letter-to-hl-credit-support-guaranty.docx

1015-00002 · Calloway-Briggs Renewables Inc · Correspondence

letter-to-hl-credit-support-guaranty.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law 1100 Louisiana Street, Suite 4500 Houston, Texas 77002 Telephone: (713) 555-7200 Facsimile: (713) 555-7201 www.calderwoodharkness.com

August 9, 2025

Evelyn Crumveth, Esq. Hargrove & Linden LLP 300 Congress Avenue, Suite 2200 Austin, Texas 78701

Re: Saguaro Flats Solar Project — Power Purchase Agreement between Saguaro Flats Solar LLC and Meridian DataCore Solutions Inc.; Seller's Credit Support Requirements and Request for Buyer Corporate Guaranty

Calderwood & Harkness Matter No. 1015-00002

Dear Ms. Crumveth:

1. Introduction and Purpose

I write on behalf of our client, Calloway-Briggs Renewables Inc. ("CBR") and its wholly owned project subsidiary, Saguaro Flats Solar LLC ("Seller"), in connection with the ongoing negotiation of the twenty (20)-year Power Purchase Agreement (the "PPA") for the output of the Saguaro Flats Solar Project — a 150 MWac / 195 MWdc solar photovoltaic generating facility located in Pecos County, Texas (the "Project") — with Meridian DataCore Solutions Inc. ("Meridian" or "Buyer"). The purpose of this letter is to formally set forth Seller's credit support requirements for the PPA, including the request that Meridian provide a corporate guaranty in favor of Seller, and to confirm the credit support that Seller is prepared to post for Buyer's benefit.

This letter is provided in advance of the Seller's Revised Second Draft PPA, which we anticipate circulating on August 11, 2025, and should be read in conjunction with Exhibit C (Form of Guaranty) and Exhibit D (Form of Letter of Credit), copies of which were previously circulated with the First Draft PPA delivered to your office on July 14, 2025. For ease of reference, we have re-enclosed those exhibits with this letter.

As you are aware, the PPA has an aggregate nominal contract value of approximately $140,000,000 over its twenty-year term. Given the magnitude and duration of the contractual obligations at issue, and the critical importance of the PPA revenue stream to the Project's financing structure, the establishment of adequate, mutual credit support is a matter of considerable significance to Seller, its equity sponsors, and the Project's lender group. We believe the credit support framework described below is commercially reasonable, proportionate to the risks undertaken by each party, and consistent with prevailing market practice for transactions of this nature.

2. Rationale for Buyer Corporate Guaranty

2.1 Long-Term Nature of the PPA and Revenue Dependency

The PPA is structured as a virtual (financial) power purchase agreement in the form of a contract for differences ("CfD") settling at the ERCOT West Hub node. The PPA has a twenty-year term commencing on the Commercial Operation Date (currently expected to occur on or about April 1, 2027) and expiring on March 31, 2047. As a financial-settlement instrument, the PPA does not involve the physical delivery of energy from the Project to Buyer; rather, it creates a bilateral payment obligation based on the difference between the fixed contract price and the floating ERCOT West Hub locational marginal price for each settlement interval.

Based on the independent solar resource assessment prepared by Heliograph Energy Consulting LLC (dated May 2025), the Project is expected to generate approximately 350,000 MWh of net energy production per year at the P50 confidence level. At the initial contract price of $20.00/MWh (fixed for years one through five, with a 1.50% per annum compounding escalator commencing in year six and continuing through year twenty), the Seller's revenue stream under the PPA is projected to average approximately $7,000,000 per year over the term.

This revenue stream is the cornerstone of Seller's project economics and the primary source of debt service for the Project's $108,000,000 senior secured construction-to-term loan facility arranged by Tralvendo National Bank, N.A. ("Tralvendo"), as Administrative Agent. The projected debt service coverage ratio ("DSCR") at P50 production levels and Year 1 pricing is approximately 1.35x, measured against a minimum DSCR covenant of 1.30x under the credit agreement. As you will appreciate, the margin between projected and covenant DSCR levels is relatively thin, meaning that even a single quarter of Buyer payment default or delay could cause a covenant breach and potentially trigger acceleration of the entire loan facility. In these circumstances, adequate credit support from Buyer is not merely a commercial preference but a structural necessity for the viability of the Project.

2.2 Buyer's Credit Profile

We acknowledge that Meridian DataCore Solutions Inc. is a substantial enterprise. Meridian is publicly traded on the Nasdaq Stock Market (ticker: MDCS) and, as of June 2025, reported a market capitalization of approximately $8.2 billion. Meridian's 2024 annual revenues were approximately $2.1 billion, with 2024 EBITDA of approximately $740 million — reflecting a mature and profitable business.

Meridian currently carries a corporate credit rating of BBB from Pinnacle Ratings Group, which constitutes investment grade but sits in the lower tier of the investment-grade spectrum. While Seller recognizes that a BBB rating reflects a currently sound credit profile, we respectfully note that this rating represents a moderate credit risk when assessed over a twenty-year horizon. Historical data across ratings agencies demonstrates that a meaningful percentage of BBB-rated issuers experience credit deterioration, downgrade to sub-investment-grade, or default over multi-decade time periods. The risk of credit migration over the life of a twenty-year contract is materially different from the risk over a conventional three-to-five-year commercial arrangement.

The corporate guaranty serves to mitigate this long-term credit risk by providing Seller with a direct claim against Meridian's corporate balance sheet — including its assets, revenue streams, and going-concern value — to backstop Buyer's payment and performance obligations under the PPA. We note that Meridian is the ultimate parent entity in its corporate structure and that no additional parent guarantor is available above Meridian. Accordingly, the guaranty request is directed at Meridian itself, which is both the Buyer under the PPA and the proposed Guarantor.

2.3 Lender Requirements and Bankability

As discussed during our July 28, 2025 call, the syndicate lenders for the Project's construction-to-term loan facility — consisting of Tralvendo National Bank, N.A., Osprey Commercial Lending Corp., Grandview Savings Bank, FSB, and Blue Prairie Capital Markets LLC, with total commitments aggregating $108,000,000 — will conduct a comprehensive bankability review of the PPA as a condition precedent to the closing of the construction loan facility. The target closing date for the construction loan is October 1, 2025. The Independent Engineer engaged by the lender group, Gresham Engineering Advisors Inc., will also review the PPA as part of its due diligence scope.

Lender's counsel, Whitfield Stroval & Cade LLP (Philip Thornton), has indicated to us in preliminary discussions that adequate Buyer credit support is a material bankability requirement and that the lender group will expect to see either a corporate guaranty from the Buyer or equivalent credit enhancement as a condition to issuing a favorable bankability opinion. The absence of a Buyer guaranty or equivalent credit enhancement could jeopardize the lender group's PPA bankability sign-off, delay or prevent the construction loan closing, and impede the issuance of the full Notice to Proceed to the Project's EPC contractor, Sunbelt Power Construction LLC (target NTP date: October 15, 2025). Any delay in NTP would have cascading effects on the construction schedule, the projected Commercial Operation Date, and Seller's ability to meet its milestone obligations under the interconnection agreement with the Electric Reliability Council of Texas and the applicable transmission service provider.

2.4 Market Practice

Corporate guaranties from creditworthy offtakers are customary and well-established in long-term renewable energy power purchase agreements of this scale and duration, particularly in virtual/financial PPA structures where the offtaker's payment obligation is the sole source of contracted revenue for the project. This is true across both investment-grade and sub-investment-grade counterparties in the ERCOT market and more broadly across U.S. wholesale power markets.

The guaranty cap of $14,000,000 that Seller has requested (as detailed in Section 3.3 below) is proportionate to the aggregate contract value and consistent with market practice for investment-grade counterparties in ERCOT-settled virtual PPAs. Specifically, a guaranty cap equivalent to approximately two years of estimated PPA revenues is within the typical range observed in comparable transactions, which generally falls between one and three years of annual contract value depending on the counterparty's credit profile and the term of the agreement. We are confident that the guaranty amount requested here is reasonable and will not impose an undue burden on Meridian's balance sheet.

3. Terms of the Requested Buyer Corporate Guaranty

Set forth below is a summary of the material terms of the corporate guaranty that Seller requests Meridian to provide. These terms are reflected in the Form of Guaranty attached as Exhibit C to the PPA.

3.1 Guarantor and Beneficiary

Guarantor: Meridian DataCore Solutions Inc. (EIN: 47-5918320), a Delaware corporation with its principal place of business at 700 Lakeshore Parkway, Building C, Austin, Texas 78746.

Beneficiary: Saguaro Flats Solar LLC (EIN: 93-1284506), a Delaware limited liability company and wholly owned subsidiary of CBR, as Seller under the PPA, with its registered office at 2800 Post Oak Boulevard, Suite 1600, Houston, Texas 77056.

3.2 Guaranteed Obligations

The guaranty shall cover all payment and performance obligations of Meridian DataCore Solutions Inc. as Buyer under the PPA, including without limitation:

(a) monthly settlement payments due under the CfD structure (i.e., the difference between the contract price and the applicable floating price multiplied by the settlement quantity for each settlement period);

(b) termination payments owed by Buyer in the event of an early termination of the PPA, whether resulting from a Buyer Event of Default, a Force Majeure termination, or other termination right exercised by Seller in accordance with the PPA;

(c) indemnification obligations of Buyer under the PPA, including indemnification for third-party claims, environmental liabilities, and tax-related indemnities; and

(d) any other monetary or performance obligations of Buyer arising under or in connection with the PPA, including reimbursement of costs and expenses, payment of interest on overdue amounts, and cooperation obligations necessary for the administration of the CfD settlement process.

3.3 Guaranty Cap

The maximum aggregate liability of the Guarantor under the guaranty shall be capped at $14,000,000 (fourteen million dollars). This cap amount equals approximately two years of estimated PPA revenues, calculated as 350,000 MWh per year × $20.00/MWh × 2 = $14,000,000. The guaranty cap is a cumulative lifetime cap, not an annual cap, and once aggregate draws or payments under the guaranty equal $14,000,000, the Guarantor's obligations thereunder shall be fully discharged.

This cap is designed to provide Seller with meaningful credit protection — covering a period of Buyer non-payment sufficient to allow Seller to pursue remedies, arrange alternative hedging arrangements, and mitigate damages — without imposing an uncapped or disproportionate contingent liability on Meridian's balance sheet. We believe the cap strikes an appropriate balance between Seller's need for credit assurance and Buyer's legitimate interest in limiting its guaranty exposure.

3.4 Form of Guaranty

The specific terms and conditions of the guaranty are set forth in the Form of Guaranty attached as Exhibit C to the PPA, which was previously circulated to your office with the First Draft PPA on July 14, 2025. A copy is re-enclosed with this letter for your convenience. The guaranty is governed by New York law, consistent with the governing law provision of the PPA itself (Article 16.1 of the current draft). Key provisions of the Form of Guaranty include:

(a) Absolute and Unconditional Guaranty. The guaranty is a guaranty of payment and performance, not merely of collection, and is absolute and unconditional, irrespective of any circumstances that might otherwise constitute a legal or equitable discharge of a surety or guarantor.

(b) Waiver of Suretyship Defenses. The Guarantor waives all suretyship defenses, including without limitation diligence, presentment, demand for payment, notice of dishonor, protest, and any defense arising from the absence, impairment, or loss of any right of reimbursement, contribution, or subrogation.

(c) Direct Claim. The Beneficiary has the right to proceed directly against the Guarantor without first proceeding against Buyer or exhausting any remedies against Buyer under the PPA, and without first resorting to any other security or collateral.

(d) Representations. The Guarantor represents and warrants as to its authority to execute and deliver the guaranty, the due authorization thereof, its solvency, and the absence of conflicts with its organizational documents, material agreements, or applicable law.

(e) Termination. The guaranty terminates upon the later of (i) the expiration or termination of the PPA and (ii) the date on which all Buyer obligations under the PPA have been fully performed, satisfied, and paid.

3.5 Duration. The guaranty shall remain in full force and effect from the date of execution of the PPA through the later of (a) the expiration of the PPA on March 31, 2047 (or such earlier termination date as may occur in accordance with the terms of the PPA) and (b) the date on which all obligations of Buyer under the PPA have been fully performed, satisfied, and indefeasibly paid in full. For the avoidance of doubt, the guaranty shall survive any early termination of the PPA to the extent that Buyer obligations (including termination payment obligations) remain outstanding as of the date of such early termination.

4. Seller's Credit Support — Irrevocable Standby Letter of Credit

In the interest of a balanced credit support framework, Seller is prepared to post credit support for Buyer's benefit as set forth below. We believe this demonstrates Seller's good-faith commitment to a reciprocal arrangement that provides both parties with appropriate assurance.

4.1 Confirmation of Seller's Willingness to Post Credit Support

Seller hereby confirms its willingness to post an irrevocable standby letter of credit (the "Seller LC") as credit support for Seller's obligations under the PPA, including without limitation Seller's obligations with respect to the availability guarantee performance thresholds and associated liquidated damages, termination payment obligations, and other monetary obligations arising under the PPA.

4.2 Issuing Bank

The Seller LC will be issued by Tralvendo National Bank, N.A., a nationally chartered bank headquartered at 600 Main Street, Suite 3000, Dallas, Texas 75202. Tralvendo also serves as Administrative Agent for the Project's $108,000,000 construction-to-term loan facility. Tralvendo is an Eligible Issuer within the meaning of the PPA (Article 1.1 of the current draft), as it is a U.S. nationally chartered bank with total assets in excess of $10 billion and a long-term unsecured debt rating of at least A- from Pinnacle Ratings Group or its equivalent from a nationally recognized statistical rating organization.

4.3 LC Amount

Initial Face Amount: $7,000,000 (seven million dollars), equal to one year of estimated PPA revenues at P50 production levels and Year 1 contract pricing (350,000 MWh × $20.00/MWh = $7,000,000).

Step-Down: The face amount of the Seller LC shall reduce to $3,500,000 (three million five hundred thousand dollars), representing 50% of the initial face amount, effective on the fifth (5th) anniversary of the Commercial Operation Date (expected to be approximately April 1, 2032), provided that no Seller Default or Seller Event of Default is then outstanding or continuing under the PPA as of the date on which the step-down would otherwise take effect. If a Seller Default or Seller Event of Default is outstanding as of such date, the step-down shall be deferred until such default has been cured or waived.

4.4 Form of Letter of Credit

The specific terms and conditions of the Seller LC are set forth in the Form of Letter of Credit attached as Exhibit D to the PPA, which was previously circulated to your office with the First Draft PPA on July 14, 2025. A copy is re-enclosed with this letter. Key terms of the Form of Letter of Credit include:

(a) Irrevocable. The Seller LC is irrevocable and may not be amended, modified, or canceled without the prior written consent of the Beneficiary (i.e., Buyer).

(b) Transferable. The Seller LC is transferable by Buyer, subject to the transfer provisions set forth in the Form of Letter of Credit, to accommodate any permitted assignment of Buyer's rights under the PPA.

(c) Draw Mechanism. Draws are made by presentation of a sight draft accompanied by a draw certificate in the form specified in the Seller LC, certifying the occurrence of one or more specified draw conditions.

(d) Tenor and Renewal. The Seller LC shall have an initial tenor of one (1) year, with automatic annual renewal (evergreen) for successive one-year periods unless the issuing bank provides written notice of non-renewal at least sixty (60) days prior to the then-current expiration date. In the event of a notice of non-renewal, Seller is obligated to provide a replacement letter of credit from an Eligible Issuer at least thirty (30) days prior to the expiration of the existing Seller LC.

(e) Governing Rules. The Seller LC shall be subject to and governed by the Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 ("UCP 600") or, at the election of the issuing bank, the International Standby Practices 1998, ICC Publication No. 590 ("ISP98").

4.5 Draw Conditions

Buyer shall be entitled to draw upon the Seller LC upon the occurrence of any of the following events:

(a) Seller's failure to pay availability liquidated damages when due under the PPA, following expiration of any applicable cure period specified in the PPA;

(b) Seller's failure to pay a termination payment owed by Seller under the PPA when due, following expiration of any applicable cure period;

(c) any other Seller monetary default under the PPA that remains uncured beyond the applicable cure period specified in the PPA; or

(d) Seller's failure to renew or replace the Seller LC at least thirty (30) days prior to the expiration of the then-current Seller LC, whether following a notice of non-renewal from the issuing bank or otherwise.

For the avoidance of doubt, the draw conditions are limited to the specific events enumerated above and in the Form of Letter of Credit, and Buyer shall not be entitled to draw on the Seller LC for any other purpose or upon the occurrence of any event not constituting a qualifying draw condition.

5. Reciprocal Nature of Credit Support Arrangements

Seller wishes to emphasize that the credit support framework described in this letter is bilateral, balanced, and designed to protect both parties against counterparty credit risk. Under the proposed framework:

• Seller posts a $7,000,000 irrevocable standby letter of credit (reducing to $3,500,000 after five years), backed by a nationally chartered bank with an investment-grade credit rating; and

• Buyer provides a $14,000,000 corporate guaranty from Meridian DataCore Solutions Inc.

The differential in the amounts of credit support reflects the asymmetric nature of the credit risk borne by each party over the twenty-year term. Buyer's aggregate payment obligations under the PPA — totaling approximately $140,000,000 in nominal terms over the contract term — are substantially larger in magnitude than Seller's potential liquidated damages exposure under the availability guarantee and other Seller monetary obligations. Accordingly, a higher guaranty cap on the Buyer side is warranted and proportionate.

Both parties benefit from this mutual credit assurance. Buyer receives the comfort of a bank-backed letter of credit securing Seller's availability and performance commitments. Seller receives the comfort of a direct corporate guaranty securing Buyer's payment commitments. Together, these instruments enhance the overall bankability of the PPA, support the Project's financing, and provide a stable contractual foundation for a twenty-year commercial relationship.

6. Interaction with Change of Control Provisions

We also wish to note that Seller's credit support requirements are interrelated with the change of control provisions currently under negotiation between the parties (Article 12 of the current draft PPA). Specifically, under Seller's position as reflected in the Revised Second Draft PPA to be circulated on August 11, 2025:

If Buyer undergoes a "Change of Control" (as defined in the PPA) and the successor entity's corporate credit rating from Pinnacle Ratings Group falls below BBB− (or the successor entity does not maintain a rating from Pinnacle Ratings Group or any other nationally recognized statistical rating organization), Seller shall have the right to demand that Buyer post additional credit support in the form of an irrevocable standby letter of credit in a face amount equal to twelve (12) months of estimated Buyer settlement payments (approximately $7,000,000 based on P50 production and Year 1 pricing), issued by an Eligible Issuer, within thirty (30) business days of the consummation of such Change of Control. If Buyer fails to post such additional credit support within such period, Seller shall have the right, in its sole discretion, to terminate the PPA.

Seller's willingness to negotiate the scope, triggers, and remedies associated with the change of control provisions will be informed in significant part by the adequacy of the Buyer's credit support package established at PPA execution. Put differently, a robust credit support package — including the corporate guaranty requested herein — may provide Seller with greater flexibility in negotiating the change of control provisions, whereas the absence of adequate upfront credit support would likely require Seller to insist on more protective change of control rights.

7. Request for Response and Next Steps

We respectfully request that Hargrove & Linden and Meridian confirm, at your earliest convenience, Buyer's agreement to provide the corporate guaranty in substantially the form of Exhibit C to the PPA, with a guaranty cap of $14,000,000, on the terms summarized in Section 3 above. If Buyer has comments on the form or terms of the guaranty, or if Buyer wishes to propose alternative or supplemental credit support mechanisms (such as a cash deposit or a combination of guaranty and letter of credit), Seller invites Buyer's redline of Exhibit C for our review and further negotiation.

We draw your attention to the following timeline milestones, which underscore the urgency of reaching agreement on credit support terms:

• Target PPA Execution Date: September 15, 2025

• Target Construction Loan Closing Date: October 1, 2025

• Target Notice to Proceed (EPC Contract): October 15, 2025

Resolution of the credit support terms is a critical path item for achieving each of these milestones. We therefore respectfully request a substantive response to this letter no later than August 22, 2025.

Additionally, we understand that Brett Callahan of this office and Ryan Matsuda of Hargrove & Linden are in the process of scheduling a negotiation call for the week of August 18, 2025, to address open issues in the PPA. We suggest that Seller's credit support requirements and the Buyer corporate guaranty be included as a priority agenda item for that call, so that the principals and their respective counsel can discuss any issues or concerns in real time.

8. Reservation of Rights

This letter is provided for discussion and negotiation purposes only. Nothing in this letter constitutes a waiver of any right, remedy, or position of Seller, CBR, or any of their affiliates under the PPA, at law, or in equity, and nothing herein shall be deemed to create any binding obligation on the part of any party. All rights, remedies, and positions are expressly reserved. The PPA, the corporate guaranty, the letter of credit, and all related credit support arrangements shall be effective and binding only upon the due execution and delivery of definitive agreements in form and substance satisfactory to the parties and, as applicable, their respective lenders.

We trust that the foregoing adequately sets forth Seller's position with respect to credit support under the PPA. We are, of course, available to discuss any aspect of this letter at your convenience, and we welcome the opportunity to work with you and your client to finalize the credit support terms on an expedited basis. Should you have any questions, please do not hesitate to contact me directly.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Patricia Dunmore Partner

Direct Dial: (713) 555-7244

Email: pdunmore@calderwoodharkness.com

cc:

Rachel Muñoz, General Counsel, Calloway-Briggs Renewables Inc. Janet Okafor, SVP, Origination & Commercial, Calloway-Briggs Renewables Inc. Derek Engstrom, VP, Project Finance & Treasury, Calloway-Briggs Renewables Inc. Brett Callahan, Calderwood & Harkness LLP Helen Nakamura, Calderwood & Harkness LLP

Enclosures:

(1) Exhibit C — Form of Guaranty (Buyer Corporate Guaranty) (previously circulated July 14, 2025) (2) Exhibit D — Form of Letter of Credit (Seller Availability LC) (previously circulated July 14, 2025)

CALDERWOOD & HARKNESS LLP Attorneys at Law 1100 Louisiana Street, Suite 4500 Houston, Texas 77002 Telephone: (713) 555-7200 Facsimile: (713) 555-7201 www.calderwoodharkness.com
August 9, 2025
Evelyn Crumveth, Esq. Hargrove & Linden LLP 300 Congress Avenue, Suite 2200 Austin, Texas 78701
Re: Saguaro Flats Solar Project — Power Purchase Agreement between Saguaro Flats Solar LLC and Meridian DataCore Solutions Inc.; Seller's Credit Support Requirements and Request for Buyer Corporate Guaranty
Calderwood & Harkness Matter No. 1015-00002
Dear Ms. Crumveth:
1. Introduction and Purpose
I write on behalf of our client, Calloway-Briggs Renewables Inc. ("CBR") and its wholly owned project subsidiary, Saguaro Flats Solar LLC ("Seller"), in connection with the ongoing negotiation of the twenty (20)-year Power Purchase Agreement (the "PPA") for the output of the Saguaro Flats Solar Project — a 150 MWac / 195 MWdc solar photovoltaic generating facility located in Pecos County, Texas (the "Project") — with Meridian DataCore Solutions Inc. ("Meridian" or "Buyer"). The purpose of this letter is to formally set forth Seller's credit support requirements for the PPA, including the request that Meridian provide a corporate guaranty in favor of Seller, and to confirm the credit support that Seller is prepared to post for Buyer's benefit.
This letter is provided in advance of the Seller's Revised Second Draft PPA, which we anticipate circulating on August 11, 2025, and should be read in conjunction with Exhibit C (Form of Guaranty) and Exhibit D (Form of Letter of Credit), copies of which were previously circulated with the First Draft PPA delivered to your office on July 14, 2025. For ease of reference, we have re-enclosed those exhibits with this letter.
As you are aware, the PPA has an aggregate nominal contract value of approximately $140,000,000 over its twenty-year term. Given the magnitude and duration of the contractual obligations at issue, and the critical importance of the PPA revenue stream to the Project's financing structure, the establishment of adequate, mutual credit support is a matter of considerable significance to Seller, its equity sponsors, and the Project's lender group. We believe the credit support framework described below is commercially reasonable, proportionate to the risks undertaken by each party, and consistent with prevailing market practice for transactions of this nature.
2. Rationale for Buyer Corporate Guaranty
2.1 Long-Term Nature of the PPA and Revenue Dependency
The PPA is structured as a virtual (financial) power purchase agreement in the form of a contract for differences ("CfD") settling at the ERCOT West Hub node. The PPA has a twenty-year term commencing on the Commercial Operation Date (currently expected to occur on or about April 1, 2027) and expiring on March 31, 2047. As a financial-settlement instrument, the PPA does not involve the physical delivery of energy from the Project to Buyer; rather, it creates a bilateral payment obligation based on the difference between the fixed contract price and the floating ERCOT West Hub locational marginal price for each settlement interval.
Based on the independent solar resource assessment prepared by Heliograph Energy Consulting LLC (dated May 2025), the Project is expected to generate approximately 350,000 MWh of net energy production per year at the P50 confidence level. At the initial contract price of $20.00/MWh (fixed for years one through five, with a 1.50% per annum compounding escalator commencing in year six and continuing through year twenty), the Seller's revenue stream under the PPA is projected to average approximately $7,000,000 per year over the term.
This revenue stream is the cornerstone of Seller's project economics and the primary source of debt service for the Project's $108,000,000 senior secured construction-to-term loan facility arranged by Tralvendo National Bank, N.A. ("Tralvendo"), as Administrative Agent. The projected debt service coverage ratio ("DSCR") at P50 production levels and Year 1 pricing is approximately 1.35x, measured against a minimum DSCR covenant of 1.30x under the credit agreement. As you will appreciate, the margin between projected and covenant DSCR levels is relatively thin, meaning that even a single quarter of Buyer payment default or delay could cause a covenant breach and potentially trigger acceleration of the entire loan facility. In these circumstances, adequate credit support from Buyer is not merely a commercial preference but a structural necessity for the viability of the Project.
2.2 Buyer's Credit Profile
We acknowledge that Meridian DataCore Solutions Inc. is a substantial enterprise. Meridian is publicly traded on the Nasdaq Stock Market (ticker: MDCS) and, as of June 2025, reported a market capitalization of approximately $8.2 billion. Meridian's 2024 annual revenues were approximately $2.1 billion, with 2024 EBITDA of approximately $740 million — reflecting a mature and profitable business.
Meridian currently carries a corporate credit rating of BBB from Pinnacle Ratings Group, which constitutes investment grade but sits in the lower tier of the investment-grade spectrum. While Seller recognizes that a BBB rating reflects a currently sound credit profile, we respectfully note that this rating represents a moderate credit risk when assessed over a twenty-year horizon. Historical data across ratings agencies demonstrates that a meaningful percentage of BBB-rated issuers experience credit deterioration, downgrade to sub-investment-grade, or default over multi-decade time periods. The risk of credit migration over the life of a twenty-year contract is materially different from the risk over a conventional three-to-five-year commercial arrangement.
The corporate guaranty serves to mitigate this long-term credit risk by providing Seller with a direct claim against Meridian's corporate balance sheet — including its assets, revenue streams, and going-concern value — to backstop Buyer's payment and performance obligations under the PPA. We note that Meridian is the ultimate parent entity in its corporate structure and that no additional parent guarantor is available above Meridian. Accordingly, the guaranty request is directed at Meridian itself, which is both the Buyer under the PPA and the proposed Guarantor.
2.3 Lender Requirements and Bankability
As discussed during our July 28, 2025 call, the syndicate lenders for the Project's construction-to-term loan facility — consisting of Tralvendo National Bank, N.A., Osprey Commercial Lending Corp., Grandview Savings Bank, FSB, and Blue Prairie Capital Markets LLC, with total commitments aggregating $108,000,000 — will conduct a comprehensive bankability review of the PPA as a condition precedent to the closing of the construction loan facility. The target closing date for the construction loan is October 1, 2025. The Independent Engineer engaged by the lender group, Gresham Engineering Advisors Inc., will also review the PPA as part of its due diligence scope.
Lender's counsel, Whitfield Stroval & Cade LLP (Philip Thornton), has indicated to us in preliminary discussions that adequate Buyer credit support is a material bankability requirement and that the lender group will expect to see either a corporate guaranty from the Buyer or equivalent credit enhancement as a condition to issuing a favorable bankability opinion. The absence of a Buyer guaranty or equivalent credit enhancement could jeopardize the lender group's PPA bankability sign-off, delay or prevent the construction loan closing, and impede the issuance of the full Notice to Proceed to the Project's EPC contractor, Sunbelt Power Construction LLC (target NTP date: October 15, 2025). Any delay in NTP would have cascading effects on the construction schedule, the projected Commercial Operation Date, and Seller's ability to meet its milestone obligations under the interconnection agreement with the Electric Reliability Council of Texas and the applicable transmission service provider.
2.4 Market Practice
Corporate guaranties from creditworthy offtakers are customary and well-established in long-term renewable energy power purchase agreements of this scale and duration, particularly in virtual/financial PPA structures where the offtaker's payment obligation is the sole source of contracted revenue for the project. This is true across both investment-grade and sub-investment-grade counterparties in the ERCOT market and more broadly across U.S. wholesale power markets.
The guaranty cap of $14,000,000 that Seller has requested (as detailed in Section 3.3 below) is proportionate to the aggregate contract value and consistent with market practice for investment-grade counterparties in ERCOT-settled virtual PPAs. Specifically, a guaranty cap equivalent to approximately two years of estimated PPA revenues is within the typical range observed in comparable transactions, which generally falls between one and three years of annual contract value depending on the counterparty's credit profile and the term of the agreement. We are confident that the guaranty amount requested here is reasonable and will not impose an undue burden on Meridian's balance sheet.
3. Terms of the Requested Buyer Corporate Guaranty
Set forth below is a summary of the material terms of the corporate guaranty that Seller requests Meridian to provide. These terms are reflected in the Form of Guaranty attached as Exhibit C to the PPA.
3.1 Guarantor and Beneficiary
Guarantor: Meridian DataCore Solutions Inc. (EIN: 47-5918320), a Delaware corporation with its principal place of business at 700 Lakeshore Parkway, Building C, Austin, Texas 78746.
Beneficiary: Saguaro Flats Solar LLC (EIN: 93-1284506), a Delaware limited liability company and wholly owned subsidiary of CBR, as Seller under the PPA, with its registered office at 2800 Post Oak Boulevard, Suite 1600, Houston, Texas 77056.
3.2 Guaranteed Obligations
The guaranty shall cover all payment and performance obligations of Meridian DataCore Solutions Inc. as Buyer under the PPA, including without limitation:
(a) monthly settlement payments due under the CfD structure (i.e., the difference between the contract price and the applicable floating price multiplied by the settlement quantity for each settlement period);
(b) termination payments owed by Buyer in the event of an early termination of the PPA, whether resulting from a Buyer Event of Default, a Force Majeure termination, or other termination right exercised by Seller in accordance with the PPA;
(c) indemnification obligations of Buyer under the PPA, including indemnification for third-party claims, environmental liabilities, and tax-related indemnities; and
(d) any other monetary or performance obligations of Buyer arising under or in connection with the PPA, including reimbursement of costs and expenses, payment of interest on overdue amounts, and cooperation obligations necessary for the administration of the CfD settlement process.
3.3 Guaranty Cap
The maximum aggregate liability of the Guarantor under the guaranty shall be capped at $14,000,000 (fourteen million dollars). This cap amount equals approximately two years of estimated PPA revenues, calculated as 350,000 MWh per year × $20.00/MWh × 2 = $14,000,000. The guaranty cap is a cumulative lifetime cap, not an annual cap, and once aggregate draws or payments under the guaranty equal $14,000,000, the Guarantor's obligations thereunder shall be fully discharged.
This cap is designed to provide Seller with meaningful credit protection — covering a period of Buyer non-payment sufficient to allow Seller to pursue remedies, arrange alternative hedging arrangements, and mitigate damages — without imposing an uncapped or disproportionate contingent liability on Meridian's balance sheet. We believe the cap strikes an appropriate balance between Seller's need for credit assurance and Buyer's legitimate interest in limiting its guaranty exposure.
3.4 Form of Guaranty
The specific terms and conditions of the guaranty are set forth in the Form of Guaranty attached as Exhibit C to the PPA, which was previously circulated to your office with the First Draft PPA on July 14, 2025. A copy is re-enclosed with this letter for your convenience. The guaranty is governed by New York law, consistent with the governing law provision of the PPA itself (Article 16.1 of the current draft). Key provisions of the Form of Guaranty include:
(a) Absolute and Unconditional Guaranty. The guaranty is a guaranty of payment and performance, not merely of collection, and is absolute and unconditional, irrespective of any circumstances that might otherwise constitute a legal or equitable discharge of a surety or guarantor.
(b) Waiver of Suretyship Defenses. The Guarantor waives all suretyship defenses, including without limitation diligence, presentment, demand for payment, notice of dishonor, protest, and any defense arising from the absence, impairment, or loss of any right of reimbursement, contribution, or subrogation.
(c) Direct Claim. The Beneficiary has the right to proceed directly against the Guarantor without first proceeding against Buyer or exhausting any remedies against Buyer under the PPA, and without first resorting to any other security or collateral.
(d) Representations. The Guarantor represents and warrants as to its authority to execute and deliver the guaranty, the due authorization thereof, its solvency, and the absence of conflicts with its organizational documents, material agreements, or applicable law.
(e) Termination. The guaranty terminates upon the later of (i) the expiration or termination of the PPA and (ii) the date on which all Buyer obligations under the PPA have been fully performed, satisfied, and paid.
3.5 Duration. The guaranty shall remain in full force and effect from the date of execution of the PPA through the later of (a) the expiration of the PPA on March 31, 2047 (or such earlier termination date as may occur in accordance with the terms of the PPA) and (b) the date on which all obligations of Buyer under the PPA have been fully performed, satisfied, and indefeasibly paid in full. For the avoidance of doubt, the guaranty shall survive any early termination of the PPA to the extent that Buyer obligations (including termination payment obligations) remain outstanding as of the date of such early termination.
4. Seller's Credit Support — Irrevocable Standby Letter of Credit
In the interest of a balanced credit support framework, Seller is prepared to post credit support for Buyer's benefit as set forth below. We believe this demonstrates Seller's good-faith commitment to a reciprocal arrangement that provides both parties with appropriate assurance.
4.1 Confirmation of Seller's Willingness to Post Credit Support
Seller hereby confirms its willingness to post an irrevocable standby letter of credit (the "Seller LC") as credit support for Seller's obligations under the PPA, including without limitation Seller's obligations with respect to the availability guarantee performance thresholds and associated liquidated damages, termination payment obligations, and other monetary obligations arising under the PPA.
4.2 Issuing Bank
The Seller LC will be issued by Tralvendo National Bank, N.A., a nationally chartered bank headquartered at 600 Main Street, Suite 3000, Dallas, Texas 75202. Tralvendo also serves as Administrative Agent for the Project's $108,000,000 construction-to-term loan facility. Tralvendo is an Eligible Issuer within the meaning of the PPA (Article 1.1 of the current draft), as it is a U.S. nationally chartered bank with total assets in excess of $10 billion and a long-term unsecured debt rating of at least A- from Pinnacle Ratings Group or its equivalent from a nationally recognized statistical rating organization.
4.3 LC Amount
Initial Face Amount: $7,000,000 (seven million dollars), equal to one year of estimated PPA revenues at P50 production levels and Year 1 contract pricing (350,000 MWh × $20.00/MWh = $7,000,000).
Step-Down: The face amount of the Seller LC shall reduce to $3,500,000 (three million five hundred thousand dollars), representing 50% of the initial face amount, effective on the fifth (5th) anniversary of the Commercial Operation Date (expected to be approximately April 1, 2032), provided that no Seller Default or Seller Event of Default is then outstanding or continuing under the PPA as of the date on which the step-down would otherwise take effect. If a Seller Default or Seller Event of Default is outstanding as of such date, the step-down shall be deferred until such default has been cured or waived.
4.4 Form of Letter of Credit
The specific terms and conditions of the Seller LC are set forth in the Form of Letter of Credit attached as Exhibit D to the PPA, which was previously circulated to your office with the First Draft PPA on July 14, 2025. A copy is re-enclosed with this letter. Key terms of the Form of Letter of Credit include:
(a) Irrevocable. The Seller LC is irrevocable and may not be amended, modified, or canceled without the prior written consent of the Beneficiary (i.e., Buyer).
(b) Transferable. The Seller LC is transferable by Buyer, subject to the transfer provisions set forth in the Form of Letter of Credit, to accommodate any permitted assignment of Buyer's rights under the PPA.
(c) Draw Mechanism. Draws are made by presentation of a sight draft accompanied by a draw certificate in the form specified in the Seller LC, certifying the occurrence of one or more specified draw conditions.
(d) Tenor and Renewal. The Seller LC shall have an initial tenor of one (1) year, with automatic annual renewal (evergreen) for successive one-year periods unless the issuing bank provides written notice of non-renewal at least sixty (60) days prior to the then-current expiration date. In the event of a notice of non-renewal, Seller is obligated to provide a replacement letter of credit from an Eligible Issuer at least thirty (30) days prior to the expiration of the existing Seller LC.
(e) Governing Rules. The Seller LC shall be subject to and governed by the Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 ("UCP 600") or, at the election of the issuing bank, the International Standby Practices 1998, ICC Publication No. 590 ("ISP98").
4.5 Draw Conditions
Buyer shall be entitled to draw upon the Seller LC upon the occurrence of any of the following events:
(a) Seller's failure to pay availability liquidated damages when due under the PPA, following expiration of any applicable cure period specified in the PPA;
(b) Seller's failure to pay a termination payment owed by Seller under the PPA when due, following expiration of any applicable cure period;
(c) any other Seller monetary default under the PPA that remains uncured beyond the applicable cure period specified in the PPA; or
(d) Seller's failure to renew or replace the Seller LC at least thirty (30) days prior to the expiration of the then-current Seller LC, whether following a notice of non-renewal from the issuing bank or otherwise.
For the avoidance of doubt, the draw conditions are limited to the specific events enumerated above and in the Form of Letter of Credit, and Buyer shall not be entitled to draw on the Seller LC for any other purpose or upon the occurrence of any event not constituting a qualifying draw condition.
5. Reciprocal Nature of Credit Support Arrangements
Seller wishes to emphasize that the credit support framework described in this letter is bilateral, balanced, and designed to protect both parties against counterparty credit risk. Under the proposed framework:
• Seller posts a $7,000,000 irrevocable standby letter of credit (reducing to $3,500,000 after five years), backed by a nationally chartered bank with an investment-grade credit rating; and
• Buyer provides a $14,000,000 corporate guaranty from Meridian DataCore Solutions Inc.
The differential in the amounts of credit support reflects the asymmetric nature of the credit risk borne by each party over the twenty-year term. Buyer's aggregate payment obligations under the PPA — totaling approximately $140,000,000 in nominal terms over the contract term — are substantially larger in magnitude than Seller's potential liquidated damages exposure under the availability guarantee and other Seller monetary obligations. Accordingly, a higher guaranty cap on the Buyer side is warranted and proportionate.
Both parties benefit from this mutual credit assurance. Buyer receives the comfort of a bank-backed letter of credit securing Seller's availability and performance commitments. Seller receives the comfort of a direct corporate guaranty securing Buyer's payment commitments. Together, these instruments enhance the overall bankability of the PPA, support the Project's financing, and provide a stable contractual foundation for a twenty-year commercial relationship.
6. Interaction with Change of Control Provisions
We also wish to note that Seller's credit support requirements are interrelated with the change of control provisions currently under negotiation between the parties (Article 12 of the current draft PPA). Specifically, under Seller's position as reflected in the Revised Second Draft PPA to be circulated on August 11, 2025:
If Buyer undergoes a "Change of Control" (as defined in the PPA) and the successor entity's corporate credit rating from Pinnacle Ratings Group falls below BBB− (or the successor entity does not maintain a rating from Pinnacle Ratings Group or any other nationally recognized statistical rating organization), Seller shall have the right to demand that Buyer post additional credit support in the form of an irrevocable standby letter of credit in a face amount equal to twelve (12) months of estimated Buyer settlement payments (approximately $7,000,000 based on P50 production and Year 1 pricing), issued by an Eligible Issuer, within thirty (30) business days of the consummation of such Change of Control. If Buyer fails to post such additional credit support within such period, Seller shall have the right, in its sole discretion, to terminate the PPA.
Seller's willingness to negotiate the scope, triggers, and remedies associated with the change of control provisions will be informed in significant part by the adequacy of the Buyer's credit support package established at PPA execution. Put differently, a robust credit support package — including the corporate guaranty requested herein — may provide Seller with greater flexibility in negotiating the change of control provisions, whereas the absence of adequate upfront credit support would likely require Seller to insist on more protective change of control rights.
7. Request for Response and Next Steps
We respectfully request that Hargrove & Linden and Meridian confirm, at your earliest convenience, Buyer's agreement to provide the corporate guaranty in substantially the form of Exhibit C to the PPA, with a guaranty cap of $14,000,000, on the terms summarized in Section 3 above. If Buyer has comments on the form or terms of the guaranty, or if Buyer wishes to propose alternative or supplemental credit support mechanisms (such as a cash deposit or a combination of guaranty and letter of credit), Seller invites Buyer's redline of Exhibit C for our review and further negotiation.
We draw your attention to the following timeline milestones, which underscore the urgency of reaching agreement on credit support terms:
• Target PPA Execution Date: September 15, 2025
• Target Construction Loan Closing Date: October 1, 2025
• Target Notice to Proceed (EPC Contract): October 15, 2025
Resolution of the credit support terms is a critical path item for achieving each of these milestones. We therefore respectfully request a substantive response to this letter no later than August 22, 2025.
Additionally, we understand that Brett Callahan of this office and Ryan Matsuda of Hargrove & Linden are in the process of scheduling a negotiation call for the week of August 18, 2025, to address open issues in the PPA. We suggest that Seller's credit support requirements and the Buyer corporate guaranty be included as a priority agenda item for that call, so that the principals and their respective counsel can discuss any issues or concerns in real time.
8. Reservation of Rights
This letter is provided for discussion and negotiation purposes only. Nothing in this letter constitutes a waiver of any right, remedy, or position of Seller, CBR, or any of their affiliates under the PPA, at law, or in equity, and nothing herein shall be deemed to create any binding obligation on the part of any party. All rights, remedies, and positions are expressly reserved. The PPA, the corporate guaranty, the letter of credit, and all related credit support arrangements shall be effective and binding only upon the due execution and delivery of definitive agreements in form and substance satisfactory to the parties and, as applicable, their respective lenders.
We trust that the foregoing adequately sets forth Seller's position with respect to credit support under the PPA. We are, of course, available to discuss any aspect of this letter at your convenience, and we welcome the opportunity to work with you and your client to finalize the credit support terms on an expedited basis. Should you have any questions, please do not hesitate to contact me directly.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Patricia Dunmore Partner
Direct Dial: (713) 555-7244
Email: pdunmore@calderwoodharkness.com
cc:
Rachel Muñoz, General Counsel, Calloway-Briggs Renewables Inc. Janet Okafor, SVP, Origination & Commercial, Calloway-Briggs Renewables Inc. Derek Engstrom, VP, Project Finance & Treasury, Calloway-Briggs Renewables Inc. Brett Callahan, Calderwood & Harkness LLP Helen Nakamura, Calderwood & Harkness LLP
Enclosures:
(1) Exhibit C — Form of Guaranty (Buyer Corporate Guaranty) (previously circulated July 14, 2025) (2) Exhibit D — Form of Letter of Credit (Seller Availability LC) (previously circulated July 14, 2025)

CALDERWOOD & HARKNESS LLP

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