CALDERWOOD & HARKNESS LLP
NEW-MATTER MEMORANDUM
Internal Administrative Form — New Matter Opening
CONFIDENTIAL — INTERNAL USE ONLY
Date of Preparation: March 10, 2022
This New-Matter Memorandum is an internal administrative document of Calderwood & Harkness LLP and is intended solely for use by authorized personnel of the firm in connection with the opening and administration of the matter described herein. This document contains confidential client information and is subject to the firm's information-security policies. Distribution outside the firm is strictly prohibited without the prior written authorization of the Responsible Partner.
SECTION 1: MATTER INFORMATION
Matter Number: 1015-00001
Matter Name / Caption: Calloway-Briggs Renewables Inc. — Proposed Initial Public Offering
Matter Type: IPO — Capital Markets
Date Opened: March 10, 2022
Office: New York (599 Lexington Avenue, New York, NY 10022)
Practice Group: Capital Markets
Sub-Practice Area: Equity Offerings — Initial Public Offerings
Conflict Check Completed: Yes — cleared March 8, 2022. The firm's General Counsel's office conducted a comprehensive conflict check in accordance with Calderwood & Harkness's standard conflict-clearance procedures covering the proposed client, all known affiliated entities, all identified adverse and related parties, and all known officers, directors, and significant stockholders. The results of that review are documented in the Conflict-Check Memorandum dated March 8, 2022, which has been reviewed and approved by the Responsible Partner and filed in the firm's conflicts database under the above Matter Number.
Engagement Letter Executed: Yes — dated March 10, 2022. The engagement letter was executed by Sandra Haverford, General Counsel & Corporate Secretary of Calloway-Briggs Renewables Inc., on behalf of the client, and by Jennifer Kwon, Partner, on behalf of Calderwood & Harkness LLP. The fully executed original has been uploaded to the firm's document-management system and a copy forwarded to the firm's Office of the General Counsel and to the Finance Department.
SECTION 2: CLIENT INFORMATION
Client Full Legal Name: Calloway-Briggs Renewables Inc.
Short Name / Acronym: CBR; Calloway-Briggs
Entity Type: Corporation
Jurisdiction of Incorporation: State of Delaware
Employer Identification Number (EIN): 83-4027615
Principal Business Address:
4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Registered Agent (Delaware):
Capitol Statutory Services, Inc. 1209 Orange Street Wilmington, DE 19801
Industry / Sector: Renewable Energy — Utility-Scale Solar, Onshore Wind, Battery Energy Storage Systems. The Company develops, constructs, owns, and operates utility-scale renewable energy generation and battery energy storage facilities across the Southwest, Southern Plains, and Mid-Atlantic regions of the United States. As of the date of matter opening, the Company's operating portfolio comprises approximately 3.2 GW of solar and wind capacity, with an additional approximately 1.5 GW of projects in various stages of development.
Year Founded: 2014
Founders: Garrett Calloway and Elaine Briggs. Mr. Calloway currently serves as Chairman of the Board and Chief Executive Officer. Ms. Briggs currently serves as Vice Chairman of the Board and Chief Operating Officer.
Number of Employees: Approximately 1,240 (as of year-end 2021)
Primary Client Contact
Name: Sandra Haverford Title: General Counsel & Corporate Secretary Address: 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 Telephone: (512) _-__ Email: shaverford@calloway-briggs.com
All substantive legal communications, including draft registration statement materials, comment-letter correspondence, and transaction-document drafts, should be directed to Ms. Haverford as the primary point of contact unless otherwise instructed by the Responsible Partner.
Secondary Client Contact
Name: Marcus Yoon Title: Chief Financial Officer Address: 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 Telephone: (512) _-__ Email: myoon@calloway-briggs.com
Mr. Yoon will serve as the principal financial contact for purposes of due diligence, financial-statement coordination with the Company's independent auditor, and review of the financial disclosure sections of the registration statement (MD&A, Selected Financial Data, Use of Proceeds, Capitalization, and Dilution).
Additional Management Contact
Name: Priya Anand Title: SVP, Finance & Treasurer Address: 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 Telephone: (512) _-__ Email: panand@calloway-briggs.com
Ms. Anand will coordinate with the Calderwood & Harkness team on matters relating to existing indebtedness, lender consents, and treasury operations.
SECTION 3: MATTER DESCRIPTION
Transaction Summary. Calderwood & Harkness LLP has been engaged to represent Calloway-Briggs Renewables Inc. ("CBR" or the "Company") as issuer's counsel in connection with its proposed initial public offering (the "Offering" or the "IPO") of shares of common stock, par value $0.01 per share, of the Company (the "Common Stock") on the New York Stock Exchange (the "NYSE") under the proposed ticker symbol "CBRI."
The Offering is expected to have an aggregate offering size of approximately $600,000,000 at the assumed offering midpoint price and is expected to include both a primary component, consisting of newly issued shares of Common Stock to be sold by the Company, and a secondary component, consisting of existing shares of Common Stock to be sold by Pinnacle Vista Capital Partners III, LP (the "Selling Stockholder"), the Company's pre-IPO majority stockholder. The Offering will include a standard 30-day option granted by the Company and the Selling Stockholder to the underwriters to purchase up to an additional 15% of the base shares offered (the "overallotment option" or "greenshoe").
Key Transaction Metrics (Estimated, at Matter Opening)
The foregoing metrics are preliminary estimates based on information provided by the Company and Hargrove Keating & Co. (Lead-Left Book-Runner) as of the date of matter opening. Actual offering size, share counts, and pricing will be determined based on market conditions, investor demand, and the results of the book-building process at the time of pricing.
Scope of Representation
The firm's engagement encompasses full-scope issuer's counsel representation in connection with the IPO, including, without limitation, the following workstreams:
1. Registration Statement Preparation and Filing. Drafting and filing of the Company's registration statement on Form S-1 under the Securities Act of 1933, as amended (the "Securities Act"), including all exhibits and financial-statement schedules. The initial submission is expected to be made on a confidential basis pursuant to Section 6(e) of the Securities Act, as made available to emerging growth companies under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act").
2. SEC Review and Comment-Letter Responses. Preparation of responses to comments received from the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the "SEC"), including coordination with the Company, the underwriters, the independent auditor, and other advisors in preparing and filing amendments to the registration statement.
3. Underwriting Agreement. Negotiation and drafting of the underwriting agreement between the Company, the Selling Stockholder, and the several underwriters named therein, together with all ancillary agreements and instruments contemplated thereby.
4. Corporate Governance and Organizational Documents. Advice on public-company governance matters, including review and revision of the Company's amended and restated certificate of incorporation and amended and restated bylaws for public-company readiness; drafting and/or review of committee charters (Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee); preparation of corporate governance guidelines; review and advice regarding board composition, independence, and committee membership requirements under SEC rules, NYSE listing standards, and the Sarbanes-Oxley Act of 2002.
5. Equity Incentive Plan Design. Drafting and/or review of the Company's omnibus equity incentive plan to be adopted in connection with the IPO, including forms of award agreements (stock options, restricted stock units, performance-based awards), employee stock purchase plan (if applicable), and analysis of share reserve, share counting provisions, and stockholder-approval requirements.
6. Due Diligence. Participation in and coordination of comprehensive due diligence across the following areas: legal (corporate records, material contracts, litigation history, compliance); corporate (organizational documents, capitalization, equity issuances, stockholder agreements); regulatory (FERC, state PUC, environmental, permitting); tax (federal and state income tax, tax-equity structures, ITC/PTC compliance); environmental (Phase I/Phase II assessments, environmental compliance history, pending proceedings); intellectual property (patents, trademarks, trade secrets, licenses); employment (benefit plans, executive compensation, employment agreements, labor matters); and debt (credit agreements, indentures, project-finance facilities, tax-equity partnership agreements).
7. Lender Consent Procurement. Identification and analysis of change-of-control, assignment, and consent provisions in the Company's existing credit facilities, project-finance agreements, and tax-equity arrangements; coordination with the Company's treasury team and outside financial counsel in obtaining requisite lender consents, waivers, and amendments.
8. NYSE Listing Application. Preparation and filing of the application for listing of the Common Stock on the NYSE, including coordination with NYSE Regulation regarding listing standards compliance and any supplemental information requests.
9. FINRA Corporate Financing Filing. Preparation and filing of the FINRA corporate financing filing pursuant to FINRA Rule 5110, including review and disclosure of underwriting compensation, expenses, and related arrangements.
10. Blue Sky Compliance. Analysis and coordination of state securities law ("blue sky") compliance in all relevant jurisdictions, including preparation and filing of any required notices, consents, or qualifications.
11. Closing Deliverables. Preparation of all closing deliverables customary for a transaction of this type, including: legal opinion of issuer's counsel; negative assurance ("10b-5") letter; officers' certificates; secretary's certificate; good-standing certificates; bring-down comfort letters (coordination with Ashford & Pemberton LLP); and closing memorandum and signature pages.
12. Ongoing Advisory. Ongoing advice and counsel from the date of engagement through the closing of the Offering (or, if the Offering is not consummated, through formal dormancy or termination of the matter), including advice on Securities Act and Exchange Act compliance, Regulation FD, quiet-period restrictions, and communications with investors, analysts, and the media.
SECTION 4: RESPONSIBLE ATTORNEYS AND STAFFING
Core Transaction Team
Responsible Partner. Jennifer Kwon will serve as the Responsible Partner for this matter and will have primary oversight of all aspects of the firm's representation, including client relationship management, strategic direction, and supervision of all workstreams. Ms. Kwon will be the primary point of contact for the Company's General Counsel and for lead counsel at the underwriters' counsel firm.
Billing Partner. Theodore Langston will serve as the Billing Partner for this matter. Mr. Langston will be responsible for review and approval of all invoices prior to their issuance to the client, monitoring of fee budgets, and coordination with the firm's Finance Department on billing and collections matters.
Lead Associate. Brendan Walsh will serve as the Lead Associate and will be responsible for day-to-day management of the transaction, including drafting and revising the registration statement, coordinating due diligence, managing the document production and review process, and serving as the primary point of contact for the underwriters' counsel associates on working-level matters.
Working Associate. Natasha Forbes will serve as a Working Associate on the transaction and will assist Mr. Walsh across all workstreams, with initial primary responsibility for corporate governance documentation, equity incentive plan drafting, and blue sky compliance.
Specialist Partner (Tax)
Leonard Cross will lead the tax workstream, including analysis of the Company's existing tax-equity structures, ITC/PTC compliance, Up-C versus C-corp structural analysis, HLBV methodology review, and Section 409A valuation review for equity compensation purposes.
Staffing Notes. Additional associates and specialists from other practice groups within the firm may be assigned to specific workstreams as the transaction progresses. Anticipated areas of additional staffing include, but are not limited to, executive compensation and employee benefits, real property and project-finance, environmental and regulatory compliance, and intellectual property. Any additions to the matter team are to be approved by Jennifer Kwon, as Responsible Partner, prior to assignment. All additions will be reflected in updates to this memorandum and entered into the firm's matter-management system.
SECTION 5: BILLING AND FEE ARRANGEMENT
Fee Structure. The fee arrangement for this matter is a hybrid structure, as set forth in the engagement letter dated March 10, 2022, consisting of a monthly retainer, hourly overage billing, and a success fee payable upon pricing of the Offering.
Monthly Retainer. The Company will pay a monthly retainer of $125,000 per month, payable on the first business day of each calendar month (or, for the initial partial month, within ten (10) business days of execution of the engagement letter). The monthly retainer is intended to cover legal services rendered by the core transaction team during the pre-filing and SEC review phases of the engagement.
Hourly Overage. In the event that the aggregate value of professional time incurred by the firm's attorneys and professional staff in any given calendar month exceeds the retainer equivalent (calculated based on standard hourly rates applied to actual time recorded), the excess shall be billed to the Company at the firm's standard hourly rates, subject to the terms and conditions of the engagement letter. Overage invoices will be issued monthly, in arrears, together with the retainer invoice for the subsequent month.
Success Fee. A success fee of $1,750,000 shall be payable by the Company to the firm upon the pricing of the Offering (i.e., the execution and delivery of the underwriting agreement). The success fee is payable regardless of the final offering size and is not subject to adjustment based on the number of shares sold or the final offering price. In the event the Offering is not consummated, no success fee shall be payable, and the firm shall be entitled only to the monthly retainers paid and any accrued hourly overage.
Billing Rates (Standard)
The firm's current standard hourly rates applicable to this matter are as follows:
Individual billing rates for each attorney and professional staff member assigned to this matter are set forth in the engagement letter and are maintained in the firm's billing system. The firm reserves the right to adjust standard hourly rates annually in accordance with its customary rate-adjustment practices, subject to the terms of the engagement letter.
Billing Frequency. Invoices will be issued on a monthly basis, in arrears, for all professional fees and disbursements incurred during the preceding calendar month.
Expense Reimbursement. The Company has agreed to reimburse the firm for all reasonable and necessary out-of-pocket expenses incurred in connection with the representation, at cost, including, without limitation:
• Travel expenses (air, ground transportation, lodging, meals) incurred in connection with organizational meetings, due diligence sessions, printer sessions, roadshow preparation, and other transaction-related travel;
• Financial printing costs (Ridgeway Financial Printing Corp.);
• SEC filing fees;
• EDGAR filing and processing expenses;
• NYSE listing application fees;
• FINRA filing fees;
• Blue sky filing fees;
• Overnight delivery and courier charges;
• Long-distance telephone and teleconference charges;
• Photocopying and document reproduction costs;
• Third-party vendor costs (including, without limitation, data room providers, search firms for UCC, lien, and litigation searches, and other third-party service providers retained in connection with due diligence); and
• Any other out-of-pocket expenses reasonably incurred in connection with the engagement.
Billing Address. All invoices shall be sent to:
Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Special Billing Instructions
All invoices issued in connection with this matter shall prominently reference C&H Matter No. 1015-00001. The Company's internal purchase-order or reference number, if any, is to be provided by Ms. Haverford and, once received, incorporated into all future invoices. Any specific invoice formatting requirements or electronic billing protocols required by the Company should be communicated to the firm's Finance Department at the earliest practicable date.
SECTION 6: RELATED PARTIES AND ADVERSE-PARTY INFORMATION
The following parties have been identified as related to, or involved in, the proposed transaction and have been included in the firm's conflict-clearance process. This section is maintained for ongoing conflict-management and matter-administration purposes.
6.1 Pre-IPO Majority Stockholder / Selling Stockholder
Name: Pinnacle Vista Capital Partners III, LP (Series III Fund)
General Partner: Pinnacle Vista Capital Management LLC
Principal Office:
900 Park Avenue, 38th Floor New York, NY 10021
Key Contacts:
• Hugh Pemberton — Co-Founder & Managing Partner
• Diane Kovac — Co-Founder & Managing Partner
Pre-IPO Ownership: Approximately 62% of the fully diluted common stock of the Company (inclusive of all shares issuable upon exercise of outstanding options and warrants and upon conversion of any convertible securities).
Role in Offering: Selling Stockholder. Pinnacle Vista Capital Partners III, LP is expected to sell approximately $150,000,000 of Common Stock (approximately 6,818,182 shares at the assumed midpoint price of $22.00 per share) in the secondary component of the Offering. Post-IPO, Pinnacle Vista is expected to remain a significant stockholder of the Company, and the controlled-company exemption under NYSE rules may be applicable depending on post-Offering ownership levels.
Pinnacle Vista's Outside Counsel:
Whitfield Archer & Doss LLP 51 West 52nd Street New York, NY 10019
• Philip Archer — Partner (Senior Relationship Partner)
• Christine Navarro — Partner, Capital Markets (Lead Transaction Partner)
• Derek Fong — Senior Associate
6.2 Lead Underwriters (Joint Book-Running Managers)
Lead-Left Book-Runner:
Hargrove Keating & Co. 383 Madison Place New York, NY 10017
• Oliver Marchetti — Managing Director, Equity Capital Markets
• Sonia Tran — Director, Equity Capital Markets
• Daniel Furman — Vice President, Equity Capital Markets
Hargrove Keating & Co. will serve as the lead-left book-running manager for the Offering and will have primary responsibility for book-building, investor allocation, and stabilization activities.
Joint Book-Runner:
Linden Pratt Securities LLC 200 Vesey Street, 40th Floor New York, NY 10281
• Rebecca Innes — Managing Director
• James Alcorn — Director
Joint Book-Runner:
Graymont Brothers Inc. 555 California Street, Suite 3200 San Francisco, CA 94104
• Kenneth Sato — Managing Director
• Lisa Trujillo — Director
6.3 Co-Managers. Co-Manager:
Barfield Stuart & Co. 101 Federal Street Boston, MA 02110
Co-Manager:
Crane Whitley Capital LLC 600 Travis Street, Suite 4400 Houston, TX 77002
6.4 Underwriters' Counsel
Firm:
Prescott, Danforth & Yee LLP 1271 Avenue of the Americas New York, NY 10020
• Margaret Yee — Partner (Lead)
• Scott Halverson — Counsel
• Anita Desmond — Associate
Prescott, Danforth & Yee LLP will serve as counsel to the underwriters in connection with the Offering. All negotiation of the underwriting agreement, comfort-letter scope, and legal-opinion protocols will be coordinated between the Calderwood & Harkness team and the Prescott Danforth team.
6.5 Independent Auditor
Firm:
Ashford & Pemberton LLP 30 Rockefeller Plaza, Suite 2800 New York, NY 10112
• Gregory Sondheim — Lead Engagement Partner, CPA
• Irene Valdez — Audit Manager, CPA
Ashford & Pemberton LLP serves as the Company's independent registered public accounting firm and will be responsible for the audited financial statements and related reports included in the registration statement, as well as for delivery of comfort letters (initial and bring-down) to the underwriters.
6.6 Additional Key Parties
The following additional parties have been identified for conflict-management and matter-administration purposes:
Tax Advisor:
Kessler McBride & Associates LLP 700 Milam Street, Suite 2100 Houston, TX 77002
• Alan Kessler
• Linda McBride
Transfer Agent / Registrar:
Continental Shareowner Services, Inc. 1 Ashbury Asset Advisors Plaza, 30th Floor New York, NY 10004
• Maria Costello
Financial Printer:
Ridgeway Financial Printing Corp. 79 Madison Avenue New York, NY 10016
• Alan Greenidge
D&O Insurance Broker:
Dravello Place Insurance Advisors LLC 250 Greenwich Street, Suite 3700 New York, NY 10007
• Nina Radcliffe
D&O Primary Carrier:
Meridian National Assurance Company Policy No. DNO-22-048871
D&O Excess Carrier (Layer 1):
Stonebridge Indemnity Corp.
D&O Excess Carrier (Layer 2):
Commonwealth Omnivrel Insurance Ltd.
Corporate Credit Facility Agent:
Veltrano National Bank 1401 McKinney Street Houston, TX 77010
• Thomas Raines
Tax-Equity Investor:
Veltara Basin Financial LLC 2029 Century Park East, Suite 1500 Los Angeles, CA 90067
• Karen Fujimoto
Project-Finance Lender:
Prairie Commercial Bank, N.A. 2200 Ross Avenue, Suite 3600 Dallas, TX 75201
• Brent Hollowell
Compensation Consultant:
Clarendon Rowe Advisory Group LLC 300 Atlantic Street, Suite 800 Stamford, CT 06901
• Patricia Voss
Investor Relations Advisor:
Broadmark Strategic Communications Inc. 640 Fifth Avenue, Suite 1205 New York, NY 10019
• Jason Eklund
Environmental Consultant:
Greenridge Environmental Sciences LLC 8400 Shoal Creek Blvd., Suite 200 Austin, TX 78757
• Dr. Nadine Torres
SECTION 7: KEY CLIENT ENTITY STRUCTURE (FOR MATTER REFERENCE)
The following organizational chart reflects the Company's key corporate structure as of the date of matter opening, based on information provided by the Company during the conflict-clearance and preliminary due-diligence process. This structure is subject to verification during formal due diligence and may be revised prior to filing of the registration statement.
Calloway-Briggs Renewables Inc. (Delaware corporation — the Issuer)
CBR Holdings LLC (Delaware limited liability company — intermediate holding company; 100% owned by Calloway-Briggs Renewables Inc.)
Calloway-Briggs Operating Company LLC (Texas limited liability company — principal operating entity; 100% owned by CBR Holdings LLC)
• Solaris West Solar LLC (Texas) — Special purpose vehicle for the Solaris West solar generation project
• Red Mesa Wind Energy LLC (Oklahoma) — Special purpose vehicle for the Red Mesa onshore wind generation project
• Painted Rock Solar LLC (Arizona) — Special purpose vehicle for the Painted Rock solar generation project
• Pronghorn Wind LLC (Texas) — Special purpose vehicle for the Pronghorn onshore wind generation project
• Brazos Energy Storage LLC (Texas) — Special purpose vehicle for the Brazos battery energy storage system project
• Mesquite Wind Holdings LLC (Texas) — Special purpose vehicle for the Mesquite Wind onshore wind generation project
• Cimarron Solar Development LLC (New Mexico) — Special purpose vehicle for the Cimarron Solar development-stage project
• CBR Development Co. LLC (Texas) — Pipeline development entity for early-stage and greenfield project development activities
The Calderwood & Harkness team will prepare a comprehensive organizational chart and subsidiary schedule as part of the registration statement exhibits (Exhibit 21 — Subsidiaries of the Registrant) and will coordinate with the Company's legal team and Ashford & Pemberton LLP regarding the identification of any additional subsidiaries, joint ventures, or variable-interest entities that may require disclosure or consolidation.
SECTION 8: REGULATORY FILINGS AND REFERENCE NUMBERS
The following filing reference numbers and identifiers have been assigned or are pending assignment in connection with the proposed transaction. This section will be updated as additional filings are made and reference numbers are obtained.
The CIK number was obtained in connection with the Company's confidential submission of its draft registration statement on Form S-1 (the "DRS-1") through the SEC's EDGAR system. The DRS-1 was submitted on a confidential basis pursuant to Section 6(e) of the Securities Act, as available to emerging growth companies under the JOBS Act. All subsequent amendments will be filed under the same CIK and will receive individual accession numbers.
The NYSE listing application was filed contemporaneously with the initial organizational activities and is currently under review by NYSE Regulation. The FINRA corporate financing filing was submitted in accordance with FINRA Rule 5110 and is pending review by FINRA's Corporate Financing Department.