1023-00001 · Ironside Capital Management LP · Transaction Documents/EPA

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

MEMORANDUM

March 12, 2023

Matter Number: 1023-00001

TO: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP

FROM: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP Theresa Kim, Lead Associate, Calderwood & Harkness LLP

RE: Implications of Second Amendment to Equity Purchase Agreement — Extension of Outside Date to June 30, 2023 — Impact on ICM Cascadia Co-Invest, LP

COPIES: Nicholas Stern, Billing Partner, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP Sylvia Hartwell, Tax, Calderwood & Harkness LLP

I. Executive Summary

We write to analyze the implications for ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest") of the proposed Second Amendment to the Equity Purchase Agreement (the "EPA"), which is expected to be executed by the parties thereto on or about March 15, 2023. As described in greater detail below, the Second Amendment will extend the outside date under the EPA from the current date of March 31, 2023 — as established by the First Amendment to the EPA dated November 22, 2022 — to June 30, 2023.

The Vehicle is a Delaware limited partnership formed for the sole purpose of co-investing alongside Meridian Infrastructure Partners Fund IV, LP ("Fund IV") in the acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"). Ironside Capital Management LP ("Ironside" or "ICM") holds a 99.99% limited partner interest in the Vehicle, representing a capital commitment of $299,970,000. Meridian Infrastructure GP IV LLC (the "GP") holds a 0.01% general partner interest, representing a capital commitment of $30,000. Total committed capital of the Vehicle is $300,000,000. To date, a single capital call of $22,500,000 has been made and funded, on August 15, 2022. The unfunded commitment balance as of the date of this memorandum is $277,500,000.

The Vehicle has been dormant since January 9, 2023, when the GP issued a Capital Call Suspension Notice pursuant to Section 7.04 of the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated as of July 29, 2022 (the "LP Agreement"), declaring a Material Impediment Event arising from the Portland Metropolitan Water District's notice of intent to renegotiate the Bull Run Filtration Project concession with Cascadia. No capital calls have been issued, and no investment activity has occurred, since that date.

This memorandum addresses five primary areas of concern arising from the proposed Second Amendment:

(1) the dormancy period under the LP Agreement and the timeline for Ironside's wind-down election right;

(2) the status of the acquisition financing commitments provided by Atlas National Bank, N.A. and Pinnacle Credit Partners LLC, and the gap between the debt commitment expiration date and the proposed new outside date;

(3) the representations and warranties insurance policy issued by Northgate Specialty Insurance Co. and the effect of the extension on the Tolling Side Letter;

(4) the current status of regulatory approvals from the Federal Energy Regulatory Commission ("FERC"), the Oregon Public Utility Commission ("OPUC"), and the Committee on Foreign Investment in the United States ("CFIUS"); and

(5) Ironside's contractual rights and our recommended course of action.

As set forth in detail below, Calderwood & Harkness recommends that Ironside provide its non-objection to the Second Amendment, subject to certain conditions and an express reservation of rights. The extension preserves the optionality of the Cascadia investment at minimal incremental cost to the Vehicle, does not accelerate or adversely affect the dormancy period or wind-down election timeline, and does not waive any of Ironside's contractual rights under the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement.

II. Background and Context

A. Transaction Overview

The underlying transaction involves the acquisition of 100% of the outstanding equity interests of Cascadia Renewables Holdings, Inc., an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. Cascadia is an integrated renewable energy and water infrastructure company operating primarily in the Pacific Northwest, with assets including hydroelectric generation facilities, water filtration and distribution infrastructure, and renewable energy development projects.

The acquisition is to be effectuated through Cascadia Acquisition Corp., a newly formed Delaware corporation jointly owned by Fund IV and the Vehicle. Cascadia Acquisition Corp. serves as the buyer entity under the EPA. Fund IV committed $750,000,000 to the acquisition (representing 71.43% of total equity), and the Vehicle committed $300,000,000 (representing 28.57% of total equity). The allocation between Fund IV and the Vehicle was established pursuant to the Co-Investment Allocation Agreement dated July 29, 2022, among Fund IV, the Vehicle, and the GP.

The agreed enterprise value of Cascadia is $1,950,000,000, reflecting an implied EV/EBITDA multiple of approximately 14.1x based on Cascadia's fiscal year 2021 EBITDA of $138,000,000. Cascadia's fiscal year 2021 revenue was $487,000,000, as set forth in the audited financial statements prepared by Halstead & Greer LLP. The equity value of the transaction is $1,050,000,000, calculated as the enterprise value of $1,950,000,000 less Cascadia's net debt of approximately $900,000,000 at the time of EPA execution.

The selling shareholders under the EPA are:

• Timberline Growth Equity Fund III, LP — holding 62% of the outstanding equity of Cascadia;

• Weir Family Trust — holding 18% of the outstanding equity of Cascadia, with Jonathan M. Weir (Cascadia's Chief Executive Officer) serving as trustee; and

• Management Rollover Pool — holding 20% of the outstanding equity of Cascadia, with the expectation that approximately 50% of the Management Rollover Pool equity would be rolled over into the post-closing capital structure.

The EPA was executed on September 15, 2022, and is governed by the laws of the State of Delaware. The original outside date specified in the EPA was December 31, 2022.

B. Concession Renegotiation and Dormancy

On October 28, 2022, the Portland Metropolitan Water District (the "Water District") formally notified Cascadia of its intent to renegotiate the Bull Run Filtration Project concession agreement. The concession was originally executed circa 2018 and provides for a 40-year term, with Cascadia receiving annual revenue of approximately $64,000,000 under the arrangement. The Bull Run Filtration Project concession is among the most significant revenue-generating contracts in Cascadia's portfolio and was a material factor in the underwriting of the acquisition. The Water District cited changed regulatory requirements under Oregon Senate Bill 1567, enacted in 2022, as the basis for the renegotiation demand.

On November 10, 2022, Meridian Infrastructure Partners (acting through the GP) notified Ironside of the Water District's renegotiation demand, characterizing it as a material adverse development with potential implications for Cascadia's projected cash flows and the economic basis of the acquisition.

In light of this development, the parties to the EPA negotiated and executed the First Amendment to the EPA on November 22, 2022, which extended the original outside date from December 31, 2022 to March 31, 2023, in order to provide additional time for the concession renegotiation to be resolved and for the parties to assess its impact on the transaction. No other material terms of the EPA were modified by the First Amendment.

Notwithstanding the extension of the EPA outside date, the concession renegotiation remained unresolved through the end of 2022 and into early January 2023. On January 9, 2023, the GP issued a Capital Call Suspension Notice to Ironside pursuant to Section 7.04 of the LP Agreement, formally declaring the existence of a Material Impediment Event. The GP's notice specifically cited the ongoing concession renegotiation and the resulting uncertainty regarding Cascadia's future revenue base as the basis for the Material Impediment Event determination. The issuance of the Capital Call Suspension Notice commenced the dormancy period of the Vehicle.

As of the date of this memorandum, the concession renegotiation between the Water District and Cascadia remains unresolved, and no definitive agreement or revised term sheet has been reported by Meridian or its counsel, Breckenridge Sloane & Pratt LLP ("BSP"). The Vehicle remains dormant, and no capital calls have been issued since August 15, 2022.

C. Sources and Uses

For reference purposes, the sources and uses of funds for the Cascadia acquisition, as set forth in the EPA and the related financing documents, are summarized below:

Sources:

Uses:

III. Impact on Dormancy Period and Wind-Down Election Right

A. Current Dormancy Timeline

The dormancy period of the Vehicle commenced on January 9, 2023, when the GP issued the Capital Call Suspension Notice pursuant to Section 7.04 of the LP Agreement. As of the date of this memorandum, March 12, 2023, approximately 62 days of dormancy have elapsed.

Under Section 7.04(c) of the LP Agreement, Ironside, as the holder of more than 75% of the limited partner interests in the Vehicle, has the right to elect a wind-down of the Vehicle if the dormancy period exceeds 18 consecutive months. The wind-down election right is not subject to the approval or consent of the GP, though the GP retains certain administrative responsibilities in connection with the wind-down process as set forth in Section 7.04(d) of the LP Agreement.

Based on the January 9, 2023 commencement date, the 18-month dormancy period will expire, and the wind-down election right will ripen, on or about July 9, 2024. This date is calculated by adding 18 calendar months to the date of the Capital Call Suspension Notice, consistent with the methodology specified in Section 1.02 of the LP Agreement (governing the computation of time periods).

It is important to note that the wind-down election right is a permissive right, not a mandatory trigger. The expiration of the 18-month dormancy period does not automatically cause a wind-down of the Vehicle; rather, it provides Ironside with the contractual option to initiate a wind-down at any time after the trigger date, should Ironside determine that continued dormancy is not in its best interests.

B. Interaction Between Outside Date Extension and Dormancy

The proposed extension of the EPA outside date from March 31, 2023 to June 30, 2023 raises the question of whether such extension could affect the calculation or operation of the dormancy period under the LP Agreement. We have analyzed this question carefully and conclude that it does not.

The dormancy period under Section 7.04 of the LP Agreement runs from the date of the Capital Call Suspension Notice — January 9, 2023 — and is not tied to, conditioned upon, or otherwise calculated by reference to, the outside date under the EPA. The LP Agreement and the EPA are separate contractual instruments, and the LP Agreement does not incorporate or cross-reference the EPA's outside date provisions in connection with the dormancy framework. Accordingly, the extension of the EPA outside date has no effect on the commencement, continuation, or expiration of the dormancy period under the LP Agreement.

However, the extension of the EPA outside date does have an important practical implication for the Vehicle. By extending the outside date, the Second Amendment preserves the EPA as a live contractual framework. This means that if the Material Impediment Event were to be cured — for example, through a satisfactory resolution of the concession renegotiation — the GP would have the ability to reactivate the Vehicle, resume capital calls, and proceed toward closing the acquisition without the need to negotiate an entirely new acquisition agreement with the selling shareholders. The absence of a live EPA, by contrast, would require the parties to commence fresh negotiations, incur additional transaction costs, and potentially re-underwrite the investment on different terms. In this sense, the extension of the outside date preserves the "option value" of the Vehicle's investment in the Cascadia acquisition.

The incremental cost of maintaining this optionality during the dormancy period is minimal. The Vehicle's annualized dormancy operating expenses are estimated at approximately $185,000, covering fund administration services provided by Kendrick Thorne & Associates LLP, Delaware franchise tax, annual report filing fees, registered agent fees payable to Cascade Systems, annual audit costs, and K-1 preparation. These costs are funded from the Vehicle's working-capital reserve and are not affected by the extension of the EPA outside date.

Critically, however, extending the outside date does not constitute a cure of the Material Impediment Event. Section 7.04(b) of the LP Agreement requires the GP to make an affirmative determination that the Material Impediment Event has ceased before capital calls may resume. No such determination has been made, and the extension of the EPA outside date does not, by itself, provide a basis for such a determination. As long as the Material Impediment Event persists and the Capital Call Suspension Notice remains in effect, the dormancy period continues to run and the 18-month clock continues to accrue, regardless of whether the EPA outside date is extended.

C. Recommendation. Based on the foregoing analysis, Calderwood & Harkness recommends that Ironside consent to, or at a minimum not object to, the proposed Second Amendment extending the EPA outside date to June 30, 2023. The extension preserves the optionality of the Cascadia investment at low incremental cost and does not accelerate or adversely affect the wind-down election timeline. The 18-month trigger date remains July 9, 2024, irrespective of the extension.

We recommend that Ironside note the July 9, 2024 trigger date internally and plan accordingly for a strategic decision in advance of that date. In particular, Ironside's infrastructure investment team should begin evaluating, no later than the first quarter of 2024, whether to exercise the wind-down election right or to continue to hold the Vehicle's investment in anticipation of a potential transaction reactivation.

IV. Impact on Acquisition Financing Commitments

A. Current Status of Debt Commitment

The acquisition financing for the Cascadia transaction is governed by a debt commitment letter (the "Commitment Letter") executed on August 30, 2022, by Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, with its principal office at 383 Madison Avenue, New York, New York 10179, and Pinnacle Credit Partners LLC ("Pinnacle"), acting as co-lender, with its principal office at 600 Lexington Avenue, 20th Floor, New York, New York 10022.

Under the Commitment Letter, Atlas and Pinnacle have committed to provide the following financing:

• Senior Secured Term Loan: $975,000,000 (Atlas share: $650,000,000; Pinnacle share: $325,000,000); and

• Revolving Credit Facility: $150,000,000 (Atlas, sole lender; undrawn at closing).

The Commitment Letter is governed by the laws of the State of New York. The commitment fee payable under the Commitment Letter was 0.50% per annum on the undrawn committed amount, calculated from the date of execution through the earlier of the closing date or the commitment expiration date.

The Commitment Letter originally contained an initial expiration date that was aligned with the EPA outside date. Following the execution of the First Amendment to the EPA in November 2022, Atlas and Pinnacle agreed to extend the commitment expiration date, which, as currently in effect, is April 30, 2023. This extension was negotiated by Meridian's counsel, BSP (Charles A. Delacroix), directly with the lenders and their counsel.

B. Gap Between Commitment Expiration and New Outside Date

The proposed extension of the EPA outside date to June 30, 2023 creates a significant gap between the current debt commitment expiration date (April 30, 2023) and the new EPA outside date (June 30, 2023). Specifically, unless Atlas and Pinnacle agree to a further extension of the Commitment Letter, there will be a 61-day period — from May 1, 2023 through June 30, 2023 — during which the EPA remains in effect as a binding agreement for the acquisition of Cascadia, but no committed acquisition financing is in place.

This gap presents a material concern for the Vehicle and for the transaction as a whole. Even if the Material Impediment Event were cured during the May 1 through June 30, 2023 window and the GP sought to reactivate the Vehicle and proceed toward closing, the financing condition precedent in the EPA could not be satisfied absent committed financing. Section 8.02(f) of the EPA (as we understand its terms based on our review of the EPA and the First Amendment) conditions the buyer's obligation to close on the availability of the committed acquisition financing. Without a valid and unexpired Commitment Letter, or a replacement commitment on substantially similar terms, the closing condition cannot be met and the transaction cannot proceed.

We understand from preliminary indications conveyed by Meridian's counsel, BSP (Charles A. Delacroix), that Meridian intends to request that Atlas and Pinnacle extend the Commitment Letter to align with the new EPA outside date. Based on Mr. Delacroix's communications to our office, the likely extension fee would be approximately 0.25% of the $975,000,000 senior secured term loan commitment, or approximately $2,437,500. Meridian has indicated that Fund IV would bear the full cost of any such extension fee and that the extension cost would not be allocated to the Vehicle or otherwise charged to the Vehicle's capital account.

We have not, however, received written confirmation of these indications, and the extension of the Commitment Letter has not yet been agreed to by the lenders.

C. Implications for the Vehicle

The Vehicle is not a party to the Commitment Letter and has no direct obligation to Atlas, Pinnacle, or any other lender in connection with the acquisition financing. The Commitment Letter was entered into by Cascadia Acquisition Corp. (as borrower), with the support and credit backing of Fund IV. The Vehicle's role in the financing structure is limited to its equity contribution to Cascadia Acquisition Corp. through the Co-Investment Allocation Agreement.

Accordingly, the Vehicle has no direct exposure to extension fees, ticking fees, or other costs associated with maintaining or extending the Commitment Letter. To the extent that Fund IV agrees to bear the extension fee, this cost would be reflected in Fund IV's own capital account and would not be allocated to the Vehicle.

However, the practical implications for the Vehicle are significant. If the Commitment Letter expires without extension and is not replaced, the transaction cannot close during the extended outside date period, and the dormancy of the Vehicle would continue. In the most adverse scenario, the lapse of the Commitment Letter could effectively preclude any closing of the Cascadia acquisition under the EPA, which would in turn constitute an additional basis for continued dormancy and would bring the Vehicle closer to the 18-month wind-down election trigger.

Moreover, in the current lending environment, there is no assurance that Atlas and Pinnacle would be willing to extend the Commitment Letter on the same or similar terms, or at all. Interest rates have risen since the Commitment Letter was executed in August 2022, and market conditions for leveraged acquisition financing have tightened. If the lenders were to require revised pricing, additional covenants, or other changes to the financing terms as a condition of extension, such changes could have downstream implications for the economics of the acquisition and, by extension, for the Vehicle's expected returns.

Ironside should monitor the status of the debt commitment extension discussions closely, and Calderwood & Harkness will coordinate with BSP to track the progress of these negotiations and to report to Ironside on any material developments.

D. Recommendation. Calderwood & Harkness recommends that Ironside request, as a condition of its non-objection to the Second Amendment, a written confirmation from Meridian (transmitted through BSP) addressing the following points:

(i) that Fund IV intends to seek an extension of the Commitment Letter to a date no earlier than June 30, 2023, in order to eliminate the gap between the debt commitment expiration and the new EPA outside date;

(ii) that any extension fees, ticking fees, or other costs associated with such extension will be borne exclusively by Fund IV and will not be allocated to the Vehicle or charged against the Vehicle's capital account; and

(iii) that Meridian will promptly notify Ironside if Atlas and Pinnacle decline to extend the Commitment Letter or propose material changes to the financing terms.

We believe that this confirmation request is reasonable and consistent with the consultation rights afforded to Ironside under the Side Letter. We are prepared to draft and transmit the request letter to BSP at Ironside's direction.

V. Impact on Representations & Warranties Insurance

A. Current Policy Status

In connection with the Cascadia acquisition, a representations and warranties insurance policy (the "R&W Policy") was bound on September 1, 2022, with Northgate Specialty Insurance Co. ("Northgate"), a Connecticut-domiciled specialty insurance carrier. The key terms of the R&W Policy are as follows:

• Policy Number: NSW-RI-2022-09814

• Coverage Limit: $195,000,000, representing 10% of the $1,950,000,000 enterprise value of Cascadia

• Premium Deposit: $4,875,000, calculated at a rate of 2.5% on the $195,000,000 coverage limit, paid on September 2, 2022 from the proceeds of the first capital call

• Named Insured: ICM Cascadia Co-Invest, LP, and Cascadia Acquisition Corp.

• Governing Law: Connecticut

The R&W Policy was obtained as part of the standard transaction risk allocation framework, providing the buyer entities (Cascadia Acquisition Corp. and, indirectly, Fund IV and the Vehicle) with insurance coverage against losses arising from breaches of the seller's representations and warranties in the EPA. The R&W Policy serves as the primary recourse mechanism for representation and warranty breaches, with limited survival and indemnification provisions applicable to the selling shareholders.

Following the commencement of dormancy on January 9, 2023, Calderwood & Harkness negotiated and drafted a Tolling Side Letter (the "Tolling Letter"), which was executed on January 20, 2023 by Northgate Specialty and ICM Cascadia Co-Invest, LP. The Tolling Letter suspends the running of the R&W Policy's coverage period during the dormancy of the Vehicle, effectively preserving the policy coverage in its current state for the duration of the dormancy.

B. Effect of Outside Date Extension on R&W Coverage

The Tolling Letter operates independently of the EPA outside date. The toll is triggered by, and runs during, the dormancy of the Vehicle as declared by the GP's Capital Call Suspension Notice. The Tolling Letter does not reference the EPA outside date, and the extension of the outside date from March 31, 2023 to June 30, 2023 does not, standing alone, alter the tolling arrangement, accelerate the resumption of the coverage period, or create any additional premium obligation on the part of the Vehicle.

Accordingly, as long as the Vehicle remains dormant and the Capital Call Suspension Notice remains in effect, the R&W Policy remains tolled pursuant to the Tolling Letter, and no further action is required from Ironside or the Vehicle in connection with the R&W Policy as a result of the Second Amendment.

However, we note that if the transaction were to reactivate — that is, if the Material Impediment Event were cured, the GP lifted the Capital Call Suspension Notice, and the parties moved toward closing — the R&W Policy would need to be "un-tolled." At that point, Northgate would likely require an updated underwriting review to assess any changes in the risk profile of the transaction since the policy was originally bound. Factors that could affect Northgate's underwriting assessment include, without limitation:

• revised terms of the Bull Run Filtration Project concession, if the renegotiation results in materially different revenue or operating terms;

• updated financial information for Cascadia, including any deterioration in financial performance or changes in the net debt position since the original underwriting;

• passage of time and any intervening material events affecting Cascadia's operations or regulatory posture; and

• changes in the representations and warranties insurance market, including pricing and coverage terms.

Depending on the outcome of such a review, Northgate may require an additional premium payment, a policy endorsement reflecting revised terms, or both. The potential for such additional costs should be considered in any decision to reactivate the transaction, but does not arise as a consequence of the Second Amendment itself.

Calderwood & Harkness recommends periodic confirmation from Northgate that the Tolling Letter remains in full force and effect and that no additional premium is required during continued dormancy. We will handle this correspondence directly with Northgate's coverage counsel and report to Ironside on any developments.

C. Risk: Policy Lapse or Withdrawal

Although the Tolling Letter does not contain an explicit unilateral termination right for Northgate, it does include a provision (Section 3(b) of the Tolling Letter) that entitles Northgate to request renegotiation of the tolling terms if the tolling period exceeds 12 months. Based on the January 20, 2023 execution date of the Tolling Letter, the 12-month renegotiation trigger would fall on approximately January 20, 2024.

If the tolling period extends beyond 12 months, Northgate could seek to impose additional conditions, adjust the premium, or, in the most adverse case, seek to withdraw from the policy arrangement altogether. While the Tolling Letter does not explicitly permit Northgate to cancel the R&W Policy during the tolling period, the renegotiation provision introduces an element of uncertainty regarding the long-term availability of coverage on current terms.

This risk is not immediate given the current timeline and is not directly implicated by the Second Amendment. However, it is a factor that Ironside should consider in its longer-term planning, particularly as the dormancy period approaches and potentially exceeds the 12-month mark in January 2024. Calderwood & Harkness will continue to monitor this issue and will advise Ironside in advance of the January 2024 renegotiation trigger date.

VI. Impact on Regulatory Approvals

A. FERC Section 203 Approval

The acquisition of Cascadia requires prior approval of the Federal Energy Regulatory Commission under Section 203 of the Federal Power Act, 16 U.S.C. § 824b, due to Cascadia's ownership of jurisdictional hydroelectric generation facilities. The relevant FERC application was filed on October 19, 2022, under FERC Docket Number EC22-143-000. FERC issued its order approving the transaction on December 15, 2022, subject to the condition that the acquiring entity (Cascadia Acquisition Corp.) complete all required license-transfer filings within a specified period following closing.

FERC's approval order contains a standard lapse provision under which the approval expires if the transaction does not close within 18 months of the date of the approval order. Based on the December 15, 2022 approval date, the FERC approval will lapse on or about June 15, 2024.

The proposed extension of the EPA outside date from March 31, 2023 to June 30, 2023 does not affect the FERC approval timeline. The FERC lapse date is calculated from the date of the FERC order, not from the EPA outside date, and the proposed new outside date of June 30, 2023 falls well within the 18-month FERC approval window. Accordingly, no action is required with respect to FERC in connection with the Second Amendment, and the FERC approval remains valid and available for the transaction.

We note, however, that if the transaction remains dormant beyond June 15, 2024, the FERC approval will lapse and a new Section 203 application would be required for any reactivated transaction. The process of obtaining a new FERC approval typically requires 60 to 180 days, depending on the complexity of the application and whether any interventions or protests are filed. The cost of preparing and filing a new application would also need to be borne by the parties. This is a longer-term consideration that does not arise from the Second Amendment but should be noted in Ironside's internal planning.

B. Oregon Public Utility Commission (OPUC) Approval

The acquisition also requires approval from the Oregon Public Utility Commission under applicable provisions of Oregon law governing changes in ownership of public utility assets. The OPUC application was filed on October 14, 2022, under OPUC Docket Number UM-2287.

Following the onset of the concession renegotiation and the execution of the First Amendment to the EPA, the parties jointly requested that the OPUC stay the proceedings in Docket UM-2287 pending resolution of the concession issue and further direction from the parties. The OPUC granted the stay request in approximately February 2023, and the proceedings remain stayed as of the date of this memorandum.

The extension of the EPA outside date to June 30, 2023 does not directly affect the OPUC proceeding. The stay remains in place and can continue for as long as the parties request. If and when the transaction moves forward, the parties can request the OPUC to lift the stay and reactivate the docket. No additional filing, application fee, or procedural step is expected in connection with the EPA outside date extension itself.

C. CFIUS. A voluntary notice was filed with the Committee on Foreign Investment in the United States on or about September 20, 2022, in connection with the acquisition. CFIUS acknowledged receipt of the notice and, following its review, effectively cleared the transaction. No foreign ownership issues were identified, and no conditions, mitigation measures, or national security concerns were raised.

No further action is required with respect to CFIUS in connection with the Second Amendment. CFIUS clearance, once granted, does not lapse based on the passage of time or changes to the transaction timeline, and the extension of the EPA outside date has no impact on the CFIUS clearance status.

D. Summary of Regulatory Implications

In summary, the proposed Second Amendment is neutral with respect to the current regulatory posture of the Cascadia acquisition. All material regulatory approvals remain in place or on hold, and the extension of the EPA outside date to June 30, 2023 does not create any new regulatory risk or require any additional regulatory filings or approvals.

The principal regulatory risk associated with extended dormancy remains the FERC 18-month lapse provision, with a lapse date of approximately June 15, 2024. This date is well beyond the proposed new outside date and is not directly implicated by the Second Amendment. Calderwood & Harkness will continue to monitor the regulatory landscape and will advise Ironside of any developments that could affect the regulatory approvals for the transaction.

VII. Impact on Vehicle Financial Position

A. Capital Called and Deployed

As noted above, a single capital call of $22,500,000 was made on August 15, 2022. The proceeds of that capital call were applied as follows:

The organizational expenses include formation costs for the Vehicle, legal fees associated with the preparation and negotiation of the LP Agreement and related documents, and initial Delaware filing and franchise tax payments. The placement-agent fee was payable to Rivermark Capital Markets Inc. in connection with the placement of Ironside's limited partner interest in the Vehicle, at a rate of 0.35% of the Vehicle's total committed capital. The due-diligence costs and deposits reflect expenses incurred in connection with the legal, financial, technical, environmental, and regulatory due diligence performed on Cascadia in advance of the EPA execution, as well as certain deposits required in connection with the regulatory approval applications.

B. Unfunded Commitment

Ironside's unfunded commitment to the Vehicle remains at $277,500,000 (i.e., $300,000,000 total commitment less $22,500,000 previously called). This commitment remains outstanding and callable in the event that the Material Impediment Event is cured, the GP lifts the Capital Call Suspension Notice, and the transaction moves forward toward closing.

The proposed extension of the EPA outside date to June 30, 2023 does not trigger any additional capital call. Under Section 7.04 of the LP Agreement, the GP has suspended capital calls and cannot issue a new capital call absent a formal determination that the Material Impediment Event has ceased and that the conditions for resumption of capital calls have been satisfied. No such determination has been made or is expected to be made in connection with the Second Amendment.

Ironside should continue to account for the unfunded commitment as a contingent obligation in its internal capital planning and liquidity management, recognizing that the commitment could be called on relatively short notice (the LP Agreement provides for a 10-business-day funding period following a capital call notice) if the transaction reactivates. However, as a practical matter, the current dormancy status and the unresolved concession renegotiation make a near-term capital call unlikely.

C. Dormancy Operating Costs

The Vehicle's estimated annualized dormancy operating expenses are approximately $185,000, comprised of the following principal components:

• Fund administration services (Kendrick Thorne & Associates LLP): approximately $75,000 per annum

• Delaware franchise tax and annual report filing: approximately $27,000 per annum

• Registered agent fees (Cascade Systems): approximately $3,000 per annum

• Annual audit: approximately $55,000 per annum

• K-1 preparation and tax compliance: approximately $25,000 per annum

These expenses are funded from the Vehicle's working-capital reserve of $3,500,000, which was established from the proceeds of the initial capital call. At the current annualized run rate, the working-capital reserve is sufficient to cover dormancy operating expenses for approximately 18.9 years, though the reserve may also be drawn upon for other legitimate administrative costs that arise during the dormancy period. Calderwood & Harkness does not anticipate any material additional administrative costs arising from the Second Amendment.

There is no incremental cost to Ironside or the Vehicle resulting from the proposed extension of the EPA outside date. The dormancy operating costs are fixed in nature and would be incurred regardless of whether the outside date is extended.

VIII. Contractual Mechanics of the Second Amendment

A. Parties to the Second Amendment

The Second Amendment is an amendment to the EPA and, as such, will be executed by the parties to the EPA: the Selling Shareholders (Timberline Growth Equity Fund III, LP; the Weir Family Trust; and the Management Rollover Pool), Cascadia Renewables Holdings, Inc. (as the target company), and Cascadia Acquisition Corp. (as the buyer entity).

The Vehicle is not a direct signatory to the EPA. Cascadia Acquisition Corp. is the buyer entity under the EPA, and the Vehicle's interest in the acquisition is held indirectly through its equity stake in Cascadia Acquisition Corp., as established under the Co-Investment Allocation Agreement dated July 29, 2022. Fund IV holds a 71.43% equity interest in Cascadia Acquisition Corp. and the Vehicle holds a 28.57% equity interest.

Although the Vehicle is not a signatory to the EPA or the Second Amendment, the Vehicle's interests are directly and materially affected by amendments to the EPA, including changes to the outside date, the closing conditions, the representations and warranties, and the indemnification provisions. Ironside should therefore be fully informed of and consulted regarding any material amendments to the EPA, consistent with the consultation rights established in the Side Letter.

Calderwood & Harkness is currently reviewing the draft Second Amendment, which was circulated by BSP on behalf of Meridian on March 8, 2023. Our review is focused on confirming that the Second Amendment does not contain any provisions beyond the extension of the outside date that could adversely affect the Vehicle's position, including any modifications to the definition of Material Adverse Effect, the representations and warranties of the selling shareholders, the indemnification provisions, or the closing conditions. We expect to complete our review within the next two business days and will report any concerns to Ironside promptly.

B. Key Provisions Expected

Based on our review of the draft Second Amendment and our discussions with BSP, we expect the Second Amendment to contain the following key provisions:

(i) Amendment of the applicable section of the EPA to change the outside date from March 31, 2023 to June 30, 2023;

(ii) Reaffirmation by all parties to the EPA of all other terms, conditions, representations, and obligations set forth in the EPA, as amended by the First Amendment;

(iii) No change to the definition of "Material Adverse Effect" as set forth in the EPA;

(iv) No modification of the representations and warranties of the selling shareholders, the buyer, or the target company;

(v) No modification of the indemnification provisions, including the cap, basket, and survival periods applicable to the seller indemnification;

(vi) No modification of the closing conditions set forth in Article VIII of the EPA; and

(vii) No additional consideration, fee, or payment payable by any party in connection with the extension.

If our review of the final draft of the Second Amendment reveals any provisions that are inconsistent with the foregoing expectations or that could adversely affect the Vehicle's interests, we will immediately notify Ironside and recommend an appropriate course of action.

C. Ironside's Consent Rights

Under the LP Agreement, the GP has broad authority to make investment decisions on behalf of the Vehicle, including the authority to consent to amendments of the EPA and to take such other actions as the GP deems necessary or appropriate in connection with the Vehicle's investments. This authority is subject to certain limitations and consultation requirements set forth in the LP Agreement and the Side Letter.

The Side Letter dated July 29, 2022, between the GP and Ironside, requires the GP to consult with Ironside prior to agreeing to any "material amendment" of the EPA or any other "material transaction document" (as those terms are used in the Side Letter). The Side Letter does not define "material amendment" with specificity, but Calderwood & Harkness considers the extension of the EPA outside date — particularly in the context of an ongoing Material Impediment Event and dormancy period — to constitute a material amendment requiring consultation with Ironside.

We understand that the GP has provided Ironside with notice of the proposed Second Amendment, consistent with its consultation obligations under the Side Letter. Calderwood & Harkness recommends that Ironside respond to the GP's notice by formally acknowledging receipt and confirming Ironside's non-objection to the proposed extension, while expressly reserving all of Ironside's rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement, including without limitation the wind-down election right under Section 7.04(c) of the LP Agreement.

We are prepared to draft the acknowledgment and non-objection letter for Ironside's review and execution at Ironside's direction. The letter would be addressed to Meridian Infrastructure GP IV LLC, with a copy to BSP, and would contain the reservation-of-rights language described in Section IX below.

IX. Ironside's Reservation of Rights

Calderwood & Harkness's letter dated January 15, 2023, addressed to Breckenridge Sloane & Pratt LLP on behalf of Ironside, reserving all of Ironside's rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement during the dormancy period, remains in full force and effect. That letter expressly preserved Ironside's rights with respect to, among other things, the wind-down election right under Section 7.04(c) of the LP Agreement, Ironside's information and consultation rights under the Side Letter, and Ironside's rights as a 28.57% equity holder in Cascadia Acquisition Corp. under the Co-Investment Allocation Agreement.

The proposed Second Amendment does not affect, modify, or waive any of Ironside's rights under the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement. The extension of the EPA outside date is a modification of the EPA — a separate instrument to which the Vehicle is not a party — and does not constitute an amendment, modification, or waiver of any provision of the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement.

In particular, Ironside's wind-down election right under Section 7.04(c) of the LP Agreement continues to accrue from January 9, 2023, and is not affected by the extension of the EPA outside date. The wind-down election trigger date remains July 9, 2024, and Ironside retains the unilateral right to elect a wind-down of the Vehicle at any time after that date if the dormancy period has not been terminated.

Calderwood & Harkness strongly recommends that any acknowledgment or non-objection letter issued by Ironside in connection with the Second Amendment include an express reservation of rights consistent with, and cross-referencing, the January 15, 2023 reservation-of-rights letter. This will ensure that Ironside's agreement to the outside date extension cannot be construed as a waiver, estoppel, or acquiescence with respect to any of Ironside's contractual rights or remedies.

X. Summary of Recommendations

Based on the foregoing analysis, Calderwood & Harkness makes the following recommendations:

1. Non-Objection to Second Amendment. Ironside should provide its non-objection to the proposed Second Amendment extending the EPA outside date to June 30, 2023. The extension preserves transaction optionality at minimal incremental cost and does not adversely affect Ironside's contractual rights or the Vehicle's financial position. Calderwood & Harkness will prepare the non-objection letter for Ironside's review.

2. Financing Commitment Tracking. Ironside should request written confirmation from Meridian (transmitted through BSP) that Fund IV intends to seek an extension of the debt commitment letter (currently expiring April 30, 2023) to a date no earlier than June 30, 2023, that any extension fees will be borne exclusively by Fund IV, and that Meridian will promptly notify Ironside if the lenders decline to extend or propose material changes to the financing terms.

3. R&W Insurance Monitoring. Calderwood & Harkness will confirm with Northgate Specialty Insurance Co. that the Tolling Side Letter dated January 20, 2023 remains in full force and effect and that no additional premium is required during continued dormancy. We will report the results of this confirmation to Ironside.

4. Regulatory Monitoring. No action is required with respect to FERC, OPUC, or CFIUS as a result of the proposed outside date extension. Calderwood & Harkness will continue to monitor the FERC 18-month lapse date (approximately June 15, 2024) and will advise Ironside in advance of any required action.

5. Reservation of Rights. Any acknowledgment or non-objection letter issued by Ironside should include an express reservation of all Ironside rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement, including the wind-down election right under Section 7.04(c) of the LP Agreement (trigger date: July 9, 2024). The reservation-of-rights language should be consistent with and cross-reference the Calderwood & Harkness letter to BSP dated January 15, 2023.

6. GP Quarterly Reporting. Ironside should ensure that the GP's next quarterly report (Q1 2023, expected to be delivered by mid-April 2023) addresses in detail the current status of the concession renegotiation with the Portland Metropolitan Water District, the proposed outside date extension and its implications, and the timeline and status of the debt commitment extension negotiations with Atlas and Pinnacle. To the extent the quarterly report is deficient in any of these areas, Calderwood & Harkness can assist Ironside in requesting supplemental disclosure from the GP.

7. Internal Calendar. Ironside's infrastructure investment team, led by Renata Obasi, should calendar and monitor the following key dates:

XI. Conclusion

The proposed Second Amendment to the EPA, extending the outside date from March 31, 2023 to June 30, 2023, is, in Calderwood & Harkness's assessment, a reasonable and prudent measure that preserves the possibility of the Cascadia acquisition proceeding if the Bull Run Filtration Project concession renegotiation is resolved and the Material Impediment Event is cured. The extension is being sought by the parties to the EPA in recognition of the fact that the concession renegotiation process has not yet concluded and that additional time is needed before the parties can make a definitive determination regarding the viability of the transaction.

The extension does not impose any additional financial obligations on Ironside or the Vehicle. It does not trigger a capital call, require the payment of any fee or premium, or create any new or additional liability for the Vehicle. The dormancy governance framework under the LP Agreement is unaffected by the extension, and all of Ironside's contractual rights — including the wind-down election right under Section 7.04(c) — remain fully intact and continue to accrue on their existing timeline.

The principal risk associated with the extension is the potential gap between the debt commitment letter expiration date (April 30, 2023) and the new EPA outside date (June 30, 2023). This risk can be mitigated through the confirmation process recommended in Section IV.D above, and Calderwood & Harkness will actively monitor and coordinate with BSP on this issue.

We remain available to discuss this analysis with you at your convenience and to prepare the non-objection and reservation-of-rights letter at Ironside's direction. Please do not hesitate to contact Pamela Cross at (212) 558-4127 or Theresa Kim at (212) 558-4843 with any questions or further instructions.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Pamela Cross Partner

By: ________

Theresa Kim Associate

Distribution: Privileged and Confidential — For addressees and copy recipients only. This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. Any unauthorized review, use, disclosure, or distribution is prohibited. If you have received this document in error, please contact Calderwood & Harkness LLP immediately.

Enclosures: None. All referenced documents are on file in Calderwood & Harkness LLP Matter No. 1023-00001.

Related Documents Referenced:

• Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP (July 29, 2022)

• Side Letter between Meridian Infrastructure GP IV LLC and Ironside Capital Management LP (July 29, 2022)

• Co-Investment Allocation Agreement among Meridian Infrastructure Partners Fund IV, LP, ICM Cascadia Co-Invest, LP, and Meridian Infrastructure GP IV LLC (July 29, 2022)

• Equity Purchase Agreement (September 15, 2022)

• First Amendment to the Equity Purchase Agreement (November 22, 2022)

• Debt Commitment Letter (August 30, 2022)

• Representations and Warranties Insurance Policy, Northgate Specialty Insurance Co., Policy No. NSW-RI-2022-09814 (September 1, 2022)

• Capital Call Suspension Notice (January 9, 2023)

• Calderwood & Harkness LLP Letter to Breckenridge Sloane & Pratt LLP re Reservation of Rights (January 15, 2023)

• Tolling Side Letter, Northgate Specialty Insurance Co. and ICM Cascadia Co-Invest, LP (January 20, 2023)

Source	Amount
Fund IV equity contribution	$750,000,000
Vehicle equity contribution	$300,000,000
Senior secured term loan (Atlas/Pinnacle)	$975,000,000
Total Sources	$2,025,000,000
Use	Amount
Enterprise value (acquisition price)	$1,950,000,000
Estimated transaction costs	$50,000,000
Working-capital adjustment escrow	$25,000,000
Total Uses	$2,025,000,000
Item	Amount
Organizational expenses	$285,000
Placement-agent fee (Rivermark Capital Markets Inc., 0.35% × $300M commitment)	$1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co.)	$4,875,000
Due-diligence costs and deposits	$12,790,000
Working-capital reserve	$3,500,000
Total	$22,500,000
Date	Event
April 30, 2023	Current debt commitment letter expiration date
June 30, 2023	Proposed new EPA outside date (per Second Amendment)
Approximately January 20, 2024	12-month renegotiation trigger under R&W Insurance Tolling Side Letter
Approximately June 15, 2024	FERC Section 203 approval lapse date (18 months from December 15, 2022 approval)
July 9, 2024	18-month dormancy mark; Ironside's wind-down election right ripens under LP Agreement §7.04(c)

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
MEMORANDUM
March 12, 2023
Matter Number: 1023-00001
TO: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
FROM: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP Theresa Kim, Lead Associate, Calderwood & Harkness LLP
RE: Implications of Second Amendment to Equity Purchase Agreement — Extension of Outside Date to June 30, 2023 — Impact on ICM Cascadia Co-Invest, LP
COPIES: Nicholas Stern, Billing Partner, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP Sylvia Hartwell, Tax, Calderwood & Harkness LLP
I. Executive Summary
We write to analyze the implications for ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest") of the proposed Second Amendment to the Equity Purchase Agreement (the "EPA"), which is expected to be executed by the parties thereto on or about March 15, 2023. As described in greater detail below, the Second Amendment will extend the outside date under the EPA from the current date of March 31, 2023 — as established by the First Amendment to the EPA dated November 22, 2022 — to June 30, 2023.
The Vehicle is a Delaware limited partnership formed for the sole purpose of co-investing alongside Meridian Infrastructure Partners Fund IV, LP ("Fund IV") in the acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"). Ironside Capital Management LP ("Ironside" or "ICM") holds a 99.99% limited partner interest in the Vehicle, representing a capital commitment of $299,970,000. Meridian Infrastructure GP IV LLC (the "GP") holds a 0.01% general partner interest, representing a capital commitment of $30,000. Total committed capital of the Vehicle is $300,000,000. To date, a single capital call of $22,500,000 has been made and funded, on August 15, 2022. The unfunded commitment balance as of the date of this memorandum is $277,500,000.
The Vehicle has been dormant since January 9, 2023, when the GP issued a Capital Call Suspension Notice pursuant to Section 7.04 of the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated as of July 29, 2022 (the "LP Agreement"), declaring a Material Impediment Event arising from the Portland Metropolitan Water District's notice of intent to renegotiate the Bull Run Filtration Project concession with Cascadia. No capital calls have been issued, and no investment activity has occurred, since that date.
This memorandum addresses five primary areas of concern arising from the proposed Second Amendment:
(1) the dormancy period under the LP Agreement and the timeline for Ironside's wind-down election right;
(2) the status of the acquisition financing commitments provided by Atlas National Bank, N.A. and Pinnacle Credit Partners LLC, and the gap between the debt commitment expiration date and the proposed new outside date;
(3) the representations and warranties insurance policy issued by Northgate Specialty Insurance Co. and the effect of the extension on the Tolling Side Letter;
(4) the current status of regulatory approvals from the Federal Energy Regulatory Commission ("FERC"), the Oregon Public Utility Commission ("OPUC"), and the Committee on Foreign Investment in the United States ("CFIUS"); and
(5) Ironside's contractual rights and our recommended course of action.
As set forth in detail below, Calderwood & Harkness recommends that Ironside provide its non-objection to the Second Amendment, subject to certain conditions and an express reservation of rights. The extension preserves the optionality of the Cascadia investment at minimal incremental cost to the Vehicle, does not accelerate or adversely affect the dormancy period or wind-down election timeline, and does not waive any of Ironside's contractual rights under the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement.
II. Background and Context
A. Transaction Overview
The underlying transaction involves the acquisition of 100% of the outstanding equity interests of Cascadia Renewables Holdings, Inc., an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. Cascadia is an integrated renewable energy and water infrastructure company operating primarily in the Pacific Northwest, with assets including hydroelectric generation facilities, water filtration and distribution infrastructure, and renewable energy development projects.
The acquisition is to be effectuated through Cascadia Acquisition Corp., a newly formed Delaware corporation jointly owned by Fund IV and the Vehicle. Cascadia Acquisition Corp. serves as the buyer entity under the EPA. Fund IV committed $750,000,000 to the acquisition (representing 71.43% of total equity), and the Vehicle committed $300,000,000 (representing 28.57% of total equity). The allocation between Fund IV and the Vehicle was established pursuant to the Co-Investment Allocation Agreement dated July 29, 2022, among Fund IV, the Vehicle, and the GP.
The agreed enterprise value of Cascadia is $1,950,000,000, reflecting an implied EV/EBITDA multiple of approximately 14.1x based on Cascadia's fiscal year 2021 EBITDA of $138,000,000. Cascadia's fiscal year 2021 revenue was $487,000,000, as set forth in the audited financial statements prepared by Halstead & Greer LLP. The equity value of the transaction is $1,050,000,000, calculated as the enterprise value of $1,950,000,000 less Cascadia's net debt of approximately $900,000,000 at the time of EPA execution.
The selling shareholders under the EPA are:
• Timberline Growth Equity Fund III, LP — holding 62% of the outstanding equity of Cascadia;
• Weir Family Trust — holding 18% of the outstanding equity of Cascadia, with Jonathan M. Weir (Cascadia's Chief Executive Officer) serving as trustee; and
• Management Rollover Pool — holding 20% of the outstanding equity of Cascadia, with the expectation that approximately 50% of the Management Rollover Pool equity would be rolled over into the post-closing capital structure.
The EPA was executed on September 15, 2022, and is governed by the laws of the State of Delaware. The original outside date specified in the EPA was December 31, 2022.
B. Concession Renegotiation and Dormancy
On October 28, 2022, the Portland Metropolitan Water District (the "Water District") formally notified Cascadia of its intent to renegotiate the Bull Run Filtration Project concession agreement. The concession was originally executed circa 2018 and provides for a 40-year term, with Cascadia receiving annual revenue of approximately $64,000,000 under the arrangement. The Bull Run Filtration Project concession is among the most significant revenue-generating contracts in Cascadia's portfolio and was a material factor in the underwriting of the acquisition. The Water District cited changed regulatory requirements under Oregon Senate Bill 1567, enacted in 2022, as the basis for the renegotiation demand.
On November 10, 2022, Meridian Infrastructure Partners (acting through the GP) notified Ironside of the Water District's renegotiation demand, characterizing it as a material adverse development with potential implications for Cascadia's projected cash flows and the economic basis of the acquisition.
In light of this development, the parties to the EPA negotiated and executed the First Amendment to the EPA on November 22, 2022, which extended the original outside date from December 31, 2022 to March 31, 2023, in order to provide additional time for the concession renegotiation to be resolved and for the parties to assess its impact on the transaction. No other material terms of the EPA were modified by the First Amendment.
Notwithstanding the extension of the EPA outside date, the concession renegotiation remained unresolved through the end of 2022 and into early January 2023. On January 9, 2023, the GP issued a Capital Call Suspension Notice to Ironside pursuant to Section 7.04 of the LP Agreement, formally declaring the existence of a Material Impediment Event. The GP's notice specifically cited the ongoing concession renegotiation and the resulting uncertainty regarding Cascadia's future revenue base as the basis for the Material Impediment Event determination. The issuance of the Capital Call Suspension Notice commenced the dormancy period of the Vehicle.
As of the date of this memorandum, the concession renegotiation between the Water District and Cascadia remains unresolved, and no definitive agreement or revised term sheet has been reported by Meridian or its counsel, Breckenridge Sloane & Pratt LLP ("BSP"). The Vehicle remains dormant, and no capital calls have been issued since August 15, 2022.
C. Sources and Uses
For reference purposes, the sources and uses of funds for the Cascadia acquisition, as set forth in the EPA and the related financing documents, are summarized below:
Sources:
Uses:
III. Impact on Dormancy Period and Wind-Down Election Right
A. Current Dormancy Timeline
The dormancy period of the Vehicle commenced on January 9, 2023, when the GP issued the Capital Call Suspension Notice pursuant to Section 7.04 of the LP Agreement. As of the date of this memorandum, March 12, 2023, approximately 62 days of dormancy have elapsed.
Under Section 7.04(c) of the LP Agreement, Ironside, as the holder of more than 75% of the limited partner interests in the Vehicle, has the right to elect a wind-down of the Vehicle if the dormancy period exceeds 18 consecutive months. The wind-down election right is not subject to the approval or consent of the GP, though the GP retains certain administrative responsibilities in connection with the wind-down process as set forth in Section 7.04(d) of the LP Agreement.
Based on the January 9, 2023 commencement date, the 18-month dormancy period will expire, and the wind-down election right will ripen, on or about July 9, 2024. This date is calculated by adding 18 calendar months to the date of the Capital Call Suspension Notice, consistent with the methodology specified in Section 1.02 of the LP Agreement (governing the computation of time periods).
It is important to note that the wind-down election right is a permissive right, not a mandatory trigger. The expiration of the 18-month dormancy period does not automatically cause a wind-down of the Vehicle; rather, it provides Ironside with the contractual option to initiate a wind-down at any time after the trigger date, should Ironside determine that continued dormancy is not in its best interests.
B. Interaction Between Outside Date Extension and Dormancy
The proposed extension of the EPA outside date from March 31, 2023 to June 30, 2023 raises the question of whether such extension could affect the calculation or operation of the dormancy period under the LP Agreement. We have analyzed this question carefully and conclude that it does not.
The dormancy period under Section 7.04 of the LP Agreement runs from the date of the Capital Call Suspension Notice — January 9, 2023 — and is not tied to, conditioned upon, or otherwise calculated by reference to, the outside date under the EPA. The LP Agreement and the EPA are separate contractual instruments, and the LP Agreement does not incorporate or cross-reference the EPA's outside date provisions in connection with the dormancy framework. Accordingly, the extension of the EPA outside date has no effect on the commencement, continuation, or expiration of the dormancy period under the LP Agreement.
However, the extension of the EPA outside date does have an important practical implication for the Vehicle. By extending the outside date, the Second Amendment preserves the EPA as a live contractual framework. This means that if the Material Impediment Event were to be cured — for example, through a satisfactory resolution of the concession renegotiation — the GP would have the ability to reactivate the Vehicle, resume capital calls, and proceed toward closing the acquisition without the need to negotiate an entirely new acquisition agreement with the selling shareholders. The absence of a live EPA, by contrast, would require the parties to commence fresh negotiations, incur additional transaction costs, and potentially re-underwrite the investment on different terms. In this sense, the extension of the outside date preserves the "option value" of the Vehicle's investment in the Cascadia acquisition.
The incremental cost of maintaining this optionality during the dormancy period is minimal. The Vehicle's annualized dormancy operating expenses are estimated at approximately $185,000, covering fund administration services provided by Kendrick Thorne & Associates LLP, Delaware franchise tax, annual report filing fees, registered agent fees payable to Cascade Systems, annual audit costs, and K-1 preparation. These costs are funded from the Vehicle's working-capital reserve and are not affected by the extension of the EPA outside date.
Critically, however, extending the outside date does not constitute a cure of the Material Impediment Event. Section 7.04(b) of the LP Agreement requires the GP to make an affirmative determination that the Material Impediment Event has ceased before capital calls may resume. No such determination has been made, and the extension of the EPA outside date does not, by itself, provide a basis for such a determination. As long as the Material Impediment Event persists and the Capital Call Suspension Notice remains in effect, the dormancy period continues to run and the 18-month clock continues to accrue, regardless of whether the EPA outside date is extended.
C. Recommendation. Based on the foregoing analysis, Calderwood & Harkness recommends that Ironside consent to, or at a minimum not object to, the proposed Second Amendment extending the EPA outside date to June 30, 2023. The extension preserves the optionality of the Cascadia investment at low incremental cost and does not accelerate or adversely affect the wind-down election timeline. The 18-month trigger date remains July 9, 2024, irrespective of the extension.
We recommend that Ironside note the July 9, 2024 trigger date internally and plan accordingly for a strategic decision in advance of that date. In particular, Ironside's infrastructure investment team should begin evaluating, no later than the first quarter of 2024, whether to exercise the wind-down election right or to continue to hold the Vehicle's investment in anticipation of a potential transaction reactivation.
IV. Impact on Acquisition Financing Commitments
A. Current Status of Debt Commitment
The acquisition financing for the Cascadia transaction is governed by a debt commitment letter (the "Commitment Letter") executed on August 30, 2022, by Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, with its principal office at 383 Madison Avenue, New York, New York 10179, and Pinnacle Credit Partners LLC ("Pinnacle"), acting as co-lender, with its principal office at 600 Lexington Avenue, 20th Floor, New York, New York 10022.
Under the Commitment Letter, Atlas and Pinnacle have committed to provide the following financing:
• Senior Secured Term Loan: $975,000,000 (Atlas share: $650,000,000; Pinnacle share: $325,000,000); and
• Revolving Credit Facility: $150,000,000 (Atlas, sole lender; undrawn at closing).
The Commitment Letter is governed by the laws of the State of New York. The commitment fee payable under the Commitment Letter was 0.50% per annum on the undrawn committed amount, calculated from the date of execution through the earlier of the closing date or the commitment expiration date.
The Commitment Letter originally contained an initial expiration date that was aligned with the EPA outside date. Following the execution of the First Amendment to the EPA in November 2022, Atlas and Pinnacle agreed to extend the commitment expiration date, which, as currently in effect, is April 30, 2023. This extension was negotiated by Meridian's counsel, BSP (Charles A. Delacroix), directly with the lenders and their counsel.
B. Gap Between Commitment Expiration and New Outside Date
The proposed extension of the EPA outside date to June 30, 2023 creates a significant gap between the current debt commitment expiration date (April 30, 2023) and the new EPA outside date (June 30, 2023). Specifically, unless Atlas and Pinnacle agree to a further extension of the Commitment Letter, there will be a 61-day period — from May 1, 2023 through June 30, 2023 — during which the EPA remains in effect as a binding agreement for the acquisition of Cascadia, but no committed acquisition financing is in place.
This gap presents a material concern for the Vehicle and for the transaction as a whole. Even if the Material Impediment Event were cured during the May 1 through June 30, 2023 window and the GP sought to reactivate the Vehicle and proceed toward closing, the financing condition precedent in the EPA could not be satisfied absent committed financing. Section 8.02(f) of the EPA (as we understand its terms based on our review of the EPA and the First Amendment) conditions the buyer's obligation to close on the availability of the committed acquisition financing. Without a valid and unexpired Commitment Letter, or a replacement commitment on substantially similar terms, the closing condition cannot be met and the transaction cannot proceed.
We understand from preliminary indications conveyed by Meridian's counsel, BSP (Charles A. Delacroix), that Meridian intends to request that Atlas and Pinnacle extend the Commitment Letter to align with the new EPA outside date. Based on Mr. Delacroix's communications to our office, the likely extension fee would be approximately 0.25% of the $975,000,000 senior secured term loan commitment, or approximately $2,437,500. Meridian has indicated that Fund IV would bear the full cost of any such extension fee and that the extension cost would not be allocated to the Vehicle or otherwise charged to the Vehicle's capital account.
We have not, however, received written confirmation of these indications, and the extension of the Commitment Letter has not yet been agreed to by the lenders.
C. Implications for the Vehicle
The Vehicle is not a party to the Commitment Letter and has no direct obligation to Atlas, Pinnacle, or any other lender in connection with the acquisition financing. The Commitment Letter was entered into by Cascadia Acquisition Corp. (as borrower), with the support and credit backing of Fund IV. The Vehicle's role in the financing structure is limited to its equity contribution to Cascadia Acquisition Corp. through the Co-Investment Allocation Agreement.
Accordingly, the Vehicle has no direct exposure to extension fees, ticking fees, or other costs associated with maintaining or extending the Commitment Letter. To the extent that Fund IV agrees to bear the extension fee, this cost would be reflected in Fund IV's own capital account and would not be allocated to the Vehicle.
However, the practical implications for the Vehicle are significant. If the Commitment Letter expires without extension and is not replaced, the transaction cannot close during the extended outside date period, and the dormancy of the Vehicle would continue. In the most adverse scenario, the lapse of the Commitment Letter could effectively preclude any closing of the Cascadia acquisition under the EPA, which would in turn constitute an additional basis for continued dormancy and would bring the Vehicle closer to the 18-month wind-down election trigger.
Moreover, in the current lending environment, there is no assurance that Atlas and Pinnacle would be willing to extend the Commitment Letter on the same or similar terms, or at all. Interest rates have risen since the Commitment Letter was executed in August 2022, and market conditions for leveraged acquisition financing have tightened. If the lenders were to require revised pricing, additional covenants, or other changes to the financing terms as a condition of extension, such changes could have downstream implications for the economics of the acquisition and, by extension, for the Vehicle's expected returns.
Ironside should monitor the status of the debt commitment extension discussions closely, and Calderwood & Harkness will coordinate with BSP to track the progress of these negotiations and to report to Ironside on any material developments.
D. Recommendation. Calderwood & Harkness recommends that Ironside request, as a condition of its non-objection to the Second Amendment, a written confirmation from Meridian (transmitted through BSP) addressing the following points:
(i) that Fund IV intends to seek an extension of the Commitment Letter to a date no earlier than June 30, 2023, in order to eliminate the gap between the debt commitment expiration and the new EPA outside date;
(ii) that any extension fees, ticking fees, or other costs associated with such extension will be borne exclusively by Fund IV and will not be allocated to the Vehicle or charged against the Vehicle's capital account; and
(iii) that Meridian will promptly notify Ironside if Atlas and Pinnacle decline to extend the Commitment Letter or propose material changes to the financing terms.
We believe that this confirmation request is reasonable and consistent with the consultation rights afforded to Ironside under the Side Letter. We are prepared to draft and transmit the request letter to BSP at Ironside's direction.
V. Impact on Representations & Warranties Insurance
A. Current Policy Status
In connection with the Cascadia acquisition, a representations and warranties insurance policy (the "R&W Policy") was bound on September 1, 2022, with Northgate Specialty Insurance Co. ("Northgate"), a Connecticut-domiciled specialty insurance carrier. The key terms of the R&W Policy are as follows:
• Policy Number: NSW-RI-2022-09814
• Coverage Limit: $195,000,000, representing 10% of the $1,950,000,000 enterprise value of Cascadia
• Premium Deposit: $4,875,000, calculated at a rate of 2.5% on the $195,000,000 coverage limit, paid on September 2, 2022 from the proceeds of the first capital call
• Named Insured: ICM Cascadia Co-Invest, LP, and Cascadia Acquisition Corp.
• Governing Law: Connecticut
The R&W Policy was obtained as part of the standard transaction risk allocation framework, providing the buyer entities (Cascadia Acquisition Corp. and, indirectly, Fund IV and the Vehicle) with insurance coverage against losses arising from breaches of the seller's representations and warranties in the EPA. The R&W Policy serves as the primary recourse mechanism for representation and warranty breaches, with limited survival and indemnification provisions applicable to the selling shareholders.
Following the commencement of dormancy on January 9, 2023, Calderwood & Harkness negotiated and drafted a Tolling Side Letter (the "Tolling Letter"), which was executed on January 20, 2023 by Northgate Specialty and ICM Cascadia Co-Invest, LP. The Tolling Letter suspends the running of the R&W Policy's coverage period during the dormancy of the Vehicle, effectively preserving the policy coverage in its current state for the duration of the dormancy.
B. Effect of Outside Date Extension on R&W Coverage
The Tolling Letter operates independently of the EPA outside date. The toll is triggered by, and runs during, the dormancy of the Vehicle as declared by the GP's Capital Call Suspension Notice. The Tolling Letter does not reference the EPA outside date, and the extension of the outside date from March 31, 2023 to June 30, 2023 does not, standing alone, alter the tolling arrangement, accelerate the resumption of the coverage period, or create any additional premium obligation on the part of the Vehicle.
Accordingly, as long as the Vehicle remains dormant and the Capital Call Suspension Notice remains in effect, the R&W Policy remains tolled pursuant to the Tolling Letter, and no further action is required from Ironside or the Vehicle in connection with the R&W Policy as a result of the Second Amendment.
However, we note that if the transaction were to reactivate — that is, if the Material Impediment Event were cured, the GP lifted the Capital Call Suspension Notice, and the parties moved toward closing — the R&W Policy would need to be "un-tolled." At that point, Northgate would likely require an updated underwriting review to assess any changes in the risk profile of the transaction since the policy was originally bound. Factors that could affect Northgate's underwriting assessment include, without limitation:
• revised terms of the Bull Run Filtration Project concession, if the renegotiation results in materially different revenue or operating terms;
• updated financial information for Cascadia, including any deterioration in financial performance or changes in the net debt position since the original underwriting;
• passage of time and any intervening material events affecting Cascadia's operations or regulatory posture; and
• changes in the representations and warranties insurance market, including pricing and coverage terms.
Depending on the outcome of such a review, Northgate may require an additional premium payment, a policy endorsement reflecting revised terms, or both. The potential for such additional costs should be considered in any decision to reactivate the transaction, but does not arise as a consequence of the Second Amendment itself.
Calderwood & Harkness recommends periodic confirmation from Northgate that the Tolling Letter remains in full force and effect and that no additional premium is required during continued dormancy. We will handle this correspondence directly with Northgate's coverage counsel and report to Ironside on any developments.
C. Risk: Policy Lapse or Withdrawal
Although the Tolling Letter does not contain an explicit unilateral termination right for Northgate, it does include a provision (Section 3(b) of the Tolling Letter) that entitles Northgate to request renegotiation of the tolling terms if the tolling period exceeds 12 months. Based on the January 20, 2023 execution date of the Tolling Letter, the 12-month renegotiation trigger would fall on approximately January 20, 2024.
If the tolling period extends beyond 12 months, Northgate could seek to impose additional conditions, adjust the premium, or, in the most adverse case, seek to withdraw from the policy arrangement altogether. While the Tolling Letter does not explicitly permit Northgate to cancel the R&W Policy during the tolling period, the renegotiation provision introduces an element of uncertainty regarding the long-term availability of coverage on current terms.
This risk is not immediate given the current timeline and is not directly implicated by the Second Amendment. However, it is a factor that Ironside should consider in its longer-term planning, particularly as the dormancy period approaches and potentially exceeds the 12-month mark in January 2024. Calderwood & Harkness will continue to monitor this issue and will advise Ironside in advance of the January 2024 renegotiation trigger date.
VI. Impact on Regulatory Approvals
A. FERC Section 203 Approval
The acquisition of Cascadia requires prior approval of the Federal Energy Regulatory Commission under Section 203 of the Federal Power Act, 16 U.S.C. § 824b, due to Cascadia's ownership of jurisdictional hydroelectric generation facilities. The relevant FERC application was filed on October 19, 2022, under FERC Docket Number EC22-143-000. FERC issued its order approving the transaction on December 15, 2022, subject to the condition that the acquiring entity (Cascadia Acquisition Corp.) complete all required license-transfer filings within a specified period following closing.
FERC's approval order contains a standard lapse provision under which the approval expires if the transaction does not close within 18 months of the date of the approval order. Based on the December 15, 2022 approval date, the FERC approval will lapse on or about June 15, 2024.
The proposed extension of the EPA outside date from March 31, 2023 to June 30, 2023 does not affect the FERC approval timeline. The FERC lapse date is calculated from the date of the FERC order, not from the EPA outside date, and the proposed new outside date of June 30, 2023 falls well within the 18-month FERC approval window. Accordingly, no action is required with respect to FERC in connection with the Second Amendment, and the FERC approval remains valid and available for the transaction.
We note, however, that if the transaction remains dormant beyond June 15, 2024, the FERC approval will lapse and a new Section 203 application would be required for any reactivated transaction. The process of obtaining a new FERC approval typically requires 60 to 180 days, depending on the complexity of the application and whether any interventions or protests are filed. The cost of preparing and filing a new application would also need to be borne by the parties. This is a longer-term consideration that does not arise from the Second Amendment but should be noted in Ironside's internal planning.
B. Oregon Public Utility Commission (OPUC) Approval
The acquisition also requires approval from the Oregon Public Utility Commission under applicable provisions of Oregon law governing changes in ownership of public utility assets. The OPUC application was filed on October 14, 2022, under OPUC Docket Number UM-2287.
Following the onset of the concession renegotiation and the execution of the First Amendment to the EPA, the parties jointly requested that the OPUC stay the proceedings in Docket UM-2287 pending resolution of the concession issue and further direction from the parties. The OPUC granted the stay request in approximately February 2023, and the proceedings remain stayed as of the date of this memorandum.
The extension of the EPA outside date to June 30, 2023 does not directly affect the OPUC proceeding. The stay remains in place and can continue for as long as the parties request. If and when the transaction moves forward, the parties can request the OPUC to lift the stay and reactivate the docket. No additional filing, application fee, or procedural step is expected in connection with the EPA outside date extension itself.
C. CFIUS. A voluntary notice was filed with the Committee on Foreign Investment in the United States on or about September 20, 2022, in connection with the acquisition. CFIUS acknowledged receipt of the notice and, following its review, effectively cleared the transaction. No foreign ownership issues were identified, and no conditions, mitigation measures, or national security concerns were raised.
No further action is required with respect to CFIUS in connection with the Second Amendment. CFIUS clearance, once granted, does not lapse based on the passage of time or changes to the transaction timeline, and the extension of the EPA outside date has no impact on the CFIUS clearance status.
D. Summary of Regulatory Implications
In summary, the proposed Second Amendment is neutral with respect to the current regulatory posture of the Cascadia acquisition. All material regulatory approvals remain in place or on hold, and the extension of the EPA outside date to June 30, 2023 does not create any new regulatory risk or require any additional regulatory filings or approvals.
The principal regulatory risk associated with extended dormancy remains the FERC 18-month lapse provision, with a lapse date of approximately June 15, 2024. This date is well beyond the proposed new outside date and is not directly implicated by the Second Amendment. Calderwood & Harkness will continue to monitor the regulatory landscape and will advise Ironside of any developments that could affect the regulatory approvals for the transaction.
VII. Impact on Vehicle Financial Position
A. Capital Called and Deployed
As noted above, a single capital call of $22,500,000 was made on August 15, 2022. The proceeds of that capital call were applied as follows:
The organizational expenses include formation costs for the Vehicle, legal fees associated with the preparation and negotiation of the LP Agreement and related documents, and initial Delaware filing and franchise tax payments. The placement-agent fee was payable to Rivermark Capital Markets Inc. in connection with the placement of Ironside's limited partner interest in the Vehicle, at a rate of 0.35% of the Vehicle's total committed capital. The due-diligence costs and deposits reflect expenses incurred in connection with the legal, financial, technical, environmental, and regulatory due diligence performed on Cascadia in advance of the EPA execution, as well as certain deposits required in connection with the regulatory approval applications.
B. Unfunded Commitment
Ironside's unfunded commitment to the Vehicle remains at $277,500,000 (i.e., $300,000,000 total commitment less $22,500,000 previously called). This commitment remains outstanding and callable in the event that the Material Impediment Event is cured, the GP lifts the Capital Call Suspension Notice, and the transaction moves forward toward closing.
The proposed extension of the EPA outside date to June 30, 2023 does not trigger any additional capital call. Under Section 7.04 of the LP Agreement, the GP has suspended capital calls and cannot issue a new capital call absent a formal determination that the Material Impediment Event has ceased and that the conditions for resumption of capital calls have been satisfied. No such determination has been made or is expected to be made in connection with the Second Amendment.
Ironside should continue to account for the unfunded commitment as a contingent obligation in its internal capital planning and liquidity management, recognizing that the commitment could be called on relatively short notice (the LP Agreement provides for a 10-business-day funding period following a capital call notice) if the transaction reactivates. However, as a practical matter, the current dormancy status and the unresolved concession renegotiation make a near-term capital call unlikely.
C. Dormancy Operating Costs
The Vehicle's estimated annualized dormancy operating expenses are approximately $185,000, comprised of the following principal components:
• Fund administration services (Kendrick Thorne & Associates LLP): approximately $75,000 per annum
• Delaware franchise tax and annual report filing: approximately $27,000 per annum
• Registered agent fees (Cascade Systems): approximately $3,000 per annum
• Annual audit: approximately $55,000 per annum
• K-1 preparation and tax compliance: approximately $25,000 per annum
These expenses are funded from the Vehicle's working-capital reserve of $3,500,000, which was established from the proceeds of the initial capital call. At the current annualized run rate, the working-capital reserve is sufficient to cover dormancy operating expenses for approximately 18.9 years, though the reserve may also be drawn upon for other legitimate administrative costs that arise during the dormancy period. Calderwood & Harkness does not anticipate any material additional administrative costs arising from the Second Amendment.
There is no incremental cost to Ironside or the Vehicle resulting from the proposed extension of the EPA outside date. The dormancy operating costs are fixed in nature and would be incurred regardless of whether the outside date is extended.
VIII. Contractual Mechanics of the Second Amendment
A. Parties to the Second Amendment
The Second Amendment is an amendment to the EPA and, as such, will be executed by the parties to the EPA: the Selling Shareholders (Timberline Growth Equity Fund III, LP; the Weir Family Trust; and the Management Rollover Pool), Cascadia Renewables Holdings, Inc. (as the target company), and Cascadia Acquisition Corp. (as the buyer entity).
The Vehicle is not a direct signatory to the EPA. Cascadia Acquisition Corp. is the buyer entity under the EPA, and the Vehicle's interest in the acquisition is held indirectly through its equity stake in Cascadia Acquisition Corp., as established under the Co-Investment Allocation Agreement dated July 29, 2022. Fund IV holds a 71.43% equity interest in Cascadia Acquisition Corp. and the Vehicle holds a 28.57% equity interest.
Although the Vehicle is not a signatory to the EPA or the Second Amendment, the Vehicle's interests are directly and materially affected by amendments to the EPA, including changes to the outside date, the closing conditions, the representations and warranties, and the indemnification provisions. Ironside should therefore be fully informed of and consulted regarding any material amendments to the EPA, consistent with the consultation rights established in the Side Letter.
Calderwood & Harkness is currently reviewing the draft Second Amendment, which was circulated by BSP on behalf of Meridian on March 8, 2023. Our review is focused on confirming that the Second Amendment does not contain any provisions beyond the extension of the outside date that could adversely affect the Vehicle's position, including any modifications to the definition of Material Adverse Effect, the representations and warranties of the selling shareholders, the indemnification provisions, or the closing conditions. We expect to complete our review within the next two business days and will report any concerns to Ironside promptly.
B. Key Provisions Expected
Based on our review of the draft Second Amendment and our discussions with BSP, we expect the Second Amendment to contain the following key provisions:
(i) Amendment of the applicable section of the EPA to change the outside date from March 31, 2023 to June 30, 2023;
(ii) Reaffirmation by all parties to the EPA of all other terms, conditions, representations, and obligations set forth in the EPA, as amended by the First Amendment;
(iii) No change to the definition of "Material Adverse Effect" as set forth in the EPA;
(iv) No modification of the representations and warranties of the selling shareholders, the buyer, or the target company;
(v) No modification of the indemnification provisions, including the cap, basket, and survival periods applicable to the seller indemnification;
(vi) No modification of the closing conditions set forth in Article VIII of the EPA; and
(vii) No additional consideration, fee, or payment payable by any party in connection with the extension.
If our review of the final draft of the Second Amendment reveals any provisions that are inconsistent with the foregoing expectations or that could adversely affect the Vehicle's interests, we will immediately notify Ironside and recommend an appropriate course of action.
C. Ironside's Consent Rights
Under the LP Agreement, the GP has broad authority to make investment decisions on behalf of the Vehicle, including the authority to consent to amendments of the EPA and to take such other actions as the GP deems necessary or appropriate in connection with the Vehicle's investments. This authority is subject to certain limitations and consultation requirements set forth in the LP Agreement and the Side Letter.
The Side Letter dated July 29, 2022, between the GP and Ironside, requires the GP to consult with Ironside prior to agreeing to any "material amendment" of the EPA or any other "material transaction document" (as those terms are used in the Side Letter). The Side Letter does not define "material amendment" with specificity, but Calderwood & Harkness considers the extension of the EPA outside date — particularly in the context of an ongoing Material Impediment Event and dormancy period — to constitute a material amendment requiring consultation with Ironside.
We understand that the GP has provided Ironside with notice of the proposed Second Amendment, consistent with its consultation obligations under the Side Letter. Calderwood & Harkness recommends that Ironside respond to the GP's notice by formally acknowledging receipt and confirming Ironside's non-objection to the proposed extension, while expressly reserving all of Ironside's rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement, including without limitation the wind-down election right under Section 7.04(c) of the LP Agreement.
We are prepared to draft the acknowledgment and non-objection letter for Ironside's review and execution at Ironside's direction. The letter would be addressed to Meridian Infrastructure GP IV LLC, with a copy to BSP, and would contain the reservation-of-rights language described in Section IX below.
IX. Ironside's Reservation of Rights
Calderwood & Harkness's letter dated January 15, 2023, addressed to Breckenridge Sloane & Pratt LLP on behalf of Ironside, reserving all of Ironside's rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement during the dormancy period, remains in full force and effect. That letter expressly preserved Ironside's rights with respect to, among other things, the wind-down election right under Section 7.04(c) of the LP Agreement, Ironside's information and consultation rights under the Side Letter, and Ironside's rights as a 28.57% equity holder in Cascadia Acquisition Corp. under the Co-Investment Allocation Agreement.
The proposed Second Amendment does not affect, modify, or waive any of Ironside's rights under the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement. The extension of the EPA outside date is a modification of the EPA — a separate instrument to which the Vehicle is not a party — and does not constitute an amendment, modification, or waiver of any provision of the LP Agreement, the Side Letter, or the Co-Investment Allocation Agreement.
In particular, Ironside's wind-down election right under Section 7.04(c) of the LP Agreement continues to accrue from January 9, 2023, and is not affected by the extension of the EPA outside date. The wind-down election trigger date remains July 9, 2024, and Ironside retains the unilateral right to elect a wind-down of the Vehicle at any time after that date if the dormancy period has not been terminated.
Calderwood & Harkness strongly recommends that any acknowledgment or non-objection letter issued by Ironside in connection with the Second Amendment include an express reservation of rights consistent with, and cross-referencing, the January 15, 2023 reservation-of-rights letter. This will ensure that Ironside's agreement to the outside date extension cannot be construed as a waiver, estoppel, or acquiescence with respect to any of Ironside's contractual rights or remedies.
X. Summary of Recommendations
Based on the foregoing analysis, Calderwood & Harkness makes the following recommendations:
1. Non-Objection to Second Amendment. Ironside should provide its non-objection to the proposed Second Amendment extending the EPA outside date to June 30, 2023. The extension preserves transaction optionality at minimal incremental cost and does not adversely affect Ironside's contractual rights or the Vehicle's financial position. Calderwood & Harkness will prepare the non-objection letter for Ironside's review.
2. Financing Commitment Tracking. Ironside should request written confirmation from Meridian (transmitted through BSP) that Fund IV intends to seek an extension of the debt commitment letter (currently expiring April 30, 2023) to a date no earlier than June 30, 2023, that any extension fees will be borne exclusively by Fund IV, and that Meridian will promptly notify Ironside if the lenders decline to extend or propose material changes to the financing terms.
3. R&W Insurance Monitoring. Calderwood & Harkness will confirm with Northgate Specialty Insurance Co. that the Tolling Side Letter dated January 20, 2023 remains in full force and effect and that no additional premium is required during continued dormancy. We will report the results of this confirmation to Ironside.
4. Regulatory Monitoring. No action is required with respect to FERC, OPUC, or CFIUS as a result of the proposed outside date extension. Calderwood & Harkness will continue to monitor the FERC 18-month lapse date (approximately June 15, 2024) and will advise Ironside in advance of any required action.
5. Reservation of Rights. Any acknowledgment or non-objection letter issued by Ironside should include an express reservation of all Ironside rights under the LP Agreement, the Side Letter, and the Co-Investment Allocation Agreement, including the wind-down election right under Section 7.04(c) of the LP Agreement (trigger date: July 9, 2024). The reservation-of-rights language should be consistent with and cross-reference the Calderwood & Harkness letter to BSP dated January 15, 2023.
6. GP Quarterly Reporting. Ironside should ensure that the GP's next quarterly report (Q1 2023, expected to be delivered by mid-April 2023) addresses in detail the current status of the concession renegotiation with the Portland Metropolitan Water District, the proposed outside date extension and its implications, and the timeline and status of the debt commitment extension negotiations with Atlas and Pinnacle. To the extent the quarterly report is deficient in any of these areas, Calderwood & Harkness can assist Ironside in requesting supplemental disclosure from the GP.
7. Internal Calendar. Ironside's infrastructure investment team, led by Renata Obasi, should calendar and monitor the following key dates:
XI. Conclusion
The proposed Second Amendment to the EPA, extending the outside date from March 31, 2023 to June 30, 2023, is, in Calderwood & Harkness's assessment, a reasonable and prudent measure that preserves the possibility of the Cascadia acquisition proceeding if the Bull Run Filtration Project concession renegotiation is resolved and the Material Impediment Event is cured. The extension is being sought by the parties to the EPA in recognition of the fact that the concession renegotiation process has not yet concluded and that additional time is needed before the parties can make a definitive determination regarding the viability of the transaction.
The extension does not impose any additional financial obligations on Ironside or the Vehicle. It does not trigger a capital call, require the payment of any fee or premium, or create any new or additional liability for the Vehicle. The dormancy governance framework under the LP Agreement is unaffected by the extension, and all of Ironside's contractual rights — including the wind-down election right under Section 7.04(c) — remain fully intact and continue to accrue on their existing timeline.
The principal risk associated with the extension is the potential gap between the debt commitment letter expiration date (April 30, 2023) and the new EPA outside date (June 30, 2023). This risk can be mitigated through the confirmation process recommended in Section IV.D above, and Calderwood & Harkness will actively monitor and coordinate with BSP on this issue.
We remain available to discuss this analysis with you at your convenience and to prepare the non-objection and reservation-of-rights letter at Ironside's direction. Please do not hesitate to contact Pamela Cross at (212) 558-4127 or Theresa Kim at (212) 558-4843 with any questions or further instructions.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Pamela Cross Partner
By: ________
Theresa Kim Associate
Distribution: Privileged and Confidential — For addressees and copy recipients only. This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. Any unauthorized review, use, disclosure, or distribution is prohibited. If you have received this document in error, please contact Calderwood & Harkness LLP immediately.
Enclosures: None. All referenced documents are on file in Calderwood & Harkness LLP Matter No. 1023-00001.
Related Documents Referenced:
• Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP (July 29, 2022)
• Side Letter between Meridian Infrastructure GP IV LLC and Ironside Capital Management LP (July 29, 2022)
• Co-Investment Allocation Agreement among Meridian Infrastructure Partners Fund IV, LP, ICM Cascadia Co-Invest, LP, and Meridian Infrastructure GP IV LLC (July 29, 2022)
• Equity Purchase Agreement (September 15, 2022)
• First Amendment to the Equity Purchase Agreement (November 22, 2022)
• Debt Commitment Letter (August 30, 2022)
• Representations and Warranties Insurance Policy, Northgate Specialty Insurance Co., Policy No. NSW-RI-2022-09814 (September 1, 2022)
• Capital Call Suspension Notice (January 9, 2023)
• Calderwood & Harkness LLP Letter to Breckenridge Sloane & Pratt LLP re Reservation of Rights (January 15, 2023)
• Tolling Side Letter, Northgate Specialty Insurance Co. and ICM Cascadia Co-Invest, LP (January 20, 2023)
Source | Amount
Fund IV equity contribution | $750,000,000
Vehicle equity contribution | $300,000,000
Senior secured term loan (Atlas/Pinnacle) | $975,000,000
Total Sources | $2,025,000,000
Use | Amount
Enterprise value (acquisition price) | $1,950,000,000
Estimated transaction costs | $50,000,000
Working-capital adjustment escrow | $25,000,000
Total Uses | $2,025,000,000
Item | Amount
Organizational expenses | $285,000
Placement-agent fee (Rivermark Capital Markets Inc., 0.35% × $300M commitment) | $1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co.) | $4,875,000
Due-diligence costs and deposits | $12,790,000
Working-capital reserve | $3,500,000
Total | $22,500,000
Date | Event
April 30, 2023 | Current debt commitment letter expiration date
June 30, 2023 | Proposed new EPA outside date (per Second Amendment)
Approximately January 20, 2024 | 12-month renegotiation trigger under R&W Insurance Tolling Side Letter
Approximately June 15, 2024 | FERC Section 203 approval lapse date (18 months from December 15, 2022 approval)
July 9, 2024 | 18-month dormancy mark; Ironside's wind-down election right ripens under LP Agreement §7.04(c)

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