Contract analysis

Section 1.1 Defined Terms. As used in this Collateral Assignment, the following terms shall have the meanings set forth below: "Assigned Contracts" means, collectively, the EPC Agreement, the Equipment Supply Agreement, the Ground Lease, and the Interconnection Agreement, including all amendments, supplements, exhibits, schedules, side letters, change orders, and ancillary documents related thereto, and any replaceme

Section 1.2 Rules of Construction. Unless the context of this Collateral Assignment otherwise requires: (a) Terms defined in the Credit Agreement and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement. (b) Terms defined in the UCC that are not otherwise defined herein or in the Credit Agreement shall have the meanings assigned to such terms in the UCC, to th

ARTICLE II COLLATERAL ASSIGNMENT

Section 2.1 Grant of Collateral Assignment. As collateral security for the full and timely payment and performance of all Obligations, Assignor hereby irrevocably assigns, transfers, conveys, pledges, hypothecates, and sets over to Assignee, and hereby grants to Assignee a continuing first-priority security interest in and to, all of Assignor's right, title, and interest in, to, and under the following (collectively,

Section 2.2 Nature of Assignment; Assignor Retains Rights Prior to Default. (a) This Collateral Assignment is made as security only for the Obligations and shall not be construed as an absolute assignment or a transfer of ownership of any Assigned Contract or any interest therein. Nothing contained herein shall constitute or be construed as an assumption by Assignee of any of Assignor's duties, obligations, or liabil

Section 2.3 Assignee's Rights Upon Default. Upon the occurrence and during the continuance of a Default under the Credit Agreement: (a) Exercise of Assignor's Rights. Assignee may, in its sole discretion, exercise all rights, remedies, and powers of Assignor under the Assigned Contracts, including, without limitation, the right to receive all payments, enforce all guarantees, warranties, and performance obligations,

ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASSIGNOR Assignor hereby represents and warrants to Assignee as of the date hereof, and such representations and warranties shall be deemed to be repeated on each date on which any advance is made under the Credit Agreement, as follows:

Section 3.1 Organization and Authority. Assignor is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Texas. Assignor has all requisite limited liability company power and authority to execute, deliver, and perform its obligations under this Collateral Assignment and to consummate the transactions contemplated hereby. The execution, delivery, and perform

Section 3.2 Enforceability. This Collateral Assignment has been duly executed and delivered by Assignor and constitutes the legal, valid, and binding obligation of Assignor, enforceable against Assignor in accordance with its terms, except as enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws affecting the enforcement of creditors

Section 3.3 No Conflicts. The execution, delivery, and performance by Assignor of this Collateral Assignment, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate, conflict with, or result in a breach of any provision of Assignor's Certificate of Formation or Company Agreement; (b) violate, conflict with, or result in a breach of, or constitute a default (or an event that, wi

Section 3.4 Assigned Contracts in Full Force and Effect. Each Assigned Contract is in full force and effect as of the date hereof and has not been amended, modified, supplemented, or otherwise changed except as has been previously disclosed in writing to Assignee. Assignor has delivered to Assignee true, correct, and complete copies of each Assigned Contract, including all exhibits, schedules, attachments, side lette

Section 3.5 No Default. No default, breach, or event of default exists under any Assigned Contract, and no event, act, condition, or omission has occurred that, with the giving of notice, the lapse of time, or both, would constitute a default, breach, or event of default under any Assigned Contract. Assignor has not received any written notice or other communication from any counterparty to any Assigned Contract clai

Section 3.6 No Prior Assignment. Assignor has not previously assigned, pledged, hypothecated, or otherwise encumbered, and has not granted any security interest in, any of its right, title, or interest in, to, or under any Assigned Contract, except for Permitted Liens. The Collateral Assignment creates in favor of Assignee a valid and enforceable first-priority security interest in and lien upon the Collateral, subje

Section 3.7 Consents Obtained. All consents, approvals, and authorizations required from the counterparties to the Assigned Contracts for the execution, delivery, and performance of this Collateral Assignment have been duly obtained in writing and are in full force and effect as of the date hereof. True, correct, and complete copies of such consents are attached hereto as Exhibits B through E. No additional consent,

Section 3.8 No Litigation. There is no action, suit, investigation, proceeding, or claim pending or, to the knowledge of Assignor, threatened before any court, arbitral tribunal, governmental authority, or other body that (a) challenges or seeks to prevent, enjoin, alter, or materially delay the consummation of the transactions contemplated by this Collateral Assignment, (b) would reasonably be expected to adversely

ARTICLE IV COVENANTS OF ASSIGNOR Assignor hereby covenants and agrees with Assignee that, from and after the date hereof and so long as any Obligation remains outstanding under the Credit Agreement:

Section 4.1 Performance of Assigned Contracts. Assignor shall duly and punctually perform and observe all of the terms, covenants, conditions, agreements, and obligations on its part to be performed or observed under each of the Assigned Contracts in all material respects, and shall take all commercially reasonable actions necessary or appropriate to maintain each Assigned Contract in full force and effect. Assignor

Section 4.2 No Modification or Termination Without Consent. Assignor shall not, without the prior written consent of Assignee (which consent may be withheld, conditioned, or delayed in Assignee's sole discretion): (a) amend, modify, supplement, restate, or waive any provision of any Assigned Contract in any material respect; (b) terminate, cancel, or surrender any Assigned Contract or accept or agree to the terminati

Section 4.3 No Further Assignment. Assignor shall not assign, transfer, pledge, hypothecate, or otherwise encumber (whether voluntarily or involuntarily, by operation of law or otherwise) any of its right, title, or interest in, to, or under any Assigned Contract to any person other than Assignee, except for Permitted Liens. Assignor shall not enter into any agreement or arrangement that would have the effect of subo

Section 4.4 Notices. Assignor shall: (a) promptly (and in any event within five (5) Business Days of receipt or transmission) deliver to Assignee copies of all material notices, demands, claims, requests, certifications, approvals, consents, correspondence, and communications sent or received by Assignor under or in connection with any Assigned Contract, including, without limitation, notices of default, notices of c

Section 4.5 Enforcement of Rights. Assignor shall diligently and in good faith enforce all of its rights, remedies, and benefits under the Assigned Contracts, including, without limitation, the timely and vigorous pursuit of all claims for liquidated damages (whether for delay, performance shortfall, or otherwise), warranty claims, performance guarantee claims, indemnification claims, and insurance claims arising und

Section 4.6 Maintenance of Permits. Assignor shall obtain, maintain, and keep in full force and effect all permits, licenses, approvals, authorizations, registrations, and filings necessary for the lawful development, construction, ownership, and operation of the Project, including, without limitation, Ector County Building Permit No. BP-2022-04517, Texas Commission on Environmental Quality ("TCEQ") Stormwater Genera

Section 4.7 Insurance. Assignor shall obtain and maintain in full force and effect all insurance coverages required under the Assigned Contracts and the Credit Agreement, and shall ensure that Assignee is named as an additional insured, loss payee, and/or mortgagee, as applicable, on all such insurance policies. Without limiting the generality of the foregoing, Assignor shall maintain: (a) builder's risk insurance, w

Section 4.8 Further Assurances. Assignor shall, at its own cost and expense, promptly execute and deliver to Assignee such additional instruments, documents, financing statements, continuation statements, and other agreements, and shall take such further actions, as Assignee may from time to time reasonably request in order to perfect, protect, maintain, continue, and enforce the security interest and collateral assi

ARTICLE V RIGHTS AND REMEDIES OF ASSIGNEE

Section 5.1 Rights Under the UCC. Assignee shall have, in addition to all rights and remedies set forth in this Collateral Assignment and the Credit Agreement, all of the rights and remedies of a secured party under Article 9 of the UCC as in effect in the State of Texas, and under any other applicable law, all of which rights and remedies shall be cumulative and not exclusive. Without limiting the generality of the

Section 5.2 Right to Perform. Upon the occurrence and during the continuance of a Default, Assignee may, but shall not be obligated to, perform any obligation of Assignor under any Assigned Contract that Assignor has failed to perform, and Assignor hereby irrevocably authorizes each counterparty to the Assigned Contracts to accept performance by Assignee or its designee in lieu of performance by Assignor. All costs,

Section 5.3 Right to Direct Payments. Upon the occurrence and during the continuance of a Default, Assignee may, in its sole discretion, notify any or all counterparties to the Assigned Contracts that this Collateral Assignment is in effect and direct that all payments, proceeds, reimbursements, credits, refunds, and other amounts payable to Assignor under the Assigned Contracts be paid directly to Assignee or to suc

Section 5.4 Right to Assume or Terminate. Upon the occurrence and during the continuance of a Default, Assignee may elect, in its sole and absolute discretion: (a) to assume the rights and obligations of Assignor under any one or more of the Assigned Contracts by delivering written notice thereof to the applicable counterparty(ies), in which case Assignee (or its designee) shall be deemed to have succeeded to the rig

Section 5.5 Application of Proceeds. All proceeds received by Assignee pursuant to the exercise of its rights under this Collateral Assignment, whether derived from the enforcement of the Assigned Contracts, the sale or other disposition of the Collateral, insurance proceeds, condemnation awards, or otherwise, shall be applied by Assignee in the order of priority set forth in Section 8.4 of the Credit Agreement (or s

Section 5.6 No Duty. Notwithstanding anything to the contrary contained herein: (a) Assignee shall have no obligation to exercise any right or remedy granted to Assignee hereunder, and Assignee's decision whether to exercise or refrain from exercising any such right or remedy shall be in its sole and absolute discretion. (b) Assignee shall have no duty or obligation to preserve, protect, collect, or enforce any of th

Section 6.1 Governing Law. This Collateral Assignment and the rights and obligations of the Parties hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas (including Section 271.001 et seq. of the Texas Local Government Code, to the extent applicable), without regard to the conflicts of law principles thereof that would require the application of the laws of any

Section 6.2 Notices. All notices, demands, requests, consents, approvals, directions, and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when (a) delivered personally, (b) sent by registered or certified United States mail, postage prepaid, return receipt requested, (c) sent by a nationally recognized overnight courier service with deli

Section 6.3 Amendments and Waivers. No amendment, modification, supplement, or waiver of any provision of this Collateral Assignment shall be effective unless set forth in a written instrument duly executed by both Assignor and Assignee. No waiver of any right, remedy, or power hereunder shall be effective unless in writing and signed by the Party granting such waiver, and no such waiver shall extend to or affect any

Section 6.4 Severability. If any provision of this Collateral Assignment is held to be invalid, illegal, or unenforceable in any respect under any applicable law, rule, or regulation by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision hereof. The Parties shall endeavor in good faith to negotiate a vali

Section 6.5 Successors and Assigns. This Collateral Assignment shall be binding upon and shall inure to the benefit of Assignor and Assignee and their respective successors and permitted assigns. Assignor may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Assignee. Assignee may assign, transfer, or participate its rights and obligations hereunder in accordance w

Section 6.6 Entire Agreement. This Collateral Assignment, together with the Credit Agreement, the other Loan Documents, and the Assigned Contracts, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, representations, warranties, and agreements (whether written or oral) between the Parties relating to the subject matter here

Section 6.7 Counterparts. This Collateral Assignment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Collateral Assignment by facsimile or by electronic mail in portable document format (.pdf) shall be effective as delivery of an original executed counte

Section 6.8 Termination. This Collateral Assignment and the security interest and collateral assignment created hereby shall remain in full force and effect until the indefeasible payment and performance in full of all Obligations under the Credit Agreement (other than contingent indemnification obligations for which no claim has been made), at which time this Collateral Assignment shall automatically terminate and t

Section 6.9 Relationship to Credit Agreement. This Collateral Assignment is one of the Loan Documents referred to in the Credit Agreement and is subject to the terms and provisions of the Credit Agreement. This Collateral Assignment supplements, and is not in derogation of, the Credit Agreement and the other Loan Documents. In the event of any conflict or inconsistency between the terms and provisions of this Collate

Section 6.10 Attorneys' Fees. In the event that Assignee is required to enforce any provision of this Collateral Assignment, to exercise any of its rights or remedies hereunder, or to defend any action or proceeding relating to this Collateral Assignment, Assignor shall reimburse Assignee for all reasonable and documented out-of-pocket attorneys' fees, costs, expenses, and disbursements incurred by Assignee in connec

1. EPC Agreement Title: Engineering, Procurement and Construction Agreement Date: December 1, 2022 Parties: Lone Star Storage I, LLC, a Texas limited liability company ("Owner"), and Meridian Power Construction, Inc., a Texas corporation ("Contractor") Contract Price: $31,200,000 (lump sum, fixed price) Scope of Work: The complete design, engineering, procurement, construction, testing, and commissioning of the Lone

2. Equipment Supply Agreement Title: Equipment Supply Agreement Date: December 1, 2022 Parties: Lone Star Storage I, LLC, a Texas limited liability company, and Harmon-Dietrich Energy Solutions, LLC, a Delaware limited liability company ("Supplier") Contract Value: $18,400,000 Scope of Supply: HD-LFP-200E lithium iron phosphate battery modules (50 MW / 200 MWh aggregate capacity); ten (10) 5 MW power conversion syste

3. Ground Lease Agreement Title: Ground Lease Agreement Date: December 1, 2022 Parties: Permian Basin Land Holdings, LP, a Texas limited partnership ("Lessor"), and Lone Star Storage I, LLC, a Texas limited liability company ("Lessee") Premises: An approximately fifteen (15)-acre parcel of real property, being a portion of Survey No. 42, Block 42, T-1-S, T&P RR Co. Survey, Ector County, Texas, located at 4800 West Un

4. Interconnection Agreement Title: Interconnection Agreement Effective Date: December 1, 2022 Parties: Lone Star Storage I, LLC, a Texas limited liability company, and Aldermere & Co. ("Interconnecting Utility") Point of Interconnection: Western Permian 138 kV Substation, Ector County, Texas ERCOT Queue Number: INR-22-03347 Resource ID (pending): LSBESS_01 Interconnection Voltage: 138 kV Generation Tie Line: Approxi

1. Consent. Contractor hereby irrevocably consents to the collateral assignment by Owner to Assignee of all of Owner's right, title, and interest in, to, and under the EPC Agreemen