Contract analysis

I. Executive Summary and Purpose The purpose of this memorandum is to analyze the proposed initial public offering of the common stock of Calloway-Briggs Renewables Inc. ("CBR" or the "Company") for compliance with Financial Industry Regulatory Authority ("FINRA") Rule 5110, commonly known as the "Corporate Financing Rule," which governs the terms and arrangements of underwriting compensation and other aspects of pub

II. Background on the Offering and Participants A. The Issuer Calloway-Briggs Renewables Inc. is a Delaware corporation headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The Company was founded in 2014 by Garrett Calloway and Elaine Briggs, who continue to serve as Chief Executive Officer and President, respectively. CBR is a developer, owner, and operator of utility-scale solar photovoltaic g

III. Overview of FINRA Rule 5110 A. Scope and Applicability FINRA Rule 5110 (the "Corporate Financing Rule") applies to any public offering of securities in which a FINRA member firm participates as an underwriter. The rule was most recently amended effective September 18, 2020, with certain technical amendments and clarifications taking effect in 2021. The primary objectives of Rule 5110 are to ensure that the terms

IV. Analysis of Underwriting Compensation (Rule 5110(b)) A. Components of Underwriting Compensation A central requirement of FINRA Rule 5110(b) is the identification and quantification of every "item of value" received or to be received by participating FINRA member firms, their associated persons, and their affiliates in connection with the public offering. We have conducted a comprehensive review of the Draft UA, t

1. Gross Spread (Underwriting discount) The underwriting discount (commonly referred to as the "gross spread") is the single largest component of underwriting compensation in the proposed offering. As set forth in Section 2 of the Draft UA, the gross spread is fixed at 5.50% of the public offering price per share. The gross spread calculations, based on the assumed midpoint IPO price of $22.00 per share, are as follo

Section 5(e) of the Draft UA provides that the Company will reimburse the underwriters for certain out-of-pocket expenses incurred in connection with the offering, subject to an aggregate cap of $350,000 (the "Expense Reimbursement Cap"). The reimbursable expenses are limited to FINRA-related filing fees and expenses, road show expenses (including travel, lodging, and presentation materials), blue-sky filing fees, an

3. Right of First Refusal We have reviewed the Draft UA, the engagement letter between CBR and Hargrove Keating & Co. dated November 15, 2021, and the engagement letters with each of the other participating underwriters. None of these documents contains a right of first refusal ("ROFR") in favor of any underwriter or its affiliates for participation in future offerings by the Company or its affiliates. Under FINRA Ru

4. Other Potential Items of Value We have conducted a comprehensive review to identify any additional items of value that may constitute underwriting compensation under Rule 5110(b). Our review encompasses the following categories: Warrants and Securities. No warrants, options, convertible securities, or other equity-linked instruments of CBR are being issued or granted to any underwriter, any associated person of an

V. Analysis of Lock-Up Provisions (Rule 5110(e)) A. Lock-Up on Underwriter Securities FINRA Rule 5110(e)(1) restricts the sale, transfer, assignment, pledge, or hypothecation of securities of the issuer acquired by participating FINRA member firms, their associated persons, or their affiliates "in connection with a public offering" for a period of 180 days following the effective date of the registration statement. T

VI. Venture Capital / Private Equity Exception Analysis (Rule 5110(f)) A. Applicability of the Exception FINRA Rule 5110(f)(2)(C) provides an exception from the filing requirements and compensation limitations otherwise applicable under the rule for offerings of securities of issuers where a participating FINRA member firm, or an affiliate of a participating FINRA member firm, acquired securities of the issuer as a v

VII. Related-Party Provisions and Conflict-of-Interest Analysis A. FINRA Rule 5121 — Conflicts of Interest FINRA Rule 5121 (the "Conflicts of Interest Rule") applies when a FINRA member firm participating in a public offering has a "conflict of interest" as defined in the rule. A conflict of interest exists where, among other circumstances: (a) the FINRA member or its affiliates will receive 5% or more of the net off

VIII. Review of Specific Unreasonable and Prohibited Terms (Rules 5110(c) and (d)) A. Unreasonable Terms (Rule 5110(c)) We have reviewed the Draft UA and all ancillary offering documents for the presence of terms and arrangements that FINRA considers "unreasonable" under Rule 5110(c). Our analysis of each relevant category follows. Overallotment Option. The overallotment option (greenshoe) granted to the underwriters

IX. FINRA Filing and Review Process A. Filing Status The FINRA corporate financing application for the proposed CBR offering was filed with FINRA's Corporate Financing Department under Filing No. 20221129-01. The filing was prepared and submitted in advance of the anticipated effective date of the registration statement, in compliance with FINRA's requirement that the application be filed at least one business day pr

1. Underwriting agreement (near-final draft dated April 18, 2022);

2. Form of lock-up agreement (attached as Exhibit A to the Draft UA);

3. Registration Statement on Form S-1 (initially submitted as a draft registration statement ("DRS") on a confidential basis, as amended through Amendment No. 2 filed publicly with the SEC);

4. Supporting schedules, consisting of: (a) Schedule A — Detailed Underwriting Compensation Calculations (itemizing the gross spread, expense reimbursement, and all other items of value); (b) Schedule B — Related Parties and Affiliations (disclosing all relationships between participating underwriters and the issuer, selling stockholders, and their respective affiliates); (c) Schedule C — Lock-Up Terms and Signatory

5. Representation letters from each of the five participating underwriters (Hargrove Keating & Co., Linden Pratt Securities LLC, Graymont Brothers Inc., Barfield Stuart & Co., and Crane Whitley Capital LLC) regarding FINRA membership status, CRD numbers, affiliations, pre-existing equity holdings, and other items of value; and

6. Representation letter from Pinnacle Vista Capital Partners III, LP (through Whitfield Archer & Doss LLP) regarding FINRA-member affiliation status. C. Outstanding Items for Reactivation Upon recommencement of the offering, the following FINRA-related items will require attention:

1. Updated FINRA Filing. If any offering terms have changed during the dormancy period (including, but not limited to, changes in the anticipated price range, offering size, underwriter allocation percentages, gross spread, expense reimbursement, or syndicate composition), the FINRA filing will need to be updated to reflect such changes. An amended or supplemented filing should be prepared and submitted promptly upon

2. Confirmation of No-Objection. FINRA must issue its no-objection letter prior to the SEC declaring the registration statement effective. The deal team should allow sufficient time (a minimum of three to five business days, and potentially longer) for FINRA to complete its review following the submission of any updated filing materials.

3. Updated Representations from Underwriters. Each of the five participating underwriters should be asked to reconfirm or update its FINRA filing representation letter to reflect any changes in affiliations, pre-existing equity holdings, or other items of value that may have arisen during the dormancy period. This is particularly important if any underwriter has undergone a change of control, merger, or reorganizatio

4. Re-Confirmation of Lock-Up Execution Status. As of June 17, 2022, 15 of the 18 required lock-up agreements had been executed. Three agreements remain outstanding. Upon reactivation, the deal team should (a) confirm that the three outstanding signatories continue to meet the criteria requiring execution of a lock-up agreement (i.e., that they remain directors, executive officers, or holders of 1% or more of pre-IPO

5. Coordination with Underwriters' Counsel. The deal team should coordinate with Margaret Yee and Scott Halverson at Prescott, Danforth & Yee LLP regarding any FINRA comments or requests for additional information received during the dormancy period, and to ensure alignment on the FINRA filing update process.

X. Summary of Conclusions and Recommendations A. Overall Compliance Assessment Based on our comprehensive review of the proposed offering terms, the underwriting documentation, and the FINRA corporate financing application materials, we reach the following conclusions:

1. Underwriting Compensation. Total underwriting compensation of approximately $33,350,000 (approximately 5.56% of total offering proceeds assuming full exercise of the overallotment option) is fair and reasonable under FINRA Rule 5110(b). The total compensation is well within the 8–10% range that FINRA considers presumptively fair for offerings of this size, and no unusual or excessive compensation items have been i

2. Gross Spread. The 5.50% gross spread is within customary market parameters for an initial public offering of approximately $600 million in the energy and renewable energy sectors. The internal allocation of the gross spread among management fee, underwriting fee, and selling concession is consistent with standard syndicate economics.

3. Expense Reimbursement. The $350,000 expense reimbursement cap on an accountable basis is a modest component of total compensation and is fully compliant with Rule 5110. No non-accountable expense allowance is present.

4. Lock-Up Provisions. The 180-day lock-up period applicable to insiders and the issuer is compliant with FINRA Rule 5110(e) and Rule 5110(c). The lock-up carve-outs are narrowly tailored and consistent with market practice. No compensation securities are being issued to underwriters, and accordingly the Rule