CALDERWOOD & HARKNESS LLP
Memorandum — Attorney Work Product Privileged and Confidential
June 15, 2022
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT. This memorandum was prepared in anticipation of litigation or in connection with the provision of legal services and is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any person outside of Calderwood & Harkness LLP or the authorized representatives of Calloway-Briggs Renewables Inc. without the prior written consent of the undersigned.
NOTE: This checklist was prepared for the anticipated closing of the initial public offering of common stock of Calloway-Briggs Renewables Inc. The offering was placed in dormant status on June 17, 2022, and the legal opinion described herein was never delivered. This memorandum is preserved in the file for use upon reactivation of the offering.
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I. Purpose and Background
This memorandum sets forth the expected scope and specific points to be covered in the legal opinion to be delivered by Prescott, Danforth & Yee LLP ("PD&Y"), as counsel to the underwriters, at the closing of the proposed initial public offering (the "IPO" or "Offering") of shares of common stock, par value $0.01 per share (the "Common Stock"), of Calloway-Briggs Renewables Inc., a Delaware corporation ("CBR" or the "Company"). The purpose of this checklist is to ensure that, upon receipt of PD&Y's draft opinion, Calderwood & Harkness LLP ("C&H" or "we") can efficiently and thoroughly review the opinion for completeness, accuracy, and conformity with market practice and the specific requirements of the transaction.
PD&Y's legal opinion is a condition to closing under Section [●] of the Underwriting Agreement (near-final draft dated June 14, 2022) (the "Underwriting Agreement") among CBR, Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership ("Pinnacle Vista"), as selling stockholder, and the several underwriters named therein (collectively, the "Underwriters"), with Hargrove Keating & Co. ("HK&Co.") acting as representative of the Underwriters (in such capacity, the "Representative"). The Underwriting Agreement provides that the obligation of the Underwriters to purchase the Shares at closing is conditioned upon, among other things, receipt of PD&Y's opinion and PD&Y's separate negative assurance letter, each in form and substance satisfactory to the Underwriters and their counsel.
PD&Y's engagement on this transaction is led by Margaret Yee, Partner, Capital Markets Group, who is supported by Scott Halverson, Counsel, Capital Markets Group, and Anita Desmond, Associate. PD&Y's principal office for purposes of this matter is located at 1271 Avenue of the Americas, New York, NY 10020. PD&Y has served as counsel to HK&Co. in numerous prior equity offerings and is well-versed in the market conventions applicable to underwriters' counsel opinions in initial public offerings.
Upon receipt of the draft opinion from PD&Y, Calderwood & Harkness will review the draft against this checklist and will coordinate comments with the following parties:
(a) the CBR legal team, led by Sandra Haverford, General Counsel and Corporate Secretary of CBR;
(b) Whitfield Archer & Doss LLP ("WAD"), counsel to Pinnacle Vista, led by Christine Navarro, Partner, and Philip Archer, Partner, to the extent the opinion touches upon selling stockholder matters or matters relating to Pinnacle Vista's ownership of shares; and
(c) the PD&Y opinion team directly, through Margaret Yee and Scott Halverson, to the extent any substantive or drafting comments are identified.
It should be noted that the opinion described in this checklist was never delivered due to the Offering being placed in dormant status on June 17, 2022, following a decision by CBR's Board of Directors and the Representative to postpone the Offering in light of unfavorable market conditions in the renewable energy sector. This checklist is being preserved in the file in its current form for use upon reactivation of the Offering. Upon reactivation, the checklist should be refreshed and updated in accordance with Section VII.D below.
II. Addressees and Date
Addressees. The PD&Y legal opinion should be addressed to each of the several Underwriters named in the Underwriting Agreement. As of the near-final draft of the Underwriting Agreement, the Underwriters are:
1. Hargrove Keating & Co. (lead-left book-runner and Representative)
2. Linden Pratt Securities LLC (joint book-runner)
3. Graymont Brothers Inc. (joint book-runner)
4. Barfield Stuart & Co. (co-manager)
5. Crane Whitley Capital LLC (co-manager)
The opinion should name each Underwriter individually or should be addressed to "the several Underwriters named in Schedule I to the Underwriting Agreement" (or similar formulation), provided that such formulation clearly encompasses all five firms listed above. We should confirm with PD&Y that co-managers Barfield Stuart & Co. and Crane Whitley Capital LLC are directly addressed (or are otherwise entitled to rely upon the opinion) without the need for a separate reliance letter. If PD&Y's practice is to address the opinion only to the Representative on behalf of the Underwriters, we should confirm that the Underwriting Agreement's agency provisions are sufficient to extend the benefit of the opinion to all Underwriters.
Date. The opinion should be dated as of the Closing Date, which is the date of delivery of and payment for the Shares (the "Firm Shares" and, if the overallotment option is exercised, the "Option Shares"). In the event of an overallotment closing on a subsequent date, PD&Y should be prepared to deliver a bring-down opinion or confirmation letter as of the Additional Closing Date.
Capacity. It should be confirmed that PD&Y is delivering the opinion solely in its capacity as counsel to the Underwriters and not as counsel to CBR, Pinnacle Vista Capital Partners III, LP, or any other party to the transaction. The introductory paragraph of the opinion should clearly state PD&Y's role and the basis for the opinion, including a description of the documents and records examined.
III. Documents and Records to Be Reviewed by PD&Y (Expected Scope of Examination)
The introductory section of PD&Y's opinion letter should set forth the documents and records that PD&Y has examined in connection with the preparation and delivery of the opinion. Set forth below is the expected scope of examination, organized by category. Upon receipt of PD&Y's draft, we should verify that all material documents have been listed and that no significant documents have been omitted.
A. Transaction Documents
PD&Y should confirm review of the following transaction documents:
(i) Underwriting Agreement. The executed version of the Underwriting Agreement, including all schedules (including Schedule I listing the Underwriters and their respective commitments, Schedule II listing the selling stockholder and the secondary shares, and Schedule III listing the lock-up parties) and all exhibits thereto.
(ii) Pricing Agreement. The executed Pricing Agreement between CBR, Pinnacle Vista, and the Representative, specifying the final public offering price of $[●] per share (anticipated to be $22.00 per share, subject to final pricing), the number of Firm Shares (23,713,636), the number of Option Shares (up to 3,559,091), and the underwriting discount ($1.21 per share, representing a gross spread of 5.50%).
(iii) Lock-Up Agreements. The form of Lock-Up Agreement approved by the Representative, together with executed copies from all eighteen (18) lock-up signatories, consisting of all directors and executive officers of CBR, Pinnacle Vista Capital Partners III, LP (and its general partner), and all holders of one percent (1%) or more of CBR's pre-IPO Common Stock.
(iv) Registration Statement on Form S-1. The Registration Statement on Form S-1 (File No. 333-[●]; SEC CIK 0001948372), as filed with the Securities and Exchange Commission (the "SEC" or the "Commission") and declared effective, including all amendments thereto. The filing history is as follows:
• Draft Registration Statement (DRS-1), submitted confidentially pursuant to the JOBS Act (EDGAR Accession No. 0001948372-22-000001);
• Amendment No. 1 to the Registration Statement (EDGAR Accession No. 0001948372-22-000002);
• Amendment No. 2 to the Registration Statement (EDGAR Accession No. 0001948372-22-000003); and
• Pricing Amendment (EDGAR Accession No. TBD at time of effectiveness).
(v) Final Prospectus. The Final Prospectus, as filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"), including all information incorporated by reference therein.
(vi) Preliminary Prospectus and Free-Writing Prospectuses. Any Preliminary Prospectus (including the "red herring" prospectus) used in connection with the Offering and any free-writing prospectus (as defined in Rule 405 under the Securities Act) filed or used in connection with the Offering.
B. Corporate and Organizational Documents of CBR
PD&Y should confirm review of the following corporate and organizational documents of CBR:
(i) Amended and Restated Certificate of Incorporation. The Amended and Restated Certificate of Incorporation of CBR in IPO form, as filed (or to be filed) with the Secretary of State of the State of Delaware, effective upon closing of the Offering.
(ii) Amended and Restated Bylaws. The Amended and Restated Bylaws of CBR in IPO form, as adopted by the Board of Directors of CBR effective upon closing of the Offering.
(iii) Board Resolutions. Resolutions of the Board of Directors of CBR authorizing the IPO, the filing of the Registration Statement, the execution and delivery of the Underwriting Agreement and related transaction documents, the issuance and sale of the primary shares, and the other transactions contemplated in connection with the Offering.
(iv) Written Consent of Stockholders. The Written Consent of Stockholders of CBR adopting the Amended and Restated Certificate of Incorporation and approving the 2022 Omnibus Equity Incentive Plan and the 2022 Employee Stock Purchase Plan.
(v) Certificate of Good Standing — Delaware. A certificate of good standing (or certificate of legal existence) for CBR issued by the Secretary of State of the State of Delaware, dated within a reasonable period prior to the Closing Date.
(vi) Certificate of Good Standing — Texas. A certificate of good standing (or certificate of existence) for CBR issued by the Secretary of State of the State of Texas, dated within a reasonable period prior to the Closing Date.
C. Selling Stockholder Documents
PD&Y should confirm review of the following documents relating to Pinnacle Vista Capital Partners III, LP as selling stockholder:
(i) Selling Stockholder Questionnaire. The Selling Stockholder Questionnaire completed and executed by Pinnacle Vista Capital Partners III, LP, providing information for inclusion in the Registration Statement and Prospectus.
(ii) Selling Stockholder Representation Letter. The Selling Stockholder Representation Letter executed by Pinnacle Vista Capital Partners III, LP, containing customary representations and warranties regarding title to the secondary shares, authority to sell, absence of restrictions, and accuracy of information provided.
(iii) Custody Agreement. The Custody Agreement among Pinnacle Vista Capital Partners III, LP, the custodian, and the Representative, providing for the deposit of the secondary shares to be sold by Pinnacle Vista in the Offering and the mechanics of delivery at closing.
(iv) Power of Attorney. The Power of Attorney executed by Pinnacle Vista Capital Partners III, LP, appointing one or more attorneys-in-fact to execute and deliver documents on behalf of Pinnacle Vista in connection with the sale of the secondary shares.
D. Governance and Equity Documents
PD&Y should confirm review of the following governance and equity documents of CBR:
(i) Amended and Restated Stockholders' Agreement. The Amended and Restated Stockholders' Agreement in IPO form, to be entered into among CBR, Pinnacle Vista, and certain other stockholders, to be effective upon closing of the Offering.
(ii) Registration Rights Agreement. The Registration Rights Agreement among CBR and the holders party thereto, providing for demand and piggyback registration rights with respect to shares of Common Stock held by Pinnacle Vista and certain other holders.
(iii) 2022 Omnibus Equity Incentive Plan. The 2022 Omnibus Equity Incentive Plan, with an aggregate share reserve of 12,727,273 shares of Common Stock.
(iv) 2022 Employee Stock Purchase Plan. The 2022 Employee Stock Purchase Plan, with an aggregate share reserve of 2,545,455 shares of Common Stock.
(v) Form of Indemnification Agreement. The form of Indemnification Agreement to be entered into between CBR and each of its directors and executive officers.
E. Regulatory Filings and Approvals
PD&Y should confirm review of the following regulatory filings and approvals:
(i) SEC Correspondence. All SEC staff comment letters and CBR response letters relating to the Registration Statement, including the first round of comments (18 comments) and the second round of comments (7 comments), for a total of 25 comments. PD&Y should also confirm awareness of oral clearance from the SEC staff, which was received on June 14, 2022.
(ii) Evidence of SEC Effectiveness. The SEC order or notice declaring the Registration Statement effective under the Securities Act, or such other evidence of effectiveness as is customary (e.g., EDGAR filing confirmation of effectiveness).
(iii) NYSE Listing Approval. Evidence that the NYSE has approved the listing of the Common Stock on the New York Stock Exchange under the ticker symbol "CBRI" (Application No. NYSE-2022-04218). PD&Y should confirm that the listing approval covers both the Firm Shares and the Option Shares.
(iv) FINRA No-Objection Letter. Evidence that the Financial Industry Regulatory Authority ("FINRA") has issued a no-objection letter with respect to the fairness and reasonableness of the underwriting terms and arrangements (Filing No. 20221129-01). As of the date of this checklist, FINRA's review is complete but the formal no-objection letter may still be pending issuance.
F. Other Closing Deliverables (for Cross-Reference)
The following additional closing deliverables are being prepared or obtained in connection with the Offering. While PD&Y's opinion need not specifically address each of these items, PD&Y should be aware of them for purposes of coordination, and this checklist notes them for cross-reference purposes:
(i) Officer's Certificate. The certificate of the Chief Executive Officer (Garrett Calloway) and Chief Financial Officer (Marcus Yoon) of CBR, certifying as to certain conditions to closing, including the accuracy of representations and warranties and the absence of any material adverse change.
(ii) Secretary's Certificate. The certificate of the Corporate Secretary (Sandra Haverford) of CBR, certifying as to the charter documents, bylaws, board resolutions, and incumbency of officers.
(iii) Comfort Letter. The comfort letter from Ashford & Pemberton LLP, CBR's independent registered public accounting firm (Gregory Sondheim, lead engagement partner), including the initial comfort letter and the bring-down comfort letter, in each case in form and substance customary for IPO transactions and satisfactory to the Underwriters.
(iv) Calderwood & Harkness LLP Legal Opinion to Underwriters. The legal opinion of C&H, as issuer's counsel, to the Underwriters (Document No. 136 in the C&H matter index).
(v) Calderwood & Harkness LLP Tax Opinion. The tax opinion of C&H addressing material U.S. federal income tax consequences of the Offering (Document No. 137 in the C&H matter index).
(vi) Calderwood & Harkness LLP Negative Assurance (10b-5) Letter. The negative assurance letter of C&H to the Underwriters (Document No. 74 in the C&H matter index).
(vii) PD&Y Negative Assurance (10b-5) Letter. The negative assurance letter of PD&Y to the Underwriters, which is a separate closing deliverable from the PD&Y legal opinion and is addressed separately in Section VI of this checklist. A draft of this letter is on file as Document No. 75 in the C&H matter index.
IV. Expected Substantive Opinion Paragraphs — Checklist
Set forth below are the specific substantive opinion paragraphs that we expect to be included in PD&Y's legal opinion. Each paragraph is accompanied by a checkbox for use during the review process and, where appropriate, notes identifying particular points requiring attention or coordination. Upon receipt of PD&Y's draft opinion, each item should be checked off as confirmed, and any deviations or omissions should be flagged for discussion.
A. Organization and Good Standing of the Issuer
• [ ] CBR is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware.
• [ ] CBR is duly qualified to transact business and in good standing as a foreign corporation in the State of Texas and in each other jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to so qualify would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), results of operations, business, properties, or prospects of CBR and its subsidiaries, taken as a whole (a "Material Adverse Effect").
Note for review: Confirm that PD&Y's reliance on good-standing certificates from the Delaware Secretary of State and the Texas Secretary of State is expressly stated in the assumptions section of the opinion. Confirm that the list of foreign qualification jurisdictions addressed (or covered by the materiality exception) is consistent with the jurisdictions disclosed in the Registration Statement and Prospectus. According to the S-1, CBR is qualified to do business in Texas, New Mexico, Arizona, California, and Oklahoma. If PD&Y addresses only the Texas qualification expressly and relies on the materiality qualifier for the remaining jurisdictions, confirm that this approach is acceptable and consistent with market practice.
B. Organization and Good Standing of Material Subsidiaries
• [ ] Each of the following material subsidiaries of CBR is a limited liability company (or, as applicable, other entity) duly organized or formed, validly existing, and in good standing under the laws of its respective jurisdiction of organization:
1. CBR Holdings LLC
2. Calloway-Briggs Operating Company LLC
3. Solaris West Solar LLC
4. Red Mesa Wind Energy LLC
5. Painted Rock Solar LLC
6. Pronghorn Wind LLC
7. Brazos Energy Storage LLC
8. Mesquite Wind Holdings LLC
9. Cimarron Solar Development LLC
10. CBR Development Co. LLC
• [ ] Each such material subsidiary is duly qualified to do business and in good standing as a foreign entity in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to so qualify would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Note for review: Verify that PD&Y's opinion addresses all ten (10) material subsidiaries listed in the Registration Statement. The S-1 identifies these ten entities as "significant subsidiaries" for purposes of Regulation S-X. Confirm that PD&Y has obtained (or intends to obtain) good-standing certificates for each material subsidiary from its respective jurisdiction of organization and that such reliance is disclosed in the assumptions section of the opinion. If any subsidiary is organized under the laws of a jurisdiction other than Delaware or New York, confirm whether PD&Y is relying on local counsel opinions or on good-standing certificates alone.
C. Authorization and Execution of the Underwriting Agreement
• [ ] The Underwriting Agreement has been duly authorized, executed, and delivered by CBR and constitutes a valid and binding obligation of CBR, enforceable against CBR in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar laws affecting creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) (collectively, the "Enforceability Exceptions").
• [ ] The Pricing Agreement has been duly authorized, executed, and delivered by CBR and constitutes a valid and binding obligation of CBR, enforceable against CBR in accordance with its terms, subject to the Enforceability Exceptions.
Note for review: The authorization opinion with respect to CBR is typically supported by review of the board resolutions and the certificate of incorporation and bylaws. PD&Y, as underwriters' counsel, may rely on C&H's opinion with respect to Delaware corporate law matters relating to due authorization. Confirm PD&Y's approach and ensure consistency. The enforceability opinion should contain the standard bankruptcy/insolvency and equitable principles qualifications, and we should confirm that the formulation used by PD&Y is consistent with the TriBar Opinion Committee's customary formulations and with the formulation used in C&H's own opinion.
D. Authorization, Issuance, and Validity of the Shares
• [ ] The shares of Common Stock to be issued and sold by CBR in the Offering (16,895,455 primary shares at base offering size, plus up to 2,534,318 additional shares upon exercise of the overallotment option by the Underwriters, for a total of up to 19,429,773 primary shares) (the "Primary Shares") have been duly authorized and, when issued and delivered against payment therefor as provided in the Underwriting Agreement and the Pricing Agreement, will be validly issued, fully paid, and non-assessable.
• [ ] The shares of Common Stock to be sold by Pinnacle Vista Capital Partners III, LP as selling stockholder in the Offering (6,818,182 shares, plus up to 1,024,773 additional shares upon exercise of the overallotment option) (the "Secondary Shares") have been duly authorized and are validly issued, fully paid, and non-assessable.
• [ ] The shares of Common Stock to be issued and sold in the Offering have a par value of $0.01 per share.
• [ ] No preemptive rights under the Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws of CBR, or under the Delaware General Corporation Law, attach to the shares of Common Stock being issued in the Offering, and no stockholder of CBR has any preemptive or similar right to subscribe for or purchase any shares of Common Stock in connection with the Offering.
Note for review: Confirm that the opinion addresses both Primary Shares (issued and sold by the Company) and Secondary Shares (sold by Pinnacle Vista). The share counts should be verified against the final Pricing Agreement. At an anticipated offering price of $22.00 per share, the base offering consists of 23,713,636 total shares (16,895,455 primary shares from CBR and 6,818,182 secondary shares from Pinnacle Vista), plus up to 3,559,091 overallotment shares. The valid-issuance opinion for the Primary Shares should be conditioned on issuance and delivery against payment in accordance with the Underwriting Agreement. The valid-issuance opinion for the Secondary Shares should confirm that such shares were validly issued, fully paid, and non-assessable when originally issued. The non-assessability opinion is a Delaware law opinion and PD&Y may rely on C&H's opinion for this point; confirm.
E. Registration Statement and Prospectus
• [ ] The Registration Statement on Form S-1 (File No. 333-[●]; SEC CIK 0001948372) has been declared effective by the SEC under the Securities Act.
• [ ] The Final Prospectus has been timely filed with the SEC pursuant to Rule 424(b) under the Securities Act.
• [ ] To the knowledge of PD&Y, no stop order suspending the effectiveness of the Registration Statement has been issued by the SEC, and no proceedings for that purpose have been instituted or, to the knowledge of PD&Y, threatened by the SEC.
Note for review: PD&Y should confirm its awareness of all SEC correspondence relating to the Registration Statement, including the two rounds of staff comments (25 total comments across two rounds: 18 comments in the first round and 7 comments in the second round) and oral clearance from the SEC staff received on June 14, 2022. The "to the knowledge of PD&Y" qualifier on the stop-order opinion is customary for underwriters' counsel opinions and is acceptable. Confirm that PD&Y's knowledge standard is consistent with TriBar conventions (i.e., actual knowledge of the lawyers at PD&Y who have rendered substantive legal services in connection with the transaction, without independent investigation).
F. No Conflict / No Violation
• [ ] The execution and delivery of the Underwriting Agreement and the Pricing Agreement by CBR, the issuance and sale of the Shares by CBR, and the consummation of the other transactions contemplated by the Underwriting Agreement and the Pricing Agreement do not and will not:
(i) violate or conflict with the Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws of CBR;
(ii) violate any applicable federal or New York state law, rule, or regulation known to PD&Y that in the experience of PD&Y is normally applicable to transactions of the type contemplated by the Underwriting Agreement; or
(iii) result in a breach of or default under, or the creation of a lien upon any property or assets of CBR pursuant to, any material agreement or instrument known to PD&Y to which CBR is a party or by which CBR or any of its properties may be bound or affected.
Note for review: This is a critical area requiring careful coordination between PD&Y and C&H. The scope of PD&Y's no-conflict opinion is expected to be limited to federal law and the laws of the State of New York, consistent with PD&Y's status as a New York-based firm. Issuer's counsel (C&H) will cover the no-conflict opinion with respect to Delaware law (including the DGCL and the Amended and Restated Certificate of Incorporation and Bylaws as a matter of Delaware corporate law) and will also address material agreements.
The following material agreements and instruments require particular attention in connection with the no-conflict analysis, as they contain change-of-control provisions, consent requirements, or restrictive covenants that could be implicated by the IPO:
(a) Veltrano National Bank Corporate Credit Facility. The Credit Agreement dated as of March 15, 2021, among CBR, as borrower, the lenders party thereto, and Veltrano National Bank, as administrative agent, providing for a $400,000,000 revolving credit facility and a $650,000,000 Term Loan B facility. This facility contains a change-of-control provision that is triggered upon, among other events, certain changes in the ownership of voting securities of CBR. Consent/notice letters have been prepared and we should confirm that all required consents have been obtained or that the IPO does not constitute a "change of control" as defined therein.
(b) Prairie Commercial Bank Project-Finance Facilities. Various project-finance credit facilities with Prairie Commercial Bank and affiliated lenders, secured by the assets of CBR's project-level subsidiaries. These facilities contain customary restrictions on changes in ownership of the project-level entities. Confirm that the IPO structure does not trigger consent requirements under these facilities.
(c) Veltara Basin Financial Tax-Equity Partnership. The tax-equity partnership arrangements with Veltara Basin Financial LLC relating to certain of CBR's solar and wind projects. These arrangements contain restrictions on transfers of interests and changes in control of the managing member. Consent/notice letters have been prepared and we should confirm that all required approvals have been obtained or waived.
We should coordinate with PD&Y to ensure that there are no gaps in coverage between the two firms' no-conflict opinions and that the scope of PD&Y's "known to PD&Y" qualifier is appropriately defined.
G. No Governmental Approvals Required
• [ ] No consent, approval, authorization, order, registration, qualification, or filing of or with any federal or New York state court or governmental authority or agency is required for the valid execution, delivery, and performance by CBR of the Underwriting Agreement and the Pricing Agreement or the issuance, sale, and delivery of the Shares, except:
(i) such as have been obtained or made under the Securities Act and the rules and regulations of the SEC thereunder;
(ii) such as have been obtained or made under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC thereunder;
(iii) such as may be required under state securities or "blue sky" laws in connection with the purchase and distribution of the Shares by the Underwriters (as to which PD&Y expresses no opinion);
(iv) such as have been obtained from the NYSE in connection with the listing of the Shares; and
(v) such as have been obtained from FINRA.
Note for review: The customary carve-outs listed above are standard for underwriters' counsel opinions in IPO transactions. Confirm that the NYSE listing approval (Application No. NYSE-2022-04218, ticker symbol CBRI) has been received prior to closing and that PD&Y has reviewed evidence thereof. Confirm that the FINRA no-objection (Filing No. 20221129-01) has been received or is expected to be received prior to closing. The blue sky carve-out is standard and acceptable, as state securities law compliance is typically addressed separately through a blue sky survey or memorandum prepared by C&H or special blue sky counsel.
H. Securities Act Compliance — Registration
• [ ] The Shares to be sold in the Offering are registered under the Securities Act pursuant to the Registration Statement.
• [ ] The form of the Registration Statement on Form S-1 was appropriate for use by CBR in connection with the Offering and the transactions contemplated by the Underwriting Agreement.
Note for review: CBR qualifies as an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), having reported revenue of $487.3 million for fiscal year 2021, which is below the $1.235 billion revenue threshold for EGC status. Confirm that PD&Y's opinion is consistent with CBR's EGC status and that Form S-1 is the appropriate registration form. As an EGC, CBR is entitled to certain accommodations in the registration process, including the ability to submit a draft registration statement confidentially for nonpublic review by the SEC staff (which CBR has done). Confirm that these accommodations are referenced appropriately, if at all, in PD&Y's opinion.
I. Exchange Act Compliance — Reporting
• [ ] CBR has filed, or will have filed prior to the Closing Date, all reports, documents, and registration statements required to be filed by CBR under the Exchange Act in connection with the Offering, including the registration of the Common Stock under Section 12(b) of the Exchange Act and the listing of the Common Stock on the NYSE.
Note for review: As a newly public company, CBR will not have a filing history under the Exchange Act prior to the IPO. This opinion paragraph should address the Section 12(b) registration and any other Exchange Act filings required in connection with the Offering (e.g., Form 8-A for registration of the Common Stock under Section 12(b)). Confirm that PD&Y's opinion is appropriately scoped to the Exchange Act filings required in connection with the IPO, rather than ongoing reporting obligations that will apply post-closing.
J. Investment Company Act
• [ ] CBR is not, and upon consummation of the Offering and application of the net proceeds therefrom as described in the Prospectus under the caption "Use of Proceeds," will not be, required to register as an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended (the "1940 Act").
Note for review: This opinion paragraph is particularly important for CBR given its business model, which involves the development, ownership, and operation of renewable energy projects through a complex structure of project-finance special purpose vehicles ("SPVs") and tax-equity partnerships. Although CBR is an operating company and its primary business is the generation and sale of electricity from renewable sources, the holding-company structure and the nature of certain of its investments in project-level entities could raise questions under the 1940 Act if not properly analyzed. Confirm that PD&Y's analysis addresses the Section 3(b)(1) exclusion (companies primarily engaged in a business other than investing, reinvesting, or trading in securities) and/or the Section 3(b)(2) exclusion, as applicable. Confirm that C&H's own opinion on this point (to the extent C&H addresses the 1940 Act) is consistent with PD&Y's analysis. If there is any question as to which counsel delivers the 1940 Act opinion, this should be resolved prior to receipt of the draft opinions.
K. Description of Capital Stock
• [ ] The statements in the Prospectus under the caption "Description of Capital Stock" and in the Registration Statement under Item 11 ("Description of Registrant's Securities to be Registered"), insofar as such statements constitute summaries of the legal matters, documents, or proceedings referred to therein, are accurate and complete in all material respects.
Note for review: Cross-reference this opinion paragraph to the "Description of Capital Stock" section in the Prospectus, which was drafted by C&H and covers the following topics:
• Authorized capital stock (shares of Common Stock and Preferred Stock authorized under the Amended and Restated Certificate of Incorporation)
• Voting rights (one vote per share of Common Stock; no cumulative voting)
• Dividend rights
• Liquidation rights
• Anti-takeover provisions, including:
• Applicability of Section 203 of the Delaware General Corporation Law
• Classified board of directors (three classes with staggered three-year terms)
• Advance-notice bylaw provisions for stockholder proposals and director nominations
• Exclusive forum provision (Delaware Court of Chancery for certain intra-corporate disputes; federal district courts for Securities Act claims)
• No preemptive or similar rights
• Transfer agent and registrar
Confirm that PD&Y has reviewed the final version of the "Description of Capital Stock" section and that its "accurate and complete in all material respects" opinion is based on that review. This opinion paragraph is customary for underwriters' counsel and provides additional assurance to the Underwriters regarding the accuracy of the capital stock disclosure.
L. Description of the Underwriting Arrangements
• [ ] The statements in the Prospectus under the caption "Underwriting" and in the Registration Statement under Item 13 ("Other Expenses of Issuance and Distribution"), insofar as such statements constitute summaries of the underwriting arrangements and the terms of the Offering, are accurate and complete in all material respects.
Note for review: This is a core responsibility of underwriters' counsel, as PD&Y will have been primarily responsible for drafting the "Underwriting" section of the Prospectus. Verify that the following specific terms and arrangements are accurately reflected in both the Prospectus and the opinion:
• Gross spread: 5.50% of the public offering price ($1.21 per share based on an assumed offering price of $22.00 per share)
• Allocation of shares among the Underwriters:
• Hargrove Keating & Co.: 40% (9,485,454 shares at base)
• Linden Pratt Securities LLC: 25% (5,928,409 shares at base)
• Graymont Brothers Inc.: 20% (4,742,727 shares at base)
• Barfield Stuart & Co.: 10% (2,371,364 shares at base)
• Crane Whitley Capital LLC: 5% (1,185,682 shares at base)
• Lock-up period: 180 days following the date of the Final Prospectus
• Overallotment option: 15% greenshoe (up to 3,559,091 additional shares), exercisable for 30 days from the date of the Final Prospectus
• Underwriter expense reimbursement cap: $350,000 (subject to FINRA Rule 5110)
• Stabilization and short-selling provisions
• Indemnification and contribution provisions (cross-reference to the Underwriting Agreement)
• Electronic distribution of prospectus
• Directed share program (if any)
M. Lock-Up Agreements
• [ ] The form of Lock-Up Agreement complies in all material respects with the requirements of the Underwriting Agreement.
• [ ] Each Lock-Up Agreement, when duly executed and delivered by the respective lock-up party, constitutes a valid and binding obligation of such lock-up party, enforceable against such lock-up party in accordance with its terms, subject to the Enforceability Exceptions.
Note for review: The Lock-Up Agreements are being executed by approximately eighteen (18) individuals and entities, consisting of all directors, all executive officers, Pinnacle Vista Capital Partners III, LP (and its general partner), and all holders of one percent (1%) or more of CBR's pre-IPO Common Stock. Verify that PD&Y confirms enforceability of the Lock-Up Agreements and that the following carve-outs and terms are accurately described in the Prospectus and are consistent with the form of Lock-Up Agreement:
• Transfers to affiliates (subject to the transferee entering into a lock-up agreement on the same terms)
• Estate-planning transfers (including transfers to trusts for the benefit of the lock-up party or immediate family members, subject to the transferee entering into a lock-up agreement)
• Adoption of Rule 10b5-1 trading plans during the lock-up period (but no sales or other dispositions under such plans may occur during the lock-up period)
• Pledges of shares to lending institutions as collateral for bona fide loans (provided that no disposition of shares occurs during the lock-up period as a result of any foreclosure or similar action)
• Release from lock-up restrictions: subject to the prior written consent of Hargrove Keating & Co. (in its capacity as Representative), or upon the occurrence of a Change of Control of CBR (as defined in the Lock-Up Agreement)
As of June 17, 2022, fifteen (15) of the eighteen (18) Lock-Up Agreements had been executed and returned. The three outstanding Lock-Up Agreements should be identified and flagged upon reactivation of the Offering. All eighteen Lock-Up Agreements may need to be re-executed or reaffirmed upon reactivation, depending on the length of the dormancy period and any intervening changes.
V. Expected Qualifications, Assumptions, and Limitations
The following qualifications, assumptions, and limitations are expected to appear in PD&Y's legal opinion. Upon receipt of the draft opinion, we should confirm that the qualifications and limitations are consistent with market practice and do not unduly narrow the scope of the opinion.
A. Customary Qualifications
• [ ] Enforceability qualification. All enforceability opinions set forth in the opinion are subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, fraudulent conveyance, and similar laws now or hereafter in effect affecting creditors' rights and remedies generally, and (ii) general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith, and fair dealing), regardless of whether enforcement is sought in a proceeding at law or in equity.
• [ ] Jurisdictional limitation. PD&Y expresses no opinion as to the laws of any jurisdiction other than (i) the federal laws of the United States of America and (ii) the laws of the State of New York. PD&Y does not purport to be experts in, and expresses no opinion with respect to, the laws of any other state or jurisdiction, including the laws of the State of Delaware (except to the extent PD&Y may rely on the opinion of C&H or a separate Delaware counsel opinion with respect to Delaware corporate law matters).
Note for review: The jurisdictional limitation is standard for a New York-based law firm. Issuer's counsel (C&H) covers Delaware law matters, including the DGCL, the Amended and Restated Certificate of Incorporation, and the Amended and Restated Bylaws. It is essential that there are no gaps in coverage between PD&Y's opinion (federal/New York law) and C&H's opinion (Delaware law). In particular, confirm the following:
(a) If PD&Y opines on the due incorporation and good standing of CBR under Delaware law, confirm that PD&Y is relying expressly on C&H's opinion or on a certificate of good standing from the Delaware Secretary of State, and that such reliance is disclosed.
(b) If PD&Y's no-conflict opinion addresses the Amended and Restated Certificate of Incorporation and Bylaws as a matter of Delaware law, confirm that PD&Y is relying on C&H's opinion for such matters.
(c) Confirm that the valid-issuance, fully-paid, and non-assessable opinions for the Shares are covered by C&H's Delaware law opinion and that PD&Y's opinion on this point, if included, is based on reliance on C&H's opinion.
B. Assumptions.
• [ ] Genuineness of signatures. PD&Y assumes the genuineness of all signatures, the authenticity of all documents submitted to PD&Y as originals, and the conformity with the originals of all documents submitted to PD&Y as copies.
• [ ] Due authorization by other parties. PD&Y assumes the due authorization, execution, and delivery of the Underwriting Agreement and all other transaction documents by all parties thereto other than CBR. It is customary for underwriters' counsel not to opine on the enforceability of the Underwriting Agreement against its own clients (the Underwriters), as the Underwriters do not need an opinion of their own counsel on their own obligations. PD&Y will assume that CBR has duly authorized, executed, and delivered the Underwriting Agreement, or will rely on C&H's opinion for such matters.
• [ ] Accuracy of certificates. PD&Y assumes the accuracy and completeness of all certificates of public officials and officers of CBR upon which PD&Y has relied in rendering the opinion.
• [ ] Good standing certificates. PD&Y assumes that good-standing certificates from the Secretaries of State of Delaware, Texas, and other applicable jurisdictions are accurate as of their respective dates and have not been superseded or revoked.
C. Limitations.
• [ ] As of date only. The opinion is rendered as of the Closing Date only, and PD&Y assumes no obligation to update or supplement the opinion after its delivery to reflect any changes in law or fact occurring after the Closing Date.
• [ ] Benefit limited to addressees. The opinion is rendered solely for the benefit of the addressees (the Underwriters) in connection with the Offering and may not be relied upon by any other person or entity, or for any other purpose, without PD&Y's prior written consent.
• [ ] Excluded areas of law. PD&Y does not opine on the following areas of law, as to which PD&Y expresses no opinion:
(i) State securities or "blue sky" laws (except to the extent expressly noted in the opinion or in the discussion of required governmental approvals);