CALDERWOOD & HARKNESS LLP
MATTER OPENING MEMORANDUM
PRIVILEGED & CONFIDENTIAL — INTERNAL ADMINISTRATION
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1. Matter Summary
Matter Name: Calloway-Briggs Renewables Inc. — Solar PPA with Meridian DataCore Solutions Inc. (Saguaro Flats Solar Project)
Matter Number: 1015-00002
Date Opened: July 8, 2025
Date of Engagement: June 20, 2025 (engagement letter effective)
Nature of Matter: Representation of Calloway-Briggs Renewables Inc. ("CBR" or the "Client") as Seller in the structuring, drafting, and negotiation of a long-term power purchase agreement (the "PPA") with Meridian DataCore Solutions Inc. ("Meridian" or the "Buyer") for the full electrical output of the Saguaro Flats Solar Project, a 150 MWac (195 MWdc) ground-mounted single-axis tracking solar photovoltaic generating facility located in Pecos County, Texas (the "Project"). The PPA is structured as a virtual (financial) power purchase agreement, also referred to as a contract for differences ("CfD"), settling against the ERCOT West Hub price. The engagement also encompasses ancillary coordination with CBR's project-finance lenders, led by Tralvendo National Bank, N.A. as Administrative Agent, regarding PPA bankability requirements, lender consent provisions, and step-in rights.
Aggregate Deal Value: Approximately $140,000,000 (nominal, over a 20-year term), based on an initial contract price of $20.00/MWh and P50 annual net generation of 350,000 MWh.
Governing Law: The PPA will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles.
Dispute Resolution: Binding arbitration administered by the American Arbitration Association ("AAA") in New York, New York, under the AAA Commercial Arbitration Rules then in effect. The arbitration panel shall consist of three (3) arbitrators. Notwithstanding the foregoing, either party may seek injunctive or other equitable relief in the Supreme Court of the State of New York, County of New York, or the United States District Court for the Southern District of New York, and each party shall consent to personal jurisdiction in such courts for the limited purpose of obtaining such relief.
2. Client Information
Client Full Legal Name: Calloway-Briggs Renewables Inc.
Short Name / Defined Term: CBR / Calloway-Briggs / "Client"
Entity Type: Corporation organized and existing under the laws of the State of Delaware.
Employer Identification Number (EIN): 82-4637201
Principal Place of Business / Headquarters: 4200 Travis Street, Suite 1800, Houston, Texas 77002
Registered Agent (State of Delaware): Capitol Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, Delaware 19904
Business Description: Calloway-Briggs Renewables Inc. is an independent renewable energy developer and operator engaged in the development, construction, ownership, and long-term operation of utility-scale solar photovoltaic and wind power generating facilities. CBR was founded in 2011 and currently owns and operates approximately 1.8 GW (nameplate) of solar and wind assets located within the Electric Reliability Council of Texas ("ERCOT"), the Southwest Power Pool ("SPP"), and the Midcontinent Independent System Operator ("MISO") market regions. The company's portfolio includes both contracted and merchant generation assets, with the majority of revenue derived from long-term PPAs with investment-grade corporate, utility, and municipal counterparties.
Financial Profile: For the fiscal year ended December 31, 2024, CBR reported consolidated revenue of approximately $312 million and adjusted EBITDA of approximately $118 million. CBR carries an investment-grade corporate family rating of BBB− from Pinnacle Ratings Group, a nationally recognized statistical rating organization. The company's balance sheet reflects a conservative capital structure, with total net leverage of approximately 3.5x adjusted EBITDA at year-end 2024.
Equity Sponsor: Ridgepoint Capital Partners LP, a Delaware limited partnership and Houston-based infrastructure-focused private equity fund, owns 68% of the outstanding common equity of CBR. The remaining 32% is held by CBR's management and co-founders. Alan Driscoll serves as Managing Partner of Ridgepoint Capital Partners LP. Ridgepoint manages approximately $4.2 billion in infrastructure-related assets across energy, transportation, and utilities sectors.
Key Client Personnel:
Auditor: Aldgate & Pryor CPAs LLP, Houston, Texas (external auditors for CBR consolidated financial statements).
3. Project Company
Full Legal Name: Saguaro Flats Solar LLC
Entity Type: Limited liability company organized and existing under the laws of the State of Delaware. Saguaro Flats Solar LLC is 100% owned, directly, by Calloway-Briggs Renewables Inc. as its sole member.
Employer Identification Number (EIN): 93-1284506
Registered Agent (State of Delaware): Capitol Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, Delaware 19904
Manager: Calloway-Briggs Renewables Inc. serves as the sole Manager of Saguaro Flats Solar LLC pursuant to the company's Amended and Restated Limited Liability Company Agreement.
Role in Transaction: Saguaro Flats Solar LLC is a special-purpose project company organized for the exclusive purpose of owning, developing, constructing, operating, and maintaining the Saguaro Flats Solar Project. The Project Company will serve as the contractual "Seller" under the PPA. Consistent with standard project-finance practice, the Project Company's organizational documents restrict its activities to Project-related purposes, prohibit it from incurring indebtedness or engaging in businesses unrelated to the Project, and include customary separateness covenants designed to support the Project Company's status as a bankruptcy-remote entity. All Project assets—including the PPA, the ground lease, the EPC contract, the interconnection agreement, and real and personal property—will be held at the Project Company level and will serve as collateral for the senior secured construction-to-term loan facility to be provided by the Tralvendo-led lender group.
4. Counterparty Information
Counterparty Full Legal Name: Meridian DataCore Solutions Inc.
Short Name / Defined Term: Meridian / MDS / "Buyer" / "Counterparty"
Entity Type: Corporation organized and existing under the laws of the State of Delaware.
Employer Identification Number (EIN): 47-5918320
Principal Place of Business / Headquarters: 700 Lakeshore Parkway, Building C, Austin, Texas 78746
Public Company Status: Meridian DataCore Solutions Inc. is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "MDCS." As of the end of June 2025, Meridian's market capitalization was approximately $8.2 billion. Meridian is a reporting company under the Securities Exchange Act of 1934 and files periodic reports (Forms 10-K, 10-Q, and 8-K) with the U.S. Securities and Exchange Commission.
Business Description: Meridian is a hyperscale and co-location data center operator headquartered in Austin, Texas. The company designs, develops, and operates purpose-built data center campuses serving cloud computing, enterprise IT, and artificial intelligence workloads. As of its most recent public filing, Meridian operates 14 data center campuses with a total critical IT load capacity of approximately 480 MW, located across Texas, Virginia, Ohio, and Nevada. Meridian has publicly disclosed corporate sustainability targets that include sourcing 100% of its electricity consumption from renewable sources by 2030, which is understood to be a primary commercial driver for the Buyer's interest in the Saguaro Flats PPA.
Credit Profile: Investment-grade corporate credit rating of BBB from Pinnacle Ratings Group. For the fiscal year ended December 31, 2024, Meridian reported total revenue of approximately $2.1 billion and adjusted EBITDA of approximately $740 million. Meridian's credit profile is considered strong relative to the obligations anticipated under the PPA, and its investment-grade status should be sufficient to satisfy lender requirements for counterparty creditworthiness, subject to appropriate credit support provisions.
Key Counterparty Personnel:
Counterparty Counsel: Hargrove & Linden LLP, 300 Congress Avenue, Suite 2200, Austin, Texas 78701.
• Lead Partner: Evelyn Crumveth, Energy & Commercial Transactions Practice Group
• Associate: Ryan Matsuda
Hargrove & Linden LLP is a well-regarded Texas-based firm with a substantial energy transactions practice. We have previously negotiated opposite Evelyn Crumveth's team on two prior transactions (unrelated clients) and have found them to be thorough but commercially reasonable negotiators. We anticipate a professional and efficient negotiation process.
5. Calderwood & Harkness Engagement Team
The following attorneys have been staffed to this matter and authorized to record time and incur disbursements against Matter No. 1015-00002:
Firm Office: Calderwood & Harkness LLP, 1100 Louisiana Street, Suite 4500, Houston, Texas 77002.
All members of the engagement team are based in the firm's Houston office. Patricia Dunmore will serve as the primary point of contact for the Client's General Counsel, Rachel Muñoz. Brett Callahan will handle day-to-day communications with the Client's commercial team (Janet Okafor and Derek Engstrom) and with Buyer's counsel (Evelyn Crumveth and Ryan Matsuda of Hargrove & Linden LLP).
6. Project Overview — Saguaro Flats Solar Project
6.1 Project Technology and Capacity
The Saguaro Flats Solar Project is a ground-mounted, single-axis tracking solar photovoltaic generating facility. The system design employs horizontal single-axis trackers with bifacial monocrystalline silicon photovoltaic modules. Key capacity parameters are as follows:
• Nameplate Capacity (DC): 195 MWdc
• AC Capacity (Inverter Rating): 150 MWac
• DC:AC Ratio: Approximately 1.30
The DC:AC ratio of 1.30 reflects industry-standard inverter loading practices for utility-scale solar facilities in high-irradiance environments such as West Texas, designed to maximize energy yield during morning, evening, and sub-optimal irradiance periods while accepting limited clipping losses during peak midday hours.
6.2 Energy Production Estimate
Estimated Annual Net Generation (P50): 350,000 MWh per year.
The P50 energy production estimate was prepared by Heliograph Energy Consulting LLC, an independent solar resource assessment firm based in Denver, Colorado. The Heliograph report was issued in January 2025 and is based on a long-term satellite-derived solar resource dataset (20+ years), site-specific soiling assumptions, and modeled system losses including inverter efficiency, transformer losses, soiling, mismatch, and degradation. The P50 estimate represents a 50th-percentile exceedance probability — i.e., there is a 50% probability that actual annual generation will meet or exceed 350,000 MWh in any given year. P90 (1-year) generation is estimated at approximately 318,000 MWh. P99 (1-year) generation is estimated at approximately 290,000 MWh. The lender group's Independent Engineer, Gresham Engineering Advisors Inc., is expected to conduct an independent review of the Heliograph report as part of the lender due diligence process.
6.3 Project Site
The Project is located on a site comprising approximately 1,400 acres of leased land in Pecos County, Texas, situated along FM Road 1776, approximately 12 miles southeast of the town of Fort Stockton, Texas 79735. The site is characterized by flat-to-gently-rolling terrain with minimal vegetation, well-suited for utility-scale solar development. The area benefits from some of the highest solar irradiance levels in the continental United States, with average global horizontal irradiance (GHI) of approximately 5.8 kWh/m²/day.
Ground Lease: CBR has executed a 35-year ground lease (with extension options) with Redrock Mesa Ranch LP, a Texas limited partnership, for the exclusive use of the Project site. The ground lease provides for an initial term co-extensive with the PPA term and useful life of the facility, and includes customary provisions for lender leasehold mortgagee protections, estoppel certificates, and non-disturbance agreements. The ground lease is expected to be collaterally assigned to the lender group as part of the project finance security package.
6.4 EPC Contractor
Contractor: Sunbelt Power Construction LLC, 2100 Industrial Blvd., San Antonio, Texas 78221.
Contract Structure: Fixed-price, date-certain, turnkey engineering, procurement, and construction ("EPC") contract.
EPC Contract Value: $142,500,000.
The EPC contract with Sunbelt Power Construction LLC covers the complete design, engineering, procurement of materials and equipment (including modules, trackers, inverters, transformers, and balance-of-system components), civil works, construction, commissioning, testing, and achievement of substantial completion milestones through commercial operation. The EPC contract includes customary performance guarantees including minimum capacity guarantee and performance ratio guarantee, backed by liquidated damages. Sunbelt Power Construction LLC has a track record of constructing over 3 GW of utility-scale solar facilities in ERCOT and is a contractor approved by the Tralvendo lender group.
6.5 Total Project Cost
Total Estimated Project Cost: Approximately $154,300,000, comprised of the following:
6.6 Interconnection. Point of Interconnection: Ft. Stockton 345 kV Substation, Pecos County, Texas.
Transmission Service Provider: West Texas Wires LLC.
ERCOT Queue Position: ERCOT-GI-2024-0437.
The Project has completed the ERCOT Full Interconnection Study process (study completed March 14, 2025) and has executed a Large Generation Interconnection Agreement ("LGIA") with West Texas Wires LLC and ERCOT as of May 15, 2025. The LGIA specifies the facilities and network upgrades required to interconnect the Project at the Ft. Stockton 345 kV Substation. Estimated interconnection costs, including CBR's share of network upgrade costs, are approximately $2.9 million as reflected in the project cost budget above. The interconnection facilities are expected to be completed and available for energization in advance of the target COD of April 1, 2027.
6.7 Independent Engineer
Independent Engineer: Gresham Engineering Advisors Inc., 8700 Shoal Creek Blvd., Suite 350, Austin, Texas 78757.
Gresham Engineering Advisors Inc. has been retained by Tralvendo National Bank, N.A., acting on behalf of the lender group, to serve as the Independent Engineer for the Project. Gresham will perform an independent technical review of the Project's design, energy yield estimates, EPC contract, O&M arrangements, equipment selection, and overall technical feasibility. The Independent Engineer's report will be a condition precedent to closing the construction loan facility.
6.8 Insurance. Insurance Broker: Fieldstone Risk Advisors LLC, Houston, Texas.
Insurance Carriers:
• Builder's Risk / Property Insurance: Commonwealth Mutual Insurance Co.
• General Liability Insurance: Ridgeway Casualty Group Inc.
The insurance program is being structured by Fieldstone Risk Advisors in coordination with the Tralvendo lender group's insurance advisor to ensure compliance with the insurance requirements set forth in the credit agreement. The insurance program will include, at minimum, builder's risk coverage during the construction period (transitioning to property / all-risk coverage upon COD), commercial general liability, excess / umbrella liability, workers' compensation and employer's liability (required of EPC contractor and O&M contractor), and business interruption / loss of revenue coverage.
6.9 Commercial Operation and Useful Life
Expected Commercial Operation Date ("COD"): April 1, 2027.
Estimated Useful Life: 35+ years.
PPA Term: 20 years from COD (April 1, 2027 through March 31, 2047).
The expected COD of April 1, 2027 is predicated on issuance of Notice to Proceed ("NTP") to Sunbelt Power Construction LLC on or about October 15, 2025, following closing of the Tralvendo construction loan facility on the target date of October 1, 2025. The construction schedule anticipates an approximately 18-month construction period. The EPC contract includes schedule guarantees and delay liquidated damages to protect CBR against late delivery.
7. Transaction Overview — PPA Key Terms
7.1 Contract Structure
The PPA is structured as a virtual (financial) power purchase agreement, also commonly referred to as a contract for differences or "CfD." Under this structure, there is no physical delivery of electricity from Seller to Buyer. Rather, Seller sells the electricity generated by the Project into the ERCOT wholesale market and receives the applicable spot market settlement price at the ERCOT West Hub. Simultaneously, Seller and Buyer enter into a financial settlement arrangement under which:
(a) For each MWh of Delivered Energy (as defined in the PPA), Buyer pays Seller the Contract Price;
(b) Seller receives the applicable Settlement Hub Price (ERCOT West Hub) for each MWh delivered to the grid;
(c) The net settlement amount for each settlement period is calculated as the difference between the Contract Price and the Hub Price, multiplied by the quantity of Delivered Energy in MWh; and
(d) If the Contract Price exceeds the Hub Price, Buyer pays Seller the difference. If the Hub Price exceeds the Contract Price, Seller pays Buyer the difference.
This CfD structure is commonly used for corporate renewable energy PPAs, particularly in ERCOT, where the wholesale market structure facilitates financial settlement without the need for physical delivery or retail electric service arrangements. The structure allows Meridian to claim the environmental attributes (RECs) associated with the Project's output for purposes of its corporate sustainability commitments while maintaining its existing electricity supply arrangements.
Settlement Hub: ERCOT West Hub.
7.2 PPA Term
The PPA term shall be twenty (20) years, commencing on the Commercial Operation Date and expiring on the twentieth (20th) anniversary thereof. Based on the expected COD of April 1, 2027, the PPA term is anticipated to run from April 1, 2027 through March 31, 2047.
7.3 Contract Value
Aggregate Nominal Contract Value: $140,000,000
Average Annual Contract Value: $7,000,000 per year ($140,000,000 ÷ 20 years)
Expected Contracted Volume (P50 basis): 350,000 MWh per year × 20 years = 7,000,000 MWh total over the PPA term.
Blended Average Price: $140,000,000 ÷ 7,000,000 MWh = $20.00/MWh (nominal blended average over the PPA term).
7.4 Contract Price and Escalator
Initial Contract Price: $20.00 per MWh (fixed for Contract Years 1 through 5).
Annual Escalator (Contract Years 6 through 20): 1.50% per annum, compounding annually on each anniversary of the COD beginning in Contract Year 6. The escalated Contract Prices at select points during the PPA term are estimated as follows:
The annual escalator is intended to provide Seller with a partial hedge against anticipated increases in operations and maintenance costs, property taxes, insurance premiums, and other recurring operating expenses over the 20-year term of the PPA.
7.5 Seller Credit Support
The Seller shall provide credit support to the Buyer in the form of an irrevocable standby letter of credit issued by Tralvendo National Bank, N.A. (the "Seller LC") in the initial amount of $7,000,000, which amount is equal to approximately one (1) year of estimated annual PPA revenue at P50 production levels and the initial Contract Price. The Seller LC shall reduce to $3,500,000 on the fifth (5th) anniversary of the COD, provided that no Seller Event of Default is then outstanding and uncured. The Seller LC shall be in a form customary for transactions of this type and acceptable to the Buyer, and shall be drawable upon the occurrence of specified Seller default triggers set forth in the PPA.
7.6 Buyer Credit Support (Seller's Request — Open Issue)
Seller has requested that Buyer provide credit support in the form of a direct corporate guaranty from Meridian DataCore Solutions Inc. (the parent entity and PPA counterparty itself being the direct obligor, no subsidiary guaranty is needed unless the PPA is assigned to a subsidiary) capped at $14,000,000, equal to approximately two (2) years of estimated annual PPA revenue at P50 production levels and the initial Contract Price. The Seller's request for a Buyer guaranty is based on the long duration of the PPA (20 years) and the need to ensure adequate financial assurance for Seller's revenue stream, particularly for lender bankability purposes. This is a lender-driven requirement as well as a Seller commercial requirement.
Buyer has not yet agreed to provide a guaranty. This remains an open negotiation issue. Given Meridian's investment-grade credit rating (BBB from Pinnacle Ratings Group) and its status as a publicly traded company with significant market capitalization, Buyer may resist providing additional credit support beyond its direct contractual obligations under the PPA. We anticipate that Buyer's counsel will argue that Meridian's balance sheet and public company status provide sufficient credit assurance. This issue will require careful negotiation and may involve alternative structures (e.g., a credit support threshold tied to Buyer's credit rating, with a guaranty or LC triggered only upon a downgrade below investment grade).
7.7 Tax Credits
The Project intends to qualify for the federal Investment Tax Credit ("ITC") under Internal Revenue Code Section 48 at the 30% rate, which includes the base credit of 6% plus the 5x adder for meeting prevailing wage and apprenticeship requirements. Based on the EPC contract value of $142,500,000, the estimated ITC value is approximately $42,750,000. CBR and its tax advisors are also evaluating the potential applicability of additional ITC adders, including the domestic content bonus (10% adder) and the energy community bonus (10% adder), which could increase the effective ITC rate to as high as 50%. Samuel Reeves of our Tax Practice Group will advise on ITC eligibility and structuring considerations, including the interaction between the virtual PPA / CfD structure and ITC eligibility under the applicable Treasury regulations and IRS guidance.
8. Key Negotiation Issues
This section identifies the principal open negotiation issues between Seller and Buyer that the engagement team should be prepared to address during the PPA drafting and negotiation process. These issues were identified during initial commercial discussions between Janet Okafor (CBR) and Nathan Gilroy (Meridian) and have been communicated to the Calderwood & Harkness team by Client's General Counsel, Rachel Muñoz.
8.1 Availability Guarantee
The parties have divergent positions on the scope and consequences of the availability guarantee, which is a critical performance metric in the PPA and a key focus for both the Buyer (seeking assurance of reliable Project performance) and the lender group (seeking to ensure that availability guarantees and associated liquidated damages do not create undue risk to debt service coverage).
Guaranteed Availability Threshold:
• Seller's Proposed Position: Guaranteed availability of ≥ 95.0% on a rolling 12-month basis. Availability is to be measured as Available Hours ÷ Period Hours × 100, excluding periods of Force Majeure, curtailment ordered by ERCOT or the transmission provider, and scheduled maintenance up to a maximum of 200 hours per year.
• Buyer's Proposed Position: Guaranteed availability of ≥ 97.0% on a rolling 12-month basis. Buyer has not yet provided detailed comments on the proposed exclusions for Force Majeure, curtailment, and scheduled maintenance, but we anticipate Buyer will seek to narrow the scheduled maintenance exclusion and limit or eliminate the curtailment exclusion.
Availability Liquidated Damages Rate:
• Seller's Proposed Position: Availability liquidated damages ("Availability LDs") at a rate of 0.50% of trailing 12-month revenue for each 1.0% shortfall below the guaranteed availability threshold. At Year 1 P50 revenue of approximately $7,000,000, this would equate to approximately $35,000 per 1.0% shortfall.
• Buyer's Proposed Position: Availability LDs at a rate of 1.00% of trailing 12-month revenue for each 1.0% shortfall below the guaranteed availability threshold. At Year 1 P50 revenue, this would equate to approximately $70,000 per 1.0% shortfall.
Availability Liquidated Damages Cap:
• Seller's Proposed Position: Aggregate Availability LDs capped at 5.0% of trailing 12-month revenue in any rolling 12-month measurement period. At Year 1 P50 revenue, the cap would be approximately $350,000.
• Buyer's Proposed Position: Aggregate Availability LDs capped at 10.0% of trailing 12-month revenue in any rolling 12-month measurement period. At Year 1 P50 revenue, the cap would be approximately $700,000.
Termination Trigger for Chronic Underperformance:
• Seller's Proposed Position: Buyer may terminate the PPA only if availability falls below 85.0% in any two (2) consecutive rolling 12-month periods and Seller fails to cure the shortfall within a reasonable cure period (Seller proposes 180 days following the end of the second consecutive 12-month measurement period). This standard provides Seller with adequate time and opportunity to address performance issues — which may involve equipment replacement, warranty claims against the EPC contractor, or seasonal variations — before facing termination.
• Buyer's Proposed Position: Buyer may terminate the PPA if availability falls below 90.0% in any single rolling 12-month period. This is a significantly more aggressive termination trigger and would expose Seller (and the lender group) to termination risk from a single underperforming year, which could result from range causes including equipment failure, supply chain delays for replacement parts, or unusual weather patterns.
Calderwood & Harkness Assessment: The availability guarantee is likely to be the most contentious performance-related provision in the negotiation. From Seller's perspective, it is critical to maintain the 95.0% availability threshold and ensure that the exclusions for Force Majeure, curtailment, and scheduled maintenance are robust. The Buyer's proposed 97.0% threshold is above industry norms for utility-scale solar CfD PPAs and may not be achievable on a consistent basis, particularly in early operating years. We recommend that the Seller's initial draft PPA include Seller's preferred positions and that we prepare a detailed availability guarantee analysis, including benchmarking against comparable transactions, to support Seller's positions in negotiations. The lender group will also have views on the availability LD cap and termination trigger, and Helen Nakamura should coordinate with Tralvendo and Whitfield Stroval & Cade on the bankability of various availability guarantee formulations.
8.2 Change of Control
Change of Control of Seller (Saguaro Flats Solar LLC):
• Seller's Proposed Position: A transfer of more than 50% of the direct or indirect equity interests in Saguaro Flats Solar LLC to a person or entity that is not an Affiliate of CBR shall constitute a "Change of Control" of Seller. A Change of Control requires thirty (30) days' prior written notice to Buyer. Buyer's sole remedy upon a Change of Control is the right to terminate the PPA, which right may be exercised only if the successor or transferee fails to satisfy a Minimum Credit Threshold, defined as (i) a tangible net worth of at least $100,000,000, or (ii) an investment-grade credit rating from a nationally recognized statistical rating organization. If the successor meets the Minimum Credit Threshold, the Change of Control shall be deemed consented to by Buyer, and the PPA shall continue in full force and effect.
• Buyer's Proposed Position: Any Change of Control of Seller requires Buyer's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. In addition, Buyer has proposed a consent fee of $1,500,000 payable to Buyer upon any Change of Control. Buyer may terminate the PPA within sixty (60) days following receipt of the Change of Control notice if Buyer does not consent to the proposed Change of Control.
Reciprocal Change of Control of Buyer:
• Seller's Proposed Position: Seller has requested a reciprocal Change of Control provision applicable to Buyer. If Buyer undergoes a Change of Control (defined as a transfer of more than 50% of voting equity or a merger, consolidation, or similar transaction resulting in a change in the controlling person of Buyer) and the successor entity's credit rating falls below BBB− (investment grade) from a nationally recognized statistical rating organization, Seller shall have the right to demand that the successor provide additional credit support in the form of an irrevocable standby letter of credit in an amount equal to twelve (12) months' estimated payments under the PPA (approximately $7,000,000 at initial pricing). If the successor fails to provide such credit support within thirty (30) days of Seller's demand, Seller may terminate the PPA upon written notice.
Lender Requirements:
• The credit agreement between Saguaro Flats Solar LLC and Tralvendo National Bank, N.A. (as Administrative Agent) is expected to require the prior written consent of the Required Lenders (as defined in the credit agreement) for any assignment of the PPA or any Change of Control of Seller. Accordingly, the PPA must include customary project-finance lender provisions, including:
(a) Consent to collateral assignment of the PPA to the Collateral Agent (Tralvendo, on behalf of the lender group);
(b) Step-in rights permitting the lender group (or its designee) to assume Seller's obligations under the PPA upon a Seller default and/or foreclosure on the Project;
(c) Cure rights providing the lender group with notice and an additional cure period to remedy any Seller default prior to Buyer exercising termination rights;
(d) New-PPA right, permitting the lender group (or its designee) to enter into a replacement PPA with Buyer on substantially the same terms if the original PPA is terminated; and
(e) Non-disturbance agreement from Buyer, confirming that Buyer will not terminate the PPA so long as a lender-approved transferee or the lender group's designee is performing Seller's obligations.
Calderwood & Harkness Assessment: The change of control provisions will require careful balancing of Seller's need for flexibility in managing its ownership structure (including potential future sales or portfolio recapitalizations by Ridgepoint Capital Partners LP) with Buyer's legitimate interest in ensuring continuity and creditworthiness of its PPA counterparty. Buyer's proposed $1,500,000 consent fee is atypical in the virtual PPA market and should be resisted. The Minimum Credit Threshold approach proposed by Seller is more aligned with market practice for corporate renewable PPAs. Helen Nakamura should confirm with Tralvendo and its counsel that Seller's proposed change of control framework is consistent with the anticipated terms of the credit agreement, and should coordinate to ensure that the lender-required provisions (consent to assignment, step-in rights, cure rights) are included in the initial draft PPA.
8.3 Other Open Issues (To Be Tracked)
The following additional negotiation issues have been identified during preliminary commercial discussions and will require attention during the PPA drafting and negotiation process:
Curtailment Risk Allocation: The allocation of curtailment risk — including economic curtailment, reliability curtailment ordered by ERCOT, and transmission-related curtailment — is a significant open issue. In a virtual PPA / CfD structure, curtailment affects Seller's physical output (and therefore the volume of MWh subject to settlement), while the financial settlement is based on actual Delivered Energy. Seller will seek broad curtailment exclusions from the availability guarantee and performance metrics, while Buyer may seek to shift curtailment risk to Seller or impose curtailment caps above which Seller bears the economic consequences. The ERCOT West Texas congestion environment adds complexity to this issue.
Force Majeure Definitions and Scope: The definition and scope of Force Majeure events will require careful negotiation. Seller will seek a broad Force Majeure definition covering natural disasters, grid outages, governmental actions, pandemics, supply chain disruptions, and other events beyond Seller's reasonable control. Buyer will likely seek to narrow the Force Majeure definition and exclude events that are foreseeable, insurable, or within Seller's control (e.g., equipment failure, subcontractor performance). The duration of Force Majeure relief and the right of either party to terminate the PPA following an extended Force Majeure event (typically 12–18 months) will also be negotiated.
Buyer Guaranty: As discussed in Section 7.6, Buyer has not yet agreed to provide a corporate guaranty or other credit support. This remains a significant open commercial issue, and Seller's lenders will have views on the minimum credit support required from Buyer to satisfy bankability requirements.
These issues will be tracked in the negotiation issues tracker to be prepared by Brett Callahan and David Stanton, and will be the subject of a detailed negotiation strategy memorandum to be circulated to the engagement team prior to the first draft PPA circulation target date of July 14, 2025.
9. Project Finance — Lender Coordination
9.1 Loan Facility Overview
Facility: Senior secured construction-to-term loan facility in the aggregate principal amount of $108,000,000.
Administrative Agent and Lead Arranger: Tralvendo National Bank, N.A., 600 Main Street, Suite 3000, Dallas, Texas 75202. Key contact: Diane Roessler, Director, Project Finance.
9.2 Syndicate Lenders
The loan facility will be syndicated among the following lenders:
9.3 Facility Terms
Tenor: The loan facility will consist of a construction loan sub-facility with a term of approximately 18 months (from first draw through COD conversion) and a term loan sub-facility with an approximately 18-year amortization schedule commencing upon conversion at COD. The total tenor from first draw to final maturity is approximately 19.5 years.
Interest Rate:
• Construction Period: Term SOFR (as published by the Federal Reserve Bank of New York) plus 200 basis points.
• Term Loan Period (post-COD conversion): Term SOFR plus 175 basis points.
Target Debt/Equity: 70/30, reflecting:
• Debt: $108,000,000 (approximately 70% of total project cost)
• Equity: approximately $46,300,000 (approximately 30% of total project cost)
• Total Project Cost: approximately $154,300,000
9.4 Debt Service Coverage Ratio Covenant
Minimum DSCR Covenant: 1.30x.
Projected DSCR: Approximately 1.35x at P50 production levels and Year 1 Contract Price, based on:
• Annual PPA Revenue (P50, Year 1): $7,000,000 (350,000 MWh × $20.00/MWh)
• Estimated Annual Debt Service: approximately $5,200,000 (principal and interest)
The projected DSCR of 1.35x provides a modest cushion above the 1.30x minimum covenant level. Actual DSCR will fluctuate based on production levels (driven by weather variability), market settlement prices (relevant to the CfD financial settlement), operating expenses, and the escalating Contract Price. The lender group and Gresham Engineering Advisors will model DSCR projections across multiple production scenarios (P50, P75, P90, P99) and interest rate sensitivities as part of the credit approval process.
9.5 Lender's Counsel
Firm: Whitfield Stroval & Cade LLP, 51 West 52nd Street, 30th Floor, New York, New York 10019.
Lead Partner: Philip Thornton.
Whitfield Stroval & Cade LLP has been retained by Tralvendo National Bank, N.A. as lender's counsel to advise the lender group in connection with the negotiation and documentation of the credit agreement, security documents, and related financing agreements. We have previously worked with Philip Thornton and his team on multiple project finance transactions and anticipate a constructive working relationship. Helen Nakamura will serve as the primary point of contact between our team and Whitfield Stroval & Cade on PPA bankability issues and lender-required PPA provisions.
9.6 Independent Engineer
Firm: Gresham Engineering Advisors Inc., 8700 Shoal Creek Blvd., Suite 350, Austin, Texas 78757.
Gresham Engineering Advisors Inc. has been retained by Tralvendo on behalf of the lender group to serve as the Independent Engineer for the Project. See Section 6.7 above for additional details.
9.7 PPA Bankability
The execution of a bankable PPA is a condition precedent to closing of the construction loan facility. "Bankability" in this context requires that the PPA contain provisions satisfactory to the lender group and its counsel, including without limitation:
(a) Consent to Collateral Assignment: A provision in the PPA permitting Seller to collaterally assign its rights and interests under the PPA to the Collateral Agent for the benefit of the lender group, without requiring Buyer's consent (or with Buyer's consent provided in advance in the PPA or a separate Lender Consent Agreement);
(b) Step-In Rights: A provision permitting the Collateral Agent (or its designee, including a foreclosure purchaser) to step into Seller's position under the PPA upon a Seller default and/or foreclosure on the Project assets;
(c) Cure Rights: A provision requiring Buyer to provide written notice to the Collateral Agent of any Seller default under the PPA and to afford the Collateral Agent an additional cure period (typically 30–60 days beyond Seller's cure period, or such longer period as is reasonably necessary to effectuate a foreclosure) before exercising any termination right;
(d) New-PPA Right: A provision entitling the Collateral Agent (or its designee) to enter into a new PPA with Buyer on substantially the same terms as the original PPA if the original PPA is rejected or terminated in connection with a Seller bankruptcy or foreclosure;
(e) Minimum DSCR-Compliant Terms: PPA pricing, term, and risk allocation provisions that are consistent with the lender group's financial model and DSCR projections, ensuring that PPA revenue is sufficient to service the debt obligations under the credit agreement; and
(f) Acceptable Change of Control Restrictions: Change of control provisions that do not unduly restrict the lender group's ability to exercise its remedies, including foreclosure and transfer of the Project to a new owner/operator.
Helen Nakamura will coordinate with Diane Roessler (Tralvendo) and Philip Thornton (Whitfield Stroval & Cade) to identify and resolve any PPA bankability issues as early as possible in the drafting process. It is anticipated that the lender group will require a Lender Consent Agreement (also known as a Consent to Collateral Assignment of PPA) as a standalone document to be executed by Seller, Buyer, and the Collateral Agent concurrently with or promptly following execution of the PPA.
9.8 Target Loan Closing
Target Loan Closing Date: October 1, 2025.
Achievement of the target loan closing date is dependent on, among other things, execution of the PPA on or before the target PPA execution date of September 15, 2025, completion of the lender's due diligence process (including the Independent Engineer's report), finalization of the credit agreement and security documents, and satisfaction of all other conditions precedent to the initial advance under the construction loan facility.
10. Regulatory and Permitting Status
The following regulatory approvals, permits, and agreements have been obtained or are in process for the Project:
ERCOT Interconnection:
• ERCOT Full Interconnection Study: Completed March 14, 2025. The study confirmed the feasibility of interconnecting the Project at the Ft. Stockton 345 kV Substation with identified network upgrades.
• Large Generation Interconnection Agreement ("LGIA"): Executed May 15, 2025, by and among Saguaro Flats Solar LLC, West Texas Wires LLC (as Interconnecting Transmission Service Provider), and ERCOT. ERCOT Queue Position: ERCOT-GI-2024-0437.
County Land Use Approval:
• Pecos County Conditional Use Permit: Approved February 10, 2025, by the Pecos County Commissioners Court. Permit No. CUP-2025-012. The Conditional Use Permit authorizes the construction and operation of a utility-scale solar photovoltaic generating facility on the Project site, subject to standard conditions regarding setbacks, screening, decommissioning, and road maintenance.
Environmental / State Permitting:
• Texas Commission on Environmental Quality ("TCEQ"): A Stormwater Pollution Prevention Plan ("SWP3") has been prepared and submitted in connection with the Project's construction activities. No individual TCEQ environmental permit is required for the Project. The Project does not involve air emissions, water discharges, or hazardous waste generation that would trigger individual TCEQ permitting requirements.