Contract analysis

I. Introduction and Engagement Calderwood & Harkness LLP ("we," "us," "our," or the "Firm") has acted as counsel to Calloway-Briggs Renewables Inc. ("CBR"), a Texas corporation, Employer Identification Number ("EIN") 84-3291076, in connection with the transactions contemplated by that certain Tax Credit Purchase Agreement dated September 21, 2023 (the "TCPA"), by and between CBR, as Seller, and Pinehurst Insurance Gr

II. Scope of Opinion We are rendering this Opinion solely with respect to the United States federal income tax consequences of the transactions described herein. The opinions set forth below relate to the following matters: (a) The eligibility of the Project Companies (as defined below) and Solstice Holdings, LLC (as defined below) to make transfer elections under Section 6418 of the Code with respect to the ITCs gen

III. Opinion Standards The opinions expressed herein are rendered at the "should" level of confidence (that is, we believe the position described is supported by a greater than fifty percent (50%) likelihood of being sustained on the merits if challenged by the Internal Revenue Service (the "IRS") in an administrative proceeding or in litigation) unless otherwise specifically noted in the text of a particular opinion

IV. Documents and Materials Reviewed In rendering the opinions set forth herein, we have examined and relied upon the following documents, instruments, certificates, and other materials (collectively, the "Reviewed Materials"):

1. Tax Credit Purchase Agreement dated September 21, 2023, by and between CBR, as Seller, and Pinehurst Insurance Group, Inc., as Buyer (execution version) (the "TCPA").

2. Tax Indemnity Agreement dated September 21, 2023, from CBR in favor of Pinehurst (indemnification cap of Sixty-Nine Million Dollars ($69,000,000), representing 125% of the $55,200,000 purchase price) (the "Tax Indemnity Agreement").

3. Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC, dated September 21, 2023, among CBR Solstice Manager, LLC and Ridgeline Capital Partners, LLC (the "LLCA").

4. Certificates of Formation filed with the Delaware Secretary of State and Limited Liability Company Agreements for each of the seven Project Companies (each, a "Project Company" and collectively, the "Project Companies"): (a) Pecos Sun Solar, LLC (85 MW(dc), Reeves County, Texas); (b) Red Mesa Solar, LLC (70 MW(dc), Pecos County, Texas); (c) Coyote Flats Solar, LLC (65 MW(dc), Ward County, Texas); (d) Llano Verde S

5. Certificate of Formation filed with the Delaware Secretary of State and Limited Liability Company Agreement of Solstice Holdings, LLC (EIN 88-4071523), formed August 14, 2023, in the State of Delaware (the "Holdings LLC Agreement").

6. Certificate of Formation filed with the Delaware Secretary of State and Limited Liability Company Agreement of CBR Solstice Manager, LLC (EIN 88-4071597), formed August 14, 2023, in the State of Delaware.

7. Articles of Incorporation of CBR filed with the Texas Secretary of State (Texas SOS File No. 803762114), together with all amendments thereto and the corporate bylaws of CBR.

8. Intercompany Contribution Agreement dated September 21, 2023, by and between CBR and Solstice Holdings, LLC (the "Contribution Agreement").

9. Master Engineering, Procurement, and Construction Agreement by and between CBR and Vasquez Brothers Construction, Inc. (EIN 75-2648103), together with the seven project-level EPC contracts entered into between the respective Project Companies and Vasquez Brothers Construction, Inc. (aggregate EPC cost of $384,600,000) (collectively, the "EPC Contracts").

10. Independent appraisal and fair market value report prepared by Greystone Worthington, LLC (Helen Farber, Managing Director), dated October 5, 2023, with respect to each of the seven Projects (the "Appraisal Report").

11. Independent engineer's reports prepared by Meridian Technical Advisors, LLC (Dr. Rajan Mehta, Principal Engineer), dated variously between September 2023 and November 2023, with respect to each of the seven Projects, including the report on mechanical completion and commercial operation (collectively, the "IE Reports").

12. Power Purchase Agreements between the five Texas Project Companies and Lone Star Grid Solutions, LLC (15-year terms, weighted average contract price of $32.50/MWh with a 1.5% annual escalator), and between the two New Mexico Project Companies and Enchantment Power Cooperative (20-year terms, weighted average contract price of $29.75/MWh with a 2.0% annual escalator) (collectively, the "PPAs").

13. Prevailing wage and apprenticeship compliance certifications from Vasquez Brothers Construction, Inc., dated variously between September 2023 and November 2023, covering all seven Projects, including certified payroll records, apprenticeship program registration documentation, and compliance attestations (the "PWA Certifications").

14. Domestic content certifications for all seven Projects, including the certifications of the steel, iron, and manufactured product cost analyses required under Section 48(a)(12) of the Code and IRS Notice 2023-38, 2023-27 I.R.B. 1 (the "Domestic Content Certifications").

15. Forms of Transfer Election Statements prepared for each of the seven Project Companies (the "Transfer Election Statements"), to be filed with the federal income tax return of Solstice Holdings, LLC for the taxable year ending December 31, 2023.

16. IRS pre-filing registration confirmations for each of the seven Project Companies, including the unique registration numbers assigned by the IRS through the IRS Energy Credits Online portal (the "Registration Confirmations").

17. Officer's Closing Certificate of CBR dated December 8, 2023, signed by Theo Vasquez, Chief Financial Officer of CBR (the "Closing Certificate").

18. ITC Claim Support Schedules and Workpapers setting forth the computation of eligible basis, ITC rate, and total ITCs for each Project, prepared by CBR and reviewed by Pinehurst's tax advisors (the "ITC Workpapers").

19. Escrow Agreement dated September 21, 2023, among CBR, Ridgeline Capital Partners, LLC, Pinehurst Insurance Group, Inc., and Clearwater Escrow Services, Inc. (Escrow Account No. CES-2023-80114) (the "Escrow Agreement").

20. Such other documents, records, certificates, and materials as we deemed relevant and necessary for purposes of rendering the opinions set forth herein. In addition to the Reviewed Materials, we have reviewed and considered the relevant provisions of the Code (including, without limitation, Sections 38, 46, 48, 50, 168(h), 267, 707, 6418, and 7701), the Treasury regulations promulgated thereunder (including propos

V. Facts Relied Upon In rendering the opinions set forth herein, we have relied upon the following facts, which have been represented to us by CBR in the Closing Certificate, confirmed through our review of the Reviewed Materials, or otherwise made known to us in the course of our engagement. We have not independently verified any of the facts set forth below. A. The Sponsor and Transaction Parties CBR is a corporati

VI. Assumptions In rendering the opinions set forth herein, we have assumed, with Pinehurst's consent and without independent investigation or verification, each of the following:

1. All representations and warranties made by CBR in the TCPA and in the Closing Certificate are true, correct, and complete in all material respects as of the Closing Date and will remain true, correct, and complete throughout the relevant periods described therein.

2. Each Project Company is and will remain a disregarded entity for federal income tax purposes within the meaning of Treasury Regulations Section 301.7701-3(b)(1)(ii), and Solstice Holdings, LLC is and will remain classified as a partnership for federal income tax purposes within the meaning of Treasury Regulations Section 301.7701-3(b)(1)(i), in each case for all relevant taxable years.

3. The solar energy property comprising each Project constitutes "energy property" within the meaning of Section 48(a)(3) of the Code and is eligible for the ITC under Section 48(a)(1) of the Code.

4. Each Project has been "placed in service" within the meaning of Section 48 of the Code and Treasury Regulations Section 1.48-2 on or before December 8, 2023, at the COD dates specified in Section V.E above, and no Project was placed in service prior to January 1, 2023.

5. CBR and the Project Companies have complied and will continue to comply with the prevailing wage and apprenticeship requirements under Section 48(a)(10) of the Code throughout the applicable compliance period (including, without limitation, the initial construction period and the ten-year period following the date on which each Project is placed in service), such that the thirty percent (30%) base ITC rate (rather

6. Each Project satisfies the domestic content requirements under Section 48(a)(12) of the Code, as further described in IRS Notice 2023-38, entitling each Project to the ten percent (10%) domestic content bonus credit adder.

7. The aggregate eligible basis of the Projects has been accurately determined at $384,600,000 and has not been reduced by any grants, subsidized energy financing, tax-exempt bond proceeds, or other amounts that would reduce the eligible basis under Section 48(a)(4) or Section 50(b) of the Code, other than amounts reflected in the ITC Workpapers.

8. The IRS pre-filing registration for each Project Company has been completed through the IRS Energy Credits Online portal, and unique registration numbers have been obtained for each Project Company, in each case prior to the making of the transfer election under Section 6418, in compliance with the pre-filing registration requirements set forth in Section 6418(g) and the proposed Treasury Regulations thereunder.

9. The TCPA, the Tax Indemnity Agreement, the Escrow Agreement, the LLCA, and all other transaction documents (collectively, the "Transaction Documents") are valid, binding, and enforceable in accordance with their respective terms and were executed by duly authorized representatives of each party thereto.

10. All parties to the Transaction Documents will perform their respective obligations thereunder in accordance with the terms thereof, and no party will take any action, or fail to take any action, that would cause the Transaction Documents to become void, voidable, or unenforceable.

11. The cash consideration paid by Pinehurst ($55,200,000) represents the total and actual purchase price paid for the Transferred Credits, and no additional consideration — whether direct, indirect, contingent, in-kind, or otherwise — has been or will be paid by Pinehurst to CBR or any affiliate thereof in connection with the transfer of the Transferred Credits. No portion of the purchase price is attributable to an

12. Pinehurst is a "domestic corporation" within the meaning of Section 7701(a)(4) of the Code, is not a tax-exempt entity within the meaning of Section 168(h)(2) of the Code, and is not an entity described in Section 6418(f)(2) of the Code that would be ineligible to serve as a transferee taxpayer under Section 6418.

13. No Project will undergo a change in use, disposition, cessation of qualified activity, or other event that would trigger ITC recapture under Section 50(a) of the Code during the applicable five-year recapture period following the date on which such Project was placed in service. If any of the foregoing assumptions proves to be inaccurate or incomplete, or if the facts at any time differ from those assumed, our op

VII. Applicable Law A. Section 6418 of the Code — Overview

Section 6418 of the Code was enacted by Section 13801(a) of the IRA, Pub. L. No. 117-169, 136 Stat. 1818, 1998 (2022), and is effective for taxable years beginning after December 31, 2022. Section 6418 represents a significant departure from prior law, which did not permit the direct transfer of federal tax credits for cash consideration. Prior to the IRA, taxpayers that generated renewable energy tax credits but lac

Section 6418(a) provides that the transferee taxpayer must satisfy two conditions: (i) the transferee must not be "related" (within the meaning of Sections 267(b) or 707(b)(1)) to the eligible taxpayer, and (ii) the transferee must not be a "tax-exempt entity" as described in Section 168(h)(2) of the Code. Pinehurst Insurance Group, Inc. is a Connecticut C-corporation engaged in the property and casualty and life ins

Section 6418(a) provides that the transfer election is made on the eligible taxpayer's federal income tax return for the taxable year in which the eligible credit is "determined." For purposes of the ITC, the credit is "determined" in the taxable year in which the energy property is "placed in service" within the meaning of Section 48. Because all seven Projects were placed in service during the taxable year ending D

Section 6418(b)(1) provides that the amount paid by the transferee taxpayer for the transferred credit is not includible in the gross income of the eligible taxpayer. This exclusion from gross income applies regardless of the character of the payment and regardless of whether the consideration is paid directly or through an escrow arrangement. Accordingly, the $55,200,000 paid by Pinehurst to CBR for the Transferred

Section 6418(b)(2) provides that the amount paid by the transferee taxpayer for the transferred credit is not deductible by the transferee taxpayer. Accordingly, Pinehurst may not claim a deduction (whether as a business expense, investment expense, or otherwise) for the $55,200,000 paid to acquire the Transferred Credits. The transferred credit is treated as a tax credit allowed to the transferee taxpayer under the

Section 6418(d) addresses the allocation of recapture risk in a Section 6418 transfer. Under Section 6418(d)(1), if, after a transfer election has been made, the eligible credit is subject to recapture under Section 50(a) of the Code (for example, because the energy property ceases to be energy property, is disposed of, or undergoes a change in use during the five-year recapture period), the transferee taxpayer (Pine

Section 6418(g) provides an "excessive credit transfer" rule. If the amount of credit transferred pursuant to a transfer election exceeds the amount of credit properly determined under the applicable section of the Code, an additional tax equal to twenty percent (20%) of the excess amount is imposed on the transferee taxpayer. This penalty is intended to discourage the transfer of inflated or improperly calculated cr

VIII. Opinions Based on the foregoing, and subject to the qualifications, limitations, and caveats set forth in Section IX below, we are of the following opinions: Opinion (i): Eligibility of the Project Companies to Make Section 6418 Transfer Elections It is our opinion that Solstice Holdings, LLC (EIN 88-4071523), as the partnership directly owning the seven disregarded-entity Project Companies comprising the Solst

IX. Qualifications, Limitations, and Caveats A. General Qualifications This Opinion is based upon the Code, the Treasury regulations promulgated thereunder (including proposed and temporary regulations), published rulings and procedures of the IRS, judicial decisions of the United States federal courts, and other applicable authorities, all as in effect and available as of December 8, 2023. All of the foregoing autho

Section 6418 of the Code was enacted in August 2022, and as of the date hereof, the IRS and the Department of the Treasury have not issued final Treasury Regulations under Section 6418. Our opinions are based in part on the Proposed Regulations published on June 14, 2023, at 88 Fed. Reg. 40,496 (REG-101610-23), and on IRS Notice 2023-44, 2023-29 I.R.B. 1. Proposed regulations, while instructive as to the likely direc

X. Reliance and Use This Opinion is furnished to Pinehurst Insurance Group, Inc. solely in connection with the transactions described herein and the closing of the TCPA on the Closing Date. This Opinion is rendered as of the date hereof and speaks only as of such date. This Opinion may be relied upon by Pinehurst Insurance Group, Inc. and its outside legal counsel, Thornberry Mack LLP, in connection with the transact

XI. Conclusion We appreciate the opportunity to assist Pinehurst Insurance Group, Inc. in connection with the transactions described herein. If you have any questions regarding this Opinion or wish to discuss any of the matters addressed herein, please do not hesitate to contact the undersigned. Very truly yours, CALDERWOOD & HARKNESS LLP By: ________ Leonard Cross Partner By: ________ Sylvia Hartwell Partner Enclosu