PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — ATTORNEY WORK PRODUCT
MEMORANDUM
December 5, 2023
TO: Leonard Cross, Partner, Tax Practice Group Leila Nazari, Associate, Tax Practice Group
FROM: Robert Jansen, Associate, Tax Practice Group
RE: UCC and Lien Search Summary — Solstice Portfolio Tax-Equity and Transferable Credit Financing (C&H Matter No. 1015-00005; Billing No. 78204-001)
CLIENT: Calloway-Briggs Renewables Inc.
STATUS: Final — Pre-Closing (Closing Date: December 8, 2023)
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I. EXECUTIVE SUMMARY
This memorandum summarizes the results of Uniform Commercial Code ("UCC") lien searches, federal and state tax lien searches, judgment and litigation searches, and fixture filing searches conducted in connection with the anticipated closing on December 8, 2023 of the $180,000,000 tax-equity and transferable tax-credit financing for the Solstice Portfolio (the "Transaction"). The Solstice Portfolio comprises 420 MW(dc) of utility-scale solar photovoltaic ("PV") projects located across seven sites in the States of Texas and New Mexico (collectively, the "Projects"). The Transaction involves a tax-equity partnership flip structure with Ridgeline Capital Partners, LLC ("Ridgeline") as the Tax-Equity Member of Solstice Holdings, LLC (the "Partnership"), a concurrent sale of transferable tax credits under Section 6418 of the Internal Revenue Code of 1986, as amended (the "Code"), to Pinehurst Insurance Group, Inc. ("Pinehurst"), and a $68,000,000 back-leverage term loan from Osprey National Bank, N.A. ("Osprey" or "ONB").
Searches were conducted against ten (10) entities: Calloway-Briggs Renewables Inc. ("CBR" or the "Client"), the transaction-level sponsor and borrower; CBR Solstice Manager, LLC ("CBR Manager"), the managing member of the Partnership; Solstice Holdings, LLC, the tax-equity partnership vehicle; and the seven project companies — Pecos Sun Solar, LLC; Red Mesa Solar, LLC; Coyote Flats Solar, LLC; Llano Verde Solar, LLC; Cimarron Solar, LLC; Sandoval Ridge Solar, LLC; and Amistad Solar, LLC (each, a "Project Company," and collectively, the "Project Companies").
Searches were conducted across three states and multiple county jurisdictions. Specifically, searches were run with the Delaware Secretary of State, Division of Corporations, UCC filing office, for all nine Delaware-formed entities (CBR Manager, Solstice Holdings, and the seven Project Companies); with the Texas Secretary of State, UCC Section, and in five Texas counties (Reeves, Pecos, Ward, Hudspeth, and Val Verde) for CBR and the five Texas-sited Project Companies; and with the New Mexico Secretary of State, UCC Division, and in two New Mexico counties (Lea and Sandoval) for the two New Mexico-sited Project Companies.
Overall Conclusion. Existing UCC-1 financing statements filed by Osprey National Bank, N.A. as secured party under the $245,000,000 construction-to-term loan facility (Agreement No. ONB-PF-2022-0341, dated as of March 15, 2022, as amended) were identified as expected. These filings are consistent with the existing debt structure and were fully anticipated by the deal team. No unexpected liens, judgments, federal or state tax liens, mechanic's liens, or other encumbrances were found against any of the ten searched entities. The search results are clean in all material respects.
Action Items for Closing. In connection with the closing on December 8, 2023, the following UCC filings will be required: (a) UCC-3 amendment filings to the existing Osprey financing statements to reflect the post-closing collateral structure and the contribution of the Project Company membership interests from CBR to Solstice Holdings, LLC; and (b) a new UCC-1 financing statement filing in Delaware to perfect Osprey's security interest in CBR Solstice Manager, LLC's managing-member interest in Solstice Holdings under the Pledge Agreement securing the $68,000,000 back-leverage term loan (Agreement No. ONB-PF-2023-0587). The required filings are described in detail in Section V of this memorandum and are scheduled in Exhibit C hereto.
II. SCOPE OF SEARCHES
A. Entities Searched
Searches were conducted against the following ten (10) entities, each of which is a party to, or whose assets are subject to the security arrangements in connection with, the Transaction:
Each of the seven Project Companies is currently a wholly owned subsidiary of CBR. At the closing of the Transaction, CBR will contribute 100% of the membership interests in each Project Company to Solstice Holdings, LLC, which will serve as the tax-equity partnership vehicle. CBR Solstice Manager, LLC will serve as the managing member of Solstice Holdings, and Ridgeline Capital Partners, LLC will be admitted as the Tax-Equity Member. Each Project Company is treated as a disregarded entity for federal income tax purposes, and Solstice Holdings is treated as a partnership.
B. Jurisdictions and Filing Offices Searched
The searches were conducted in the following jurisdictions and with the following filing offices:
Delaware. All UCC and federal tax lien searches for the nine Delaware-formed entities (CBR Manager, Solstice Holdings, and the seven Project Companies) were conducted with the Delaware Secretary of State, Division of Corporations, UCC Filing Office, located at John G. Townsend Building, 401 Federal Street, Suite 4, Dover, Delaware 19901. Under Article 9 of the Uniform Commercial Code, as adopted in Delaware (6 Del. C. § 9-501), the appropriate filing office for a debtor organized under the laws of Delaware is the Delaware Secretary of State. The Delaware Secretary of State is also the appropriate office for filing notices of federal tax liens against entities formed in Delaware.
Texas. UCC searches were conducted with the Texas Secretary of State, UCC Section, located at the James Earl Rudder State Office Building, 1019 Brazos Street, Austin, Texas 78701, for CBR as a Texas-organized corporation and for the five Texas-sited Project Companies (Pecos Sun, Red Mesa, Coyote Flats, Llano Verde, and Amistad). Although the Project Companies are Delaware-formed LLCs and UCC financing statements are properly filed at the debtor's state of organization (i.e., Delaware) under UCC § 9-301(1), searches were also conducted at the Texas Secretary of State level as a precautionary measure, given that the Project assets are located in Texas. In addition, county-level searches were conducted with the county clerks in each of the five Texas counties in which Projects are located:
• Reeves County Clerk, Pecos, Texas (Pecos Sun Solar, LLC — 85 MW project)
• Pecos County Clerk, Fort Stockton, Texas (Red Mesa Solar, LLC — 70 MW project)
• Ward County Clerk, Monahans, Texas (Coyote Flats Solar, LLC — 65 MW project)
• Hudspeth County Clerk, Sierra Blanca, Texas (Llano Verde Solar, LLC — 55 MW project)
• Val Verde County Clerk, Del Rio, Texas (Amistad Solar, LLC — 45 MW project)
County-level searches in Texas were conducted to identify real property liens, fixture filings under UCC § 9-502(b), judgment liens, federal tax liens filed with the county recorder, and any mechanic's lien filings. CBR's principal place of business is located in Houston, Harris County, Texas, and a judgment lien search was conducted in Harris County as well.
New Mexico. UCC searches were conducted with the New Mexico Secretary of State, UCC Division, located at 325 Don Gaspar Avenue, Suite 300, Santa Fe, New Mexico 87501, for the two New Mexico-sited Project Companies (Cimarron Solar and Sandoval Ridge Solar). County-level searches were conducted with the county clerks in each of the two New Mexico counties in which Projects are located:
• Lea County Clerk, Lovington, New Mexico (Cimarron Solar, LLC — 50 MW project)
• Sandoval County Clerk, Bernalillo, New Mexico (Sandoval Ridge Solar, LLC — 50 MW project)
County-level searches in New Mexico were conducted to identify real property liens, fixture filings, judgment liens, and any mechanic's lien filings.
C. Types of Searches Conducted
The following categories of searches were conducted against each of the ten entities in all applicable jurisdictions:
1. UCC Financing Statement Searches. Searches for all UCC-1 financing statements, UCC-3 amendments (including amendments to collateral descriptions, continuations, assignments, and termination statements), and any other UCC filings indexed under the name of any of the searched entities as debtor. These searches were conducted at the Secretary of State level in each applicable state and, for fixture filings, at the county level in each applicable project county.
2. Federal Tax Lien Searches. Searches for notices of federal tax liens filed by the Internal Revenue Service under 26 U.S.C. § 6323 against any of the searched entities. Federal tax lien notices were searched at both the Secretary of State level and the county recorder level, as applicable, in Delaware, Texas, and New Mexico.
3. State Tax Lien Searches. Searches for state tax lien filings against the searched entities. In Texas, searches were conducted with the Texas Comptroller of Public Accounts. In New Mexico, searches were conducted with the New Mexico Taxation and Revenue Department. In Delaware, franchise tax status was confirmed for each Delaware-formed entity.
4. Judgment and Litigation Searches. Searches of county court and federal court judgment indices in all applicable jurisdictions to identify any outstanding judgments, pending litigation, or unsatisfied judgment liens against any of the searched entities. Federal court searches included the United States District Courts for the Southern District of Texas, the Western District of Texas, the District of New Mexico, and the District of Delaware.
5. Fixture Filing Searches. Searches with the county recorder or clerk in each of the seven project counties for fixture filings under UCC § 9-502(b), covering equipment and other fixtures installed at each project site.
D. Search Providers and Dates
All searches were ordered through and conducted by Capitol Information Services, Inc. ("CIS"), Calderwood & Harkness's primary search vendor for UCC and lien searches. CIS engaged local search agents in each applicable jurisdiction to conduct county-level searches. The initial search run date was November 28, 2023, and updated bring-down searches were conducted through December 4, 2023 (the most recent business day prior to the date of this memorandum). The search results reflected in this memorandum are current as of December 4, 2023.
All original search certificates, reports, and certified copies obtained from CIS and its local agents are attached to this memorandum as Exhibit A and will be included in the closing binder for the Transaction.
III. SEARCH RESULTS BY ENTITY
Set forth below are the detailed search results for each of the ten searched entities, organized by entity.
A. Calloway-Briggs Renewables Inc. (CBR)
Jurisdiction Searched: Texas Secretary of State; Harris County, Texas
1. UCC Financing Statement Search (Texas Secretary of State).
One (1) UCC-1 financing statement was identified on file against Calloway-Briggs Renewables Inc. as debtor, with the following details:
• Filing Number: 23-0042871501
• Original Filing Date: March 22, 2022
• Secured Party: Osprey National Bank, N.A., 300 Madison Avenue, New York, NY 10017
• Debtor: Calloway-Briggs Renewables Inc., 1200 Louisiana Street, Suite 3200, Houston, TX 77002
• Collateral Description: All assets, revenues, accounts, accounts receivable, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles, goods, instruments, inventory, investment property, letter-of-credit rights, membership interests in each of the Project Companies identified on Schedule I thereto, all related contracts (including but not limited to power purchase agreements, EPC contracts, O&M agreements, interconnection agreements, site lease agreements, and equipment supply agreements), permits, governmental approvals, insurance proceeds, and all products and proceeds of the foregoing.
• Related Agreement: Construction-to-Term Loan Agreement dated as of March 15, 2022 (Agreement No. ONB-PF-2022-0341), as amended by that certain First Amendment to Construction-to-Term Loan Agreement dated as of September 30, 2022, and that certain Second Amendment to Construction-to-Term Loan Agreement dated as of June 15, 2023, among Calloway-Briggs Renewables Inc. as borrower, the Project Companies as guarantors, and Osprey National Bank, N.A. as administrative agent and lender.
• Status: Active. No UCC-3 termination statement on file. One UCC-3 amendment filed on October 4, 2022 (Filing No. 23-0056291803) to add Amistad Solar, LLC to the schedule of Project Companies in the collateral description.
• Assessment: This is an expected filing associated with the $245,000,000 construction-to-term loan facility extended by Osprey National Bank to CBR and the Project Companies. The existence and terms of this facility were disclosed by the Client and are fully reflected in the transaction documents. This filing will be addressed at closing as described in Section V below.
No other UCC-1 financing statements were found against CBR at the Texas Secretary of State.
2. Federal Tax Lien Search (Texas Secretary of State and Harris County, Texas). No notices of federal tax liens filed by the Internal Revenue Service were found against Calloway-Briggs Renewables Inc. (EIN 84-3291076) in either the Texas Secretary of State records or the Harris County Clerk's records.
3. State Tax Lien Search (Texas Comptroller of Public Accounts). No state tax liens were found against Calloway-Briggs Renewables Inc. The Texas Comptroller's records confirm that CBR is current on all Texas franchise tax obligations.
4. Judgment and Litigation Search (Harris County, Texas; S.D. Tex.; W.D. Tex.). No outstanding judgments, pending suits, or unsatisfied judgment liens were identified against Calloway-Briggs Renewables Inc. in the Harris County District Clerk's records, the Harris County civil court indices, or the United States District Court for the Southern District of Texas or the Western District of Texas.
5. Conclusion. No unexpected liens or encumbrances were identified against CBR. The sole UCC-1 filing is an expected filing by Osprey National Bank, N.A. in connection with the existing construction-to-term loan facility and will be addressed at closing through UCC-3 amendment filings as described in Section V of this memorandum.
B. CBR Solstice Manager, LLC (CBR Manager)
Jurisdiction Searched: Delaware Secretary of State
1. UCC Financing Statement Search (Delaware Secretary of State). No UCC-1 financing statements are on file against CBR Solstice Manager, LLC as debtor.
2. Federal Tax Lien Search (Delaware Secretary of State). No notices of federal tax liens were found against CBR Solstice Manager, LLC (EIN 88-4071597).
3. Entity Formation and Related Notes. CBR Solstice Manager, LLC was formed in the State of Delaware on August 14, 2023 by the filing of a Certificate of Formation with the Delaware Secretary of State. It is a single-member limited liability company; its sole member is Calloway-Briggs Renewables Inc. CBR Manager is treated as a disregarded entity for federal income tax purposes. Its registered agent is Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904 (the same registered agent as Solstice Holdings, LLC). Good standing was confirmed as of December 1, 2023.
4. Conclusion. Clean — no liens, encumbrances, or other filings were identified against CBR Manager. A new UCC-1 financing statement will be filed in Delaware at closing to perfect the pledge of CBR Manager's managing-member interest in Solstice Holdings, LLC to Osprey National Bank, N.A. under the back-leverage term loan, as described in Section V.B below.
C. Solstice Holdings, LLC (the Partnership)
Jurisdiction Searched: Delaware Secretary of State
1. UCC Financing Statement Search (Delaware Secretary of State). No UCC-1 financing statements are on file against Solstice Holdings, LLC as debtor.
2. Federal Tax Lien Search (Delaware Secretary of State). No notices of federal tax liens were found against Solstice Holdings, LLC (EIN 88-4071523).
3. Entity Formation and Related Notes. Solstice Holdings, LLC was formed in the State of Delaware on August 14, 2023 by the filing of a Certificate of Formation with the Delaware Secretary of State. It will be classified as a partnership for federal income tax purposes upon the admission of Ridgeline Capital Partners, LLC as the Tax-Equity Member at closing. Prior to closing, it is a disregarded entity wholly owned by CBR Solstice Manager, LLC. Its registered agent is Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904. Good standing was confirmed as of December 1, 2023.
4. Conclusion. Clean — no liens, encumbrances, or other filings were identified against Solstice Holdings. No UCC filings are expected against Solstice Holdings as debtor under the current transaction structure. Solstice Holdings is the issuer of the membership interests that are the subject of the pledge by CBR Manager to Osprey, but Solstice Holdings itself is not a debtor under the back-leverage loan facility.
D. Project Companies — Individual Results
All seven Project Companies were searched in Delaware (the state of formation for each entity) and in the applicable state (Texas or New Mexico) and county where the Project assets are physically located. The results for each Project Company are set forth below.
1. Pecos Sun Solar, LLC (85 MW — Reeves County, Texas). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file:
• Filing Number: 2022-1847293
• Original Filing Date: March 22, 2022
• Secured Party: Osprey National Bank, N.A., 300 Madison Avenue, New York, NY 10017
• Debtor: Pecos Sun Solar, LLC, c/o Calloway-Briggs Renewables Inc., 1200 Louisiana Street, Suite 3200, Houston, TX 77002
• Collateral Description: All assets of the debtor, including but not limited to all solar energy generation equipment (including photovoltaic modules, inverters, transformers, racking and mounting systems, combiner boxes, and balance-of-system components), all contracts and contract rights (including the EPC agreement, the PPA, the site lease, the interconnection agreement, the O&M agreement, and all equipment supply and warranty agreements), all permits, licenses, and governmental approvals, all accounts, accounts receivable, deposit accounts, general intangibles, goods, inventory, investment property, chattel paper, instruments, insurance proceeds, and all products and proceeds of the foregoing.
• Related Agreement: Construction-to-Term Loan Agreement (ONB-PF-2022-0341)
• Status: Active. No amendments, continuations, or terminations on file.
• Assessment: Expected filing.
Texas Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement was identified:
• Filing Number: 23-0042871604
• Original Filing Date: March 22, 2022
• Secured Party: Osprey National Bank, N.A.
• Debtor: Pecos Sun Solar, LLC
• Collateral Description: Substantially identical to the Delaware filing described above.
• Status: Active. Expected filing.
Reeves County, Texas — Fixture Filing Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, covering solar photovoltaic modules, inverters, racking and mounting systems, and all balance-of-system equipment installed on the approximately 650-acre leased project site in Reeves County, Texas. The fixture filing was recorded with the Reeves County Clerk on March 28, 2022, as Document No. 2022-00004187. The filing includes a legal description of the real property sufficient to satisfy UCC § 9-502(b). This is an expected filing.
Reeves County, Texas — Real Property and Judgment Search. No real property liens were identified against Pecos Sun Solar, LLC. The project site is held under a ground lease and is not owned by the Project Company. No judgment liens or pending suits were identified. No mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens (IRS) and no state tax liens (Texas Comptroller) were found against Pecos Sun Solar, LLC.
Conclusion. Only expected Osprey construction facility filings were found. No unexpected liens or encumbrances. The existing filings will be addressed at closing as described in Section V.
2. Red Mesa Solar, LLC (70 MW — Pecos County, Texas). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party, with substantially the same collateral description as the Pecos Sun filing described above. Filing Number 2022-1847307, filed March 22, 2022. Status: Active. Expected filing associated with the construction facility (ONB-PF-2022-0341).
Texas Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement was identified by Osprey National Bank, N.A. Filing Number 23-0042871708, filed March 22, 2022. Status: Active. Expected filing.
Pecos County, Texas — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Pecos County Clerk on March 28, 2022, as Document No. 2022-001573, covering solar energy equipment and balance-of-system components installed on the leased project site in Pecos County. Expected filing. No real property liens were identified (site is leased). No judgment liens or pending suits were found. No mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens and no state tax liens were found against Red Mesa Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
3. Coyote Flats Solar, LLC (65 MW — Ward County, Texas). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party. Filing Number 2022-1847321, filed March 22, 2022. Collateral description substantially identical to the other Project Company filings. Status: Active. Expected filing associated with the construction facility (ONB-PF-2022-0341).
Texas Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement by Osprey National Bank, N.A. Filing Number 23-0042871812, filed March 22, 2022. Status: Active. Expected filing.
Ward County, Texas — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Ward County Clerk on March 29, 2022, as Document No. 2022-00002841, covering solar energy equipment installed on the leased project site in Ward County. Expected filing. No real property liens, judgment liens, pending suits, or mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens and no state tax liens were found against Coyote Flats Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
4. Llano Verde Solar, LLC (55 MW — Hudspeth County, Texas). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party. Filing Number 2022-1847339, filed March 22, 2022. Collateral description substantially identical to the other Project Company filings. Status: Active. Expected filing associated with the construction facility (ONB-PF-2022-0341).
Texas Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement by Osprey National Bank, N.A. Filing Number 23-0042871916, filed March 22, 2022. Status: Active. Expected filing.
Hudspeth County, Texas — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Hudspeth County Clerk on March 29, 2022, as Document No. 2022-00000897, covering solar energy equipment installed on the leased project site in Hudspeth County. Expected filing. No real property liens, judgment liens, pending suits, or mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens and no state tax liens were found against Llano Verde Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
5. Cimarron Solar, LLC (50 MW — Lea County, New Mexico). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party. Filing Number 2022-1847354, filed March 22, 2022. Collateral description substantially identical to the other Project Company filings. Status: Active. Expected filing associated with the construction facility (ONB-PF-2022-0341).
New Mexico Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement by Osprey National Bank, N.A. was identified. Filing Number NM-2022-0039281, filed March 23, 2022. Status: Active. Expected filing.
Lea County, New Mexico — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Lea County Clerk on March 30, 2022, as Document No. 2022-005214, covering solar energy equipment and balance-of-system components installed on the leased project site in Lea County. Expected filing. No real property liens, judgment liens, pending suits, or mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens (IRS) and no state tax liens (New Mexico Taxation and Revenue Department) were found against Cimarron Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
6. Sandoval Ridge Solar, LLC (50 MW — Sandoval County, New Mexico). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party. Filing Number 2022-1847368, filed March 22, 2022. Collateral description substantially identical to the other Project Company filings. Status: Active. Expected filing associated with the construction facility (ONB-PF-2022-0341).
New Mexico Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement by Osprey National Bank, N.A. was identified. Filing Number NM-2022-0039295, filed March 23, 2022. Status: Active. Expected filing.
Sandoval County, New Mexico — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Sandoval County Clerk on March 30, 2022, as Document No. 2022-018742, covering solar energy equipment installed on the leased project site in Sandoval County. Expected filing. No real property liens, judgment liens, pending suits, or mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens (IRS) and no state tax liens (New Mexico Taxation and Revenue Department) were found against Sandoval Ridge Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
7. Amistad Solar, LLC (45 MW — Val Verde County, Texas). Delaware Secretary of State — UCC Search. One (1) UCC-1 financing statement was identified on file by Osprey National Bank, N.A. as secured party. Filing Number 2022-2914782, filed October 4, 2022. This filing was made later than the other Project Company filings because Amistad Solar, LLC was added to the construction facility collateral package pursuant to the First Amendment to the Construction-to-Term Loan Agreement dated as of September 30, 2022. Collateral description substantially identical to the other Project Company filings. Status: Active. Expected filing.
Texas Secretary of State — UCC Search. One (1) corresponding UCC-1 financing statement by Osprey National Bank, N.A. Filing Number 23-0056291907, filed October 4, 2022. Status: Active. Expected filing.
Val Verde County, Texas — Fixture Filing, Real Property, and Judgment Search. One (1) fixture filing by Osprey National Bank, N.A. was identified, recorded with the Val Verde County Clerk on October 10, 2022, as Document No. 2022-00007628, covering solar energy equipment and balance-of-system components installed on the leased project site in Val Verde County. Expected filing. No real property liens, judgment liens, pending suits, or mechanic's lien filings were found.
Federal and State Tax Lien Search. No federal tax liens and no state tax liens were found against Amistad Solar, LLC.
Conclusion. Clean — only expected Osprey construction facility filings were identified. No unexpected liens or encumbrances.
E. Summary Table of Existing UCC-1 Filings
The following table summarizes all existing UCC-1 financing statements and fixture filings identified in the searches:
Total Existing Filings: Twenty-two (22) UCC-1 financing statements and fixture filings. Each of the seven Project Companies has three (3) filings (one at the Delaware Secretary of State, one at the applicable state Secretary of State (Texas or New Mexico), and one county-level fixture filing). CBR has one (1) filing at the Texas Secretary of State. All filings are made by Osprey National Bank, N.A. as secured party in connection with the $245,000,000 construction-to-term loan facility (Agreement No. ONB-PF-2022-0341). All filings are expected and consistent with the existing debt structure.
IV. ANALYSIS OF EXISTING OSPREY FILINGS
A. Construction Facility Context
Osprey National Bank, N.A. provided a $245,000,000 construction-to-term loan facility to CBR and the Project Companies pursuant to the Construction-to-Term Loan Agreement dated as of March 15, 2022 (Agreement No. ONB-PF-2022-0341), as amended by the First Amendment dated as of September 30, 2022 (adding Amistad Solar, LLC to the borrower group and increasing the facility commitment to accommodate the Amistad project) and the Second Amendment dated as of June 15, 2023 (extending the conversion deadline and modifying certain financial covenants) (as so amended, the "Construction Facility"). The Construction Facility financed the development, procurement, and construction of the seven Projects in the Solstice Portfolio.
The UCC-1 financing statements and fixture filings identified in the search results were made to perfect Osprey's security interest in substantially all assets of each Project Company, including all solar energy generation equipment, all project contracts (including the engineering, procurement, and construction agreement with Vasquez Brothers Construction, Inc. ("VBC"), the power purchase agreements with Lone Star Grid Solutions, LLC and Enchantment Power Cooperative, each site lease, each interconnection agreement, and each operations and maintenance agreement), all permits and governmental approvals, all accounts, accounts receivable, insurance proceeds, and all other personal property. Osprey also holds a perfected security interest in CBR's membership interests in each Project Company.
At the closing of the Transaction on December 8, 2023, proceeds from Ridgeline's initial capital contribution (the first tranche of $96,000,000) and the purchase price paid by Pinehurst under the Tax Credit Purchase Agreement ($55,200,000 for the first installment of transferable credits) will be applied, in part, to repay all outstanding construction draws under the Construction Facility. As of the date of this memorandum, the outstanding principal balance under the Construction Facility is approximately $207,500,000. Following the application of Transaction proceeds, the Construction Facility will be repaid in full, and the residual project-level debt will be restructured under the back-leverage term loan (Agreement No. ONB-PF-2023-0587).
B. Intercreditor and Consent Arrangements
The relationship between Osprey's security interests and the tax-equity structure is governed by the Back-Leverage Intercreditor and Consent Agreement dated as of December 8, 2023 (the "Intercreditor Agreement"), among Osprey National Bank, N.A., Ridgeline Capital Partners, LLC, CBR Solstice Manager, LLC, and Calloway-Briggs Renewables Inc. The Intercreditor Agreement establishes the following arrangements relevant to the lien structure:
(a) Osprey has consented to the contribution of 100% of the membership interests in each of the seven Project Companies from CBR to Solstice Holdings, LLC, and to the restructuring of CBR's direct ownership of the Project Companies into an indirect ownership through Solstice Holdings.
(b) Osprey has consented to the admission of Ridgeline Capital Partners, LLC as the Tax-Equity Member of Solstice Holdings, LLC and acknowledges that Ridgeline's interest in Solstice Holdings is not subject to Osprey's security interest.
(c) Osprey's post-closing security interest under the back-leverage term loan will attach to CBR Solstice Manager, LLC's managing-member interest in Solstice Holdings (rather than to the individual Project Company membership interests directly), and to the Project-level assets at the Project Company level, subject to the distribution waterfall priority, standstill periods, and Ridgeline consent rights specified in the Intercreditor Agreement.
(d) Ridgeline holds consent rights over any Osprey enforcement action against the managing-member interest during the Tax-Equity Period (as defined in the LLCA), subject to certain exceptions for payment defaults by CBR under the back-leverage loan exceeding ninety (90) days.
Post-closing, the Construction Facility collateral package will be restructured and partially released as appropriate, with replacement security provided under the back-leverage term loan arrangement as described in Section V below.
C. No Conflicting Liens
Based on the search results summarized in Section III above, no other secured party has filed UCC-1 financing statements against any of the ten searched entities. Osprey National Bank, N.A. is the sole secured party of record with respect to any of the searched entities. No subordinate, pari passu, or competing security interests were identified.
Additionally, no mechanic's lien filings were identified in any of the seven project counties. We note in this regard that VBC's performance under the EPC Agreement is secured by performance and payment bonds issued by Ironclad Surety Corp. (Bond Nos. ISC-PB-2022-0841 and ISC-PMT-2022-0842, each in the penal sum of $198,000,000), which provide statutory protection against mechanic's lien claims from subcontractors and material suppliers. All seven Projects have achieved substantial completion, and the applicable mechanic's lien filing periods under Texas Property Code Chapter 53 and the New Mexico Mechanic's Lien Act (NMSA 1978, §§ 48-2-1 et seq.) have either expired or are expected to expire prior to closing without any filings. Calderwood & Harkness's construction counsel has separately confirmed the status of mechanic's lien exposure in a separate memorandum dated November 20, 2023.
V. CLOSING ACTIONS — UCC-3 AMENDMENTS AND NEW UCC-1 FILINGS
A. UCC-3 Amendments to Existing Osprey Filings
At or promptly following the closing on December 8, 2023, UCC-3 amendment filings will be made to the existing Osprey UCC-1 financing statements to reflect the post-closing collateral structure. The specific amendments are as follows:
Project Company Filings. UCC-3 amendments will be filed against each of the seven Project Companies to reflect that, following the contribution at closing, the membership interests in each Project Company are held by Solstice Holdings, LLC rather than directly by CBR. The amendments will update the collateral descriptions to reflect any changes resulting from the restructuring, including the addition of references to the Amended and Restated Limited Liability Company Agreement of Solstice Holdings (the "LLCA") and the related partnership governance documents, while maintaining the existing all-assets grant as to each Project Company's project-level assets. Amendments will be filed in the following jurisdictions:
• Delaware Secretary of State: UCC-3 amendments to the seven existing Project Company filings (Filing Nos. 2022-1847293, 2022-1847307, 2022-1847321, 2022-1847339, 2022-1847354, 2022-1847368, and 2022-2914782).
• Texas Secretary of State: UCC-3 amendments to the five Texas Project Company filings (Filing Nos. 23-0042871604, 23-0042871708, 23-0042871812, 23-0042871916, and 23-0056291907).
• New Mexico Secretary of State: UCC-3 amendments to the two New Mexico Project Company filings (Filing Nos. NM-2022-0039281 and NM-2022-0039295).
• County Fixture Filings: Amendments to the seven county fixture filings in Reeves, Pecos, Ward, Hudspeth, Val Verde, Lea, and Sandoval counties, to the extent required to reflect the restructured ownership of the Project Companies.
CBR Filing. A UCC-3 amendment will be filed against the existing CBR filing at the Texas Secretary of State (Filing No. 23-0042871501) to reflect the restructured collateral description under the back-leverage term loan (ONB-PF-2023-0587). To the extent that the existing Construction Facility filing against CBR is being terminated and replaced rather than amended, a UCC-3 termination statement will be filed and a new UCC-1 financing statement reflecting the back-leverage loan collateral package will be filed simultaneously. This determination is being coordinated with Osprey's counsel, Davis Whitfield & Rowe LLP, and will be finalized prior to closing.
B. New UCC-1 Filings — Back-Leverage Pledge
A new UCC-1 financing statement will be filed with the Delaware Secretary of State to perfect Osprey National Bank's security interest in CBR Solstice Manager, LLC's managing-member interest in Solstice Holdings, LLC. The filing details are as follows:
• Filing Office: Delaware Secretary of State, Division of Corporations, UCC Filing Office
• Debtor: CBR Solstice Manager, LLC (EIN 88-4071597), c/o Cascade Systems, 160 Greentree Drive, Suite 101, Dover, DE 19904
• Secured Party: Osprey National Bank, N.A., 300 Madison Avenue, New York, NY 10017
• Collateral Description: 100% of Debtor's managing-member interest in Solstice Holdings, LLC, a Delaware limited liability company (EIN 88-4071523), including without limitation all of Debtor's right, title, and interest in and to (i) all distributions payable to Debtor by Solstice Holdings, LLC, (ii) all allocations of income, gain, loss, deduction, and credit made to Debtor by Solstice Holdings, LLC, (iii) Debtor's capital account in Solstice Holdings, LLC, (iv) all economic rights, governance rights, management rights, voting rights, and consent rights arising from or related to Debtor's membership interest in Solstice Holdings, LLC, and (v) all proceeds of the foregoing (including any proceeds arising from a sale, exchange, liquidation, or other disposition of Debtor's membership interest in Solstice Holdings, LLC).
This filing perfects Osprey's security interest under the Pledge and Security Agreement dated as of December 8, 2023, between CBR Solstice Manager, LLC as pledgor and Osprey National Bank, N.A. as secured party (the "Pledge Agreement"), which secures CBR's obligations under the $68,000,000 Back-Leverage Term Loan Agreement dated as of December 8, 2023 (Agreement No. ONB-PF-2023-0587), among Calloway-Briggs Renewables Inc. as borrower, CBR Solstice Manager, LLC as pledgor, and Osprey National Bank, N.A. as administrative agent and lender.
It should be noted that the pledge of CBR Manager's managing-member interest in Solstice Holdings is subject to the intercreditor arrangements with Ridgeline Capital Partners, LLC as Tax-Equity Member. Specifically, under Section 8.3 of the Intercreditor Agreement, Ridgeline holds consent rights over any exercise of remedies by Osprey against the pledged managing-member interest during the Tax-Equity Period, subject to certain exceptions for payment defaults by CBR exceeding ninety (90) days. In addition, the distribution waterfall set forth in Article IV of the LLCA establishes the priority of Ridgeline's distributions over debt service on the back-leverage loan, and the standstill provisions in Section 8.5 of the Intercreditor Agreement limit Osprey's ability to accelerate or foreclose during certain specified cure periods.
C. UCC Filing Authorization
Section 4.2 of the Pledge Agreement between CBR Solstice Manager, LLC and Osprey National Bank, N.A. provides that CBR Manager hereby authorizes Osprey to file UCC-1 financing statements, UCC-3 amendments, continuations, and any other UCC filings as Osprey may deem necessary or advisable to perfect, maintain, and continue the perfection of Osprey's security interest in the pledged managing-member interest, without further consent, approval, or signature of CBR Manager. Similarly, Section 7.8 of the Back-Leverage Term Loan Agreement authorizes Osprey to file UCC financing statements covering the collateral described in the Pledge Agreement and the related security documents.
Calderwood & Harkness will coordinate the preparation and filing of all UCC-3 amendments and the new UCC-1 financing statement with Osprey's counsel, Davis Whitfield & Rowe LLP, and with the relevant filing offices. Draft UCC forms have been circulated to Osprey's counsel for review and are expected to be finalized by December 7, 2023.
D. Timing. All UCC-3 amendment filings and the new UCC-1 financing statement are to be submitted for filing on December 8, 2023 (the closing date) or, if the filing offices are not able to process same-day submissions, on the next business day (December 11, 2023). For the Delaware Secretary of State, expedited same-day filing service has been arranged through CIS to ensure that filings are processed and recorded on the closing date.
Confirmation of filing, file-stamped copies, and certified search reports reflecting the new and amended filings will be obtained promptly following closing and will be included in the closing binder for the Transaction. Calderwood & Harkness will circulate copies to all counsel of record upon receipt.
VI. FEDERAL AND STATE TAX LIEN SEARCH RESULTS
A. Federal Tax Lien Searches
Federal tax lien searches were conducted in all applicable jurisdictions — Delaware, Texas, and New Mexico — for all ten (10) searched entities, to identify any notices of federal tax liens filed by the Internal Revenue Service under 26 U.S.C. § 6323. Under federal law, IRS tax liens attach to all property and rights to property of the taxpayer and, once filed, constitute an encumbrance on the taxpayer's assets. The identification of any federal tax lien against a Transaction party would constitute a potential impediment to closing and would need to be addressed prior to the consummation of the Transaction.
Result: No federal tax liens were found against any of the ten searched entities in any jurisdiction. Specifically:
• Calloway-Briggs Renewables Inc. (EIN 84-3291076) — No federal tax liens found (Texas SOS, Harris County).
• CBR Solstice Manager, LLC (EIN 88-4071597) — No federal tax liens found (Delaware SOS).
• Solstice Holdings, LLC (EIN 88-4071523) — No federal tax liens found (Delaware SOS).
• Pecos Sun Solar, LLC — No federal tax liens found (Delaware SOS, Texas SOS, Reeves County).
• Red Mesa Solar, LLC — No federal tax liens found (Delaware SOS, Texas SOS, Pecos County).
• Coyote Flats Solar, LLC — No federal tax liens found (Delaware SOS, Texas SOS, Ward County).
• Llano Verde Solar, LLC — No federal tax liens found (Delaware SOS, Texas SOS, Hudspeth County).
• Cimarron Solar, LLC — No federal tax liens found (Delaware SOS, New Mexico SOS, Lea County).
• Sandoval Ridge Solar, LLC — No federal tax liens found (Delaware SOS, New Mexico SOS, Sandoval County).
• Amistad Solar, LLC — No federal tax liens found (Delaware SOS, Texas SOS, Val Verde County).
B. State Tax Lien Searches
State tax lien searches were conducted in each applicable state for the entities operating or holding assets in that state.
Texas. Searches were conducted with the Texas Comptroller of Public Accounts for Calloway-Briggs Renewables Inc. and the five Texas-sited Project Companies (Pecos Sun Solar, LLC; Red Mesa Solar, LLC; Coyote Flats Solar, LLC; Llano Verde Solar, LLC; and Amistad Solar, LLC). No state tax liens were found against any of these entities. CBR is current on all Texas franchise tax obligations, and its Texas franchise tax account is in good standing.
New Mexico. Searches were conducted with the New Mexico Taxation and Revenue Department for Cimarron Solar, LLC and Sandoval Ridge Solar, LLC. No state tax liens were found against either entity. Both entities are registered to do business in New Mexico and are current on all applicable New Mexico tax obligations.
Delaware. Franchise tax status was confirmed current for all nine Delaware-formed entities (CBR Manager, Solstice Holdings, and the seven Project Companies). Delaware franchise tax reports and payments for the 2023 tax year have been filed and remitted. No liens arising from unpaid Delaware franchise taxes were identified. Good standing certificates were obtained from the Delaware Secretary of State for each entity, as described in Exhibit D.
VII. JUDGMENT AND LITIGATION SEARCH RESULTS
Judgment lien searches and litigation searches were conducted in all applicable county courts and United States District Courts for the relevant jurisdictions to identify any outstanding judgments, pending lawsuits, or unsatisfied judgment liens against any of the ten searched entities. The results are set forth below.
Harris County, Texas (CBR headquarters). A search of the Harris County District Clerk's records and the Harris County civil court indices revealed no outstanding judgments, pending suits, or unsatisfied judgment liens against Calloway-Briggs Renewables Inc.
Project Counties — Texas (Reeves, Pecos, Ward, Hudspeth, and Val Verde Counties). Searches of the county court records in each of the five Texas project counties revealed no outstanding judgments, pending suits, or unsatisfied judgment liens against any of the five Texas-sited Project Companies (Pecos Sun Solar, LLC; Red Mesa Solar, LLC; Coyote Flats Solar, LLC; Llano Verde Solar, LLC; Amistad Solar, LLC).
Project Counties — New Mexico (Lea and Sandoval Counties). Searches of the county court records in each of the two New Mexico project counties revealed no outstanding judgments, pending suits, or unsatisfied judgment liens against either of the two New Mexico-sited Project Companies (Cimarron Solar, LLC; Sandoval Ridge Solar, LLC).
New Castle County, Delaware. Searches of the Superior Court of Delaware and the Court of Chancery records in New Castle County revealed no outstanding judgments, pending suits, or unsatisfied judgment liens against CBR Solstice Manager, LLC, Solstice Holdings, LLC, or any of the seven Project Companies.
Federal Courts. Searches of the Public Access to Court Electronic Records (PACER) system and the case management/electronic case filing (CM/ECF) records for the following United States District Courts revealed no pending litigation, unsatisfied judgments, or other matters involving any of the ten searched entities:
• United States District Court for the Southern District of Texas
• United States District Court for the Western District of Texas
• United States District Court for the District of New Mexico
• United States District Court for the District of Delaware
Conclusion. No judgment liens, pending litigation matters, or other adverse court actions were identified against any of the ten searched entities or affecting any of the Project assets. The judgment and litigation search results are clean.
VIII. CONCLUSIONS AND RECOMMENDATIONS
A. Overall Conclusion
Based on the comprehensive UCC, federal and state tax lien, judgment and litigation, and fixture filing searches conducted across all applicable jurisdictions and filing offices as described in this memorandum, the following conclusions are reached: