POWER PURCHASE AGREEMENT
Seller's Revised Draft — Second Draft
August 11, 2025
between
SAGUARO FLATS SOLAR LLC a Delaware limited liability company ("Seller")
and
MERIDIAN DATACORE SOLUTIONS INC. a Delaware corporation ("Buyer")
for the
SAGUARO FLATS SOLAR PROJECT Pecos County, Texas
Marked to show changes from Seller's First Draft dated July 14, 2025, reflecting Seller's response to Buyer's redline received August 1, 2025. Tracked changes are indicated by and notations throughout this document. Clean provisions reflect terms carried forward without change from the First Draft.
Prepared by Calderwood & Harkness LLP, counsel to Seller.
TABLE OF CONTENTS
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POWER PURCHASE AGREEMENT
This Power Purchase Agreement (this "Agreement") is entered into as of the date of execution set forth on the signature page hereto (such date, the "Execution Date"), by and between Saguaro Flats Solar LLC, a Delaware limited liability company ("Seller"), and Meridian DataCore Solutions Inc., a Delaware corporation ("Buyer"). Seller and Buyer are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Seller is a Delaware limited liability company formed for the purpose of developing, constructing, owning, and operating the Facility (as defined herein);
WHEREAS, Seller is managed by Calloway-Briggs Renewables Inc., a Delaware corporation ("CBR"), which serves as the sole manager of Seller;
WHEREAS, Seller intends to develop a ground-mounted single-axis tracking solar photovoltaic generating facility with a nameplate capacity of approximately 195 MWdc / 150 MWac, to be located in Pecos County, Texas (the "Facility" or the "Saguaro Flats Solar Project"), as more particularly described in Exhibit A attached hereto;
WHEREAS, Buyer is a Delaware corporation listed on the Nasdaq Stock Market (ticker: MDCS) engaged in the business of operating hyperscale and co-location data centers throughout the United States;
WHEREAS, Buyer desires to purchase, and Seller desires to sell, the Energy (as defined herein) produced by the Facility on the terms and conditions set forth herein;
WHEREAS, this Agreement is structured as a virtual power purchase agreement (i.e., a contract for differences) settling financially at the ERCOT West Hub, and the Parties intend that settlement under this Agreement shall occur on a purely financial basis without the physical delivery of electric energy from Seller to Buyer;
WHEREAS, Seller intends to finance the Facility through a senior secured construction-to-term loan facility provided by a syndicate of lenders led by Tralvendo National Bank, N.A. as Administrative Agent, and requires this Agreement to satisfy customary bankability standards for project-financed renewable energy facilities in the Electric Reliability Council of Texas ("ERCOT") market;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS AND INTERPRETATION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings ascribed to them below:
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the direct or indirect ownership of more than fifty percent (50%) of the voting securities or equivalent equity interests of such Person, or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract, or otherwise.
"Agreement" means this Power Purchase Agreement, including all Exhibits and Schedules attached hereto, as the same may be amended, supplemented, or modified from time to time in accordance with the terms hereof.
"Available Hours" means the total number of hours in the applicable Measurement Period during which the Facility is capable of generating Energy at a level consistent with prevailing solar irradiance conditions, excluding (a) hours during which the Facility is unable to generate Energy due to a Force Majeure event, (b) hours during which a Curtailment Event is in effect, and (c) hours of Scheduled Maintenance, up to the Scheduled Maintenance Allowance.
"Availability" means, for any Measurement Period, the quotient of (a) Available Hours divided by (b) Period Hours, multiplied by one hundred (100), expressed as a percentage, measured on a rolling twelve (12)-month basis.
"Availability Guarantee" means the guaranteed minimum Availability level specified in Section 4.4(a), which is .
"Availability Liquidated Damages" or "Availability LDs" means the liquidated damages payable by Seller to Buyer pursuant to Section 4.4(b) in the event that the Availability of the Facility falls below the Availability Guarantee during any Measurement Period.
"Buyer" means Meridian DataCore Solutions Inc., a Delaware corporation, and its permitted successors and assigns under this Agreement.
"Buyer Credit Support" means the Buyer Guaranty to be provided by Buyer pursuant to Section 10.2 and Exhibit C attached hereto.
"Buyer Guaranty" means the corporate guaranty of Meridian DataCore Solutions Inc. in the form attached hereto as Exhibit C, guaranteeing all payment and performance obligations of Buyer under this Agreement, with a maximum liability cap of Fourteen Million Dollars ($14,000,000).
"Change of Control" has the meaning set forth in Section 13.2(a).
"COD" or "Commercial Operation Date" means the date on which the Facility achieves Commercial Operation in accordance with the requirements set forth in Section 2.4 and Article 8, which date is expected to be April 1, 2027.
"Commercial Operation" means the condition in which the Facility has been completed, has achieved initial synchronization with the ERCOT transmission grid, has completed performance testing to the satisfaction of the Independent Engineer, has all permits in full force and effect, has all required insurance in place, and is capable of generating and delivering Energy to the Settlement Hub on a sustained basis.
"Contract Price" means the price per MWh of Energy as set forth in Section 5.1 and Exhibit B, which is Twenty Dollars ($20.00) per MWh for Contract Years 1 through 5, with a one and one-half percent (1.50%) per annum compounding escalation for Contract Years 6 through 20.
"Contract Year" means each successive twelve (12)-month period commencing on the COD (for Contract Year 1) and on each anniversary of the COD thereafter (for each subsequent Contract Year).
"Contract Value" means the aggregate projected revenue under this Agreement for the remaining Term, calculated as the product of the Expected Annual Generation and the applicable Contract Price for each remaining Contract Year, summed over all such remaining Contract Years.
"Curtailment Event" has the meaning set forth in Section 4.5(a).
"Economic Curtailment Cap" has the meaning set forth in Section 4.5(b).
"Effective Date" means the date on which all Conditions Precedent set forth in Section 2.2 have been satisfied or waived in writing by the applicable Party, which date is targeted to be on or about September 15, 2025.
"Energy" means electric energy generated by the Facility, measured in megawatt-hours (MWh), as recorded by the revenue-grade meters at the Point of Delivery in accordance with ERCOT protocols.
"Environmental Attributes" means any and all credits, benefits, emissions reductions, offsets, allowances, and other attributes of any kind whatsoever (whether or not currently existing or contemplated by law) that are associated with the generation of Energy by the Facility, including renewable energy certificates ("RECs"), carbon credits, carbon offsets, emissions reduction credits, green tags, tradable renewable certificates, and any other environmental or "green" attributes, howsoever entitled, arising from the Facility's generation of Energy using solar photovoltaic technology.
"EPC Contract" means the Engineering, Procurement, and Construction Agreement between Seller and Sunbelt Power Construction LLC for the design, engineering, procurement, construction, and commissioning of the Facility on a fixed-price turnkey basis.
"ERCOT" means the Electric Reliability Council of Texas, or any successor entity performing the functions of the independent system operator for the ERCOT region.
"Execution Date" has the meaning set forth in the preamble.
"Expected Annual Generation" means three hundred fifty thousand (350,000) MWh per Contract Year, representing the P50 energy production estimate prepared by Heliograph Energy Consulting LLC for the Facility.
"Facility" means the Saguaro Flats Solar Project, a ground-mounted single-axis tracking solar photovoltaic generating facility with a nameplate capacity of approximately 195 MWdc / 150 MWac, located in Pecos County, Texas, as more particularly described in Exhibit A.
"Financing Documents" means, collectively, all credit agreements, loan agreements, security agreements, mortgages, deeds of trust, notes, guarantees, intercreditor agreements, and other documents and instruments entered into or delivered in connection with the financing or refinancing of the Facility, including the senior secured construction-to-term loan facility provided by the Financing Parties.
"Financing Parties" means the lenders, agents, arrangers, and other creditors under any Financing Documents, including Tralvendo National Bank, N.A. as Administrative Agent, Osprey Commercial Lending Corp., Grandview Savings Bank, FSB, and Blue Prairie Capital Markets LLC, and their respective successors, assigns, and transferees.
"Force Majeure" has the meaning set forth in Section 12.1.
"Ground Lease" means the ground lease between Redrock Mesa Ranch LP, as landlord, and Seller, as tenant, for the project site, having a term of thirty-five (35) years.
"Guaranteed Availability" means .
"Guaranteed COD Date" has the meaning set forth in Section 2.3.
"Hub Price" means, for any Settlement Period, the applicable real-time settlement price for energy at the Settlement Hub, as published by ERCOT or its successor.
"Independent Engineer" means Gresham Engineering Advisors Inc., as retained by the Financing Parties, or such other independent engineering firm as may be designated by Buyer (at Buyer's cost) pursuant to Section 3.5, as applicable.
"Interconnection Agreement" or "LGIA" means the Large Generation Interconnection Agreement executed on May 15, 2025, relating to ERCOT Queue Position ERCOT-GI-2024-0437, between Seller and West Texas Wires LLC as Transmission Service Provider, as the same may be amended, supplemented, or modified from time to time.
"Investment Tax Credit" or "ITC" means the federal investment tax credit available under Section 48 of the Internal Revenue Code of 1986, as amended (the "IRC"), with respect to the Facility.
"Lender Consent Agreement" means the agreement among Seller, Buyer, and the Administrative Agent in the form attached hereto as Exhibit F, providing the Financing Parties with customary consent and step-in rights with respect to this Agreement.
"Letter of Credit" means the irrevocable standby letter of credit to be issued by Tralvendo National Bank, N.A. (or a substitute issuing bank meeting the requirements set forth in Section 10.1) in the form attached hereto as Exhibit D, in the initial amount of Seven Million Dollars ($7,000,000).
"Measurement Period" means each rolling twelve (12)-month period, measured on a calendar-month basis, commencing on the first day of the calendar month in which the COD occurs and on the first day of each subsequent calendar month during the Delivery Term.
"Minimum Credit Threshold" means (a) a tangible net worth of at least One Hundred Million Dollars ($100,000,000), calculated in accordance with generally accepted accounting principles, or (b) an investment-grade credit rating (i.e., a rating of BBB- or higher, or the equivalent) from a nationally recognized credit rating agency.
"Nasdaq" means The Nasdaq Stock Market LLC.
"Parties" means Seller and Buyer, collectively, and "Party" means either Seller or Buyer, individually.
"Period Hours" means the total number of hours in the applicable Measurement Period.
"Permitted Liens" means (a) liens in favor of the Financing Parties arising under or in connection with the Financing Documents, (b) liens for taxes not yet due and payable or that are being contested in good faith by appropriate proceedings, (c) mechanics', materialmen's, and similar statutory liens arising in the ordinary course of business, (d) easements, rights-of-way, restrictions, encumbrances, and similar encumbrances of record that do not materially interfere with the operation of the Facility, and (e) liens arising under the Ground Lease.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, governmental authority, or other entity.
"Point of Delivery" means the Ft. Stockton 345 kV Substation, located in Pecos County, Texas, which is the point at which Energy generated by the Facility is delivered to the ERCOT transmission grid.
"Prudent Industry Practice" means those practices, methods, standards, and acts that would be employed by a reasonably prudent developer, owner, and operator of a solar photovoltaic generating facility of similar size, type, and location in the ERCOT region, taking into account the manufacturer's recommendations for major equipment, applicable laws, applicable reliability standards, and the requirements of the Interconnection Agreement.
"Scheduled Maintenance" means planned maintenance of the Facility that is scheduled in advance by Seller in accordance with Prudent Industry Practice and applicable manufacturer recommendations.
"Scheduled Maintenance Allowance" means two hundred (200) hours per Contract Year.
"Seller" means Saguaro Flats Solar LLC, a Delaware limited liability company, and its permitted successors and assigns under this Agreement.
"Seller Credit Support" means the Letter of Credit to be provided by Seller pursuant to Section 10.1 and Exhibit D.
"Settlement Hub" means the ERCOT West Hub, as defined and administered by ERCOT.
"Settlement Period" means each calendar month during the Delivery Term.
"Term" has the meaning set forth in Section 2.1.
"Termination Notice" means a written notice of termination delivered by one Party to the other Party in accordance with the terms of this Agreement.
"Termination Payment" has the meaning set forth in Section 9.3.
"Trailing Twelve-Month Revenue" means the aggregate amounts payable to Seller under this Agreement during the applicable Measurement Period, calculated as the sum of all monthly settlement amounts (whether positive or negative from Seller's perspective) for the twelve (12) calendar months constituting such Measurement Period.
"Transmission Service Provider" means West Texas Wires LLC, or any successor entity providing transmission service at the Point of Delivery.
Section 1.2 — Rules of Interpretation
The following rules of interpretation shall apply to this Agreement:
(a) All references in this Agreement to "Articles," "Sections," "Exhibits," and "Schedules" are to Articles, Sections, Exhibits, and Schedules of this Agreement, unless otherwise specified.
(b) The headings and captions in this Agreement are included for convenience of reference only and shall not be used in the interpretation or construction of this Agreement.
(c) Unless the context otherwise requires, words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(d) The word "including" (and its correlatives "include," "includes," and "included") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(e) All references to currency or dollar amounts in this Agreement refer to lawful money of the United States of America.
(f) References to any law, statute, rule, regulation, or ordinance shall be deemed to include all amendments, supplements, successor legislation, and regulations promulgated thereunder, unless the context otherwise requires.
(g) Unless otherwise specified, whenever this Agreement requires any action to be taken or notice to be given within a stated period of days, the first day of the period shall be excluded and the last day of the period shall be included. If the last day of a period falls on a day that is not a Business Day, the period shall be extended to the next succeeding Business Day.
(h) A "Business Day" means any day other than a Saturday, Sunday, or day on which commercial banks in New York, New York, or Houston, Texas, are authorized or required to close.
(i) References to any agreement or instrument shall be deemed to refer to such agreement or instrument as amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms.
(j) The words "hereof," "herein," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
Section 1.3 — Exhibits and Schedules
The following Exhibits are attached to and incorporated into this Agreement by reference:
• Exhibit A — Facility Description and Site
• Exhibit B — Contract Price and Escalation Schedule
• Exhibit C — Form of Guaranty (Buyer Corporate Guarantee)
• Exhibit D — Form of Letter of Credit (Seller Availability LC)
• Exhibit E — Insurance Requirements
• Exhibit F — Form of Lender Consent Agreement
In the event of any conflict or inconsistency between the terms and conditions of the body of this Agreement and any Exhibit or Schedule, the terms and conditions of the body of this Agreement shall control and prevail.
ARTICLE 2 — TERM
Section 2.1 — Term
(a) Effective Date. This Agreement shall become effective on the date on which all of the Conditions Precedent set forth in Section 2.2 have been satisfied or waived in writing by the Party entitled to the benefit thereof (the "Effective Date"). The Parties' target date for the Effective Date is September 15, 2025.
(b) Delivery Term. The delivery term of this Agreement (the "Delivery Term") shall commence on the COD and shall continue for a period of twenty (20) Contract Years from the COD (the "Term"), unless earlier terminated in accordance with the provisions of this Agreement. Based on the expected COD of April 1, 2027, the expected expiration date of the Delivery Term is March 31, 2047.
(c) Pre-COD Obligations. The obligations of the Parties set forth in Article 3 (Facility Development and Construction), Section 2.2 (Conditions Precedent), Section 2.3 (Guaranteed COD), Section 10 (Credit Support), Article 13 (Assignment and Change of Control), Article 16 (Confidentiality), Article 17 (Dispute Resolution), Article 18 (Governing Law), and Article 19 (Miscellaneous), and such other provisions of this Agreement as are necessary to give effect to the foregoing, shall commence on the Execution Date and remain in effect during the period between the Execution Date and the COD.
(d) Survival. Expiration or termination of this Agreement shall not release either Party from any obligation or liability that accrued prior to such expiration or termination, nor shall it affect the survival of any provision that, by its terms or nature, is intended to survive expiration or termination, including those provisions identified in Section 19.8.
Section 2.2 — Conditions Precedent to Effective Date
The Effective Date shall occur upon the satisfaction or written waiver of each of the following conditions precedent:
(a) Execution. This Agreement has been duly executed and delivered by each of Seller and Buyer.
(b) Seller Credit Support. Seller has delivered to Buyer the Letter of Credit in the initial amount of Seven Million Dollars ($7,000,000) in the form of Exhibit D, issued by Tralvendo National Bank, N.A. or another financial institution meeting the credit requirements set forth in Section 10.1.
(c) Buyer Credit Support. Buyer has delivered to Seller the Buyer Guaranty in the form of Exhibit C, with a maximum liability cap of Fourteen Million Dollars ($14,000,000).
(d) Officer's Certificates. Each Party has delivered to the other Party a certificate of an authorized officer of such Party, dated as of the Effective Date, certifying (i) the due authorization, execution, and delivery of this Agreement, (ii) the accuracy of the representations and warranties set forth in Article 6 as of such date, and (iii) the incumbency and specimen signatures of the officers authorized to execute and deliver this Agreement and any other documents to be delivered hereunder.
(e) Lender Consent Agreement. The Lender Consent Agreement in the form of Exhibit F has been duly executed and delivered by Seller, Buyer, and the Administrative Agent.
(f) Legal Opinions. Each Party has delivered to the other Party a legal opinion of its respective outside counsel, addressed to the other Party, in customary form and substance, opining as to the due authorization, execution, delivery, and enforceability of this Agreement.
(g) Insurance. Seller has delivered to Buyer evidence of insurance satisfying the requirements set forth in Exhibit E, including certificates of insurance naming Buyer and the Financing Parties as additional insureds and loss payees, as applicable.
(h) Pecos County Conditional Use Permit. Seller has delivered to Buyer evidence that the Pecos County Conditional Use Permit (CUP-2025-012), approved on February 10, 2025, is in full force and effect and has not been revoked, suspended, or materially modified.
(i) LGIA Execution. Seller has delivered to Buyer evidence that the Large Generation Interconnection Agreement (ERCOT Queue Position ERCOT-GI-2024-0437) was executed on May 15, 2025, and is in full force and effect.
(j) Good Standing. Seller has delivered to Buyer a certificate of good standing (or equivalent certificate) issued by the Secretary of State of the State of Delaware, dated not more than thirty (30) days prior to the Effective Date.
Section 2.3 — Guaranteed COD; Delay Liquidated Damages
(a) Expected COD. The Parties acknowledge that the expected COD is April 1, 2027. Seller shall use commercially reasonable efforts to achieve the COD on or before such date.
(b) Guaranteed COD Date. The guaranteed date for achievement of the COD (the "Guaranteed COD Date") shall be October 1, 2027 (being six (6) months after the expected COD), as such date may be extended on a day-for-day basis for Force Majeure events affecting Seller's ability to achieve COD, up to a maximum extension of one hundred eighty (180) days.
(c) Delay Liquidated Damages. If the COD has not been achieved by the Guaranteed COD Date (as the same may be extended pursuant to clause (b) above), Seller shall pay to Buyer delay liquidated damages in the amount of Five Thousand Dollars ($5,000) per day for each day commencing on the day after the Guaranteed COD Date and continuing until the earlier of (i) the date on which COD is achieved and (ii) the Outside Date (as defined below). The Parties acknowledge that the delay liquidated damages set forth in this Section 2.3(c) represent a reasonable pre-estimate of Buyer's damages arising from delay in achieving the COD and are not intended as a penalty.
(d) Outside Date; Buyer's Termination Right. If the COD has not been achieved by the date that is twelve (12) months after the expected COD (i.e., April 1, 2028, as the same may be extended for Force Majeure events) (the "Outside Date"), Buyer may, at its option, terminate this Agreement by delivering a Termination Notice to Seller. Upon such termination, Seller shall pay to Buyer a termination fee equal to the aggregate amount of delay liquidated damages accrued through the date of termination, plus the unamortized portion of Buyer's transaction costs incurred in connection with this Agreement, not to exceed Two Million Dollars ($2,000,000) in the aggregate. Such termination shall not constitute an Event of Default, and neither Party shall be liable for any Termination Payment under Section 9.3 in connection with such termination.
Section 2.4 — Conditions to COD
The COD shall be deemed to have been achieved when all of the following conditions have been satisfied:
(a) The Facility has achieved initial synchronization with the ERCOT transmission grid and has generated and delivered Energy to the Point of Delivery.
(b) The Facility has completed performance testing in accordance with the testing protocols established by the Independent Engineer, demonstrating that the Facility is capable of generating Energy at a sustained level consistent with its nameplate capacity under prevailing solar irradiance conditions.
(c) The Interconnection Agreement is in full force and effect, and all interconnection facilities required for the delivery of Energy from the Facility to the ERCOT transmission grid have been completed, tested, and placed in service.
(d) All permits necessary for the construction, operation, and maintenance of the Facility have been obtained and are in full force and effect, including the Pecos County Conditional Use Permit (CUP-2025-012) and all applicable TCEQ permits.
(e) The Independent Engineer (Gresham Engineering Advisors Inc.) has delivered to Seller, Buyer, and the Administrative Agent a COD certificate confirming that the conditions set forth in clauses (a) through (d) above have been satisfied.
(f) Seller has delivered to Buyer evidence that all insurance coverages required by Exhibit E are in full force and effect.
(g) Seller has delivered to Buyer an updated officer's certificate confirming the accuracy of Seller's representations and warranties set forth in Article 6 as of the COD.
ARTICLE 3 — FACILITY DEVELOPMENT AND CONSTRUCTION
Section 3.1 — Seller's Obligations
(a) Seller shall develop, finance, engineer, procure, construct, commission, and achieve Commercial Operation of the Facility in accordance with Prudent Industry Practice, all applicable laws, rules, regulations, and permits, and the Interconnection Agreement. Seller shall be responsible for all costs and expenses associated with the development, construction, and commissioning of the Facility.
(b) Seller has entered into a fixed-price turnkey Engineering, Procurement, and Construction Agreement with Sunbelt Power Construction LLC (the "EPC Contractor") for the design, engineering, procurement, construction, and commissioning of the Facility. The contract value of the EPC Contract is One Hundred Forty-Two Million Five Hundred Thousand Dollars ($142,500,000). Seller shall cause the EPC Contractor to construct the Facility in accordance with the terms and conditions of the EPC Contract and in a manner consistent with Prudent Industry Practice.
(c) The Facility shall be constructed on a project site consisting of approximately 1,400 acres located in Pecos County, Texas, leased by Seller from Redrock Mesa Ranch LP pursuant to the Ground Lease, a thirty-five (35)-year ground lease. The project site is situated on FM Road 1776, approximately twelve (12) miles southeast of Fort Stockton, Texas 79735.
(d) Seller shall use commercially reasonable efforts to achieve the COD on or before the expected COD of April 1, 2027, and in no event later than the Guaranteed COD Date (as the same may be extended pursuant to Section 2.3(b)).
(e) Seller shall not make any material changes to the design, specifications, or configuration of the Facility that would reasonably be expected to (i) reduce the Expected Annual Generation by more than five percent (5%), (ii) materially affect the Interconnection Agreement or the interconnection of the Facility to the ERCOT transmission grid, or (iii) adversely affect Seller's ability to achieve the COD by the Guaranteed COD Date, in each case without the prior written consent of Buyer, not to be unreasonably withheld, conditioned, or delayed.
Section 3.2 — Interconnection
(a) Seller shall be solely responsible for securing and maintaining the Interconnection Agreement and all interconnection facilities required for the delivery of Energy from the Facility to the ERCOT transmission grid.
(b) The Facility will be interconnected at the Ft. Stockton 345 kV Substation, located in Pecos County, Texas, pursuant to the Large Generation Interconnection Agreement with West Texas Wires LLC as Transmission Service Provider, bearing ERCOT Queue Position ERCOT-GI-2024-0437, executed on May 15, 2025.
(c) Seller shall bear all costs and expenses associated with the interconnection of the Facility, including network upgrades, distribution upgrades, and any contributions in aid of construction required by the Transmission Service Provider or ERCOT.
(d) Seller shall promptly notify Buyer of any material change, modification, or termination of the Interconnection Agreement, or any material dispute between Seller and the Transmission Service Provider relating to the interconnection of the Facility.
Section 3.3 — Permits
(a) Seller shall be responsible for obtaining and maintaining in full force and effect all permits, licenses, approvals, authorizations, and consents necessary for the development, construction, operation, and maintenance of the Facility, including without limitation:
(i) the Pecos County Conditional Use Permit (CUP-2025-012), approved on February 10, 2025;
(ii) all permits and authorizations required by the Texas Commission on Environmental Quality ("TCEQ"), including stormwater permits and compliance with the Texas Pollutant Discharge Elimination System;
(iii) all building permits, grading permits, and other local construction permits required by Pecos County or any other applicable governmental authority;
(iv) all Federal Aviation Administration ("FAA") determinations of no hazard, to the extent required; and
(v) all other federal, state, and local permits required in connection with the Facility.
(b) Seller shall promptly notify Buyer of any revocation, suspension, material modification, or expiration of any material permit required for the operation of the Facility.
Section 3.4 — Progress Reports
Commencing on the Effective Date and continuing through the COD, Seller shall provide to Buyer quarterly written construction progress reports within fifteen (15) days after the end of each calendar quarter. Each progress report shall include, at a minimum, (a) a summary of construction activities during the preceding quarter, (b) the current status of key milestones, (c) a comparison of actual progress to the construction schedule, (d) identification of any material issues, delays, or change orders, (e) updated photographs of the project site, and (f) any other information reasonably requested by Buyer.
Section 3.5 — Independent Engineer
(a) Buyer shall have the right, at Buyer's sole cost and expense, to designate an independent engineer to review construction progress, inspect the Facility during construction, and review the results of performance testing. Any such independent engineer designated by Buyer shall be a nationally recognized engineering firm with experience in solar photovoltaic generating facilities.
(b) The Parties acknowledge that Gresham Engineering Advisors Inc. has been retained by the Financing Parties as the Independent Engineer for the Facility. Seller shall use commercially reasonable efforts to facilitate access to the project site and construction documentation for the Independent Engineer and for any independent engineer designated by Buyer pursuant to clause (a) above, subject to reasonable advance notice, compliance with safety protocols, and execution of customary non-disclosure agreements.
(c) The engagement of any independent engineer by Buyer shall not relieve Seller of any of its obligations under this Agreement, and Buyer shall not be deemed to have approved, accepted, or assumed responsibility for any aspect of the Facility's design, construction, or operation by reason of such engagement.
ARTICLE 4 — DELIVERY AND ACCEPTANCE OF ENERGY; AVAILABILITY
Section 4.1 — Delivery of Energy
(a) Commencing on the COD and continuing throughout the Delivery Term, Seller shall operate the Facility and deliver all Energy produced by the Facility to the Settlement Hub for financial settlement under this Agreement.
(b) The Parties acknowledge and agree that this Agreement is structured as a virtual power purchase agreement (i.e., a contract for differences) and that the delivery of Energy hereunder is financial in nature. Seller shall retain title to all physical electricity generated by the Facility and shall be responsible for scheduling and settling such electricity with ERCOT at the applicable ERCOT node. This Agreement provides solely for financial settlement of the difference between the Contract Price and the Hub Price with respect to the Energy generated by the Facility, as more particularly described in Section 4.2.
(c) Nothing in this Agreement shall be construed to create a physical delivery obligation, a tolling arrangement, or a capacity purchase, nor shall this Agreement convey to Buyer any right, title, or interest in the physical electricity generated by the Facility or in the Facility itself.
Section 4.2 — Settlement Mechanics
(a) For each Settlement Period (each calendar month during the Delivery Term), the Parties shall calculate the net settlement amount as follows:
(i) If the Contract Price for the applicable Contract Year exceeds the Hub Price for such Settlement Period: Buyer shall pay to Seller an amount equal to the product of (A) the difference between the Contract Price and the Hub Price (expressed in $/MWh) and (B) the actual MWh of Energy delivered by the Facility during such Settlement Period.
(ii) If the Hub Price for such Settlement Period exceeds the Contract Price for the applicable Contract Year: Seller shall pay to Buyer an amount equal to the product of (A) the difference between the Hub Price and the Contract Price (expressed in $/MWh) and (B) the actual MWh of Energy delivered by the Facility during such Settlement Period.
(b) The net settlement amount for each Settlement Period shall be calculated and invoiced in accordance with Section 5.2. Net settlement payments shall be made by the twentieth (20th) Business Day following the end of each calendar month constituting the applicable Settlement Period.
(c) The Settlement Hub for all settlement calculations under this Agreement shall be the ERCOT West Hub.
(d) All metering and measurement of Energy for settlement purposes shall be conducted in accordance with ERCOT protocols and procedures. In the event of any discrepancy between metered data and ERCOT settlement data, ERCOT settlement data shall control for purposes of this Agreement, subject to adjustment for any ERCOT resettlement.
Section 4.3 — Environmental Attributes
(a) All Environmental Attributes associated with Energy generated and delivered by the Facility during the Term shall be the sole and exclusive property of Buyer. Seller hereby assigns, transfers, and conveys to Buyer all right, title, and interest in and to such Environmental Attributes, and Seller shall take all actions and execute all documents necessary to effectuate such transfer, including registering the Facility with the applicable REC tracking system and transferring RECs to Buyer's account on a quarterly basis (or such other frequency as Buyer may reasonably request).
(b) Seller shall not sell, assign, transfer, or otherwise dispose of any Environmental Attributes associated with Energy generated by the Facility during the Term to any Person other than Buyer.
(c) The Contract Price set forth in Section 5.1 includes consideration for the transfer of all Environmental Attributes to Buyer, and Buyer shall not be required to pay any additional amounts for such Environmental Attributes.
(d) In the event that any law, regulation, or governmental program is enacted or modified after the Effective Date that creates or modifies Environmental Attributes (including carbon credits or renewable energy credits), the Parties shall negotiate in good faith to determine the appropriate allocation of such new or modified Environmental Attributes, provided that any Environmental Attributes arising from the Facility's generation of Energy using solar photovoltaic technology shall be transferred to Buyer.
Section 4.4 — Availability Guarantee and Liquidated Damages
Section 4.4(a) — Guaranteed Availability. Seller guarantees that the Availability of the Facility shall be no less than during each Measurement Period (each rolling twelve (12)-month period) throughout the Delivery Term (the "Guaranteed Availability"). This Guaranteed Availability level of represents Seller's compromise from the threshold set forth in the First Draft, moving toward Buyer's proposed 97.0%. The 96.0% level reflects market benchmarking for utility-scale solar photovoltaic facilities operating in the ERCOT region and preserves adequate debt service coverage ratio ("DSCR") coverage under Seller's financing arrangements with Tralvendo National Bank, N.A. and the other Financing Parties.
Availability for each Measurement Period shall be calculated as follows:
Availability (%) = (Available Hours ÷ Period Hours) × 100
The following hours shall be excluded from the calculation of Availability (i.e., excluded from both Available Hours and Period Hours, as applicable):
(i) hours during which the Facility is unable to generate Energy due to a Force Majeure event (as defined in Section 12.1);
(ii) hours during which a Curtailment Event (as defined in Section 4.5) is in effect; and
(iii) hours of Scheduled Maintenance, up to the Scheduled Maintenance Allowance of two hundred (200) hours per Contract Year. Scheduled Maintenance hours in excess of the Scheduled Maintenance Allowance shall be included in Period Hours and shall reduce Available Hours.
Section 4.4(b) — Availability Liquidated Damages. If the actual Availability of the Facility falls below the Guaranteed Availability of in any Measurement Period, Seller shall pay to Buyer Availability Liquidated Damages calculated as follows: for each one percent (1.0%) (or pro rata portion thereof) by which actual Availability falls below the Guaranteed Availability of , Seller shall pay Buyer liquidated damages equal to of the Trailing Twelve-Month Revenue for such Measurement Period.
"Trailing Twelve-Month Revenue" means the aggregate amounts payable to Seller under this Agreement during the applicable Measurement Period.
By way of illustration, assuming P50 generation of 350,000 MWh and Contract Year 1 pricing of $20.00/MWh:
• Trailing Twelve-Month Revenue = 350,000 MWh × $20.00/MWh = $7,000,000
• Availability LD per 1.0% shortfall = × $7,000,000 =
• Example: If actual Availability is 93.0% (i.e., 3.0% below Guaranteed Availability of 96.0%), Availability LDs = 3.0 × $52,500 = $157,500
The Parties acknowledge and agree that the Availability Liquidated Damages set forth in this Section 4.4(b) represent a reasonable pre-estimate of Buyer's damages arising from Seller's failure to achieve the Guaranteed Availability and are not intended as a penalty.
Section 4.4(c) — Availability LD Cap. The aggregate Availability Liquidated Damages payable by Seller to Buyer in any single Measurement Period shall not exceed of the Trailing Twelve-Month Revenue for such Measurement Period.
By way of illustration, assuming Trailing Twelve-Month Revenue of $7,000,000 at Year 1:
• Availability LD Cap = × $7,000,000 =
This cap represents a compromise between Seller's proposed cap in the First Draft and Buyer's proposed 10.0% cap.
Section 4.4(d) — Availability LDs as Sole Remedy. Payment of Availability Liquidated Damages pursuant to this Section 4.4 shall be Buyer's sole and exclusive remedy for any failure by Seller to achieve the Guaranteed Availability in any Measurement Period, subject to Buyer's termination right under Section 4.4(e) in the event of chronic underperformance. The Parties acknowledge and agree that the Availability Liquidated Damages represent a fair and reasonable pre-estimate of Buyer's damages and are not intended as a penalty, and that actual damages for Seller's failure to achieve the Guaranteed Availability would be difficult or impossible to ascertain with precision.