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CONFIDENTIAL

EXECUTION VERSION

SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

dated as of October 13, 2023

among

CASCABEL FINANCIAL HOLDINGS, INC., a Delaware corporation, as Holdings and a Borrower,

CASCABEL ASSET MANAGEMENT LLC, a Delaware limited liability company, as a Borrower,

and

DRIFTWOOD ABSOLUTE RETURN FUND LTD., an exempted company incorporated in the Cayman Islands, as DIP Lender

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

RECITALS

This SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this "Agreement") is entered into as of October 13, 2023, among CASCABEL FINANCIAL HOLDINGS, INC., a Delaware corporation ("Holdings" or "Borrower"), CASCABEL ASSET MANAGEMENT LLC, a Delaware limited liability company ("CAM" and, together with Holdings, the "Borrowers"), and DRIFTWOOD ABSOLUTE RETURN FUND LTD., an exempted company incorporated in the Cayman Islands (the "DIP Lender").

WHEREAS, Cascabel Financial Holdings, Inc. is a Delaware corporation with its principal office at 1200 Market Street, Suite 900, Wilmington, DE 19801 (EIN: 84-3291057), and Cascabel Asset Management LLC is a Delaware limited liability company and SEC-registered investment adviser and a wholly-owned subsidiary of Holdings;

WHEREAS, each of the Borrowers filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") on September 8, 2023 (the "Petition Date") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), and the cases are being jointly administered under Case No. 23-11487 (KFM) before the Honorable Karen F. McAllister (the "Cases");

WHEREAS, the Borrowers continue to operate their businesses and manage their properties as debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code;

WHEREAS, Ridgeline Community Bank, a Delaware state-chartered commercial bank and subsidiary of Holdings regulated by the Delaware Office of the State Bank Commissioner and the Federal Deposit Insurance Corporation (the "FDIC"), with total deposits of approximately $385,000,000 as of the Petition Date, is excluded from the Cases and continues to operate under regulatory supervision;

WHEREAS, Holdings is party to that certain Credit Agreement, dated as of January 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Pre-Petition Credit Agreement"), among Holdings, as borrower, Velthorn National Bank, N.A., as administrative agent (the "Pre-Petition Agent"), and the lenders party thereto (collectively, the "Pre-Petition First Lien Lenders"), pursuant to which $120,000,000 in aggregate principal amount of senior secured first lien term loans (the "Pre-Petition First Lien Loans") were made, bearing interest at SOFR plus 425 basis points per annum, maturing January 15, 2026;

WHEREAS, the Pre-Petition First Lien Lenders consist of: Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount), Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), Brindoval Institutional Lending, LLC (holding $22,000,000 in aggregate principal amount), and the DIP Lender (holding $32,000,000 in aggregate principal amount), for a total of $120,000,000 in aggregate principal amount outstanding;

WHEREAS, the DIP Lender holds $32,000,000 in face value of the Pre-Petition First Lien Loans, representing approximately 26.67% of the total outstanding first lien obligations;

WHEREAS, Holdings also has outstanding: (a) $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027 (the "Pre-Petition Second Lien Notes"), issued under an indenture dated June 1, 2022 (the "Second Lien Indenture") with Zynvaro Trust Company, 101 Hudson Street, Jersey City, NJ 07302, as indenture trustee (the "Second Lien Trustee"), of which approximately $30,000,000 is held by Ashford Mezzanine Capital, LP; and (b) $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025 (the "Pre-Petition Unsecured Notes"), for total pre-petition funded debt of $183,500,000;

WHEREAS, as of the Petition Date, the Borrowers had total assets of approximately $620,000,000 and total liabilities of approximately $710,000,000, reflecting a negative equity position of approximately $90,000,000;

WHEREAS, the Borrowers require debtor-in-possession financing to fund their operations during the Cases, preserve going-concern value, maintain the ongoing business operations of CAM and its approximately $1,200,000,000 in client assets under management, support the continued orderly operation of Ridgeline Community Bank, and pursue a plan of reorganization;

WHEREAS, the Borrowers have requested that the DIP Lender provide a senior secured superpriority debtor-in-possession credit facility in the aggregate principal amount of $75,000,000, consisting of $43,000,000 in new money term loans and $32,000,000 in roll-up term loans, as more fully described herein;

WHEREAS, on September 15, 2023, the Bankruptcy Court entered an Interim Order (Dkt. No. 47) (the "Interim DIP Order") authorizing the Borrowers to borrow up to $18,000,000 on an interim basis under this Agreement, pending a final hearing on the DIP financing;

WHEREAS, on October 13, 2023, the Bankruptcy Court entered a Final Order (Dkt. No. 128) (the "Final DIP Order" and, together with the Interim DIP Order, the "DIP Orders") authorizing the Borrowers to borrow the full $43,000,000 New Money DIP Tranche and approving the $32,000,000 Roll-Up Tranche on a final basis, after notice and a hearing as required by Section 364 of the Bankruptcy Code;

WHEREAS, the DIP Lender is represented by Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022 and 1000 North King Street, Suite 300, Wilmington, DE 19801 (the "DIP Lender's Counsel");

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I — DEFINITIONS AND INTERPRETATION

Section 1.01 — Defined Terms

As used in this Agreement, the following terms shall have the following meanings:

"Adequate Protection Payments" means the monthly current-pay interest payments to the Non-Driftwood Pre-Petition First Lien Lenders on $88,000,000 of Pre-Petition First Lien Loans at the non-default contract rate of SOFR plus 425 basis points per annum, as more fully described in Section 2.13(c) and as authorized by the DIP Orders and the Adequate Protection Stipulation.

"Adequate Protection Reserve" means a segregated reserve account in the amount of $3,500,000, funded from the proceeds of Draw 1, established and maintained for the benefit of the Non-Driftwood Pre-Petition First Lien Lenders, as more fully described in Section 2.13(d).

"Adequate Protection Stipulation" means that certain Stipulation Regarding Adequate Protection filed with the Bankruptcy Court on October 9, 2023 (Dkt. No. 119), among the DIP Lender, the Borrowers, Velthorn National Bank, N.A., and Pinnacle Credit Partners Fund II, LP, embodying the global settlement reached on October 6, 2023 with respect to adequate protection for the Non-Driftwood Pre-Petition First Lien Lenders in connection with the DIP Facility and the priming of the Pre-Petition Liens.

"Ad Hoc Group" means the informal group of Pre-Petition First Lien Lenders consisting of Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount) and Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), in aggregate holding $66,000,000 of the Pre-Petition First Lien Loans, which group was formed on or about September 12, 2023 in connection with the Cases.

"Ad Hoc Group Counsel" means Hartwell & Crane LLP, 51 JFK Parkway, Suite 200, Short Hills, NJ 07078 (Lead Partner: Monica L. Hartwell), counsel to the Ad Hoc Group.

"Ad Hoc Group Counsel Fee Cap" means $1,200,000, representing the maximum aggregate amount of fees and expenses of Ad Hoc Group Counsel that are payable as part of the adequate protection package provided to the Non-Driftwood Pre-Petition First Lien Lenders under Section 2.13(e).

"Adjusted Term SOFR" means, with respect to any Interest Period, the per annum rate equal to Term SOFR for such Interest Period; provided that in no event shall Adjusted Term SOFR be less than the SOFR Floor.

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

"Applicable Rate" means 900 basis points (9.00%) per annum above Adjusted Term SOFR; provided that the all-in Applicable Rate shall not be less than 13.00% per annum (reflecting the SOFR Floor of 4.00% plus 900 basis points).

"Avoidance Actions" means any and all avoidance actions or causes of action arising under Chapter 5 of the Bankruptcy Code, including Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code, and any analogous state law claims.

"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended from time to time.

"Bankruptcy Court" means the United States Bankruptcy Court for the District of Delaware presiding over the Cases, or such other court having jurisdiction over the Cases from time to time.

"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended from time to time, and the local rules of the Bankruptcy Court.

"Borrowers" means, collectively, Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, and each individually a "Borrower." The obligations of the Borrowers hereunder are joint and several.

"Budget" means the 13-week rolling cash flow budget attached hereto as Exhibit B, as updated every four (4) weeks in accordance with Sections 6.01(c) and 7.16, and approved by the DIP Lender, prepared in coordination with Alderpoint Advisory Partners LLC (CRO Terrence M. Kowalski).

"Business Day" means any day that is not a Saturday, a Sunday, or a day on which banking institutions in the City of New York, New York or Wilmington, Delaware are authorized or required by law or other governmental action to close.

"CAM" means Cascabel Asset Management LLC, a Delaware limited liability company, SEC-registered investment adviser (CRD No. 293841) managing approximately $1,200,000,000 in client assets under management as of the Petition Date.

"Carve-Out" has the meaning assigned to such term in Section 2.14.

"Carve-Out Trigger Notice" means a written notice delivered by the DIP Lender to the Borrowers and the Committee, following the occurrence and during the continuance of an Event of Default, declaring that the Carve-Out is triggered and that all professional fees and expenses incurred thereafter by the Borrowers' professionals and the Committee's professionals shall be subject to the aggregate caps set forth in Section 2.14.

"Cases" means the jointly administered Chapter 11 cases of the Borrowers, Case No. 23-11487 (KFM), pending before the Bankruptcy Court.

"Challenge Period" means: (a) with respect to the Committee, 75 days from the entry of the Final DIP Order (i.e., from October 13, 2023, expiring December 27, 2023); and (b) with respect to any other party in interest, 60 days from the entry of the Final DIP Order (i.e., from October 13, 2023, expiring December 12, 2023), in each case, to investigate and commence a challenge to the Pre-Petition Liens or the Roll-Up, as more fully set forth in Section 2.15.

"Closing Date" means the date on which the conditions precedent set forth in Section 4.01 have been satisfied or waived in accordance with the terms hereof, which occurred on October 13, 2023, upon entry of the Final DIP Order.

"Collateral" has the meaning assigned to such term in Section 8.02.

"Commitment" means the total commitment of $75,000,000, consisting of the New Money Commitment of $43,000,000 and the Roll-Up Commitment of $32,000,000.

"Commitment Fee" means a fee equal to 2.00% of the total Commitment ($75,000,000 multiplied by 2.00%, equaling $1,500,000), fully earned upon execution of this Agreement and payable upon entry of the Interim DIP Order, as more fully described in Section 2.04(a).

"Committee" means the Official Committee of Unsecured Creditors appointed by the Office of the United States Trustee on September 22, 2023 (Dkt. No. 68), chaired by Vendara Technology Solutions, Inc., as the same may be reconstituted from time to time.

"Committee Counsel" means Breckenridge McCoy LLP, 919 North Market Street, Suite 700, Wilmington, DE 19801 (Lead Partner: Thomas A. Breckenridge), counsel to the Committee.

"Compliance Certificate" means a certificate substantially in the form of Exhibit C.

"CRO" means Terrence M. Kowalski, the Chief Restructuring Officer appointed by the Board of Directors of Holdings on August 25, 2023, provided by Alderpoint Advisory Partners LLC, 399 Park Avenue, 22nd Floor, New York, NY 10022, or any successor CRO approved by the DIP Lender.

"Debtor's Counsel" means Whitfield, Graves & Sato LLP, 1201 North Market Street, Suite 1500, Wilmington, DE 19801 (Lead Partner: Jonathan R. Whitfield; Lead Associate: Rachel P. Dumont), counsel to the Borrowers.

"Debtor's Investment Banker" means Solstice Partners LLC, 650 Fifth Avenue, 18th Floor, New York, NY 10019 (Managing Director: David R. Chin), retained pre-petition on August 10, 2023 and approved by the Bankruptcy Court pursuant to Section 327 of the Bankruptcy Code.

"Default" means any event or condition that, with the giving of notice or the passage of time (or both), would constitute an Event of Default.

"Default Rate" means the Applicable Rate plus an additional 200 basis points per annum, for a total of 1,100 basis points over Adjusted Term SOFR (resulting in a minimum default all-in rate of 15.00% per annum).

"DIP Facility" means the debtor-in-possession credit facility established pursuant to this Agreement.

"DIP Lender" means Driftwood Absolute Return Fund Ltd., an exempted company incorporated in the Cayman Islands, with registered office at 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman, KY1-1002, Cayman Islands, and principal office at c/o Driftwood Capital Advisors LLC, 280 Park Avenue, 38th Floor, New York, NY 10017. The DIP Lender's investment manager is Driftwood Capital Advisors LLC, a Delaware limited liability company. Co-Founders: Marcus Ellison (Chief Investment Officer) and Priya Venkatesh (Chief Operating Officer). Assets under management approximately $4.8 billion as of September 2023.

"DIP Lender's Counsel" means Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022 and 1000 North King Street, Suite 300, Wilmington, DE 19801 (Lead Partner: Colette Whitman).

"DIP Liens" means the first priority priming liens on and security interests in the Collateral granted to the DIP Lender pursuant to this Agreement, the DIP Orders, and Article VIII hereof.

"DIP Loans" means, collectively, the New Money DIP Tranche and the Roll-Up Tranche.

"DIP Orders" means, collectively, the Interim DIP Order and the Final DIP Order.

"DIP Superpriority Claims" means the superpriority administrative expense claims granted to the DIP Lender pursuant to Section 364(c)(1) of the Bankruptcy Code, as set forth in Section 2.10.

"Draw 1" means the first advance under the New Money DIP Tranche in the amount of $18,000,000, which became available upon entry of the Interim DIP Order and was drawn on September 15, 2023.

"Draw 2" means the second advance under the New Money DIP Tranche in the amount of $25,000,000 ($43,000,000 minus $18,000,000), which became available upon entry of the Final DIP Order and was drawn on October 13, 2023.

"Effective Date" means the effective date of a confirmed Chapter 11 plan of the Borrowers.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Event of Default" has the meaning assigned to such term in Section 9.01.

"Excluded Assets" means all assets of Ridgeline Community Bank that are subject to regulatory restrictions imposed by the Delaware Office of the State Bank Commissioner and the FDIC, including without limitation deposit accounts held at or by Ridgeline, loans originated by Ridgeline, and regulatory capital of Ridgeline.

"Exit Fee" means a fee equal to 1.50% of all amounts drawn under this Agreement ($75,000,000 multiplied by 1.50%, equaling $1,125,000), payable upon the earlier of the Maturity Date, voluntary prepayment in full, or acceleration, as more fully described in Section 2.04(b).

"FATCA" means Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (or any amended or successor version thereof), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of such Code.

"FDIC" means the Federal Deposit Insurance Corporation.

"Final DIP Order" means the order entered by the Bankruptcy Court on October 13, 2023 (Dkt. No. 128), authorizing borrowing of the full New Money DIP Tranche and approving the Roll-Up Tranche on a final basis, substantially in the form attached hereto as Exhibit F-2.

"GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time.

"Holdings" means Cascabel Financial Holdings, Inc., a Delaware corporation. CEO: Gerald T. Harmon. CFO: Susan K. Nakamura.

"Interim DIP Order" means the order entered by the Bankruptcy Court on September 15, 2023 (Dkt. No. 47), authorizing borrowing of up to $18,000,000 on an interim basis, substantially in the form attached hereto as Exhibit F-1.

"Interest Period" means, with respect to any DIP Loan, (a) initially, the period commencing on the date such DIP Loan is made or deemed made and ending on the last day of the calendar month in which such DIP Loan is made, and (b) thereafter, each successive period commencing on the last day of the immediately preceding Interest Period and ending on the numerically corresponding day in the calendar month that is one (1) month thereafter; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, and (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period.

"Judge" means the Honorable Karen F. McAllister, United States Bankruptcy Judge for the District of Delaware.

"Lender's Professional Fees" means all fees and expenses of DIP Lender's Counsel (Calderwood & Harkness LLP) that are reimbursable by the Borrowers' estates pursuant to Section 11.04 as administrative expenses of the Borrowers' estates under Section 503(b)(1) of the Bankruptcy Code.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, security interest, or preference, priority, or other security agreement of any kind or nature whatsoever, including any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing.

"Material Adverse Effect" means any event, change, condition, occurrence, or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, financial condition, or results of operations of the Borrowers, taken as a whole (excluding, for the avoidance of doubt, the effects of the filing of the Cases themselves), (b) the ability of the Borrowers to perform their obligations under this Agreement or any other Transaction Document, (c) the validity or enforceability of this Agreement or any DIP Order, or (d) the rights and remedies of the DIP Lender hereunder or under the DIP Orders.

"Maturity Date" means the earliest to occur of: (i) September 8, 2024 (twelve months from the Petition Date); (ii) the Effective Date of a confirmed Chapter 11 plan; (iii) the consummation of a sale of substantially all assets of the Borrowers under Section 363 of the Bankruptcy Code; or (iv) the date of acceleration of the Obligations following an Event of Default.

"Milestones" has the meaning assigned to such term in Section 7.18.

"New Money Commitment" means $43,000,000 in aggregate new money term loan commitments of the DIP Lender.

"New Money DIP Tranche" means the tranche of DIP Loans consisting of $43,000,000 in new money term loans, advanced in two draws: Draw 1 ($18,000,000) and Draw 2 ($25,000,000).

"Non-Driftwood Pre-Petition First Lien Lenders" means Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount), Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), and Brindoval Institutional Lending, LLC (holding $22,000,000 in aggregate principal amount), collectively holding $88,000,000 in aggregate principal amount of the Pre-Petition First Lien Loans.

"Obligations" means all amounts owing by the Borrowers, jointly and severally, to the DIP Lender under this Agreement, including all principal, interest (including post-petition interest), fees (including the Commitment Fee, the Exit Fee, and the Unused Line Fee), costs, expenses, indemnification obligations, and Lender's Professional Fees, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

"Permitted Indebtedness" means (a) the Obligations under this Agreement, (b) the Pre-Petition First Lien Loans (to the extent not rolled up into the DIP Facility), (c) the Pre-Petition Second Lien Notes, (d) the Pre-Petition Unsecured Notes, (e) trade payables and accrued expenses incurred in the ordinary course of business consistent with the Budget, (f) intercompany indebtedness existing on the Petition Date and disclosed in Schedule 5 hereto, and (g) other indebtedness expressly permitted by the DIP Orders.

"Permitted Liens" has the meaning assigned to such term in Schedule 3 hereto.

"Permitted Variances" means: (i) with respect to cumulative actual revenue for any bi-weekly testing period, a variance of not more than plus or minus 10% from the projected revenue for such period under the Budget; and (ii) with respect to cumulative actual disbursements for any bi-weekly testing period, a variance of not more than plus or minus 15% from the projected disbursements for such period under the Budget.

"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, governmental authority, or any other entity.

"Petition Date" means September 8, 2023, the date on which the Borrowers filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code.

"Pre-Petition Agent" means Velthorn National Bank, N.A., 500 Boylston Street, Boston, MA 02116, in its capacity as administrative agent under the Pre-Petition Credit Agreement.

"Pre-Petition Credit Agreement" means the Credit Agreement dated as of January 15, 2021, among Holdings, as borrower, the Pre-Petition Agent, and the Pre-Petition First Lien Lenders party thereto, as amended, restated, supplemented, or otherwise modified from time to time prior to the Petition Date.

"Pre-Petition First Lien Lenders" means, collectively, Velthorn National Bank, N.A., Pinnacle Credit Partners Fund II, LP, Brindoval Institutional Lending, LLC, and the DIP Lender (in its capacity as a lender under the Pre-Petition Credit Agreement), and their respective successors and assigns.

"Pre-Petition First Lien Loans" means the $120,000,000 in aggregate principal amount of senior secured first lien term loans outstanding under the Pre-Petition Credit Agreement as of the Petition Date.

"Pre-Petition Liens" means the liens and security interests securing the Pre-Petition First Lien Loans under the Pre-Petition Credit Agreement and the related security documents.

"Pre-Petition Second Lien Notes" means the $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027, issued by Holdings under the Second Lien Indenture.

"Pre-Petition Unsecured Notes" means the $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025, issued by Holdings.

"Replacement Liens" means the replacement liens on the Collateral granted to the Non-Driftwood Pre-Petition First Lien Lenders as adequate protection pursuant to Section 2.13(a) and the DIP Orders, junior only to the DIP Liens and the Carve-Out.

"Ridgeline" means Ridgeline Community Bank, a Delaware state-chartered commercial bank, a subsidiary of Holdings, regulated by the Delaware Office of the State Bank Commissioner and the FDIC.

"Roll-Up Commitment" means the commitment of $32,000,000, representing the dollar-for-dollar roll-up of the DIP Lender's Pre-Petition First Lien Loan claims into DIP Loans hereunder.

"Roll-Up Tranche" means the tranche of DIP Loans in the amount of $32,000,000, representing the dollar-for-dollar roll-up of the DIP Lender's Pre-Petition First Lien Loan claims into DIP Loans bearing superpriority administrative expense claim status and DIP Lien priority, pari passu with the New Money DIP Tranche.

"Second Lien Indenture" means the indenture dated as of June 1, 2022, between Holdings and the Second Lien Trustee, governing the Pre-Petition Second Lien Notes, as amended, supplemented, or otherwise modified from time to time prior to the Petition Date.

"Second Lien Trustee" means Zynvaro Trust Company, 101 Hudson Street, Jersey City, NJ 07302, as indenture trustee under the Second Lien Indenture.

"SOFR Floor" means 4.00% per annum.

"Superpriority Claim" means the administrative expense claim status granted to the Obligations under Section 364(c)(1) and Section 507(b) of the Bankruptcy Code, as set forth in Section 2.10.

"Term SOFR" means the forward-looking term rate based on the Secured Overnight Financing Rate, as published by the CME Group Benchmark Administration Limited (or any successor administrator acceptable to the DIP Lender), for a tenor equal to the applicable Interest Period, as of two (2) U.S. Government Securities Business Days prior to the commencement of such Interest Period.

"Total DIP Loans" means the aggregate principal amount of all DIP Loans outstanding at any time under this Agreement, up to a maximum of $75,000,000.

"Transaction Documents" means, collectively, this Agreement, the DIP Orders, the Adequate Protection Stipulation, and all other documents, instruments, and agreements executed and delivered in connection herewith, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"UCC" means the Uniform Commercial Code as in effect in the State of Delaware or any other applicable jurisdiction.

"Unused Line Fee" means a fee of 0.50% per annum on the average daily undrawn portion of the New Money DIP Tranche, as more fully described in Section 2.04(c).

"U.S. Trustee" means the Office of the United States Trustee for the District of Delaware.

"Variance Testing" means the budget compliance testing described in Section 7.16, conducted on a cumulative bi-weekly basis with Permitted Variances of plus or minus 10% for revenue and plus or minus 15% for disbursements.

Section 1.02 — Interpretation

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a) The words "hereof," "herein," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b) References to any Article, Section, Schedule, or Exhibit are references to Articles, Sections, Schedules, and Exhibits to this Agreement, unless otherwise specified.

(d) References to any law, statute, or regulation shall mean such law, statute, or regulation as amended, modified, codified, replaced, or reenacted, in whole or in part, and in effect from time to time, and shall include any rules, regulations, and delegated legislation issued thereunder.

(e) References to any Person shall include such Person's successors and permitted assigns.

(f) References to any agreement or document shall include such agreement or document as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms and the terms hereof.

(g) The headings and captions in this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision hereof.

(h) Words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.

(i) Unless otherwise specified, all references to dollar amounts are to United States dollars.

(j) The rules of construction set forth in Section 102 of the Bankruptcy Code shall apply to the interpretation of this Agreement.

Section 1.03 — Accounting Terms

Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other financial information required to be delivered hereunder shall be prepared in accordance with GAAP, applied on a basis consistent with the Borrowers' historical accounting practices, as modified by applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Any reference to "consolidated" financial data means the consolidated financial data of Holdings and its subsidiaries (including CAM), but excluding Ridgeline Community Bank to the extent required by applicable regulatory requirements.

Section 1.04 — UCC Terms

Terms used herein but not otherwise defined herein that are defined in the UCC shall have the meanings assigned to them in Article 1 or Article 9 of the UCC, as applicable, as in effect in the State of Delaware from time to time.

Section 1.05 — Rates

(a) The interest rate on DIP Loans is based on Adjusted Term SOFR, which incorporates the SOFR Floor of 4.00% per annum. In no event shall Adjusted Term SOFR for any Interest Period be deemed to be less than the SOFR Floor.

(b) If Term SOFR for any Interest Period is unavailable or ceases to be published, the DIP Lender and the Borrowers shall negotiate in good faith to establish a replacement benchmark rate consistent with then-prevailing market conventions; provided that in the event that the parties are unable to agree upon a replacement benchmark within ten (10) Business Days, the DIP Lender shall select such replacement benchmark in its reasonable discretion.

(c) No provision of this Agreement shall require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If any excess of interest in such respect is provided for herein, or if the amount of interest paid or agreed to be paid exceeds the maximum amount permitted by applicable law, such excess shall be applied to the reduction of the principal balance of the DIP Loans and not to the payment of interest, or if such excess exceeds the unpaid principal balance of the DIP Loans, such excess shall be refunded to the Borrowers.

ARTICLE II — THE DIP FACILITY

Section 2.01 — DIP Loans

(a) New Money DIP Tranche. Subject to the terms and conditions of this Agreement and the DIP Orders, the DIP Lender agrees to make term loans to the Borrowers in an aggregate principal amount of $43,000,000 (the "New Money DIP Tranche"), available in two draws as follows:

(i) Draw 1. Upon entry of the Interim DIP Order and satisfaction of the conditions precedent set forth in Section 4.01, the DIP Lender shall advance to the Borrowers term loans in the principal amount of $18,000,000 ("Draw 1"). Draw 1 was advanced on September 15, 2023.

(ii) Draw 2. Upon entry of the Final DIP Order and satisfaction of the conditions precedent set forth in Section 4.02, the DIP Lender shall advance to the Borrowers term loans in the principal amount of $25,000,000 ($43,000,000 minus $18,000,000) ("Draw 2"). Draw 2 was advanced on October 13, 2023.

(b) Roll-Up Tranche. Upon entry of the Final DIP Order and satisfaction of the conditions precedent set forth in Section 4.03, $32,000,000 of the DIP Lender's Pre-Petition First Lien Loan claims shall be deemed rolled up into this Agreement and shall constitute DIP Loans hereunder (the "Roll-Up Tranche"). The Roll-Up Tranche shall receive superpriority administrative expense claim status and DIP Lien priority, pari passu in all respects with the New Money DIP Tranche. No additional cash shall be advanced in connection with the Roll-Up Tranche; rather, the DIP Lender's existing Pre-Petition First Lien Loan claims in the amount of $32,000,000 shall be satisfied by the deemed extension of DIP Loans in the same amount.

(c) Total Commitment. The total commitment under this Agreement is $75,000,000, consisting of the New Money Commitment of $43,000,000 and the Roll-Up Commitment of $32,000,000.

(d) Term Loan Facility. The DIP Loans are term loans. Amounts repaid or prepaid may not be reborrowed.

Section 2.02 — Borrowing Mechanics

(a) Borrowing Notice. Each borrowing of DIP Loans under the New Money DIP Tranche shall be made upon delivery by the Borrowers to the DIP Lender of a written borrowing notice (each, a "Borrowing Notice"), substantially in the form of Exhibit A attached hereto, not later than 11:00 a.m. (New York time) on the Business Day that is two (2) Business Days prior to the requested date of borrowing (or such shorter period as the DIP Lender may agree in its sole discretion). Each Borrowing Notice shall be irrevocable and shall specify (i) the requested date of borrowing, (ii) the aggregate principal amount of DIP Loans to be borrowed, (iii) the applicable Draw (Draw 1 or Draw 2), and (iv) the Interest Period to apply to such borrowing.

(b) Minimum Amounts. Each borrowing under the New Money DIP Tranche shall be in a minimum principal amount of $5,000,000 or the remaining undrawn balance of the applicable Draw, whichever is less.

(c) Funding. Subject to satisfaction of the applicable conditions precedent, the DIP Lender shall make the requested DIP Loans available to the Borrowers by wire transfer of immediately available funds to the account designated by the Borrowers in the applicable Borrowing Notice (or as otherwise set forth in Exhibit H hereto) no later than 2:00 p.m. (New York time) on the requested date of borrowing.

(d) Deemed Borrowing. The Roll-Up Tranche shall be deemed borrowed upon entry of the Final DIP Order and satisfaction of the conditions set forth in Section 4.03, without the delivery of a Borrowing Notice and without the transfer of cash proceeds.

Section 2.03 — Interest

(a) Applicable Rate. Each DIP Loan shall bear interest at a rate per annum equal to Adjusted Term SOFR for the applicable Interest Period plus the Applicable Rate of 900 basis points (9.00%). The SOFR Floor is 4.00% per annum, resulting in a minimum all-in interest rate of 13.00% per annum (4.00% plus 9.00%). As of the Closing Date, with Term SOFR at approximately 5.33%, the effective all-in interest rate is approximately 14.33% per annum.

(b) Default Rate. Upon the occurrence and during the continuance of an Event of Default, the outstanding principal amount of all DIP Loans and, to the extent permitted by applicable law, all other overdue Obligations, shall bear interest at the Default Rate, which shall be the Applicable Rate plus an additional 200 basis points per annum, for a total of 1,100 basis points over Adjusted Term SOFR (resulting in a minimum all-in default rate of 15.00% per annum). The Default Rate shall be effective automatically upon the occurrence of an Event of Default under Section 9.01(a) or Section 9.01(h), and upon notice from the DIP Lender for all other Events of Default.

(c) Interest Payment Dates. Accrued interest on the DIP Loans shall be payable monthly in arrears on the first Business Day of each calendar month, commencing on the first such date following the initial borrowing, and on the Maturity Date. Interest accrued at the Default Rate shall be payable on demand.

(d) Computation. All interest hereunder shall be computed on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day) in the applicable Interest Period or other period for which interest is being calculated. Each determination of an interest rate by the DIP Lender pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers in the absence of manifest error.

Section 2.04 — Fees

(a) Commitment Fee. The Borrowers shall pay to the DIP Lender a commitment fee equal to 2.00% of the total Commitment ($75,000,000 multiplied by 2.00%, equaling $1,500,000). The Commitment Fee shall be fully earned upon execution of this Agreement and shall be payable upon entry of the Interim DIP Order. The Commitment Fee was paid from the proceeds of Draw 1 on September 15, 2023. The Commitment Fee is non-refundable and shall not be subject to counterclaim, setoff, or deduction of any kind.

(b) Exit Fee. The Borrowers shall pay to the DIP Lender an exit fee equal to 1.50% of all amounts drawn under this Agreement ($75,000,000 multiplied by 1.50%, equaling $1,125,000). The Exit Fee shall be payable upon the earlier of (i) the Maturity Date, (ii) voluntary prepayment in full of the DIP Loans, or (iii) acceleration of the Obligations following an Event of Default. The Exit Fee shall be fully earned on the Closing Date, and once earned, shall be non-refundable.

(c) Unused Line Fee. The Borrowers shall pay to the DIP Lender a fee equal to 0.50% per annum on the average daily undrawn portion of the New Money DIP Tranche (the "Unused Line Fee"). The Unused Line Fee shall accrue from the Closing Date and shall be payable quarterly in arrears on the first Business Day of each calendar quarter and on the date on which the New Money DIP Tranche is fully drawn or terminated. For the avoidance of doubt, the Roll-Up Tranche shall not be included in the calculation of the Unused Line Fee.

(d) General Fee Provisions. All fees payable hereunder shall be fully earned when due and shall be non-refundable for any reason whatsoever. Fees shall be paid in immediately available funds by wire transfer to the DIP Lender's account as set forth in Exhibit H hereto.

Section 2.05 — Repayment and Maturity

(a) All outstanding Obligations, including all principal, accrued and unpaid interest, the Exit Fee, and all other amounts owing hereunder, shall be due and payable in full on the Maturity Date.

(b) The Maturity Date is the earliest to occur of: (i) September 8, 2024 (twelve months from the Petition Date); (ii) the Effective Date of a confirmed Chapter 11 plan of the Borrowers; (iii) the consummation of a sale of substantially all assets of the Borrowers pursuant to Section 363 of the Bankruptcy Code; or (iv) the date of acceleration of the Obligations following an Event of Default in accordance with Section 9.02.

(c) No extension of the Maturity Date shall be effective without the prior written consent of the DIP Lender and, if required, approval of the Bankruptcy Court.

Section 2.06 — Voluntary Prepayment

(a) The Borrowers may prepay all or any portion of the outstanding DIP Loans at any time without premium or penalty (other than the Exit Fee payable pursuant to Section 2.04(b) and any breakage costs payable pursuant to Section 3.03), upon not less than three (3) Business Days' prior written notice to the DIP Lender (or one (1) Business Day in the case of a prepayment in connection with the consummation of a plan of reorganization or a Section 363 sale).

(b) Each voluntary prepayment shall be in a minimum principal amount of $1,000,000 or, if less, the entire outstanding principal balance of the DIP Loans.

(c) Any voluntary prepayment shall be accompanied by (i) all accrued and unpaid interest on the amount prepaid through the date of prepayment, (ii) the Exit Fee (if all DIP Loans are being prepaid in full), and (iii) any breakage costs payable under Section 3.03.

(d) Voluntary prepayments shall be applied to the DIP Loans in accordance with Section 2.08.

Section 2.07 — Mandatory Prepayment

(a) Asset Dispositions. Subject to the provisions of the DIP Orders, the Borrowers shall prepay the DIP Loans in an amount equal to 100% of the net cash proceeds received by any Borrower from any sale, transfer, or other disposition of assets outside the ordinary course of business (other than any sale, transfer, or disposition of assets of Ridgeline Community Bank or Excluded Assets), promptly upon receipt thereof and in any event within three (3) Business Days of receipt. For purposes of this Section 2.07(a), "net cash proceeds" means the gross cash proceeds received in connection with such disposition, less (i) reasonable and customary transaction costs and expenses (including brokerage commissions, legal fees, and transfer taxes) actually paid in connection with such disposition, and (ii) amounts required to be applied to repay any indebtedness secured by a Permitted Lien on the asset sold (other than the DIP Loans), to the extent such indebtedness is required to be repaid in connection with such disposition.

(b) Insurance and Condemnation Proceeds. The Borrowers shall prepay the DIP Loans in an amount equal to 100% of the net cash proceeds received by any Borrower from any casualty event or condemnation affecting any material Collateral, to the extent such net cash proceeds exceed $500,000 in the aggregate during the term of this Agreement, promptly upon receipt thereof and in any event within five (5) Business Days of receipt; provided that no such prepayment shall be required to the extent that, within 180 days after receipt of such proceeds, the Borrowers commit to use (and thereafter promptly use) such proceeds to repair or replace the affected Collateral, and no Event of Default has occurred and is continuing.

(c) Extraordinary Receipts. The Borrowers shall prepay the DIP Loans in an amount equal to 100% of any extraordinary receipts (including tax refunds in excess of $250,000, litigation proceeds, and indemnification payments) received by any Borrower, promptly upon receipt thereof and in any event within three (3) Business Days of receipt; provided that such obligation shall not apply to proceeds of Avoidance Actions to the extent such proceeds constitute Collateral and remain available to the DIP Lender.

(d) Application. Mandatory prepayments shall be applied to the outstanding DIP Loans in accordance with Section 2.08.

Section 2.08 — Application of Payments

All amounts received by the DIP Lender in respect of the Obligations (whether from voluntary prepayments, mandatory prepayments, payments at maturity, or proceeds of Collateral) shall be applied in the following order:

First, to the payment of all costs and expenses (including Lender's Professional Fees) then due and payable under this Agreement;

Second, to the payment of all accrued and unpaid interest on the DIP Loans;

Third, to the payment of all fees then due and payable hereunder (including the Exit Fee, to the extent then payable);

Fourth, to the repayment of the outstanding principal amount of the DIP Loans (applied ratably between the New Money DIP Tranche and the Roll-Up Tranche, unless otherwise agreed by the DIP Lender);

Fifth, to the payment of any remaining Obligations.

Section 2.09 — Use of Proceeds

(a) Draw 1 Proceeds. The proceeds of Draw 1 ($18,000,000) shall be used solely for the following purposes:

(i) working capital and general corporate purposes of the Borrowers, in accordance with the Budget;

(ii) funding of the Adequate Protection Reserve in the amount of $3,500,000, in accordance with Section 2.13(d);

(iii) payment of the Commitment Fee in the amount of $1,500,000, in accordance with Section 2.04(a);

(iv) payment of DIP Lender's Professional Fees and related transaction costs incurred in connection with the negotiation, documentation, and closing of the DIP Facility;

(v) adequate protection payments to the Pre-Petition First Lien Lenders, in accordance with Section 2.13(c) and the Adequate Protection Stipulation; and

(vi) other payments authorized by the Interim DIP Order and the Budget.

(b) Draw 2 Proceeds. The proceeds of Draw 2 ($25,000,000) shall be used solely for the following purposes:

(i) working capital and general corporate purposes of the Borrowers, in accordance with the Budget;

(ii) adequate protection payments to the Pre-Petition First Lien Lenders, in accordance with Section 2.13(c) and the Adequate Protection Stipulation;

(iii) payments authorized by the DIP Orders and the Budget; and

(iv) other purposes approved in writing by the DIP Lender.

(c) Restriction on Use. Notwithstanding anything herein to the contrary, no proceeds of the DIP Loans (and no cash collateral of the DIP Lender) shall be used, directly or indirectly, to investigate, challenge, object to, contest, or bring any claim, counterclaim, action, proceeding, or cause of action against the DIP Lender, any of its Affiliates (including Driftwood Capital Advisors LLC), or any of its or their respective directors, officers, employees, agents, or advisors (including Calderwood & Harkness LLP), or to challenge, object to, or contest the validity, enforceability, perfection, or priority of the Pre-Petition Liens, the DIP Liens, or the Roll-Up; provided, however, that the Committee and any other party in interest may use up to $75,000 from the Carve-Out during the Challenge Period to investigate and, if warranted, prosecute a challenge to the Pre-Petition Liens or the Roll-Up in accordance with Section 2.15.

Section 2.10 — DIP Superpriority Claims

CONFIDENTIAL
EXECUTION VERSION
SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of October 13, 2023
among
CASCABEL FINANCIAL HOLDINGS, INC., a Delaware corporation, as Holdings and a Borrower,
CASCABEL ASSET MANAGEMENT LLC, a Delaware limited liability company, as a Borrower,
and
DRIFTWOOD ABSOLUTE RETURN FUND LTD., an exempted company incorporated in the Cayman Islands, as DIP Lender
In re Cascabel Financial Holdings, Inc., et al. Case No. 23-11487 (KFM) United States Bankruptcy Court for the District of Delaware
RECITALS
This SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this "Agreement") is entered into as of October 13, 2023, among CASCABEL FINANCIAL HOLDINGS, INC., a Delaware corporation ("Holdings" or "Borrower"), CASCABEL ASSET MANAGEMENT LLC, a Delaware limited liability company ("CAM" and, together with Holdings, the "Borrowers"), and DRIFTWOOD ABSOLUTE RETURN FUND LTD., an exempted company incorporated in the Cayman Islands (the "DIP Lender").
WHEREAS, Cascabel Financial Holdings, Inc. is a Delaware corporation with its principal office at 1200 Market Street, Suite 900, Wilmington, DE 19801 (EIN: 84-3291057), and Cascabel Asset Management LLC is a Delaware limited liability company and SEC-registered investment adviser and a wholly-owned subsidiary of Holdings;
WHEREAS, each of the Borrowers filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") on September 8, 2023 (the "Petition Date") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), and the cases are being jointly administered under Case No. 23-11487 (KFM) before the Honorable Karen F. McAllister (the "Cases");
WHEREAS, the Borrowers continue to operate their businesses and manage their properties as debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, Ridgeline Community Bank, a Delaware state-chartered commercial bank and subsidiary of Holdings regulated by the Delaware Office of the State Bank Commissioner and the Federal Deposit Insurance Corporation (the "FDIC"), with total deposits of approximately $385,000,000 as of the Petition Date, is excluded from the Cases and continues to operate under regulatory supervision;
WHEREAS, Holdings is party to that certain Credit Agreement, dated as of January 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Pre-Petition Credit Agreement"), among Holdings, as borrower, Velthorn National Bank, N.A., as administrative agent (the "Pre-Petition Agent"), and the lenders party thereto (collectively, the "Pre-Petition First Lien Lenders"), pursuant to which $120,000,000 in aggregate principal amount of senior secured first lien term loans (the "Pre-Petition First Lien Loans") were made, bearing interest at SOFR plus 425 basis points per annum, maturing January 15, 2026;
WHEREAS, the Pre-Petition First Lien Lenders consist of: Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount), Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), Brindoval Institutional Lending, LLC (holding $22,000,000 in aggregate principal amount), and the DIP Lender (holding $32,000,000 in aggregate principal amount), for a total of $120,000,000 in aggregate principal amount outstanding;
WHEREAS, the DIP Lender holds $32,000,000 in face value of the Pre-Petition First Lien Loans, representing approximately 26.67% of the total outstanding first lien obligations;
WHEREAS, Holdings also has outstanding: (a) $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027 (the "Pre-Petition Second Lien Notes"), issued under an indenture dated June 1, 2022 (the "Second Lien Indenture") with Zynvaro Trust Company, 101 Hudson Street, Jersey City, NJ 07302, as indenture trustee (the "Second Lien Trustee"), of which approximately $30,000,000 is held by Ashford Mezzanine Capital, LP; and (b) $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025 (the "Pre-Petition Unsecured Notes"), for total pre-petition funded debt of $183,500,000;
WHEREAS, as of the Petition Date, the Borrowers had total assets of approximately $620,000,000 and total liabilities of approximately $710,000,000, reflecting a negative equity position of approximately $90,000,000;
WHEREAS, the Borrowers require debtor-in-possession financing to fund their operations during the Cases, preserve going-concern value, maintain the ongoing business operations of CAM and its approximately $1,200,000,000 in client assets under management, support the continued orderly operation of Ridgeline Community Bank, and pursue a plan of reorganization;
WHEREAS, the Borrowers have requested that the DIP Lender provide a senior secured superpriority debtor-in-possession credit facility in the aggregate principal amount of $75,000,000, consisting of $43,000,000 in new money term loans and $32,000,000 in roll-up term loans, as more fully described herein;
WHEREAS, on September 15, 2023, the Bankruptcy Court entered an Interim Order (Dkt. No. 47) (the "Interim DIP Order") authorizing the Borrowers to borrow up to $18,000,000 on an interim basis under this Agreement, pending a final hearing on the DIP financing;
WHEREAS, on October 13, 2023, the Bankruptcy Court entered a Final Order (Dkt. No. 128) (the "Final DIP Order" and, together with the Interim DIP Order, the "DIP Orders") authorizing the Borrowers to borrow the full $43,000,000 New Money DIP Tranche and approving the $32,000,000 Roll-Up Tranche on a final basis, after notice and a hearing as required by Section 364 of the Bankruptcy Code;
WHEREAS, the DIP Lender is represented by Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022 and 1000 North King Street, Suite 300, Wilmington, DE 19801 (the "DIP Lender's Counsel");
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Defined Terms
As used in this Agreement, the following terms shall have the following meanings:
"Adequate Protection Payments" means the monthly current-pay interest payments to the Non-Driftwood Pre-Petition First Lien Lenders on $88,000,000 of Pre-Petition First Lien Loans at the non-default contract rate of SOFR plus 425 basis points per annum, as more fully described in Section 2.13(c) and as authorized by the DIP Orders and the Adequate Protection Stipulation.
"Adequate Protection Reserve" means a segregated reserve account in the amount of $3,500,000, funded from the proceeds of Draw 1, established and maintained for the benefit of the Non-Driftwood Pre-Petition First Lien Lenders, as more fully described in Section 2.13(d).
"Adequate Protection Stipulation" means that certain Stipulation Regarding Adequate Protection filed with the Bankruptcy Court on October 9, 2023 (Dkt. No. 119), among the DIP Lender, the Borrowers, Velthorn National Bank, N.A., and Pinnacle Credit Partners Fund II, LP, embodying the global settlement reached on October 6, 2023 with respect to adequate protection for the Non-Driftwood Pre-Petition First Lien Lenders in connection with the DIP Facility and the priming of the Pre-Petition Liens.
"Ad Hoc Group" means the informal group of Pre-Petition First Lien Lenders consisting of Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount) and Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), in aggregate holding $66,000,000 of the Pre-Petition First Lien Loans, which group was formed on or about September 12, 2023 in connection with the Cases.
"Ad Hoc Group Counsel" means Hartwell & Crane LLP, 51 JFK Parkway, Suite 200, Short Hills, NJ 07078 (Lead Partner: Monica L. Hartwell), counsel to the Ad Hoc Group.
"Ad Hoc Group Counsel Fee Cap" means $1,200,000, representing the maximum aggregate amount of fees and expenses of Ad Hoc Group Counsel that are payable as part of the adequate protection package provided to the Non-Driftwood Pre-Petition First Lien Lenders under Section 2.13(e).
"Adjusted Term SOFR" means, with respect to any Interest Period, the per annum rate equal to Term SOFR for such Interest Period; provided that in no event shall Adjusted Term SOFR be less than the SOFR Floor.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Applicable Rate" means 900 basis points (9.00%) per annum above Adjusted Term SOFR; provided that the all-in Applicable Rate shall not be less than 13.00% per annum (reflecting the SOFR Floor of 4.00% plus 900 basis points).
"Avoidance Actions" means any and all avoidance actions or causes of action arising under Chapter 5 of the Bankruptcy Code, including Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code, and any analogous state law claims.
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended from time to time.
"Bankruptcy Court" means the United States Bankruptcy Court for the District of Delaware presiding over the Cases, or such other court having jurisdiction over the Cases from time to time.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended from time to time, and the local rules of the Bankruptcy Court.
"Borrowers" means, collectively, Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, and each individually a "Borrower." The obligations of the Borrowers hereunder are joint and several.
"Budget" means the 13-week rolling cash flow budget attached hereto as Exhibit B, as updated every four (4) weeks in accordance with Sections 6.01(c) and 7.16, and approved by the DIP Lender, prepared in coordination with Alderpoint Advisory Partners LLC (CRO Terrence M. Kowalski).
"Business Day" means any day that is not a Saturday, a Sunday, or a day on which banking institutions in the City of New York, New York or Wilmington, Delaware are authorized or required by law or other governmental action to close.
"CAM" means Cascabel Asset Management LLC, a Delaware limited liability company, SEC-registered investment adviser (CRD No. 293841) managing approximately $1,200,000,000 in client assets under management as of the Petition Date.
"Carve-Out" has the meaning assigned to such term in Section 2.14.
"Carve-Out Trigger Notice" means a written notice delivered by the DIP Lender to the Borrowers and the Committee, following the occurrence and during the continuance of an Event of Default, declaring that the Carve-Out is triggered and that all professional fees and expenses incurred thereafter by the Borrowers' professionals and the Committee's professionals shall be subject to the aggregate caps set forth in Section 2.14.
"Cases" means the jointly administered Chapter 11 cases of the Borrowers, Case No. 23-11487 (KFM), pending before the Bankruptcy Court.
"Challenge Period" means: (a) with respect to the Committee, 75 days from the entry of the Final DIP Order (i.e., from October 13, 2023, expiring December 27, 2023); and (b) with respect to any other party in interest, 60 days from the entry of the Final DIP Order (i.e., from October 13, 2023, expiring December 12, 2023), in each case, to investigate and commence a challenge to the Pre-Petition Liens or the Roll-Up, as more fully set forth in Section 2.15.
"Closing Date" means the date on which the conditions precedent set forth in Section 4.01 have been satisfied or waived in accordance with the terms hereof, which occurred on October 13, 2023, upon entry of the Final DIP Order.
"Collateral" has the meaning assigned to such term in Section 8.02.
"Commitment" means the total commitment of $75,000,000, consisting of the New Money Commitment of $43,000,000 and the Roll-Up Commitment of $32,000,000.
"Commitment Fee" means a fee equal to 2.00% of the total Commitment ($75,000,000 multiplied by 2.00%, equaling $1,500,000), fully earned upon execution of this Agreement and payable upon entry of the Interim DIP Order, as more fully described in Section 2.04(a).
"Committee" means the Official Committee of Unsecured Creditors appointed by the Office of the United States Trustee on September 22, 2023 (Dkt. No. 68), chaired by Vendara Technology Solutions, Inc., as the same may be reconstituted from time to time.
"Committee Counsel" means Breckenridge McCoy LLP, 919 North Market Street, Suite 700, Wilmington, DE 19801 (Lead Partner: Thomas A. Breckenridge), counsel to the Committee.
"Compliance Certificate" means a certificate substantially in the form of Exhibit C.
"CRO" means Terrence M. Kowalski, the Chief Restructuring Officer appointed by the Board of Directors of Holdings on August 25, 2023, provided by Alderpoint Advisory Partners LLC, 399 Park Avenue, 22nd Floor, New York, NY 10022, or any successor CRO approved by the DIP Lender.
"Debtor's Counsel" means Whitfield, Graves & Sato LLP, 1201 North Market Street, Suite 1500, Wilmington, DE 19801 (Lead Partner: Jonathan R. Whitfield; Lead Associate: Rachel P. Dumont), counsel to the Borrowers.
"Debtor's Investment Banker" means Solstice Partners LLC, 650 Fifth Avenue, 18th Floor, New York, NY 10019 (Managing Director: David R. Chin), retained pre-petition on August 10, 2023 and approved by the Bankruptcy Court pursuant to Section 327 of the Bankruptcy Code.
"Default" means any event or condition that, with the giving of notice or the passage of time (or both), would constitute an Event of Default.
"Default Rate" means the Applicable Rate plus an additional 200 basis points per annum, for a total of 1,100 basis points over Adjusted Term SOFR (resulting in a minimum default all-in rate of 15.00% per annum).
"DIP Facility" means the debtor-in-possession credit facility established pursuant to this Agreement.
"DIP Lender" means Driftwood Absolute Return Fund Ltd., an exempted company incorporated in the Cayman Islands, with registered office at 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman, KY1-1002, Cayman Islands, and principal office at c/o Driftwood Capital Advisors LLC, 280 Park Avenue, 38th Floor, New York, NY 10017. The DIP Lender's investment manager is Driftwood Capital Advisors LLC, a Delaware limited liability company. Co-Founders: Marcus Ellison (Chief Investment Officer) and Priya Venkatesh (Chief Operating Officer). Assets under management approximately $4.8 billion as of September 2023.
"DIP Lender's Counsel" means Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022 and 1000 North King Street, Suite 300, Wilmington, DE 19801 (Lead Partner: Colette Whitman).
"DIP Liens" means the first priority priming liens on and security interests in the Collateral granted to the DIP Lender pursuant to this Agreement, the DIP Orders, and Article VIII hereof.
"DIP Loans" means, collectively, the New Money DIP Tranche and the Roll-Up Tranche.
"DIP Orders" means, collectively, the Interim DIP Order and the Final DIP Order.
"DIP Superpriority Claims" means the superpriority administrative expense claims granted to the DIP Lender pursuant to Section 364(c)(1) of the Bankruptcy Code, as set forth in Section 2.10.
"Draw 1" means the first advance under the New Money DIP Tranche in the amount of $18,000,000, which became available upon entry of the Interim DIP Order and was drawn on September 15, 2023.
"Draw 2" means the second advance under the New Money DIP Tranche in the amount of $25,000,000 ($43,000,000 minus $18,000,000), which became available upon entry of the Final DIP Order and was drawn on October 13, 2023.
"Effective Date" means the effective date of a confirmed Chapter 11 plan of the Borrowers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Event of Default" has the meaning assigned to such term in Section 9.01.
"Excluded Assets" means all assets of Ridgeline Community Bank that are subject to regulatory restrictions imposed by the Delaware Office of the State Bank Commissioner and the FDIC, including without limitation deposit accounts held at or by Ridgeline, loans originated by Ridgeline, and regulatory capital of Ridgeline.
"Exit Fee" means a fee equal to 1.50% of all amounts drawn under this Agreement ($75,000,000 multiplied by 1.50%, equaling $1,125,000), payable upon the earlier of the Maturity Date, voluntary prepayment in full, or acceleration, as more fully described in Section 2.04(b).
"FATCA" means Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (or any amended or successor version thereof), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of such Code.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final DIP Order" means the order entered by the Bankruptcy Court on October 13, 2023 (Dkt. No. 128), authorizing borrowing of the full New Money DIP Tranche and approving the Roll-Up Tranche on a final basis, substantially in the form attached hereto as Exhibit F-2.
"GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time.
"Holdings" means Cascabel Financial Holdings, Inc., a Delaware corporation. CEO: Gerald T. Harmon. CFO: Susan K. Nakamura.
"Interim DIP Order" means the order entered by the Bankruptcy Court on September 15, 2023 (Dkt. No. 47), authorizing borrowing of up to $18,000,000 on an interim basis, substantially in the form attached hereto as Exhibit F-1.
"Interest Period" means, with respect to any DIP Loan, (a) initially, the period commencing on the date such DIP Loan is made or deemed made and ending on the last day of the calendar month in which such DIP Loan is made, and (b) thereafter, each successive period commencing on the last day of the immediately preceding Interest Period and ending on the numerically corresponding day in the calendar month that is one (1) month thereafter; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, and (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period.
"Judge" means the Honorable Karen F. McAllister, United States Bankruptcy Judge for the District of Delaware.
"Lender's Professional Fees" means all fees and expenses of DIP Lender's Counsel (Calderwood & Harkness LLP) that are reimbursable by the Borrowers' estates pursuant to Section 11.04 as administrative expenses of the Borrowers' estates under Section 503(b)(1) of the Bankruptcy Code.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, security interest, or preference, priority, or other security agreement of any kind or nature whatsoever, including any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing.
"Material Adverse Effect" means any event, change, condition, occurrence, or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, financial condition, or results of operations of the Borrowers, taken as a whole (excluding, for the avoidance of doubt, the effects of the filing of the Cases themselves), (b) the ability of the Borrowers to perform their obligations under this Agreement or any other Transaction Document, (c) the validity or enforceability of this Agreement or any DIP Order, or (d) the rights and remedies of the DIP Lender hereunder or under the DIP Orders.
"Maturity Date" means the earliest to occur of: (i) September 8, 2024 (twelve months from the Petition Date); (ii) the Effective Date of a confirmed Chapter 11 plan; (iii) the consummation of a sale of substantially all assets of the Borrowers under Section 363 of the Bankruptcy Code; or (iv) the date of acceleration of the Obligations following an Event of Default.
"Milestones" has the meaning assigned to such term in Section 7.18.
"New Money Commitment" means $43,000,000 in aggregate new money term loan commitments of the DIP Lender.
"New Money DIP Tranche" means the tranche of DIP Loans consisting of $43,000,000 in new money term loans, advanced in two draws: Draw 1 ($18,000,000) and Draw 2 ($25,000,000).
"Non-Driftwood Pre-Petition First Lien Lenders" means Velthorn National Bank, N.A. (holding $38,000,000 in aggregate principal amount), Pinnacle Credit Partners Fund II, LP (holding $28,000,000 in aggregate principal amount), and Brindoval Institutional Lending, LLC (holding $22,000,000 in aggregate principal amount), collectively holding $88,000,000 in aggregate principal amount of the Pre-Petition First Lien Loans.
"Obligations" means all amounts owing by the Borrowers, jointly and severally, to the DIP Lender under this Agreement, including all principal, interest (including post-petition interest), fees (including the Commitment Fee, the Exit Fee, and the Unused Line Fee), costs, expenses, indemnification obligations, and Lender's Professional Fees, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.
"Permitted Indebtedness" means (a) the Obligations under this Agreement, (b) the Pre-Petition First Lien Loans (to the extent not rolled up into the DIP Facility), (c) the Pre-Petition Second Lien Notes, (d) the Pre-Petition Unsecured Notes, (e) trade payables and accrued expenses incurred in the ordinary course of business consistent with the Budget, (f) intercompany indebtedness existing on the Petition Date and disclosed in Schedule 5 hereto, and (g) other indebtedness expressly permitted by the DIP Orders.
"Permitted Liens" has the meaning assigned to such term in Schedule 3 hereto.
"Permitted Variances" means: (i) with respect to cumulative actual revenue for any bi-weekly testing period, a variance of not more than plus or minus 10% from the projected revenue for such period under the Budget; and (ii) with respect to cumulative actual disbursements for any bi-weekly testing period, a variance of not more than plus or minus 15% from the projected disbursements for such period under the Budget.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, governmental authority, or any other entity.
"Petition Date" means September 8, 2023, the date on which the Borrowers filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code.
"Pre-Petition Agent" means Velthorn National Bank, N.A., 500 Boylston Street, Boston, MA 02116, in its capacity as administrative agent under the Pre-Petition Credit Agreement.
"Pre-Petition Credit Agreement" means the Credit Agreement dated as of January 15, 2021, among Holdings, as borrower, the Pre-Petition Agent, and the Pre-Petition First Lien Lenders party thereto, as amended, restated, supplemented, or otherwise modified from time to time prior to the Petition Date.
"Pre-Petition First Lien Lenders" means, collectively, Velthorn National Bank, N.A., Pinnacle Credit Partners Fund II, LP, Brindoval Institutional Lending, LLC, and the DIP Lender (in its capacity as a lender under the Pre-Petition Credit Agreement), and their respective successors and assigns.
"Pre-Petition First Lien Loans" means the $120,000,000 in aggregate principal amount of senior secured first lien term loans outstanding under the Pre-Petition Credit Agreement as of the Petition Date.
"Pre-Petition Liens" means the liens and security interests securing the Pre-Petition First Lien Loans under the Pre-Petition Credit Agreement and the related security documents.
"Pre-Petition Second Lien Notes" means the $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027, issued by Holdings under the Second Lien Indenture.
"Pre-Petition Unsecured Notes" means the $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025, issued by Holdings.
"Replacement Liens" means the replacement liens on the Collateral granted to the Non-Driftwood Pre-Petition First Lien Lenders as adequate protection pursuant to Section 2.13(a) and the DIP Orders, junior only to the DIP Liens and the Carve-Out.
"Ridgeline" means Ridgeline Community Bank, a Delaware state-chartered commercial bank, a subsidiary of Holdings, regulated by the Delaware Office of the State Bank Commissioner and the FDIC.
"Roll-Up Commitment" means the commitment of $32,000,000, representing the dollar-for-dollar roll-up of the DIP Lender's Pre-Petition First Lien Loan claims into DIP Loans hereunder.
"Roll-Up Tranche" means the tranche of DIP Loans in the amount of $32,000,000, representing the dollar-for-dollar roll-up of the DIP Lender's Pre-Petition First Lien Loan claims into DIP Loans bearing superpriority administrative expense claim status and DIP Lien priority, pari passu with the New Money DIP Tranche.
"Second Lien Indenture" means the indenture dated as of June 1, 2022, between Holdings and the Second Lien Trustee, governing the Pre-Petition Second Lien Notes, as amended, supplemented, or otherwise modified from time to time prior to the Petition Date.
"Second Lien Trustee" means Zynvaro Trust Company, 101 Hudson Street, Jersey City, NJ 07302, as indenture trustee under the Second Lien Indenture.
"SOFR Floor" means 4.00% per annum.
"Superpriority Claim" means the administrative expense claim status granted to the Obligations under Section 364(c)(1) and Section 507(b) of the Bankruptcy Code, as set forth in Section 2.10.
"Term SOFR" means the forward-looking term rate based on the Secured Overnight Financing Rate, as published by the CME Group Benchmark Administration Limited (or any successor administrator acceptable to the DIP Lender), for a tenor equal to the applicable Interest Period, as of two (2) U.S. Government Securities Business Days prior to the commencement of such Interest Period.
"Total DIP Loans" means the aggregate principal amount of all DIP Loans outstanding at any time under this Agreement, up to a maximum of $75,000,000.
"Transaction Documents" means, collectively, this Agreement, the DIP Orders, the Adequate Protection Stipulation, and all other documents, instruments, and agreements executed and delivered in connection herewith, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"UCC" means the Uniform Commercial Code as in effect in the State of Delaware or any other applicable jurisdiction.
"Unused Line Fee" means a fee of 0.50% per annum on the average daily undrawn portion of the New Money DIP Tranche, as more fully described in Section 2.04(c).
"U.S. Trustee" means the Office of the United States Trustee for the District of Delaware.
"Variance Testing" means the budget compliance testing described in Section 7.16, conducted on a cumulative bi-weekly basis with Permitted Variances of plus or minus 10% for revenue and plus or minus 15% for disbursements.
Section 1.02 — Interpretation
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The words "hereof," "herein," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b) References to any Article, Section, Schedule, or Exhibit are references to Articles, Sections, Schedules, and Exhibits to this Agreement, unless otherwise specified.
(c) The term "including" shall mean "including, without limitation."
(d) References to any law, statute, or regulation shall mean such law, statute, or regulation as amended, modified, codified, replaced, or reenacted, in whole or in part, and in effect from time to time, and shall include any rules, regulations, and delegated legislation issued thereunder.
(e) References to any Person shall include such Person's successors and permitted assigns.
(f) References to any agreement or document shall include such agreement or document as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms and the terms hereof.
(g) The headings and captions in this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision hereof.
(h) Words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(i) Unless otherwise specified, all references to dollar amounts are to United States dollars.
(j) The rules of construction set forth in Section 102 of the Bankruptcy Code shall apply to the interpretation of this Agreement.
Section 1.03 — Accounting Terms
Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other financial information required to be delivered hereunder shall be prepared in accordance with GAAP, applied on a basis consistent with the Borrowers' historical accounting practices, as modified by applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Any reference to "consolidated" financial data means the consolidated financial data of Holdings and its subsidiaries (including CAM), but excluding Ridgeline Community Bank to the extent required by applicable regulatory requirements.
Section 1.04 — UCC Terms
Terms used herein but not otherwise defined herein that are defined in the UCC shall have the meanings assigned to them in Article 1 or Article 9 of the UCC, as applicable, as in effect in the State of Delaware from time to time.
Section 1.05 — Rates
(a) The interest rate on DIP Loans is based on Adjusted Term SOFR, which incorporates the SOFR Floor of 4.00% per annum. In no event shall Adjusted Term SOFR for any Interest Period be deemed to be less than the SOFR Floor.
(b) If Term SOFR for any Interest Period is unavailable or ceases to be published, the DIP Lender and the Borrowers shall negotiate in good faith to establish a replacement benchmark rate consistent with then-prevailing market conventions; provided that in the event that the parties are unable to agree upon a replacement benchmark within ten (10) Business Days, the DIP Lender shall select such replacement benchmark in its reasonable discretion.
(c) No provision of this Agreement shall require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If any excess of interest in such respect is provided for herein, or if the amount of interest paid or agreed to be paid exceeds the maximum amount permitted by applicable law, such excess shall be applied to the reduction of the principal balance of the DIP Loans and not to the payment of interest, or if such excess exceeds the unpaid principal balance of the DIP Loans, such excess shall be refunded to the Borrowers.
ARTICLE II — THE DIP FACILITY
Section 2.01 — DIP Loans
(a) New Money DIP Tranche. Subject to the terms and conditions of this Agreement and the DIP Orders, the DIP Lender agrees to make term loans to the Borrowers in an aggregate principal amount of $43,000,000 (the "New Money DIP Tranche"), available in two draws as follows:
(i) Draw 1. Upon entry of the Interim DIP Order and satisfaction of the conditions precedent set forth in Section 4.01, the DIP Lender shall advance to the Borrowers term loans in the principal amount of $18,000,000 ("Draw 1"). Draw 1 was advanced on September 15, 2023.
(ii) Draw 2. Upon entry of the Final DIP Order and satisfaction of the conditions precedent set forth in Section 4.02, the DIP Lender shall advance to the Borrowers term loans in the principal amount of $25,000,000 ($43,000,000 minus $18,000,000) ("Draw 2"). Draw 2 was advanced on October 13, 2023.
(b) Roll-Up Tranche. Upon entry of the Final DIP Order and satisfaction of the conditions precedent set forth in Section 4.03, $32,000,000 of the DIP Lender's Pre-Petition First Lien Loan claims shall be deemed rolled up into this Agreement and shall constitute DIP Loans hereunder (the "Roll-Up Tranche"). The Roll-Up Tranche shall receive superpriority administrative expense claim status and DIP Lien priority, pari passu in all respects with the New Money DIP Tranche. No additional cash shall be advanced in connection with the Roll-Up Tranche; rather, the DIP Lender's existing Pre-Petition First Lien Loan claims in the amount of $32,000,000 shall be satisfied by the deemed extension of DIP Loans in the same amount.
(c) Total Commitment. The total commitment under this Agreement is $75,000,000, consisting of the New Money Commitment of $43,000,000 and the Roll-Up Commitment of $32,000,000.
(d) Term Loan Facility. The DIP Loans are term loans. Amounts repaid or prepaid may not be reborrowed.
Section 2.02 — Borrowing Mechanics
(a) Borrowing Notice. Each borrowing of DIP Loans under the New Money DIP Tranche shall be made upon delivery by the Borrowers to the DIP Lender of a written borrowing notice (each, a "Borrowing Notice"), substantially in the form of Exhibit A attached hereto, not later than 11:00 a.m. (New York time) on the Business Day that is two (2) Business Days prior to the requested date of borrowing (or such shorter period as the DIP Lender may agree in its sole discretion). Each Borrowing Notice shall be irrevocable and shall specify (i) the requested date of borrowing, (ii) the aggregate principal amount of DIP Loans to be borrowed, (iii) the applicable Draw (Draw 1 or Draw 2), and (iv) the Interest Period to apply to such borrowing.
(b) Minimum Amounts. Each borrowing under the New Money DIP Tranche shall be in a minimum principal amount of $5,000,000 or the remaining undrawn balance of the applicable Draw, whichever is less.
(c) Funding. Subject to satisfaction of the applicable conditions precedent, the DIP Lender shall make the requested DIP Loans available to the Borrowers by wire transfer of immediately available funds to the account designated by the Borrowers in the applicable Borrowing Notice (or as otherwise set forth in Exhibit H hereto) no later than 2:00 p.m. (New York time) on the requested date of borrowing.
(d) Deemed Borrowing. The Roll-Up Tranche shall be deemed borrowed upon entry of the Final DIP Order and satisfaction of the conditions set forth in Section 4.03, without the delivery of a Borrowing Notice and without the transfer of cash proceeds.
Section 2.03 — Interest
(a) Applicable Rate. Each DIP Loan shall bear interest at a rate per annum equal to Adjusted Term SOFR for the applicable Interest Period plus the Applicable Rate of 900 basis points (9.00%). The SOFR Floor is 4.00% per annum, resulting in a minimum all-in interest rate of 13.00% per annum (4.00% plus 9.00%). As of the Closing Date, with Term SOFR at approximately 5.33%, the effective all-in interest rate is approximately 14.33% per annum.
(b) Default Rate. Upon the occurrence and during the continuance of an Event of Default, the outstanding principal amount of all DIP Loans and, to the extent permitted by applicable law, all other overdue Obligations, shall bear interest at the Default Rate, which shall be the Applicable Rate plus an additional 200 basis points per annum, for a total of 1,100 basis points over Adjusted Term SOFR (resulting in a minimum all-in default rate of 15.00% per annum). The Default Rate shall be effective automatically upon the occurrence of an Event of Default under Section 9.01(a) or Section 9.01(h), and upon notice from the DIP Lender for all other Events of Default.
(c) Interest Payment Dates. Accrued interest on the DIP Loans shall be payable monthly in arrears on the first Business Day of each calendar month, commencing on the first such date following the initial borrowing, and on the Maturity Date. Interest accrued at the Default Rate shall be payable on demand.
(d) Computation. All interest hereunder shall be computed on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day) in the applicable Interest Period or other period for which interest is being calculated. Each determination of an interest rate by the DIP Lender pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers in the absence of manifest error.
Section 2.04 — Fees
(a) Commitment Fee. The Borrowers shall pay to the DIP Lender a commitment fee equal to 2.00% of the total Commitment ($75,000,000 multiplied by 2.00%, equaling $1,500,000). The Commitment Fee shall be fully earned upon execution of this Agreement and shall be payable upon entry of the Interim DIP Order. The Commitment Fee was paid from the proceeds of Draw 1 on September 15, 2023. The Commitment Fee is non-refundable and shall not be subject to counterclaim, setoff, or deduction of any kind.
(b) Exit Fee. The Borrowers shall pay to the DIP Lender an exit fee equal to 1.50% of all amounts drawn under this Agreement ($75,000,000 multiplied by 1.50%, equaling $1,125,000). The Exit Fee shall be payable upon the earlier of (i) the Maturity Date, (ii) voluntary prepayment in full of the DIP Loans, or (iii) acceleration of the Obligations following an Event of Default. The Exit Fee shall be fully earned on the Closing Date, and once earned, shall be non-refundable.
(c) Unused Line Fee. The Borrowers shall pay to the DIP Lender a fee equal to 0.50% per annum on the average daily undrawn portion of the New Money DIP Tranche (the "Unused Line Fee"). The Unused Line Fee shall accrue from the Closing Date and shall be payable quarterly in arrears on the first Business Day of each calendar quarter and on the date on which the New Money DIP Tranche is fully drawn or terminated. For the avoidance of doubt, the Roll-Up Tranche shall not be included in the calculation of the Unused Line Fee.
(d) General Fee Provisions. All fees payable hereunder shall be fully earned when due and shall be non-refundable for any reason whatsoever. Fees shall be paid in immediately available funds by wire transfer to the DIP Lender's account as set forth in Exhibit H hereto.
Section 2.05 — Repayment and Maturity
(a) All outstanding Obligations, including all principal, accrued and unpaid interest, the Exit Fee, and all other amounts owing hereunder, shall be due and payable in full on the Maturity Date.
(b) The Maturity Date is the earliest to occur of: (i) September 8, 2024 (twelve months from the Petition Date); (ii) the Effective Date of a confirmed Chapter 11 plan of the Borrowers; (iii) the consummation of a sale of substantially all assets of the Borrowers pursuant to Section 363 of the Bankruptcy Code; or (iv) the date of acceleration of the Obligations following an Event of Default in accordance with Section 9.02.
(c) No extension of the Maturity Date shall be effective without the prior written consent of the DIP Lender and, if required, approval of the Bankruptcy Court.
Section 2.06 — Voluntary Prepayment
(a) The Borrowers may prepay all or any portion of the outstanding DIP Loans at any time without premium or penalty (other than the Exit Fee payable pursuant to Section 2.04(b) and any breakage costs payable pursuant to Section 3.03), upon not less than three (3) Business Days' prior written notice to the DIP Lender (or one (1) Business Day in the case of a prepayment in connection with the consummation of a plan of reorganization or a Section 363 sale).
(b) Each voluntary prepayment shall be in a minimum principal amount of $1,000,000 or, if less, the entire outstanding principal balance of the DIP Loans.
(c) Any voluntary prepayment shall be accompanied by (i) all accrued and unpaid interest on the amount prepaid through the date of prepayment, (ii) the Exit Fee (if all DIP Loans are being prepaid in full), and (iii) any breakage costs payable under Section 3.03.
(d) Voluntary prepayments shall be applied to the DIP Loans in accordance with Section 2.08.
Section 2.07 — Mandatory Prepayment
(a) Asset Dispositions. Subject to the provisions of the DIP Orders, the Borrowers shall prepay the DIP Loans in an amount equal to 100% of the net cash proceeds received by any Borrower from any sale, transfer, or other disposition of assets outside the ordinary course of business (other than any sale, transfer, or disposition of assets of Ridgeline Community Bank or Excluded Assets), promptly upon receipt thereof and in any event within three (3) Business Days of receipt. For purposes of this Section 2.07(a), "net cash proceeds" means the gross cash proceeds received in connection with such disposition, less (i) reasonable and customary transaction costs and expenses (including brokerage commissions, legal fees, and transfer taxes) actually paid in connection with such disposition, and (ii) amounts required to be applied to repay any indebtedness secured by a Permitted Lien on the asset sold (other than the DIP Loans), to the extent such indebtedness is required to be repaid in connection with such disposition.
(b) Insurance and Condemnation Proceeds. The Borrowers shall prepay the DIP Loans in an amount equal to 100% of the net cash proceeds received by any Borrower from any casualty event or condemnation affecting any material Collateral, to the extent such net cash proceeds exceed $500,000 in the aggregate during the term of this Agreement, promptly upon receipt thereof and in any event within five (5) Business Days of receipt; provided that no such prepayment shall be required to the extent that, within 180 days after receipt of such proceeds, the Borrowers commit to use (and thereafter promptly use) such proceeds to repair or replace the affected Collateral, and no Event of Default has occurred and is continuing.
(c) Extraordinary Receipts. The Borrowers shall prepay the DIP Loans in an amount equal to 100% of any extraordinary receipts (including tax refunds in excess of $250,000, litigation proceeds, and indemnification payments) received by any Borrower, promptly upon receipt thereof and in any event within three (3) Business Days of receipt; provided that such obligation shall not apply to proceeds of Avoidance Actions to the extent such proceeds constitute Collateral and remain available to the DIP Lender.
(d) Application. Mandatory prepayments shall be applied to the outstanding DIP Loans in accordance with Section 2.08.
Section 2.08 — Application of Payments
All amounts received by the DIP Lender in respect of the Obligations (whether from voluntary prepayments, mandatory prepayments, payments at maturity, or proceeds of Collateral) shall be applied in the following order:
First, to the payment of all costs and expenses (including Lender's Professional Fees) then due and payable under this Agreement;
Second, to the payment of all accrued and unpaid interest on the DIP Loans;
Third, to the payment of all fees then due and payable hereunder (including the Exit Fee, to the extent then payable);
Fourth, to the repayment of the outstanding principal amount of the DIP Loans (applied ratably between the New Money DIP Tranche and the Roll-Up Tranche, unless otherwise agreed by the DIP Lender);
Fifth, to the payment of any remaining Obligations.
Section 2.09 — Use of Proceeds
(a) Draw 1 Proceeds. The proceeds of Draw 1 ($18,000,000) shall be used solely for the following purposes:
(i) working capital and general corporate purposes of the Borrowers, in accordance with the Budget;
(ii) funding of the Adequate Protection Reserve in the amount of $3,500,000, in accordance with Section 2.13(d);
(iii) payment of the Commitment Fee in the amount of $1,500,000, in accordance with Section 2.04(a);
(iv) payment of DIP Lender's Professional Fees and related transaction costs incurred in connection with the negotiation, documentation, and closing of the DIP Facility;
(v) adequate protection payments to the Pre-Petition First Lien Lenders, in accordance with Section 2.13(c) and the Adequate Protection Stipulation; and
(vi) other payments authorized by the Interim DIP Order and the Budget.
(b) Draw 2 Proceeds. The proceeds of Draw 2 ($25,000,000) shall be used solely for the following purposes:
(i) working capital and general corporate purposes of the Borrowers, in accordance with the Budget;
(ii) adequate protection payments to the Pre-Petition First Lien Lenders, in accordance with Section 2.13(c) and the Adequate Protection Stipulation;
(iii) payments authorized by the DIP Orders and the Budget; and
(iv) other purposes approved in writing by the DIP Lender.
(c) Restriction on Use. Notwithstanding anything herein to the contrary, no proceeds of the DIP Loans (and no cash collateral of the DIP Lender) shall be used, directly or indirectly, to investigate, challenge, object to, contest, or bring any claim, counterclaim, action, proceeding, or cause of action against the DIP Lender, any of its Affiliates (including Driftwood Capital Advisors LLC), or any of its or their respective directors, officers, employees, agents, or advisors (including Calderwood & Harkness LLP), or to challenge, object to, or contest the validity, enforceability, perfection, or priority of the Pre-Petition Liens, the DIP Liens, or the Roll-Up; provided, however, that the Committee and any other party in interest may use up to $75,000 from the Carve-Out during the Challenge Period to investigate and, if warranted, prosecute a challenge to the Pre-Petition Liens or the Roll-Up in accordance with Section 2.15.
Section 2.10 — DIP Superpriority Claims
(a) Pursuant to Section 364(c)(1) of the Bankruptcy Code and the DIP Orders, all Obligations constitute allowed superpriority administrative expense claims against each Borrower and each Borrower's estate (the "DIP Superpriority Claims"), with priority in payment over any and all other administrative expense claims and all claims of any kind or nature whatsoever against each Borrower or each Borrower's estate, including, without limitation, all administrative expense claims of the kinds specified in or ordered pursuant to Sections 105, 326, 328, 330, 331, 365, 503(b), 506(c), 507(a), and 507(b) of the Bankruptcy Code, whether or not such claims may become allowed claims under Section 502 of the Bankruptcy Code.
(b) The DIP Superpriority Claims shall be subject only to the Carve-Out.
(c) The DIP Superpriority Claims shall not be pari passu with, or made junior to, any other claim under Section 364(c)(1) of the Bankruptcy Code, without the prior written consent of the DIP Lender.
Section 2.11 — Roll-Up Mechanics
(a) Upon entry of the Final DIP Order and satisfaction of the conditions precedent set forth in Section 4.03, $32,000,000 of the DIP Lender's Pre-Petition First Lien Loan claims shall be deemed satisfied by the deemed extension of DIP Loans in the same amount. Following such roll-up, the DIP Lender's Pre-Petition First Lien Loan claims in the amount of $32,000,000 shall be extinguished and shall be replaced in their entirety by DIP Loan claims under this Agreement, with the benefit of the DIP Liens, the DIP Superpriority Claims, and all other rights and protections afforded to the DIP Loans hereunder and under the DIP Orders.
(b) The Roll-Up Tranche shall be pari passu in right of payment, lien priority, and all other respects with the New Money DIP Tranche. All payments on account of the DIP Loans shall be applied ratably between the New Money DIP Tranche and the Roll-Up Tranche, except as otherwise provided in Section 7.09.
(c) Following the roll-up, the DIP Lender's Pre-Petition First Lien Loan claims are no longer claims under the Pre-Petition Credit Agreement and are treated exclusively under this Agreement. The DIP Lender shall have no further rights or claims under the Pre-Petition Credit Agreement with respect to the rolled-up amount of $32,000,000, and the Pre-Petition Agent shall reduce the outstanding balance under the Pre-Petition Credit Agreement accordingly. For the avoidance of doubt, the aggregate outstanding balance of Pre-Petition First Lien Loans under the Pre-Petition Credit Agreement, following consummation of the roll-up, shall be $88,000,000 ($120,000,000 minus $32,000,000).
(d) The roll-up is subject to the Challenge Period provisions set forth in Section 2.15. If a timely challenge is commenced and results in a determination adverse to the DIP Lender with respect to the validity of the roll-up, the rolled-up amount shall be deemed restored as a Pre-Petition First Lien Loan claim, and the DIP Lender's DIP Loan claims shall be reduced accordingly; provided that such restoration shall not affect the validity, enforceability, or priority of the New Money DIP Tranche.
Section 2.12 — Priming
(a) Pursuant to Section 364(d) of the Bankruptcy Code and the DIP Orders, the DIP Liens are priming liens, senior in priority to the Pre-Petition Liens and all other liens and security interests in the Collateral, whether arising before or after the Petition Date.
(b) The Pre-Petition First Lien Lenders have consented to, or have been found by the Bankruptcy Court to be adequately protected against, the priming of the Pre-Petition Liens, as set forth in the DIP Orders and the Adequate Protection Stipulation. The Adequate Protection Stipulation was filed with the Bankruptcy Court on October 9, 2023 (Dkt. No. 119) and embodies the global settlement reached on October 6, 2023 among the DIP Lender, the Borrowers, Velthorn National Bank, N.A., and Pinnacle Credit Partners Fund II, LP with respect to adequate protection and the terms of the DIP Facility.
(c) The priming of the Pre-Petition Liens is effective upon entry of the applicable DIP Order and does not require the separate consent of any individual Pre-Petition First Lien Lender other than as provided in the DIP Orders and the Adequate Protection Stipulation.
Section 2.13 — Adequate Protection
As adequate protection for the interests of the Non-Driftwood Pre-Petition First Lien Lenders in the Collateral, and as a condition to the priming authorized by the DIP Orders, the following adequate protection package is provided:
(a) Replacement Liens. The Non-Driftwood Pre-Petition First Lien Lenders shall receive replacement liens on and security interests in the Collateral, pursuant to Sections 361, 363(e), and 364(d)(1) of the Bankruptcy Code, junior only to (i) the DIP Liens, (ii) the Carve-Out, and (iii) any Permitted Liens that are senior to the Pre-Petition Liens as of the Petition Date. Such replacement liens shall be valid, binding, enforceable, and perfected without the need for any further action by the Non-Driftwood Pre-Petition First Lien Lenders.
(b) Section 507(b) Claims. The Non-Driftwood Pre-Petition First Lien Lenders shall receive superpriority administrative expense claims under Section 507(b) of the Bankruptcy Code, junior only to the DIP Superpriority Claims and the Carve-Out, but senior to all other administrative expense claims and all other claims against the Borrowers' estates.
(c) Adequate Protection Payments. The Borrowers shall make monthly current-pay interest payments to the Non-Driftwood Pre-Petition First Lien Lenders on $88,000,000 of Pre-Petition First Lien Loans at the non-default contract rate of SOFR plus 425 basis points per annum. Based on Term SOFR of approximately 5.33% as of the Closing Date, the all-in adequate protection interest rate is approximately 9.58% per annum, resulting in estimated monthly adequate protection interest payments of approximately $702,133 in the aggregate. Such payments shall be made on the first Business Day of each calendar month, commencing on the first such date following the Closing Date, through and including the Maturity Date or the earlier termination of this Agreement. Adequate Protection Payments shall be allocated among the Non-Driftwood Pre-Petition First Lien Lenders in proportion to their respective holdings of Pre-Petition First Lien Loans (Velthorn National Bank, N.A.: 43.18%; Pinnacle Credit Partners Fund II, LP: 31.82%; Brindoval Institutional Lending, LLC: 25.00%).
(d) Adequate Protection Reserve. The Borrowers shall fund, from the proceeds of Draw 1, a segregated reserve account in the amount of $3,500,000 (the "Adequate Protection Reserve"), to be maintained at a depository institution acceptable to the DIP Lender and the Pre-Petition Agent. The Adequate Protection Reserve shall be available to fund Adequate Protection Payments in the event that the Borrowers' operating cash flow is insufficient to make such payments when due. The Adequate Protection Reserve shall be replenished by the Borrowers to the extent any amounts are drawn therefrom, subject to the Budget and available cash. Upon indefeasible payment in full of the Pre-Petition First Lien Loans (as reduced by the roll-up), any remaining balance in the Adequate Protection Reserve shall revert to the Borrowers' estates.
(e) Ad Hoc Group Counsel Fees. The Borrowers' estates shall reimburse the reasonable fees and expenses of Ad Hoc Group Counsel (Hartwell & Crane LLP) incurred in connection with the Cases and the DIP Facility, in an aggregate amount not to exceed $1,200,000 (the "Ad Hoc Group Counsel Fee Cap"). Such fees and expenses shall be payable monthly upon submission of invoices to the Borrowers and the DIP Lender, subject to the reasonableness standards set forth in Section 330 of the Bankruptcy Code. For the avoidance of doubt, the Ad Hoc Group Counsel Fee Cap is a maximum amount, and the Borrowers shall not be obligated to pay fees and expenses in excess of such cap without the prior written consent of the DIP Lender.
(f) Second Lien and Unsecured Adequate Protection. The holders of the Pre-Petition Second Lien Notes (including Ashford Mezzanine Capital, LP) and the holders of the Pre-Petition Unsecured Notes shall not receive adequate protection under this Agreement or the DIP Orders. Any adequate protection provided to such holders shall be determined by separate order of the Bankruptcy Court.
Section 2.14 — Carve-Out
(a) Notwithstanding the DIP Liens, the DIP Superpriority Claims, and the Replacement Liens, the following amounts (collectively, the "Carve-Out") shall have priority over the DIP Liens, the DIP Superpriority Claims, and the Replacement Liens:
(i) All unpaid fees of the Clerk of the Bankruptcy Court and fees payable to the U.S. Trustee pursuant to 28 U.S.C. Section 1930(a)(6), together with interest thereon pursuant to 31 U.S.C. Section 3717, in an aggregate amount not to exceed $250,000;
(ii) All allowed and unpaid professional fees and disbursements of the Borrowers' retained professionals and the Committee's retained professionals that are incurred after the date of delivery of a Carve-Out Trigger Notice by the DIP Lender, in an aggregate amount not to exceed $2,500,000 (the "Post-Trigger Professional Fee Cap"); provided that of such $2,500,000, no more than $750,000 may be allocated to or used by the Committee's retained professionals (including Committee Counsel, Breckenridge McCoy LLP, and any financial advisor retained by the Committee).
(b) The total Carve-Out shall not exceed $2,750,000 in the aggregate ($250,000 for Clerk and U.S. Trustee fees plus $2,500,000 for professional fees).
(c) The DIP Liens, the DIP Superpriority Claims, the Replacement Liens, and the Section 507(b) claims of the Non-Driftwood Pre-Petition First Lien Lenders shall in each case be subject and subordinate to the Carve-Out. For the avoidance of doubt, the Carve-Out shall be senior to all liens, claims, and interests, other than fees of the Clerk of the Bankruptcy Court and the U.S. Trustee as described in clause (a)(i) above.
(d) Prior to the delivery of a Carve-Out Trigger Notice, the Carve-Out shall not limit the payment of professional fees and expenses of the Borrowers' professionals and the Committee's professionals as authorized by the Bankruptcy Court and provided for in the Budget.
(e) The Carve-Out shall not be available to fund any investigation of, challenge to, or action against the DIP Lender or its Affiliates, or any challenge to the Pre-Petition Liens or the Roll-Up, except to the extent of $75,000, which may be used by the Committee during the Challenge Period solely for the purpose of investigating and, if warranted, commencing a challenge action as set forth in Section 2.15.
Section 2.15 — Challenge Period
(a) The Committee shall have seventy-five (75) days from the date of entry of the Final DIP Order (i.e., from October 13, 2023, such period expiring on December 27, 2023) to investigate and, if warranted, commence a challenge or action with respect to:
(i) the validity, enforceability, perfection, priority, or extent of the Pre-Petition Liens; or
(ii) the validity or propriety of the Roll-Up authorized by the Final DIP Order, including whether the roll-up of the DIP Lender's Pre-Petition First Lien Loan claims was authorized on proper grounds under applicable law.
(b) Any other party in interest (other than the Committee) shall have sixty (60) days from the date of entry of the Final DIP Order (i.e., from October 13, 2023, such period expiring on December 12, 2023) to investigate and commence any such challenge or action.
(c) If no challenge is timely commenced within the applicable period described in clauses (a) or (b) above, then (i) the Pre-Petition Liens shall be deemed valid, enforceable, properly perfected, and not subject to avoidance, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaim, defense, or disallowance under the Bankruptcy Code or applicable non-bankruptcy law, and (ii) the Roll-Up shall be deemed valid, properly authorized, and not subject to challenge, avoidance, or reversal.
(d) For the avoidance of doubt, the Borrowers may not commence, support, or fund any challenge to the Pre-Petition Liens or the Roll-Up, whether from DIP Loan proceeds, cash collateral, or otherwise, except to the extent funded from the Carve-Out as provided in Section 2.14(e).
ARTICLE III — TAXES; INCREASED COSTS; YIELD PROTECTION
Section 3.01 — Taxes
(a) All payments made by the Borrowers hereunder shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities (including interest, penalties, and additions to tax) with respect thereto (collectively, "Taxes"), unless such deduction or withholding is required by applicable law. If the Borrowers are required by applicable law to deduct or withhold any Taxes from any payment, the Borrowers shall (i) make such deduction or withholding, (ii) pay the full amount deducted or withheld to the relevant governmental authority in accordance with applicable law, and (iii) pay to the DIP Lender such additional amounts as may be necessary so that the DIP Len

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