PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT / ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP 780 Third Avenue, 30th Floor New York, NY 10017
INTERNAL MEMORANDUM
Matter No.: 1009-00006
TO: Theodore Langston, Responsible Partner, Capital Markets
FROM: Simone Laroche, Lead Associate; Jeffrey Park, Working Associate
DATE: January 28, 2026 (Updated through February 10, 2026)
RE: Key Issues and Negotiation Points — Skybridge Fintech Ltd. Warehouse Credit Facility ($40,000,000 Master Repurchase Agreement with Pinnacle Atlantic Bank, N.A.)
CLIENT: Skybridge Fintech Ltd.
This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of litigation and for the purpose of rendering legal advice. It is prepared solely for internal use by the Calderwood & Harkness LLP engagement team assigned to Matter No. 1009-00006 and should not be disclosed to any third party — including the client's other advisors, counterparties, or affiliates — without the express authorization of the responsible partner, Theodore Langston.
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I. Executive Summary and Purpose
The purpose of this memorandum is to memorialize the key structural, legal, and negotiation issues arising from the proposed $40,000,000 master repurchase / warehouse credit facility (the "Facility") for Skybridge Fintech Ltd. ("Skybridge" or the "Client"), and to recommend positions for Calderwood & Harkness LLP ("C&H") in the ongoing negotiations with lender's counsel, Whitmore Crane & Bates LLP ("WCB"). This memorandum is intended as a working reference for the C&H engagement team and as a framework for partner review and strategic decision-making in advance of the anticipated February 28, 2026 closing.
C&H, acting as borrower's counsel, issued the first draft of the Master Repurchase Agreement (the "MRA") to WCB on January 10, 2026. WCB returned a comprehensive mark-up of the MRA on January 24, 2026 (the "WCB Mark-Up"). This memorandum analyzes the WCB Mark-Up, identifies areas of agreement and disagreement, and sets forth C&H's recommended positions on all material open points.
Since the original date of this memorandum, certain issues have been resolved. Specifically, the eligibility criteria governing the characteristics of receivables eligible for purchase under the Facility and the concentration limits applicable to the purchased pool were agreed by the parties as of February 7, 2026. These agreed terms are reflected in this memorandum as updated through February 10, 2026. Additionally, the Custodial Agreement with Ironclad Trust Company was finalized on February 14, 2026.
The Facility is designed to warehouse eligible consumer installment loan receivables originated by Skybridge through its digital lending platform, pending Skybridge's anticipated Q4 2026 term securitization. The warehouse facility will provide interim financing for a pool of receivables that Skybridge intends to aggregate over the six-month revolving period, with the expectation that the receivables will be taken out through a rated term asset-backed securitization in or around Q4 2026. The Facility thus serves as a critical component of Skybridge's capital markets strategy and its first institutional warehouse line.
The target signing and closing date is February 28, 2026. Several material issues remain open as of the date of this update, and the sections below identify these issues, analyze the relevant legal and commercial considerations, and set forth recommended negotiation positions for partner review and approval.
II. Transaction Structure Summary
A. Parties and Roles
The following entities and individuals are the principal parties to, and key contacts for, the proposed Facility:
Seller: SBF Warehouse I LLC, a Delaware limited liability company (Delaware Secretary of State Entity File No. 8102356; EIN 93-1784620). SBF Warehouse I LLC is a wholly owned, bankruptcy-remote, special-purpose entity subsidiary of Skybridge Fintech Ltd. It was formed specifically for the purpose of this Facility and holds no assets other than the receivables to be transferred to it by Skybridge under the Sale and Contribution Agreement. SBF Warehouse I LLC will serve as the "Seller" under the MRA, entering into repurchase transactions with the Buyers.
Originator / Servicer / Performance Guarantor: Skybridge Fintech Ltd., a Delaware corporation (Delaware Secretary of State Entity File No. 7384921; EIN 84-3291507), headquartered at 400 North Market Street, Suite 1200, Wilmington, DE 19801. Skybridge was co-founded in 2019 by Margot Ellison, who serves as Chief Executive Officer. Skybridge is a portfolio company of Redstone Meridian Capital Partners, LP, which acquired a 62% equity stake in Skybridge in 2022 for approximately $145 million. Skybridge will act in three capacities under the Facility documents: (i) as Originator, selling receivables to SBF Warehouse I LLC under the Sale and Contribution Agreement; (ii) as Servicer, servicing the receivables on behalf of the SPE and the Buyers under the Servicing Agreement; and (iii) as Performance Guarantor, guaranteeing certain obligations of SBF Warehouse I LLC under the Performance Guaranty.
Administrative Agent / Committed Buyer: Pinnacle Atlantic Bank, N.A. ("Pinnacle Atlantic"), a nationally chartered commercial bank (RSSD ID 4827301), headquartered at 201 South Tryon Street, 34th Floor, Charlotte, NC 28202. Pinnacle Atlantic will serve as the Administrative Agent for the Buyers and will hold a $30,000,000 commitment, representing 75% of the aggregate Facility amount. The principal contacts at Pinnacle Atlantic for this transaction are Harrison Wolfe (Managing Director, Structured Products), Candace Reeves (Director, Warehouse Lending), and Thomas Brandt (Vice President, Credit Risk).
Participating Buyer: Ridgeline Capital Markets LLC ("Ridgeline"), a New York limited liability company, with offices at 599 Lexington Avenue, 22nd Floor, New York, NY 10022. Ridgeline will hold a $10,000,000 commitment, representing 25% of the aggregate Facility amount. The principal contacts at Ridgeline are Derek Ashworth (Partner) and Samantha Liu (Vice President). Ridgeline will participate in each repurchase transaction on a pro rata basis with Pinnacle Atlantic, with Pinnacle Atlantic acting as Administrative Agent for both Buyers.
Document Custodian: Ironclad Trust Company, a Connecticut-chartered trust company, located at 185 Asylum Street, Suite 900, Hartford, CT 06103. Ironclad Trust Company will serve as the Document Custodian under the Custodial Agreement, holding and verifying receivable files on behalf of the Administrative Agent. The principal contact at Ironclad Trust Company is Nora Finch (Senior Vice President, Custody Services). The Custodial Agreement was finalized on February 14, 2026.
Verification Agent: Brindoval Analytics, Inc. ("Brindoval"), a Texas corporation, with offices at 816 Congress Avenue, Suite 1400, Austin, TX 78701. Brindoval has been engaged by Pinnacle Atlantic to perform independent collateral-tape verification of the initial pool of receivables and to conduct ongoing surveillance of collateral performance on a periodic basis during the Facility term. Brindoval's costs are borne by the Buyers.
Lender's Counsel: Whitmore Crane & Bates LLP, with offices at 1 Liberty Plaza, 41st Floor, New York, NY 10006. The WCB team is led by Conrad Whitfield (Partner), with associates Maya Gutierrez and Brian Hessler supporting the transaction.
Borrower's Counsel: Calderwood & Harkness LLP.
Independent Auditor: Grandview Kapoor LLP, with offices at 1700 Market Street, Suite 2400, Philadelphia, PA 19103. Grandview Kapoor serves as Skybridge's independent auditor for purposes of annual audited financial statements. The engagement partner is Anil Kapoor. Grandview Kapoor's audit reports will be delivered to the Administrative Agent as part of the information covenants under the Performance Guaranty.
B. Facility Structure
The Facility is structured as a Master Repurchase Agreement / Warehouse Credit Facility, under which the Buyers will purchase eligible consumer installment loan receivables from the Seller (SBF Warehouse I LLC) pursuant to individual repurchase transactions, with the Seller agreeing to repurchase those receivables at an agreed-upon repurchase price on the applicable repurchase date or upon termination.
The Maximum Facility Amount is $40,000,000, consisting of Pinnacle Atlantic's $30,000,000 commitment and Ridgeline's $10,000,000 commitment. Each Buyer's participation in any given transaction is pro rata based on its respective commitment percentage (75% / 25%).
The flow of receivables and consideration through the structure is as follows:
1. Origination: Skybridge originates consumer installment loans through its digital lending platform in the ordinary course of its business.
2. Tier 1 Transfer — Sale and Contribution Agreement: Skybridge, as Originator, transfers eligible receivables to SBF Warehouse I LLC pursuant to the Sale and Contribution Agreement. This transfer is intended to constitute a "true sale" for purposes of federal bankruptcy law, such that the receivables become the property of the SPE and are isolated from Skybridge's bankruptcy estate. Skybridge receives a purchase price equal to the Cut-Off Date Principal Balance of the transferred receivables, less a servicing fee strip.
3. Tier 2 Transfer — Master Repurchase Agreement: SBF Warehouse I LLC, as Seller, sells the receivables to the Buyers under the MRA in individual repurchase transactions. The Buyers pay a purchase price equal to the Advance Rate (85%) multiplied by the aggregate Cut-Off Date Principal Balance of the Eligible Receivables. SBF Warehouse I LLC retains a subordinated economic interest in the receivables equal to the difference between the full balance and the advance amount (the 15% "equity" or overcollateralization piece).
4. Servicing: Skybridge continues to service the receivables under the Servicing Agreement, collecting payments from obligors and remitting collections to the segregated collection account maintained at Pinnacle Atlantic.
5. Waterfall: Collections in the collection account are distributed pursuant to a priority-of-payments waterfall set forth in the MRA, with senior payments to the Administrative Agent and Buyers (including the Price Differential, which serves as the interest equivalent) paid prior to distributions to the Seller.
SBF Warehouse I LLC is a bankruptcy-remote special-purpose entity. Its organizational documents include separateness covenants, independent director/manager requirements, and limited-purpose restrictions designed to minimize the risk of substantive consolidation with Skybridge in the event of a Skybridge bankruptcy filing. The structural protections applicable to the SPE are discussed in greater detail in Section VI below.
C. Key Economics
The following summarizes the key economic terms of the Facility as set forth in the term sheet executed on December 22, 2025, and as reflected in the C&H first draft of the MRA:
Pricing Rate: The Price Differential (the interest-equivalent component of the repurchase price) accrues at a rate equal to the Secured Overnight Financing Rate ("SOFR") plus 260 basis points (2.60%) per annum, calculated on an actual/360 day-count basis. Based on the indicative SOFR rate of 4.33% as of January 15, 2026, the all-in pricing rate would be approximately 6.93%. The Pricing Rate is subject to a SOFR floor of 0.00% (no negative rate protection). No SOFR adjustment spread is applied given the cessation of LIBOR.
Advance Rate: 85% of the aggregate Cut-Off Date Principal Balance of Eligible Receivables in the purchased pool. This means that for every $100 of eligible receivable balance, the Buyers will advance $85, with the remaining $15 representing the required overcollateralization or "haircut." At full draw of the $40,000,000 Maximum Facility Amount, Skybridge would need to deliver a pool of Eligible Receivables with a minimum aggregate Cut-Off Date Principal Balance of $47,058,824 ($40,000,000 ÷ 0.85).
Facility Term: The Facility has an 18-month term from the Closing Date (February 28, 2026) to the Maturity Date (August 28, 2027). The term is divided into two periods:
• Revolving Period: Six (6) months, from the Closing Date through August 28, 2026. During the Revolving Period, SBF Warehouse I LLC may request new repurchase transactions (i.e., sell additional receivables to the Buyers) up to the Maximum Facility Amount, and proceeds from collections and repayments may be reinvested in new receivables, subject to compliance with all eligibility criteria and concentration limits.
• Amortization Period: Twelve (12) months, from August 28, 2026 through August 28, 2027. During the Amortization Period, no new repurchase transactions may be initiated. All collections on the Purchased Receivables are applied to reduce the outstanding Purchase Price until the Facility is fully repaid or the Maturity Date is reached, at which point all remaining obligations are due and payable.
Governing Law: The MRA, Performance Guaranty, Sale and Contribution Agreement, and related transaction documents are governed by the laws of the State of New York, without regard to principles of conflicts of law.
D. Fee Structure
The following fees are payable in connection with the Facility:
The upfront/structuring fee of $200,000 is payable to Pinnacle Atlantic at closing and is non-refundable. The unused commitment fee of 30 basis points per annum is calculated on the daily average undrawn portion of the Maximum Facility Amount and is payable monthly in arrears beginning on the last Business Day of the first full calendar month following the Closing Date. The administrative agent fee of $75,000 per year (payable in semi-annual installments of $37,500) compensates Pinnacle Atlantic for its role as Administrative Agent. The custodial fee of $2,500 per month is payable to Ironclad Trust Company for document custody services under the Custodial Agreement.
In addition to the foregoing fees, Skybridge is responsible for reimbursing the Buyers' legal fees and expenses (i.e., WCB's fees) up to a negotiated cap of $175,000, as well as C&H's own fees, which are billed directly to Skybridge.
E. Key Dates and Timeline
The following table summarizes the key dates and milestones for the Facility:
F. Skybridge Business Overview (For Context)
Skybridge Fintech Ltd. operates a digital lending platform that originates unsecured and lightly secured consumer installment loans. Loans originated by Skybridge have original terms ranging from 12 to 60 months and principal balances between $2,000 and $35,000. Skybridge's borrower base consists predominantly of near-prime and prime consumers, with a portfolio weighted-average FICO score at origination of approximately 712.
Skybridge is currently licensed to originate consumer loans in 38 states and the District of Columbia. Since its founding in 2019 by CEO Margot Ellison, Skybridge has originated approximately $780 million in cumulative loan volume. The current outstanding servicing portfolio has an unpaid principal balance of approximately $310 million as of December 31, 2025.
For FY2025, Skybridge reported total revenue (comprising net interest income and servicing fees) of $67.3 million and adjusted EBITDA of $18.9 million. These figures were derived from Skybridge's audited financial statements prepared by Grandview Kapoor LLP (engagement partner Anil Kapoor) and supplemented by management-prepared financial data provided by Rajan Sundaram (CFO) and Priya Chakraborty (Controller).
The key client contacts for this engagement are:
• Margot Ellison — Chief Executive Officer and Co-Founder
• Rajan Sundaram — Chief Financial Officer
• Deirdre Knox — General Counsel and Corporate Secretary
• Luis Ferreira — Vice President, Capital Markets
• Priya Chakraborty — Controller
Skybridge's strategic objective for the Facility is to establish a scalable warehouse line that can fund receivable originations during the ramp period leading up to its anticipated Q4 2026 term securitization. The warehouse facility is expected to be the first of potentially multiple warehouse lines as Skybridge continues to scale its origination platform. The relationship with Pinnacle Atlantic is viewed as strategically important, and Skybridge's management has expressed a preference for maintaining a constructive negotiating posture while protecting key commercial and structural terms.
III. Analysis of WCB Mark-Up Issues (January 24, 2026 Redline)
This section analyzes the principal open issues arising from WCB's January 24, 2026 mark-up of the MRA. For each issue, we summarize the original C&H draft position, describe the changes proposed by WCB, and set forth C&H's recommended negotiation position for partner review and approval.
A. Margin Call Mechanics and Cure Period
The margin call provisions are among the most commercially significant terms in the MRA, as they govern the Administrative Agent's ability to require additional collateral or cash from the Seller when the outstanding Purchase Price exceeds the Advance Rate applied to the current Eligible Receivable pool balance. Overly aggressive margin call provisions can create significant liquidity pressure on the Seller and, in extreme cases, trigger a "death spiral" in which margin calls beget forced repurchases, which further reduce the pool, which generate additional margin calls.
1. C&H Draft Position
In the C&H first draft, the margin call mechanism operated as follows:
(a) Trigger. A margin call is triggered when the aggregate Purchase Price of all outstanding Purchased Receivables exceeds the product of the Advance Rate (85%) and the aggregate Cut-Off Date Principal Balance of all Eligible Receivables then held by the Seller (i.e., a "margin deficit" exists).
(b) Cure. The Seller has three (3) Business Days following receipt of a margin call notice to cure the margin deficit by either (i) delivering additional Eligible Receivables to the Buyers, thereby increasing the denominator of the advance rate test, or (ii) remitting cash to the Administrative Agent in an amount sufficient to reduce the outstanding Purchase Price to a level at or below the applicable advance rate.
(c) Frequency. The Administrative Agent may deliver margin call notices no more frequently than once per week, on a designated Business Day.
(d) Form. Margin calls must be delivered in writing (including by electronic mail) by the Administrative Agent to the Seller.
This formulation was designed to provide Skybridge with sufficient operational time to respond to margin calls, given the logistical steps involved in identifying, packaging, and transferring additional eligible receivables (including custodial certification by Ironclad Trust Company), while still providing the Buyers with meaningful collateral protection.
2. WCB Proposed Changes
The WCB Mark-Up made the following material changes to the margin call provisions:
(a) Cure Period. WCB shortened the cure period from three (3) Business Days to one (1) Business Day. WCB's stated rationale (per Conrad Whitfield's cover letter) is that the one-Business-Day cure period reflects current market practice for repurchase facilities and is necessary to protect the Buyers against rapid deterioration in collateral value.
(b) Frequency. WCB removed the limitation on margin call frequency, permitting the Administrative Agent to deliver margin calls on a daily basis (or more frequently as needed). The weekly limitation in the C&H draft was deleted in its entirety.
(c) Material Adverse Change Trigger. WCB inserted a new provision permitting the Administrative Agent to issue a margin call based on its "reasonable determination" that a "material adverse change in the quality or performance of the Purchased Receivables" has occurred, independent of — and without the need to demonstrate — a numerical margin deficit. This subjective trigger would permit the Administrative Agent to demand additional collateral or cash even when the portfolio is not in technical margin deficit, based on the Agent's qualitative assessment of collateral quality.
(d) Discretionary Advance Rate Reduction ("Haircut" Authority). WCB added a provision granting the Administrative Agent discretionary authority to apply an additional reduction to the Advance Rate of up to 5 percentage points (i.e., from 85% to as low as 80%) upon its "reasonable determination" of adverse collateral performance. This reduction would not require the consent of the Seller and could be implemented upon written notice. The effect of this provision is to immediately increase the required overcollateralization, which could create an instantaneous margin deficit and trigger corresponding margin calls.
3. C&H Recommended Position
After careful analysis, C&H recommends the following positions on each element of the margin call provisions:
Cure Period. C&H recommends pushing back to a two (2) Business Day cure period as a compromise between the three-Business-Day period in the C&H draft and the one-Business-Day period proposed by WCB. A one-Business-Day cure period is impracticable for a fintech originator of Skybridge's size and operational profile. Curing a margin deficit requires the Seller to identify available eligible receivables from Skybridge's origination pipeline, execute the transfer documentation, deliver the receivable files to the Document Custodian (Ironclad Trust Company in Hartford, Connecticut), and obtain the Custodian's certification that the receivable files are complete and in order. These steps cannot reliably be completed within a single Business Day, particularly where the margin call is received late in the day or where custodial certification is delayed. Two Business Days is a commercially reasonable cure period that balances the Buyers' collateral protection interests with the Seller's operational reality. We note that two-Business-Day cure periods are common in warehouse facilities for consumer lending platforms and are consistent with the SIFMA/TBMA master repurchase agreement framework as adapted for asset-backed warehouse transactions.
Frequency. C&H recommends accepting bi-weekly (twice per week) margin calls as a compromise. Daily margin calls, particularly when combined with a short cure period, create an operational burden on the Seller and its servicing team that is disproportionate to the Buyers' collateral protection interests, especially during the Revolving Period when new receivables are being added to the pool on a regular basis. Twice-weekly margin calls (e.g., on Tuesdays and Thursdays, or on Business Days designated by the Administrative Agent) provide the Agent with frequent collateral monitoring while giving the Seller adequate time to respond. We should resist WCB's position permitting unlimited daily calls.
Material Adverse Change Trigger. C&H recommends accepting the concept of a MAC-based margin call trigger but imposing the following conditions: (a) the determination must be made in good faith by the Administrative Agent; (b) the Administrative Agent must provide reasonable supporting documentation to the Seller setting forth the basis for the determination (including relevant collateral performance data, delinquency trends, or other quantitative metrics); and (c) the Seller shall have the right to contest the Administrative Agent's determination by requesting an independent review by the Verification Agent (Brindoval Analytics, Inc.), with the Brindoval determination to be binding on the parties (or, alternatively, advisory but carrying significant weight). This approach preserves the Buyers' ability to act on qualitative credit deterioration while providing the Seller with procedural protections against arbitrary or ill-founded margin calls.
Discretionary Advance Rate Reduction. C&H recommends strongly resisting the discretionary haircut authority as drafted. The WCB formulation effectively grants the Administrative Agent unilateral authority to ratchet the Advance Rate from 85% down to 80% — a 5-percentage-point reduction — based solely on its "reasonable determination" of adverse performance, without any defined criteria, without the Seller's consent, and without any independent verification. This provision fundamentally alters the economics of the Facility. At full draw ($40,000,000), the required pool UPB at an 85% advance rate is $47,058,824; at an 80% advance rate, the required pool UPB increases to $50,000,000 — an increase of approximately $2.9 million in required overcollateralization. This $2.9 million increase would either require the Seller to deliver substantial additional receivables or to remit cash, in either case imposing significant and potentially unexpected capital demands on Skybridge.
C&H proposes the following compromise on the haircut authority: (a) any Advance Rate reduction beyond 2 percentage points (i.e., below 83%) shall require ten (10) Business Days' prior written notice to the Seller; (b) any reduction must be supported by objective, defined performance triggers tied to specified delinquency or default rate thresholds (e.g., 60+ day delinquency rate exceeding a stated percentage, cumulative net loss rate exceeding a stated threshold); and (c) the Seller shall have the right to request a review of the collateral performance data by Brindoval Analytics, Inc. before the reduction takes effect. Any Advance Rate reduction of 2 percentage points or less (i.e., from 85% to 83%) may be implemented by the Administrative Agent upon reasonable notice without objective triggers, as a more limited form of portfolio management discretion. This approach permits the Administrative Agent to make measured adjustments to the Advance Rate in response to genuine performance concerns while preventing the sweeping, unconstrained reductions contemplated by the WCB draft.
B. Cross-Default Provisions
Cross-default provisions determine the circumstances under which a default by the Performance Guarantor (Skybridge) under other indebtedness will constitute an Event of Default under the MRA. These provisions are critical because they can cause a termination of the Facility and forced liquidation of the collateral based on events unrelated to the performance of the Purchased Receivables.
1. C&H Draft Position
The C&H first draft provided for a cross-default trigger as follows:
(a) An Event of Default under the MRA is triggered by a default by Skybridge (in its capacity as Performance Guarantor under the Performance Guaranty) under any Material Indebtedness in excess of $5,000,000 in the aggregate that results in the acceleration thereof.
(b) "Material Indebtedness" was defined to mean indebtedness for borrowed money, including capital lease obligations and guaranty obligations, but expressly excluding trade payables, ordinary-course operating obligations, and purchase money obligations not exceeding $500,000 individually.
This formulation was designed to capture only significant credit events — specifically, defaults under material debt instruments that have actually been accelerated by the applicable lender — while avoiding hair-trigger cross-defaults based on minor or technical defaults that may be cured without consequences.
2. WCB Proposed Changes
The WCB Mark-Up made three material changes to the cross-default provisions:
(a) Threshold. WCB lowered the Material Indebtedness threshold from $5,000,000 to $2,500,000.
(b) Trigger. WCB broadened the trigger from defaults that have resulted in acceleration to include any default (whether or not resulting in acceleration) that "is not cured within any applicable grace period under the relevant agreement." This formulation would capture, for example, a financial covenant default under another credit agreement that the relevant lender has chosen not to accelerate (perhaps in exchange for a waiver fee or amendment), even where no actual credit event has occurred.
(c) Affiliate Scope. WCB added a cross-default to any obligation of any "Affiliate" of Skybridge. As defined in the WCB Mark-Up, "Affiliate" means any person or entity that directly or indirectly controls, is controlled by, or is under common control with Skybridge. Because Redstone Meridian Capital Partners, LP holds a 62% equity stake in Skybridge, Redstone Meridian would constitute an "Affiliate" under this definition, and its other portfolio companies (which share common control through Redstone Meridian) would likewise fall within the definition. Accordingly, a default by any unrelated Redstone Meridian portfolio company under its own debt instruments could trigger an Event of Default under Skybridge's warehouse facility.
3. C&H Recommended Position
Threshold. C&H recommends accepting the lower $2,500,000 threshold as a reasonable compromise. Skybridge's current leverage profile (as discussed in Section V below) consists primarily of the proposed warehouse facility and limited other indebtedness. A $2,500,000 cross-default threshold is within the range of market practice for warehouse facilities with borrowers of Skybridge's size and credit profile, and resisting this point is unlikely to yield significant negotiating capital for use on higher-priority issues.
Trigger. C&H recommends resisting the "any default not resulting in acceleration" formulation. The appropriate standard for a cross-default provision is a default that has resulted in, or would entitle the applicable lender to declare, an acceleration of the related indebtedness. A broader trigger that captures defaults even where the relevant lender has elected not to accelerate — for example, where the lender has waived the default or entered into a forbearance agreement — is disproportionate and would subject Skybridge's warehouse facility to termination based on events that the relevant creditor itself has determined do not warrant acceleration. C&H proposes limiting the cross-default trigger to defaults that "have resulted in or would permit" the acceleration of Material Indebtedness, which is a widely accepted middle-ground formulation.
Affiliate Scope. C&H recommends strongly resisting the Affiliate cross-default. The inclusion of Affiliate defaults as a trigger for Events of Default under the MRA is commercially unreasonable and beyond market practice for warehouse credit facilities of this type. Redstone Meridian Capital Partners, LP is a private equity fund organized as a limited partnership that holds investments in multiple unrelated portfolio companies across various industries. Redstone Meridian's relationship to Skybridge is that of a passive financial investor — it holds a 62% equity stake and has board representation, but it does not manage Skybridge's day-to-day operations and does not guarantee Skybridge's obligations. Tying the performance of Skybridge's warehouse facility to the creditworthiness and covenant compliance of unrelated Redstone Meridian portfolio companies creates an unmanageable and unpredictable risk for Skybridge. A default by an unrelated Redstone Meridian portfolio company — over which Skybridge has no control and may have no knowledge — could trigger a termination of the Facility and forced liquidation of Skybridge's receivable pool, even when the Purchased Receivables are performing well and all Skybridge-specific covenants are being met.
C&H proposes limiting the definition of "Affiliate" for cross-default purposes to Skybridge's direct and indirect subsidiaries only — specifically, SBF Warehouse I LLC and any future special-purpose entities formed in connection with Skybridge's securitization activities. Parent entities, sibling portfolio companies, and other entities in the Redstone Meridian capital structure should be expressly excluded from the cross-default provision.
We note that Redstone Meridian's consent may be required for certain covenant provisions that directly or indirectly affect the equity ownership structure of Skybridge, including the change-of-control provisions discussed in Section VIII.B below. C&H should coordinate with Deirdre Knox (General Counsel) and Luis Ferreira (VP, Capital Markets) to confirm whether any Redstone Meridian fund-level approvals are needed for the proposed covenant package and to ensure alignment between the client team and the sponsor.
C. Representations and Warranties — Scope and Bring-Down
The representations and warranties in the MRA serve as the foundation for the Buyers' credit decision and as the basis for repurchase obligations in the event of breaches. The scope and bring-down mechanics of these representations are therefore of critical commercial importance.
1. WCB Proposed Changes
The WCB Mark-Up made three significant changes to the representation and warranty framework:
(a) Consumer Protection Compliance Representation. WCB added a representation that each Eligible Receivable "complies in all respects with all applicable federal and state consumer protection laws, rules, and regulations, including but not limited to 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.), and all applicable state consumer financial protection laws and regulations (including state mini-CFPA equivalents)." Notably, this representation contains no materiality qualifier — it requires absolute, unqualified compliance with all applicable consumer protection laws for each receivable in the pool.
(b) Continuous Bring-Down. WCB inserted a provision requiring that all representations and warranties made by the Seller be "brought down" (i.e., reaffirmed as true and correct) as of each Purchase Date on which new receivables are sold to the Buyers. Any inaccuracy in any representation on any Purchase Date would constitute an immediate Event of Default, with no cure period and no materiality threshold.
(c) Underwriting Guidelines Modification Restriction. WCB added a representation that Skybridge's underwriting guidelines "have not been materially modified, amended, supplemented, or otherwise changed since September 1, 2025 (the effective date of Underwriting Guidelines v.7.2)" without the prior written consent of the Administrative Agent. This effectively gives Pinnacle Atlantic veto power over any changes to Skybridge's underwriting practices.
2. C&H Recommended Position
Consumer Protection Compliance. C&H recommends accepting the substance of the consumer protection compliance representation but insisting on the inclusion of a "material compliance" qualifier, such that the representation reads "complies in all material respects" rather than "complies in all respects." An absolute, unqualified compliance standard across all applicable federal and state consumer protection laws for every individual receivable in a pool that spans 38 states and the District of Columbia is commercially impracticable. Consumer lending is subject to an extraordinarily complex and evolving regulatory framework, and even the most diligent originator may have individual receivables that contain minor, technical non-compliance issues (e.g., a disclosure formatting error, an immaterial timing discrepancy in a notice requirement). Requiring absolute compliance would effectively create a perpetual repurchase obligation, as virtually any receivable could be found to have some arguable deviation from the letter of one or more of the dozens of applicable statutes and regulations.
The "in all material respects" qualifier is standard market practice for consumer receivable warehouse facilities and is consistent with the representation framework used in rated term securitizations. It provides the Buyers with robust protection against meaningful regulatory non-compliance (which could give rise to obligor defenses, regulatory enforcement actions, or assignee liability) while acknowledging the practical realities of high-volume consumer lending across multiple jurisdictions.
Bring-Down and Event of Default Threshold. C&H recommends accepting the bring-down of representations at each Purchase Date — this is standard and expected — but insisting on two modifications to the Event of Default trigger:
(i) Materiality Threshold. An inaccuracy in a representation should not constitute an Event of Default unless the aggregate repurchase price of all affected receivables exceeds 2% of the then-outstanding aggregate Purchase Price. Below this threshold, the Seller should be required to repurchase or substitute the non-conforming receivables, but no Event of Default should be triggered. This approach appropriately distinguishes between systemic representation failures (which properly warrant an Event of Default) and isolated, immaterial inaccuracies (which should be addressed through the repurchase/substitution mechanism without triggering facility-wide default consequences).
(ii) Cure Period. The Seller should have fifteen (15) Business Days following notice from the Administrative Agent to cure any representation inaccuracy by repurchasing or substituting the affected receivables. Only if the Seller fails to repurchase or substitute within the cure period, and the aggregate affected amount exceeds the 2% materiality threshold, should an Event of Default be triggered.
Underwriting Guidelines Modification. C&H recommends accepting the underwriting guidelines representation in principle but proposing modified language that permits Skybridge to implement routine updates to its credit models, scoring parameters, and internal risk policies without the prior consent of the Administrative Agent, provided that such updates do not "materially relax" Skybridge's underwriting standards. Skybridge's business model as a technology-driven digital lender relies on iterative, data-driven refinement of its credit models and scoring algorithms. These refinements are a core competitive advantage and a critical element of Skybridge's risk management framework. A blanket restriction requiring Pinnacle Atlantic's consent for any modification to the underwriting guidelines — even routine improvements that tighten credit standards — would be operationally burdensome and could impede Skybridge's ability to compete effectively in the consumer lending market.
C&H proposes adding a proviso that states: "provided that routine updates to the Originator's credit scoring models, algorithmic parameters, or internal risk metrics that do not materially relax the overall credit quality standards set forth in the Underwriting Guidelines shall not be deemed modifications requiring the Administrative Agent's prior consent." In addition, Skybridge should be required to provide notice (but not obtain consent) of any material change to the underwriting guidelines within 10 Business Days of implementation, together with a summary description of the nature and impact of the change.
D. Discretionary Exclusion Authority
1. WCB Proposed Changes
The WCB Mark-Up inserted a new provision granting the Administrative Agent the right, in its "sole discretion," to exclude any Receivable from the definition of "Eligible Receivable" at any time after the initial Purchase Date on which such Receivable was purchased by the Buyers. The effect of such an exclusion would be to render the excluded Receivable ineligible for inclusion in the pool, thereby reducing the Eligible Receivable balance for purposes of the advance rate test and potentially creating a margin deficit. Furthermore, any Receivable so excluded would be subject to immediate mandatory repurchase by the Seller at the full Purchase Price plus accrued and unpaid Price Differential.
This provision, as drafted, grants the Administrative Agent essentially unchecked authority to cherry-pick individual receivables out of the pool at any time, for any reason, and to require the Seller to repurchase them at par plus accrued interest. No objective criteria are specified, no notice period is required, and no limit is placed on the number or aggregate balance of receivables that may be excluded.
2. C&H Recommended Position
C&H recommends strongly resisting the sole discretion standard for post-purchase receivable exclusion. The ability to reclassify a previously purchased receivable as ineligible and require immediate repurchase is a powerful remedy that, if unconstrained, could be used to effectively accelerate the Facility or to shift credit losses from the Buyers to the Seller outside the agreed-upon risk allocation framework.
C&H proposes that post-purchase exclusion of receivables from the Eligible Receivable definition be limited to the following circumstances:
(a) Receivables that are objectively determined to have failed to meet one or more of the agreed eligibility criteria at the time of the initial purchase (i.e., the receivable was ineligible ab initio but was included in the pool in error);
(b) Receivables that have become subject to a specific, defined trigger event after the date of purchase, including but not limited to: (i) the receivable becoming 60 or more days delinquent; (ii) the obligor filing for bankruptcy protection or becoming the subject of an involuntary bankruptcy proceeding; (iii) the discovery of fraud in connection with the origination of the receivable; or (iv) a material breach of a representation or warranty relating to the specific receivable that has not been cured within the applicable cure period;
(c) Receivables that have been the subject of a consumer dispute, regulatory inquiry, or legal proceeding that, in the reasonable judgment of the Administrative Agent, is likely to materially and adversely affect the collectability or enforceability of the receivable.
If a broader discretion is ultimately accepted as a compromise, C&H recommends at minimum that the provision require: (a) the Administrative Agent to exercise its exclusion authority in "commercially reasonable good faith" rather than "sole discretion"; and (b) the Administrative Agent to provide the Seller with five (5) Business Days' prior written notice of any proposed exclusion, together with a statement of the reasons therefor, and to engage in consultation with the Seller during such notice period before the exclusion becomes effective. This procedural protection would give Skybridge the opportunity to provide additional information, dispute the basis for the exclusion, or plan for the resulting repurchase obligation.
IV. Eligibility Criteria and Concentration Limits — Recommended Positions
A. Agreed Eligibility Criteria (as of February 7, 2026)
The eligibility criteria governing the characteristics of receivables eligible for purchase under the Facility were negotiated between the parties and agreed as of February 7, 2026. The following criteria have been incorporated into the Eligibility Criteria Schedule to be attached as Annex A to the MRA:
1. The Receivable was originated by Skybridge Fintech Ltd. in the ordinary course of its business under the Skybridge Consumer Installment Loan Underwriting Guidelines, Version 7.2, effective September 1, 2025 (as such guidelines may be updated in accordance with the terms of the MRA).
2. The Obligor's FICO score at the time of origination was not less than 660.
3. The original term of the Receivable is not less than 12 months and not greater than 60 months.
4. The outstanding principal balance of the Receivable as of the applicable Cut-Off Date is not less than $2,000 and not greater than $35,000.
5. The Receivable is not more than 30 days past due as of the related Purchase Date (i.e., the Receivable is "current" or "1–30 days delinquent" under standard industry delinquency definitions).
6. The Obligor is located in a state (or the District of Columbia) in which Skybridge holds a valid and subsisting lending license or is otherwise authorized to originate consumer installment loans (currently 38 states and the District of Columbia).
7. The annual percentage rate ("APR") of the Receivable does not exceed the applicable state usury cap or other interest rate limitation under the laws of the Obligor's state of residence.
8. The Receivable is denominated and payable in United States dollars.
9. No bankruptcy, insolvency, receivership, or similar proceeding has been filed by or against the Obligor, and the Obligor is not deceased.
10. The Receivable has not been previously modified, extended, or made subject to a formal hardship, forbearance, or deferral program. Routine one-time payment date adjustments of 15 days or fewer due to autopay timing are permitted and shall not constitute a "modification" for purposes of this criterion.
These criteria are now final and will be incorporated into the execution version of the MRA. Simone Laroche circulated the final eligibility criteria schedule to WCB on February 8, 2026 for confirmation.
B. Analysis of Specific Eligibility Criteria Issues
1. FICO Floor (660 Individual / 700 Pool Weighted-Average)
The agreed eligibility criteria include both an individual-level minimum FICO score at origination of 660 and a pool-level weighted-average FICO floor of 700 (the latter of which is set forth in the concentration limits discussed in Section IV.C below).
The individual minimum FICO at origination of 660 is consistent with Skybridge's actual origination profile under Underwriting Guidelines v.7.2 and does not materially constrain Skybridge's origination pipeline. Skybridge's internal minimum FICO for its core consumer installment product is 640, but the vast majority of Skybridge's originations (approximately 92% by balance, per data provided by Luis Ferreira) are to borrowers with FICO scores of 660 or above. The 660 floor thus excludes only a small tail of Skybridge's origination volume from eligibility for the warehouse.
The pool-level weighted-average FICO floor of 700 is somewhat tighter than comparable facilities in the market. Market comparables for near-prime consumer installment warehouse facilities typically feature pool-level WA FICO floors in the 680–690 range. The 700 floor reflects Pinnacle Atlantic's conservative credit posture and its desire to maintain a higher credit quality pool. Skybridge's current portfolio weighted-average FICO at origination is approximately 712, based on loan-level data provided by Luis Ferreira as of January 2026. This provides a 12-point cushion above the 700 floor, which should be adequate under normal origination conditions.
Recommendation: Accepted. The FICO criteria are manageable given Skybridge's current portfolio composition and origination practices. However, we note that the 700 pool-level floor limits Skybridge's flexibility to include lower-FICO receivables in the warehouse pool that might otherwise be eligible under the individual 660 floor. This constraint is relevant for planning purposes as Skybridge ramps receivable volume ahead of the anticipated Q4 2026 term securitization, which may have different (and potentially more permissive) credit criteria. Skybridge should be aware that the warehouse eligibility criteria may not perfectly align with the securitization eligibility criteria, requiring careful collateral selection during the transition.
2. Delinquency Trigger (30 Days)
The agreed eligibility criteria permit receivables that are up to 30 days past due as of the applicable Purchase Date. This was a negotiated compromise. WCB initially proposed a 0-day delinquency requirement, under which only receivables that were fully current (i.e., no payment past due) as of the Purchase Date would be eligible. C&H pushed back on this position, noting that consumer installment loan portfolios routinely include receivables with minor payment delays that do not reflect underlying credit deterioration — for example, delays caused by autopay processing timing, obligor payment scheduling, or weekend/holiday effects. A 0-day requirement would have unnecessarily constrained the pool of eligible receivables without a commensurate reduction in credit risk.
The agreed 30-day delinquency cutoff at the Purchase Date is a standard threshold for consumer warehouse facilities and aligns with industry conventions for defining "performing" receivables. Additionally, receivables that subsequently become 60 or more days past due after the Purchase Date are subject to mandatory repurchase by the Seller (at the Purchase Price plus accrued Price Differential), providing the Buyers with credit protection against receivables that deteriorate after purchase.
Recommendation: Accepted. The 30-day threshold at purchase, combined with the 60-day mandatory repurchase trigger post-purchase, provides an appropriate risk allocation framework.
3. Modification Exclusion
The agreed eligibility criteria exclude receivables that have been "modified, extended, or placed on a formal hardship, forbearance, or deferral program" at any time. This criterion was also the subject of negotiation.
WCB initially proposed an absolute exclusion of any receivable that had been "modified, extended, refinanced, or subject to any forbearance, deferral, or hardship program at any time," which would have captured even the most routine operational adjustments to payment dates. C&H negotiated a carve-out for routine one-time payment date adjustments of 15 days or fewer that are attributable to autopay timing and that are standard in Skybridge's servicing operations. These adjustments — such as shifting a monthly payment date from the 1st to the 15th of the month to align with an obligor's pay cycle — do not alter the economic terms of the receivable (principal balance, interest rate, maturity date) and do not reflect credit distress.
Recommendation: Accepted. The agreed language strikes an appropriate balance. The carve-out for routine payment date adjustments is important for Skybridge's operational flexibility, as these adjustments are a standard servicing practice that improves payment performance and reduces delinquency. Skybridge should maintain clear internal documentation distinguishing routine payment date adjustments (which are permitted) from modifications, extensions, and formal hardship programs (which render a receivable ineligible). C&H should advise Deirdre Knox and Luis Ferreira to implement a compliance protocol within Skybridge's servicing platform to flag and categorize receivable modifications for warehouse eligibility tracking purposes.
C. Agreed Concentration Limits (as of February 7, 2026)
The following concentration limits were agreed by the parties as of February 7, 2026 and will be incorporated into the Concentration Limit Schedule to be attached as Annex B to the MRA:
1. Single Obligor Concentration: No single obligor may have aggregate outstanding principal balances in the purchased pool in excess of $100,000, representing 0.25% of the $40,000,000 Maximum Facility Amount.
2. Single State Concentration: No single state (or the District of Columbia) may represent more than 20% of the aggregate Purchase Price of all Purchased Receivables.
3. Weighted-Average FICO Floor: The weighted-average FICO score at origination of all Purchased Receivables (weighted by outstanding principal balance) must be no less than 700.
4. Weighted-Average Coupon Floor: The weighted-average coupon (stated interest rate) of all Purchased Receivables (weighted by outstanding principal balance) must be no less than 12.00% per annum.
5. Maximum 60-Month Original Term Receivables: The aggregate outstanding principal balance of Purchased Receivables with original terms of 60 months may not exceed $12,000,000, representing 30% of the $40,000,000 aggregate Purchase Price.
D. Analysis of Concentration Limits
1. Single State Concentration (20%)
The 20% single-state concentration limit is designed to ensure geographic diversification of the purchased pool and to limit the impact of state-specific economic or regulatory events on pool performance. Skybridge's current origination volume is concentrated in several large states, with the largest concentrations being California (approximately 14% of the current portfolio by balance), Texas (approximately 12%), and Florida (approximately 10%). No other state exceeds 8% of the portfolio. The 20% cap provides adequate headroom relative to Skybridge's current geographic distribution, but compliance should be monitored in the monthly servicer reports and compliance certificates. If origination growth is concentrated in a particular state (for example, due to a marketing push or a new lending partnership in that state), the 20% cap could become a binding constraint.
2. 60-Month Term Receivable Cap (30% / $12M)
The 30% cap on 60-month original term receivables reflects the Buyers' preference for shorter-duration collateral, which reduces extension risk and allows for faster amortization of the purchased pool during the Amortization Period. Skybridge's current origination mix includes approximately 25% by balance in 60-month receivables (the maximum original term offered under Underwriting Guidelines v.7.2), with the remainder distributed across 12-, 24-, 36-, and 48-month terms. The 30% cap ($12 million at full draw) provides 5 percentage points of headroom relative to the current 25% mix, which is adequate but not generous.
This concentration limit should be monitored carefully during the Revolving Period, particularly if Skybridge's origination mix shifts toward longer-term products. If the 60-month product becomes a larger share of originations — whether due to consumer demand, competitive pricing, or strategic product decisions — the 30% cap could constrain the volume of receivables that can be warehoused, potentially requiring Skybridge to hold longer-term receivables on balance sheet outside the warehouse.
3. Weighted-Average Coupon Floor (12.00%)
The pool-level weighted-average coupon floor of 12.00% ensures that the purchased pool generates sufficient interest income to cover the Price Differential (SOFR + 260 bps, currently approximately 6.93%) and to maintain adequate excess spread. Skybridge's current blended coupon across its servicing portfolio is approximately 14.2%, providing approximately 220 basis points of cushion above the 12.00% floor. This cushion should be sufficient under normal operating conditions.
However, C&H notes that if Skybridge introduces lower-rate promotional products (e.g., rate-reduced refinance offers, partnership-based subsidized rate programs, or competitive pricing initiatives targeting higher-FICO borrowers), the pool-level WAC could decline. Skybridge should be advised to monitor the WAC floor as part of its collateral selection process and to ensure that lower-coupon receivables are balanced by higher-coupon receivables in the warehouse pool to maintain the 12.00% floor.
V. Financial Covenant Calibration Analysis
A. Overview of Financial Covenants in the Performance Guaranty
The Performance Guaranty, to be executed by Skybridge Fintech Ltd. as Performance Guarantor in favor of the Administrative Agent and the Buyers, imposes the following financial maintenance covenants on Skybridge, tested at the intervals specified below:
These covenants are designed to ensure that Skybridge maintains sufficient capitalization, liquidity, and operational scale to support its obligations as Originator, Servicer, and Performance Guarantor throughout the 18-month Facility term. A breach of any financial covenant constitutes an Event of Default under the MRA (subject to the cure period analysis discussed in Section VIII.D below).
B. Calibration Against Skybridge's Current Financial Position
1. Tangible Net Worth
Based on Skybridge's FY2025 audited financial statements, which were audited by Grandview Kapoor LLP (engagement partner Anil Kapoor), Skybridge's tangible net worth as of December 31, 2025 was approximately $64 million. "Tangible net worth" is defined in the Performance Guaranty as total stockholders' equity minus intangible assets (including goodwill, capitalized software development costs, deferred financing costs, and similar intangible items).
The $55,000,000 covenant threshold provides a cushion of approximately $9 million, representing approximately 14% headroom relative to the current tangible net worth figure. This cushion is adequate for the near term but warrants ongoing monitoring throughout the Facility term. Several factors could erode the tangible net worth cushion, including: (a) significant write-offs or charge-offs on Skybridge's retained receivable portfolio (i.e., receivables not sold into the warehouse); (b) operating losses in any quarter; (c) equity distributions to Redstone Meridian Capital Partners, LP (as the 62% equity holder); and (d) growth-related investments that increase intangible assets (e.g., additional capitalized software development costs related to platform enhancements).
Recommendation: Accepted. C&H should confirm with Rajan Sundaram (CFO) and Priya Chakraborty (Controller) that no material equity distribution, extraordinary write-off, or significant capitalized intangible asset addition is anticipated during the 18-month Facility term that could cause tangible net worth to approach or breach the $55 million threshold. In particular, C&H should inquire whether Redstone Meridian has any planned or expected equity distributions or dividend recapitalization events that would reduce Skybridge's equity base.
2. Liquidity. Skybridge's unrestricted cash and cash equivalents position as of December 31, 2025 was approximately $17.5 million, based on management reporting provided by Rajan Sundaram. The $10,000,000 minimum liquidity covenant provides a cushion of approximately $7.5 million, representing approximately 43% headroom.
While the absolute cushion appears comfortable, C&H notes that the liquidity covenant is tested monthly — a more frequent testing cadence than the quarterly tests applicable to the other financial covenants. Monthly testing increases the risk that intra-month cash flow fluctuations could compress liquidity below the covenant threshold. Skybridge's business involves significant cash flow cyclicality related to loan origination funding (cash outflows when new loans are originated) and loan repayment collections (cash inflows as borrowers make monthly payments). During peak origination periods, Skybridge's cash position may temporarily decline as it funds new loan originations before collections from the existing portfolio are received.
Recommendation: Accepted. C&H should advise Skybridge to implement an internal liquidity monitoring protocol with a $12.5 million internal trigger — i.e., if unrestricted cash falls below $12.5 million at any point during a month, Skybridge's treasury team should be alerted to the potential for a covenant breach and should take proactive measures (such as timing origination funding to align with collection cycles or drawing on the warehouse facility to reduce on-balance-sheet receivable holdings). The $12.5 million internal trigger provides a $2.5 million buffer above the $10 million covenant level, which should be sufficient to absorb normal intra-month fluctuations.
3. Leverage Ratio
Skybridge's current estimated Total Debt to Tangible Net Worth ratio is approximately 3.2:1.00, based on FY2025 balance sheet data. The 4.00:1.00 maximum leverage ratio covenant provides approximately 0.8x of headroom.
However, the leverage ratio analysis requires careful attention to the definition of "Total Debt" in the Performance Guaranty. The WCB Mark-Up defined "Total Debt" broadly to include "all indebtedness for borrowed money, all obligations evidenced by bonds, debentures, notes, or similar instruments, all capital lease obligations, all obligations under repurchase agreements or similar financing arrangements, and all guaranty obligations." Under this defin