DISCLOSURE SCHEDULE
TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
SKYBRIDGE FINTECH LTD.
a Delaware corporation
Dated as of July 18, 2022
CONFIDENTIAL — This document contains confidential and proprietary information of Skybridge Fintech Ltd. and is being furnished solely to the Purchasers in connection with the Series B Preferred Stock Purchase Agreement. This document may not be reproduced, distributed, or disclosed to any third party without the prior written consent of the Company.
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INTRODUCTORY STATEMENT
These Disclosure Schedules (the "Disclosure Schedules") are delivered by Skybridge Fintech Ltd., a Delaware corporation (the "Company"), in connection with, and form an integral part of, the Series B Preferred Stock Purchase Agreement, dated as of July 18, 2022 (the "Agreement"), by and among the Company, Granite Peak Ventures, LP, a Delaware limited partnership ("Granite Peak"), Ridgeline Capital Partners, LLC, a Delaware limited liability company ("Ridgeline"), and Solstice Growth Fund I, LP, a Delaware limited partnership ("Solstice" and, together with Granite Peak and Ridgeline, collectively, the "Purchasers").
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. Unless the context otherwise requires, all references herein to "Sections" or "Schedules" refer to the corresponding Sections of, or Schedules to, the Agreement.
The disclosure of any item in any particular Schedule herein shall be deemed disclosed with respect to any other Schedule to the extent that the relevance of such disclosure to such other Schedule is reasonably apparent on the face of such disclosure, notwithstanding the absence of a specific cross-reference. The Company has endeavored to identify items for disclosure under the most directly applicable Schedule; however, the Purchasers are advised to review the Disclosure Schedules in their entirety.
Nothing in these Disclosure Schedules is intended to broaden the scope of any representation or warranty of the Company contained in the Agreement or to create any covenant or agreement on the part of the Company not otherwise set forth in the Agreement. The inclusion of any item herein shall not constitute, and shall not be deemed to constitute, an admission of liability, obligation, or materiality on the part of the Company with respect to such item. Matters reflected in these Disclosure Schedules are not necessarily limited to matters required by the Agreement to be reflected herein. Certain information may be included in these Disclosure Schedules solely for informational purposes and may not be required to be disclosed pursuant to the terms of the Agreement.
These Disclosure Schedules have been prepared by Calderwood & Harkness LLP, counsel to the Company, based on information provided by Company management, including, without limitation, Naveen Raghavan (Co-Founder & Chief Executive Officer), Claire Whitmore (Co-Founder & Chief Technology Officer), and David Okonkwo (Chief Financial Officer). The Company has used commercially reasonable efforts to ensure the accuracy and completeness of the information contained herein; however, the Company reserves the right to supplement or amend these Disclosure Schedules in accordance with the terms of the Agreement.
Headings and section references contained in these Disclosure Schedules are included for convenience of reference only and correspond to the sections of the Agreement to which they relate. Such headings shall not be deemed to modify, limit, or otherwise affect the substance of the disclosures set forth herein.
These Disclosure Schedules are qualified in their entirety by reference to the specific provisions of the Agreement, including the definitions of terms therein. In the event of any conflict between the terms of these Disclosure Schedules and the terms of the Agreement, the terms of the Agreement shall control.
SCHEDULE 2.1
Organization, Good Standing, and Qualification
2.1(a) — Organization and Good Standing
The following information is provided with respect to the Company's organization and good standing:
Full Legal Name: Skybridge Fintech Ltd.
Entity Type: Corporation (C-corporation)
State of Incorporation: Delaware
Date of Incorporation: March 14, 2018
Employer Identification Number (EIN): 84-3291057
Registered Agent in Delaware: Pemberton Industries, 251 Little Falls Drive, Wilmington, DE 19808
Principal Executive Offices and Headquarters: 1600 Market Street, Suite 2200, Wilmington, DE 19801
The Company was incorporated under the laws of the State of Delaware on March 14, 2018, by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware. The Company's Certificate of Incorporation was subsequently amended and restated in connection with the Company's Series Seed Preferred Stock financing on August 10, 2018, and again in connection with the Company's Series A Preferred Stock financing on March 6, 2020. The Amended and Restated Certificate of Incorporation to be filed in connection with the Series B financing contemplated by the Agreement will supersede all prior certificates.
The Company is in good standing under the laws of the State of Delaware. A Certificate of Good Standing from the Delaware Secretary of State, dated no earlier than five (5) business days prior to the Closing Date, will be attached as an exhibit to the Secretary's Certificate to be delivered at closing pursuant to Section 5 of the Agreement.
The Company possesses all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
2.1(b) — Foreign Qualifications
The Company is qualified to do business as a foreign corporation in the following jurisdictions, each of which is a state where the Company maintains employees, offices, or a significant number of customers utilizing its cloud-based payments-orchestration and treasury-management platform:
The Company has determined that it is not required to qualify as a foreign corporation in any other jurisdiction based on its current business operations, employee locations, and the nature and extent of its contacts with other states. The Company continues to monitor its nexus in all states and will seek qualification in additional jurisdictions as and when required by applicable law.
SCHEDULE 2.2
Capitalization
2.2(a) — Authorized Capital Stock (Pre-Series B)
As of immediately prior to the closing of the Series B financing contemplated by the Agreement, the authorized capital stock of the Company consists of the following:
Common Stock:
• Authorized: 30,000,000 shares
• Par value: $0.0001 per share
Preferred Stock:
• Series Seed Preferred Stock: 3,000,000 shares authorized, par value $0.0001 per share
• Series A Preferred Stock: 5,000,000 shares authorized, par value $0.0001 per share
The Amended and Restated Certificate of Incorporation to be filed at closing will increase the authorized share capital to accommodate the issuance of the Series B Preferred Stock and the increase to the option pool as described below.
2.2(b) — Issued and Outstanding Capital Stock (Pre-Series B, Pre-Money)
Set forth below is a complete and accurate list of all holders of the Company's issued and outstanding capital stock as of the date of the Agreement, immediately prior to the closing of the Series B financing on a pre-money basis.
Common Stock Outstanding: 12,400,000 shares
All shares of Common Stock issued to the Co-Founders were originally subject to restricted stock purchase agreements containing four-year vesting schedules with one-year cliff provisions; however, all such shares are now fully vested. Each of the Co-Founders' restricted stock purchase agreements was entered into on or about March 14, 2018, contemporaneously with the Company's incorporation.
David Okonkwo's 600,000 shares of Common Stock were issued pursuant to a Restricted Stock Purchase Agreement dated January 15, 2021. Under the terms of such agreement, twenty-five percent (25%) of the shares (150,000 shares) vested on January 15, 2022 (the first anniversary of his start date), and the remaining seventy-five percent (75%) of the shares (450,000 shares) vest ratably on a monthly basis over the thirty-six (36) month period following the cliff date, such that all shares will be fully vested on January 15, 2025, subject to Mr. Okonkwo's continued service with the Company on each applicable vesting date.
The shares held by "Other employees and early advisors" consist of shares held by seventeen (17) individual holders, including early employees and advisory board members. The Company will make available to the Purchasers upon request a complete schedule setting forth the name, number of shares, grant date, vesting commencement date, vesting schedule, and current vesting status for each such holder. All such shares were issued pursuant to restricted stock purchase agreements or upon exercise of stock options granted under the 2018 Equity Incentive Plan.
Series Seed Preferred Stock Outstanding: 3,000,000 shares
Harborview Seed Investors LLC is a Delaware limited liability company managed by Elliott Yun, Managing Member. The address for Harborview Seed Investors LLC is 44 Montgomery Street, Suite 1800, San Francisco, CA 94104. The Series Seed Preferred Stock was issued pursuant to a Series Seed Preferred Stock Purchase Agreement dated August 10, 2018.
The principal terms of the Series Seed Preferred Stock, as set forth in the Company's current Amended and Restated Certificate of Incorporation, are as follows:
• Dividends: Six percent (6%) non-cumulative dividend, payable when and if declared by the Board of Directors.
• Conversion: Each share of Series Seed Preferred Stock is convertible at the option of the holder into shares of Common Stock at an initial conversion ratio of one-to-one (1:1), subject to adjustment for stock splits, stock dividends, combinations, and similar events, and subject to weighted-average broad-based anti-dilution adjustment in the event of dilutive issuances below the applicable conversion price.
• Liquidation Preference: In the event of any liquidation, dissolution, or winding up of the Company (including a Deemed Liquidation Event, as defined in the Amended and Restated Certificate of Incorporation), holders of Series Seed Preferred Stock are entitled to receive, prior and in preference to any distribution to the holders of Common Stock, an amount per share equal to the Original Issue Price of $0.50 (as adjusted for stock splits, stock dividends, and similar events), plus any declared but unpaid dividends. The aggregate liquidation preference for the Series Seed Preferred Stock is $1,500,000.
• Voting Rights: Holders of Series Seed Preferred Stock are entitled to vote on an as-converted basis with the holders of Common Stock on all matters submitted to the stockholders for a vote.
• Protective Provisions: The consent of the holders of a majority of the outstanding shares of Series Seed Preferred Stock, voting as a separate class, is required for certain actions as specified in the Amended and Restated Certificate of Incorporation.
Series A Preferred Stock Outstanding: 5,000,000 shares
Ridgeline Capital Partners, LLC is a Delaware limited liability company and holds seventy-five percent (75%) of the outstanding Series A Preferred Stock. Thomas Brennan is the Managing Director of Ridgeline Capital Partners, LLC. The address for Ridgeline Capital Partners, LLC is 200 Clarendon Street, 40th Floor, Boston, MA 02116. Ridgeline Capital Partners, LLC is also a Purchaser under the Agreement and is participating in the Series B financing.
The "Other Series A holders" consist of three (3) individual accredited investors who participated in the Series A financing alongside Ridgeline Capital Partners, LLC. The names, addresses, and individual share amounts for such holders are set forth in the stock ledger maintained by Ledgermark Transfer Services, Inc. and are available upon request.
The Series A Preferred Stock was issued pursuant to a Series A Preferred Stock Purchase Agreement dated March 6, 2020. The principal terms of the Series A Preferred Stock, as set forth in the Company's current Amended and Restated Certificate of Incorporation, are as follows:
• Dividends: Six percent (6%) non-cumulative dividend, payable when and if declared by the Board of Directors.
• Conversion: Each share of Series A Preferred Stock is convertible at the option of the holder into shares of Common Stock at an initial conversion ratio of one-to-one (1:1), subject to adjustment for stock splits, stock dividends, combinations, and similar events, and subject to weighted-average broad-based anti-dilution adjustment in the event of dilutive issuances below the applicable conversion price.
• Liquidation Preference: In the event of any liquidation, dissolution, or winding up of the Company (including a Deemed Liquidation Event), holders of Series A Preferred Stock are entitled to receive, prior and in preference to any distribution to the holders of Common Stock (but after payment in full of the liquidation preference payable to the holders of any series of Preferred Stock ranking senior to the Series A Preferred Stock in liquidation), an amount per share equal to the Original Issue Price of $2.00 (as adjusted for stock splits, stock dividends, and similar events), plus any declared but unpaid dividends. The aggregate liquidation preference for the Series A Preferred Stock is $10,000,000.
• Voting Rights: Holders of Series A Preferred Stock are entitled to vote on an as-converted basis with the holders of Common Stock on all matters submitted to the stockholders for a vote.
• Protective Provisions: The consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting as a separate class, is required for certain actions as specified in the Amended and Restated Certificate of Incorporation.
• Board Designation Right: The holders of a majority of the outstanding shares of Series A Preferred Stock, voting as a separate class, are entitled to designate one (1) member of the Company's Board of Directors. Thomas Brennan currently serves as the Series A Preferred Director.
2.2(c) — Pre-Money Fully Diluted Capitalization Summary
The following table sets forth the pre-money fully diluted capitalization of the Company as of immediately prior to the closing of the Series B financing:
For purposes of the foregoing table, shares of Preferred Stock are included on an as-converted to Common Stock basis using the initial conversion ratio of 1:1 for each series, without giving effect to any anti-dilution adjustments. The option pool includes both vested and unvested options. The shares available for future grant represent the unallocated reserve under the 2018 Equity Incentive Plan as of the date hereof.
2.2(d) — Equity Incentive Plan and Stock Options
Plan Name: 2018 Equity Incentive Plan (the "Plan")
Date of Adoption: The Plan was adopted by the Board of Directors and approved by the stockholders of the Company on March 14, 2018, in connection with the Company's incorporation.
Total Shares Currently Reserved Under the Plan (Pre-Closing): 3,000,000 shares of Common Stock
The following is a summary of the current status of the Plan:
Weighted-Average Exercise Price of Outstanding Options: $1.15 per share
The outstanding options were granted over the period from 2019 through 2022 to employees, consultants, and advisors of the Company. All options were granted with exercise prices equal to the fair market value of the Company's Common Stock on the date of grant, as determined by the Board of Directors based on independent 409A valuations performed by qualified third-party valuation firms. The options generally vest over four-year periods with one-year cliff provisions and monthly vesting thereafter.
A detailed schedule of all outstanding options, including the name of each optionholder, grant date, number of shares subject to option, exercise price, vesting commencement date, vesting schedule, and expiration date, is maintained by the Company and is available for review by the Purchasers upon request.
Option Pool Increase at Closing:
As contemplated by the Agreement and the term sheet for the Series B financing, an additional 1,635,000 shares of Common Stock will be reserved for issuance under the Plan at or prior to the closing of the Series B financing. This increase will bring the total Plan reserve from 3,000,000 shares to 4,635,000 shares, which amount is equal to fifteen percent (15%) of the post-closing fully diluted share count of 30,900,000 shares (calculated on an as-converted, fully diluted basis, including all outstanding shares, all shares issuable upon conversion of Preferred Stock, and all shares reserved under the Plan).
Post-Closing Option Pool Summary:
The option pool increase of 1,635,000 shares is carved from the pre-money valuation and is reflected in the pre-money fully diluted share count for purposes of calculating the Series B price per share.
2.2(e) — Series B Issuance (Post-Closing Capitalization)
Series B Preferred Stock to Be Issued: 7,500,000 shares at a price per share of $6.00 (the "Original Issue Price")
The following table sets forth the commitment of each Purchaser under the Agreement:
Granite Peak Ventures, LP is a Delaware limited partnership. The general partner of Granite Peak Ventures, LP is Granite Peak Ventures GP, LLC. The principal contact for Granite Peak Ventures, LP is Priya Deshmukh, General Partner. The address for Granite Peak Ventures, LP is 345 Park Avenue, 25th Floor, New York, NY 10154.
Solstice Growth Fund I, LP is a Delaware limited partnership. The general partner of Solstice Growth Fund I, LP is Solstice Growth Management, LLC. The principal contact for Solstice Growth Fund I, LP is Marcus Chen, Partner. The address for Solstice Growth Fund I, LP is 600 Congress Avenue, Suite 1400, Austin, TX 78701.
The principal terms of the Series B Preferred Stock, as will be set forth in the Amended and Restated Certificate of Incorporation to be filed at closing, are as follows:
• Original Issue Price: $6.00 per share.
• Dividends: Eight percent (8%) non-cumulative dividend, payable when and if declared by the Board of Directors. Dividends on the Series B Preferred Stock shall be in preference to dividends on the Series A Preferred Stock, the Series Seed Preferred Stock, and the Common Stock.
• Conversion: Each share of Series B Preferred Stock is convertible at the option of the holder into shares of Common Stock at an initial conversion ratio of one-to-one (1:1), subject to adjustment for stock splits, stock dividends, combinations, and similar events, and subject to weighted-average broad-based anti-dilution adjustment in the event of dilutive issuances below the applicable conversion price. The Series B Preferred Stock shall automatically convert into Common Stock upon (a) the closing of a firm-commitment underwritten public offering with aggregate gross proceeds of at least $75,000,000 and a per-share price of at least three times (3x) the Original Issue Price (as adjusted), or (b) the written consent of holders of at least a majority of the then-outstanding shares of Series B Preferred Stock.
• Liquidation Preference: In the event of any liquidation, dissolution, or winding up of the Company (including a Deemed Liquidation Event), holders of Series B Preferred Stock are entitled to receive, prior and in preference to any distribution to the holders of any junior series of Preferred Stock or Common Stock, an amount per share equal to the Original Issue Price of $6.00 (as adjusted for stock splits, stock dividends, and similar events), plus any declared but unpaid dividends. The aggregate liquidation preference for the Series B Preferred Stock is $45,000,000.
• Participation: Non-participating preferred. After payment of the liquidation preference, holders of Series B Preferred Stock do not participate in remaining distributions with the Common Stock unless they elect to convert to Common Stock.
• Voting Rights: Holders of Series B Preferred Stock are entitled to vote on an as-converted basis with the holders of Common Stock on all matters submitted to the stockholders for a vote.
• Protective Provisions: The consent of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting as a separate class, is required for certain actions as specified in the Amended and Restated Certificate of Incorporation, including without limitation: (i) any amendment to the Company's Certificate of Incorporation or Bylaws that adversely affects the Series B Preferred Stock; (ii) any increase or decrease in the authorized number of shares of Series B Preferred Stock; (iii) the authorization or issuance of any equity security senior to or on parity with the Series B Preferred Stock; (iv) the declaration or payment of any dividend on shares of Common Stock; (v) any redemption or repurchase of shares of Common Stock (other than pursuant to equity incentive agreements at cost upon termination of service); (vi) any Deemed Liquidation Event; and (vii) any incurrence of indebtedness in excess of $2,000,000 in the aggregate.
• Board Designation Right: The holders of a majority of the outstanding shares of Series B Preferred Stock, voting as a separate class, are entitled to designate one (1) member of the Company's Board of Directors. Priya Deshmukh has been designated as the initial Series B Preferred Director.
Post-Closing Fully Diluted Capitalization:
Note: The 2,535,000 shares available for future grant include the existing 900,000 unallocated shares plus the 1,635,000 additional shares reserved at closing. The option pool increase is carved from the pre-money fully diluted share count.
Valuation:
• Pre-Money Valuation: 23,400,000 pre-money fully diluted shares × $6.00 per share = $140,400,000
• Post-Money Valuation: $140,400,000 + $45,000,000 (aggregate Series B investment) = $185,400,000
2.2(f) — Aggregate Liquidation Preferences (Post-Closing)
The following table summarizes the aggregate liquidation preferences of all series of Preferred Stock outstanding following the closing of the Series B financing. In the event of a liquidation, dissolution, or winding up of the Company (including a Deemed Liquidation Event), the liquidation preferences are payable in the following order of priority (senior to junior):
After payment of all liquidation preferences in full, the remaining assets of the Company available for distribution shall be distributed ratably among the holders of Common Stock (and, to the extent applicable, any holders of Preferred Stock who have elected to convert to Common Stock prior to such distribution).
2.2(g) — Transfer Agent
The Company's transfer agent is:
Ledgermark Transfer Services, Inc. 250 Royall Street Canton, MA 02021
Attention: Corporate Trust Department
Telephone: (781) 555-4200
Ledgermark Transfer Services, Inc. maintains all stock transfer books and records for the Company, including the stock ledger reflecting all issued and outstanding shares of Common Stock and Preferred Stock, all restricted stock purchase agreements, and all option records. The Company's stock transfer books are current and accurate in all material respects as of the date hereof.
2.2(h) — Other Equity Rights
Except as described in this Schedule 2.2, there are no outstanding warrants, convertible notes, Simple Agreements for Future Equity (SAFEs), or other securities convertible into or exercisable or exchangeable for any shares of capital stock or other equity interests of the Company. Other than the stock options described in Schedule 2.2(d) above, no person has any right to acquire any equity securities of the Company.
There are no outstanding stockholder agreements, voting trusts, voting agreements, proxies, registration rights agreements, or other agreements or understandings relating to the voting, transfer, or registration of the Company's capital stock, other than the following agreements being entered into simultaneously with the execution and delivery of the Agreement in connection with the Series B financing:
(a) Amended and Restated Voting Agreement, dated as of July 18, 2022, by and among the Company, the Purchasers, and the other stockholders named therein;
(b) Amended and Restated Investors' Rights Agreement, dated as of July 18, 2022, by and among the Company, the Purchasers, and the other stockholders named therein; and
(c) Amended and Restated Right of First Refusal and Co-Sale Agreement, dated as of July 18, 2022, by and among the Company, the Purchasers, and the other stockholders named therein.
Each of the foregoing agreements amends and restates in its entirety the corresponding agreement previously entered into in connection with the Company's Series A financing.
All series of Preferred Stock (Series Seed, Series A, and Series B) are subject to weighted-average broad-based anti-dilution protection in the event of dilutive issuances, as more fully described in the Amended and Restated Certificate of Incorporation.
There are no outstanding rights of first refusal, preemptive rights, or similar rights with respect to the issuance of the Company's capital stock, other than as set forth in the Amended and Restated Investors' Rights Agreement and the Amended and Restated Right of First Refusal and Co-Sale Agreement described above.
SCHEDULE 2.3
Subsidiaries
The Company has no subsidiaries. The Company does not own, directly or indirectly, any equity interest, partnership interest, joint venture interest, or other ownership interest in any corporation, partnership, limited liability company, joint venture, trust, or other entity. The Company has not entered into any agreement or commitment to acquire any such interest.
SCHEDULE 2.4
Authorization
No exceptions.
The execution and delivery of the Agreement, the Amended and Restated Investors' Rights Agreement, the Amended and Restated Voting Agreement, the Amended and Restated Right of First Refusal and Co-Sale Agreement, and all other Transaction Documents, the filing of the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of the Company.
The Board of Directors of the Company unanimously approved the Series B financing and all related Transaction Documents by unanimous written consent dated July 18, 2022. The unanimous written consent was executed by each of the following directors:
• Naveen Raghavan (Common Stock Director)
• Claire Whitmore (Common Stock Director)
• Thomas Brennan (Series A Preferred Director)
Stockholder approval has been obtained as required under the Delaware General Corporation Law (the "DGCL") and the Company's existing Amended and Restated Certificate of Incorporation. Written consent of the stockholders of the Company was obtained on July 18, 2022, in accordance with Section 228 of the DGCL, approving (a) the Amended and Restated Certificate of Incorporation (including the authorization of the Series B Preferred Stock), (b) the increase in the shares reserved under the 2018 Equity Incentive Plan, and (c) the other transactions contemplated by the Agreement and the related Transaction Documents. The written consent was executed by stockholders holding a sufficient number of shares to satisfy the applicable voting thresholds under the DGCL and the Company's existing Amended and Restated Certificate of Incorporation.
No further corporate action, and no consent or approval of any stockholder, director, or other person, is required in connection with the consummation of the transactions contemplated by the Agreement.
SCHEDULE 2.5
Governmental Consents and Filings
The following governmental consents, approvals, authorizations, registrations, qualifications, and filings are required in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:
1. Amended and Restated Certificate of Incorporation. The Amended and Restated Certificate of Incorporation of the Company must be filed with the Secretary of State of the State of Delaware. The Company expects to file the Amended and Restated Certificate of Incorporation on or about July 29, 2022, which is the anticipated Closing Date.
2. Federal Securities Law Filings. The Company is required to file a Form D with the U.S. Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended, within fifteen (15) days following the first sale of the Series B Preferred Stock. The Company will timely file such Form D.
3. State Securities Law Filings (Blue Sky Filings). The Company is required to make filings or notice filings under the state securities or "blue sky" laws of certain states in which the Purchasers are resident or in which the offering is deemed to take place. The Company will make all required state blue sky filings in a timely manner following the closing.
Other than the foregoing, no governmental consent, approval, order, authorization, registration, qualification, designation, declaration, or filing with any federal, state, local, or foreign governmental authority is required on the part of the Company in connection with the valid execution, delivery, and performance of the Agreement or the offer, sale, and issuance of the Series B Preferred Stock or the Common Stock issuable upon conversion thereof, except for such filings as may be required under applicable state securities laws, which filings will be made in a timely manner.
SCHEDULE 2.6
Litigation
As of the date of the Agreement, there is no action, suit, proceeding, arbitration, claim, investigation, or inquiry pending or, to the Company's knowledge, threatened against the Company or any of its officers or directors (in their capacity as such) before any court, arbitrator, mediator, or governmental authority, whether federal, state, local, or foreign. The Company is not a party to or subject to the provisions of any order, writ, injunction, judgment, or decree of any court or governmental authority.
There are no outstanding judgments, decrees, injunctions, rulings, or orders of any court, governmental body, or arbitration tribunal against the Company or any of its properties, assets, or business.
To the Company's knowledge, no event has occurred or circumstance exists that may give rise to, or serve as the basis for, the commencement of any such action, suit, proceeding, arbitration, claim, investigation, or inquiry.
SCHEDULE 2.7
Intellectual Property
2.7(a) — Owned intellectual Property
The Company owns all right, title, and interest in and to the following intellectual property, free and clear of all liens, encumbrances, and restrictions (other than licenses granted in the ordinary course of business to customers under the Company's standard SaaS subscription agreements):
Software and Technology:
The Company owns its cloud-based payments-orchestration and treasury-management platform (the "Skybridge Platform"), including all proprietary software, source code, object code, algorithms, application programming interfaces (APIs), data models, databases, user interfaces, architectural designs, system configurations, and all related technical documentation, specifications, and know-how. The Skybridge Platform enables enterprise and mid-market clients to integrate, manage, and optimize payment flows across multiple payment processors, banking partners, and financial networks through a unified, API-driven interface.
Trademarks:
The Company owns the following trademarks, both registered and unregistered (common law):
• "Skybridge" (word mark)
• "Skybridge Fintech" (word mark)
• Skybridge logo (design mark, consisting of a stylized bridge graphic in blue and silver)
• "Skybridge" and the Skybridge logo are used in commerce in connection with the Company's SaaS platform and related services.
Domain Names:
The Company owns the following internet domain names:
• skybridge.io
• skybridgefintech.com
• skybridgepay.com
• skybridgeplatform.com
All domain name registrations are current and in good standing.
Invention Assignments:
All intellectual property created by or on behalf of the Company's employees and independent contractors in the course of their engagement with the Company has been assigned to the Company pursuant to written proprietary information and inventions assignment agreements. The Company has obtained written assignments of all intellectual property rights from each founder, employee, and contractor who has contributed to the development of the Skybridge Platform or any other Company intellectual property. The Company is not aware of any claim by any current or former employee or contractor asserting ownership of any Company intellectual property.
2.7(b) — Registered intellectual Property
The following is a list of the Company's registered intellectual property and pending applications:
Trademark Registrations and Applications:
A complete set of trademark registration certificates and pending application documentation will be made available to the Purchasers upon request.
Patents:
The Company does not currently hold any registered patents or pending patent applications. The Company has not filed any provisional or non-provisional patent applications with the United States Patent and Trademark Office or any foreign patent office. The Company's intellectual property strategy has focused on trade secret protection and rapid product development rather than patent prosecution to date. The Company may evaluate the filing of patent applications in the future as its technology and product portfolio evolves.
2.7(c) — Third-Party Licenses
The Company uses certain third-party software and technology under license agreements in the ordinary course of its business. The following is a summary of the Company's material third-party license arrangements:
Commercial Software Licenses:
The Company maintains standard commercial software licenses for cloud infrastructure services, development tools, productivity applications, and third-party application programming interfaces (APIs). None of these licenses are individually material to the operation of the Company's business, except for the following:
• Ridgeway Industries (Meridian Technologies): The Company utilizes Meridian Technologies for cloud hosting, computing, storage, and related infrastructure services under Meridian Technologies's standard Customer Agreement. The Company's current annual spend on Meridian Technologies is approximately $840,000. The Company's agreement with Meridian Technologies is terminable by either party on thirty (30) days' notice.
• Vireo Solutions: The Company integrates with Kestrel Group's payment processing APIs as one of multiple supported payment processors on the Skybridge Platform. The Company operates under Kestrel Group's standard platform agreement and connected account terms.
• Cobalt Ridge Software: The Company integrates with Ashgrove Group's financial data connectivity APIs for bank account verification and financial data aggregation functionality. The Company operates under Ashgrove Group's standard API license agreement.
Open-Source Software:
The Company uses open-source software components in the development and operation of the Skybridge Platform. The Company maintains an open-source compliance policy, administered by the CTO, that governs the evaluation, approval, and use of open-source software within the Company's codebase. The Company primarily uses open-source software components licensed under standard permissive licenses, including the MIT License and the Apache License, Version 2.0. The Company does not incorporate any open-source software into the Skybridge Platform in a manner that would, under the terms of the applicable open-source license, require the Company to (i) disclose or distribute the source code of the Skybridge Platform or any proprietary portion thereof, (ii) license the Skybridge Platform or any proprietary portion thereof for the purpose of making derivative works, or (iii) distribute the Skybridge Platform at no charge. Specifically, the Company does not use any open-source software licensed under "copyleft" or "strong copyleft" licenses (such as the GNU General Public License (GPL) v2 or v3, or the GNU Affero General Public License (AGPL)) in a manner that would trigger such obligations.
A detailed inventory of all open-source software components used by the Company, including the applicable license for each component, is maintained by the Company's engineering team and is available for review by the Purchasers upon request.
2.7(d) — No Infringement
To the Company's knowledge, the Company's operation of its business and use of its intellectual property does not infringe, misappropriate, dilute, or otherwise violate the intellectual property rights or other proprietary rights of any third party. The Company has not received any written or oral claim, demand, notice, or communication from any person alleging that the Company's business or intellectual property infringes, misappropriates, or otherwise violates any third party's intellectual property rights.
To the Company's knowledge, no third party is infringing, misappropriating, or otherwise violating the Company's intellectual property rights. The Company has not asserted any claim of infringement, misappropriation, or other violation of its intellectual property against any third party.
SCHEDULE 2.8
Material Contracts
2.8(a) — List of Material Contracts
The following is a list of all contracts, agreements, and arrangements that are material to the Company's business, financial condition, or results of operations (collectively, the "Material Contracts"):
1. Customer Agreements
The Company has entered into SaaS subscription agreements with its customers for access to and use of the Skybridge Platform. The Company's ten (10) largest customers by annual recurring revenue ("ARR") account for approximately sixty-two percent (62%) of the Company's total ARR. As of March 31, 2022, the Company's last-twelve-months ARR was $18,600,000.
The Company's customer agreements are generally entered into on the Company's standard form SaaS Subscription Agreement, which provides for (a) subscription terms of one (1) to three (3) years, (b) annual billing in advance, (c) standard service level commitments (99.9% uptime), (d) mutual confidentiality obligations, (e) limitations of liability, (f) the Company's standard data processing addendum, and (g) termination for cause upon material breach (with cure periods). A list of the Company's ten (10) largest customers by ARR, together with the contract value, term, and renewal date for each such customer, is available for review by the Purchasers upon request and has been provided to the Purchasers' counsel under separate cover.
The Company has not received any written notice of termination, non-renewal, or material breach from any of its top ten customers, and to the Company's knowledge, no such customer intends to terminate or materially reduce its engagement with the Company.
2. Placement Agent Agreement
The Company has entered into a Placement Agent Agreement with Compass Bridge Advisory Group LLC ("Compass Bridge"), dated on or about April 11, 2022. Under the terms of the Placement Agent Agreement, Compass Bridge agreed to act as the Company's exclusive placement agent in connection with the Series B financing. The material terms of the Placement Agent Agreement are as follows:
• Placement Agent Fee: Two percent (2.0%) of aggregate gross proceeds raised in the Series B financing. Based on the $45,000,000 aggregate gross proceeds of the Series B round, the placement agent fee is $900,000.
• Payment: The placement agent fee is payable at closing from the gross proceeds of the Series B financing.
• Term: The engagement is for the period from the date of the agreement through the earlier of (a) the closing of the Series B financing and (b) December 31, 2022.
• Tail Period: Compass Bridge is entitled to a fee on any financing closed within twelve (12) months following termination of the engagement with any investor introduced by Compass Bridge during the term.
Compass Bridge Advisory Group LLC is a registered broker-dealer and member of FINRA. The address for Compass Bridge is 75 Ashbury Asset Advisors, Suite 2400, Boston, MA 02109. The principal contact is Lena Kowalski, Managing Director.