Contract analysis

I. Executive Summary This memorandum analyzes the eligibility of seven utility-scale solar photovoltaic projects comprising the Solstice Portfolio, totaling 420 megawatts direct current ("MW(dc)"), for the federal investment tax credit ("ITC") under Section 48 of the Internal Revenue Code of 1986, as amended (the "Code"), including as substantially revised by the Inflation Reduction Act of 2022 (the "IRA"). The Solst

1. ITC Eligibility. All seven projects in the Solstice Portfolio constitute "energy property" eligible for the ITC under Section 48(a). Each project consists of equipment that uses solar energy to generate electricity within the meaning of Section 48(a)(2)(A)(i)(VII), and construction of each project began before January 1, 2025, such that Section 48 (rather than the technology-neutral Section 48E) governs the ITC de

2. Applicable ITC Rate. The applicable ITC rate is 40%, composed of a 30% base rate (reflecting satisfaction of the prevailing wage and apprenticeship requirements under Sections 48(a)(10) and 48(a)(11)) plus a 10% domestic content bonus adder under Section 48(a)(12). The energy community bonus adder under Section 48(a)(14) does not apply, as none of the seven project sites qualifies as an "energy community." The low

3. Total Eligible Basis. The total eligible basis (cost basis of solar energy property under Section 1012) across the seven projects is $384,600,000, representing aggregate EPC costs as confirmed by the independent appraisal prepared by Greystone Worthington, LLC.

4. Total ITCs Generated. The Solstice Portfolio generates total ITCs of $153,840,000 ($384,600,000 × 40%).

5. Allocation of ITCs. The ITCs are allocated as follows: • $89,040,000 allocated through the partnership-flip structure in Solstice Holdings, LLC, with Ridgeline Capital Partners, LLC serving as the tax-equity investor (99% pre-flip allocation of tax items, including ITCs, to Ridgeline; 1% to CBR Solstice Manager, LLC); • $64,800,000 to be the subject of Section 6418 transfer elections, of which $60,000,000 in face

II. Background and Transaction Overview A. The Sponsor Calloway-Briggs Renewables Inc. ("CBR") is a Texas C-corporation (EIN: 84-3291076; Texas Secretary of State File No.: 803762114) with its principal offices located at 2700 Post Oak Boulevard, Suite 1450, Houston, Texas 77056. CBR was co-founded by Marcus Calloway, who serves as Chairman and Chief Executive Officer and holds approximately 38% of CBR's equity, and

III. Legal Framework: ITC Under Section 48 (as Amended by the IRA) A. Statutory Overview of Section 48 Energy Property ITC

Section 48(a)(1) of the Code provides that the amount of the energy credit for any taxable year equals the applicable percentage of the basis of each energy property placed in service during such taxable year. The ITC is a dollar-for-dollar reduction in federal income tax liability, subject to certain limitations and recapture provisions.

Section 48(a)(2)(A)(i)(VII) defines "energy property" to include, among other things, "equipment which uses solar energy to generate electricity." Utility-scale solar photovoltaic systems — consisting of solar modules, inverters, racking and tracking systems, and associated balance-of-plant equipment — Squarely fall within this definition. This classification has been well established through decades of IRS guidance

Section 48 continues to apply to solar energy property for which construction begins before January 1, 2025. Projects for which construction begins on or after January 1, 2025 are subject to the new technology-neutral clean electricity ITC under Section 48E. All seven Solstice Portfolio projects commenced physical work of a significant nature or satisfied the five-percent safe harbor for beginning of construction wel

IV. Prevailing Wage and Apprenticeship Compliance (30% Base Rate Qualification) A. Prevailing Wage Requirements — Section 48(a)(10)

Section 48(a)(10)(A) of the Code, as added by the IRA, requires that laborers and mechanics employed by the taxpayer, or by any contractor or subcontractor, in the construction, alteration, or repair of a facility with respect to which the ITC is claimed must be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility

Section 48(a)(11)(A) of the Code requires that the applicable percentage of total labor hours of construction, alteration, or repair work performed on a qualifying facility be performed by qualified apprentices. A "qualified apprentice" is an individual who is employed by the taxpayer, contractor, or subcontractor and is participating in a registered apprenticeship program as defined by the National Apprenticeship Ac

Section 48(a)(11)(B)(ii) provides a "good faith effort" exception to the apprenticeship requirement. If the taxpayer (or its contractor or subcontractor) has requested qualified apprentices from a registered apprenticeship program and either (a) the request has been denied or (b) the program has failed to respond within five business days, the apprenticeship requirement is deemed satisfied with respect to the labor h

V. Domestic Content Bonus Adder (10% Adder Qualification) A. Statutory Requirements — Section 48(a)(12)

Section 48(a)(12)(A) of the Code provides an additional 10 percentage points of ITC for energy property that satisfies certain domestic content requirements. Specifically, the bonus adder applies if any steel, iron, or manufactured product that is a component of the energy property was "produced in the United States." The term "produced in the United States" is defined by reference to Section 48(a)(12)(B) and interpr

VI. Energy Community Bonus Adder (Not Applicable) A. Statutory Requirements — Section 48(a)(14)

Section 48(a)(14) of the Code provides an additional 10 percentage points of ITC for energy property located in an "energy community" as defined under Section 45(b)(11)(B). The energy community designation is designed to direct clean energy investment toward communities that have been economically impacted by the transition away from fossil fuel-based energy production.

Section 45(b)(11)(B) defines three categories of energy communities: (i) Brownfield sites — Any site that is a brownfield site as defined under certain provisions of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601(39)(A) and (D)(ii)(III). (ii) Metropolitan or non-metropolitan statistical areas with fossil fuel employment — Any metropolitan statistical area ("MSA"

VII. Eligible Basis Analysis A. Methodology Under Section 48(a)(1) of the Code, the ITC is computed on the "basis" of energy property placed in service during the taxable year. For property acquired by purchase from an unrelated party, the basis is the cost of the property under Section 1012, which includes all amounts paid or incurred to acquire, construct, and place the property in a condition suitable for its inte

VIII. ITC Computation A. ITC Calculation by Project Applying the 40% ITC rate (30% base rate + 10% domestic content bonus adder) to the eligible basis of each project, the ITC amounts are computed as follows: The ITC computation is straightforward for each project: the eligible basis (equal to the EPC contract cost, with no adjustments) is multiplied by the applicable ITC rate of 40%. The 40% rate is uniform across a

IX. Allocation of ITCs Between Partnership Structure and Section 6418 Transfer A. Overview of Dual-Tranche Allocation The $153,840,000 in total ITCs generated by the Solstice Portfolio will be allocated across two separate monetization channels: • Partnership-flip tax-equity structure: $89,040,000 in ITCs will flow through Solstice Holdings, LLC to its members and will be allocated in accordance with the partnership

X. Placed-in-Service Analysis A. Placed-in-Service Standard Under Section 48 Property is treated as "placed in service" for purposes of the ITC in the taxable year in which the property is "placed in a condition or state of readiness and availability for a specifically assigned function." See Treas. Reg. § 1.46-3(d)(1)(ii). This standard is well established in the context of energy property and has been the subject o

XI. Depreciable Basis After ITC Reduction A. Basis Reduction Under Section 50(c)

Section 50(c)(1) of the Code provides that the basis of property for purposes of computing depreciation deductions is reduced by 50% of the amount of the ITC determined with respect to such property. This basis reduction rule applies to all energy property placed in service after 2008 under Section 50(c)(3). The purpose of the basis reduction is to prevent a taxpayer from receiving a double benefit — the ITC on the f