RECEIVABLES PURCHASE AGREEMENT
dated as of March 11, 2024
between
SKYBRIDGE FINTECH LTD., as Seller
and
SKYLEND FUNDING LLC, as Purchaser
DRAFT — For Discussion Purposes Only
Prepared by:
Calderwood & Harkness LLP 425 Lexington Avenue New York, NY 10017 Matter No. 1009-00005
RECITALS
WHEREAS, Skybridge Fintech Ltd., a Delaware corporation (the "Seller"), is engaged in the business of originating unsecured consumer installment loans through its direct-to-consumer digital lending platform known as "SkyLend," with individual loan balances ranging from $1,000 to $25,000 and original terms ranging from 12 to 60 months, and in connection therewith has developed proprietary underwriting models, credit-scoring algorithms, and loan-management infrastructure designed to facilitate the efficient origination, servicing, and administration of such consumer installment loans;
WHEREAS, SkyLend Funding LLC, a Delaware limited liability company and wholly owned subsidiary of the Seller (the "Purchaser"), was formed on January 30, 2024, as a special-purpose, bankruptcy-remote entity for the sole purpose of acquiring consumer installment-loan receivables from the Seller and transferring such receivables to SkyLend Receivables Trust 2024-1, a Delaware statutory trust (the "Trust" or "SRT 2024-1"), formed on February 14, 2024, pursuant to that certain Trust Agreement dated February 14, 2024, between the Purchaser, as depositor, and Keymark Trust Company, National Association, as owner trustee;
WHEREAS, the Purchaser will, pursuant to that certain Sale and Servicing Agreement dated as of March 11, 2024 (the "Sale and Servicing Agreement"), among the Purchaser, the Trust, Skybridge Fintech Ltd., as servicer, and Clearview Loan Servicing, Inc., as sub-servicer, transfer the Receivables acquired hereunder to the Trust to serve as collateral for asset-backed securities to be issued by the Trust;
WHEREAS, the Trust intends to issue approximately $170,000,000 in aggregate principal amount of Class A Asset-Backed Notes and approximately $22,000,000 in aggregate principal amount of Class B Asset-Backed Notes (collectively, the "Notes"), secured by the Receivables, pursuant to an Indenture dated as of the Closing Date (the "Indenture") between the Trust and Atlantic Fiduciary Services, Inc., as Indenture Trustee, and the proceeds of the issuance of such Notes will be used, in part, to fund the Purchase Price payable by the Purchaser to the Seller hereunder;
WHEREAS, the parties intend that each sale, transfer, and assignment of Receivables under this Agreement shall constitute a "true sale" of such Receivables from the Seller to the Purchaser and not a pledge of, or the grant of a security interest in, such Receivables to secure a debt or other obligation of the Seller, and the parties have structured the transactions contemplated hereby to achieve such legal characterization;
WHEREAS, this Agreement is governed by the laws of the State of New York, and the parties desire to set forth the terms and conditions upon which the Seller will sell and the Purchaser will purchase the Receivables described herein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Aggregate Outstanding Principal Balance" means, as of any date of determination, the sum of the Outstanding Principal Balances of all Receivables in the Pool as of such date of determination, after giving effect to all payments received and applied to such Receivables on or prior to such date.
"Agreement" means this Receivables Purchase Agreement, dated as of March 11, 2024, between the Seller and the Purchaser, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Business Day" means any day other than (i) a Saturday, (ii) a Sunday, or (iii) a day on which banking institutions in New York, New York or Wilmington, Delaware are authorized or required by law, regulation, or executive order to close.
"Clearview" means Clearview Loan Servicing, Inc., an Ohio corporation, the third-party sub-servicer of the Receivables, having its principal office at 8800 Brecksville Road, Suite 300, Cleveland, OH 44141.
"Closing Date" means the date on which the initial sale of Receivables by the Seller to the Purchaser hereunder is consummated and the Purchase Price is paid by the Purchaser to the Seller, which date is expected to occur on or about April 15, 2024, or such other date as the parties may mutually agree.
"Collection Account" means the account established and maintained pursuant to Section 3.01 of the Indenture for the deposit of all collections received in respect of the Receivables, including all payments of principal, interest, fees, and other amounts received from or on behalf of the Obligors.
"Cut-Off Date" means March 31, 2024, the date as of which the Receivables included in the Pool are identified and the related data on the Schedule of Receivables is determined.
"Defaulted Receivable" means any Receivable as to which (i) the related Obligor is 120 or more days past due in respect of any required payment (based on the contractual payment-application waterfall set forth in the Loan Agreement and the Master Servicing Agreement), or (ii) the Seller or the Servicer has determined, in its reasonable judgment, that collection of such Receivable is unlikely, or (iii) the related Obligor has become the subject of a bankruptcy, insolvency, or similar proceeding.
"Depositor" means SkyLend Funding LLC, a Delaware limited liability company, EIN 93-4187620, having its principal office at 1400 Market Street, Suite 1210, Wilmington, DE 19801.
"Eligibility Criteria" means, with respect to each Receivable, the criteria set forth in Section 2.04 of this Agreement and restated in Schedule A hereto, each of which must be satisfied as of both the Cut-Off Date and the Closing Date for such Receivable to constitute an "Eligible Receivable."
"Eligible Receivable" means a Receivable that, as of the Cut-Off Date and as of the Closing Date, satisfies each of the Eligibility Criteria.
"FICO Score" means the credit score assigned to an Obligor at the time of origination of the related Receivable, based on data obtained from one or more of the nationally recognized consumer reporting agencies (Harborview Enterprises, Penrose Group, and/or Penmark Enterprises), using the FICO scoring model then in effect.
"Indenture" means the Indenture dated as of the Closing Date, between SkyLend Receivables Trust 2024-1 and Atlantic Fiduciary Services, Inc., as Indenture Trustee, pursuant to which the Notes are issued, as such Indenture may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Indenture Trustee" means Atlantic Fiduciary Services, Inc., a Delaware banking corporation, having its principal office at 2 Christiana Centre, Suite 1400, Wilmington, DE 19801, in its capacity as indenture trustee under the Indenture. The Corporate Trust Officer of the Indenture Trustee as of the date hereof is David Moynihan.
"Initial Pool" means the pool of Receivables identified on the Schedule of Receivables as of the Cut-Off Date, having an aggregate outstanding principal balance of approximately $213,750,000 prior to application of the Eligibility Criteria and credit screening, with a final targeted pool balance, after application of the Eligibility Criteria, of approximately $200,000,000.
"Loan Agreement" means, with respect to each Receivable, the promissory note, loan agreement, or other evidence of indebtedness executed by the related Obligor in connection with such Receivable, as originated through the SkyLend Platform, together with all amendments, modifications, and supplements thereto.
"Master Servicing Agreement" or "MSA" means the Master Servicing Agreement dated as of October 1, 2022, between Skybridge Fintech Ltd. and Clearview Loan Servicing, Inc., Servicing Account No. CLS-SBF-2022-0041, as amended by Amendment No. 1 thereto dated March 18, 2024, and as may be further amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Notes" means, collectively, the Class A Asset-Backed Notes and the Class B Asset-Backed Notes issued by the Trust pursuant to the Indenture.
"Obligor" means the individual who is the borrower under a Loan Agreement and who is obligated to make all scheduled payments of principal and interest in respect of the related Receivable.
"Outstanding Principal Balance" means, with respect to any Receivable, the unpaid principal balance of such Receivable as of any date of determination, after giving effect to all payments of principal received and applied to such Receivable on or prior to such date.
"Owner Trustee" means Keymark Trust Company, National Association, a national banking association, having its principal office at 600 North King Street, Wilmington, DE 19801, in its capacity as owner trustee under the Trust Agreement.
"Payment Waterfall" means the order of application of payments received on each Receivable, being first to interest, then to fees, and then to principal, as specified in Section 4.03 of the Master Servicing Agreement.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, governmental authority, or other entity.
"Pool" means the aggregate of all Receivables transferred by the Seller to the Purchaser hereunder and subsequently transferred by the Purchaser to the Trust pursuant to the Sale and Servicing Agreement.
"Purchase Price" has the meaning set forth in Section 2.02 of this Agreement.
"Purchaser" means SkyLend Funding LLC, a Delaware limited liability company, EIN 93-4187620.
"Rating Agencies" means Meridian Credit Ratings, Inc. and Carrollton Ratings Group LLC, and any successor thereto or additional rating agency engaged in connection with the Notes.
"Receivable" means an unsecured consumer installment loan originated by the Seller through the SkyLend Platform, evidenced by a Loan Agreement, which Receivable is included in the Pool and transferred to the Purchaser pursuant to this Agreement.
"Receivable File" means, with respect to each Receivable, the electronic and physical records relating to such Receivable, including, without limitation, the Loan Agreement, credit application, FICO Score documentation, identity-verification records, payment history, collection notes, and all related documents, correspondence, and data, whether held in electronic form on the SkyLend Platform or the Sub-Servicer's systems, or in physical form.
"Reconveyance" means the repurchase or substitution of a Receivable by the Seller pursuant to Article IV of this Agreement.
"Repurchase Price" has the meaning set forth in Section 4.01 of this Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement dated as of March 11, 2024, among SkyLend Funding LLC, as depositor, SkyLend Receivables Trust 2024-1, as issuer, Skybridge Fintech Ltd., as servicer, and Clearview Loan Servicing, Inc., as sub-servicer, as such agreement may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Schedule of Receivables" means the schedule attached hereto as Schedule B, listing each Receivable included in the Pool as of the Cut-Off Date and setting forth the information required therein.
"Seller" means Skybridge Fintech Ltd., a Delaware corporation, EIN 84-3291076, having its principal office at 1400 Market Street, Suite 1210, Wilmington, DE 19801.
"Servicer" means Skybridge Fintech Ltd., in its capacity as servicer of the Receivables under the Sale and Servicing Agreement.
"SkyLend Platform" means the Seller's proprietary direct-to-consumer digital lending platform through which all Receivables are originated, underwritten, funded, and initially serviced.
"Sub-Servicer" means Clearview Loan Servicing, Inc., in its capacity as sub-servicer of the Receivables under the Sale and Servicing Agreement and the Master Servicing Agreement.
"Transaction Documents" means, collectively, this Agreement, the Sale and Servicing Agreement, the Indenture, the Trust Agreement, the Master Servicing Agreement, and all other agreements, documents, instruments, and certificates executed and delivered in connection with the transactions contemplated hereby.
"Trust" means SkyLend Receivables Trust 2024-1, a Delaware statutory trust, EIN 93-4201855, formed on February 14, 2024, pursuant to the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated February 14, 2024, between SkyLend Funding LLC, as depositor, and Keymark Trust Company, N.A., as owner trustee, as such agreement may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"UCC" means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction. Unless otherwise specified, references to specific articles or sections of the UCC refer to such articles or sections as in effect in the State of New York or the State of Delaware, as the context may require.
Section 1.02 — Rules of Construction
The following rules of construction shall apply to this Agreement:
(a) Headings and captions used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any provision hereof.
(b) Unless the context otherwise requires, words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(c) The word "including" (and cognate expressions such as "include" and "includes") shall mean "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(d) References to any Section, Article, Schedule, or Exhibit are references to Sections, Articles, Schedules, or Exhibits of this Agreement, and references to any Section shall include all subsections thereof.
(e) References to any agreement, document, or instrument shall be deemed to include references to such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof.
(f) All references to currency or monetary amounts herein are references to lawful money of the United States of America.
(g) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflicts-of-law principles (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).
(h) The terms "hereof," "herein," "hereto," "hereunder," and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.
(i) References to any Person shall include such Person's successors and permitted assigns.
(j) References to "days" shall mean calendar days unless "Business Days" is specifically stated.
ARTICLE II — SALE AND PURCHASE OF RECEIVABLES
Section 2.01 — Sale of Receivables
On the Closing Date, the Seller hereby sells, transfers, assigns, sets over, and otherwise conveys to the Purchaser, without recourse (except as specifically provided in Article IV hereof and elsewhere in this Agreement), all right, title, and interest of the Seller in and to each Eligible Receivable listed on the Schedule of Receivables, together with:
(i) all related Receivable Files;
(ii) all monies due or to become due thereunder, whether in the form of principal, interest, late charges, fees, or other amounts;
(iii) all proceeds thereof (including insurance proceeds, if any);
(iv) all rights of the Seller under the related Loan Agreements, including all rights to enforce such Loan Agreements and to receive payments thereunder;
(v) all security interests or other rights, if any, of the Seller in respect of such Receivables; and
(vi) all present and future claims, demands, causes of action, and choses in action in respect of the foregoing.
The Receivables to be transferred hereunder shall consist of approximately 23,100 unsecured consumer installment loans originated through the SkyLend Platform, with an aggregate Outstanding Principal Balance of approximately $200,000,000 after application of the Eligibility Criteria, as of the Cut-Off Date of March 31, 2024. The specific Receivables comprising the Pool are identified on the Schedule of Receivables attached as Schedule B hereto.
It is the express intent of the parties that the conveyance of the Receivables pursuant to this Agreement constitutes a sale and absolute assignment of such Receivables from the Seller to the Purchaser and not a pledge of, or the grant of a security interest in, such Receivables by the Seller to secure a debt or other obligation of the Seller. The Seller and the Purchaser have structured the transactions contemplated by this Agreement to achieve such legal characterization, and the parties shall treat such conveyance as a sale for all purposes, including accounting, tax, and regulatory purposes. However, in the event that, notwithstanding the intent of the parties, any such conveyance is deemed by any court, governmental agency, or other authority to constitute a pledge or the granting of a security interest rather than a sale, then this Agreement shall also be deemed to be a security agreement under the UCC and the Seller hereby grants to the Purchaser a first-priority perfected security interest in all of the Seller's right, title, and interest in and to all Receivables, Receivable Files, collections, proceeds, and all related rights and interests described in clauses (i) through (vi) above, to secure all obligations of the Seller hereunder.
Section 2.02 — Purchase Price
The purchase price for each Receivable transferred hereunder shall be equal to the Outstanding Principal Balance of such Receivable as of the Cut-Off Date, plus accrued and unpaid interest thereon through the Cut-Off Date (the "Purchase Price"). For the avoidance of doubt, the Purchase Price for any Receivable shall reflect the application of all payments received on or prior to the Cut-Off Date in accordance with the Payment Waterfall.
The aggregate Purchase Price for the initial Pool is expected to be approximately $200,000,000 (representing the sum of the Outstanding Principal Balances of all Eligible Receivables as of the Cut-Off Date, plus accrued and unpaid interest through the Cut-Off Date). The final aggregate Purchase Price shall be determined by reference to the Schedule of Receivables as completed on or about the Cut-Off Date.
Payment of the Purchase Price shall be made on the Closing Date by the Purchaser to the Seller in immediately available funds by wire transfer to such account as the Seller shall designate in writing to the Purchaser not fewer than two (2) Business Days prior to the Closing Date. The Purchase Price shall be funded from the proceeds of the issuance of the Notes by the Trust pursuant to the Indenture, together with any equity contribution made by the Purchaser or its sole member, as applicable.
Section 2.03 — Conveyance of Receivable Files
(a) On or prior to the Closing Date, the Seller shall deliver or cause to be delivered to the Indenture Trustee (or its designated custodian) the Receivable Files for each Receivable in the Pool. With respect to Receivable Files maintained in electronic form (including electronic promissory notes, credit applications, and payment histories maintained on the SkyLend Platform and/or the Sub-Servicer's systems), the Seller shall provide access to and control of such electronic records to the Indenture Trustee or its designee, in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) and Article 9 of the UCC, as applicable.
(b) The Seller shall, on or prior to the Closing Date, deliver to the Purchaser and the Indenture Trustee a certification, substantially in the form attached as Exhibit A hereto, executed by an authorized officer of the Seller, certifying that all Receivable Files delivered or made accessible in connection with the Closing Date are complete and accurate in all material respects as of the date of delivery.
(c) The Seller shall retain copies of all Receivable Files transferred hereunder and shall make such copies available to the Purchaser, the Trust, the Servicer, the Sub-Servicer, the Indenture Trustee, and the Owner Trustee upon reasonable request.
Section 2.04 — Eligibility Criteria
Each Receivable transferred hereunder must satisfy, as of both the Cut-Off Date and the Closing Date, each of the following eligibility criteria (the "Eligibility Criteria"), as further detailed on Schedule A hereto:
(a) The Receivable is an unsecured consumer installment loan originated by the Seller through the SkyLend Platform in the ordinary course of the Seller's business.
(b) The Receivable has an original principal balance of not less than $1,000 and not more than $25,000.
(c) The Receivable has an original term of not less than 12 months and not more than 60 months.
(d) As of the Cut-Off Date, the Obligor thereunder is not more than 29 days past due in respect of any scheduled payment (with delinquency determined in accordance with the contractual Payment Waterfall).
(e) The Obligor had a FICO Score at origination of not less than 620.
(f) The Receivable is denominated and payable in U.S. dollars.
(g) The Receivable is not a Defaulted Receivable.
(h) The Obligor is a natural person residing in one of the 50 states of the United States or the District of Columbia.
(i) The Receivable is not subject to any right of rescission, setoff, counterclaim, or defense of the Obligor that could be asserted against the Seller, the Purchaser, or the Trust.
(j) The Receivable was originated in compliance with all applicable federal, state, and local laws, rules, and regulations, including, without limitation, the Truth in Lending Act ("TILA"), the Equal Credit Opportunity Act ("ECOA"), the Fair Credit Reporting Act ("FCRA"), and all applicable state consumer-lending statutes and licensing requirements.
(k) The Outstanding Principal Balance of such Receivable does not exceed 0.15% of the aggregate targeted Pool balance (i.e., the Outstanding Principal Balance of any single Receivable shall not exceed $300,000) (maximum single-obligor concentration).
(l) No single state accounts for more than 20% of the aggregate Pool balance by Outstanding Principal Balance as of the Cut-Off Date (geographic concentration limit).
(m) The Receivable has not been modified, extended, or restructured in a manner that would impair the enforceability of the related Loan Agreement or materially alter the originally scheduled payment terms.
(n) The Receivable is a fully amortizing loan with scheduled monthly payments of principal and interest, and no balloon payment is due at maturity.
(o) The Seller has good and marketable title to the Receivable, free and clear of all liens, security interests, claims, charges, and encumbrances of any kind.
Any Receivable that fails to satisfy any of the foregoing Eligibility Criteria as of the Cut-Off Date or the Closing Date shall not be included in the Pool and shall not be transferred to the Purchaser hereunder. If, after transfer, it is discovered that a Receivable did not satisfy one or more of the Eligibility Criteria as of the Cut-Off Date or the Closing Date, such Receivable shall be subject to the repurchase or substitution provisions of Article IV.
Section 2.05 — True-Sale Intent and Precautionary Grant
(a) True-Sale Intent. The parties expressly intend that each transfer of Receivables from the Seller to the Purchaser hereunder shall constitute a "true sale" and absolute assignment of such Receivables and not a secured lending arrangement, pledge, or other form of financing. The parties have structured the transactions contemplated hereby to achieve such legal characterization, and the following factors evidence the parties' intent:
(i) The Purchase Price paid by the Purchaser to the Seller represents fair value for the Receivables and constitutes adequate consideration for the transfer thereof;
(ii) Following the sale, the Seller retains no equity of redemption or other residual interest in the Receivables (other than the Seller's interest, if any, as the sole member of the Purchaser and its obligations under Article IV);
(iii) The transfer is absolute and irrevocable, and the Seller has no right to recall or reacquire the Receivables except as expressly set forth in Article IV;
(iv) Upon consummation of the sale, the Purchaser and the Trust (following the subsequent transfer to the Trust) bear the risk of loss and decline in value of the Receivables, and the Purchaser (and, subsequently, the Trust and the Noteholders) bear the credit risk associated with the Receivables;
(v) The Seller has accounted for and will account for the transfer as a sale on its books and records and in its financial statements; and
(vi) The Seller and the Purchaser shall treat such transfer as a sale for all federal, state, and local income-tax purposes and shall not take any position inconsistent therewith.
(b) Precautionary Security Interest. Notwithstanding the foregoing, to the extent that any court, governmental agency, or other Person of competent jurisdiction determines that the conveyance of the Receivables hereunder does not constitute a true sale but rather constitutes a secured financing or a pledge, then the Seller hereby grants to the Purchaser a first-priority security interest in all of the Seller's right, title, and interest in and to:
(i) all Receivables transferred or purported to be transferred hereunder;
(ii) all proceeds and collections in respect of such Receivables, including all payments of principal, interest, fees, and other amounts;
(iii) all Receivable Files relating to such Receivables; and
(iv) all rights of the Seller under the related Loan Agreements, including all rights to enforce such Loan Agreements and to receive payments thereunder.
(c) UCC Filings. To perfect the interests of the Purchaser (whether as owner or as secured party) in the Receivables, the Seller shall, on or prior to the Closing Date, file or cause to be filed UCC-1 financing statements with the Secretary of State of the State of Delaware, substantially in the form of Exhibit B hereto, naming the Seller as debtor and the Purchaser as secured party and describing the collateral. The Seller hereby authorizes the Purchaser (and any designee thereof, including the Indenture Trustee) to file, and the Purchaser is hereby authorized to file, amendments, continuations, and other statements as may be necessary or appropriate to maintain the perfection and priority of the Purchaser's interests in the Receivables. The Seller shall cooperate fully with the Purchaser and the Indenture Trustee in connection with the filing of any such statements.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
Section 3.01 — Representations and Warranties of the Seller
The Seller represents and warrants to the Purchaser as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. The Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Seller's employer identification number is 84-3291076, and its principal office is located at 1400 Market Street, Suite 1210, Wilmington, DE 19801. The Seller is duly qualified to do business and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to have a material adverse effect on the Seller's ability to perform its obligations hereunder.
(b) Authority; No Conflict. The Seller has full corporate power and authority to execute, deliver, and perform this Agreement and each of the other Transaction Documents to which it is a party. The execution, delivery, and performance by the Seller of this Agreement have been duly authorized by all necessary corporate action, including the resolutions adopted by the Board of Directors of the Seller on February 28, 2024, and no further action on the part of the Seller or its stockholders is required. The execution, delivery, and performance of this Agreement by the Seller do not and will not (i) contravene the Seller's certificate of incorporation or bylaws, (ii) violate any applicable law, rule, regulation, order, judgment, or decree, or (iii) conflict with, result in a breach of, or constitute (with notice or lapse of time or both) a default under any material agreement or instrument to which the Seller is a party or by which the Seller or its assets are bound.
(c) Valid and Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium, and other laws affecting the rights of creditors generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) No Litigation. There is no action, suit, proceeding, or investigation pending or, to the Seller's knowledge, threatened against the Seller before any court, governmental agency, regulatory body, or arbitrator that (i) relates to the Receivables or the transactions contemplated by this Agreement, or (ii) could reasonably be expected to have a material adverse effect on the Seller's ability to perform its obligations hereunder or under any other Transaction Document.
(e) Compliance with Laws. The Seller is in compliance in all material respects with all applicable federal, state, and local laws, regulations, rules, orders, and directives applicable to its business of originating and servicing consumer installment loans, including, without limitation, the Truth in Lending Act (15 U.S.C. §§ 1601 et seq.), the Equal Credit Opportunity Act (15 U.S.C. §§ 1691 et seq.), the Fair Credit Reporting Act (15 U.S.C. §§ 1681 et seq.), the Fair Debt Collection Practices Act, and all applicable state consumer-lending statutes, usury laws, and licensing requirements. The Seller possesses all material licenses, permits, and authorizations necessary to conduct its business as presently conducted.
(f) Solvency. The Seller is solvent and will not be rendered insolvent by the transactions contemplated by this Agreement. After giving effect to the transactions contemplated hereby, (i) the fair value of the assets of the Seller will exceed its liabilities (including contingent liabilities), (ii) the Seller will be able to pay its debts as they become due, and (iii) the Seller will not have unreasonably small capital with which to carry on its business as presently conducted. The transfer of the Receivables hereunder is not made with actual intent to hinder, delay, or defraud any creditor of the Seller, and the Seller has received reasonably equivalent value in exchange for the Receivables so transferred.
(g) Financial Condition. As of December 31, 2023, the date of the Seller's most recently available audited financial statements, the Seller had total assets of approximately $1,020,000,000, total receivables of approximately $876,500,000 (gross) and $841,400,000 (net of allowance for credit losses of approximately $35,100,000), total liabilities of approximately $682,000,000, and total stockholders' equity of approximately $338,000,000. The Seller's revenue for fiscal year ended December 31, 2023, was approximately $187,300,000. Since December 31, 2023, there has been no material adverse change in the financial condition, business, or operations of the Seller.
(h) No Broker. Except for the engagement of Halcyon Securities LLC as initial purchaser of the Notes under the Preliminary Purchase Agreement, no broker, finder, investment banker, or other Person is entitled to any brokerage fee, finder's fee, commission, or similar payment from the Seller in connection with this Agreement or the transactions contemplated hereby.
(i) Tax Status. The Seller has timely filed (or has obtained extensions for) all required federal, state, and local tax returns and reports required to be filed by it, and has paid all taxes, assessments, and governmental charges due and owing (including any interest or penalties thereon), except for taxes being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with generally accepted accounting principles.
(j) Origination Practices. All Receivables were originated through the SkyLend Platform in the ordinary course of the Seller's business, in accordance with the Seller's underwriting guidelines, credit policies, and standard operating procedures as in effect at the time of origination of each such Receivable. The Seller has not adopted or implemented any material changes to its underwriting guidelines since January 1, 2023, that have not been disclosed to the Purchaser.
(k) Equity Ownership. The Seller is the sole member of SkyLend Funding LLC (the Purchaser). Pinnacle Growth Equity Partners, LP, a Delaware limited partnership, owns approximately 62.4% of the Seller's fully diluted equity, and the remaining equity is held by management and other investors. No other Person has any ownership interest in the Purchaser.
Section 3.02 — Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Seller as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. The Purchaser is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of Delaware. The Purchaser's employer identification number is 93-4187620, and its principal office is located at 1400 Market Street, Suite 1210, Wilmington, DE 19801. The sole member of the Purchaser is Skybridge Fintech Ltd. The Manager of the Purchaser is Danielle Prescott.
(b) Authority; No Conflict. The Purchaser has full limited liability company power and authority to execute, deliver, and perform this Agreement and each of the other Transaction Documents to which it is a party. The execution, delivery, and performance by the Purchaser of this Agreement have been duly authorized by all necessary limited liability company action, and no further action on the part of the Purchaser or its members is required. The execution, delivery, and performance of this Agreement by the Purchaser do not and will not contravene the Purchaser's Certificate of Formation, Limited Liability Company Agreement, or any applicable law, rule, regulation, or agreement to which the Purchaser is a party or by which its assets are bound.
(c) Valid and Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium, and other laws affecting the rights of creditors generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) Bankruptcy-Remote Entity. The Purchaser has been formed as a special-purpose, bankruptcy-remote entity, and has complied and will continue to comply in all material respects with all separateness covenants and other organizational requirements set forth in its Limited Liability Company Agreement and Certificate of Formation, including those covenants described in Section 5.03 of this Agreement. The Purchaser has at all times since its formation maintained its separate legal identity from the Seller and from every other Person.
(e) No Prior Business. Since its formation on January 30, 2024, the Purchaser has not engaged in any business, activity, or transaction other than (i) the acquisition of Receivables from the Seller as contemplated by this Agreement, (ii) the transfer of Receivables to the Trust as contemplated by the Sale and Servicing Agreement, and (iii) activities incidental to the foregoing. The Purchaser has no assets, liabilities, or obligations other than those arising under the Transaction Documents and those incidental to its existence as a Delaware limited liability company.
Section 3.03 — Representations and Warranties Regarding the Receivables
The Seller represents and warrants to the Purchaser, as of the Cut-Off Date and as of the Closing Date, with respect to each Receivable transferred hereunder, as follows:
(a) Eligibility. Such Receivable satisfies each of the Eligibility Criteria set forth in Section 2.04 and Schedule A hereto.
(b) Ownership; Title. The Seller is the sole owner and holder of each Receivable and has good and marketable title thereto, free and clear of all liens, security interests, charges, claims, encumbrances, pledges, and interests of any kind whatsoever. Upon the sale and transfer of a Receivable to the Purchaser hereunder, the Purchaser will acquire good and marketable title to such Receivable, free and clear of all liens, security interests, charges, claims, and encumbrances.
(c) Enforceable Obligation. Each Receivable constitutes the legal, valid, and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other laws affecting the rights of creditors generally and to general principles of equity.
(d) No Modification. Since origination, no Receivable has been modified, waived, or amended in any material respect except in accordance with the Seller's standard modification policies, which have been disclosed in writing to the Purchaser. No Receivable has been the subject of any forbearance arrangement, deferment, or payment holiday that has not been disclosed in the Schedule of Receivables.
(e) Origination Compliance. Each Receivable was originated in compliance in all material respects with all applicable federal, state, and local laws, rules, and regulations, including, without limitation, the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, all applicable state consumer-lending statutes, usury laws, and licensing requirements. All required disclosures have been provided to the Obligor, and the Seller has obtained all necessary licenses and authorizations in the state in which each Receivable was originated.
(f) Accurate Information. All information set forth in the Schedule of Receivables with respect to each Receivable (including, without limitation, the principal balance, interest rate, FICO Score at origination, remaining term, origination date, geographic location of the Obligor, payment status, and delinquency status) is true, correct, and complete in all material respects as of the Cut-Off Date.
(g) Payment Status. As of the Cut-Off Date, no Receivable is more than 29 days past due in respect of any required payment. The determination of delinquency status for each Receivable is based on the application of payments in accordance with the contractual Payment Waterfall under Section 4.03 of the MSA (interest first, then fees, then principal). No Receivable included in the Pool is subject to any payment moratorium, forbearance arrangement, or similar accommodation as of the Cut-Off Date.
(h) No Defense or Setoff. No Receivable is subject to any right of rescission, setoff, counterclaim, or defense of the related Obligor, and no Receivable is subject to any dispute between the Seller and the related Obligor that could impair the enforceability or collectibility of such Receivable.
(i) Pool Characteristics. As of the Cut-Off Date, the Pool of Receivables has the following aggregate characteristics, subject to final confirmation upon completion of the Schedule of Receivables: approximately 23,100 loans; a weighted average coupon ("WAC") of 14.82%; a weighted average remaining term of 38.4 months; a weighted average FICO Score at origination of 698; no single Obligor with an Outstanding Principal Balance exceeding 0.15% of the aggregate Pool balance (i.e., $300,000); and no single state accounting for more than 20% of the aggregate Pool balance by Outstanding Principal Balance.
(j) Single Borrower. Each Receivable relates to a single Obligor who is a natural person. No Receivable is a joint loan or co-signed loan with more than one primary obligor.
(k) U.S. Dollar Denomination. Each Receivable is denominated and payable in U.S. dollars.
(l) Servicing Data Accuracy. All servicing data, including delinquency, default, and loss data, provided by or on behalf of the Seller with respect to the Receivables, including data furnished by the Sub-Servicer (Clearview Loan Servicing, Inc.) under the Master Servicing Agreement, is true, correct, and complete in all material respects and has been prepared in accordance with the Payment Waterfall set forth in Section 4.03 of the Master Servicing Agreement (interest first, then fees, then principal). The Seller has verified, or has caused to be verified, the accuracy of such servicing data through its periodic reconciliation processes.
(m) No Bankruptcy of Obligor. To the Seller's knowledge, after due inquiry, no Obligor under a Receivable is the subject of a pending or threatened bankruptcy, insolvency, receivership, or reorganization proceeding under Title 11 of the United States Code or any comparable state law.
(n) Insurance. The Seller does not require any insurance coverage in connection with any Receivable. All Receivables are unsecured consumer installment loans, and no Receivable is secured by any real or personal property or supported by any credit-enhancement insurance policy (other than the structural credit enhancement provided by subordination and overcollateralization in the Trust).
The representations and warranties set forth in this Section 3.03 shall survive the sale and transfer of the Receivables to the Purchaser and the subsequent transfer to the Trust, and shall inure to the benefit of the Purchaser, the Trust, the Indenture Trustee, and the Noteholders.
ARTICLE IV — REPURCHASE AND SUBSTITUTION OBLIGATIONS
Section 4.01 — Repurchase for Breach of Representation or Warranty
Upon discovery by the Seller, the Purchaser, the Indenture Trustee, the Servicer, the Sub-Servicer, or any other party of a breach of any representation or warranty set forth in Section 3.03 with respect to any Receivable, the party discovering such breach shall promptly notify the Seller in writing (a "Breach Notice"), describing in reasonable detail the nature of the breach and the Receivable(s) affected thereby. Upon receipt of a Breach Notice, the Seller shall, within sixty (60) days of receiving such written notice (or such longer period as the Purchaser may agree in writing, not to exceed ninety (90) days), at the Seller's option, either:
(a) Cure such breach in all material respects, such that the affected Receivable fully satisfies the applicable representation or warranty as of the date of such cure; or
(b) Repurchase such Receivable from the Purchaser (or, if such Receivable has previously been transferred to the Trust, from the Trust) at a price equal to the Outstanding Principal Balance of such Receivable as of the date of repurchase, plus accrued and unpaid interest thereon through the date of repurchase, calculated in accordance with the terms of the related Loan Agreement (the "Repurchase Price").
If the breach materially and adversely affects the interests of the Purchaser or, if the Receivable has been transferred to the Trust, the interests of the Noteholders, the obligation of the Seller to cure or repurchase shall be unconditional and shall not be subject to any materiality threshold or de minimis exception. Payment of the Repurchase Price shall be made in immediately available funds to the Collection Account (if the Receivable has been transferred to the Trust) or directly to the Purchaser, as applicable. Upon payment of the Repurchase Price, the Purchaser (or the Trust, as applicable) shall reconvey and transfer to the Seller all right, title, and interest in the repurchased Receivable and the related Receivable File, without representation or warranty.
Section 4.02 — Substitution of Receivables
In lieu of repurchasing a Receivable as to which a breach has been identified, the Seller may, with the prior written consent of the Purchaser (and, if the Receivable has been transferred to the Trust, with the prior written consent of the Indenture Trustee, acting at the direction of the holders of a majority in aggregate principal amount of the Notes then outstanding), substitute one or more Eligible Receivables for the breaching Receivable. Any substitute Receivable must:
(i) satisfy each of the Eligibility Criteria set forth in Section 2.04 as of the date of substitution;
(ii) have an aggregate Outstanding Principal Balance not less than the Outstanding Principal Balance of the breaching Receivable as of the date of substitution; and
(iii) not cause the Pool, after giving effect to the substitution, to fail to comply with any concentration limit or Pool-level characteristic requirement set forth in Section 2.04 or Schedule A.
Upon completion of a substitution, the Seller shall deliver or cause to be delivered to the Indenture Trustee (or its designated custodian) the Receivable Files for the substitute Receivable(s) and shall cause the Schedule of Receivables to be updated accordingly. The breaching Receivable and the related Receivable File shall be reconveyed to the Seller without representation or warranty.
Section 4.03 — Notice of Breach
(a) The Seller shall promptly (and in any event within five (5) Business Days) notify the Purchaser in writing upon becoming aware of any breach or potential breach of any representation or warranty set forth in Section 3.03, specifying in reasonable detail the nature of the breach and the Receivable(s) affected thereby.
(b) The Purchaser (or the Indenture Trustee on behalf of the Trust) may provide written notice to the Seller of any breach discovered through independent due diligence, audit, examination, or otherwise, and the Seller shall have the cure and repurchase rights set forth in Section 4.01 upon receipt of such notice.
(c) The Servicer and the Sub-Servicer shall, in the course of their servicing and administration of the Receivables, use commercially reasonable efforts to identify any breach of the representations and warranties set forth in Section 3.03, and shall promptly report any such breach to the Seller and the Purchaser.
Section 4.04 — Repurchase Sole Remedy
The repurchase or substitution obligation set forth in this Article IV shall constitute the sole and exclusive remedy of the Purchaser (and, after transfer of the Receivables to the Trust, the sole and exclusive remedy of the Noteholders, the Indenture Trustee, and the Owner Trustee) for any breach of the representations and warranties set forth in Section 3.03 with respect to any Receivable; provided, however, that this limitation shall not (i) limit any rights or remedies available to the Purchaser for the Seller's breach of its other obligations hereunder (including its obligations under Article V or Article VIII), (ii) limit any rights or remedies available to the Purchaser or the Indenture Trustee for fraud or willful misconduct by the Seller, or (iii) limit any indemnification rights of the Purchaser under Article VIII.
ARTICLE V — COVENANTS OF THE SELLER
Section 5.01 — Affirmative Covenants
The Seller hereby covenants and agrees with the Purchaser that, from and after the date hereof until the termination of this Agreement pursuant to Article IX:
(a) Maintenance of Existence. The Seller shall maintain its corporate existence, good standing, and qualifications under the laws of the State of Delaware and in each other jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to maintain such qualification would not reasonably be expected to have a material adverse effect on the Seller's ability to perform its obligations hereunder.
(b) Compliance with Laws. The Seller shall comply in all material respects with all applicable laws, rules, regulations, orders, and directives of any governmental authority, including, without limitation, all federal and state consumer-lending laws and regulations (including TILA, ECOA, FCRA, and applicable state licensing requirements), all privacy laws (including the Gramm-Leach-Bliley Act), and all anti-money laundering laws (including the Bank Secrecy Act and the USA PATRIOT Act).
(c) Record Maintenance. The Seller shall maintain, and shall cause the Sub-Servicer to maintain, complete and accurate records for each Receivable in the Pool, including, without limitation, payment histories, delinquency data, default data, and loss data, in accordance with industry standards, the requirements of the MSA, and the requirements of the Rating Agencies. All such records shall be maintained in a manner that clearly identifies the Receivables as having been sold to the Purchaser and subsequently transferred to the Trust.
(d) Cooperation. The Seller shall cooperate fully and in good faith with the Purchaser, the Trust, the Indenture Trustee, the Owner Trustee, the Servicer, the Sub-Servicer, and their respective agents and representatives in connection with the servicing, collection, and administration of the Receivables and the enforcement of the related Loan Agreements.
(e) UCC Filings. The Seller shall take all actions necessary to maintain the perfection and first-priority status of the Purchaser's interest (whether as owner or as secured party) in the Receivables, including, without limitation, the timely filing of UCC continuation statements with the Secretary of State of the State of Delaware, and shall not take any action that would impair such perfection or priority.
(f) Further Assurances. The Seller shall, at its own expense, execute and deliver such further instruments, documents, and agreements, and take such further actions, as the Purchaser or the Indenture Trustee may reasonably request from time to time to carry out the purposes and intent of this Agreement and the transactions contemplated hereby, including any actions necessary to perfect, protect, or enforce the Purchaser's or the Trust's interest in the Receivables.
(g) Tax Reporting. The Seller shall file all tax returns and reports, and shall cause all tax information to be reported, in a manner consistent with the treatment of the transfer of Receivables hereunder as a sale and not as a secured financing, and shall not take any position on any tax return or in any proceeding or audit that is inconsistent with such treatment.
(h) Notices. The Seller shall promptly (and in any event within five (5) Business Days) notify the Purchaser in writing of:
(i) any material adverse change in the financial condition, business, operations, or prospects of the Seller;
(ii) any material litigation, proceeding, investigation, or inquiry instituted or threatened against the Seller by any governmental authority, regulatory body, or any other Person;
(iii) any event, circumstance, or condition that would reasonably be expected to result in a breach of any representation, warranty, or covenant of the Seller under this Agreement; and
(iv) any change in the Seller's underwriting guidelines, credit policies, or loan-origination procedures that would materially affect the credit quality, performance, or characteristics of the Receivables originated through the SkyLend Platform.
Section 5.02 — Negative Covenants
The Seller hereby covenants and agrees with the Purchaser that, from and after the date hereof until the termination of this Agreement pursuant to Article IX:
(a) No Liens. The Seller shall not create, incur, assume, or permit to exist any lien, security interest, pledge, charge, or other encumbrance on any Receivable transferred or to be transferred hereunder, or on any related Receivable File, collections, or proceeds, other than the interest of the Purchaser (and, following the transfer to the Trust, the interest of the Trust and the Indenture Trustee) as contemplated by the Transaction Documents.
(b) No Amendment. The Seller shall not amend, modify, supplement, or waive any material term or provision of this Agreement without the prior written consent of the Purchaser and the Indenture Trustee, and, to the extent required by the terms of the Indenture, without the consent of the holders of a majority in aggregate principal amount of the Notes then outstanding.
(c) No Transfer. The Seller shall not sell, transfer, assign, convey, pledge, or otherwise dispose of any Receivable included in the Pool to any Person other than the Purchaser pursuant to this Agreement.