RESOLUTIONS OF THE BOARD OF DIRECTORS OF CALLOWAY-BRIGGS RENEWABLES INC.
Authorization of Initial Public Offering and Related Transactions
Adopted by Unanimous Written Consent in Lieu of a Special Meeting
March 14, 2022
The undersigned, being all of the members of the Board of Directors (the "Board") of Calloway-Briggs Renewables Inc., a Delaware corporation (the "Company" or "CBR"), acting pursuant to Section 141(f) of the General Corporation Law of the State of Delaware (the "DGCL") and Article III, Section 3.12 of the Bylaws of the Company (the "Bylaws"), which permit the Board to take action by unanimous written consent without a meeting, hereby adopt the following recitals and resolutions, effective as of the date first written above.
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I. RECITALS AND PREAMBLE
A. Identity of the Company
The Company is Calloway-Briggs Renewables Inc., a corporation duly organized and existing under the laws of the State of Delaware. The Company's Employer Identification Number (EIN) is 83-4027615. The Company's principal executive offices are located at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The Company's registered agent in the State of Delaware is Capitol Statutory Services, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
B. Directors Participating
The following seven (7) individuals constitute the entire Board of Directors of the Company, and each is participating in this unanimous written consent:
The Board hereby confirms that the foregoing seven (7) directors constitute the entire Board of Directors of the Company as of the date hereof, and that each director is participating in and consenting to the adoption of these resolutions.
C. Background Recitals
WHEREAS, the Company is a leading developer, owner, and operator of utility-scale renewable energy generation and battery energy storage projects in the United States, with a diversified portfolio consisting of approximately 3.8 gigawatts ("GW") of operating capacity across twenty-two (22) solar, onshore wind, and battery energy storage projects located in the states of Texas, New Mexico, Arizona, California, and Oklahoma, approximately 1.4 GW of capacity currently under construction, and a development pipeline of approximately 6.2 GW;
WHEREAS, the Company's pre-IPO capitalization consists of approximately 100,000,000 shares of common stock outstanding on a fully diluted, post-reclassification basis, with approximately 62% of such shares held by Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership ("Pinnacle Vista" or "PVCP III"), approximately 24% held by the Company's co-founders and members of management, and approximately 14% held by earlier-stage investors and employees;
WHEREAS, the Board has carefully considered and determined that it is advisable and in the best interests of the Company and its stockholders to pursue an initial public offering (the "IPO") of shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), on the New York Stock Exchange (the "NYSE") under the proposed ticker symbol "CBRI";
WHEREAS, the Board has received detailed presentations from the Company's management, including Marcus Yoon, Chief Financial Officer, and Sandra Haverford, General Counsel and Corporate Secretary, regarding the Company's financial condition, capital structure, business prospects, and the strategic rationale for the IPO, including the anticipated benefits of access to the public capital markets, enhanced public profile, and liquidity for existing stockholders;
WHEREAS, the Board has received presentations from the Company's outside financial and legal advisors regarding the proposed structure, terms, timeline, and regulatory requirements of the IPO, the current state of the equity capital markets for renewable energy issuers, and comparable precedent transactions;
WHEREAS, the Company has engaged Calderwood & Harkness LLP, located at 599 Lexington Avenue, New York, New York 10022, as issuer's counsel for the IPO, pursuant to an engagement letter dated March 10, 2022 (C&H Matter No. 1015-00001), with Jennifer Kwon serving as responsible partner and Theodore Langston serving as billing partner;
WHEREAS, Ashford & Pemberton LLP, located at 30 Rockefeller Plaza, Suite 2800, New York, New York 10112, serves as the Company's independent registered public accounting firm, with Gregory Sondheim, CPA, as lead engagement partner;
WHEREAS, the Board has considered the potential risks and disadvantages of an IPO, including the costs and burdens of public-company compliance, the potential loss of operational flexibility, the dilutive effect on existing stockholders, and the market and execution risks inherent in any equity offering, and has determined that the anticipated benefits of the IPO outweigh such risks and disadvantages;
WHEREAS, the Board has considered and discussed the proposed offering structure, the selection of underwriters, the proposed use of proceeds, and the various corporate governance actions and related transactions described herein;
NOW, THEREFORE, BE IT RESOLVED, that the Board hereby adopts the following resolutions:
II. RESOLUTION 1 — AUTHORIZATION OF THE INITIAL PUBLIC OFFERING
A. Approval of the IPO Generally
RESOLVED, that the Board hereby authorizes, approves, and ratifies the Company's pursuit of an initial public offering of shares of Common Stock, on the terms and conditions described herein and as may be further determined by the authorized officers of the Company in consultation with the Company's advisors.
FURTHER RESOLVED, that the target aggregate offering size for the IPO shall be approximately Six Hundred Million Dollars ($600,000,000), inclusive of the underwriters' overallotment option, consisting of a base offering of approximately Five Hundred Twenty-One Million Seven Hundred Thousand Dollars ($521,700,000) and an overallotment option (the "Greenshoe") of approximately Seventy-Eight Million Three Hundred Thousand Dollars ($78,300,000), representing approximately 15% of the base offering amount.
FURTHER RESOLVED, that, for filing and planning purposes, the assumed midpoint IPO price shall be Twenty-Two Dollars ($22.00) per share of Common Stock, resulting in the following indicative share figures:
(a) Base offering shares: approximately 23,713,636 shares;
(b) Overallotment (greenshoe) shares: approximately 3,559,091 shares;
(c) Total shares offered (assuming full exercise of the overallotment option): approximately 27,272,727 shares;
(d) Post-IPO shares outstanding (base offering only): approximately 123,713,636 shares; and
(e) Post-IPO shares outstanding (full exercise of overallotment option): approximately 127,272,727 shares.
The foregoing share figures are preliminary and are provided for planning purposes only. The final public offering price, number of shares offered, and other terms of the IPO shall be as set forth in the pricing agreement to be entered into at the time of pricing, as authorized herein.
B. Primary and Secondary Components
FURTHER RESOLVED, that the IPO shall consist of both a primary offering by the Company and a secondary offering by a selling stockholder, structured as follows:
(a) Primary Offering. The Company shall sell primary shares of Common Stock representing approximately Three Hundred Seventy-One Million Seven Hundred Thousand Dollars ($371,700,000) in aggregate gross proceeds, consisting of approximately 16,895,455 shares at the assumed midpoint price of $22.00 per share. The net proceeds of the primary offering, after deducting underwriting discounts and commissions and estimated offering expenses, shall be received by the Company and applied as described in Section II.C below.
(b) Secondary Offering. Pinnacle Vista Capital Partners III, LP, as a selling stockholder, shall sell secondary shares of Common Stock representing approximately One Hundred Fifty Million Dollars ($150,000,000) in aggregate gross proceeds, consisting of approximately 6,818,182 shares at the assumed midpoint price of $22.00 per share. The Company shall not receive any proceeds from the sale of secondary shares by the selling stockholder.
C. Use of Proceeds
FURTHER RESOLVED, that the Board hereby authorizes the application of the net proceeds from the primary offering as follows:
(a) Approximately Two Hundred Million Dollars ($200,000,000) shall be applied to repay a portion of the Term Loan B outstanding under the Credit Agreement dated as of June 15, 2020, among the Company, Veltrano National Bank, as administrative agent, and the lenders party thereto (the "Term Loan B"), including any accrued and unpaid interest and applicable prepayment premiums;
(b) Approximately One Hundred Million Dollars ($100,000,000) shall be applied to fund construction costs of the Cimarron Solar project, a 450 MW (AC) utility-scale solar photovoltaic facility being developed by Cimarron Solar Development LLC, a wholly owned indirect subsidiary of the Company, located in Doña Ana County, New Mexico; and
(c) Approximately Seventy-One Million Seven Hundred Thousand Dollars ($71,700,000) shall be applied for general corporate purposes, including working capital, capital expenditures, potential acquisitions, and other corporate needs as determined by management.
FURTHER RESOLVED, that the Chief Executive Officer (Garrett Calloway), Chief Financial Officer (Marcus Yoon), and Senior Vice President, Finance & Treasurer (Priya Anand) are each hereby authorized, empowered, and directed, acting individually or together, to finalize the allocation and application of the net proceeds from the IPO in a manner consistent with the foregoing authorization, and to make such adjustments to the allocation as they may deem necessary or advisable in their judgment.
D. Listing on the New York Stock Exchange
FURTHER RESOLVED, that the Board hereby authorizes and directs the officers of the Company to apply for the listing of the Common Stock on the New York Stock Exchange under the proposed ticker symbol "CBRI."
FURTHER RESOLVED, that the officers of the Company are hereby authorized and directed to prepare, execute, and file the NYSE Listing Application (Application No. NYSE-2022-04218) and all related corporate governance certifications, listing agreements, supplemental materials, and other documents required by the NYSE in connection with the listing of the Common Stock.
FURTHER RESOLVED, that the officers of the Company are hereby authorized and directed to take all actions necessary, proper, or advisable to satisfy the NYSE's quantitative and qualitative listing standards, including, without limitation, the standards relating to minimum share price, market capitalization, number of publicly held shares, number of round-lot holders, corporate governance requirements, and the establishment of independent board committees as required by Section 303A of the NYSE Listed Company Manual.
III. RESOLUTION 2 — AUTHORIZATION OF REGISTRATION STATEMENT ON FORM S-1
A. Filing of the Registration Statement
RESOLVED, that the Board hereby authorizes the preparation, execution, and filing with the United States Securities and Exchange Commission (the "SEC") of a registration statement on Form S-1 (the "Registration Statement"), including any and all pre-effective and post-effective amendments thereto, under the Securities Act of 1933, as amended (the "Securities Act"), covering the offering and sale of shares of Common Stock in the IPO and the secondary offering by the selling stockholder, together with all exhibits, financial statements, and other documents required to be filed as part of or incorporated by reference into the Registration Statement.
FURTHER RESOLVED, that the Registration Statement shall initially be filed confidentially as a draft registration statement ("DRS") pursuant to Section 6(e) of the Securities Act, as added by Section 106(a) of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), the Company qualifying as an "emerging growth company" within the meaning of the JOBS Act by virtue of the Company's total annual gross revenue for its most recently completed fiscal year (fiscal year ended December 31, 2021) of approximately $487.3 million, which is below the applicable threshold of $1.235 billion.
FURTHER RESOLVED, that the Company's SEC Central Index Key (CIK) number is 0001948372, and all filings with the SEC in connection with the IPO shall be made under such CIK number.
FURTHER RESOLVED, that the Registration Statement shall include all required prospectus disclosure (Part I of Form S-1) and all information not required to be included in the prospectus (Part II of Form S-1), including, without limitation, audited consolidated financial statements of the Company for the fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021, prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and audited by Ashford & Pemberton LLP, and unaudited interim consolidated financial data for the quarterly period ending March 31, 2022 (to the extent available and required at the time of filing), together with all other financial information required by Regulation S-X under the Securities Act and Regulation S-K under the Securities Act.
B. Authorization of Officers to Execute
FURTHER RESOLVED, that Garrett Calloway, as Chief Executive Officer, Marcus Yoon, as Chief Financial Officer, and Sandra Haverford, as General Counsel and Corporate Secretary, are each hereby authorized and directed to sign the Registration Statement (and any amendments thereto) on behalf of the Company.
FURTHER RESOLVED, that each member of the Board of Directors is hereby authorized and directed to sign the Registration Statement (and any amendments thereto) as a director of the Company, or to execute a power of attorney authorizing one or more designees to sign the Registration Statement on his or her behalf, and the Company is hereby authorized to file such powers of attorney as exhibits to the Registration Statement.
FURTHER RESOLVED, that the officers of the Company, and each of them acting individually, are hereby authorized and directed to prepare, execute, and file with the SEC any and all amendments and supplements to the Registration Statement, any and all response letters to SEC staff comment letters, any and all correspondence with the SEC staff, and any and all other documents and filings necessary or advisable in connection with the Registration Statement and the IPO, without the need for further Board action, provided that such filings and correspondence are consistent with the purposes and intent of these resolutions.
C. Prospectus Contents
FURTHER RESOLVED, that the Board hereby approves the inclusion in the Registration Statement and the prospectus forming a part thereof (the "Prospectus") of all material information regarding the Company, its business, properties, financial condition, results of operations, risk factors, management and directors, executive and director compensation, capitalization, dilution, related-party transactions, principal and selling stockholders, and all other matters required by applicable SEC rules and regulations, including Regulation S-K, Regulation S-X, and the Securities Act and the rules and forms promulgated thereunder.
FURTHER RESOLVED, that the Board hereby approves the definition of "material adverse effect" as negotiated with the underwriters and their counsel for inclusion in the Registration Statement and the Underwriting Agreement (as defined below), and authorizes the officers and issuer's counsel to finalize such definition in a manner consistent with market practice for initial public offerings of comparable size and type.
IV. RESOLUTION 3 — ENGAGEMENT OF UNDERWRITERS
A. Selection of Lead-Left Book-Runner and Joint Book-Running Managers
RESOLVED, that the Board hereby approves the engagement of the following investment banks as underwriters for the IPO, in the capacities set forth below:
(a) Hargrove Keating & Co., with offices at 383 Madison Place, New York, New York 10017, as lead-left book-running manager and coordinating underwriter for the IPO. Key contacts: Oliver Marchetti, Managing Director, Equity Capital Markets; and Sonia Tran, Director, Power & Renewables Investment Banking.
(b) Linden Pratt Securities LLC, with offices at 200 Vesey Street, 40th Floor, New York, New York 10281, as joint book-running manager. Key contact: Rebecca Innes, Managing Director, Equity Capital Markets.
(c) Graymont Brothers Inc., with offices at 555 California Street, Suite 3200, San Francisco, California 94104, as joint book-running manager. Key contact: Kenneth Sato, Managing Director, Equity Capital Markets.
B. Selection of Co-Managers
FURTHER RESOLVED, that the Board hereby approves the engagement of the following investment banks as co-managers for the IPO:
(a) Barfield Stuart & Co., with offices at 101 Federal Street, Boston, Massachusetts 02110, as co-manager.
(b) Crane Whitley Capital LLC, with offices at 600 Travis Street, Suite 4400, Houston, Texas 77002, as co-manager.
C. Underwriting Economics
FURTHER RESOLVED, that the Board hereby approves the following underwriting economics for the IPO:
(a) The gross spread (underwriting discount) shall be 5.50% of the public offering price per share.
(b) Based on the assumed midpoint offering price of $22.00 per share and assuming full exercise of the overallotment option (aggregate offering size of approximately $600,000,000), the total underwriting discount shall be approximately Thirty-Three Million Dollars ($33,000,000), allocated among the underwriters' compensation components as follows:
(i) Management fee: 20% of gross spread, or approximately $6,600,000;
(ii) Underwriting fee: 20% of gross spread, or approximately $6,600,000; and
(iii) Selling concession: 60% of gross spread, or approximately $19,800,000.
(c) The underwriters' expense reimbursement cap shall be $350,000, covering FINRA-related filing fees and other regulatory costs.
(d) The base offering shares shall be allocated among the underwriters as follows:
The foregoing allocations are preliminary and are subject to adjustment by agreement among the underwriters and the Company.
D. Authorization of Underwriting Agreement
FURTHER RESOLVED, that the Board hereby authorizes the Chief Executive Officer (Garrett Calloway), Chief Financial Officer (Marcus Yoon), and General Counsel (Sandra Haverford), each acting individually or together, to negotiate, finalize, execute, and deliver an underwriting agreement (the "Underwriting Agreement") with the underwriters, with Hargrove Keating & Co. acting as representative of the several underwriters (the "Representative"), on behalf of the Company and in connection with the IPO.
FURTHER RESOLVED, that the Underwriting Agreement shall contain customary representations and warranties of the Company and the selling stockholder, conditions to the closing of the offering, covenants of the Company and the selling stockholder (including covenants regarding future issuances of securities), indemnification and contribution provisions, and termination provisions, all as negotiated by the Company's counsel and the underwriters' counsel in accordance with prevailing market practice for initial public offerings of this type and size.
FURTHER RESOLVED, that the Underwriting Agreement shall grant to the underwriters an overallotment option (the Greenshoe) to purchase up to 3,559,091 additional shares of Common Stock (representing approximately 15% of the base offering shares), exercisable in whole or in part within 30 days following the date of the final Prospectus.
The Board notes that Prescott, Danforth & Yee LLP, with offices at 1271 Avenue of the Americas, New York, New York 10020, serves as counsel to the underwriters in connection with the IPO. The key contact at Prescott, Danforth & Yee LLP is Margaret Yee, Partner, Capital Markets.
E. Authorization of Pricing Agreement
FURTHER RESOLVED, that the Board hereby authorizes the Chief Executive Officer (Garrett Calloway) and Chief Financial Officer (Marcus Yoon), each acting individually, to execute and deliver a pricing agreement (the "Pricing Agreement") at the time of pricing of the IPO, specifying the final public offering price per share, the underwriting discount per share, the number of shares of Common Stock to be sold by the Company and by the selling stockholder, and the net proceeds to the Company and the selling stockholder.
FURTHER RESOLVED, that the final pricing terms set forth in the Pricing Agreement shall be subject to the approval of the Chief Executive Officer (or his designee) and the Chief Financial Officer, acting within the following parameters approved by the Board: (i) the final public offering price per share shall be within the range of $19.00 to $25.00 per share (inclusive), and (ii) the total number of shares offered in the base offering shall not exceed 27,500,000 shares (exclusive of the overallotment option). Any pricing outside such parameters shall require further Board approval.
F. Authorization of Lock-Up Provisions
FURTHER RESOLVED, that the Board hereby approves the form of lock-up agreement (the "Lock-Up Agreement") substantially in the form to be attached to these resolutions as Exhibit H, providing for a lock-up period of one hundred eighty (180) days following the date of the final Prospectus (the "Lock-Up Period").
FURTHER RESOLVED, that the Lock-Up Agreement shall be executed by all directors, executive officers, and holders of 1% or more of the pre-IPO Common Stock (approximately eighteen (18) persons and entities in the aggregate), and shall restrict, during the Lock-Up Period, the offer, sale, contract to sell, pledge, grant of options or warrants, or other disposition of shares of Common Stock or securities convertible into or exchangeable for Common Stock, subject to the following carve-outs:
(a) Transfers to affiliates, provided the transferee enters into a lock-up agreement on substantially identical terms;
(b) Estate-planning transfers, including transfers to trusts, family members, or charitable organizations, provided the transferee enters into a lock-up agreement on substantially identical terms;
(c) The adoption (but not execution) of a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(d) Pledges of shares to bona fide lending institutions as collateral for indebtedness, provided that any foreclosure or transfer resulting therefrom shall be subject to the lock-up restrictions.
FURTHER RESOLVED, that early release from the Lock-Up Agreement shall be permitted only with the prior written consent of Hargrove Keating & Co. (as Representative) or upon the occurrence of a Change of Control of the Company (as defined in the Lock-Up Agreement).
FURTHER RESOLVED, that the Board hereby approves an issuer lock-up, pursuant to which the Company shall agree not to issue, sell, offer to sell, or file a registration statement covering any additional shares of Common Stock or securities convertible into or exchangeable for Common Stock for a period of 180 days following the date of the final Prospectus, subject to customary exceptions for (i) shares issued under the Company's employee equity incentive plans (including the 2022 Omnibus Equity Incentive Plan and the 2022 Employee Stock Purchase Plan), (ii) shares issued in connection with acquisitions or strategic transactions, and (iii) shares issuable upon exercise of outstanding options or warrants.
V. RESOLUTION 4 — ENGAGEMENT OF ADVISORS AND SERVICE PROVIDERS
A. Ratification of Issuer's Counsel
RESOLVED, that the Board hereby ratifies the engagement of Calderwood & Harkness LLP, with offices at 599 Lexington Avenue, New York, New York 10022, as issuer's counsel for the IPO, pursuant to the engagement letter dated March 10, 2022 (C&H Matter No. 1015-00001).
The fee arrangement with Calderwood & Harkness LLP consists of a monthly retainer of One Hundred Twenty-Five Thousand Dollars ($125,000) plus hourly overage at the firm's standard rates, and a success fee of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) payable upon pricing of the IPO. The responsible partner for the engagement is Jennifer Kwon, and the billing partner is Theodore Langston.
B. Ratification of Independent Auditor
FURTHER RESOLVED, that the Board hereby ratifies the engagement of Ashford & Pemberton LLP, with offices at 30 Rockefeller Plaza, Suite 2800, New York, New York 10112, as the Company's independent registered public accounting firm for purposes of the IPO and the Company's ongoing reporting obligations as a public company.
The lead engagement partner is Gregory Sondheim, CPA, and the audit manager is Irene Valdez, CPA. The Board further authorizes the independent auditors to prepare and deliver comfort letters (within the meaning of SAS 72 / AU-C 920) to the underwriters in connection with the IPO, with three comfort-letter circle-ups currently planned: an initial comfort letter at the time of filing of the Registration Statement, a bring-down comfort letter prior to the effective date, and a pricing comfort letter at the time of pricing.
C. Ratification of Tax Advisor
FURTHER RESOLVED, that the Board hereby ratifies the engagement of Kessler McBride & Associates LLP, with offices at 700 Milam Street, Suite 2100, Houston, Texas 77002, as the Company's external tax advisor for the IPO. Kessler McBride & Associates LLP shall provide advice and assistance with respect to the Up-C/Down-C structural analysis, partnership-flip tax compliance review (including review of the Company's tax-equity partnership arrangements), hypothetical liquidation at book value ("HLBV") accounting analysis, and other tax-related matters arising in connection with the IPO and the Company's transition to public-company status.
The key contacts at Kessler McBride & Associates LLP are Alan Kessler, Managing Partner, and Linda McBride, Partner, Tax Structures.
D. Engagement of Transfer Agent and Registrar
FURTHER RESOLVED, that the Board hereby approves the engagement of Continental Shareowner Services, Inc., with offices at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, New York 10004, as transfer agent and registrar for the Company's Common Stock, pursuant to a transfer agent and registrar agreement to be entered into between the Company and Continental Shareowner Services, Inc. on customary terms and conditions. The key contact at Continental Shareowner Services, Inc. is Maria Costello, Vice President, Corporate Actions.
E. Engagement of Financial Printer
FURTHER RESOLVED, that the Board hereby approves the engagement of Ridgeway Financial Printing Corp., with offices at 79 Madison Avenue, New York, New York 10016, for the typesetting, printing, and EDGAR filing of the Registration Statement, the Prospectus, and all related documents in connection with the IPO, pursuant to a services agreement to be entered into between the Company and Ridgeway Financial Printing Corp. on customary terms and conditions. The key contact at Ridgeway Financial Printing Corp. is Alan Greenidge, Account Director.
F. Engagement of D&O Insurance Broker
FURTHER RESOLVED, that the Board hereby approves the engagement of Dravello Place Insurance Advisors LLC, with offices at 250 Greenwich Street, Suite 3700, New York, New York 10007, as the Company's directors' and officers' ("D&O") insurance broker in connection with the placement of the Company's IPO D&O insurance program. The key contact at Dravello Place Insurance Advisors LLC is Nina Radcliffe, Vice President.
The Board notes that the Company's existing D&O insurance tower provides aggregate coverage of $50,000,000, consisting of the following layers: (i) primary coverage issued by Meridian National Assurance Company (Policy No. DNO-22-048871); (ii) first excess layer issued by Stonebridge Indemnity Corp.; and (iii) second excess layer issued by Commonwealth Omnivrel Insurance Ltd. The current annual premium for the existing tower is approximately $1,870,000. The officers are authorized to work with Dravello Place Insurance Advisors LLC to obtain enhanced coverage, including a public-company D&O policy and Side A/DIC coverage, in connection with the IPO.
G. Engagement of Compensation Consultant
FURTHER RESOLVED, that the Board hereby ratifies the engagement of Clarendon Rowe Advisory Group LLC, with offices at 300 Atlantic Street, Suite 800, Stamford, Connecticut 06901, as the Board-retained independent compensation consultant for executive compensation benchmarking, equity-plan design, and related advisory services in connection with the IPO and the Company's transition to public-company status. The key contact at Clarendon Rowe Advisory Group LLC is Patricia Voss, Senior Managing Director.
H. Engagement of Investor Relations Advisor
FURTHER RESOLVED, that the Board hereby approves the engagement of Broadmark Strategic Communications Inc., with offices at 640 Fifth Avenue, Suite 1205, New York, New York 10019, for IPO communications strategy, roadshow preparation, investor targeting analysis, and analyst-day coordination in connection with the IPO. The key contact at Broadmark Strategic Communications Inc. is Jason Eklund, Managing Director.
VI. RESOLUTION 5 — APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
A. Recommendation of Charter Amendments
RESOLVED, that the Board hereby approves and recommends to the stockholders of the Company the adoption of the Amended and Restated Certificate of Incorporation of the Company (the "Amended Charter"), in substantially the form presented to the Board and attached to these resolutions as Exhibit A, to become effective upon the closing of the IPO and the filing of such Amended Charter with the Secretary of State of the State of Delaware.
The Amended Charter shall include, among other things, the following key provisions:
(a) Authorized Capital Stock. The total number of shares of capital stock that the Company shall be authorized to issue shall be [●] shares, consisting of [●] shares of Common Stock, par value $0.01 per share, and [●] shares of preferred stock, par value $0.01 per share.
(b) Classified Board of Directors. The Board shall be divided into three classes, with each class serving staggered three-year terms, in accordance with Section 141(d) of the DGCL.
(c) Delaware Section 203. The Amended Charter shall address the applicability of Section 203 of the DGCL (the "business combination" statute), including the Board's determination regarding whether to opt in to or opt out of Section 203 and any associated protective provisions.
(d) Exclusive Forum Provision. The Amended Charter shall designate the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) as the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Amended Charter, or the Amended Bylaws, and (iv) any action asserting a claim governed by the internal-affairs doctrine.
(e) Renouncement of Corporate Opportunity Doctrine. To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision), the Amended Charter shall provide that the Company renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for both the Company and Pinnacle Vista or any of its affiliates or portfolio companies, or for both the Company and any director who is a designee of Pinnacle Vista (including Hugh Pemberton and Diane Kovac).
(f) Supermajority Voting Requirements. The Amended Charter shall require the affirmative vote of the holders of at least 66⅔% of the outstanding voting stock of the Company, voting together as a single class, to amend, alter, or repeal certain specified provisions of the Amended Charter and the Amended Bylaws, including provisions relating to the classified board, the exclusive forum, the corporate opportunity renouncement, and the supermajority voting requirements themselves.
FURTHER RESOLVED, that the officers of the Company are hereby authorized and directed to file the Amended Charter with the Secretary of State of the State of Delaware upon the closing of the IPO, and to take all actions necessary to give effect thereto.
B. Solicitation of Stockholder Approval
FURTHER RESOLVED, that the General Counsel (Sandra Haverford) is hereby authorized and directed to solicit and obtain the written consent of the stockholders of the Company holding a sufficient number of shares to adopt the Amended Charter in accordance with the DGCL and the Company's existing Certificate of Incorporation and Bylaws. In particular, the General Counsel is authorized to solicit and obtain written consents from Pinnacle Vista Capital Partners III, LP, Garrett Calloway, and Elaine Briggs, who collectively hold in excess of 90% of the outstanding voting power of the Company, which constitutes the requisite stockholder approval for the adoption of the Amended Charter.
VII. RESOLUTION 6 — APPROVAL OF AMENDED AND RESTATED BYLAWS
RESOLVED, that the Board hereby approves the adoption of the Amended and Restated Bylaws of the Company (the "Amended Bylaws"), in substantially the form presented to the Board and attached to these resolutions as Exhibit B, to become effective upon the closing of the IPO.
The Amended Bylaws shall include, among other things, the following key provisions:
(a) Advance-Notice Provisions. Detailed advance-notice requirements for stockholder proposals and director nominations to be presented at annual or special meetings of stockholders, including deadlines, information requirements, and procedures for updating and supplementing stockholder notices.
(b) Forum-Selection Clause. A provision designating the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder disputes, consistent with the exclusive forum provision in the Amended Charter.
(c) Board Committee Structure. Provisions authorizing the Board to establish committees, including the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, with authority to delegate powers to such committees to the fullest extent permitted by the DGCL.
(d) Indemnification and Advancement of Expenses. Provisions providing for the indemnification and advancement of expenses to directors and officers of the Company to the fullest extent permitted by Section 145 of the DGCL and other applicable law, including mandatory advancement of expenses upon receipt of an undertaking.
(e) Meetings, Quorum, and Voting. Provisions governing procedures for meetings of the Board and stockholders, quorum requirements, and voting standards, including provisions permitting meetings by means of remote communication and action by written consent.
VIII. RESOLUTION 7 — APPROVAL OF THE 2022 OMNIBUS EQUITY INCENTIVE PLAN
RESOLVED, that the Board hereby approves the adoption of the 2022 Omnibus Equity Incentive Plan of the Company (the "Equity Plan"), in substantially the form presented to the Board and attached to these resolutions as Exhibit C, and hereby recommends the Equity Plan to the stockholders of the Company for adoption.
The material terms of the Equity Plan are as follows:
(a) Share Reserve. The maximum number of shares of Common Stock reserved and available for issuance under the Equity Plan shall be 12,727,273 shares, representing approximately 10% of the post-IPO shares outstanding on a fully-exercised basis (based on 127,272,727 shares outstanding).
(b) Award Types. The Equity Plan shall authorize the grant of stock options (incentive stock options and nonqualified stock options), restricted stock awards, restricted stock units ("RSUs"), performance stock units ("PSUs"), stock appreciation rights, and other equity-based or equity-linked awards, in each case as determined by the Compensation Committee (or the Board, as applicable) in its discretion.
(c) Evergreen Provision. The Equity Plan shall include an automatic annual increase provision (the "evergreen" feature), pursuant to which the share reserve shall be automatically increased on the first day of each fiscal year during the term of the Equity Plan by a number of shares equal to the lesser of (i) a specified percentage of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year, and (ii) a number of shares determined by the Board.
(d) Award Agreements. The Board hereby approves the forms of stock option agreement and restricted stock unit agreement, in substantially the forms attached as sub-exhibits to Exhibit C.
FURTHER RESOLVED, that the Board, upon the recommendation of the Compensation Committee and based on benchmarking analysis performed by Clarendon Rowe Advisory Group LLC (Patricia Voss, Senior Managing Director), hereby recommends the following IPO equity grants to the named executive officers of the Company, subject to final approval by the Compensation Committee:
All IPO RSU grants shall vest ratably over a four-year period, with 25% of the shares vesting on each anniversary of the grant date, subject to continued employment with the Company and the terms and conditions of the applicable award agreement.
FURTHER RESOLVED, that the General Counsel (Sandra Haverford) is hereby authorized and directed to solicit and obtain the written consent of the stockholders of the Company for the adoption of the Equity Plan in accordance with the DGCL, NYSE listing standards, and applicable tax requirements.
IX. RESOLUTION 8 — APPROVAL OF THE 2022 EMPLOYEE STOCK PURCHASE PLAN
RESOLVED, that the Board hereby approves the adoption of the 2022 Employee Stock Purchase Plan of the Company (the "ESPP"), in substantially the form presented to the Board and attached to these resolutions as Exhibit D, and hereby recommends the ESPP to the stockholders of the Company for adoption.
The material terms of the ESPP are as follows:
(a) Share Reserve. The maximum number of shares of Common Stock reserved and available for issuance under the ESPP shall be 2,545,455 shares, representing approximately 2% of the post-IPO shares outstanding on a fully-exercised basis (based on 127,272,727 shares outstanding).
(b) Purchase Price discount. Eligible employees may purchase shares of Common Stock under the ESPP at a price equal to 85% of the lower of (i) the fair market value of the Common Stock on the first trading day of the applicable offering period, or (ii) the fair market value of the Common Stock on the last trading day of the applicable offering period, representing a 15% purchase price discount.
(c) Offering Periods. The ESPP shall provide for consecutive six-month offering periods, with such offering periods commencing on dates to be determined by the Board or the Compensation Committee.
(d) Tax Qualification. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be construed and administered in a manner consistent with such qualification.
FURTHER RESOLVED, that the General Counsel (Sandra Haverford) is hereby authorized and directed to solicit and obtain the written consent of the stockholders of the Company for the adoption of the ESPP in accordance with the DGCL, NYSE listing standards, and Section 423 of the Code.
X. RESOLUTION 9 — APPROVAL OF STOCKHOLDERS' AGREEMENT
RESOLVED, that the Board hereby approves the Amended and Restated Stockholders' Agreement (the "Stockholders' Agreement") among the Company, Pinnacle Vista Capital Partners III, LP, Garrett Calloway, and Elaine Briggs, in substantially the form presented to the Board, to become effective upon the closing of the IPO. The Stockholders' Agreement shall replace in its entirety the existing pre-IPO Stockholders' Agreement among such parties dated as of September 22, 2017, as amended.
The material terms of the Stockholders' Agreement are as follows:
(a) Board Designation Rights. Pinnacle Vista shall have the right to designate individuals for nomination to the Board, subject to a step-down schedule tied to Pinnacle Vista's ownership of the Company's outstanding Common Stock. The number of directors that Pinnacle Vista shall be entitled to designate shall decrease as Pinnacle Vista's ownership percentage decreases below specified thresholds.
(b) Transfer Restrictions. The parties to the Stockholders' Agreement shall be subject to certain restrictions on the transfer of their shares of Common Stock, in addition to the restrictions imposed by the Lock-Up Agreement.
(c) Standstill Provisions. Pinnacle Vista shall be subject to certain standstill obligations, including restrictions on the acquisition of additional shares of Common Stock in excess of specified ownership thresholds without the prior approval of the Board.
(d) Information Rights. Pinnacle Vista shall be entitled to receive certain financial and operational information regarding the Company, subject to applicable securities laws and the Company's obligations as a public reporting company.
The Board notes that Pinnacle Vista's counsel in connection with the Stockholders' Agreement and the IPO is Whitfield Archer & Doss LLP, with offices at 51 West 52nd Street, New York, New York 10019. Key contacts: Philip Archer, Partner; and Christine Navarro, Partner, Capital Markets.
XI. RESOLUTION 10 — APPROVAL OF REGISTRATION RIGHTS AGREEMENT
RESOLVED, that the Board hereby approves the Registration Rights Agreement (the "Registration Rights Agreement") among the Company and Pinnacle Vista Capital Partners III, LP (and its permitted transferees), in substantially the form presented to the Board, to become effective upon the closing of the IPO.
The material terms of the Registration Rights Agreement are as follows:
(a) Demand Registration Rights. Pinnacle Vista shall have the right to require the Company to file a registration statement under the Securities Act covering the resale of all or a portion of the shares of Common Stock held by Pinnacle Vista, subject to customary limitations on frequency and minimum offering size.
(b) Piggyback Registration Rights. In the event the Company proposes to register shares of Common Stock under the Securities Act (whether for the Company's own account or for the account of any other stockholder), Pinnacle Vista shall have the right to include its shares in such registration, subject to customary cut-back provisions.
(c) S-3 Shelf Registration Rights. Following the date on which the Company becomes eligible to use a registration statement on Form S-3 under the Securities Act, Pinnacle Vista shall have the right to require the Company to file and maintain a shelf registration statement on Form S-3 covering the resale of shares of Common Stock held by Pinnacle Vista.
(d) Cut-Back Provisions. If the managing underwriter of any underwritten offering advises the Company that the total number of shares requested to be included in such offering exceeds the number that can be sold without adversely affecting the offering, the shares shall be cut back in accordance with the priority provisions set forth in the Registration Rights Agreement.
The Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law.
XII. RESOLUTION 11 — APPROVAL OF INDEMNIFICATION AGREEMENTS
RESOLVED, that the Board hereby approves the form of indemnification agreement (the "Indemnification Agreement") between the Company and each of its directors and executive officers, in substantially the form presented to the Board and attached to these resolutions as Exhibit E.
The Indemnification Agreement shall provide, among other things, for the following:
(a) Indemnification Scope. Indemnification of each indemnitee to the fullest extent permitted by the DGCL and other applicable law against all expenses, judgments, fines, penalties, and amounts paid in settlement actually and reasonably incurred by the indemnitee in connection with any threatened, pending, or completed action, suit, or proceeding (whether civil, criminal, administrative, or investigative) arising out of or relating to the indemnitee's service as a director or officer of the Company.
(b) Advancement of Expenses. Mandatory advancement of expenses (including attorneys' fees) incurred by the indemnitee in defending any such proceeding, upon receipt of an undertaking by the indemnitee to repay such amounts if it is ultimately determined that the indemnitee is not entitled to indemnification.
(c) Procedures for Claims. Detailed procedures for the submission and resolution of indemnification claims, including the right to seek judicial determination of entitlement to indemnification.
(d) Insurance Requirements. An obligation of the Company to maintain D&O insurance coverage providing coverage for the indemnitee, subject to the terms and conditions of such insurance policies.
FURTHER RESOLVED, that the General Counsel (Sandra Haverford) is hereby authorized and directed to execute and deliver Indemnification Agreements on behalf of the Company with each of the following individuals:
Directors:
1. Garrett Calloway
2. Elaine Briggs
3. Hugh Pemberton
4. Diane Kovac
5. Warren Okoro
6. Catherine Liang
7. Richard Estavez
Named Executive Officers:
1. Marcus Yoon, Chief Financial Officer
2. Sandra Haverford, General Counsel & Corporate Secretary
3. Dale Renfroe, Chief Operating Officer
4. Priya Anand, Senior Vice President, Finance & Treasurer
5. Tomás Quintero, Senior Vice President, Project Development
6. Rachel Whitmore, Senior Vice President, Power Marketing & Origination
XIII. RESOLUTION 12 — ESTABLISHMENT OF BOARD COMMITTEES
A. Audit Committee
RESOLVED, that the Board hereby establishes the Audit Committee of the Board of Directors (the "Audit Committee"), effective upon the closing of the IPO, and appoints the following independent directors as members thereof: