1015-00001 · Graymont Brothers Inc · Debt & Lender Consents

draft-consent-request-ridgemont.docx DOCUMENT Capital Markets

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CONFIDENTIAL

CALLOWAY-BRIGGS RENEWABLES INC. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746

[__ , 2022]

Thomas Raines Managing Director, Energy Lending Veltrano National Bank 1401 McKinney Street Houston, TX 77010

Re: Request for Consent and Waiver under (i) the Credit Agreement, dated as of January [], 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "**Revolving Credit Agreement**"), among Calloway-Briggs Renewables Inc., as Borrower, CBR Holdings LLC, as Holdings, the Lenders party thereto, and Veltrano National Bank, as Administrative Agent, providing for a revolving credit facility in an aggregate principal amount of $400,000,000; and (ii) the Credit Agreement, dated as of January [], 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Term Loan Credit Agreement" and, together with the Revolving Credit Agreement, the "Credit Agreements"), among Calloway-Briggs Renewables Inc., as Borrower, CBR Holdings LLC, as Holdings, the Lenders party thereto, and Veltrano National Bank, as Administrative Agent, providing for a term loan facility in an aggregate principal amount of $650,000,000 (of which $612,500,000 is currently outstanding) — In Connection with Proposed Initial Public Offering of Common Stock

Dear Mr. Raines:

Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the applicable Credit Agreement.

1. Introduction and Background

Calloway-Briggs Renewables Inc., a Delaware corporation ("CBR" or the "Borrower"), with its principal offices located at 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 (EIN 83-4027615), writes to you in your capacity as Managing Director, Energy Lending, at Veltrano National Bank ("Veltrano" or the "Administrative Agent") in connection with the Credit Agreements described above.

As you are aware, CBR is the Borrower under both Credit Agreements, with Veltrano National Bank acting as Administrative Agent for the benefit of the Lenders party thereto. CBR Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of CBR, serves as Holdings under both Credit Agreements. The Credit Agreements were entered into on or about January [__], 2022, and provide for the following credit facilities:

(a) Revolving Credit Agreement. A revolving credit facility in an aggregate principal amount of $400,000,000 (the "Revolving Credit Facility"), with a maturity date of January [__], 2027. As of the date hereof, no amounts are drawn under the Revolving Credit Facility, and the full committed amount remains available for borrowing, subject to the terms and conditions set forth therein.

(b) Term Loan Credit Agreement. A term loan facility in an aggregate principal amount of $650,000,000 (the "Term Loan Facility"), with a maturity date of January [__], 2029. As of the date hereof, the outstanding principal amount under the Term Loan Facility is $612,500,000, reflecting scheduled amortization payments made to date in accordance with the applicable amortization schedule.

CBR is writing to formally request the consent and waiver described in greater detail below in connection with its proposed initial public offering of shares of its common stock (the "IPO"), which CBR believes will materially strengthen the Borrower's balance sheet and credit profile, and which is more fully described in Section 2 of this letter.

2. Description of the Proposed IPO Transaction

CBR proposes to conduct an initial public offering of shares of its 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." The following is a summary of the material terms of the proposed IPO, as currently contemplated:

Aggregate Offering Size. The target aggregate offering size is approximately $600,000,000, inclusive of a 15% overallotment option (commonly referred to as a "greenshoe" option) to be granted to the underwriters in connection with the IPO. The offering is expected to be comprised as follows:

• Base offering: approximately $521,700,000

• Overallotment option: approximately $78,300,000

Offering Price and Share Counts. Based on an assumed midpoint offering price of $22.00 per share, the total number of shares of Common Stock to be offered in the IPO (assuming full exercise of the overallotment option) is approximately 27,272,727 shares. Prior to the IPO, CBR has 100,000,000 shares of Common Stock outstanding on a fully diluted, post-reclassification basis. Following the consummation of the IPO, the number of shares of Common Stock outstanding is expected to be:

• Approximately 123,713,636 shares (base offering, assuming no exercise of the overallotment option); or

• Approximately 127,272,727 shares (assuming full exercise of the overallotment option by the underwriters).

Primary and Secondary Components. The offering includes both a primary component and a secondary component. In the primary component, CBR will issue and sell approximately 16,895,455 new shares of Common Stock for aggregate gross proceeds of approximately $371,700,000. In the secondary component, Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), the Company's majority pre-IPO stockholder, will sell approximately 6,818,182 existing shares of Common Stock for aggregate gross proceeds of approximately $150,000,000. CBR will not receive any proceeds from the sale of shares by Pinnacle Vista in the secondary component. The overallotment option, if exercised, may consist of additional primary shares, additional secondary shares, or a combination thereof, as determined by CBR and the underwriters.

Pre-IPO Ownership Structure. As of the date hereof, the ownership structure of CBR on a fully diluted basis is as follows:

• Pinnacle Vista Capital Partners III, LP: approximately 62% of fully diluted Common Stock;

• Co-founders Garrett Calloway and Elaine Briggs, together with current and former members of senior management: approximately 24% of fully diluted Common Stock; and

• Earlier-stage institutional and individual investors and current and former employees holding vested equity awards: approximately 14% of fully diluted Common Stock.

Underwriters. The underwriters for the IPO are led by Hargrove Keating & Co. as lead-left book-running manager, together with Linden Pratt Securities LLC and Graymont Brothers Inc. as joint book-runners, and Barfield Stuart & Co. and Crane Whitley Capital LLC as co-managers. A copy of the form of underwriting agreement, when available in substantially final form, will be made available to the Administrative Agent upon request.

SEC Registration and Market Status. A confidential draft registration statement on Form S-1 has been submitted to the Securities and Exchange Commission (the "SEC") in accordance with applicable procedures, and the SEC has indicated oral clearance of the registration statement, subject to the filing of a pricing amendment. As of the date hereof, the IPO is currently in dormant status due to prevailing market conditions; however, CBR intends to proceed with the offering when market conditions improve and expects that the transaction could be launched promptly upon the decision to proceed. The listing of the shares of Common Stock is proposed on the New York Stock Exchange.

3. Intended Use of IPO Proceeds Relevant to the Credit Agreements

CBR intends to apply the net proceeds from the primary component of the IPO as follows, which application is relevant to the Credit Agreements:

Prepayment of Term Loan Indebtedness. CBR intends to use a portion of the net proceeds from the primary offering to prepay approximately $200,000,000 of the outstanding principal amount under the Term Loan Credit Agreement. Following such prepayment, the outstanding principal balance under the Term Loan Facility will be reduced from $612,500,000 to approximately $412,500,000. The prepayment premium payable in connection with such prepayment, as estimated under the applicable provisions of the Term Loan Credit Agreement, is 1.00% of the prepaid amount, or approximately $2,000,000. CBR will deliver all required prepayment notices in accordance with the terms of the Term Loan Credit Agreement, including compliance with the minimum notice period and any other applicable procedural requirements.

Construction of Cimarron Solar Project. Remaining net primary proceeds of approximately $100,000,000 will be directed toward the construction and development of the Cimarron Solar project, which is being developed through Cimarron Solar Development LLC, a wholly owned subsidiary of CBR. The Cimarron Solar project is a utility-scale solar photovoltaic facility currently in the advanced stages of development, and the application of IPO proceeds to this project is consistent with CBR's disclosed business plan and growth strategy.

General Corporate Purposes. The balance of the net primary proceeds, estimated at approximately $71,700,000, will be used for general corporate purposes, including working capital, potential future acquisitions or strategic investments, and other capital expenditures in the ordinary course of business.

CBR believes that the IPO and the associated use of proceeds, including the substantial prepayment of Term Loan B indebtedness described above, will meaningfully strengthen the Borrower's balance sheet and overall credit profile, reduce leverage, and enhance CBR's financial flexibility to the benefit of the Lenders under the Credit Agreements.

4. Specific Consents and Waivers Requested

CBR respectfully requests that the Administrative Agent and the Required Lenders under the Credit Agreements grant the following consents and waivers, each of which is described in detail below.

4.1 Consent to the IPO and Change of Control

The Credit Agreements contain certain change-of-control provisions that, depending on the post-IPO ownership structure, may be triggered by the consummation of the IPO and the resulting dilution of Pinnacle Vista's equity ownership interest in CBR. Specifically, the change-of-control definition under the Credit Agreements generally provides that a "Change of Control" occurs, among other things, if Pinnacle Vista (together with its Affiliates and certain Permitted Holders) ceases to hold, directly or indirectly, a specified percentage of the total voting power of CBR.

Following the consummation of the IPO, Pinnacle Vista Capital Partners III, LP is expected to hold approximately 49% of the voting power of CBR (on a fully diluted basis) in the case of the base offering (assuming no exercise of the overallotment option), or approximately 47% of the voting power of CBR (on a fully diluted basis) in the case of the full exercise of the overallotment option. This represents a reduction from Pinnacle Vista's current ownership of approximately 62% of CBR's fully diluted common stock.

CBR notes, however, that together with co-founders Garrett Calloway and Elaine Briggs — who hold shares of Common Stock that are subject to the Amended and Restated Stockholders' Agreement, which provides for coordinated governance arrangements including, among other things, certain board nomination rights and voting agreements — Pinnacle Vista may continue to exercise significant influence over the governance and affairs of CBR following the IPO. Accordingly, CBR believes that the practical control dynamics of CBR will not change materially as a result of the IPO.

In light of the foregoing, CBR requests the following:

(a) That Veltrano National Bank, as Administrative Agent, and the Required Lenders consent to the consummation of the IPO on the terms described in this letter and confirm that the IPO and the resulting changes in the equity ownership of CBR do not constitute a "Change of Control" (or any similar defined event of default, mandatory prepayment trigger, or other adverse consequence) under either Credit Agreement; and

(b) Alternatively, to the extent that the consummation of the IPO would technically trigger a "Change of Control" under the terms of either or both of the Credit Agreements, CBR requests a waiver of any such event and any resulting Default, Event of Default, or mandatory prepayment obligation arising solely from the consummation of the IPO and the changes in equity ownership resulting therefrom.

4.2 Consent to Issuance of Common Stock

CBR requests consent, to the extent required under the Credit Agreements, for the issuance by CBR of up to 27,272,727 shares of Common Stock (including shares issuable upon exercise of the overallotment option) in connection with the IPO.

In addition, in connection with the IPO, CBR intends to adopt (i) the 2022 Omnibus Equity Incentive Plan (reserving 12,727,273 shares of Common Stock for issuance thereunder) and (ii) the 2022 Employee Stock Purchase Plan (reserving 2,545,455 shares of Common Stock for issuance thereunder). CBR requests consent, to the extent such consent is required under the Credit Agreements, for the adoption of such plans and for the future issuance of shares of Common Stock (or other equity interests) thereunder, including issuances of restricted stock, restricted stock units, stock options, and other equity-based awards in the ordinary course of business to directors, officers, employees, and consultants of CBR and its subsidiaries in accordance with the terms of such plans.

4.3 Consent to Amended and Restated Organizational Documents

In connection with the IPO and in order to establish a governance framework appropriate for a publicly traded company, CBR intends to take the following actions with respect to its organizational and governance documents:

(a) Amended and Restated Certificate of Incorporation. CBR will file an Amended and Restated Certificate of Incorporation (the "Restated Charter") with the Secretary of State of the State of Delaware, which will, among other things, increase the authorized number of shares of Common Stock, establish a classified board structure, provide for certain supermajority voting requirements, and contain other customary provisions for a publicly traded Delaware corporation.

(b) Amended and Restated Bylaws. CBR will adopt Amended and Restated Bylaws (the "Restated Bylaws"), which will contain customary provisions for a publicly traded company, including provisions governing advance notice requirements for stockholder proposals, procedures for the conduct of meetings of stockholders and the board of directors, and related matters.

(c) Amended and Restated Stockholders' Agreement. CBR will enter into an Amended and Restated Stockholders' Agreement (the "Stockholders' Agreement") among CBR, Pinnacle Vista Capital Partners III, LP, and the co-founders, Garrett Calloway and Elaine Briggs. The Stockholders' Agreement will govern certain aspects of the post-IPO governance of CBR, including board nomination rights, preemptive rights (if any), information rights, and certain transfer restrictions, in each case as customary for a controlled-company stockholders' agreement in connection with an initial public offering.

(d) Registration Rights Agreement. CBR will enter into a Registration Rights Agreement (the "Registration Rights Agreement") with Pinnacle Vista Capital Partners III, LP, as more fully described in Section 4.4 below.

CBR requests consent to the execution, delivery, and performance of each of the foregoing organizational and governance documents, and to the filing of the Restated Charter, to the extent such consent is required under the Credit Agreements.

4.4 Consent to Registration Rights and Related Agreements

The Registration Rights Agreement will grant Pinnacle Vista Capital Partners III, LP the following rights, in each case on terms and subject to conditions customary for transactions of this type:

(a) Demand registration rights, pursuant to which Pinnacle Vista will have the right, subject to customary limitations and conditions, to require CBR to file a registration statement under the Securities Act of 1933, as amended, covering the resale of shares of Common Stock held by Pinnacle Vista;

(b) Piggyback registration rights, pursuant to which Pinnacle Vista will have the right to include its shares of Common Stock in certain registration statements filed by CBR for its own account or for the account of other security holders, subject to customary cut-back provisions and underwriter limitations; and

(c) S-3 shelf registration rights, pursuant to which Pinnacle Vista will have the right, following CBR's eligibility to use a registration statement on Form S-3, to require CBR to file and maintain a shelf registration statement covering the resale of Pinnacle Vista's shares, with customary takedown provisions.

The Registration Rights Agreement will contain customary cut-back provisions, lock-up provisions, indemnification provisions, and other terms and conditions. CBR requests consent to the entry into the Registration Rights Agreement to the extent such consent is required under the Credit Agreements.

4.5 Waiver of Any Notice Period Deficiency

To the extent that the Credit Agreements require advance written notice to the Administrative Agent or the Lenders of the IPO or any of the transactions contemplated thereby, and to the extent that any notice previously given or to be given by CBR does not satisfy the specified notice period set forth in the applicable Credit Agreement, CBR respectfully requests a waiver of any such notice period deficiency. CBR has endeavored to provide the Administrative Agent with prompt notice of its intention to pursue the IPO and will continue to keep the Administrative Agent informed of material developments. CBR will provide all further notices required under the Credit Agreements as promptly as practicable.

5. Representations and Confirmations by the Borrower

In connection with this request for consent and waiver, CBR hereby represents, warrants, and confirms as follows, in each case as of the date hereof and after giving pro forma effect to the consummation of the IPO (assuming the consummation thereof on the terms described in Section 2 of this letter) and the application of the net proceeds as described in Section 3 of this letter:

(a) No Default or Event of Default. No Default or Event of Default under either Credit Agreement exists as of the date hereof or would exist after giving effect to the consummation of the IPO and the transactions contemplated thereby, other than any Default or Event of Default arising solely from the consummation of the IPO for which a waiver is specifically requested in this letter.

(b) Accuracy of Representations and Warranties. All representations and warranties of the Borrower and Holdings set forth in the Credit Agreements and in each other Loan Document are true and correct in all material respects (or, to the extent any such representation or warranty is qualified by materiality or Material Adverse Effect, such representation or warranty is true and correct in all respects) as of the date hereof and as of the date of the consummation of the IPO, except to the extent that any such representation or warranty specifically relates to an earlier date, in which case such representation or warranty was true and correct in all material respects (or, as applicable, in all respects) as of such earlier date.

(c) Compliance with Financial Covenants. The Borrower is in compliance with all financial covenants contained in the Credit Agreements as of the most recent testing date and, after giving pro forma effect to the consummation of the IPO and the application of proceeds described herein (including the prepayment of approximately $200,000,000 of the Term Loan Facility), the Borrower will be in compliance with all financial covenants contained in the Credit Agreements.

(d) No Violation of Law. The consummation of the IPO and the other transactions described in this letter will not violate any applicable law, rule, or regulation, or any order, judgment, decree, or similar legal requirement of any governmental authority binding on the Borrower or any of its subsidiaries.

CBR further confirms that, after giving effect to the prepayment of approximately $200,000,000 of outstanding principal under the Term Loan Credit Agreement as described in Section 3 of this letter, the outstanding principal balance under the Term Loan Facility will be approximately $412,500,000. CBR confirms that the Revolving Credit Facility will remain unaffected by the IPO and the transactions described herein and will continue to be available for borrowing in its full committed amount of $400,000,000, subject to the terms and conditions of the Revolving Credit Agreement.

6. Conditions and Timing

CBR requests that the consent and waiver described in this letter become effective upon the later of:

(a) the date on which the Administrative Agent and the Required Lenders (as defined in the applicable Credit Agreement) have executed and delivered the Consent and Waiver in substantially the form attached hereto as Exhibit A (or in such other form as may be agreed among the parties); and

(b) the closing date of the IPO (the "IPO Closing Date").

If the IPO does not close within [__] days of the date of this letter (or such later date as may be agreed by the Administrative Agent in writing), the consent and waiver described herein and set forth in the executed Consent and Waiver shall automatically terminate and be of no further force or effect, without any further action or notice required by any party.

CBR will provide the Administrative Agent with prompt written notice of the pricing date and the expected closing date of the IPO, together with copies of the final prospectus (as filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended) and any related documentation reasonably requested by the Administrative Agent or any Lender in connection therewith.

CBR will deliver all prepayment notices required under the Term Loan Credit Agreement in connection with the prepayment of approximately $200,000,000 of outstanding principal in accordance with the applicable provisions thereof, including compliance with any minimum notice periods and other procedural requirements set forth in the Term Loan Credit Agreement.

7. Request for Confirmation and Next Steps

CBR respectfully requests that Veltrano National Bank, as Administrative Agent under the Credit Agreements, circulate the enclosed form of Consent and Waiver (attached hereto as Exhibit A) to the Lenders party to the Credit Agreements for their review and execution, in accordance with the procedures set forth in the Credit Agreements for obtaining the consent of the Required Lenders.

CBR further requests that the Administrative Agent confirm receipt of this letter and advise CBR and its counsel as to the expected timeline for obtaining the consent and execution of the Required Lenders under each of the Credit Agreements, including any anticipated questions, comments, or additional information requirements that the Administrative Agent or any Lender may have in connection with this request.

CBR's outside counsel, Calderwood & Harkness LLP, is available to discuss any questions regarding this request or to provide additional documentation or information as may be reasonably requested. The primary contact at Calderwood & Harkness LLP for this matter is:

Brendan Walsh Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 558-[__]

Email: bwalsh@calderwoodharkness.com

CBR and its advisors appreciate the constructive relationship with Veltrano National Bank and the Lenders under the Credit Agreements and look forward to working together to bring this request to a timely and satisfactory conclusion.

8. Miscellaneous

This letter and the consent and waiver requested herein shall not constitute a modification of, or amendment to, either Credit Agreement or any other Loan Document, except to the extent expressly set forth in the executed Consent and Waiver. Except as expressly provided in the Consent and Waiver, all other terms and conditions of the Credit Agreements and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. Nothing in this letter or the Consent and Waiver shall be deemed to establish a precedent or course of dealing, or to obligate the Administrative Agent or any Lender to grant any future consent, waiver, or modification with respect to the Credit Agreements.

This letter may be executed in counterparts (including by means of facsimile or electronic transmission in portable document format (.pdf)), each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

We thank you for your prompt attention to this matter and look forward to receiving your confirmation of receipt and anticipated next steps at your earliest convenience.

Very truly yours,

CALLOWAY-BRIGGS RENEWABLES INC.

By: ________

Name: Priya Anand

Title: SVP, Finance & Treasurer

Date: ________

4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746

cc:

Sandra Haverford, General Counsel & Corporate Secretary, Calloway-Briggs Renewables Inc.

Marcus Yoon, Chief Financial Officer, Calloway-Briggs Renewables Inc.

Jennifer Kwon, Partner, Calderwood & Harkness LLP (Issuer's Counsel)

Brendan Walsh, Associate, Calderwood & Harkness LLP

Enclosure:

Form of Consent and Waiver (Exhibit A) — Draft Lender Consent — Veltrano National Bank (C&H Matter No. 1015-00001, Document No. 110)

Note: The enclosed form of Consent and Waiver is in draft form and is subject to further negotiation and finalization among the parties.

This letter and all enclosures are confidential and are subject to the confidentiality provisions of the Credit Agreements. This letter has been prepared by Calderwood & Harkness LLP (C&H Matter No. 1015-00001; Brendan Walsh, Lead Associate, Capital Markets) on behalf of Calloway-Briggs Renewables Inc. and is furnished solely for the purpose described herein.

CONFIDENTIAL
CALLOWAY-BRIGGS RENEWABLES INC. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
[__ , 2022]
Thomas Raines Managing Director, Energy Lending Veltrano National Bank 1401 McKinney Street Houston, TX 77010
Re: Request for Consent and Waiver under (i) the Credit Agreement, dated as of January [], 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "**Revolving Credit Agreement**"), among Calloway-Briggs Renewables Inc., as Borrower, CBR Holdings LLC, as Holdings, the Lenders party thereto, and Veltrano National Bank, as Administrative Agent, providing for a revolving credit facility in an aggregate principal amount of $400,000,000; and (ii) the Credit Agreement, dated as of January [], 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Term Loan Credit Agreement" and, together with the Revolving Credit Agreement, the "Credit Agreements"), among Calloway-Briggs Renewables Inc., as Borrower, CBR Holdings LLC, as Holdings, the Lenders party thereto, and Veltrano National Bank, as Administrative Agent, providing for a term loan facility in an aggregate principal amount of $650,000,000 (of which $612,500,000 is currently outstanding) — In Connection with Proposed Initial Public Offering of Common Stock
Dear Mr. Raines:
Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the applicable Credit Agreement.
1. Introduction and Background
Calloway-Briggs Renewables Inc., a Delaware corporation ("CBR" or the "Borrower"), with its principal offices located at 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 (EIN 83-4027615), writes to you in your capacity as Managing Director, Energy Lending, at Veltrano National Bank ("Veltrano" or the "Administrative Agent") in connection with the Credit Agreements described above.
As you are aware, CBR is the Borrower under both Credit Agreements, with Veltrano National Bank acting as Administrative Agent for the benefit of the Lenders party thereto. CBR Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of CBR, serves as Holdings under both Credit Agreements. The Credit Agreements were entered into on or about January [__], 2022, and provide for the following credit facilities:
(a) Revolving Credit Agreement. A revolving credit facility in an aggregate principal amount of $400,000,000 (the "Revolving Credit Facility"), with a maturity date of January [__], 2027. As of the date hereof, no amounts are drawn under the Revolving Credit Facility, and the full committed amount remains available for borrowing, subject to the terms and conditions set forth therein.
(b) Term Loan Credit Agreement. A term loan facility in an aggregate principal amount of $650,000,000 (the "Term Loan Facility"), with a maturity date of January [__], 2029. As of the date hereof, the outstanding principal amount under the Term Loan Facility is $612,500,000, reflecting scheduled amortization payments made to date in accordance with the applicable amortization schedule.
CBR is writing to formally request the consent and waiver described in greater detail below in connection with its proposed initial public offering of shares of its common stock (the "IPO"), which CBR believes will materially strengthen the Borrower's balance sheet and credit profile, and which is more fully described in Section 2 of this letter.
2. Description of the Proposed IPO Transaction
CBR proposes to conduct an initial public offering of shares of its 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." The following is a summary of the material terms of the proposed IPO, as currently contemplated:
Aggregate Offering Size. The target aggregate offering size is approximately $600,000,000, inclusive of a 15% overallotment option (commonly referred to as a "greenshoe" option) to be granted to the underwriters in connection with the IPO. The offering is expected to be comprised as follows:
•  Base offering: approximately $521,700,000
•  Overallotment option: approximately $78,300,000
Offering Price and Share Counts. Based on an assumed midpoint offering price of $22.00 per share, the total number of shares of Common Stock to be offered in the IPO (assuming full exercise of the overallotment option) is approximately 27,272,727 shares. Prior to the IPO, CBR has 100,000,000 shares of Common Stock outstanding on a fully diluted, post-reclassification basis. Following the consummation of the IPO, the number of shares of Common Stock outstanding is expected to be:
•  Approximately 123,713,636 shares (base offering, assuming no exercise of the overallotment option); or
•  Approximately 127,272,727 shares (assuming full exercise of the overallotment option by the underwriters).
Primary and Secondary Components. The offering includes both a primary component and a secondary component. In the primary component, CBR will issue and sell approximately 16,895,455 new shares of Common Stock for aggregate gross proceeds of approximately $371,700,000. In the secondary component, Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), the Company's majority pre-IPO stockholder, will sell approximately 6,818,182 existing shares of Common Stock for aggregate gross proceeds of approximately $150,000,000. CBR will not receive any proceeds from the sale of shares by Pinnacle Vista in the secondary component. The overallotment option, if exercised, may consist of additional primary shares, additional secondary shares, or a combination thereof, as determined by CBR and the underwriters.
Pre-IPO Ownership Structure. As of the date hereof, the ownership structure of CBR on a fully diluted basis is as follows:
•  Pinnacle Vista Capital Partners III, LP: approximately 62% of fully diluted Common Stock;
•  Co-founders Garrett Calloway and Elaine Briggs, together with current and former members of senior management: approximately 24% of fully diluted Common Stock; and
•  Earlier-stage institutional and individual investors and current and former employees holding vested equity awards: approximately 14% of fully diluted Common Stock.
Underwriters. The underwriters for the IPO are led by Hargrove Keating & Co. as lead-left book-running manager, together with Linden Pratt Securities LLC and Graymont Brothers Inc. as joint book-runners, and Barfield Stuart & Co. and Crane Whitley Capital LLC as co-managers. A copy of the form of underwriting agreement, when available in substantially final form, will be made available to the Administrative Agent upon request.
SEC Registration and Market Status. A confidential draft registration statement on Form S-1 has been submitted to the Securities and Exchange Commission (the "SEC") in accordance with applicable procedures, and the SEC has indicated oral clearance of the registration statement, subject to the filing of a pricing amendment. As of the date hereof, the IPO is currently in dormant status due to prevailing market conditions; however, CBR intends to proceed with the offering when market conditions improve and expects that the transaction could be launched promptly upon the decision to proceed. The listing of the shares of Common Stock is proposed on the New York Stock Exchange.
3. Intended Use of IPO Proceeds Relevant to the Credit Agreements
CBR intends to apply the net proceeds from the primary component of the IPO as follows, which application is relevant to the Credit Agreements:
Prepayment of Term Loan Indebtedness. CBR intends to use a portion of the net proceeds from the primary offering to prepay approximately $200,000,000 of the outstanding principal amount under the Term Loan Credit Agreement. Following such prepayment, the outstanding principal balance under the Term Loan Facility will be reduced from $612,500,000 to approximately $412,500,000. The prepayment premium payable in connection with such prepayment, as estimated under the applicable provisions of the Term Loan Credit Agreement, is 1.00% of the prepaid amount, or approximately $2,000,000. CBR will deliver all required prepayment notices in accordance with the terms of the Term Loan Credit Agreement, including compliance with the minimum notice period and any other applicable procedural requirements.
Construction of Cimarron Solar Project. Remaining net primary proceeds of approximately $100,000,000 will be directed toward the construction and development of the Cimarron Solar project, which is being developed through Cimarron Solar Development LLC, a wholly owned subsidiary of CBR. The Cimarron Solar project is a utility-scale solar photovoltaic facility currently in the advanced stages of development, and the application of IPO proceeds to this project is consistent with CBR's disclosed business plan and growth strategy.
General Corporate Purposes. The balance of the net primary proceeds, estimated at approximately $71,700,000, will be used for general corporate purposes, including working capital, potential future acquisitions or strategic investments, and other capital expenditures in the ordinary course of business.
CBR believes that the IPO and the associated use of proceeds, including the substantial prepayment of Term Loan B indebtedness described above, will meaningfully strengthen the Borrower's balance sheet and overall credit profile, reduce leverage, and enhance CBR's financial flexibility to the benefit of the Lenders under the Credit Agreements.
4. Specific Consents and Waivers Requested
CBR respectfully requests that the Administrative Agent and the Required Lenders under the Credit Agreements grant the following consents and waivers, each of which is described in detail below.
4.1 Consent to the IPO and Change of Control
The Credit Agreements contain certain change-of-control provisions that, depending on the post-IPO ownership structure, may be triggered by the consummation of the IPO and the resulting dilution of Pinnacle Vista's equity ownership interest in CBR. Specifically, the change-of-control definition under the Credit Agreements generally provides that a "Change of Control" occurs, among other things, if Pinnacle Vista (together with its Affiliates and certain Permitted Holders) ceases to hold, directly or indirectly, a specified percentage of the total voting power of CBR.
Following the consummation of the IPO, Pinnacle Vista Capital Partners III, LP is expected to hold approximately 49% of the voting power of CBR (on a fully diluted basis) in the case of the base offering (assuming no exercise of the overallotment option), or approximately 47% of the voting power of CBR (on a fully diluted basis) in the case of the full exercise of the overallotment option. This represents a reduction from Pinnacle Vista's current ownership of approximately 62% of CBR's fully diluted common stock.
CBR notes, however, that together with co-founders Garrett Calloway and Elaine Briggs — who hold shares of Common Stock that are subject to the Amended and Restated Stockholders' Agreement, which provides for coordinated governance arrangements including, among other things, certain board nomination rights and voting agreements — Pinnacle Vista may continue to exercise significant influence over the governance and affairs of CBR following the IPO. Accordingly, CBR believes that the practical control dynamics of CBR will not change materially as a result of the IPO.
In light of the foregoing, CBR requests the following:
(a) That Veltrano National Bank, as Administrative Agent, and the Required Lenders consent to the consummation of the IPO on the terms described in this letter and confirm that the IPO and the resulting changes in the equity ownership of CBR do not constitute a "Change of Control" (or any similar defined event of default, mandatory prepayment trigger, or other adverse consequence) under either Credit Agreement; and
(b) Alternatively, to the extent that the consummation of the IPO would technically trigger a "Change of Control" under the terms of either or both of the Credit Agreements, CBR requests a waiver of any such event and any resulting Default, Event of Default, or mandatory prepayment obligation arising solely from the consummation of the IPO and the changes in equity ownership resulting therefrom.
4.2 Consent to Issuance of Common Stock
CBR requests consent, to the extent required under the Credit Agreements, for the issuance by CBR of up to 27,272,727 shares of Common Stock (including shares issuable upon exercise of the overallotment option) in connection with the IPO.
In addition, in connection with the IPO, CBR intends to adopt (i) the 2022 Omnibus Equity Incentive Plan (reserving 12,727,273 shares of Common Stock for issuance thereunder) and (ii) the 2022 Employee Stock Purchase Plan (reserving 2,545,455 shares of Common Stock for issuance thereunder). CBR requests consent, to the extent such consent is required under the Credit Agreements, for the adoption of such plans and for the future issuance of shares of Common Stock (or other equity interests) thereunder, including issuances of restricted stock, restricted stock units, stock options, and other equity-based awards in the ordinary course of business to directors, officers, employees, and consultants of CBR and its subsidiaries in accordance with the terms of such plans.
4.3 Consent to Amended and Restated Organizational Documents
In connection with the IPO and in order to establish a governance framework appropriate for a publicly traded company, CBR intends to take the following actions with respect to its organizational and governance documents:
(a) Amended and Restated Certificate of Incorporation. CBR will file an Amended and Restated Certificate of Incorporation (the "Restated Charter") with the Secretary of State of the State of Delaware, which will, among other things, increase the authorized number of shares of Common Stock, establish a classified board structure, provide for certain supermajority voting requirements, and contain other customary provisions for a publicly traded Delaware corporation.
(b) Amended and Restated Bylaws. CBR will adopt Amended and Restated Bylaws (the "Restated Bylaws"), which will contain customary provisions for a publicly traded company, including provisions governing advance notice requirements for stockholder proposals, procedures for the conduct of meetings of stockholders and the board of directors, and related matters.
(c) Amended and Restated Stockholders' Agreement. CBR will enter into an Amended and Restated Stockholders' Agreement (the "Stockholders' Agreement") among CBR, Pinnacle Vista Capital Partners III, LP, and the co-founders, Garrett Calloway and Elaine Briggs. The Stockholders' Agreement will govern certain aspects of the post-IPO governance of CBR, including board nomination rights, preemptive rights (if any), information rights, and certain transfer restrictions, in each case as customary for a controlled-company stockholders' agreement in connection with an initial public offering.
(d) Registration Rights Agreement. CBR will enter into a Registration Rights Agreement (the "Registration Rights Agreement") with Pinnacle Vista Capital Partners III, LP, as more fully described in Section 4.4 below.
CBR requests consent to the execution, delivery, and performance of each of the foregoing organizational and governance documents, and to the filing of the Restated Charter, to the extent such consent is required under the Credit Agreements.
4.4 Consent to Registration Rights and Related Agreements
The Registration Rights Agreement will grant Pinnacle Vista Capital Partners III, LP the following rights, in each case on terms and subject to conditions customary for transactions of this type:
(a) Demand registration rights, pursuant to which Pinnacle Vista will have the right, subject to customary limitations and conditions, to require CBR to file a registration statement under the Securities Act of 1933, as amended, covering the resale of shares of Common Stock held by Pinnacle Vista;
(b) Piggyback registration rights, pursuant to which Pinnacle Vista will have the right to include its shares of Common Stock in certain registration statements filed by CBR for its own account or for the account of other security holders, subject to customary cut-back provisions and underwriter limitations; and
(c) S-3 shelf registration rights, pursuant to which Pinnacle Vista will have the right, following CBR's eligibility to use a registration statement on Form S-3, to require CBR to file and maintain a shelf registration statement covering the resale of Pinnacle Vista's shares, with customary takedown provisions.
The Registration Rights Agreement will contain customary cut-back provisions, lock-up provisions, indemnification provisions, and other terms and conditions. CBR requests consent to the entry into the Registration Rights Agreement to the extent such consent is required under the Credit Agreements.
4.5 Waiver of Any Notice Period Deficiency
To the extent that the Credit Agreements require advance written notice to the Administrative Agent or the Lenders of the IPO or any of the transactions contemplated thereby, and to the extent that any notice previously given or to be given by CBR does not satisfy the specified notice period set forth in the applicable Credit Agreement, CBR respectfully requests a waiver of any such notice period deficiency. CBR has endeavored to provide the Administrative Agent with prompt notice of its intention to pursue the IPO and will continue to keep the Administrative Agent informed of material developments. CBR will provide all further notices required under the Credit Agreements as promptly as practicable.
5. Representations and Confirmations by the Borrower
In connection with this request for consent and waiver, CBR hereby represents, warrants, and confirms as follows, in each case as of the date hereof and after giving pro forma effect to the consummation of the IPO (assuming the consummation thereof on the terms described in Section 2 of this letter) and the application of the net proceeds as described in Section 3 of this letter:
(a) No Default or Event of Default. No Default or Event of Default under either Credit Agreement exists as of the date hereof or would exist after giving effect to the consummation of the IPO and the transactions contemplated thereby, other than any Default or Event of Default arising solely from the consummation of the IPO for which a waiver is specifically requested in this letter.
(b) Accuracy of Representations and Warranties. All representations and warranties of the Borrower and Holdings set forth in the Credit Agreements and in each other Loan Document are true and correct in all material respects (or, to the extent any such representation or warranty is qualified by materiality or Material Adverse Effect, such representation or warranty is true and correct in all respects) as of the date hereof and as of the date of the consummation of the IPO, except to the extent that any such representation or warranty specifically relates to an earlier date, in which case such representation or warranty was true and correct in all material respects (or, as applicable, in all respects) as of such earlier date.
(c) Compliance with Financial Covenants. The Borrower is in compliance with all financial covenants contained in the Credit Agreements as of the most recent testing date and, after giving pro forma effect to the consummation of the IPO and the application of proceeds described herein (including the prepayment of approximately $200,000,000 of the Term Loan Facility), the Borrower will be in compliance with all financial covenants contained in the Credit Agreements.
(d) No Violation of Law. The consummation of the IPO and the other transactions described in this letter will not violate any applicable law, rule, or regulation, or any order, judgment, decree, or similar legal requirement of any governmental authority binding on the Borrower or any of its subsidiaries.
CBR further confirms that, after giving effect to the prepayment of approximately $200,000,000 of outstanding principal under the Term Loan Credit Agreement as described in Section 3 of this letter, the outstanding principal balance under the Term Loan Facility will be approximately $412,500,000. CBR confirms that the Revolving Credit Facility will remain unaffected by the IPO and the transactions described herein and will continue to be available for borrowing in its full committed amount of $400,000,000, subject to the terms and conditions of the Revolving Credit Agreement.
6. Conditions and Timing
CBR requests that the consent and waiver described in this letter become effective upon the later of:
(a) the date on which the Administrative Agent and the Required Lenders (as defined in the applicable Credit Agreement) have executed and delivered the Consent and Waiver in substantially the form attached hereto as Exhibit A (or in such other form as may be agreed among the parties); and
(b) the closing date of the IPO (the "IPO Closing Date").
If the IPO does not close within [__] days of the date of this letter (or such later date as may be agreed by the Administrative Agent in writing), the consent and waiver described herein and set forth in the executed Consent and Waiver shall automatically terminate and be of no further force or effect, without any further action or notice required by any party.
CBR will provide the Administrative Agent with prompt written notice of the pricing date and the expected closing date of the IPO, together with copies of the final prospectus (as filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended) and any related documentation reasonably requested by the Administrative Agent or any Lender in connection therewith.
CBR will deliver all prepayment notices required under the Term Loan Credit Agreement in connection with the prepayment of approximately $200,000,000 of outstanding principal in accordance with the applicable provisions thereof, including compliance with any minimum notice periods and other procedural requirements set forth in the Term Loan Credit Agreement.
7. Request for Confirmation and Next Steps
CBR respectfully requests that Veltrano National Bank, as Administrative Agent under the Credit Agreements, circulate the enclosed form of Consent and Waiver (attached hereto as Exhibit A) to the Lenders party to the Credit Agreements for their review and execution, in accordance with the procedures set forth in the Credit Agreements for obtaining the consent of the Required Lenders.
CBR further requests that the Administrative Agent confirm receipt of this letter and advise CBR and its counsel as to the expected timeline for obtaining the consent and execution of the Required Lenders under each of the Credit Agreements, including any anticipated questions, comments, or additional information requirements that the Administrative Agent or any Lender may have in connection with this request.
CBR's outside counsel, Calderwood & Harkness LLP, is available to discuss any questions regarding this request or to provide additional documentation or information as may be reasonably requested. The primary contact at Calderwood & Harkness LLP for this matter is:
Brendan Walsh Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022 Telephone: (212) 558-[__]
Email: bwalsh@calderwoodharkness.com
CBR and its advisors appreciate the constructive relationship with Veltrano National Bank and the Lenders under the Credit Agreements and look forward to working together to bring this request to a timely and satisfactory conclusion.
8. Miscellaneous
This letter and the consent and waiver requested herein shall not constitute a modification of, or amendment to, either Credit Agreement or any other Loan Document, except to the extent expressly set forth in the executed Consent and Waiver. Except as expressly provided in the Consent and Waiver, all other terms and conditions of the Credit Agreements and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. Nothing in this letter or the Consent and Waiver shall be deemed to establish a precedent or course of dealing, or to obligate the Administrative Agent or any Lender to grant any future consent, waiver, or modification with respect to the Credit Agreements.
This letter may be executed in counterparts (including by means of facsimile or electronic transmission in portable document format (.pdf)), each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.
We thank you for your prompt attention to this matter and look forward to receiving your confirmation of receipt and anticipated next steps at your earliest convenience.
Very truly yours,
CALLOWAY-BRIGGS RENEWABLES INC.
By: ________
Name: Priya Anand
Title: SVP, Finance & Treasurer
Date: ________
4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
cc:
Sandra Haverford, General Counsel & Corporate Secretary, Calloway-Briggs Renewables Inc.
Marcus Yoon, Chief Financial Officer, Calloway-Briggs Renewables Inc.
Jennifer Kwon, Partner, Calderwood & Harkness LLP (Issuer's Counsel)
Brendan Walsh, Associate, Calderwood & Harkness LLP
Enclosure:
Form of Consent and Waiver (Exhibit A) — Draft Lender Consent — Veltrano National Bank (C&H Matter No. 1015-00001, Document No. 110)
Note: The enclosed form of Consent and Waiver is in draft form and is subject to further negotiation and finalization among the parties.
This letter and all enclosures are confidential and are subject to the confidentiality provisions of the Credit Agreements. This letter has been prepared by Calderwood & Harkness LLP (C&H Matter No. 1015-00001; Brendan Walsh, Lead Associate, Capital Markets) on behalf of Calloway-Briggs Renewables Inc. and is furnished solely for the purpose described herein.

CONFIDENTIAL

CALLOWAY-BRIGGS RENEWABLES INC.

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