1015-00005 · Calloway-Briggs Renewables Inc · Correspondence

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

600 Lexington Avenue New York, NY 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

Houston Office: 1000 Louisiana Street, Suite 3800 Houston, TX 77002 Telephone: (713) 220-5700 Facsimile: (713) 220-5788

www.calderwoodharkness.com

December 12, 2023

Mr. Marcus Calloway Chairman & Chief Executive Officer Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, TX 77056

Mr. Theo Vasquez Chief Financial Officer Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, TX 77056

Re: Closing of Tax-Equity Investment and Transferable Tax-Credit Financing — Solstice Portfolio (420 MW) Calderwood & Harkness LLP Matter No. 1015-00005

Dear Marcus and Theo:

We are pleased to write to you on behalf of Calderwood & Harkness LLP to summarize the successful closing of the integrated tax-equity investment and transferable tax-credit financing for the Solstice Portfolio (the "Transaction"), which took place on December 8, 2023. This letter is intended to serve as a comprehensive post-closing summary for your records and to identify certain pending items and continuing obligations that will require your attention in the coming months.

As you know, the Transaction comprised two integrated financing tranches: (1) a partnership-flip tax-equity investment by Ridgeline Capital Partners, LLC ("Ridgeline") into Solstice Holdings, LLC ("Solstice Holdings" or the "Partnership"), and (2) a Section 6418 transferable tax-credit sale to Pinehurst Insurance Group, Inc. ("Pinehurst"). The closing was originally scheduled for November 30, 2023, but was extended to December 8, 2023 to allow for the receipt of final ERCOT interconnection confirmation for the Amistad Solar project (45 MW, Val Verde County, Texas), which achieved Commercial Operation Date ("COD") on November 18, 2023. The aggregate deal value of the Transaction is approximately $180,000,000, reflecting one of the most significant combined partnership-flip and transferable-credit financings completed in the renewable energy sector during the 2023 tax year.

The purpose of this letter is to: (a) confirm the key actions completed at closing; (b) summarize the principal transaction economics; (c) identify pending items and post-closing obligations that require CBR's ongoing attention; (d) provide guidance on document retention; and (e) outline our continuing availability to assist Calloway-Briggs Renewables Inc. ("CBR" or the "Company") with respect to all aspects of this Transaction.

This letter is organized into six sections, as set forth below.

Section 1: Summary of Closing — Key Actions Completed on December 8, 2023

1.1 Execution and Delivery of Transaction Documents

We confirm that all principal transaction documents were duly executed and delivered by all parties on December 8, 2023, in accordance with the conditions precedent set forth in the respective agreements. Original signature pages, together with PDF counterparts, have been collected and are included in the closing binder described in Section 4 below.

The following principal documents were executed and delivered at closing:

1. Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC (the "LLCA"), among CBR Solstice Manager, LLC, a Delaware limited liability company ("CBR Manager"), as Managing Member, and Ridgeline Capital Partners, LLC, a Delaware limited liability company, as Tax-Equity Member. The LLCA is governed by the laws of the State of Delaware, with all tax provisions construed under applicable provisions of federal tax law, including the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder.

2. Tax Credit Purchase Agreement (the "TCPA"), between Calloway-Briggs Renewables Inc. and Pinehurst Insurance Group, Inc., governing the sale and transfer of specified investment tax credits pursuant to Section 6418 of the Code. The TCPA is governed by the laws of the State of New York.

3. Capital Contribution Agreement, pursuant to which Ridgeline Capital Partners, LLC has committed to make capital contributions to Solstice Holdings, LLC in an aggregate amount of $120,000,000, payable in two tranches as described herein. The Capital Contribution Agreement is governed by the laws of the State of New York.

4. Tax Indemnity Agreement, entered into by CBR in favor of Pinehurst Insurance Group, Inc., providing for indemnification against ITC recapture and disallowance events with respect to the transferred credits. The indemnification obligation is capped at $69,000,000, representing 125% of the $55,200,000 purchase price paid by Pinehurst for the transferred credits. The Tax Indemnity Agreement is governed by the laws of the State of New York.

5. Purchase Option Agreement, granting CBR Solstice Manager, LLC the option to purchase Ridgeline's residual 5% interest in Solstice Holdings, LLC at fair market value (with a floor of $1.00) during the 180-day window following the "flip date" (projected to occur in Q4 2028). The Purchase Option Agreement is governed by the laws of the State of New York.

6. Escrow Agreement, among CBR, Ridgeline, Pinehurst, and Clearwater Escrow Services, Inc. ("Clearwater"), as escrow agent. The escrow account is identified as Escrow Account No. CES-2023-80114. The Escrow Agreement is governed by the laws of the State of New York.

7. Intercompany Contribution Agreement, pursuant to which CBR contributed 100% of its membership interests in each of the seven project companies (as identified in Section 1.6 below) to Solstice Holdings, LLC. The contribution was structured as a tax-free contribution under Section 721 of the Code, and no gain or loss was recognized by CBR or Solstice Holdings in connection therewith.

8. Partnership Representative Designation and Tax Matters Agreement, designating CBR Solstice Manager, LLC (acting through Theo Vasquez as the "designated individual") as partnership representative of Solstice Holdings, LLC under Section 6223 of the Code for all taxable years of the Partnership. The agreement sets forth the rights and obligations of the partnership representative and the notification and consent requirements applicable to Ridgeline in connection with any IRS audit or administrative proceeding.

9. Back-Leverage Intercreditor and Consent Agreement, among Osprey National Bank, N.A. ("Osprey" or "ONB"), Ridgeline Capital Partners, LLC, and CBR. The intercreditor agreement governs the relative rights and priorities of Osprey (as lender under both the construction facility identified as ONB-PF-2022-0341 and the back-leverage term loan facility identified as ONB-PF-2023-0587) and Ridgeline (as Tax-Equity Member under the LLCA), and includes Ridgeline's consent to certain actions by Osprey as secured creditor.

10. Pledge Agreement, pursuant to which CBR Solstice Manager, LLC has pledged its managing-member interest in Solstice Holdings, LLC to Osprey National Bank, N.A. as security for the $68,000,000 back-leverage term loan (ONB-PF-2023-0587). The pledge was perfected by the filing of a UCC-1 financing statement as described in Section 1.4 below.

Original signature pages for each of the foregoing documents, together with notarized pages where applicable, have been compiled and are included in the closing binder. PDF counterparts have been distributed to all parties and their respective counsel.

1.2 Funding and Release of Escrowed Amounts

On December 8, 2023, in accordance with the Funds Flow Memorandum dated December 8, 2023 (the "Funds Flow Memo"), the following funding actions were completed:

(a) Ridgeline First Tranche Capital Contribution. Ridgeline's first tranche capital contribution in the amount of $96,000,000 (representing 80% of its total $120,000,000 commitment) was released from the Clearwater Escrow account (Account No. CES-2023-80114) and deposited into Solstice Holdings' operating account maintained at Osprey National Bank, N.A. The remaining $24,000,000 second tranche is subject to the post-closing funding timeline described in Section 3.1 below.

(b) Pinehurst Credit Purchase Price. The credit purchase price in the amount of $55,200,000 (reflecting $60,000,000 in face-value investment tax credits multiplied by a purchase price of $0.92 per $1.00 of credit) was released from the Clearwater Escrow account and deposited into CBR's designated account. This amount represents the net proceeds to CBR from the Section 6418 transferable credit sale.

(c) CBR Manager Capital Contribution. CBR Solstice Manager, LLC funded its capital contribution in the amount of $2,400,000 (representing 2% of Ridgeline's $120,000,000 commitment, consistent with the minimum investment requirements set forth in Revenue Procedure 2007-65) to Solstice Holdings' operating account at Osprey National Bank, N.A.

(d) Partial Repayment of Osprey Construction Facility. In accordance with the Funds Flow Memo, a portion of the closing-day proceeds was applied toward partial repayment of outstanding draws under the Osprey National Bank construction facility (ONB-PF-2022-0341, total commitments of $245,000,000), as required under the terms of the Intercreditor and Consent Agreement.

All wire transfers were confirmed and reconciled by counsel on December 8, 2023, in accordance with the Funds Flow Memo. Copies of wire confirmation receipts and the executed Funds Flow Memo are included in the closing binder.

1.3 Opinions and Certificates Delivered

The following opinions, certificates, and third-party reports were delivered at or prior to closing as conditions precedent to the funding obligations of Ridgeline, Pinehurst, and Osprey:

Tax Opinions:

(a) Tax Opinion Letter to Ridgeline Capital Partners, LLC. Calderwood & Harkness LLP delivered its tax opinion letter (the "Ridgeline Tax Opinion") to Ridgeline, opining on the following matters: (i) the availability of the investment tax credit under Section 48 of the Code at a 40% rate (comprising the 30% base rate plus the 10% domestic content bonus credit adder); (ii) the substantial economic effect of the partnership allocations of tax items under Section 704(b) of the Code and the Treasury Regulations thereunder; (iii) the consistency of the partnership-flip mechanics set forth in the LLCA with the safe-harbor guidelines of Revenue Procedure 2007-65; and (iv) the availability to Ridgeline of its allocable share of the investment tax credits generated by the Solstice Portfolio ($89,040,000 in ITCs allocated at the partnership level) and Modified Accelerated Cost Recovery System ("MACRS") depreciation deductions.

(b) Tax Opinion Letter to Pinehurst Insurance Group, Inc. Calderwood & Harkness LLP delivered its tax opinion letter (the "Pinehurst Tax Opinion") to Pinehurst, opining on the following matters: (i) the validity of the Section 6418 transfer elections to be made by the seven project companies; (ii) the treatment of the $60,000,000 in transferred investment tax credits as credits allowed to Pinehurst for its taxable year ending December 31, 2023; and (iii) the non-inclusion of the $55,200,000 purchase price in Pinehurst's gross income under Section 6418(b) of the Code.

Legal Opinion:

(c) Legal Opinion Letter. Calderwood & Harkness LLP delivered a legal opinion letter addressed to Ridgeline, Pinehurst, and Osprey National Bank, opining that: (i) Calloway-Briggs Renewables Inc. is duly organized and in good standing under the laws of the State of Texas (Texas Secretary of State File No. 803762114); (ii) CBR Solstice Manager, LLC is duly organized and in good standing under the laws of the State of Delaware; (iii) Solstice Holdings, LLC is duly organized and in good standing under the laws of the State of Delaware (EIN 88-4071523); (iv) the execution, delivery, and performance of the Transaction documents by CBR, CBR Manager, and Solstice Holdings have been duly authorized by all requisite corporate and limited liability company action; (v) the Transaction documents constitute the legal, valid, and binding obligations of CBR, CBR Manager, and Solstice Holdings, enforceable in accordance with their respective terms, subject to customary bankruptcy and equitable limitations; and (vi) the execution and delivery of the Transaction documents do not conflict with or result in a breach of the organizational documents of CBR, CBR Manager, or Solstice Holdings, or any material agreement to which any such entity is a party.

Certificates:

(d) Secretary's Certificate of Calloway-Briggs Renewables Inc. The Secretary of CBR delivered a certificate certifying true and correct copies of the Company's Articles of Incorporation, Bylaws, board resolutions authorizing the Transaction, officer incumbency, and a certificate of good standing from the Texas Secretary of State.

(e) Secretary's Certificate of CBR Solstice Manager, LLC. The Secretary of CBR Manager delivered a certificate certifying true and correct copies of its Certificate of Formation, Limited Liability Company Agreement, member consent authorizing the Transaction, incumbency of authorized signatories, and a certificate of good standing from the Delaware Secretary of State.

(f) Officer's Closing Certificate. Theo Vasquez, in his capacity as Chief Financial Officer of CBR, delivered a closing certificate confirming: (i) the accuracy in all material respects of CBR's representations and warranties as of the closing date; (ii) the satisfaction of all covenants and conditions precedent set forth in the Transaction documents; and (iii) the absence of any material adverse effect with respect to CBR, the project companies, or any project since the signing date of September 21, 2023.

Third-Party Reports:

(g) Independent Appraisal. Greystone Worthington, LLC (Helen Farber, Managing Director) delivered its independent appraisal report setting forth the ITC-basis fair market value analysis for the Solstice Portfolio. The appraisal supports the cost basis used in the ITC computations and confirms that the fair market value of the energy property is not less than the cost basis claimed for ITC purposes.

(h) Independent Engineer Report. Meridian Technical Advisors, LLC (Dr. Rajan Mehta, Principal Engineer) delivered its independent engineer report, which includes energy-yield assessments for each of the seven projects in the Solstice Portfolio and confirmation of construction monitoring and COD achievement for all projects.

1.4 UCC Filings

The following Uniform Commercial Code filings were made in connection with the closing:

(a) A UCC-1 financing statement was filed by Osprey National Bank, N.A. in the State of Delaware in connection with the back-leverage Pledge Agreement, identifying CBR Solstice Manager, LLC as debtor and covering CBR Solstice Manager's managing-member interest in Solstice Holdings, LLC and all proceeds thereof.

(b) UCC-3 amendment filings were made to the existing UCC-1 financing statements filed by Osprey National Bank in connection with the construction facility (ONB-PF-2022-0341) in the States of Delaware, Texas, and New Mexico, as applicable, to reflect the updated collateral descriptions and the consummation of the Transaction.

In connection with the pre-closing lien search conducted by our office, we confirm that no unexpected prior liens were identified in the UCC and lien search results for: (i) Calloway-Briggs Renewables Inc. (EIN 84-3291076); (ii) CBR Solstice Manager, LLC (EIN 88-4071597); (iii) Solstice Holdings, LLC (EIN 88-4071523); or (iv) any of the seven project companies. Copies of all UCC filing confirmations and search results are included in the closing binder.

1.5 Insurance Confirmation

We have confirmed that the insurance program placed by Sentinel Underwriters, Inc. with Fortis Indemnity Company (property and casualty coverage) and the performance and payment bonds issued by Ironclad Surety Corp. meet all insurance requirements set forth in the LLCA and the TCPA. Coverage terms, policy limits, deductibles, and named-insured designations are consistent with the insurance requirements schedules attached to those agreements.

Both Ridgeline Capital Partners, LLC and Pinehurst Insurance Group, Inc. have been added as additional insureds and loss payees, as applicable, in accordance with the requirements of the LLCA and the TCPA, respectively. Certificates of insurance reflecting these designations have been delivered to all parties and are included in the closing binder.

1.6 Project Status — All Seven Projects at COD

We confirm that all seven solar photovoltaic projects comprising the Solstice Portfolio achieved Commercial Operation Date prior to the closing date, as summarized below:

The weighted-average COD for the Solstice Portfolio is October 25, 2023. All seven projects were constructed by Vasquez Brothers Construction, Inc. under fixed-price engineering, procurement, and construction ("EPC") contracts, with an aggregate EPC cost of $384,600,000. Each project has received its respective independent engineer COD certificate from Meridian Technical Advisors, LLC, and all ERCOT (Texas projects) and Northgate Corporation (New Mexico projects) interconnection requirements have been satisfied.

Section 2: Key Transaction Economics — Summary for Your Records

For ease of reference, we set forth below a summary of the principal economic terms of the Transaction.

2.1 Tax-Equity Investment (Partnership Flip)

The partnership-flip structure between Ridgeline and CBR Manager within Solstice Holdings is summarized as follows:

• Total Ridgeline Commitment: $120,000,000

• First Tranche (Funded at Closing): $96,000,000 (80% of total commitment)

• Second Tranche (Post-Closing): $24,000,000, subject to the conditions and timeline described in Section 3.1 below

• Pre-Flip Allocations:

• Ridgeline: 99% of all tax items (ITC, MACRS depreciation, taxable income and loss) and 30% of cash distributions

• CBR Manager: 1% of all tax items and 70% of cash distributions

• Post-Flip Allocations (upon Ridgeline achieving its target 7.25% after-tax internal rate of return, projected to occur in Q4 2028):

• Ridgeline: 5% of all items (tax items and cash distributions)

• CBR Manager: 95% of all items (tax items and cash distributions)

• Purchase Option: CBR Manager holds the right to purchase Ridgeline's residual 5% interest in Solstice Holdings at fair market value (with a floor price of $1.00) during the 180-day window following the flip date

2.2 Transferable Credit Sale (Section 6418)

The Section 6418 transferable tax-credit component of the Transaction is summarized as follows:

• Total ITCs Generated by Portfolio: $153,840,000, calculated as $384,600,000 in eligible basis multiplied by the 40% ITC rate (30% base rate plus 10% domestic content bonus credit adder)

• ITCs Allocated to Partnership (Solstice Holdings): $89,040,000, which are allocated to Ridgeline and CBR Manager in accordance with the LLCA

• ITCs Subject to Section 6418 Transfer Elections: $64,800,000, representing the project-level credits retained by the project companies and not contributed to the Partnership

• Sold to Pinehurst: $60,000,000 in face value at a price of $0.92 per $1.00 of credit, yielding cash proceeds of $55,200,000

• Retained by CBR: $4,800,000 in face value, available for use on CBR's own federal income tax return

• 5-Year MACRS Depreciable Basis (Post-50% ITC Basis Reduction): $307,680,000, calculated as $384,600,000 less 50% of $153,840,000 in ITCs claimed

2.3 Total Deal Value Summary

The following table summarizes the aggregate deal value of the Transaction:

The foregoing amounts are presented for summary purposes only and do not reflect the additional value to CBR of MACRS depreciation deductions, cash flow from operations under the power purchase agreements, or the back-leverage term loan proceeds from Osprey National Bank.

Section 3: Pending Items and Post-Closing Obligations

While the closing has been successfully completed, a number of important post-closing items and ongoing obligations require CBR's attention. We strongly recommend that CBR establish internal tracking and compliance processes for each of the items described below.

3.1 Ridgeline Second Tranche Capital Contribution

Under the Capital Contribution Agreement, Ridgeline is obligated to fund its second tranche capital contribution of $24,000,000 within 60 days following the final COD date for the Solstice Portfolio. Because the Amistad Solar project was the last project to achieve COD (on November 18, 2023), the 60-day period expires on January 17, 2024. However, we note that the parties agreed at closing to extend the second tranche due date to February 6, 2024, to provide additional time for the completion of certain post-closing administrative items.

CBR should monitor for timely receipt of the second tranche funding and should immediately notify Calderwood & Harkness if the $24,000,000 is not received by the extended due date. Additionally, the funding conditions set forth in Section 5.2 of the Capital Contribution Agreement — including the delivery of an updated officer's closing certificate and confirmation of continued COD status for all projects — should be confirmed as satisfied prior to the funding date. We are available to assist in preparing or reviewing any required deliverables in connection with the second tranche funding.

3.2 Section 6418 Transfer Election Statement Filings

The Section 6418 transfer elections must be effectuated through the filing of transfer election statements by each of the seven project companies with their respective federal income tax returns for the taxable year ending December 31, 2023. Calderwood & Harkness has prepared the form of each transfer election statement, which was delivered at closing and is included in the closing binder.

Each transfer election statement must identify the following information:

(a) The name and employer identification number of the eligible taxpayer (i.e., each project company);

(b) The name and employer identification number of the transferee taxpayer (Pinehurst Insurance Group, Inc., EIN 06-1938274);

(d) The amount of the credit being transferred by each project company;

(e) The transfer price allocated to each project company's credits; and

(f) The applicable tax year (2023).

CBR should coordinate closely with Larchmont & Associates, PLLC (Susan Kaplan, Tax Partner) — CBR's outside tax return preparer — to ensure that the transfer election statements are timely and accurately filed with each project company's 2023 federal income tax return. Please also note that the IRS pre-filing registration requirements under Notice 2023-44 and the applicable final regulations must be completed prior to filing. We recommend commencing the pre-filing registration process as soon as practicable in early 2024 to avoid any delays in the filing of the 2023 returns.

3.3 Prevailing Wage and Apprenticeship Compliance — Annual Certifications

As you are aware, the availability of the 30% base ITC rate (as distinguished from the 6% base rate applicable to projects that do not satisfy the prevailing wage and apprenticeship requirements) is contingent upon ongoing compliance with the prevailing wage and apprenticeship requirements set forth in Section 48(a) of the Code, as added by the Inflation Reduction Act of 2022.

CBR must maintain comprehensive records of prevailing wage compliance and apprenticeship utilization by Vasquez Brothers Construction, Inc. during the construction period and by any operations and maintenance ("O&M") contractors engaged during the ITC recapture period. Annual compliance certifications should be obtained from all relevant contractors and service providers and should be provided to both Ridgeline and Pinehurst in accordance with the certification schedules set forth in the LLCA (Section 8.4(c)) and the TCPA (Section 7.2(b)), respectively.

We wish to emphasize the significance of this requirement. Failure to maintain prevailing wage and apprenticeship compliance could result in a reduction of the applicable ITC rate from 40% (30% base plus 10% domestic content adder) to approximately 16% (6% base plus 10% domestic content adder), with significant recapture exposure for credits already claimed or transferred. CBR should consider implementing a dedicated compliance monitoring function, and we are available to provide guidance on establishing appropriate internal protocols.

3.4 ITC Recapture Monitoring (5-Year Period)

The 5-year recapture period under Section 50(a) of the Code runs from each project's placed-in-service date through the fifth anniversary thereof. Based on the COD dates for the Solstice Portfolio projects, the recapture period expirations are as follows:

During the recapture period, CBR and the project companies must not take any action that would constitute a "recapture event" under Section 50(a), including but not limited to:

(a) Disposing of any project or any project assets that constitute "energy property" within the meaning of Section 48;

(b) Ceasing to use any such assets as energy property; or

(c) Engaging in any change in the nature of the use of such assets that would trigger recapture under the applicable provisions of the Code and Treasury Regulations.

In the event of a recapture of the transferred credits (i.e., the Pinehurst tranche), CBR's indemnification obligation under the Tax Indemnity Agreement would be triggered. As noted above, this obligation is capped at $69,000,000, representing 125% of the $55,200,000 purchase price paid by Pinehurst. Any recapture of the partnership-level credits allocated to Ridgeline would similarly give rise to indemnification obligations under the LLCA.

We strongly recommend that CBR implement internal protocols — including quarterly compliance reviews and pre-approval procedures for any proposed disposition, refinancing, or modification of project assets — to ensure that no project-level actions inadvertently trigger recapture events. Calderwood & Harkness is available to assist in designing and implementing such protocols.

3.5 Domestic Content Bonus Adder Compliance

The 10% domestic content bonus credit adder claimed under Section 48(a)(12) of the Code requires that all applicable steel, iron, and manufactured products incorporated into each project meet the domestic content thresholds specified in the applicable IRS guidance, including Notice 2023-38 and any subsequent regulations or safe harbors.

CBR should retain all documentation supporting the domestic content certifications obtained from Vasquez Brothers Construction, Inc. throughout the recapture period, including bills of materials, certificates of origin, manufacturer certifications, and any third-party verification reports. These records should be maintained in a manner that allows CBR to substantiate domestic content compliance in the event of an IRS inquiry or audit.

Any IRS inquiry, audit, or correspondence regarding domestic content eligibility should be reported immediately to Calderwood & Harkness so that we may assist in formulating an appropriate response.

3.6 Partnership Representative Obligations

As noted above, Theo Vasquez has been designated as the "designated individual" acting for CBR Solstice Manager, LLC in its capacity as partnership representative of Solstice Holdings, LLC under Section 6223 of the Code. This designation carries significant responsibilities and obligations, including:

(a) Notification Obligations. CBR Manager must promptly notify Ridgeline of any IRS communications, notices of audit, proposed partnership adjustments, or proposed deficiencies received with respect to any taxable year of Solstice Holdings.

(b) Consent Requirements. Under the Partnership Representative Designation and Tax Matters Agreement, certain actions — including the settlement or resolution of any IRS audit or administrative proceeding that would result in a partnership-level imputed underpayment — require the prior written consent of Ridgeline.

(c) Push-Out Election. In the event of a partnership-level audit adjustment, CBR Manager should consider whether to make a "push-out" election under Section 6226 of the Code, which would shift the reporting and payment obligations to the individual partners rather than imposing a partnership-level liability. The advisability of a push-out election will depend on the nature and magnitude of any proposed adjustments, and Calderwood & Harkness is available to advise on this matter.

We recommend that Theo establish internal procedures to ensure that any IRS correspondence addressed to Solstice Holdings or CBR Manager is immediately routed to the appropriate personnel and to outside counsel.

3.7 PPA and Revenue Obligations

The revenue stream supporting the Solstice Portfolio is derived from the following power purchase agreements:

• Texas Projects (5 PPAs): Entered into with Lone Star Grid Solutions, LLC, each with a 15-year term, at a weighted-average contract price of $32.50/MWh with a 1.5% annual escalator.

• New Mexico Projects (2 PPAs): Entered into with Enchantment Power Cooperative, each with a 20-year term, at a weighted-average contract price of $29.75/MWh with a 2.0% annual escalator.

All power purchase agreements are identified in the LLCA as "material project contracts," and CBR's compliance with the covenants and reporting obligations under these agreements is a continuing obligation under the LLCA. CBR should ensure that all PPA-related reporting, invoicing, and operational requirements are met on a timely basis, and should promptly notify Ridgeline and Calderwood & Harkness of any events of default, force majeure claims, curtailment events, or disputes arising under any PPA.

3.8 Osprey National Bank Reporting Covenants

CBR has ongoing reporting covenants under the $68,000,000 back-leverage term loan (ONB-PF-2023-0587) and the related Intercreditor and Consent Agreement. These obligations include, among others:

(a) Quarterly Financial Reporting. CBR is required to deliver unaudited quarterly financial statements for Solstice Holdings and each project company within 45 days following the end of each fiscal quarter.

(b) Annual Audited Financial Statements. CBR is required to deliver audited annual financial statements for Solstice Holdings, prepared in accordance with generally accepted accounting principles, within 120 days following the end of each fiscal year. These statements are to be prepared by Larchmont & Associates, PLLC (Martin Larchmont, Managing Partner).

(c) Compliance Certificates. CBR is required to deliver quarterly compliance certificates in the form prescribed by the credit agreement, certifying compliance with all financial covenants and the absence of any events of default.

CBR should establish a calendar of reporting deadlines to ensure that all deliverables are provided to Osprey National Bank on a timely basis. Failure to comply with reporting covenants could constitute an event of default under the back-leverage credit agreement.

Section 4: Document Retention Guidance

4.1 Closing Binder

Calderwood & Harkness has prepared a complete closing binder containing all executed transaction documents, tax and legal opinion letters, certificates, escrow instructions, UCC filing confirmations, good standing certificates, and all other ancillary deliverables. The closing binder has been prepared in both digital format (delivered via USB drive and via the Calderwood & Harkness secure document portal) and physical format (bound hard copy delivered under separate cover).

A comprehensive Closing Index and Table of Contents has been prepared by Leila Nazari and Robert Jansen and is included as the first document in the closing binder. The Closing Index organizes all documents by category and includes cross-references to the applicable provisions of the Transaction documents.

CBR should retain the closing binder in its permanent records and ensure that copies are accessible to relevant personnel, including the finance, legal, tax, and operations departments. Copies of the closing binder have been provided to the following parties:

• Ridgeline Capital Partners, LLC — via Whitfield & Ayers LLP (attention: Kenji Watanabe, Partner)

• Pinehurst Insurance Group, Inc. — via Thornberry Mack LLP (attention: Gwen Schaefer, Partner)

• Osprey National Bank, N.A. — attention: Anita Reyes, Senior Vice President, Project Finance

4.2 Tax Records Retention

All tax-related records pertaining to the Solstice Portfolio and the Transaction should be retained for the longer of:

(a) The 5-year ITC recapture period applicable to each project plus 3 years (representing the general statute of limitations under Section 6501 of the Code), i.e., approximately 8 years from each project's COD date (the latest of which would be November 18, 2031, with respect to Amistad Solar); or

(b) The period during which any partnership-level audit with respect to Solstice Holdings could be commenced under the centralized partnership audit rules of Sections 6221 through 6241 of the Code, including any extensions of the statute of limitations agreed to by the partnership representative.

Tax-related records to be retained include, without limitation: ITC computations and supporting schedules, cost-basis documentation, placed-in-service certificates and evidence, prevailing wage certifications, apprenticeship utilization records, domestic content certifications and supporting documentation, transfer election statements, partnership tax returns (IRS Forms 1065 and Schedules K-1), and all correspondence with the IRS.

The ITC Claim Support Schedules and Workpapers prepared by Robert Jansen are included in the closing binder and should be maintained alongside CBR's tax files. We recommend that CBR coordinate with Larchmont & Associates, PLLC to integrate these records into CBR's overall tax document retention policy and ensure that all retention periods are tracked and observed.

4.3 Real Estate and Permitting Records

All real estate and permitting documentation pertaining to the seven projects in the Solstice Portfolio should be retained for the operational life of the projects. This includes, without limitation: site leases, access easements, title insurance policies, ERCOT and Northgate Corporation interconnection agreements, environmental and stormwater permits, county building permits, conditional use permits, and FAA determinations of no hazard.

A comprehensive real property diligence summary prepared by Derek Saunders, Senior Associate in our Real Estate and Project Development practice, is included in the closing binder and provides a project-by-project index of all real estate and permitting deliverables.

Section 5: Calderwood & Harkness Billing Summary

For your records, we provide the following summary of fees and expenses incurred by Calderwood & Harkness in connection with this engagement:

• Matter Number: 1015-00005

• Billing Number: 78204-001

• Billed Fees (Hourly): $1,387,500 (reflecting blended hourly rates for all timekeeper categories)

• Success Fee: $150,000, earned upon closing of the Transaction on December 8, 2023

• Expenses: Subject to the $45,000 expense cap set forth in our engagement letter, exclusive of filing fees (including UCC filing fees, good standing certificate fees, and similar governmental charges)

A final invoice reflecting all remaining unbilled time and expenses through the closing date will be delivered under separate cover. Please direct any billing inquiries to the undersigned or to our billing coordinator, Janet Reeves, at jreeves@calderwoodharkness.com.

Section 6: Continuing Availability

Calderwood & Harkness LLP remains available to assist CBR on an ongoing basis with respect to all aspects of the Transaction, including without limitation:

• Monitoring and advising on the Ridgeline second tranche capital contribution funding (due by February 6, 2024)

• Providing guidance on the preparation and filing of Section 6418 transfer election statements and completion of IRS pre-filing registration requirements

• ITC recapture monitoring and compliance advisory services throughout the 5-year recapture period

• Advisory services in connection with the post-flip purchase option exercise (projected Q4 2028)

• Representation of CBR in connection with any IRS audit, inquiry, or administrative proceeding relating to the Solstice Portfolio, the Partnership, or the transferred credits

• Annual compliance matters, including prevailing wage and apprenticeship certifications, domestic content documentation, and partnership representative obligations

Your primary point of contact for all post-closing matters will be Leila Nazari (direct: (212) 558-4127; email: lnazari@calderwoodharkness.com), with Leonard Cross (direct: (212) 558-4050; email: lcross@calderwoodharkness.com) available for escalation and strategic matters.

We congratulate CBR on the successful closing of this significant financing. The Solstice Portfolio transaction represents a landmark achievement for the Company, combining two of the most important Inflation Reduction Act incentive mechanisms — the partnership-flip tax-equity structure and the new Section 6418 transferable tax-credit regime — in a single, integrated financing of substantial scale. We are proud to have served as your tax and legal counsel in this Transaction and look forward to our continued work together.

Please do not hesitate to contact us with any questions regarding the contents of this letter or any aspect of the Transaction.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner, Tax Calderwood & Harkness LLP

By: ________

Leila Nazari Associate, Tax Calderwood & Harkness LLP

cc:

Diana Briggs, President & Chief Operating Officer, Calloway-Briggs Renewables Inc. Priya Anand, Vice President, Project Finance, Calloway-Briggs Renewables Inc. Sylvia Hartwell, Partner, Tax, Calderwood & Harkness LLP Monica Chu, Partner, Project Finance, Calderwood & Harkness LLP Robert Jansen, Associate, Tax, Calderwood & Harkness LLP Derek Saunders, Senior Associate, Real Estate/Project Development, Calderwood & Harkness LLP

Enclosures (delivered under separate cover):

1. Closing Binder (digital copy on USB drive and via Calderwood & Harkness secure document portal; bound hard copy)

2. Closing Index / Table of Contents

3. Funds Flow Memorandum (executed version, dated December 8, 2023)

4. UCC Filing Confirmations

5. ITC Claim Support Schedules and Workpapers

This letter is intended solely for the information and use of the addressees and the individuals and entities identified in the "cc" list above. It contains information that is privileged, confidential, and subject to the attorney-client privilege and the work product doctrine. Any dissemination, distribution, or copying of this communication by any person other than the intended recipients is strictly prohibited.

Project	Entity	Capacity (MW dc)	Location	COD
Cimarron Solar	Cimarron Solar, LLC	50	Lea County, NM	September 30, 2023
Pecos Sun Solar	Pecos Sun Solar, LLC	85	Reeves County, TX	October 15, 2023
Sandoval Ridge Solar	Sandoval Ridge Solar, LLC	50	Sandoval County, NM	October 20, 2023
Red Mesa Solar	Red Mesa Solar, LLC	70	Pecos County, TX	October 28, 2023
Coyote Flats Solar	Coyote Flats Solar, LLC	65	Ward County, TX	November 5, 2023
Llano Verde Solar	Llano Verde Solar, LLC	55	Hudspeth County, TX	November 12, 2023
Amistad Solar	Amistad Solar, LLC	45	Val Verde County, TX	November 18, 2023
Total	420
Component	Amount
Tax-equity investment (Ridgeline Capital Partners)	$120,000,000
Transferable credit sale proceeds (Pinehurst Insurance Group)	$55,200,000
CBR retained credits (face value)	$4,800,000
Total Deal Value	$180,000,000
Project	COD / Placed-in-Service Date	Recapture Period Expiration
Cimarron Solar	September 30, 2023	September 30, 2028
Pecos Sun Solar	October 15, 2023	October 15, 2028
Sandoval Ridge Solar	October 20, 2023	October 20, 2028
Red Mesa Solar	October 28, 2023	October 28, 2028
Coyote Flats Solar	November 5, 2023	November 5, 2028
Llano Verde Solar	November 12, 2023	November 12, 2028
Amistad Solar	November 18, 2023	November 18, 2028

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law
600 Lexington Avenue New York, NY 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Houston Office: 1000 Louisiana Street, Suite 3800 Houston, TX 77002 Telephone: (713) 220-5700 Facsimile: (713) 220-5788
www.calderwoodharkness.com
December 12, 2023
Mr. Marcus Calloway Chairman & Chief Executive Officer Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, TX 77056
Mr. Theo Vasquez Chief Financial Officer Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, TX 77056
Re: Closing of Tax-Equity Investment and Transferable Tax-Credit Financing — Solstice Portfolio (420 MW) Calderwood & Harkness LLP Matter No. 1015-00005
Dear Marcus and Theo:
We are pleased to write to you on behalf of Calderwood & Harkness LLP to summarize the successful closing of the integrated tax-equity investment and transferable tax-credit financing for the Solstice Portfolio (the "Transaction"), which took place on December 8, 2023. This letter is intended to serve as a comprehensive post-closing summary for your records and to identify certain pending items and continuing obligations that will require your attention in the coming months.
As you know, the Transaction comprised two integrated financing tranches: (1) a partnership-flip tax-equity investment by Ridgeline Capital Partners, LLC ("Ridgeline") into Solstice Holdings, LLC ("Solstice Holdings" or the "Partnership"), and (2) a Section 6418 transferable tax-credit sale to Pinehurst Insurance Group, Inc. ("Pinehurst"). The closing was originally scheduled for November 30, 2023, but was extended to December 8, 2023 to allow for the receipt of final ERCOT interconnection confirmation for the Amistad Solar project (45 MW, Val Verde County, Texas), which achieved Commercial Operation Date ("COD") on November 18, 2023. The aggregate deal value of the Transaction is approximately $180,000,000, reflecting one of the most significant combined partnership-flip and transferable-credit financings completed in the renewable energy sector during the 2023 tax year.
The purpose of this letter is to: (a) confirm the key actions completed at closing; (b) summarize the principal transaction economics; (c) identify pending items and post-closing obligations that require CBR's ongoing attention; (d) provide guidance on document retention; and (e) outline our continuing availability to assist Calloway-Briggs Renewables Inc. ("CBR" or the "Company") with respect to all aspects of this Transaction.
This letter is organized into six sections, as set forth below.
Section 1: Summary of Closing — Key Actions Completed on December 8, 2023
1.1 Execution and Delivery of Transaction Documents
We confirm that all principal transaction documents were duly executed and delivered by all parties on December 8, 2023, in accordance with the conditions precedent set forth in the respective agreements. Original signature pages, together with PDF counterparts, have been collected and are included in the closing binder described in Section 4 below.
The following principal documents were executed and delivered at closing:
1.  Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC (the "LLCA"), among CBR Solstice Manager, LLC, a Delaware limited liability company ("CBR Manager"), as Managing Member, and Ridgeline Capital Partners, LLC, a Delaware limited liability company, as Tax-Equity Member. The LLCA is governed by the laws of the State of Delaware, with all tax provisions construed under applicable provisions of federal tax law, including the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder.
2.  Tax Credit Purchase Agreement (the "TCPA"), between Calloway-Briggs Renewables Inc. and Pinehurst Insurance Group, Inc., governing the sale and transfer of specified investment tax credits pursuant to Section 6418 of the Code. The TCPA is governed by the laws of the State of New York.
3.  Capital Contribution Agreement, pursuant to which Ridgeline Capital Partners, LLC has committed to make capital contributions to Solstice Holdings, LLC in an aggregate amount of $120,000,000, payable in two tranches as described herein. The Capital Contribution Agreement is governed by the laws of the State of New York.
4.  Tax Indemnity Agreement, entered into by CBR in favor of Pinehurst Insurance Group, Inc., providing for indemnification against ITC recapture and disallowance events with respect to the transferred credits. The indemnification obligation is capped at $69,000,000, representing 125% of the $55,200,000 purchase price paid by Pinehurst for the transferred credits. The Tax Indemnity Agreement is governed by the laws of the State of New York.
5.  Purchase Option Agreement, granting CBR Solstice Manager, LLC the option to purchase Ridgeline's residual 5% interest in Solstice Holdings, LLC at fair market value (with a floor of $1.00) during the 180-day window following the "flip date" (projected to occur in Q4 2028). The Purchase Option Agreement is governed by the laws of the State of New York.
6.  Escrow Agreement, among CBR, Ridgeline, Pinehurst, and Clearwater Escrow Services, Inc. ("Clearwater"), as escrow agent. The escrow account is identified as Escrow Account No. CES-2023-80114. The Escrow Agreement is governed by the laws of the State of New York.
7.  Intercompany Contribution Agreement, pursuant to which CBR contributed 100% of its membership interests in each of the seven project companies (as identified in Section 1.6 below) to Solstice Holdings, LLC. The contribution was structured as a tax-free contribution under Section 721 of the Code, and no gain or loss was recognized by CBR or Solstice Holdings in connection therewith.
8.  Partnership Representative Designation and Tax Matters Agreement, designating CBR Solstice Manager, LLC (acting through Theo Vasquez as the "designated individual") as partnership representative of Solstice Holdings, LLC under Section 6223 of the Code for all taxable years of the Partnership. The agreement sets forth the rights and obligations of the partnership representative and the notification and consent requirements applicable to Ridgeline in connection with any IRS audit or administrative proceeding.
9.  Back-Leverage Intercreditor and Consent Agreement, among Osprey National Bank, N.A. ("Osprey" or "ONB"), Ridgeline Capital Partners, LLC, and CBR. The intercreditor agreement governs the relative rights and priorities of Osprey (as lender under both the construction facility identified as ONB-PF-2022-0341 and the back-leverage term loan facility identified as ONB-PF-2023-0587) and Ridgeline (as Tax-Equity Member under the LLCA), and includes Ridgeline's consent to certain actions by Osprey as secured creditor.
10.  Pledge Agreement, pursuant to which CBR Solstice Manager, LLC has pledged its managing-member interest in Solstice Holdings, LLC to Osprey National Bank, N.A. as security for the $68,000,000 back-leverage term loan (ONB-PF-2023-0587). The pledge was perfected by the filing of a UCC-1 financing statement as described in Section 1.4 below.
Original signature pages for each of the foregoing documents, together with notarized pages where applicable, have been compiled and are included in the closing binder. PDF counterparts have been distributed to all parties and their respective counsel.
1.2 Funding and Release of Escrowed Amounts
On December 8, 2023, in accordance with the Funds Flow Memorandum dated December 8, 2023 (the "Funds Flow Memo"), the following funding actions were completed:
(a) Ridgeline First Tranche Capital Contribution. Ridgeline's first tranche capital contribution in the amount of $96,000,000 (representing 80% of its total $120,000,000 commitment) was released from the Clearwater Escrow account (Account No. CES-2023-80114) and deposited into Solstice Holdings' operating account maintained at Osprey National Bank, N.A. The remaining $24,000,000 second tranche is subject to the post-closing funding timeline described in Section 3.1 below.
(b) Pinehurst Credit Purchase Price. The credit purchase price in the amount of $55,200,000 (reflecting $60,000,000 in face-value investment tax credits multiplied by a purchase price of $0.92 per $1.00 of credit) was released from the Clearwater Escrow account and deposited into CBR's designated account. This amount represents the net proceeds to CBR from the Section 6418 transferable credit sale.
(c) CBR Manager Capital Contribution. CBR Solstice Manager, LLC funded its capital contribution in the amount of $2,400,000 (representing 2% of Ridgeline's $120,000,000 commitment, consistent with the minimum investment requirements set forth in Revenue Procedure 2007-65) to Solstice Holdings' operating account at Osprey National Bank, N.A.
(d) Partial Repayment of Osprey Construction Facility. In accordance with the Funds Flow Memo, a portion of the closing-day proceeds was applied toward partial repayment of outstanding draws under the Osprey National Bank construction facility (ONB-PF-2022-0341, total commitments of $245,000,000), as required under the terms of the Intercreditor and Consent Agreement.
All wire transfers were confirmed and reconciled by counsel on December 8, 2023, in accordance with the Funds Flow Memo. Copies of wire confirmation receipts and the executed Funds Flow Memo are included in the closing binder.
1.3 Opinions and Certificates Delivered
The following opinions, certificates, and third-party reports were delivered at or prior to closing as conditions precedent to the funding obligations of Ridgeline, Pinehurst, and Osprey:
Tax Opinions:
(a) Tax Opinion Letter to Ridgeline Capital Partners, LLC. Calderwood & Harkness LLP delivered its tax opinion letter (the "Ridgeline Tax Opinion") to Ridgeline, opining on the following matters: (i) the availability of the investment tax credit under Section 48 of the Code at a 40% rate (comprising the 30% base rate plus the 10% domestic content bonus credit adder); (ii) the substantial economic effect of the partnership allocations of tax items under Section 704(b) of the Code and the Treasury Regulations thereunder; (iii) the consistency of the partnership-flip mechanics set forth in the LLCA with the safe-harbor guidelines of Revenue Procedure 2007-65; and (iv) the availability to Ridgeline of its allocable share of the investment tax credits generated by the Solstice Portfolio ($89,040,000 in ITCs allocated at the partnership level) and Modified Accelerated Cost Recovery System ("MACRS") depreciation deductions.
(b) Tax Opinion Letter to Pinehurst Insurance Group, Inc. Calderwood & Harkness LLP delivered its tax opinion letter (the "Pinehurst Tax Opinion") to Pinehurst, opining on the following matters: (i) the validity of the Section 6418 transfer elections to be made by the seven project companies; (ii) the treatment of the $60,000,000 in transferred investment tax credits as credits allowed to Pinehurst for its taxable year ending December 31, 2023; and (iii) the non-inclusion of the $55,200,000 purchase price in Pinehurst's gross income under Section 6418(b) of the Code.
Legal Opinion:
(c) Legal Opinion Letter. Calderwood & Harkness LLP delivered a legal opinion letter addressed to Ridgeline, Pinehurst, and Osprey National Bank, opining that: (i) Calloway-Briggs Renewables Inc. is duly organized and in good standing under the laws of the State of Texas (Texas Secretary of State File No. 803762114); (ii) CBR Solstice Manager, LLC is duly organized and in good standing under the laws of the State of Delaware; (iii) Solstice Holdings, LLC is duly organized and in good standing under the laws of the State of Delaware (EIN 88-4071523); (iv) the execution, delivery, and performance of the Transaction documents by CBR, CBR Manager, and Solstice Holdings have been duly authorized by all requisite corporate and limited liability company action; (v) the Transaction documents constitute the legal, valid, and binding obligations of CBR, CBR Manager, and Solstice Holdings, enforceable in accordance with their respective terms, subject to customary bankruptcy and equitable limitations; and (vi) the execution and delivery of the Transaction documents do not conflict with or result in a breach of the organizational documents of CBR, CBR Manager, or Solstice Holdings, or any material agreement to which any such entity is a party.
Certificates:
(d) Secretary's Certificate of Calloway-Briggs Renewables Inc. The Secretary of CBR delivered a certificate certifying true and correct copies of the Company's Articles of Incorporation, Bylaws, board resolutions authorizing the Transaction, officer incumbency, and a certificate of good standing from the Texas Secretary of State.
(e) Secretary's Certificate of CBR Solstice Manager, LLC. The Secretary of CBR Manager delivered a certificate certifying true and correct copies of its Certificate of Formation, Limited Liability Company Agreement, member consent authorizing the Transaction, incumbency of authorized signatories, and a certificate of good standing from the Delaware Secretary of State.
(f) Officer's Closing Certificate. Theo Vasquez, in his capacity as Chief Financial Officer of CBR, delivered a closing certificate confirming: (i) the accuracy in all material respects of CBR's representations and warranties as of the closing date; (ii) the satisfaction of all covenants and conditions precedent set forth in the Transaction documents; and (iii) the absence of any material adverse effect with respect to CBR, the project companies, or any project since the signing date of September 21, 2023.
Third-Party Reports:
(g) Independent Appraisal. Greystone Worthington, LLC (Helen Farber, Managing Director) delivered its independent appraisal report setting forth the ITC-basis fair market value analysis for the Solstice Portfolio. The appraisal supports the cost basis used in the ITC computations and confirms that the fair market value of the energy property is not less than the cost basis claimed for ITC purposes.
(h) Independent Engineer Report. Meridian Technical Advisors, LLC (Dr. Rajan Mehta, Principal Engineer) delivered its independent engineer report, which includes energy-yield assessments for each of the seven projects in the Solstice Portfolio and confirmation of construction monitoring and COD achievement for all projects.
1.4 UCC Filings
The following Uniform Commercial Code filings were made in connection with the closing:
(a) A UCC-1 financing statement was filed by Osprey National Bank, N.A. in the State of Delaware in connection with the back-leverage Pledge Agreement, identifying CBR Solstice Manager, LLC as debtor and covering CBR Solstice Manager's managing-member interest in Solstice Holdings, LLC and all proceeds thereof.
(b) UCC-3 amendment filings were made to the existing UCC-1 financing statements filed by Osprey National Bank in connection with the construction facility (ONB-PF-2022-0341) in the States of Delaware, Texas, and New Mexico, as applicable, to reflect the updated collateral descriptions and the consummation of the Transaction.
In connection with the pre-closing lien search conducted by our office, we confirm that no unexpected prior liens were identified in the UCC and lien search results for: (i) Calloway-Briggs Renewables Inc. (EIN 84-3291076); (ii) CBR Solstice Manager, LLC (EIN 88-4071597); (iii) Solstice Holdings, LLC (EIN 88-4071523); or (iv) any of the seven project companies. Copies of all UCC filing confirmations and search results are included in the closing binder.
1.5 Insurance Confirmation
We have confirmed that the insurance program placed by Sentinel Underwriters, Inc. with Fortis Indemnity Company (property and casualty coverage) and the performance and payment bonds issued by Ironclad Surety Corp. meet all insurance requirements set forth in the LLCA and the TCPA. Coverage terms, policy limits, deductibles, and named-insured designations are consistent with the insurance requirements schedules attached to those agreements.
Both Ridgeline Capital Partners, LLC and Pinehurst Insurance Group, Inc. have been added as additional insureds and loss payees, as applicable, in accordance with the requirements of the LLCA and the TCPA, respectively. Certificates of insurance reflecting these designations have been delivered to all parties and are included in the closing binder.
1.6 Project Status — All Seven Projects at COD
We confirm that all seven solar photovoltaic projects comprising the Solstice Portfolio achieved Commercial Operation Date prior to the closing date, as summarized below:
The weighted-average COD for the Solstice Portfolio is October 25, 2023. All seven projects were constructed by Vasquez Brothers Construction, Inc. under fixed-price engineering, procurement, and construction ("EPC") contracts, with an aggregate EPC cost of $384,600,000. Each project has received its respective independent engineer COD certificate from Meridian Technical Advisors, LLC, and all ERCOT (Texas projects) and Northgate Corporation (New Mexico projects) interconnection requirements have been satisfied.
Section 2: Key Transaction Economics — Summary for Your Records
For ease of reference, we set forth below a summary of the principal economic terms of the Transaction.
2.1 Tax-Equity Investment (Partnership Flip)
The partnership-flip structure between Ridgeline and CBR Manager within Solstice Holdings is summarized as follows:
•  Total Ridgeline Commitment: $120,000,000
•  First Tranche (Funded at Closing): $96,000,000 (80% of total commitment)
•  Second Tranche (Post-Closing): $24,000,000, subject to the conditions and timeline described in Section 3.1 below
•  Pre-Flip Allocations:
•  Ridgeline: 99% of all tax items (ITC, MACRS depreciation, taxable income and loss) and 30% of cash distributions
•  CBR Manager: 1% of all tax items and 70% of cash distributions
•  Post-Flip Allocations (upon Ridgeline achieving its target 7.25% after-tax internal rate of return, projected to occur in Q4 2028):
•  Ridgeline: 5% of all items (tax items and cash distributions)
•  CBR Manager: 95% of all items (tax items and cash distributions)
•  Purchase Option: CBR Manager holds the right to purchase Ridgeline's residual 5% interest in Solstice Holdings at fair market value (with a floor price of $1.00) during the 180-day window following the flip date
2.2 Transferable Credit Sale (Section 6418)
The Section 6418 transferable tax-credit component of the Transaction is summarized as follows:
•  Total ITCs Generated by Portfolio: $153,840,000, calculated as $384,600,000 in eligible basis multiplied by the 40% ITC rate (30% base rate plus 10% domestic content bonus credit adder)
•  ITCs Allocated to Partnership (Solstice Holdings): $89,040,000, which are allocated to Ridgeline and CBR Manager in accordance with the LLCA
•  ITCs Subject to Section 6418 Transfer Elections: $64,800,000, representing the project-level credits retained by the project companies and not contributed to the Partnership
•  Sold to Pinehurst: $60,000,000 in face value at a price of $0.92 per $1.00 of credit, yielding cash proceeds of $55,200,000
•  Retained by CBR: $4,800,000 in face value, available for use on CBR's own federal income tax return
•  5-Year MACRS Depreciable Basis (Post-50% ITC Basis Reduction): $307,680,000, calculated as $384,600,000 less 50% of $153,840,000 in ITCs claimed
2.3 Total Deal Value Summary
The following table summarizes the aggregate deal value of the Transaction:
The foregoing amounts are presented for summary purposes only and do not reflect the additional value to CBR of MACRS depreciation deductions, cash flow from operations under the power purchase agreements, or the back-leverage term loan proceeds from Osprey National Bank.
Section 3: Pending Items and Post-Closing Obligations
While the closing has been successfully completed, a number of important post-closing items and ongoing obligations require CBR's attention. We strongly recommend that CBR establish internal tracking and compliance processes for each of the items described below.
3.1 Ridgeline Second Tranche Capital Contribution
Under the Capital Contribution Agreement, Ridgeline is obligated to fund its second tranche capital contribution of $24,000,000 within 60 days following the final COD date for the Solstice Portfolio. Because the Amistad Solar project was the last project to achieve COD (on November 18, 2023), the 60-day period expires on January 17, 2024. However, we note that the parties agreed at closing to extend the second tranche due date to February 6, 2024, to provide additional time for the completion of certain post-closing administrative items.
CBR should monitor for timely receipt of the second tranche funding and should immediately notify Calderwood & Harkness if the $24,000,000 is not received by the extended due date. Additionally, the funding conditions set forth in Section 5.2 of the Capital Contribution Agreement — including the delivery of an updated officer's closing certificate and confirmation of continued COD status for all projects — should be confirmed as satisfied prior to the funding date. We are available to assist in preparing or reviewing any required deliverables in connection with the second tranche funding.
3.2 Section 6418 Transfer Election Statement Filings
The Section 6418 transfer elections must be effectuated through the filing of transfer election statements by each of the seven project companies with their respective federal income tax returns for the taxable year ending December 31, 2023. Calderwood & Harkness has prepared the form of each transfer election statement, which was delivered at closing and is included in the closing binder.
Each transfer election statement must identify the following information:
(a) The name and employer identification number of the eligible taxpayer (i.e., each project company);
(b) The name and employer identification number of the transferee taxpayer (Pinehurst Insurance Group, Inc., EIN 06-1938274);
(c) The type of credit being transferred (Section 48 investment tax credit);
(d) The amount of the credit being transferred by each project company;
(e) The transfer price allocated to each project company's credits; and
(f) The applicable tax year (2023).
CBR should coordinate closely with Larchmont & Associates, PLLC (Susan Kaplan, Tax Partner) — CBR's outside tax return preparer — to ensure that the transfer election statements are timely and accurately filed with each project company's 2023 federal income tax return. Please also note that the IRS pre-filing registration requirements under Notice 2023-44 and the applicable final regulations must be completed prior to filing. We recommend commencing the pre-filing registration process as soon as practicable in early 2024 to avoid any delays in the filing of the 2023 returns.
3.3 Prevailing Wage and Apprenticeship Compliance — Annual Certifications
As you are aware, the availability of the 30% base ITC rate (as distinguished from the 6% base rate applicable to projects that do not satisfy the prevailing wage and apprenticeship requirements) is contingent upon ongoing compliance with the prevailing wage and apprenticeship requirements set forth in Section 48(a) of the Code, as added by the Inflation Reduction Act of 2022.
CBR must maintain comprehensive records of prevailing wage compliance and apprenticeship utilization by Vasquez Brothers Construction, Inc. during the construction period and by any operations and maintenance ("O&M") contractors engaged during the ITC recapture period. Annual compliance certifications should be obtained from all relevant contractors and service providers and should be provided to both Ridgeline and Pinehurst in accordance with the certification schedules set forth in the LLCA (Section 8.4(c)) and the TCPA (Section 7.2(b)), respectively.
We wish to emphasize the significance of this requirement. Failure to maintain prevailing wage and apprenticeship compliance could result in a reduction of the applicable ITC rate from 40% (30% base plus 10% domestic content adder) to approximately 16% (6% base plus 10% domestic content adder), with significant recapture exposure for credits already claimed or transferred. CBR should consider implementing a dedicated compliance monitoring function, and we are available to provide guidance on establishing appropriate internal protocols.
3.4 ITC Recapture Monitoring (5-Year Period)
The 5-year recapture period under Section 50(a) of the Code runs from each project's placed-in-service date through the fifth anniversary thereof. Based on the COD dates for the Solstice Portfolio projects, the recapture period expirations are as follows:
During the recapture period, CBR and the project companies must not take any action that would constitute a "recapture event" under Section 50(a), including but not limited to:
(a) Disposing of any project or any project assets that constitute "energy property" within the meaning of Section 48;
(b) Ceasing to use any such assets as energy property; or
(c) Engaging in any change in the nature of the use of such assets that would trigger recapture under the applicable provisions of the Code and Treasury Regulations.
In the event of a recapture of the transferred credits (i.e., the Pinehurst tranche), CBR's indemnification obligation under the Tax Indemnity Agreement would be triggered. As noted above, this obligation is capped at $69,000,000, representing 125% of the $55,200,000 purchase price paid by Pinehurst. Any recapture of the partnership-level credits allocated to Ridgeline would similarly give rise to indemnification obligations under the LLCA.
We strongly recommend that CBR implement internal protocols — including quarterly compliance reviews and pre-approval procedures for any proposed disposition, refinancing, or modification of project assets — to ensure that no project-level actions inadvertently trigger recapture events. Calderwood & Harkness is available to assist in designing and implementing such protocols.
3.5 Domestic Content Bonus Adder Compliance
The 10% domestic content bonus credit adder claimed under Section 48(a)(12) of the Code requires that all applicable steel, iron, and manufactured products incorporated into each project meet the domestic content thresholds specified in the applicable IRS guidance, including Notice 2023-38 and any subsequent regulations or safe harbors.
CBR should retain all documentation supporting the domestic content certifications obtained from Vasquez Brothers Construction, Inc. throughout the recapture period, including bills of materials, certificates of origin, manufacturer certifications, and any third-party verification reports. These records should be maintained in a manner that allows CBR to substantiate domestic content compliance in the event of an IRS inquiry or audit.
Any IRS inquiry, audit, or correspondence regarding domestic content eligibility should be reported immediately to Calderwood & Harkness so that we may assist in formulating an appropriate response.
3.6 Partnership Representative Obligations
As noted above, Theo Vasquez has been designated as the "designated individual" acting for CBR Solstice Manager, LLC in its capacity as partnership representative of Solstice Holdings, LLC under Section 6223 of the Code. This designation carries significant responsibilities and obligations, including:
(a) Notification Obligations. CBR Manager must promptly notify Ridgeline of any IRS communications, notices of audit, proposed partnership adjustments, or proposed deficiencies received with respect to any taxable year of Solstice Holdings.
(b) Consent Requirements. Under the Partnership Representative Designation and Tax Matters Agreement, certain actions — including the settlement or resolution of any IRS audit or administrative proceeding that would result in a partnership-level imputed underpayment — require the prior written consent of Ridgeline.
(c) Push-Out Election. In the event of a partnership-level audit adjustment, CBR Manager should consider whether to make a "push-out" election under Section 6226 of the Code, which would shift the reporting and payment obligations to the individual partners rather than imposing a partnership-level liability. The advisability of a push-out election will depend on the nature and magnitude of any proposed adjustments, and Calderwood & Harkness is available to advise on this matter.
We recommend that Theo establish internal procedures to ensure that any IRS correspondence addressed to Solstice Holdings or CBR Manager is immediately routed to the appropriate personnel and to outside counsel.
3.7 PPA and Revenue Obligations
The revenue stream supporting the Solstice Portfolio is derived from the following power purchase agreements:
•  Texas Projects (5 PPAs): Entered into with Lone Star Grid Solutions, LLC, each with a 15-year term, at a weighted-average contract price of $32.50/MWh with a 1.5% annual escalator.
•  New Mexico Projects (2 PPAs): Entered into with Enchantment Power Cooperative, each with a 20-year term, at a weighted-average contract price of $29.75/MWh with a 2.0% annual escalator.
All power purchase agreements are identified in the LLCA as "material project contracts," and CBR's compliance with the covenants and reporting obligations under these agreements is a continuing obligation under the LLCA. CBR should ensure that all PPA-related reporting, invoicing, and operational requirements are met on a timely basis, and should promptly notify Ridgeline and Calderwood & Harkness of any events of default, force majeure claims, curtailment events, or disputes arising under any PPA.
3.8 Osprey National Bank Reporting Covenants
CBR has ongoing reporting covenants under the $68,000,000 back-leverage term loan (ONB-PF-2023-0587) and the related Intercreditor and Consent Agreement. These obligations include, among others:
(a) Quarterly Financial Reporting. CBR is required to deliver unaudited quarterly financial statements for Solstice Holdings and each project company within 45 days following the end of each fiscal quarter.
(b) Annual Audited Financial Statements. CBR is required to deliver audited annual financial statements for Solstice Holdings, prepared in accordance with generally accepted accounting principles, within 120 days following the end of each fiscal year. These statements are to be prepared by Larchmont & Associates, PLLC (Martin Larchmont, Managing Partner).
(c) Compliance Certificates. CBR is required to deliver quarterly compliance certificates in the form prescribed by the credit agreement, certifying compliance with all financial covenants and the absence of any events of default.
CBR should establish a calendar of reporting deadlines to ensure that all deliverables are provided to Osprey National Bank on a timely basis. Failure to comply with reporting covenants could constitute an event of default under the back-leverage credit agreement.
Section 4: Document Retention Guidance
4.1 Closing Binder
Calderwood & Harkness has prepared a complete closing binder containing all executed transaction documents, tax and legal opinion letters, certificates, escrow instructions, UCC filing confirmations, good standing certificates, and all other ancillary deliverables. The closing binder has been prepared in both digital format (delivered via USB drive and via the Calderwood & Harkness secure document portal) and physical format (bound hard copy delivered under separate cover).
A comprehensive Closing Index and Table of Contents has been prepared by Leila Nazari and Robert Jansen and is included as the first document in the closing binder. The Closing Index organizes all documents by category and includes cross-references to the applicable provisions of the Transaction documents.
CBR should retain the closing binder in its permanent records and ensure that copies are accessible to relevant personnel, including the finance, legal, tax, and operations departments. Copies of the closing binder have been provided to the following parties:
•  Ridgeline Capital Partners, LLC — via Whitfield & Ayers LLP (attention: Kenji Watanabe, Partner)
•  Pinehurst Insurance Group, Inc. — via Thornberry Mack LLP (attention: Gwen Schaefer, Partner)
•  Osprey National Bank, N.A. — attention: Anita Reyes, Senior Vice President, Project Finance
4.2 Tax Records Retention
All tax-related records pertaining to the Solstice Portfolio and the Transaction should be retained for the longer of:
(a) The 5-year ITC recapture period applicable to each project plus 3 years (representing the general statute of limitations under Section 6501 of the Code), i.e., approximately 8 years from each project's COD date (the latest of which would be November 18, 2031, with respect to Amistad Solar); or
(b) The period during which any partnership-level audit with respect to Solstice Holdings could be commenced under the centralized partnership audit rules of Sections 6221 through 6241 of the Code, including any extensions of the statute of limitations agreed to by the partnership representative.
Tax-related records to be retained include, without limitation: ITC computations and supporting schedules, cost-basis documentation, placed-in-service certificates and evidence, prevailing wage certifications, apprenticeship utilization records, domestic content certifications and supporting documentation, transfer election statements, partnership tax returns (IRS Forms 1065 and Schedules K-1), and all correspondence with the IRS.
The ITC Claim Support Schedules and Workpapers prepared by Robert Jansen are included in the closing binder and should be maintained alongside CBR's tax files. We recommend that CBR coordinate with Larchmont & Associates, PLLC to integrate these records into CBR's overall tax document retention policy and ensure that all retention periods are tracked and observed.
4.3 Real Estate and Permitting Records
All real estate and permitting documentation pertaining to the seven projects in the Solstice Portfolio should be retained for the operational life of the projects. This includes, without limitation: site leases, access easements, title insurance policies, ERCOT and Northgate Corporation interconnection agreements, environmental and stormwater permits, county building permits, conditional use permits, and FAA determinations of no hazard.
A comprehensive real property diligence summary prepared by Derek Saunders, Senior Associate in our Real Estate and Project Development practice, is included in the closing binder and provides a project-by-project index of all real estate and permitting deliverables.
Section 5: Calderwood & Harkness Billing Summary
For your records, we provide the following summary of fees and expenses incurred by Calderwood & Harkness in connection with this engagement:
•  Matter Number: 1015-00005
•  Billing Number: 78204-001
•  Billed Fees (Hourly): $1,387,500 (reflecting blended hourly rates for all timekeeper categories)
•  Success Fee: $150,000, earned upon closing of the Transaction on December 8, 2023
•  Expenses: Subject to the $45,000 expense cap set forth in our engagement letter, exclusive of filing fees (including UCC filing fees, good standing certificate fees, and similar governmental charges)
A final invoice reflecting all remaining unbilled time and expenses through the closing date will be delivered under separate cover. Please direct any billing inquiries to the undersigned or to our billing coordinator, Janet Reeves, at jreeves@calderwoodharkness.com.
Section 6: Continuing Availability
Calderwood & Harkness LLP remains available to assist CBR on an ongoing basis with respect to all aspects of the Transaction, including without limitation:
•  Monitoring and advising on the Ridgeline second tranche capital contribution funding (due by February 6, 2024)
•  Providing guidance on the preparation and filing of Section 6418 transfer election statements and completion of IRS pre-filing registration requirements
•  ITC recapture monitoring and compliance advisory services throughout the 5-year recapture period
•  Advisory services in connection with the post-flip purchase option exercise (projected Q4 2028)
•  Representation of CBR in connection with any IRS audit, inquiry, or administrative proceeding relating to the Solstice Portfolio, the Partnership, or the transferred credits
•  Annual compliance matters, including prevailing wage and apprenticeship certifications, domestic content documentation, and partnership representative obligations
Your primary point of contact for all post-closing matters will be Leila Nazari (direct: (212) 558-4127; email: lnazari@calderwoodharkness.com), with Leonard Cross (direct: (212) 558-4050; email: lcross@calderwoodharkness.com) available for escalation and strategic matters.
We congratulate CBR on the successful closing of this significant financing. The Solstice Portfolio transaction represents a landmark achievement for the Company, combining two of the most important Inflation Reduction Act incentive mechanisms — the partnership-flip tax-equity structure and the new Section 6418 transferable tax-credit regime — in a single, integrated financing of substantial scale. We are proud to have served as your tax and legal counsel in this Transaction and look forward to our continued work together.
Please do not hesitate to contact us with any questions regarding the contents of this letter or any aspect of the Transaction.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner, Tax Calderwood & Harkness LLP
By: ________
Leila Nazari Associate, Tax Calderwood & Harkness LLP
cc:
Diana Briggs, President & Chief Operating Officer, Calloway-Briggs Renewables Inc. Priya Anand, Vice President, Project Finance, Calloway-Briggs Renewables Inc. Sylvia Hartwell, Partner, Tax, Calderwood & Harkness LLP Monica Chu, Partner, Project Finance, Calderwood & Harkness LLP Robert Jansen, Associate, Tax, Calderwood & Harkness LLP Derek Saunders, Senior Associate, Real Estate/Project Development, Calderwood & Harkness LLP
Enclosures (delivered under separate cover):
1.  Closing Binder (digital copy on USB drive and via Calderwood & Harkness secure document portal; bound hard copy)
2.  Closing Index / Table of Contents
3.  Funds Flow Memorandum (executed version, dated December 8, 2023)
4.  UCC Filing Confirmations
5.  ITC Claim Support Schedules and Workpapers
This letter is intended solely for the information and use of the addressees and the individuals and entities identified in the "cc" list above. It contains information that is privileged, confidential, and subject to the attorney-client privilege and the work product doctrine. Any dissemination, distribution, or copying of this communication by any person other than the intended recipients is strictly prohibited.
Project | Entity | Capacity (MW dc) | Location | COD
Cimarron Solar | Cimarron Solar, LLC | 50 | Lea County, NM | September 30, 2023
Pecos Sun Solar | Pecos Sun Solar, LLC | 85 | Reeves County, TX | October 15, 2023
Sandoval Ridge Solar | Sandoval Ridge Solar, LLC | 50 | Sandoval County, NM | October 20, 2023
Red Mesa Solar | Red Mesa Solar, LLC | 70 | Pecos County, TX | October 28, 2023
Coyote Flats Solar | Coyote Flats Solar, LLC | 65 | Ward County, TX | November 5, 2023
Llano Verde Solar | Llano Verde Solar, LLC | 55 | Hudspeth County, TX | November 12, 2023
Amistad Solar | Amistad Solar, LLC | 45 | Val Verde County, TX | November 18, 2023
Total | 420
Component | Amount
Tax-equity investment (Ridgeline Capital Partners) | $120,000,000
Transferable credit sale proceeds (Pinehurst Insurance Group) | $55,200,000
CBR retained credits (face value) | $4,800,000
Total Deal Value | $180,000,000
Project | COD / Placed-in-Service Date | Recapture Period Expiration
Cimarron Solar | September 30, 2023 | September 30, 2028
Pecos Sun Solar | October 15, 2023 | October 15, 2028
Sandoval Ridge Solar | October 20, 2023 | October 20, 2028
Red Mesa Solar | October 28, 2023 | October 28, 2028
Coyote Flats Solar | November 5, 2023 | November 5, 2028
Llano Verde Solar | November 12, 2023 | November 12, 2028
Amistad Solar | November 18, 2023 | November 18, 2028

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

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