, Kelvantis hereby consents to the execution, delivery, and performance by the Borrower of (a) Amendment No. 1 to the Amended and Restated Investors' Rights Agreement, dated as of [the closing date of the NPA], among the Borrower, the Purchasers, and the other parties thereto, and (b) Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement, dated as of [the closing date of the NPA], among the Borrower, the Purchasers, and the other parties thereto (collectively, the "Investor Agreement Amendments"), in each case solely to the extent that such Investor Agreement Amendments do not materially and adversely affect Kelvantis's rights, remedies, or interests under the Loan Agreement or any related loan document. The Borrower shall promptly provide Kelvantis with fully executed copies of the Investor Agreement Amendments following the execution thereof.
1.3 Consent to Subordination Agreement
Kelvantis hereby consents to and acknowledges the Subordination Agreement and confirms that the terms and conditions thereof, as set forth in the form reviewed by Kelvantis prior to the date hereof, are acceptable to Kelvantis. Kelvantis further confirms that the Notes and all obligations of the Borrower thereunder, including without limitation all obligations in respect of principal, interest, fees, indemnities, and other amounts payable under or in connection with the Notes, shall be fully subordinated to the Borrower's obligations under the Loan Agreement in right of payment and priority, in accordance with the terms and conditions of the Subordination Agreement. The Subordination Agreement shall be in substantially the form reviewed and approved by Kelvantis prior to the date hereof, and any material modification, amendment, or waiver of the Subordination Agreement shall require the prior written consent of Kelvantis.
Section 2: Waiver
2.1 Waiver of Default
Kelvantis hereby waives any Default or Event of Default under the Loan Agreement that would arise solely as a result of (a) the execution, delivery, and performance by the Borrower of the Bridge Financing Documents, (b) the issuance of the Notes and the incurrence of the indebtedness represented thereby, or (c) the granting of any liens or security interests in the assets or properties of the Borrower in favor of the holders of the Notes or any agent or trustee acting on their behalf, in each case solely to the extent that such liens and security interests are junior and subordinate to Kelvantis's liens and security interests in the Collateral (as defined in the Loan Agreement) pursuant to the terms of the Subordination Agreement. This waiver applies solely to any Default or Event of Default that would arise under the Loan Agreement by reason of the specific matters described in clauses (a), (b), and (c) of this Section 2.1, and for no other reason.
2.2 Limited Waiver
The waiver set forth in Section 2.1 above is a one-time waiver and is limited solely and specifically to the matters described therein. This waiver shall not be construed as, nor shall it constitute, a waiver of any other provision, term, covenant, or condition of the Loan Agreement, or of any Default or Event of Default under the Loan Agreement, whether now existing or hereafter arising, other than the specific Defaults and Events of Default expressly waived hereby. Without limiting the generality of the foregoing, nothing contained in this Letter shall constitute a waiver of any right of Kelvantis to exercise any remedy available to it under the Loan Agreement with respect to any Default or Event of Default not expressly waived by this Letter. This waiver shall not establish a course of dealing between the parties, nor shall it be construed as evidence of any willingness or obligation on the part of Kelvantis to grant any future consent, waiver, or modification with respect to any provision of the Loan Agreement or any future transaction of the Borrower.
Section 3: Conditions to Effectiveness
The consent and waiver set forth in this Letter shall not become effective until each of the following conditions precedent shall have been satisfied to the reasonable satisfaction of Kelvantis (the date upon which all such conditions are satisfied, the "Effective Date"):
(a) Execution of this Letter. Kelvantis shall have received a fully executed copy of this Consent and Waiver Letter, duly countersigned by an authorized officer of the Borrower, in form and substance satisfactory to Kelvantis.
(b) Subordination Agreement. Kelvantis shall have received a fully executed copy of the Subordination Agreement, duly executed by all parties thereto, in substantially the form previously reviewed and approved by Kelvantis prior to the date hereof, and such Subordination Agreement shall be in full force and effect.
(c) NPA and Notes. The NPA and the Notes shall be in substantially the form previously provided to Kelvantis prior to the date hereof, and no material modification, amendment, or supplement shall have been made thereto without Kelvantis's prior written consent. Kelvantis shall have received copies of the executed NPA and the executed Notes promptly following execution thereof.
(d) No Existing Default. No Default or Event of Default (other than any Default or Event of Default expressly waived by this Letter) shall have occurred and be continuing under the Loan Agreement as of the date hereof and as of the Effective Date.
(e) Representations and Warranties. The representations and warranties of the Borrower contained in the Loan Agreement and in each other loan document shall be true and correct in all material respects (or, in the case of any representation or warranty qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the date hereof and as of the Effective Date, except to the extent that any such representation or warranty expressly relates to a specific earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date.
Section 4: Representations and Acknowledgments of the Borrower
By countersigning this Letter, the Borrower hereby represents and warrants to Kelvantis, and acknowledges and agrees, as follows:
(a) No Default. Except as expressly waived by this Letter, no Default or Event of Default has occurred and is continuing under the Loan Agreement as of the date of the Borrower's countersignature hereof.
(b) Representations and Warranties. The representations and warranties of the Borrower set forth in the Loan Agreement and each other loan document are true and correct in all material respects (or, in the case of any representation or warranty qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the date of the Borrower's countersignature hereof, except to the extent that any such representation or warranty expressly relates to a specific earlier date, in which case such representation or warranty is true and correct in all material respects as of such earlier date.
(c) Compliance with Covenants. After giving effect to the issuance of the Notes and the consummation of the transactions contemplated by the Bridge Financing Documents, the Borrower is and will be in compliance with all financial covenants, affirmative covenants, negative covenants, and other terms and conditions of the Loan Agreement, other than those covenants, terms, or conditions expressly waived or consented to in this Letter.
(d) Principal Amount Cap. The aggregate principal amount of the Notes issued and outstanding at any time shall not exceed Sixty Million Dollars ($60,000,000), and the Borrower shall not issue any Notes in excess of such amount without the prior written consent of Kelvantis.
(e) Subordination. The Notes shall be, and at all times shall remain, subordinated to the Loan Agreement and all obligations of the Borrower thereunder in all respects, in accordance with the terms and conditions of the Subordination Agreement, and the Borrower shall not take any action, or fail to take any action, that would be inconsistent with such subordination.
Section 5: Reaffirmation of Loan Agreement
The Borrower hereby ratifies and reaffirms all of its obligations, covenants, agreements, representations, and warranties under and pursuant to the Loan Agreement and each other loan document, and confirms that the Loan Agreement and each other loan document remain in full force and effect, as modified solely by this Consent and Waiver Letter, and are hereby ratified and confirmed in all respects.
Without limiting the generality of the foregoing, the Borrower hereby reaffirms and confirms the grant by the Borrower to Kelvantis of a first-priority security interest in and lien upon the Collateral (as defined in the Loan Agreement) to secure the prompt and complete payment and performance of all Obligations (as defined in the Loan Agreement). The Borrower acknowledges and agrees that all security interests and liens granted by the Borrower in favor of Kelvantis under the Loan Agreement and the related loan documents continue unimpaired and in full force and effect, that the Collateral continues to secure all Obligations under the Loan Agreement, and that the priority of Kelvantis's security interests and liens in the Collateral has not been and shall not be diminished, altered, or otherwise affected by the transactions contemplated by this Letter or the Bridge Financing Documents.
Nothing contained in this Consent and Waiver Letter shall be construed as a substitution, replacement, or novation of the Loan Agreement or the obligations of the Borrower thereunder, and this Letter shall not be deemed to evidence or result in a novation of, or a substitution for, any of the Obligations.
Section 6: Reservation of Rights
Except as expressly set forth in this Letter, Kelvantis hereby expressly reserves all of its rights, remedies, powers, and privileges under the Loan Agreement, each other loan document, applicable law, and in equity, all of which are hereby preserved in their entirety. No failure or delay on the part of Kelvantis in exercising any right, remedy, or power under the Loan Agreement or this Letter shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, or power preclude any other or further exercise thereof or the exercise of any other right, remedy, or power.
This Consent and Waiver Letter shall not be construed as a waiver of Kelvantis's right to exercise any right, remedy, or power under the Loan Agreement, any other loan document, applicable law, or in equity with respect to any matter or circumstance not expressly addressed herein, whether arising before, on, or after the date hereof.
Section 7: Miscellaneous Provisions
7.1 Governing Law
This Consent and Waiver Letter and any claim, controversy, or dispute arising under or related to this Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
7.2 Counterparts. This Letter may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which counterparts taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Letter by facsimile transmission or by electronic transmission in portable document format (PDF) shall be effective as delivery of a manually executed original counterpart hereof.
7.3 Entire Agreement
This Consent and Waiver Letter, together with the Loan Agreement, the Subordination Agreement, and the other loan documents, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, communications, discussions, correspondence, agreements, and understandings, whether written or oral, relating to such subject matter.
7.4 Amendment. No amendment, modification, termination, or waiver of any provision of this Letter shall be effective unless the same shall be in writing and signed by Kelvantis and the Borrower. No waiver of any provision of this Letter, and no consent to any departure by any party herefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
7.5 Successors and Assigns
This Consent and Waiver Letter shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns in accordance with the terms of the Loan Agreement. Neither the Borrower nor Kelvantis may assign or transfer any of its rights or obligations hereunder except in accordance with the terms of the Loan Agreement.
If the foregoing accurately reflects our agreement, please indicate the Borrower's acknowledgment and agreement by executing and returning the enclosed counterpart of this Letter to the undersigned.
[Remainder of Page Intentionally Left Blank — Signature Page Follows]
SIGNATURE PAGE TO CONSENT AND WAIVER LETTER
Very truly yours,
KELVANTIS LENDING CORP.
By: ________
Name: Theodore "Ted" Marsh
Title: Vice President, Authorized Signatory
Date: January 12, 2024
COUNTERSIGNATURE PAGE TO CONSENT AND WAIVER LETTER
ACKNOWLEDGED AND AGREED:
SKYBRIDGE FINTECH LTD.
By: ________
Name: Arjun Mehta
Title: Chief Executive Officer
Date: January 12, 2024
cc: David Lindstrom, Chief Financial Officer, Skybridge Fintech Ltd. cc: Leonard Ashford, Esq., Calderwood & Harkness LLP cc: Nina Reyes, Esq., Calderwood & Harkness LLP