CLOSING BINDER INDEX

CLOSING BINDER INDEX
Formation of Solstice Plateau Energy Holdings LLC
50/50 Joint Venture between Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC
Prepared by:
Derek Okonkwo Calderwood & Harkness LLP 1000 Louisiana Street, Suite 5500 Houston, Texas 77002 Telephone: (713) 555-4200
INTRODUCTION AND PREFATORY NOTE
This Closing Binder Index catalogues all executed transaction documents, certificates, legal opinions, regulatory consents, and ancillary closing deliverables executed, delivered, or obtained in connection with the formation of Solstice Plateau Energy Holdings LLC, a Delaware limited liability company (DE SOS File Number 7849312) (the "Company" or the "JV"), organized as a 50/50 joint venture between Calloway-Briggs Renewables Inc. ("CBR"), a Texas corporation, and Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge"), a Delaware limited liability company.
All documents contained herein are organized sequentially by tab number and grouped by category across twelve volumes, as more fully described below. Where a document has multiple exhibits, schedules, or annexes, such attachments are included immediately following the primary document within the same tab.
Originals or conformed copies of all documents referenced in this Index are maintained in the physical closing binder held at the offices of Calderwood & Harkness LLP, 1000 Louisiana Street, Suite 5500, Houston, Texas 77002. Fully executed electronic copies (PDF) of all documents are maintained on the Calderwood & Harkness LLP secure deal room server and have been made available to both CBR and Lumen Ridge and their respective counsel.
Any questions regarding the contents of this Closing Binder, including requests for additional copies or access to the electronic deal room, should be directed to:
Derek Okonkwo, Associate Calderwood & Harkness LLP 1000 Louisiana Street, Suite 5500 Houston, Texas 77002 Telephone: (713) 555-4218
Email: derek.okonkwo@calderwoodharkness.com
Megan Chu, Senior Associate Calderwood & Harkness LLP 1000 Louisiana Street, Suite 5500 Houston, Texas 77002 Telephone: (713) 555-4205
Email: megan.chu@calderwoodharkness.com
Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Limited Liability Company Agreement of Solstice Plateau Energy Holdings LLC, dated December 4, 2023.
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VOLUME I — FORMATION AND GOVERNING DOCUMENTS
Tab 1 — Limited Liability Company Agreement of Solstice Plateau Energy Holdings LLC (Execution Version)
Date: December 4, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation, signed by Margaret "Meg" Calloway, Chairwoman and Chief Executive Officer; and
(b) Lumen Ridge Infrastructure Partners LLC, a Delaware limited liability company, signed by Nathaniel "Nate" Forsythe, Co-Founder and Managing Partner.
Governing Law: State of Delaware
Summary of Key Terms:
•  Aggregate Equity Commitment: $300,000,000, allocated equally between CBR ($150,000,000) and Lumen Ridge ($150,000,000). CBR's commitment is comprised of $90,000,000 in contributed project assets (at agreed valuation) and $60,000,000 in cash. Lumen Ridge's commitment is comprised entirely of $150,000,000 in cash.
•  Management Committee: Six-member Management Committee consisting of three (3) designees appointed by CBR and three (3) designees appointed by Lumen Ridge. The Management Committee shall oversee all material business decisions of the Company, subject to reserved matters requiring supermajority approval.
•  Supermajority Voting: Reserved matters (including, without limitation, annual budgets in excess of 110% of the approved business plan, debt incurrence above specified thresholds, asset dispositions in excess of $10,000,000, affiliate transactions, admission of new members, and amendments to the LLC Agreement) require an affirmative vote of at least five (5) of the six (6) Management Committee members.
•  Lock-Up Period: Three-year lock-up period commencing on the Closing Date (February 20, 2024), during which neither Member may transfer, sell, assign, pledge, or otherwise dispose of its Membership Interest without the prior written consent of the other Member, subject to customary exceptions for Permitted Transfers.
•  Right of First Offer (ROFO): Following expiration of the lock-up period, any Member wishing to transfer all or a portion of its Membership Interest must first offer such interest to the non-transferring Member on terms no less favorable than those to be offered to any third party, with a sixty (60)-day exercise period for the offeree Member.
•  Buy-Sell Mechanism: In the event of a material disagreement between the Members that is not resolved through the deadlock resolution procedures set forth in the LLC Agreement, either Member may initiate a buy-sell procedure (also known as a "Russian roulette" or "shotgun" clause), pursuant to which the non-initiating Member shall have a forty-five (45)-day response period in which to elect to either buy or sell at the price specified in the buy-sell notice.
•  Distribution Waterfall: Distributions of Available Cash shall be made as follows: (i) first, 50% to CBR and 50% to Lumen Ridge until each Member has achieved an 8% internal rate of return ("IRR") on its Unreturned Capital Contributions; (ii) second, 60% to CBR and 40% to Lumen Ridge until CBR has achieved a 12% IRR on its Unreturned Capital Contributions; and (iii) thereafter, 50% to CBR and 50% to Lumen Ridge.
•  Deadlock Resolution: In the event of a deadlock on any Reserved Matter, the Members shall first engage in good-faith negotiations for a period of thirty (30) days. If such negotiations fail to resolve the deadlock, the dispute shall be submitted to binding arbitration administered by the International Chamber of Commerce ("ICC") in Houston, Texas, conducted in accordance with the ICC Rules of Arbitration then in effect, with a panel of three (3) arbitrators.
This document consists of approximately 142 pages, inclusive of all exhibits and schedules.
Tab 2 — Certificate of Formation of Solstice Plateau Energy Holdings LLC
Filed with: Delaware Secretary of State, Division of Corporations
Filing Date: February 19, 2024
DE SOS File Number: 7849312
Registered Agent: Peachtree Corporate Services, Inc., 1209 Orange Street, Suite 300, Wilmington, Delaware 19801
Registered Office: 1209 Orange Street, Suite 300, Wilmington, Delaware 19801 (same as registered agent)
The Certificate of Formation was filed one business day prior to the Closing Date in accordance with the closing mechanics set forth in the LLC Agreement and as contemplated by the Closing Checklist (Tab 44). A certified copy of the filed Certificate of Formation, bearing the Delaware Secretary of State's endorsement stamp, is included.
Tab 3 — Certificate of Good Standing — Solstice Plateau Energy Holdings LLC (Delaware)
Issuing Authority: Delaware Secretary of State, Division of Corporations
Date of Issuance: On or about February 20, 2024
This Certificate of Good Standing confirms that Solstice Plateau Energy Holdings LLC is duly formed, validly existing, and in good standing under the laws of the State of Delaware as of the date of issuance. The original certificate, together with a conformed copy, is included.
VOLUME II — CONTRIBUTION AND CAPITAL DOCUMENTS
Tab 4 — Contribution Agreement (Project Portfolio) — Execution Version
Date: December 4, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation (as "Contributor"); and
(b) Solstice Plateau Energy Holdings LLC, a Delaware limited liability company (as "Recipient").
Governing Law: State of Delaware
Summary: This Contribution Agreement governs CBR's contribution of eight (8) solar development projects to the Company, representing an aggregate nameplate capacity of approximately 1,200 MW DC across approximately 14,340 leased acres in the states of Texas, New Mexico, and Arizona. The contributed portfolio was valued at an agreed amount of $90,000,000 based on arm's-length negotiations between CBR and Lumen Ridge, supported by the Fairness Analysis prepared by Ridgeline Barrow & Co. (Tab 6).
The Contribution Agreement includes comprehensive representations and warranties by CBR regarding, among other matters:
(a) good and marketable title to the contributed projects, free and clear of all liens, encumbrances, and adverse claims (other than Permitted Encumbrances as defined therein);
(b) compliance with all applicable federal, state, and local environmental laws and regulations, including, without limitation, the National Environmental Policy Act ("NEPA"), the Clean Air Act, the Clean Water Act, and state-level environmental permitting requirements;
(c) the validity and enforceability of all material permits, licenses, and governmental approvals necessary for the development, construction, and operation of each contributed project;
(d) the status of all material contracts relating to the contributed projects, including land leases, interconnection agreements, power purchase agreements, and engineering, procurement, and construction contracts, and the absence of any material breach or default thereunder; and
(e) the absence of any pending or threatened litigation, arbitration, or governmental investigation that would reasonably be expected to have a material adverse effect on any contributed project.
The agreement also includes customary indemnification provisions, survival periods for representations and warranties (eighteen (18) months from the Closing Date for general representations; statute of limitations for fundamental representations), and a cap on indemnification obligations equal to the agreed valuation of the contributed portfolio ($90,000,000), subject to a deductible basket of $900,000 (1% of portfolio value).
Tab 5 — Schedule of Contributed Projects (Exhibit to Contribution Agreement)
The following table sets forth the eight (8) solar development projects contributed by CBR to the Company pursuant to the Contribution Agreement:
As reflected above, the Brazos Point project in Wharton County, Texas was the only contributed project that had not received all required permits as of the Signing Date (December 4, 2023). The final outstanding permit for the Brazos Point project was received on January 10, 2024, thereby satisfying the related condition precedent to Closing. A copy of the Brazos Point permit is included at Tab 30.
Tab 6 — Fairness Analysis — Ridgeline Barrow & Co.
Date: November 15, 2023
Prepared by: Ridgeline Barrow & Co. (Marcus Delgado, Managing Director, Energy Advisory), 811 Main Street, Suite 3100, Houston, Texas 77002
Commissioned by: Calloway-Briggs Renewables Inc.
Summary: Ridgeline Barrow & Co. was engaged to prepare an independent fairness analysis of the valuation of CBR's eight-project solar development portfolio to be contributed to the joint venture. The analysis employed a combination of methodologies, including a discounted cash flow analysis, comparable transactions analysis, and a comparable public companies / precedent development-stage asset analysis.
The resulting valuation range determined by Ridgeline Barrow & Co. was $87,000,000 to $96,000,000. The parties agreed upon a midpoint valuation of $90,000,000 for purposes of the Contribution Agreement, which falls within the range established by the independent analysis. The Fairness Analysis also assessed the reasonableness of the 50/50 equity split in light of the respective contributions of the Members and concluded that the terms of the joint venture were fair from a financial point of view to CBR.
Tab 7 — Escrow Agreement — Execution Version
Date: December 4, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation;
(b) Lumen Ridge Infrastructure Partners LLC, a Delaware limited liability company; and
(c) Continental Fiduciary Trust Company, a Delaware trust company (as "Escrow Agent"), 1105 North Market Street, Suite 1200, Wilmington, Delaware 19801.
Escrow Account Reference: CFT-2024-00847
Governing Law: State of Delaware
Summary: Pursuant to the Escrow Agreement, the parties established a segregated escrow account at Continental Fiduciary Trust Company to hold the cash contributions of both Members pending satisfaction of all conditions to Closing. The required deposits were as follows:
•  CBR: $60,000,000 in immediately available funds (representing the cash portion of CBR's $150,000,000 aggregate equity commitment, the balance of which is comprised of the $90,000,000 contributed project portfolio); and
•  Lumen Ridge: $150,000,000 in immediately available funds (representing the entirety of Lumen Ridge's aggregate equity commitment).
All required escrow deposits were funded as of February 5, 2024. The release condition for the escrowed funds was the satisfaction (or waiver by the applicable party) of all conditions to Closing set forth in the LLC Agreement, including without limitation receipt of all required regulatory approvals (including HSR clearance), delivery of all closing certificates and legal opinions, filing of the Certificate of Formation with the Delaware Secretary of State, and receipt of the Brazos Point project permit. Upon confirmation that all Closing conditions were satisfied, the Escrow Agent released the escrowed funds on February 20, 2024 in accordance with the Funds Flow Memorandum (Tab 8).
The Escrow Agreement also addresses, among other matters, the duties and liability of the Escrow Agent, indemnification of the Escrow Agent, investment of escrowed funds during the escrow period (limited to U.S. Treasury obligations and money market funds), dispute resolution procedures in the event of conflicting instructions, and provisions governing the resignation or removal of the Escrow Agent.
Tab 8 — Funds Flow Memorandum
Date: February 20, 2024 (Closing Date)
Prepared by: Megan Chu, Senior Associate, Calderwood & Harkness LLP
Summary: This memorandum details the flow of funds on the Closing Date. The Funds Flow Memorandum was circulated to all parties and their respective counsel, to Continental Fiduciary Trust Company (as Escrow Agent), and to Trident National Bank, N.A. (as the Company's depository bank) in advance of Closing.
The memorandum provides that, upon confirmation that all Closing conditions have been satisfied, the following fund transfers shall occur in the sequence specified:
Step 1: Continental Fiduciary Trust Company (Escrow Account Reference: CFT-2024-00847) to release $60,000,000 (CBR cash contribution) via Fedwire transfer to the Solstice Plateau Energy Holdings LLC operating account at Trident National Bank, N.A.
Step 2: Continental Fiduciary Trust Company (Escrow Account Reference: CFT-2024-00847) to release $150,000,000 (Lumen Ridge cash contribution) via Fedwire transfer to the Solstice Plateau Energy Holdings LLC operating account at Trident National Bank, N.A.
The memorandum includes complete wire instructions and account numbers for the receiving account at Trident National Bank, N.A., the Escrow Agent's release authorization procedures, the expected timing sequence for each transfer, and confirmation telephone numbers for each financial institution involved.
All transfers were completed on February 20, 2024, and confirmation of receipt of funds in the Company's operating account was provided by Trident National Bank, N.A. to Calderwood & Harkness LLP and Haverford, Quinn & Steele LLP on the same date.
VOLUME III — ANCILLARY TRANSACTION AGREEMENTS
Tab 9 — Development and Construction Management Agreement — Execution Version
Date: December 4, 2023
Parties:
(a) Solstice Plateau Energy Holdings LLC, a Delaware limited liability company (as "Owner"); and
(b) Calloway-Briggs Renewables Inc., a Texas corporation (as "Development and Construction Manager").
Summary: This agreement governs CBR's appointment as the exclusive development and construction manager for all projects owned by the Company. CBR will provide, or cause its affiliates and subcontractors to provide, all development, permitting, engineering, procurement, construction management, and related services necessary to advance each project from its current stage of development through commercial operation.
The compensation structure under the Development and Construction Management Agreement is as follows:
•  Development Management Fee: 1.5% per annum of the aggregate capital deployed by the Company. At full deployment of the $300,000,000 aggregate equity commitment, the annualized development management fee would equal $4,500,000.
•  Construction Management Fee: 3.0% of total hard construction costs incurred with respect to each project. Based on current estimates of total hard construction costs across the eight-project portfolio of approximately $720,000,000, the potential aggregate construction management fee is approximately $21,600,000.
The agreement includes detailed performance standards and milestones, monthly and quarterly reporting obligations, budget variance thresholds requiring Management Committee approval, insurance requirements, and termination provisions (including termination for cause upon failure to meet material milestones after notice and cure, and termination for convenience by the Company upon the affirmative vote of at least five (5) of the six (6) Management Committee members, subject to a termination fee).
Tab 10 — Tax Protection Agreement — Execution Version
Date: December 4, 2023
Parties:
(a) Solstice Plateau Energy Holdings LLC, a Delaware limited liability company; and
(b) Calloway-Briggs Renewables Inc., a Texas corporation (as the "Protected Member").
Governing Law: State of Delaware
Summary: In connection with CBR's contribution of the eight-project solar development portfolio to the Company, this Tax Protection Agreement provides CBR with protection against the recognition of the approximately $55,800,000 in built-in gain inherent in the contributed assets. The built-in gain represents the difference between the agreed book value of the contributed portfolio ($90,000,000) and the aggregate adjusted tax basis of the contributed assets ($34,200,000).
The tax protection period is seven (7) years, commencing on the Closing Date (February 20, 2024) and expiring on February 20, 2031. During the tax protection period, if the Company engages in a taxable disposition (as defined in the agreement, and including, without limitation, a sale, exchange, or other transfer) of any contributed asset that results in the recognition by CBR of all or a portion of the protected built-in gain, the Company shall make a make-whole payment to CBR in an amount sufficient to place CBR in the same after-tax position it would have been in had such taxable disposition not occurred. The make-whole payment obligation is calculated based on a specified formula that takes into account the federal and state income tax rates applicable to CBR, the amount of protected built-in gain recognized, and the present value discount factor.
The agreement also contains certain exceptions to the tax protection, including dispositions consented to in writing by CBR, dispositions occurring in connection with a casualty or condemnation event, and dispositions required by applicable law or governmental order.
Tab 11 — Mutual Non-Disclosure Agreement
Date: September 18, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation; and
(b) Lumen Ridge Infrastructure Partners LLC, a Delaware limited liability company.
Governing Law: State of Delaware
Summary: This Mutual Non-Disclosure Agreement was executed by the parties at the outset of their discussions regarding the potential formation of a joint venture, prior to the exchange of any confidential or proprietary information. The agreement provides for a two (2)-year term commencing on the date of execution and governs the use and disclosure of confidential information shared between the parties in connection with the evaluation and negotiation of the joint venture transaction. The agreement includes customary provisions regarding the definition of confidential information, exclusions from confidentiality obligations, permitted disclosures to representatives and advisors, return and destruction of confidential materials, non-solicitation of employees, and equitable remedies for breach.
VOLUME IV — CORPORATE AUTHORIZATIONS AND CERTIFICATES — CALLOWAY-BRIGGS RENEWABLES INC.
Tab 12 — Secretary's Certificate of Calloway-Briggs Renewables Inc.
Date: February 20, 2024
Executed by: Daniel Estrada, Secretary, Calloway-Briggs Renewables Inc.
Summary: This Secretary's Certificate was delivered to Lumen Ridge Infrastructure Partners LLC and to Continental Fiduciary Trust Company (as Escrow Agent) as a condition to Closing. The certificate certifies the following:
(a) attached thereto is a true, correct, and complete copy of the Certificate of Incorporation of Calloway-Briggs Renewables Inc., as currently in effect, including all amendments thereto;
(b) attached thereto is a true, correct, and complete copy of the Bylaws of Calloway-Briggs Renewables Inc., as currently in effect, including all amendments thereto;
(c) attached thereto is a true, correct, and complete copy of the resolutions duly adopted by the Board of Directors of Calloway-Briggs Renewables Inc. at a meeting duly called and held on November 30, 2023 (or by unanimous written consent in lieu of meeting), authorizing the execution, delivery, and performance by CBR of the LLC Agreement, the Contribution Agreement, the Escrow Agreement, the Development and Construction Management Agreement, the Tax Protection Agreement, and all other ancillary transaction documents, and authorizing the consummation of the transactions contemplated thereby;
(d) a certificate of incumbency confirming the names, titles, and specimen signatures of the officers of CBR authorized to execute and deliver the transaction documents on behalf of CBR; and
(e) no proceedings have been taken or are pending for the dissolution, merger, consolidation, or liquidation of CBR.
Attested copies of the Board resolutions referenced in clause (c) above are attached to the certificate and are also separately filed at Tab 15.
Tab 13 — Officer's Certificate of Calloway-Briggs Renewables Inc.
Date: February 20, 2024
Executed by: Margaret "Meg" Calloway, Chairwoman and Chief Executive Officer, Calloway-Briggs Renewables Inc.
Delivered to: Lumen Ridge Infrastructure Partners LLC
Summary: This Officer's Certificate was delivered as a condition to Closing and certifies the following:
(a) the representations and warranties of CBR set forth in the LLC Agreement, the Contribution Agreement, and the other transaction documents are true and correct in all material respects (or, in the case of representations and warranties qualified by materiality, true and correct in all respects) as of the Signing Date and as of the Closing Date, except to the extent such representations and warranties expressly relate to a specific date, in which case they are true and correct as of such date;
(b) CBR has performed and complied with, in all material respects, all covenants and agreements required to be performed or complied with by CBR on or prior to the Closing Date;
(c) all conditions to Closing set forth in the LLC Agreement that are required to be satisfied by CBR have been satisfied or waived;
(d) no material adverse change has occurred with respect to CBR or the contributed projects since the Signing Date; and
(e) a certificate of incumbency confirming the names, titles, and specimen signatures of the officers of CBR authorized to execute and deliver closing documents on behalf of CBR, including Margaret "Meg" Calloway (Chairwoman & CEO) and Daniel Estrada (Secretary & General Counsel).
Tab 14 — Certificate of Good Standing — Calloway-Briggs Renewables Inc. (Texas Secretary of State)
TX SOS File Number: 0801647392
Summary: This Certificate of Good Standing was obtained from the Texas Secretary of State, confirming that Calloway-Briggs Renewables Inc. is a corporation duly organized and in good standing under the laws of the State of Texas. The certificate was obtained within ten (10) days of the Closing Date, in accordance with the requirements of the LLC Agreement.
Included within this tab is a cover letter from Calderwood & Harkness LLP dated February 12, 2024, transmitting the Certificate of Good Standing and confirming its receipt from the Texas Secretary of State's office.
Tab 15 — Board Resolutions of Calloway-Briggs Renewables Inc.
Summary: This tab contains a certified copy of the resolutions duly adopted by the Board of Directors of Calloway-Briggs Renewables Inc. authorizing the following:
(a) the execution and delivery by CBR of the Limited Liability Company Agreement of Solstice Plateau Energy Holdings LLC;
(b) the execution and delivery by CBR of the Contribution Agreement (Project Portfolio);
(c) the execution and delivery by CBR of the Development and Construction Management Agreement;
(d) the execution and delivery by CBR of the Tax Protection Agreement;
(e) the execution and delivery by CBR of the Escrow Agreement;
(f) the execution and delivery by CBR of all ancillary documents, instruments, and certificates required to be delivered by CBR in connection with the foregoing transactions; and
(g) the designation of Margaret "Meg" Calloway, Chairwoman and Chief Executive Officer, and Daniel Estrada, Secretary and General Counsel, as the authorized signatories of CBR for purposes of executing and delivering all transaction documents and closing deliverables on behalf of CBR.
The resolutions were adopted at a meeting of the Board of Directors duly called and held on November 30, 2023, at which a quorum was present and acting, and were certified by Daniel Estrada, Secretary.
VOLUME V — CORPORATE AUTHORIZATIONS AND CERTIFICATES — LUMEN RIDGE INFRASTRUCTURE PARTNERS LLC
Tab 16 — Secretary's / Authorized Person's Certificate of Lumen Ridge Infrastructure Partners LLC
Date: February 20, 2024
Executed by: An authorized person of Lumen Ridge Infrastructure Partners LLC
Delivered to: Calloway-Briggs Renewables Inc.
Summary: This certificate was delivered as a condition to Closing and certifies the following:
(a) attached thereto is a true, correct, and complete copy of the Certificate of Formation of Lumen Ridge Infrastructure Partners LLC, as filed with the Delaware Secretary of State, including all amendments thereto;
(b) attached thereto is a true, correct, and complete copy of the Operating Agreement of Lumen Ridge Infrastructure Partners LLC (or relevant excerpts thereof), as currently in effect;
(c) attached thereto is a true, correct, and complete copy of the resolutions duly adopted by the managing member(s) or authorized person(s) of Lumen Ridge Infrastructure Partners LLC (and/or Lumen Ridge Capital Advisors LLC, as its manager, if applicable) authorizing the execution, delivery, and performance by Lumen Ridge of the LLC Agreement, the Escrow Agreement, and all other transaction documents, and authorizing the consummation of the transactions contemplated thereby; and
(d) a certificate of incumbency confirming the names, titles, and specimen signatures of the authorized signatories of Lumen Ridge empowered to execute and deliver the transaction documents on behalf of Lumen Ridge.
Tab 17 — Officer's Certificate of Lumen Ridge Infrastructure Partners LLC
Date: February 20, 2024
Executed by: Nathaniel "Nate" Forsythe, Co-Founder and Managing Partner, Lumen Ridge Infrastructure Partners LLC
Delivered to: Calloway-Briggs Renewables Inc.
Summary: This Officer's Certificate was delivered as a condition to Closing and certifies the following:
(a) the representations and warranties of Lumen Ridge set forth in the LLC Agreement and the other transaction documents are true and correct in all material respects (or, in the case of representations and warranties qualified by materiality, true and correct in all respects) as of the Signing Date and as of the Closing Date, except to the extent such representations and warranties expressly relate to a specific date, in which case they are true and correct as of such date;
(b) Lumen Ridge has performed and complied with, in all material respects, all covenants and agreements required to be performed or complied with by Lumen Ridge on or prior to the Closing Date;
(c) all conditions to Closing set forth in the LLC Agreement that are required to be satisfied by Lumen Ridge have been satisfied or waived; and
(d) no material adverse change has occurred with respect to Lumen Ridge since the Signing Date.
Tab 18 — Certificate of Good Standing — Lumen Ridge Infrastructure Partners LLC (Delaware Secretary of State)
Summary: This Certificate of Good Standing was obtained from the Delaware Secretary of State, Division of Corporations, confirming that Lumen Ridge Infrastructure Partners LLC is duly formed, validly existing, and in good standing under the laws of the State of Delaware. The certificate was obtained within ten (10) days of the Closing Date, in compliance with the requirements of the LLC Agreement.
Tab 19 — Resolutions of Lumen Ridge Infrastructure Partners LLC
Summary: This tab contains a certified copy of the resolutions duly adopted by the board, management, or authorized persons of Lumen Ridge Infrastructure Partners LLC (and/or Lumen Ridge Capital Advisors LLC, as its manager, to the extent applicable under Lumen Ridge's governing documents), authorizing the execution and delivery by Lumen Ridge of the LLC Agreement, the Escrow Agreement, and all other ancillary transaction documents, and authorizing the consummation of the transactions contemplated thereby. The resolutions designate Nathaniel "Nate" Forsythe, Co-Founder and Managing Partner, as the authorized signatory of Lumen Ridge for purposes of executing and delivering all transaction documents and closing deliverables on behalf of Lumen Ridge.
VOLUME VI — LEGAL OPINIONS
Tab 20 — Legal Opinion of Calderwood & Harkness LLP (Counsel to CBR)
Date: February 20, 2024 (Closing Date)
Delivered to: Lumen Ridge Infrastructure Partners LLC
Signed by: James Prentice, Responsible Partner, Mergers & Acquisitions, Calderwood & Harkness LLP, 1000 Louisiana Street, Suite 5500, Houston, Texas 77002
Summary of Opinions:
(a) Due Organization and Good Standing. Calloway-Briggs Renewables Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas.
(b) Corporate Power and Authority. CBR has the corporate power and authority to enter into and perform its obligations under the Limited Liability Company Agreement, the Contribution Agreement, the Development and Construction Management Agreement, the Tax Protection Agreement, the Escrow Agreement, and the other transaction documents to which it is a party.
(c) Due Authorization, Execution, and Delivery. The execution, delivery, and performance by CBR of each transaction document to which it is a party has been duly authorized by all necessary corporate action, including the resolutions of its Board of Directors, and each such transaction document has been duly executed and delivered by CBR.
(d) No Conflicts. The execution, delivery, and performance by CBR of the transaction documents, and the consummation of the transactions contemplated thereby, do not and will not (i) violate or conflict with any provision of CBR's Certificate of Incorporation or Bylaws, (ii) violate or conflict with any applicable law, rule, or regulation, or (iii) constitute a default under, or result in the acceleration of any obligation under, any material agreement, indenture, or instrument to which CBR is a party or by which its properties are bound.
(e) Enforceability. Each transaction document to which CBR is a party constitutes a legal, valid, and binding obligation of CBR, enforceable against CBR in accordance with its terms, subject to customary exceptions, including applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally, general principles of equity (whether considered in a proceeding in equity or at law), and the implied covenant of good faith and fair dealing.
The opinion letter is subject to the customary qualifications, assumptions, and limitations set forth therein.
Tab 21 — Legal Opinion of Haverford, Quinn & Steele LLP (Counsel to Lumen Ridge)
Date: February 20, 2024 (Closing Date)
Delivered to: Calloway-Briggs Renewables Inc.
Signed by: Gregory Haverford III, Lead Partner, Haverford, Quinn & Steele LLP, 599 Lexington Avenue, 28th Floor, New York, New York 10022
Summary of Opinions:
(a) Due Organization and Good Standing. Lumen Ridge Infrastructure Partners LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) Power and Authority. Lumen Ridge has the limited liability company power and authority to enter into and perform its obligations under the Limited Liability Company Agreement, the Escrow Agreement, and the other transaction documents to which it is a party.
(c) Due Authorization, Execution, and Delivery. The execution, delivery, and performance by Lumen Ridge of each transaction document to which it is a party has been duly authorized by all necessary limited liability company action, and each such transaction document has been duly executed and delivered by Lumen Ridge.
(d) No Conflicts. The execution, delivery, and performance by Lumen Ridge of the transaction documents, and the consummation of the transactions contemplated thereby, do not and will not violate or conflict with any provision of Lumen Ridge's Certificate of Formation or Operating Agreement, any applicable law, rule, or regulation, or any material agreement to which Lumen Ridge is a party.
(e) Enforceability. Each transaction document to which Lumen Ridge is a party constitutes a legal, valid, and binding obligation of Lumen Ridge, enforceable against Lumen Ridge in accordance with its terms, subject to customary exceptions, including applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally, general principles of equity, and the implied covenant of good faith and fair dealing.
The opinion letter is subject to the customary qualifications, assumptions, and limitations set forth therein.
VOLUME VII — REGULATORY APPROVALS AND CONSENTS
Tab 22 — Hart-Scott-Rodino Antitrust Clearance
HSR Filing Date: October 18, 2023
HSR Transaction Number: 20231018-CBR-LRI
Summary: Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. § 18a), and the rules promulgated thereunder by the Federal Trade Commission, pre-merger notification filings were submitted by CBR and Lumen Ridge to the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice on October 18, 2023.
On November 8, 2023, twenty-one (21) days after the filing date, the Federal Trade Commission granted early termination of the initial thirty (30)-day waiting period applicable to the transaction. A copy of the FTC early termination notice is included. No second request for additional information was issued, and no conditions were imposed in connection with the clearance.
Tab 23 — Cascadia Growth Equity Fund III, L.P. — Written Consent
Date: November 20, 2023
Delivered by: Owen Charbonneau, Managing Director, on behalf of Cascadia Growth Equity Fund III, L.P., 900 SW Fifth Avenue, Suite 2600, Portland, Oregon 97204
Summary: Cascadia Growth Equity Fund III, L.P. ("Cascadia Fund III") holds an equity interest of approximately twenty-two percent (22%) in Calloway-Briggs Renewables Inc. Under the terms of the Amended and Restated Stockholders' Agreement of CBR, dated as of March 14, 2019, certain material transactions by CBR — including the formation of joint ventures involving the contribution of material assets — require the prior written consent of stockholders holding in excess of twenty percent (20%) of the outstanding common stock of CBR. Accordingly, the consent of Cascadia Fund III was required as a condition to the formation of the joint venture and the execution and consummation of the transactions contemplated by the transaction documents.
On November 20, 2023, Owen Charbonneau, Managing Director of Cascadia Growth Equity Fund III, L.P., delivered a written consent confirming Cascadia Fund III's approval of the formation of Solstice Plateau Energy Holdings LLC, the contribution by CBR of the eight-project solar development portfolio, and the execution by CBR of all related transaction documents. The original executed consent is included.
VOLUME VIII — PROJECT-LEVEL AND THIRD-PARTY DOCUMENTS
Tab 24 — Trident National Bank Credit Facility Commitment Letter
Execution Date: January 22, 2024
Lender: Trident National Bank, N.A. (Patricia Henning, Managing Director, Energy & Infrastructure Finance), 383 Madison Avenue, 12th Floor, New York, New York 10179
Borrower: Solstice Plateau Energy Holdings LLC (or one or more project-level subsidiaries to be formed)
Facility Reference: TNB-EIF-2024-0193
Summary: Trident National Bank, N.A. has issued a binding commitment letter to provide a project-level credit facility to the Company (or its designated project-level subsidiaries) in an aggregate principal amount of up to $480,000,000, comprised of a term loan facility and a revolving construction facility. The principal terms of the credit facility are as follows:
•  Facility Size: Up to $480,000,000 (subject to customary conditions precedent to funding, including execution of definitive credit documentation, completion of lender due diligence, and achievement of certain project milestones).
•  Maturity: Seven (7) years from the initial funding date.
•  Interest Rate: SOFR (Secured Overnight Financing Rate) plus 175 basis points per annum, with customary fallback provisions in the event of SOFR discontinuation.
•  Security: Non-recourse to the Members. The facility will be secured by the assets of the borrower and its project-level subsidiaries, including, without limitation, liens on real property interests, assignment of project contracts (including PPAs and interconnection agreements), pledges of equity interests in project subsidiaries, and assignment of insurance proceeds and governmental permits.
•  Arranging Responsibility: Lumen Ridge Infrastructure Partners LLC was responsible for arranging the credit facility, drawing upon its established relationships with project finance lenders in the energy and infrastructure sectors.
The commitment letter is subject to customary conditions precedent, including execution of definitive credit agreements, satisfactory completion of lender due diligence, receipt of certain regulatory approvals, and compliance with financial covenants. Definitive credit documentation is expected to be negotiated and executed in connection with the initial draw under the facility.
Tab 25 — Letter from Calderwood & Harkness LLP re: Review of Trident Credit Facility Commitment Letter
Date: January 25, 2024
From: James Prentice, Responsible Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
To: Rebecca Whitfield, General Counsel, Calloway-Briggs Renewables Inc.; Priya Narayanan, Chief Financial Officer, Calloway-Briggs Renewables Inc.
Summary: This letter provides a summary of Calderwood & Harkness LLP's review of the Trident National Bank credit facility commitment letter (Tab 24) on behalf of CBR. The letter identifies and discusses the key terms and conditions of the proposed credit facility, highlights conditions precedent to initial funding, and flags certain items for further negotiation in the definitive credit documentation, including certain financial covenant thresholds, permitted lien baskets, distribution lock-up provisions, and change-of-control triggers that could interact with the governance provisions of the LLC Agreement. The letter also addresses the non-recourse nature of the facility and confirms that neither CBR nor Lumen Ridge will be required to provide parent guarantees or credit support beyond their respective equity commitments to the Company.
Tab 26 — Insurance Program Documents
Broker: Blackthorn Risk Advisors LLC (Garrett Yoon, Senior Vice President), 1200 Smith Street, Suite 1650, Houston, Texas 77002
Carrier: Ironclad Mutual Insurance Co., 233 South Wacker Drive, Suite 4400, Chicago, Illinois 60606
Policy Number: BRX-2024-SP-00412
Summary: This tab contains the insurance program documents arranged by Blackthorn Risk Advisors LLC for the benefit of the Company and its projects, including:
(a) Builder's Risk Insurance Policy, providing coverage for property damage and business interruption during the construction phase of each project;
(b) Commercial Property Insurance Policy, providing coverage for completed and operational project assets;
(c) Additional insured endorsements naming Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC as additional insureds under each policy;
(d) Certificates of insurance evidencing coverage; and
(e) Binders and policy declaration pages.
The insurance program was designed to satisfy the requirements of the LLC Agreement, the Development and Construction Management Agreement, and the Trident National Bank credit facility commitment letter.
Tab 27 — Insurance Review Memorandum — Calderwood & Harkness LLP
Date: January 30, 2024
From: Derek Okonkwo, Associate, Calderwood & Harkness LLP
To: Megan Chu, Senior Associate, and James Prentice, Responsible Partner, Calderwood & Harkness LLP
Summary: This internal memorandum provides a summary of Calderwood & Harkness LLP's review of the builder's risk and commercial property insurance program arranged by Blackthorn Risk Advisors LLC with Ironclad Mutual Insurance Co. (Policy Number BRX-2024-SP-00412). The memorandum confirms that the insurance coverage is adequate to satisfy the requirements of the transaction documents and the Trident credit facility commitment letter, identifies certain minor gaps in sublimit coverage for specific perils (including earthquake and flood coverage for the Arizona and New Mexico project sites), and recommends that the additional insured endorsements for both CBR and Lumen Ridge be expanded to include "completed operations" coverage. All recommendations were addressed prior to Closing.
Tab 28 — Title Commitments and Surveys
Provided by: Meridian Land Title Company, 3131 Turtle Creek Boulevard, Suite 800, Dallas, Texas 75219
Summary: This tab contains the title commitments and ALTA/NSPS land surveys for all eight (8) project sites comprising the contributed portfolio, covering approximately 14,340 acres across the following counties:
•  Pecos County, Texas (Red Mesa Solar I and Red Mesa Solar II — 4,500 acres combined)
•  Crockett County, Texas (Cimarron Flats — 1,800 acres)
•  Webb County, Texas (Lone Star Prairie — 1,560 acres)
•  Wharton County, Texas (Brazos Point — 1,440 acres)
•  Doña Ana County, New Mexico (Sangre del Sol I and Sangre del Sol II — 3,120 acres combined)
•  Pinal County, Arizona (Sonoran Ridge — 1,920 acres)
Each title commitment identifies the property, the proposed insured, the proposed coverage amount, and all Schedule B exceptions (including easements, encumbrances, mineral reservations, and other matters disclosed by the public records and surveys). The results of the title review are summarized in the Title and Real Property Due Diligence Memorandum at Tab 36.
Tab 29 — Environmental Site Assessments (Phase I and Phase II)
Prepared by: TerraNova Environmental Sciences Inc. (Dr. Sharon Kessler, Senior Project Manager), 4807 Spicewood Springs Road, Suite 200, Austin, Texas 78759
Summary: This tab contains the Phase I and Phase II Environmental Site Assessments ("ESAs") prepared by TerraNova Environmental Sciences Inc. for all eight (8) project sites comprising the contributed portfolio. The Phase I ESAs were conducted in accordance with ASTM E1527-21 (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process), and the Phase II ESAs were conducted in accordance with ASTM E1903-19 (Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process).
No material recognized environmental conditions ("RECs") were identified at any of the eight project sites. Certain de minimis historical environmental conditions were noted at the Cimarron Flats and Lone Star Prairie sites (related to prior agricultural use), but these were determined to be below reportable thresholds and do not constitute material RECs. The results of the environmental review are summarized in the Environmental Due Diligence Summary Memorandum at Tab 37.
Tab 30 — Brazos Point Project Permit
Date Received: January 10, 2024
Summary: This tab contains the final outstanding permit required for the Brazos Point solar development project located in Wharton County, Texas (120 MW DC, 1,440-acre lease). The receipt of this permit on January 10, 2024 satisfied the final remaining project-level condition precedent to Closing under the LLC Agreement and the Contribution Agreement. As noted at Tab 5, the Brazos Point project was the only contributed project that had not received all required permits as of the Signing Date (December 4, 2023). All other contributed projects were fully permitted as of the Signing Date.
The permit, together with the related correspondence and cover letter from the issuing authority, is included.
VOLUME IX — ENGAGEMENT LETTERS AND ADVISORY AGREEMENTS
Tab 31 — Calderwood & Harkness LLP Engagement Letter
Date: September 12, 2023
From: Calderwood & Harkness LLP (James Prentice, Responsible Partner; Sandra Tung, Billing Partner)
To: Calloway-Briggs Renewables Inc.
Scope: Legal representation of CBR in connection with the formation of a 50/50 solar-development joint venture with Lumen Ridge Infrastructure Partners LLC, including negotiation and documentation of the LLC Agreement, Contribution Agreement, and all ancillary transaction documents, regulatory filings, due diligence, and closing.
Fee Arrangement:
•  Hourly rates: Partner — $1,150 per hour; Senior Associate — $850 per hour; Associate — $725 per hour; Paralegal — $375 per hour.
•  Estimated fees (exclusive of disbursements): $1,800,000 to $2,200,000.
•  Actual fees billed through Closing: $2,050,000.
•  Payment terms: 50% holdback of all invoiced fees pending successful Closing; holdback released upon Closing. All invoiced fees were paid in full following Closing.
Matter Number: 48172.001
Governing Law: State of New York
Tab 32 — Ridgeline Barrow & Co. Engagement Letter
Date: September 20, 2023
From: Ridgeline Barrow & Co. (Marcus Delgado, Managing Director, Energy Advisory), 811 Main Street, Suite 3100, Houston, Texas 77002
To: Calloway-Briggs Renewables Inc.
Scope: Financial advisory engagement for CBR in connection with the proposed joint venture, including evaluation of joint venture structures, valuation of the CBR project portfolio, negotiation support on economic terms, and preparation of the Fairness Analysis (Tab 6).
Fee Arrangement:
•  Flat advisory fee: $1,250,000, payable in installments during the engagement period.
•  Success fee: $500,000, payable upon successful Closing of the joint venture transaction.
•  Total fees: $1,750,000.
Tab 33 — Pennington Clarke LLP Engagement Letter
Date: January 8, 2024
From: Pennington Clarke LLP (Harold Yeung, CPA, Engagement Partner), 155 North Wacker Drive, Suite 3800, Chicago, Illinois 60606
To: Solstice Plateau Energy Holdings LLC
Scope: Engagement of Pennington Clarke LLP as the independent auditor and tax-return preparer for Solstice Plateau Energy Holdings LLC, including preparation of annual audited financial statements, preparation of federal and state partnership tax returns (Form 1065 and applicable state returns), and Schedules K-1 for each Member.
VOLUME X — DUE DILIGENCE MATERIALS
Tab 34 — Due Diligence Request List and Checklist
Maintained by: Megan Chu, Senior Associate, and Derek Okonkwo, Associate, Calderwood & Harkness LLP
Initially Circulated: October 2, 2023
Final Version: November 22, 2023
Summary: This comprehensive due diligence request list and checklist was prepared by Calderwood & Harkness LLP on behalf of CBR to organize and track the due diligence investigation conducted in connection with the joint venture transaction. The checklist is organized into the following categories:
(a) Corporate and organizational documents;
(b) Real property — land leases, title commitments, surveys, and land control;
(c) Environmental — Phase I and Phase II ESAs, permits, and compliance records;
(d) Permits and governmental approvals — federal, state, and local;
(e) Material contracts — interconnection agreements, power purchase agreements, EPC contracts, and O&M agreements;
(f) Tax — tax returns, tax elections, and tax structuring analysis;
(g) Insurance — existing policies, coverage gaps, and broker relationships;
(h) Litigation — pending or threatened claims, arbitration proceedings, and governmental investigations; and
(i) Labor and employment — employees, contractors, and labor agreements.
The checklist reflects the status of each diligence item as of the date of finalization, including items received, items reviewed, open items, and items waived or deemed not applicable.
Tab 35 — Due Diligence Memorandum — CBR Project Portfolio
Date: November 1, 2023
Prepared by: Megan Chu, Senior Associate, and Derek Okonkwo, Associate, Calderwood & Harkness LLP
Summary: This comprehensive legal due diligence memorandum summarizes the results of Calderwood & Harkness LLP's review of all material documents and information relating to the eight solar development projects comprising the CBR contributed portfolio. The memorandum covers the following principal areas:
(a) Land Leases. Review of all land leases and lease amendments for each project site, including term, renewal options, rental payments, termination provisions, and lender consent and estoppel requirements.
(b) Environmental Permits. Review of all environmental permits and approvals, including NEPA categorical exclusions, state environmental permits, stormwater permits, and spill prevention and control plans.
(c) Interconnection Agreements. Review of all executed and pending interconnection agreements with the relevant transmission operators (including ERCOT for the Texas projects and the applicable regional transmission organizations for the New Mexico and Arizona projects), including interconnection timelines, cost allocations, and upgrade requirements.
(d) Power Purchase Agreements (PPAs). Review of all executed and pending power purchase agreements, including counterparty creditworthiness, pricing terms, tenor, curtailment provisions, and force majeure clauses.
(e) Title Matters. Summary of title review results based on commitments and surveys provided by Meridian Land Title Company (cross-referencing Tab 36).
(f) Open Items. The memorandum identifies the Brazos Point project's outstanding permit (Wharton County, TX) as the only material open diligence item at the time of writing. The memorandum recommends that the receipt of this permit be included as a condition precedent to Closing. As noted elsewhere in this Index, the Brazos Point permit was subsequently received on January 10, 2024.
Tab 36 — Title and Real Property Due Diligence Memorandum
Date: October 25, 2023
Prepared by: Derek Okonkwo, Associate, Calderwood & Harkness LLP
Summary: This memorandum provides a detailed review and analysis of the title commitments and ALTA/NSPS land surveys provided by Meridian Land Title Company (Tab 28) for all eight project sites comprising the contributed portfolio. The memorandum identifies and categorizes all encumbrances, easements, mineral reservations, utility easements, and other title exceptions disclosed by the title commitments and surveys. The memorandum confirms that CBR holds adequate land control (through long-term ground leases or federal BLM leases, as applicable) for each project site, that no title defects exist that would materially impair the development, construction, or operation of any project, and that all identified encumbrances are either standard Permitted Encumbrances under the Contribution Agreement or are otherwise immaterial to the intended use of the properties.
Tab 37 — Environmental Due Diligence Summary Memorandum
Date: October 28, 2023
Prepared by: Derek Okonkwo, Associate, Calderwood & Harkness LLP
Summary: This memorandum summarizes Calderwood & Harkness LLP's review of the Phase I and Phase II Environmental Site Assessments prepared by TerraNova Environmental Sciences Inc. (Tab 29) for all eight project sites. The memorandum addresses compliance with NEPA categorical exclusions (for the BLM lease sites in Doña Ana County, New Mexico), state environmental permits, wetlands delineations, cultural resources surveys, and threatened and endangered species evaluations.
The memorandum confirms that no material recognized environmental conditions were identified at any of the eight project sites. Certain de minimis historical conditions related to prior agricultural use were noted at the Cimarron Flats and Lone Star Prairie sites, but these were determined to be below applicable reportable thresholds and do not constitute material recognized environmental conditions. No further Phase II investigation or remediation was recommended by TerraNova Environmental Sciences Inc. for any project site.
VOLUME XI — PRE-SIGNING AND NEGOTIATION DOCUMENTS
Tab 38 — Non-Binding Term Sheet
Date: September 25, 2023
Signed by:
•  Margaret "Meg" Calloway, Chairwoman and Chief Executive Officer, Calloway-Briggs Renewables Inc.
•  Nathaniel "Nate" Forsythe, Co-Founder and Managing Partner, Lumen Ridge Infrastructure Partners LLC.
Drafted by: Calderwood & Harkness LLP
Summary: This non-binding term sheet sets forth the principal economic and governance terms of the proposed 50/50 joint venture between CBR and Lumen Ridge, including:
•  Total Equity Commitment: $300,000,000 (50/50 between CBR and Lumen Ridge).
•  Entity Structure: Delaware limited liability company (Solstice Plateau Energy Holdings LLC).
•  Portfolio Valuation: $90,000,000 for CBR's eight-project solar development portfolio (1,200 MW DC).
•  Management Committee: Six-member Management Committee (3 CBR / 3 Lumen Ridge), with supermajority voting on reserved matters.
•  Distribution Waterfall: As described in the LLC Agreement (Tab 1).
•  Exclusivity Period: Sixty (60)-day exclusivity period commencing on the date of execution, during which neither party would engage in discussions with third parties regarding alternative transactions for the contributed projects.
The term sheet was expressly non-binding and subject in all respects to the negotiation, execution, and delivery of definitive transaction documents.
Tab 39 — HSR Filing Analysis Memorandum
Date: October 5, 2023
Prepared by: Derek Okonkwo, Associate, Calderwood & Harkness LLP
Summary: This internal memorandum analyzes the applicability of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, to the proposed joint venture transaction. The memorandum concludes that the transaction exceeds the applicable size-of-transaction threshold and that both parties exceed the applicable size-of-person thresholds, such that pre-merger notification filings are required. The memorandum recommends an expedited filing strategy and discusses the anticipated timeline for clearance. The filing was submitted on October 18, 2023 under HSR Transaction Number 20231018-CBR-LRI, and early termination was granted on November 8, 2023.
Tab 40 — Cascadia Consent Analysis Memorandum
Date: October 8, 2023
Prepared by: Megan Chu, Senior Associate, Calderwood & Harkness LLP
Summary: This internal memorandum analyzes the consent requirements applicable to the proposed joint venture transaction under CBR's Amended and Restated Stockholders' Agreement, dated March 14, 2019, with particular reference to the consent rights of Cascadia Growth Equity Fund III, L.P. as a holder of approximately 22% of the outstanding common stock of CBR. The memorandum identifies the specific provisions of the Stockholders' Agreement triggered by the formation of the joint venture and the contribution of the project portfolio, outlines the procedural requirements for obtaining consent, and recommends early engagement with Cascadia's investment team. The written consent of Cascadia Fund III was subsequently obtained on November 20, 2023 (Tab 23).
Tab 41 — Structuring Memorandum — Proposed Solar Development Joint Venture
Date: September 29, 2023
Prepared by: James Prentice, Responsible Partner, Mergers & Acquisitions, and Megan Chu, Senior Associate, Calderwood & Harkness LLP
Summary: This memorandum analyzes alternative legal structures for the proposed joint venture, including:
(a) Delaware limited liability company taxed as a partnership;
(b) Delaware limited partnership;
(c) Delaware C-corporation; and
(d) Other hybrid structures.
The memorandum evaluates each alternative with respect to tax efficiency (including the ability to pass through investment tax credits and depreciation deductions to the Members), governance flexibility, liability protection, transferability of interests, administrative complexity, and compatibility with the contemplated credit facility. The memorandum recommends the formation of a Delaware limited liability company classified as a partnership for federal income tax purposes, which structure was ultimately adopted by the parties.
Tab 42 — Tax Structuring Memorandum
Date: October 10, 2023
Prepared by: Leonard Cross, Specialist Partner, Tax (New York Office), Calderwood & Harkness LLP
Summary: This memorandum provides a detailed analysis of the federal income tax considerations relating to the formation and operation of the proposed joint venture, including:
(a) Partnership Classification. Confirmation that Solstice Plateau Energy Holdings LLC will be classified as a partnership for federal income tax purposes under Treasury Regulations § 301.7701-3, and that no entity classification election ("check-the-box" election) is required.
(b) Section 704(c) Allocation Method. Analysis of available allocation methods under Internal Revenue Code ("IRC") § 704(c) for allocations of income, gain, loss, and deductions with respect to contributed property, including the traditional method, the traditional method with curative allocations, and the remedial allocation method. The memorandum recommends adoption of the remedial allocation method as the most equitable approach in light of the significant built-in gain in the contributed portfolio ($55,800,000).
(c) Bonus Depreciation. Analysis of the availability of bonus depreciation under IRC § 168(k) for the solar project assets, including the applicable phase-down percentages under the Tax Cuts and Jobs Act of 2017 and the modifications enacted by the Inflation Reduction Act of 2022.
(d) Investment Tax Credits (ITCs). Analysis of the availability and allocation of investment tax credits under IRC § 48, including the base credit rate (30%) and the enhanced credit rate (40%) applicable to projects satisfying the domestic content bonus and/or energy community bonus requirements of the Inflation Reduction Act. The memorandum recommends a 50/50 allocation of ITCs between the Members, consistent with the 50/50 economic arrangement.
(e) Tax Protection. Analysis of the $55,800,000 built-in gain in the contributed portfolio (book value of $90,000,000 minus adjusted tax basis of $34,200,000) and recommendation for a seven (7)-year tax protection agreement to protect CBR against recognition of such built-in gain in the event of a taxable disposition by the Co