CLOSING INDEX

CLOSING INDEX
Solstice Portfolio Tax-Equity and Transferable Credit Financing
$180,000,000 Tax-Equity Investment and Transferable Tax Credit Financing for the Solstice Portfolio 420 MW(dc) Utility-Scale Solar Photovoltaic Generation
PARTIES
Closing Date: December 8, 2023
Prepared by:
Leila Nazari and Robert Jansen CALDERWOOD & HARKNESS LLP
600 Lexington Avenue New York, New York 10022
1000 Louisiana Street, Suite 3800 Houston, Texas 77002
Matter No.: 1015-00005 Billing No.: 78204-001
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INTRODUCTORY NOTE
This Closing Index (the "Index") catalogs all documents, instruments, certificates, opinions, memoranda, and related materials that were executed, delivered, or otherwise made available in connection with the closing (the "Closing") of the tax-equity and transferable tax credit financing of the Solstice Portfolio (the "Transaction"). The Transaction involves a $180,000,000 aggregate financing consisting of (i) a $120,000,000 tax-equity investment by Ridgeline Capital Partners, LLC ("Ridgeline") in Solstice Holdings, LLC (the "Partnership"), structured as a partnership-flip transaction, and (ii) a $55,200,000 transferable tax credit purchase by Pinehurst Insurance Group, Inc. ("Pinehurst") from Calloway-Briggs Renewables Inc. ("CBR" or the "Sponsor") under Section 6418 of the Internal Revenue Code of 1986, as amended (the "Code"), together with related back-leverage financing from Osprey National Bank, N.A. ("Osprey" or the "Lender").
Format and Organization. This Index is organized by tab number within lettered document categories (Tab A through Tab N), followed by an Appendix containing a summary table of key transaction terms. Each entry identifies the full title of the document, the date of execution or delivery, the parties thereto, and selected key terms. Cross-references among entries are provided where relevant.
Signing and Closing Dates. The Transaction Documents (as defined in the Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC) were signed on September 21, 2023 (the "Signing Date"). The Closing occurred on December 8, 2023 (the "Closing Date"). The Closing was originally scheduled for November 30, 2023 but was extended by eight (8) days to accommodate the receipt of final interconnection confirmation from the Electric Reliability Council of Texas ("ERCOT") for the Amistad Solar project (45 MW(dc), Val Verde County, Texas), which achieved Commercial Operation on November 18, 2023. The circumstances of the Closing Date extension are documented in the Closing Delay Notification Letter at Tab M-1.
Document Copies and Retention. Unless otherwise indicated, this Index references fully executed originals of each document. Counterpart signature pages have been assembled and attached to each executed original. Portable Document Format (PDF) copies of all executed documents, including scanned counterpart signature pages, are maintained in the electronic closing binder hosted on Calderwood & Harkness LLP's secure document management platform (DMS Reference: SCL-SolsticePortfolio-2023-ClosingBinder). Where a document has been executed in counterparts, each counterpart together shall constitute one and the same instrument. Parties and their respective counsel should retain copies of this Index and the electronic closing binder in their permanent files.
Disclaimer. The descriptions of documents contained in this Index are provided for convenience of reference only and are qualified in their entirety by the actual terms of the documents described. In the event of any inconsistency between the descriptions in this Index and the terms of any document, the terms of the document shall control.
TAB A — CORE TRANSACTION DOCUMENTS
Tab A-1: Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC
Full Title: Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC (Execution Version)
Date: September 21, 2023
Parties:
(a) CBR Solstice Manager, LLC, a Delaware limited liability company, as Managing Member; and
(b) Ridgeline Capital Partners, LLC, a Delaware limited liability company, as Tax-Equity Member.
Entity Information:
•  Solstice Holdings, LLC is a limited liability company organized under the laws of the State of Delaware.
•  Employer Identification Number (EIN): 88-4071523.
•  Registered Agent: Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
Governing Law: Delaware (entity formation and governance matters); federal tax law (tax provisions, including allocation provisions under Sections 704(b) and 704(c) of the Code).
Key Terms:
•  Pre-Flip Tax Allocations: 99% to Ridgeline (Tax-Equity Member) / 1% to CBR Solstice Manager (Managing Member).
•  Pre-Flip Cash Distributions: 30% to Ridgeline (Tax-Equity Member) / 70% to CBR Solstice Manager (Managing Member).
•  Post-Flip Allocations and Distributions: 5% to Ridgeline (Tax-Equity Member) / 95% to CBR Solstice Manager (Managing Member).
•  Ridgeline Target Yield: 7.25% after-tax internal rate of return (IRR).
•  Projected Flip Date: Fourth quarter of 2028 (Q4 2028), based on the base-case financial model delivered at Closing.
•  Capital Accounts: Maintained in accordance with Treasury Regulation § 1.704-1(b)(2)(iv).
•  Minimum Gain Chargeback: Included per Treasury Regulation § 1.704-2(f).
•  Qualified Income Offset: Included per Treasury Regulation § 1.704-1(b)(2)(ii)(d).
Tab A-2: Tax Credit Purchase Agreement
Full Title: Tax Credit Purchase Agreement (Execution Version)
Date: September 21, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation, as Seller; and
(b) Pinehurst Insurance Group, Inc., a Connecticut corporation, as Buyer.
Governing Law: State of New York.
Key Terms:
•  Transferred Credits: Investment Tax Credits under Section 48 of the Code eligible for transfer under Section 6418 of the Code.
•  Face Value of Transferred ITCs: $60,000,000.
•  Purchase Price per Dollar of Credit: $0.92 per $1.00 of credit face value.
•  Aggregate Purchase Price: $55,200,000.
•  Payment Terms: Full purchase price deposited into escrow on or prior to Closing Date; released upon satisfaction of Closing conditions pursuant to the Escrow Agreement (Tab A-6).
•  Transfer Election: Each project company to make transfer election under Section 6418 of the Code in the form set forth in Tab G-1, identifying Pinehurst as the transferee taxpayer.
•  Representations and Warranties: Customary representations regarding eligibility of credits, compliance with prevailing wage and apprenticeship requirements, and domestic content requirements.
•  Indemnification: Cross-reference to Tax Indemnity Agreement at Tab A-4.
Tab A-3: Capital Contribution Agreement
Full Title: Capital Contribution Agreement — Ridgeline Capital Partners, LLC to Solstice Holdings, LLC
Date: September 21, 2023
Governing Law: State of New York.
Key Terms:
•  Total Commitment of Ridgeline: $120,000,000.
•  First Tranche: $96,000,000, funded at Closing on December 8, 2023, via release from the Clearwater Escrow Account (CES-2023-80114) to the Partnership operating account at Osprey National Bank, N.A.
•  Second Tranche: $24,000,000, due no later than February 6, 2024 (sixty (60) days following the final Commercial Operation Date of the Solstice Portfolio, as extended). The Second Tranche is subject to satisfaction of customary conditions precedent, including delivery of a true-up of the base-case financial model reflecting actual COD dates and initial production data, confirmation of compliance with prevailing wage and apprenticeship requirements, and absence of a Material Adverse Effect.
•  CBR Manager Capital Contribution: CBR Solstice Manager, LLC to contribute $2,400,000 to Solstice Holdings, LLC at Closing, representing a minimum 2% capital contribution by the Managing Member as required under Rev. Proc. 2007-65 safe harbor guidelines.
•  Conditions Precedent to First Tranche Funding: Achievement of Commercial Operation by all seven (7) project companies; execution and delivery of all Transaction Documents; receipt of legal and tax opinion letters; satisfaction of insurance requirements; receipt of Independent Engineer report and ITC-basis appraisal; no Material Adverse Effect.
Tab A-4: Tax Indemnity Agreement
Full Title: Tax Indemnity Agreement — Calloway-Briggs Renewables Inc. in favor of Pinehurst Insurance Group, Inc.
Date: September 21, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation, as Indemnitor; and
(b) Pinehurst Insurance Group, Inc., a Connecticut corporation, as Indemnitee.
Governing Law: State of New York.
Key Terms:
•  Scope of Coverage: Indemnification for (i) recapture of Investment Tax Credits under Section 50(a) of the Code during the five-year recapture period, and (ii) disallowance or reduction of transferred Investment Tax Credits by the Internal Revenue Service, in each case to the extent attributable to actions or failures of the Indemnitor or any project company, or inaccuracy of representations and warranties made by the Indemnitor in the Tax Credit Purchase Agreement.
•  Indemnity Amount: 100% of the face value of the affected credits, plus a gross-up for any additional federal and state tax liability incurred by the Indemnitee as a result of such recapture or disallowance, including interest and penalties.
•  Indemnity Cap: 125% of the aggregate purchase price paid by Pinehurst, equal to $69,000,000.
•  Survival Period: Obligations of the Indemnitor survive until the date that is sixty (60) days following the expiration of the five-year recapture period applicable to the last project to achieve Commercial Operation (i.e., sixty (60) days following November 18, 2028, being the fifth anniversary of the Amistad Solar COD).
•  Notice Requirements: Prompt written notice of any IRS audit, inquiry, or proceeding relating to the transferred credits; Indemnitee's right to participate in defense of any such proceeding.
•  Exclusions: No indemnification for losses arising solely from (i) the Indemnitee's own acts or omissions, (ii) changes in law enacted after the Closing Date, or (iii) the Indemnitee's failure to properly claim the transferred credits on its federal income tax return.
Tab A-5: Purchase Option Agreement
Full Title: Purchase Option Agreement — CBR Solstice Manager, LLC Option to Purchase Ridgeline Capital Partners, LLC Post-Flip Interest
Date: September 21, 2023
Parties:
(a) CBR Solstice Manager, LLC, a Delaware limited liability company, as Option Holder; and
(b) Ridgeline Capital Partners, LLC, a Delaware limited liability company, as Option Grantor.
Governing Law: State of New York.
Key Terms:
•  Option: CBR Solstice Manager has the right, but not the obligation, to purchase the entirety of Ridgeline's membership interest in Solstice Holdings, LLC following the occurrence of the Flip Date.
•  Exercise Price: Fair market value of Ridgeline's interest as of the date of exercise, determined by mutual agreement or, failing agreement, by an independent appraiser selected pursuant to the procedures set forth in the Purchase Option Agreement, subject to a floor price of $1.00.
•  Exercise Window: The option is exercisable during the period commencing on the Flip Date and ending on the date that is one hundred eighty (180) calendar days following the Flip Date (the "Exercise Window"). If CBR Solstice Manager does not exercise the option during the Exercise Window, the option shall lapse and be of no further force or effect.
•  Projected Flip Date: Q4 2028, based on the base-case financial model delivered at Closing.
•  Closing of Purchase: Within thirty (30) business days following delivery of exercise notice, subject to customary conditions.
Tab A-6: Escrow Agreement
Full Title: Escrow Agreement
Date: September 21, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation;
(b) Ridgeline Capital Partners, LLC, a Delaware limited liability company;
(c) Pinehurst Insurance Group, Inc., a Connecticut corporation; and
(d) Clearwater Escrow Services, Inc., a New York corporation, as Escrow Agent.
Governing Law: State of New York.
Key Terms:
•  Escrow Account Number: CES-2023-80114, maintained at Greaves Bancorp
•  Amounts Deposited:
•  Ridgeline first tranche capital contribution: $96,000,000
•  Pinehurst tax credit purchase price: $55,200,000
•  Total escrow deposits: $151,200,000
•  Release Conditions: Satisfaction (or waiver by the applicable beneficiary) of all conditions precedent to Closing as set forth in the Capital Contribution Agreement (Tab A-3) and the Tax Credit Purchase Agreement (Tab A-2), including receipt of joint release instructions signed by authorized representatives of CBR, Ridgeline, and Pinehurst (see Tab H-3).
•  Escrow Agent: Clearwater Escrow Services, Inc., 100 Wall Street, Suite 600, New York, New York 10005.
•  Escrow Officer: James Harding, Senior Vice President.
•  Escrow Fee: $35,000 (paid by CBR).
•  Investment of Escrowed Funds: Invested in U.S. Treasury money market funds pending release.
•  Termination: Upon release of all escrowed funds or return of escrowed funds to the depositing parties in accordance with the terms of the Escrow Agreement.
Tab A-7: Intercompany Contribution Agreement
Full Title: Intercompany Contribution Agreement — Calloway-Briggs Renewables Inc. Contributing Project Company Interests to Solstice Holdings, LLC
Date: September 21, 2023
Parties:
(a) Calloway-Briggs Renewables Inc., a Texas corporation, as Contributor; and
(b) Solstice Holdings, LLC, a Delaware limited liability company, as the Partnership.
Governing Law: State of New York.
Key Terms:
•  Contributed Interests: One hundred percent (100%) of the membership interests in each of the following seven (7) project companies (collectively, the "Project Companies"), each a Delaware limited liability company:
1.  Pecos Sun Solar, LLC — 85 MW(dc), Reeves County, Texas
2.  Red Mesa Solar, LLC — 70 MW(dc), Pecos County, Texas
3.  Coyote Flats Solar, LLC — 65 MW(dc), Ward County, Texas
4.  Llano Verde Solar, LLC — 55 MW(dc), Hudspeth County, Texas
5.  Cimarron Solar, LLC — 50 MW(dc), Lea County, New Mexico
6.  Sandoval Ridge Solar, LLC — 50 MW(dc), Sandoval County, New Mexico
7.  Amistad Solar, LLC — 45 MW(dc), Val Verde County, Texas
•  Aggregate Capacity: 420 MW(dc).
•  Tax Treatment: Contribution of property to a partnership in exchange for a partnership interest, intended to qualify as a tax-free contribution under Section 721 of the Code. No gain or loss recognized by CBR or the Partnership upon such contribution, subject to Section 704(c) allocation requirements.
•  Effective Date of Contribution: December 8, 2023 (the Closing Date).
Tab A-8: Partnership Representative Designation and Tax Matters Agreement
Full Title: Partnership Representative Designation and Tax Matters Agreement
Date: September 21, 2023
Parties:
(a) CBR Solstice Manager, LLC, as Partnership Representative;
(b) Ridgeline Capital Partners, LLC, as Tax-Equity Member; and
(c) Solstice Holdings, LLC, as the Partnership.
Governing Law: State of New York (procedural matters); federal tax law (substantive tax provisions).
Key Terms:
•  Partnership Representative: CBR Solstice Manager, LLC, designated as the "partnership representative" within the meaning of Section 6223 of the Code (as amended by the Bipartisan Budget Act of 2015).
•  Designated Individual: Theo Vasquez, Chief Financial Officer of Calloway-Briggs Renewables Inc., designated as the individual authorized to act on behalf of CBR Solstice Manager, LLC in its capacity as Partnership Representative, in accordance with Treasury Regulation § 301.6223-1(b)(3).
•  Notification Obligations: CBR Solstice Manager required to provide Ridgeline with prompt written notice of (i) any notice of administrative proceeding received from the Internal Revenue Service, (ii) any proposed adjustments, (iii) any final partnership adjustment, and (iv) any settlement discussions or proposals.
•  Push-Out Election: CBR Solstice Manager required to make a push-out election under Section 6226 of the Code upon the written request of Ridgeline, unless such election would result in a material adverse tax consequence to the Managing Member as demonstrated in writing with reasonable supporting analysis.
•  Consent Requirements: No audit settlement, extension of statute of limitations, or amended partnership return may be agreed to or filed without the prior written consent of Ridgeline (not to be unreasonably withheld, conditioned, or delayed).
•  Successor Partnership Representative: In the event CBR Solstice Manager is removed as Managing Member or ceases to be a member of the Partnership, Ridgeline shall have the right to designate a successor Partnership Representative.
TAB B — LENDER / BACK-LEVERAGE DOCUMENTS
Tab B-1: Back-Leverage Intercreditor and Consent Agreement
Full Title: Back-Leverage Intercreditor and Consent Agreement
Date: December 8, 2023
Parties:
(a) Osprey National Bank, N.A., a national banking association, as Back-Leverage Lender;
(b) Ridgeline Capital Partners, LLC, a Delaware limited liability company, as Tax-Equity Investor; and
(c) Calloway-Briggs Renewables Inc., a Texas corporation, as Sponsor.
Governing Law: State of New York.
Key Terms:
•  Back-Leverage Facility: Credit Agreement dated December 8, 2023, by and between CBR Solstice Manager, LLC, as Borrower, and Osprey National Bank, N.A., as Lender, providing for a $68,000,000 term loan facility (Osprey Reference No.: ONB-PF-2023-0587).
•  Construction Facility: Existing Construction Loan Agreement dated March 15, 2022, by and between Calloway-Briggs Renewables Inc., as Borrower, and Osprey National Bank, N.A., as Lender, providing for a $245,000,000 construction loan facility (Osprey Reference No.: ONB-PF-2022-0341). Partial repayment of outstanding draws under the construction facility to occur at Closing from the proceeds of the tax-equity investment and credit sale.
•  Intercreditor Provisions: Consent by Ridgeline to (i) the pledge by CBR Solstice Manager of its managing member interest in Solstice Holdings, LLC to Osprey as security for the back-leverage term loan, (ii) the exercise by Osprey of remedies upon an event of default under the back-leverage term loan, subject to customary cure rights in favor of Ridgeline, and (iii) transfer of the managing member interest to a Qualified Transferee (as defined therein) upon foreclosure, subject to Ridgeline's prior written consent (not to be unreasonably withheld).
•  Ridgeline Protections: (i) Osprey may not amend the back-leverage credit agreement in any manner that would adversely affect Ridgeline without Ridgeline's prior written consent; (ii) Ridgeline has the right (but not the obligation) to cure any event of default under the back-leverage credit agreement; (iii) Ridgeline receives copies of all notices of default.
•  Subordination: Osprey's security interest in the managing member interest is subordinate to the terms and conditions of the LLCA governing distributions, allocations, and the flip mechanics.
Tab B-2: Pledge Agreement
Full Title: Pledge Agreement — CBR Solstice Manager, LLC Pledge of Managing Member Interest to Osprey National Bank, N.A.
Date: December 8, 2023
Parties:
(a) CBR Solstice Manager, LLC, a Delaware limited liability company, as Pledgor; and
(b) Osprey National Bank, N.A., a national banking association, as Secured Party.
Governing Law: State of New York (with UCC filings governed by the law of the State of Delaware as the jurisdiction of organization of the Pledgor).
Key Terms:
•  Pledged Collateral: All of CBR Solstice Manager's right, title, and interest in and to its managing member interest in Solstice Holdings, LLC, including all distributions, allocations, and other economic and non-economic rights appurtenant thereto, together with all proceeds thereof.
•  Secured Obligations: All obligations of CBR Solstice Manager, LLC under the $68,000,000 back-leverage term loan (Osprey Reference No.: ONB-PF-2023-0587), including principal, interest, fees, costs, expenses, and indemnification obligations.
•  UCC-1 Filing Authorization: CBR Solstice Manager authorizes Osprey to file a UCC-1 Financing Statement in the office of the Delaware Secretary of State describing the pledged collateral (see Tab L-1).
•  Representations and Warranties: CBR Solstice Manager represents that (i) it is the sole owner of the managing member interest, free and clear of all liens (other than the lien created by the Pledge Agreement), (ii) the managing member interest constitutes a "general intangible" under Article 9 of the Uniform Commercial Code, and (iii) there are no restrictions on the pledge of the managing member interest other than those set forth in the LLCA (which have been waived or satisfied in connection with the Transaction).
•  Events of Default and Remedies: Upon an event of default under the back-leverage credit agreement, Osprey may exercise the rights and remedies of a secured party under the Uniform Commercial Code, including foreclosure upon and disposition of the pledged collateral, subject to the intercreditor provisions set forth in the Back-Leverage Intercreditor and Consent Agreement (Tab B-1) and any applicable cure rights of Ridgeline.
TAB C — TAX OPINIONS AND MEMORANDA
Tab C-1: Tax Opinion Letter — Calderwood & Harkness LLP to Ridgeline Capital Partners, LLC
Date: December 8, 2023
From: Calderwood & Harkness LLP (Leonard Cross, Partner; Leila Nazari, Associate)
Addressed to: Ridgeline Capital Partners, LLC
Key Opinions:
(i) Each of the seven (7) projects in the Solstice Portfolio constitutes "energy property" within the meaning of Section 48(a)(3) of the Code, eligible for the Investment Tax Credit under Section 48 of the Code.
(ii) A 40% ITC rate (consisting of the 30% base rate applicable to projects satisfying the prevailing wage and apprenticeship requirements of Section 48(a)(10) of the Code, plus the 10% domestic content bonus credit under Section 48(a)(12) of the Code) is supported based on the facts, representations, and certifications provided.
(iii) The allocations of income, gain, loss, deduction, and credit under the Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC have substantial economic effect within the meaning of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, including compliance with the economic effect equivalence test, the capital account maintenance requirements of Treasury Regulation § 1.704-1(b)(2)(iv), the deficit restoration obligation and qualified income offset provisions, and the minimum gain chargeback requirements of Treasury Regulation § 1.704-2(f).
(iv) The partnership-flip structure of Solstice Holdings, LLC, including the pre-flip and post-flip allocation ratios, the flip mechanics, and the purchase option, is consistent with the safe harbor guidelines of Revenue Procedure 2007-65 (as modified by Notice 2017-04 and subsequent IRS guidance).
(v) Ridgeline's distributive share of ITCs and Modified Accelerated Cost Recovery System ("MACRS") depreciation deductions with respect to the Solstice Portfolio projects should be available for Ridgeline's use on its federal income tax returns for the applicable taxable years.
Qualifications and Assumptions: The opinion is subject to standard qualifications, including reliance on factual representations and certifications provided by CBR, the Project Companies, and their respective officers and employees; the assumption that all Transaction Documents have been duly authorized, executed, and delivered and are enforceable in accordance with their terms; and the caveat that the opinion does not address state or local tax matters. The opinion is rendered as of the Closing Date and does not take into account any changes in law or facts occurring after such date.
Tab C-2: Tax Opinion Letter — Calderwood & Harkness LLP to Pinehurst Insurance Group, Inc.
Date: December 8, 2023
From: Calderwood & Harkness LLP (Leonard Cross, Partner; Leila Nazari, Associate)
Addressed to: Pinehurst Insurance Group, Inc.
Key Opinions:
(i) Each of the seven (7) project companies is an "eligible taxpayer" within the meaning of Section 6418(a) of the Code and the Treasury Regulations promulgated thereunder, and is eligible to make a transfer election under Section 6418 with respect to Investment Tax Credits generated by its respective project.
(ii) The $60,000,000 of Investment Tax Credits to be transferred to Pinehurst pursuant to the Tax Credit Purchase Agreement (Tab A-2) and the corresponding transfer election statements (Tab G-1) should, upon the proper filing of such election statements, be treated as credits allowed to Pinehurst under the applicable credit provision (Section 48 of the Code) for the taxable year in which the credits are determined with respect to the transferring project companies.
(iii) The $55,200,000 aggregate purchase price paid by Pinehurst for the transferred credits should not be includible in Pinehurst's gross income under Section 6418(b) of the Code, and the transferred credits should not be treated as a payment or receipt that gives rise to gross income, a deduction, or a basis adjustment for Pinehurst.
(iv) The form and content of the transfer election statements prepared by Calderwood & Harkness LLP (Tab G-1) comply in all material respects with the requirements of Section 6418 of the Code and the applicable Treasury Regulations, including the pre-filing registration requirements and the information reporting requirements.
Qualifications and Assumptions: Subject to standard qualifications and assumptions substantially similar to those set forth in the opinion at Tab C-1, including reliance on certifications regarding prevailing wage and apprenticeship compliance, domestic content qualification, and eligible basis calculations.
Tab C-3: Tax Structure Memorandum
Full Title: Tax Structure Memorandum — Partnership-Flip and Section 6418 Transfer Analysis for the Solstice Portfolio
Date: November 15, 2023 (updated as of Closing Date)
From: Leonard Cross, Partner, and Leila Nazari, Associate, Calderwood & Harkness LLP
To: Marcus Calloway, Chief Executive Officer, Calloway-Briggs Renewables Inc.; Theo Vasquez, Chief Financial Officer, Calloway-Briggs Renewables Inc.; and Priya Anand, Vice President — Tax, Calloway-Briggs Renewables Inc.
Subject: Overall tax structure of the Solstice Portfolio financing, integrating the partnership-flip tax-equity investment with the Section 6418 transferable credit sale.
Summary of Key Tax Figures:
The memorandum provides a detailed analysis of the dual-track structure, including the ordering of the Section 6418 transfer election relative to the partnership-level allocation of credits, the bifurcation of eligible basis between the partnership-allocated credits and the transferred credits, and the impact of the structure on the depreciable basis available for MACRS depreciation within the partnership.
Tab C-4: ITC Eligibility and Basis Memorandum
Full Title: Memorandum Regarding ITC Eligibility, Prevailing Wage and Apprenticeship Compliance, and Domestic Content Bonus Qualification
Date: October 30, 2023
From: Leila Nazari, Associate, and Robert Jansen, Associate, Calderwood & Harkness LLP
To: Leonard Cross, Partner, Calderwood & Harkness LLP
Subject: Analysis of (i) compliance with the prevailing wage and apprenticeship requirements of Section 48(a)(10) of the Code by Vasquez Brothers Construction, Inc. ("VBC"), the EPC contractor for all seven projects in the Solstice Portfolio, and (ii) qualification for the 10% domestic content bonus credit under Section 48(a)(12) of the Code based on the sourcing of solar modules, inverters, trackers, and balance-of-system components.
Key Conclusions:
•  VBC has maintained contemporaneous payroll records demonstrating payment of prevailing wages in accordance with Davis-Bacon Act requirements for the relevant geographic areas (West Texas, Southern New Mexico, and the Val Verde County area of Texas).
•  Apprenticeship requirements satisfied through VBC's registered apprenticeship program with the International Brotherhood of Electrical Workers (IBEW) Locals 583 (El Paso) and 611 (Albuquerque).
•  Domestic content analysis based on Adjusted Percentage calculations under Notice 2023-38 and proposed Treasury Regulations, demonstrating that the required threshold of domestically manufactured components has been met for each project.
Tab C-5: Section 6418 Transfer Election Memorandum
Full Title: Memorandum Regarding Section 6418 Transfer Election Mechanics, Filing Requirements, Pre-Filing Registration, and Buyer Protections
Date: August 28, 2023
From: Leila Nazari, Associate, Calderwood & Harkness LLP
To: Leonard Cross, Partner, and Sylvia Hartwell, Partner, Calderwood & Harkness LLP
Subject: Detailed analysis of the procedural and substantive requirements for making a valid transfer election under Section 6418 of the Code, including (i) the pre-filing registration process through the IRS electronic portal, (ii) the content and form of the transfer election statement to be attached to each project company's federal income tax return, (iii) the information to be provided to the transferee (Pinehurst), (iv) the "excessive credit transfer" penalty provisions and reasonable cause defenses, and (v) the transferee protection rule of Section 6418(c) providing that a credit transferred pursuant to a valid election shall not be subject to recapture in the hands of the transferee on account of the transferor's actions.
Tab C-6: ITC Recapture Risk Memorandum
Full Title: Memorandum Regarding Investment Tax Credit Recapture Risks and Indemnification Analysis
Date: September 8, 2023
From: Robert Jansen, Associate, Calderwood & Harkness LLP
To: Leila Nazari, Associate, and Leonard Cross, Partner, Calderwood & Harkness LLP
Subject: Analysis of the five-year recapture period applicable to Section 48 ITCs under Section 50(a) of the Code, including (i) events that could trigger recapture (sale or other disposition of energy property, cessation of qualification as energy property, change in ownership or use), (ii) the taper schedule under Section 50(a)(1)(B), (iii) application of recapture rules to credits allocated within the partnership versus credits transferred under Section 6418, (iv) impact of recapture on Ridgeline's target yield and flip mechanics, and (v) adequacy of the indemnity cap of $69,000,000 (125% of the Pinehurst purchase price) under the Tax Indemnity Agreement (Tab A-4) to cover potential recapture exposure inclusive of gross-up and penalties.
Tab C-7: Partnership Tax Allocation Memorandum
Full Title: Memorandum Regarding Partnership Tax Allocation Provisions and Substantial Economic Effect Analysis
Date: September 15, 2023
From: Sylvia Hartwell, Partner, and Leila Nazari, Associate, Calderwood & Harkness LLP
To: File (Calderwood & Harkness LLP — Matter No. 1015-00005)
Subject: Comprehensive analysis of the tax allocation provisions of the Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC (Tab A-1), addressing the following:
•  Section 704(b) substantial economic effect analysis, including satisfaction of the "economic effect equivalence" test and the "big three" requirements: (i) capital account maintenance in accordance with Treasury Regulation § 1.704-1(b)(2)(iv), (ii) liquidation in accordance with positive capital account balances, and (iii) deficit restoration obligations.
•  Minimum gain chargeback provisions per Treasury Regulation § 1.704-2(f) and partner nonrecourse debt minimum gain chargeback provisions per Treasury Regulation § 1.704-2(i).
•  Qualified income offset provisions per Treasury Regulation § 1.704-1(b)(2)(ii)(d).
•  MACRS depreciation on $307,680,000 aggregate depreciable basis using 5-year recovery period under Section 168(e)(3)(B)(vi) of the Code, with application of the half-year convention and 200% declining balance method.
•  Rev. Proc. 2007-65 safe harbor compliance, including verification that the Managing Member's minimum capital contribution of $2,400,000 represents at least 1% (and in this case, approximately 2%) of total capital contributions to the Partnership.
•  Section 704(c) allocation methodology (traditional method with curative allocations).
Tab C-8: Research Memo — Interaction of Section 6418 Transfer and Partnership-Flip Structures
Full Title: Research Memorandum Regarding the Interaction of Section 6418 Transferable Tax Credit Elections and Partnership-Flip Tax-Equity Structures
Date: July 20, 2023
From: Robert Jansen, Associate, Calderwood & Harkness LLP
To: Leila Nazari, Associate, Calderwood & Harkness LLP
Subject: Analysis of (i) whether the Section 6418 transfer election should be made at the project company level or the partnership level, and the legal and practical implications of each approach, (ii) the impact of a project-company-level transfer election on the amount and character of ITCs available for allocation at the partnership level, (iii) the basis reduction rules applicable to transferred credits versus partnership-allocated credits and the interaction with Section 50(c) basis adjustment, (iv) review of proposed Treasury Regulations under Section 6418 (REG-101610-23, published June 14, 2023) and their treatment of partnerships and tiered structures, and (v) practitioner commentary and IRS informal guidance regarding hybrid structures combining partnership-flip allocations with Section 6418 transfers.
Conclusion: The memorandum concludes that making the Section 6418 transfer election at the project company level (prior to the contribution of credits to the partnership for allocation) is the preferred approach, as it provides greater certainty under the proposed regulations, avoids complexity associated with partnership-level elections, and ensures that Pinehurst, as the transferee, looks directly to the project companies as eligible taxpayers.
TAB D — LEGAL OPINIONS AND ENFORCEABILITY
Tab D-1: Legal Opinion Letter — Calderwood & Harkness LLP
Date: December 8, 2023
From: Calderwood & Harkness LLP (Monica Chu, Partner)
Addressed to:
(a) Ridgeline Capital Partners, LLC;
(b) Pinehurst Insurance Group, Inc.; and
(c) Osprey National Bank, N.A.
Key Opinions:
(i) Due Organization and Good Standing. Each of the following entities is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization:
•  Calloway-Briggs Renewables Inc. — organized under the laws of the State of Texas.
•  CBR Solstice Manager, LLC — organized under the laws of the State of Delaware.
•  Solstice Holdings, LLC — organized under the laws of the State of Delaware.
Each such entity is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its business or the ownership or leasing of its properties requires such qualification.
(ii) Authority. Each of CBR, CBR Solstice Manager, and Solstice Holdings has all requisite corporate or limited liability company power and authority to execute, deliver, and perform its obligations under each Transaction Document to which it is a party. The execution, delivery, and performance of each Transaction Document by each such entity have been duly authorized by all necessary corporate or limited liability company action, including approval by the board of directors of CBR, the sole member of CBR Solstice Manager (CBR), and the members of Solstice Holdings in accordance with the Amended and Restated Limited Liability Company Agreement.
(iii) Enforceability. Each Transaction Document to which CBR, CBR Solstice Manager, or Solstice Holdings is a party constitutes the legal, valid, and binding obligation of such entity, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(iv) No Conflicts. The execution, delivery, and performance by each of CBR, CBR Solstice Manager, and Solstice Holdings of the Transaction Documents to which it is a party do not and will not (a) violate or conflict with its organizational documents, (b) violate any applicable law, rule, or regulation, (c) result in a breach of or constitute a default under any material contract to which such entity is a party, or (d) result in the creation of any lien on any property or assets of such entity (other than liens created pursuant to the Transaction Documents).
Governing Law: The opinion covers Transaction Documents governed by New York law. Entity-level opinions regarding organization, good standing, and authority are rendered under the laws of the State of Delaware (for CBR Solstice Manager and Solstice Holdings) and the State of Texas (for CBR). The opinion is subject to customary assumptions, qualifications, exceptions, and limitations, including the bankruptcy and equitable principles qualification, and is given solely for the benefit of the addressees.
TAB E — CERTIFICATES
Tab E-1: Secretary's Certificate of Calloway-Briggs Renewables Inc.
Date: December 8, 2023
Certifying Officer: Sandra Fielding, Corporate Secretary, Calloway-Briggs Renewables Inc.
Certifications:
(a) Attached as Exhibit A to the Certificate is a true, correct, and complete copy of the Amended and Restated Articles of Incorporation of Calloway-Briggs Renewables Inc., as filed with the Texas Secretary of State on February 12, 2018, as in effect on the date of the Certificate, without amendment or modification.
(b) Attached as Exhibit B is a true, correct, and complete copy of the Amended and Restated Bylaws of Calloway-Briggs Renewables Inc., as adopted by the Board of Directors on March 8, 2021, as in effect on the date of the Certificate, without amendment or modification.
(c) Attached as Exhibit C is a true, correct, and complete copy of the resolutions adopted by the Board of Directors of Calloway-Briggs Renewables Inc. on September 15, 2023, authorizing the execution, delivery, and performance of the Transaction Documents to which CBR is a party, which resolutions have not been amended, modified, or rescinded and remain in full force and effect.
(d) Attached as Exhibit D is a certificate of officer incumbency identifying each officer of Calloway-Briggs Renewables Inc. authorized to execute the Transaction Documents, together with specimen signatures of each such officer, including Marcus Calloway (CEO), Theo Vasquez (CFO), and Sandra Fielding (Corporate Secretary).
(e) Attached as Exhibit E is a Certificate of Good Standing (also referred to as a Certificate of Fact) issued by the Texas Secretary of State, dated within ten (10) business days of the Closing Date, confirming that Calloway-Briggs Renewables Inc. is in good standing under the laws of the State of Texas.
Entity Information:
•  EIN: 84-3291076
•  Texas Secretary of State File No.: 803762114
Tab E-2: Secretary's Certificate of CBR Solstice Manager, LLC
Date: December 8, 2023
Certifying Officer: Sandra Fielding, authorized signatory on behalf of Calloway-Briggs Renewables Inc., sole member of CBR Solstice Manager, LLC.
Certifications:
(a) Attached as Exhibit A to the Certificate is a true, correct, and complete copy of the Certificate of Formation of CBR Solstice Manager, LLC, as filed with the Delaware Secretary of State on August 14, 2023, without amendment or modification.
(b) Attached as Exhibit B is a true, correct, and complete copy of the Limited Liability Company Agreement of CBR Solstice Manager, LLC, executed by Calloway-Briggs Renewables Inc. as sole member, dated August 14, 2023, as in effect on the date of the Certificate.
(c) Attached as Exhibit C is a true, correct, and complete copy of the written consent of the sole member of CBR Solstice Manager, LLC (Calloway-Briggs Renewables Inc.), dated September 15, 2023, authorizing the execution, delivery, and performance of the Transaction Documents to which CBR Solstice Manager is a party, which consent has not been amended, modified, or rescinded.
(d) Attached as Exhibit D is a certificate identifying the authorized signatories of CBR Solstice Manager, LLC, together with their specimen signatures.
(e) Attached as Exhibit E is a Certificate of Good Standing issued by the Delaware Secretary of State, dated within ten (10) business days of the Closing Date.
Entity Information:
•  EIN: 88-4071597
•  Sole Member: Calloway-Briggs Renewables Inc.
Tab E-3: Officer's Closing Certificate of Calloway-Briggs Renewables Inc.
Date: December 8, 2023
Signed by: Theo Vasquez, Chief Financial Officer, Calloway-Briggs Renewables Inc.
Certifications:
(i) All representations and warranties of Calloway-Briggs Renewables Inc. and CBR Solstice Manager, LLC contained in the Transaction Documents are true and correct in all material respects as of the Closing Date (or, where qualified by materiality or Material Adverse Effect, true and correct in all respects) with the same force and effect as if made on and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date.
(ii) CBR and CBR Solstice Manager have performed and complied in all material respects with all covenants, agreements, and conditions required to be performed or complied with by them on or prior to the Closing Date under the Transaction Documents, and all conditions precedent to the obligations of the other parties to consummate the Closing have been satisfied or waived.
(iii) Since the Signing Date of September 21, 2023, there has been no Material Adverse Effect (as defined in the Amended and Restated Limited Liability Company Agreement) with respect to CBR, CBR Solstice Manager, Solstice Holdings, or any Project Company.
TAB F — ENTITY FORMATION AND GOOD STANDING DOCUMENTS
Tab F-1: Certificate of Formation — Solstice Holdings, LLC
Filing Date: August 14, 2023
Filing Office: Delaware Secretary of State, Division of Corporations, John G. Townsend Building, 401 Federal Street, Suite 4, Dover, Delaware 19901.
Entity Type: Limited liability company organized under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.).
Registered Agent: Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
EIN: 88-4071523.
Tab F-2: Certificate of Formation — CBR Solstice Manager, LLC
Filing Date: August 14, 2023
Filing Office: Delaware Secretary of State, Division of Corporations.
Entity Type: Limited liability company organized under the Delaware Limited Liability Company Act.
Sole Member: Calloway-Briggs Renewables Inc., a Texas corporation.
Registered Agent: Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
EIN: 88-4071597.
Tab F-3: Good Standing Certificate — Calloway-Briggs Renewables Inc.
Issuing Authority: Texas Secretary of State, Statutory Filings Division, P.O. Box 13697, Austin, Texas 78711.
Entity: Calloway-Briggs Renewables Inc., a Texas corporation.
File No.: 803762114.
Date of Issuance: Within ten (10) business days of the Closing Date of December 8, 2023.
Tab F-4: Good Standing Certificate — Solstice Holdings, LLC
Issuing Authority: Delaware Secretary of State, Division of Corporations.
Entity: Solstice Holdings, LLC, a Delaware limited liability company.
Date of Issuance: Within ten (10) business days of the Closing Date of December 8, 2023.
Tab F-5: Good Standing Certificate — CBR Solstice Manager, LLC
Issuing Authority: Delaware Secretary of State, Division of Corporations.
Entity: CBR Solstice Manager, LLC, a Delaware limited liability company.
Date of Issuance: Within ten (10) business days of the Closing Date of December 8, 2023.
Tab F-6: Good Standing Certificates — Project Companies
Certificates of Good Standing for each of the seven (7) Project Companies, each issued by the Delaware Secretary of State, Division of Corporations, within ten (10) business days of the Closing Date:
1.  Pecos Sun Solar, LLC — Delaware limited liability company
2.  Red Mesa Solar, LLC — Delaware limited liability company
3.  Coyote Flats Solar, LLC — Delaware limited liability company
4.  Llano Verde Solar, LLC — Delaware limited liability company
5.  Cimarron Solar, LLC — Delaware limited liability company
6.  Sandoval Ridge Solar, LLC — Delaware limited liability company
7.  Amistad Solar, LLC — Delaware limited liability company
Tab F-7: Foreign Qualification Certificates
Certificates of Authority or Foreign Qualification for each entity required to be qualified to transact business in a jurisdiction other than its jurisdiction of organization:
•  Solstice Holdings, LLC:
•  Foreign qualification in the State of Texas (filed with the Texas Secretary of State)
•  Foreign qualification in the State of New Mexico (filed with the New Mexico Secretary of State)
•  Pecos Sun Solar, LLC — Foreign qualification in the State of Texas (Reeves County project)
•  Red Mesa Solar, LLC — Foreign qualification in the State of Texas (Pecos County project)
•  Coyote Flats Solar, LLC — Foreign qualification in the State of Texas (Ward County project)
•  Llano Verde Solar, LLC — Foreign qualification in the State of Texas (Hudspeth County project)
•  Amistad Solar, LLC — Foreign qualification in the State of Texas (Val Verde County project)
•  Cimarron Solar, LLC — Foreign qualification in the State of New Mexico (Lea County project)
•  Sandoval Ridge Solar, LLC — Foreign qualification in the State of New Mexico (Sandoval County project)
TAB G — TAX ELECTION AND IRS FILINGS
Tab G-1: Form of Transfer Election Statement (IRS Section 6418)
Prepared by: Calderwood & Harkness LLP (Leila Nazari and Robert Jansen)
Description: Template transfer election statement for each of the seven (7) Project Companies, to be attached to each Project Company's federal income tax return (Form 1065 or Form 1120, as applicable) for the taxable year in which the applicable ITC is determined. Each transfer election statement contains the following information:
•  Eligible Taxpayer Identification: Name and EIN of the electing Project Company.
•  Transferee Taxpayer Identification: Pinehurst Insurance Group, Inc.; EIN: 06-1938274.
•  Credit Type: Investment Tax Credit under Section 48 of the Code.
•  Credit Amount: Specified for each Project Company based on its eligible basis and applicable ITC rate.
•  Transfer Price: $0.92 per $1.00 of transferred credit face value.
•  Tax Year: The taxable year ending December 31, 2023.
•  Pre-Filing Registration Number: Unique registration number assigned to each Project Company through the IRS pre-filing registration portal established under Treasury Regulation § 1.6418-4.
•  Statement of Compliance: Certification that the eligible taxpayer satisfies all requirements for making a transfer election under Section 6418 of the Code and the Treasury Regulations promulgated thereunder.
Tab G-2: ITC Claim Support Schedules and Workpapers
Prepared by: Robert Jansen, Associate, Calderwood & Harkness LLP
Description: Detailed schedules and workpapers supporting the ITC claims for each of the seven (7) projects in the Solstice Portfolio, including:
Eligible Basis by Project:
ITC Allocation Summary:
Depreciable Basis Calculation:
Aggregate Eligible Basis: $384,600,000 Less: ITC Basis Reduction under § 50(c) (50% of total ITCs): ($76,920,000) Depreciable Basis (post-ITC reduction): $307,680,000
The workpapers include supporting documentation for each line item of eligible basis, including invoices, certificates of completion, cost segregation analyses, and reconciliation to EPC contract amounts.
TAB H — ESCROW AND FUNDS FLOW
Tab H-1: Escrow Funding Confirmation
From: Clearwater Escrow Services, Inc. (James Harding, Senior Vice President, Escrow Officer)
Date: December 7, 2023
Account Number: CES-2023-80114
Confirmation:
This letter confirms that the following amounts have been received and are on deposit in Escrow Account No. CES-2023-80114 maintained at Greaves Bancorp, in accordance with the Escrow Agreement dated September 21, 2023:
Funds are invested in U.S. Treasury money market instruments pending receipt of joint release instructions from the authorized representatives of Calloway-Briggs Renewables Inc., Ridgeline Capital Partners, LLC, and Pinehurst Insurance Group, Inc.
Tab H-2: Funds Flow Memorandum
Full Title: Funds Flow Memorandum — Solstice Portfolio Closing
Date: December 8, 2023
Prepared by: Calderwood & Harkness LLP
Wire Transfer Sequence:
The following wire transfers are to be executed on the Closing Date in the order set forth below, upon receipt of confirmation that all conditions precedent to Closing have been satisfied or waived and upon delivery of the executed Escrow Release Instructions (Tab H-3):
Wire 1. Release of Ridgeline First Tranche from Escrow.
Amount: $96,000,000.00 From: Clearwater Escrow Account No. CES-2023-80114 (Greaves Bancorp) To: Solstice Holdings, LLC — Operating Account at Osprey National Bank, N.A. Purpose: Ridgeline Capital Partners, LLC first tranche capital contribution to Solstice Holdings, LLC pursuant to the Capital Contribution Agreement (Tab A-3).
Wire 2. Release of Pinehurst Credit Purchase Price from Escrow.
Amount: $55,200,000.00 From: Clearwater Escrow Account No. CES-2023-80114 (Greaves Bancorp) To: Calloway-Briggs Renewables Inc. — Operating Account at Osprey National Bank, N.A. Purpose: Payment of aggregate tax credit purchase price by Pinehurst Insurance Group, Inc. to Calloway-Briggs Renewables Inc. pursuant to the Tax Credit Purchase Agreement (Tab A-2).
Wire 3. CBR Manager Capital Contribution.
Amount: $2,400,000.00 From: CBR Solstice Manager, LLC — Operating Account at Osprey National Bank, N.A. To: Solstice Holdings, LLC — Operating Account at Osprey National Bank, N.A. Purpose: CBR Solstice Manager, LLC capital contribution to Solstice Holdings, LLC pursuant to the Capital Contribution Agreement (Tab A-3).
Wire 4. Partial Repayment of Osprey Construction Facility.
Amount: Per payoff letter from Osprey National Bank, N.A. dated December 6, 2023. From: Solstice Holdings, LLC — Operating Account at Osprey National Bank, N.A. and/or Calloway-Briggs Renewables Inc. — Operating Account at Osprey National Bank, N.A. To: Osprey National Bank, N.A. — Loan Repayment Account Purpose: Partial repayment of outstanding draws under the Construction Loan Agreement (Osprey Reference No.: ONB-PF-2022-0341; $245,000,000 facility).
The Funds Flow Memorandum includes detailed wire instructions for each transfer, including beneficiary bank name, ABA routing number, account number, beneficiary name, and reference information. Each wire transfer is to be confirmed by the sending bank and the receiving bank, with confirmation numbers reported to Calderwood & Harkness LLP and the authorized representatives of the applicable parties by no later than 4:00 p.m. Eastern Time on the Closing Date.
Tab H-3: Escrow Release Instructions
Full Title: Joint Escrow Release Instructions
Date: December 8, 2023
To: Clearwater Escrow Services, Inc. (Attention: James Harding, Senior Vice President)
From: Authorized representatives of Calloway-Briggs Renewables Inc., Ridgeline Capital Partners, LLC, and Pinehurst Insurance Group, Inc.
Description: Joint written instructions directing Clearwater Escrow Services, Inc. to release all funds held in Escrow Account No. CES-2023-80114 in accordance with the wire transfer sequence set forth in the Funds Flow Memorandum (Tab H-2), upon the undersigned parties' confirmation that all conditions precedent to the Closing under the Capital Contribution Agreement (Tab A-3) and the Tax Credit Purchase Agreement (Tab A-2) have been satisfied or waived. The Escrow Release Instructions are signed by:
•  Theo Vasquez, CFO, on behalf of Calloway-Briggs Renewables Inc.
•  Patricia Whitfield, authorized representative, on behalf of Ridgeline Capital Partners, LLC
•  Roland Thornberry, authorized representative, on behalf of Pinehurst Insurance Group, Inc.
TAB I — DILIGENCE MATERIALS
Tab I-1: Real Property and Lease Diligence Summary
Full Title: Summary of Real Property Diligence — Solstice Portfolio
Prepared by: Derek Saunders, Associate, Calderwood & Harkness LLP
Date: November 20, 2023
Description: Comprehensive summary of real property diligence conducted in connection with the seven (7) project sites comprising the Solstice Portfolio, located across the following jurisdictions:
Texas:
•  Reeves County (Pecos Sun Solar)
•  Pecos County (Red Mesa Solar)
•  Ward County (Coyote Flats Solar)
•  Hudspeth County (Llano Verde Solar)
•  Val Verde County (Amistad Solar)
New Mexico:
•  Lea County (Cimarron Solar)
•  Sandoval County (Sandoval Ridge Solar)
The summary covers the following categories of real property diligence for each project site: (a) ground lease agreements (including term, renewal options, rental escalations, termination provisions, and lender consent and recognition agreements), (b) easements and rights-of-way (including transmission line easements, access road easements, and utility easements), (c) title insurance policies and title commitments (including Schedule B exceptions and endorsements), (d) surface use agreements and agricultural coexistence provisions, (e) identified encumbrances (mortgages, deeds of trust, mineral reservations, and other recorded instruments), and (f) confirmation that lease terms are co-extensive with, or exceed, the tenor of the applicable Power Purchase Agreements for each project.
Tab I-2: Regulatory and Permitting Compliance Checklist
Full Title: Regulatory and Permitting Compliance Checklist — Solstice Portfolio
Prepared by: Derek Saunders, Associate, and Robert Jansen, Associate, Calderwood & Harkness LLP
Date: November 28, 2023
Description: Project-by-project checklist of all regulatory approvals, permits, licenses, and interconnection agreements required for the construction, operation, and maintenance of the seven (7) projects in the Solstice Portfolio. The checklist includes:
•  ERCOT Interconnection Agreements: Fully executed Large Generation Interconnection Agreements ("LGIAs") with the Electric Reliability Council of Texas for the five (5) Texas projects: Pecos Sun Solar, Red Mesa Solar, Coyote Flats Solar, Llano Verde Solar, and Amistad Solar. Amistad Solar interconnection confirmation was the final approval received, resulting in the eight-day extension of the Closing Date as described in the Closing Delay Notification Letter (Tab M-1).
•  Northgate Corporation/WECC Interconnection: Fully executed interconnection agreements with the Ostrander Partners LLC ("Northgate Corporation") and coordination with the Western Electricity Coordinating Council ("WECC") for the two (2) New Mexico projects: Cimarron Solar and Sandoval Ridge Solar.
•  Environmental Permits: Compliance with the National Environmental Policy Act ("NEPA") requirements (where applicable), state-level environmental quality approvals from the Texas Commission on Environmental Quality ("TCEQ") and the New Mexico Environment Department ("NMED"), stormwater pollution prevention plans, and wildlife and habitat assessments.
•  County Building Permits: Building permits and inspection certificates from the applicable county authorities in each of the seven (7) project counties.
•  FAA Determinations: Determinations of No Hazard to Air Navigation issued by the Federal Aviation Administration for any project structures exceeding applicable height thresholds.
•  Status Tracking: Each permit, approval, and agreement is tracked by status (Obtained / Pending / Waived / Not Applicable), issuance date, and expiration date (where applicable). As of the Closing Date, all required regulatory approvals and permits have been obtained or confirmed as not required.
Tab I-3: UCC / Lien Search Summary Memorandum
Full Title: Summary of UCC and Lien Search Results — Solstice Portfolio Entities
Prepared by: Robert Jansen, Associate, Calderwood & Harkness LLP
Date: December 4, 2023
Description: Summary of Uniform Commercial Code, federal and state tax lien, and judgment lien searches conducted in the States of Delaware, Texas, and New Mexico for each of the following entities:
•  Calloway-Briggs Renewables Inc.
•  CBR Solstice Manager, LLC
•  Solstice Holdings, LLC
•  Pecos Sun Solar, LLC
•  Red Mesa Solar, LLC
•  Coyote Flats Solar, LLC
•  Llano Verde Solar, LLC
•  Cimarron Solar, LLC
•  Sandoval Ridge Solar, LLC
•  Amistad Solar, LLC
Findings:
•  Existing UCC-1 Filings: UCC-1 Financing Statements filed by Osprey National Bank, N.A. against each of the seven (7) Project Companies in connection with the existing construction loan facility (Osprey Reference No.: ONB-PF-2022-0341; $245,000,000). These filings are expected and have been consented to by Ridgeline pursuant to the Back-Leverage Intercreditor and Consent Agreement (Tab B-1).
•  No Unexpected Liens: No unexpected liens, judgment liens, federal tax liens, or state tax liens were identified against any of the searched entities.
•  UCC-3 Amendments and New UCC-1 Filings at Closing: The memorandum notes the following UCC actions to be taken at or promptly following Closing: (i) UCC-3 Amendment Statements amending the existing Osprey UCC-1 filings to reflect the revised collateral scope following the conversion of the construction facility to the back-leverage term loan structure, and (ii) a new UCC-1 Financing Statement to be filed by Osprey against CBR Solstice Manager, LLC in Delaware, reflecting the pledge of the managing member interest in Solstice Holdings, LLC pursuant to the Pledge Agreement (Tab B-2). See Tab L for UCC filing documents.
Tab I-4: Independent Engineer Report
Full Title: Independent Engineer Report — Solstice Portfolio (420 MW(dc) Utility-Scale Solar PV)
Prepared by: Meridian Technical Advisors, LLC
Principal Engineer: Dr. Rajan Mehta, P.E.
Address: 1700 Broadway, Suite 1510, Denver, Colorado 80290
Date: November 22, 2023
Description: The Independent Engineer Report prepared by Meridian Technical Advisors, LLC provides a comprehensive technical assessment of the seven (7) projects in the Solstice Portfolio, including (a) energy-yield assessments based on P50 and P90 production estimates for each project, incorporating site-specific solar irradiance data (TMY3 datasets), module degradation assumptions, and system loss factors, (b) construction monitoring reports documenting Meridian's periodic site inspections during the construction phase for each project, (c) review of equipment specifications (solar modules, inverters, single-axis trackers, and balance-of-system components), (d) assessment of EPC contractor qualifications and performance, (e) review of interconnection studies and grid compliance, (f) assessment of site conditions and geotechnical reports, and (g) confirmation of Commercial Operation for each project.
Tab I-5: Independent ITC-Basis Appraisal and Fair Market Value Analysis
Full Title: Independent Appraisal — Fair Market Value Analysis of the Solstice Portfolio for ITC Basis Purposes
Prepared by: Greystone Worthington, LLC
Managing Director: Helen Farber, ASA, CFA
Address: 200 S. Wacker Drive, Suite 2900, Chicago, Illinois 60606
Date: November 17, 2023
Description: Independent appraisal report prepared by Greystone Worthington, LLC, an accredited valuation firm, providing a fair market value analysis of the seven (7) projects in the Solstice Portfolio as of each project's respective placed-in-service date. The appraisal supports the aggregate eligible basis of $384,600,000 used for purposes of computing the Section 48 Investment Tax Credits. The appraisal employs the income approach (Discounted cash flow analysis), the cost approach (replac