Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze and present alternative legal structures for the proposed joint venture between Calloway-Briggs Renewables Inc. ("CBR") and Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge") to co-develop, construct, finance, own, and operate a portfolio of approximately 1.2 GW (1,200 MW DC) of utility-scale solar photovoltaic projects across Texas, New Mexico, a

II. Background A. The Parties Calloway-Briggs Renewables Inc. ("CBR") CBR is a Texas corporation founded in 2011, with its principal offices located at 2300 Travis Street, Suite 4200, Houston, Texas 77006. CBR is one of the largest privately held independent solar developers in the southern United States. The company currently has a development pipeline of approximately 3.8 GW of solar projects in various stages of d

III. Analysis of Alternative JV Structures In evaluating the appropriate legal structure for the proposed JV, we have considered three principal entity forms: (A) a Delaware limited liability company, (B) a Delaware limited partnership, and (C) a Delaware C-corporation. Our analysis of each alternative, together with our recommendation, is set forth below. A. Delaware Limited Liability Company (Recommended) A Delawar

Section 704(c) Flexibility. Because CBR will be contributing the eight-project portfolio to the JV (with a book value of $90,000,000 and a tax basis to CBR of approximately $34,200,000, resulting in $55,800,000 of built-in gain), the JV must address the allocation of this built-in gain under Section 704(c) of the Code. The LLC/partnership structure provides the flexibility to adopt the remedial allocation method unde

IV. Proposed Governance Framework The governance framework for the JV must be carefully structured to reflect the 50/50 ownership relationship, provide each party with meaningful protective rights, and ensure that the JV can be managed efficiently on a day-to-day basis. The following governance provisions are proposed for inclusion in the LLC Agreement. A. Management Committee Composition. The JV will be governed by

V. Capital Structure A. Initial Capital Contributions The initial capitalization of the JV reflects the 50/50 ownership structure, with each party contributing a total value of $150,000,000 to the JV at closing: CBR's Contribution. CBR will contribute $60,000,000 in cash together with the eight-project solar development portfolio at an agreed valuation of $90,000,000, for a total initial capital contribution of $150,

VI. Distribution Waterfall A. Waterfall Tiers Distributions of available cash from the JV to CBR and Lumen Ridge will be made in accordance with the following three-tier waterfall: Tier 1 — Pari Passu to 8.0% IRR. Distributions shall be split 50% to CBR / 50% to Lumen Ridge (pari passu), on a pro-rata basis in proportion to their respective membership interests, until each member has received aggregate distributions

VII. Management Fees In addition to the enhanced Tier 2 distribution split described in Section VI above, CBR will receive management fees from the JV in compensation for its role as the development and construction manager for the JV's project portfolio. These fees will be structured as follows: A. Development Management Fee CBR will receive an annual development management fee equal to 1.5% of aggregate capital dep

VIII. Transfer Restrictions and Exit Provisions The LLC Agreement will include comprehensive transfer restrictions and exit provisions to protect the stability of the JV relationship, provide the parties with orderly exit mechanisms, and ensure that neither party is forced into a partnership with an unwanted third party. The proposed provisions are as follows: A. Lock-Up Period For a period of three (3) years from th