Contract analysis

I. Executive Summary This memorandum addresses a significant development in the pending acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Company") by Cascadia Acquisition Corp. (the "Buyer"), a special-purpose entity jointly controlled by Meridian Infrastructure Partners LP ("Meridian" or "Fund IV") and ICM Cascadia Co-Invest, LP ("ICM Co-Invest"), of which Ironside Capital Management LP ("Ironsi

II. Factual Background A. The Bull Run Filtration Project Concession Cascadia Renewables Holdings, Inc. holds a 40-year water-treatment concession with the Portland Metropolitan Water District for the Bull Run Filtration Project, a large-scale water-treatment and filtration facility serving portions of the Portland metropolitan area's municipal water supply. The concession was originally executed in approximately 201

III. Material Adverse Effect Definition Under the EPA A. Text of the MAE Definition The operative MAE definition is set forth in Section 1.01 of the EPA, within the defined terms of Article I. As is standard in negotiated acquisition agreements of this nature, the MAE definition consists of two principal components: (i) an affirmative definition of what constitutes an MAE, and (ii) a series of enumerated carve-outs s

1. Regulatory/Legislative Change Carve-Out The first carve-out excludes from the MAE definition: any effect arising from or relating to changes in applicable law, rules, regulations, orders, or other binding directives issued by any governmental authority, or changes in the interpretation or enforcement thereof, in each case occurring after the date of this Agreement. This carve-out is directly relevant to the conces

2. Industry-Wide Effects Carve-Out The second carve-out excludes from the MAE definition: any effect generally affecting the industries or markets in which the Company and its Subsidiaries operate, including changes in prevailing interest rates, commodity prices, or market valuations. This carve-out is relevant to the extent that Oregon SB 1567 affects the water-infrastructure concession industry broadly rather than

3. General Economic and Market Conditions Carve-Out The EPA carves out from the MAE definition: any effect arising from or relating to general economic, political, financial, or market conditions, including changes in prevailing interest rates, currency exchange rates, credit markets, capital markets, or equity markets. This carve-out is unlikely to be directly applicable to the concession renegotiation, which is dri

4. Acts of Government / Regulatory Action Carve-Out The EPA contains a carve-out for: any effect arising from or relating to any action taken by any governmental authority, including any legislative, regulatory, or judicial action or any enforcement action, in each case of general applicability. This carve-out overlaps with and supplements the regulatory-change carve-out discussed in Section III.B.1 above. Its applic

5. Pandemic / Force Majeure Carve-Out The EPA excludes from the MAE definition effects arising from pandemics, epidemics, disease outbreaks, or natural disasters. This carve-out is not applicable to the concession renegotiation and is noted solely for completeness.

6. Transaction-Related Carve-Out The EPA carves out: any effect arising from or attributable to the announcement or pendency of the transactions contemplated by this Agreement, including any loss of, or change in the relationship with, any customer, supplier, employee, or business partner resulting therefrom. This carve-out is designed to insulate sellers from adverse effects caused by the announcement of the acquisi

IV. Quantitative Materiality Analysis A. Revenue Impact The Bull Run Concession generates approximately $64 million in annual revenue. Cascadia's total FY 2021 revenue, as reflected in the audited financial statements, was $487 million. The Bull Run Concession therefore represents approximately 13.1% of Cascadia's total revenue. However, the mere existence of the renegotiation does not necessarily mean that the entir

V. Application of MAE Analysis to the Concession Renegotiation A. Arguments Supporting an MAE Finding We identify the following principal arguments supporting the conclusion that the concession renegotiation constitutes an MAE or is reasonably likely to result in one:

1. Magnitude of Revenue at Risk. The Bull Run Concession generates approximately $64 million in annual revenue, representing approximately 13.1% of Cascadia's total FY 2021 revenue. Even under a partial-renegotiation scenario, the revenue at risk is substantial, and the potential EBITDA impact ($18–22 million annually in a full-loss scenario) is meaningful relative to Cascadia's total EBITDA of $138 million. As discu

2. Durational Significance. The concession has approximately 36 years remaining on its term. Any adverse modification to the concession's economics would persist for decades, producing a large cumulative impact. This factor strongly favors an MAE finding under the durational-significance framework established by the Delaware courts.

3. Centrality of Bull Run to the Investment Thesis. The Bull Run Filtration Project is Cascadia's single largest water-treatment concession and one of the crown jewels of the Company's contracted revenue portfolio. The concession was a significant driver of the agreed enterprise value of $1.95 billion and the premium 14.1x EV/EBITDA multiple. The investment thesis supporting Ironside's $300 million co-investment comm

4. Regulatory-Change Carve-Out May Not Apply. As analyzed in detail in Section III.B.1 above, Oregon SB 1567 was enacted and took effect before the EPA execution date of September 15, 2022. Under a plain-reading approach, SB 1567 does not constitute a change in law occurring "after the date of this Agreement" and is not covered by the regulatory-change carve-out. Moreover, the proximate cause of the adverse effect on

5. Disproportionate Impact Argument. If the Bull Run Concession is uniquely affected by SB 1567 — for example, because the Bull Run Concession Agreement contains broader renegotiation triggers than other Oregon water-treatment concessions, or because the Bull Run Filtration Project faces more extensive compliance requirements under SB 1567 than other facilities — the disproportionate-impact exception to the carve-out

1. Regulatory-Change Carve-Out. The sellers' strongest argument is that Oregon SB 1567 constitutes a change in applicable law and that the concession renegotiation flows directly from that regulatory change. Sellers will argue that the carve-out's "arising from or relating to" language is broad enough to encompass the downstream effects of the statute, including the Water District's exercise of a contractual renegoti

2. Industry-Wide Effects. Sellers may argue that SB 1567 affects all water-treatment concession holders in Oregon, making the concession renegotiation an industry-wide effect sheltered by the industry-wide-effects carve-out. If other concession holders are similarly affected, the impact on Cascadia is not unique to the Company but rather a shared condition of the industry.

3. No Disproportionate Impact. Sellers will contend that Cascadia is not disproportionately affected by SB 1567 relative to other similarly situated companies. If other Oregon water-treatment concession holders face comparable renegotiation risks, the disproportionate-impact exception does not apply.

4. Renegotiation Does Not Equal Termination. The sellers will emphasize that the concession has not been terminated, repudiated, or fundamentally impaired. A renegotiation may result in modified terms that preserve significant economic value for Cascadia. The sellers may point to the possibility of favorable renegotiation outcomes — such as a modest pricing adjustment, a term extension, or a rebalancing of capital-ex

5. Prematurity. No renegotiation outcome has been reached. Asserting an MAE at this early stage — before any proposed terms have been put forward — is inherently speculative and premature. Delaware courts have consistently required evidence of a realized or reasonably ascertainable adverse impact, not merely the initiation of a process that may or may not result in adverse outcomes.

6. Quantitative Threshold Not Clearly Met. The sellers will argue that a 13.1% revenue impact (and the corresponding 13–16% EBITDA impact) does not satisfy the high quantitative bar set by Delaware courts for MAE findings. Citing IBP and the pre-Akorn case law, the sellers will contend that impacts below approximately 40% of earnings are presumptively insufficient to constitute an MAE, and that the 13.1% figure falls

VI. Impact on Closing Conditions A. No-MAE Closing Condition

Section 7.02(a) of the EPA contains a closing condition requiring, as a condition to the Buyer's obligation to consummate the transactions, that "no Material Adverse Effect shall have occurred since the date of this Agreement and be continuing as of the Closing Date." This is the standard "no-MAE" closing condition, also sometimes referred to as the "bring-down" condition with respect to the MAE. If an MAE has occurr

Section 7.02(b) of the EPA contains a closing condition requiring that the Selling Shareholders' representations and warranties set forth in Article III of the EPA be true and correct in all material respects (or, with respect to representations qualified by materiality or MAE, in all respects) as of the EPA date and as of the closing date. The representations likely relevant to the concession renegotiation include:

VII. Implications for ICM Cascadia Co-Invest, LP A. Ironside's Position as Limited Partner Ironside Capital Management LP holds a 99.99% limited-partnership interest in ICM Cascadia Co-Invest, LP, reflecting a capital commitment of $299,970,000 (with the remaining $30,000 attributable to the general partner's interest). The general partner of ICM Co-Invest is Meridian Infrastructure GP IV LLC (the "GP"), an affiliate