ESCROW AGREEMENT
Dated as of September 21, 2023
among
CALLOWAY-BRIGGS RENEWABLES INC. a Texas corporation ("CBR" or "Sponsor")
RIDGELINE CAPITAL PARTNERS, LLC a Delaware limited liability company ("Ridgeline" or "Tax-Equity Investor")
PINEHURST INSURANCE GROUP, INC. a Connecticut corporation ("Pinehurst" or "Credit Buyer")
and
CLEARWATER ESCROW SERVICES, INC. a New York corporation ("Escrow Agent")
________________________________________
Relating to the Tax-Equity and Transferable Tax-Credit Financing of the Solstice Portfolio (420 MW(dc) Utility-Scale Solar Photovoltaic Projects)
________________________________________
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ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of September 21, 2023, by and among Calloway-Briggs Renewables Inc., a Texas corporation ("CBR" or "Sponsor"), Ridgeline Capital Partners, LLC, a Delaware limited liability company ("Ridgeline" or "Tax-Equity Investor"), Pinehurst Insurance Group, Inc., a Connecticut corporation ("Pinehurst" or "Credit Buyer"), and Clearwater Escrow Services, Inc., a New York corporation ("Escrow Agent"). Each of CBR, Ridgeline, Pinehurst, and Escrow Agent is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. Background of Transaction. CBR has developed a portfolio of seven utility-scale solar photovoltaic projects totaling approximately 420 megawatts direct current (420 MW(dc)) located across the States of Texas and New Mexico (the "Solstice Portfolio"). The Solstice Portfolio is held through Solstice Holdings, LLC, a Delaware limited liability company (EIN: 88-4071523) ("Solstice Holdings"), which is managed by CBR Solstice Manager, LLC, a Delaware limited liability company (EIN: 88-4071597) and wholly owned subsidiary of CBR. In connection with the tax-equity and transferable tax-credit financing of the Solstice Portfolio, the Parties and certain of their affiliates have entered into, or are entering into contemporaneously with the execution and delivery of this Agreement, the following agreements (among others):
(i) The Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC, dated as of September 21, 2023 (the "LLCA"), among CBR Solstice Manager, LLC and Ridgeline;
(ii) The Tax Credit Purchase Agreement, dated as of September 21, 2023 (the "TCPA"), between CBR and Pinehurst; and
(iii) The Capital Contribution Agreement, dated as of September 21, 2023 (the "CCA"), between Ridgeline and Solstice Holdings.
B. Ridgeline Capital Contribution. Under the CCA and the LLCA, Ridgeline has committed to make capital contributions totaling One Hundred Twenty Million Dollars ($120,000,000) to Solstice Holdings in two tranches: (i) a first tranche in the amount of Ninety-Six Million Dollars ($96,000,000), representing eighty percent (80%) of the total capital contribution commitment, due at Closing (the "First Tranche Deposit"); and (ii) a second tranche in the amount of Twenty-Four Million Dollars ($24,000,000), representing twenty percent (20%) of the total capital contribution commitment, due within sixty (60) days of the final project's commercial operation date (currently anticipated to be February 6, 2024). This Agreement applies solely to the First Tranche Deposit of Ninety-Six Million Dollars ($96,000,000).
C. Pinehurst Credit Purchase Price. Under the TCPA, Pinehurst has agreed to purchase Sixty Million Dollars ($60,000,000) in face-value Investment Tax Credits under Section 6418 of the Internal Revenue Code of 1986, as amended (the "Code"), at a purchase price of $0.92 per $1.00 of credit, for aggregate consideration of Fifty-Five Million Two Hundred Thousand Dollars ($55,200,000) (the "Credit Purchase Deposit"). The Credit Purchase Deposit is to be deposited into escrow five (5) Business Days before Closing and released upon the satisfaction of the conditions specified herein.
D. Purpose of Escrow. The Parties desire to establish an escrow arrangement with Clearwater Escrow Services, Inc. to hold, invest, and release the First Tranche Deposit and the Credit Purchase Deposit in accordance with the terms and conditions set forth herein. The Escrow Account established pursuant to this Agreement shall be designated as Account No. CES-2023-80114.
E. Escrow Agent Willingness. Clearwater Escrow Services, Inc. is willing to serve as Escrow Agent upon and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Aggregate Escrow Amount" means the sum of the First Tranche Deposit and the Credit Purchase Deposit, totaling One Hundred Fifty-One Million Two Hundred Thousand Dollars ($151,200,000), together with any investment income earned thereon.
"Business Day" means any day other than a Saturday, Sunday, or a day on which banking institutions in New York, New York are authorized or required by law or executive order to close.
"CCA" means the Capital Contribution Agreement, dated as of September 21, 2023, between Ridgeline and Solstice Holdings, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Closing" means the closing of the transactions contemplated by the LLCA, the TCPA, and the CCA, originally scheduled for November 30, 2023, as such date may be extended pursuant to the terms of the Transaction Documents.
"Closing Date" means the date on which the Closing actually occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Credit Purchase Deposit" means Fifty-Five Million Two Hundred Thousand Dollars ($55,200,000), deposited or to be deposited by Pinehurst into Sub-Account B pursuant to Section 2.3.
"Credit Purchase Release Conditions" has the meaning set forth in Section 3.2(b).
"Depositing Party" means each of Ridgeline (with respect to the First Tranche Deposit) and Pinehurst (with respect to the Credit Purchase Deposit), and "Depositing Parties" means both of them.
"Escrow Account" means Account No. CES-2023-80114 maintained by Escrow Agent, including Sub-Account A and Sub-Account B.
"Escrow Agent" means Clearwater Escrow Services, Inc., a New York corporation, and any successor escrow agent appointed in accordance with Section 5.5.
"First Tranche Deposit" means Ninety-Six Million Dollars ($96,000,000), deposited or to be deposited by Ridgeline into Sub-Account A pursuant to Section 2.2.
"First Tranche Release Conditions" has the meaning set forth in Section 3.2(a).
"Joint Written Instructions" has the meaning set forth in Section 3.3.
"LLCA" means the Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC, dated as of September 21, 2023, among CBR Solstice Manager, LLC and Ridgeline, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Outside Date" means the date that is ninety (90) days after the originally scheduled Closing Date (i.e., February 28, 2024, as the same may be adjusted to the next succeeding Business Day if such date falls on a day that is not a Business Day).
"Permitted Investments" has the meaning set forth in Section 4.1.
"Release Conditions" means, collectively, the First Tranche Release Conditions and the Credit Purchase Release Conditions.
"Solstice Holdings" means Solstice Holdings, LLC, a Delaware limited liability company (EIN: 88-4071523).
"Sub-Account A" means the sub-account of the Escrow Account designated as the "Ridgeline First Tranche Sub-Account" and established pursuant to Section 2.1.
"Sub-Account B" means the sub-account of the Escrow Account designated as the "Pinehurst Credit Purchase Sub-Account" and established pursuant to Section 2.1.
"TCPA" means the Tax Credit Purchase Agreement, dated as of September 21, 2023, between CBR and Pinehurst, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Transaction Documents" means, collectively, the LLCA, the TCPA, the CCA, the Tax Indemnity Agreement, the Purchase Option Agreement, and all ancillary agreements, certificates, instruments, and documents delivered in connection therewith.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LLCA.
Section 1.2 — Rules of Construction
Unless the context otherwise requires: (a) references to Sections, Articles, and Exhibits are to the Sections, Articles, and Exhibits of this Agreement; (b) references to any agreement, document, or instrument mean such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms; (c) the singular includes the plural and vice versa; (d) references to any gender include references to all genders; (e) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation"; (f) the word "or" is not exclusive; (g) references to "herein," "hereof," "hereby," and "hereunder" refer to this Agreement as a whole and not to any particular provision; (h) the headings, captions, and table of contents in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Agreement; (i) all references to dollar amounts shall mean United States Dollars unless otherwise specified; and (j) all references to any statute or regulation shall include all amendments thereto and any successor provisions and all regulations and other authoritative interpretive guidance issued thereunder.
ARTICLE II — ESTABLISHMENT OF ESCROW; DEPOSITS
Section 2.1 — Establishment of Escrow Account
Promptly following the execution and delivery of this Agreement, Escrow Agent shall establish and maintain a segregated escrow account designated as Account No. CES-2023-80114 (the "Escrow Account") at the offices of Clearwater Escrow Services, Inc., 100 Wall Street, Suite 600, New York, New York 10005. The Escrow Account shall consist of two sub-accounts, as follows:
(a) Sub-Account A: "Ridgeline First Tranche Sub-Account." Sub-Account A shall be used exclusively for the deposit, investment, and release (or return) of the First Tranche Deposit and all investment income earned thereon.
(b) Sub-Account B: "Pinehurst Credit Purchase Sub-Account." Sub-Account B shall be used exclusively for the deposit, investment, and release (or return) of the Credit Purchase Deposit and all investment income earned thereon.
Each sub-account shall be separately tracked and accounted for by Escrow Agent for all purposes under this Agreement, including investment income allocation, tax reporting, and release of funds. Escrow Agent shall maintain accurate and complete records of all deposits into and disbursements from each sub-account and shall make such records available for inspection by any Party upon reasonable request during normal business hours.
Section 2.2 — Deposit of First Tranche by Ridgeline
Ridgeline shall deposit, or cause to be deposited, Ninety-Six Million Dollars ($96,000,000) in immediately available funds by wire transfer into Sub-Account A no later than two (2) Business Days prior to the anticipated Closing Date. Wire transfer instructions for Sub-Account A shall be provided by Escrow Agent to Ridgeline upon execution of this Agreement and are set forth on Exhibit A attached hereto. Escrow Agent shall promptly confirm receipt of such deposit in writing (which may be by email) to all Parties and their respective counsel in accordance with Section 2.4.
Section 2.3 — Deposit of Credit Purchase Price by Pinehurst
Pinehurst shall deposit, or cause to be deposited, Fifty-Five Million Two Hundred Thousand Dollars ($55,200,000) in immediately available funds by wire transfer into Sub-Account B no later than five (5) Business Days prior to the anticipated Closing Date. Wire transfer instructions for Sub-Account B shall be provided by Escrow Agent to Pinehurst upon execution of this Agreement and are set forth on Exhibit A attached hereto. Escrow Agent shall promptly confirm receipt of such deposit in writing (which may be by email) to all Parties and their respective counsel in accordance with Section 2.4.
Section 2.4 — Confirmation of Deposits
Upon receipt of each deposit contemplated by Sections 2.2 and 2.3, Escrow Agent shall deliver written confirmation (which may be delivered by email) of such receipt, specifying the amount received and the date and time of receipt, to each of the following:
(a) CBR — Attention: Theo Vasquez, Chief Financial Officer, and Priya Anand, Vice President, Project Finance, at Calloway-Briggs Renewables Inc., 2700 Post Oak Boulevard, Suite 1450, Houston, Texas 77056;
(b) Ridgeline — Attention: David Lim, Vice President, at Ridgeline Capital Partners, LLC, 390 Park Avenue, 22nd Floor, New York, New York 10022;
(c) Pinehurst — Attention: Alec Drummond, Director, Alternative Tax Investments, at Pinehurst Insurance Group, Inc., 175 Constitution Plaza, Hartford, Connecticut 06103; and
(d) Calderwood & Harkness LLP — Attention: Leila Nazari, at Calderwood & Harkness LLP, 600 Lexington Avenue, New York, New York 10022.
Section 2.5 — Insufficiency of Deposits
If any deposit required to be made under Section 2.2 or Section 2.3 is less than the full required amount, or is not received by Escrow Agent by the applicable deadline specified in such Section, Escrow Agent shall promptly notify all Parties in writing (which may be by email) of such shortfall or non-receipt. Escrow Agent shall have no obligation to release any portion of a deficient deposit until the full amount required has been received and credited to the applicable sub-account. For the avoidance of doubt, Escrow Agent shall have no obligation to investigate the reason for any shortfall or non-receipt and shall bear no responsibility or liability to any Party by reason of the failure of a Depositing Party to make a timely or complete deposit.
ARTICLE III — RELEASE OF ESCROW FUNDS
Section 3.1 — General
Escrow Agent shall hold the escrowed funds in the Escrow Account and shall release such funds solely in accordance with the provisions of this Article III. No release of escrowed funds shall be made except upon the satisfaction of the applicable Release Conditions and the delivery of Joint Written Instructions to Escrow Agent, or as otherwise expressly provided in this Agreement. Escrow Agent shall have no obligation to independently verify whether the underlying conditions to Closing have been satisfied under the Transaction Documents and shall be entitled to rely conclusively on the Joint Written Instructions and the documents delivered to it as specified in Section 3.2.
Section 3.2 — Release Conditions
(a) First Tranche Release Conditions (Sub-Account A — Ridgeline $96,000,000). Escrow Agent shall release the First Tranche Deposit, together with all accrued and unpaid investment income attributable to Sub-Account A, to the operating account of Solstice Holdings, LLC maintained at Osprey National Bank, N.A. (wire transfer instructions as set forth on Exhibit B attached hereto), upon the simultaneous satisfaction of all of the following conditions (collectively, the "First Tranche Release Conditions"):
(1) Escrow Agent has received Joint Written Instructions signed by CBR and Ridgeline directing such release in the form attached hereto as Exhibit C;
(2) Escrow Agent has received a copy (which may be delivered electronically) of the fully executed LLCA;
(3) Escrow Agent has received a copy (which may be delivered electronically) of the fully executed CCA;
(4) Escrow Agent has received a copy (which may be delivered electronically) of the Officer's Closing Certificate of CBR, certifying that (A) all representations and warranties of CBR contained in the LLCA and CCA are true and correct in all material respects as of the Closing Date, and (B) all conditions precedent to Closing set forth in the LLCA and CCA have been satisfied or waived;
(5) Escrow Agent has received a copy (which may be delivered electronically) of the legal opinion of Calderwood & Harkness LLP, dated as of the Closing Date and addressed to Ridgeline, regarding the due authorization of CBR's entry into the Transaction Documents, the enforceability thereof, and the absence of material conflicts with applicable law and organizational documents; and
(6) The Closing Date has occurred or is occurring simultaneously with such release.
For the avoidance of doubt, Escrow Agent's obligation under this Section 3.2(a) is limited to confirming that it has received each of the documents and instructions described in clauses (1) through (5) above. Escrow Agent shall have no duty to examine, evaluate, or pass upon the substance, sufficiency, or legal effect of any such document.
(b) Credit Purchase Release Conditions (Sub-Account B — Pinehurst $55,200,000). Escrow Agent shall release the Credit Purchase Deposit, together with all accrued and unpaid investment income attributable to Sub-Account B, to CBR's designated account (wire transfer instructions as set forth on Exhibit B attached hereto), upon the simultaneous satisfaction of all of the following conditions (collectively, the "Credit Purchase Release Conditions"):
(1) Escrow Agent has received Joint Written Instructions signed by CBR and Pinehurst directing such release in the form attached hereto as Exhibit C;
(2) Escrow Agent has received a copy (which may be delivered electronically) of the fully executed TCPA;
(3) Escrow Agent has received a copy (which may be delivered electronically) of the fully executed Tax Indemnity Agreement, executed by CBR in favor of Pinehurst, with an indemnity cap of Sixty-Nine Million Dollars ($69,000,000);
(4) Escrow Agent has received copies (which may be delivered electronically) of the executed Transfer Election Statements under Section 6418 of the Code for each of the seven project companies within the Solstice Portfolio;
(5) Escrow Agent has received a copy (which may be delivered electronically) of the Officer's Closing Certificate of CBR, certifying that (A) all representations and warranties of CBR contained in the TCPA are true and correct in all material respects as of the Closing Date, and (B) all conditions precedent to Closing set forth in the TCPA have been satisfied or waived;
(6) Escrow Agent has received a copy (which may be delivered electronically) of the tax opinion of Calderwood & Harkness LLP, dated as of the Closing Date and addressed to Pinehurst, regarding the validity of the Section 6418 transfer election and the availability of the Investment Tax Credits described in the TCPA; and
(7) The Closing Date has occurred or is occurring simultaneously with such release.
For the avoidance of doubt, Escrow Agent's obligation under this Section 3.2(b) is limited to confirming that it has received each of the documents and instructions described in clauses (1) through (6) above. Escrow Agent shall have no duty to examine, evaluate, or pass upon the substance, sufficiency, or legal effect of any such document, including, without limitation, the validity of any Transfer Election Statement, tax opinion, or Tax Indemnity Agreement.
Section 3.3 — Joint Written Instructions
"Joint Written Instructions" means written instructions delivered to Escrow Agent (which may initially be delivered by email from the authorized representatives identified below, provided that original signatures are delivered to Escrow Agent within three (3) Business Days thereafter) that are signed by the following persons:
(a) For release from Sub-Account A: CBR (by any one or more of Marcus Calloway, Chairman & CEO; Theo Vasquez, Chief Financial Officer; or Priya Anand, Vice President, Project Finance) and Ridgeline (by any one or more of Jonathan Kessler, Managing Partner; Samara Okonkwo, Partner; or David Lim, Vice President).
(b) For release from Sub-Account B: CBR (by any one or more of Marcus Calloway, Chairman & CEO; Theo Vasquez, Chief Financial Officer; or Priya Anand, Vice President, Project Finance) and Pinehurst (by any one or more of Gerald Fontaine, Chief Executive Officer; Catherine Moreau, Senior Vice President, Tax & Treasury; or Alec Drummond, Director, Alternative Tax Investments).
Each set of Joint Written Instructions shall specify: (i) the sub-account from which release is requested (Sub-Account A or Sub-Account B, as applicable); (ii) the amount to be released, including the principal deposit amount and any accrued and unpaid investment income thereon; (iii) the complete wire transfer instructions for the recipient of such funds; and (iv) a confirmation that all applicable Release Conditions for such sub-account have been satisfied or are being satisfied simultaneously with such release. The form of Joint Written Instructions is attached hereto as Exhibit C.
Any Party may, by written notice to all other Parties and Escrow Agent in accordance with Article VIII, change the persons authorized to sign Joint Written Instructions on its behalf, which change shall be effective upon receipt by Escrow Agent.
Section 3.4 — Simultaneous Release
To the extent practicable and consistent with the Funds Flow Memorandum prepared by counsel for the Closing, the releases from Sub-Account A and Sub-Account B shall occur simultaneously on the Closing Date. Escrow Agent shall coordinate the sequence and timing of wire transfers with counsel to the respective Parties, including Calderwood & Harkness LLP (counsel to CBR), Whitfield & Ayers LLP (counsel to Ridgeline), and Thornberry Mack LLP (counsel to Pinehurst). Escrow Agent shall use commercially reasonable efforts to initiate outgoing wire transfers promptly following receipt of Joint Written Instructions and all documents required under Section 3.2, provided that Escrow Agent shall not be liable for any delay in the initiation or completion of wire transfers caused by circumstances beyond its reasonable control, including processing delays by correspondent banks or the Federal Reserve wire transfer system.
Section 3.5 — Return of Funds Upon Failure to Close
If the Closing has not occurred on or before the Outside Date, or if the Transaction Documents are terminated by any Party prior to Closing in accordance with their terms, Escrow Agent shall return the escrowed funds as follows:
(a) Return of First Tranche Deposit. Escrow Agent shall return the First Tranche Deposit, together with all accrued and unpaid investment income attributable to Sub-Account A, to Ridgeline by wire transfer in accordance with the wire transfer instructions set forth on Exhibit D attached hereto, upon receipt of Joint Written Instructions from Ridgeline and CBR. If such Joint Written Instructions are not received by Escrow Agent within ten (10) Business Days following the Outside Date or the date of termination of the Transaction Documents (whichever is applicable), Escrow Agent shall return the First Tranche Deposit and accrued investment income to Ridgeline upon receipt of written instructions from Ridgeline alone, provided that Escrow Agent shall deliver written notice of such return instructions to CBR at least five (5) Business Days prior to effecting such return.
(b) Return of Credit Purchase Deposit. Escrow Agent shall return the Credit Purchase Deposit, together with all accrued and unpaid investment income attributable to Sub-Account B, to Pinehurst by wire transfer in accordance with the wire transfer instructions set forth on Exhibit D attached hereto, upon receipt of Joint Written Instructions from Pinehurst and CBR. If such Joint Written Instructions are not received by Escrow Agent within ten (10) Business Days following the Outside Date or the date of termination of the Transaction Documents (whichever is applicable), Escrow Agent shall return the Credit Purchase Deposit and accrued investment income to Pinehurst upon receipt of written instructions from Pinehurst alone, provided that Escrow Agent shall deliver written notice of such return instructions to CBR at least five (5) Business Days prior to effecting such return.
For purposes of this Section 3.5, a Party claiming that the Transaction Documents have been terminated shall deliver to Escrow Agent a certificate, signed by an authorized officer of such Party, stating the basis for termination and attaching copies of any relevant termination notices. Escrow Agent shall be entitled to rely conclusively on any such certificate without further inquiry.
Section 3.6 — Partial Releases
No partial release of escrowed funds from either Sub-Account A or Sub-Account B shall be permitted except as expressly agreed in supplemental Joint Written Instructions signed by all Parties (including CBR, the applicable Depositing Party, and Escrow Agent's written acknowledgment of such supplemental instructions). Any supplemental Joint Written Instructions authorizing a partial release shall specify the amount to be released, the sub-account from which such release is to be made, the wire transfer instructions for the recipient, and the amount (if any) to remain on deposit in such sub-account following such partial release.
ARTICLE IV — INVESTMENT OF ESCROW FUNDS
Section 4.1 — Permitted Investments
Escrow Agent shall invest and reinvest the escrowed funds held in the Escrow Account in one or more of the following categories of investments (collectively, "Permitted Investments"):
(a) Direct obligations of the United States of America, or obligations the principal of and interest on which are unconditionally guaranteed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days of the date of acquisition thereof;
(b) Certificates of deposit or time deposits of any commercial bank organized under the laws of the United States or any state thereof that is insured by the Federal Deposit Insurance Corporation and has combined capital and surplus of not less than One Billion Dollars ($1,000,000,000), maturing within thirty (30) days of the date of acquisition thereof;
(c) Money market funds that are rated at least AAAm (or its equivalent) by a nationally recognized statistical rating organization (as defined in Section 3(a)(62) of the Securities Exchange Act of 1934, as amended) and that invest exclusively in obligations of the type described in clause (a) above; and
(d) Such other investments as CBR and the applicable Depositing Party may jointly direct in writing, provided that Escrow Agent shall have consented to such investments (such consent not to be unreasonably withheld).
Section 4.2 — Investment Instructions
In the absence of specific written investment instructions received from CBR and the applicable Depositing Party for the relevant sub-account, Escrow Agent shall invest all escrowed funds in Permitted Investments described in Section 4.1(c). Any investment instruction delivered to Escrow Agent must be in writing and signed by an authorized representative of CBR and an authorized representative of the applicable Depositing Party for the relevant sub-account. Escrow Agent shall have no liability for any investment losses resulting from investments made in accordance with Permitted Investments as directed by the Parties or as selected by Escrow Agent in the absence of specific instructions, except as provided in Section 4.5.
Section 4.3 — Allocation of Investment Income
Investment income (including interest, dividends, and gains) earned on funds held in Sub-Account A shall be allocated to Ridgeline and shall be released to or for the account of Ridgeline together with, or in addition to, the principal amount of the First Tranche Deposit upon the release or return of Sub-Account A funds in accordance with this Agreement. Investment income earned on funds held in Sub-Account B shall be allocated to Pinehurst and shall be released to or for the account of Pinehurst together with, or in addition to, the principal amount of the Credit Purchase Deposit upon the release or return of Sub-Account B funds in accordance with this Agreement.
Each Party shall be solely responsible for reporting and paying any and all taxes on its allocable share of investment income for federal, state, and local income tax purposes. Escrow Agent shall issue applicable IRS Forms (including Form 1099-INT or similar information returns) to the Party to whom investment income is allocated, in accordance with applicable law.
Section 4.4 — Tax Identification Numbers
For purposes of tax reporting with respect to escrow investment income, the following taxpayer identification numbers are provided:
(a) CBR: EIN 84-3291076;
(b) Ridgeline: EIN 13-4827651; and
(c) Pinehurst: EIN 06-1938274.
Each of CBR, Ridgeline, and Pinehurst shall deliver a properly completed and executed IRS Form W-9 (Request for Taxpayer Identification Number and Certification) to Escrow Agent upon execution of this Agreement. If any Party fails to provide a completed Form W-9, Escrow Agent shall be authorized to withhold from investment income any amounts required to be withheld under applicable law, including backup withholding under Section 3406 of the Code.
Section 4.5 — Risk of Loss
Escrow Agent shall not be liable for any loss arising from Permitted Investments, including any loss of principal or investment income resulting from market fluctuations, default by an issuer, or the failure of any depository institution, except to the extent that such loss is caused by the Escrow Agent's own gross negligence or willful misconduct. Escrow Agent shall not be obligated to pay interest on the escrowed funds or any portion thereof except to the extent of actual investment income received by Escrow Agent on Permitted Investments. The Parties acknowledge that the escrowed funds are not deposits of or guaranteed by Escrow Agent or any of its affiliates and are subject to investment risk, including the possible loss of principal.
ARTICLE V — ESCROW AGENT PROVISIONS
Section 5.1 — Duties and Responsibilities
The duties and responsibilities of Escrow Agent under this Agreement are purely ministerial in nature and shall be determined solely by the express provisions of this Agreement. Escrow Agent shall not be required to interpret or enforce any other Transaction Document, including, without limitation, the LLCA, the TCPA, the CCA, or the Tax Indemnity Agreement. Escrow Agent is not a party to any Transaction Document other than this Agreement and shall have no duties or obligations with respect to any such other Transaction Document. Escrow Agent shall act only upon receipt of written instructions delivered to it in conformity with this Agreement and shall not be liable for any action taken or omitted to be taken by it in good faith and in accordance with instructions believed by it to be genuine and to have been signed or delivered by the proper person or persons.
Section 5.2 — Reliance
Escrow Agent may conclusively rely on, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, certificate, request, direction, consent, or other document or communication (including any Joint Written Instructions) that Escrow Agent believes in good faith to be genuine and to have been signed, presented, or given by the proper person or persons. Escrow Agent shall be entitled to rely on the advice of legal counsel (including in-house counsel) retained by Escrow Agent in connection with any matter arising out of or relating to this Agreement, and Escrow Agent shall not be liable for any action taken or omitted to be taken in good faith in reliance upon such advice.
Section 5.3 — No Implied Duties
Escrow Agent shall have no duty to inquire into or investigate the underlying transaction, the satisfaction of conditions under the Transaction Documents (other than Escrow Agent's receipt of the specific documents and instructions listed in Section 3.2 as conditions to release), or the authority of any person signing Joint Written Instructions or other documents or communications. Escrow Agent shall have no responsibility for the genuineness, validity, enforceability, or sufficiency of any document, certificate, opinion, or instrument delivered to it for purposes of this Agreement. Escrow Agent shall not be required to take any action that, in Escrow Agent's sole judgment, would be contrary to applicable law or the terms of this Agreement.
Section 5.4 — Conflicting Instructions and Interpleader
If at any time Escrow Agent receives conflicting instructions from the Parties, or if Escrow Agent is otherwise uncertain or in doubt as to the proper course of action under this Agreement, Escrow Agent may, at its option:
(a) Refrain from taking any action (other than continuing to hold the escrowed funds in the Escrow Account and investing the same in Permitted Investments in accordance with Article IV) until Escrow Agent receives (i) Joint Written Instructions from the applicable Parties resolving such conflict or uncertainty, or (ii) a final, non-appealable order or judgment of a court of competent jurisdiction directing the disposition of the escrowed funds; or
(b) Deposit or interplead the escrowed funds (or any portion thereof as to which a conflict or uncertainty exists) with a court of competent jurisdiction located in the Borough of Manhattan, City of New York, State of New York, and thereupon interplead the Parties, and upon making such deposit and filing such interpleader action, Escrow Agent shall be released and discharged from all further obligations, duties, and liability hereunder with respect to the funds so deposited, except to the extent of its own gross negligence or willful misconduct.
All costs and expenses of any interpleader action commenced by Escrow Agent pursuant to this Section 5.4 (including, without limitation, reasonable attorneys' fees and court costs) shall be borne equally by CBR, Ridgeline, and Pinehurst (each bearing one-third of such costs). Escrow Agent shall be entitled to deduct such costs from the escrowed funds prior to deposit with the court, unless the Parties pay such costs directly.
Section 5.5 — Resignation and Removal
(a) Resignation. Escrow Agent may resign at any time by giving thirty (30) days' prior written notice to all other Parties. Such resignation shall take effect upon the appointment of a successor escrow agent and the transfer of the escrowed funds to such successor in accordance with Section 5.6, or upon the expiration of such thirty (30)-day period, whichever occurs first.
(b) Removal. Escrow Agent may be removed at any time by Joint Written Instructions of CBR, Ridgeline, and Pinehurst (acting together) upon thirty (30) days' prior written notice to Escrow Agent. Such removal shall take effect upon the appointment of a successor escrow agent and the transfer of the escrowed funds to such successor in accordance with Section 5.6.
(c) Appointment of Successor. Upon any resignation or removal of Escrow Agent, a successor escrow agent shall be appointed by the mutual agreement of CBR, Ridgeline, and Pinehurst within thirty (30) days following the effective date of such resignation or removal. The resigning or removed Escrow Agent shall promptly transfer the escrowed funds (together with all accrued and unpaid investment income) and all records and documents relating to this Agreement to the successor escrow agent.
(d) Court Deposit. If a successor escrow agent has not been appointed within thirty (30) days following the effective date of Escrow Agent's resignation or removal, Escrow Agent may deposit the escrowed funds with a court of competent jurisdiction located in the Borough of Manhattan, City of New York, State of New York, and upon making such deposit, Escrow Agent shall be released and discharged from all further obligations, duties, and liability hereunder with respect to the funds so deposited.
Section 5.6 — Successor Escrow Agent
Any successor escrow agent appointed pursuant to Section 5.5 shall be a national or state-chartered bank or trust company organized under the laws of the United States or any state thereof, with combined capital and surplus of not less than Five Hundred Million Dollars ($500,000,000). Upon accepting appointment as successor escrow agent, such successor shall succeed to all rights, duties, and obligations of the predecessor Escrow Agent under this Agreement, and the predecessor Escrow Agent shall be released from all further obligations and liability hereunder (except with respect to claims arising prior to such successor's appointment).
ARTICLE VI — FEES, EXPENSES, AND INDEMNIFICATION OF ESCROW AGENT
Section 6.1 — Escrow Agent Fees
CBR shall pay to Escrow Agent all fees and charges for the establishment, maintenance, and administration of the Escrow Account, including the sub-accounts, as set forth on the fee schedule attached hereto as Exhibit E. Such fees are non-refundable and shall be payable upon execution of this Agreement (with respect to the acceptance and setup fee) and annually thereafter on each anniversary of the date of this Agreement while the Escrow Account remains open and any escrowed funds remain on deposit (with respect to the annual administration fee, prorated for any partial year). For the avoidance of doubt, Escrow Agent's fees shall not be deducted from the escrowed funds unless CBR fails to pay such fees within thirty (30) days of written demand therefor.
Section 6.2 — Expenses
CBR shall reimburse Escrow Agent for all reasonable and documented out-of-pocket expenses incurred by Escrow Agent in connection with the performance of its duties under this Agreement, including wire transfer fees (both incoming and outgoing), postage, courier charges, and photocopying costs. Escrow Agent shall provide CBR with a summary of such expenses on a quarterly basis or upon request. Such reimbursement shall be due and payable within thirty (30) days of CBR's receipt of Escrow Agent's invoice therefor.
Section 6.3 — Indemnification of Escrow Agent
(a) CBR, Ridgeline, and Pinehurst, jointly and severally, shall indemnify, defend, and hold harmless Escrow Agent and its officers, directors, employees, agents, and affiliates (collectively, the "Escrow Agent Indemnitees") from and against any and all claims, demands, actions, suits, proceedings, losses, liabilities, damages, penalties, judgments, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") arising out of or in connection with this Agreement, the Escrow Account, or the escrowed funds, or the performance of Escrow Agent's duties hereunder, except to the extent that such Losses are finally determined by a court of competent jurisdiction (in a judgment that is not subject to further appeal) to have resulted from the Escrow Agent's own gross negligence or willful misconduct.
(b) As between CBR, Ridgeline, and Pinehurst, indemnification obligations under this Section 6.3 shall be allocated as follows:
(i) CBR: fifty percent (50%);
(ii) Ridgeline: thirty percent (30%); and
(iii) Pinehurst: twenty percent (20%).
Nothing in this allocation shall limit Escrow Agent's right to proceed against any one or more of CBR, Ridgeline, or Pinehurst for the full amount of any Losses. The foregoing allocation is solely for purposes of determining the rights of contribution among CBR, Ridgeline, and Pinehurst.
(c) Without limiting the foregoing, Escrow Agent shall have a first-priority lien on the escrowed funds (and any investment income thereon) for any unpaid fees, expenses, and indemnification amounts owing to Escrow Agent under this Agreement. Escrow Agent shall not exercise such lien without first providing at least ten (10) Business Days' prior written notice to all Parties specifying the amounts claimed.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Representations of CBR
CBR hereby represents and warrants to each other Party as of the date hereof as follows:
(a) CBR is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas (Texas Secretary of State File No. 803762114; EIN 84-3291076).
(b) CBR has full corporate power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(c) The execution, delivery, and performance of this Agreement by CBR have been duly authorized by all necessary corporate action on the part of CBR, and no other corporate proceedings on the part of CBR are necessary to authorize the execution, delivery, or performance of this Agreement.
(d) This Agreement has been duly executed and delivered by CBR and constitutes a legal, valid, and binding obligation of CBR, enforceable against CBR in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 7.2 — Representations of Ridgeline
Ridgeline hereby represents and warrants to each other Party as of the date hereof as follows:
(a) Ridgeline is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware (EIN 13-4827651).
(b) Ridgeline has full limited liability company power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(c) The execution, delivery, and performance of this Agreement by Ridgeline have been duly authorized by all necessary limited liability company action on the part of Ridgeline, and no other proceedings on the part of Ridgeline are necessary to authorize the execution, delivery, or performance of this Agreement.
(d) This Agreement has been duly executed and delivered by Ridgeline and constitutes a legal, valid, and binding obligation of Ridgeline, enforceable against Ridgeline in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 7.3 — Representations of Pinehurst
Pinehurst hereby represents and warrants to each other Party as of the date hereof as follows:
(a) Pinehurst is a corporation duly organized, validly existing, and in good standing under the laws of the State of Connecticut (EIN 06-1938274).
(b) Pinehurst has full corporate power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(c) The execution, delivery, and performance of this Agreement by Pinehurst have been duly authorized by all necessary corporate action on the part of Pinehurst, and no other corporate proceedings on the part of Pinehurst are necessary to authorize the execution, delivery, or performance of this Agreement.
(d) This Agreement has been duly executed and delivered by Pinehurst and constitutes a legal, valid, and binding obligation of Pinehurst, enforceable against Pinehurst in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 7.4 — Representations of Escrow Agent
Escrow Agent hereby represents and warrants to each other Party as of the date hereof as follows:
(a) Escrow Agent is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York.
(b) Escrow Agent has full corporate power and authority to execute, deliver, and perform this Agreement and to serve as Escrow Agent hereunder.
(c) The execution, delivery, and performance of this Agreement by Escrow Agent, and the performance by Escrow Agent of its obligations hereunder, do not and will not (i) violate any provision of applicable law, rule, or regulation, (ii) conflict with or result in a breach of Escrow Agent's certificate of incorporation, bylaws, or other organizational documents, or (iii) require the consent or approval of any governmental authority or any other person that has not been obtained.
ARTICLE VIII — NOTICES
Section 8.1 — Form and Delivery of Notices
All notices, requests, instructions, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given and received: (a) upon delivery, if delivered personally (by hand or by messenger or courier service); (b) on the next Business Day after deposit with a nationally recognized overnight courier service, postage prepaid, addressed as set forth below; (c) upon transmission (with confirmation of receipt), if delivered by email in portable document format (.pdf), provided that a confirmation copy is sent by nationally recognized overnight courier within two (2) Business Days thereafter; or (d) on the fifth (5th) Business Day after deposit in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed as set forth below.
Section 8.2 — Notice Addresses
Notices shall be addressed as follows:
If to CBR:
Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, Texas 77056
Attention: Theo Vasquez, Chief Financial Officer
Email: tvasquez@calloway-briggs.com
With a copy (which shall not constitute notice) to:
Calloway-Briggs Renewables Inc. 2700 Post Oak Boulevard, Suite 1450 Houston, Texas 77056
Attention: Priya Anand, Vice President, Project Finance
Email: panand@calloway-briggs.com
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 600 Lexington Avenue New York, New York 10022
Attention: Leonard Cross and Leila Nazari
Email: lcross@calderwoodharkness.com; lnazari@calderwoodharkness.com