1015-00004 · Calloway-Briggs Renewables Inc · Memos & Analyses

cascadia-consent-analysis.docx DOCUMENT M&A / Corporate

25 / 37 ← → ✕

MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

Calderwood & Harkness LLP 1000 Louisiana Street, Suite 5500 Houston, TX 77002

October 8, 2023

This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressee and other authorized personnel of Calderwood & Harkness LLP in connection with the above-referenced matter. This memorandum should not be disclosed, distributed, or reproduced in whole or in part without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of the attorney-client privilege or work-product protection.

I. Executive Summary

The purpose of this memorandum is to analyze whether the proposed formation of a 50/50 joint venture between Calloway-Briggs Renewables Inc. ("CBR") and Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge") triggers any consent or approval rights held by Cascadia Growth Equity Fund III, L.P. ("Cascadia" or "Cascadia Fund III") under CBR's existing stockholders' agreement (the "Stockholders' Agreement"). This analysis has been prepared at the request of James Prentice, Responsible Partner, in anticipation of the parties' execution of definitive joint venture documents, which is currently targeted for early December 2023.

Conclusion. Based on our review of the Stockholders' Agreement and the terms of the proposed transaction, we conclude that Cascadia's prior written consent is required before CBR may execute the definitive documents forming the proposed joint venture. Cascadia holds an approximately 22% equity stake in CBR, and the Stockholders' Agreement requires Cascadia's prior written consent for any "Material Transaction" as broadly defined therein. The proposed joint venture formation — which involves the contribution of CBR's eight-project, 1,200 MW utility-scale solar development portfolio (with an agreed valuation of $90,000,000) and an aggregate initial equity commitment of $150,000,000 by CBR ($60,000,000 in cash plus the $90,000,000 in-kind contribution), with potential additional capital calls of up to $200,000,000 — clearly constitutes a "Material Transaction" under the Stockholders' Agreement and triggers the consent requirement on multiple independent grounds.

Recommendation. We recommend that CBR promptly engage with Owen Charbonneau, Managing Director of Cascadia Fund III, to present the transaction and commence the consent process. CBR should prepare and deliver a comprehensive information package to Cascadia and allow a reasonable period for review and discussion. The target should be to obtain Cascadia's executed written consent before circulation of the final definitive documents, which is currently targeted for late November 2023. The consent process can proceed in parallel with ongoing due diligence activities and the Hart-Scott-Rodino antitrust filing.

Status Update (November 2023). Cascadia Fund III delivered its unconditional written consent to the proposed joint venture formation on November 20, 2023. The consent letter, executed by Owen Charbonneau in his capacity as Managing Director, has been received by CBR's General Counsel, Rebecca Whitfield, and transmitted to Calderwood & Harkness LLP for inclusion in the matter files. This memorandum has been updated accordingly to reflect the successful completion of the consent process.

II. Background

A. The Parties

1. Calloway-Briggs Renewables Inc.

Calloway-Briggs Renewables Inc. ("CBR") is a Texas corporation founded in 2011 and headquartered at 2300 Travis Street, Suite 4200, Houston, Texas 77006. CBR's Employer Identification Number is 46-2837451, and its Texas Secretary of State File Number is 0801647392. CBR is one of the largest privately held independent solar developers in the southern United States, with an active development and operational portfolio of approximately 3.8 gigawatts ("GW") of solar projects spanning Texas, New Mexico, Arizona, and Nevada. For the fiscal year ended December 31, 2022, CBR reported revenues of approximately $412 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $98 million.

CBR's key principals and officers are as follows:

• Margaret "Meg" Calloway — Co-Founder, Chairwoman, and Chief Executive Officer

• Thomas R. Briggs — Co-Founder and President

• Priya Narayanan — Chief Financial Officer

• Daniel Estrada — Senior Vice President, Corporate Development

• Rebecca Whitfield — General Counsel

CBR's outstanding equity is majority-owned by its co-founders, Margaret Calloway and Thomas R. Briggs. In addition to the founders' holdings, CBR has a single minority institutional stockholder: Cascadia Growth Equity Fund III, L.P., which holds an approximately 22% equity stake in the company. This minority stake was acquired by Cascadia in connection with a growth equity investment consummated in prior years, at which time the parties entered into the Stockholders' Agreement that is the subject of this memorandum.

2. Cascadia Growth Equity Fund III, L.P.

Cascadia Growth Equity Fund III, L.P. ("Cascadia" or "Cascadia Fund III") is a Delaware limited partnership organized and existing under the laws of the State of Delaware. Cascadia is a growth-equity fund based at 900 SW Fifth Avenue, Suite 2600, Portland, Oregon 97204. Cascadia focuses on growth-stage investments in the energy, infrastructure, and environmental services sectors. The key principal relevant to this matter is Owen Charbonneau, Managing Director of Cascadia Fund III, who serves as the primary relationship manager for Cascadia's investment in CBR and is authorized to act on behalf of Cascadia Fund III in connection with consent matters arising under the Stockholders' Agreement.

3. Lumen Ridge Infrastructure Partners LLC

Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge") is a Delaware limited liability company headquartered at 301 Tresser Boulevard, Suite 1400, Stamford, Connecticut 06901. Lumen Ridge is a renewable-energy infrastructure investment platform formed in 2018 and managed by Lumen Ridge Capital Advisors LLC, its affiliated investment adviser. As of the date of this memorandum, Lumen Ridge manages approximately $4.2 billion in assets under management ("AUM") across a diversified portfolio of solar, wind, battery storage, and grid infrastructure investments.

Lumen Ridge's key principals and officers relevant to this matter are as follows:

• Nathaniel "Nate" Forsythe — Co-Founder and Managing Partner

• Carolyn J. Delaney — Partner and Head of Solar Investments

• Victor Osei — Chief Financial Officer

• Amanda Prescott — General Counsel and Chief Compliance Officer

Lumen Ridge has a strong track record of partnering with leading developers to originate, develop, construct, and operate utility-scale renewable energy projects across the United States. The proposed joint venture with CBR is consistent with Lumen Ridge's stated investment strategy of deploying institutional capital alongside experienced development partners.

B. The Proposed Transaction

CBR and Lumen Ridge propose to form Solstice Plateau Energy Holdings LLC (the "JV" or "Solstice Plateau"), a Delaware limited liability company, as a 50/50 joint venture for the purpose of developing, constructing, owning, and operating a portfolio of utility-scale solar energy projects.

The key terms of the proposed transaction, as set forth in the non-binding term sheet executed by Margaret Calloway and Nathaniel Forsythe on September 25, 2023 (the "Non-binding Term Sheet"), are summarized below:

Equity Commitment and Capital Structure. The total aggregate initial equity commitment to Solstice Plateau is $300,000,000, to be contributed equally by CBR and Lumen Ridge at $150,000,000 per member. CBR's initial contribution consists of the following:

(a) $60,000,000 in cash; and

(b) An in-kind contribution of eight utility-scale solar development projects (the "Contributed Portfolio"), representing an aggregate capacity of approximately 1,200 megawatts DC, located across Texas, New Mexico, and Arizona, at an agreed valuation of $90,000,000.

The $90,000,000 agreed valuation of the Contributed Portfolio is supported by an independent fairness analysis prepared by Ridgeline Barrow & Co., an investment banking firm retained by CBR. The fairness analysis, which was delivered on November 15, 2023 (subsequent to the date of this memorandum), valued the portfolio in a range of $87,000,000 to $96,000,000, thereby supporting the agreed $90,000,000 valuation.

Lumen Ridge's initial contribution consists of $150,000,000 in cash.

Additional Capital Calls. The JV operating agreement (the "LLC Agreement") will authorize additional capital calls of up to $200,000,000 per member ($400,000,000 in the aggregate) to fund the development and construction of JV projects beyond the initial contributed portfolio. Any such additional capital calls will be subject to supermajority approval of the Management Committee (as described below), requiring approval by at least five of the six appointed members.

Governance. Solstice Plateau will be governed by a six-member Management Committee, with three members appointed by CBR and three members appointed by Lumen Ridge. Major decisions — including, without limitation, the approval of additional capital calls in excess of initial commitments, entry into project-level financing arrangements, approval of annual budgets in excess of agreed thresholds, and the admission of additional members — will require supermajority approval of five of the six Management Committee members.

Management Fees and CBR's Operating Role. CBR will serve as the development and construction manager for all JV projects pursuant to a Development and Construction Management Agreement to be entered into concurrently with the LLC Agreement. CBR will receive the following fees in consideration for its management services:

(a) A development management fee equal to 1.5% per annum of aggregate capital deployed in respect of projects under active development; and

(b) A construction management fee equal to 3.0% of hard construction costs for each JV project during the construction phase.

Tax Protection. CBR will receive the benefit of a seven-year tax protection agreement (the "Tax Protection Agreement") covering $55,800,000 of built-in gain on the Contributed Portfolio (calculated as the difference between the agreed book value of $90,000,000 and CBR's aggregate tax basis in the contributed assets of $34,200,000). The Tax Protection Agreement will indemnify CBR against incremental tax liabilities arising from a taxable disposition of the contributed assets by Solstice Plateau during the seven-year protection period, subject to customary exceptions and limitations to be negotiated in the definitive documents.

Project-Level Financing. The JV anticipates obtaining non-recourse project-level debt financing from Trident National Bank, N.A. for the construction and term financing of individual JV projects. The specific terms and conditions of such financing will be negotiated on a project-by-project basis and will be subject to Management Committee approval.

Distribution Waterfall. Distributions from the JV to its members will follow a multi-tiered waterfall structure. In the first tier, distributions will be allocated equally (50/50) between CBR and Lumen Ridge until each member has received a return of its contributed capital and a preferred return. In the second tier, distributions will be allocated 60% to CBR and 40% to Lumen Ridge, reflecting CBR's enhanced economics as the operating partner. The detailed mechanics of the distribution waterfall will be set forth in the LLC Agreement.

C. Timeline Context

The following timeline summarizes key dates and milestones relevant to this memorandum:

III. CBR's Stockholders' Agreement — Relevant Provisions

A. Overview of the Stockholders' Agreement

CBR entered into the Stockholders' Agreement in connection with Cascadia Fund III's original growth equity investment in CBR. The Stockholders' Agreement was negotiated and executed at the time of Cascadia's acquisition of its approximately 22% equity stake in CBR and governs certain rights and obligations among CBR, its co-founders (Margaret Calloway and Thomas R. Briggs), and Cascadia Fund III as a minority institutional stockholder.

The Stockholders' Agreement addresses a range of governance, transfer, and protective matters, including, among others: (i) consent rights in favor of Cascadia with respect to specified categories of transactions; (ii) information and reporting rights; (iii) board representation or observer rights; (iv) restrictions on transfers of equity; (v) drag-along and tag-along rights; (vi) registration rights; and (vii) preemptive rights with respect to certain issuances of additional equity. For purposes of this memorandum, we focus principally on the consent provisions applicable to "Material Transactions" and related information rights.

The consent and protective provisions of the Stockholders' Agreement are exercisable by Cascadia so long as Cascadia holds a specified minimum equity percentage in CBR. As of the date of this memorandum, Cascadia holds approximately 22% of CBR's outstanding equity, which is well above any minimum threshold set forth in the Stockholders' Agreement for the exercise of consent rights. Accordingly, there is no question that Cascadia's consent rights are currently in effect and enforceable.

B. Consent Rights — Material Transactions

The Stockholders' Agreement contains a comprehensive set of consent provisions requiring CBR to obtain the prior written consent of Cascadia before undertaking any "Material Transaction." The term "Material Transaction" is defined broadly in the Stockholders' Agreement and is designed to capture a wide range of significant corporate actions that could materially affect Cascadia's investment in CBR. Specifically, the definition of "Material Transaction" includes, among other things, the following categories of transactions:

(a) Joint ventures, partnerships, and similar arrangements. The entry by CBR (or any of its subsidiaries) into any joint venture, partnership, strategic alliance, or similar arrangement involving aggregate commitments, contributions, or capital expenditures by CBR exceeding a specified dollar threshold;

(b) Dispositions of material assets. The contribution, sale, transfer, assignment, conveyance, or other disposition of material assets of CBR (including, without limitation, development-stage projects, land rights, interconnection agreements, power purchase agreements, and other project assets) outside the ordinary course of CBR's business;

(c) Incurrence of material indebtedness. The incurrence of material indebtedness or the granting of material guarantees by CBR or any of its subsidiaries in excess of specified thresholds, other than customary project-level financing in the ordinary course;

(d) Changes to capital structure or business plan. Any transaction or series of related transactions that would materially alter CBR's capital structure, equity ownership, business plan, or strategic direction.

The foregoing categories are disjunctive, meaning that a transaction need only fall within any one of the enumerated categories in order to constitute a "Material Transaction" requiring Cascadia's prior written consent. As analyzed in detail in Section IV below, the proposed JV formation triggers the consent requirement on multiple independent grounds.

It is important to note that the consent right is a prior written consent right — meaning that CBR is required to obtain Cascadia's consent before executing definitive documentation or consummating the transaction. Proceeding without obtaining Cascadia's consent would constitute a breach of the Stockholders' Agreement and could expose CBR to claims for breach of contract, injunctive relief, and damages.

C. Other Relevant Provisions

In addition to the Material Transaction consent rights described above, several other provisions of the Stockholders' Agreement are relevant to the proposed JV formation:

Information Rights. Cascadia is entitled to receive reasonable advance notice and information regarding proposed Material Transactions. This obligation encompasses the duty to provide Cascadia with sufficient information to enable a meaningful evaluation of the proposed transaction before Cascadia is asked to deliver its written consent. In practice, this requires CBR to furnish Cascadia with a comprehensive information package describing the terms of the transaction, the counterparty, the strategic rationale, and the financial analysis supporting the agreed-upon terms.

Board Observer Rights and Periodic Reporting. The Stockholders' Agreement may also provide Cascadia with the right to designate a board observer or to receive periodic reporting on material developments affecting CBR's business. In the context of the proposed JV formation, this may include the right to receive ongoing reports regarding JV activities and performance following the closing. We recommend confirming the scope of any such observer or reporting rights with CBR's General Counsel, Rebecca Whitfield, to ensure that any ongoing obligations are identified and addressed in the definitive JV documentation and post-closing compliance procedures.

Ordinary Course and De Minimis Exceptions. The Stockholders' Agreement does not require Cascadia's consent for: (i) transactions conducted in the ordinary course of CBR's business; (ii) de minimis transactions falling below the applicable dollar thresholds specified in the agreement; or (iii) transactions between CBR and its wholly owned subsidiaries, which are generally excluded from the definition of "Material Transaction." As discussed below, none of these exceptions is applicable to the proposed JV formation.

IV. Analysis — Applicability to the Proposed JV Formation

A. The JV Formation Constitutes a "Material Transaction"

Based on our review of the Stockholders' Agreement and the terms of the proposed transaction as set forth in the Non-binding Term Sheet, we conclude that the formation of Solstice Plateau Energy Holdings LLC constitutes a "Material Transaction" under the Stockholders' Agreement, triggering Cascadia's prior written consent right. This conclusion is supported by several independent grounds.

Dollar Magnitude. CBR's aggregate initial equity commitment to the JV is $150,000,000, consisting of $60,000,000 in cash and an in-kind contribution of the Contributed Portfolio valued at $90,000,000. In addition, the LLC Agreement will authorize additional capital calls of up to $200,000,000 per member, which, if called, would bring CBR's total potential equity commitment to $350,000,000. These amounts are well in excess of any materiality or dollar threshold specified in the Stockholders' Agreement for the purpose of triggering the consent requirement applicable to joint ventures, partnerships, and similar arrangements. Even considering only the initial $150,000,000 commitment, the magnitude of CBR's financial exposure in connection with the proposed JV formation is substantial by any measure and clearly surpasses the relevant threshold.

Asset Contribution. The contribution of the Contributed Portfolio — comprising eight utility-scale solar development projects with an aggregate capacity of approximately 1,200 MW DC across Texas, New Mexico, and Arizona, and an agreed valuation of $90,000,000 — constitutes a significant disposition of development assets outside the ordinary course of CBR's business. The Contributed Portfolio represents approximately one-third of CBR's total development pipeline of approximately 3.8 GW. The transfer of assets of this scale and strategic significance from CBR to a jointly controlled entity clearly falls within the Stockholders' Agreement's definition of a disposition of "material assets" outside the ordinary course. This ground alone would be sufficient to trigger Cascadia's consent right.

Structural Significance and Alteration of Control. The proposed JV formation creates a jointly controlled entity with 50/50 ownership between CBR and Lumen Ridge, governed by a six-member Management Committee requiring supermajority (five of six) approval for major decisions. This governance structure means that, with respect to the Contributed Portfolio and all projects developed through the JV, CBR will no longer have unilateral decision-making authority. Rather, CBR will share control of these assets with Lumen Ridge, a third-party infrastructure investment platform. This represents a material alteration of CBR's control over a significant portion of its asset base and strategic direction. The shift from sole ownership and control to shared governance over a jointly controlled entity is precisely the type of structural change that the Stockholders' Agreement's consent provisions were designed to address.

Ongoing Commitments. In addition to the initial equity commitment and asset contribution, the proposed JV entails significant ongoing operational and financial commitments for CBR, including: (i) CBR's role as development and construction manager for all JV projects, with associated performance obligations and liability exposure; (ii) the receipt of management fees tied to aggregate capital deployed and hard construction costs, which creates an ongoing financial interdependency between CBR and the JV; and (iii) the potential for additional capital calls of up to $200,000,000 beyond the initial commitment, which, even though subject to supermajority Management Committee approval, represents a material contingent financial obligation. These ongoing commitments further reinforce the conclusion that the proposed JV formation is a Material Transaction requiring Cascadia's prior written consent.

B. No Available Exemption

We have considered whether any of the exemptions from the consent requirement set forth in the Stockholders' Agreement might apply to the proposed JV formation. None is applicable.

Ordinary Course of Business. The proposed JV formation is not in the ordinary course of CBR's business. While CBR is in the business of developing, constructing, and operating solar energy projects, it has not previously formed a joint venture of this scale or contributed a significant portfolio of development-stage projects to a jointly controlled entity. The formation of a $300,000,000 joint venture with an institutional infrastructure platform represents a significant departure from CBR's historical business practices and cannot reasonably be characterized as an ordinary course transaction.

De Minimis Threshold. The proposed JV involves aggregate commitments by CBR of $150,000,000 (with potential additional calls of up to $200,000,000) and an asset contribution valued at $90,000,000. These amounts far exceed any de minimis threshold under the Stockholders' Agreement. The transaction is not remotely close to the thresholds below which the consent requirement does not apply.

Wholly Owned Subsidiary Exception. Solstice Plateau Energy Holdings LLC is not a wholly owned subsidiary of CBR. It is a 50/50 joint venture between CBR and Lumen Ridge. The exception for transactions between CBR and its wholly owned subsidiaries is therefore inapplicable.

C. Conclusion

For the reasons set forth above, we conclude that the proposed formation of Solstice Plateau Energy Holdings LLC unambiguously constitutes a "Material Transaction" under the Stockholders' Agreement and triggers Cascadia's prior written consent right on multiple independent grounds. CBR must obtain Cascadia's prior written consent before executing the definitive LLC Agreement and ancillary documents. Proceeding without such consent would constitute a breach of the Stockholders' Agreement and could expose CBR to significant legal risk, including claims for breach of contract, injunctive relief, and potential damages.

V. Process for Obtaining Cascadia's Consent

A. Recommended Approach

We recommend the following process for obtaining Cascadia's prior written consent:

Step 1 — Initial Outreach and Notification. CBR management — we suggest Meg Calloway (CEO) and Priya Narayanan (CFO) — should contact Owen Charbonneau, Managing Director of Cascadia Fund III, to provide advance notice of the proposed transaction and to arrange a meeting or call for a detailed presentation. The initial outreach should convey the strategic rationale for the JV, introduce Lumen Ridge as the proposed partner, and explain the general terms and structure of the transaction. This initial contact should emphasize CBR's commitment to transparency and its desire to keep Cascadia fully informed.

Step 2 — Delivery of Comprehensive Information Package. Following the initial outreach, CBR should prepare and deliver to Cascadia a comprehensive information package containing the following materials:

(a) A summary of the proposed JV structure, including a copy of the Non-binding Term Sheet signed on September 25, 2023;

(b) An overview of Lumen Ridge as the JV partner, including background on the firm's management team, investment strategy, approximately $4.2 billion in assets under management, and relevant track record in renewable energy infrastructure;

(c) A description of the Contributed Portfolio, including project-level summaries of the eight utility-scale solar development projects (aggregate 1,200 MW DC capacity) located across Texas, New Mexico, and Arizona, and the current development status and projected timelines for each project;

(d) The Ridgeline Barrow & Co. fairness analysis, which was delivered on November 15, 2023, and valued the Contributed Portfolio in a range of $87,000,000 to $96,000,000, supporting the agreed valuation of $90,000,000 (note: this analysis was in preparation as of the date of this memorandum and should be delivered to Cascadia promptly upon completion);

(e) A summary of key economic terms, including the $300,000,000 total equity commitment, the distribution waterfall structure (including CBR's enhanced Tier 2 economics of 60/40), the management fee structure (1.5% development management fee and 3.0% construction management fee), and the Tax Protection Agreement covering $55,800,000 of built-in gain over a seven-year period;

(f) A discussion of the strategic rationale for the JV and the expected benefits to CBR and its stockholders, including access to institutional capital, acceleration of project development timelines, diversification of development risk, and enhanced development and construction management fee revenue.

Step 3 — Review Period and Engagement. CBR should allow Cascadia a reasonable review period of approximately two to three weeks following delivery of the information package. During this review period, CBR should be prepared to address any questions, requests for additional information, or concerns raised by Cascadia. We recommend designating Daniel Estrada (SVP — Corporate Development) and Rebecca Whitfield (General Counsel) as the primary points of contact for Cascadia's due diligence inquiries. If Cascadia requests a follow-up meeting or presentation, CBR should accommodate such requests promptly.

Step 4 — Execution of Formal Written Consent. Upon completion of Cascadia's review and any discussions, CBR should obtain Cascadia's formal written consent in the form required by the Stockholders' Agreement. Typically, this takes the form of a signed consent letter or written consent instrument that specifically references the proposed transaction, identifies the definitive documents to be executed, and confirms Cascadia's consent to CBR entering into such documents. Calderwood & Harkness LLP will prepare a draft consent letter for Cascadia's review and execution.

B. Timing Considerations

The timing of the consent process is critical and must be coordinated with the overall transaction timeline. The following timing considerations should guide CBR's approach:

Target Date for Consent. Cascadia's written consent should ideally be obtained before the circulation of final definitive documents, which is currently targeted for late November 2023. This will ensure that the consent is in hand before the parties finalize and execute the LLC Agreement and ancillary documents.

Condition Precedent to Signing. Cascadia's consent is a condition precedent to CBR's authority to execute the definitive documents. The definitive LLC Agreement should include a representation by CBR that all necessary stockholder consents, including Cascadia's consent, have been obtained. The absence of such consent at the time of signing would undermine the validity of this representation and could give rise to a breach claim by Lumen Ridge.

Recommended Initiation Date. We recommend initiating the consent process no later than mid-October 2023 in order to allow adequate time for Cascadia's review, any follow-up discussions, and the execution of the formal consent instrument before the targeted late November 2023 date for circulation of final definitive documents. Given the complexity of the transaction and the magnitude of CBR's commitments, a two-to-three-week review period is a reasonable minimum.

Parallel Workstreams. The consent process can and should proceed in parallel with other ongoing workstreams, including: (i) the Hart-Scott-Rodino Act premerger notification filing, which was submitted on October 18, 2023 (HSR Transaction Number 20231018-CBR-LRI), and for which early termination was subsequently granted by the FTC on November 8, 2023; (ii) ongoing due diligence activities between CBR and Lumen Ridge; and (iii) the negotiation and drafting of definitive documents. There is no reason for the Cascadia consent process to delay or impede any of these parallel workstreams, provided that CBR initiates the outreach to Cascadia promptly.

C. Potential Cascadia Concerns and Mitigation

Based on our understanding of Cascadia's investment objectives and the terms of the proposed transaction, we anticipate the following potential concerns from Cascadia, along with recommended mitigation strategies:

Dilution of CBR's Control Over Contributed Assets. Cascadia may express concern that the contribution of the eight-project, 1,200 MW portfolio to a jointly controlled entity will dilute CBR's unilateral control over these assets. This concern can be mitigated by highlighting the following features of the JV structure: (i) the 50/50 governance structure, which ensures that CBR retains equal control with Lumen Ridge and that no major decision can be taken without the concurrence of CBR's appointees to the Management Committee; (ii) the supermajority voting requirement (five of six votes) for major decisions, which provides CBR with effective veto power over significant actions affecting the JV and the contributed assets; (iii) CBR's role as development and construction manager, which ensures CBR's continued day-to-day operational control over the development and construction of JV projects; and (iv) CBR's enhanced distribution economics in Tier 2 of the distribution waterfall (60/40 in CBR's favor), which reflects the value of CBR's operating platform and development expertise.

Capital Deployment Risk. Cascadia may be concerned about the risk associated with CBR's significant capital deployment into the JV, including the initial $150,000,000 commitment and the potential for additional capital calls of up to $200,000,000. This concern can be mitigated by emphasizing that: (i) additional capital calls beyond the initial $150,000,000 commitment are not mandatory but rather subject to supermajority Management Committee approval; (ii) the JV anticipates obtaining non-recourse project-level debt financing from Trident National Bank, N.A. for the construction and term financing of individual projects, which will reduce the equity capital required from the JV members; and (iii) the JV's investment thesis is predicated on the development and sale or long-term ownership of utility-scale solar assets with predictable, contracted cash flows.

Valuation of Contributed Portfolio. Cascadia may seek assurance that the $90,000,000 agreed valuation of the Contributed Portfolio is fair and reasonable. This concern is directly addressed by the independent fairness analysis prepared by Ridgeline Barrow & Co., which valued the portfolio in a range of $87,000,000 to $96,000,000, placing the agreed $90,000,000 valuation within the midrange of the independent analysis. We recommend delivering the Ridgeline Barrow & Co. fairness analysis to Cascadia as part of the information package.

Impact on CBR's Existing Business. Cascadia may be concerned about the impact of the JV on CBR's remaining standalone operations and development pipeline. This concern can be mitigated by emphasizing that CBR retains its remaining approximately 2.6 GW of development pipeline outside the JV (representing approximately two-thirds of CBR's total pipeline) and continues all other operations, including independent project development, construction management activities, and existing contractual relationships. The JV is designed to complement, rather than cannibalize, CBR's existing business, and the management fee revenue from the JV will provide an additional, recurring revenue stream to CBR.

VI. Status Update — Consent Obtained

On November 20, 2023, Cascadia Growth Equity Fund III, L.P. — acting through Owen Charbonneau, Managing Director — delivered its written consent to the proposed JV formation. The consent letter was executed by Mr. Charbonneau in his capacity as an authorized signatory of Cascadia Fund III and was delivered to CBR in accordance with the notice provisions of the Stockholders' Agreement.

The consent letter specifically authorized CBR to enter into the following definitive documents and related ancillary agreements with Lumen Ridge Infrastructure Partners LLC and Solstice Plateau Energy Holdings LLC:

(a) The LLC Agreement of Solstice Plateau Energy Holdings LLC;

(b) The Contribution Agreement, pursuant to which CBR will contribute the eight-project, 1,200 MW solar development portfolio and $60,000,000 in cash to Solstice Plateau;

(c) The Development and Construction Management Agreement, pursuant to which CBR will serve as development and construction manager for all JV projects;

(d) The Tax Protection Agreement, providing CBR with protection against incremental tax liabilities arising from the disposition of contributed assets during the seven-year protection period; and

(e) All related ancillary documents and agreements necessary to effectuate the transactions contemplated by the foregoing documents.

The consent was unconditional. Cascadia did not impose any conditions, limitations, or qualifications on its consent. No side letters or additional agreements were requested or entered into in connection with the consent process.

Rebecca Whitfield, CBR's General Counsel, confirmed receipt of the executed consent letter and transmitted a copy to Calderwood & Harkness LLP on November 20, 2023. The executed consent letter has been filed in Calderwood & Harkness's matter files under Matter Number 48172.001 and will be included in the closing deliverables and closing binder for the transaction.

We note that the consent process proceeded smoothly and within the anticipated timeline. CBR's management team — including Meg Calloway, Priya Narayanan, and Daniel Estrada — engaged effectively with Owen Charbonneau and the Cascadia team, and Cascadia's questions and requests for information were addressed promptly and satisfactorily. The successful completion of the consent process within the target timeline is a credit to CBR's management team and reflects the strength of the relationship between CBR and Cascadia.

VII. Recommendations and Next Steps

In light of the foregoing analysis and the successful completion of the consent process, we provide the following recommendations and action items:

1. Consent Requirement Satisfied. The Cascadia consent requirement has been satisfied. No further action is required with respect to Cascadia's approval of the proposed JV formation. CBR is authorized to proceed with the execution of the definitive LLC Agreement and ancillary documents, subject to satisfaction of all other conditions precedent to signing.

2. Closing Checklist. The executed Cascadia consent letter should be included as a line item on the closing checklist for the transaction. The closing team should verify that the original executed consent letter (or a copy certified by CBR's General Counsel) is included among the closing deliverables and that a copy is placed in the closing binder.

3. Ongoing Information and Observer Rights. CBR should confirm with Rebecca Whitfield (General Counsel) whether Cascadia has ongoing information rights, board observer rights, or other periodic reporting obligations under the Stockholders' Agreement that will require periodic reporting with respect to the JV following the closing. If so, CBR should establish a process for providing such reports and designate an individual within CBR's management team to serve as the liaison for Cascadia-related reporting obligations. We are available to assist in reviewing the Stockholders' Agreement to identify the scope of any such ongoing obligations.

4. Representation in LLC Agreement. The definitive LLC Agreement should include a representation by CBR that all necessary stockholder consents and approvals, including Cascadia's written consent, have been obtained in connection with CBR's execution and delivery of the LLC Agreement and ancillary documents. We recommend confirming with the drafting team that this representation is included in the Representations and Warranties section of the LLC Agreement applicable to CBR. This is a standard representation in transactions of this type and is expected to be required by Lumen Ridge as a condition to its execution of the definitive documents.

5. Document Management. The executed Cascadia consent letter has been filed in Calderwood & Harkness's document management system under Matter Number 48172.001. We recommend that an additional copy be maintained in CBR's corporate records, alongside the Stockholders' Agreement and other stockholder-related governance documents, for future reference.

6. Post-Closing Coordination. Following the signing and closing of the JV documents, Calderwood & Harkness LLP should coordinate with CBR's General Counsel to ensure that any notifications, filings, or updates required to be made to Cascadia under the Stockholders' Agreement in connection with the consummation of the transaction are timely delivered.

Please do not hesitate to contact me if you have any questions regarding this memorandum or require additional analysis in connection with the Cascadia consent matter or any other aspect of the proposed JV transaction.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Megan Chu Lead Associate, Mergers & Acquisitions

Reviewed by: ________ James Prentice Responsible Partner, Mergers & Acquisitions

VIII. Enclosures / Attachments (Referenced)

The following documents are referenced in this memorandum and are attached hereto or maintained in the matter files under Matter Number 48172.001:

1. Exhibit A — Relevant excerpts from the Stockholders' Agreement of Calloway-Briggs Renewables Inc. (consent provisions, including the definition of "Material Transaction" and related information rights provisions).

2. Exhibit B — Non-binding Term Sheet dated September 25, 2023, by and between Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC.

3. Exhibit C — Copy of executed Cascadia Growth Equity Fund III, L.P. consent letter dated November 20, 2023 (added to the enclosures following receipt of the executed consent).

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP	Matter No. 48172.001 This memorandum and all attached exhibits are protected by the attorney-client privilege and the attorney work-product doctrine. Unauthorized disclosure, copying, or distribution is strictly prohibited.
TO:	James Prentice, Responsible Partner, Mergers & Acquisitions
FROM:	Megan Chu, Lead Associate, Mergers & Acquisitions
RE:	Consent Requirements of Cascadia Growth Equity Fund III, L.P. in Connection with Proposed Joint Venture Between Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC
MATTER NO.:	48172.001
Date	Event
September 12, 2023	Calderwood & Harkness LLP engaged by CBR as outside counsel for the proposed JV transaction
September 18, 2023	Mutual non-disclosure agreement executed between CBR and Lumen Ridge
September 25, 2023	Non-binding Term Sheet signed by Margaret Calloway (CBR) and Nathaniel Forsythe (Lumen Ridge)
October 2, 2023	Due diligence commenced; virtual data room opened by CBR
October 8, 2023	Date of this memorandum
October 18, 2023	Hart-Scott-Rodino Act premerger notification filing submitted to the FTC and DOJ (HSR Transaction Number 20231018-CBR-LRI)
November 8, 2023	HSR early termination granted by the Federal Trade Commission
November 15, 2023	Ridgeline Barrow & Co. delivers fairness analysis (valuation range: $87M–$96M)
November 20, 2023	Cascadia Fund III delivers written consent to the proposed JV formation
November 28, 2023	Final LLC Agreement and ancillary documents circulated to the parties
December 4, 2023	Signing Date — execution of definitive JV documents

MEMORANDUM
PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
Calderwood & Harkness LLP 1000 Louisiana Street, Suite 5500 Houston, TX 77002
October 8, 2023
This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressee and other authorized personnel of Calderwood & Harkness LLP in connection with the above-referenced matter. This memorandum should not be disclosed, distributed, or reproduced in whole or in part without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of the attorney-client privilege or work-product protection.
I. Executive Summary
The purpose of this memorandum is to analyze whether the proposed formation of a 50/50 joint venture between Calloway-Briggs Renewables Inc. ("CBR") and Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge") triggers any consent or approval rights held by Cascadia Growth Equity Fund III, L.P. ("Cascadia" or "Cascadia Fund III") under CBR's existing stockholders' agreement (the "Stockholders' Agreement"). This analysis has been prepared at the request of James Prentice, Responsible Partner, in anticipation of the parties' execution of definitive joint venture documents, which is currently targeted for early December 2023.
Conclusion. Based on our review of the Stockholders' Agreement and the terms of the proposed transaction, we conclude that Cascadia's prior written consent is required before CBR may execute the definitive documents forming the proposed joint venture. Cascadia holds an approximately 22% equity stake in CBR, and the Stockholders' Agreement requires Cascadia's prior written consent for any "Material Transaction" as broadly defined therein. The proposed joint venture formation — which involves the contribution of CBR's eight-project, 1,200 MW utility-scale solar development portfolio (with an agreed valuation of $90,000,000) and an aggregate initial equity commitment of $150,000,000 by CBR ($60,000,000 in cash plus the $90,000,000 in-kind contribution), with potential additional capital calls of up to $200,000,000 — clearly constitutes a "Material Transaction" under the Stockholders' Agreement and triggers the consent requirement on multiple independent grounds.
Recommendation. We recommend that CBR promptly engage with Owen Charbonneau, Managing Director of Cascadia Fund III, to present the transaction and commence the consent process. CBR should prepare and deliver a comprehensive information package to Cascadia and allow a reasonable period for review and discussion. The target should be to obtain Cascadia's executed written consent before circulation of the final definitive documents, which is currently targeted for late November 2023. The consent process can proceed in parallel with ongoing due diligence activities and the Hart-Scott-Rodino antitrust filing.
Status Update (November 2023). Cascadia Fund III delivered its unconditional written consent to the proposed joint venture formation on November 20, 2023. The consent letter, executed by Owen Charbonneau in his capacity as Managing Director, has been received by CBR's General Counsel, Rebecca Whitfield, and transmitted to Calderwood & Harkness LLP for inclusion in the matter files. This memorandum has been updated accordingly to reflect the successful completion of the consent process.
II. Background
A. The Parties
1. Calloway-Briggs Renewables Inc.
Calloway-Briggs Renewables Inc. ("CBR") is a Texas corporation founded in 2011 and headquartered at 2300 Travis Street, Suite 4200, Houston, Texas 77006. CBR's Employer Identification Number is 46-2837451, and its Texas Secretary of State File Number is 0801647392. CBR is one of the largest privately held independent solar developers in the southern United States, with an active development and operational portfolio of approximately 3.8 gigawatts ("GW") of solar projects spanning Texas, New Mexico, Arizona, and Nevada. For the fiscal year ended December 31, 2022, CBR reported revenues of approximately $412 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $98 million.
CBR's key principals and officers are as follows:
• Margaret "Meg" Calloway — Co-Founder, Chairwoman, and Chief Executive Officer
• Thomas R. Briggs — Co-Founder and President
• Priya Narayanan — Chief Financial Officer
• Daniel Estrada — Senior Vice President, Corporate Development
• Rebecca Whitfield — General Counsel
CBR's outstanding equity is majority-owned by its co-founders, Margaret Calloway and Thomas R. Briggs. In addition to the founders' holdings, CBR has a single minority institutional stockholder: Cascadia Growth Equity Fund III, L.P., which holds an approximately 22% equity stake in the company. This minority stake was acquired by Cascadia in connection with a growth equity investment consummated in prior years, at which time the parties entered into the Stockholders' Agreement that is the subject of this memorandum.
2. Cascadia Growth Equity Fund III, L.P.
Cascadia Growth Equity Fund III, L.P. ("Cascadia" or "Cascadia Fund III") is a Delaware limited partnership organized and existing under the laws of the State of Delaware. Cascadia is a growth-equity fund based at 900 SW Fifth Avenue, Suite 2600, Portland, Oregon 97204. Cascadia focuses on growth-stage investments in the energy, infrastructure, and environmental services sectors. The key principal relevant to this matter is Owen Charbonneau, Managing Director of Cascadia Fund III, who serves as the primary relationship manager for Cascadia's investment in CBR and is authorized to act on behalf of Cascadia Fund III in connection with consent matters arising under the Stockholders' Agreement.
3. Lumen Ridge Infrastructure Partners LLC
Lumen Ridge Infrastructure Partners LLC ("Lumen Ridge") is a Delaware limited liability company headquartered at 301 Tresser Boulevard, Suite 1400, Stamford, Connecticut 06901. Lumen Ridge is a renewable-energy infrastructure investment platform formed in 2018 and managed by Lumen Ridge Capital Advisors LLC, its affiliated investment adviser. As of the date of this memorandum, Lumen Ridge manages approximately $4.2 billion in assets under management ("AUM") across a diversified portfolio of solar, wind, battery storage, and grid infrastructure investments.
Lumen Ridge's key principals and officers relevant to this matter are as follows:
• Nathaniel "Nate" Forsythe — Co-Founder and Managing Partner
• Carolyn J. Delaney — Partner and Head of Solar Investments
• Victor Osei — Chief Financial Officer
• Amanda Prescott — General Counsel and Chief Compliance Officer
Lumen Ridge has a strong track record of partnering with leading developers to originate, develop, construct, and operate utility-scale renewable energy projects across the United States. The proposed joint venture with CBR is consistent with Lumen Ridge's stated investment strategy of deploying institutional capital alongside experienced development partners.
B. The Proposed Transaction
CBR and Lumen Ridge propose to form Solstice Plateau Energy Holdings LLC (the "JV" or "Solstice Plateau"), a Delaware limited liability company, as a 50/50 joint venture for the purpose of developing, constructing, owning, and operating a portfolio of utility-scale solar energy projects.
The key terms of the proposed transaction, as set forth in the non-binding term sheet executed by Margaret Calloway and Nathaniel Forsythe on September 25, 2023 (the "Non-binding Term Sheet"), are summarized below:
Equity Commitment and Capital Structure. The total aggregate initial equity commitment to Solstice Plateau is $300,000,000, to be contributed equally by CBR and Lumen Ridge at $150,000,000 per member. CBR's initial contribution consists of the following:
(a) $60,000,000 in cash; and
(b) An in-kind contribution of eight utility-scale solar development projects (the "Contributed Portfolio"), representing an aggregate capacity of approximately 1,200 megawatts DC, located across Texas, New Mexico, and Arizona, at an agreed valuation of $90,000,000.
The $90,000,000 agreed valuation of the Contributed Portfolio is supported by an independent fairness analysis prepared by Ridgeline Barrow & Co., an investment banking firm retained by CBR. The fairness analysis, which was delivered on November 15, 2023 (subsequent to the date of this memorandum), valued the portfolio in a range of $87,000,000 to $96,000,000, thereby supporting the agreed $90,000,000 valuation.
Lumen Ridge's initial contribution consists of $150,000,000 in cash.
Additional Capital Calls. The JV operating agreement (the "LLC Agreement") will authorize additional capital calls of up to $200,000,000 per member ($400,000,000 in the aggregate) to fund the development and construction of JV projects beyond the initial contributed portfolio. Any such additional capital calls will be subject to supermajority approval of the Management Committee (as described below), requiring approval by at least five of the six appointed members.
Governance. Solstice Plateau will be governed by a six-member Management Committee, with three members appointed by CBR and three members appointed by Lumen Ridge. Major decisions — including, without limitation, the approval of additional capital calls in excess of initial commitments, entry into project-level financing arrangements, approval of annual budgets in excess of agreed thresholds, and the admission of additional members — will require supermajority approval of five of the six Management Committee members.
Management Fees and CBR's Operating Role. CBR will serve as the development and construction manager for all JV projects pursuant to a Development and Construction Management Agreement to be entered into concurrently with the LLC Agreement. CBR will receive the following fees in consideration for its management services:
(a) A development management fee equal to 1.5% per annum of aggregate capital deployed in respect of projects under active development; and
(b) A construction management fee equal to 3.0% of hard construction costs for each JV project during the construction phase.
Tax Protection. CBR will receive the benefit of a seven-year tax protection agreement (the "Tax Protection Agreement") covering $55,800,000 of built-in gain on the Contributed Portfolio (calculated as the difference between the agreed book value of $90,000,000 and CBR's aggregate tax basis in the contributed assets of $34,200,000). The Tax Protection Agreement will indemnify CBR against incremental tax liabilities arising from a taxable disposition of the contributed assets by Solstice Plateau during the seven-year protection period, subject to customary exceptions and limitations to be negotiated in the definitive documents.
Project-Level Financing. The JV anticipates obtaining non-recourse project-level debt financing from Trident National Bank, N.A. for the construction and term financing of individual JV projects. The specific terms and conditions of such financing will be negotiated on a project-by-project basis and will be subject to Management Committee approval.
Distribution Waterfall. Distributions from the JV to its members will follow a multi-tiered waterfall structure. In the first tier, distributions will be allocated equally (50/50) between CBR and Lumen Ridge until each member has received a return of its contributed capital and a preferred return. In the second tier, distributions will be allocated 60% to CBR and 40% to Lumen Ridge, reflecting CBR's enhanced economics as the operating partner. The detailed mechanics of the distribution waterfall will be set forth in the LLC Agreement.
C. Timeline Context
The following timeline summarizes key dates and milestones relevant to this memorandum:
III. CBR's Stockholders' Agreement — Relevant Provisions
A. Overview of the Stockholders' Agreement
CBR entered into the Stockholders' Agreement in connection with Cascadia Fund III's original growth equity investment in CBR. The Stockholders' Agreement was negotiated and executed at the time of Cascadia's acquisition of its approximately 22% equity stake in CBR and governs certain rights and obligations among CBR, its co-founders (Margaret Calloway and Thomas R. Briggs), and Cascadia Fund III as a minority institutional stockholder.
The Stockholders' Agreement addresses a range of governance, transfer, and protective matters, including, among others: (i) consent rights in favor of Cascadia with respect to specified categories of transactions; (ii) information and reporting rights; (iii) board representation or observer rights; (iv) restrictions on transfers of equity; (v) drag-along and tag-along rights; (vi) registration rights; and (vii) preemptive rights with respect to certain issuances of additional equity. For purposes of this memorandum, we focus principally on the consent provisions applicable to "Material Transactions" and related information rights.
The consent and protective provisions of the Stockholders' Agreement are exercisable by Cascadia so long as Cascadia holds a specified minimum equity percentage in CBR. As of the date of this memorandum, Cascadia holds approximately 22% of CBR's outstanding equity, which is well above any minimum threshold set forth in the Stockholders' Agreement for the exercise of consent rights. Accordingly, there is no question that Cascadia's consent rights are currently in effect and enforceable.
B. Consent Rights — Material Transactions
The Stockholders' Agreement contains a comprehensive set of consent provisions requiring CBR to obtain the prior written consent of Cascadia before undertaking any "Material Transaction." The term "Material Transaction" is defined broadly in the Stockholders' Agreement and is designed to capture a wide range of significant corporate actions that could materially affect Cascadia's investment in CBR. Specifically, the definition of "Material Transaction" includes, among other things, the following categories of transactions:
(a) Joint ventures, partnerships, and similar arrangements. The entry by CBR (or any of its subsidiaries) into any joint venture, partnership, strategic alliance, or similar arrangement involving aggregate commitments, contributions, or capital expenditures by CBR exceeding a specified dollar threshold;
(b) Dispositions of material assets. The contribution, sale, transfer, assignment, conveyance, or other disposition of material assets of CBR (including, without limitation, development-stage projects, land rights, interconnection agreements, power purchase agreements, and other project assets) outside the ordinary course of CBR's business;
(c) Incurrence of material indebtedness. The incurrence of material indebtedness or the granting of material guarantees by CBR or any of its subsidiaries in excess of specified thresholds, other than customary project-level financing in the ordinary course;
(d) Changes to capital structure or business plan. Any transaction or series of related transactions that would materially alter CBR's capital structure, equity ownership, business plan, or strategic direction.
The foregoing categories are disjunctive, meaning that a transaction need only fall within any one of the enumerated categories in order to constitute a "Material Transaction" requiring Cascadia's prior written consent. As analyzed in detail in Section IV below, the proposed JV formation triggers the consent requirement on multiple independent grounds.
It is important to note that the consent right is a prior written consent right — meaning that CBR is required to obtain Cascadia's consent before executing definitive documentation or consummating the transaction. Proceeding without obtaining Cascadia's consent would constitute a breach of the Stockholders' Agreement and could expose CBR to claims for breach of contract, injunctive relief, and damages.
C. Other Relevant Provisions
In addition to the Material Transaction consent rights described above, several other provisions of the Stockholders' Agreement are relevant to the proposed JV formation:
Information Rights. Cascadia is entitled to receive reasonable advance notice and information regarding proposed Material Transactions. This obligation encompasses the duty to provide Cascadia with sufficient information to enable a meaningful evaluation of the proposed transaction before Cascadia is asked to deliver its written consent. In practice, this requires CBR to furnish Cascadia with a comprehensive information package describing the terms of the transaction, the counterparty, the strategic rationale, and the financial analysis supporting the agreed-upon terms.
Board Observer Rights and Periodic Reporting. The Stockholders' Agreement may also provide Cascadia with the right to designate a board observer or to receive periodic reporting on material developments affecting CBR's business. In the context of the proposed JV formation, this may include the right to receive ongoing reports regarding JV activities and performance following the closing. We recommend confirming the scope of any such observer or reporting rights with CBR's General Counsel, Rebecca Whitfield, to ensure that any ongoing obligations are identified and addressed in the definitive JV documentation and post-closing compliance procedures.
Ordinary Course and De Minimis Exceptions. The Stockholders' Agreement does not require Cascadia's consent for: (i) transactions conducted in the ordinary course of CBR's business; (ii) de minimis transactions falling below the applicable dollar thresholds specified in the agreement; or (iii) transactions between CBR and its wholly owned subsidiaries, which are generally excluded from the definition of "Material Transaction." As discussed below, none of these exceptions is applicable to the proposed JV formation.
IV. Analysis — Applicability to the Proposed JV Formation
A. The JV Formation Constitutes a "Material Transaction"
Based on our review of the Stockholders' Agreement and the terms of the proposed transaction as set forth in the Non-binding Term Sheet, we conclude that the formation of Solstice Plateau Energy Holdings LLC constitutes a "Material Transaction" under the Stockholders' Agreement, triggering Cascadia's prior written consent right. This conclusion is supported by several independent grounds.
Dollar Magnitude. CBR's aggregate initial equity commitment to the JV is $150,000,000, consisting of $60,000,000 in cash and an in-kind contribution of the Contributed Portfolio valued at $90,000,000. In addition, the LLC Agreement will authorize additional capital calls of up to $200,000,000 per member, which, if called, would bring CBR's total potential equity commitment to $350,000,000. These amounts are well in excess of any materiality or dollar threshold specified in the Stockholders' Agreement for the purpose of triggering the consent requirement applicable to joint ventures, partnerships, and similar arrangements. Even considering only the initial $150,000,000 commitment, the magnitude of CBR's financial exposure in connection with the proposed JV formation is substantial by any measure and clearly surpasses the relevant threshold.
Asset Contribution. The contribution of the Contributed Portfolio — comprising eight utility-scale solar development projects with an aggregate capacity of approximately 1,200 MW DC across Texas, New Mexico, and Arizona, and an agreed valuation of $90,000,000 — constitutes a significant disposition of development assets outside the ordinary course of CBR's business. The Contributed Portfolio represents approximately one-third of CBR's total development pipeline of approximately 3.8 GW. The transfer of assets of this scale and strategic significance from CBR to a jointly controlled entity clearly falls within the Stockholders' Agreement's definition of a disposition of "material assets" outside the ordinary course. This ground alone would be sufficient to trigger Cascadia's consent right.
Structural Significance and Alteration of Control. The proposed JV formation creates a jointly controlled entity with 50/50 ownership between CBR and Lumen Ridge, governed by a six-member Management Committee requiring supermajority (five of six) approval for major decisions. This governance structure means that, with respect to the Contributed Portfolio and all projects developed through the JV, CBR will no longer have unilateral decision-making authority. Rather, CBR will share control of these assets with Lumen Ridge, a third-party infrastructure investment platform. This represents a material alteration of CBR's control over a significant portion of its asset base and strategic direction. The shift from sole ownership and control to shared governance over a jointly controlled entity is precisely the type of structural change that the Stockholders' Agreement's consent provisions were designed to address.
Ongoing Commitments. In addition to the initial equity commitment and asset contribution, the proposed JV entails significant ongoing operational and financial commitments for CBR, including: (i) CBR's role as development and construction manager for all JV projects, with associated performance obligations and liability exposure; (ii) the receipt of management fees tied to aggregate capital deployed and hard construction costs, which creates an ongoing financial interdependency between CBR and the JV; and (iii) the potential for additional capital calls of up to $200,000,000 beyond the initial commitment, which, even though subject to supermajority Management Committee approval, represents a material contingent financial obligation. These ongoing commitments further reinforce the conclusion that the proposed JV formation is a Material Transaction requiring Cascadia's prior written consent.
B. No Available Exemption
We have considered whether any of the exemptions from the consent requirement set forth in the Stockholders' Agreement might apply to the proposed JV formation. None is applicable.
Ordinary Course of Business. The proposed JV formation is not in the ordinary course of CBR's business. While CBR is in the business of developing, constructing, and operating solar energy projects, it has not previously formed a joint venture of this scale or contributed a significant portfolio of development-stage projects to a jointly controlled entity. The formation of a $300,000,000 joint venture with an institutional infrastructure platform represents a significant departure from CBR's historical business practices and cannot reasonably be characterized as an ordinary course transaction.
De Minimis Threshold. The proposed JV involves aggregate commitments by CBR of $150,000,000 (with potential additional calls of up to $200,000,000) and an asset contribution valued at $90,000,000. These amounts far exceed any de minimis threshold under the Stockholders' Agreement. The transaction is not remotely close to the thresholds below which the consent requirement does not apply.
Wholly Owned Subsidiary Exception. Solstice Plateau Energy Holdings LLC is not a wholly owned subsidiary of CBR. It is a 50/50 joint venture between CBR and Lumen Ridge. The exception for transactions between CBR and its wholly owned subsidiaries is therefore inapplicable.
C. Conclusion
For the reasons set forth above, we conclude that the proposed formation of Solstice Plateau Energy Holdings LLC unambiguously constitutes a "Material Transaction" under the Stockholders' Agreement and triggers Cascadia's prior written consent right on multiple independent grounds. CBR must obtain Cascadia's prior written consent before executing the definitive LLC Agreement and ancillary documents. Proceeding without such consent would constitute a breach of the Stockholders' Agreement and could expose CBR to significant legal risk, including claims for breach of contract, injunctive relief, and potential damages.
V. Process for Obtaining Cascadia's Consent
A. Recommended Approach
We recommend the following process for obtaining Cascadia's prior written consent:
Step 1 — Initial Outreach and Notification. CBR management — we suggest Meg Calloway (CEO) and Priya Narayanan (CFO) — should contact Owen Charbonneau, Managing Director of Cascadia Fund III, to provide advance notice of the proposed transaction and to arrange a meeting or call for a detailed presentation. The initial outreach should convey the strategic rationale for the JV, introduce Lumen Ridge as the proposed partner, and explain the general terms and structure of the transaction. This initial contact should emphasize CBR's commitment to transparency and its desire to keep Cascadia fully informed.
Step 2 — Delivery of Comprehensive Information Package. Following the initial outreach, CBR should prepare and deliver to Cascadia a comprehensive information package containing the following materials:
(a) A summary of the proposed JV structure, including a copy of the Non-binding Term Sheet signed on September 25, 2023;
(b) An overview of Lumen Ridge as the JV partner, including background on the firm's management team, investment strategy, approximately $4.2 billion in assets under management, and relevant track record in renewable energy infrastructure;
(c) A description of the Contributed Portfolio, including project-level summaries of the eight utility-scale solar development projects (aggregate 1,200 MW DC capacity) located across Texas, New Mexico, and Arizona, and the current development status and projected timelines for each project;
(d) The Ridgeline Barrow & Co. fairness analysis, which was delivered on November 15, 2023, and valued the Contributed Portfolio in a range of $87,000,000 to $96,000,000, supporting the agreed valuation of $90,000,000 (note: this analysis was in preparation as of the date of this memorandum and should be delivered to Cascadia promptly upon completion);
(e) A summary of key economic terms, including the $300,000,000 total equity commitment, the distribution waterfall structure (including CBR's enhanced Tier 2 economics of 60/40), the management fee structure (1.5% development management fee and 3.0% construction management fee), and the Tax Protection Agreement covering $55,800,000 of built-in gain over a seven-year period;
(f) A discussion of the strategic rationale for the JV and the expected benefits to CBR and its stockholders, including access to institutional capital, acceleration of project development timelines, diversification of development risk, and enhanced development and construction management fee revenue.
Step 3 — Review Period and Engagement. CBR should allow Cascadia a reasonable review period of approximately two to three weeks following delivery of the information package. During this review period, CBR should be prepared to address any questions, requests for additional information, or concerns raised by Cascadia. We recommend designating Daniel Estrada (SVP — Corporate Development) and Rebecca Whitfield (General Counsel) as the primary points of contact for Cascadia's due diligence inquiries. If Cascadia requests a follow-up meeting or presentation, CBR should accommodate such requests promptly.
Step 4 — Execution of Formal Written Consent. Upon completion of Cascadia's review and any discussions, CBR should obtain Cascadia's formal written consent in the form required by the Stockholders' Agreement. Typically, this takes the form of a signed consent letter or written consent instrument that specifically references the proposed transaction, identifies the definitive documents to be executed, and confirms Cascadia's consent to CBR entering into such documents. Calderwood & Harkness LLP will prepare a draft consent letter for Cascadia's review and execution.
B. Timing Considerations
The timing of the consent process is critical and must be coordinated with the overall transaction timeline. The following timing considerations should guide CBR's approach:
Target Date for Consent. Cascadia's written consent should ideally be obtained before the circulation of final definitive documents, which is currently targeted for late November 2023. This will ensure that the consent is in hand before the parties finalize and execute the LLC Agreement and ancillary documents.
Condition Precedent to Signing. Cascadia's consent is a condition precedent to CBR's authority to execute the definitive documents. The definitive LLC Agreement should include a representation by CBR that all necessary stockholder consents, including Cascadia's consent, have been obtained. The absence of such consent at the time of signing would undermine the validity of this representation and could give rise to a breach claim by Lumen Ridge.
Recommended Initiation Date. We recommend initiating the consent process no later than mid-October 2023 in order to allow adequate time for Cascadia's review, any follow-up discussions, and the execution of the formal consent instrument before the targeted late November 2023 date for circulation of final definitive documents. Given the complexity of the transaction and the magnitude of CBR's commitments, a two-to-three-week review period is a reasonable minimum.
Parallel Workstreams. The consent process can and should proceed in parallel with other ongoing workstreams, including: (i) the Hart-Scott-Rodino Act premerger notification filing, which was submitted on October 18, 2023 (HSR Transaction Number 20231018-CBR-LRI), and for which early termination was subsequently granted by the FTC on November 8, 2023; (ii) ongoing due diligence activities between CBR and Lumen Ridge; and (iii) the negotiation and drafting of definitive documents. There is no reason for the Cascadia consent process to delay or impede any of these parallel workstreams, provided that CBR initiates the outreach to Cascadia promptly.
C. Potential Cascadia Concerns and Mitigation
Based on our understanding of Cascadia's investment objectives and the terms of the proposed transaction, we anticipate the following potential concerns from Cascadia, along with recommended mitigation strategies:
Dilution of CBR's Control Over Contributed Assets. Cascadia may express concern that the contribution of the eight-project, 1,200 MW portfolio to a jointly controlled entity will dilute CBR's unilateral control over these assets. This concern can be mitigated by highlighting the following features of the JV structure: (i) the 50/50 governance structure, which ensures that CBR retains equal control with Lumen Ridge and that no major decision can be taken without the concurrence of CBR's appointees to the Management Committee; (ii) the supermajority voting requirement (five of six votes) for major decisions, which provides CBR with effective veto power over significant actions affecting the JV and the contributed assets; (iii) CBR's role as development and construction manager, which ensures CBR's continued day-to-day operational control over the development and construction of JV projects; and (iv) CBR's enhanced distribution economics in Tier 2 of the distribution waterfall (60/40 in CBR's favor), which reflects the value of CBR's operating platform and development expertise.
Capital Deployment Risk. Cascadia may be concerned about the risk associated with CBR's significant capital deployment into the JV, including the initial $150,000,000 commitment and the potential for additional capital calls of up to $200,000,000. This concern can be mitigated by emphasizing that: (i) additional capital calls beyond the initial $150,000,000 commitment are not mandatory but rather subject to supermajority Management Committee approval; (ii) the JV anticipates obtaining non-recourse project-level debt financing from Trident National Bank, N.A. for the construction and term financing of individual projects, which will reduce the equity capital required from the JV members; and (iii) the JV's investment thesis is predicated on the development and sale or long-term ownership of utility-scale solar assets with predictable, contracted cash flows.
Valuation of Contributed Portfolio. Cascadia may seek assurance that the $90,000,000 agreed valuation of the Contributed Portfolio is fair and reasonable. This concern is directly addressed by the independent fairness analysis prepared by Ridgeline Barrow & Co., which valued the portfolio in a range of $87,000,000 to $96,000,000, placing the agreed $90,000,000 valuation within the midrange of the independent analysis. We recommend delivering the Ridgeline Barrow & Co. fairness analysis to Cascadia as part of the information package.
Impact on CBR's Existing Business. Cascadia may be concerned about the impact of the JV on CBR's remaining standalone operations and development pipeline. This concern can be mitigated by emphasizing that CBR retains its remaining approximately 2.6 GW of development pipeline outside the JV (representing approximately two-thirds of CBR's total pipeline) and continues all other operations, including independent project development, construction management activities, and existing contractual relationships. The JV is designed to complement, rather than cannibalize, CBR's existing business, and the management fee revenue from the JV will provide an additional, recurring revenue stream to CBR.
VI. Status Update — Consent Obtained
On November 20, 2023, Cascadia Growth Equity Fund III, L.P. — acting through Owen Charbonneau, Managing Director — delivered its written consent to the proposed JV formation. The consent letter was executed by Mr. Charbonneau in his capacity as an authorized signatory of Cascadia Fund III and was delivered to CBR in accordance with the notice provisions of the Stockholders' Agreement.
The consent letter specifically authorized CBR to enter into the following definitive documents and related ancillary agreements with Lumen Ridge Infrastructure Partners LLC and Solstice Plateau Energy Holdings LLC:
(a) The LLC Agreement of Solstice Plateau Energy Holdings LLC;
(b) The Contribution Agreement, pursuant to which CBR will contribute the eight-project, 1,200 MW solar development portfolio and $60,000,000 in cash to Solstice Plateau;
(c) The Development and Construction Management Agreement, pursuant to which CBR will serve as development and construction manager for all JV projects;
(d) The Tax Protection Agreement, providing CBR with protection against incremental tax liabilities arising from the disposition of contributed assets during the seven-year protection period; and
(e) All related ancillary documents and agreements necessary to effectuate the transactions contemplated by the foregoing documents.
The consent was unconditional. Cascadia did not impose any conditions, limitations, or qualifications on its consent. No side letters or additional agreements were requested or entered into in connection with the consent process.
Rebecca Whitfield, CBR's General Counsel, confirmed receipt of the executed consent letter and transmitted a copy to Calderwood & Harkness LLP on November 20, 2023. The executed consent letter has been filed in Calderwood & Harkness's matter files under Matter Number 48172.001 and will be included in the closing deliverables and closing binder for the transaction.
We note that the consent process proceeded smoothly and within the anticipated timeline. CBR's management team — including Meg Calloway, Priya Narayanan, and Daniel Estrada — engaged effectively with Owen Charbonneau and the Cascadia team, and Cascadia's questions and requests for information were addressed promptly and satisfactorily. The successful completion of the consent process within the target timeline is a credit to CBR's management team and reflects the strength of the relationship between CBR and Cascadia.
VII. Recommendations and Next Steps
In light of the foregoing analysis and the successful completion of the consent process, we provide the following recommendations and action items:
1. Consent Requirement Satisfied. The Cascadia consent requirement has been satisfied. No further action is required with respect to Cascadia's approval of the proposed JV formation. CBR is authorized to proceed with the execution of the definitive LLC Agreement and ancillary documents, subject to satisfaction of all other conditions precedent to signing.
2. Closing Checklist. The executed Cascadia consent letter should be included as a line item on the closing checklist for the transaction. The closing team should verify that the original executed consent letter (or a copy certified by CBR's General Counsel) is included among the closing deliverables and that a copy is placed in the closing binder.
3. Ongoing Information and Observer Rights. CBR should confirm with Rebecca Whitfield (General Counsel) whether Cascadia has ongoing information rights, board observer rights, or other periodic reporting obligations under the Stockholders' Agreement that will require periodic reporting with respect to the JV following the closing. If so, CBR should establish a process for providing such reports and designate an individual within CBR's management team to serve as the liaison for Cascadia-related reporting obligations. We are available to assist in reviewing the Stockholders' Agreement to identify the scope of any such ongoing obligations.
4. Representation in LLC Agreement. The definitive LLC Agreement should include a representation by CBR that all necessary stockholder consents and approvals, including Cascadia's written consent, have been obtained in connection with CBR's execution and delivery of the LLC Agreement and ancillary documents. We recommend confirming with the drafting team that this representation is included in the Representations and Warranties section of the LLC Agreement applicable to CBR. This is a standard representation in transactions of this type and is expected to be required by Lumen Ridge as a condition to its execution of the definitive documents.
5. Document Management. The executed Cascadia consent letter has been filed in Calderwood & Harkness's document management system under Matter Number 48172.001. We recommend that an additional copy be maintained in CBR's corporate records, alongside the Stockholders' Agreement and other stockholder-related governance documents, for future reference.
6. Post-Closing Coordination. Following the signing and closing of the JV documents, Calderwood & Harkness LLP should coordinate with CBR's General Counsel to ensure that any notifications, filings, or updates required to be made to Cascadia under the Stockholders' Agreement in connection with the consummation of the transaction are timely delivered.
Please do not hesitate to contact me if you have any questions regarding this memorandum or require additional analysis in connection with the Cascadia consent matter or any other aspect of the proposed JV transaction.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Megan Chu Lead Associate, Mergers & Acquisitions
Reviewed by: ________ James Prentice Responsible Partner, Mergers & Acquisitions
VIII. Enclosures / Attachments (Referenced)
The following documents are referenced in this memorandum and are attached hereto or maintained in the matter files under Matter Number 48172.001:
1. Exhibit A — Relevant excerpts from the Stockholders' Agreement of Calloway-Briggs Renewables Inc. (consent provisions, including the definition of "Material Transaction" and related information rights provisions).
2. Exhibit B — Non-binding Term Sheet dated September 25, 2023, by and between Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC.
3. Exhibit C — Copy of executed Cascadia Growth Equity Fund III, L.P. consent letter dated November 20, 2023 (added to the enclosures following receipt of the executed consent).
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP | Matter No. 48172.001 This memorandum and all attached exhibits are protected by the attorney-client privilege and the attorney work-product doctrine. Unauthorized disclosure, copying, or distribution is strictly prohibited.
TO: | James Prentice, Responsible Partner, Mergers & Acquisitions
FROM: | Megan Chu, Lead Associate, Mergers & Acquisitions
RE: | Consent Requirements of Cascadia Growth Equity Fund III, L.P. in Connection with Proposed Joint Venture Between Calloway-Briggs Renewables Inc. and Lumen Ridge Infrastructure Partners LLC
MATTER NO.: | 48172.001
Date | Event
September 12, 2023 | Calderwood & Harkness LLP engaged by CBR as outside counsel for the proposed JV transaction
September 18, 2023 | Mutual non-disclosure agreement executed between CBR and Lumen Ridge
September 25, 2023 | Non-binding Term Sheet signed by Margaret Calloway (CBR) and Nathaniel Forsythe (Lumen Ridge)
October 2, 2023 | Due diligence commenced; virtual data room opened by CBR
October 8, 2023 | Date of this memorandum
October 18, 2023 | Hart-Scott-Rodino Act premerger notification filing submitted to the FTC and DOJ (HSR Transaction Number 20231018-CBR-LRI)
November 8, 2023 | HSR early termination granted by the Federal Trade Commission
November 15, 2023 | Ridgeline Barrow & Co. delivers fairness analysis (valuation range: $87M–$96M)
November 20, 2023 | Cascadia Fund III delivers written consent to the proposed JV formation
November 28, 2023 | Final LLC Agreement and ancillary documents circulated to the parties
December 4, 2023 | Signing Date — execution of definitive JV documents

MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts