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Carbon Credit SPV — Negotiation Tracker

East West Carbon × Virridy  |  Permanent Capital Vehicle  |  $20M First Close

Virridy review notes + EW counter-proposal  |  MAR 30 2026

Virridy (MAR 26): Thanks for putting this together — the overall structure is thoughtful and the phased approach makes a lot of sense. We’re excited about the partnership. Below are our notes and questions as we work toward a term sheet. Before getting into the term-level comments, we want to flag one threshold structural question that we think we need to work through first.
East West Counter-Proposal (MAR 30): We’ve reviewed all of Virridy’s comments in detail and appreciate the thoughtfulness. Our counter-proposal introduces a two-pronged structural shift to resolve the threshold compatibility question: (1) the SPV funds new projects only, cleanly separated from Virridy Carbon LLC’s existing pipeline, and (2) EW provides mezzanine debt to Virridy Carbon’s existing facility with a declining revenue participation — no competing claims, no collateral conflict. Detailed responses to each annotation are shown in coral below.

Threshold Question — Structural Compatibility with Virridy Carbon LLC

As you know, Virridy Carbon LLC is the entity that owns the projects, project development agreements, and offtake agreements with both sellers and buyers. Virridy Carbon is currently in the process of raising its own debt facility to fund these projects. We want to make sure we’re aligned on how a new SPV would sit alongside that existing structure, because as currently proposed there are several areas where the two vehicles would conflict.

Competing claims on the same revenue. Virridy Carbon’s debt lenders will expect project credit revenues to service that facility. The SPV also proposes buying credits at a $10 floor with a 70% platform share from the same projects. Both entities can’t have priority on the same cash flows — lenders doing diligence on Virridy Carbon’s facility will flag the SPV’s claim.

Negative pledge collision. The SPV proposal includes a negative pledge on Virridy’s offtake agreements. Virridy Carbon’s debt facility will almost certainly require its own negative pledge or security interest over those same offtake agreements — they’re the primary collateral backing the loan. These two pledges would be mutually exclusive.

Cross-default chain. The SPV intercompany loan includes a cross-default clause. Virridy Carbon’s debt facility will have its own cross-default provisions. This creates a daisy chain where a covenant issue on the SPV side could trigger default on Virridy Carbon’s debt facility (and vice versa), even if the underlying projects are performing well.

Security package overlap. The SPV proposes “security per facility” on the debt side. Virridy Carbon’s lenders will also want security over project assets. Two separate entities claiming security over the same underlying projects and agreements would create a priority conflict that lenders on both sides will need resolved.

Distress contingency rights. The SPV’s “contingency rights on Virridy distress” become especially sensitive in this context. If Virridy Carbon trips a covenant on its own debt facility (even temporarily), does the SPV step in and claim offtake agreements? That could itself constitute an event of default under Virridy Carbon’s facility.

Possible Paths Forward

We see a few ways this could work — would love to discuss which makes most sense for both sides:

  1. New projects only. The SPV funds genuinely new projects that are not in Virridy Carbon LLC’s existing pipeline or debt facility. Clean separation, no collateral conflicts.
  2. SPV as co-investor into Virridy Carbon. EW invests into or alongside Virridy Carbon’s existing facility via a participation agreement, rather than a parallel competing structure.
  3. Defined project allocation. Virridy Carbon’s lenders and the SPV agree upfront (via intercreditor agreement) on which projects or revenue tranches belong to each vehicle.
  4. Sequential priority. The SPV funds projects only after Virridy Carbon’s debt is fully serviced, essentially taking a mezzanine or equity position below Virridy Carbon’s senior debt.

We think resolving this structural question first will make the term-level details much easier to finalize. Happy to walk through our current facility structure in detail so we can find the right approach together.

EW Counter-Proposal — Two-Pronged Structure

We hear the structural concern and believe we’ve found a path that addresses every conflict raised above. Our counter-proposal splits the relationship into two clean channels:

Prong 1 — New Projects via SPV. The SPV funds genuinely new projects only — projects that are not in Virridy Carbon LLC’s existing pipeline and not pledged to Virridy Carbon’s debt facility. 100% capex funded, grant-style deployment, credits purchased at the $10 floor. This eliminates competing claims entirely: Virridy Carbon’s lenders have no interest in SPV-originated projects, and the SPV has no claim on Virridy Carbon’s existing revenue streams.

Prong 2 — Mezzanine Debt to Virridy Carbon. For access to Virridy Carbon’s existing project pipeline, EW provides mezzanine-level debt to Virridy Carbon LLC (subordinate to senior lenders). In return, EW receives a declining revenue participation: a share of credit revenues from existing projects that declines over time as the mezzanine is repaid. This sits cleanly below Virridy Carbon’s senior debt — no negative pledge collision, no cross-default chain, no security overlap.

Key parameters:

  • Debt allocation cap: 25–30% of SPV capital to mezzanine, remainder to new projects
  • Mezzanine revenue participation: Declining structure — higher share in early years, stepping down as principal repays. Ring-fenced to mezzanine-funded projects, pro rata to capital deployed.
  • No collateral conflict: Mezzanine is unsecured or junior-secured, subordinated to Virridy Carbon’s senior facility via intercreditor agreement
  • Offtake access: SPV-originated projects get dedicated offtake agreements (not competing with Virridy Carbon’s existing offtake). Open question: programmatic offtake vs. project-specific — to be resolved in Phase 0.

This approach maps directly to Virridy’s Path 1 (new projects only) plus Path 4 (mezzanine position below senior debt) — addressing the structural concern while giving EW exposure to both new and existing project economics.

Aligned — we’re good with this
Question — would like to discuss
Suggestion — proposed refinement
EW Counter — response from East West
Slide 1 — Structure & Economics
Entity & Governance
SPV Entity
Delaware LLC, member-managed. Permanent capital vehicle (no fixed term).
AlignedDelaware LLC and member-managed structure work well for us.
Ownership
40% East West Carbon / 40% Virridy + 20% preferred equity holders
Aligned40/40 split reflects the partnership well.
EW Role
Capital raising, project sourcing, strategic dev., day-to-day governance. Casting vote on capital deployment.
Question — Casting Vote ScopeWe understand the rationale for a tiebreaker on capital deployment. Could we scope this to deployment decisions above a defined threshold (e.g., >$500K)? For day-to-day and operational matters, joint approval feels more natural for a 40/40 partnership. We’d also like to discuss whether Virridy should hold a reciprocal authority on credit/verification matters, since that’s our core domain.
EW CounterEW casting vote applies to all capital deployment decisions, without a dollar threshold. This is a fiduciary duty issue — as the party raising and managing investor capital, EW needs clear decision authority on deployment. However, EW will not exercise casting vote on project economics, credit pricing, or verification matters. No casting vote on day-to-day operations below $50K (see Operational Expenses section below).
Virridy Role
Carbon offtake agreements, project registration, credit sales, verification & auditing. Min credit generation KPIs (MSA-bound).
Question — Mutual Performance StandardsWe’re comfortable with credit generation KPIs — accountability is important and we want investors to see that. Could we also define parallel milestones for capital raising and project deployment so both sides are held to measurable standards? We think that symmetry would be a strong signal to investors.
EW ClarificationAgreed on mutual accountability. EW commits to deploying $10M into the SPV by month 18. Reciprocal termination rights: Virridy can terminate if EW misses capital deployment milestones, just as EW can terminate if Virridy misses credit KPIs. Both subject to 90-day cure period.
Deadlock
Tiered: (1) Escalation to principals → (2) Independent mediator → (3) Shotgun buy-sell with independent FMV appraisal
AlignedTiered resolution with independent FMV appraisal is solid. No notes here.
Key Person
Departure of named principals triggers enhanced governance rights or exit options for other party.
AlignedGood protection for both sides.
Capital Structure (Target $20M)
~60% Debt ($12M)
Raised at SPV level; SPV repays. Standard protective covenants. Security per facility.
SuggestionDebt at the SPV level makes sense. Could we clarify what “security per facility” means in practice? We want to make sure Virridy’s existing assets (offtake agreements, equipment outside SPV-funded projects) aren’t pledged as collateral for SPV-level debt.
EW — AgreedSPV debt security is limited to SPV-funded project assets only. Virridy’s existing assets, offtake agreements, and equipment outside the SPV are explicitly excluded from the SPV security package. Clean ring-fencing.
~20% Equity ($4M)
Distributions begin Yr 7+ once debt serviced & reserves met. 5–7 year periodic liquidity window + ROFR for transfers. Capital recycled.
Question — Distribution TimelineSeven years is a long horizon, especially given the operational commitment from Virridy during that period. Would you be open to exploring either a shorter initial distribution window (e.g., Year 5) or a modest preferred return to the operating partner to bridge the gap? Happy to model this together.
EW CounterYear 7 remains our baseline for distributions, but we’re open to validating this through the joint cash flow model (Phase 0 deliverable). If the model shows distributions are sustainable earlier, we’ll adjust. The key constraint is ensuring debt service and reserves are fully covered before any distributions begin.
~20% Grants ($4M)
Funder-specific terms. Foundation capital accepted. No structural limitations anticipated. Deployed as grant-style funding.
AlignedFlexibility on grant capital is great for the vehicle.
Project & Credit Economics
Existing Projects
SPV loans @ 6% interest + proportional share of credit revenues at % capex funded. Covenants: info rights, CoC, cross-default, negative pledge.
Question — Negative Pledge ScopeCould we scope the negative pledge to SPV-funded projects specifically, rather than all Virridy offtake agreements? Virridy has existing and future projects outside the SPV, and we want to make sure we retain flexibility for those. The cross-default clause — could we discuss ring-fencing that as well so one project doesn’t cascade?
EW — AgreedNegative pledge scoped to SPV-funded projects only. Virridy retains full flexibility on projects outside the SPV. Cross-default ring-fenced — no cascade between SPV projects and Virridy Carbon’s existing facility. This is consistent with the two-pronged structure: clean separation between SPV-originated projects and Virridy Carbon’s existing pipeline.
SPV-Originated
100% capex funded (grant-style). Buy credits @ ~$10 floor → sell @ $19+ target. 70% platform share. No unilateral renegotiation by Virridy.
Suggestion — Market Adjustment MechanismThe $10 floor and 70/30 split work at current market prices. Since this is a long-duration vehicle, could we build in a periodic market-adjustment mechanism (e.g., floor indexed to a recognized carbon price benchmark, reviewed every 2–3 years)? This protects both sides — it also prevents the SPV from overpaying if prices drop. On the “no unilateral renegotiation” language, we’d suggest making that mutual so neither party can unilaterally change terms.
EW — AgreedFloor price benchmarked to Verra/Gold Standard indices, reviewed every 3 years. Non-renegotiation clause made mutual — neither party can unilaterally change credit pricing terms. Floor adjusts with market to protect both sides.
Unit Economics
~1,124 credits per $65K system  |  ~107.9 credits per $ invested  |  ~$10.41 per person served
SuggestionThese are helpful illustrative numbers. We’d like to validate them together against our actual project data before they go into investor materials, since yields can vary by geography and project type.
EW — AgreedJoint validation of unit economics before investor materials. Numbers will be labeled “illustrative” in all investor-facing documents until validated through the joint cash flow model.
Fees & Compensation
Years 1–3
1.25% management fee (split EW/Virridy) + Virridy verification costs (capped)
Aligned50/50 fee split is fair. Capped verification costs make sense.
Post-First Credit
Converts to 3% gross carbon revenue (1.5% EW / 1.5% Virridy). D&O + PI insurance required.
AlignedEqual revenue-based fees and insurance requirements work well.
Cash Flow Waterfall
Priority
1. OpEx (capped) → 2. Verification (benchmarked) → 3. Debt service → 4. Mgmt fees → 5. Retained (recycled to Yr 7) → 6. Distributions
SuggestionWaterfall priority is logical. Would be great to build a joint cash flow model to project when distributions realistically begin — this would also strengthen the investor pitch.
EW — AgreedJoint cash flow model is now a Phase 0 deliverable — to be built collaboratively before the binding term sheet is finalized. Will inform distribution timeline, waterfall calibration, and investor materials.
Slide 2 — Required Documents (22 Documents, 4 Phases)
Phase 0
Lock Partnership
~$10–20K
Phase 1
Form SPV
(triggered by IOIs)
Phase 2
Raise Capital
Phase 3
Deploy & Report
Phase 0 — Lock Partnership
Binding Term Sheet / LOI
40/40 ownership, roles, fees, exclusivity, capital raise trigger, 12-mo sunset + 6-mo extension, asymmetric breakup fee
Suggestion12-month sunset is reasonable. Could we confirm the 6-month extension requires mutual written consent?
EW — AgreedExtension requires mutual written consent. Neither party can unilaterally extend the sunset period.
Mutual NDA & Non-Circumvent
EW ↔ Virridy offtake/investor protection. 3-year tail survives termination.
AlignedMutual and symmetric. 3-year tail is standard.
Kill Switch Provisions
Auto-dissolve if IOIs < 50% by month 12. Performance exit (MSA KPIs). Voluntary withdrawal with FMV payout over 12–24 mo.
AlignedClean exit mechanics protect both parties. FMV payout is the right approach.
Data Rights & IP Clause
EW retains investor relationship data. IP assignment for pipeline data to SPV.
Question — IP StructureWe appreciate that EW retains its investor relationship data — that makes sense. Could we apply the same principle to Virridy’s IP? Our preference would be for Virridy to retain ownership of its technology and pipeline data, with an exclusive license to the SPV for the scope of the partnership. This keeps both parties’ core assets protected symmetrically and is cleaner on dissolution.
EW — AgreedBoth parties retain their core IP. Each grants an exclusive license to the SPV for the scope of the partnership. Symmetric structure — EW retains investor data and relationships, Virridy retains technology and pipeline data. Clean reversion on dissolution.
Phase 1 — SPV Formation
Operating Agreement
40/40/20 ownership, tiered deadlock, distributions Yr 7+, key person clause, pre-wired 3(c)(1) to 3(c)(7) conversion
SuggestionThe 3(c)(1) to 3(c)(7) pre-wire signals strong ambition for the vehicle — we like it. Let’s make sure the conversion mechanics are well documented upfront so it’s seamless when triggered.
EW — Agreed3(c)(1) to 3(c)(7) conversion mechanics will be fully documented in the Operating Agreement upfront. Pre-wired triggers, investor notification process, and compliance steps all specified at formation.
MSA — Virridy × SPV
Offtake, verification, credit sales. Min credit KPIs. 90-day cure. Performance-based termination.
QuestionWe’re on board with the MSA structure and performance-based accountability. As noted above, could we build a parallel set of milestones into EW’s management agreement? Investors will likely appreciate seeing that both operating partners are held to defined standards.
EW ClarificationVirridy commits to project registration + first credit issuance within 12 months of each project deployment. 90-day cure period for missed milestones. These are the measurable KPIs that will be in the MSA.
Management Agmt — EW
Sourcing, underwriting, deployment, governance. EW casting vote on capital + investor relations.
SuggestionCould we include defined sourcing and deployment milestones in this agreement, similar to the credit KPIs in Virridy’s MSA? Having measurable commitments on both sides would present well to investors and ensure the capital gets deployed on pace.
EW ClarificationEW commits to deploying $10M by month 18. 90-day cure period. If not met, Virridy has termination rights. Symmetric accountability — both parties have measurable milestones with identical cure and termination mechanics.
Intercompany Loan Agmt
SPV → Virridy: 6% interest, pari passu, info rights, CoC, cross-default, negative pledge on offtake
Financial Controls
Priority waterfall. Ring-fenced accounts. OpEx capped. Verification benchmarked. Fee conversion trigger at first verified credit revenue.
AlignedRing-fenced accounts and capped OpEx are great financial discipline. Happy with this.
Phase 2 — Capital Raising
Carbon Credit Offtake Agmt
SPV access to Virridy offtake. Contingency rights on Virridy distress.
Question — Distress DefinitionCould we discuss what “distress” means in practice and what specific rights would transfer? We want to make sure this is narrowly defined so it functions as a genuine safety net for the SPV rather than a broad option. Happy to work through specific scenarios together.
EW — AgreedDistress narrowly defined: (1) insolvency or bankruptcy filing, (2) material MSA breach after 90-day cure period, (3) loss of key offtake agreements. Explicitly excludes Virridy Carbon LLC covenant trips that don’t affect the SPV. Contingency rights are a safety net, not an option to acquire.
PPM / Investor Materials
Distinguish proven vs projected yields. Illiquidity risk. Permanent capital disclosure.
AlignedProper risk disclosure is good practice and builds investor trust.
Subscription Agreement
Permanent capital. Transfer restrictions. 5–7 year liquidity window. ROFR. Side letter templates.
Loan / Credit Facility
Debt terms, tenor, covenants, security package. Pari passu across facilities.
Grant Agreements
Funder-specific terms. No structural limitations.
D&O / PI Insurance
Required as condition of SPV formation.
AlignedStandard and good for both parties.
Phase 3 — Project Execution
Credit Purchase Template
Per-project @ ~$10 floor. 70/30 platform split. No unilateral renegotiation.
Project Funding Template
Loan-style (existing) or grant-style (new SPV-originated). Standard deployment terms.
Revenue Sharing Agmt
70% platform share, capex-proportional. Project owner floor + upside. EW consent required.
Question — Revenue Sharing ApprovalCould this be a joint approval rather than EW consent alone? Since Virridy is the operating partner managing these project relationships, having both parties sign off feels more aligned with the 40/40 structure.
EW — AgreedJoint approval by both parties as 40/40 partners on all revenue sharing terms. No casting vote on project economics — these decisions require consensus.
Reporting Framework
Quarterly + annual cycles. Credit issuance reporting. Investor communications.
AlignedStandard reporting cadence. Happy to co-develop the templates.
Slide 3 — Execution Roadmap
Phase 0 — Lock Partnership
Action
Execute binding term sheet with Virridy: non-circumvent, asymmetric breakup fee, exclusivity, 12-month sunset clause.
Gate
Term sheet signed.
Phase 1A — Test Appetite
Action
SPV-branded outreach — both EW and Virridy present. Target 5–10 investors. Use PACT for soft commitments. Zero relationship exposure.
Gate
Soft commitments via PACT.
AlignedWe like this a lot — low-risk market test with both teams presenting together. Smart way to validate the thesis before committing major resources.
Phase 1B — Joint Engagement
Action
Binding term sheet already executed. All relationships contractually protected. Full partnership, team, and thesis presented upfront.
Gate
IOIs ≥ 25–50% ($5–10M).
Phase 2 — Form SPV & Close
Trigger
IOIs ≥ 50–75% ($10–15M)
Legal Build
Full Operating Agreement, MSAs, PPM, Subscription Agreements — the complete doc stack.
Close
Execute subscriptions: Form D and Reg S docs to offshore sovereign investors.
Sunset
If IOIs below threshold by month 12, sunset clause provides clean exit for both parties.
AlignedGated approach is well designed — major legal costs only triggered by real investor interest. Sunset protects everyone.
Kill Switch & Exit Mechanics
Asymmetric Breakup Fee
Pre-Investor
Either party walks, no fee. NDA and non-circumvent survive.
Post-Investor
Walking party pays 2× documented legal + diligence costs + $50–$100K relationship fee.
Post-IOI Threshold
Walking party pays 3× costs + relationship fee + lost management fee equivalent for 12 mo.
SuggestionThe escalating structure makes sense. Worth discussing whether the fee levels should reflect each party’s replaceability — since the operating partner (technology, offtake, verification) is harder to substitute than the capital partner, a departure on the capital side may warrant a higher fee to compensate for disruption to project delivery.
EW CounterBreakup fees should be symmetric — both partners are hard to replace. EW brings capital relationships, sovereign access, and project origination that are equally difficult to substitute. Proposed: 2× documented costs post-investor, 2.5× post-IOI threshold for either party. Same fee structure regardless of which party walks.
Exit Mechanics
Capital Raise Fails
Auto-dissolve if IOIs < 50% by month 12. Both parties return to pre-engagement positions.
AlignedClean walk-away if the market doesn’t validate the thesis. Good for both sides.
Virridy Underperforms
MSA min credit KPIs. 90-day cure. EW has unilateral termination if not remedied.
Question — Reciprocal TerminationWe accept performance-based termination — accountability matters. Could we include a parallel provision where Virridy has termination rights if capital deployment or fundraising milestones aren’t met within defined timeframes? This gives both parties equivalent protections and looks balanced to investors.
EW — AgreedReciprocal termination rights for both parties. Virridy can terminate if EW misses $10M deployment by month 18; EW can terminate if Virridy misses credit generation KPIs. Both subject to 90-day cure. Symmetric and balanced.
EW Wants Out
Independent FMV appraisal. Structured payout over 12–24 months. No value destruction.
AlignedStructured exit with FMV appraisal is the right approach.
Slide 4 — Visual Structure
Debt (~60%)   Equity (~20%)   Grants (~20%) ↓ EW – VIRRIDY SPV
Permanent Capital Vehicle  |  Delaware LLC  |  40/40/20

EW Carbon LLC — 40%     Virridy LLC — 40% ↓ Water Projects
Credits @ $10 floor to $19+ target  |  6% interco. loans  |  70/30 revenue split
EW Contributes
Raises strategic capital; govt relationships across Africa; sources & originates projects; day-to-day SPV governance; casting vote on capital deployment; battery & solar supply chains
Virridy Contributes
Holds offtake agreements; verification & auditing; Lume water sensor technology; project registration; credit sales execution; min credit sale KPIs (MSA-bound)
SuggestionThe complementary roles are clear and compelling. As we finalize the structure, it would be worth ensuring that the governance rights, performance obligations, and IP protections reflect the nature of each party’s contribution. Symmetric protections will make for a stronger pitch to institutional investors.
EW — AddressedSymmetric protections are reflected throughout this counter-proposal: mutual IP licensing, reciprocal termination rights, parallel milestones, joint approval on project economics, and symmetric breakup fees. Both parties’ contributions are protected equally.
EW Counter-Proposal — New Items Introduced
Mezzanine Revenue Participation

For EW’s mezzanine debt into Virridy Carbon’s existing facility, EW receives a declining revenue participation from existing project credit revenues:

Structure
Revenue share declines as mezzanine principal is repaid. Higher participation in early years when capital is most at risk, stepping down as the loan amortizes.
Ring-fencing
Participation limited to projects funded by mezzanine capital. No claim on Virridy Carbon projects funded by senior debt or other sources.
Allocation
Pro rata to capital deployed. If mezzanine funds 20% of a project’s capex, EW receives 20% of that project’s credit revenue participation (subject to the declining schedule).
Debt Allocation Cap
Mezzanine Cap
25–30% of total SPV capital allocated to mezzanine debt into Virridy Carbon’s existing facility.
New Projects
Remainder (70–75%) deployed into genuinely new SPV-originated projects. This ensures the SPV is primarily a growth vehicle, not a refinancing tool.
Offtake Access for SPV-Originated Projects
Approach
SPV-originated projects get dedicated offtake agreements — separate from Virridy Carbon’s existing offtake book.
Open Question
Programmatic vs. project-specific offtake — should the SPV negotiate a blanket offtake agreement covering all SPV projects, or individual agreements per project? To be resolved in Phase 0.
Open — For DiscussionThis is a key commercial question: programmatic offtake is more efficient but may limit pricing flexibility per project. Project-specific offtake allows tailored pricing but adds transaction cost. Both teams should model the tradeoffs.
Operational Expenses
Day-to-Day
Virridy operates freely on all operational matters. No approval required for routine project operations.
Joint Approval
$50K threshold — expenses above $50K require joint approval from both partners. Below $50K, the operating partner (Virridy) has full discretion.
Verification & Crediting Priority
Methodology
Virridy retains full ownership of verification methodology, technology, and crediting approach. No EW override on technical/scientific matters.
Scheduling
EW receives visibility into verification scheduling for investor reporting and capital planning purposes. Virridy provides quarterly verification pipeline updates.
Revised Phase 0 Execution Sequence

EW proposes resequencing Phase 0 to build commercial alignment before legal commitment:

Step 1
Mutual NDA & LOI — Non-binding letter of intent covering scope, exclusivity, and key commercial principles. Low cost, fast execution.
Step 2
Joint Cash Flow Model — Collaborative financial model covering unit economics, waterfall, distribution timeline, and mezzanine participation. Both teams validate assumptions together.
Step 3
Binding Term Sheet — Only after both parties are aligned on the economics. Informed by the cash flow model rather than negotiated in the abstract.
EW RationaleBuilding the financial model before the binding term sheet means both parties negotiate from shared numbers rather than assumptions. This reduces the risk of a term sheet that doesn’t survive contact with real economics.
Illustrative Walkthrough — $10M Fund

The following traces how a $10M first close would flow through the two-pronged structure, step by step, with dollar amounts at each stage. All unit economics are illustrative and subject to validation in the Phase 0 joint cash flow model.

Step 1 — Capital In ($10M)
SourceAmountTerms
Senior Debt$6,000,000Raised at SPV level, ~6% interest, SPV repays
Equity (investors)$2,000,000Permanent capital, no distributions until Year 7+
Grants (foundations)$2,000,000Grant-style terms, funder-specific
Total Raised$10,000,000
↓
Step 2 — Capital Deployed (Two Prongs)
ProngAllocationAmountWhat It Funds
New Projects (SPV)75%$7,500,000115 new water systems at $65K each
Mezzanine (Virridy Carbon)25%$2,500,000Subordinated debt into existing facility at ~6%
Total Deployed100%$10,000,000
↓
Step 3 — Credit Generation (New Projects)
MetricValue
Systems deployed115 water systems
Credits per system per year~1,124 credits
Total annual credits (once fully deployed)~129,260 credits/year
↓
Step 4 — Credit Sales Revenue (Annual)
Line ItemPer CreditAnnual Total
SPV sells credits on market$19.00$2,455,940
Less: floor price paid to Virridy($10.00)($1,292,600)
Gross margin$9.00$1,163,340
70% to SPV (platform share)$6.30$814,338
30% to Virridy (upside share)$2.70$349,002

Virridy receives $12.70/credit total ($10.00 floor + $2.70 upside) = $1,641,602/yr. SPV retains $6.30/credit = $814,338/yr.

↓
Step 5 — Mezzanine Income (Annual)
Line ItemAnnual Amount
Interest on $2.5M mezzanine (~6%)$150,000
Revenue participation (declining, early years)~$75,000–$150,000
Total mezzanine income to SPV~$225,000–$300,000
↓
Step 6 — Total SPV Revenue (Annual)
SourceAnnual Amount
Credit platform share (70% of $9 margin × 129,260 credits)$814,338
Mezzanine interest + revenue participation~$250,000
Total SPV gross revenue~$1,064,338/yr
↓
Step 7 — Waterfall (Annual Expenses)
PriorityExpenseAnnual Amount
1Operating expenses (capped)~$150,000
2Verification costs (benchmarked)~$100,000
3Debt service ($6M at ~6% + amortization)~$480,000
4Management fees (3% of $2.46M gross credit revenue)~$73,700
— EW share (1.5%)$36,850
— Virridy share (1.5%)$36,850
Total expenses~$803,700
5Retained / recycled to new projects~$260,600/yr
6Distributions to equity holders (Year 7+)After reserves met
↓
Step 8 — What Each Party Earns (Annual)
Virridy Annual RevenueAmount
Credit floor ($10/credit × 129,260)$1,292,600
Upside share (30% of $9 margin)$349,002
Management fee (1.5% of gross)$36,850
Total to Virridy~$1,678,452/yr
EW Annual RevenueAmount
Management fee (1.5% of gross)$36,850
Mezzanine interest + participation~$250,000
40% of SPV distributions (Year 7+, est.)~$104,240
Total to EW~$391,090/yr
↓
10-Year Cumulative View
MetricValue
Total credits generated~1,292,600
Total gross credit sales~$24,560,000
Total SPV net revenue~$10,640,000
Senior debt repaid by~Year 8–9
Capital recycled into new projects~$2,606,000 (funds ~40 more systems)
Investor distributions beginYear 7
Total to Virridy over 10 years~$16,785,000
Total to EW over 10 years~$3,911,000
People served (~$10.41 per person)~720,000

All figures are illustrative and based on deck assumptions ($65K/system, ~1,124 credits/system/yr, $10 floor, $19 target sale price, 70/30 platform split). The joint cash flow model in Phase 0 will validate these against actual project data — yields vary by geography, project type, and market conditions. Mezzanine revenue participation schedule and exact debt allocation split are still open items.

Negotiation Status Tracker

Status of all discussion items as of the MAR 30 2026 counter-proposal:

ItemStatusDetail
Negative pledge scopeAgreedScoped to SPV-funded projects only
SPV debt securityAgreedLimited to SPV-funded project assets
Cross-default ring-fencingAgreedNo cascade between SPV and Virridy Carbon
Credit pricing mechanismAgreedVerra/Gold Standard benchmark, 3-year review, mutual non-renegotiation
Unit economics validationAgreedJoint validation, labeled “illustrative”
Cash flow modelAgreedPhase 0 deliverable, built collaboratively
IP ownershipAgreedBoth retain core IP, exclusive license to SPV
Sunset extensionAgreedRequires mutual written consent
3(c)(1) to 3(c)(7) conversionAgreedMechanics documented in Operating Agreement
Distress definitionAgreedNarrowly defined: insolvency, material breach after cure, loss of key offtake
Revenue sharing approvalAgreedJoint approval, no casting vote on project economics
Reciprocal terminationAgreedBoth parties have performance-based exit rights
Mutual KPIsAgreedEW: $10M by month 18. Virridy: credit issuance within 12 mo of deployment
Casting vote scopeCounterEW: all deployment decisions (fiduciary duty), no threshold. No casting vote on operations <$50K
Distribution timelineCounterYear 7 baseline, subject to joint cash flow model validation
Breakup fee structureCounterSymmetric: 2× post-investor, 2.5× post-IOI for either party
Offtake structureOpenProgrammatic vs. project-specific — to be modeled in Phase 0
Mezzanine participation termsOpenDeclining schedule to be defined in joint cash flow model
Debt allocation splitOpen25–30% mezzanine vs. 70–75% new projects — exact split TBD

13 items agreed  |  3 items countered (EW position stated, Virridy response pending)  |  3 items open (to be resolved in Phase 0)

Next step: Schedule working session to review counter-proposal, align on countered items, and kick off Phase 0 (NDA → Joint Cash Flow Model → Binding Term Sheet).