Contract analysis

I. Executive Summary The purpose of this memorandum is to set forth Calderwood & Harkness LLP's ("C&H") preliminary analysis of the proposed structure for monetizing Production Tax Credits ("PTCs") generated by the 250 MW Ridgeway Wind Project (the "Project") through a direct transfer election under Section 6418 of the Internal Revenue Code of 1986, as amended ("IRC" or the "Code"), as enacted by the Inflation Reduct

II. Background and Project Overview A. Dunmore Energy Holdings Ltd. — Corporate Overview DEH is a privately held energy company controlled by the Dunmore family. Callum Dunmore serves as Chairman of the board of directors and holds a 68% equity interest in DEH. The remaining equity interests are held by other members of the Dunmore family and certain long-tenured senior executives, the details of which are not materi

III. Eligibility Analysis — IRC § 6418 Transfer Election A. Eligible Taxpayer Status of the Transferor Under IRC § 6418(a), as enacted by Section 13801 of the IRA, an "eligible taxpayer" that determines any "specified credit portion" for a taxable year may elect to transfer all or a portion of such credit to an unrelated transferee taxpayer for cash consideration. The election permits the transferor to monetize the c

IV. PTC Computation A. Base Credit Rate The base credit rate for the PTC under IRC § 45(a)(1) is $0.0055 per kilowatt-hour ("kWh") of electricity produced from a qualified energy resource at a qualified facility during the 10-year period beginning on the date the facility is placed in service. This rate reflects the inflation-adjusted base rate applicable to wind facilities placed in service in calendar year 2025, as

V. Proposed Transfer Structure and Economics A. Transfer Mechanism The proposed transaction will be structured as a direct transfer election under IRC § 6418(a). DRI, as the regarded taxpayer and the eligible taxpayer for purposes of the transfer election, will elect to transfer the specified credit portion — i.e., the PTCs generated by the Ridgeway Wind Project — to Pinnacle for cash consideration. The transfer mech

VI. IRS Pre-Filing Registration Requirements Under Treasury Regulations Section 1.6418-4, the eligible taxpayer making a transfer election under § 6418 must complete a pre-filing registration with the IRS for each taxable year in which a transfer election is made. The registration requirement is a mandatory prerequisite to the valid transfer of credits; failure to complete the registration renders the transfer electi

VII. Recapture Risk Analysis A. Recapture Events Under IRC § 45 PTCs claimed under IRC § 45 are subject to recapture in certain circumstances. The primary recapture risk for the Ridgeway Wind Project arises if the qualified facility ceases to qualify as a "qualified facility" during the 10-year PTC eligibility period — for example, if the facility ceases to produce electricity from a qualified energy resource (wind)

VIII. Lender Consent Requirements — Redstone Capital Bank Credit Agreement A. Section 7.14 Restriction The Credit Agreement dated March 28, 2023, between RWE (as borrower) and Redstone Capital Bank, N.A. (as administrative agent and lender) contains a restrictive covenant in Section 7.14 that requires prior written consent of Redstone Capital Bank for any "transfer, sale, or assignment of tax attributes" generated by