1009-00001 · Skybridge Fintech Ltd · Term Sheet

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Victoria Chambers, Responsible Partner Leonard Ashford, Of Counsel Emory, Castillo, Voss & Chung LLP ("ECVC")

FROM: Nina Reyes, Senior Associate, ECVC

DATE: December 2, 2023

RE: Skybridge Fintech Ltd. — $60M Convertible Note Bridge Financing — Term Sheet Comparison and Redline Summary

Matter No.: 1009-00001

I. Purpose and Background

The purpose of this memorandum is to summarize the material differences between (i) the initial draft term sheet circulated by Whitfield, Pratt & Soo LLP ("WPS") on behalf of Ridgeline Ventures Fund IV, L.P. ("Ridgeline") and the investor syndicate on November 20, 2023 (the "Initial Draft"), and (ii) the revised term sheet incorporating Calderwood & Harkness LLP's ("C&H") comments on behalf of Skybridge Fintech Ltd. (the "Company"), circulated by C&H on November 29, 2023 (the "Revised Draft" and, together with the Initial Draft, the "Drafts"). This memorandum is prepared in advance of the anticipated execution of the final term sheet, which the parties are targeting for the week of December 4, 2023.

The proposed transaction is a $60,000,000 convertible promissory note bridge financing led by Ridgeline Ventures Fund IV, L.P. (Samuel Okonkwo, Deal Lead), with co-investors Beacon Hill Capital Partners, LLC ("Beacon Hill"), Northstar Innovation Fund II, L.P. ("Northstar"), and Halcyon Growth Equity, L.P. ("Halcyon" and, together with Ridgeline, Beacon Hill, and Northstar, the "Investors"). The bridge financing is intended to provide the Company with runway through the anticipated Series D preferred stock financing, which is currently planned for the third or fourth quarter of 2024.

Investor counsel is Whitfield, Pratt & Soo LLP (Graham Whitfield, lead partner; Danielle Kwon, associate), which is representing the full syndicate through Ridgeline in its capacity as lead investor. Company counsel is Calderwood & Harkness LLP, which prepared and circulated the Revised Draft incorporating the Company's comments, counter-proposals, and corrections.

The Initial Draft was prepared and circulated by Ridgeline and WPS on November 20, 2023. C&H circulated its marked-up revised version on November 29, 2023. The parties are targeting execution of the final, agreed-upon term sheet during the week of December 4, 2023, with the expectation that definitive documentation would follow promptly thereafter.

This memorandum is organized as follows: Section II identifies terms that remained substantively unchanged between the two Drafts; Section III details the material differences and open negotiation points; Section IV addresses minor and conforming corrections; Section V sets forth our negotiation strategy recommendations; Section VI outlines next steps; and Section VII contains a comprehensive side-by-side comparison table.

II. Summary of Agreed Terms (No Material Changes Between Drafts)

The following terms remained substantively unchanged between the Initial Draft and the Revised Draft. While C&H made certain clarifying and conforming edits to certain of these provisions (as noted in Section IV below), the economic and structural substance of these terms is agreed between the parties:

The Investor allocation schedule also remained unchanged between the two Drafts, as set forth below:

We note that Northstar Innovation Fund II, L.P. (Wei-Lin Chang, Managing Partner) is a new investor to the Company's capitalization table, with no prior relationship or existing equity position. The remaining three Investors are existing preferred stockholders: Ridgeline through its predecessor fund (Ridgeline Ventures Fund III, L.P., a Series C investor), Beacon Hill (also a Series C investor), and Halcyon (a Series B investor). These existing positions are relevant to several of the open negotiation points discussed in Section III below, particularly with respect to anti-dilution interaction and information rights.

III. Material Differences and Open Negotiation Points

The following subsections describe, for each material difference between the Drafts, (i) the position taken in the Initial Draft, (ii) the counter-position taken in the Revised Draft, (iii) the rationale advanced by or attributable to C&H and the Company, and (iv) the current status of the point.

A. Change of Control Provision

Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that, upon a Change of Control (as defined therein) occurring prior to conversion of the Notes, each holder would receive the greater of (i) 2.5x the outstanding principal amount of such holder's Note, plus all accrued and unpaid interest thereon, or (ii) the amount that would be payable to such holder upon conversion of such holder's Note at the Valuation Cap. Under this formulation, the maximum aggregate Change of Control payment at the time of issuance — assuming the 2.5x multiple exceeds the cap-conversion value — would be 2.5 × $60,000,000 = $150,000,000, plus accrued interest.

Revised Draft (C&H/Skybridge Position): The Revised Draft proposed a reduction of the Change of Control multiple from 2.5x to 2.0x outstanding principal plus accrued and unpaid interest. Under C&H's proposed formulation, the maximum aggregate Change of Control payment at issuance (if the 2.0x multiple exceeds the cap-conversion value) would be 2.0 × $60,000,000 = $120,000,000, plus accrued interest. No other changes were proposed to the mechanics of the Change of Control provision; the "greater of" structure and the alternative cap-conversion payout were retained.

Rationale for Skybridge's Position: C&H's cover letter cited three principal grounds for the reduction. First, a 2.0x multiple is market for growth-stage convertible bridge note financings, citing benchmarks from their practice and publicly available venture lending data; a 2.5x multiple is above-market and could be viewed as punitive. Second, a 2.5x Change of Control payment obligation — with a maximum aggregate payout of $150,000,000 — could meaningfully deter potential acquirers, particularly given the Company's current cash position of approximately $18.5 million (pre-bridge) and its monthly burn rate of approximately $4.8 million, which implies only approximately 3.9 months of runway absent the bridge financing. An acquirer's diligence process would identify the $150,000,000 contingent obligation and discount its bid accordingly, or potentially decline to proceed. Third, the 2.5x multiple may create potential conflicts with the subordination provisions governing the existing Kelvantis Lending Corp. venture debt facility, to the extent that the Kelvantis credit agreement contains restrictions on the Company's ability to incur obligations that are senior to or pari passu with the Kelvantis debt upon a change of control or acceleration event.

Status: Open. WPS has not yet formally responded to C&H's proposed reduction. Based on our understanding of Ridgeline's position on comparable transactions, we believe the 2.5x multiple reflects an aggressive opening position, and a 2.0x multiple is defensible and appropriate for this transaction. We recommend holding firm at 2.0x.

B. Optional Conversion at Maturity

Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that if no Qualified Financing occurs on or prior to the Maturity Date, each holder may, at its individual election, choose to either (a) convert its Note at the Valuation Cap price (i.e., at the price per share implied by the $750,000,000 pre-money valuation cap, which is approximately $15.46 per share based on approximately 48,500,000 fully diluted shares), or (b) demand repayment of all outstanding principal plus accrued and unpaid interest on its Note, with the Company required to complete such repayment within 30 days of receipt of such demand. Critically, the Initial Draft also included an automatic cross-acceleration clause providing that if the Company fails to repay any holder within the 30-day repayment window, all Notes held by all holders shall become immediately due and payable, regardless of whether such other holders have elected conversion or repayment.

Revised Draft (C&H/Skybridge Position): The Revised Draft accepted the two-option framework (conversion at the Valuation Cap price or demand for repayment), but proposed two significant modifications to the repayment mechanics. First, C&H proposed extending the repayment period from 30 days to 90 days following the Maturity Date. Second, C&H deleted the automatic cross-acceleration clause in its entirety and proposed instead a majority-in-interest consent mechanism for acceleration, pursuant to which acceleration of any or all Notes would require the written consent of holders representing a majority of the aggregate outstanding principal amount of all then-outstanding Notes (i.e., holders of more than $30,000,000 in original principal amount at issuance, assuming no interim repayments or conversions).

Rationale for Skybridge's Position: C&H advanced two principal arguments. First, a 30-day repayment window is commercially unworkable if multiple holders — or all holders — simultaneously demand repayment at maturity. If all four Investors elected repayment, the Company would be required to repay $60,000,000 in principal plus approximately $7,200,000 in accrued interest (assuming the full 24-month maturity period) within 30 calendar days, a timeline that is practically impossible to achieve through cash on hand, refinancing, or asset disposition. A 90-day window provides the Company with a commercially reasonable period in which to arrange alternative financing, pursue a strategic transaction, or negotiate with the noteholders regarding restructuring. Second, the automatic cross-acceleration clause creates an acute risk of an involuntary liquidity crisis triggered by a single smaller noteholder. Under the Initial Draft's formulation, Halcyon — the smallest holder at $5,000,000, representing only 8.33% of the aggregate principal — could demand repayment, and the Company's failure to repay Halcyon within 30 days would automatically accelerate the remaining $55,000,000 in Notes, even if the other three holders had elected to convert. This asymmetric risk is commercially unreasonable and would give disproportionate leverage to the smallest investor in the syndicate.

Status: Open. This is a significant negotiation point that is likely to require principal-level discussion between Arjun Mehta (CEO, Skybridge) and Samuel Okonkwo and Kate Drummond at Ridgeline. We anticipate that Ridgeline may be willing to accept the 90-day extension on the repayment period but may resist the elimination of the cross-acceleration clause entirely; a potential compromise could involve retaining an acceleration mechanism but conditioning it on the consent of a supermajority-in-interest (e.g., 66⅔%) rather than the simple majority proposed by C&H.

C. Most Favored Nation (MFN) Provision — Scope

Initial Draft (WPS/Ridgeline Position): The Initial Draft contained a broad MFN clause providing that if the Company issues any subsequent convertible note, Simple Agreement for Future Equity ("SAFE"), or other convertible instrument or debt instrument on terms more favorable than the terms of the Notes, each holder of the Notes shall have the right, at such holder's individual election, to adopt any or all of the more favorable terms with respect to its Note. The clause was drafted without any limitations on the types of debt instruments covered or any carve-outs for specific categories of indebtedness.

Revised Draft (C&H/Skybridge Position): The Revised Draft proposed three modifications to the MFN clause. First, C&H narrowed the scope of covered instruments from "any convertible note, SAFE, or other convertible instrument or debt instrument" to "any convertible note or SAFE," thereby excluding non-convertible debt instruments from the MFN trigger. Second, C&H added an express carve-out for bank and commercial lending facilities, equipment financing, and similar working capital or asset-based credit arrangements, regardless of whether such facilities contain any convertible feature. Third, C&H proposed that the right to adopt more favorable terms be exercised by holders representing a majority of the aggregate outstanding principal amount of the Notes (a "majority election" mechanism), rather than at each individual holder's election.

Rationale for Skybridge's Position: C&H's cover letter identified two primary concerns. First, the broad MFN clause covering all debt instruments could inadvertently trigger MFN rights upon routine credit facility amendments, refinancings, or new working capital facilities. For example, if the Company were to enter into a revolving credit facility with a lower interest rate than 6.00% per annum, the broad MFN clause could theoretically be invoked to reduce the interest rate on the Notes, a result that was clearly not intended by the parties. Narrowing the MFN to convertible instruments and excluding bank and commercial lending facilities eliminates this risk. Second, individual holder election creates significant administrative complexity and the potential for inconsistent terms across the syndicate. If one holder elects to adopt a lower valuation cap from a subsequent SAFE but another holder does not, the Notes would have different economic terms, creating tracking, accounting, and conversion complications at the time of the Qualified Financing. A majority election mechanism ensures that all Notes remain on uniform terms.

Status: Open. WPS has indicated, in informal communications between Danielle Kwon and this office on November 30, 2023, a willingness to narrow the instrument scope to convertible instruments and to accept the bank facility carve-out. However, WPS has pushed back on the majority-election concept, insisting that individual election is a fundamental investor protection that allows each fund to make its own independent economic decision. This remains an open point.

D. Information Rights

Initial Draft (WPS/Ridgeline Position): The Initial Draft included a comprehensive information rights package providing for: (i) quarterly unaudited financial statements, to be delivered within 45 days following the end of each fiscal quarter; (ii) annual audited financial statements, to be delivered within 120 days following the end of the Company's fiscal year; (iii) monthly management reports including key performance indicators, specifically identifying annual recurring revenue ("ARR"), gross payment volume ("GPV"), monthly burn rate, and customer metrics (including customer count, net retention, and churn); (iv) a board observer seat for Ridgeline (with notice of and attendance rights at all meetings of the Company's board of directors, subject to customary confidentiality obligations and attorney-client privilege exclusions); and (v) continuing access to the Company's virtual data room, as updated from time to time.

Revised Draft (C&H/Skybridge Position): C&H accepted the obligation to deliver quarterly unaudited and annual audited financial statements but proposed extending the quarterly delivery deadline from 45 days to 60 days following the end of each fiscal quarter; the 120-day deadline for annual audited financials was accepted without change. C&H accepted the obligation to provide monthly management reports but narrowed the scope of required KPIs to ARR, cash balance, and headcount only, deleting the requirements for detailed GPV breakdowns and customer-level metrics (including net retention and churn). C&H opposed the inclusion of a board observer right, characterizing it as a governance right that exceeds the scope of a convertible note financing and should instead be negotiated in connection with the Series D preferred stock financing anticipated for Q3–Q4 2024. C&H deleted the continuing data room access provision in its entirety, arguing that it imposes an undue administrative burden on the Company's finance and legal teams. Finally, C&H proposed a minimum holding threshold of $10,000,000 in original principal amount as a condition to receiving the full information rights package. Under this threshold, Halcyon Growth Equity, L.P. — which is committing $5,000,000 — would receive only the annual audited financial statements, and would not be entitled to quarterly financials, monthly management reports, or any other information rights.

Rationale for Skybridge's Position: C&H's principal argument is that information rights of the scope proposed in the Initial Draft are typical of priced equity round documentation (e.g., the Investors' Rights Agreement negotiated in connection with a Series D preferred stock financing) and are not customary for convertible note bridge financings, which are by their nature intended to be a short-duration, light-documentation capital raise. The board observer seat in particular is characterized as a governance right that should be reserved for equity investors and negotiated as part of the Series D, at which point Ridgeline (through Fund IV) will presumably participate as a lead or co-lead investor. The continuing data room access provision is described as overly burdensome in practice, requiring the Company's legal team to maintain and update the data room on an ongoing basis during a period when the Company should be focused on operational execution and Series D preparation. The minimum holding threshold is designed to prevent the administrative burden and information-leakage risk of serving multiple smaller holders who may not have the same depth of relationship with the Company.

Status: Open. This is expected to be one of the most actively negotiated sections of the term sheet. We anticipate particular resistance from WPS on two points: (i) the board observer right for Ridgeline, which Samuel Okonkwo has characterized in prior discussions as a core requirement for any Ridgeline investment in excess of $25,000,000; and (ii) the minimum threshold that would exclude Halcyon from quarterly and monthly reporting, which Halcyon (as an existing Series B investor) may view as a diminution of its existing information access. We also note that Northstar Innovation Fund II, L.P. (Wei-Lin Chang), as a new investor committing $10,000,000, will fall exactly at the proposed threshold and is likely to have strong views on the scope and timeliness of information delivery, particularly given that Northstar does not have an existing relationship with the Company's management team or access to historical financial data.

E. Qualified Financing Definition — Participation Rights

Initial Draft (WPS/Ridgeline Position): The Initial Draft included, within the definition of "Qualified Financing" and the related conversion mechanics, a participation right entitling each noteholder to invest an additional amount equal to its pro rata share of the Series D round (calculated based on its ownership on an as-converted basis), in addition to the conversion of the Notes. This participation right was subject to customary pay-to-play terms requiring each noteholder to participate at its full pro rata allocation in order to maintain its anti-dilution protections and other protective provisions.

Revised Draft (C&H/Skybridge Position): C&H deleted the pro rata participation right from the term sheet in its entirety. C&H's cover letter noted that participation rights of this nature are more appropriately addressed in the Amendment No. 1 to the Amended and Restated Investors' Rights Agreement (the "IRA"), which will be negotiated as part of the definitive documentation for the Series D preferred stock financing. C&H's position is that embedding participation rights in the convertible note instrument creates structural complexity for the Series D lead investor, who will need to negotiate the overall allocation of the Series D round. If the noteholders already hold contractual participation rights embedded in the Notes, the Series D lead investor may be unable to secure its desired allocation of the round, which could deter interest from potential lead investors and adversely affect the Company's ability to complete the Series D financing on attractive terms.

Rationale: As noted above, the primary concern is that participation rights embedded in a pre-Series D convertible note term sheet can deter new Series D lead investors and limit the Company's flexibility in structuring the Series D round. The pro rata right would also complicate the capitalization table analysis at the time of the Qualified Financing, as it introduces a second tranche of investment (in addition to conversion) with potentially different economic terms. C&H's view is that these rights are more properly and more flexibly addressed through the IRA amendment process, where they can be negotiated with the full universe of existing and new investors participating in the Series D.

Status: Open. WPS has indicated that Ridgeline views the participation right as a material economic term of its $30,000,000 commitment and may resist deferral entirely. We understand from prior informal discussions that Ridgeline's position is that the participation right is a quid pro quo for providing bridge capital at a time when the Company has limited runway and significant execution risk, and that the right to participate in the upside of the Series D is an essential component of the risk-return profile of the bridge note investment. This point may require principal-level resolution.

F. Closing Mechanics — Single vs. Multiple Closings

Initial Draft (WPS/Ridgeline Position): The Initial Draft contemplated a single simultaneous closing of the full $60,000,000 aggregate principal amount, with all four Investors funding their respective commitments on the same date and the Notes being issued simultaneously to all Investors upon satisfaction of all closing conditions and release of funds from escrow at Granite Trust Company, N.A.

Revised Draft (C&H/Skybridge Position): C&H proposed allowance for a two-tranche closing structure consisting of an Initial Closing and a Final Closing. The Initial Closing would require a minimum of $40,000,000 to be funded by the participating Investors, with the Final Closing for the remaining commitments to occur within 15 business days following the Initial Closing. C&H's cover letter explained that the two-tranche structure is intended to accommodate the internal investment committee approval timeline of Northstar Innovation Fund II, L.P., which, as a new investor to the Company, requires additional time to complete its internal due diligence review and secure formal investment committee approval. C&H noted that Ridgeline ($30,000,000), Beacon Hill ($15,000,000), and Halcyon ($5,000,000) — representing $50,000,000 in aggregate — are prepared to fund at the Initial Closing, while Northstar ($10,000,000) may require the additional window to finalize its process.

Status: Open. WPS has indicated general willingness to accept a two-tranche closing structure in principle but has proposed two modifications: (i) increasing the minimum Initial Closing amount from $40,000,000 to $45,000,000, and (ii) shortening the outside date for the Final Closing from 15 business days to 10 business days following the Initial Closing. Given that three of the four Investors have indicated readiness to fund $50,000,000 in aggregate at the Initial Closing, a $45,000,000 minimum is commercially achievable. The 10-business-day window is tighter but may be sufficient if Northstar's investment committee process is already substantially advanced.

G. Anti-Dilution Interaction

Initial Draft (WPS/Ridgeline Position): The Initial Draft was silent on the interaction between the conversion of the Notes at the Qualified Financing and the existing weighted-average anti-dilution protections held by the Company's existing preferred stockholders. Specifically, the Initial Draft did not address whether the issuance of shares upon conversion of the Notes — at the discounted Conversion Price (i.e., the lower of the 20% discount to the Series D price or the Valuation Cap price) — would constitute a "dilutive issuance" triggering weighted-average anti-dilution adjustments to the conversion prices of the Company's outstanding Series A Preferred Stock (held by Crestpoint Seed Partners), Series B Preferred Stock (held by Halcyon Growth Equity, among others), and Series C Preferred Stock (held by Ridgeline Ventures Fund III, L.P. and Beacon Hill Capital Partners, among others).

Revised Draft (C&H/Skybridge Position): C&H added a provision expressly stating that the conversion of the Notes at the Qualified Financing shall not trigger anti-dilution adjustments to the conversion prices of the Company's existing outstanding series of preferred stock. The stated basis for this carve-out is that the Notes are priced with the benefit of the conversion discount and the valuation cap, and the shares issued upon conversion should therefore be treated as if issued at the Series D price per share for purposes of the anti-dilution calculations, notwithstanding that the effective price per share to the converting noteholders will be lower than the Series D price.

Status: Open. This provision requires further analysis, and we have commenced preparation of a separate memorandum addressing the MFN and Anti-Dilution Interaction Analysis in detail, which is targeted for circulation on December 5, 2023. WPS has reserved its position pending review of C&H's proposed language and the underlying anti-dilution mechanics. We note that this issue is complicated by the fact that certain of the Investors (Ridgeline, through Fund III, and Beacon Hill) hold existing preferred stock that carries the anti-dilution protections in question — creating a situation in which the same parties are on both sides of the anti-dilution analysis. We recommend that this point be discussed in detail on the call with Priya Ramanathan and David Lindstrom scheduled for December 3, 2023.

H. Dispute Resolution

Initial Draft (WPS/Ridgeline Position): The Initial Draft provided for exclusive jurisdiction in the federal or state courts of the Commonwealth of Massachusetts, reflecting Ridgeline Ventures' principal office location in Boston, Massachusetts. The Initial Draft did not specify whether this provision was intended as a mandatory forum selection clause or merely a permissive consent to jurisdiction.

Revised Draft (C&H/Skybridge Position): C&H proposed exclusive jurisdiction in the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines to exercise or lacks subject matter jurisdiction, the Superior Court of the State of Delaware), or the United States District Court for the District of Delaware. This proposal is consistent with the agreed Delaware governing law provision and the Company's state of incorporation (Delaware, File Number 6384291). C&H's cover letter noted that Delaware courts have well-developed jurisprudence on corporate and contractual disputes, and that a Delaware forum selection clause ensures consistency between the substantive governing law and the adjudicating forum.

Status: Open; however, we expect this to be a low-priority negotiation point. Given that the parties have already agreed on Delaware governing law, WPS is likely to accept the Delaware forum selection clause. We note that Massachusetts courts would apply Delaware law in any event under standard choice-of-law analysis, but there is no compelling reason for the parties to litigate in a jurisdiction with no nexus to the transaction other than one investor's principal office. We anticipate concession from WPS on this point.

I. Fee Provisions

Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that the Company shall reimburse the lead investor's legal fees and expenses incurred in connection with the transaction, subject to a cap of $150,000, for work performed by Whitfield, Pratt & Soo LLP.

Revised Draft (C&H/Skybridge Position): C&H proposed a reduction of the investor counsel fee reimbursement cap from $150,000 to $100,000.

Status: Open. We expect this point to be resolved through straightforward negotiation, likely settling in the range of $125,000. For context, C&H's own fee cap for the engagement (representing the Company) is $275,000 plus disbursements, as set forth in the C&H engagement letter. The investor counsel fee reimbursement cap in comparable convertible note financings of this size typically ranges from $75,000 to $150,000, depending on the complexity of the transaction and the number of co-investors. Given the four-investor syndicate and the anticipated complexity of the definitive documentation, a $125,000 cap would be reasonable and within market range.

IV. Minor / Conforming Differences

In addition to the material negotiation points summarized in Section III above, C&H's Revised Draft included the following minor and conforming corrections:

1. Company Legal Name. C&H revised the definition of "Company" from "Skybridge Fintech, Inc." (as incorrectly stated in the Initial Draft) to the correct legal name "Skybridge Fintech Ltd." This correction is essential and should be carried through to all definitive documentation. The Company is organized as a limited company under the laws of the State of Delaware, and the use of the incorrect "Inc." suffix in the Initial Draft was an error.

2. Company Address. C&H reviewed the Company's address as stated in the Initial Draft (1400 Market Street, Suite 2200, Wilmington, DE 19801) and confirmed that it is correct. No change was made.

3. Fully Diluted Share Count. C&H updated the fully diluted share count reference from "approximately 48 million" (as stated in the Initial Draft) to "approximately 48,500,000" for greater precision. This more precise figure is based on the Company's most recent capitalization table (as of November 15, 2023), which reflects all outstanding shares of common stock, all outstanding shares of Series A, Series B, and Series C preferred stock on an as-converted basis, all outstanding options (whether vested or unvested) under the Company's 2019 Equity Incentive Plan, and all shares reserved for issuance under the Company's outstanding warrants.

4. Company Identification. C&H added the Company's Employer Identification Number (EIN: 83-2147605) and Delaware File Number (6384291) to the Company identification section of the term sheet. These additions are consistent with standard practice and will facilitate preparation of the definitive documents.

5. Interest Rate Computation Basis. C&H revised the interest rate computation language to clarify that interest is calculated on a 365-day year basis (actual/365). The Initial Draft referenced a 360-day year basis, which is inconsistent with the parties' agreed economic term of 600 basis points simple interest computed on an actual/365 basis. On a $60,000,000 principal amount, the difference between actual/360 and actual/365 computation results in approximately $49,315 of additional annual interest accrual under the 360-day convention. C&H's correction aligns the term sheet language with the parties' agreed economics.

V. Negotiation Strategy Recommendations

Based on our review of the Drafts and our assessment of the relative bargaining positions and market practice, we recommend the following prioritization framework for the remaining open negotiation points:

Priority 1 — Hold Firm. We recommend that the Company hold firm on the following positions, which we believe are supported by market practice, sound commercial reasoning, and the Company's legitimate operational needs:

• Change of Control multiple at 2.0x (Section III.A). A 2.0x multiple is market for growth-stage convertible bridge note financings. A 2.5x multiple is above-market and creates meaningful deterrent effects for potential acquirers, which is contrary to the Company's long-term strategic interests and potentially adverse to all stockholders, including the Investors themselves. The differential between a 2.0x payout ($120,000,000) and a 2.5x payout ($150,000,000) is $30,000,000, which is material in the context of a potential acquisition.

• Maturity repayment period at 90 days with majority-consent acceleration (Section III.B). The 30-day repayment window in the Initial Draft is commercially unworkable for an aggregate principal amount of $60,000,000, and the automatic cross-acceleration clause creates unacceptable systemic risk from individual small noteholders. We should be prepared to discuss a supermajority threshold (e.g., 66⅔%) for the acceleration consent mechanism as a potential compromise if Ridgeline resists the simple majority standard.

• Delaware forum selection (Section III.H). This is a low-priority point for the Investors and is consistent with the agreed governing law provision. We expect concession.

Priority 2 — Negotiate to Acceptable Middle Ground. We recommend flexibility on the following points, subject to the parameters described below:

• MFN scope (Section III.C). Accept individual election (WPS's preferred mechanism) if WPS agrees to the instrument-type narrowing (covering only convertible notes and SAFEs) and the bank and commercial lending facility carve-out. The instrument-scope narrowing is the more commercially important protection for the Company, and the individual election mechanism, while administratively complex, is a standard investor protection.

• Information rights (Section III.D). Potentially accept a board observer right for Ridgeline alone (not extending to any co-investor), provided that the other information scope reductions proposed by C&H are accepted — specifically, the narrowed KPI scope (ARR, cash balance, and headcount only), the extension of the quarterly delivery deadline to 60 days, the deletion of continuing data room access, and the maintenance of the $10,000,000 minimum holding threshold. A board observer right for the lead investor in a $60 million bridge financing, while aggressive, is not unprecedented, and conceding on this point may generate goodwill that facilitates resolution of higher-priority items.

• Closing mechanics (Section III.F). Accept WPS's counter-proposal of a $45,000,000 minimum for the Initial Closing and a 10-business-day window for the Final Closing. Given that $50,000,000 in commitments (Ridgeline, Beacon Hill, and Halcyon) are expected to be available at the Initial Closing, a $45,000,000 minimum is achievable and provides adequate assurance of minimum bridge capital. The 10-business-day window, while compressed, should be sufficient for Northstar to complete its investment committee process, provided that the process is already substantially advanced (which Wei-Lin Chang has confirmed informally).

• Investor counsel fee reimbursement (Section III.I). Split the difference at $125,000. This is within market range and should not be a contentious point.

Priority 3 — Defer or Concede if Necessary. The following points are lower priority and may be conceded or deferred to preserve negotiating capital on higher-priority items:

• Participation rights (Section III.E). If Ridgeline insists on the inclusion of pro rata participation rights in the term sheet, propose a compromise: include a limited pro rata right, but (i) cap the aggregate additional investment amount at a specified dollar figure (e.g., $20,000,000 in aggregate across all noteholders), and (ii) clarify that the exercise of the participation right is subject to the consent of the Series D lead investor. This formulation preserves the noteholders' economic upside while protecting the Company's flexibility to structure the Series D round on terms acceptable to a new lead investor.

• Anti-dilution interaction (Section III.G). Defer the substance of this provision to the definitive document negotiation, where the full anti-dilution mechanics can be analyzed in context with the Company's existing certificate of incorporation and the specific terms of the Series D preferred stock. The forthcoming MFN and Anti-Dilution Interaction Analysis memorandum (targeted for December 5, 2023) will provide the analytical framework for this discussion.

VI. Next Steps

The following action items are proposed in connection with the finalization of the term sheet and the transition to definitive documentation:

1. Client Direction Call. Schedule a call with Priya Ramanathan (General Counsel, Skybridge) and David Lindstrom (CFO, Skybridge) to review the open points identified in this memorandum and obtain client direction on negotiation priorities. Target date: December 3, 2023. The call should address, at minimum, the Company's position on the Change of Control multiple, the maturity repayment period and acceleration mechanics, the board observer right, the participation rights issue, and the closing mechanics timeline.

2. Internal Review. Circulate this memorandum to Victoria Chambers and Leonard Ashford for review and comment. Any revisions to the recommended negotiation strategy should be communicated prior to the client direction call on December 3, 2023.

3. WPS Response. Prepare and circulate a formal written response to WPS (Graham Whitfield / Danielle Kwon) with the Company's proposed resolution of each open point, targeting agreement on the final form of the term sheet by December 4, 2023. The response should be in the form of a revised markup of the Revised Draft, incorporating the Company's final positions as directed by Priya Ramanathan.

4. Definitive Documentation. Upon execution of the final term sheet, commence preparation of the initial draft Note Purchase Agreement and the form of Convertible Promissory Note for circulation to WPS and the Investor syndicate by December 11, 2023. The Note Purchase Agreement should incorporate all agreed term sheet provisions and should include representations, warranties, conditions to closing, and other customary provisions. Ancillary documents to be prepared will include the Subordination Agreement (to the extent modifications to the existing Kelvantis subordination arrangements are required), the Escrow Agreement with Granite Trust Company, N.A., and any amendments to the Company's existing stockholder agreements.

5. IP Diligence. Coordinate with Peter Vassiliev and Wendy Schultz on the intellectual property due diligence workstream, which was added to our engagement scope pursuant to the engagement letter amendment dated December 1, 2023. The IP diligence will need to be substantially complete prior to the circulation of the definitive documents to permit inclusion of appropriate IP-related representations and warranties.

VII. Appendix: Side-by-Side Comparison Table

The following table presents a comprehensive term-by-term comparison of the Initial Draft and the Revised Draft, covering all terms addressed in Sections II through IV of this memorandum.

This memorandum is a privileged and confidential attorney work product prepared by Emory, Castillo, Voss & Chung LLP for the sole use of the addressees identified herein. This memorandum is not intended to constitute, and should not be relied upon as, legal advice to any party other than the addressees. Distribution or disclosure of this memorandum or its contents to any third party without the prior written consent of ECVC is strictly prohibited.

Prepared by:

Nina Reyes Senior Associate Emory, Castillo, Voss & Chung LLP One Liberty Plaza, 46th Floor New York, New York 10006 (212) 555-0147 n.reyes@ecvc.com

Term	Agreed Position
Aggregate Principal Amount	$60,000,000
Interest Rate	6.00% per annum (600 basis points), simple interest, calculated on a 365-day year basis
Annual Interest Accrual	$3,600,000 on the full outstanding principal amount
Maturity Date	24 months from the Closing Date (i.e., approximately January 2026, assuming a mid-January 2024 closing)
Instrument Type	Convertible promissory notes (the "Notes")
Conversion discount	20% discount to the Series D price per share
Valuation Cap	$750,000,000 pre-money valuation
Cap-Implied Price per Share	Approximately $15.46 per share ($750,000,000 ÷ approximately 48,500,000 fully diluted shares)
Conversion Price	The lower of (a) 80% of the Series D price per share, or (b) the price per share implied by the $750,000,000 valuation cap
Qualified Financing Threshold	At least $80,000,000 in new equity capital raised in a Series D preferred stock financing
Automatic Conversion	Upon the occurrence of a Qualified Financing, all outstanding principal and accrued but unpaid interest shall convert automatically into shares of the series of preferred stock issued in the Qualified Financing at the Conversion Price
Governing Law	State of Delaware
Escrow	Closing funds to be held in escrow by Granite Trust Company, N.A., as escrow agent, pending satisfaction of all closing conditions
Subordination	The Notes shall be subordinated in right of payment to the Company's existing $15,000,000 venture debt facility with Kelvantis Lending Corp. (pursuant to the Loan and Security Agreement dated August 15, 2022, as amended)
Investor	Commitment Amount	Percentage of Aggregate
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%
Term	Initial Draft (Nov. 20, 2023)	Revised Draft (Nov. 29, 2023)
Aggregate Principal Amount	$60,000,000	$60,000,000 (unchanged)
Interest Rate	6.00% per annum (600 bps), simple interest, computed on a 360-day year basis	6.00% per annum (600 bps), simple interest, computed on a 365-day year basis (corrected to reflect agreed economics)
Annual Interest Accrual	$3,600,000 (on full principal)	$3,600,000 (on full principal) (unchanged)

Maturity Date	24 months from Closing Date	24 months from Closing Date (unchanged)
Instrument Type	Convertible promissory notes	Convertible promissory notes (unchanged)
Conversion discount	20% discount to Series D price per share	20% discount to Series D price per share (unchanged)
Valuation Cap	$750,000,000 pre-money	$750,000,000 pre-money (unchanged)
Cap-Implied Price per Share	~$15.63/share ($750M ÷ ~48M fully diluted shares)	~$15.46/share ($750M ÷ ~48.5M fully diluted shares) (updated share count)
Conversion Price	Lower of (a) 80% of Series D price, or (b) price implied by $750M cap	Lower of (a) 80% of Series D price, or (b) price implied by $750M cap (unchanged)
Qualified Financing Threshold	$80,000,000 in new equity capital (Series D)	$80,000,000 in new equity capital (Series D) (unchanged)
Automatic Conversion	Upon Qualified Financing, all outstanding principal and accrued interest convert automatically	Upon Qualified Financing, all outstanding principal and accrued interest convert automatically (unchanged)
Change of Control Multiple	Greater of (i) 2.5x outstanding principal plus accrued interest, or (ii) amount payable upon conversion at Valuation Cap (maximum aggregate CoC payment at issuance: $150,000,000 plus accrued interest)	Greater of (i) 2.0x outstanding principal plus accrued interest, or (ii) amount payable upon conversion at Valuation Cap (maximum aggregate CoC payment at issuance: $120,000,000 plus accrued interest) — OPEN
Optional Conversion at Maturity — Repayment Period	If no Qualified Financing by maturity, holders elect (a) conversion at cap, or (b) repayment within 30 days of demand	If no Qualified Financing by maturity, holders elect (a) conversion at cap, or (b) repayment within 90 days following maturity — OPEN
Optional Conversion at Maturity — Acceleration	Automatic cross-acceleration: failure to repay any holder within 30 days makes all Notes immediately due and payable	Deleted automatic cross-acceleration; proposed majority-in-interest consent mechanism for acceleration — OPEN
MFN — Instrument Scope	Covers any subsequent convertible note, SAFE, other convertible instrument, or debt instrument	Covers only subsequent convertible notes or SAFEs; express carve-out for bank/commercial lending facilities and equipment financing — OPEN
MFN — Election Mechanism	Individual holder election to adopt any or all more favorable terms	Majority-in-interest election required (holders of >50% of outstanding principal) — OPEN
Information Rights — Quarterly Financials	Unaudited quarterly financials within 45 days of quarter-end	Unaudited quarterly financials within 60 days of quarter-end — OPEN
Information Rights — Annual Financials	Audited annual financials within 120 days of fiscal year-end	Audited annual financials within 120 days of fiscal year-end (unchanged)
Information Rights — Monthly Reports	Monthly management reports with KPIs: ARR, GPV, burn rate, customer count, net retention, churn	Monthly management reports with KPIs: ARR, cash balance, and headcount only (GPV, burn rate, customer metrics deleted) — OPEN
Information Rights — Board Observer	Board observer seat for Ridgeline (attendance at all board meetings, subject to confidentiality and privilege exclusions)	Deleted; C&H position is that board observer right should be deferred to Series D — OPEN
Information Rights — Data Room Access	Continuing access to Company's virtual data room	Deleted — OPEN
Information Rights — Minimum Threshold	No minimum holding threshold; all holders receive full information rights	$10,000,000 minimum original principal amount for full information rights; holders below threshold (i.e., Halcyon at $5M) receive only annual audited financials — OPEN
Participation Rights	Pro rata right for each noteholder to invest additional amounts in Series D, subject to pay-to-play	Deleted; C&H position is that participation rights should be addressed in Amendment No. 1 to the Amended and Restated IRA in connection with the Series D — OPEN
Closing Mechanics	Single simultaneous closing of full $60,000,000	Two-tranche structure: Initial Closing (minimum $40,000,000) and Final Closing within 15 business days — OPEN (WPS counter: $45M minimum Initial Closing, 10 business days for Final Closing)
Anti-Dilution Interaction	Silent on whether Note conversion triggers anti-dilution adjustments to existing preferred stock conversion prices	Express provision that Note conversion at Qualified Financing shall not trigger anti-dilution adjustments; Notes treated as if issued at Series D price for anti-dilution purposes — OPEN
Dispute Resolution	Exclusive jurisdiction in federal or state courts of Massachusetts	Exclusive jurisdiction in Court of Chancery of Delaware (or Superior Court of Delaware), or U.S. District Court for the District of Delaware — OPEN
Investor Counsel Fee Reimbursement	Company to reimburse WPS fees up to $150,000	Company to reimburse WPS fees up to $100,000 — OPEN
Subordination	Notes subordinated to existing $15M Kelvantis Lending Corp. venture debt facility (LSA dated August 15, 2022)	Notes subordinated to existing $15M Kelvantis Lending Corp. venture debt facility (LSA dated August 15, 2022) (unchanged)

Escrow Agent	Granite Trust Company, N.A.	Granite Trust Company, N.A. (unchanged)
Purchaser Allocations	Ridgeline: $30M (50.00%); Beacon Hill: $15M (25.00%); Northstar: $10M (16.67%); Halcyon: $5M (8.33%)	Ridgeline: $30M (50.00%); Beacon Hill: $15M (25.00%); Northstar: $10M (16.67%); Halcyon: $5M (8.33%) (unchanged)
Governing Law	State of Delaware	State of Delaware (unchanged)
Company Legal Name	"Skybridge Fintech, Inc." (incorrect)	"Skybridge Fintech Ltd." (corrected)
Fully Diluted Share Count	"Approximately 48 million"	"Approximately 48,500,000" (updated for precision)
Company EIN	Not included	83-2147605 (added)
Delaware File Number	Not included	6384291 (added)

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Victoria Chambers, Responsible Partner Leonard Ashford, Of Counsel Emory, Castillo, Voss & Chung LLP ("ECVC")
FROM: Nina Reyes, Senior Associate, ECVC
DATE: December 2, 2023
RE: Skybridge Fintech Ltd. — $60M Convertible Note Bridge Financing — Term Sheet Comparison and Redline Summary
Matter No.: 1009-00001
I. Purpose and Background
The purpose of this memorandum is to summarize the material differences between (i) the initial draft term sheet circulated by Whitfield, Pratt & Soo LLP ("WPS") on behalf of Ridgeline Ventures Fund IV, L.P. ("Ridgeline") and the investor syndicate on November 20, 2023 (the "Initial Draft"), and (ii) the revised term sheet incorporating Calderwood & Harkness LLP's ("C&H") comments on behalf of Skybridge Fintech Ltd. (the "Company"), circulated by C&H on November 29, 2023 (the "Revised Draft" and, together with the Initial Draft, the "Drafts"). This memorandum is prepared in advance of the anticipated execution of the final term sheet, which the parties are targeting for the week of December 4, 2023.
The proposed transaction is a $60,000,000 convertible promissory note bridge financing led by Ridgeline Ventures Fund IV, L.P. (Samuel Okonkwo, Deal Lead), with co-investors Beacon Hill Capital Partners, LLC ("Beacon Hill"), Northstar Innovation Fund II, L.P. ("Northstar"), and Halcyon Growth Equity, L.P. ("Halcyon" and, together with Ridgeline, Beacon Hill, and Northstar, the "Investors"). The bridge financing is intended to provide the Company with runway through the anticipated Series D preferred stock financing, which is currently planned for the third or fourth quarter of 2024.
Investor counsel is Whitfield, Pratt & Soo LLP (Graham Whitfield, lead partner; Danielle Kwon, associate), which is representing the full syndicate through Ridgeline in its capacity as lead investor. Company counsel is Calderwood & Harkness LLP, which prepared and circulated the Revised Draft incorporating the Company's comments, counter-proposals, and corrections.
The Initial Draft was prepared and circulated by Ridgeline and WPS on November 20, 2023. C&H circulated its marked-up revised version on November 29, 2023. The parties are targeting execution of the final, agreed-upon term sheet during the week of December 4, 2023, with the expectation that definitive documentation would follow promptly thereafter.
This memorandum is organized as follows: Section II identifies terms that remained substantively unchanged between the two Drafts; Section III details the material differences and open negotiation points; Section IV addresses minor and conforming corrections; Section V sets forth our negotiation strategy recommendations; Section VI outlines next steps; and Section VII contains a comprehensive side-by-side comparison table.
II. Summary of Agreed Terms (No Material Changes Between Drafts)
The following terms remained substantively unchanged between the Initial Draft and the Revised Draft. While C&H made certain clarifying and conforming edits to certain of these provisions (as noted in Section IV below), the economic and structural substance of these terms is agreed between the parties:
The Investor allocation schedule also remained unchanged between the two Drafts, as set forth below:
We note that Northstar Innovation Fund II, L.P. (Wei-Lin Chang, Managing Partner) is a new investor to the Company's capitalization table, with no prior relationship or existing equity position. The remaining three Investors are existing preferred stockholders: Ridgeline through its predecessor fund (Ridgeline Ventures Fund III, L.P., a Series C investor), Beacon Hill (also a Series C investor), and Halcyon (a Series B investor). These existing positions are relevant to several of the open negotiation points discussed in Section III below, particularly with respect to anti-dilution interaction and information rights.
III. Material Differences and Open Negotiation Points
The following subsections describe, for each material difference between the Drafts, (i) the position taken in the Initial Draft, (ii) the counter-position taken in the Revised Draft, (iii) the rationale advanced by or attributable to C&H and the Company, and (iv) the current status of the point.
A. Change of Control Provision
Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that, upon a Change of Control (as defined therein) occurring prior to conversion of the Notes, each holder would receive the greater of (i) 2.5x the outstanding principal amount of such holder's Note, plus all accrued and unpaid interest thereon, or (ii) the amount that would be payable to such holder upon conversion of such holder's Note at the Valuation Cap. Under this formulation, the maximum aggregate Change of Control payment at the time of issuance — assuming the 2.5x multiple exceeds the cap-conversion value — would be 2.5 × $60,000,000 = $150,000,000, plus accrued interest.
Revised Draft (C&H/Skybridge Position): The Revised Draft proposed a reduction of the Change of Control multiple from 2.5x to 2.0x outstanding principal plus accrued and unpaid interest. Under C&H's proposed formulation, the maximum aggregate Change of Control payment at issuance (if the 2.0x multiple exceeds the cap-conversion value) would be 2.0 × $60,000,000 = $120,000,000, plus accrued interest. No other changes were proposed to the mechanics of the Change of Control provision; the "greater of" structure and the alternative cap-conversion payout were retained.
Rationale for Skybridge's Position: C&H's cover letter cited three principal grounds for the reduction. First, a 2.0x multiple is market for growth-stage convertible bridge note financings, citing benchmarks from their practice and publicly available venture lending data; a 2.5x multiple is above-market and could be viewed as punitive. Second, a 2.5x Change of Control payment obligation — with a maximum aggregate payout of $150,000,000 — could meaningfully deter potential acquirers, particularly given the Company's current cash position of approximately $18.5 million (pre-bridge) and its monthly burn rate of approximately $4.8 million, which implies only approximately 3.9 months of runway absent the bridge financing. An acquirer's diligence process would identify the $150,000,000 contingent obligation and discount its bid accordingly, or potentially decline to proceed. Third, the 2.5x multiple may create potential conflicts with the subordination provisions governing the existing Kelvantis Lending Corp. venture debt facility, to the extent that the Kelvantis credit agreement contains restrictions on the Company's ability to incur obligations that are senior to or pari passu with the Kelvantis debt upon a change of control or acceleration event.
Status: Open. WPS has not yet formally responded to C&H's proposed reduction. Based on our understanding of Ridgeline's position on comparable transactions, we believe the 2.5x multiple reflects an aggressive opening position, and a 2.0x multiple is defensible and appropriate for this transaction. We recommend holding firm at 2.0x.
B. Optional Conversion at Maturity
Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that if no Qualified Financing occurs on or prior to the Maturity Date, each holder may, at its individual election, choose to either (a) convert its Note at the Valuation Cap price (i.e., at the price per share implied by the $750,000,000 pre-money valuation cap, which is approximately $15.46 per share based on approximately 48,500,000 fully diluted shares), or (b) demand repayment of all outstanding principal plus accrued and unpaid interest on its Note, with the Company required to complete such repayment within 30 days of receipt of such demand. Critically, the Initial Draft also included an automatic cross-acceleration clause providing that if the Company fails to repay any holder within the 30-day repayment window, all Notes held by all holders shall become immediately due and payable, regardless of whether such other holders have elected conversion or repayment.
Revised Draft (C&H/Skybridge Position): The Revised Draft accepted the two-option framework (conversion at the Valuation Cap price or demand for repayment), but proposed two significant modifications to the repayment mechanics. First, C&H proposed extending the repayment period from 30 days to 90 days following the Maturity Date. Second, C&H deleted the automatic cross-acceleration clause in its entirety and proposed instead a majority-in-interest consent mechanism for acceleration, pursuant to which acceleration of any or all Notes would require the written consent of holders representing a majority of the aggregate outstanding principal amount of all then-outstanding Notes (i.e., holders of more than $30,000,000 in original principal amount at issuance, assuming no interim repayments or conversions).
Rationale for Skybridge's Position: C&H advanced two principal arguments. First, a 30-day repayment window is commercially unworkable if multiple holders — or all holders — simultaneously demand repayment at maturity. If all four Investors elected repayment, the Company would be required to repay $60,000,000 in principal plus approximately $7,200,000 in accrued interest (assuming the full 24-month maturity period) within 30 calendar days, a timeline that is practically impossible to achieve through cash on hand, refinancing, or asset disposition. A 90-day window provides the Company with a commercially reasonable period in which to arrange alternative financing, pursue a strategic transaction, or negotiate with the noteholders regarding restructuring. Second, the automatic cross-acceleration clause creates an acute risk of an involuntary liquidity crisis triggered by a single smaller noteholder. Under the Initial Draft's formulation, Halcyon — the smallest holder at $5,000,000, representing only 8.33% of the aggregate principal — could demand repayment, and the Company's failure to repay Halcyon within 30 days would automatically accelerate the remaining $55,000,000 in Notes, even if the other three holders had elected to convert. This asymmetric risk is commercially unreasonable and would give disproportionate leverage to the smallest investor in the syndicate.
Status: Open. This is a significant negotiation point that is likely to require principal-level discussion between Arjun Mehta (CEO, Skybridge) and Samuel Okonkwo and Kate Drummond at Ridgeline. We anticipate that Ridgeline may be willing to accept the 90-day extension on the repayment period but may resist the elimination of the cross-acceleration clause entirely; a potential compromise could involve retaining an acceleration mechanism but conditioning it on the consent of a supermajority-in-interest (e.g., 66⅔%) rather than the simple majority proposed by C&H.
C. Most Favored Nation (MFN) Provision — Scope
Initial Draft (WPS/Ridgeline Position): The Initial Draft contained a broad MFN clause providing that if the Company issues any subsequent convertible note, Simple Agreement for Future Equity ("SAFE"), or other convertible instrument or debt instrument on terms more favorable than the terms of the Notes, each holder of the Notes shall have the right, at such holder's individual election, to adopt any or all of the more favorable terms with respect to its Note. The clause was drafted without any limitations on the types of debt instruments covered or any carve-outs for specific categories of indebtedness.
Revised Draft (C&H/Skybridge Position): The Revised Draft proposed three modifications to the MFN clause. First, C&H narrowed the scope of covered instruments from "any convertible note, SAFE, or other convertible instrument or debt instrument" to "any convertible note or SAFE," thereby excluding non-convertible debt instruments from the MFN trigger. Second, C&H added an express carve-out for bank and commercial lending facilities, equipment financing, and similar working capital or asset-based credit arrangements, regardless of whether such facilities contain any convertible feature. Third, C&H proposed that the right to adopt more favorable terms be exercised by holders representing a majority of the aggregate outstanding principal amount of the Notes (a "majority election" mechanism), rather than at each individual holder's election.
Rationale for Skybridge's Position: C&H's cover letter identified two primary concerns. First, the broad MFN clause covering all debt instruments could inadvertently trigger MFN rights upon routine credit facility amendments, refinancings, or new working capital facilities. For example, if the Company were to enter into a revolving credit facility with a lower interest rate than 6.00% per annum, the broad MFN clause could theoretically be invoked to reduce the interest rate on the Notes, a result that was clearly not intended by the parties. Narrowing the MFN to convertible instruments and excluding bank and commercial lending facilities eliminates this risk. Second, individual holder election creates significant administrative complexity and the potential for inconsistent terms across the syndicate. If one holder elects to adopt a lower valuation cap from a subsequent SAFE but another holder does not, the Notes would have different economic terms, creating tracking, accounting, and conversion complications at the time of the Qualified Financing. A majority election mechanism ensures that all Notes remain on uniform terms.
Status: Open. WPS has indicated, in informal communications between Danielle Kwon and this office on November 30, 2023, a willingness to narrow the instrument scope to convertible instruments and to accept the bank facility carve-out. However, WPS has pushed back on the majority-election concept, insisting that individual election is a fundamental investor protection that allows each fund to make its own independent economic decision. This remains an open point.
D. Information Rights
Initial Draft (WPS/Ridgeline Position): The Initial Draft included a comprehensive information rights package providing for: (i) quarterly unaudited financial statements, to be delivered within 45 days following the end of each fiscal quarter; (ii) annual audited financial statements, to be delivered within 120 days following the end of the Company's fiscal year; (iii) monthly management reports including key performance indicators, specifically identifying annual recurring revenue ("ARR"), gross payment volume ("GPV"), monthly burn rate, and customer metrics (including customer count, net retention, and churn); (iv) a board observer seat for Ridgeline (with notice of and attendance rights at all meetings of the Company's board of directors, subject to customary confidentiality obligations and attorney-client privilege exclusions); and (v) continuing access to the Company's virtual data room, as updated from time to time.
Revised Draft (C&H/Skybridge Position): C&H accepted the obligation to deliver quarterly unaudited and annual audited financial statements but proposed extending the quarterly delivery deadline from 45 days to 60 days following the end of each fiscal quarter; the 120-day deadline for annual audited financials was accepted without change. C&H accepted the obligation to provide monthly management reports but narrowed the scope of required KPIs to ARR, cash balance, and headcount only, deleting the requirements for detailed GPV breakdowns and customer-level metrics (including net retention and churn). C&H opposed the inclusion of a board observer right, characterizing it as a governance right that exceeds the scope of a convertible note financing and should instead be negotiated in connection with the Series D preferred stock financing anticipated for Q3–Q4 2024. C&H deleted the continuing data room access provision in its entirety, arguing that it imposes an undue administrative burden on the Company's finance and legal teams. Finally, C&H proposed a minimum holding threshold of $10,000,000 in original principal amount as a condition to receiving the full information rights package. Under this threshold, Halcyon Growth Equity, L.P. — which is committing $5,000,000 — would receive only the annual audited financial statements, and would not be entitled to quarterly financials, monthly management reports, or any other information rights.
Rationale for Skybridge's Position: C&H's principal argument is that information rights of the scope proposed in the Initial Draft are typical of priced equity round documentation (e.g., the Investors' Rights Agreement negotiated in connection with a Series D preferred stock financing) and are not customary for convertible note bridge financings, which are by their nature intended to be a short-duration, light-documentation capital raise. The board observer seat in particular is characterized as a governance right that should be reserved for equity investors and negotiated as part of the Series D, at which point Ridgeline (through Fund IV) will presumably participate as a lead or co-lead investor. The continuing data room access provision is described as overly burdensome in practice, requiring the Company's legal team to maintain and update the data room on an ongoing basis during a period when the Company should be focused on operational execution and Series D preparation. The minimum holding threshold is designed to prevent the administrative burden and information-leakage risk of serving multiple smaller holders who may not have the same depth of relationship with the Company.
Status: Open. This is expected to be one of the most actively negotiated sections of the term sheet. We anticipate particular resistance from WPS on two points: (i) the board observer right for Ridgeline, which Samuel Okonkwo has characterized in prior discussions as a core requirement for any Ridgeline investment in excess of $25,000,000; and (ii) the minimum threshold that would exclude Halcyon from quarterly and monthly reporting, which Halcyon (as an existing Series B investor) may view as a diminution of its existing information access. We also note that Northstar Innovation Fund II, L.P. (Wei-Lin Chang), as a new investor committing $10,000,000, will fall exactly at the proposed threshold and is likely to have strong views on the scope and timeliness of information delivery, particularly given that Northstar does not have an existing relationship with the Company's management team or access to historical financial data.
E. Qualified Financing Definition — Participation Rights
Initial Draft (WPS/Ridgeline Position): The Initial Draft included, within the definition of "Qualified Financing" and the related conversion mechanics, a participation right entitling each noteholder to invest an additional amount equal to its pro rata share of the Series D round (calculated based on its ownership on an as-converted basis), in addition to the conversion of the Notes. This participation right was subject to customary pay-to-play terms requiring each noteholder to participate at its full pro rata allocation in order to maintain its anti-dilution protections and other protective provisions.
Revised Draft (C&H/Skybridge Position): C&H deleted the pro rata participation right from the term sheet in its entirety. C&H's cover letter noted that participation rights of this nature are more appropriately addressed in the Amendment No. 1 to the Amended and Restated Investors' Rights Agreement (the "IRA"), which will be negotiated as part of the definitive documentation for the Series D preferred stock financing. C&H's position is that embedding participation rights in the convertible note instrument creates structural complexity for the Series D lead investor, who will need to negotiate the overall allocation of the Series D round. If the noteholders already hold contractual participation rights embedded in the Notes, the Series D lead investor may be unable to secure its desired allocation of the round, which could deter interest from potential lead investors and adversely affect the Company's ability to complete the Series D financing on attractive terms.
Rationale: As noted above, the primary concern is that participation rights embedded in a pre-Series D convertible note term sheet can deter new Series D lead investors and limit the Company's flexibility in structuring the Series D round. The pro rata right would also complicate the capitalization table analysis at the time of the Qualified Financing, as it introduces a second tranche of investment (in addition to conversion) with potentially different economic terms. C&H's view is that these rights are more properly and more flexibly addressed through the IRA amendment process, where they can be negotiated with the full universe of existing and new investors participating in the Series D.
Status: Open. WPS has indicated that Ridgeline views the participation right as a material economic term of its $30,000,000 commitment and may resist deferral entirely. We understand from prior informal discussions that Ridgeline's position is that the participation right is a quid pro quo for providing bridge capital at a time when the Company has limited runway and significant execution risk, and that the right to participate in the upside of the Series D is an essential component of the risk-return profile of the bridge note investment. This point may require principal-level resolution.
F. Closing Mechanics — Single vs. Multiple Closings
Initial Draft (WPS/Ridgeline Position): The Initial Draft contemplated a single simultaneous closing of the full $60,000,000 aggregate principal amount, with all four Investors funding their respective commitments on the same date and the Notes being issued simultaneously to all Investors upon satisfaction of all closing conditions and release of funds from escrow at Granite Trust Company, N.A.
Revised Draft (C&H/Skybridge Position): C&H proposed allowance for a two-tranche closing structure consisting of an Initial Closing and a Final Closing. The Initial Closing would require a minimum of $40,000,000 to be funded by the participating Investors, with the Final Closing for the remaining commitments to occur within 15 business days following the Initial Closing. C&H's cover letter explained that the two-tranche structure is intended to accommodate the internal investment committee approval timeline of Northstar Innovation Fund II, L.P., which, as a new investor to the Company, requires additional time to complete its internal due diligence review and secure formal investment committee approval. C&H noted that Ridgeline ($30,000,000), Beacon Hill ($15,000,000), and Halcyon ($5,000,000) — representing $50,000,000 in aggregate — are prepared to fund at the Initial Closing, while Northstar ($10,000,000) may require the additional window to finalize its process.
Status: Open. WPS has indicated general willingness to accept a two-tranche closing structure in principle but has proposed two modifications: (i) increasing the minimum Initial Closing amount from $40,000,000 to $45,000,000, and (ii) shortening the outside date for the Final Closing from 15 business days to 10 business days following the Initial Closing. Given that three of the four Investors have indicated readiness to fund $50,000,000 in aggregate at the Initial Closing, a $45,000,000 minimum is commercially achievable. The 10-business-day window is tighter but may be sufficient if Northstar's investment committee process is already substantially advanced.
G. Anti-Dilution Interaction
Initial Draft (WPS/Ridgeline Position): The Initial Draft was silent on the interaction between the conversion of the Notes at the Qualified Financing and the existing weighted-average anti-dilution protections held by the Company's existing preferred stockholders. Specifically, the Initial Draft did not address whether the issuance of shares upon conversion of the Notes — at the discounted Conversion Price (i.e., the lower of the 20% discount to the Series D price or the Valuation Cap price) — would constitute a "dilutive issuance" triggering weighted-average anti-dilution adjustments to the conversion prices of the Company's outstanding Series A Preferred Stock (held by Crestpoint Seed Partners), Series B Preferred Stock (held by Halcyon Growth Equity, among others), and Series C Preferred Stock (held by Ridgeline Ventures Fund III, L.P. and Beacon Hill Capital Partners, among others).
Revised Draft (C&H/Skybridge Position): C&H added a provision expressly stating that the conversion of the Notes at the Qualified Financing shall not trigger anti-dilution adjustments to the conversion prices of the Company's existing outstanding series of preferred stock. The stated basis for this carve-out is that the Notes are priced with the benefit of the conversion discount and the valuation cap, and the shares issued upon conversion should therefore be treated as if issued at the Series D price per share for purposes of the anti-dilution calculations, notwithstanding that the effective price per share to the converting noteholders will be lower than the Series D price.
Status: Open. This provision requires further analysis, and we have commenced preparation of a separate memorandum addressing the MFN and Anti-Dilution Interaction Analysis in detail, which is targeted for circulation on December 5, 2023. WPS has reserved its position pending review of C&H's proposed language and the underlying anti-dilution mechanics. We note that this issue is complicated by the fact that certain of the Investors (Ridgeline, through Fund III, and Beacon Hill) hold existing preferred stock that carries the anti-dilution protections in question — creating a situation in which the same parties are on both sides of the anti-dilution analysis. We recommend that this point be discussed in detail on the call with Priya Ramanathan and David Lindstrom scheduled for December 3, 2023.
H. Dispute Resolution
Initial Draft (WPS/Ridgeline Position): The Initial Draft provided for exclusive jurisdiction in the federal or state courts of the Commonwealth of Massachusetts, reflecting Ridgeline Ventures' principal office location in Boston, Massachusetts. The Initial Draft did not specify whether this provision was intended as a mandatory forum selection clause or merely a permissive consent to jurisdiction.
Revised Draft (C&H/Skybridge Position): C&H proposed exclusive jurisdiction in the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines to exercise or lacks subject matter jurisdiction, the Superior Court of the State of Delaware), or the United States District Court for the District of Delaware. This proposal is consistent with the agreed Delaware governing law provision and the Company's state of incorporation (Delaware, File Number 6384291). C&H's cover letter noted that Delaware courts have well-developed jurisprudence on corporate and contractual disputes, and that a Delaware forum selection clause ensures consistency between the substantive governing law and the adjudicating forum.
Status: Open; however, we expect this to be a low-priority negotiation point. Given that the parties have already agreed on Delaware governing law, WPS is likely to accept the Delaware forum selection clause. We note that Massachusetts courts would apply Delaware law in any event under standard choice-of-law analysis, but there is no compelling reason for the parties to litigate in a jurisdiction with no nexus to the transaction other than one investor's principal office. We anticipate concession from WPS on this point.
I. Fee Provisions
Initial Draft (WPS/Ridgeline Position): The Initial Draft provided that the Company shall reimburse the lead investor's legal fees and expenses incurred in connection with the transaction, subject to a cap of $150,000, for work performed by Whitfield, Pratt & Soo LLP.
Revised Draft (C&H/Skybridge Position): C&H proposed a reduction of the investor counsel fee reimbursement cap from $150,000 to $100,000.
Status: Open. We expect this point to be resolved through straightforward negotiation, likely settling in the range of $125,000. For context, C&H's own fee cap for the engagement (representing the Company) is $275,000 plus disbursements, as set forth in the C&H engagement letter. The investor counsel fee reimbursement cap in comparable convertible note financings of this size typically ranges from $75,000 to $150,000, depending on the complexity of the transaction and the number of co-investors. Given the four-investor syndicate and the anticipated complexity of the definitive documentation, a $125,000 cap would be reasonable and within market range.
IV. Minor / Conforming Differences
In addition to the material negotiation points summarized in Section III above, C&H's Revised Draft included the following minor and conforming corrections:
1. Company Legal Name. C&H revised the definition of "Company" from "Skybridge Fintech, Inc." (as incorrectly stated in the Initial Draft) to the correct legal name "Skybridge Fintech Ltd." This correction is essential and should be carried through to all definitive documentation. The Company is organized as a limited company under the laws of the State of Delaware, and the use of the incorrect "Inc." suffix in the Initial Draft was an error.
2. Company Address. C&H reviewed the Company's address as stated in the Initial Draft (1400 Market Street, Suite 2200, Wilmington, DE 19801) and confirmed that it is correct. No change was made.
3. Fully Diluted Share Count. C&H updated the fully diluted share count reference from "approximately 48 million" (as stated in the Initial Draft) to "approximately 48,500,000" for greater precision. This more precise figure is based on the Company's most recent capitalization table (as of November 15, 2023), which reflects all outstanding shares of common stock, all outstanding shares of Series A, Series B, and Series C preferred stock on an as-converted basis, all outstanding options (whether vested or unvested) under the Company's 2019 Equity Incentive Plan, and all shares reserved for issuance under the Company's outstanding warrants.
4. Company Identification. C&H added the Company's Employer Identification Number (EIN: 83-2147605) and Delaware File Number (6384291) to the Company identification section of the term sheet. These additions are consistent with standard practice and will facilitate preparation of the definitive documents.
5. Interest Rate Computation Basis. C&H revised the interest rate computation language to clarify that interest is calculated on a 365-day year basis (actual/365). The Initial Draft referenced a 360-day year basis, which is inconsistent with the parties' agreed economic term of 600 basis points simple interest computed on an actual/365 basis. On a $60,000,000 principal amount, the difference between actual/360 and actual/365 computation results in approximately $49,315 of additional annual interest accrual under the 360-day convention. C&H's correction aligns the term sheet language with the parties' agreed economics.
V. Negotiation Strategy Recommendations
Based on our review of the Drafts and our assessment of the relative bargaining positions and market practice, we recommend the following prioritization framework for the remaining open negotiation points:
Priority 1 — Hold Firm. We recommend that the Company hold firm on the following positions, which we believe are supported by market practice, sound commercial reasoning, and the Company's legitimate operational needs:
• Change of Control multiple at 2.0x (Section III.A). A 2.0x multiple is market for growth-stage convertible bridge note financings. A 2.5x multiple is above-market and creates meaningful deterrent effects for potential acquirers, which is contrary to the Company's long-term strategic interests and potentially adverse to all stockholders, including the Investors themselves. The differential between a 2.0x payout ($120,000,000) and a 2.5x payout ($150,000,000) is $30,000,000, which is material in the context of a potential acquisition.
• Maturity repayment period at 90 days with majority-consent acceleration (Section III.B). The 30-day repayment window in the Initial Draft is commercially unworkable for an aggregate principal amount of $60,000,000, and the automatic cross-acceleration clause creates unacceptable systemic risk from individual small noteholders. We should be prepared to discuss a supermajority threshold (e.g., 66⅔%) for the acceleration consent mechanism as a potential compromise if Ridgeline resists the simple majority standard.
• Delaware forum selection (Section III.H). This is a low-priority point for the Investors and is consistent with the agreed governing law provision. We expect concession.
Priority 2 — Negotiate to Acceptable Middle Ground. We recommend flexibility on the following points, subject to the parameters described below:
• MFN scope (Section III.C). Accept individual election (WPS's preferred mechanism) if WPS agrees to the instrument-type narrowing (covering only convertible notes and SAFEs) and the bank and commercial lending facility carve-out. The instrument-scope narrowing is the more commercially important protection for the Company, and the individual election mechanism, while administratively complex, is a standard investor protection.
• Information rights (Section III.D). Potentially accept a board observer right for Ridgeline alone (not extending to any co-investor), provided that the other information scope reductions proposed by C&H are accepted — specifically, the narrowed KPI scope (ARR, cash balance, and headcount only), the extension of the quarterly delivery deadline to 60 days, the deletion of continuing data room access, and the maintenance of the $10,000,000 minimum holding threshold. A board observer right for the lead investor in a $60 million bridge financing, while aggressive, is not unprecedented, and conceding on this point may generate goodwill that facilitates resolution of higher-priority items.
• Closing mechanics (Section III.F). Accept WPS's counter-proposal of a $45,000,000 minimum for the Initial Closing and a 10-business-day window for the Final Closing. Given that $50,000,000 in commitments (Ridgeline, Beacon Hill, and Halcyon) are expected to be available at the Initial Closing, a $45,000,000 minimum is achievable and provides adequate assurance of minimum bridge capital. The 10-business-day window, while compressed, should be sufficient for Northstar to complete its investment committee process, provided that the process is already substantially advanced (which Wei-Lin Chang has confirmed informally).
• Investor counsel fee reimbursement (Section III.I). Split the difference at $125,000. This is within market range and should not be a contentious point.
Priority 3 — Defer or Concede if Necessary. The following points are lower priority and may be conceded or deferred to preserve negotiating capital on higher-priority items:
• Participation rights (Section III.E). If Ridgeline insists on the inclusion of pro rata participation rights in the term sheet, propose a compromise: include a limited pro rata right, but (i) cap the aggregate additional investment amount at a specified dollar figure (e.g., $20,000,000 in aggregate across all noteholders), and (ii) clarify that the exercise of the participation right is subject to the consent of the Series D lead investor. This formulation preserves the noteholders' economic upside while protecting the Company's flexibility to structure the Series D round on terms acceptable to a new lead investor.
• Anti-dilution interaction (Section III.G). Defer the substance of this provision to the definitive document negotiation, where the full anti-dilution mechanics can be analyzed in context with the Company's existing certificate of incorporation and the specific terms of the Series D preferred stock. The forthcoming MFN and Anti-Dilution Interaction Analysis memorandum (targeted for December 5, 2023) will provide the analytical framework for this discussion.
VI. Next Steps
The following action items are proposed in connection with the finalization of the term sheet and the transition to definitive documentation:
1. Client Direction Call. Schedule a call with Priya Ramanathan (General Counsel, Skybridge) and David Lindstrom (CFO, Skybridge) to review the open points identified in this memorandum and obtain client direction on negotiation priorities. Target date: December 3, 2023. The call should address, at minimum, the Company's position on the Change of Control multiple, the maturity repayment period and acceleration mechanics, the board observer right, the participation rights issue, and the closing mechanics timeline.
2. Internal Review. Circulate this memorandum to Victoria Chambers and Leonard Ashford for review and comment. Any revisions to the recommended negotiation strategy should be communicated prior to the client direction call on December 3, 2023.
3. WPS Response. Prepare and circulate a formal written response to WPS (Graham Whitfield / Danielle Kwon) with the Company's proposed resolution of each open point, targeting agreement on the final form of the term sheet by December 4, 2023. The response should be in the form of a revised markup of the Revised Draft, incorporating the Company's final positions as directed by Priya Ramanathan.
4. Definitive Documentation. Upon execution of the final term sheet, commence preparation of the initial draft Note Purchase Agreement and the form of Convertible Promissory Note for circulation to WPS and the Investor syndicate by December 11, 2023. The Note Purchase Agreement should incorporate all agreed term sheet provisions and should include representations, warranties, conditions to closing, and other customary provisions. Ancillary documents to be prepared will include the Subordination Agreement (to the extent modifications to the existing Kelvantis subordination arrangements are required), the Escrow Agreement with Granite Trust Company, N.A., and any amendments to the Company's existing stockholder agreements.
5. IP Diligence. Coordinate with Peter Vassiliev and Wendy Schultz on the intellectual property due diligence workstream, which was added to our engagement scope pursuant to the engagement letter amendment dated December 1, 2023. The IP diligence will need to be substantially complete prior to the circulation of the definitive documents to permit inclusion of appropriate IP-related representations and warranties.
VII. Appendix: Side-by-Side Comparison Table
The following table presents a comprehensive term-by-term comparison of the Initial Draft and the Revised Draft, covering all terms addressed in Sections II through IV of this memorandum.
This memorandum is a privileged and confidential attorney work product prepared by Emory, Castillo, Voss & Chung LLP for the sole use of the addressees identified herein. This memorandum is not intended to constitute, and should not be relied upon as, legal advice to any party other than the addressees. Distribution or disclosure of this memorandum or its contents to any third party without the prior written consent of ECVC is strictly prohibited.
Prepared by:
Nina Reyes Senior Associate Emory, Castillo, Voss & Chung LLP One Liberty Plaza, 46th Floor New York, New York 10006 (212) 555-0147 n.reyes@ecvc.com
Term | Agreed Position
Aggregate Principal Amount | $60,000,000
Interest Rate | 6.00% per annum (600 basis points), simple interest, calculated on a 365-day year basis
Annual Interest Accrual | $3,600,000 on the full outstanding principal amount
Maturity Date | 24 months from the Closing Date (i.e., approximately January 2026, assuming a mid-January 2024 closing)
Instrument Type | Convertible promissory notes (the "Notes")
Conversion discount | 20% discount to the Series D price per share
Valuation Cap | $750,000,000 pre-money valuation
Cap-Implied Price per Share | Approximately $15.46 per share ($750,000,000 ÷ approximately 48,500,000 fully diluted shares)
Conversion Price | The lower of (a) 80% of the Series D price per share, or (b) the price per share implied by the $750,000,000 valuation cap
Qualified Financing Threshold | At least $80,000,000 in new equity capital raised in a Series D preferred stock financing
Automatic Conversion | Upon the occurrence of a Qualified Financing, all outstanding principal and accrued but unpaid interest shall convert automatically into shares of the series of preferred stock issued in the Qualified Financing at the Conversion Price
Governing Law | State of Delaware
Escrow | Closing funds to be held in escrow by Granite Trust Company, N.A., as escrow agent, pending satisfaction of all closing conditions
Subordination | The Notes shall be subordinated in right of payment to the Company's existing $15,000,000 venture debt facility with Kelvantis Lending Corp. (pursuant to the Loan and Security Agreement dated August 15, 2022, as amended)
Investor | Commitment Amount | Percentage of Aggregate
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%
Term | Initial Draft (Nov. 20, 2023) | Revised Draft (Nov. 29, 2023)
Aggregate Principal Amount | $60,000,000 | $60,000,000 (unchanged)
Interest Rate | 6.00% per annum (600 bps), simple interest, computed on a 360-day year basis | 6.00% per annum (600 bps), simple interest, computed on a 365-day year basis (corrected to reflect agreed economics)
Annual Interest Accrual | $3,600,000 (on full principal) | $3,600,000 (on full principal) (unchanged)
Maturity Date | 24 months from Closing Date | 24 months from Closing Date (unchanged)
Instrument Type | Convertible promissory notes | Convertible promissory notes (unchanged)
Conversion discount | 20% discount to Series D price per share | 20% discount to Series D price per share (unchanged)
Valuation Cap | $750,000,000 pre-money | $750,000,000 pre-money (unchanged)
Cap-Implied Price per Share | ~$15.63/share ($750M ÷ ~48M fully diluted shares) | ~$15.46/share ($750M ÷ ~48.5M fully diluted shares) (updated share count)
Conversion Price | Lower of (a) 80% of Series D price, or (b) price implied by $750M cap | Lower of (a) 80% of Series D price, or (b) price implied by $750M cap (unchanged)
Qualified Financing Threshold | $80,000,000 in new equity capital (Series D) | $80,000,000 in new equity capital (Series D) (unchanged)
Automatic Conversion | Upon Qualified Financing, all outstanding principal and accrued interest convert automatically | Upon Qualified Financing, all outstanding principal and accrued interest convert automatically (unchanged)
Change of Control Multiple | Greater of (i) 2.5x outstanding principal plus accrued interest, or (ii) amount payable upon conversion at Valuation Cap (maximum aggregate CoC payment at issuance: $150,000,000 plus accrued interest) | Greater of (i) 2.0x outstanding principal plus accrued interest, or (ii) amount payable upon conversion at Valuation Cap (maximum aggregate CoC payment at issuance: $120,000,000 plus accrued interest) — OPEN
Optional Conversion at Maturity — Repayment Period | If no Qualified Financing by maturity, holders elect (a) conversion at cap, or (b) repayment within 30 days of demand | If no Qualified Financing by maturity, holders elect (a) conversion at cap, or (b) repayment within 90 days following maturity — OPEN
Optional Conversion at Maturity — Acceleration | Automatic cross-acceleration: failure to repay any holder within 30 days makes all Notes immediately due and payable | Deleted automatic cross-acceleration; proposed majority-in-interest consent mechanism for acceleration — OPEN
MFN — Instrument Scope | Covers any subsequent convertible note, SAFE, other convertible instrument, or debt instrument | Covers only subsequent convertible notes or SAFEs; express carve-out for bank/commercial lending facilities and equipment financing — OPEN
MFN — Election Mechanism | Individual holder election to adopt any or all more favorable terms | Majority-in-interest election required (holders of >50% of outstanding principal) — OPEN
Information Rights — Quarterly Financials | Unaudited quarterly financials within 45 days of quarter-end | Unaudited quarterly financials within 60 days of quarter-end — OPEN
Information Rights — Annual Financials | Audited annual financials within 120 days of fiscal year-end | Audited annual financials within 120 days of fiscal year-end (unchanged)
Information Rights — Monthly Reports | Monthly management reports with KPIs: ARR, GPV, burn rate, customer count, net retention, churn | Monthly management reports with KPIs: ARR, cash balance, and headcount only (GPV, burn rate, customer metrics deleted) — OPEN
Information Rights — Board Observer | Board observer seat for Ridgeline (attendance at all board meetings, subject to confidentiality and privilege exclusions) | Deleted; C&H position is that board observer right should be deferred to Series D — OPEN
Information Rights — Data Room Access | Continuing access to Company's virtual data room | Deleted — OPEN
Information Rights — Minimum Threshold | No minimum holding threshold; all holders receive full information rights | $10,000,000 minimum original principal amount for full information rights; holders below threshold (i.e., Halcyon at $5M) receive only annual audited financials — OPEN
Participation Rights | Pro rata right for each noteholder to invest additional amounts in Series D, subject to pay-to-play | Deleted; C&H position is that participation rights should be addressed in Amendment No. 1 to the Amended and Restated IRA in connection with the Series D — OPEN
Closing Mechanics | Single simultaneous closing of full $60,000,000 | Two-tranche structure: Initial Closing (minimum $40,000,000) and Final Closing within 15 business days — OPEN (WPS counter: $45M minimum Initial Closing, 10 business days for Final Closing)
Anti-Dilution Interaction | Silent on whether Note conversion triggers anti-dilution adjustments to existing preferred stock conversion prices | Express provision that Note conversion at Qualified Financing shall not trigger anti-dilution adjustments; Notes treated as if issued at Series D price for anti-dilution purposes — OPEN
Dispute Resolution | Exclusive jurisdiction in federal or state courts of Massachusetts | Exclusive jurisdiction in Court of Chancery of Delaware (or Superior Court of Delaware), or U.S. District Court for the District of Delaware — OPEN
Investor Counsel Fee Reimbursement | Company to reimburse WPS fees up to $150,000 | Company to reimburse WPS fees up to $100,000 — OPEN
Subordination | Notes subordinated to existing $15M Kelvantis Lending Corp. venture debt facility (LSA dated August 15, 2022) | Notes subordinated to existing $15M Kelvantis Lending Corp. venture debt facility (LSA dated August 15, 2022) (unchanged)
Escrow Agent | Granite Trust Company, N.A. | Granite Trust Company, N.A. (unchanged)
Purchaser Allocations | Ridgeline: $30M (50.00%); Beacon Hill: $15M (25.00%); Northstar: $10M (16.67%); Halcyon: $5M (8.33%) | Ridgeline: $30M (50.00%); Beacon Hill: $15M (25.00%); Northstar: $10M (16.67%); Halcyon: $5M (8.33%) (unchanged)
Governing Law | State of Delaware | State of Delaware (unchanged)
Company Legal Name | "Skybridge Fintech, Inc." (incorrect) | "Skybridge Fintech Ltd." (corrected)
Fully Diluted Share Count | "Approximately 48 million" | "Approximately 48,500,000" (updated for precision)
Company EIN | Not included | 83-2147605 (added)
Delaware File Number | Not included | 6384291 (added)

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

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