CALDERWOOD & HARKNESS LLP 900 Third Avenue, 28th Floor New York, NY 10022
INTERNAL — PRIVILEGED & CONFIDENTIAL
NEW-MATTER MEMORANDUM / RISK ASSESSMENT
SECTION 1: CLIENT IDENTIFICATION
1(a) Primary Client
The primary client in this matter is Pinnacle Venture Fund II LP, a Delaware limited partnership (EIN: 83-2671048). Pinnacle Venture Fund II LP serves as the "Sponsor" of Pinnacle Acquisition Corp. I, the blank-check company described below. The general partner of Pinnacle Venture Fund II LP is Pinnacle Venture Management II LLC, a Delaware limited liability company. The principal office of Pinnacle Venture Fund II LP is located at 388 Embarcadero Center, Suite 2400, San Francisco, California 94111.
The key contact for this engagement is Marcus Yuen, Founder and Managing Partner of Pinnacle Venture Fund II LP. Mr. Yuen will serve as the primary point of contact for all matters relating to this engagement, including business decisions, legal strategy, and fee arrangements. Mr. Yuen also serves as Chairman of the Board and Chief Executive Officer of Pinnacle Acquisition Corp. I.
Pinnacle Venture Fund II LP is the second fund managed by Pinnacle Venture Management II LLC. As of the date of this memorandum, the Pinnacle platform manages assets under management of approximately $725 million across two funds. The fund's investment focus is on enterprise SaaS, cloud infrastructure, and AI-enabled B2B platforms — a sector that is currently experiencing substantial public market interest and represents a credible pipeline for potential acquisition targets in the de-SPAC context.
1(b) Co-Client. The co-client in this matter is Pinnacle Acquisition Corp. I, a Delaware corporation organized as a blank-check company (EIN: 86-3194507; Delaware Secretary of State File No.: 7319284). Pinnacle Acquisition Corp. I was incorporated on January 22, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.
The registered agent for Pinnacle Acquisition Corp. I is Capitol Registered Agents Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. The principal executive office of the Company is c/o Pinnacle Venture Fund II LP, 388 Embarcadero Center, Suite 2400, San Francisco, California 94111. The Company's CIK number assigned by the Securities and Exchange Commission is 0001893247.
As of the date of this memorandum, the Company has no operations, assets (other than nominal cash from the sale of Founder Shares), or revenues. The Company's sole purpose is to consummate an initial public offering and thereafter identify and complete an initial business combination within the timeframes described in this memorandum.
1(c) Client Relationship
This engagement represents a new client relationship for the firm. Calderwood & Harkness LLP has not previously represented Pinnacle Venture Fund II LP, Pinnacle Venture Management II LLC, Pinnacle Acquisition Corp. I, or any other entity affiliated with the Pinnacle platform. This is one of the firm's earliest engagements for the Pinnacle organization, and the engagement team should treat this matter with particular attention to client development and relationship building.
Marcus Yuen is the primary client contact for all substantive and administrative matters relating to this engagement. Deborah Sinclair, Partner, Technology Investments at Pinnacle Venture Fund II LP and President of Pinnacle Acquisition Corp. I, serves as the secondary contact and will be involved in day-to-day deal execution and coordination with the underwriters. Ms. Sinclair brings significant experience in technology sector investing and public company transactions and is expected to play a prominent role in the marketing and roadshow process.
SECTION 2: CONFLICT CHECK
2(a) Parties Searched
The following parties and individuals were run through the firm's proprietary conflicts database (Glenrock Health IT Walls/Open) in connection with this new-matter intake. The search included all known variations of entity names, individual names, and associated aliases:
1. Pinnacle Venture Fund II LP
2. Pinnacle Venture Management II LLC
3. Pinnacle Acquisition Corp. I
4. Marcus Yuen (Founder & Managing Partner; Chairman & CEO of PinnacleAC)
5. Deborah Sinclair (Partner, Technology Investments; President of PinnacleAC)
6. Raymond Holtz (Chief Financial Officer of PinnacleAC, independent)
7. Nadia Petrova (Independent Director of PinnacleAC)
8. William K. Ashmore (Independent Director of PinnacleAC)
9. Ridgeline Whitfield Securities LLC (Lead Book-Running Manager)
10. Halyard Capital Markets Inc. (Co-Manager)
11. Continental Dunmore Financial (Trustee/Warrant Agent)
12. Whitmore & Caldwell LLP (Underwriters' Counsel)
13. Beckett & Hale LLP (Delaware Counsel)
14. Trask, Worthington & Giordano LLP (Auditor)
15. Northpoint Specialty Insurance Co. (D&O Insurance Carrier)
16. Donnovan Financial Printers Inc. (Printer/EDGAR Filing Agent)
2(b) Search Results
The conflicts search was conducted on March 11, 2021, by Priscilla Eng, Conflicts Analyst, in the firm's General Counsel's Office. The search returned the following results:
Hit (i): Ridgeline Whitfield Securities LLC. Calderwood & Harkness has represented Ridgeline Whitfield Securities LLC on three prior matters: (a) two M&A advisory transactions (Matter Nos. 38214.00001 and 39502.00003, both closed in 2019 and 2020, respectively) and (b) one equity offering in which Ridgeline Whitfield served as underwriter (Matter No. 40115.00002, closed in 2020). All three matters are closed, and there is no current or active representation of Ridgeline Whitfield by the firm. In this matter, Ridgeline Whitfield is the counterparty — it will serve as lead book-running manager and representative of the underwriters. The firm will be on the opposite side of the table from Ridgeline Whitfield in the negotiation of the Underwriting Agreement and related transaction documents. Because our prior representations of Ridgeline Whitfield are all closed matters and because Ridgeline Whitfield is serving as the counterparty (not as a co-client or adverse party in a dispute context), a standard counterparty waiver is not required under the firm's conflict-of-interest policies. No adverse representation has been identified. Ridgeline Whitfield is represented by its own counsel (Whitmore & Caldwell LLP) in this transaction. No conflict exists.
Hit (ii): Continental Dunmore Financial. Calderwood & Harkness represented Continental Dunmore Financial on one prior matter (Matter No. 37849.00001), involving a trust indenture in connection with a high-yield bond offering. That matter was closed in 2018, and no active representation of Continental Atlantic exists. In this transaction, Continental Atlantic serves in a ministerial capacity as trustee under the Investment Management Trust Agreement and warrant agent under the Warrant Agreement. Continental Atlantic's role is custodial and administrative in nature and does not give rise to any adversity or conflict. No conflict has been identified.
Hit (iii): No Other Hits. No conflicts were identified for any of the remaining parties searched, including Halyard Capital Markets Inc., Whitmore & Caldwell LLP, Beckett & Hale LLP, Trask, Worthington & Giordano LLP, Northpoint Specialty Insurance Co., Donnovan Financial Printers Inc., or any of the individual officers and directors listed above (Marcus Yuen, Deborah Sinclair, Raymond Holtz, Nadia Petrova, and William K. Ashmore). None of these individuals or entities appear in the firm's conflicts database as current or former clients, adverse parties, or otherwise.
2(c) Conclusion. CLEARED — No conflicts requiring waiver, informed consent, or declining the engagement have been identified. The two hits described above (Ridgeline Whitfield Securities LLC and Continental Dunmore Financial) involve closed prior representations that do not give rise to any current conflict, and neither party's role in this transaction presents adversity to any existing or former client interest. The engagement may proceed without restriction.
SECTION 3: MATTER DESCRIPTION
3(a) Transaction Type
This matter involves a Special Purpose Acquisition Company ("SPAC") Initial Public Offering within the Capital Markets practice area. Pinnacle Acquisition Corp. I is a blank-check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. The Company has no operations, revenues, or material assets other than the nominal cash received from the sale of Founder Shares to the Sponsor. The Company intends to raise proceeds through the IPO described below, deposit such proceeds (net of underwriting discounts and offering expenses) in a trust account, and thereafter identify and consummate an initial business combination.
3(b) Our Role
Calderwood & Harkness LLP will serve as issuer's counsel, representing both the Sponsor (Pinnacle Venture Fund II LP) and the Company (Pinnacle Acquisition Corp. I) as co-clients. This dual representation arrangement is addressed in further detail in Section 6(f) below and has been disclosed and consented to by both parties in the engagement letter dated March 15, 2021. The firm's role encompasses all securities, corporate, and transactional legal work associated with the IPO, including preparation of the Registration Statement, drafting and negotiation of all transaction agreements, delivery of legal opinions, and coordination with other counsel and service providers.
3(c) Governing Law
The principal governing law considerations for this matter are as follows:
• Delaware law governs all corporate and organizational matters relating to the Company (Pinnacle Acquisition Corp. I) and the Sponsor entities, including the Amended and Restated Certificate of Incorporation and Bylaws.
• New York law governs the Underwriting Agreement, the Investment Management Trust Agreement, the Warrant Agreement, and other principal transaction agreements, consistent with market practice for SPAC IPOs.
• Federal securities law (Securities Act of 1933 and Securities Exchange Act of 1934) governs the registration, offer, and sale of the Units, Class A common stock, and warrants.
3(d) Deal Value
The proposed deal value is summarized as follows:
Each Unit consists of one share of Class A common stock (par value $0.0001 per share) and one-half of one redeemable warrant. Each whole warrant is exercisable for one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment as set forth in the Warrant Agreement. Fractional warrants will not be issued, and only whole warrants will trade on the Nasdaq Capital Market following the separation of the Units.
The maximum offering size, assuming full exercise of the underwriters' over-allotment option, is $230,000,000, representing up to 3,000,000 additional Units (15% of the base offering). The total number of Public Warrants in the base offering is 10,000,000.
3(e) Listing. The Company has applied to list the Units, Class A common stock, and warrants on the Nasdaq Capital Market under the following ticker symbols:
The Units will begin trading on or promptly after the date of the final prospectus. The Class A common stock and warrants will begin separate trading on the 52nd day after the date of the final prospectus (or earlier, if Ridgeline Whitfield Securities LLC, as representative of the underwriters, informs the Company of its decision to allow earlier separate trading, subject to applicable securities law requirements and the filing of a Current Report on Form 8-K).
3(f) Underwriters. Lead Book-Running Manager:
• Ridgeline Whitfield Securities LLC
• Contact: Jonathan Haber, Managing Director, SPAC Origination
• Address: 299 Park Avenue, 31st Floor, New York, New York 10171
• Ridgeline Whitfield will serve as representative of the underwriters and will have primary responsibility for the marketing, distribution, and stabilization of the offering.
Co-Manager:
• Halyard Capital Markets Inc.
• Contact: Priya Ramachandran, Director
• Address: 1251 Avenue of the Americas, 18th Floor, New York, New York 10020
Underwriting discount Structure:
The underwriting discount will be structured as follows, consistent with prevailing SPAC IPO market practice:
The deferred underwriting discount is payable only upon the consummation of the Company's initial business combination and will be held in the trust account until that time. If no business combination is consummated within the applicable deadline, the deferred discount will not be paid and will be distributed to public shareholders along with the other trust proceeds.
Fee Split: Ridgeline Whitfield Securities LLC: 75%; Halyard Capital Markets Inc.: 25%.
3(g) Underwriters' Counsel
The underwriters are represented by Whitmore & Caldwell LLP, with Garrett Doyle, Partner, Capital Markets, serving as the lead attorney. Whitmore & Caldwell's principal office for this engagement is located at 100 Federal Street, 32nd Floor, Boston, Massachusetts 02110. Whitmore & Caldwell is a well-known capital markets firm and has acted as underwriters' counsel in numerous SPAC IPOs. Our engagement team has worked opposite Whitmore & Caldwell on prior transactions and expects an efficient and professional working relationship.
3(h) Delaware Counsel
Beckett & Hale LLP will serve as Delaware counsel to the Company. The lead attorney is Amanda Chisholm, Partner, at Beckett & Hale's Wilmington, Delaware office, located at 500 Delaware Avenue, Suite 1500, Wilmington, Delaware 19801. Beckett & Hale will provide the opinion of Delaware counsel regarding due authorization, valid issuance, and other matters under Delaware General Corporation Law, which opinion will be filed as an exhibit to the Registration Statement or delivered at closing, as applicable.
3(i) Auditor. The Company's independent registered public accounting firm is Trask, Worthington & Giordano LLP ("TWG"), with Sean Novotny, CPA, serving as the Lead Engagement Partner. TWG's office is located at 600 Montgomery Street, Suite 1800, San Francisco, California 94111. TWG is registered with the Public Company Accounting Oversight Board under PCAOB ID: 6241.
TWG's role in this transaction includes the audit of the Company's financial statements included in the Registration Statement, delivery of a comfort letter to the underwriters in customary form, and provision of consents for the use of TWG's audit report in the Registration Statement. The engagement team will coordinate closely with TWG and Sean Novotny regarding financial statement preparation, balance sheet presentation, and comfort letter deliverables.
3(j) Trustee / Warrant Agent
Continental Dunmore Financial will serve in a dual capacity as (i) trustee under the Investment Management Trust Agreement and (ii) warrant agent under the Warrant Agreement. Continental Atlantic's office is located at 17 Ashbury Asset Advisors, 14th Floor, New York, New York 10004. The trust account has been assigned Trust Account No.: TA-2021-07834.
As trustee, Continental Atlantic will hold the IPO proceeds (net of the upfront underwriting discount and offering expenses) in trust for the benefit of public shareholders and will invest such proceeds in United States government securities or qualifying money market funds meeting the conditions of Rule 2a-7 under the Investment Company Act of 1940. As warrant agent, Continental Atlantic will administer the issuance, transfer, exchange, and exercise of the warrants in accordance with the terms of the Warrant Agreement.
3(k) Other Service Providers
The following additional service providers have been engaged or will be engaged in connection with the IPO:
• Registered Agent: Capitol Registered Agents Inc., 1209 Orange Street, Wilmington, Delaware 19801. Capitol serves as the Company's registered agent in Delaware for purposes of service of process and other statutory requirements.
• D&O Insurance: Northpoint Specialty Insurance Co., 425 Lexington Avenue, 9th Floor, New York, New York 10017. Northpoint is providing directors' and officers' liability insurance coverage to the Company, with an aggregate limit of $10,000,000 under Policy No. NSI-SPD-210603. See Section 8(c) below for additional detail.
• Printer / EDGAR Filing Agent: Donnovan Financial Printers Inc., 55 Water Street, Suite 700, New York, New York 10041. Donnovan will handle all printing, typesetting, EDGAR conversion, and electronic filing services for the Registration Statement, prospectus, and closing binder materials.
3(l) Sponsor / Insider Economics
The economics of the Sponsor's investment in the Company are summarized as follows:
Founder Shares (Class B Common Stock):
The Sponsor was issued 5,750,000 shares of Class B common stock (the "Founder Shares") pursuant to a stock subscription agreement dated February 10, 2021, for an aggregate purchase price of $25,000 (approximately $0.004 per share). The Founder Shares will convert into shares of Class A common stock on a one-for-one basis (subject to adjustment) upon the consummation of an initial business combination. The Founder Shares are subject to certain transfer restrictions and lock-up provisions as set forth in the Letter Agreement.
Of the 5,750,000 Founder Shares, up to 750,000 shares are subject to forfeiture in the event the underwriters' over-allotment option is not exercised in full, such that the number of Founder Shares outstanding after the IPO will represent approximately 20% of the total shares of common stock outstanding (the customary "promote" structure).
Private Placement Warrants:
Simultaneously with the closing of the IPO, the Sponsor will purchase 7,000,000 Private Placement Warrants (or up to 7,900,000 Private Placement Warrants if the over-allotment option is exercised in full) at a price of $1.50 per warrant, generating aggregate proceeds of $10,500,000 (or up to $11,850,000 with full over-allotment exercise). The Private Placement Warrants are identical to the Public Warrants, except that (a) they are not redeemable by the Company so long as they are held by the Sponsor or its permitted transferees and (b) they may be exercised on a cashless basis under certain circumstances.
Total Sponsor Investment at Risk:
The proceeds from the sale of Private Placement Warrants, together with a portion of the IPO proceeds, will be deposited into the trust account so that the trust holds at least $10.00 per public share. Trust proceeds will be invested in U.S. government securities with a maturity of 185 days or less or in qualifying money market funds meeting the conditions of Rule 2a-7 under the Investment Company Act of 1940.
3(m) Target Criteria
The Company intends to focus its search for an initial business combination target in the enterprise SaaS and cloud technology sectors, consistent with the expertise and investment focus of the Sponsor. The Company is targeting businesses with an enterprise value in the range of $600,000,000 to $2,000,000,000. In accordance with the Company's Amended and Restated Certificate of Incorporation and applicable SEC regulations, the Company must use at least 80% of the net assets held in the trust account (excluding deferred underwriting discounts and taxes payable on trust interest) as consideration in connection with its initial business combination.
3(n) Business Combination Deadline
The Company will have 18 months from the closing of the IPO to consummate its initial business combination. Based on an anticipated IPO closing in late June 2021, the initial deadline would be approximately December 25, 2022.
The deadline is extendable to 24 months (approximately June 25, 2023) upon the Sponsor's deposit of $0.10 per public share into the trust account. Assuming 21,500,000 public shares are outstanding (reflecting a partial exercise of the over-allotment option), the extension deposit would total approximately $2,150,000. The terms and mechanics of the extension will be set forth in the Amended and Restated Certificate of Incorporation and the Investment Management Trust Agreement.
If the Company fails to consummate an initial business combination within the applicable deadline, the Company will (i) cease all operations except for the purpose of winding up, (ii) redeem all public shares at a per-share price equal to the aggregate amount then on deposit in the trust account (including interest earned, less taxes payable and up to $100,000 of interest to pay dissolution expenses), and (iii) dissolve and liquidate.
3(o) Key Corporate Information
Authorized Capital Stock:
SEC Registration: The Company's Registration Statement on Form S-1 has been assigned SEC File No. 333-254891.
Directors and Officers:
SECTION 4: ENGAGEMENT TEAM
The following Calderwood & Harkness attorneys have been assigned to this matter:
Jennifer Kwon will serve as the responsible partner for this engagement and will have overall supervisory responsibility for all legal work product and client communications. Theodore Langston will serve as the billing partner and will oversee fee arrangements, billing, and collection matters.
Claire Dempsey, as lead associate, will be responsible for day-to-day transaction management, including drafting the Registration Statement and transaction documents, coordinating with co-counsel and service providers, managing the SEC review process, and preparing closing deliverables. Audrey Zhou will support Claire Dempsey in all aspects of the engagement, including research, document preparation, and due diligence coordination.
Other attorneys and paraprofessionals within the Capital Markets Group or other practice groups may assist from time to time as needed, depending on workload, scheduling, and subject-matter requirements. Any significant changes to the engagement team will be communicated to the client.
SECTION 5: FEE ARRANGEMENT
Billing Method: This engagement will be billed on an hourly basis at Calderwood & Harkness's standard rates, which are as follows for the current billing year:
Rates are subject to the firm's annual rate adjustments, which typically take effect on January 1 of each year. Any such adjustments during the pendency of this engagement will be communicated to the client in advance.
Estimated Fee Cap: The parties have agreed to a fee cap of $750,000 for legal services rendered in connection with the IPO, exclusive of disbursements. Disbursements include, but are not limited to, the SEC registration fee (estimated at approximately $23,475 based on the maximum aggregate offering amount of $230,000,000), printing and EDGAR filing costs, travel expenses, overnight delivery, long-distance telephone charges, and other reasonable out-of-pocket expenses incurred by the firm on behalf of the client.
Billing Frequency: Invoices will be rendered on a monthly basis. Payment terms are net 30 days from the date of invoice.
Billing Party: All fees and expenses incurred in connection with this engagement will be the responsibility of Pinnacle Venture Fund II LP (the Sponsor). It is expected that certain legal fees and expenses will be reimbursable from the IPO proceeds as offering expenses, to the extent disclosed in the Registration Statement and permitted under applicable law. However, the Sponsor is solely responsible for payment to the firm regardless of whether reimbursement is obtained.
Scope Limitation: This engagement is limited to the IPO of Pinnacle Acquisition Corp. I as described herein. Any subsequent de-SPAC transaction, business combination, or other matter would require a separate engagement letter and fee arrangement, subject to updated conflict checks and risk assessments at that time.
SECTION 6: RISK ASSESSMENT
6(a) SEC Review Risk — MODERATE
Pinnacle Acquisition Corp. I is a first-time blank-check company issuer with no prior reporting history with the SEC. The Registration Statement on Form S-1 will be subject to review by the SEC's Division of Corporation Finance, Office of Finance (or such other office as the SEC may designate for SPAC filings). The engagement team anticipates filing a confidential draft registration statement ("DRS") with the SEC by late March 2021, taking advantage of the accommodations available to emerging growth companies under the JOBS Act.
Based on current SEC review timelines and the Division's focus on SPAC offerings, we expect at least one round of SEC staff comments on the initial DRS submission. Comment periods have been running approximately four weeks for SPAC filings during the first quarter of 2021, though timelines may vary depending on SEC workload and the complexity of comments received.
The Calderwood & Harkness engagement team has extensive experience in SPAC IPO transactions and has managed the SEC review and comment/response process on numerous prior SPAC offerings. We are well-positioned to respond efficiently to SEC comments and to navigate the review process with minimal delay to the transaction timeline.
Particular areas of SEC focus for SPAC Registration Statements in the current regulatory environment include:
• Disclosure regarding dilution from Founder Shares and Private Placement Warrants, including the quantification of the effective dilution to public shareholders from the sponsor promote structure;
• The terms and economics of the sponsor promote and the potential conflicts of interest arising therefrom;
• Business combination mechanics, including the voting threshold for approval, the redemption feature, and the extension provisions;
• Risk factor disclosure regarding the blank-check company structure and the speculative nature of the investment; and
• The adequacy of disclosure concerning the deferred underwriting discount and its impact on the amount available for the initial business combination.
The team will prepare a comprehensive disclosure package that addresses all of these areas and is consistent with current SEC staff expectations and guidance. Overall SEC review risk is assessed as MODERATE — elevated relative to a seasoned issuer's offering but manageable given the team's experience and the well-established market precedent for SPAC disclosure.
6(b) Reputational Risk — LOW
Reputational risk associated with this engagement is assessed as LOW for the following reasons:
• Financial Strength and Credibility of the Sponsor. Pinnacle Venture Fund II LP is a well-capitalized venture capital fund with approximately $725 million in assets under management across two funds. The Sponsor has a demonstrated track record of institutional-quality investing in the technology sector and is backed by a sophisticated investor base.
• Experienced Principals. Marcus Yuen, Founder and Managing Partner, and Deborah Sinclair, Partner, Technology Investments, both have established and well-regarded track records in technology venture investing. Their experience and reputations in the market will contribute positively to investor confidence during the IPO marketing process.
• Strong Independent Governance. The Company's board includes two independent directors — Nadia Petrova and William K. Ashmore — as well as an independent Chief Financial Officer, Raymond Holtz. Each of these individuals brings meaningful public company governance experience, which strengthens the Company's governance profile and mitigates potential reputational concerns.
• Clean Background. No negative press, regulatory actions, enforcement proceedings, civil litigation, or other adverse matters have been identified for any principal, officer, director, or entity associated with this transaction. Background searches and media screening have not revealed any issues of concern.
• Credible Sector Focus. The Company's target sector — enterprise SaaS and cloud technology — is experiencing strong public market interest, robust deal flow, and favorable investor sentiment. The Sponsor's deep domain expertise in this sector lends credibility to the Company's stated acquisition strategy and enhances the firm's reputational comfort with this engagement.
6(c) Regulatory Risk — MODERATE
Regulatory risk is assessed as MODERATE, reflecting the broader environment of increased SEC scrutiny of SPACs that has intensified throughout the first quarter of 2021. Key considerations include:
• SEC Staff Guidance and Potential Rulemaking. In March 2021, John Coates, the SEC's Acting Director of the Division of Corporation Finance, issued a public statement cautioning that the liability protections often assumed to apply to forward-looking statements and projections in the context of de-SPAC transactions may not be as robust as market participants have assumed. Specifically, the Acting Director questioned the availability of the safe harbor under the Private Securities Litigation Reform Act for projections made in connection with de-SPAC transactions and signaled that the SEC staff is closely examining SPAC-related disclosures.
• Potential New Rules. There is growing market expectation that the SEC may propose new rulemaking specifically targeting SPAC transactions, potentially including enhanced disclosure requirements regarding dilution, sponsor economics, and conflicts of interest; changes to the accounting treatment of warrants; and heightened liability standards for projections used in de-SPAC proxy solicitations.
• Scope Limitation. Importantly, the firm's engagement scope is limited to the IPO phase of this transaction. Any subsequent de-SPAC transaction would require a new engagement letter, updated conflict check, refreshed risk assessment, and potentially a different team composition to address the distinct legal issues that arise in the business combination context. This scope limitation materially reduces the firm's regulatory risk exposure in connection with this engagement.
• Disclosure Strategy. Notwithstanding the IPO-only scope of this engagement, the prospectus disclosure should robustly address the current regulatory environment, including specific risk factors relating to potential changes in SPAC regulation, the evolving SEC posture toward SPAC transactions, and the possibility that new rules or interpretive positions could affect the Company's ability to consummate its initial business combination or could increase the costs and regulatory burdens associated with doing so.
• Ongoing Monitoring. The engagement team should monitor SEC developments throughout the registration and marketing process, including any new staff statements, no-action letters, proposed rules, or enforcement actions relating to SPACs. If material regulatory developments occur prior to effectiveness or pricing, the team will assess whether supplemental disclosure or amendments to the Registration Statement are warranted.
6(d) Financial Risk (Collections) — LOW
The risk of non-payment or delayed payment is assessed as LOW based on the following considerations:
• The Sponsor has committed substantial capital at risk in connection with this transaction — an estimated $10,525,000 at the base offering level and up to $11,875,000 with full exercise of the over-allotment option — demonstrating a strong financial commitment to the success of the IPO.
• The Pinnacle platform manages approximately $725 million in assets under management across two funds. The Sponsor is well-capitalized and financially capable of paying legal fees throughout the engagement.
• The estimated fee cap of $750,000 is well within the Sponsor's financial capacity, representing a small fraction of the Sponsor's total investment and fund assets.
• Although Pinnacle Venture Fund II LP is a new client with no prior payment history with the firm, the Sponsor's financial profile, institutional backing, and commitment of substantial at-risk capital provide adequate assurance of creditworthiness. No concerns regarding collections have been identified.
6(e) Anti-Money Laundering / Sanctions Screening
In accordance with the firm's anti-money laundering ("AML") and sanctions compliance policies, the following screening procedures were completed:
• OFAC Screening: All individuals and entities identified in Section 2(a) above were screened against the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List, as well as all other applicable OFAC sanctions programs. No matches were found.
• U.S. Person Status: All principals (Marcus Yuen, Deborah Sinclair, Raymond Holtz, Nadia Petrova, and William K. Ashmore) are U.S. persons for purposes of OFAC and related compliance requirements. All entity clients are organized under the laws of the State of Delaware.
• Adverse Media and AML Databases: Screening of all individuals and entities against proprietary and third-party AML databases, adverse media sources, and politically exposed persons ("PEP") lists was completed. No adverse findings were identified.
• Conclusion: No AML, sanctions, or related compliance issues have been identified. The engagement may proceed without further action in this regard.
6(f) Dual Representation Considerations
This engagement involves dual representation — Calderwood & Harkness will represent both the Sponsor (Pinnacle Venture Fund II LP) and the Company (Pinnacle Acquisition Corp. I) as co-clients. This arrangement is standard market practice for SPAC IPOs and has been carefully considered in light of the firm's ethical obligations under the New York Rules of Professional Conduct.
Current Alignment of Interests. At this stage — prior to the IPO and prior to any business combination — the interests of the Sponsor and the Company are fully aligned. The Sponsor formed the Company, controls its board of directors, and is funding the Company's pre-IPO operations and organizational expenses. The Company has no operations, assets, or revenues independent of the Sponsor, and no public shareholders exist. There are no third-party interests that diverge from the Sponsor's interests at this time. Both the Sponsor and the Company share the common objective of completing a successful IPO on the most favorable terms reasonably obtainable.
Disclosure and Consent. The dual representation arrangement has been disclosed to and consented to by both clients in the engagement letter dated March 15, 2021. Each client has acknowledged the potential risks and benefits of joint representation and has provided informed consent in writing, as required by Rule 1.7 of the New York Rules of Professional Conduct.
Future Divergence. While interests are currently aligned, the engagement team recognizes that the interests of the Sponsor and the Company (and, following the IPO, the Company's public shareholders) may diverge in the future, particularly in the context of a business combination. For example, the Sponsor's economic interest in the Founder Shares (which were acquired for nominal consideration) and Private Placement Warrants may create incentives that are not perfectly aligned with the interests of public shareholders who paid $10.00 per share. If such a divergence arises, the firm will reassess the dual representation and, if necessary, recommend that one party (typically the Sponsor) retain independent counsel for the business combination or other matter giving rise to the divergence.
Joint and Several Representations in the Underwriting Agreement. The Underwriting Agreement will contain joint and several representations and warranties from both the Company and the Sponsor, which is consistent with market practice and further aligns the interests of the co-clients during the IPO phase. This structure reinforces the appropriateness of dual representation at this stage.
Ongoing Duty to Monitor. The engagement team will continue to monitor the dual representation throughout the engagement and will promptly advise both clients and the firm's General Counsel's Office if any circumstances arise that could create a material conflict between the co-clients.
SECTION 7: SCOPE OF LEGAL WORK / DELIVERABLES
Calderwood & Harkness's scope of engagement encompasses the following legal services and deliverables in connection with the IPO of Pinnacle Acquisition Corp. I:
1. Registration Statement on Form S-1. Preparation, drafting, and filing of the Registration Statement on Form S-1 (and all amendments thereto) with the SEC under the Securities Act of 1933, as amended. This includes the drafting of the preliminary and final prospectus, preparation of all exhibits, and management of the SEC review and comment/response process, including the initial confidential DRS submission and all subsequent amendments through effectiveness.
2. Underwriting Agreement. Drafting and negotiation of the Underwriting Agreement between the Company, the Sponsor, and Ridgeline Whitfield Securities LLC, as representative of the several underwriters, including all schedules and ancillary documents thereto.
3. Investment Management Trust Agreement. Drafting of the Investment Management Trust Agreement between the Company and Continental Dunmore Financial, as trustee, governing the establishment, maintenance, investment, and distribution of the trust account.
4. Warrant Agreement. Drafting of the Warrant Agreement between the Company and Continental Dunmore Financial, as warrant agent, governing the terms, conditions, exercise, and redemption of the Public Warrants and Private Placement Warrants.
5. Letter Agreement. Drafting of the Letter Agreement (insider lock-up and Founder Share transfer restrictions) among the Company, the Sponsor, and each officer and director of the Company, setting forth restrictions on the transfer of Founder Shares, Private Placement Warrants, and other insider securities, as well as other customary covenants and agreements.
6. Registration Rights Agreement. Drafting of the Registration Rights Agreement among the Company, the Sponsor, and certain other security holders, providing for customary demand and piggyback registration rights with respect to the Founder Shares (and the Class A common stock issuable upon conversion thereof), Private Placement Warrants, and other registrable securities.
7. Amended and Restated Certificate of Incorporation and Bylaws. Preparation of the Amended and Restated Certificate of Incorporation and Bylaws of the Company, to be effective upon the closing of the IPO, reflecting the Company's post-IPO capital structure, governance provisions, and business combination mechanics (including the redemption feature, the extension provisions, the anti-dilution provisions, and other customary SPAC charter provisions).
8. Legal Opinions and Negative Assurance Letter. Delivery of customary legal opinions to the underwriters, including an opinion regarding the valid issuance of the securities being offered, the due authorization and execution of the transaction documents, and other customary matters. Delivery of a 10b-5 negative assurance letter to the underwriters, providing negative assurance as to the material accuracy and completeness of the Registration Statement and prospectus.
9. Tax Opinion. Delivery of a tax opinion regarding the federal income tax treatment of the Units, including the allocation of the Unit purchase price between the Class A common stock and the warrants for federal income tax purposes.
10. Closing Deliverables. Preparation of all closing deliverables, including officer's certificates, secretary's certificate, good standing certificates, closing checklist, and such other customary documents and instruments as may be required in connection with the closing of the IPO and, if applicable, the exercise of the over-allotment option.
11. General Advice. General corporate and securities law advice to the Company and the Sponsor in connection with the IPO, including advice regarding Nasdaq listing requirements, blue sky compliance, corporate governance, and SEC reporting obligations following the IPO.
12. Coordination with Other Counsel and Service Providers. Coordination with Beckett & Hale LLP (Delaware law opinion), Trask, Worthington & Giordano LLP (comfort letter and consent), Continental Dunmore Financial (trust and warrant agent matters), Donnovan Financial Printers Inc. (printing and EDGAR filing), and Northpoint Specialty Insurance Co. (D&O insurance), as applicable.
13. Exclusion — De-SPAC Transaction. For the avoidance of doubt, the scope of this engagement does not include representation in connection with any de-SPAC transaction, initial business combination, proxy solicitation, merger agreement negotiation, or related matter. Any such representation would require a separate engagement letter, updated conflict check, and separate fee arrangement.
SECTION 8: SPECIAL INSTRUCTIONS
8(a) Client Service
This matter represents the firm's first engagement for Pinnacle Venture Fund II LP and the broader Pinnacle platform. As such, the responsible partner and the entire engagement team should ensure an especially high level of client service, responsiveness, and communication throughout the engagement. The objective is not only to provide excellent legal work product but also to establish a strong, lasting relationship that positions Calderwood & Harkness for future engagements with Pinnacle, including potential representation in the de-SPAC transaction and other fund-related matters.
Regular status calls with Marcus Yuen and Deborah Sinclair should be scheduled throughout the registration and marketing process. At a minimum, the team should plan for weekly calls during the drafting and SEC review phases and daily calls during the marketing and pricing phases. Jennifer Kwon (responsible partner) should participate in all significant client communications and should make herself available to Marcus Yuen and Deborah Sinclair on a timely basis throughout the engagement.
8(b) S-1 Review Process
All drafts of the Registration Statement on Form S-1 must be circulated through the firm's internal Capital Markets review process before any submission to the SEC. This includes the initial confidential DRS submission as well as all subsequent amendments. The internal review process is designed to ensure quality control, consistency with the firm's drafting standards, and compliance with current SEC requirements and staff positions.
Given the heightened SEC focus on SPAC disclosures in the current regulatory environment, particular attention should be paid to the following areas of the prospectus:
• Risk Factors. Risk factors should comprehensively address the risks of dilution from the sponsor promote structure, the blank-check company format, the speculative nature of the investment, the potential for regulatory changes affecting SPACs, and the conflicts of interest inherent in the sponsor/public shareholder dynamic.
• Dilution Disclosure. The dilution table and related discussion should clearly and quantitatively present the effective dilution that public shareholders will experience as a result of the Founder Shares, the Private Placement Warrants, and the deferred underwriting discount.
• Conflicts of Interest. Disclosure regarding the potential conflicts of interest between the Sponsor, the Company's officers and directors, and the public shareholders should be thorough and balanced, consistent with current SEC expectations.
• Blank-Check Company Structure. The description of the Company's business combination mechanics, including the voting threshold, the redemption feature, and the extension provisions, should be drafted with precision and clarity.
The engagement team should also ensure that all financial data contained in the prospectus is fully reconciled with TWG's audited financial statements and that any pro forma or estimated figures are clearly labeled and consistent with the audited numbers. Any discrepancies should be resolved with TWG prior to filing.
8(c) D&O Insurance
A D&O insurance binder must be confirmed and in place prior to the effectiveness of the Registration Statement. The Company is obtaining directors' and officers' liability insurance coverage from Northpoint Specialty Insurance Co., located at 425 Lexington Avenue, 9th Floor, New York, New York 10017.
The relevant policy details are as follows:
Claire Dempsey is responsible for coordinating with Raymond Holtz (CFO) to ensure that the D&O insurance binder is obtained and confirmed before the effective date of the Registration Statement. A copy of the binder (or the final policy, if available) should be included in the closing binder. The team should confirm that the policy provides appropriate coverage for all directors and officers named in the Registration Statement, including coverage for pre-IPO acts and omissions to the extent applicable.
8(d) Closing Binder and Document Distribution
The closing binder and electronic document set will be prepared by Donnovan Financial Printers Inc., located at 55 Water Street, Suite 700, New York, New York 10041. Donnovan will compile, organize, and produce both physical and electronic closing sets in accordance with the firm's instructions and the parties' requirements.
The final closing set is to be assembled and distributed to all parties within 14 business days after the final closing (i.e., the later of the initial closing and the closing of the over-allotment option, or the expiration of the over-allotment option period without exercise).
Electronic copies of the closing set will be distributed via a secure data room hosted by Donnovan Financial Printers Inc. Access to the data room will be restricted to authorized representatives of the following parties:
1. Pinnacle Acquisition Corp. I (the Company)
2. Pinnacle Venture Fund II LP (the Sponsor)
3. Ridgeline Whitfield Securities LLC (Lead Book-Running Manager)
4. Halyard Capital Markets Inc. (Co-Manager)
5. Whitmore & Caldwell LLP (Underwriters' Counsel)
6. Beckett & Hale LLP (Delaware Counsel)
7. Trask, Worthington & Giordano LLP (Auditor)