1015-00001 · Graymont Brothers Inc · Indemnification & D&O

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D&O Insurance — Side A Difference-in-Conditions (DIC) Policy Summary

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

Purpose: This memorandum provides a summary and analysis of the Meridian National Assurance Company primary directors' and officers' liability insurance policy, with particular focus on the non-rescindable Side A difference-in-conditions (DIC) coverage, prepared in connection with the proposed initial public offering of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"). This analysis is based on a review of policy forms and placement documentation provided by Dravello Place Insurance Advisors LLC (Nina Radcliffe, Vice President) and has been coordinated with CBR's General Counsel, Sandra Haverford. All capitalized terms not otherwise defined herein have the meanings ascribed to them in the applicable policy forms.

I. Executive Summary

Calloway-Briggs Renewables Inc. has procured a comprehensive directors' and officers' liability insurance program in anticipation of its proposed initial public offering of common stock on the New York Stock Exchange (proposed ticker symbol: CBRI), with an expected offering size of approximately $600,000,000. The establishment of a robust D&O insurance program is a fundamental component of IPO readiness, providing essential personal liability protection to the Company's directors and officers as CBR transitions to public-company status and becomes subject to the heightened litigation risks attendant to the federal securities laws and public-company governance obligations.

The D&O insurance tower consists of three layers — a primary policy and two excess layers — aggregating $50,000,000 in total available coverage, with a combined annual premium of approximately $1,870,000 across all layers. The primary policy has been issued by Meridian National Assurance Company under Policy No. DNO-22-048871, and it includes a critically important non-rescindable Side A difference-in-conditions (DIC) coverage feature. The two excess layers are written by Stonebridge Indemnity Corp. (first excess, $15,000,000) and Commonwealth Omnivrel Insurance Ltd. (second excess, $10,000,000), each on a follow-form basis.

This memorandum summarizes the key terms and conditions of the primary policy, with particular emphasis on the Side A DIC feature, and provides an assessment of the program's adequacy in the context of the proposed IPO. The policy forms and placement documentation were provided to Calderwood & Harkness by Dravello Place Insurance Advisors LLC (Nina Radcliffe, Vice President) and have been reviewed in coordination with Sandra Haverford, General Counsel and Corporate Secretary of CBR. The analysis herein is intended to assist the IPO working group in evaluating the D&O program's readiness for the public offering and to identify any areas requiring further attention or modification prior to the IPO closing.

II. D&O Insurance Tower Overview

A. Tower Structure

The following table summarizes the structure of the D&O insurance tower as currently placed:

The primary layer, written by Meridian National, serves as the lead policy and establishes the coverage terms, conditions, definitions, and exclusions that govern the program. The two excess layers are written on a follow-form basis, meaning they incorporate by reference the terms and conditions of the Meridian National primary policy, subject to any specific modifications or additional terms set forth in the respective excess policy forms. This follow-form structure provides consistency across the tower and simplifies coverage analysis in the event of a claim.

B. Key Commercial Terms

The following summarizes the key commercial terms applicable to the D&O insurance program:

Policy Number (Primary): DNO-22-048871

Named Insured: Calloway-Briggs Renewables Inc. and all subsidiaries (as defined in the policy). The definition of "subsidiary" generally includes any entity in which CBR holds, directly or indirectly, more than 50% of the outstanding voting securities or equivalent ownership interests. This definition should be reviewed in connection with CBR's joint venture structures and any minority-owned project entities to confirm the scope of subsidiary coverage.

Policy Period: Twelve months from the binding date, which is to be coordinated with the anticipated closing date of the IPO. Calderwood & Harkness recommends that the policy inception date be set no later than the date the registration statement on Form S-1 is first filed with the Securities and Exchange Commission, in order to ensure coverage is in place during the offering period, and that the policy period be confirmed to align precisely with the IPO closing timeline once a definitive schedule is established.

Annual Aggregate Premium (Full Tower): $1,870,000, allocated among the three carriers as follows:

• Meridian National Assurance Company (primary): approximately $1,120,000

• Stonebridge Indemnity Corp. (excess Layer 1): approximately $470,000

• Commonwealth Omnivrel Insurance Ltd. (excess Layer 2): approximately $280,000

These premium allocations are estimated based on the placement summary provided by Fenwick Place and are subject to confirmation on the final binder. Premium allocations among layers are typical for a D&O tower of this configuration, with the primary carrier commanding the largest share of the total premium given the greater frequency of claims within the primary layer attachment.

Retention (Company Reimbursable Claims — Sides B and C): $1,000,000 per claim. This retention functions as a corporate self-insured retention (SIR) and applies to all claims covered under Side B (company reimbursement) and Side C (entity securities claims). The retention amount is subject to final confirmation on the binder. A $1,000,000 retention is generally consistent with market standards for companies of CBR's size and risk profile, and it is designed to align the Company's interests with those of the insurer by requiring the Company to bear the initial costs of each claim.

Retention (Side A — Non-Indemnifiable Claims): $0. No retention applies to claims covered under Side A. This is a critical feature of the policy: when the Company has not indemnified and is not permitted or required to indemnify a director or officer, the Side A coverage responds on a first-dollar basis without any deductible or self-insured retention. This ensures that individual directors and officers are not required to bear any out-of-pocket costs before insurance coverage is triggered in non-indemnifiable claim scenarios.

Broker of Record: Dravello Place Insurance Advisors LLC, 250 Greenwich Street, Suite 3700, New York, NY 10007. Contact: Nina Radcliffe, Vice President. Fenwick Place has served as the insurance broker for the D&O placement and has coordinated the structuring of the tower, the solicitation of carrier quotations, and the negotiation of policy terms. All communications with the carriers regarding the D&O program should be directed through Fenwick Place.

III. Insuring Agreements — Primary Policy (Meridian National)

The Meridian National primary policy contains three principal insuring agreements, commonly referred to as Side A, Side B, and Side C coverage. Each insuring agreement addresses a distinct coverage need and operates subject to its own terms, conditions, and retention structure. The following summarizes each insuring agreement in detail.

A. Side A Coverage — Individual Directors and Officers (Non-Indemnifiable Loss)

Side A coverage is the most critical component of the D&O insurance program from the perspective of individual directors and officers. Under the Side A insuring agreement, Meridian National agrees to pay, on behalf of any insured person, loss arising from claims first made against such insured person during the policy period for wrongful acts, but only to the extent that the Company has not indemnified and is not permitted or required to indemnify the insured person for such loss. This coverage is designed to respond in circumstances where the Company's corporate indemnification — the first line of defense for individual directors and officers — is unavailable.

The situations in which Side A coverage is triggered generally fall into several categories. First, Side A responds where indemnification is legally prohibited under applicable law. Under the Delaware General Corporation Law ("DGCL"), for example, a corporation may not indemnify a director against liability arising from a breach of the duty of loyalty unless the director acted in good faith and in a manner reasonably believed to be in the best interests of the corporation. Certain claims, if ultimately adjudicated adversely, may fall outside the scope of permissible indemnification, leaving the individual director or officer personally exposed absent Side A insurance coverage. Second, Side A responds where the Company is financially unable to indemnify, most notably in scenarios involving corporate insolvency or bankruptcy proceedings. If CBR were to enter Chapter 11 or Chapter 7 proceedings, the automatic stay and the constraints of the bankruptcy estate would likely prevent the Company from making indemnification payments to its directors and officers, and Side A would fill this critical gap. Third, Side A responds in any other circumstance where the Company has simply not provided indemnification, regardless of the reason.

No corporate retention applies to Side A claims. Coverage drops down to first dollar, meaning that individual directors and officers need not satisfy any deductible or self-insured retention before the insurer's obligations are triggered. This first-dollar coverage feature is of paramount importance to directors and officers, particularly those serving as independent directors or as designees of pre-IPO investors such as Pinnacle Vista, who rely on the D&O insurance program as a primary element of their personal liability protection.

Side A coverage is particularly critical in the post-IPO context. Upon becoming a publicly traded company, CBR will be subject to significantly heightened securities-class-action exposure, including potential claims under Section 11 of the Securities Act of 1933, Section 12 of the Securities Act, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934. Directors and officers named in such actions face the prospect of personal liability for damages that may be substantial, and the availability of robust Side A coverage is frequently cited by prospective independent directors as a prerequisite to agreeing to serve on the board of a newly public company.

B. Side B Coverage — Company Reimbursement

Under the Side B insuring agreement, Meridian National agrees to reimburse the Company for loss that the Company pays to indemnify an insured person for claims first made against such insured person during the policy period for wrongful acts. Side B coverage thus operates as a reimbursement mechanism: when a director or officer incurs covered loss and the Company fulfills its indemnification obligations by advancing or paying such loss, the insurer reimburses the Company for those payments.

Side B coverage is subject to the per-claim corporate retention of $1,000,000. The Company must absorb the first $1,000,000 of each claim before the insurer's reimbursement obligation is triggered. This retention aligns the Company's interests with those of the insurer and reflects the principle that the Company's own indemnification obligations constitute the primary layer of protection for individual directors and officers, with insurance serving as a supplemental source of funding.

The Company's indemnification obligations arise under multiple sources, including the following:

(a) The Amended and Restated Certificate of Incorporation of CBR (IPO form), which contains indemnification provisions consistent with Section 145 of the DGCL, providing for indemnification of directors and officers to the fullest extent permitted by Delaware law;

(b) The Amended and Restated Bylaws of CBR (IPO form), which include supplementary indemnification and mandatory advancement of expenses provisions;

(c) Individual indemnification agreements executed between CBR and each of its directors and executive officers, providing contractual rights to indemnification and advancement of expenses that supplement and, in certain respects, expand upon the protections available under the charter and bylaws.

As of the date of this memorandum, CBR has executed or is in the process of executing individual indemnification agreements with each of its seven directors — Garrett Calloway (Chairman and Chief Executive Officer), Elaine Briggs (President, Development), Hugh Pemberton (Pinnacle Vista designee), Diane Kovac (Pinnacle Vista designee), Warren Okoro (Independent Director), Catherine Liang (Independent Director), and Richard Estavez (Independent Director) — and each of its six named executive officers — Marcus Yoon (Chief Financial Officer), Sandra Haverford (General Counsel and Corporate Secretary), Dale Renfroe (Chief Operating Officer), Priya Anand (Senior Vice President, Finance and Treasurer), Tomás Quintero (Senior Vice President, Project Development), and Rachel Whitmore (Chief People Officer). The status of execution of these agreements is tracked separately in the Indemnification Agreement — Schedule of Executed Agreements maintained by Calderwood & Harkness.

C. Side C Coverage — Entity Securities Claims

Under the Side C insuring agreement, Meridian National agrees to pay, on behalf of the Company, loss arising from securities claims first made against the Company during the policy period. Side C coverage is distinct from Sides A and B in that it protects the Company itself as an entity, rather than individual directors and officers.

Side C coverage is limited in scope to claims alleging violations of securities laws. This limitation reflects the D&O insurance market's standard approach of restricting entity-level coverage to securities-related liability, which represents the primary litigation risk to the corporate entity in the public-company context. Specifically, Side C covers claims brought against CBR alleging violations of the Securities Act of 1933 (including Section 11 and Section 12 claims arising from misstatements or omissions in registration statements and prospectuses), the Securities Exchange Act of 1934 (including Rule 10b-5 claims alleging securities fraud in connection with the purchase or sale of securities), and the rules and regulations promulgated thereunder.

Side C coverage is subject to the same per-claim corporate retention of $1,000,000 applicable to Side B. In the context of the proposed IPO, Side C coverage is of particular relevance, as CBR will become subject to potential Section 11 liability as the issuer of securities offered pursuant to the registration statement. In a typical IPO-related securities class action, claims are brought against both the issuer (covered under Side C) and the individual directors and officers who signed the registration statement (covered under Sides A and B), and the D&O policy must respond to both categories of claims from the shared policy limits.

IV. Side A Difference-in-Conditions (DIC) Feature — Detailed Analysis

A. Overview and Purpose of the DIC

The Meridian National primary policy includes an embedded Side A DIC endorsement, which is one of the most significant features of the D&O insurance program from the perspective of individual directors and officers. The DIC endorsement enhances the Side A coverage by providing two critical protections: first, non-rescindability of the Side A coverage by the insurer; and second, drop-down coverage in circumstances where the underlying D&O policy (Sides B and C) has been rescinded, exhausted by other claims, or is otherwise unavailable.

The purpose of the Side A DIC feature is to ensure that individual directors and officers retain meaningful personal liability protection even in worst-case corporate scenarios — scenarios in which the Company's indemnification obligations cannot be fulfilled, the broader D&O policy has been impaired, or the insurer has taken adverse coverage positions with respect to entity-level claims. The DIC feature reflects the fundamental principle that Side A coverage exists for the personal benefit of individual directors and officers, and should not be undermined by actions of the Company, disputes between the Company and the insurer, or circumstances beyond the control of the individual insureds.

The inclusion of a non-rescindable Side A DIC feature in the primary policy is consistent with current best practices for public-company D&O insurance programs and is widely regarded as a minimum expectation for IPO-class placements. The presence of this feature will provide significant comfort to CBR's board members — particularly the independent directors (Warren Okoro, Catherine Liang, and Richard Estavez) and the Pinnacle Vista designees (Hugh Pemberton and Diane Kovac) — in their decision to serve on the board of a publicly traded company.

B. Non-Rescindability Provision

The non-rescindability provision is the cornerstone of the DIC endorsement. Under this provision, Meridian National expressly and irrevocably waives any right to rescind, void, or cancel the Side A coverage for any reason whatsoever. This waiver applies regardless of any misrepresentation, non-disclosure, or breach of warranty in the policy application by the Company or its representatives, and it remains in effect notwithstanding any fraud, intentional misconduct, or other wrongdoing by the Company or any individual insured in connection with the procurement of the policy.

Specifically, the insurer's waiver of rescission rights encompasses, without limitation, the following:

(a) Material Misrepresentation in the Policy Application. Even if the Company made materially false or misleading statements in the D&O insurance application — including in the warranty letter, the financial statements provided to the insurer, or any other information furnished in connection with the placement — the insurer cannot rescind or void the Side A coverage.

(b) Failure to Disclose Material Information. Even if the Company failed to disclose material facts that would have affected the insurer's underwriting decision, including pending or threatened litigation, regulatory investigations, known financial irregularities, or other material adverse developments, the insurer cannot rescind or void the Side A coverage.

(c) Breach of Policy Conditions or Warranties. Even if the Company breached a policy condition, warranty, or covenant — including notice requirements, cooperation obligations, or other policy terms — the insurer cannot rescind or void the Side A coverage as to individual insured persons.

It is essential to emphasize that the non-rescindability protection applies solely to Side A coverage. Sides B and C remain subject to the insurer's standard rescission rights and policy conditions. This means that if Meridian National were to discover, for example, that CBR's management had made material misrepresentations in the D&O application, the insurer could potentially rescind the Sides B and C coverage (thereby eliminating the Company's right to reimbursement and the entity's securities-claims coverage), but the insurer would be contractually barred from rescinding the Side A coverage that protects individual directors and officers.

This asymmetry is by design and reflects the fundamental purpose of the DIC structure. The individuals who serve as directors and officers of CBR — many of whom may not have been personally involved in the preparation of the insurance application or aware of any alleged misrepresentations — should not lose their personal liability coverage as a consequence of corporate misconduct or errors in the application process. The non-rescindability provision ensures that innocent directors and officers retain their Side A protection in precisely the circumstances where they are most likely to need it.

C. DIC Drop-Down Triggers

The Side A DIC coverage includes provisions that cause it to "drop down" — that is, to respond as primary, first-dollar coverage — in a number of specified circumstances. These drop-down triggers represent the situations in which the standard Side A coverage may be insufficient or unavailable, and in which the DIC enhancement provides additional protection to individual insureds. The principal drop-down triggers are as follows:

1. Insolvency or Bankruptcy of the Company. If CBR becomes unable to indemnify its directors and officers due to the commencement of bankruptcy or insolvency proceedings — whether under Chapter 7 or Chapter 11 of the United States Bankruptcy Code, or under analogous state or foreign insolvency laws — the Side A DIC coverage responds without regard to the corporate retention and without any requirement that the Company first attempt to indemnify. This trigger is critically important because corporate insolvency often coincides with the very events (financial restatements, disclosure failures, fraud allegations) that give rise to D&O claims. In the insolvency scenario, the Company's indemnification obligations become effectively worthless, and the Side A DIC ensures that individual directors and officers are not left without coverage at the moment of greatest personal exposure.

2. Exhaustion of the Underlying Coverage. If the limits available under Sides B and C are exhausted by payments on other claims, the Side A DIC coverage continues to provide protection for non-indemnifiable loss up to the remaining available limit of the Side A coverage. This trigger addresses the scenario in which a large entity-level securities claim consumes the policy's aggregate limits, potentially leaving no remaining coverage for individual directors and officers who are separately named as defendants. The DIC's drop-down feature ensures that Side A claims are not subordinated to Side B and C claims in the allocation of policy limits.

3. Rescission or Voiding of the Underlying Policy. If Meridian National exercises its rescission rights with respect to Sides B and C — for example, due to a determination that the Company made material misrepresentations in the insurance application — the Side A DIC coverage remains in full force and effect for individual insured persons. As discussed in Section IV.B above, the non-rescindability provision prevents the insurer from rescinding Side A coverage, and the drop-down trigger ensures that the Side A DIC responds as primary coverage in the event of such a rescission. This is frequently regarded as the most valuable aspect of the DIC feature, as it addresses the scenario that is most catastrophic for individual directors and officers: a situation in which the Company has engaged in misconduct that vitiates the insurance policy, and the individuals who may have had no involvement in or knowledge of such misconduct are left personally exposed.

4. Refusal to Indemnify. If the Company is legally permitted to indemnify a director or officer but refuses or fails to do so, the Side A DIC may respond to provide coverage for the individual insured. This trigger addresses the gap scenario in which the Company has the legal authority and financial capacity to indemnify but, for whatever reason — a change in management, a dispute with the director, a cost-driven decision, or simple corporate inaction — does not in fact provide indemnification. The scope of this trigger is subject to important policy-wording considerations regarding the distinction between corporate "inability" and corporate "refusal" to indemnify, which are discussed in further detail in Section IV.E below.

5. Coverage Gap from Other Policy Exclusions. If a specific exclusion in the policy applies to a Side B or Side C claim but the corresponding exclusion does not apply to the Side A claim (or no corresponding Side A exclusion exists), the DIC feature allows the Side A coverage to respond for the benefit of the individual insured. This trigger reflects the structural asymmetry discussed in Section VII.B below, in which certain exclusions are applied only to entity-level coverage (Sides B and C) and not to individual coverage (Side A).

D. Side A DIC Sub-Limit and Aggregate

The Side A DIC coverage shares the full primary policy limit of $25,000,000 per policy period. Importantly, the Side A DIC is not subject to a separate, reduced sub-limit — a feature that is sometimes seen in less favorable policy forms and that would limit the practical value of the DIC enhancement. Under the Meridian National policy, the entire $25,000,000 primary limit is available for Side A DIC claims, subject to the aggregate nature of the limit and to any reductions resulting from other payments made under the policy during the policy period.

Furthermore, the two excess layers in the D&O tower — Stonebridge Indemnity Corp. (Layer 1, $15,000,000) and Commonwealth Omnivrel Insurance Ltd. (Layer 2, $10,000,000) — are written on a follow-form basis to the Meridian National primary policy, including its Side A coverage terms. This means that the full $50,000,000 tower is potentially available for Side A claims, subject to the specific terms and conditions of each excess policy. Calderwood & Harkness has reviewed the excess policy forms and confirmed that each excess layer follows form to the primary policy's Side A insuring agreement, though each excess policy should be separately analyzed in the event of a claim to confirm the applicability of the follow-form provisions.

E. Key Interpretive Considerations

Several interpretive issues arise from the policy language governing the Side A DIC feature, and these merit careful consideration in the context of the IPO:

"Unable" vs. "Unwilling" to Indemnify. The policy language regarding the trigger for Side A coverage uses the formulation "not indemnified" and references situations where the Company "has not indemnified and is not permitted or required to indemnify" the insured person. Calderwood & Harkness's reading of this language is that it is sufficiently broad to cover both situations where the Company is legally unable to indemnify (e.g., because Delaware law prohibits indemnification, because the Company is in bankruptcy, or because indemnification would violate a court order) and situations where the Company has simply not in fact provided indemnification to the individual insured, regardless of whether the failure to indemnify is attributable to inability, unwillingness, or any other reason.

However, certain provisions in the policy — including the DIC drop-down trigger for "refusal to indemnify" discussed in Section IV.C.4 — may distinguish between corporate "inability" and corporate "refusal," and the insurer could potentially argue that the standard Side A trigger is limited to situations of legal inability, while the DIC drop-down for refusal addresses a separate category of circumstances. This distinction, while unlikely to be litigated in the ordinary course, should be monitored in the context of CBR's indemnification agreements and charter provisions, which impose mandatory indemnification and advancement obligations on the Company and thereby reduce (but do not eliminate) the risk of a "refusal" scenario. We recommend that this issue be flagged for the attention of CBR's General Counsel in connection with any future indemnification disputes.

Severability of Application. The DIC endorsement includes a severability clause providing that the application statements of each insured person are severed from those of every other insured person and from those of the Company. Under this clause, no statement made by, or knowledge of, one insured person is imputed to another insured person for purposes of determining the availability of Side A coverage. This severability provision is critically important because it ensures that an innocent director or officer — one who had no knowledge of any misrepresentation in the insurance application — is not penalized by the statements or knowledge of a co-insured or of the Company. The severability clause operates in tandem with the non-rescindability provision to provide a robust protective framework for individual insureds.

Priority of Payment / Order of Coverage. In the event of concurrent claims that implicate both Side A and Sides B/C — for example, a securities class action naming both CBR as an entity (Side C) and its directors and officers individually (Side A/B) — the policy provides that Side A claims take priority in the allocation of policy limits. This "priority of payments" provision is highly favorable to individual insureds because it ensures that payments to or on behalf of individual directors and officers are made before the policy limits are consumed by entity-level claims. In the absence of a priority-of-payments provision, individual insureds could face the risk that the entity's claim payments would exhaust the available limits, leaving no remaining coverage for their personal defense costs or liabilities. The inclusion of this provision in the Meridian National policy is consistent with best practices and represents a meaningful protection for the CBR board.

V. Definition of Insured Persons

The policy defines "Insured Persons" broadly to encompass the following categories of individuals:

Directors. All natural persons who have been, are, or shall become duly elected or appointed members of the board of directors of CBR or of any subsidiary during the policy period are covered as insured persons under the policy. This definition is prospective and retroactive in scope — it covers individuals who served as directors prior to the policy inception (for claims arising from their tenure), individuals who are currently serving as directors, and individuals who are appointed or elected to the board during the policy period.

The current board of directors of CBR consists of seven members:

• Garrett Calloway — Chairman of the Board and Chief Executive Officer

• Elaine Briggs — President, Development

• Hugh Pemberton — Pinnacle Vista designee

• Diane Kovac — Pinnacle Vista designee

• Warren Okoro — Independent Director

• Catherine Liang — Independent Director

• Richard Estavez — Independent Director

Officers. All natural persons who have been, are, or shall become duly elected or appointed officers of CBR or of any subsidiary during the policy period are covered as insured persons, including all executive officers as defined under the federal securities laws. The key officers of CBR include:

• Marcus Yoon — Chief Financial Officer

• Sandra Haverford — General Counsel and Corporate Secretary

• Dale Renfroe — Chief Operating Officer

• Priya Anand — Senior Vice President, Finance and Treasurer

• Tomás Quintero — Senior Vice President, Project Development

• Rachel Whitmore — Chief People Officer

Automatic Coverage for New Directors and Officers. The policy extends automatically to any person who becomes a director or officer of CBR or any subsidiary during the policy period, without the need for an endorsement, notification to the insurer, or payment of additional premium. This automatic coverage feature is important in the IPO context, as the Company may appoint additional independent directors or executive officers in connection with the public offering or in the period immediately following the IPO closing.

Former Directors and Officers. The policy extends coverage to former directors and officers for claims arising from wrongful acts committed during their tenure with CBR or any subsidiary. This retrospective coverage ensures that individuals who have departed from the Company — whether through retirement, resignation, removal, or any other reason — retain the benefit of D&O insurance protection for claims that relate to their prior service.

VI. Definition of Loss

The policy defines "Loss" to include the following categories of covered amounts:

(a) Defense costs, including attorneys' fees, expert witness fees, and other costs and expenses incurred in the investigation, defense, or appeal of a covered claim;

(b) Judgments and awards entered against an insured person or the Company in connection with a covered claim;

(c) Settlements, including amounts paid to resolve or settle a covered claim with the consent of the insurer (which consent is not to be unreasonably withheld);

(d) Pre-judgment and post-judgment interest on any covered judgment or award.

The definition of Loss is subject to several important exclusions and limitations. Specifically, Loss does not include:

(a) Criminal or civil fines or penalties imposed by law, except to the extent that such fines or penalties are insurable under applicable law. Under Delaware law, the insurability of fines and penalties is not entirely settled, but the weight of authority suggests that certain categories of fines (particularly those imposed on a strict-liability or negligence basis, as opposed to those arising from intentional misconduct) may be insurable. This issue should be evaluated on a case-by-case basis in connection with any specific claim.

(b) Taxes, including any tax liability arising from the insured's personal tax obligations or from the Company's tax positions.

(c) Amounts deemed uninsurable as a matter of public policy, which may include, under certain circumstances, punitive damages (the insurability of which varies by jurisdiction).

(d) Matters that are restitutionary or disgorgement in nature, subject to the operation of the "most favorable jurisdiction" clause described below.

Most Favorable Jurisdiction Clause. The policy includes a "most favorable jurisdiction" provision, which provides that the question of whether a particular type of loss (including settlements, fines, penalties, and disgorgement amounts) constitutes insurable loss shall be determined under the law of the jurisdiction that is most favorable to the insurability of such loss. This provision is significant because the insurability of certain categories of loss — particularly disgorgement, restitution, and punitive damages — varies substantially across jurisdictions. By applying the most favorable jurisdictional law, the policy maximizes the scope of covered loss and provides the broadest possible protection to insured persons. Calderwood & Harkness views this clause as a meaningful enhancement to the policy's coverage scope.

Defense Costs Advancement. The policy provides for the advancement of defense costs on a current basis, as such costs are incurred by the insured person or the Company. This advancement obligation requires the insurer to fund defense costs contemporaneously with the insured's obligation to pay such costs, rather than on a reimbursement basis after the conclusion of the claim. The advancement of defense costs is subject to a repayment undertaking by the insured: if it is ultimately determined, by final adjudication or otherwise, that the insured is not entitled to coverage under the policy, the insured agrees to repay the advanced defense costs to the insurer. The defense-costs-advancement provision is a critical feature of the policy, as the costs of defending a securities class action or regulatory investigation can be substantial — often exceeding tens of millions of dollars — and the ability to access insurance-funded defense costs on a current basis is essential to ensuring that insured persons can mount an effective defense.

VII. Key Exclusions — Primary Policy

A. Standard Exclusions (Applicable to All Insuring Agreements)

The policy contains several standard exclusions that apply to all three insuring agreements (Sides A, B, and C). These exclusions are consistent with market-standard D&O policy forms and include the following:

1. Conduct Exclusions. The policy excludes claims arising from deliberately dishonest, fraudulent, or criminal acts by an insured person, or from the gaining of any personal profit or advantage to which the insured person was not legally entitled. This exclusion is subject to an important limitation: it applies only if the excluded conduct is established by a final, non-appealable adjudication in the underlying proceeding (or in a separate proceeding). The "final adjudication" standard is the most favorable standard available to insured persons and means that the conduct exclusion cannot be invoked by the insurer based merely on allegations in a complaint, interim court findings, or preliminary rulings. Until a final, non-appealable adjudication is entered, the insurer must continue to provide coverage, including the advancement of defense costs.

2. Prior/Pending Litigation Exclusion. The policy excludes claims arising from or related to litigation, regulatory proceedings, or other proceedings that were pending as of the policy's retroactive date or that were known to the insured prior to the policy inception date. This exclusion is designed to prevent the insured from obtaining coverage for pre-existing liabilities and is standard in claims-made D&O policies. The retroactive date and the scope of the prior-knowledge inquiry should be confirmed on the final binder.

3. Insured vs. Insured Exclusion. The policy excludes claims brought by one insured person against another insured person, or by the Company against an insured person. This exclusion is intended to prevent collusive claims within the insured organization. However, the exclusion is subject to customary carve-outs that preserve coverage for shareholder derivative actions (which are technically brought by or on behalf of the Company against its directors and officers), whistleblower claims brought by insured persons acting in a whistleblower capacity, and employment-related claims (such as wrongful termination actions) brought by insured persons in their capacity as employees. These carve-outs are important to ensure that the exclusion does not inadvertently bar coverage for legitimate claims.

4. Professional Services / Pollution Exclusion. The policy excludes claims for bodily injury, property damage, and pollution-related liabilities. This exclusion reflects the standard D&O insurance principle that physical-injury and environmental claims are properly addressed by other insurance products (such as commercial general liability, environmental liability, and professional liability policies). Given CBR's operations in the renewable-energy sector and its environmental profile, this exclusion should be reviewed in coordination with the environmental assessments prepared by Greenridge Environmental Sciences LLC to confirm that any D&O-related environmental exposure is adequately addressed either within the D&O policy's scope or by separate environmental liability coverage.

5. ERISA / Benefits Exclusion. The policy excludes claims arising from the administration of employee benefit plans, including claims under the Employee Retirement Income Security Act of 1974 ("ERISA"). Liability related to employee benefit plan administration is typically addressed by fiduciary liability insurance, which is a separate product from D&O insurance. CBR should ensure that a fiduciary liability insurance policy is in place to cover claims arising from the administration of its 401(k) plan and any other employee benefit plans.

B. Exclusions Applicable Only to Sides B and C (Not Applicable to Side A)

A key structural feature of the policy — and one that is directly tied to the Side A DIC architecture — is the asymmetry in the application of certain exclusions. Specifically, certain exclusions in the policy apply only to Sides B and C (company reimbursement and entity securities claims coverage) and do not apply to Side A (individual coverage for non-indemnifiable loss). This asymmetry ensures that individual directors and officers retain broader coverage under Side A than the Company retains under Sides B and C. The exclusions applicable only to Sides B and C include:

(a) Contractual Liability Exclusion (Side B/C Only). Claims arising from breach of contract or from the assumption of another party's liability under a contract may be excluded under Sides B and C but remain covered under Side A to the extent they constitute claims for wrongful acts against individual insured persons.

(b) Certain Regulatory-Proceeding Exclusions (Side B/C Only). Certain categories of regulatory proceedings or investigations may be excluded from Sides B and C coverage but remain covered under Side A. The specific scope of these exclusions should be reviewed on a claim-by-claim basis in coordination with Fenwick Place and the applicable carrier.

This structural asymmetry is a fundamental component of the Side A DIC design. It ensures that even when the entity-level coverage is excluded for a particular claim, individual directors and officers may still access Side A coverage for the same underlying facts. The DIC drop-down feature (discussed in Section IV.C.5) operates in conjunction with this asymmetry to provide the broadest possible protection to individual insureds.

C. Exclusion Carve-Outs Favorable to Insureds

Several important carve-outs and limitations on the policy's exclusions operate to the benefit of insured persons:

Final Adjudication Standard. As noted in Section VII.A.1, the conduct exclusions (fraud, dishonesty, personal profit) apply only upon a final, non-appealable adjudication. This is the most favorable standard in the D&O insurance market and provides significant protection to insured persons during the pendency of litigation or regulatory proceedings.

Severability of Exclusions. The wrongful conduct of one insured person is not imputed to another insured person for purposes of applying the conduct exclusions. This severability principle means that the fraud or dishonesty of one director or officer cannot be used by the insurer to deny coverage to other directors or officers who are not themselves guilty of the excluded conduct. The severability of exclusions operates in concert with the severability of the application (discussed in Section IV.E) to provide layered protection for innocent insureds.

Defense Costs Pending Adjudication. Even if a conduct exclusion may ultimately apply to a claim — for example, if it is later determined by final adjudication that the insured person committed fraud — the insurer is obligated to advance defense costs until the final adjudication is entered. This provision ensures that insured persons have access to insurance-funded defense during the potentially lengthy period of litigation, during which the applicability of the conduct exclusion remains unresolved.

VIII. Claims-Made and Reporting Provisions

Claims-Made Basis. The policy is written on a claims-made basis, which means that coverage is triggered by claims that are first made against insured persons during the policy period (or during any applicable extended reporting period). This is the standard coverage trigger for D&O insurance and differs from the occurrence-based trigger used in many other lines of insurance. Under a claims-made policy, the relevant date is the date on which the claim is first asserted against the insured, not the date on which the underlying wrongful act occurred. This distinction has important implications for coverage continuity and the timing of policy procurement.

Retroactive Date. The policy includes a retroactive date, which serves as the earliest date for which wrongful acts are covered. Claims arising from wrongful acts that occurred prior to the retroactive date are not covered, even if the claim is first made during the policy period. The retroactive date for the Meridian National policy is expected to be set at the inception date of the first D&O policy in the continuous program, which will be coordinated with the IPO closing date. The specific retroactive date should be confirmed on the final binder, and Calderwood & Harkness recommends that the retroactive date be set as early as practicable — ideally at or before the date of the Company's initial formation or the earliest date of any pre-IPO director or officer service — to ensure that the broadest possible temporal scope of coverage is available.

Extended Reporting Period (Tail). The policy includes provisions for extended reporting periods following the expiration or non-renewal of the policy:

(a) Automatic Extended Reporting Period. Upon the expiration or non-renewal of the policy, the insured receives an automatic extended reporting period of sixty (60) days at no additional premium. During this period, the insured may report claims that are first made during the extended reporting period, provided that such claims arise from wrongful acts that occurred prior to the policy expiration date.

(b) Optional Extended Reporting Period. In the event of non-renewal by the insurer (as opposed to non-renewal by the insured), the insured has the option to purchase an extended reporting period of up to six (6) years at a premium of up to 200% of the expiring annual premium. This optional "tail" provision allows the insured to maintain coverage continuity for an extended period following the expiration of the policy, which is particularly important in the D&O context given the lengthy statutes of limitations and repose applicable to securities claims (e.g., three years from the date of the offering under Section 13 of the Securities Act of 1933, and five years under Section 10(b) of the Securities Exchange Act of 1934 as measured from the date of the violation).

The tail provision is of critical importance in several IPO-related contexts. First, it provides a mechanism for protecting pre-IPO directors and officers for claims arising from pre-IPO conduct in the event that the D&O policy is not renewed or is replaced after the IPO. Second, it is relevant to board transitions — including the eventual exit by Pinnacle Vista from the CBR board — by ensuring that departing directors retain coverage for pre-departure wrongful acts. Third, it addresses the scenario in which a change of control occurs (discussed in Section IX below), as a change of control may convert the policy to run-off status and necessitate the purchase of tail coverage.

IX. Change of Control and Merger / Acquisition Provisions

Change of Control Definition. The policy defines a "change of control" as generally occurring upon (a) the acquisition by any person, entity, or group of persons acting in concert of more than 50% of the outstanding voting power of CBR, or (b) a merger, consolidation, amalgamation, or similar transaction involving CBR that results in a change in the composition of a majority of CBR's board of directors.

Impact of Change of Control. Upon the occurrence of a change of control, the policy automatically converts to "run-off" coverage for the remainder of the policy period. Under run-off coverage, the policy covers only claims arising from wrongful acts that occurred prior to the effective date of the change of control. No coverage is available for wrongful acts occurring after the change of control, and no new wrongful acts coverage is provided for the post-change-of-control period. The policy effectively freezes in place as of the change-of-control date and serves only as historical coverage for pre-existing exposure.

Relevance to the IPO. The proposed IPO itself is not expected to constitute a change of control under the policy. Pinnacle Vista, which currently holds approximately 62% of CBR's outstanding equity on a pre-IPO basis, will retain a significant ownership position following the IPO. However, the projected post-IPO ownership structure presents a nuanced issue: depending on the size of the offering and the number of shares sold, Pinnacle Vista's post-IPO stake is expected to decline to approximately 49% on a base offering basis. If Pinnacle Vista's ownership falls below the 50% threshold specified in the change-of-control definition, the question arises whether the IPO has triggered a change of control.

Calderwood & Harkness's analysis is that the IPO should not trigger the change-of-control provision, for the following reasons:

(a) The relevant trigger under clause (a) of the definition is the "acquisition by any person or group" of more than 50% of voting power — which looks at the acquiror's holdings, not the dilution of an existing holder's position. No single person or group is acquiring a majority position in CBR in connection with the IPO; rather, shares are being sold to dispersed public investors who do not constitute a "group."

(b) Clause (b) of the definition, relating to a change in majority board composition, is not triggered because the Stockholders' Agreement (IPO form) preserves certain board designation rights for Pinnacle Vista, and the composition of the board is not expected to change materially in connection with the IPO closing. Pinnacle Vista will retain the right to designate two directors (Pemberton and Kovac) and the existing independent directors (Okoro, Liang, and Estavez) will continue in their positions.

Notwithstanding this analysis, the change-of-control provision should be monitored carefully in the post-IPO period, particularly in connection with any secondary offerings by Pinnacle Vista, any changes in board composition, or any future M&A activity involving CBR. Calderwood & Harkness recommends that Fenwick Place be consulted on the specific interaction between the policy's change-of-control definition and the post-IPO ownership and governance structure to confirm that no inadvertent trigger occurs.

Run-Off/Tail Considerations for IPO. In addition to the change-of-control analysis, Calderwood & Harkness recommends that the IPO working group discuss with Fenwick Place the need for tail or run-off coverage to protect pre-IPO directors and officers for conduct occurring prior to the IPO. If the IPO-era policy is not renewed at the end of its initial term, or if the policy is replaced by a new policy with a later retroactive date, pre-IPO directors and officers could face a gap in coverage for pre-IPO wrongful acts. A properly structured tail policy would close this gap and ensure continuity of coverage across the pre-IPO and post-IPO periods.

X. Subrogation and Allocation

A. Subrogation. The policy contains standard subrogation provisions entitling the insurer, upon making a payment under the policy, to be subrogated to the insured's rights of recovery against third parties responsible for the loss. This subrogation right is subject to two important limitations:

(a) No Subrogation Against Insured Persons. The insurer does not retain subrogation rights against insured persons to the extent of Side A payments. This means that if the insurer pays a Side A claim on behalf of an individual director or officer, the insurer cannot seek reimbursement from that individual (or from any other insured person) for the amounts paid.

(b) Waiver of Subrogation Against the Company. The insurer waives its subrogation rights against the Company in respect of Side A payments. This waiver prevents the insurer from seeking reimbursement from CBR for Side A claims paid on behalf of individual directors and officers. This is an important protection because, absent such a waiver, the insurer could potentially seek to recover Side A payments from the Company on the theory that the Company should have indemnified the individual insured — thereby shifting the economic burden of the claim back to the Company and undermining the purpose of the Side A coverage.

B. Allocation. The policy includes a pre-agreed allocation methodology to address claims that involve both covered and non-covered elements, or that are brought against both individual insured persons and the Company (or other non-insured parties). In a typical securities class action, for example, the complaint may assert claims against both the Company (covered under Side C) and individual directors and officers (covered under Sides A and B), and a global settlement may be reached that does not separately allocate the settlement amount between the entity and the individuals, or between covered and non-covered claims.

The policy's allocation provision establishes a framework for determining the portion of any settlement, judgment, or defense costs that is allocable to covered loss under the policy. This pre-agreed allocation methodology is designed to avoid the disputes that frequently arise between insurers and insureds regarding the proper allocation of a mixed settlement or a judgment that encompasses both covered and non-covered claims. By establishing the allocation framework in advance, the policy provides greater predictability and reduces the risk of coverage litigation.

In the event that the insurer and the insured are unable to agree on the proper allocation of a particular loss, the policy provides for resolution by a mutually agreed-upon independent third party. This dispute-resolution mechanism offers an efficient alternative to litigation and is consistent with market-standard allocation provisions in IPO-class D&O policies.

XI. Coordination with CBR's Indemnification Framework

The D&O insurance program operates within and is coordinated with CBR's broader indemnification framework, which consists of the following components:

Individual Indemnification Agreements. CBR has executed (or is in the process of executing) individual indemnification agreements with each of its directors and executive officers. These agreements provide contractual rights to indemnification and advancement of expenses to the fullest extent permitted by Delaware law, and they supplement the protections available under CBR's charter and bylaws. The individual indemnification agreements are particularly important because they provide contractual certainty that cannot be unilaterally modified by the Company (unlike charter or bylaw provisions, which can be amended by board or stockholder action). Each agreement obligates the Company to advance defense costs to the individual indemnitee on a current basis, subject to an undertaking to repay if it is ultimately determined that the indemnitee is not entitled to indemnification.

Amended and Restated Certificate of Incorporation (IPO Form). The Amended and Restated Certificate of Incorporation includes indemnification provisions consistent with Section 145 of the DGCL, providing for indemnification of directors and officers to the fullest extent permitted by Delaware law. The certificate also includes an exculpation provision pursuant to Section 102(b)(7) of the DGCL, which eliminates the personal liability of directors for monetary damages arising from breaches of the duty of care (subject to specified exceptions, including breaches of the duty of loyalty, acts or omissions not in good faith, and transactions from which the director derived an improper personal benefit).

Amended and Restated Bylaws (IPO Form). The Amended and Restated Bylaws include supplementary indemnification provisions that provide for mandatory indemnification and advancement of expenses to directors and officers, subject to the limitations of Delaware law. The bylaws also establish procedural mechanisms for the determination of indemnification rights and for the resolution of disputes regarding indemnification.

Interaction with D&O Insurance. The D&O policy operates as a backstop and complement to the corporate indemnification framework. In the ordinary course, when a director or officer incurs covered loss, the Company will fulfill its indemnification and advancement obligations under the charter, bylaws, and indemnification agreements, and the Side B insuring agreement will reimburse the Company for those payments (net of the corporate retention). Side A coverage operates as a safety net: it responds only when the corporate indemnification is unavailable, ensuring that directors and officers are not left without protection in the scenarios where they are most vulnerable.

The non-rescindable Side A DIC feature provides an additional and critical layer of protection within this framework. Even in scenarios where the Company's indemnification obligations become unenforceable, unfunded, or otherwise unavailable — whether due to insolvency, legal prohibition, corporate misconduct that vitiates the insurance policy, or simple corporate refusal — the Side A DIC ensures that individual directors and officers retain personal liability coverage. This protection is independent of and insulated from the Company's own circumstances, and it is this independence that makes the DIC feature the single most important element of the D&O insurance program from the perspective of individual insureds.

XII. Adequacy Assessment for IPO

A. Tower Size

The $50,000,000 aggregate D&O tower is within the range generally observed for mid-cap renewable-energy company IPOs, though it falls on the lower end of the spectrum for a company with a proposed post-money equity valuation of approximately $2.72 billion. Comparable renewable-energy IPOs in the 2021–2022 period generally maintained D&O insurance towers in the range of $50,000,000 to $100,000,000, with the size of the tower typically correlated to the company's market capitalization, the offering size, and the perceived litigation risk profile.

CBR's proposed offering size of $600,000,000, its operations in a sector that has attracted increasing regulatory and investor scrutiny, and the heightened securities-litigation environment for newly public companies all weigh in favor of evaluating whether the tower should be increased above $50,000,000. At the same time, the cost of additional coverage must be weighed against the incremental protection afforded, and the D&O insurance market has experienced significant pricing volatility in recent years. Calderwood & Harkness recommends that the tower size be reassessed upon reactivation of the IPO process, taking into account then-current market conditions, pricing, and the Company's updated risk profile.

B. Carrier Quality

The three carriers participating in the D&O tower are established and well-regarded participants in the D&O insurance market:

• Meridian National Assurance Company — domiciled in Connecticut. Meridian National is an established specialty D&O underwriter with a significant presence in the IPO D&O market. Financial strength rating to be confirmed with Fenwick Place upon reactivation of the placement.

• Stonebridge Indemnity Corp. — domiciled in Illinois. Stonebridge is a well-known excess market carrier with substantial experience in writing excess layers for public-company D&O programs. Financial strength rating to be confirmed.

• Commonwealth Omnivrel Insurance Ltd. — domiciled in Bermuda. Commonwealth Fidelity is a Bermuda-based excess insurer that is a common participant in IPO D&O towers, particularly in the higher excess layers. Financial strength rating to be confirmed.

Calderwood & Harkness recommends that the financial strength ratings of all three carriers be confirmed with Fenwick Place prior to the IPO closing, and that any carrier with a rating below A.M. Best "A-" (Excellent) or equivalent be replaced or supported by an additional carrier with a higher rating.

C. Side A DIC Strength

The non-rescindable, severability-enhanced Side A DIC coverage provided by the Meridian National primary policy is a strong and favorable feature that meets current best practices for IPO D&O programs. The DIC structure provides the following key benefits:

• Ensures that individual directors and officers retain personal liability protection even in scenarios involving corporate insolvency, policy rescission, or exhaustion of entity-level coverage;

• Provides first-dollar coverage for non-indemnifiable claims without the application of any corporate retention;

• Includes robu

D&O Insurance — Side A Difference-in-Conditions (DIC) Policy Summary
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Purpose: This memorandum provides a summary and analysis of the Meridian National Assurance Company primary directors' and officers' liability insurance policy, with particular focus on the non-rescindable Side A difference-in-conditions (DIC) coverage, prepared in connection with the proposed initial public offering of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"). This analysis is based on a review of policy forms and placement documentation provided by Dravello Place Insurance Advisors LLC (Nina Radcliffe, Vice President) and has been coordinated with CBR's General Counsel, Sandra Haverford. All capitalized terms not otherwise defined herein have the meanings ascribed to them in the applicable policy forms.
I. Executive Summary
Calloway-Briggs Renewables Inc. has procured a comprehensive directors' and officers' liability insurance program in anticipation of its proposed initial public offering of common stock on the New York Stock Exchange (proposed ticker symbol: CBRI), with an expected offering size of approximately $600,000,000. The establishment of a robust D&O insurance program is a fundamental component of IPO readiness, providing essential personal liability protection to the Company's directors and officers as CBR transitions to public-company status and becomes subject to the heightened litigation risks attendant to the federal securities laws and public-company governance obligations.
The D&O insurance tower consists of three layers — a primary policy and two excess layers — aggregating $50,000,000 in total available coverage, with a combined annual premium of approximately $1,870,000 across all layers. The primary policy has been issued by Meridian National Assurance Company under Policy No. DNO-22-048871, and it includes a critically important non-rescindable Side A difference-in-conditions (DIC) coverage feature. The two excess layers are written by Stonebridge Indemnity Corp. (first excess, $15,000,000) and Commonwealth Omnivrel Insurance Ltd. (second excess, $10,000,000), each on a follow-form basis.
This memorandum summarizes the key terms and conditions of the primary policy, with particular emphasis on the Side A DIC feature, and provides an assessment of the program's adequacy in the context of the proposed IPO. The policy forms and placement documentation were provided to Calderwood & Harkness by Dravello Place Insurance Advisors LLC (Nina Radcliffe, Vice President) and have been reviewed in coordination with Sandra Haverford, General Counsel and Corporate Secretary of CBR. The analysis herein is intended to assist the IPO working group in evaluating the D&O program's readiness for the public offering and to identify any areas requiring further attention or modification prior to the IPO closing.
II. D&O Insurance Tower Overview
A. Tower Structure
The following table summarizes the structure of the D&O insurance tower as currently placed:
The primary layer, written by Meridian National, serves as the lead policy and establishes the coverage terms, conditions, definitions, and exclusions that govern the program. The two excess layers are written on a follow-form basis, meaning they incorporate by reference the terms and conditions of the Meridian National primary policy, subject to any specific modifications or additional terms set forth in the respective excess policy forms. This follow-form structure provides consistency across the tower and simplifies coverage analysis in the event of a claim.
B. Key Commercial Terms
The following summarizes the key commercial terms applicable to the D&O insurance program:
Policy Number (Primary): DNO-22-048871
Named Insured: Calloway-Briggs Renewables Inc. and all subsidiaries (as defined in the policy). The definition of "subsidiary" generally includes any entity in which CBR holds, directly or indirectly, more than 50% of the outstanding voting securities or equivalent ownership interests. This definition should be reviewed in connection with CBR's joint venture structures and any minority-owned project entities to confirm the scope of subsidiary coverage.
Policy Period: Twelve months from the binding date, which is to be coordinated with the anticipated closing date of the IPO. Calderwood & Harkness recommends that the policy inception date be set no later than the date the registration statement on Form S-1 is first filed with the Securities and Exchange Commission, in order to ensure coverage is in place during the offering period, and that the policy period be confirmed to align precisely with the IPO closing timeline once a definitive schedule is established.
Annual Aggregate Premium (Full Tower): $1,870,000, allocated among the three carriers as follows:
• Meridian National Assurance Company (primary): approximately $1,120,000
• Stonebridge Indemnity Corp. (excess Layer 1): approximately $470,000
• Commonwealth Omnivrel Insurance Ltd. (excess Layer 2): approximately $280,000
These premium allocations are estimated based on the placement summary provided by Fenwick Place and are subject to confirmation on the final binder. Premium allocations among layers are typical for a D&O tower of this configuration, with the primary carrier commanding the largest share of the total premium given the greater frequency of claims within the primary layer attachment.
Retention (Company Reimbursable Claims — Sides B and C): $1,000,000 per claim. This retention functions as a corporate self-insured retention (SIR) and applies to all claims covered under Side B (company reimbursement) and Side C (entity securities claims). The retention amount is subject to final confirmation on the binder. A $1,000,000 retention is generally consistent with market standards for companies of CBR's size and risk profile, and it is designed to align the Company's interests with those of the insurer by requiring the Company to bear the initial costs of each claim.
Retention (Side A — Non-Indemnifiable Claims): $0. No retention applies to claims covered under Side A. This is a critical feature of the policy: when the Company has not indemnified and is not permitted or required to indemnify a director or officer, the Side A coverage responds on a first-dollar basis without any deductible or self-insured retention. This ensures that individual directors and officers are not required to bear any out-of-pocket costs before insurance coverage is triggered in non-indemnifiable claim scenarios.
Broker of Record: Dravello Place Insurance Advisors LLC, 250 Greenwich Street, Suite 3700, New York, NY 10007. Contact: Nina Radcliffe, Vice President. Fenwick Place has served as the insurance broker for the D&O placement and has coordinated the structuring of the tower, the solicitation of carrier quotations, and the negotiation of policy terms. All communications with the carriers regarding the D&O program should be directed through Fenwick Place.
III. Insuring Agreements — Primary Policy (Meridian National)
The Meridian National primary policy contains three principal insuring agreements, commonly referred to as Side A, Side B, and Side C coverage. Each insuring agreement addresses a distinct coverage need and operates subject to its own terms, conditions, and retention structure. The following summarizes each insuring agreement in detail.
A. Side A Coverage — Individual Directors and Officers (Non-Indemnifiable Loss)
Side A coverage is the most critical component of the D&O insurance program from the perspective of individual directors and officers. Under the Side A insuring agreement, Meridian National agrees to pay, on behalf of any insured person, loss arising from claims first made against such insured person during the policy period for wrongful acts, but only to the extent that the Company has not indemnified and is not permitted or required to indemnify the insured person for such loss. This coverage is designed to respond in circumstances where the Company's corporate indemnification — the first line of defense for individual directors and officers — is unavailable.
The situations in which Side A coverage is triggered generally fall into several categories. First, Side A responds where indemnification is legally prohibited under applicable law. Under the Delaware General Corporation Law ("DGCL"), for example, a corporation may not indemnify a director against liability arising from a breach of the duty of loyalty unless the director acted in good faith and in a manner reasonably believed to be in the best interests of the corporation. Certain claims, if ultimately adjudicated adversely, may fall outside the scope of permissible indemnification, leaving the individual director or officer personally exposed absent Side A insurance coverage. Second, Side A responds where the Company is financially unable to indemnify, most notably in scenarios involving corporate insolvency or bankruptcy proceedings. If CBR were to enter Chapter 11 or Chapter 7 proceedings, the automatic stay and the constraints of the bankruptcy estate would likely prevent the Company from making indemnification payments to its directors and officers, and Side A would fill this critical gap. Third, Side A responds in any other circumstance where the Company has simply not provided indemnification, regardless of the reason.
No corporate retention applies to Side A claims. Coverage drops down to first dollar, meaning that individual directors and officers need not satisfy any deductible or self-insured retention before the insurer's obligations are triggered. This first-dollar coverage feature is of paramount importance to directors and officers, particularly those serving as independent directors or as designees of pre-IPO investors such as Pinnacle Vista, who rely on the D&O insurance program as a primary element of their personal liability protection.
Side A coverage is particularly critical in the post-IPO context. Upon becoming a publicly traded company, CBR will be subject to significantly heightened securities-class-action exposure, including potential claims under Section 11 of the Securities Act of 1933, Section 12 of the Securities Act, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934. Directors and officers named in such actions face the prospect of personal liability for damages that may be substantial, and the availability of robust Side A coverage is frequently cited by prospective independent directors as a prerequisite to agreeing to serve on the board of a newly public company.
B. Side B Coverage — Company Reimbursement
Under the Side B insuring agreement, Meridian National agrees to reimburse the Company for loss that the Company pays to indemnify an insured person for claims first made against such insured person during the policy period for wrongful acts. Side B coverage thus operates as a reimbursement mechanism: when a director or officer incurs covered loss and the Company fulfills its indemnification obligations by advancing or paying such loss, the insurer reimburses the Company for those payments.
Side B coverage is subject to the per-claim corporate retention of $1,000,000. The Company must absorb the first $1,000,000 of each claim before the insurer's reimbursement obligation is triggered. This retention aligns the Company's interests with those of the insurer and reflects the principle that the Company's own indemnification obligations constitute the primary layer of protection for individual directors and officers, with insurance serving as a supplemental source of funding.
The Company's indemnification obligations arise under multiple sources, including the following:
(a) The Amended and Restated Certificate of Incorporation of CBR (IPO form), which contains indemnification provisions consistent with Section 145 of the DGCL, providing for indemnification of directors and officers to the fullest extent permitted by Delaware law;
(b) The Amended and Restated Bylaws of CBR (IPO form), which include supplementary indemnification and mandatory advancement of expenses provisions;
(c) Individual indemnification agreements executed between CBR and each of its directors and executive officers, providing contractual rights to indemnification and advancement of expenses that supplement and, in certain respects, expand upon the protections available under the charter and bylaws.
As of the date of this memorandum, CBR has executed or is in the process of executing individual indemnification agreements with each of its seven directors — Garrett Calloway (Chairman and Chief Executive Officer), Elaine Briggs (President, Development), Hugh Pemberton (Pinnacle Vista designee), Diane Kovac (Pinnacle Vista designee), Warren Okoro (Independent Director), Catherine Liang (Independent Director), and Richard Estavez (Independent Director) — and each of its six named executive officers — Marcus Yoon (Chief Financial Officer), Sandra Haverford (General Counsel and Corporate Secretary), Dale Renfroe (Chief Operating Officer), Priya Anand (Senior Vice President, Finance and Treasurer), Tomás Quintero (Senior Vice President, Project Development), and Rachel Whitmore (Chief People Officer). The status of execution of these agreements is tracked separately in the Indemnification Agreement — Schedule of Executed Agreements maintained by Calderwood & Harkness.
C. Side C Coverage — Entity Securities Claims
Under the Side C insuring agreement, Meridian National agrees to pay, on behalf of the Company, loss arising from securities claims first made against the Company during the policy period. Side C coverage is distinct from Sides A and B in that it protects the Company itself as an entity, rather than individual directors and officers.
Side C coverage is limited in scope to claims alleging violations of securities laws. This limitation reflects the D&O insurance market's standard approach of restricting entity-level coverage to securities-related liability, which represents the primary litigation risk to the corporate entity in the public-company context. Specifically, Side C covers claims brought against CBR alleging violations of the Securities Act of 1933 (including Section 11 and Section 12 claims arising from misstatements or omissions in registration statements and prospectuses), the Securities Exchange Act of 1934 (including Rule 10b-5 claims alleging securities fraud in connection with the purchase or sale of securities), and the rules and regulations promulgated thereunder.
Side C coverage is subject to the same per-claim corporate retention of $1,000,000 applicable to Side B. In the context of the proposed IPO, Side C coverage is of particular relevance, as CBR will become subject to potential Section 11 liability as the issuer of securities offered pursuant to the registration statement. In a typical IPO-related securities class action, claims are brought against both the issuer (covered under Side C) and the individual directors and officers who signed the registration statement (covered under Sides A and B), and the D&O policy must respond to both categories of claims from the shared policy limits.
IV. Side A Difference-in-Conditions (DIC) Feature — Detailed Analysis
A. Overview and Purpose of the DIC
The Meridian National primary policy includes an embedded Side A DIC endorsement, which is one of the most significant features of the D&O insurance program from the perspective of individual directors and officers. The DIC endorsement enhances the Side A coverage by providing two critical protections: first, non-rescindability of the Side A coverage by the insurer; and second, drop-down coverage in circumstances where the underlying D&O policy (Sides B and C) has been rescinded, exhausted by other claims, or is otherwise unavailable.
The purpose of the Side A DIC feature is to ensure that individual directors and officers retain meaningful personal liability protection even in worst-case corporate scenarios — scenarios in which the Company's indemnification obligations cannot be fulfilled, the broader D&O policy has been impaired, or the insurer has taken adverse coverage positions with respect to entity-level claims. The DIC feature reflects the fundamental principle that Side A coverage exists for the personal benefit of individual directors and officers, and should not be undermined by actions of the Company, disputes between the Company and the insurer, or circumstances beyond the control of the individual insureds.
The inclusion of a non-rescindable Side A DIC feature in the primary policy is consistent with current best practices for public-company D&O insurance programs and is widely regarded as a minimum expectation for IPO-class placements. The presence of this feature will provide significant comfort to CBR's board members — particularly the independent directors (Warren Okoro, Catherine Liang, and Richard Estavez) and the Pinnacle Vista designees (Hugh Pemberton and Diane Kovac) — in their decision to serve on the board of a publicly traded company.
B. Non-Rescindability Provision
The non-rescindability provision is the cornerstone of the DIC endorsement. Under this provision, Meridian National expressly and irrevocably waives any right to rescind, void, or cancel the Side A coverage for any reason whatsoever. This waiver applies regardless of any misrepresentation, non-disclosure, or breach of warranty in the policy application by the Company or its representatives, and it remains in effect notwithstanding any fraud, intentional misconduct, or other wrongdoing by the Company or any individual insured in connection with the procurement of the policy.
Specifically, the insurer's waiver of rescission rights encompasses, without limitation, the following:
(a) Material Misrepresentation in the Policy Application. Even if the Company made materially false or misleading statements in the D&O insurance application — including in the warranty letter, the financial statements provided to the insurer, or any other information furnished in connection with the placement — the insurer cannot rescind or void the Side A coverage.
(b) Failure to Disclose Material Information. Even if the Company failed to disclose material facts that would have affected the insurer's underwriting decision, including pending or threatened litigation, regulatory investigations, known financial irregularities, or other material adverse developments, the insurer cannot rescind or void the Side A coverage.
(c) Breach of Policy Conditions or Warranties. Even if the Company breached a policy condition, warranty, or covenant — including notice requirements, cooperation obligations, or other policy terms — the insurer cannot rescind or void the Side A coverage as to individual insured persons.
It is essential to emphasize that the non-rescindability protection applies solely to Side A coverage. Sides B and C remain subject to the insurer's standard rescission rights and policy conditions. This means that if Meridian National were to discover, for example, that CBR's management had made material misrepresentations in the D&O application, the insurer could potentially rescind the Sides B and C coverage (thereby eliminating the Company's right to reimbursement and the entity's securities-claims coverage), but the insurer would be contractually barred from rescinding the Side A coverage that protects individual directors and officers.
This asymmetry is by design and reflects the fundamental purpose of the DIC structure. The individuals who serve as directors and officers of CBR — many of whom may not have been personally involved in the preparation of the insurance application or aware of any alleged misrepresentations — should not lose their personal liability coverage as a consequence of corporate misconduct or errors in the application process. The non-rescindability provision ensures that innocent directors and officers retain their Side A protection in precisely the circumstances where they are most likely to need it.
C. DIC Drop-Down Triggers
The Side A DIC coverage includes provisions that cause it to "drop down" — that is, to respond as primary, first-dollar coverage — in a number of specified circumstances. These drop-down triggers represent the situations in which the standard Side A coverage may be insufficient or unavailable, and in which the DIC enhancement provides additional protection to individual insureds. The principal drop-down triggers are as follows:
1. Insolvency or Bankruptcy of the Company. If CBR becomes unable to indemnify its directors and officers due to the commencement of bankruptcy or insolvency proceedings — whether under Chapter 7 or Chapter 11 of the United States Bankruptcy Code, or under analogous state or foreign insolvency laws — the Side A DIC coverage responds without regard to the corporate retention and without any requirement that the Company first attempt to indemnify. This trigger is critically important because corporate insolvency often coincides with the very events (financial restatements, disclosure failures, fraud allegations) that give rise to D&O claims. In the insolvency scenario, the Company's indemnification obligations become effectively worthless, and the Side A DIC ensures that individual directors and officers are not left without coverage at the moment of greatest personal exposure.
2. Exhaustion of the Underlying Coverage. If the limits available under Sides B and C are exhausted by payments on other claims, the Side A DIC coverage continues to provide protection for non-indemnifiable loss up to the remaining available limit of the Side A coverage. This trigger addresses the scenario in which a large entity-level securities claim consumes the policy's aggregate limits, potentially leaving no remaining coverage for individual directors and officers who are separately named as defendants. The DIC's drop-down feature ensures that Side A claims are not subordinated to Side B and C claims in the allocation of policy limits.
3. Rescission or Voiding of the Underlying Policy. If Meridian National exercises its rescission rights with respect to Sides B and C — for example, due to a determination that the Company made material misrepresentations in the insurance application — the Side A DIC coverage remains in full force and effect for individual insured persons. As discussed in Section IV.B above, the non-rescindability provision prevents the insurer from rescinding Side A coverage, and the drop-down trigger ensures that the Side A DIC responds as primary coverage in the event of such a rescission. This is frequently regarded as the most valuable aspect of the DIC feature, as it addresses the scenario that is most catastrophic for individual directors and officers: a situation in which the Company has engaged in misconduct that vitiates the insurance policy, and the individuals who may have had no involvement in or knowledge of such misconduct are left personally exposed.
4. Refusal to Indemnify. If the Company is legally permitted to indemnify a director or officer but refuses or fails to do so, the Side A DIC may respond to provide coverage for the individual insured. This trigger addresses the gap scenario in which the Company has the legal authority and financial capacity to indemnify but, for whatever reason — a change in management, a dispute with the director, a cost-driven decision, or simple corporate inaction — does not in fact provide indemnification. The scope of this trigger is subject to important policy-wording considerations regarding the distinction between corporate "inability" and corporate "refusal" to indemnify, which are discussed in further detail in Section IV.E below.
5. Coverage Gap from Other Policy Exclusions. If a specific exclusion in the policy applies to a Side B or Side C claim but the corresponding exclusion does not apply to the Side A claim (or no corresponding Side A exclusion exists), the DIC feature allows the Side A coverage to respond for the benefit of the individual insured. This trigger reflects the structural asymmetry discussed in Section VII.B below, in which certain exclusions are applied only to entity-level coverage (Sides B and C) and not to individual coverage (Side A).
D. Side A DIC Sub-Limit and Aggregate
The Side A DIC coverage shares the full primary policy limit of $25,000,000 per policy period. Importantly, the Side A DIC is not subject to a separate, reduced sub-limit — a feature that is sometimes seen in less favorable policy forms and that would limit the practical value of the DIC enhancement. Under the Meridian National policy, the entire $25,000,000 primary limit is available for Side A DIC claims, subject to the aggregate nature of the limit and to any reductions resulting from other payments made under the policy during the policy period.
Furthermore, the two excess layers in the D&O tower — Stonebridge Indemnity Corp. (Layer 1, $15,000,000) and Commonwealth Omnivrel Insurance Ltd. (Layer 2, $10,000,000) — are written on a follow-form basis to the Meridian National primary policy, including its Side A coverage terms. This means that the full $50,000,000 tower is potentially available for Side A claims, subject to the specific terms and conditions of each excess policy. Calderwood & Harkness has reviewed the excess policy forms and confirmed that each excess layer follows form to the primary policy's Side A insuring agreement, though each excess policy should be separately analyzed in the event of a claim to confirm the applicability of the follow-form provisions.
E. Key Interpretive Considerations
Several interpretive issues arise from the policy language governing the Side A DIC feature, and these merit careful consideration in the context of the IPO:
"Unable" vs. "Unwilling" to Indemnify. The policy language regarding the trigger for Side A coverage uses the formulation "not indemnified" and references situations where the Company "has not indemnified and is not permitted or required to indemnify" the insured person. Calderwood & Harkness's reading of this language is that it is sufficiently broad to cover both situations where the Company is legally unable to indemnify (e.g., because Delaware law prohibits indemnification, because the Company is in bankruptcy, or because indemnification would violate a court order) and situations where the Company has simply not in fact provided indemnification to the individual insured, regardless of whether the failure to indemnify is attributable to inability, unwillingness, or any other reason.
However, certain provisions in the policy — including the DIC drop-down trigger for "refusal to indemnify" discussed in Section IV.C.4 — may distinguish between corporate "inability" and corporate "refusal," and the insurer could potentially argue that the standard Side A trigger is limited to situations of legal inability, while the DIC drop-down for refusal addresses a separate category of circumstances. This distinction, while unlikely to be litigated in the ordinary course, should be monitored in the context of CBR's indemnification agreements and charter provisions, which impose mandatory indemnification and advancement obligations on the Company and thereby reduce (but do not eliminate) the risk of a "refusal" scenario. We recommend that this issue be flagged for the attention of CBR's General Counsel in connection with any future indemnification disputes.
Severability of Application. The DIC endorsement includes a severability clause providing that the application statements of each insured person are severed from those of every other insured person and from those of the Company. Under this clause, no statement made by, or knowledge of, one insured person is imputed to another insured person for purposes of determining the availability of Side A coverage. This severability provision is critically important because it ensures that an innocent director or officer — one who had no knowledge of any misrepresentation in the insurance application — is not penalized by the statements or knowledge of a co-insured or of the Company. The severability clause operates in tandem with the non-rescindability provision to provide a robust protective framework for individual insureds.
Priority of Payment / Order of Coverage. In the event of concurrent claims that implicate both Side A and Sides B/C — for example, a securities class action naming both CBR as an entity (Side C) and its directors and officers individually (Side A/B) — the policy provides that Side A claims take priority in the allocation of policy limits. This "priority of payments" provision is highly favorable to individual insureds because it ensures that payments to or on behalf of individual directors and officers are made before the policy limits are consumed by entity-level claims. In the absence of a priority-of-payments provision, individual insureds could face the risk that the entity's claim payments would exhaust the available limits, leaving no remaining coverage for their personal defense costs or liabilities. The inclusion of this provision in the Meridian National policy is consistent with best practices and represents a meaningful protection for the CBR board.
V. Definition of Insured Persons
The policy defines "Insured Persons" broadly to encompass the following categories of individuals:
Directors. All natural persons who have been, are, or shall become duly elected or appointed members of the board of directors of CBR or of any subsidiary during the policy period are covered as insured persons under the policy. This definition is prospective and retroactive in scope — it covers individuals who served as directors prior to the policy inception (for claims arising from their tenure), individuals who are currently serving as directors, and individuals who are appointed or elected to the board during the policy period.
The current board of directors of CBR consists of seven members:
• Garrett Calloway — Chairman of the Board and Chief Executive Officer
• Elaine Briggs — President, Development
• Hugh Pemberton — Pinnacle Vista designee
• Diane Kovac — Pinnacle Vista designee
• Warren Okoro — Independent Director
• Catherine Liang — Independent Director
• Richard Estavez — Independent Director
Officers. All natural persons who have been, are, or shall become duly elected or appointed officers of CBR or of any subsidiary during the policy period are covered as insured persons, including all executive officers as defined under the federal securities laws. The key officers of CBR include:
• Marcus Yoon — Chief Financial Officer
• Sandra Haverford — General Counsel and Corporate Secretary
• Dale Renfroe — Chief Operating Officer
• Priya Anand — Senior Vice President, Finance and Treasurer
• Tomás Quintero — Senior Vice President, Project Development
• Rachel Whitmore — Chief People Officer
Automatic Coverage for New Directors and Officers. The policy extends automatically to any person who becomes a director or officer of CBR or any subsidiary during the policy period, without the need for an endorsement, notification to the insurer, or payment of additional premium. This automatic coverage feature is important in the IPO context, as the Company may appoint additional independent directors or executive officers in connection with the public offering or in the period immediately following the IPO closing.
Former Directors and Officers. The policy extends coverage to former directors and officers for claims arising from wrongful acts committed during their tenure with CBR or any subsidiary. This retrospective coverage ensures that individuals who have departed from the Company — whether through retirement, resignation, removal, or any other reason — retain the benefit of D&O insurance protection for claims that relate to their prior service.
VI. Definition of Loss
The policy defines "Loss" to include the following categories of covered amounts:
(a) Defense costs, including attorneys' fees, expert witness fees, and other costs and expenses incurred in the investigation, defense, or appeal of a covered claim;
(b) Judgments and awards entered against an insured person or the Company in connection with a covered claim;
(c) Settlements, including amounts paid to resolve or settle a covered claim with the consent of the insurer (which consent is not to be unreasonably withheld);
(d) Pre-judgment and post-judgment interest on any covered judgment or award.
The definition of Loss is subject to several important exclusions and limitations. Specifically, Loss does not include:
(a) Criminal or civil fines or penalties imposed by law, except to the extent that such fines or penalties are insurable under applicable law. Under Delaware law, the insurability of fines and penalties is not entirely settled, but the weight of authority suggests that certain categories of fines (particularly those imposed on a strict-liability or negligence basis, as opposed to those arising from intentional misconduct) may be insurable. This issue should be evaluated on a case-by-case basis in connection with any specific claim.
(b) Taxes, including any tax liability arising from the insured's personal tax obligations or from the Company's tax positions.
(c) Amounts deemed uninsurable as a matter of public policy, which may include, under certain circumstances, punitive damages (the insurability of which varies by jurisdiction).
(d) Matters that are restitutionary or disgorgement in nature, subject to the operation of the "most favorable jurisdiction" clause described below.
Most Favorable Jurisdiction Clause. The policy includes a "most favorable jurisdiction" provision, which provides that the question of whether a particular type of loss (including settlements, fines, penalties, and disgorgement amounts) constitutes insurable loss shall be determined under the law of the jurisdiction that is most favorable to the insurability of such loss. This provision is significant because the insurability of certain categories of loss — particularly disgorgement, restitution, and punitive damages — varies substantially across jurisdictions. By applying the most favorable jurisdictional law, the policy maximizes the scope of covered loss and provides the broadest possible protection to insured persons. Calderwood & Harkness views this clause as a meaningful enhancement to the policy's coverage scope.
Defense Costs Advancement. The policy provides for the advancement of defense costs on a current basis, as such costs are incurred by the insured person or the Company. This advancement obligation requires the insurer to fund defense costs contemporaneously with the insured's obligation to pay such costs, rather than on a reimbursement basis after the conclusion of the claim. The advancement of defense costs is subject to a repayment undertaking by the insured: if it is ultimately determined, by final adjudication or otherwise, that the insured is not entitled to coverage under the policy, the insured agrees to repay the advanced defense costs to the insurer. The defense-costs-advancement provision is a critical feature of the policy, as the costs of defending a securities class action or regulatory investigation can be substantial — often exceeding tens of millions of dollars — and the ability to access insurance-funded defense costs on a current basis is essential to ensuring that insured persons can mount an effective defense.
VII. Key Exclusions — Primary Policy
A. Standard Exclusions (Applicable to All Insuring Agreements)
The policy contains several standard exclusions that apply to all three insuring agreements (Sides A, B, and C). These exclusions are consistent with market-standard D&O policy forms and include the following:
1. Conduct Exclusions. The policy excludes claims arising from deliberately dishonest, fraudulent, or criminal acts by an insured person, or from the gaining of any personal profit or advantage to which the insured person was not legally entitled. This exclusion is subject to an important limitation: it applies only if the excluded conduct is established by a final, non-appealable adjudication in the underlying proceeding (or in a separate proceeding). The "final adjudication" standard is the most favorable standard available to insured persons and means that the conduct exclusion cannot be invoked by the insurer based merely on allegations in a complaint, interim court findings, or preliminary rulings. Until a final, non-appealable adjudication is entered, the insurer must continue to provide coverage, including the advancement of defense costs.
2. Prior/Pending Litigation Exclusion. The policy excludes claims arising from or related to litigation, regulatory proceedings, or other proceedings that were pending as of the policy's retroactive date or that were known to the insured prior to the policy inception date. This exclusion is designed to prevent the insured from obtaining coverage for pre-existing liabilities and is standard in claims-made D&O policies. The retroactive date and the scope of the prior-knowledge inquiry should be confirmed on the final binder.
3. Insured vs. Insured Exclusion. The policy excludes claims brought by one insured person against another insured person, or by the Company against an insured person. This exclusion is intended to prevent collusive claims within the insured organization. However, the exclusion is subject to customary carve-outs that preserve coverage for shareholder derivative actions (which are technically brought by or on behalf of the Company against its directors and officers), whistleblower claims brought by insured persons acting in a whistleblower capacity, and employment-related claims (such as wrongful termination actions) brought by insured persons in their capacity as employees. These carve-outs are important to ensure that the exclusion does not inadvertently bar coverage for legitimate claims.
4. Professional Services / Pollution Exclusion. The policy excludes claims for bodily injury, property damage, and pollution-related liabilities. This exclusion reflects the standard D&O insurance principle that physical-injury and environmental claims are properly addressed by other insurance products (such as commercial general liability, environmental liability, and professional liability policies). Given CBR's operations in the renewable-energy sector and its environmental profile, this exclusion should be reviewed in coordination with the environmental assessments prepared by Greenridge Environmental Sciences LLC to confirm that any D&O-related environmental exposure is adequately addressed either within the D&O policy's scope or by separate environmental liability coverage.
5. ERISA / Benefits Exclusion. The policy excludes claims arising from the administration of employee benefit plans, including claims under the Employee Retirement Income Security Act of 1974 ("ERISA"). Liability related to employee benefit plan administration is typically addressed by fiduciary liability insurance, which is a separate product from D&O insurance. CBR should ensure that a fiduciary liability insurance policy is in place to cover claims arising from the administration of its 401(k) plan and any other employee benefit plans.
B. Exclusions Applicable Only to Sides B and C (Not Applicable to Side A)
A key structural feature of the policy — and one that is directly tied to the Side A DIC architecture — is the asymmetry in the application of certain exclusions. Specifically, certain exclusions in the policy apply only to Sides B and C (company reimbursement and entity securities claims coverage) and do not apply to Side A (individual coverage for non-indemnifiable loss). This asymmetry ensures that individual directors and officers retain broader coverage under Side A than the Company retains under Sides B and C. The exclusions applicable only to Sides B and C include:
(a) Contractual Liability Exclusion (Side B/C Only). Claims arising from breach of contract or from the assumption of another party's liability under a contract may be excluded under Sides B and C but remain covered under Side A to the extent they constitute claims for wrongful acts against individual insured persons.
(b) Certain Regulatory-Proceeding Exclusions (Side B/C Only). Certain categories of regulatory proceedings or investigations may be excluded from Sides B and C coverage but remain covered under Side A. The specific scope of these exclusions should be reviewed on a claim-by-claim basis in coordination with Fenwick Place and the applicable carrier.
This structural asymmetry is a fundamental component of the Side A DIC design. It ensures that even when the entity-level coverage is excluded for a particular claim, individual directors and officers may still access Side A coverage for the same underlying facts. The DIC drop-down feature (discussed in Section IV.C.5) operates in conjunction with this asymmetry to provide the broadest possible protection to individual insureds.
C. Exclusion Carve-Outs Favorable to Insureds
Several important carve-outs and limitations on the policy's exclusions operate to the benefit of insured persons:
Final Adjudication Standard. As noted in Section VII.A.1, the conduct exclusions (fraud, dishonesty, personal profit) apply only upon a final, non-appealable adjudication. This is the most favorable standard in the D&O insurance market and provides significant protection to insured persons during the pendency of litigation or regulatory proceedings.
Severability of Exclusions. The wrongful conduct of one insured person is not imputed to another insured person for purposes of applying the conduct exclusions. This severability principle means that the fraud or dishonesty of one director or officer cannot be used by the insurer to deny coverage to other directors or officers who are not themselves guilty of the excluded conduct. The severability of exclusions operates in concert with the severability of the application (discussed in Section IV.E) to provide layered protection for innocent insureds.
Defense Costs Pending Adjudication. Even if a conduct exclusion may ultimately apply to a claim — for example, if it is later determined by final adjudication that the insured person committed fraud — the insurer is obligated to advance defense costs until the final adjudication is entered. This provision ensures that insured persons have access to insurance-funded defense during the potentially lengthy period of litigation, during which the applicability of the conduct exclusion remains unresolved.
VIII. Claims-Made and Reporting Provisions
Claims-Made Basis. The policy is written on a claims-made basis, which means that coverage is triggered by claims that are first made against insured persons during the policy period (or during any applicable extended reporting period). This is the standard coverage trigger for D&O insurance and differs from the occurrence-based trigger used in many other lines of insurance. Under a claims-made policy, the relevant date is the date on which the claim is first asserted against the insured, not the date on which the underlying wrongful act occurred. This distinction has important implications for coverage continuity and the timing of policy procurement.
Retroactive Date. The policy includes a retroactive date, which serves as the earliest date for which wrongful acts are covered. Claims arising from wrongful acts that occurred prior to the retroactive date are not covered, even if the claim is first made during the policy period. The retroactive date for the Meridian National policy is expected to be set at the inception date of the first D&O policy in the continuous program, which will be coordinated with the IPO closing date. The specific retroactive date should be confirmed on the final binder, and Calderwood & Harkness recommends that the retroactive date be set as early as practicable — ideally at or before the date of the Company's initial formation or the earliest date of any pre-IPO director or officer service — to ensure that the broadest possible temporal scope of coverage is available.
Extended Reporting Period (Tail). The policy includes provisions for extended reporting periods following the expiration or non-renewal of the policy:
(a) Automatic Extended Reporting Period. Upon the expiration or non-renewal of the policy, the insured receives an automatic extended reporting period of sixty (60) days at no additional premium. During this period, the insured may report claims that are first made during the extended reporting period, provided that such claims arise from wrongful acts that occurred prior to the policy expiration date.
(b) Optional Extended Reporting Period. In the event of non-renewal by the insurer (as opposed to non-renewal by the insured), the insured has the option to purchase an extended reporting period of up to six (6) years at a premium of up to 200% of the expiring annual premium. This optional "tail" provision allows the insured to maintain coverage continuity for an extended period following the expiration of the policy, which is particularly important in the D&O context given the lengthy statutes of limitations and repose applicable to securities claims (e.g., three years from the date of the offering under Section 13 of the Securities Act of 1933, and five years under Section 10(b) of the Securities Exchange Act of 1934 as measured from the date of the violation).
The tail provision is of critical importance in several IPO-related contexts. First, it provides a mechanism for protecting pre-IPO directors and officers for claims arising from pre-IPO conduct in the event that the D&O policy is not renewed or is replaced after the IPO. Second, it is relevant to board transitions — including the eventual exit by Pinnacle Vista from the CBR board — by ensuring that departing directors retain coverage for pre-departure wrongful acts. Third, it addresses the scenario in which a change of control occurs (discussed in Section IX below), as a change of control may convert the policy to run-off status and necessitate the purchase of tail coverage.
IX. Change of Control and Merger / Acquisition Provisions
Change of Control Definition. The policy defines a "change of control" as generally occurring upon (a) the acquisition by any person, entity, or group of persons acting in concert of more than 50% of the outstanding voting power of CBR, or (b) a merger, consolidation, amalgamation, or similar transaction involving CBR that results in a change in the composition of a majority of CBR's board of directors.
Impact of Change of Control. Upon the occurrence of a change of control, the policy automatically converts to "run-off" coverage for the remainder of the policy period. Under run-off coverage, the policy covers only claims arising from wrongful acts that occurred prior to the effective date of the change of control. No coverage is available for wrongful acts occurring after the change of control, and no new wrongful acts coverage is provided for the post-change-of-control period. The policy effectively freezes in place as of the change-of-control date and serves only as historical coverage for pre-existing exposure.
Relevance to the IPO. The proposed IPO itself is not expected to constitute a change of control under the policy. Pinnacle Vista, which currently holds approximately 62% of CBR's outstanding equity on a pre-IPO basis, will retain a significant ownership position following the IPO. However, the projected post-IPO ownership structure presents a nuanced issue: depending on the size of the offering and the number of shares sold, Pinnacle Vista's post-IPO stake is expected to decline to approximately 49% on a base offering basis. If Pinnacle Vista's ownership falls below the 50% threshold specified in the change-of-control definition, the question arises whether the IPO has triggered a change of control.
Calderwood & Harkness's analysis is that the IPO should not trigger the change-of-control provision, for the following reasons:
(a) The relevant trigger under clause (a) of the definition is the "acquisition by any person or group" of more than 50% of voting power — which looks at the acquiror's holdings, not the dilution of an existing holder's position. No single person or group is acquiring a majority position in CBR in connection with the IPO; rather, shares are being sold to dispersed public investors who do not constitute a "group."
(b) Clause (b) of the definition, relating to a change in majority board composition, is not triggered because the Stockholders' Agreement (IPO form) preserves certain board designation rights for Pinnacle Vista, and the composition of the board is not expected to change materially in connection with the IPO closing. Pinnacle Vista will retain the right to designate two directors (Pemberton and Kovac) and the existing independent directors (Okoro, Liang, and Estavez) will continue in their positions.
Notwithstanding this analysis, the change-of-control provision should be monitored carefully in the post-IPO period, particularly in connection with any secondary offerings by Pinnacle Vista, any changes in board composition, or any future M&A activity involving CBR. Calderwood & Harkness recommends that Fenwick Place be consulted on the specific interaction between the policy's change-of-control definition and the post-IPO ownership and governance structure to confirm that no inadvertent trigger occurs.
Run-Off/Tail Considerations for IPO. In addition to the change-of-control analysis, Calderwood & Harkness recommends that the IPO working group discuss with Fenwick Place the need for tail or run-off coverage to protect pre-IPO directors and officers for conduct occurring prior to the IPO. If the IPO-era policy is not renewed at the end of its initial term, or if the policy is replaced by a new policy with a later retroactive date, pre-IPO directors and officers could face a gap in coverage for pre-IPO wrongful acts. A properly structured tail policy would close this gap and ensure continuity of coverage across the pre-IPO and post-IPO periods.
X. Subrogation and Allocation
A. Subrogation. The policy contains standard subrogation provisions entitling the insurer, upon making a payment under the policy, to be subrogated to the insured's rights of recovery against third parties responsible for the loss. This subrogation right is subject to two important limitations:
(a) No Subrogation Against Insured Persons. The insurer does not retain subrogation rights against insured persons to the extent of Side A payments. This means that if the insurer pays a Side A claim on behalf of an individual director or officer, the insurer cannot seek reimbursement from that individual (or from any other insured person) for the amounts paid.
(b) Waiver of Subrogation Against the Company. The insurer waives its subrogation rights against the Company in respect of Side A payments. This waiver prevents the insurer from seeking reimbursement from CBR for Side A claims paid on behalf of individual directors and officers. This is an important protection because, absent such a waiver, the insurer could potentially seek to recover Side A payments from the Company on the theory that the Company should have indemnified the individual insured — thereby shifting the economic burden of the claim back to the Company and undermining the purpose of the Side A coverage.
B. Allocation. The policy includes a pre-agreed allocation methodology to address claims that involve both covered and non-covered elements, or that are brought against both individual insured persons and the Company (or other non-insured parties). In a typical securities class action, for example, the complaint may assert claims against both the Company (covered under Side C) and individual directors and officers (covered under Sides A and B), and a global settlement may be reached that does not separately allocate the settlement amount between the entity and the individuals, or between covered and non-covered claims.
The policy's allocation provision establishes a framework for determining the portion of any settlement, judgment, or defense costs that is allocable to covered loss under the policy. This pre-agreed allocation methodology is designed to avoid the disputes that frequently arise between insurers and insureds regarding the proper allocation of a mixed settlement or a judgment that encompasses both covered and non-covered claims. By establishing the allocation framework in advance, the policy provides greater predictability and reduces the risk of coverage litigation.
In the event that the insurer and the insured are unable to agree on the proper allocation of a particular loss, the policy provides for resolution by a mutually agreed-upon independent third party. This dispute-resolution mechanism offers an efficient alternative to litigation and is consistent with market-standard allocation provisions in IPO-class D&O policies.
XI. Coordination with CBR's Indemnification Framework
The D&O insurance program operates within and is coordinated with CBR's broader indemnification framework, which consists of the following components:
Individual Indemnification Agreements. CBR has executed (or is in the process of executing) individual indemnification agreements with each of its directors and executive officers. These agreements provide contractual rights to indemnification and advancement of expenses to the fullest extent permitted by Delaware law, and they supplement the protections available under CBR's charter and bylaws. The individual indemnification agreements are particularly important because they provide contractual certainty that cannot be unilaterally modified by the Company (unlike charter or bylaw provisions, which can be amended by board or stockholder action). Each agreement obligates the Company to advance defense costs to the individual indemnitee on a current basis, subject to an undertaking to repay if it is ultimately determined that the indemnitee is not entitled to indemnification.
Amended and Restated Certificate of Incorporation (IPO Form). The Amended and Restated Certificate of Incorporation includes indemnification provisions consistent with Section 145 of the DGCL, providing for indemnification of directors and officers to the fullest extent permitted by Delaware law. The certificate also includes an exculpation provision pursuant to Section 102(b)(7) of the DGCL, which eliminates the personal liability of directors for monetary damages arising from breaches of the duty of care (subject to specified exceptions, including breaches of the duty of loyalty, acts or omissions not in good faith, and transactions from which the director derived an improper personal benefit).
Amended and Restated Bylaws (IPO Form). The Amended and Restated Bylaws include supplementary indemnification provisions that provide for mandatory indemnification and advancement of expenses to directors and officers, subject to the limitations of Delaware law. The bylaws also establish procedural mechanisms for the determination of indemnification rights and for the resolution of disputes regarding indemnification.
Interaction with D&O Insurance. The D&O policy operates as a backstop and complement to the corporate indemnification framework. In the ordinary course, when a director or officer incurs covered loss, the Company will fulfill its indemnification and advancement obligations under the charter, bylaws, and indemnification agreements, and the Side B insuring agreement will reimburse the Company for those payments (net of the corporate retention). Side A coverage operates as a safety net: it responds only when the corporate indemnification is unavailable, ensuring that directors and officers are not left without protection in the scenarios where they are most vulnerable.
The non-rescindable Side A DIC feature provides an additional and critical layer of protection within this framework. Even in scenarios where the Company's indemnification obligations become unenforceable, unfunded, or otherwise unavailable — whether due to insolvency, legal prohibition, corporate misconduct that vitiates the insurance policy, or simple corporate refusal — the Side A DIC ensures that individual directors and officers retain personal liability coverage. This protection is independent of and insulated from the Company's own circumstances, and it is this independence that makes the DIC feature the single most important element of the D&O insurance program from the perspective of individual insureds.
XII. Adequacy Assessment for IPO
A. Tower Size
The $50,000,000 aggregate D&O tower is within the range generally observed for mid-cap renewable-energy company IPOs, though it falls on the lower end of the spectrum for a company with a proposed post-money equity valuation of approximately $2.72 billion. Comparable renewable-energy IPOs in the 2021–2022 period generally maintained D&O insurance towers in the range of $50,000,000 to $100,000,000, with the size of the tower typically correlated to the company's market capitalization, the offering size, and the perceived litigation risk profile.
CBR's proposed offering size of $600,000,000, its operations in a sector that has attracted increasing regulatory and investor scrutiny, and the heightened securities-litigation environment for newly public companies all weigh in favor of evaluating whether the tower should be increased above $50,000,000. At the same time, the cost of additional coverage must be weighed against the incremental protection afforded, and the D&O insurance market has experienced significant pricing volatility in recent years. Calderwood & Harkness recommends that the tower size be reassessed upon reactivation of the IPO process, taking into account then-current market conditions, pricing, and the Company's updated risk profile.
B. Carrier Quality
The three carriers participating in the D&O tower are established and well-regarded participants in the D&O insurance market:
• Meridian National Assurance Company — domiciled in Connecticut. Meridian National is an established specialty D&O underwriter with a significant presence in the IPO D&O market. Financial strength rating to be confirmed with Fenwick Place upon reactivation of the placement.
• Stonebridge Indemnity Corp. — domiciled in Illinois. Stonebridge is a well-known excess market carrier with substantial experience in writing excess layers for public-company D&O programs. Financial strength rating to be confirmed.
• Commonwealth Omnivrel Insurance Ltd. — domiciled in Bermuda. Commonwealth Fidelity is a Bermuda-based excess insurer that is a common participant in IPO D&O towers, particularly in the higher excess layers. Financial strength rating to be confirmed.
Calderwood & Harkness recommends that the financial strength ratings of all three carriers be confirmed with Fenwick Place prior to the IPO closing, and that any carrier with a rating below A.M. Best "A-" (Excellent) or equivalent be replaced or supported by an additional carrier with a higher rating.
C. Side A DIC Strength
The non-rescindable, severability-enhanced Side A DIC coverage provided by the Meridian National primary policy is a strong and favorable feature that meets current best practices for IPO D&O programs. The DIC structure provides the following key benefits:
• Ensures that individual directors and officers retain personal liability protection even in scenarios involving corporate insolvency, policy rescission, or exhaustion of entity-level coverage;
• Provides first-dollar coverage for non-indemnifiable claims without the application of any corporate retention;
• Includes robu

D&O Insurance — Side A Difference-in-Conditions (DIC) Policy Summary

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