1009-00005 · Skybridge Fintech Ltd · Opinions

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Contract analysis Extract to table

CALDERWOOD & HARKNESS LLP Attorneys at Law

425 Lexington Avenue New York, New York 10017

Telephone: (212) 455-2000 Facsimile: (212) 455-2502

DRAFT — [DATE TO BE INSERTED] — NOT FOR DELIVERY

[●], 2024

Matter No. 1009-00005

Halcyon Securities LLC 200 Vesey Street, 42nd Floor New York, New York 10281

Attention: Rebecca Thornton, Managing Director

Jonathan Kramer, Head of ABS Origination

Re: SkyLend Receivables Trust 2024-1 — Rule 144A / Regulation S Offering of $170,000,000 Class A Asset-Backed Notes and $22,000,000 Class B Asset-Backed Notes

Halcyon Deal Reference: HLC-ABS-2024-017 CUSIP Prefix: 87165Q

Ladies and Gentlemen:

1. Introduction and Engagement Context

Calderwood & Harkness LLP ("we," "us," the "Firm," or "C&H") has acted as counsel to Skybridge Fintech Ltd. ("SBF"), a corporation organized and existing under the laws of the State of Delaware, SkyLend Funding LLC (the "Depositor"), a Delaware single-member limited liability company and wholly owned subsidiary of SBF, and SkyLend Receivables Trust 2024-1 (the "Trust" or the "Issuer"), a Delaware statutory trust formed pursuant to the Delaware Statutory Trust Act, 12 Del. C. §§ 3801 et seq., in connection with the proposed offering (the "Offering") of asset-backed notes (the "Notes") described below.

The Offering contemplates the issuance by the Trust of (i) $170,000,000 aggregate principal amount of Class A Asset-Backed Notes (the "Class A Notes") and (ii) $22,000,000 aggregate principal amount of Class B Asset-Backed Notes (the "Class B Notes" and, together with the Class A Notes, the "Notes"). The Offering is being made pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), Rule 144A promulgated thereunder ("Rule 144A"), and Regulation S promulgated thereunder ("Regulation S"). The Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereof.

This letter is being delivered to Halcyon Securities LLC ("Halcyon" or the "Initial Purchaser"), acting in its capacity as sole bookrunning manager and initial purchaser of the Notes, pursuant to Section [●] of the Preliminary Purchase Agreement dated as of [●], 2024 (the "Purchase Agreement"), among the Trust, SBF, the Depositor, and Halcyon. We understand that the delivery of this letter is a condition precedent to the obligations of Halcyon under the Purchase Agreement.

The C&H engagement team for purposes of this letter and the related transaction is led by Theodore Langston, a partner in the Capital Markets group of the Firm. Mr. Langston has supervised the Firm's participation in the preparation and review of the Offering Memorandum (as defined below) and the other Transaction Documents (as defined below), and this letter has been prepared under his direction and supervision.

2. Documents Reviewed

In connection with rendering the statements set forth in this letter, we have reviewed originals or copies, certified or otherwise identified to our satisfaction, of the following documents and materials:

1. The Preliminary Offering Memorandum dated April 5, 2024 (the "Preliminary Offering Memorandum" or the "Preliminary OM"), relating to the proposed offering by the Trust of the Class A Notes in an aggregate principal amount of $170,000,000 (with expected ratings of Aaa(sf) by Meridian Credit Ratings, Inc. ("Meridian") and AA+(sf) by Carrollton Ratings Group LLC ("Carrollton") and a target coupon range of 5.45% to 5.65% per annum) and the Class B Notes in an aggregate principal amount of $22,000,000 (with expected ratings of A2(sf) by Meridian and A(sf) by Carrollton and a target coupon range of 6.75% to 7.00% per annum);

2. The [draft] Final Offering Memorandum dated [●], 2024 (the "Final Offering Memorandum" and, together with the Preliminary Offering Memorandum, the "Offering Memorandum"), which was intended to supplement and supersede the Preliminary Offering Memorandum and to reflect, among other things, the final pricing terms, the final pool composition, and such other information as may have been determined at or prior to pricing; provided, however, that as of the date of this letter the Final Offering Memorandum has not been prepared or circulated in any form, and all references herein to the Final Offering Memorandum shall be understood as placeholder references only;

3. The draft Indenture, dated as of March 4, 2024 (the "Indenture"), between the Trust, as issuer, and Atlantic Fiduciary Services, Inc. ("AFS"), a national banking association, as indenture trustee, paying agent, note registrar, and custodian, pursuant to which the Notes are to be issued and secured;

4. The Trust Agreement, dated as of February 14, 2024 (the "Trust Agreement"), between the Depositor, as depositor, and Keymark Trust Company, National Association ("Keymark"), as owner trustee, pursuant to which the Trust was formed as a Delaware statutory trust;

5. The draft Receivables Purchase Agreement, dated as of March 11, 2024 (the "Receivables Purchase Agreement"), between SBF, as seller and originator, and the Depositor, as purchaser, providing for the sale, transfer, and assignment of the receivables from SBF to the Depositor;

6. The draft Sale and Servicing Agreement, dated as of March 11, 2024 (the "Sale and Servicing Agreement"), among the Depositor, as seller, the Trust, as issuer, SBF, as servicer, and Clearview Loan Servicing, Inc. ("Clearview"), as sub-servicer, providing for, among other things, the sale of the receivables from the Depositor to the Trust, the servicing of the receivables by SBF and Clearview, and the allocation and distribution of collections;

7. The draft Purchase Agreement (as defined in Section 1 above), among the Trust, SBF, the Depositor, and Halcyon;

8. The draft Administration Agreement (the "Administration Agreement"), between the Trust and SBF, as administrator, providing for the administration of the Trust by SBF;

9. The draft Account Control Agreement (the "Account Control Agreement"), among the Trust, AFS, as secured party, and Keymark (acting in its commercial banking capacity as depositary bank), providing for the establishment and control of the trust accounts maintained in connection with the transaction;

10. The Secretary's Certificate and resolutions of the Board of Directors of SBF, certified by the Secretary of SBF, authorizing the execution, delivery, and performance by SBF of the Transaction Documents and the consummation of the transactions contemplated thereby;

11. The Certificate of Formation and Limited Liability Company Agreement of SkyLend Funding LLC (formed January 30, 2024, with the Secretary of State of the State of Delaware; Employer Identification Number: 93-4187620), as in effect on the date hereof;

12. The Certificate of Trust of SkyLend Receivables Trust 2024-1 (formed February 14, 2024, with the Secretary of State of the State of Delaware; Employer Identification Number: 93-4201855), as filed with the Secretary of State of the State of Delaware;

13. Amendment No. 1 to the Master Servicing Agreement, dated as of March 18, 2024 (the "MSA Amendment"), between SBF and Clearview, amending the Master Servicing Agreement originally dated as of October 1, 2022 (Clearview Servicing Account No. CLS-SBF-2022-0041), to provide for, among other things, the servicing of the receivables included in the Trust and the delivery of servicer reports to the indenture trustee;

14. The draft Officer's Certificate of SBF, to be delivered at closing, certifying as to, among other things, the accuracy of the representations and warranties of SBF set forth in the Transaction Documents and the satisfaction of the conditions to closing;

15. The rating-agency presentations dated April 8, 2024, delivered to Meridian (lead analyst: Gregory Fontaine) and Carrollton (lead analyst: Teresa Kobayashi), including the legal and structural overview, cash-flow modeling assumptions, and pool stratification tables contained therein; and

16. Such other documents, certificates, corporate records, and instruments as we have deemed necessary or appropriate for purposes of rendering the statements contained herein.

The documents and materials described in clauses (1) through (16) above are collectively referred to herein as the "Transaction Documents." In addition, we have reviewed such matters of law as we have considered relevant to the opinions and statements expressed herein.

3. Role and Participation

In connection with the preparation and review of the Offering Memorandum, we have, among other things:

(a) participated in the drafting and review of the Preliminary Offering Memorandum, including the preparation of the sections thereof relating to the terms of the Notes, the structure of the Trust, the description of the Transaction Documents, the risk factors, certain legal and regulatory matters, and the transfer restrictions applicable to the Notes;

(b) participated in conferences, meetings, and discussions with officers and employees of SBF, including Arun Mehta, Chief Executive Officer, Danielle Prescott, Chief Financial Officer, and Tomás Reyes, General Counsel, regarding the business, operations, financial condition, and receivables origination practices of SBF, the characteristics of the receivables pool, and the accuracy and completeness of the information contained in the Offering Memorandum;

(c) participated in conferences, meetings, and discussions with representatives of Halcyon, including Rebecca Thornton, Managing Director, and Jonathan Kramer, Head of ABS Origination, regarding the structure, terms, and marketing of the Offering and the content of the Offering Memorandum;

(d) participated in conferences, meetings, and discussions with representatives of Whitfield, Drummond & Paige LLP ("WDP"), counsel to the Initial Purchaser, including Harrison Whitfield III, partner, and Priya Subramanian, counsel, regarding the form and content of the Transaction Documents, the disclosure in the Offering Memorandum, and the legal and structural aspects of the Offering;

(e) reviewed the static-pool performance data and receivables pool characteristics provided by SBF and Clearview, as described and included in the Preliminary OM, including the following key pool metrics: a receivables pool consisting of approximately 23,100 unsecured consumer installment loans, with an aggregate outstanding principal balance of approximately $213,750,000 (gross, before application of the cut-off date), a weighted average coupon of 14.82% per annum, a weighted average remaining term of 38.4 months, a weighted average FICO score at origination of 698, a reported 30+ day delinquency rate of 3.21%, and reported cumulative net losses for the 2022 origination vintage of 4.12%;

(f) participated in the preparation of the legal and structural sections of the rating-agency presentations delivered on April 8, 2024, to Meridian and Carrollton, including descriptions of the true-sale analysis, the bankruptcy-remoteness of the Depositor and the Trust, the priority-of-payments waterfall, and the legal isolation of the receivables;

(g) reviewed the capital structure of the Offering, consisting of: (i) the Class A Notes ($170,000,000 aggregate principal amount, representing approximately 85% of the total securities issued by the Trust), (ii) the Class B Notes ($22,000,000 aggregate principal amount, representing approximately 11% of the total securities issued by the Trust), and (iii) a subordinated residual interest ($8,000,000, representing approximately 4% of the capital structure, to be retained by SBF through the Depositor in order to satisfy applicable risk-retention requirements under Regulation RR promulgated under the Securities Exchange Act of 1934, as amended);

(h) reviewed the credit-enhancement features of the transaction, including: (i) an initial overcollateralization target of 3.5% of the aggregate initial pool balance (approximately $7,000,000), to be built through the application of excess spread over time, (ii) a reserve account with an initial deposit amount equal to 1.00% of the aggregate initial pool balance (approximately $2,000,000), funded on the closing date from the proceeds of the Offering, and (iii) estimated excess spread of approximately 2.85% per annum, based on the weighted average coupon of the receivables, the weighted average note rate of the Notes, and the estimated servicing fees and other trust expenses; and

(i) reviewed the pool concentration limits described in the Offering Memorandum, including: (i) a maximum single-obligor concentration limit of 0.15% of the aggregate initial pool balance (approximately $300,000 per obligor) and (ii) a geographic concentration limit pursuant to which no single state may account for more than 20% of the aggregate initial pool balance.

The foregoing describes the nature and extent of the Firm's participation in the preparation of the Offering Memorandum and the related Transaction Documents. We note, however, that we are not experts in, and did not independently verify, any financial, statistical, accounting, or actuarial data contained in or derived from the Offering Memorandum or any of the Transaction Documents, and we have assumed the accuracy, completeness, and fair presentation of all such data for purposes of this letter. Our participation was limited to the legal and structural aspects of the Offering described above.

4. Limitations and Qualifications

The statements set forth in this letter are subject to the following limitations, qualifications, and assumptions:

(a) Not a Guarantee. This letter is not, and shall not be construed as, a guarantee or warranty that the Offering Memorandum is accurate, complete, or not misleading. This letter does not constitute an opinion of law or a legal opinion within the meaning of applicable professional standards or bar association guidelines. The negative assurance statement set forth in Section 5 below is inherently limited in scope and is based solely upon the Firm's participation as described in Section 3 and the Firm's review of the documents described in Section 2, and should not be interpreted as providing any assurance beyond that expressly stated.

(b) No Independent Verification. We have not independently verified, and assume no responsibility for, the accuracy, completeness, or fairness of the financial statements, statistical data, static-pool performance tables, collateral stratification tables, cash-flow projections, or other numerical or quantitative information contained in or derived from the Offering Memorandum. In preparing this letter, we have relied upon the accuracy and completeness of information provided to us by SBF, Clearview, and Rowland & Cross LLP ("R&C"), the independent registered public accounting firm of SBF (engagement partner: Nathan Delacroix), without independent investigation or verification. We have assumed, without independent inquiry, that the officers and employees of SBF and Clearview who provided information to us and who participated in the conferences and discussions described in Section 3 above have been truthful and have not omitted to state any material facts.

(c) No Audit or Accounting Procedures. We are a law firm and not an accounting firm, and we have not performed, and are not qualified to perform, any audit, review, compilation, or agreed-upon procedures with respect to the financial or statistical data contained in the Offering Memorandum. We express no view as to the conformity of any financial statements or financial data with generally accepted accounting principles or any other accounting standards or as to the adequacy or sufficiency of any financial disclosures.

(d) Scope Limited to Securities Act. The term "material" as used in this letter has the meaning ascribed to such term under the Securities Act and the rules and regulations of the Securities and Exchange Commission (the "SEC") thereunder, as interpreted by the federal courts of the United States. We express no view as to the meaning of "material" or "materiality" under any other federal or state statute, regulation, or common-law standard.

(e) Rule 144A / Regulation S Context. The Offering Memorandum was prepared for use solely in connection with the private placement of the Notes to qualified institutional buyers (as defined in Rule 144A) in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 144A thereunder and to non-U.S. persons (as defined in Regulation S) in offshore transactions in reliance on Regulation S thereunder. Accordingly, the Offering Memorandum was not prepared in accordance with the disclosure requirements of the Securities Act and the rules and regulations of the SEC applicable to registered offerings, including the requirements of Regulation AB (17 C.F.R. §§ 229.1100 et seq.). This letter should be read and interpreted in the context of the limited disclosure obligations applicable to private placements under Rule 144A and Regulation S as compared to registered public offerings of asset-backed securities.

(f) Cut-Off Date Qualification. Our review of the Offering Memorandum and the Transaction Documents is based solely on information and documents made available to us as of the date of this letter. The statements set forth herein relate to the Offering Memorandum as of the date thereof and the Transaction Documents as of the respective dates thereof. We undertake no obligation, and disclaim any duty, to update, revise, or supplement this letter to reflect any changes in facts, circumstances, law, or regulation occurring or coming to our attention after the date hereof.

(g) Excluded Sections. The statements set forth in Section 5 below do not extend to, and we express no view whatsoever with respect to, the following portions of, and information in, the Offering Memorandum:

(i) the financial statements or financial data of SBF, the Depositor, or the Trust, including any pro forma financial information, balance sheet data, income statement data, or cash-flow statement data, whether audited or unaudited;

(ii) the static-pool performance tables and related statistical data, including delinquency, default, recovery, and loss data for prior origination vintages and the current receivables pool;

(iii) any information provided by or derived from Broadleaf Analytics Group LLC ("Broadleaf"), the third-party due-diligence provider engaged by Halcyon in connection with the Offering (managing director: Sanjay Rajan), including the results of any loan-level due diligence, re-underwriting, compliance testing, or data integrity review conducted by Broadleaf;

(iv) information supplied by the rating agencies, including any descriptions of the rating agencies' methodologies, criteria, assumptions, models, or rating processes, and any information regarding the expected ratings of the Notes;

(v) the computation of any yield, weighted average life (estimated at 2.1 years for the Class A Notes and 3.4 years for the Class B Notes, based on pricing-speed assumptions), payment window, principal or interest cash flow, overcollateralization build schedule, or other numerical or mathematical computation set forth in the Offering Memorandum; and

(vi) any information in the Offering Memorandum relating to the Initial Purchaser, its affiliates, or their respective businesses, operations, financial condition, or regulatory status, including the section entitled "Plan of Distribution" and any references to the Initial Purchaser's selling restrictions, stabilization activities, or conflicts of interest.

5. Negative Assurance Statement

Based on and subject to the foregoing and the limitations, qualifications, assumptions, and exclusions set forth in this letter, and having regard to the nature and extent of the Firm's participation in the preparation of the Offering Memorandum as described in Section 3 above, we advise you that nothing has come to our attention that causes us to believe that:

(a) the Preliminary Offering Memorandum, as of its date (April 5, 2024), contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or

(b) the Final Offering Memorandum, as of its date, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

provided, however, that the foregoing statement in clause (b) is included solely as a placeholder for the negative assurance that would have been delivered with respect to the Final Offering Memorandum had such document been prepared and finalized, and no negative assurance with respect to the Final Offering Memorandum is being given, or should be understood to be given, by the inclusion of such clause in this draft letter; and

provided, further, that the foregoing statements in clauses (a) and (b) are subject in each case to the exclusions set forth in Section 4(g) above.

We note that the statements set forth in this Section 5 are commonly referred to as "negative assurance" and are intended to convey only the limited assurance described above. Such statements are not opinions of law and should not be characterized or relied upon as such. The scope and limitations of negative assurance letters in the context of securities offerings have been discussed in, among other authorities, the American Bar Association's Third-Party "Closing" Opinions and the TriBar Opinion Committee's Special Report on Negative Assurance in Securities Offerings (2008), and the statements herein should be read in the context of such authorities and the customary practice of the securities bar.

6. Reliance and Benefit

This letter is furnished solely for the benefit of Halcyon Securities LLC, in its capacity as Initial Purchaser of the Notes in connection with the Offering, and is not intended to, and may not, be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, this letter may not be relied upon by any subsequent purchaser or holder of the Notes, any affiliate of Halcyon, or any other participant in the Offering.

This letter may not be quoted in whole or in part, summarized, referred to, or reproduced in any document, or filed with any governmental agency, regulatory authority, or other person, without the prior written consent of the Firm, except (i) as may be required by applicable law or regulation, (ii) in connection with any regulatory examination or inquiry directed at Halcyon, or (iii) in connection with any judicial or administrative proceeding relating to the Offering in which this letter is relevant, provided that in each case prompt notice of such disclosure is given to the Firm to the extent permitted by applicable law.

7. Governing Law

This letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without giving effect to any choice-of-law or conflicts-of-law rules or principles that would require the application of the laws of any other jurisdiction.

[Remainder of page intentionally left blank — signature page follows]

We remain available to discuss any aspect of this letter at your convenience.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Theodore Langston

Title: Partner, Capital Markets Group

[Signature page intentionally left blank — DRAFT]

INTERNAL NOTATION — NOT FOR DISTRIBUTION

This letter was never finalized or delivered. The transaction (SkyLend Receivables Trust 2024-1; Matter No. 1009-00005) was terminated on May 8, 2024, following the discovery of material servicing-data discrepancies in the static-pool performance information and receivables pool tape on April 22, 2024. For further information, see the Calderwood & Harkness LLP Memorandum re: Servicing-Data Discrepancy Investigation, dated April 23, 2024, prepared by Theodore Langston and circulated to SBF General Counsel Tomás Reyes and C&H Risk Committee.

Matter No. 1009-00005 — C&H internal reference only. Filed: Capital Markets / ABS / SkyLend.

CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Lexington Avenue New York, New York 10017
Telephone: (212) 455-2000 Facsimile: (212) 455-2502
DRAFT — [DATE TO BE INSERTED] — NOT FOR DELIVERY
[●], 2024
Matter No. 1009-00005
Halcyon Securities LLC 200 Vesey Street, 42nd Floor New York, New York 10281
Attention: Rebecca Thornton, Managing Director
Jonathan Kramer, Head of ABS Origination
Re: SkyLend Receivables Trust 2024-1 — Rule 144A / Regulation S Offering of $170,000,000 Class A Asset-Backed Notes and $22,000,000 Class B Asset-Backed Notes
Halcyon Deal Reference: HLC-ABS-2024-017 CUSIP Prefix: 87165Q
Ladies and Gentlemen:
1. Introduction and Engagement Context
Calderwood & Harkness LLP ("we," "us," the "Firm," or "C&H") has acted as counsel to Skybridge Fintech Ltd. ("SBF"), a corporation organized and existing under the laws of the State of Delaware, SkyLend Funding LLC (the "Depositor"), a Delaware single-member limited liability company and wholly owned subsidiary of SBF, and SkyLend Receivables Trust 2024-1 (the "Trust" or the "Issuer"), a Delaware statutory trust formed pursuant to the Delaware Statutory Trust Act, 12 Del. C. §§ 3801 et seq., in connection with the proposed offering (the "Offering") of asset-backed notes (the "Notes") described below.
The Offering contemplates the issuance by the Trust of (i) $170,000,000 aggregate principal amount of Class A Asset-Backed Notes (the "Class A Notes") and (ii) $22,000,000 aggregate principal amount of Class B Asset-Backed Notes (the "Class B Notes" and, together with the Class A Notes, the "Notes"). The Offering is being made pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), Rule 144A promulgated thereunder ("Rule 144A"), and Regulation S promulgated thereunder ("Regulation S"). The Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereof.
This letter is being delivered to Halcyon Securities LLC ("Halcyon" or the "Initial Purchaser"), acting in its capacity as sole bookrunning manager and initial purchaser of the Notes, pursuant to Section [●] of the Preliminary Purchase Agreement dated as of [●], 2024 (the "Purchase Agreement"), among the Trust, SBF, the Depositor, and Halcyon. We understand that the delivery of this letter is a condition precedent to the obligations of Halcyon under the Purchase Agreement.
The C&H engagement team for purposes of this letter and the related transaction is led by Theodore Langston, a partner in the Capital Markets group of the Firm. Mr. Langston has supervised the Firm's participation in the preparation and review of the Offering Memorandum (as defined below) and the other Transaction Documents (as defined below), and this letter has been prepared under his direction and supervision.
2. Documents Reviewed
In connection with rendering the statements set forth in this letter, we have reviewed originals or copies, certified or otherwise identified to our satisfaction, of the following documents and materials:
1.  The Preliminary Offering Memorandum dated April 5, 2024 (the "Preliminary Offering Memorandum" or the "Preliminary OM"), relating to the proposed offering by the Trust of the Class A Notes in an aggregate principal amount of $170,000,000 (with expected ratings of Aaa(sf) by Meridian Credit Ratings, Inc. ("Meridian") and AA+(sf) by Carrollton Ratings Group LLC ("Carrollton") and a target coupon range of 5.45% to 5.65% per annum) and the Class B Notes in an aggregate principal amount of $22,000,000 (with expected ratings of A2(sf) by Meridian and A(sf) by Carrollton and a target coupon range of 6.75% to 7.00% per annum);
2.  The [draft] Final Offering Memorandum dated [●], 2024 (the "Final Offering Memorandum" and, together with the Preliminary Offering Memorandum, the "Offering Memorandum"), which was intended to supplement and supersede the Preliminary Offering Memorandum and to reflect, among other things, the final pricing terms, the final pool composition, and such other information as may have been determined at or prior to pricing; provided, however, that as of the date of this letter the Final Offering Memorandum has not been prepared or circulated in any form, and all references herein to the Final Offering Memorandum shall be understood as placeholder references only;
3.  The draft Indenture, dated as of March 4, 2024 (the "Indenture"), between the Trust, as issuer, and Atlantic Fiduciary Services, Inc. ("AFS"), a national banking association, as indenture trustee, paying agent, note registrar, and custodian, pursuant to which the Notes are to be issued and secured;
4.  The Trust Agreement, dated as of February 14, 2024 (the "Trust Agreement"), between the Depositor, as depositor, and Keymark Trust Company, National Association ("Keymark"), as owner trustee, pursuant to which the Trust was formed as a Delaware statutory trust;
5.  The draft Receivables Purchase Agreement, dated as of March 11, 2024 (the "Receivables Purchase Agreement"), between SBF, as seller and originator, and the Depositor, as purchaser, providing for the sale, transfer, and assignment of the receivables from SBF to the Depositor;
6.  The draft Sale and Servicing Agreement, dated as of March 11, 2024 (the "Sale and Servicing Agreement"), among the Depositor, as seller, the Trust, as issuer, SBF, as servicer, and Clearview Loan Servicing, Inc. ("Clearview"), as sub-servicer, providing for, among other things, the sale of the receivables from the Depositor to the Trust, the servicing of the receivables by SBF and Clearview, and the allocation and distribution of collections;
7.  The draft Purchase Agreement (as defined in Section 1 above), among the Trust, SBF, the Depositor, and Halcyon;
8.  The draft Administration Agreement (the "Administration Agreement"), between the Trust and SBF, as administrator, providing for the administration of the Trust by SBF;
9.  The draft Account Control Agreement (the "Account Control Agreement"), among the Trust, AFS, as secured party, and Keymark (acting in its commercial banking capacity as depositary bank), providing for the establishment and control of the trust accounts maintained in connection with the transaction;
10.  The Secretary's Certificate and resolutions of the Board of Directors of SBF, certified by the Secretary of SBF, authorizing the execution, delivery, and performance by SBF of the Transaction Documents and the consummation of the transactions contemplated thereby;
11.  The Certificate of Formation and Limited Liability Company Agreement of SkyLend Funding LLC (formed January 30, 2024, with the Secretary of State of the State of Delaware; Employer Identification Number: 93-4187620), as in effect on the date hereof;
12.  The Certificate of Trust of SkyLend Receivables Trust 2024-1 (formed February 14, 2024, with the Secretary of State of the State of Delaware; Employer Identification Number: 93-4201855), as filed with the Secretary of State of the State of Delaware;
13.  Amendment No. 1 to the Master Servicing Agreement, dated as of March 18, 2024 (the "MSA Amendment"), between SBF and Clearview, amending the Master Servicing Agreement originally dated as of October 1, 2022 (Clearview Servicing Account No. CLS-SBF-2022-0041), to provide for, among other things, the servicing of the receivables included in the Trust and the delivery of servicer reports to the indenture trustee;
14.  The draft Officer's Certificate of SBF, to be delivered at closing, certifying as to, among other things, the accuracy of the representations and warranties of SBF set forth in the Transaction Documents and the satisfaction of the conditions to closing;
15.  The rating-agency presentations dated April 8, 2024, delivered to Meridian (lead analyst: Gregory Fontaine) and Carrollton (lead analyst: Teresa Kobayashi), including the legal and structural overview, cash-flow modeling assumptions, and pool stratification tables contained therein; and
16.  Such other documents, certificates, corporate records, and instruments as we have deemed necessary or appropriate for purposes of rendering the statements contained herein.
The documents and materials described in clauses (1) through (16) above are collectively referred to herein as the "Transaction Documents." In addition, we have reviewed such matters of law as we have considered relevant to the opinions and statements expressed herein.
3. Role and Participation
In connection with the preparation and review of the Offering Memorandum, we have, among other things:
(a) participated in the drafting and review of the Preliminary Offering Memorandum, including the preparation of the sections thereof relating to the terms of the Notes, the structure of the Trust, the description of the Transaction Documents, the risk factors, certain legal and regulatory matters, and the transfer restrictions applicable to the Notes;
(b) participated in conferences, meetings, and discussions with officers and employees of SBF, including Arun Mehta, Chief Executive Officer, Danielle Prescott, Chief Financial Officer, and Tomás Reyes, General Counsel, regarding the business, operations, financial condition, and receivables origination practices of SBF, the characteristics of the receivables pool, and the accuracy and completeness of the information contained in the Offering Memorandum;
(c) participated in conferences, meetings, and discussions with representatives of Halcyon, including Rebecca Thornton, Managing Director, and Jonathan Kramer, Head of ABS Origination, regarding the structure, terms, and marketing of the Offering and the content of the Offering Memorandum;
(d) participated in conferences, meetings, and discussions with representatives of Whitfield, Drummond & Paige LLP ("WDP"), counsel to the Initial Purchaser, including Harrison Whitfield III, partner, and Priya Subramanian, counsel, regarding the form and content of the Transaction Documents, the disclosure in the Offering Memorandum, and the legal and structural aspects of the Offering;
(e) reviewed the static-pool performance data and receivables pool characteristics provided by SBF and Clearview, as described and included in the Preliminary OM, including the following key pool metrics: a receivables pool consisting of approximately 23,100 unsecured consumer installment loans, with an aggregate outstanding principal balance of approximately $213,750,000 (gross, before application of the cut-off date), a weighted average coupon of 14.82% per annum, a weighted average remaining term of 38.4 months, a weighted average FICO score at origination of 698, a reported 30+ day delinquency rate of 3.21%, and reported cumulative net losses for the 2022 origination vintage of 4.12%;
(f) participated in the preparation of the legal and structural sections of the rating-agency presentations delivered on April 8, 2024, to Meridian and Carrollton, including descriptions of the true-sale analysis, the bankruptcy-remoteness of the Depositor and the Trust, the priority-of-payments waterfall, and the legal isolation of the receivables;
(g) reviewed the capital structure of the Offering, consisting of: (i) the Class A Notes ($170,000,000 aggregate principal amount, representing approximately 85% of the total securities issued by the Trust), (ii) the Class B Notes ($22,000,000 aggregate principal amount, representing approximately 11% of the total securities issued by the Trust), and (iii) a subordinated residual interest ($8,000,000, representing approximately 4% of the capital structure, to be retained by SBF through the Depositor in order to satisfy applicable risk-retention requirements under Regulation RR promulgated under the Securities Exchange Act of 1934, as amended);
(h) reviewed the credit-enhancement features of the transaction, including: (i) an initial overcollateralization target of 3.5% of the aggregate initial pool balance (approximately $7,000,000), to be built through the application of excess spread over time, (ii) a reserve account with an initial deposit amount equal to 1.00% of the aggregate initial pool balance (approximately $2,000,000), funded on the closing date from the proceeds of the Offering, and (iii) estimated excess spread of approximately 2.85% per annum, based on the weighted average coupon of the receivables, the weighted average note rate of the Notes, and the estimated servicing fees and other trust expenses; and
(i) reviewed the pool concentration limits described in the Offering Memorandum, including: (i) a maximum single-obligor concentration limit of 0.15% of the aggregate initial pool balance (approximately $300,000 per obligor) and (ii) a geographic concentration limit pursuant to which no single state may account for more than 20% of the aggregate initial pool balance.
The foregoing describes the nature and extent of the Firm's participation in the preparation of the Offering Memorandum and the related Transaction Documents. We note, however, that we are not experts in, and did not independently verify, any financial, statistical, accounting, or actuarial data contained in or derived from the Offering Memorandum or any of the Transaction Documents, and we have assumed the accuracy, completeness, and fair presentation of all such data for purposes of this letter. Our participation was limited to the legal and structural aspects of the Offering described above.
4. Limitations and Qualifications
The statements set forth in this letter are subject to the following limitations, qualifications, and assumptions:
(a) Not a Guarantee. This letter is not, and shall not be construed as, a guarantee or warranty that the Offering Memorandum is accurate, complete, or not misleading. This letter does not constitute an opinion of law or a legal opinion within the meaning of applicable professional standards or bar association guidelines. The negative assurance statement set forth in Section 5 below is inherently limited in scope and is based solely upon the Firm's participation as described in Section 3 and the Firm's review of the documents described in Section 2, and should not be interpreted as providing any assurance beyond that expressly stated.
(b) No Independent Verification. We have not independently verified, and assume no responsibility for, the accuracy, completeness, or fairness of the financial statements, statistical data, static-pool performance tables, collateral stratification tables, cash-flow projections, or other numerical or quantitative information contained in or derived from the Offering Memorandum. In preparing this letter, we have relied upon the accuracy and completeness of information provided to us by SBF, Clearview, and Rowland & Cross LLP ("R&C"), the independent registered public accounting firm of SBF (engagement partner: Nathan Delacroix), without independent investigation or verification. We have assumed, without independent inquiry, that the officers and employees of SBF and Clearview who provided information to us and who participated in the conferences and discussions described in Section 3 above have been truthful and have not omitted to state any material facts.
(c) No Audit or Accounting Procedures. We are a law firm and not an accounting firm, and we have not performed, and are not qualified to perform, any audit, review, compilation, or agreed-upon procedures with respect to the financial or statistical data contained in the Offering Memorandum. We express no view as to the conformity of any financial statements or financial data with generally accepted accounting principles or any other accounting standards or as to the adequacy or sufficiency of any financial disclosures.
(d) Scope Limited to Securities Act. The term "material" as used in this letter has the meaning ascribed to such term under the Securities Act and the rules and regulations of the Securities and Exchange Commission (the "SEC") thereunder, as interpreted by the federal courts of the United States. We express no view as to the meaning of "material" or "materiality" under any other federal or state statute, regulation, or common-law standard.
(e) Rule 144A / Regulation S Context. The Offering Memorandum was prepared for use solely in connection with the private placement of the Notes to qualified institutional buyers (as defined in Rule 144A) in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 144A thereunder and to non-U.S. persons (as defined in Regulation S) in offshore transactions in reliance on Regulation S thereunder. Accordingly, the Offering Memorandum was not prepared in accordance with the disclosure requirements of the Securities Act and the rules and regulations of the SEC applicable to registered offerings, including the requirements of Regulation AB (17 C.F.R. §§ 229.1100 et seq.). This letter should be read and interpreted in the context of the limited disclosure obligations applicable to private placements under Rule 144A and Regulation S as compared to registered public offerings of asset-backed securities.
(f) Cut-Off Date Qualification. Our review of the Offering Memorandum and the Transaction Documents is based solely on information and documents made available to us as of the date of this letter. The statements set forth herein relate to the Offering Memorandum as of the date thereof and the Transaction Documents as of the respective dates thereof. We undertake no obligation, and disclaim any duty, to update, revise, or supplement this letter to reflect any changes in facts, circumstances, law, or regulation occurring or coming to our attention after the date hereof.
(g) Excluded Sections. The statements set forth in Section 5 below do not extend to, and we express no view whatsoever with respect to, the following portions of, and information in, the Offering Memorandum:
(i) the financial statements or financial data of SBF, the Depositor, or the Trust, including any pro forma financial information, balance sheet data, income statement data, or cash-flow statement data, whether audited or unaudited;
(ii) the static-pool performance tables and related statistical data, including delinquency, default, recovery, and loss data for prior origination vintages and the current receivables pool;
(iii) any information provided by or derived from Broadleaf Analytics Group LLC ("Broadleaf"), the third-party due-diligence provider engaged by Halcyon in connection with the Offering (managing director: Sanjay Rajan), including the results of any loan-level due diligence, re-underwriting, compliance testing, or data integrity review conducted by Broadleaf;
(iv) information supplied by the rating agencies, including any descriptions of the rating agencies' methodologies, criteria, assumptions, models, or rating processes, and any information regarding the expected ratings of the Notes;
(v) the computation of any yield, weighted average life (estimated at 2.1 years for the Class A Notes and 3.4 years for the Class B Notes, based on pricing-speed assumptions), payment window, principal or interest cash flow, overcollateralization build schedule, or other numerical or mathematical computation set forth in the Offering Memorandum; and
(vi) any information in the Offering Memorandum relating to the Initial Purchaser, its affiliates, or their respective businesses, operations, financial condition, or regulatory status, including the section entitled "Plan of Distribution" and any references to the Initial Purchaser's selling restrictions, stabilization activities, or conflicts of interest.
5. Negative Assurance Statement
Based on and subject to the foregoing and the limitations, qualifications, assumptions, and exclusions set forth in this letter, and having regard to the nature and extent of the Firm's participation in the preparation of the Offering Memorandum as described in Section 3 above, we advise you that nothing has come to our attention that causes us to believe that:
(a) the Preliminary Offering Memorandum, as of its date (April 5, 2024), contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(b) the Final Offering Memorandum, as of its date, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing statement in clause (b) is included solely as a placeholder for the negative assurance that would have been delivered with respect to the Final Offering Memorandum had such document been prepared and finalized, and no negative assurance with respect to the Final Offering Memorandum is being given, or should be understood to be given, by the inclusion of such clause in this draft letter; and
provided, further, that the foregoing statements in clauses (a) and (b) are subject in each case to the exclusions set forth in Section 4(g) above.
We note that the statements set forth in this Section 5 are commonly referred to as "negative assurance" and are intended to convey only the limited assurance described above. Such statements are not opinions of law and should not be characterized or relied upon as such. The scope and limitations of negative assurance letters in the context of securities offerings have been discussed in, among other authorities, the American Bar Association's Third-Party "Closing" Opinions and the TriBar Opinion Committee's Special Report on Negative Assurance in Securities Offerings (2008), and the statements herein should be read in the context of such authorities and the customary practice of the securities bar.
6. Reliance and Benefit
This letter is furnished solely for the benefit of Halcyon Securities LLC, in its capacity as Initial Purchaser of the Notes in connection with the Offering, and is not intended to, and may not, be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, this letter may not be relied upon by any subsequent purchaser or holder of the Notes, any affiliate of Halcyon, or any other participant in the Offering.
This letter may not be quoted in whole or in part, summarized, referred to, or reproduced in any document, or filed with any governmental agency, regulatory authority, or other person, without the prior written consent of the Firm, except (i) as may be required by applicable law or regulation, (ii) in connection with any regulatory examination or inquiry directed at Halcyon, or (iii) in connection with any judicial or administrative proceeding relating to the Offering in which this letter is relevant, provided that in each case prompt notice of such disclosure is given to the Firm to the extent permitted by applicable law.
7. Governing Law
This letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without giving effect to any choice-of-law or conflicts-of-law rules or principles that would require the application of the laws of any other jurisdiction.
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We remain available to discuss any aspect of this letter at your convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Theodore Langston
Title: Partner, Capital Markets Group
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INTERNAL NOTATION — NOT FOR DISTRIBUTION
This letter was never finalized or delivered. The transaction (SkyLend Receivables Trust 2024-1; Matter No. 1009-00005) was terminated on May 8, 2024, following the discovery of material servicing-data discrepancies in the static-pool performance information and receivables pool tape on April 22, 2024. For further information, see the Calderwood & Harkness LLP Memorandum re: Servicing-Data Discrepancy Investigation, dated April 23, 2024, prepared by Theodore Langston and circulated to SBF General Counsel Tomás Reyes and C&H Risk Committee.
Matter No. 1009-00005 — C&H internal reference only. Filed: Capital Markets / ABS / SkyLend.

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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