CONFIDENTIAL — ATTORNEY WORK PRODUCT — DRAFT — SUBJECT TO REVISION
CUSTODY AGREEMENT
Among
PINNACLE VISTA CAPITAL PARTNERS III, LP as Depositor
and
HARGROVE KEATING & CO. as Custodian
In connection with the proposed Initial Public Offering of Common Stock of CALLOWAY-BRIGGS RENEWABLES INC.
DRAFT — [●], 2022
This Agreement was never executed. The proposed offering was placed in dormant status on June 17, 2022.
C&H Matter No. 1015-00001
Prepared by: Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
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CUSTODY AGREEMENT
This CUSTODY AGREEMENT (this "Agreement") is entered into as of [●], 2022, by and between:
(1) PINNACLE VISTA CAPITAL PARTNERS III, LP, a Delaware limited partnership (the "Depositor" or the "Selling Stockholder"), acting by and through its general partner, Pinnacle Vista Capital Management LLC, a Delaware limited liability company, with principal offices at 900 Park Avenue, 38th Floor, New York, NY 10021; and
(2) HARGROVE KEATING & CO., a Delaware corporation and broker-dealer registered with the U.S. Securities and Exchange Commission (the "SEC"), and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"), with principal offices at 383 Madison Place, New York, NY 10017 (the "Custodian").
The Depositor and the Custodian are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a corporation duly organized and existing under the laws of the State of Delaware, with its principal executive offices at 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746, proposes to conduct an initial public offering (the "IPO") of its common stock, par value $0.01 per share (the "Common Stock"), on the New York Stock Exchange under the proposed ticker symbol "CBRI";
WHEREAS, the proposed aggregate offering size is approximately $600,000,000 (inclusive of the underwriters' overallotment option), representing approximately 27,272,727 shares of Common Stock at an assumed midpoint initial public offering price of $22.00 per share (consisting of approximately 23,713,636 shares in the base offering and an additional 3,559,091 shares subject to the underwriters' overallotment option);
WHEREAS, in connection with the IPO, the Depositor intends to sell secondary shares of Common Stock representing approximately $150,000,000 of the base offering (the "Secondary Shares"), which, at the assumed midpoint IPO price of $22.00 per share, consist of 6,818,182 shares of Common Stock ($150,000,000 ÷ $22.00);
WHEREAS, the offering will be conducted pursuant to a registration statement on Form S-1 (File No. 333-[●]), which has been filed confidentially with the SEC (CIK 0001948372), and an Underwriting Agreement (as defined herein) to be entered into among the Company, the Depositor, and the several underwriters named therein;
WHEREAS, Hargrove Keating & Co. is acting as the lead-left book-running manager and representative of the several underwriters in the IPO (the "Representative");
WHEREAS, the Depositor wishes to deposit the Secondary Shares with the Custodian, and the Custodian agrees to hold such shares in custody, during the Offering Period (as defined herein), subject to the terms and conditions set forth in this Agreement, to facilitate the orderly delivery and settlement of the Secondary Shares at the Closing (as defined herein);
WHEREAS, a Pricing Agreement (as defined herein) is expected to be entered into by and among the Company, the Depositor, and the Representative at or prior to the time of pricing of the IPO, which Pricing Agreement will specify the final public offering price per share, the number of shares to be sold (including the number of Secondary Shares), the underwriting discount, and the net proceeds payable to the Depositor; and
WHEREAS, the Depositor has executed, or will execute prior to the Closing, a Power of Attorney (the "Power of Attorney") appointing certain attorneys-in-fact to act on behalf of the Depositor in connection with the execution and delivery of the Underwriting Agreement, the Pricing Agreement, and the delivery of the Secondary Shares.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Underwriting Agreement.
Section 1.1. "Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in the City of New York are authorized or required by law, regulation, or executive order to remain closed.
Section 1.2. "Closing" means the closing of the purchase and sale of shares of Common Stock pursuant to the Underwriting Agreement, including the purchase and sale of the Secondary Shares by the Depositor to the several Underwriters.
Section 1.3. "Closing Date" means the date of the Closing, which is expected to be the second Business Day following the date of pricing of the IPO (i.e., T+2), or such other date as may be specified in the Underwriting Agreement or the Pricing Agreement.
Section 1.4. "Common Stock" means the common stock, par value $0.01 per share, of Calloway-Briggs Renewables Inc.
Section 1.5. "Company" means Calloway-Briggs Renewables Inc., a Delaware corporation (EIN 83-4027615).
Section 1.6. "Custodian" means Hargrove Keating & Co., a Delaware corporation.
Section 1.7. "Depositor" means Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership.
Section 1.8. "DTC" means The Depository Trust Company, a subsidiary of the Depository Trust & Clearing Corporation.
Section 1.9. "Lock-Up Agreement" means the lock-up agreement executed by the Depositor in connection with the IPO, providing for a 180-day restriction on the sale or disposition of shares of Common Stock following the date of the final prospectus relating to the IPO, subject to the exceptions and conditions set forth therein.
Section 1.10. "Offering Period" means the period commencing on the date of deposit of the Secondary Shares with the Custodian pursuant to Section 2.1 and ending on the earliest to occur of (a) the Closing Date, (b) the Termination Date, or (c) the return of the Secondary Shares to the Depositor pursuant to Section 6.2.
Section 1.11. "Overallotment Option" means the option granted to the Underwriters pursuant to the Underwriting Agreement to purchase up to an additional 3,559,091 shares of Common Stock (representing 15% of the base offering of approximately 23,713,636 shares), at the public offering price less the underwriting discount, representing approximately $78,300,000 in aggregate at the assumed midpoint price of $22.00 per share. For the avoidance of doubt, the Secondary Shares relate solely to the base offering and are not part of or subject to the Overallotment Option.
Section 1.12. "Pricing Agreement" means the agreement specifying the final public offering price per share, the number of shares of Common Stock to be sold in the IPO (including the number of Secondary Shares), the underwriting discount, and the net proceeds payable to each of the Company and the Depositor, to be executed by and among the Company, the Depositor, and the Representative at or prior to the time of pricing of the IPO.
Section 1.13. "Secondary Shares" means 6,818,182 shares of Common Stock to be sold by the Depositor in the base offering, as such number may be adjusted for final pricing pursuant to Section 2.3.
Section 1.14. "Termination Date" means the date on which this Agreement terminates pursuant to Article VI.
Section 1.15. "Transfer Agent" means Continental Shareowner Services, Inc., with offices at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, NY 10004 (contact: Maria Costello, Vice President, Corporate Actions), in its capacity as transfer agent and registrar for the Common Stock.
Section 1.16. "Underwriters" means the several underwriters named in the Underwriting Agreement, being:
Section 1.17. "Underwriting Agreement" means the underwriting agreement to be entered into among the Company, the Depositor (as Selling Stockholder), and the several Underwriters named therein, in connection with the IPO.
Section 1.18. Cross-References. Capitalized terms used in this Agreement that are not otherwise defined herein shall have the respective meanings ascribed to such terms in the Underwriting Agreement. In the event of any conflict between the definitions in this Agreement and the definitions in the Underwriting Agreement, the definitions in this Agreement shall control with respect to the custody of the Secondary Shares, and the definitions in the Underwriting Agreement shall control in all other respects.
ARTICLE II — DEPOSIT OF SECONDARY SHARES
Section 2.1 — Deposit.
(a) The Depositor shall deposit, or cause to be deposited, with the Custodian, no later than [●] Business Days prior to the anticipated Closing Date, stock certificates representing 6,818,182 shares of Common Stock (or, at the election of the Depositor, shall arrange for book-entry transfer through DTC of such shares to the Custodian's DTC account, DTC Participant No. [●]) (the "Deposit"). The Depositor shall use commercially reasonable efforts to effect the Deposit as promptly as practicable following execution of this Agreement and filing of the registration statement, and in any event in sufficient time to permit the orderly settlement of the Secondary Shares at the Closing.
(b) The Secondary Shares deposited with the Custodian pursuant to this Section 2.1 must be free and clear of all liens, pledges, encumbrances, security interests, claims, charges, options, rights of first refusal, and restrictions on transfer of any kind or nature, other than (i) restrictions arising under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws, (ii) restrictions under the Lock-Up Agreement applicable to the Depositor (which restrictions do not prohibit the sale of the Secondary Shares in the IPO), and (iii) any restrictions that will be released or terminated on or prior to the Closing Date.
(c) Concurrently with the Deposit, the Depositor shall deliver to the Custodian (i) duly executed stock powers, in blank, with respect to each certificate representing Secondary Shares (if applicable), together with medallion signature guarantees acceptable to the Transfer Agent, (ii) such other transfer documentation, instruments of assignment, or instructions as may be reasonably required by the Transfer Agent, the Custodian, or DTC to effect the transfer and delivery of the Secondary Shares at the Closing, and (iii) any required tax certifications, including Internal Revenue Service Form W-9 (or applicable Form W-8, if relevant).
(d) The Depositor acknowledges that the Custodian may coordinate with the Transfer Agent and DTC in connection with the Deposit and shall cooperate with the Custodian in facilitating such coordination.
Section 2.2 — Confirmation of Deposit.
(a) Promptly upon receipt of the Secondary Shares (and in any event within one Business Day following the Deposit), the Custodian shall deliver written confirmation of the Deposit (the "Deposit Confirmation"), substantially in the form attached hereto as Exhibit A, to each of the following:
(i) the Depositor, at the address set forth in Section 9.1;
(ii) the Company, attention: Sandra Haverford, General Counsel & Corporate Secretary, at the address set forth in Section 9.1;
(iii) underwriters' counsel, Prescott, Danforth & Yee LLP, attention: Margaret Yee, at the address set forth in Section 9.1; and
(iv) issuer's counsel, Calderwood & Harkness LLP, attention: Jennifer Kwon and Brendan Walsh, at the address set forth in Section 9.1.
(b) The Deposit Confirmation shall set forth (i) the date of the Deposit, (ii) the number of shares of Common Stock received by the Custodian, (iii) the manner of the Deposit (certificated or book-entry through DTC), (iv) the DTC participant number (if applicable), and (v) a confirmation or reference number assigned by the Custodian.
(c) The delivery of the Deposit Confirmation shall not constitute a waiver or release of any representation, warranty, or obligation of the Depositor under this Agreement or the Underwriting Agreement.
Section 2.3 — Adjustment for Final Pricing.
(a) The Parties acknowledge that the number of Secondary Shares set forth herein is based on an assumed midpoint IPO price of $22.00 per share, resulting in 6,818,182 shares ($150,000,000 ÷ $22.00 = 6,818,181.818, rounded to the nearest whole share). The assumed IPO price range, as set forth in the preliminary prospectus, is $20.00 to $24.00 per share.
(b) If the final public offering price per share, as determined in the Pricing Agreement, differs from $22.00 per share, the number of Secondary Shares shall be adjusted to equal $150,000,000 divided by the final public offering price per share, rounded to the nearest whole share (the "Adjusted Secondary Shares"). The Pricing Agreement shall specify the final number of Adjusted Secondary Shares to be sold by the Depositor.
(c) If the number of Secondary Shares deposited with the Custodian exceeds the number of Adjusted Secondary Shares, the Custodian shall promptly (and in any event within two Business Days following execution of the Pricing Agreement) return the excess shares to the Depositor by book-entry transfer to the Depositor's DTC account or by physical delivery of certificates, as the Depositor may direct.
(d) If the final public offering price is higher than $22.00 per share, fewer Secondary Shares will be required to achieve aggregate gross proceeds of $150,000,000, and the difference shall be returned to the Depositor in accordance with Section 2.3(c). If the final public offering price is lower than $22.00 per share, additional Secondary Shares will be required, and the Depositor shall deposit such additional shares with the Custodian prior to the Closing in accordance with the procedures set forth in Section 2.1.
(e) By way of illustration:
ARTICLE III — CUSTODY; HOLDING OF SHARES
Section 3.1 — Custody Obligations.
(a) During the Offering Period, the Custodian shall hold the Secondary Shares in a segregated custody account (the "Custody Account") established and maintained by the Custodian for the sole benefit of the Depositor. The Custodian shall designate the Custody Account with an account name and number that clearly identifies the Secondary Shares as being held in custody for the account of the Depositor.
(b) The Custodian shall not commingle the Secondary Shares with the Custodian's own securities, proprietary trading positions, or other assets, or with the securities or assets of any other person or entity. The Secondary Shares shall at all times be separately identifiable in the books and records of the Custodian.
(c) The Custodian shall maintain accurate, complete, and current books and records reflecting the Secondary Shares held in the Custody Account, including the date of deposit, the number of shares held, any adjustments pursuant to Section 2.3, and any deliveries or returns of shares pursuant to this Agreement. Such books and records shall be available for inspection by the Depositor, or its authorized representatives, upon reasonable prior notice during normal business hours.
(d) The Custodian shall hold the Secondary Shares in accordance with all applicable federal and state laws and regulations, including without limitation the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the SEC thereunder, and the rules of FINRA and DTC.
Section 3.2 — Restrictions on Transfer and Encumbrance.
(a) During the Offering Period, neither the Depositor nor the Custodian shall sell, transfer, assign, pledge, hypothecate, grant any option or security interest in, or otherwise dispose of or encumber the Secondary Shares or any interest therein, except:
(i) in connection with the delivery of the Secondary Shares at the Closing pursuant to the Underwriting Agreement and Article IV of this Agreement; or
(ii) as required by applicable law, regulation, or valid order of a court or governmental authority of competent jurisdiction.
(b) The Custodian shall not lend, rehypothecate, or otherwise make available the Secondary Shares, or any interest therein, to any third party for any purpose whatsoever, including without limitation for purposes of facilitating short sales, securities lending, or collateral arrangements.
(c) The Custodian shall not take any action, or permit any action to be taken, that would result in any lien, pledge, encumbrance, security interest, or adverse claim attaching to the Secondary Shares while such shares are held in the Custody Account.
Section 3.3 — Voting and Dividends.
(a) During the Offering Period, the Depositor shall retain all voting rights and other rights of a shareholder with respect to the Secondary Shares held in custody. The Custodian shall have no right to vote or exercise any shareholder rights with respect to the Secondary Shares. If, during the Offering Period, the Custodian receives any proxy materials, notices of meetings, consent solicitations, or other communications relating to the Secondary Shares in the Custodian's capacity as holder of record, the Custodian shall promptly (and in any event within two Business Days of receipt) forward all such materials and communications to the Depositor at the address set forth in Section 9.1.
(b) Any cash dividends, stock dividends, distributions, interest, or other payments received by the Custodian on or with respect to the Secondary Shares during the Offering Period shall be held by the Custodian in the Custody Account for the account of the Depositor and shall be promptly remitted to the Depositor by wire transfer to the account designated by the Depositor. For the avoidance of doubt, the Company has not historically paid, and does not currently anticipate paying, any cash or other dividends on the Common Stock prior to or following the IPO, as disclosed in the registration statement.
(c) If any stock split, stock combination, recapitalization, or similar event occurs with respect to the Common Stock during the Offering Period, any additional or replacement shares received by the Custodian with respect to the Secondary Shares shall be deemed to constitute part of the Secondary Shares for all purposes of this Agreement and shall be held in the Custody Account on the same terms and conditions.
Section 3.4 — No Beneficial Interest of Custodian.
The Custodian holds the Secondary Shares solely in its capacity as custodian and agent for the Depositor and not as principal. The Custodian has no beneficial interest, economic interest, or ownership interest in the Secondary Shares, and the Custodian shall not assert any claim or interest in the Secondary Shares other than its rights and obligations as custodian under this Agreement. Nothing in this Agreement shall be construed to create a partnership, joint venture, trust, or fiduciary relationship between the Parties, except to the extent that the Custodian's custodial obligations give rise to a duty of care as set forth herein.
ARTICLE IV — DELIVERY AT CLOSING
Section 4.1 — Delivery of Secondary Shares to Underwriters.
(a) Upon (i) the satisfaction or waiver of all conditions to the Closing set forth in the Underwriting Agreement, and (ii) receipt by the Custodian of written instructions from the Depositor (or from the attorneys-in-fact designated in the Power of Attorney executed by the Depositor) directing the delivery of the Secondary Shares (the "Delivery Instructions"), substantially in the form attached hereto as Exhibit C, the Custodian shall deliver the Secondary Shares (or cause book-entry transfer thereof through the facilities of DTC) to or for the account of the several Underwriters at the Closing, in accordance with the allocation set forth in Section 4.2.
(b) The delivery of the Secondary Shares shall be made against payment by the Underwriters of the aggregate purchase price therefor to the Depositor (or to the Custodian for the account of the Depositor). The aggregate purchase price shall be calculated as the product of (x) the final public offering price per share and (y) the number of Secondary Shares sold, less the underwriting discount. The underwriting discount shall be 5.50% of the gross proceeds from the sale of the Secondary Shares.
(c) For illustrative purposes, assuming the midpoint offering price of $22.00 per share:
• Gross proceeds from Secondary Shares: 6,818,182 shares × $22.00 = $150,000,004.00
• Underwriting discount (5.50%): $150,000,004.00 × 0.055 = $8,250,000.22
• Net proceeds to Depositor: $150,000,004.00 − $8,250,000.22 = $141,750,003.78
(d) Payment of the net proceeds to the Depositor shall be made by wire transfer in immediately available funds to the bank account designated by the Depositor in the wire transfer instructions attached hereto as Exhibit B (or as otherwise directed by the Depositor in writing prior to the Closing Date). Such payment shall be made simultaneously with, and as a condition to, the delivery of the Secondary Shares at the Closing.
(e) The Custodian shall use its commercially reasonable efforts to coordinate the delivery and settlement of the Secondary Shares with the delivery and settlement of the shares of Common Stock being sold by the Company in the IPO, such that settlement of all shares occurs simultaneously on the Closing Date.
Section 4.2 — Allocation of Shares Among Underwriters.
The Secondary Shares shall be delivered to the several Underwriters at the Closing in the same proportions as the base offering allocation, as follows:
The final allocation among the Underwriters shall be as specified in the Underwriting Agreement and/or the Pricing Agreement and may be subject to adjustment in connection with final pricing and syndicate reallocation.
Section 4.3 — Partial Delivery.
(a) If, for any reason, fewer than all of the conditions to the Closing set forth in the Underwriting Agreement are satisfied or waived, or if the number of Secondary Shares to be sold by the Depositor is reduced or adjusted in connection with the final pricing or for any other reason, the Custodian shall deliver only the number of Secondary Shares specified in the Pricing Agreement or as otherwise set forth in the Delivery Instructions from the Depositor (or its attorneys-in-fact).
(b) Any Secondary Shares held by the Custodian in excess of the number to be delivered at the Closing shall be promptly returned to the Depositor in accordance with Section 6.2.
(c) In no event shall the Custodian deliver more Secondary Shares than are authorized for delivery by the Depositor (or its attorneys-in-fact) in writing, nor shall the Custodian deliver any Secondary Shares in the absence of valid Delivery Instructions.
ARTICLE V — REPRESENTATIONS AND WARRANTIES
Section 5.1 — Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Custodian as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. The Depositor is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Pinnacle Vista Capital Management LLC, a Delaware limited liability company, is the sole general partner of the Depositor and is duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) Authority. Pinnacle Vista Capital Management LLC, as general partner of the Depositor, has full power, authority, and legal right to execute and deliver this Agreement on behalf of the Depositor and to perform all of the Depositor's obligations hereunder. The execution and delivery of this Agreement by the Depositor and the performance by the Depositor of its obligations hereunder have been duly authorized by all necessary partnership and limited liability company action, and no further consent or approval of any partner, member, manager, or other person is required.
(c) Ownership of Secondary Shares. The Depositor is the sole record and beneficial owner of the Secondary Shares, being 6,818,182 shares of Common Stock (subject to adjustment pursuant to Section 2.3). Such shares constitute a portion of the approximately 62,000,000 shares of Common Stock held by the Depositor, which represent approximately 62% of the 100,000,000 shares of Common Stock outstanding as of the date hereof (prior to the IPO). The Depositor has good and valid title to the Secondary Shares.
(d) Free and Clear of Encumbrances. The Secondary Shares are, and upon delivery to the Underwriters at the Closing will be, free and clear of all liens, pledges, encumbrances, security interests, claims, charges, equities, options, rights of first refusal, preemptive rights, and restrictions on transfer of any kind or nature, other than (i) restrictions arising under the Securities Act and applicable state securities laws, and (ii) restrictions under the Lock-Up Agreement (which do not prohibit the sale of the Secondary Shares in the IPO).
(e) No Conflicts. The execution, delivery, and performance of this Agreement by the Depositor do not and will not (i) conflict with, violate, or result in a breach of the Amended and Restated Agreement of Limited Partnership of the Depositor or the operating agreement of Pinnacle Vista Capital Management LLC, (ii) conflict with, violate, or result in a breach or default under any agreement, contract, instrument, or obligation to which the Depositor or its general partner is a party or by which the Depositor or any of its properties or assets is bound, or (iii) violate any applicable law, rule, regulation, order, judgment, or decree of any governmental authority.
(f) Lock-Up Agreement. The Depositor has executed the Lock-Up Agreement providing for a 180-day lock-up period following the date of the final prospectus relating to the IPO, and the sale of the Secondary Shares in the IPO is expressly permitted under, and does not constitute a violation of, the Lock-Up Agreement.
(g) Selling Stockholder Documentation. The Depositor has provided a completed Selling Stockholder Questionnaire and Selling Stockholder Representation Letter to the Company and the Underwriters, and all information set forth therein is true, correct, and complete as of the date hereof and will be true, correct, and complete as of the Closing Date.
(h) Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of the Depositor, enforceable against the Depositor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 5.2 — Representations and Warranties of the Custodian.
The Custodian hereby represents and warrants to the Depositor as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. The Custodian is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. The Custodian is duly registered as a broker-dealer with the SEC and is a member in good standing of FINRA.
(b) Authority. The Custodian has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Custodian and the performance by the Custodian of its obligations hereunder have been duly authorized by all necessary corporate action.
(c) Compliance with Law. The Custodian will hold the Secondary Shares and perform its obligations under this Agreement in accordance with all applicable federal and state laws and regulations, including without limitation the Exchange Act, the rules and regulations of the SEC thereunder, and the rules and regulations of FINRA and DTC.
(d) Insurance and Controls. The Custodian maintains, and will continue to maintain during the term of this Agreement, adequate insurance coverage and internal controls for the safekeeping of securities held in custody, including Securities Investor Protection Corporation ("SIPC") coverage and any excess SIPC coverage, as applicable.
(e) Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of the Custodian, enforceable against the Custodian in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(f) No Conflicts. The execution, delivery, and performance of this Agreement by the Custodian do not and will not conflict with, violate, or result in a breach of the Custodian's certificate of incorporation or bylaws, or any agreement, contract, or obligation to which the Custodian is a party or by which it is bound.
ARTICLE VI — TERMINATION AND RETURN OF SHARES
Section 6.1 — Termination Events.
This Agreement shall terminate automatically and without further action by either Party upon the earliest to occur of the following (the date of such termination being the "Termination Date"):
(a) the delivery of the Secondary Shares at the Closing in accordance with Article IV, together with the receipt by the Depositor (or the Custodian for the account of the Depositor) of the net proceeds from the sale of such shares;
(b) the termination of the Underwriting Agreement in accordance with its terms, including without limitation any termination pursuant to the market-out, disaster-out, material adverse change, or similar provisions thereof;
(c) receipt by the Custodian of written notice from the Depositor (or from the Company, with the Depositor's consent) that the offering has been abandoned, withdrawn, or indefinitely postponed;
(d) the written agreement of the Depositor and the Custodian to terminate this Agreement.
Note: The proposed offering of Common Stock of Calloway-Briggs Renewables Inc. was placed in dormant status on June 17, 2022, when the Company and the Underwriters mutually determined to postpone the IPO due to adverse market conditions in the renewables sector and broader equity market volatility. As a result, this Agreement was never executed and the transactions contemplated hereby were not consummated. This notation is for informational purposes and does not form a part of the operative provisions of this Agreement.
Section 6.2 — Return of Secondary Shares.
(a) Upon termination of this Agreement for any reason other than the delivery of the Secondary Shares at the Closing pursuant to Section 6.1(a), the Custodian shall promptly, and in any event within two (2) Business Days following the Termination Date, return all Secondary Shares then held in the Custody Account to the Depositor.
(b) The return of the Secondary Shares shall be effected, at the Depositor's election, by (i) book-entry transfer through the facilities of DTC to the Depositor's DTC account, or (ii) physical delivery of stock certificates representing the Secondary Shares, duly endorsed or accompanied by stock powers, to the Depositor at the address set forth in Section 9.1 or such other address as the Depositor may specify in writing.
(c) Upon the return of all Secondary Shares to the Depositor (or upon the delivery of all Secondary Shares at the Closing), the Custodian shall have no further rights, obligations, or liabilities with respect to the Secondary Shares under this Agreement, except as otherwise expressly provided in Article VIII (Indemnification) and Article X (General Provisions), which provisions shall survive termination of this Agreement.
(d) The Custodian shall, upon the return of the Secondary Shares, deliver to the Depositor a written confirmation of the return, specifying the number of shares returned, the date and manner of return, and any other relevant details.
ARTICLE VII — POWER OF ATTORNEY
Section 7.1 — Reference to Power of Attorney.
(a) The Depositor has executed, or will execute prior to the Closing, a Power of Attorney (the "Power of Attorney") appointing one or more attorneys-in-fact (each, an "Attorney-in-Fact") to act on behalf of the Depositor in connection with (i) the execution and delivery of the Underwriting Agreement and the Pricing Agreement, (ii) the delivery of the Secondary Shares at the Closing, and (iii) such other actions as may be necessary or appropriate in connection with the consummation of the IPO.
(b) The Custodian may rely conclusively, and shall be fully protected in relying, on any written instructions, directions, or authorizations given by any Attorney-in-Fact designated in the Power of Attorney as if such instructions, directions, or authorizations were given directly by the Depositor. The Custodian shall not be required to verify the identity or authority of any Attorney-in-Fact beyond reviewing the Power of Attorney and confirming that the person giving instructions is named therein as an Attorney-in-Fact.
(c) The Power of Attorney executed by the Depositor is a separate instrument and is not attached hereto; however, a copy thereof shall be delivered to the Custodian prior to the Closing. The Depositor shall promptly notify the Custodian in writing of any revocation, amendment, or modification of the Power of Attorney. The Power of Attorney shall be governed by its own terms and conditions and is incorporated herein by reference solely for purposes of establishing the Custodian's right to rely on instructions from the Attorneys-in-Fact.
ARTICLE VIII — INDEMNIFICATION
Section 8.1 — Indemnification by the Depositor.
The Depositor shall indemnify, defend, and hold harmless the Custodian and its affiliates, and their respective directors, officers, employees, agents, and controlling persons (each, a "Custodian Indemnified Party"), from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and disbursements and costs of investigation) (collectively, "Losses") arising out of or relating to:
(a) any breach or inaccuracy of any representation or warranty made by the Depositor in this Agreement;
(b) any breach or failure by the Depositor to perform or comply with any covenant, obligation, or agreement of the Depositor contained in this Agreement;
(c) any lien, encumbrance, security interest, adverse claim, or restriction on the Secondary Shares (other than restrictions arising under the Securities Act and applicable state securities laws and the Lock-Up Agreement) that existed at the time of the Deposit or that arises as a result of actions or omissions of the Depositor; or
(d) any claim by a third party arising out of or relating to the Depositor's ownership or sale of the Secondary Shares;
provided, however, that the Depositor shall not be required to indemnify any Custodian Indemnified Party to the extent that such Losses are determined by a court of competent jurisdiction, in a final and non-appealable judgment, to have resulted from the gross negligence, bad faith, or willful misconduct of such Custodian Indemnified Party.
Section 8.2 — Indemnification by the Custodian.
The Custodian shall indemnify, defend, and hold harmless the Depositor and its affiliates, and their respective partners, members, managers, directors, officers, employees, agents, and controlling persons (each, a "Depositor Indemnified Party"), from and against any and all Losses arising out of or relating to:
(a) the gross negligence, bad faith, or willful misconduct of the Custodian or any of its directors, officers, employees, or agents in the performance of the Custodian's obligations under this Agreement;
(b) any breach or inaccuracy of any representation or warranty made by the Custodian in this Agreement; or
(c) any breach or failure by the Custodian to perform or comply with any covenant, obligation, or agreement of the Custodian contained in this Agreement.
Section 8.3 — Limitation of Custodian Liability.
(a) The Custodian shall not be liable for any act or omission taken or suffered by the Custodian in good faith and in accordance with the terms of this Agreement, except in cases of gross negligence, bad faith, or willful misconduct. The Custodian shall not be liable for any error of judgment made in good faith by an officer or employee of the Custodian, unless it is established that the Custodian was grossly negligent or acted in bad faith.
(b) The Custodian shall not be liable for any Losses arising from or caused by events beyond its reasonable control, including without limitation acts of God, fire, flood, earthquake, hurricane, epidemic, pandemic, war, terrorism, insurrection, civil disturbance, strikes, labor disputes, government sanctions, embargoes, disruptions in electrical power, telecommunications, or computer systems, failures of DTC, or any other force majeure event (each, a "Force Majeure Event"), provided that the Custodian uses commercially reasonable efforts to mitigate the effects of such Force Majeure Event and to resume performance of its obligations hereunder as soon as practicable.
(c) In no event shall the Custodian be liable to the Depositor or any other person for any indirect, consequential, special, incidental, or punitive damages arising out of or relating to this Agreement, regardless of the form of action, whether in contract, tort, strict liability, or otherwise, and regardless of whether such damages were foreseeable.
(d) The aggregate liability of the Custodian under this Agreement shall in no event exceed the aggregate market value of the Secondary Shares at the time of the event giving rise to such liability.
ARTICLE IX — NOTICES
Section 9.1 — Notice Addresses.
All notices, requests, demands, consents, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given (a) when delivered by hand, (b) one Business Day after being sent by reputable overnight courier service (with signature confirmation), or (c) when sent by email with confirmation of receipt (including automated delivery receipt or response confirming receipt from the recipient), in each case addressed as follows:
If to the Depositor:
Pinnacle Vista Capital Partners III, LP c/o Pinnacle Vista Capital Management LLC 900 Park Avenue, 38th Floor New York, NY 10021
Attention: Hugh Pemberton, Co-Founder & Managing Partner
Attention: Diane Kovac, Co-Founder & Managing Partner
with a copy (which shall not constitute notice) to:
Whitfield Archer & Doss LLP 51 West 52nd Street New York, NY 10019
Attention: Philip Archer
Attention: Christine Navarro
If to the Custodian:
Hargrove Keating & Co. 383 Madison Place New York, NY 10017
Attention: Oliver Marchetti, Managing Director, Equity Capital Markets
Attention: Daniel Furman, Vice President, ECM Syndicate
with a copy (which shall not constitute notice) to:
Prescott, Danforth & Yee LLP 1271 Avenue of the Americas New York, NY 10020
Attention: Margaret Yee
Attention: Scott Halverson
Informational copies to the Company (which shall not constitute notice):
Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Attention: Sandra Haverford, General Counsel & Corporate Secretary
with a copy to issuer's counsel:
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
Attention: Jennifer Kwon
Attention: Brendan Walsh
Either Party may change its notice address by providing written notice of such change to the other Party in accordance with this Section 9.1. Informational copies to the Company and its counsel are provided as a courtesy and are not a condition to the effectiveness of any notice.
ARTICLE X — GENERAL PROVISIONS
Section 10.1 — Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to any choice-of-law or conflict-of-laws rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City and State of New York, for the purposes of any action or proceeding arising out of or relating to this Agreement, and each Party irrevocably waives any objection to the laying of venue of any such action or proceeding in any such court.
Section 10.2 — Entire Agreement.
This Agreement, together with the Underwriting Agreement, the Pricing Agreement, the Power of Attorney, the Lock-Up Agreement, and the exhibits and schedules hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof (namely, the custody of the Secondary Shares) and supersedes all prior and contemporaneous agreements, negotiations, representations, warranties, and understandings, whether oral or written, between the Parties with respect to such subject matter. No Party shall be bound by, or be liable for, any alleged representation, promise, inducement, or statement of intention not contained in this Agreement.
Section 10.3 — Amendment and Waiver.
No amendment, modification, or supplement to this Agreement shall be valid or binding unless set forth in a written instrument duly executed by both the Depositor and the Custodian. No waiver of any provision of this Agreement, or any right or remedy hereunder, shall be effective unless set forth in a written instrument signed by the Party against whom such waiver is sought to be enforced. The failure of either Party to enforce any provision of this Agreement or to exercise any right or remedy at any time shall not be construed as a waiver of such provision, right, or remedy, and shall not affect the right of such Party subsequently to enforce such provision or exercise such right or remedy. No single or partial exercise of any right or remedy shall preclude any other or further exercise of such right or remedy, or the exercise of any other right or remedy.
Section 10.4 — Assignment.
Neither Party may assign, delegate, or transfer this Agreement, or any of its rights, obligations, or interests hereunder, to any person or entity without the prior written consent of the other Party, and any purported assignment without such consent shall be null and void and of no force or effect. Notwithstanding the foregoing, the Custodian may assign its rights and obligations under this Agreement to any successor entity resulting from a merger, consolidation, or reorganization of the Custodian, provided that such successor entity assumes all of the Custodian's obligations hereunder and is duly registered as a broker-dealer with the SEC and a member of FINRA.
Section 10.5 — Successors and Assigns.
Subject to the restrictions on assignment set forth in Section 10.4, this Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors, heirs, executors, administrators, legal representatives, and permitted assigns.
Section 10.6 — Severability.
If any provision of this Agreement (or any portion thereof) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein; provided, that the Parties shall negotiate in good faith to replace such invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that achieves, to the greatest extent possible, the economic, business, and other purposes of the invalid, illegal, or unenforceable provision.
Section 10.7 — Counterparts.
This Agreement may be executed in one or more counterparts (including by means of facsimile or portable document format (PDF) signatures transmitted by electronic mail), each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or PDF shall be as effective as delivery of a manually executed counterpart.
Section 10.8 — No Third-Party Beneficiaries.