1024-00001 · Driftwood Absolute Return Fund Ltd · Closing

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CALDERWOOD & HARKNESS LLP

599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6000 Facsimile: (212) 848-6099

1000 North King Street, Suite 300 Wilmington, DE 19801 Telephone: (302) 552-3700 Facsimile: (302) 552-3799

February 14, 2024

VIA ELECTRONIC MAIL AND Sundial Data Systems

Jonathan R. Whitfield, Esq. Whitfield, Graves & Sato LLP 1201 North Market Street, Suite 1500 Wilmington, DE 19801

Gerald T. Harmon, Chief Executive Officer Susan K. Nakamura, Chief Financial Officer Cascabel Financial Holdings, Inc. 1200 Market Street, Suite 900 Wilmington, DE 19801

cc: Terrence M. Kowalski, Chief Restructuring Officer, Alderpoint Advisory Partners LLC, 399 Park Avenue, 22nd Floor, New York, NY 10022

cc: Rachel P. Dumont, Esq., Whitfield, Graves & Sato LLP, 1201 North Market Street, Suite 1500, Wilmington, DE 19801

Re: Payoff Letter and Authorization for Lien Release — Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender

Reference: In re Cascabel Financial Holdings, Inc., et al., Case No. 23-11487 (KFM), United States Bankruptcy Court for the District of Delaware

Dear Mr. Whitfield, Mr. Harmon, and Ms. Nakamura:

1. Introduction and Purpose

Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") represents Driftwood Absolute Return Fund Ltd. ("Driftwood" or the "DIP Lender"), a Cayman Islands exempted company with its principal office located at 280 Park Avenue, 38th Floor, New York, NY 10017, and its investment manager, Driftwood Capital Advisors LLC, a Delaware limited liability company with its principal office at the same address. We deliver this letter to you in our capacity as counsel to the DIP Lender.

The purpose of this letter (this "Payoff Letter") is to provide a payoff statement setting forth the amounts necessary to satisfy in full all Obligations (as defined in the DIP Credit Agreement) arising under or in connection with that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as of October 13, 2023 (as amended, supplemented, or otherwise modified from time to time, the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc., a Delaware corporation ("Cascabel Holdings"), and Cascabel Asset Management LLC, a Delaware limited liability company ("Cascabel Asset Management" and, together with Cascabel Holdings, the "Borrowers" or the "Debtors"), as borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender, and to provide the DIP Lender's authorization for the release of all liens and superpriority claims upon repayment in full of such Obligations.

This Payoff Letter is delivered in connection with the anticipated repayment in full of all Obligations under the DIP Credit Agreement on the Plan Effective Date, which is expected to occur on February 16, 2024 (the "Payoff Date"). The Debtors have represented to the DIP Lender that all conditions to the occurrence of the Plan Effective Date are expected to be satisfied or waived on or before such date.

This Payoff Letter is delivered following the entry of that certain Order Confirming the Debtors' Second Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (D.I. 487) (the "Confirmation Order") by the Honorable Karen F. McAllister, United States Bankruptcy Judge, on January 29, 2024, confirming the Second Amended Joint Plan of Reorganization of Cascabel Financial Holdings, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (as modified, the "Plan").

For the avoidance of doubt, this Payoff Letter is further delivered in connection with and pursuant to the terms of the Final Order (I) Authorizing the Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364(c), and 364(d), (II) Granting Liens and Superpriority Claims, (III) Authorizing the Use of Cash Collateral, (IV) Approving the Roll-Up of Certain Pre-Petition Secured Indebtedness, and (V) Granting Related Relief (D.I. 198) (the "Final DIP Order"), entered by the Court on October 13, 2023, which authorized the Debtors to borrow up to $75,000,000 under the DIP Credit Agreement (comprising $43,000,000 in new money borrowings and a $32,000,000 roll-up of Driftwood's pre-petition first lien claims), and which granted the DIP Lender final priming liens on substantially all assets of the Debtors and their estates and superpriority administrative expense claims under Sections 364(c)(1) and 507(b) of the Bankruptcy Code. References herein to the "Interim DIP Order" refer to the Interim Order (D.I. 47) entered by the Court on September 15, 2023, and references to the "DIP Orders" refer collectively to the Interim DIP Order and the Final DIP Order.

Unless otherwise defined herein, all capitalized terms used in this Payoff Letter shall have the meanings ascribed to such terms in the DIP Credit Agreement.

2. Payoff Amount

2.1 Total Payoff Amount as of February 16, 2024

The total payoff amount (the "Payoff Amount") required to satisfy all Obligations under the DIP Credit Agreement in full as of February 16, 2024 (the "Payoff Date") is set forth in Section 2.2 below. The Payoff Amount represents the aggregate amount that must be received by the DIP Lender in order to fully discharge and satisfy all Obligations of the Borrowers arising under or in connection with the DIP Credit Agreement, the DIP Orders, and all related DIP Loan Documents (as defined in the DIP Credit Agreement).

The Payoff Amount set forth herein is calculated assuming irrevocable receipt of good, cleared, and immediately available funds in the account designated in Section 4 hereof and in Exhibit A hereto on or before 2:00 p.m. (Eastern Time) on February 16, 2024. In the event that payment is received after 2:00 p.m. (Eastern Time) on February 16, 2024, or on any date subsequent to the Payoff Date, additional per diem interest shall continue to accrue and the Payoff Amount shall be recalculated in accordance with Section 2.7 below. The DIP Lender shall have no obligation to accept partial payment or to release any lien, security interest, or superpriority claim unless and until the full Payoff Amount is received as set forth herein.

2.2 Itemized Payoff Schedule

The following table sets forth the itemized components of the Payoff Amount as of February 16, 2024:

The amounts set forth for Reimbursable Expenses of DIP Lender and Reimbursable Professional Fees of Calderwood & Harkness LLP are estimates only and remain subject to final reconciliation and final invoice as more fully described in Section 2.6 below. The Debtors' obligation to pay the final, reconciled amounts of such expenses and fees shall survive the payment of the Payoff Amount and the release of liens described herein.

2.3 Interest Calculation Detail

Interest on the Obligations outstanding under the DIP Credit Agreement accrues at a rate equal to Adjusted Term SOFR (as defined in the DIP Credit Agreement) plus 900 basis points per annum, subject to a SOFR floor of 4.00% per annum. Accordingly, the minimum all-in interest rate applicable to the DIP facility is 13.00% per annum (the "Applicable Rate"). As of the date hereof, the Applicable Rate is 13.00% per annum.

Interest has been calculated using the actual/365 day-count convention as specified in Section 2.08(d) of the DIP Credit Agreement. The calculation period runs from the applicable funding dates through February 16, 2024, the anticipated Payoff Date.

A detailed calculation worksheet setting forth the interest accrual on each tranche and draw is attached hereto as Exhibit B. For purposes of this Section 2.3, the aggregate blended accrual is summarized as follows:

(a) Draw 1 (New Money DIP Tranche — Interim Draw): $18,000,000.00 in principal was funded on September 15, 2023, upon entry of the Interim DIP Order. Interest has accrued on this amount from September 15, 2023 through February 16, 2024, a period of 154 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $987,616.44.

(b) Draw 2 (New Money DIP Tranche — Final Draw): $25,000,000.00 in additional principal was funded on October 13, 2023, upon entry of the Final DIP Order. Interest has accrued on this amount from October 13, 2023 through February 16, 2024, a period of 126 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $1,121,917.81.

(c) Roll-Up Tranche: $32,000,000.00 in pre-petition first lien claims of Driftwood were deemed rolled up and converted into DIP Obligations on October 13, 2023, upon entry of the Final DIP Order. Interest has accrued on this amount from October 13, 2023 through February 16, 2024, a period of 126 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $1,436,054.79.

(d) Subtotal Accrued Interest: $987,616.44 + $1,121,917.81 + $1,436,054.79 = approximately $3,545,589.04. The aggregate figure of $4,306,250.00 set forth in the payoff schedule above reflects the blended accrual across all funding dates as further adjusted for interim interest payment credits and the compounding provisions set forth in Section 2.08(e) of the DIP Credit Agreement, including capitalization of accrued interest at the end of each quarterly interest period. A full reconciliation of the interest calculation, including interim adjustments, is set forth on Exhibit B.

No default rate interest has been applied in the calculation of the Payoff Amount. No Event of Default (as defined in the DIP Credit Agreement) has occurred and is continuing as of the date of this Payoff Letter. In the event an Event of Default has occurred and is continuing on the Payoff Date, the DIP Lender reserves the right to recalculate the Payoff Amount to include interest at the Default Rate as set forth in Section 2.7 below.

2.4 Commitment Fee

Pursuant to Section 2.05 of the DIP Credit Agreement, a Commitment Fee in the amount of $1,500,000.00 (representing 2.00% of the aggregate $75,000,000.00 DIP facility commitments) was earned by the DIP Lender and was paid in full upon entry of the Interim DIP Order on September 15, 2023. The Commitment Fee has been fully satisfied and is not included in the Payoff Amount set forth in Section 2.2 above.

2.5 Exit Fee

Pursuant to Section 2.06 of the DIP Credit Agreement, an Exit Fee in the amount equal to 1.50% of all amounts drawn under the DIP Credit Agreement is due and payable upon repayment of the DIP facility. The Exit Fee is calculated as follows:

$75,000,000.00 × 1.50% = $1,125,000.00

The Exit Fee is included in the Payoff Amount set forth in Section 2.2 above and is payable upon repayment of the DIP facility on the Payoff Date pursuant to Section 2.06 of the DIP Credit Agreement. The Exit Fee is earned upon repayment and is non-refundable.

2.6 Reimbursable Expenses and Professional Fees

Pursuant to Section 11.04 of the DIP Credit Agreement and Paragraph 22 of the Final DIP Order, all reasonable and documented out-of-pocket fees, costs, and expenses of the DIP Lender incurred in connection with the DIP Credit Agreement, the DIP Orders, and the transactions contemplated thereby, including without limitation the fees, disbursements, and expenses of Calderwood & Harkness LLP as counsel to the DIP Lender, constitute allowed administrative expense claims of the Debtors' estates with priority under Section 503(b)(1) of the Bankruptcy Code.

The estimated total professional fees and expenses of Calderwood & Harkness LLP incurred over the course of this engagement through the anticipated Payoff Date are approximately $2,849,718.50 (inclusive of disbursements and expenses). The hourly rates of the professionals at Calderwood & Harkness LLP who have rendered services in this engagement are as follows: Partners at $1,650.00 per hour, Associates at $950.00 per hour, and Paraprofessionals at $425.00 per hour. Such rates are consistent with market rates for comparable legal services and are subject to periodic adjustment in accordance with the firm's standard policies.

The estimated reimbursable expenses of the DIP Lender (exclusive of Calderwood & Harkness LLP fees) are approximately $187,432.61, representing travel, due diligence, third-party advisory, and other out-of-pocket costs incurred in connection with the origination, documentation, and administration of the DIP facility.

Final invoices for all Calderwood & Harkness LLP fees and expenses, and for all other reimbursable expenses of the DIP Lender, will be delivered to the Debtors and their counsel promptly following the Payoff Date. The Debtors' obligation to pay the final, reconciled amounts of all reimbursable expenses and professional fees shall survive the payment of the Payoff Amount and the release of liens described in Section 5 hereof. In the event that the final amount of reimbursable expenses and professional fees differs from the estimated amounts set forth in the payoff schedule above, the Debtors shall remain obligated to pay any deficiency, and Driftwood hereby reserves all rights to seek payment of any such deficiency as an allowed administrative expense claim of the Debtors' estates under Section 503(b)(1) of the Bankruptcy Code, the DIP Credit Agreement, and the DIP Orders.

2.7 Per Diem Interest

In the event that the Payoff Amount is not received in full in immediately available funds on or before 2:00 p.m. (Eastern Time) on February 16, 2024, additional interest shall continue to accrue on the outstanding principal balance of $75,000,000.00 at the Applicable Rate of 13.00% per annum, resulting in per diem interest of:

$75,000,000.00 × 13.00% ÷ 365 = $26,712.33 per diem

Any payment received after the Payoff Date must include all additional per diem interest accrued from and after February 16, 2024 through and including the date of actual receipt of good funds by the DIP Lender.

The DIP Lender expressly reserves all rights and remedies available under the DIP Credit Agreement, the DIP Orders, and applicable law, including without limitation the right to impose interest at the Default Rate upon the occurrence and during the continuance of any Event of Default. The Default Rate under the DIP Credit Agreement is equal to Adjusted Term SOFR plus 1,100 basis points per annum, with a minimum all-in rate of 15.00% per annum.

3. Source of Payoff Funds

The Debtors have represented to the DIP Lender and to Calderwood & Harkness LLP that the Payoff Amount will be funded from the following sources:

(a) Proceeds of a new $95,000,000.00 exit credit facility (the "Exit Facility") to be provided by Thornbury Capital Markets LLC pursuant to a Credit Agreement to be entered into on or about the Payoff Date in connection with the Plan Effective Date; and

(b) Approximately $12,000,000.00 in unrestricted cash on hand held by the Debtors and their estates as of the Payoff Date.

Calderwood & Harkness LLP and the DIP Lender express no opinion as to the adequacy, availability, or sufficiency of such funds or as to the satisfaction of any conditions precedent to the closing of the Exit Facility. The obligation of the Borrowers to pay the Payoff Amount in full on the Payoff Date is unconditional and is not subject to or contingent upon the closing of the Exit Facility or the availability of any other source of funds. The DIP Lender shall have no obligation to subordinate or defer its right to receive the Payoff Amount in favor of any other creditor, lender, or party in interest.

4. Wire Instructions

All payments of the Payoff Amount must be made by wire transfer of immediately available funds to the account designated below:

Bank Name: Greaves Bancorp ABA Routing Number: 021000021 Account Name: Driftwood Absolute Return Fund Ltd. Account Number: 8834-7291-006 Reference: DIP Payoff — Cascabel Financial Holdings, Inc. — Case No. 23-11487 (KFM) Attention: Marcus Ellison, Co-Founder & CIO, and Priya Venkatesh, Co-Founder & COO

Complete wire instructions, including the SWIFT code for international reference purposes (given the Cayman Islands domicile of Driftwood), are set forth in Exhibit A attached hereto.

The Debtors are requested to provide telephonic confirmation of the initiation of the wire transfer to the following persons promptly upon submission of wire instructions to their depository institution:

(i) Colette Whitman, Partner, Calderwood & Harkness LLP, Telephone: (212) 848-6142, Email: colette.whitman@calderwoodharkness.com; and

(ii) Marcus Ellison and Priya Venkatesh, Driftwood Capital Advisors LLC, 280 Park Avenue, 38th Floor, New York, NY 10017, Telephone: (212) 756-8800.

5. Authorization for Release of DIP Liens and Superpriority Claims

5.1 Conditional Authorization

Upon irrevocable receipt of the full Payoff Amount in immediately available funds in the account designated in Section 4 hereof and in Exhibit A hereto, as confirmed by written notice from Calderwood & Harkness LLP or Driftwood (such confirmation, the "Payoff Confirmation"), Driftwood hereby irrevocably authorizes each of the following:

(a) Release of Liens. The release, discharge, and termination of all liens, security interests, pledges, charges, mortgages, assignments, hypothecations, and encumbrances of any kind whatsoever (collectively, "Liens") heretofore granted to, or for the benefit of, the DIP Lender under the DIP Credit Agreement, the Interim DIP Order (entered September 15, 2023, D.I. 47), the Final DIP Order (entered October 13, 2023, D.I. 198), and all related DIP Loan Documents, on or against any and all assets, property, and interests in property of the Debtors and their estates, wherever located and whether now existing or hereafter acquired, including, without limitation: (i) all first priority priming liens on substantially all assets of Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC (including all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles, goods, instruments, intellectual property, inventory, investment property, letter-of-credit rights, payment intangibles, and supporting obligations); (ii) all liens on the proceeds of avoidance actions arising under Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code; and (iii) all liens on any other property of the Debtors' estates securing the Obligations under the DIP Credit Agreement.

(b) Release of Superpriority Claims. The release, discharge, and satisfaction of all superpriority administrative expense claims heretofore granted to the DIP Lender under Sections 364(c)(1) and 507(b) of the Bankruptcy Code and the DIP Orders, including all claims having priority over any and all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code.

(c) Release of Roll-Up Tranche Claims. The release, discharge, and satisfaction of all claims of Driftwood arising from or in connection with the $32,000,000.00 Roll-Up Tranche (being the rolled-up pre-petition first lien claims of Driftwood under that certain Amended and Restated Credit Agreement dated as of March 15, 2021, as amended), which claims were converted into DIP Obligations pursuant to the Final DIP Order and the DIP Credit Agreement.

5.2 UCC Financing Statement Terminations

Upon delivery of the Payoff Confirmation, Driftwood hereby authorizes the filing of UCC-3 termination statements with respect to all UCC-1 financing statements (and all continuation statements and amendments thereto) filed by or on behalf of the DIP Lender in connection with the DIP Credit Agreement in the State of Delaware, Department of State, Division of Corporations, and in any other jurisdiction in which financing statements were filed to perfect the DIP Lender's security interests in the collateral described therein.

The Debtors and their counsel, Whitfield, Graves & Sato LLP, are hereby authorized to prepare and file all such UCC-3 termination statements at the Debtors' sole cost and expense. Driftwood will promptly execute and deliver any additional instruments, documents, or agreements reasonably requested by the Debtors or their counsel in order to effectuate the release and termination of the Liens described in Section 5.1 above, including without limitation any releases, satisfactions, discharges, or terminations required to be recorded in any governmental office or filing jurisdiction.

5.3 No Release Prior to Payoff Confirmation

The authorizations set forth in this Section 5 are expressly conditioned upon the irrevocable receipt by the DIP Lender of the full Payoff Amount in immediately available funds. No release of any Lien, no discharge or termination of any security interest, and no satisfaction or release of any superpriority administrative expense claim shall be effective unless and until the Payoff Confirmation has been delivered in writing by Calderwood & Harkness LLP or Driftwood to the Debtors and their counsel.

Until such time as the Payoff Confirmation is delivered, all Liens, security interests, superpriority administrative expense claims, and all other rights, remedies, and claims of the DIP Lender under the DIP Credit Agreement, the DIP Orders, and all related DIP Loan Documents shall remain in full force and effect, and the DIP Lender shall retain all rights, powers, and privileges granted to it thereunder. The Debtors shall take no action to file or cause to be filed any UCC-3 termination statement or any other instrument purporting to release or terminate any Lien of the DIP Lender prior to delivery of the Payoff Confirmation.

6. Reservation of Rights

Except as expressly set forth in this Payoff Letter, Driftwood hereby expressly reserves all of its rights, remedies, claims, and defenses under the DIP Credit Agreement, the Interim DIP Order, the Final DIP Order, the Adequate Protection Stipulation (as defined below), the Confirmation Order, the Plan, and all applicable law, whether arising in equity, at law, or under the Bankruptcy Code.

Without limiting the generality of the foregoing, the release and lien termination authorized herein shall not constitute, and shall not be deemed to constitute, a release, waiver, or discharge of:

(a) any obligation of the Debtors or the Reorganized Debtors to pay post-closing reimbursable expenses and professional fees of the DIP Lender and its counsel pursuant to Section 11.04 of the DIP Credit Agreement and Paragraph 22 of the Final DIP Order, which obligations shall survive repayment of the DIP facility and the release of Liens;

(b) any indemnification obligations of the Debtors or the Reorganized Debtors to the DIP Lender, its affiliates, and their respective directors, officers, employees, agents, and advisors, including without limitation indemnification obligations arising under Section 11.05 of the DIP Credit Agreement, which obligations shall survive repayment of the DIP facility;

(c) any rights, claims, or interests of Driftwood under the Confirmation Order or the Plan, including without limitation any rights as holder of the equity interests issued to Driftwood on the Plan Effective Date; or

(d) any claims, causes of action, or rights of Driftwood against any third party, including without limitation any guarantors, co-obligors, or other persons or entities not party to this Payoff Letter.

7. Adequate Protection Obligations — Confirmation of Satisfaction

This Section 7 is provided for informational purposes and for the avoidance of doubt. Reference is made to that certain Stipulation Among the Debtors, Driftwood Absolute Return Fund Ltd., Velthorn National Bank, N.A., and Pinnacle Credit Partners Fund II, LP Regarding Adequate Protection (D.I. 189), filed with the Court on October 9, 2023 (the "Adequate Protection Stipulation"), by and among Driftwood, Cascabel Holdings, Cascabel Asset Management, Velthorn National Bank, N.A. (as administrative agent and collateral agent for the pre-petition first lien lenders holding approximately $38,000,000.00 in aggregate outstanding principal), and Pinnacle Credit Partners Fund II, LP (as administrative agent and collateral agent for the pre-petition second lien lenders holding approximately $28,000,000.00 in aggregate outstanding principal).

The adequate protection obligations set forth in the Adequate Protection Stipulation and approved by the Final DIP Order — including the granting of replacement liens and Section 507(b) claims for the benefit of the non-Driftwood pre-petition first lien lenders holding an aggregate of approximately $88,000,000.00 in pre-petition secured claims (comprising the Velthorn syndicate and the Pinnacle syndicate) — are separate and distinct from the DIP Lender's claims and are not affected by, released by, or otherwise implicated in this Payoff Letter.

The adequate protection reserve of $3,500,000.00, which was funded from the proceeds of Draw 1 and deposited into a segregated account pursuant to Paragraph 14(c) of the Final DIP Order, and the ongoing adequate protection payments at a rate of SOFR plus 425 basis points per annum on $88,000,000.00 in aggregate pre-petition first lien obligations, are matters exclusively between the Debtors and the pre-petition first lien lenders and are governed by the Plan. Under the Plan, the non-Driftwood pre-petition first lien lenders are to receive distributions equal to approximately 89 cents on the dollar, payable in cash on the Plan Effective Date. Driftwood expresses no opinion as to the adequacy or timing of such distributions.

8. No Waiver

Nothing contained in this Payoff Letter shall be deemed a waiver or modification of any provision of the DIP Credit Agreement, the DIP Orders, or any related DIP Loan Document, or of any right or remedy of the DIP Lender arising thereunder or under applicable law. The delivery of this Payoff Letter, and the authorization for release of Liens set forth herein, do not and shall not create any obligation on the part of Driftwood to extend, renew, or modify the maturity date of the DIP Credit Agreement (which has an outside maturity date of September 8, 2024), to forbear from exercising any right or remedy upon the occurrence of an Event of Default, or to consent to any action by the Debtors or any other party in interest.

The DIP Lender's agreement to accept the Payoff Amount and to authorize the release of Liens as set forth herein is made solely in connection with the anticipated occurrence of the Plan Effective Date on February 16, 2024, and is without prejudice to any right, remedy, or defense of the DIP Lender in the event that the Plan Effective Date does not occur on such date or at all.

9. Governing Law

This Payoff Letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict-of-laws principles that would require or permit the application of the laws of any other jurisdiction, consistent with Section 11.14 of the DIP Credit Agreement. To the extent not preempted by federal law, the internal laws of the State of New York shall govern all questions of construction, validity, and interpretation of this Payoff Letter.

The United States Bankruptcy Court for the District of Delaware shall retain exclusive jurisdiction over any disputes arising under, in connection with, or related to this Payoff Letter, the DIP Credit Agreement, the DIP Orders, and the transactions contemplated hereby and thereby, to the fullest extent permitted by applicable law. Each party hereto irrevocably submits to the jurisdiction of such court and waives any objection to venue therein.

10. Counterparts and Delivery

This Payoff Letter may be executed and delivered in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Payoff Letter by facsimile transmission or by electronic transmission in portable document format (PDF) or other electronic imaging means shall be effective as delivery of an original executed counterpart hereof.

[Remainder of this page intentionally left blank; signature pages follow.]

SIGNATURE PAGE TO DIP PAYOFF LETTER AND AUTHORIZATION FOR LIEN RELEASE

We trust that the foregoing accurately sets forth the Payoff Amount and the terms upon which the DIP Lender will authorize the release of its Liens and superpriority claims. Please do not hesitate to contact us if you have any questions.

Very truly yours,

CALDERWOOD & HARKNESS LLP, on behalf of DRIFTWOOD ABSOLUTE RETURN FUND LTD.

By: ________

Name: Colette Whitman

Title: Partner

Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6142

Email: colette.whitman@calderwoodharkness.com

With a copy to:

Calderwood & Harkness LLP 1000 North King Street, Suite 300 Wilmington, DE 19801 Telephone: (302) 552-3700

ACKNOWLEDGMENT AND AGREEMENT

The undersigned hereby (i) acknowledge receipt of this Payoff Letter, (ii) confirm the accuracy of the amounts set forth herein (subject to finalization of the reimbursable expenses and professional fees), (iii) agree to wire the full Payoff Amount to the account designated in Section 4 and Exhibit A hereof on or before 2:00 p.m. (Eastern Time) on February 16, 2024, and (iv) agree to the terms and conditions set forth in this Payoff Letter, including the obligation to pay any post-closing reimbursable expenses and professional fees in accordance with Section 2.6 hereof.

CASCABEL FINANCIAL HOLDINGS, INC.

By: ________

Name: Gerald T. Harmon

Title: Chief Executive Officer

By: ________

Name: Terrence M. Kowalski

Title: Chief Restructuring Officer

Alderpoint Advisory Partners LLC

Date: ________

CASCABEL ASSET MANAGEMENT LLC

By: ________

Name: Gerald T. Harmon

Title: Manager

Date: ________

ACKNOWLEDGED BY DEBTORS' COUNSEL:

WHITFIELD, GRAVES & SATO LLP

By: ________

Name: Jonathan R. Whitfield

Title: Partner

Date: ________

EXHIBIT A

WIRE INSTRUCTIONS

All payments of the Payoff Amount shall be made by wire transfer of immediately available funds to the following account:

The SWIFT code (CHASUS33) is provided for international reference purposes given the Cayman Islands domicile of Driftwood Absolute Return Fund Ltd. All payments are to be made in United States dollars.

Contact Information for Wire Confirmation:

Upon initiation of the wire transfer, the Debtors are requested to provide telephonic and email confirmation to each of the following persons:

1. Colette Whitman, Esq.

Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6142

Email: colette.whitman@calderwoodharkness.com

2. Marcus Ellison, Co-Founder & Chief Investment Officer

Driftwood Capital Advisors LLC 280 Park Avenue, 38th Floor New York, NY 10017 Telephone: (212) 756-8801

Email: mellison@driftwoodcap.com

3. Priya Venkatesh, Co-Founder & Chief Operating Officer

Driftwood Capital Advisors LLC 280 Park Avenue, 38th Floor New York, NY 10017 Telephone: (212) 756-8803

Email: pvenkatesh@driftwoodcap.com

The DIP Lender shall endeavor to deliver the Payoff Confirmation promptly upon verification that the full Payoff Amount has been irrevocably received in immediately available funds in the account designated above.

EXHIBIT B

PAYOFF CALCULATION WORKSHEET

The following worksheet sets forth the detailed calculation of the Payoff Amount as of February 16, 2024. All interest calculations are based on the actual/365 day-count convention as specified in Section 2.08(d) of the DIP Credit Agreement.

I. Principal.

II. Accrued and Unpaid Interest

Applicable Rate: 13.00% per annum (Adjusted Term SOFR + 900 bps; SOFR floor of 4.00%; minimum all-in rate of 13.00%)

Day-Count Convention: Actual/365

Note: The quarterly compounding adjustment reflects the capitalization of accrued interest at the end of the quarterly interest periods ending December 15, 2023, and the pro rata compounding through the Payoff Date, as provided in Section 2.08(e) of the DIP Credit Agreement. Interest on capitalized amounts accrues at the Applicable Rate from the date of capitalization.

III. Exit Fee

IV. Commitment Fee (Previously Paid)

V. Reimbursable Expenses and Professional Fees

VI. Grand Total Payoff Amount

The Grand Total Estimated Payoff Amount is subject to adjustment based on (i) the actual date and time of receipt of good funds, (ii) final reconciliation of reimbursable expenses, and (iii) delivery of final invoices for professional fees. The Debtors remain obligated to pay any deficiency in reimbursable expenses and professional fees following the Payoff Date.

VII. Per Diem Interest (if payment is received after 2:00 p.m. ET on February 16, 2024)

The Default Rate per diem is set forth for reference only. The Default Rate applies only upon the occurrence and during the continuance of an Event of Default under the DIP Credit Agreement.

— End of Exhibit B —

Component	Amount
Principal — New Money DIP Tranche	$43,000,000.00
Principal — Roll-Up Tranche	$32,000,000.00
Total Outstanding Principal	$75,000,000.00
Accrued and Unpaid Interest (through February 16, 2024)	$4,306,250.00
Exit Fee (1.50% × $75,000,000.00)	$1,125,000.00
Reimbursable Expenses of DIP Lender (estimated, subject to final reconciliation)	$187,432.61
Reimbursable Professional Fees — Calderwood & Harkness LLP (estimated, subject to final invoice pursuant to § 11.04 of the DIP Credit Agreement)	$2,849,718.50
Total Estimated Payoff Amount	$83,468,401.11
Beneficiary Bank:	Greaves Bancorp
Bank Address:	383 Madison Avenue, New York, NY 10179
ABA Routing Number:	021000021
SWIFT Code:	CHASUS33
Account Name:	Driftwood Absolute Return Fund Ltd.
Account Number:	8834-7291-006
Reference:	DIP Payoff — Cascabel Financial Holdings, Inc. — Case No. 23-11487 (KFM)
Attention:	Marcus Ellison, Co-Founder & CIO, and Priya Venkatesh, Co-Founder & COO
Tranche	Funding Date	Principal Amount
Draw 1 — New Money DIP Tranche (Interim Draw)	September 15, 2023	$18,000,000.00
Draw 2 — New Money DIP Tranche (Final Draw)	October 13, 2023	$25,000,000.00
Roll-Up Tranche	October 13, 2023 (deemed funded)	$32,000,000.00
Total Outstanding Principal	$75,000,000.00
Tranche	Principal	Accrual Start Date	Accrual End Date	Days	Rate	Interest Accrued
Draw 1	$18,000,000.00	September 15, 2023	February 16, 2024	154	13.00%	$987,616.44
Draw 2	$25,000,000.00	October 13, 2023	February 16, 2024	126	13.00%	$1,121,917.81

Roll-Up Tranche	$32,000,000.00	October 13, 2023	February 16, 2024	126	13.00%	$1,436,054.79
Subtotal — Straight-Line Accrual	$3,545,589.04
Quarterly Compounding Adjustments (per § 2.08(e))	$760,660.96
Total Accrued and Unpaid Interest	$4,306,250.00
Description	Calculation	Amount
Exit Fee (§ 2.06 of DIP Credit Agreement)	$75,000,000.00 × 1.50%	$1,125,000.00
Description	Calculation	Amount	Status
Commitment Fee (§ 2.05 of DIP Credit Agreement)	$75,000,000.00 × 2.00%	$1,500,000.00	Paid September 15, 2023 — Not Included in Payoff Amount
Description	Estimated Amount	Status
Reimbursable Expenses of DIP Lender (travel, due diligence, third-party advisory, misc.)	$187,432.61	Subject to final reconciliation
Professional Fees — Calderwood & Harkness LLP (inclusive of disbursements)	$2,849,718.50	Subject to final invoice
Subtotal — Reimbursable Amounts	$3,037,151.11
Component	Amount
Total Outstanding Principal	$75,000,000.00
Total Accrued and Unpaid Interest	$4,306,250.00
Exit Fee	$1,125,000.00
Reimbursable Expenses of DIP Lender	$187,432.61
Professional Fees — Calderwood & Harkness LLP	$2,849,718.50
Grand Total Estimated Payoff Amount	$83,468,401.11
Description	Calculation	Amount
Per Diem Interest at Applicable Rate	$75,000,000.00 × 13.00% ÷ 365	$26,712.33 per diem
Per Diem Interest at Default Rate	$75,000,000.00 × 15.00% ÷ 365	$30,821.92 per diem

CALDERWOOD & HARKNESS LLP
599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6000 Facsimile: (212) 848-6099
1000 North King Street, Suite 300 Wilmington, DE 19801 Telephone: (302) 552-3700 Facsimile: (302) 552-3799
February 14, 2024
VIA ELECTRONIC MAIL AND Sundial Data Systems
Jonathan R. Whitfield, Esq. Whitfield, Graves & Sato LLP 1201 North Market Street, Suite 1500 Wilmington, DE 19801
Gerald T. Harmon, Chief Executive Officer Susan K. Nakamura, Chief Financial Officer Cascabel Financial Holdings, Inc. 1200 Market Street, Suite 900 Wilmington, DE 19801
cc: Terrence M. Kowalski, Chief Restructuring Officer, Alderpoint Advisory Partners LLC, 399 Park Avenue, 22nd Floor, New York, NY 10022
cc: Rachel P. Dumont, Esq., Whitfield, Graves & Sato LLP, 1201 North Market Street, Suite 1500, Wilmington, DE 19801
Re: Payoff Letter and Authorization for Lien Release — Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender
Reference: In re Cascabel Financial Holdings, Inc., et al., Case No. 23-11487 (KFM), United States Bankruptcy Court for the District of Delaware
Dear Mr. Whitfield, Mr. Harmon, and Ms. Nakamura:
1. Introduction and Purpose
Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") represents Driftwood Absolute Return Fund Ltd. ("Driftwood" or the "DIP Lender"), a Cayman Islands exempted company with its principal office located at 280 Park Avenue, 38th Floor, New York, NY 10017, and its investment manager, Driftwood Capital Advisors LLC, a Delaware limited liability company with its principal office at the same address. We deliver this letter to you in our capacity as counsel to the DIP Lender.
The purpose of this letter (this "Payoff Letter") is to provide a payoff statement setting forth the amounts necessary to satisfy in full all Obligations (as defined in the DIP Credit Agreement) arising under or in connection with that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as of October 13, 2023 (as amended, supplemented, or otherwise modified from time to time, the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc., a Delaware corporation ("Cascabel Holdings"), and Cascabel Asset Management LLC, a Delaware limited liability company ("Cascabel Asset Management" and, together with Cascabel Holdings, the "Borrowers" or the "Debtors"), as borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender, and to provide the DIP Lender's authorization for the release of all liens and superpriority claims upon repayment in full of such Obligations.
This Payoff Letter is delivered in connection with the anticipated repayment in full of all Obligations under the DIP Credit Agreement on the Plan Effective Date, which is expected to occur on February 16, 2024 (the "Payoff Date"). The Debtors have represented to the DIP Lender that all conditions to the occurrence of the Plan Effective Date are expected to be satisfied or waived on or before such date.
This Payoff Letter is delivered following the entry of that certain Order Confirming the Debtors' Second Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (D.I. 487) (the "Confirmation Order") by the Honorable Karen F. McAllister, United States Bankruptcy Judge, on January 29, 2024, confirming the Second Amended Joint Plan of Reorganization of Cascabel Financial Holdings, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (as modified, the "Plan").
For the avoidance of doubt, this Payoff Letter is further delivered in connection with and pursuant to the terms of the Final Order (I) Authorizing the Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364(c), and 364(d), (II) Granting Liens and Superpriority Claims, (III) Authorizing the Use of Cash Collateral, (IV) Approving the Roll-Up of Certain Pre-Petition Secured Indebtedness, and (V) Granting Related Relief (D.I. 198) (the "Final DIP Order"), entered by the Court on October 13, 2023, which authorized the Debtors to borrow up to $75,000,000 under the DIP Credit Agreement (comprising $43,000,000 in new money borrowings and a $32,000,000 roll-up of Driftwood's pre-petition first lien claims), and which granted the DIP Lender final priming liens on substantially all assets of the Debtors and their estates and superpriority administrative expense claims under Sections 364(c)(1) and 507(b) of the Bankruptcy Code. References herein to the "Interim DIP Order" refer to the Interim Order (D.I. 47) entered by the Court on September 15, 2023, and references to the "DIP Orders" refer collectively to the Interim DIP Order and the Final DIP Order.
Unless otherwise defined herein, all capitalized terms used in this Payoff Letter shall have the meanings ascribed to such terms in the DIP Credit Agreement.
2. Payoff Amount
2.1 Total Payoff Amount as of February 16, 2024
The total payoff amount (the "Payoff Amount") required to satisfy all Obligations under the DIP Credit Agreement in full as of February 16, 2024 (the "Payoff Date") is set forth in Section 2.2 below. The Payoff Amount represents the aggregate amount that must be received by the DIP Lender in order to fully discharge and satisfy all Obligations of the Borrowers arising under or in connection with the DIP Credit Agreement, the DIP Orders, and all related DIP Loan Documents (as defined in the DIP Credit Agreement).
The Payoff Amount set forth herein is calculated assuming irrevocable receipt of good, cleared, and immediately available funds in the account designated in Section 4 hereof and in Exhibit A hereto on or before 2:00 p.m. (Eastern Time) on February 16, 2024. In the event that payment is received after 2:00 p.m. (Eastern Time) on February 16, 2024, or on any date subsequent to the Payoff Date, additional per diem interest shall continue to accrue and the Payoff Amount shall be recalculated in accordance with Section 2.7 below. The DIP Lender shall have no obligation to accept partial payment or to release any lien, security interest, or superpriority claim unless and until the full Payoff Amount is received as set forth herein.
2.2 Itemized Payoff Schedule
The following table sets forth the itemized components of the Payoff Amount as of February 16, 2024:
The amounts set forth for Reimbursable Expenses of DIP Lender and Reimbursable Professional Fees of Calderwood & Harkness LLP are estimates only and remain subject to final reconciliation and final invoice as more fully described in Section 2.6 below. The Debtors' obligation to pay the final, reconciled amounts of such expenses and fees shall survive the payment of the Payoff Amount and the release of liens described herein.
2.3 Interest Calculation Detail
Interest on the Obligations outstanding under the DIP Credit Agreement accrues at a rate equal to Adjusted Term SOFR (as defined in the DIP Credit Agreement) plus 900 basis points per annum, subject to a SOFR floor of 4.00% per annum. Accordingly, the minimum all-in interest rate applicable to the DIP facility is 13.00% per annum (the "Applicable Rate"). As of the date hereof, the Applicable Rate is 13.00% per annum.
Interest has been calculated using the actual/365 day-count convention as specified in Section 2.08(d) of the DIP Credit Agreement. The calculation period runs from the applicable funding dates through February 16, 2024, the anticipated Payoff Date.
A detailed calculation worksheet setting forth the interest accrual on each tranche and draw is attached hereto as Exhibit B. For purposes of this Section 2.3, the aggregate blended accrual is summarized as follows:
(a) Draw 1 (New Money DIP Tranche — Interim Draw): $18,000,000.00 in principal was funded on September 15, 2023, upon entry of the Interim DIP Order. Interest has accrued on this amount from September 15, 2023 through February 16, 2024, a period of 154 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $987,616.44.
(b) Draw 2 (New Money DIP Tranche — Final Draw): $25,000,000.00 in additional principal was funded on October 13, 2023, upon entry of the Final DIP Order. Interest has accrued on this amount from October 13, 2023 through February 16, 2024, a period of 126 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $1,121,917.81.
(c) Roll-Up Tranche: $32,000,000.00 in pre-petition first lien claims of Driftwood were deemed rolled up and converted into DIP Obligations on October 13, 2023, upon entry of the Final DIP Order. Interest has accrued on this amount from October 13, 2023 through February 16, 2024, a period of 126 days, at the Applicable Rate of 13.00% per annum, yielding accrued interest of approximately $1,436,054.79.
(d) Subtotal Accrued Interest: $987,616.44 + $1,121,917.81 + $1,436,054.79 = approximately $3,545,589.04. The aggregate figure of $4,306,250.00 set forth in the payoff schedule above reflects the blended accrual across all funding dates as further adjusted for interim interest payment credits and the compounding provisions set forth in Section 2.08(e) of the DIP Credit Agreement, including capitalization of accrued interest at the end of each quarterly interest period. A full reconciliation of the interest calculation, including interim adjustments, is set forth on Exhibit B.
No default rate interest has been applied in the calculation of the Payoff Amount. No Event of Default (as defined in the DIP Credit Agreement) has occurred and is continuing as of the date of this Payoff Letter. In the event an Event of Default has occurred and is continuing on the Payoff Date, the DIP Lender reserves the right to recalculate the Payoff Amount to include interest at the Default Rate as set forth in Section 2.7 below.
2.4 Commitment Fee
Pursuant to Section 2.05 of the DIP Credit Agreement, a Commitment Fee in the amount of $1,500,000.00 (representing 2.00% of the aggregate $75,000,000.00 DIP facility commitments) was earned by the DIP Lender and was paid in full upon entry of the Interim DIP Order on September 15, 2023. The Commitment Fee has been fully satisfied and is not included in the Payoff Amount set forth in Section 2.2 above.
2.5 Exit Fee
Pursuant to Section 2.06 of the DIP Credit Agreement, an Exit Fee in the amount equal to 1.50% of all amounts drawn under the DIP Credit Agreement is due and payable upon repayment of the DIP facility. The Exit Fee is calculated as follows:
$75,000,000.00 × 1.50% = $1,125,000.00
The Exit Fee is included in the Payoff Amount set forth in Section 2.2 above and is payable upon repayment of the DIP facility on the Payoff Date pursuant to Section 2.06 of the DIP Credit Agreement. The Exit Fee is earned upon repayment and is non-refundable.
2.6 Reimbursable Expenses and Professional Fees
Pursuant to Section 11.04 of the DIP Credit Agreement and Paragraph 22 of the Final DIP Order, all reasonable and documented out-of-pocket fees, costs, and expenses of the DIP Lender incurred in connection with the DIP Credit Agreement, the DIP Orders, and the transactions contemplated thereby, including without limitation the fees, disbursements, and expenses of Calderwood & Harkness LLP as counsel to the DIP Lender, constitute allowed administrative expense claims of the Debtors' estates with priority under Section 503(b)(1) of the Bankruptcy Code.
The estimated total professional fees and expenses of Calderwood & Harkness LLP incurred over the course of this engagement through the anticipated Payoff Date are approximately $2,849,718.50 (inclusive of disbursements and expenses). The hourly rates of the professionals at Calderwood & Harkness LLP who have rendered services in this engagement are as follows: Partners at $1,650.00 per hour, Associates at $950.00 per hour, and Paraprofessionals at $425.00 per hour. Such rates are consistent with market rates for comparable legal services and are subject to periodic adjustment in accordance with the firm's standard policies.
The estimated reimbursable expenses of the DIP Lender (exclusive of Calderwood & Harkness LLP fees) are approximately $187,432.61, representing travel, due diligence, third-party advisory, and other out-of-pocket costs incurred in connection with the origination, documentation, and administration of the DIP facility.
Final invoices for all Calderwood & Harkness LLP fees and expenses, and for all other reimbursable expenses of the DIP Lender, will be delivered to the Debtors and their counsel promptly following the Payoff Date. The Debtors' obligation to pay the final, reconciled amounts of all reimbursable expenses and professional fees shall survive the payment of the Payoff Amount and the release of liens described in Section 5 hereof. In the event that the final amount of reimbursable expenses and professional fees differs from the estimated amounts set forth in the payoff schedule above, the Debtors shall remain obligated to pay any deficiency, and Driftwood hereby reserves all rights to seek payment of any such deficiency as an allowed administrative expense claim of the Debtors' estates under Section 503(b)(1) of the Bankruptcy Code, the DIP Credit Agreement, and the DIP Orders.
2.7 Per Diem Interest
In the event that the Payoff Amount is not received in full in immediately available funds on or before 2:00 p.m. (Eastern Time) on February 16, 2024, additional interest shall continue to accrue on the outstanding principal balance of $75,000,000.00 at the Applicable Rate of 13.00% per annum, resulting in per diem interest of:
$75,000,000.00 × 13.00% ÷ 365 = $26,712.33 per diem
Any payment received after the Payoff Date must include all additional per diem interest accrued from and after February 16, 2024 through and including the date of actual receipt of good funds by the DIP Lender.
The DIP Lender expressly reserves all rights and remedies available under the DIP Credit Agreement, the DIP Orders, and applicable law, including without limitation the right to impose interest at the Default Rate upon the occurrence and during the continuance of any Event of Default. The Default Rate under the DIP Credit Agreement is equal to Adjusted Term SOFR plus 1,100 basis points per annum, with a minimum all-in rate of 15.00% per annum.
3. Source of Payoff Funds
The Debtors have represented to the DIP Lender and to Calderwood & Harkness LLP that the Payoff Amount will be funded from the following sources:
(a) Proceeds of a new $95,000,000.00 exit credit facility (the "Exit Facility") to be provided by Thornbury Capital Markets LLC pursuant to a Credit Agreement to be entered into on or about the Payoff Date in connection with the Plan Effective Date; and
(b) Approximately $12,000,000.00 in unrestricted cash on hand held by the Debtors and their estates as of the Payoff Date.
Calderwood & Harkness LLP and the DIP Lender express no opinion as to the adequacy, availability, or sufficiency of such funds or as to the satisfaction of any conditions precedent to the closing of the Exit Facility. The obligation of the Borrowers to pay the Payoff Amount in full on the Payoff Date is unconditional and is not subject to or contingent upon the closing of the Exit Facility or the availability of any other source of funds. The DIP Lender shall have no obligation to subordinate or defer its right to receive the Payoff Amount in favor of any other creditor, lender, or party in interest.
4. Wire Instructions
All payments of the Payoff Amount must be made by wire transfer of immediately available funds to the account designated below:
Bank Name: Greaves Bancorp ABA Routing Number: 021000021 Account Name: Driftwood Absolute Return Fund Ltd. Account Number: 8834-7291-006 Reference: DIP Payoff — Cascabel Financial Holdings, Inc. — Case No. 23-11487 (KFM) Attention: Marcus Ellison, Co-Founder & CIO, and Priya Venkatesh, Co-Founder & COO
Complete wire instructions, including the SWIFT code for international reference purposes (given the Cayman Islands domicile of Driftwood), are set forth in Exhibit A attached hereto.
The Debtors are requested to provide telephonic confirmation of the initiation of the wire transfer to the following persons promptly upon submission of wire instructions to their depository institution:
(i) Colette Whitman, Partner, Calderwood & Harkness LLP, Telephone: (212) 848-6142, Email: colette.whitman@calderwoodharkness.com; and
(ii) Marcus Ellison and Priya Venkatesh, Driftwood Capital Advisors LLC, 280 Park Avenue, 38th Floor, New York, NY 10017, Telephone: (212) 756-8800.
5. Authorization for Release of DIP Liens and Superpriority Claims
5.1 Conditional Authorization
Upon irrevocable receipt of the full Payoff Amount in immediately available funds in the account designated in Section 4 hereof and in Exhibit A hereto, as confirmed by written notice from Calderwood & Harkness LLP or Driftwood (such confirmation, the "Payoff Confirmation"), Driftwood hereby irrevocably authorizes each of the following:
(a) Release of Liens. The release, discharge, and termination of all liens, security interests, pledges, charges, mortgages, assignments, hypothecations, and encumbrances of any kind whatsoever (collectively, "Liens") heretofore granted to, or for the benefit of, the DIP Lender under the DIP Credit Agreement, the Interim DIP Order (entered September 15, 2023, D.I. 47), the Final DIP Order (entered October 13, 2023, D.I. 198), and all related DIP Loan Documents, on or against any and all assets, property, and interests in property of the Debtors and their estates, wherever located and whether now existing or hereafter acquired, including, without limitation: (i) all first priority priming liens on substantially all assets of Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC (including all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles, goods, instruments, intellectual property, inventory, investment property, letter-of-credit rights, payment intangibles, and supporting obligations); (ii) all liens on the proceeds of avoidance actions arising under Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code; and (iii) all liens on any other property of the Debtors' estates securing the Obligations under the DIP Credit Agreement.
(b) Release of Superpriority Claims. The release, discharge, and satisfaction of all superpriority administrative expense claims heretofore granted to the DIP Lender under Sections 364(c)(1) and 507(b) of the Bankruptcy Code and the DIP Orders, including all claims having priority over any and all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code.
(c) Release of Roll-Up Tranche Claims. The release, discharge, and satisfaction of all claims of Driftwood arising from or in connection with the $32,000,000.00 Roll-Up Tranche (being the rolled-up pre-petition first lien claims of Driftwood under that certain Amended and Restated Credit Agreement dated as of March 15, 2021, as amended), which claims were converted into DIP Obligations pursuant to the Final DIP Order and the DIP Credit Agreement.
5.2 UCC Financing Statement Terminations
Upon delivery of the Payoff Confirmation, Driftwood hereby authorizes the filing of UCC-3 termination statements with respect to all UCC-1 financing statements (and all continuation statements and amendments thereto) filed by or on behalf of the DIP Lender in connection with the DIP Credit Agreement in the State of Delaware, Department of State, Division of Corporations, and in any other jurisdiction in which financing statements were filed to perfect the DIP Lender's security interests in the collateral described therein.
The Debtors and their counsel, Whitfield, Graves & Sato LLP, are hereby authorized to prepare and file all such UCC-3 termination statements at the Debtors' sole cost and expense. Driftwood will promptly execute and deliver any additional instruments, documents, or agreements reasonably requested by the Debtors or their counsel in order to effectuate the release and termination of the Liens described in Section 5.1 above, including without limitation any releases, satisfactions, discharges, or terminations required to be recorded in any governmental office or filing jurisdiction.
5.3 No Release Prior to Payoff Confirmation
The authorizations set forth in this Section 5 are expressly conditioned upon the irrevocable receipt by the DIP Lender of the full Payoff Amount in immediately available funds. No release of any Lien, no discharge or termination of any security interest, and no satisfaction or release of any superpriority administrative expense claim shall be effective unless and until the Payoff Confirmation has been delivered in writing by Calderwood & Harkness LLP or Driftwood to the Debtors and their counsel.
Until such time as the Payoff Confirmation is delivered, all Liens, security interests, superpriority administrative expense claims, and all other rights, remedies, and claims of the DIP Lender under the DIP Credit Agreement, the DIP Orders, and all related DIP Loan Documents shall remain in full force and effect, and the DIP Lender shall retain all rights, powers, and privileges granted to it thereunder. The Debtors shall take no action to file or cause to be filed any UCC-3 termination statement or any other instrument purporting to release or terminate any Lien of the DIP Lender prior to delivery of the Payoff Confirmation.
6. Reservation of Rights
Except as expressly set forth in this Payoff Letter, Driftwood hereby expressly reserves all of its rights, remedies, claims, and defenses under the DIP Credit Agreement, the Interim DIP Order, the Final DIP Order, the Adequate Protection Stipulation (as defined below), the Confirmation Order, the Plan, and all applicable law, whether arising in equity, at law, or under the Bankruptcy Code.
Without limiting the generality of the foregoing, the release and lien termination authorized herein shall not constitute, and shall not be deemed to constitute, a release, waiver, or discharge of:
(a) any obligation of the Debtors or the Reorganized Debtors to pay post-closing reimbursable expenses and professional fees of the DIP Lender and its counsel pursuant to Section 11.04 of the DIP Credit Agreement and Paragraph 22 of the Final DIP Order, which obligations shall survive repayment of the DIP facility and the release of Liens;
(b) any indemnification obligations of the Debtors or the Reorganized Debtors to the DIP Lender, its affiliates, and their respective directors, officers, employees, agents, and advisors, including without limitation indemnification obligations arising under Section 11.05 of the DIP Credit Agreement, which obligations shall survive repayment of the DIP facility;
(c) any rights, claims, or interests of Driftwood under the Confirmation Order or the Plan, including without limitation any rights as holder of the equity interests issued to Driftwood on the Plan Effective Date; or
(d) any claims, causes of action, or rights of Driftwood against any third party, including without limitation any guarantors, co-obligors, or other persons or entities not party to this Payoff Letter.
7. Adequate Protection Obligations — Confirmation of Satisfaction
This Section 7 is provided for informational purposes and for the avoidance of doubt. Reference is made to that certain Stipulation Among the Debtors, Driftwood Absolute Return Fund Ltd., Velthorn National Bank, N.A., and Pinnacle Credit Partners Fund II, LP Regarding Adequate Protection (D.I. 189), filed with the Court on October 9, 2023 (the "Adequate Protection Stipulation"), by and among Driftwood, Cascabel Holdings, Cascabel Asset Management, Velthorn National Bank, N.A. (as administrative agent and collateral agent for the pre-petition first lien lenders holding approximately $38,000,000.00 in aggregate outstanding principal), and Pinnacle Credit Partners Fund II, LP (as administrative agent and collateral agent for the pre-petition second lien lenders holding approximately $28,000,000.00 in aggregate outstanding principal).
The adequate protection obligations set forth in the Adequate Protection Stipulation and approved by the Final DIP Order — including the granting of replacement liens and Section 507(b) claims for the benefit of the non-Driftwood pre-petition first lien lenders holding an aggregate of approximately $88,000,000.00 in pre-petition secured claims (comprising the Velthorn syndicate and the Pinnacle syndicate) — are separate and distinct from the DIP Lender's claims and are not affected by, released by, or otherwise implicated in this Payoff Letter.
The adequate protection reserve of $3,500,000.00, which was funded from the proceeds of Draw 1 and deposited into a segregated account pursuant to Paragraph 14(c) of the Final DIP Order, and the ongoing adequate protection payments at a rate of SOFR plus 425 basis points per annum on $88,000,000.00 in aggregate pre-petition first lien obligations, are matters exclusively between the Debtors and the pre-petition first lien lenders and are governed by the Plan. Under the Plan, the non-Driftwood pre-petition first lien lenders are to receive distributions equal to approximately 89 cents on the dollar, payable in cash on the Plan Effective Date. Driftwood expresses no opinion as to the adequacy or timing of such distributions.
8. No Waiver
Nothing contained in this Payoff Letter shall be deemed a waiver or modification of any provision of the DIP Credit Agreement, the DIP Orders, or any related DIP Loan Document, or of any right or remedy of the DIP Lender arising thereunder or under applicable law. The delivery of this Payoff Letter, and the authorization for release of Liens set forth herein, do not and shall not create any obligation on the part of Driftwood to extend, renew, or modify the maturity date of the DIP Credit Agreement (which has an outside maturity date of September 8, 2024), to forbear from exercising any right or remedy upon the occurrence of an Event of Default, or to consent to any action by the Debtors or any other party in interest.
The DIP Lender's agreement to accept the Payoff Amount and to authorize the release of Liens as set forth herein is made solely in connection with the anticipated occurrence of the Plan Effective Date on February 16, 2024, and is without prejudice to any right, remedy, or defense of the DIP Lender in the event that the Plan Effective Date does not occur on such date or at all.
9. Governing Law
This Payoff Letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict-of-laws principles that would require or permit the application of the laws of any other jurisdiction, consistent with Section 11.14 of the DIP Credit Agreement. To the extent not preempted by federal law, the internal laws of the State of New York shall govern all questions of construction, validity, and interpretation of this Payoff Letter.
The United States Bankruptcy Court for the District of Delaware shall retain exclusive jurisdiction over any disputes arising under, in connection with, or related to this Payoff Letter, the DIP Credit Agreement, the DIP Orders, and the transactions contemplated hereby and thereby, to the fullest extent permitted by applicable law. Each party hereto irrevocably submits to the jurisdiction of such court and waives any objection to venue therein.
10. Counterparts and Delivery
This Payoff Letter may be executed and delivered in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Payoff Letter by facsimile transmission or by electronic transmission in portable document format (PDF) or other electronic imaging means shall be effective as delivery of an original executed counterpart hereof.
[Remainder of this page intentionally left blank; signature pages follow.]
SIGNATURE PAGE TO DIP PAYOFF LETTER AND AUTHORIZATION FOR LIEN RELEASE
We trust that the foregoing accurately sets forth the Payoff Amount and the terms upon which the DIP Lender will authorize the release of its Liens and superpriority claims. Please do not hesitate to contact us if you have any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP, on behalf of DRIFTWOOD ABSOLUTE RETURN FUND LTD.
By: ________
Name: Colette Whitman
Title: Partner
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6142
Email: colette.whitman@calderwoodharkness.com
With a copy to:
Calderwood & Harkness LLP 1000 North King Street, Suite 300 Wilmington, DE 19801 Telephone: (302) 552-3700
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby (i) acknowledge receipt of this Payoff Letter, (ii) confirm the accuracy of the amounts set forth herein (subject to finalization of the reimbursable expenses and professional fees), (iii) agree to wire the full Payoff Amount to the account designated in Section 4 and Exhibit A hereof on or before 2:00 p.m. (Eastern Time) on February 16, 2024, and (iv) agree to the terms and conditions set forth in this Payoff Letter, including the obligation to pay any post-closing reimbursable expenses and professional fees in accordance with Section 2.6 hereof.
CASCABEL FINANCIAL HOLDINGS, INC.
By: ________
Name: Gerald T. Harmon
Title: Chief Executive Officer
or
By: ________
Name: Terrence M. Kowalski
Title: Chief Restructuring Officer
Alderpoint Advisory Partners LLC
Date: ________
CASCABEL ASSET MANAGEMENT LLC
By: ________
Name: Gerald T. Harmon
Title: Manager
Date: ________
ACKNOWLEDGED BY DEBTORS' COUNSEL:
WHITFIELD, GRAVES & SATO LLP
By: ________
Name: Jonathan R. Whitfield
Title: Partner
Date: ________
EXHIBIT A
WIRE INSTRUCTIONS
All payments of the Payoff Amount shall be made by wire transfer of immediately available funds to the following account:
The SWIFT code (CHASUS33) is provided for international reference purposes given the Cayman Islands domicile of Driftwood Absolute Return Fund Ltd. All payments are to be made in United States dollars.
Contact Information for Wire Confirmation:
Upon initiation of the wire transfer, the Debtors are requested to provide telephonic and email confirmation to each of the following persons:
1.  Colette Whitman, Esq.
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 848-6142
Email: colette.whitman@calderwoodharkness.com
2.  Marcus Ellison, Co-Founder & Chief Investment Officer
Driftwood Capital Advisors LLC 280 Park Avenue, 38th Floor New York, NY 10017 Telephone: (212) 756-8801
Email: mellison@driftwoodcap.com
3.  Priya Venkatesh, Co-Founder & Chief Operating Officer
Driftwood Capital Advisors LLC 280 Park Avenue, 38th Floor New York, NY 10017 Telephone: (212) 756-8803
Email: pvenkatesh@driftwoodcap.com
The DIP Lender shall endeavor to deliver the Payoff Confirmation promptly upon verification that the full Payoff Amount has been irrevocably received in immediately available funds in the account designated above.
EXHIBIT B
PAYOFF CALCULATION WORKSHEET
The following worksheet sets forth the detailed calculation of the Payoff Amount as of February 16, 2024. All interest calculations are based on the actual/365 day-count convention as specified in Section 2.08(d) of the DIP Credit Agreement.
I. Principal.  
II. Accrued and Unpaid Interest
Applicable Rate: 13.00% per annum (Adjusted Term SOFR + 900 bps; SOFR floor of 4.00%; minimum all-in rate of 13.00%)
Day-Count Convention: Actual/365
Note: The quarterly compounding adjustment reflects the capitalization of accrued interest at the end of the quarterly interest periods ending December 15, 2023, and the pro rata compounding through the Payoff Date, as provided in Section 2.08(e) of the DIP Credit Agreement. Interest on capitalized amounts accrues at the Applicable Rate from the date of capitalization.
III. Exit Fee
IV. Commitment Fee (Previously Paid)
V. Reimbursable Expenses and Professional Fees
VI. Grand Total Payoff Amount
The Grand Total Estimated Payoff Amount is subject to adjustment based on (i) the actual date and time of receipt of good funds, (ii) final reconciliation of reimbursable expenses, and (iii) delivery of final invoices for professional fees. The Debtors remain obligated to pay any deficiency in reimbursable expenses and professional fees following the Payoff Date.
VII. Per Diem Interest (if payment is received after 2:00 p.m. ET on February 16, 2024)
The Default Rate per diem is set forth for reference only. The Default Rate applies only upon the occurrence and during the continuance of an Event of Default under the DIP Credit Agreement.
— End of Exhibit B —
Component | Amount
Principal — New Money DIP Tranche | $43,000,000.00
Principal — Roll-Up Tranche | $32,000,000.00
Total Outstanding Principal | $75,000,000.00
Accrued and Unpaid Interest (through February 16, 2024) | $4,306,250.00
Exit Fee (1.50% × $75,000,000.00) | $1,125,000.00
Reimbursable Expenses of DIP Lender (estimated, subject to final reconciliation) | $187,432.61
Reimbursable Professional Fees — Calderwood & Harkness LLP (estimated, subject to final invoice pursuant to § 11.04 of the DIP Credit Agreement) | $2,849,718.50
Total Estimated Payoff Amount | $83,468,401.11
Beneficiary Bank: | Greaves Bancorp
Bank Address: | 383 Madison Avenue, New York, NY 10179
ABA Routing Number: | 021000021
SWIFT Code: | CHASUS33
Account Name: | Driftwood Absolute Return Fund Ltd.
Account Number: | 8834-7291-006
Reference: | DIP Payoff — Cascabel Financial Holdings, Inc. — Case No. 23-11487 (KFM)
Attention: | Marcus Ellison, Co-Founder & CIO, and Priya Venkatesh, Co-Founder & COO
Tranche | Funding Date | Principal Amount
Draw 1 — New Money DIP Tranche (Interim Draw) | September 15, 2023 | $18,000,000.00
Draw 2 — New Money DIP Tranche (Final Draw) | October 13, 2023 | $25,000,000.00
Roll-Up Tranche | October 13, 2023 (deemed funded) | $32,000,000.00
Total Outstanding Principal | $75,000,000.00
Tranche | Principal | Accrual Start Date | Accrual End Date | Days | Rate | Interest Accrued
Draw 1 | $18,000,000.00 | September 15, 2023 | February 16, 2024 | 154 | 13.00% | $987,616.44
Draw 2 | $25,000,000.00 | October 13, 2023 | February 16, 2024 | 126 | 13.00% | $1,121,917.81
Roll-Up Tranche | $32,000,000.00 | October 13, 2023 | February 16, 2024 | 126 | 13.00% | $1,436,054.79
Subtotal — Straight-Line Accrual | $3,545,589.04
Quarterly Compounding Adjustments (per § 2.08(e)) | $760,660.96
Total Accrued and Unpaid Interest | $4,306,250.00
Description | Calculation | Amount
Exit Fee (§ 2.06 of DIP Credit Agreement) | $75,000,000.00 × 1.50% | $1,125,000.00
Description | Calculation | Amount | Status
Commitment Fee (§ 2.05 of DIP Credit Agreement) | $75,000,000.00 × 2.00% | $1,500,000.00 | Paid September 15, 2023 — Not Included in Payoff Amount
Description | Estimated Amount | Status
Reimbursable Expenses of DIP Lender (travel, due diligence, third-party advisory, misc.) | $187,432.61 | Subject to final reconciliation
Professional Fees — Calderwood & Harkness LLP (inclusive of disbursements) | $2,849,718.50 | Subject to final invoice
Subtotal — Reimbursable Amounts | $3,037,151.11
Component | Amount
Total Outstanding Principal | $75,000,000.00
Total Accrued and Unpaid Interest | $4,306,250.00
Exit Fee | $1,125,000.00
Reimbursable Expenses of DIP Lender | $187,432.61
Professional Fees — Calderwood & Harkness LLP | $2,849,718.50
Grand Total Estimated Payoff Amount | $83,468,401.11
Description | Calculation | Amount
Per Diem Interest at Applicable Rate | $75,000,000.00 × 13.00% ÷ 365 | $26,712.33 per diem
Per Diem Interest at Default Rate | $75,000,000.00 × 15.00% ÷ 365 | $30,821.92 per diem

CALDERWOOD & HARKNESS LLP

SIGNATURE PAGE TO DIP PAYOFF LETTER AND AUTHORIZATION FOR LIEN RELEASE

ACKNOWLEDGMENT AND AGREEMENT

CASCABEL FINANCIAL HOLDINGS, INC.

CASCABEL ASSET MANAGEMENT LLC

ACKNOWLEDGED BY DEBTORS' COUNSEL:

WHITFIELD, GRAVES & SATO LLP

EXHIBIT A

WIRE INSTRUCTIONS

EXHIBIT B

PAYOFF CALCULATION WORKSHEET

Record

Parties

Dates

Amounts