Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze whether Calloway-Briggs Renewables Inc. ("CBR" or the "Company") will qualify as a "controlled company" under the corporate governance rules of the New York Stock Exchange (the "NYSE") following the completion of its proposed initial public offering of approximately $600,000,000 of common stock (proposed ticker: CBRI), and to set forth the implications

II. Background A. The Proposed IPO Calloway-Briggs Renewables Inc. is a Delaware-incorporated, Austin, Texas-headquartered developer and operator of utility-scale solar, wind, and battery-storage projects across the continental United States. The Company was founded in 2015 by Garrett Calloway and Elaine Briggs and has grown significantly since Pinnacle Vista's initial investment in 2017, expanding from a regional so

III. Post-IPO Voting-Power Analysis A. Methodology. CBR's common stock carries one vote per share on all matters submitted to a vote of the stockholders. The Company does not have, and does not currently propose to adopt, a dual-class or supervoting share structure. Accordingly, a stockholder's voting power is equal to the number of shares of common stock it holds divided by the total number of shares of common stock

1. Base Offering Scenario (No Overallotment). Under the base offering scenario, the underwriters' overallotment option is not exercised. The total number of new shares issued in the offering is 23,713,636 (base offering only). Of these, 16,895,455 are primary shares (new shares issued by the Company) and 6,818,182 are secondary shares (existing shares sold by Pinnacle Vista). The calculation of Pinnacle Vista's post-

2. Full Overallotment Scenario. Under the full overallotment scenario, the overallotment option of 3,559,091 shares is exercised in full. The impact on Pinnacle Vista's voting power depends on the allocation of the overallotment as between primary and secondary shares. Scenario 2(a): Overallotment Entirely Primary. If the overallotment shares are entirely primary (newly issued by the Company), Pinnacle Vista does not

IV. NYSE Controlled-Company Exemption — Legal Framework A. Applicable Rules The NYSE's corporate governance requirements for listed companies are set forth in Section 303A of the NYSE Listed Company Manual. The following provisions are directly relevant to the controlled-company analysis: NYSE Listed Company Manual Section 303A.00 — Definition of "Controlled Company." Section 303A.00 defines a "controlled company" as

1. Majority Independent Board (Section 303A.01). CBR will not be required to have a majority of independent directors on its board. This exemption is critical for CBR, as only three of its seven current directors are independent, and the addition of independent directors to achieve a majority would conflict with Pinnacle Vista's negotiated board designation rights under the Stockholders' Agreement.

2. Fully Independent Nominating/Corporate Governance Committee (Section 303A.04). The Company's nominating/corporate governance committee need not be composed entirely of independent directors, and the committee need not have a written charter meeting the specific requirements of Section 303A.04. This exemption is particularly important for CBR, as the current Nominating and Corporate Governance Committee includes Hu

3. Fully Independent Compensation Committee (Section 303A.05). The Company's compensation committee need not be composed entirely of independent directors, and the committee need not have a written charter meeting the specific requirements of Section 303A.05. Although CBR's current Compensation Committee is already fully independent (composed of Catherine Liang, Richard Estavez, and Warren Okoro), this exemption prov

V. CBR Board Composition Analysis A. Current Board of Directors (Pre-IPO) The Company's board of directors currently consists of seven members. The independence status of each director, assessed in accordance with NYSE independence standards, is as follows: The board consists of three independent directors (42.9%) and four non-independent directors (57.1%). Of the four non-independent directors, two are members of ma

1. Board Composition. The Company's board does not have a majority of independent directors. Three of seven directors (42.9%) are independent, which falls short of the majority (57.1% or greater) required by NYSE Section 303A.01. The controlled-company exemption waives this requirement.

2. Nominating and Corporate Governance Committee Composition. The Company's Nominating and Corporate Governance Committee includes Hugh Pemberton, a non-independent Pinnacle Vista designee. This composition violates NYSE Section 303A.04, which requires that the committee be composed entirely of independent directors. The controlled-company exemption waives this requirement. If the controlled-company exemption is not

VI. Phase-In Schedule Upon Loss of Controlled-Company Status A. Triggering Event CBR will lose its status as a "controlled company" under NYSE rules if and when Pinnacle Vista, the Founders, and any other members of the "group" (as determined by the Stockholders' Agreement and other contractual arrangements) collectively hold 50% or less of the Company's total voting power. This is a bright-line test: the exemption i

VII. Pinnacle Vista Board Designation Rights — Step-Down Schedule A. Stockholders' Agreement Provisions The Amended and Restated Stockholders' Agreement (to be effective upon the closing of the IPO) grants Pinnacle Vista contractual rights to designate members of the Company's board of directors. These designation rights are subject to a step-down schedule tied to Pinnacle Vista's ownership of the Company's outstandi

VIII. Disclosure Considerations for the S-1 Registration Statement A. Prospectus Disclosure The Company's S-1 registration statement must include comprehensive disclosure regarding its controlled-company status, the exemptions upon which it intends to rely, and the associated risks to investors. The following disclosure elements should be addressed: Risk Factors. The "Risk Factors" section of the S-1 should include a

IX. Emerging Growth Company ("EGC") Status — Interaction Separately from the controlled-company analysis, CBR qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The Company's total annual revenues for its most recently completed fiscal year (FY 2021) were approximately $487.3 million, which is below the $1.235 billion revenue threshold for EGC sta

X. Investor-Perception and ISS/Proxy-Advisor Considerations Institutional investors, proxy advisory firms (principally Northgate Partners LLC ("ISS") and Aldermere & Co. ("Tarrant Partners LLC")), and governance-focused investment funds generally view the controlled-company exemption with skepticism or outright opposition. These stakeholders are concerned that the exemption reduces accountability mechanisms, concentr