Margaret,
Thank you for circulating the initial draft of the underwriting agreement in connection with the proposed initial public offering of common stock of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"). We appreciate the quick turnaround from you, Scott, and the rest of the Prescott Danforth team.
We are reviewing the draft on the issuer side and expect to circulate our comments and a marked copy by the end of this week — we are targeting Friday, April 22. Brendan Walsh will be the primary day-to-day contact on our side for the underwriting agreement, so please feel free to direct any interim questions to him as well.
Without getting into the substance at this stage, I wanted to flag the principal areas where we anticipate providing comments so that your team has a sense of where the markup will be concentrated:
- **Material Adverse Effect Definition.** We will want to review the scope of the MAE definition and related carve-outs to ensure consistency with the formulation in the draft registration statement.
- **Indemnification.** We expect to have comments on the scope, caps, and procedural mechanics of the indemnification provisions.
- **Termination.** We will be looking closely at the market-out clause and other termination triggers.
- **Lock-Up Provisions.** We anticipate substantive comments on the 180-day lock-up mechanics, including the form of lock-up agreement applicable to directors, officers, and holders of 1% or more of pre-IPO common stock (we have approximately 18 covered persons/entities). We will want to discuss the carve-outs — transfers to affiliates, estate-planning transfers, adoption (but not execution during the lock-up period) of Rule 10b5-1 plans, and pledges to lending institutions — as well as the early release mechanism (written consent of Hargrove Keating & Co. or upon a Change of Control).
- **Issuer Lock-Up.** We will focus on the carve-outs for issuances under the Company's 2022 Omnibus Equity Incentive Plan and 2022 Employee Stock Purchase Plan, as well as acquisition-related issuances.
- **FINRA Compliance.** We will review the underwriting compensation elements for consistency with FINRA Rule 5110 and the pending FINRA filing (Filing No. 20221129-01), including the underwriter expense reimbursement cap of $350,000.
- **Conditions to Closing.** We will have comments on the comfort letter requirements (initial, bring-down, and pricing circle-ups from Ashford & Pemberton LLP), the officer's and secretary's certificates, legal opinion deliverables, and good-standing certificate requirements.
- **Overallotment Option.** We will confirm the 15% greenshoe structure and mechanics.
These are preliminary, and the full markup will of course be comprehensive.
On a coordination point — as you know, the underwriting agreement is a three-party agreement among CBR as issuer, Pinnacle Vista Capital Partners III, LP as selling stockholder, and the several underwriters. Pinnacle Vista's secondary component is approximately $150,000,000 (6,818,182 shares at the assumed $22.00 midpoint price) alongside the Company's primary offering. We will be coordinating with Christine Navarro and Derek Fong at Whitfield Archer & Doss LLP on Pinnacle Vista's comments and will incorporate those into our markup to the extent possible. Separately, we intend to circulate the selling stockholder questionnaire and power of attorney / representation letter forms to Whitfield Archer & Doss shortly.
For shared context, the key offering parameters as we understand them for purposes of the underwriting agreement review are as follows:
- Aggregate offering size: approximately $600,000,000 (including full exercise of overallotment option) - Base offering: approximately $521.7 million - Gross spread: 5.50% - Lead-left book-running manager / representative of the underwriters: Hargrove Keating & Co. - Joint book-runners: Linden Pratt Securities LLC and Graymont Brothers Inc. - Co-managers: Barfield Stuart & Co. and Crane Whitley Capital LLC - Listing: New York Stock Exchange, proposed ticker symbol "CBRI"
Please let me know if any of those parameters need to be updated.
Margaret, if you would like to discuss any threshold issues before we circulate the formal markup, please don't hesitate to call. We look forward to moving this forward efficiently.
Best regards,
Jennifer
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**Jennifer Kwon** Partner **Calderwood & Harkness LLP** 599 Lexington Avenue New York, NY 10022 T: (212) 558-4000
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