1015-00001 · Graymont Brothers Inc · Blue Sky

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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by Calderwood & Harkness LLP at the direction of counsel and solely for the internal use of the deal team. This memorandum should not be disclosed to any third party without the prior written consent of the undersigned.

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I. Executive Summary and Purpose

This memorandum analyzes the state securities law requirements—commonly referred to as "blue sky" requirements—applicable to the proposed initial public offering (the "IPO" or the "Offering") of shares of common stock, par value $0.01 per share (the "Common Stock"), of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a Delaware corporation headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746.

The Offering contemplates an aggregate offering size of approximately $600,000,000 (inclusive of the overallotment option), at an assumed midpoint price of $22.00 per share. The Common Stock is expected to be listed on the New York Stock Exchange (the "NYSE") under the proposed ticker symbol "CBRI." The Offering comprises both a primary component and a secondary component, as described below.

The key parties to the transaction are as follows:

• Issuer: Calloway-Briggs Renewables Inc., a Delaware corporation

• Issuer's Counsel: Calderwood & Harkness LLP ("C&H")

• Underwriters' Counsel: Prescott, Danforth & Yee LLP ("PD&Y") (Margaret Yee, lead)

• Lead-Left Book-Running Manager: Hargrove Keating & Co. ("Hargrove Keating") (Oliver Marchetti, Managing Director, Equity Capital Markets)

• Joint Book-Runners: Linden Pratt Securities LLC ("Linden Pratt") and Graymont Brothers Inc. ("Graymont Brothers")

• Co-Managers: Barfield Stuart & Co. ("Barfield Stuart") and Crane Whitley Capital LLC ("Crane Whitley")

• Selling Stockholder: Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), selling approximately $150,000,000, or 6,818,182 shares, of Common Stock in a secondary offering

• Selling Stockholder's Counsel: Whitfield Archer & Doss LLP (Philip Archer, Christine Navarro)

In the primary component of the Offering, the Company expects to sell approximately 16,895,455 shares of Common Stock for aggregate gross proceeds of approximately $371,700,000 (exclusive of the overallotment option). In the secondary component, Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership and the Company's largest pre-IPO stockholder, expects to sell approximately 6,818,182 shares of Common Stock for aggregate gross proceeds of approximately $150,000,000. The overallotment option, if exercised in full, would provide for the sale of additional shares by the Company and/or the Selling Stockholder, bringing the total aggregate offering size to approximately $600,000,000.

Principal Conclusion. Because the Common Stock will be listed on the NYSE, it will constitute a "covered security" under the National Securities Markets Improvement Act of 1996 ("NSMIA"), which amended Section 18 of the Securities Act of 1933, as amended (the "Securities Act"). As a covered security, the Offering is preempted from state registration, qualification, and merit review requirements in all 50 states, the District of Columbia, and the United States territories, subject to limited exceptions relating to (a) state notice filing requirements, (b) associated filing fees, and (c) continuing state antifraud authority.

This memorandum surveys the following areas in detail:

(a) the scope and application of NSMIA preemption to the Offering;

(b) the state-by-state notice filing and fee requirements applicable to the Offering, including a comprehensive table covering all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands;

(c) an analysis of blue sky considerations in the states with particular operational relevance to CBR, specifically Texas, New Mexico, Arizona, California, Oklahoma, Delaware, and New York; and

(d) secondary-market trading considerations following the completion of the IPO, including Rule 144 resale implications and the impact of the Registration Rights Agreement.

This memorandum should be read in conjunction with the Blue Sky Filing Checklist and Status Tracker, which is maintained as a separate document in the matter files and will be updated on an ongoing basis through the closing of the Offering.

II. Legal Framework — National Securities Markets Improvement Act of 1996

A. Overview of NSMIA

The National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3416 (1996) ("NSMIA"), was enacted by Congress to create a more uniform national framework for securities regulation by limiting the ability of individual states to impose duplicative registration and qualification requirements on certain categories of securities offerings. NSMIA amended Section 18 of the Securities Act of 1933 (15 U.S.C. § 77r) to introduce the concept of "covered securities"—a category of securities that is substantially exempt from state-level registration and qualification requirements.

Prior to the enactment of NSMIA, issuers conducting public offerings were required to comply with not only the federal registration requirements of the Securities Act but also the separate and often divergent registration, qualification, or merit review requirements of each state in which the securities were offered or sold. This system of dual federal-state regulation imposed significant costs and delays on issuers, particularly for large, nationally distributed offerings. NSMIA addressed these inefficiencies by preempting state registration requirements for covered securities while preserving certain important aspects of state regulatory authority.

The key features of NSMIA, as relevant to the Offering, are as follows:

(i) Preemption of State Registration. NSMIA preempts state registration and qualification requirements for covered securities, meaning that states may not require an issuer to register a covered security under state law, submit to state merit review, or obtain state approval before offering or selling a covered security within the state.

(ii) Preservation of State Antifraud Authority. NSMIA does not preempt state antifraud authority. Each state retains full power to investigate and bring enforcement actions for fraud in connection with the offer or sale of securities, including covered securities. This reservation of antifraud authority is set forth in Section 18(c)(1) of the Securities Act.

(iii) Preservation of State Notice Filing Authority. NSMIA does not preempt state authority to require notice filings and to collect fees in connection with offerings of covered securities. States may require issuers to file a notice, typically consisting of a copy of the federal registration statement or a designated state notice filing form, and to pay a filing fee, as a condition of offering covered securities within the state. This authority is set forth in Section 18(c)(2) of the Securities Act.

B. Definition of "Covered Security"

Under Section 18(b)(1) of the Securities Act (15 U.S.C. § 77r(b)(1)), a "covered security" includes any security that is listed, or authorized for listing, on the New York Stock Exchange, the Nasdaq Stock Market, or any other national securities exchange that has been designated by the Securities and Exchange Commission (the "SEC") by rule as having listing standards substantially similar to those of the NYSE or Nasdaq. The SEC has designated certain other exchanges as meeting this standard; however, for purposes of this memorandum, the relevant exchange is the NYSE.

CBR's Common Stock will be listed on the NYSE upon approval of the Company's listing application. NYSE Listing Application No. NYSE-2022-04218 was submitted to the NYSE on behalf of the Company and is currently under review. Upon approval of the listing application and authorization for listing, the shares of Common Stock to be offered and sold in the Offering will constitute "covered securities" under Section 18(b)(1) of the Securities Act.

Both the primary shares to be issued and sold by the Company (approximately 16,895,455 shares, exclusive of the overallotment option) and the secondary shares to be sold by Pinnacle Vista Capital Partners III, LP (approximately 6,818,182 shares) qualify as covered securities, provided that the NYSE listing is approved. There is no distinction under NSMIA between primary and secondary shares for purposes of the covered security analysis; the relevant inquiry is whether the securities are of a class listed, or authorized for listing, on a qualifying national securities exchange.

We have reviewed the NYSE listing standards applicable to CBR and, based on the Company's financial condition, market capitalization, and other listing criteria, we expect that the NYSE will approve the listing application in due course. We will update this analysis if the listing application is not approved or if the Company elects to list on a different exchange.

C. Scope of Preemption

The preemptive effect of NSMIA, as applied to the Offering, may be summarized as follows:

(i) State Registration Preempted. No state may require CBR to register or qualify the Common Stock under state securities law as a condition of offering or selling the Common Stock within the state. This preemption applies to both the initial public offering and to any subsequent offering of Common Stock that is listed on the NYSE.

(ii) State Merit Review Preempted. No state may impose substantive merit review on the Offering, including requirements relating to the fairness of the offering price, the adequacy of disclosure, or the suitability of the investment for investors within the state. Certain states, notably California and Texas, historically maintained active merit review programs that applied to securities offerings conducted within their borders; these programs are preempted by NSMIA with respect to covered securities.

(iii) Notice Filings Permitted. States may require issuers to file a notice, typically consisting of a copy of the Form S-1 registration statement (or a summary thereof) and a designated state notice filing form, as a condition of offering covered securities within the state. The notice filing is administrative in nature and does not involve substantive review of the offering.

(iv) Fees Permitted. States may collect a filing fee in connection with the notice filing. These fees are typically nominal and are subject to statutory maximums that vary by state.

(v) Antifraud Authority Preserved. States retain full antifraud authority with respect to covered securities, as discussed in greater detail in Section IV of this memorandum.

(vi) Broker-Dealer Registration Not Preempted. NSMIA does not preempt state broker-dealer registration requirements. All underwriters participating in the Offering must be registered (or exempt from registration) as broker-dealers in each state in which they offer or sell securities, as discussed in greater detail in Section V of this memorandum.

D. Interaction with SEC Registration

The Offering will be registered under the Securities Act on Form S-1. The registration process is proceeding as follows:

• A confidential draft registration statement on Form S-1 (DRS-1) was submitted to the SEC on April 11, 2022 (EDGAR Accession No. 0001948372-22-000001) under the confidential submission process available to emerging growth companies ("EGCs") under Title I of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). CBR qualifies as an EGC because its total annual gross revenues for fiscal year 2021 were approximately $487.3 million, which is below the $1.235 billion EGC revenue threshold then in effect under the Securities Act.

• The SEC issued a first-round comment letter on May 6, 2022, containing 18 comments. Amendment No. 1 to the registration statement was filed on May 20, 2022 in response to the SEC's comments.

• The SEC issued a second-round comment letter on June 3, 2022, containing 7 comments. Amendment No. 2 to the registration statement was filed on June 10, 2022.

• The SEC provided oral clearance of the registration statement on June 14, 2022, subject to the filing of a pricing amendment and related exhibits. As of the date of this memorandum, the pricing amendment has not yet been filed, and the registration statement has not been declared effective.

Upon pricing of the Offering and the filing of the pricing amendment, the SEC is expected to declare the registration statement effective. At that point, NSMIA preemption will fully attach for state blue sky purposes, and the state notice filing and fee requirements described in this memorandum will become operative. We note that, as discussed in Section X below, the Offering was placed in dormant status on June 17, 2022, and the pricing amendment has not been filed as of the date of this memorandum update.

III. State-by-State Survey: Notice Filing Requirements and Fees

A. Methodology

This survey covers all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. For each jurisdiction, we have analyzed the following:

(i) whether the jurisdiction requires a notice filing for covered securities offered or sold within the jurisdiction;

(ii) the form required for the notice filing, which typically consists of Form D, the Uniform Notice Filing form, a state-specific notice filing form, or a copy of the federal registration statement;

(iii) the filing fee, including any applicable minimum or maximum amounts;

(iv) the timing or deadline for the notice filing (e.g., prior to the first offer in the state, concurrent with the first offer, or within a specified number of days following the first sale); and

(v) any special conditions, additional requirements, or noteworthy aspects of the state's notice filing regime.

Our analysis is based on a review of each state's applicable securities statute, administrative rules, and published guidance as of the date of this memorandum. We have also consulted the blue sky resources maintained by the North American Securities Administrators Association ("NASAA") and the blue sky filing services and databases commonly used by practitioners in this area. Where applicable, we have coordinated with Prescott, Danforth & Yee LLP, counsel to the underwriting syndicate, who customarily assumes responsibility for the preparation and filing of blue sky notice filings on behalf of the underwriters. PD&Y has indicated that Scott Halverson, a senior associate in their Capital Markets group, will serve as the primary point of contact for blue sky filing coordination.

We note that the blue sky landscape is subject to periodic change as states amend their securities statutes and administrative rules. Accordingly, we recommend that this survey be updated immediately prior to pricing to confirm that all filing requirements and fee calculations remain current.

B. States Requiring Notice Filings — Detailed Analysis of Key Jurisdictions

The following sections provide a detailed analysis of the blue sky notice filing requirements in the states with the greatest operational relevance to CBR, including the states in which CBR maintains its headquarters, renewable energy projects, or significant business operations, as well as states of incorporation and states in which key deal participants are located.

Texas. Texas is the most operationally significant state for purposes of the blue sky analysis. CBR's corporate headquarters are located in Austin, Texas, and the Company maintains major renewable energy generation and storage assets across the state, including:

• Solaris West Solar — Pecos County, Texas; 450 MW solar photovoltaic facility; currently operating.

• Pronghorn Wind — Nolan County, Texas; 510 MW onshore wind facility; currently operating.

• Brazos Storage — Fort Bend County, Texas; 200 MW / 800 MWh utility-scale battery energy storage system; currently operating.

• Mesquite Wind — Oldham County, Texas; 420 MW onshore wind facility; currently under construction, with expected commercial operation date ("COD") in Q3 2022.

• Silverleaf Wind — Irion County, Texas; 600 MW onshore wind facility; currently in the development pipeline, with expected COD to be determined.

CBR employs approximately 1,240 individuals, the majority of whom are based in Texas. The Company's primary operating subsidiary, Calloway-Briggs Operating Company LLC, is a Texas limited liability company. Multiple project-level special purpose vehicles ("SPVs"), including Solaris West Solar LLC, Pronghorn Wind LLC, Brazos Energy Storage LLC, Mesquite Wind Holdings LLC, and CBR Development Co. LLC, are organized as Texas limited liability companies.

The Texas blue sky requirements for covered securities are as follows:

Given CBR's significant Texas operations and the number of Texas-resident investors who are expected to participate in the Offering, timely compliance with the Texas notice filing requirement is essential.

New Mexico. CBR maintains a significant development-stage project in New Mexico:

• Cimarron Solar — Doña Ana County, New Mexico; 350 MW solar photovoltaic facility; currently under construction, with expected COD in Q1 2023. The project is being developed through Cimarron Solar Development LLC, a New Mexico limited liability company.

The Cimarron Solar project is currently financed through a construction-to-term credit facility in the principal amount of $143,000,000, provided by Prairie Commercial Bank, N.A. (Brent Hollowell, Senior Vice President, Project Finance, lead). The project is a material asset of the Company and is expected to be highlighted in the prospectus as a key growth driver.

The New Mexico blue sky requirements for covered securities are as follows:

Arizona. CBR maintains an operating renewable energy project in Arizona:

• Painted Rock Solar — Maricopa County, Arizona; 320 MW solar photovoltaic facility; currently operating, with COD in Q4 2020. The project is owned and operated through Painted Rock Solar LLC, an Arizona limited liability company.

The Arizona blue sky requirements for covered securities are as follows:

California. CBR is developing a major renewable energy and storage project in California:

• Copper Basin Solar + Storage — Riverside County, California; 750 MW solar photovoltaic facility plus 300 MW / 1,200 MWh battery energy storage system; currently in the development pipeline, with expected COD in Q2 2025.

California represents the largest individual project in CBR's development pipeline by capacity and is expected to be a significant contributor to the Company's future revenue and asset base. The California regulatory environment for renewable energy development is among the most complex in the nation, and CBR's operations in the state are subject to extensive state and local regulatory oversight.

The California blue sky requirements for covered securities are as follows:

Oklahoma. CBR maintains an operating renewable energy project in Oklahoma:

• Red Mesa Wind — Custer County, Oklahoma; 380 MW onshore wind facility; currently operating, with COD in Q1 2019. The project is owned and operated through Red Mesa Wind Energy LLC, an Oklahoma limited liability company.

The Oklahoma blue sky requirements for covered securities are as follows:

Delaware. Delaware is the state of incorporation for CBR, as well as for multiple subsidiaries and affiliated entities, including CBR Holdings LLC (a Delaware limited liability company), Pinnacle Vista Capital Partners III, LP (a Delaware limited partnership), and Pinnacle Vista Capital Management LLC (a Delaware limited liability company). Several of the underwriters and other deal participants are also incorporated or organized in Delaware, including Hargrove Keating & Co., Graymont Brothers Inc., Barfield Stuart & Co., Crane Whitley Capital LLC, and Linden Pratt Securities LLC.

CBR's registered agent in Delaware is Capitol Statutory Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. The Company's employer identification number is 83-4027615.

The Delaware blue sky requirements for covered securities are as follows:

New York. New York is the principal location of many of the key participants in the Offering, including:

• Calderwood & Harkness LLP — 599 Lexington Avenue, New York, NY 10022 (issuer's counsel)

• Prescott, Danforth & Yee LLP — 1271 Avenue of the Americas, New York, NY 10020 (underwriters' counsel)

• Whitfield Archer & Doss LLP — 51 West 52nd Street, New York, NY 10019 (selling stockholder's counsel)

• Hargrove Keating & Co. — 383 Madison Place, New York, NY 10017 (lead-left book-running manager)

• Linden Pratt Securities LLC — 200 Vesey Street, New York, NY 10281 (joint book-runner)

• Ashford & Pemberton LLP — 30 Rockefeller Plaza, Suite 2800, New York, NY 10112 (auditors / tax advisors)

• Pinnacle Vista Capital Partners III, LP — 900 Park Avenue, 38th Floor, New York, NY 10021 (selling stockholder)

Despite the significant New York nexus of the Offering, New York does not impose a state notice filing requirement for covered securities. New York has adopted the provisions of the Uniform Securities Act recognizing NSMIA preemption and does not require issuers to file a notice or pay a fee as a condition of offering covered securities within the state. The state securities regulator in New York is the New York Attorney General, Investor Protection Bureau, which retains antifraud jurisdiction over securities transactions occurring within the state.

C. Summary Table — All 50 States, D.C., and Territories

The following table provides a comprehensive summary of the notice filing requirements for covered securities in each of the 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. For purposes of this table, "Y" indicates that a notice filing is required, and "N" indicates that no notice filing is required. Filing forms, fees, and deadlines are provided in summary form; additional detail for specific jurisdictions may be found in the state-by-state analysis above and in Appendix A.

Summary Observations:

• Approximately 49 of the 50 states (plus the District of Columbia and U.S. territories) require some form of notice filing for covered securities offered or sold within the jurisdiction. New York and Wyoming do not require a notice filing for covered securities.

• The vast majority of states accept the Form D or the Uniform Notice Filing form. A small number of states, including Texas and California, require the use of a state-specific form.

• Filing fees range from $0 (in states that do not require a notice filing) to a maximum of approximately $1,000 (Florida). Most states impose fees in the range of $100 to $500.

• The total estimated blue sky filing fees for all jurisdictions in connection with the Offering are approximately $12,000 to $18,000. These fees will be included in the "Expenses of Issuance and Distribution" as reported in Part II of the Form S-1 (Item 13).

A more detailed version of this table, including citations to the applicable state statutes and administrative rules, is set forth in Appendix A to this memorandum.

D. Filing Mechanics and Coordination

The filing of state blue sky notice filings is customarily handled by underwriters' counsel in connection with an initial public offering. In this case, Prescott, Danforth & Yee LLP, as counsel to the underwriting syndicate, will prepare and file all blue sky notice filings on behalf of the underwriters. Calderwood & Harkness will coordinate with PD&Y to ensure that all filings are made on a timely basis and that any issuer-specific information or documentation required for the filings is provided to PD&Y in advance.

The following filing mechanics and coordination protocols will apply:

(i) Filing Timing. Most state notice filings will be made concurrent with or immediately following the effective date of the Form S-1 registration statement and the pricing of the Offering. Certain states permit post-offering filings within a specified number of days following the first sale in the state; however, as a matter of best practice, we recommend that all filings be made at or before the time of the initial offer to avoid any potential compliance issues.

(ii) Blue Sky Filing Checklist and Status Tracker. A comprehensive Blue Sky Filing Checklist and Status Tracker has been prepared as a separate document in the matter files. This tracker lists each jurisdiction, the applicable filing requirement, the required form, the fee amount, and the filing status. The tracker will be updated on an ongoing basis by PD&Y and circulated to the deal team at regular intervals.

(iii) Coordination Protocol. Calderwood & Harkness (Natasha Forbes / Brendan Walsh) will serve as the primary point of contact for blue sky coordination with PD&Y (Margaret Yee / Scott Halverson). Any questions or issues relating to specific state filing requirements should be directed to Brendan Walsh in the first instance.

(iv) Current Status. As of the date of this memorandum, all state notice filings remain in pending status. The Offering is in active preparation, but the pricing amendment has not been filed and the registration statement has not been declared effective. State notice filings will be executed upon pricing of the Offering. We note that the Offering was placed in dormant status on June 17, 2022 (as discussed further in Section X below), and all blue sky filings remain in pending status pending reactivation of the Offering.

IV. Antifraud Provisions — Continuing State Authority

A. Reservation of State Antifraud Jurisdiction

As noted above, NSMIA expressly preserves the authority of each state to investigate and bring enforcement actions for fraud in connection with securities transactions, including transactions involving covered securities. Section 18(c)(1) of the Securities Act provides that nothing in Section 18 shall be construed as affecting the jurisdiction of any state to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with securities or securities transactions.

This reservation of antifraud authority is broad and unconditional. Each of the 50 states and the District of Columbia retains antifraud jurisdiction over offerings and sales of covered securities occurring within their borders, regardless of the NSMIA preemption of state registration requirements. In practice, this means that the Company, its directors and officers, the Selling Stockholder, and the underwriters remain subject to potential state antifraud enforcement actions if any material misstatement or omission occurs in connection with the Offering.

The following state antifraud statutes are of particular relevance to CBR's Offering, given the Company's operational footprint:

• Texas: Texas Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581 et seq. (anti-fraud provisions, including Section 29 (civil liability for fraud) and Section 33A (administrative enforcement)).

• California: California Corporations Code §§ 25401 (unlawful to offer or sell a security by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact), 25501 (civil liability for violations of Section 25401), and 25501.5 (aiding and abetting liability).

• New York: The Martin Act, N.Y. Gen. Bus. Law Art. 23-A, §§ 352–359-h, which grants the New York Attorney General broad authority to investigate and prosecute securities fraud within New York. The Martin Act is notable for its low threshold for enforcement—the Attorney General is not required to prove scienter (intent to defraud) to bring a Martin Act enforcement action.

• Oklahoma: Oklahoma Uniform Securities Act, 71 Okla. Stat. § 1-101 et seq. (anti-fraud provisions).

• New Mexico: New Mexico Securities Act, N.M. Stat. Ann. §§ 58-13C-101 et seq. (anti-fraud provisions).

• Arizona: Arizona Securities Act, Ariz. Rev. Stat. Ann. §§ 44-1991 et seq. (anti-fraud provisions).

B. Practical Implications for the Offering

The continuing applicability of state antifraud provisions has several practical implications for the Offering:

(i) Accuracy of the Prospectus. The prospectus included in the Form S-1 registration statement must be accurate and complete under both federal securities laws (specifically, Sections 11 and 12(a)(2) of the Securities Act, which impose strict liability and negligence-based liability, respectively, for material misstatements or omissions in a registration statement and prospectus) and applicable state antifraud provisions. While the standard of liability varies among states, the general requirement of accuracy is consistent across all jurisdictions.

(ii) Risk Factor Disclosure. The risk factors section of the Form S-1 prospectus addresses, among other things, the regulatory and enforcement risks associated with CBR's operations in multiple states, including the risk that state securities regulators may investigate or bring enforcement actions against the Company or its affiliates in connection with the Offering.

(iii) No Additional State Prospectus Delivery Obligations. Because the Common Stock is a covered security, states may not impose additional prospectus delivery requirements beyond those required under federal law. The federal prospectus delivery requirements under Section 5 of the Securities Act, as modified by the Securities Offering Reform rules adopted by the SEC in 2005, govern the delivery of the prospectus to investors in the Offering.

(iv) Due Diligence. The due diligence process conducted by the underwriters and their counsel, including the review of the Company's operations, financial statements, and disclosures, serves to mitigate the risk of state antifraud liability as well as federal securities law liability. The "reasonable investigation" defense under Section 11(b) of the Securities Act provides a model for the level of diligence expected, and compliance with this standard is generally sufficient to address state antifraud concerns as well.

V. Broker-Dealer Registration Considerations

A. NSMIA Does Not Preempt Broker-Dealer Registration

It is important to note that NSMIA's preemption of state securities registration requirements does not extend to state broker-dealer registration requirements. State broker-dealer registration is a separate regulatory regime from securities registration, and each state retains full authority to require that broker-dealers be registered (or exempt from registration) as a condition of conducting securities business within the state.

All five members of the underwriting syndicate—Hargrove Keating & Co. (lead-left book-running manager), Linden Pratt Securities LLC (joint book-runner), Graymont Brothers Inc. (joint book-runner), Barfield Stuart & Co. (co-manager), and Crane Whitley Capital LLC (co-manager)—are SEC-registered broker-dealers and members of the Financial Industry Regulatory Authority ("FINRA"). Each underwriter is expected to maintain state broker-dealer registrations in all jurisdictions in which it will offer or sell securities in connection with the Offering.

Prescott, Danforth & Yee LLP, as underwriters' counsel, will be responsible for confirming that each underwriter is duly registered as a broker-dealer in each state in which the Offering will be made. Calderwood & Harkness will request that PD&Y provide this confirmation prior to the effective date of the registration statement. In addition, Calderwood & Harkness will request that the underwriting agreement include customary representations and warranties from each underwriter to the effect that it is duly registered as a broker-dealer in each state in which it will offer or sell the Common Stock and that it will comply with all applicable state broker-dealer registration requirements in connection with the Offering.

The following is a summary of the broker-dealer registration status of each underwriter:

We note that Hargrove Keating & Co. is a Delaware corporation with its principal offices at 383 Madison Place, New York, New York 10017. Hargrove Keating is the lead-left book-running manager and will serve as the representative of the underwriters under the underwriting agreement. Oliver Marchetti, Managing Director, Equity Capital Markets, is the lead banker on the Offering.

B. Selling Stockholder Considerations

Pinnacle Vista Capital Partners III, LP is selling approximately 6,818,182 shares of Common Stock (approximately $150,000,000 at the assumed midpoint offering price of $22.00 per share) as a selling stockholder in the Offering. Pinnacle Vista is not a registered broker-dealer and will sell its shares exclusively through the underwriting syndicate pursuant to the terms of the underwriting agreement.

As a selling stockholder, Pinnacle Vista is required to complete a selling stockholder questionnaire and representation letter, which has been prepared by Whitfield Archer & Doss LLP (Philip Archer, Christine Navarro) and submitted to Calderwood & Harkness for review. The questionnaire and representation letter confirm, among other things, that Pinnacle Vista is not a FINRA-restricted person or affiliate of a FINRA member, and that the sale of shares by Pinnacle Vista does not involve any arrangement that would require Pinnacle Vista or any of its affiliates to register as a broker-dealer under federal or state law. Pinnacle Vista Capital Management LLC, the general partner of Pinnacle Vista, has also confirmed that none of its managing partners, principals, or employees is a FINRA-restricted person.

No separate state broker-dealer registration is required for Pinnacle Vista in connection with the sale of its shares through the underwriting syndicate, provided that Pinnacle Vista does not engage in any direct solicitation or selling activities that would constitute "broker-dealer" activity under applicable state law.

VI. Secondary Market Trading Considerations

A. Post-IPO Secondary Trading

Under Section 18(b)(2) of the Securities Act (15 U.S.C. § 77r(b)(2)), securities of the same class as a covered security—i.e., securities that are identical in all material respects to a security that is listed on a national securities exchange—are themselves treated as covered securities for purposes of secondary-market transactions. This provision ensures that the NSMIA preemption extends not only to the initial public offering of covered securities but also to all subsequent secondary-market trading in securities of the same class.

Accordingly, after the completion of the IPO, secondary-market trading of CBR Common Stock on the NYSE will be exempt from state registration requirements. States may not impose registration, qualification, or merit review requirements on secondary-market purchases and sales of CBR Common Stock on the NYSE or in any other secondary-market transaction involving securities of the same class as the NYSE-listed Common Stock. This preemption applies to transactions effected through the NYSE, through any alternative trading system or electronic communications network, or in any over-the-counter market for NYSE-listed securities.

B. Rule 144 Resales

Rule 144 under the Securities Act (17 C.F.R. § 230.144) provides a safe harbor for the resale of restricted securities and the resale of securities by affiliates of the issuer. To the extent that CBR's Common Stock is listed on the NYSE, resales of restricted Common Stock under Rule 144 will constitute sales of covered securities for purposes of NSMIA preemption, and no state registration or qualification will be required for such resales.

This is particularly relevant to the following categories of holders who will hold restricted or control securities following the IPO:

• Pinnacle Vista Capital Partners III, LP — the Selling Stockholder, which will continue to hold a significant block of Common Stock following the IPO (subject to the lock-up described below).

• Garrett Calloway and Elaine Briggs — the Company's co-founders, who are expected to retain significant holdings of Common Stock following the IPO.

• Other Pre-IPO Holders — directors, executive officers, and other pre-IPO stockholders who hold restricted or control securities.

All of the foregoing holders are subject to a lock-up period of 180 days following the date of the final prospectus. The lock-up applies to all directors, executive officers, Pinnacle Vista Capital Partners III, LP, and all holders of 1% or more of the pre-IPO Common Stock (approximately 18 persons and entities in total). During the lock-up period, these holders may not, without the prior written consent of Hargrove Keating & Co. (as representative of the underwriters), directly or indirectly offer, sell, pledge, contract to sell, or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock.

The lock-up may be released prior to the expiration of the 180-day period only with the prior written consent of Hargrove Keating & Co. or upon the occurrence of a Change of Control (as defined in the lock-up agreement). Following the expiration of the lock-up period (or earlier release), the holders will be free to resell their shares in compliance with Rule 144 or pursuant to an effective registration statement, subject to any applicable volume limitations, manner of sale requirements, and other conditions of Rule 144.

State blue sky considerations do not impose additional holding periods, volume limitations, or other restrictions on resales of NYSE-listed covered securities beyond those imposed by Rule 144 and federal securities law. The NSMIA preemption ensures that state law does not add a separate layer of regulation to secondary-market resales of covered securities.

C. Registration Rights and Future Offerings

Pursuant to the Registration Rights Agreement to be entered into in connection with the IPO (the "Registration Rights Agreement"), Pinnacle Vista Capital Partners III, LP will be granted the following registration rights with respect to its remaining shares of Common Stock:

• Demand Registration Rights: Pinnacle Vista will have the right to demand that the Company file a registration statement under the Securities Act covering the resale of Pinnacle Vista's shares, subject to customary limitations on the number and frequency of demand registrations.

• Piggyback Registration Rights: Pinnacle Vista will have the right to include its shares in any registered offering of Common Stock by the Company, subject to customary cutback provisions.

• S-3 Shelf Registration Rights: Pinnacle Vista will have the right to demand that the Company file a registration statement on Form S-3 (or any successor form) for the shelf registration of Pinnacle Vista's shares, provided that the Company is then eligible to use Form S-3.

Any future registered offering of CBR Common Stock—whether pursuant to the exercise of demand registration rights, a shelf takedown, or an offering initiated by the Company—will continue to benefit from NSMIA preemption so long as the NYSE listing is maintained. State notice filing requirements would apply to any such future registered offering in the same manner as the IPO, requiring the filing of notice forms and payment of fees in each jurisdiction that requires them.

It is important to note that if CBR were to lose its NYSE listing for any reason (e.g., failure to meet continued listing standards, voluntary delisting, or suspension of trading), NSMIA preemption would cease to apply to the Company's Common Stock, and full state registration, qualification, and merit review requirements could apply to any subsequent offering. In such a scenario, a comprehensive state-by-state registration analysis would be required before any offering could proceed. We do not currently anticipate any risk to CBR's NYSE listing, but we flag this as a contingency that should be monitored on an ongoing basis.

VII. States with Specific Relevance to CBR Operations

This Section provides a consolidated summary of the blue sky considerations in each of the states with specific operational relevance to CBR, incorporating the notice filing requirements discussed in Section III and the antifraud considerations discussed in Section IV.

A. Texas (Headquarters and Multiple Projects)

Texas is the state of greatest operational significance to CBR. The Company's corporate headquarters are located at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746, and the Company employs approximately 1,240 individuals, the majority of whom are based in Texas.

CBR maintains the following renewable energy generation and storage projects in Texas:

The Company's primary operating subsidiary, Calloway-Briggs Operating Company LLC, is a Texas limited liability company. Multiple project-level SPVs are organized as Texas limited liability companies, including Solaris West Solar LLC, Pronghorn Wind LLC, Brazos Energy Storage LLC, Mesquite Wind Holdings LLC, and CBR Development Co. LLC.

Blue Sky Summary — Texas:

• Notice filing required (Form 133.33; fee of 1/10 of 1% of aggregate offering price of securities sold in Texas, minimum $25, maximum $500).

• No merit review; NSMIA preemption applies.

• Texas State Securities Board retains antifraud authority under the Texas Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581 et seq.

• All underwriters must be registered as broker-dealers in Texas.

B. New Mexico

CBR is constructing a major solar project in New Mexico:

• Cimarron Solar — Doña Ana County, New Mexico; 350 MW solar photovoltaic facility; currently under construction, with expected COD in Q1 2023. The project is developed and will be owned through Cimarron Solar Development LLC, a New Mexico limited liability company.

The Cimarron Solar project is financed through a construction-to-term credit facility in the principal amount of $143,000,000, provided by Prairie Commercial Bank, N.A. (Brent Hollowell, Senior Vice President, Project Finance). This facility will convert to a term loan upon achievement of commercial operation.

Blue Sky Summary — New Mexico:

• Notice filing required (Uniform Notice Filing form; nominal fee).

• NSMIA preemption applies; no merit review.

• New Mexico Securities Division retains antifraud authority under the New Mexico Securities Act, N.M. Stat. Ann. §§ 58-13C-101 et seq.

• All underwriters must be registered as broker-dealers in New Mexico.

C. Arizona

CBR operates a solar project in Arizona:

Blue Sky Summary — Arizona:

• Notice filing required (Uniform Notice Filing form or state form; applicable fee per Arizona Securities Act).

• NSMIA preemption applies; no merit review.

• Arizona Corporation Commission, Securities Division retains antifraud authority under the Arizona Securities Act, Ariz. Rev. Stat. Ann. §§ 44-1991 et seq.

• All underwriters must be registered as broker-dealers in Arizona.

D. California

CBR is developing its largest project in California:

California represents the most significant growth opportunity in CBR's development pipeline. The state's ambitious renewable energy mandate (SB 100, requiring 100% clean energy by 2045) and its active procurement processes for utility-scale renewable energy and storage make California a critical market for the Company's long-term growth strategy.

Blue Sky Summary — California:

• Notice filing required (Form 25102(n) or successor form; fee calculated based on offering amount, subject to statutory maximum).

• NSMIA preemption applies; no merit review. California historically had one of the most rigorous merit review programs in the nation; this is preempted for covered securities.

• California Department of Financial Protection and Innovation retains antifraud authority under California Corporations Code §§ 25401, 25501.

• All underwriters must be registered as broker-dealers in California.

E. Oklahoma

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by Calderwood & Harkness LLP at the direction of counsel and solely for the internal use of the deal team. This memorandum should not be disclosed to any third party without the prior written consent of the undersigned.
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I. Executive Summary and Purpose
This memorandum analyzes the state securities law requirements—commonly referred to as "blue sky" requirements—applicable to the proposed initial public offering (the "IPO" or the "Offering") of shares of common stock, par value $0.01 per share (the "Common Stock"), of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a Delaware corporation headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746.
The Offering contemplates an aggregate offering size of approximately $600,000,000 (inclusive of the overallotment option), at an assumed midpoint price of $22.00 per share. The Common Stock is expected to be listed on the New York Stock Exchange (the "NYSE") under the proposed ticker symbol "CBRI." The Offering comprises both a primary component and a secondary component, as described below.
The key parties to the transaction are as follows:
• Issuer: Calloway-Briggs Renewables Inc., a Delaware corporation
• Issuer's Counsel: Calderwood & Harkness LLP ("C&H")
• Underwriters' Counsel: Prescott, Danforth & Yee LLP ("PD&Y") (Margaret Yee, lead)
• Lead-Left Book-Running Manager: Hargrove Keating & Co. ("Hargrove Keating") (Oliver Marchetti, Managing Director, Equity Capital Markets)
• Joint Book-Runners: Linden Pratt Securities LLC ("Linden Pratt") and Graymont Brothers Inc. ("Graymont Brothers")
• Co-Managers: Barfield Stuart & Co. ("Barfield Stuart") and Crane Whitley Capital LLC ("Crane Whitley")
• Selling Stockholder: Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), selling approximately $150,000,000, or 6,818,182 shares, of Common Stock in a secondary offering
• Selling Stockholder's Counsel: Whitfield Archer & Doss LLP (Philip Archer, Christine Navarro)
In the primary component of the Offering, the Company expects to sell approximately 16,895,455 shares of Common Stock for aggregate gross proceeds of approximately $371,700,000 (exclusive of the overallotment option). In the secondary component, Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership and the Company's largest pre-IPO stockholder, expects to sell approximately 6,818,182 shares of Common Stock for aggregate gross proceeds of approximately $150,000,000. The overallotment option, if exercised in full, would provide for the sale of additional shares by the Company and/or the Selling Stockholder, bringing the total aggregate offering size to approximately $600,000,000.
Principal Conclusion. Because the Common Stock will be listed on the NYSE, it will constitute a "covered security" under the National Securities Markets Improvement Act of 1996 ("NSMIA"), which amended Section 18 of the Securities Act of 1933, as amended (the "Securities Act"). As a covered security, the Offering is preempted from state registration, qualification, and merit review requirements in all 50 states, the District of Columbia, and the United States territories, subject to limited exceptions relating to (a) state notice filing requirements, (b) associated filing fees, and (c) continuing state antifraud authority.
This memorandum surveys the following areas in detail:
(a) the scope and application of NSMIA preemption to the Offering;
(b) the state-by-state notice filing and fee requirements applicable to the Offering, including a comprehensive table covering all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands;
(c) an analysis of blue sky considerations in the states with particular operational relevance to CBR, specifically Texas, New Mexico, Arizona, California, Oklahoma, Delaware, and New York; and
(d) secondary-market trading considerations following the completion of the IPO, including Rule 144 resale implications and the impact of the Registration Rights Agreement.
This memorandum should be read in conjunction with the Blue Sky Filing Checklist and Status Tracker, which is maintained as a separate document in the matter files and will be updated on an ongoing basis through the closing of the Offering.
II. Legal Framework — National Securities Markets Improvement Act of 1996
A. Overview of NSMIA
The National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3416 (1996) ("NSMIA"), was enacted by Congress to create a more uniform national framework for securities regulation by limiting the ability of individual states to impose duplicative registration and qualification requirements on certain categories of securities offerings. NSMIA amended Section 18 of the Securities Act of 1933 (15 U.S.C. § 77r) to introduce the concept of "covered securities"—a category of securities that is substantially exempt from state-level registration and qualification requirements.
Prior to the enactment of NSMIA, issuers conducting public offerings were required to comply with not only the federal registration requirements of the Securities Act but also the separate and often divergent registration, qualification, or merit review requirements of each state in which the securities were offered or sold. This system of dual federal-state regulation imposed significant costs and delays on issuers, particularly for large, nationally distributed offerings. NSMIA addressed these inefficiencies by preempting state registration requirements for covered securities while preserving certain important aspects of state regulatory authority.
The key features of NSMIA, as relevant to the Offering, are as follows:
(i) Preemption of State Registration. NSMIA preempts state registration and qualification requirements for covered securities, meaning that states may not require an issuer to register a covered security under state law, submit to state merit review, or obtain state approval before offering or selling a covered security within the state.
(ii) Preservation of State Antifraud Authority. NSMIA does not preempt state antifraud authority. Each state retains full power to investigate and bring enforcement actions for fraud in connection with the offer or sale of securities, including covered securities. This reservation of antifraud authority is set forth in Section 18(c)(1) of the Securities Act.
(iii) Preservation of State Notice Filing Authority. NSMIA does not preempt state authority to require notice filings and to collect fees in connection with offerings of covered securities. States may require issuers to file a notice, typically consisting of a copy of the federal registration statement or a designated state notice filing form, and to pay a filing fee, as a condition of offering covered securities within the state. This authority is set forth in Section 18(c)(2) of the Securities Act.
B. Definition of "Covered Security"
Under Section 18(b)(1) of the Securities Act (15 U.S.C. § 77r(b)(1)), a "covered security" includes any security that is listed, or authorized for listing, on the New York Stock Exchange, the Nasdaq Stock Market, or any other national securities exchange that has been designated by the Securities and Exchange Commission (the "SEC") by rule as having listing standards substantially similar to those of the NYSE or Nasdaq. The SEC has designated certain other exchanges as meeting this standard; however, for purposes of this memorandum, the relevant exchange is the NYSE.
CBR's Common Stock will be listed on the NYSE upon approval of the Company's listing application. NYSE Listing Application No. NYSE-2022-04218 was submitted to the NYSE on behalf of the Company and is currently under review. Upon approval of the listing application and authorization for listing, the shares of Common Stock to be offered and sold in the Offering will constitute "covered securities" under Section 18(b)(1) of the Securities Act.
Both the primary shares to be issued and sold by the Company (approximately 16,895,455 shares, exclusive of the overallotment option) and the secondary shares to be sold by Pinnacle Vista Capital Partners III, LP (approximately 6,818,182 shares) qualify as covered securities, provided that the NYSE listing is approved. There is no distinction under NSMIA between primary and secondary shares for purposes of the covered security analysis; the relevant inquiry is whether the securities are of a class listed, or authorized for listing, on a qualifying national securities exchange.
We have reviewed the NYSE listing standards applicable to CBR and, based on the Company's financial condition, market capitalization, and other listing criteria, we expect that the NYSE will approve the listing application in due course. We will update this analysis if the listing application is not approved or if the Company elects to list on a different exchange.
C. Scope of Preemption
The preemptive effect of NSMIA, as applied to the Offering, may be summarized as follows:
(i) State Registration Preempted. No state may require CBR to register or qualify the Common Stock under state securities law as a condition of offering or selling the Common Stock within the state. This preemption applies to both the initial public offering and to any subsequent offering of Common Stock that is listed on the NYSE.
(ii) State Merit Review Preempted. No state may impose substantive merit review on the Offering, including requirements relating to the fairness of the offering price, the adequacy of disclosure, or the suitability of the investment for investors within the state. Certain states, notably California and Texas, historically maintained active merit review programs that applied to securities offerings conducted within their borders; these programs are preempted by NSMIA with respect to covered securities.
(iii) Notice Filings Permitted. States may require issuers to file a notice, typically consisting of a copy of the Form S-1 registration statement (or a summary thereof) and a designated state notice filing form, as a condition of offering covered securities within the state. The notice filing is administrative in nature and does not involve substantive review of the offering.
(iv) Fees Permitted. States may collect a filing fee in connection with the notice filing. These fees are typically nominal and are subject to statutory maximums that vary by state.
(v) Antifraud Authority Preserved. States retain full antifraud authority with respect to covered securities, as discussed in greater detail in Section IV of this memorandum.
(vi) Broker-Dealer Registration Not Preempted. NSMIA does not preempt state broker-dealer registration requirements. All underwriters participating in the Offering must be registered (or exempt from registration) as broker-dealers in each state in which they offer or sell securities, as discussed in greater detail in Section V of this memorandum.
D. Interaction with SEC Registration
The Offering will be registered under the Securities Act on Form S-1. The registration process is proceeding as follows:
• A confidential draft registration statement on Form S-1 (DRS-1) was submitted to the SEC on April 11, 2022 (EDGAR Accession No. 0001948372-22-000001) under the confidential submission process available to emerging growth companies ("EGCs") under Title I of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). CBR qualifies as an EGC because its total annual gross revenues for fiscal year 2021 were approximately $487.3 million, which is below the $1.235 billion EGC revenue threshold then in effect under the Securities Act.
• The SEC issued a first-round comment letter on May 6, 2022, containing 18 comments. Amendment No. 1 to the registration statement was filed on May 20, 2022 in response to the SEC's comments.
• The SEC issued a second-round comment letter on June 3, 2022, containing 7 comments. Amendment No. 2 to the registration statement was filed on June 10, 2022.
• The SEC provided oral clearance of the registration statement on June 14, 2022, subject to the filing of a pricing amendment and related exhibits. As of the date of this memorandum, the pricing amendment has not yet been filed, and the registration statement has not been declared effective.
Upon pricing of the Offering and the filing of the pricing amendment, the SEC is expected to declare the registration statement effective. At that point, NSMIA preemption will fully attach for state blue sky purposes, and the state notice filing and fee requirements described in this memorandum will become operative. We note that, as discussed in Section X below, the Offering was placed in dormant status on June 17, 2022, and the pricing amendment has not been filed as of the date of this memorandum update.
III. State-by-State Survey: Notice Filing Requirements and Fees
A. Methodology
This survey covers all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. For each jurisdiction, we have analyzed the following:
(i) whether the jurisdiction requires a notice filing for covered securities offered or sold within the jurisdiction;
(ii) the form required for the notice filing, which typically consists of Form D, the Uniform Notice Filing form, a state-specific notice filing form, or a copy of the federal registration statement;
(iii) the filing fee, including any applicable minimum or maximum amounts;
(iv) the timing or deadline for the notice filing (e.g., prior to the first offer in the state, concurrent with the first offer, or within a specified number of days following the first sale); and
(v) any special conditions, additional requirements, or noteworthy aspects of the state's notice filing regime.
Our analysis is based on a review of each state's applicable securities statute, administrative rules, and published guidance as of the date of this memorandum. We have also consulted the blue sky resources maintained by the North American Securities Administrators Association ("NASAA") and the blue sky filing services and databases commonly used by practitioners in this area. Where applicable, we have coordinated with Prescott, Danforth & Yee LLP, counsel to the underwriting syndicate, who customarily assumes responsibility for the preparation and filing of blue sky notice filings on behalf of the underwriters. PD&Y has indicated that Scott Halverson, a senior associate in their Capital Markets group, will serve as the primary point of contact for blue sky filing coordination.
We note that the blue sky landscape is subject to periodic change as states amend their securities statutes and administrative rules. Accordingly, we recommend that this survey be updated immediately prior to pricing to confirm that all filing requirements and fee calculations remain current.
B. States Requiring Notice Filings — Detailed Analysis of Key Jurisdictions
The following sections provide a detailed analysis of the blue sky notice filing requirements in the states with the greatest operational relevance to CBR, including the states in which CBR maintains its headquarters, renewable energy projects, or significant business operations, as well as states of incorporation and states in which key deal participants are located.
Texas. Texas is the most operationally significant state for purposes of the blue sky analysis. CBR's corporate headquarters are located in Austin, Texas, and the Company maintains major renewable energy generation and storage assets across the state, including:
• Solaris West Solar — Pecos County, Texas; 450 MW solar photovoltaic facility; currently operating.
• Pronghorn Wind — Nolan County, Texas; 510 MW onshore wind facility; currently operating.
• Brazos Storage — Fort Bend County, Texas; 200 MW / 800 MWh utility-scale battery energy storage system; currently operating.
• Mesquite Wind — Oldham County, Texas; 420 MW onshore wind facility; currently under construction, with expected commercial operation date ("COD") in Q3 2022.
• Silverleaf Wind — Irion County, Texas; 600 MW onshore wind facility; currently in the development pipeline, with expected COD to be determined.
CBR employs approximately 1,240 individuals, the majority of whom are based in Texas. The Company's primary operating subsidiary, Calloway-Briggs Operating Company LLC, is a Texas limited liability company. Multiple project-level special purpose vehicles ("SPVs"), including Solaris West Solar LLC, Pronghorn Wind LLC, Brazos Energy Storage LLC, Mesquite Wind Holdings LLC, and CBR Development Co. LLC, are organized as Texas limited liability companies.
The Texas blue sky requirements for covered securities are as follows:
Given CBR's significant Texas operations and the number of Texas-resident investors who are expected to participate in the Offering, timely compliance with the Texas notice filing requirement is essential.
New Mexico. CBR maintains a significant development-stage project in New Mexico:
• Cimarron Solar — Doña Ana County, New Mexico; 350 MW solar photovoltaic facility; currently under construction, with expected COD in Q1 2023. The project is being developed through Cimarron Solar Development LLC, a New Mexico limited liability company.
The Cimarron Solar project is currently financed through a construction-to-term credit facility in the principal amount of $143,000,000, provided by Prairie Commercial Bank, N.A. (Brent Hollowell, Senior Vice President, Project Finance, lead). The project is a material asset of the Company and is expected to be highlighted in the prospectus as a key growth driver.
The New Mexico blue sky requirements for covered securities are as follows:
Arizona. CBR maintains an operating renewable energy project in Arizona:
• Painted Rock Solar — Maricopa County, Arizona; 320 MW solar photovoltaic facility; currently operating, with COD in Q4 2020. The project is owned and operated through Painted Rock Solar LLC, an Arizona limited liability company.
The Arizona blue sky requirements for covered securities are as follows:
California. CBR is developing a major renewable energy and storage project in California:
• Copper Basin Solar + Storage — Riverside County, California; 750 MW solar photovoltaic facility plus 300 MW / 1,200 MWh battery energy storage system; currently in the development pipeline, with expected COD in Q2 2025.
California represents the largest individual project in CBR's development pipeline by capacity and is expected to be a significant contributor to the Company's future revenue and asset base. The California regulatory environment for renewable energy development is among the most complex in the nation, and CBR's operations in the state are subject to extensive state and local regulatory oversight.
The California blue sky requirements for covered securities are as follows:
Oklahoma. CBR maintains an operating renewable energy project in Oklahoma:
• Red Mesa Wind — Custer County, Oklahoma; 380 MW onshore wind facility; currently operating, with COD in Q1 2019. The project is owned and operated through Red Mesa Wind Energy LLC, an Oklahoma limited liability company.
The Oklahoma blue sky requirements for covered securities are as follows:
Delaware. Delaware is the state of incorporation for CBR, as well as for multiple subsidiaries and affiliated entities, including CBR Holdings LLC (a Delaware limited liability company), Pinnacle Vista Capital Partners III, LP (a Delaware limited partnership), and Pinnacle Vista Capital Management LLC (a Delaware limited liability company). Several of the underwriters and other deal participants are also incorporated or organized in Delaware, including Hargrove Keating & Co., Graymont Brothers Inc., Barfield Stuart & Co., Crane Whitley Capital LLC, and Linden Pratt Securities LLC.
CBR's registered agent in Delaware is Capitol Statutory Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. The Company's employer identification number is 83-4027615.
The Delaware blue sky requirements for covered securities are as follows:
New York. New York is the principal location of many of the key participants in the Offering, including:
• Calderwood & Harkness LLP — 599 Lexington Avenue, New York, NY 10022 (issuer's counsel)
• Prescott, Danforth & Yee LLP — 1271 Avenue of the Americas, New York, NY 10020 (underwriters' counsel)
• Whitfield Archer & Doss LLP — 51 West 52nd Street, New York, NY 10019 (selling stockholder's counsel)
• Hargrove Keating & Co. — 383 Madison Place, New York, NY 10017 (lead-left book-running manager)
• Linden Pratt Securities LLC — 200 Vesey Street, New York, NY 10281 (joint book-runner)
• Ashford & Pemberton LLP — 30 Rockefeller Plaza, Suite 2800, New York, NY 10112 (auditors / tax advisors)
• Pinnacle Vista Capital Partners III, LP — 900 Park Avenue, 38th Floor, New York, NY 10021 (selling stockholder)
Despite the significant New York nexus of the Offering, New York does not impose a state notice filing requirement for covered securities. New York has adopted the provisions of the Uniform Securities Act recognizing NSMIA preemption and does not require issuers to file a notice or pay a fee as a condition of offering covered securities within the state. The state securities regulator in New York is the New York Attorney General, Investor Protection Bureau, which retains antifraud jurisdiction over securities transactions occurring within the state.
C. Summary Table — All 50 States, D.C., and Territories
The following table provides a comprehensive summary of the notice filing requirements for covered securities in each of the 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. For purposes of this table, "Y" indicates that a notice filing is required, and "N" indicates that no notice filing is required. Filing forms, fees, and deadlines are provided in summary form; additional detail for specific jurisdictions may be found in the state-by-state analysis above and in Appendix A.
Summary Observations:
• Approximately 49 of the 50 states (plus the District of Columbia and U.S. territories) require some form of notice filing for covered securities offered or sold within the jurisdiction. New York and Wyoming do not require a notice filing for covered securities.
• The vast majority of states accept the Form D or the Uniform Notice Filing form. A small number of states, including Texas and California, require the use of a state-specific form.
• Filing fees range from $0 (in states that do not require a notice filing) to a maximum of approximately $1,000 (Florida). Most states impose fees in the range of $100 to $500.
• The total estimated blue sky filing fees for all jurisdictions in connection with the Offering are approximately $12,000 to $18,000. These fees will be included in the "Expenses of Issuance and Distribution" as reported in Part II of the Form S-1 (Item 13).
A more detailed version of this table, including citations to the applicable state statutes and administrative rules, is set forth in Appendix A to this memorandum.
D. Filing Mechanics and Coordination
The filing of state blue sky notice filings is customarily handled by underwriters' counsel in connection with an initial public offering. In this case, Prescott, Danforth & Yee LLP, as counsel to the underwriting syndicate, will prepare and file all blue sky notice filings on behalf of the underwriters. Calderwood & Harkness will coordinate with PD&Y to ensure that all filings are made on a timely basis and that any issuer-specific information or documentation required for the filings is provided to PD&Y in advance.
The following filing mechanics and coordination protocols will apply:
(i) Filing Timing. Most state notice filings will be made concurrent with or immediately following the effective date of the Form S-1 registration statement and the pricing of the Offering. Certain states permit post-offering filings within a specified number of days following the first sale in the state; however, as a matter of best practice, we recommend that all filings be made at or before the time of the initial offer to avoid any potential compliance issues.
(ii) Blue Sky Filing Checklist and Status Tracker. A comprehensive Blue Sky Filing Checklist and Status Tracker has been prepared as a separate document in the matter files. This tracker lists each jurisdiction, the applicable filing requirement, the required form, the fee amount, and the filing status. The tracker will be updated on an ongoing basis by PD&Y and circulated to the deal team at regular intervals.
(iii) Coordination Protocol. Calderwood & Harkness (Natasha Forbes / Brendan Walsh) will serve as the primary point of contact for blue sky coordination with PD&Y (Margaret Yee / Scott Halverson). Any questions or issues relating to specific state filing requirements should be directed to Brendan Walsh in the first instance.
(iv) Current Status. As of the date of this memorandum, all state notice filings remain in pending status. The Offering is in active preparation, but the pricing amendment has not been filed and the registration statement has not been declared effective. State notice filings will be executed upon pricing of the Offering. We note that the Offering was placed in dormant status on June 17, 2022 (as discussed further in Section X below), and all blue sky filings remain in pending status pending reactivation of the Offering.
IV. Antifraud Provisions — Continuing State Authority
A. Reservation of State Antifraud Jurisdiction
As noted above, NSMIA expressly preserves the authority of each state to investigate and bring enforcement actions for fraud in connection with securities transactions, including transactions involving covered securities. Section 18(c)(1) of the Securities Act provides that nothing in Section 18 shall be construed as affecting the jurisdiction of any state to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with securities or securities transactions.
This reservation of antifraud authority is broad and unconditional. Each of the 50 states and the District of Columbia retains antifraud jurisdiction over offerings and sales of covered securities occurring within their borders, regardless of the NSMIA preemption of state registration requirements. In practice, this means that the Company, its directors and officers, the Selling Stockholder, and the underwriters remain subject to potential state antifraud enforcement actions if any material misstatement or omission occurs in connection with the Offering.
The following state antifraud statutes are of particular relevance to CBR's Offering, given the Company's operational footprint:
• Texas: Texas Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581 et seq. (anti-fraud provisions, including Section 29 (civil liability for fraud) and Section 33A (administrative enforcement)).
• California: California Corporations Code §§ 25401 (unlawful to offer or sell a security by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact), 25501 (civil liability for violations of Section 25401), and 25501.5 (aiding and abetting liability).
• New York: The Martin Act, N.Y. Gen. Bus. Law Art. 23-A, §§ 352–359-h, which grants the New York Attorney General broad authority to investigate and prosecute securities fraud within New York. The Martin Act is notable for its low threshold for enforcement—the Attorney General is not required to prove scienter (intent to defraud) to bring a Martin Act enforcement action.
• Oklahoma: Oklahoma Uniform Securities Act, 71 Okla. Stat. § 1-101 et seq. (anti-fraud provisions).
• New Mexico: New Mexico Securities Act, N.M. Stat. Ann. §§ 58-13C-101 et seq. (anti-fraud provisions).
• Arizona: Arizona Securities Act, Ariz. Rev. Stat. Ann. §§ 44-1991 et seq. (anti-fraud provisions).
B. Practical Implications for the Offering
The continuing applicability of state antifraud provisions has several practical implications for the Offering:
(i) Accuracy of the Prospectus. The prospectus included in the Form S-1 registration statement must be accurate and complete under both federal securities laws (specifically, Sections 11 and 12(a)(2) of the Securities Act, which impose strict liability and negligence-based liability, respectively, for material misstatements or omissions in a registration statement and prospectus) and applicable state antifraud provisions. While the standard of liability varies among states, the general requirement of accuracy is consistent across all jurisdictions.
(ii) Risk Factor Disclosure. The risk factors section of the Form S-1 prospectus addresses, among other things, the regulatory and enforcement risks associated with CBR's operations in multiple states, including the risk that state securities regulators may investigate or bring enforcement actions against the Company or its affiliates in connection with the Offering.
(iii) No Additional State Prospectus Delivery Obligations. Because the Common Stock is a covered security, states may not impose additional prospectus delivery requirements beyond those required under federal law. The federal prospectus delivery requirements under Section 5 of the Securities Act, as modified by the Securities Offering Reform rules adopted by the SEC in 2005, govern the delivery of the prospectus to investors in the Offering.
(iv) Due Diligence. The due diligence process conducted by the underwriters and their counsel, including the review of the Company's operations, financial statements, and disclosures, serves to mitigate the risk of state antifraud liability as well as federal securities law liability. The "reasonable investigation" defense under Section 11(b) of the Securities Act provides a model for the level of diligence expected, and compliance with this standard is generally sufficient to address state antifraud concerns as well.
V. Broker-Dealer Registration Considerations
A. NSMIA Does Not Preempt Broker-Dealer Registration
It is important to note that NSMIA's preemption of state securities registration requirements does not extend to state broker-dealer registration requirements. State broker-dealer registration is a separate regulatory regime from securities registration, and each state retains full authority to require that broker-dealers be registered (or exempt from registration) as a condition of conducting securities business within the state.
All five members of the underwriting syndicate—Hargrove Keating & Co. (lead-left book-running manager), Linden Pratt Securities LLC (joint book-runner), Graymont Brothers Inc. (joint book-runner), Barfield Stuart & Co. (co-manager), and Crane Whitley Capital LLC (co-manager)—are SEC-registered broker-dealers and members of the Financial Industry Regulatory Authority ("FINRA"). Each underwriter is expected to maintain state broker-dealer registrations in all jurisdictions in which it will offer or sell securities in connection with the Offering.
Prescott, Danforth & Yee LLP, as underwriters' counsel, will be responsible for confirming that each underwriter is duly registered as a broker-dealer in each state in which the Offering will be made. Calderwood & Harkness will request that PD&Y provide this confirmation prior to the effective date of the registration statement. In addition, Calderwood & Harkness will request that the underwriting agreement include customary representations and warranties from each underwriter to the effect that it is duly registered as a broker-dealer in each state in which it will offer or sell the Common Stock and that it will comply with all applicable state broker-dealer registration requirements in connection with the Offering.
The following is a summary of the broker-dealer registration status of each underwriter:
We note that Hargrove Keating & Co. is a Delaware corporation with its principal offices at 383 Madison Place, New York, New York 10017. Hargrove Keating is the lead-left book-running manager and will serve as the representative of the underwriters under the underwriting agreement. Oliver Marchetti, Managing Director, Equity Capital Markets, is the lead banker on the Offering.
B. Selling Stockholder Considerations
Pinnacle Vista Capital Partners III, LP is selling approximately 6,818,182 shares of Common Stock (approximately $150,000,000 at the assumed midpoint offering price of $22.00 per share) as a selling stockholder in the Offering. Pinnacle Vista is not a registered broker-dealer and will sell its shares exclusively through the underwriting syndicate pursuant to the terms of the underwriting agreement.
As a selling stockholder, Pinnacle Vista is required to complete a selling stockholder questionnaire and representation letter, which has been prepared by Whitfield Archer & Doss LLP (Philip Archer, Christine Navarro) and submitted to Calderwood & Harkness for review. The questionnaire and representation letter confirm, among other things, that Pinnacle Vista is not a FINRA-restricted person or affiliate of a FINRA member, and that the sale of shares by Pinnacle Vista does not involve any arrangement that would require Pinnacle Vista or any of its affiliates to register as a broker-dealer under federal or state law. Pinnacle Vista Capital Management LLC, the general partner of Pinnacle Vista, has also confirmed that none of its managing partners, principals, or employees is a FINRA-restricted person.
No separate state broker-dealer registration is required for Pinnacle Vista in connection with the sale of its shares through the underwriting syndicate, provided that Pinnacle Vista does not engage in any direct solicitation or selling activities that would constitute "broker-dealer" activity under applicable state law.
VI. Secondary Market Trading Considerations
A. Post-IPO Secondary Trading
Under Section 18(b)(2) of the Securities Act (15 U.S.C. § 77r(b)(2)), securities of the same class as a covered security—i.e., securities that are identical in all material respects to a security that is listed on a national securities exchange—are themselves treated as covered securities for purposes of secondary-market transactions. This provision ensures that the NSMIA preemption extends not only to the initial public offering of covered securities but also to all subsequent secondary-market trading in securities of the same class.
Accordingly, after the completion of the IPO, secondary-market trading of CBR Common Stock on the NYSE will be exempt from state registration requirements. States may not impose registration, qualification, or merit review requirements on secondary-market purchases and sales of CBR Common Stock on the NYSE or in any other secondary-market transaction involving securities of the same class as the NYSE-listed Common Stock. This preemption applies to transactions effected through the NYSE, through any alternative trading system or electronic communications network, or in any over-the-counter market for NYSE-listed securities.
B. Rule 144 Resales
Rule 144 under the Securities Act (17 C.F.R. § 230.144) provides a safe harbor for the resale of restricted securities and the resale of securities by affiliates of the issuer. To the extent that CBR's Common Stock is listed on the NYSE, resales of restricted Common Stock under Rule 144 will constitute sales of covered securities for purposes of NSMIA preemption, and no state registration or qualification will be required for such resales.
This is particularly relevant to the following categories of holders who will hold restricted or control securities following the IPO:
• Pinnacle Vista Capital Partners III, LP — the Selling Stockholder, which will continue to hold a significant block of Common Stock following the IPO (subject to the lock-up described below).
• Garrett Calloway and Elaine Briggs — the Company's co-founders, who are expected to retain significant holdings of Common Stock following the IPO.
• Other Pre-IPO Holders — directors, executive officers, and other pre-IPO stockholders who hold restricted or control securities.
All of the foregoing holders are subject to a lock-up period of 180 days following the date of the final prospectus. The lock-up applies to all directors, executive officers, Pinnacle Vista Capital Partners III, LP, and all holders of 1% or more of the pre-IPO Common Stock (approximately 18 persons and entities in total). During the lock-up period, these holders may not, without the prior written consent of Hargrove Keating & Co. (as representative of the underwriters), directly or indirectly offer, sell, pledge, contract to sell, or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock.
The lock-up may be released prior to the expiration of the 180-day period only with the prior written consent of Hargrove Keating & Co. or upon the occurrence of a Change of Control (as defined in the lock-up agreement). Following the expiration of the lock-up period (or earlier release), the holders will be free to resell their shares in compliance with Rule 144 or pursuant to an effective registration statement, subject to any applicable volume limitations, manner of sale requirements, and other conditions of Rule 144.
State blue sky considerations do not impose additional holding periods, volume limitations, or other restrictions on resales of NYSE-listed covered securities beyond those imposed by Rule 144 and federal securities law. The NSMIA preemption ensures that state law does not add a separate layer of regulation to secondary-market resales of covered securities.
C. Registration Rights and Future Offerings
Pursuant to the Registration Rights Agreement to be entered into in connection with the IPO (the "Registration Rights Agreement"), Pinnacle Vista Capital Partners III, LP will be granted the following registration rights with respect to its remaining shares of Common Stock:
• Demand Registration Rights: Pinnacle Vista will have the right to demand that the Company file a registration statement under the Securities Act covering the resale of Pinnacle Vista's shares, subject to customary limitations on the number and frequency of demand registrations.
• Piggyback Registration Rights: Pinnacle Vista will have the right to include its shares in any registered offering of Common Stock by the Company, subject to customary cutback provisions.
• S-3 Shelf Registration Rights: Pinnacle Vista will have the right to demand that the Company file a registration statement on Form S-3 (or any successor form) for the shelf registration of Pinnacle Vista's shares, provided that the Company is then eligible to use Form S-3.
Any future registered offering of CBR Common Stock—whether pursuant to the exercise of demand registration rights, a shelf takedown, or an offering initiated by the Company—will continue to benefit from NSMIA preemption so long as the NYSE listing is maintained. State notice filing requirements would apply to any such future registered offering in the same manner as the IPO, requiring the filing of notice forms and payment of fees in each jurisdiction that requires them.
It is important to note that if CBR were to lose its NYSE listing for any reason (e.g., failure to meet continued listing standards, voluntary delisting, or suspension of trading), NSMIA preemption would cease to apply to the Company's Common Stock, and full state registration, qualification, and merit review requirements could apply to any subsequent offering. In such a scenario, a comprehensive state-by-state registration analysis would be required before any offering could proceed. We do not currently anticipate any risk to CBR's NYSE listing, but we flag this as a contingency that should be monitored on an ongoing basis.
VII. States with Specific Relevance to CBR Operations
This Section provides a consolidated summary of the blue sky considerations in each of the states with specific operational relevance to CBR, incorporating the notice filing requirements discussed in Section III and the antifraud considerations discussed in Section IV.
A. Texas (Headquarters and Multiple Projects)
Texas is the state of greatest operational significance to CBR. The Company's corporate headquarters are located at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746, and the Company employs approximately 1,240 individuals, the majority of whom are based in Texas.
CBR maintains the following renewable energy generation and storage projects in Texas:
The Company's primary operating subsidiary, Calloway-Briggs Operating Company LLC, is a Texas limited liability company. Multiple project-level SPVs are organized as Texas limited liability companies, including Solaris West Solar LLC, Pronghorn Wind LLC, Brazos Energy Storage LLC, Mesquite Wind Holdings LLC, and CBR Development Co. LLC.
Blue Sky Summary — Texas:
• Notice filing required (Form 133.33; fee of 1/10 of 1% of aggregate offering price of securities sold in Texas, minimum $25, maximum $500).
• No merit review; NSMIA preemption applies.
• Texas State Securities Board retains antifraud authority under the Texas Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581 et seq.
• All underwriters must be registered as broker-dealers in Texas.
B. New Mexico
CBR is constructing a major solar project in New Mexico:
• Cimarron Solar — Doña Ana County, New Mexico; 350 MW solar photovoltaic facility; currently under construction, with expected COD in Q1 2023. The project is developed and will be owned through Cimarron Solar Development LLC, a New Mexico limited liability company.
The Cimarron Solar project is financed through a construction-to-term credit facility in the principal amount of $143,000,000, provided by Prairie Commercial Bank, N.A. (Brent Hollowell, Senior Vice President, Project Finance). This facility will convert to a term loan upon achievement of commercial operation.
Blue Sky Summary — New Mexico:
• Notice filing required (Uniform Notice Filing form; nominal fee).
• NSMIA preemption applies; no merit review.
• New Mexico Securities Division retains antifraud authority under the New Mexico Securities Act, N.M. Stat. Ann. §§ 58-13C-101 et seq.
• All underwriters must be registered as broker-dealers in New Mexico.
C. Arizona
CBR operates a solar project in Arizona:
• Painted Rock Solar — Maricopa County, Arizona; 320 MW solar photovoltaic facility; currently operating, with COD in Q4 2020. The project is owned and operated through Painted Rock Solar LLC, an Arizona limited liability company.
Blue Sky Summary — Arizona:
• Notice filing required (Uniform Notice Filing form or state form; applicable fee per Arizona Securities Act).
• NSMIA preemption applies; no merit review.
• Arizona Corporation Commission, Securities Division retains antifraud authority under the Arizona Securities Act, Ariz. Rev. Stat. Ann. §§ 44-1991 et seq.
• All underwriters must be registered as broker-dealers in Arizona.
D. California
CBR is developing its largest project in California:
• Copper Basin Solar + Storage — Riverside County, California; 750 MW solar photovoltaic facility plus 300 MW / 1,200 MWh battery energy storage system; currently in the development pipeline, with expected COD in Q2 2025.
California represents the most significant growth opportunity in CBR's development pipeline. The state's ambitious renewable energy mandate (SB 100, requiring 100% clean energy by 2045) and its active procurement processes for utility-scale renewable energy and storage make California a critical market for the Company's long-term growth strategy.
Blue Sky Summary — California:
• Notice filing required (Form 25102(n) or successor form; fee calculated based on offering amount, subject to statutory maximum).
• NSMIA preemption applies; no merit review. California historically had one of the most rigorous merit review programs in the nation; this is preempted for covered securities.
• California Department of Financial Protection and Innovation retains antifraud authority under California Corporations Code §§ 25401, 25501.
• All underwriters must be registered as broker-dealers in California.
E. Oklahoma
CBR operates a wind project in Oklahoma:
• Red Mesa Wind — Custer County, Oklahoma; 380 MW onshore wind facility; currently operating, with COD in Q1 2019. The project is owned and operated through Red Mesa Wind Energy LLC, an Oklahoma limited liability company.
Blue Sky Summary — Oklahoma:
• Notice filing required (Uniform Notice Filing form or state form; applicable fee under the Oklahoma Uniform Securities Act).
• NSMIA preemption applies; no merit review.
• Oklahoma Department of Securities retains antifraud authority under the Oklahoma Uniform Securities Act, 71 Okla. Stat. § 1-101 et seq.
• All underwriters must be registered as broker-dealers in Oklahoma.
F. Delaware
Delaware is the state of incorporation for CBR and for multiple subsidiaries and affiliated entities, including CBR Holdings LLC, Pinnacle Vista Capital Partners III, LP, and Pinnacle Vista Capital Management LLC. The Company's registered agent in Delaware is Capitol Statutory Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. The Company's employer identification number is 83-4027615.
Blue Sky Summary — Delaware:
• Notice filing required (state form; nominal fee).
• NSMIA preemption applies; no merit review.
• Delaware Division of Securities retains antifraud authority under the Delaware Securities Act, 6 Del. C. §§ 7301 et seq.
• All underwriters must be registered as broker-dealers in Delaware.
VIII. Uniform Consent to Service of Process (Form U-2)
A number of states require, as a condition of the notice filing, that the issuer and/or the selling stockholders execute and file a Uniform Consent to Service of Process (Form U-2) with the state securities regulator. The Form U-2 appoints the state's Secretary of State, securities commissioner, or other designated official as the issuer's agent for service of process in connection with any action or proceeding arising out of the offer or sale of securities within the state.
The requirement to file a Form U-2 is a common feature of state notice filing regimes and is designed to ensure that state regulators and private litigants are able to obtain personal jurisdiction over out-of-state issuers in connection with securities transactions occurring within the state.
A template Form U-2 has been prepared by Calderwood & Harkness and is maintained in the matter files as a separate document. The template has been reviewed and approved by the Capital Markets group. CBR will execute a Form U-2 for each state that requires the filing of a consent to service of process as a condition of the notice filing. The agent for service of process will be designated as the applicable state's Secretary of State or securities commissioner, or, where permitted, a designated registered agent within the state.
Calderwood & Harkness will coordinate with PD&Y on the preparation and execution of all required Form U-2 filings. The Form U-2 filings will be made concurrent with the notice filings in each applicable state.
IX. Estimated Filing Costs
The total estimated blue sky filing fees across all jurisdictions in connection with the Offering are approximately $12,000 to $18,000. This estimate is based on the fee schedules currently in effect in each jurisdiction and assumes that the Offering will be made in all 50 states, the District of Columbia, and the U.S. territories.
These fees will be included in the "Expenses of Issuance and Distribution" as reported in Part II of the Form S-1 registration statement (Item 13). Under the terms of the underwriting agreement, blue sky filing fees are treated as expenses of the issuer and are not deducted from the underwriting discount or commission. Accordingly, these fees are borne by the Company (and, to the extent attributable to the secondary shares, by the Selling Stockholder on a pro rata basis, as set forth in the underwriting agreement).
Blue sky filing fees are separate from, and not included in, the underwriter expense reimbursement cap of $350,000 that has been negotiated as part of the Offering. The underwriter expense reimbursement cap covers the reimbursement of certain out-of-pocket expenses incurred by the underwriters in connection with the Offering, including FINRA filing fees, road show expenses, and certain legal and printing costs. The blue sky filing fees are classified as issuer expenses and are reported separately.
The following table provides a summary of the estimated blue sky filing costs:
X. Recommendations and Action Items
Based on the foregoing analysis, Calderwood & Harkness recommends the following action items in connection with the blue sky compliance for the Offering:
1. Coordination with Underwriters' Counsel. Calderwood & Harkness (Natasha Forbes / Brendan Walsh) will coordinate with Prescott, Danforth & Yee LLP (Margaret Yee / Scott Halverson) on the timing and execution of all state notice filings upon pricing of the Offering. PD&Y has primary responsibility for the preparation and filing of all blue sky notice filings. Calderwood & Harkness will provide PD&Y with all issuer-specific information and documentation required for the filings, including copies of the registration statement, the prospectus, and the Form U-2.
2. Blue Sky Filing Checklist. The Blue Sky Filing Checklist and Status Tracker (maintained as a separate document in the matter files) will be updated and maintained on an ongoing basis through the closing of the Offering. The tracker will be circulated to the deal team at each milestone (filing, pricing, effectiveness, and closing).
3. Broker-Dealer Confirmations. Calderwood & Harkness will obtain confirmation from PD&Y that all members of the underwriting syndicate—Hargrove Keating & Co., Linden Pratt Securities LLC, Graymont Brothers Inc., Barfield Stuart & Co., and Crane Whitley Capital LLC—are duly registered as broker-dealers in all states in which the Offering will be made. This confirmation should be obtained prior to the effective date of the registration statement.
4. Form U-2 Execution. Calderwood & Harkness will prepare final Form U-2 consents to service of process for CBR's execution for each state that requires the filing of a Form U-2 as a condition of the notice filing. The Form U-2 template has been prepared and is maintained in the matter files.
5. Ongoing Monitoring. Calderwood & Harkness will monitor any state legislative or regulatory changes affecting blue sky requirements between the date of this memorandum and the pricing date. This includes monitoring for changes in fee schedules, filing form requirements, and any new or amended state securities statutes or administrative rules that could affect the Offering. We note that the Offering has received SEC oral clearance (June 14, 2022) but pricing has not yet occurred, and there may be an extended period between the date of this memorandum and the eventual pricing date.
6. Dormancy Note (added June 20, 2022). As of June 17, 2022, the Offering was placed in dormant status due to market conditions. All blue sky filings remain in "pending" status and no filings have been made to any state or territorial jurisdiction. Upon reactivation of the Offering, the following steps should be taken:
(a) This blue sky survey memorandum should be updated for any intervening changes in state law, including any changes in notice filing requirements, fee schedules, filing forms, or applicable state statutes.
(b) The Blue Sky Filing Checklist and Status Tracker should be updated to reflect the current filing requirements in each jurisdiction.
(c) All filing deadlines will restart based on the new pricing date; no filings will carry over from the prior active period.
(d) Calderwood & Harkness will re-confirm with PD&Y the broker-dealer registration status of all members of the underwriting syndicate.
(e) Any changes to the underwriting syndicate (additions, removals, or changes in underwriter roles) should be reflected in the blue sky analysis and filing plan.
XI. Conclusion
Because the Common Stock of Calloway-Briggs Renewables Inc. will be listed on the New York Stock Exchange and will therefore constitute a "covered security" under the National Securities Markets Improvement Act of 1996, the proposed initial public offering is preempted from state registration, qualification, and merit review in all 50 states, the District of Columbia, and the United States territories.
Notwithstanding this preemption, state notice filing and fee requirements, state antifraud jurisdiction, and state broker-dealer registration requirements remain applicable and must be satisfied in connection with the Offering. Calderwood & Harkness has identified the notice filing and fee requirements applicable in each jurisdiction and has prepared this memorandum to guide the deal team's blue sky compliance efforts.
Calderwood & Harkness recommends proceeding with blue sky compliance in coordination with Prescott, Danforth & Yee LLP upon reactivation of the Offering. Upon reactivation, this memorandum should be updated to reflect any intervening changes in state law, and all state notice filings should be executed upon pricing.
We are available to discuss any questions or issues arising from this memorandum at your convenience.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Natasha Forbes Associate, Capital Markets
By: ________
Brendan Walsh Lead Associate, Capital Markets
APPENDIX A — Comprehensive State-by-State Notice Filing Table
The following table provides a comprehensive summary of the notice filing requirements for covered securities in each of the 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. This table is current as of the date of this memorandum (April 10, 2022) and should be updated prior to pricing.
Note: Fee amounts are approximate and based on currently available published schedules. Actual fees may vary based on the final aggregate offering price and the specific calculation method employed by each jurisdiction. This table should be confirmed and updated prior to the filing of notice filings.
APPENDIX B — Key Statutory Citations
The following statutory citations are referenced in this memorandum:
Federal Statutes:
• National Securities Markets Improvement Act of 1996 — Pub. L. No. 104-290, 110 Stat. 3416 (1996); codified at Section 18 of the Securities Act of 1933, 15 U.S.C. § 77r.
• Securities Act of 1933 — 15 U.S.C. §§ 77a–77aa, as amended.
• Section 18(b)(1) of the Securities Act — 15 U.S.C. § 77r(b)(1) (definition of "covered security" — securities listed on a national securities exchange).
• Section 18(b)(2) of the Securities Act — 15 U.S.C. § 77r(b)(2) (covered security status for secondary-market transactions in securities of the same class).
• Section 18(c)(1) of the Securities Act — 15 U.S.C. § 77r(c)(1) (preservation of state antifraud authority).
• Section 18(c)(2) of the Securities Act — 15 U.S.C. § 77r(c)(2) (preservation of state authority to require notice filings and fees).
• Section 11 of the Securities Act — 15 U.S.C. § 77k (civil liability for misstatements in registration statements).
• Section 12(a)(2) of the Securities Act — 15 U.S.C. § 77l(a)(2) (civil liability for misstatements in prospectuses and oral communications).
• Rule 144 under the Securities Act — 17 C.F.R. § 230.144 (safe harbor for resales of restricted and control securities).
• Jumpstart Our Business Startups Act of 2012 — Pub. L. No. 112-106, 126 Stat. 306 (2012) (JOBS Act; EGC provisions).
State Statutes — Key Operating and Incorporation States:
• Texas: Texas Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581 et seq.; Tex. Admin. Code § 133.33 (notice filing for covered securities).
• New Mexico: New Mexico Securities Act, N.M. Stat. Ann. §§ 58-13C-101 et seq.
• Arizona: Arizona Securities Act, Ariz. Rev. Stat. Ann. §§ 44-1801 et seq. (registration provisions); §§ 44-1991 et seq. (anti-fraud provisions).
• California: California Corporate Securities Law of 1968, Cal. Corp. Code §§ 25000 et seq.; Cal. Corp. Code § 25102(n) (notice filing for covered securities); Cal. Corp. Code §§ 25401, 25501 (anti-fraud provisions).
• Oklahoma: Oklahoma Uniform Securities Act, 71 Okla. Stat. § 1-101 et seq.
• Delaware: Delaware Securities Act, 6 Del. C. §§ 7301 et seq.
• New York: Martin Act, N.Y. Gen. Bus. Law Art. 23-A, §§ 352–359-h.
APPENDIX C — Form U-2 Template Reference
A template Uniform Consent to Service of Process (Form U-2) has been prepared by Calderwood & Harkness and is maintained in the matter files for C&H Matter No. 1015-00001. The template is available at the following location:
Document Management System Reference: C&H DMS Doc. No. 1015-00001-00147 File Path: /CapMarkets/CBRIPO/BlueSky/FormU2Template_v1.docx Last Updated: April 8, 2022 Prepared By: Brendan Walsh, Lead Associate, Capital Markets
The Form U-2 template includes the following information:
(i) Name and address of the issuer (Calloway-Briggs Renewables Inc., 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746).
(ii) State of incorporation (Delaware).
(iii) Description of the securities subject to the notice filing (shares of common stock, par value $0.01 per share).
(iv) Appointment of the applicable state official as agent for service of process.
(v) Irrevocable consent to service of process through the designated agent.
(vi) Signature block for execution by an authorized officer of CBR.
CBR will execute a separate Form U-2 for each state that requires the filing of a consent to service of process as a condition of the blue sky notice filing. The executed Form U-2 will be filed concurrently with the notice filing in each applicable state. Calderwood & Harkness will coordinate with PD&Y on the execution and filing of all Form U-2 filings.
END OF MEMORANDUM
This memorandum is intended solely for the use of the deal team in connection with C&H Matter No. 1015-00001 and should not be distributed to any third party without the prior written consent of Calderwood & Harkness LLP. The analysis contained herein is based on laws and regulations in effect as of the date of this memorandum and is subject to change. This memorandum does not constitute legal advice to any person or entity other than the addressee.
TO: | Jennifer Kwon, Partner, Capital Markets
FROM: | Natasha Forbes, Associate, Capital Markets; Brendan Walsh, Lead Associate, Capital Markets
DATE: | April 10, 2022
RE: | Blue Sky / State Securities Law Survey — Proposed Initial Public Offering of Common Stock of Calloway-Briggs Renewables Inc.
MATTER NO.: | C&H Matter No. 1015-00001
Item | Detail
Notice Filing Required | Yes
Filing Form | Form 133.33 (Notice Filing for Covered Securities)
Fee | 1/10 of 1% of the aggregate offering price of securities sold in Texas, with a minimum fee of $25 and a maximum fee of $500
Timing | Concurrent with or prior to the initial offer of the covered securities in Texas
State Regulator | Texas State Securities Board, 208 E. 10th Street, 5th Floor, Austin, TX 78701
Special Notes | No merit review; NSMIA preemption applies. Texas has historically maintained an active state securities regulatory program, but the registration and merit review functions are preempted with respect to covered securities. The notice filing is administrative only.
Item | Detail
Notice Filing Required | Yes
Filing Form | Uniform Notice Filing form
Fee | Nominal fee (typically under $300, calculated b

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