CONFIDENTIAL — DRAFT FOR DISCUSSION PURPOSES ONLY SUBJECT TO FURTHER REVISION
AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
DRAFT — Circulated January 2, 2024
Prepared by: Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Matter No. 1009-00001
This draft is circulated for discussion purposes only and is subject to further revision. This draft does not constitute a binding offer or commitment by any party. All terms remain subject to negotiation and agreement among the parties and their respective counsel. This document is protected by the attorney-client privilege and work product doctrine.
AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Amendment No. 1 to the Amended and Restated Investors' Rights Agreement (this "Amendment") is made and entered into as of [●], 2024, by and among:
(i) Skybridge Fintech Ltd., a Delaware corporation (the "Company"), with its principal office at 1400 Market Street, Suite 2200, Wilmington, DE 19801;
(ii) The Investors listed on the signature pages hereto (the "Existing Investors"); and
(iii) The additional parties listed on Exhibit A hereto (the "New Investors" and, together with the Existing Investors, the "Investors").
The Company, the Existing Investors, and the New Investors are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company and the Existing Investors are parties to that certain Amended and Restated Investors' Rights Agreement, dated as of July 16, 2021, by and among the Company and the Investors party thereto (the "IRA"), which was entered into in connection with the Company's Series C Preferred Stock financing, which closed on July 16, 2021 at a post-money valuation of Six Hundred Twenty Million Dollars ($620,000,000);
WHEREAS, the Company proposes to issue and sell convertible promissory notes in an aggregate principal amount of Sixty Million Dollars ($60,000,000) (the "Notes") pursuant to a Note Purchase Agreement dated as of [●], 2024 (the "Note Purchase Agreement"), by and among the Company and the purchasers named therein (the "Purchasers");
WHEREAS, the Purchasers under the Note Purchase Agreement are: (a) Ridgeline Ventures Fund IV, L.P., in the principal amount of Thirty Million Dollars ($30,000,000); (b) Beacon Hill Capital Partners, LLC, in the principal amount of Fifteen Million Dollars ($15,000,000); (c) Northstar Innovation Fund II, L.P., in the principal amount of Ten Million Dollars ($10,000,000); and (d) Halcyon Growth Equity, L.P., in the principal amount of Five Million Dollars ($5,000,000);
WHEREAS, certain of the Purchasers, specifically Ridgeline Ventures Fund III, L.P. (an affiliate of Ridgeline Ventures Fund IV, L.P.), Beacon Hill Capital Partners, LLC, and Halcyon Growth Equity, L.P., or their affiliates, are existing parties to the IRA as Existing Investors, and Northstar Innovation Fund II, L.P. is a New Investor that is not currently a party to the IRA;
WHEREAS, it is a condition to the closing of the transactions contemplated by the Note Purchase Agreement that the IRA be amended to add the New Investors as parties thereto and to extend certain rights to the Purchasers as provided herein;
WHEREAS, pursuant to Section [●] of the IRA, the IRA may be amended, modified, or supplemented by a written instrument signed by the Company and the holders of at least [a majority / specified percentage] of the Registrable Securities then outstanding (the "Requisite Holders"); and
WHEREAS, the Existing Investors executing this Amendment constitute the Requisite Holders for purposes of approving this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms.
Capitalized terms used but not otherwise defined in this Amendment shall have the respective meanings ascribed to such terms in the IRA. In addition to the defined terms set forth in the IRA, the following terms shall have the meanings set forth below for all purposes of this Amendment and the IRA, as amended hereby:
"Amendment" means this Amendment No. 1 to the Amended and Restated Investors' Rights Agreement, as it may be further amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Conversion Shares" means the shares of capital stock of the Company issuable upon conversion of the Notes in accordance with their terms and the terms of the Note Purchase Agreement, whether upon a Qualified Financing, a Change of Control, or at maturity, as applicable.
"Information Rights Threshold" has the meaning set forth in Section 3.2 of this Amendment.
"New Investors" means Northstar Innovation Fund II, L.P. and any other Purchaser (or affiliate of a Purchaser) not already a party to the IRA as of the date immediately prior to the effectiveness of this Amendment.
"Note Purchase Agreement" means that certain Note Purchase Agreement, dated as of [●], 2024, by and among the Company and the Purchasers, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Notes" means the convertible promissory notes issued by the Company to the Purchasers pursuant to the Note Purchase Agreement in the aggregate principal amount of Sixty Million Dollars ($60,000,000), bearing interest at a rate of 6.00% per annum, maturing on January 15, 2026, and convertible into equity securities of the Company upon the terms and conditions set forth in the Note Purchase Agreement and the Notes.
"Purchasers" means, collectively, (a) Ridgeline Ventures Fund IV, L.P., a Delaware limited partnership, (b) Beacon Hill Capital Partners, LLC, a Delaware limited liability company, (c) Northstar Innovation Fund II, L.P., a Delaware limited partnership, and (d) Halcyon Growth Equity, L.P., a Delaware limited partnership, and, to the extent applicable, their respective successors and permitted assigns and permitted transferees of the Notes.
"Qualified Financing" means an equity financing of the Company in which the Company raises at least Eighty Million Dollars ($80,000,000) in new equity capital from investors (excluding any amounts raised through conversion of the Notes), consistent with the definition of such term in the Note Purchase Agreement.
Section 1.2 — Interpretation.
Unless the context otherwise requires, all references in this Amendment to "Sections" are to Sections of the IRA, as amended by this Amendment, unless otherwise expressly indicated. The headings and captions contained in this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provision hereof. All references herein to "Articles" or "Sections" of this Amendment are to Articles or Sections of this Amendment unless otherwise specified. As used in this Amendment, the words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation." The use of the singular or plural form of any defined term shall include the other form, as the context may require.
ARTICLE 2 — JOINDER OF NEW INVESTORS
Section 2.1 — Joinder.
Each New Investor hereby acknowledges that it has received and reviewed a complete copy of the IRA and, by executing this Amendment, hereby becomes a party to the IRA as an "Investor" thereunder, effective as of the date of this Amendment. Without limiting the generality of the foregoing, Northstar Innovation Fund II, L.P., a Delaware limited partnership, with its principal office at 555 California Street, Suite 4100, San Francisco, CA 94104, hereby becomes a party to the IRA as an "Investor" thereunder. Each New Investor shall be bound by all of the terms, conditions, covenants, and obligations of the IRA, as amended by this Amendment, and shall be entitled to the benefits of the IRA, as amended by this Amendment, in each case as if such New Investor were an original signatory to the IRA. Each New Investor hereby agrees to be bound by the IRA, as amended by this Amendment, with the same force and effect as if such New Investor had been named as an Investor in the IRA as of the date thereof and had executed the IRA on such date.
Section 2.2 — Schedule of Investors.
The Schedule of Investors attached to the IRA is hereby amended and supplemented to add the New Investors, together with their respective addresses and notice information, as set forth in Exhibit A attached hereto. From and after the date of this Amendment, the Schedule of Investors, as so amended and supplemented, shall be the Schedule of Investors for all purposes of the IRA, as amended by this Amendment. The Company shall deliver an updated Schedule of Investors to each Investor promptly following the execution and delivery of this Amendment.
Section 2.3 — Existing Investor Affiliates.
The Parties hereby acknowledge and agree that Ridgeline Ventures Fund IV, L.P., a Delaware limited partnership, with its principal office at 800 Boylston Street, 34th Floor, Boston, MA 02199, is an affiliate of Ridgeline Ventures Fund III, L.P., an Existing Investor and party to the IRA. Ridgeline Ventures Fund IV, L.P. is a Purchaser under the Note Purchase Agreement and, by its execution of this Amendment, shall be treated as an Investor under the IRA for all purposes of this Amendment, including the information rights, pro rata participation rights, registration rights, and other rights and obligations set forth herein and in the IRA, as amended hereby. For the avoidance of doubt, the rights and obligations of Ridgeline Ventures Fund IV, L.P. under the IRA, as amended by this Amendment, shall be independent of and in addition to any rights and obligations of Ridgeline Ventures Fund III, L.P. under the IRA, and the existence of such affiliate relationship shall not be deemed to consolidate the rights, obligations, or holdings of such entities for purposes of any threshold, voting, or consent requirement under the IRA, as amended by this Amendment, except as expressly provided herein or in the IRA.
ARTICLE 3 — AMENDMENT TO INFORMATION RIGHTS
Section 3.1 — Extension of Information Rights to Purchasers.
Section [●] of the IRA (Information Rights / Covenants of the Company) is hereby amended and supplemented to include the Purchasers (and their respective permitted transferees of Notes) as holders entitled to receive the following financial information from the Company, subject to the threshold requirements set forth in Section 3.2 of this Amendment:
(a) Annual Financial Statements. As soon as practicable, and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, audited consolidated financial statements of the Company for such fiscal year, prepared in accordance with generally accepted accounting principles in the United States ("GAAP") consistently applied and audited by Pinnacle Audit Group LLP or such other independent auditor of nationally recognized standing as the Company may select with the approval of the Company's Board of Directors, including a consolidated balance sheet as of the end of such fiscal year, a consolidated statement of operations for such fiscal year, a consolidated statement of stockholders' equity for such fiscal year, a consolidated statement of cash flows for such fiscal year, and the notes thereto, together with an unqualified opinion of such independent auditor.
(b) Quarterly Financial Statements. As soon as practicable, and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company, unaudited consolidated financial statements of the Company for such fiscal quarter and for the portion of the fiscal year then ended, prepared in accordance with GAAP consistently applied (subject to normal year-end adjustments and the absence of footnotes), including a consolidated balance sheet as of the end of such fiscal quarter, a consolidated statement of operations for such fiscal quarter and for the portion of the fiscal year then ended, and a consolidated statement of cash flows for such fiscal quarter and for the portion of the fiscal year then ended, each certified by the Company's Chief Financial Officer as presenting fairly, in all material respects, the financial condition and results of operations of the Company.
(c) Monthly Financial Statements. As soon as practicable, and in any event within thirty (30) days after the end of each calendar month, unaudited consolidated financial statements of the Company for such month, prepared in accordance with GAAP consistently applied (subject to normal year-end adjustments and the absence of footnotes), including (i) a consolidated balance sheet as of the end of such month, (ii) a consolidated income statement for such month and for the year-to-date period then ended, and (iii) a consolidated statement of cash flows for such month and for the year-to-date period then ended, together with a comparison of actual results to the Company's then-current operating budget, with a narrative explanation of any material variances.
(d) Annual Operating Budget and Business Plan. As soon as practicable, and in any event no later than thirty (30) days prior to the beginning of each fiscal year of the Company, a comprehensive annual operating budget and business plan for such fiscal year, in form and substance reasonably satisfactory to the Board of Directors of the Company, including projected financial statements, capital expenditure budgets, headcount projections, and key assumptions underlying such budget and plan.
Section 3.2 — Threshold for Information Rights.
Information rights under Section 3.1 of this Amendment shall be available to each Purchaser (or permitted transferee of Notes) that holds Notes (or Conversion Shares issued upon conversion thereof) with an aggregate original principal amount of at least Five Million Dollars ($5,000,000) (the "Information Rights Threshold"). For the avoidance of doubt, each of the four Purchasers satisfies the Information Rights Threshold based on their respective commitments under the Note Purchase Agreement: Ridgeline Ventures Fund IV, L.P. ($30,000,000), Beacon Hill Capital Partners, LLC ($15,000,000), Northstar Innovation Fund II, L.P. ($10,000,000), and Halcyon Growth Equity, L.P. ($5,000,000). In the event of a partial transfer of Notes by any Purchaser, the Information Rights Threshold shall be applied to each transferee independently based on the aggregate original principal amount of Notes held by such transferee.
Section 3.3 — Confidentiality Obligations.
Each Purchaser receiving information pursuant to Section 3.1 of this Amendment shall be bound by the confidentiality provisions set forth in Section [●] of the IRA, with the same force and effect as if such Purchaser were an original party to such confidentiality provisions. In addition, each Purchaser shall execute and deliver any additional confidentiality undertaking reasonably requested by the Company in connection with the receipt of information hereunder. The confidentiality obligations set forth in this Section 3.3 and in the applicable provisions of the IRA shall be subject to the following standard exceptions:
(a) disclosures required by applicable law, regulation, or legal process, including any subpoena or similar compulsory process issued by a court of competent jurisdiction or governmental authority, provided that, to the extent legally permissible, the disclosing Purchaser shall provide the Company with prompt written notice of any such required disclosure prior to making such disclosure, so as to afford the Company a reasonable opportunity to seek a protective order or other appropriate remedy;
(b) disclosures to the partners, members, limited partners, and other equity holders of any Purchaser that is a fund entity or similar investment vehicle, to the extent such disclosure is made in connection with customary fund reporting obligations, provided that such recipients are informed of the confidential nature of such information and are bound by confidentiality obligations no less restrictive than those set forth herein;
(c) disclosures to the directors, officers, employees, agents, and professional advisors (including attorneys, accountants, and financial advisors) of the Purchaser, in each case who have a need to know such information and who are bound by confidentiality obligations no less restrictive than those set forth herein or who are subject to professional obligations of confidentiality; and
(d) disclosures of information that (i) is or becomes generally available to the public other than as a result of a breach of this Section 3.3 or the confidentiality provisions of the IRA, (ii) was available to the Purchaser on a non-confidential basis prior to its disclosure by the Company, or (iii) becomes available to the Purchaser on a non-confidential basis from a source other than the Company, provided that such source is not, to the knowledge of the Purchaser, subject to a confidentiality obligation to the Company with respect to such information.
Section 3.4 — Termination of Information Rights.
The information rights granted under this Article 3 shall terminate upon the earliest to occur of the following:
(a) the closing of a Qualified Financing, at which point successor information rights, if any, shall be governed by the definitive agreements for such Qualified Financing and the Purchasers' (or, following conversion of the Notes, former Purchasers') rights thereunder;
(b) the repayment in full of all outstanding principal and accrued interest on all Notes in accordance with their terms; or
(c) the closing of a Change of Control transaction (as such term is defined in the IRA or, if not defined therein, as defined in the Note Purchase Agreement).
For the avoidance of doubt, the termination of information rights pursuant to this Section 3.4 shall not affect any rights that the Purchasers (or their successors or assigns) may have under the IRA as Investors thereunder following conversion of the Notes into Conversion Shares in a Qualified Financing or otherwise.
Section 3.5 — Inspection Rights.
In addition to the information rights set forth in Section 3.1, each Purchaser holding Notes (or Conversion Shares) with an aggregate original principal amount of at least Ten Million Dollars ($10,000,000) shall have the right, upon reasonable prior written notice to the Company of not less than five (5) business days, to visit and inspect the Company's properties, to examine the Company's books of account and records, and to discuss the Company's affairs, finances, and accounts with the Company's officers and, subject to the Company's reasonable consent (not to be unreasonably withheld, conditioned, or delayed), the Company's independent auditors, during normal business hours of the Company, at such reasonable times as may be mutually agreed by the Company and such Purchaser, and in a manner so as not to unreasonably disrupt the Company's normal business operations. All information obtained by a Purchaser pursuant to this Section 3.5 shall be subject to the confidentiality obligations set forth in Section 3.3 of this Amendment and Section [●] of the IRA. Based on the commitments under the Note Purchase Agreement, the following Purchasers satisfy the threshold for inspection rights under this Section 3.5: Ridgeline Ventures Fund IV, L.P. ($30,000,000), Beacon Hill Capital Partners, LLC ($15,000,000), and Northstar Innovation Fund II, L.P. ($10,000,000).
ARTICLE 4 — PRO RATA PARTICIPATION RIGHTS
Section 4.1 — Grant of Pro Rata Rights.
Section [●] of the IRA (Right of First Offer / Pro Rata Participation Rights) is hereby amended and supplemented to grant each Purchaser (and, following conversion of the Notes, each holder of Conversion Shares) a pro rata right to participate in any issuance by the Company of New Securities (as defined in the IRA), on the same terms and conditions as granted to the Existing Investors under the IRA, including but not limited to the right to purchase such Purchaser's pro rata share of such New Securities at the same price per share and on the same terms and conditions as such New Securities are proposed to be offered to third-party investors. For purposes of this Section 4.1, each Purchaser's pro rata share shall be calculated based on such Purchaser's proportionate ownership of the Company's capital stock on an as-converted, fully diluted basis, determined as of immediately prior to the proposed issuance of New Securities and assuming conversion of the Notes held by such Purchaser at the lower of (i) the Valuation Cap price (calculated as Seven Hundred Fifty Million Dollars ($750,000,000) in pre-money valuation divided by the total number of fully diluted shares of the Company's capital stock outstanding immediately prior to such calculation, which is approximately 48,500,000 shares, yielding an approximate conversion price of $15.46 per share) or (ii) eighty percent (80%) of the price per share payable for the equity securities issued in the applicable Series D Preferred Stock financing or other Qualified Financing, in each case as more fully set forth in the Notes and the Note Purchase Agreement.
Section 4.2 — Exercise of Pro Rata Rights.
The Company shall provide written notice (a "Pro Rata Notice") to each Purchaser entitled to pro rata participation rights pursuant to Section 4.1 at least fifteen (15) days prior to the proposed issuance date of any New Securities, which notice shall set forth in reasonable detail (a) the type and class of New Securities proposed to be issued, (b) the price per share and other material terms and conditions of the proposed issuance, (c) the aggregate number of New Securities proposed to be issued, (d) such Purchaser's pro rata share of such New Securities, and (e) the proposed date of the issuance. Each Purchaser shall have ten (10) days from the date of receipt of the Pro Rata Notice to elect to exercise its pro rata participation rights by delivering a written notice of election to the Company, specifying the number of New Securities (up to and including such Purchaser's full pro rata share) that such Purchaser elects to purchase. Any failure by a Purchaser to deliver such written notice of election within such ten (10)-day period shall be deemed a waiver of such Purchaser's pro rata participation rights with respect to such proposed issuance. Any pro rata rights that are not exercised by the applicable Purchasers or other Investors within the applicable election period may be reallocated among the participating Investors (including participating Purchasers) in accordance with the existing overallotment mechanics set forth in Section [●] of the IRA, on a pro rata basis (based on their respective proportionate ownership of the Company's capital stock on an as-converted, fully diluted basis) among those Investors who have elected to participate and have indicated a desire to purchase additional New Securities in excess of their initial pro rata allocation.
Section 4.3 — Exceptions to Pro Rata Rights.
The pro rata participation rights granted under this Article 4 shall not apply to any issuance of New Securities that constitutes an Excluded Issuance, as defined in the IRA, including without limitation:
(a) shares of Common Stock (and options or warrants to purchase shares of Common Stock) issued or issuable to employees, officers, directors, consultants, or advisors of the Company pursuant to equity incentive plans or agreements approved by the Board of Directors of the Company, including the Company's 2020 Equity Incentive Plan, as amended from time to time;
(b) shares of capital stock issued or issuable in connection with strategic transactions approved by the Board of Directors of the Company, including mergers, acquisitions, joint ventures, licensing arrangements, or similar transactions, provided that such transactions are primarily for purposes other than raising equity capital;
(c) shares of capital stock issued or issuable upon the conversion of the Notes or any other convertible securities, warrants, or options outstanding as of the date of this Amendment;
(d) shares of capital stock issued or issuable as a dividend or distribution on, or in connection with a stock split, recapitalization, or similar event with respect to, the Company's then-outstanding capital stock; and
(e) such other excluded issuances as may be specified in the IRA.
Section 4.4 — Termination of Pro Rata Rights.
The pro rata participation rights granted under this Article 4 shall terminate upon the earliest to occur of the following:
(a) the conversion of all outstanding Notes into Conversion Shares in connection with a Qualified Financing, at which point the Purchasers' (or, following such conversion, the holders of Conversion Shares') pro rata participation rights, if any, shall be governed by the definitive agreements for such Qualified Financing;
(b) the repayment in full of all outstanding principal and accrued interest on all Notes in accordance with their terms; or
(c) the consummation of a Change of Control transaction (as such term is defined in the IRA or, if not defined therein, as defined in the Note Purchase Agreement).
ARTICLE 5 — ADDITIONAL COVENANTS
Section 5.1 — Board Observer Rights.
[Note: This Section 5.1 is an open negotiation point. Investor counsel (Whitfield, Pratt & Soo LLP — Graham Whitfield / Danielle Kwon) may request broader observer rights or designation rights. The following represents the Company's initial proposal and is subject to further discussion.]
The Company shall permit one (1) representative designated by [Ridgeline Ventures Fund IV, L.P. / the holders of a majority of the aggregate outstanding principal amount of the Notes (the "Majority Holders of the Notes")] (the "Board Observer") to attend all meetings (whether in person, by telephone, by video conference, or otherwise) of the Board of Directors of the Company (and any committee thereof) in a non-voting observer capacity. The Board Observer shall be entitled to receive all notices, agendas, board packages, and other materials provided to the members of the Board of Directors at the same time such materials are provided to such members. Notwithstanding the foregoing, the Company shall have the right to exclude the Board Observer from access to any meeting, portion of a meeting, or materials if the Board of Directors determines in good faith (upon advice of outside legal counsel) that such exclusion is reasonably necessary to (a) preserve the attorney-client privilege or work product protection between the Company and its counsel, (b) address a matter involving a conflict of interest between the Company and the entity that designated the Board Observer or any affiliate thereof, or (c) comply with applicable law or fiduciary duties. The Board Observer shall be required to execute a confidentiality agreement in form and substance reasonably satisfactory to the Company prior to attending any meeting of the Board of Directors or receiving any materials described in this Section 5.1. The rights set forth in this Section 5.1 shall terminate upon the earliest of (i) conversion of all Notes in a Qualified Financing, (ii) repayment in full of all Notes, or (iii) the closing of a Change of Control, unless successor board observer rights are agreed to in connection with any such transaction.
Section 5.2 — Notice of Certain Events.
The Company shall provide prompt written notice to the Purchasers (at the addresses set forth in Exhibit B hereto or as otherwise specified by the Purchasers in writing) upon the occurrence of any of the following events:
(a) Qualified Financing. The commencement of any Qualified Financing or any proposed Qualified Financing, including the delivery of a term sheet or letter of intent from any potential lead investor in connection therewith, and the closing of any such Qualified Financing, together with a summary of the material terms thereof.
(b) Change of Control. Any proposed Change of Control, including the receipt by the Company or any of its stockholders of any bona fide offer, indication of interest, letter of intent, or term sheet with respect to a Change of Control, and the consummation of any such Change of Control, together with a summary of the material terms thereof.
(c) Material Litigation. The commencement (by filing, service, or other formal initiation) of any material litigation, arbitration, administrative proceeding, or regulatory investigation or proceeding against the Company or any of its subsidiaries, or the threat thereof (to the extent such threat is received in writing from a third party), where "material" means any such proceeding that (i) involves a claim or potential liability in excess of Two Hundred Fifty Thousand Dollars ($250,000), (ii) seeks injunctive or equitable relief that could reasonably be expected to have a material adverse effect on the Company's business, operations, or financial condition, or (iii) involves any governmental or regulatory authority.
(d) Default Under Venture Debt Facility. Any default (whether an "Event of Default" or a default that, with the giving of notice or lapse of time or both, would become an "Event of Default") under the Loan and Security Agreement dated August 15, 2022 (as amended, restated, supplemented, or otherwise modified from time to time), between the Company and Kelvantis Lending Corp. (the "Kelvantis Loan Agreement"), which provides for a venture debt facility in the aggregate principal amount of Fifteen Million Dollars ($15,000,000), maturing on August 15, 2025, together with a description of the nature of such default, the actions the Company is taking or proposes to take with respect thereto, and copies of any written notices received from or delivered to Kelvantis Lending Corp. in connection therewith.
The Company shall deliver the notices required by this Section 5.2 promptly, and in any event within five (5) business days, after the applicable event or the Company's knowledge thereof, whichever is earlier.
Section 5.3 — Use of Proceeds.
The Parties acknowledge that the use of proceeds from the issuance and sale of the Notes is governed by the applicable covenants set forth in the Note Purchase Agreement. Without limiting the foregoing, the Company covenants that the proceeds of the Notes shall be used for general corporate purposes, working capital, and product development, consistent with the Company's business plan, pending the Company's planned Series D Preferred Stock financing in Q3–Q4 2024. This Section 5.3 is intended solely as a cross-reference to and acknowledgment of the use-of-proceeds covenant contained in the Note Purchase Agreement and shall not be deemed to create any independent obligation of the Company beyond those set forth in the Note Purchase Agreement.
ARTICLE 6 — REGISTRATION RIGHTS
Section 6.1 — Registrable Securities.
The definition of "Registrable Securities" in the IRA is hereby amended and supplemented to include the Conversion Shares issuable upon conversion of the Notes in accordance with their terms and the terms of the Note Purchase Agreement. From and after the date on which any Notes are converted into Conversion Shares in accordance with their terms, such Conversion Shares shall be treated as Registrable Securities for purposes of all registration rights provisions of the IRA, including without limitation the demand registration rights set forth in Section [●] of the IRA, the registration rights on Form S-3 (or any successor form) set forth in Section [●] of the IRA, and the piggyback registration rights set forth in Section [●] of the IRA, in each case on the same terms and conditions as apply to other Registrable Securities held by the Investors under the IRA. For the avoidance of doubt, the holders of Conversion Shares that constitute Registrable Securities shall have the same rights and obligations as the holders of other Registrable Securities under the IRA, including with respect to cutback provisions, lock-up agreements, indemnification, and contribution.
Section 6.2 — Conditions.
Notwithstanding anything in Section 6.1 to the contrary, the registration rights with respect to the Conversion Shares shall become effective only upon the actual conversion of the Notes into equity securities of the Company in accordance with the terms of the Notes and the Note Purchase Agreement, and only to the extent that the Conversion Shares constitute "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act of 1933, as amended (the "Securities Act"). For the avoidance of doubt, no holder of Notes (in such capacity, prior to the conversion of such Notes into Conversion Shares) shall be entitled to exercise any registration rights under the IRA solely by virtue of holding Notes. To the extent that any Conversion Shares cease to be "restricted securities" or are otherwise freely transferable without registration under the Securities Act and without volume or manner-of-sale limitations under Rule 144 thereunder (including, without limitation, upon the expiration of any applicable holding period and the satisfaction of all other conditions of Rule 144), such Conversion Shares shall cease to be Registrable Securities for purposes of the IRA, as amended by this Amendment.
ARTICLE 7 — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Company Representations.
The Company hereby represents and warrants to each of the Investors as of the date of this Amendment as follows:
(a) Organization and Good Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (DE File Number 6384291). The Company has the requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted and as proposed to be conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company's business, operations, financial condition, or prospects.
(b) Corporate Authority. The Company has all requisite corporate power and authority to execute, deliver, and perform this Amendment and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Amendment by the Company, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of the Company, including authorization by the Board of Directors of the Company pursuant to a Unanimous Written Consent of the Board of Directors dated January 10, 2024, and approval by the requisite stockholders of the Company pursuant to a Written Consent in Lieu of Special Meeting of Stockholders dated January 12, 2024. No other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery, and performance of this Amendment.
(c) No Conflicts. The execution, delivery, and performance of this Amendment by the Company and the consummation of the transactions contemplated hereby do not and will not (i) violate, conflict with, or result in a breach of any provision of the Company's Amended and Restated Certificate of Incorporation (as amended to date) or Bylaws (as amended to date), (ii) violate, conflict with, or result in a breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation, acceleration, or loss of any benefit under, any material agreement, contract, lease, license, instrument, note, mortgage, indenture, or other obligation to which the Company is a party or by which any of its properties or assets are bound, including, without limitation, the Kelvantis Loan Agreement, or (iii) violate any applicable law, rule, regulation, order, judgment, or decree of any court, governmental authority, or regulatory body applicable to the Company or any of its properties or assets.
(d) Enforceability. This Amendment has been duly executed and delivered by the Company. The IRA, as amended by this Amendment, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 7.2 — Investor Representations.
Each Investor executing this Amendment hereby represents and warrants to the Company and to each other Investor as of the date of this Amendment that (a) such Investor has the requisite power and authority (corporate, partnership, limited liability company, or otherwise, as applicable) to execute and deliver this Amendment and to perform its obligations hereunder, (b) the execution, delivery, and performance of this Amendment by such Investor have been duly authorized by all necessary action on the part of such Investor, (c) this Amendment has been duly executed and delivered by such Investor and constitutes the valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, subject to the qualifications set forth in Section 7.1(d) above, and (d) the execution, delivery, and performance of this Amendment by such Investor do not and will not violate, conflict with, or result in a breach of any provision of such Investor's organizational documents or any material agreement, contract, or other obligation binding upon such Investor.
ARTICLE 8 — MISCELLANEOUS
Section 8.1 — Effect on IRA.
Except as expressly amended, modified, or supplemented by this Amendment, the IRA shall remain in full force and effect and is hereby ratified and confirmed in all respects. Nothing herein shall be deemed to constitute a waiver of any rights or remedies of any Party under the IRA, except as expressly set forth in this Amendment. In the event of any conflict or inconsistency between the terms and provisions of this Amendment and the terms and provisions of the IRA, the terms and provisions of this Amendment shall control and govern. From and after the date of this Amendment, all references in the IRA to "this Agreement," "hereof," "herein," "hereunder," or words of similar import shall be deemed to refer to the IRA as amended by this Amendment, unless the context clearly requires otherwise.
Section 8.2 — Governing Law.
This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The governing law provision of this Section 8.2 is consistent with the governing law provisions of the IRA and the Note Purchase Agreement.
Section 8.3 — Dispute Resolution.
Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, the Superior Court of the State of Delaware), or, in the case of claims arising under federal law, the United States District Court for the District of Delaware, and any appellate court from any thereof, in any action, suit, or proceeding arising out of or relating to this Amendment or the IRA, as amended hereby, or for recognition or enforcement of any judgment relating thereto. Each of the Parties hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim, or otherwise, in any such action, suit, or proceeding (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with applicable law, (b) that it or its property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment, or otherwise), and (c) that (i) such action, suit, or proceeding is brought in an inconvenient forum, (ii) the venue of such action, suit, or proceeding is improper, or (iii) this Amendment or the IRA, as amended hereby, or the subject matter hereof or thereof, may not be enforced in or by such courts.
Section 8.4 — Counterparts.
This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic transmission in portable document format (.pdf) or other electronic format shall be effective as delivery of an original executed counterpart of this Amendment. Electronic signatures complying with the U.S. federal ESIGN Act of 2000 or the Uniform Electronic Transactions Act, as applicable, shall be deemed original signatures for all purposes of this Amendment.
Section 8.5 — Entire Agreement.
The IRA, as amended by this Amendment, together with the Note Purchase Agreement, the Notes, and the other transaction documents executed and delivered in connection with the transactions contemplated by the Note Purchase Agreement (collectively, the "Transaction Documents"), constitutes the entire agreement of the Parties with respect to the subject matter hereof and thereof and supersedes all prior agreements, understandings, negotiations, and discussions, both written and oral, among the Parties with respect to the subject matter hereof and thereof. There are no representations, warranties, covenants, or agreements among the Parties with respect to the subject matter hereof and thereof other than those expressly set forth in this Amendment, the IRA, and the other Transaction Documents.
Section 8.6 — Notices.
All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Amendment shall be in writing and shall be delivered in accordance with the notice provisions of the IRA. For purposes of this Amendment:
(a) Notices to the Company shall be sent to:
Skybridge Fintech Ltd. 1400 Market Street, Suite 2200 Wilmington, DE 19801
Attention: Priya Ramanathan, General Counsel
Email: [●]
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022
Attention: Leonard Ashford
Email: [●]
(b) Notices to the New Investors and the Purchasers shall be sent to the addresses set forth in Exhibit B hereto, or to such other address as any such New Investor or Purchaser may designate in writing in accordance with the notice provisions of the IRA.
(c) Notices to the Existing Investors shall be sent to the respective addresses set forth in the Schedule of Investors attached to the IRA, as amended by this Amendment, or to such other address as any such Existing Investor may designate in writing in accordance with the notice provisions of the IRA.
Section 8.7 — Amendments and Waivers.
Any provision of this Amendment (or of the IRA, as amended by this Amendment) may be amended, modified, or supplemented, and the observance thereof may be waived (either generally or in a particular instance, and either retroactively or prospectively), only by a written instrument signed by the Company and the Requisite Holders (as defined in the IRA, as amended by this Amendment). Any amendment, modification, supplement, or waiver effected in accordance with this Section 8.7 shall be binding upon all Parties and their respective successors and assigns.
Section 8.8 — Severability.
If any provision of this Amendment is held to be illegal, invalid, or unenforceable under any present or future law, rule, or regulation, (a) such provision shall be fully severable, (b) this Amendment shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Amendment a legal, valid, and enforceable provision as similar in terms and economic effect to such illegal, invalid, or unenforceable provision as may be possible. The Parties shall use their commercially reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitute for any such illegal, invalid, or unenforceable provision in light of the intent of this Amendment.
Section 8.9 — Fees and Expenses.
Each Party shall bear its own costs and expenses (including the fees and disbursements of its counsel, accountants, and other advisors) incurred in connection with the negotiation, execution, delivery, and performance of this Amendment and the transactions contemplated hereby; provided, however, that the Company shall reimburse the reasonable and documented legal fees and out-of-pocket expenses of Whitfield, Pratt & Soo LLP, as counsel to the Purchasers (or certain of the Purchasers), in an aggregate amount not to exceed One Hundred Twenty-Five Thousand Dollars ($125,000), as provided in Section [●] of the Note Purchase Agreement. Such reimbursement shall be made by the Company at the closing of the transactions contemplated by the Note Purchase Agreement, upon presentation of reasonable documentation of such fees and expenses.
[Signature Pages Follow]
SIGNATURE PAGES TO AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
IN WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to the Amended and Restated Investors' Rights Agreement to be duly executed and delivered as of the date first written above.
COMPANY:
SKYBRIDGE FINTECH LTD.
By: ________
Name: Arjun Mehta
Title: Chief Executive Officer & Co-Founder
Date: ________
SIGNATURE PAGES TO AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
EXISTING INVESTORS:
RIDGELINE VENTURES FUND III, L.P.
By: Ridgeline Ventures Management III, LLC, its General Partner
By: ________
Name: ________
Title: Authorized Signatory
Date: ________
Address: 800 Boylston Street, 34th Floor, Boston, MA 02199
BEACON HILL CAPITAL PARTNERS, LLC
By: ________
Name: Joanna Falkner
Title: Managing Director
Date: ________
Address: 222 West Adams Street, Suite 3400, Chicago, IL 60606
HALCYON GROWTH EQUITY, L.P.
By: Halcyon Growth Management, LLC, its General Partner
By: ________
Name: Robert "Rob" Castillo
Title: Partner
Date: ________
Address: 1201 Third Avenue, Suite 5600, Seattle, WA 98101
SIGNATURE PAGES TO AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
EXISTING INVESTORS (continued):
CRESTPOINT SEED PARTNERS, L.P.
By: ________
Name: ________
Title: Authorized Signatory
Date: ________
Address: ________
[Additional signature pages for Existing Investors to be added as required by the IRA signatory list.]
SIGNATURE PAGES TO AMENDMENT NO. 1 TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
NEW INVESTORS / PURCHASERS:
RIDGELINE VENTURES FUND IV, L.P.
By: Ridgeline Ventures Management IV, LLC, its General Partner
By: ________
Name: Catherine "Kate" Drummond
Title: Managing Partner
Date: ________
or
By: ________
Name: Samuel Okonkwo
Title: Partner
Date: ________
Address: 800 Boylston Street, 34th Floor, Boston, MA 02199
NORTHSTAR INNOVATION FUND II, L.P.
By: Northstar Innovation GP II, LLC, its General Partner
By: ________
Name: Wei-Lin Chang
Title: Managing Partner
Date: ________
Address: 555 California Street, Suite 4100, San Francisco, CA 94104
EXHIBIT A
SCHEDULE OF NEW INVESTORS
The following New Investors are hereby added to the Schedule of Investors attached to the Amended and Restated Investors' Rights Agreement, dated as of July 16, 2021, by and among Skybridge Fintech Ltd. and the Investors party thereto, as amended by Amendment No. 1 thereto: