AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
among
CALLOWAY-BRIGGS RENEWABLES INC.
PINNACLE VISTA CAPITAL PARTNERS III, LP
GARRETT CALLOWAY
and
ELAINE BRIGGS
Dated as of [●], 2022
DRAFT — Subject to completion upon IPO pricing and closing. Bracketed amounts and dates to be completed upon pricing and closing of the initial public offering.
Right-click to update Table of Contents
This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement") is entered into as of [●], 2022 (the "Execution Date"), by and among:
(1) Calloway-Briggs Renewables Inc., a Delaware corporation (the "Company"), with its principal executive offices at 4200 Ridgeline Parkway, Suite 1100, Austin, TX 78746 (EIN 83-4027615);
(2) Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership ("Pinnacle Vista" or the "Investor"), with its principal office at 900 Park Avenue, 38th Floor, New York, NY 10021, acting through its general partner, Pinnacle Vista Capital Management LLC, a Delaware limited liability company;
(3) Garrett Calloway, an individual and resident of the State of Texas ("Calloway"); and
(4) Elaine Briggs, an individual and resident of the State of Texas ("Briggs" and, together with Calloway, the "Founders" or the "Founder Stockholders"; and, together with Pinnacle Vista, the "Stockholders").
Each of the Company, Pinnacle Vista, Calloway, and Briggs is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company is a Delaware corporation engaged in the development, construction, ownership, and operation of utility-scale renewable energy projects across the United States;
WHEREAS, Pinnacle Vista is a Delaware limited partnership that, acting through its general partner Pinnacle Vista Capital Management LLC, a Delaware limited liability company, manages private equity investments, including its investment in the Company;
WHEREAS, Calloway serves as the Co-Founder, Chairman and Chief Executive Officer of the Company, and Briggs serves as the Co-Founder and President, Development of the Company, each having co-founded the Company and contributed to its growth and development since inception;
WHEREAS, the Parties previously entered into that certain Stockholders' Agreement, dated as of [●], 2017, in connection with Pinnacle Vista's initial equity investment in the Company in the aggregate amount of Three Hundred Eighty-Five Million Dollars ($385,000,000) (the "2017 Investment"), which Stockholders' Agreement was subsequently amended in connection with Pinnacle Vista's follow-on equity investment in the aggregate amount of One Hundred Twenty Million Dollars ($120,000,000) in 2019 (the "2019 Follow-On Investment"), as so amended, the "Original Agreement";
WHEREAS, the Company is consummating an initial public offering (the "IPO") of shares of its common stock, par value $0.01 per share (the "Common Stock"), registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a registration statement on Form S-1 (File No. 333-[●]) (the "Registration Statement"), with the shares of Common Stock to be listed on the New York Stock Exchange (the "NYSE") under the ticker symbol "CBRI";
WHEREAS, the proposed aggregate offering size of the IPO is approximately Six Hundred Million Dollars ($600,000,000), consisting of a base offering of approximately Five Hundred Twenty-One Million Seven Hundred Thousand Dollars ($521,700,000), inclusive of primary shares to be issued and sold by the Company and secondary shares to be sold by Pinnacle Vista, together with an overallotment option granted to the underwriters in the amount of approximately Seventy-Eight Million Three Hundred Thousand Dollars ($78,300,000);
WHEREAS, in connection with the IPO, the Company and Pinnacle Vista are entering into that certain Registration Rights Agreement of even date herewith (the "Registration Rights Agreement"), pursuant to which the Company is granting certain registration rights to Pinnacle Vista with respect to shares of Common Stock Beneficially Owned by Pinnacle Vista;
WHEREAS, the Parties desire to amend and restate the Original Agreement in its entirety to set forth their respective rights and obligations as stockholders of the Company following the consummation of the IPO, including, without limitation, with respect to the composition of the Board of Directors, transfer restrictions, preemptive rights, information rights, and related matters; and
WHEREAS, this Agreement shall become effective upon the closing of the IPO (the "IPO Closing Date") and shall, upon such effectiveness, supersede and replace the Original Agreement in its entirety, and the Original Agreement shall thereupon be of no further force or effect.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth 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
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the generality of the foregoing, with respect to Pinnacle Vista, "Affiliate" shall include Pinnacle Vista Capital Management LLC (its general partner), any fund, parallel vehicle, co-investment vehicle, or alternative investment vehicle managed or advised by Pinnacle Vista Capital Management LLC or any of its Affiliates, and the respective general partners, managing members, and controlling persons of any of the foregoing.
"Agreement" means this Amended and Restated Stockholders' Agreement, as the same may be amended, modified, supplemented, or restated from time to time in accordance with the terms hereof.
"Amended and Restated Bylaws" means the Amended and Restated Bylaws of the Company, as in effect on and after the IPO Closing Date, as the same may be further amended from time to time.
"Amended and Restated Certificate of Incorporation" means the Amended and Restated Certificate of Incorporation of the Company, as in effect on and after the IPO Closing Date, as the same may be further amended from time to time.
"Beneficially Own" or "Beneficial Ownership" has the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and a Person's beneficial ownership of Equity Securities shall be calculated in accordance with the provisions of such Rule. For the avoidance of doubt, a Person shall be deemed to Beneficially Own all Equity Securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which commercial banks in New York, New York or Austin, Texas are authorized or required by law to remain closed.
"Change of Control" means the occurrence of any one or more of the following events: (a) any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than one or more of the Parties hereto or their respective Permitted Transferees, acquires Beneficial Ownership of Equity Securities representing more than fifty percent (50%) of the total voting power of all then-outstanding Equity Securities of the Company; (b) the Company consummates a merger, consolidation, or similar business combination transaction with or into another Person, unless, immediately following such transaction, the holders of Common Stock immediately prior to such transaction Beneficially Own, directly or indirectly, securities representing more than fifty percent (50%) of the total voting power of the outstanding voting securities of the surviving or resulting entity (or its ultimate parent entity); or (c) the Company consummates a sale, lease, exchange, or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any Person other than a wholly owned subsidiary of the Company.
"Common Stock" means shares of common stock of the Company, par value $0.01 per share, and any securities into which such shares of common stock may be reclassified, subdivided, combined, or converted.
"Company" means Calloway-Briggs Renewables Inc., a Delaware corporation, and its successors and assigns.
"D&O Insurance" has the meaning set forth in Section 2.7(a).
"DGCL" means the General Corporation Law of the State of Delaware, as amended from time to time.
"Drag-Along Notice" has the meaning set forth in Section 3.7(a).
"Drag-Along Transaction" has the meaning set forth in Section 3.7(a).
"Equity Securities" means (a) shares of Common Stock, (b) any securities convertible into or exchangeable for shares of Common Stock, (c) any options, warrants, or other rights to acquire shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock, and (d) any equity interests or equity-linked securities of the Company of any kind.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Excluded Issuances" has the meaning set forth in Section 6.2.
"Execution Date" has the meaning set forth in the preamble to this Agreement.
"Founder Stockholders" or "Founders" means Garrett Calloway and Elaine Briggs, collectively, and their respective Permitted Transferees.
"Fully Diluted Shares" means, as of any date of determination, the total number of shares of Common Stock outstanding as of such date, calculated on a fully diluted basis assuming the exercise, conversion, or exchange of all outstanding options, warrants, convertible securities, and other rights to acquire shares of Common Stock, whether or not then vested or exercisable, but excluding (for the avoidance of doubt) any shares reserved for issuance but not yet subject to outstanding grants under any equity incentive plan.
"Independent Director" means a director of the Company who qualifies as "independent" under the applicable listing standards of the NYSE and the applicable rules of the Securities and Exchange Commission (the "SEC"), and who is not (a) an officer or employee of the Company or any of its subsidiaries, (b) an officer, employee, director, member, partner, or Affiliate of Pinnacle Vista or any of its Affiliates, or (c) a Founder Stockholder or a family member of a Founder Stockholder.
"Investor" means Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership, and its Permitted Transferees that become parties to this Agreement in accordance with Section 3.4.
"Investor Designees" means the individuals designated by Pinnacle Vista for nomination to the Board pursuant to Section 2.2.
"IPO" means the initial public offering of shares of Common Stock of the Company, registered under the Securities Act pursuant to the Registration Statement on Form S-1, resulting in the listing of the Common Stock on the NYSE.
"IPO Closing Date" means the date on which the closing of the IPO occurs and the shares of Common Stock offered thereby are issued and delivered to the underwriters against payment of the purchase price therefor.
"Lock-Up Period" means the period commencing on the date of the final prospectus filed by the Company in connection with the IPO and ending one hundred eighty (180) days thereafter, as more fully described in the lock-up agreements entered into by the Stockholders in connection with the IPO.
"NYSE" means the New York Stock Exchange.
"Original Agreement" means the Stockholders' Agreement, dated as of [●], 2017, among the Company, Pinnacle Vista, Calloway, and Briggs, as amended in connection with the 2019 Follow-On Investment.
"Ownership Percentage" means, with respect to any Stockholder as of any date of determination, the percentage equal to (a) the number of Fully Diluted Shares Beneficially Owned by such Stockholder as of such date, divided by (b) the total number of Fully Diluted Shares outstanding as of such date, expressed as a percentage.
"Permitted Transferee" means (a) with respect to Pinnacle Vista, any Affiliate of Pinnacle Vista, any successor fund or parallel vehicle managed or advised by Pinnacle Vista Capital Management LLC or any of its Affiliates, and any limited partner of Pinnacle Vista receiving a distribution in kind of shares; and (b) with respect to each Founder, (i) such Founder's spouse, parents, siblings, children, grandchildren, and their respective spouses (collectively, "family members"), (ii) any trust established by such Founder or any family member of such Founder for estate-planning purposes, (iii) any family limited partnership or limited liability company controlled by such Founder, and (iv) any individual retirement account for the benefit of such Founder; provided, in each case, that such Permitted Transferee has agreed in writing to be bound by all terms and conditions of this Agreement as a condition to such Transfer in accordance with Section 3.4.
"Person" means any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, unincorporated organization, association, governmental authority, or any other entity of any kind or nature.
"Pre-IPO Shares" means the one hundred million (100,000,000) shares of Common Stock outstanding immediately prior to the IPO on a fully diluted, post-reclassification basis (giving effect to the stock reclassification and recapitalization effected in connection with the IPO).
"Prohibited Transferee" means any Person that is a direct competitor of the Company in the utility-scale renewable energy sector (including development, construction, ownership, or operation of utility-scale solar, wind, or energy storage projects in the United States), as reasonably determined by a majority of the Independent Directors.
"Qualified IPO" means an underwritten initial public offering of shares of Common Stock of the Company, registered under the Securities Act, resulting in the listing of the Common Stock on a national securities exchange, with aggregate gross proceeds to the Company and any selling stockholders of at least Two Hundred Fifty Million Dollars ($250,000,000) (before deducting underwriting discounts and commissions and offering expenses).
"Registration Rights Agreement" means the Registration Rights Agreement, dated as of the IPO Closing Date, by and among the Company and Pinnacle Vista, as the same may be amended, modified, supplemented, or restated from time to time.
"Registration Statement" means the Registration Statement on Form S-1 (File No. 333-[●]) filed by the Company with the SEC in connection with the IPO, as amended or supplemented.
"ROFO Notice" has the meaning set forth in Section 3.5(a).
"ROFO Period" has the meaning set forth in Section 3.5(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Stockholder" means each of Pinnacle Vista, Garrett Calloway, and Elaine Briggs, together with their respective Permitted Transferees who become parties to this Agreement in accordance with Section 3.4, and "Stockholders" means all of them, collectively.
"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, joint venture, or other entity of which such Person (a) Beneficially Owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities or equity interests, or (b) otherwise has the power to vote, direct the voting of, or direct the management and policies of such entity (whether through ownership, by contract, or otherwise).
"Tag-Along Notice" has the meaning set forth in Section 3.6(a).
"Tax" or "Taxes" means any and all federal, state, local, foreign, and other taxes, assessments, charges, duties, levies, and similar governmental charges, including income, franchise, profits, gross receipts, capital gains, capital stock, value added, use, sales, property, personal property, stamp, excise, employment, social security, workers' compensation, unemployment, disability, payroll, occupation, premium, windfall profits, customs, severance, transfer, recapture, production, withholding, alternative or add-on minimum, or other taxes or charges imposed by any governmental authority, including any interest, penalty, or addition thereto.
"Transfer" means, with respect to any Equity Securities, any direct or indirect sale, assignment, transfer, pledge, hypothecation, encumbrance, gift, bequest, distribution, or other disposition of such Equity Securities, or any interest therein, whether voluntary or involuntary, by operation of law or otherwise, and including (without limitation) any hedging, short-selling, or derivative transaction that has the economic effect of a disposition of such Equity Securities; provided, however, that "Transfer" shall not include (a) the grant of a revocable proxy to vote Equity Securities in connection with a meeting of stockholders if such proxy is granted in accordance with this Agreement, or (b) the mere execution or delivery of a voting agreement in accordance with this Agreement. "Transferred" and "Transferring" shall have correlative meanings.
Section 1.2 — Rules of Construction
(a) Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (iv) the terms "Article," "Section," "Exhibit," and "Schedule" refer to the specified Article, Section, Exhibit, or Schedule of or to this Agreement unless otherwise specified; (v) the word "including" means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it; and (vi) references to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.
(b) The headings and captions used in this Agreement are used for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize, or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no heading or caption had been used herein.
(c) The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by all Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
(d) No summary of this Agreement prepared by any Party shall affect the interpretation of this Agreement.
ARTICLE II — BOARD OF DIRECTORS; CORPORATE GOVERNANCE
Section 2.1 — Board Composition
(a) As of the IPO Closing Date, the Board shall consist of seven (7) directors. The initial composition of the Board shall be as follows:
(i) Garrett Calloway (Co-Founder, Chairman and Chief Executive Officer of the Company) — Management Director;
(ii) Elaine Briggs (Co-Founder and President, Development of the Company) — Management Director;
(iii) Hugh Pemberton (Co-Founder and Managing Partner of Pinnacle Vista Capital Management LLC) — Investor Designee;
(iv) Diane Kovac (Co-Founder and Managing Partner of Pinnacle Vista Capital Management LLC) — Investor Designee;
(v) Warren Okoro — Independent Director;
(vi) Catherine Liang — Independent Director; and
(vii) Richard Estavez — Independent Director.
(b) The Board may increase or decrease the total number of directors constituting the full Board only upon the approval of a majority of the full Board (including at least one (1) Investor Designee, for so long as Pinnacle Vista's Ownership Percentage equals or exceeds twenty-five percent (25%)); provided that any increase in the size of the Board shall not diminish or adversely affect Pinnacle Vista's designation rights under Section 2.2 or result in a decrease in the proportional representation of the Investor Designees on the Board relative to the total number of directors constituting the full Board.
(c) For so long as this Article II remains in effect, the Company shall take all Necessary Action (as defined below) to cause the Board to be constituted in a manner consistent with the requirements of this Section 2.1 and Section 2.2. "Necessary Action" means, with respect to any specified result, all actions (to the extent permitted by applicable law and applicable listing standards) necessary or desirable to cause such result, including (i) calling special meetings of the Board or stockholders, (ii) voting or providing a written consent or proxy with respect to shares of Common Stock, (iii) causing the adoption of stockholder resolutions and amendments to the organizational documents of the Company, (iv) executing agreements and instruments, and (v) making, or causing to be made, with governmental, administrative, or regulatory authorities, all filings, registrations, or similar actions that are required to achieve such result.
Section 2.2 — Pinnacle Vista Board Designation Rights
(a) For so long as this Agreement remains in effect, Pinnacle Vista shall have the right to designate individuals for nomination to the Board in accordance with the following step-down schedule, based on Pinnacle Vista's Ownership Percentage as of the record date for the applicable annual or special meeting of stockholders (or, in the case of a vacancy, as of the date such vacancy is to be filled):
(b) For reference purposes, as of the IPO Closing Date (assuming the base offering and no exercise of the overallotment option):
(i) Pinnacle Vista holds approximately sixty-two million (62,000,000) shares of Common Stock prior to the IPO, representing approximately sixty-two percent (62%) of the Pre-IPO Shares.
(ii) In connection with the IPO, Pinnacle Vista is selling approximately six million eight hundred eighteen thousand one hundred eighty-two (6,818,182) secondary shares at an assumed offering price of $22.00 per share, resulting in post-IPO Beneficial Ownership of approximately fifty-five million one hundred eighty-one thousand eight hundred eighteen (55,181,818) shares out of a total of approximately one hundred twenty-three million seven hundred thirteen thousand six hundred thirty-six (123,713,636) shares of Common Stock outstanding, representing an Ownership Percentage of approximately forty-four and six-tenths percent (44.6%).
(iii) If the underwriters' overallotment option is exercised in full (and assuming no additional secondary sales by Pinnacle Vista in the overallotment), Pinnacle Vista's post-IPO Beneficial Ownership would be approximately fifty-five million one hundred eighty-one thousand eight hundred eighteen (55,181,818) shares out of a total of approximately one hundred twenty-seven million two hundred seventy-two thousand seven hundred twenty-seven (127,272,727) shares of Common Stock outstanding, representing an Ownership Percentage of approximately forty-three and four-tenths percent (43.4%).
(iv) Accordingly, Pinnacle Vista's initial post-IPO Ownership Percentage triggers the "greater than or equal to 40%" threshold, entitling Pinnacle Vista to designate two (2) Investor Designees. The initial Investor Designees shall be Hugh Pemberton and Diane Kovac.
(c) Each individual designated by Pinnacle Vista as an Investor Designee must (i) be willing to serve as a director of the Company, (ii) meet the qualifications for directors set forth in the Amended and Restated Bylaws, (iii) comply with all applicable legal requirements (including securities laws), and (iv) complete a director questionnaire in the form customarily used by the Company for its director nominees. The Company may reject any Investor Designee only if such individual (x) has been convicted of a felony involving moral turpitude, fraud, or dishonesty, (y) is subject to a disqualification order under applicable securities laws, or (z) would cause the Company to violate applicable law or regulation.
(d) Pinnacle Vista shall have the right to change or replace any Investor Designee at any time, subject to compliance with the requirements of this Section 2.2, by providing written notice to the Company.
(e) Upon the date on which Pinnacle Vista's Ownership Percentage first falls below five percent (5%) of Fully Diluted Shares, all of Pinnacle Vista's rights under this Section 2.2 shall terminate, and Pinnacle Vista shall promptly cause any remaining Investor Designees to tender their resignations from the Board (and any committees thereof), effective as of such date or such later date as may be reasonably requested by the Board to ensure orderly transition.
Section 2.3 — Nomination and Voting Obligations
(a) Company Obligations. For so long as Pinnacle Vista has the right to designate one or more Investor Designees under Section 2.2:
(i) The Company shall include each Investor Designee in the slate of nominees recommended by the Board and the Nominating and Corporate Governance Committee (or any successor committee) for election at each annual meeting of stockholders (or any special meeting of stockholders called for the purpose of electing directors).
(ii) The Company shall use its reasonable best efforts to cause the election of each Investor Designee to the Board, including by (A) recommending that the stockholders of the Company vote in favor of the election of such Investor Designee, (B) soliciting proxies in favor of the election of such Investor Designee in the same manner as it solicits proxies in favor of its other director nominees, and (C) otherwise supporting each Investor Designee for election in a manner no less rigorous and favorable than the manner in which the Company supports any of its other nominees.
(iii) The Company shall include each Investor Designee in any proxy statement, annual report, or other disclosure document distributed to stockholders in connection with such election, with biographical and other information concerning such Investor Designee in the same form and manner as the Company provides for its other director nominees.
(b) Founder Voting Obligations. Each Founder Stockholder agrees to vote (or cause to be voted) all shares of Common Stock and other Equity Securities Beneficially Owned by such Founder Stockholder at each meeting of stockholders at which directors are to be elected (and in connection with any written consent of stockholders) in favor of the election of each Investor Designee designated by Pinnacle Vista in accordance with Section 2.2.
(c) Pinnacle Vista Voting Obligations. Pinnacle Vista agrees to vote (or cause to be voted) all shares of Common Stock and other Equity Securities Beneficially Owned by the Investor at each meeting of stockholders at which directors are to be elected (and in connection with any written consent of stockholders) in favor of the Company's full recommended slate of director nominees, including any Management Directors and Independent Directors nominated by the Board.
(d) Compliance with Law. Notwithstanding anything to the contrary in this Section 2.3, neither the Company, Pinnacle Vista, nor any Founder Stockholder shall be required to take any action that would violate applicable law or the fiduciary duties of the directors of the Company under the DGCL.
Section 2.4 — Vacancies and Removal
(a) Replacement of Investor Designees. If an Investor Designee ceases to serve as a director of the Company for any reason, including death, disability, resignation, retirement, or removal, Pinnacle Vista shall have the right to designate a replacement Investor Designee to fill such vacancy; provided that Pinnacle Vista's Ownership Percentage at the time of such designation meets the applicable threshold under Section 2.2 entitling Pinnacle Vista to such number of Investor Designees. The Company shall take all Necessary Action to cause any such replacement Investor Designee to be promptly appointed to the Board to fill such vacancy.
(b) Step-Down Obligations. Pinnacle Vista shall not be required to cause the resignation or removal of any Investor Designee except as required by the step-down schedule set forth in Section 2.2; provided, however, that within thirty (30) calendar days after Pinnacle Vista's Ownership Percentage first falls below an applicable threshold set forth in Section 2.2, Pinnacle Vista shall take such action as is reasonably necessary to reduce the number of Investor Designees serving on the Board to the number permitted at the new threshold level, including by causing the applicable Investor Designee(s) to tender their resignation(s) from the Board. If Pinnacle Vista fails to cause such resignation(s) within such thirty (30)-day period, the Company shall have the right to request the resignation of the applicable Investor Designee(s), and Pinnacle Vista shall promptly cause such resignation(s) to be tendered.
(c) Removal of Investor Designees. The Company shall not remove any Investor Designee from the Board without the prior written consent of Pinnacle Vista, except for cause (as determined by a majority of the Independent Directors in their good-faith judgment). For purposes of this Section 2.4(c), "cause" shall include (i) a final, non-appealable conviction of, or plea of guilty or nolo contendere to, a felony, (ii) a willful and material breach of fiduciary duty to the Company, (iii) a determination by a court of competent jurisdiction that such director has committed fraud, embezzlement, or misappropriation of Company property, or (iv) a final order or judgment of the SEC or any other regulatory body disqualifying such individual from serving as a director of a public company.
Section 2.5 — Board Committee Composition
(a) Initial Committee Composition. As of the IPO Closing Date, the committees of the Board shall be composed as follows:
(i) Audit Committee: Warren Okoro (Chair and designated audit committee financial expert within the meaning of Item 407(d)(5)(ii) of Regulation S-K), Catherine Liang, and Richard Estavez. All members of the Audit Committee shall be Independent Directors.
(ii) Compensation Committee: Catherine Liang (Chair), Richard Estavez, and Warren Okoro. All members of the Compensation Committee shall be Independent Directors.
(iii) Nominating and Corporate Governance Committee: Richard Estavez (Chair), Catherine Liang, and Hugh Pemberton (Investor Designee).
(b) Pinnacle Vista Committee Rights. For so long as Pinnacle Vista's Ownership Percentage equals or exceeds twenty-five percent (25%) of Fully Diluted Shares, Pinnacle Vista shall have the right to have at least one (1) Investor Designee serve as a member of the Nominating and Corporate Governance Committee (or any successor committee). The Company shall take all Necessary Action to cause the appointment of such Investor Designee to such committee.
(c) Compliance with Listing Standards and SEC Rules. Notwithstanding anything to the contrary in this Section 2.5, the composition of each committee of the Board shall comply with all applicable NYSE listing standards and SEC rules, subject to any applicable phase-in periods and any exemptions available to the Company, including the "controlled company" exemption described in Section 2.5(d).
(d) Controlled-Company Exemption. The Parties acknowledge that, as of the IPO Closing Date, Pinnacle Vista's combined voting power (together with any shares subject to voting arrangements with the Founders under this Agreement) may cause the Company to qualify as a "controlled company" within the meaning of Section 303A of the NYSE Listed Company Manual. For so long as the Company qualifies as a "controlled company," the Company may elect to rely on the applicable exemptions from the requirements for (i) a fully independent compensation committee and (ii) a fully independent nominating and corporate governance committee, and any applicable phase-in periods with respect to such requirements upon the Company's loss of "controlled company" status. The Company shall disclose its reliance on any such exemption as required by applicable NYSE listing standards and SEC rules.
Section 2.6 — Board Observer Rights
For so long as Pinnacle Vista's Ownership Percentage equals or exceeds five percent (5%) of Fully Diluted Shares but Pinnacle Vista is not entitled to designate at least one (1) Investor Designee to the Board (or, if entitled to designate one (1) Investor Designee pursuant to the 5%-to-less-than-15% threshold, such designation has not been approved by the Board pursuant to Section 2.2), Pinnacle Vista shall have the right to appoint one (1) non-voting observer (the "Board Observer") to attend all regular and special meetings of the Board (including telephonic meetings). The Board Observer shall be entitled to receive all materials and information provided to members of the Board at the same time such materials and information are provided to the directors; provided, however, that the Company may exclude the Board Observer from any portion of any meeting, and may withhold any materials or information from the Board Observer, to the extent that attendance or access, as applicable, would (a) create or exacerbate a conflict of interest between Pinnacle Vista and the Company, (b) result in the loss of attorney-client privilege or work-product protection with respect to matters discussed at such meeting or contained in such materials, or (c) otherwise violate applicable law. The Board Observer shall be subject to the confidentiality obligations set forth in Section 5.3.
Section 2.7 — Directors' and Officers' Insurance; Indemnification
(a) D&O Insurance. The Company shall at all times maintain directors' and officers' liability insurance (the "D&O Insurance") covering the directors and officers of the Company (including the Investor Designees) in an aggregate amount of not less than Fifty Million Dollars ($50,000,000), with terms, conditions, coverage limits, and deductibles that are customary for companies of a similar size, nature, and stage operating in the renewable energy industry. As of the date hereof, the Company's D&O Insurance tower consists of (i) primary coverage issued by Meridian National Assurance Company under policy no. DNO-22-048871, (ii) excess Layer 1 coverage issued by Stonebridge Indemnity Corp., and (iii) excess Layer 2 coverage issued by Commonwealth Omnivrel Insurance Ltd., with an aggregate annual premium of approximately $1.87 million. The Company shall not materially reduce the scope or amount of such insurance coverage without the prior consent of a majority of the Board (including at least one (1) Investor Designee, for so long as Pinnacle Vista has designation rights under Section 2.2).
(b) Indemnification Agreements. The Company shall enter into indemnification agreements with each director of the Company (including each Investor Designee) in substantially the form approved by the Board prior to the IPO Closing Date, providing for indemnification and advancement of expenses to the fullest extent permitted by the DGCL and the Amended and Restated Certificate of Incorporation.
(c) Organizational Documents. The Company shall at all times maintain in its Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws (each as effective upon the IPO Closing Date) provisions providing for indemnification and exculpation of directors to the fullest extent permitted by the DGCL, including Section 102(b)(7) and Section 145 thereof (or any successor provisions), and shall not amend, modify, or repeal any such provision in any manner that would adversely affect the rights of any director (including any Investor Designee) thereunder, without the prior written consent of such director.
ARTICLE III — TRANSFER RESTRICTIONS
Section 3.1 — Lock-Up Period Restrictions
(a) During the Lock-Up Period, no Stockholder shall Transfer any Equity Securities, except as expressly permitted by (i) the terms of the lock-up agreements entered into by such Stockholder in connection with the IPO (the "Lock-Up Agreements") and (ii) this Section 3.1.
(b) Notwithstanding Section 3.1(a), during the Lock-Up Period, a Stockholder may Transfer Equity Securities in connection with the following (to the extent consistent with the applicable Lock-Up Agreement):
(i) Transfers to Affiliates and Permitted Transferees, provided that the transferee executes and delivers to the Company and to Hargrove Keating & Co. (as lead-left book-running manager and representative of the underwriters) a lock-up agreement in substantially the same form as the transferring Stockholder's Lock-Up Agreement;
(ii) Transfers for bona fide estate-planning purposes, including transfers to trusts, family limited partnerships, or family limited liability companies, provided that the transferee executes and delivers a lock-up agreement in substantially the same form as described in clause (i);
(iii) The adoption (but not the execution of any sale or other disposition pursuant to) a trading plan established in accordance with Rule 10b5-1 under the Exchange Act;
(iv) Pledges of Equity Securities to bona fide third-party lending institutions as collateral for indebtedness, provided that any foreclosure, margin call, or similar disposition of such pledged Equity Securities during the Lock-Up Period shall be subject to the restrictions of this Section 3.1; and
(v) Transfers made pursuant to a bona fide third-party tender offer, merger, consolidation, or other similar transaction made to all holders of Common Stock that has been approved by the Board, provided that if such transaction is not completed, the Equity Securities subject to such Transfer shall remain subject to the restrictions of this Section 3.1.
(c) The restrictions set forth in this Section 3.1 are in addition to, and not in lieu of, the restrictions set forth in the Lock-Up Agreements. In the event of any conflict between the terms of this Section 3.1 and the terms of any Lock-Up Agreement, the more restrictive provision shall govern.
(d) Release Provisions. The restrictions set forth in this Section 3.1 may be waived or released, in whole or in part, (i) with the prior written consent of Hargrove Keating & Co. (as lead-left book-running manager and representative of the underwriters), or (ii) upon the occurrence of a Change of Control. If any release or waiver is granted to any Stockholder under the Lock-Up Agreements, the Company shall promptly notify each other Stockholder of such release or waiver, and each such other Stockholder shall be entitled to a proportional release of its shares from the restrictions of this Section 3.1 and the applicable Lock-Up Agreement on a pro rata basis.
Section 3.2 — Post-Lock-Up Transfer Restrictions (Pinnacle Vista)
Following the expiration of the Lock-Up Period, Pinnacle Vista may Transfer shares of Common Stock or other Equity Securities, subject to the following conditions:
(a) Compliance with Securities Laws. All Transfers shall be made in compliance with all applicable federal and state securities laws, including Rule 144 under the Securities Act (to the extent applicable), and the Investor shall furnish to the Company such certifications, legal opinions, or other information as the Company may reasonably request to confirm such compliance.
(b) Registration Rights. Pinnacle Vista may Transfer shares of Common Stock pursuant to the exercise of demand registration rights, shelf registration rights, piggyback registration rights, or other registration rights granted to Pinnacle Vista under the Registration Rights Agreement.
(c) Orderly Marketing Provisions. For any proposed Transfer by Pinnacle Vista (whether through a block trade, privately negotiated transaction, or other means, but excluding Transfers through registered offerings or open-market transactions) in a single transaction or series of related transactions representing more than three percent (3%) of Fully Diluted Shares:
(i) Pinnacle Vista shall provide the Company with at least five (5) Business Days' prior written notice of such proposed Transfer, which notice shall include the number of shares proposed to be Transferred, the proposed method of disposition, and, to the extent known, the identity of the proposed transferee(s) and the proposed per-share consideration.
(ii) The Company may, at its option, designate a block-trade coordinator (which may be one of the Company's existing investment banking relationships) to assist in effecting such Transfer in an orderly manner designed to minimize disruption to the trading market for the Common Stock. Pinnacle Vista shall cooperate in good faith with any such block-trade coordinator; provided that the Company shall bear the costs and expenses of any such block-trade coordinator, and the designation of a block-trade coordinator shall not unreasonably delay or impede Pinnacle Vista's ability to consummate the proposed Transfer.
(d) Prohibited Transferees. Pinnacle Vista shall not knowingly Transfer any Equity Securities to any Prohibited Transferee. If Pinnacle Vista becomes aware that a proposed transferee is a Prohibited Transferee, it shall promptly terminate or withdraw such proposed Transfer. Any Transfer made in violation of this Section 3.2(d) shall be voidable at the election of a majority of the Independent Directors.
Section 3.3 — Post-Lock-Up Transfer Restrictions (Founders)
Following the expiration of the Lock-Up Period, each Founder may Transfer shares of Common Stock or other Equity Securities, subject to the following conditions:
(a) Compliance with Securities Laws. All Transfers shall be made in compliance with all applicable federal and state securities laws, and the applicable Founder shall furnish to the Company such certifications, legal opinions, or other information as the Company may reasonably request to confirm such compliance.
(b) Registration Rights. Each Founder may Transfer shares of Common Stock pursuant to the exercise of piggyback registration rights (to the extent available under the Registration Rights Agreement) or pursuant to any other registration rights that may be granted to such Founder from time to time.
(c) Insider Trading Policy Compliance. For so long as a Founder serves as an executive officer of the Company, any proposed Transfer of Equity Securities by such Founder (other than Transfers to a Permitted Transferee that do not involve a change in Beneficial Ownership for purposes of Section 16 of the Exchange Act) shall comply with the Company's insider trading policy (as in effect from time to time) and any applicable pre-clearance requirements established by the Company's General Counsel or compliance officer. Each Founder acknowledges and agrees that the Company may impose additional restrictions on Transfers of Equity Securities by executive officers, including blackout periods surrounding the release of quarterly and annual financial results and other material non-public information.
(d) Prohibited Transferees. No Founder shall knowingly Transfer any Equity Securities to any Prohibited Transferee. Any Transfer made in violation of this Section 3.3(d) shall be voidable at the election of a majority of the Independent Directors.
Section 3.4 — Permitted Transferees
(a) Pinnacle Vista Permitted Transferees. Pinnacle Vista may Transfer Equity Securities to any of its Permitted Transferees (i.e., Affiliates, successor funds, parallel vehicles, and co-investment vehicles managed or advised by Pinnacle Vista Capital Management LLC), provided that, as a condition precedent to such Transfer:
(i) Such Permitted Transferee shall execute and deliver a joinder agreement in substantially the form attached hereto as Exhibit A, pursuant to which such Permitted Transferee agrees to be bound by all of the terms and conditions of this Agreement as if such Permitted Transferee were an original party hereto; and
(ii) Pinnacle Vista shall deliver written notice of such Transfer to the Company and each Founder Stockholder at least five (5) Business Days prior to the consummation thereof.
(b) Founder Permitted Transferees. Each Founder may Transfer Equity Securities to any of such Founder's Permitted Transferees (i.e., family members, trusts established for estate-planning purposes, family limited partnerships, and entities controlled by the applicable Founder), provided that, as a condition precedent to such Transfer:
(i) Such Permitted Transferee shall execute and deliver a joinder agreement in substantially the form attached hereto as Exhibit A, pursuant to which such Permitted Transferee agrees to be bound by all of the terms and conditions of this Agreement as if such Permitted Transferee were an original party hereto; and
(ii) The applicable Founder shall deliver written notice of such Transfer to the Company, and, if such Transfer involves shares representing more than one percent (1%) of Fully Diluted Shares, to Pinnacle Vista, at least five (5) Business Days prior to the consummation thereof.
(c) Void Transfers. Any Transfer to a Permitted Transferee that does not comply with the requirements of this Section 3.4 shall be void ab initio, and the Company shall not, and shall instruct its transfer agent not to, register any such Transfer on the books and records of the Company or recognize any such purported transferee as a holder of Common Stock.
(d) Transferor Liability. Notwithstanding any Transfer to a Permitted Transferee, the transferring Stockholder shall remain liable for the performance by such Permitted Transferee of all obligations under this Agreement and shall guarantee such performance.
Section 3.5 — Right of First Offer (ROFO)
(a) ROFO Notice. Prior to any proposed Transfer by Pinnacle Vista of shares of Common Stock representing more than five percent (5%) of Fully Diluted Shares to any third party (other than Transfers to Permitted Transferees, Transfers effected through open-market sales, and Transfers effected pursuant to registered offerings under the Registration Rights Agreement), Pinnacle Vista shall first deliver a written notice (the "ROFO Notice") to the Company and each Founder, which ROFO Notice shall include (i) the number of shares proposed to be Transferred, (ii) the proposed per-share price (which shall be the fair market value of the shares as determined in good faith by Pinnacle Vista or, if Pinnacle Vista has received a bona fide third-party offer, the per-share price set forth in such third-party offer), (iii) the other material terms and conditions of the proposed Transfer, and (iv) the identity of any proposed third-party transferee (to the extent known at such time).
(b) ROFO Exercise Period. The Company and the Founders shall have fifteen (15) Business Days following receipt of the ROFO Notice (the "ROFO Period") to deliver written notice to Pinnacle Vista electing to purchase all or a portion of the shares offered in the ROFO Notice. The Company and the Founders shall have the right to purchase such shares on a pro rata basis (based on the relative Ownership Percentages of the Company (treated as if the shares to be purchased by the Company were treasury shares) and the Founders). To the extent the Company or any Founder does not exercise its or his or her pro rata right in full, the other offerees shall have the right to purchase the unsubscribed shares. The purchase price for any shares purchased pursuant to this Section 3.5 shall be the per-share price specified in the ROFO Notice.
(c) Completion of Transfer. If the Company and the Founders do not exercise the right of first offer with respect to all of the shares specified in the ROFO Notice within the ROFO Period, Pinnacle Vista may proceed with the Transfer of the remaining unsubscribed shares to a third party, on terms and conditions no more favorable to the third party than those set forth in the ROFO Notice, within ninety (90) calendar days following the expiration of the ROFO Period. If such Transfer is not consummated within such ninety (90)-day period, Pinnacle Vista shall be required to comply again with the provisions of this Section 3.5 before Transferring such shares.
(d) Closing. Any purchase of shares by the Company or the Founders pursuant to this Section 3.5 shall be consummated within thirty (30) calendar days following the exercise of the right of first offer (or such longer period as may be required to obtain any necessary regulatory approvals), at a closing to be held at the principal offices of the Company or at such other place as the parties may agree.
Section 3.6 — Tag-Along Rights
(a) Tag-Along Notice. If Pinnacle Vista proposes to Transfer shares of Common Stock representing more than fifteen percent (15%) of Fully Diluted Shares in a single transaction or a series of related transactions to a third party (other than a Permitted Transferee, or through a registered offering or open-market sales), Pinnacle Vista shall, at least ten (10) Business Days prior to the proposed closing of such Transfer, deliver a written notice (the "Tag-Along Notice") to each Founder, which notice shall include (i) the number of shares proposed to be Transferred, (ii) the identity of the proposed transferee, (iii) the proposed per-share consideration and other material terms and conditions of the proposed Transfer, and (iv) the proposed closing date.
(b) Exercise of Tag-Along Rights. Each Founder shall have the right, exercisable by delivering written notice to Pinnacle Vista within ten (10) Business Days following receipt of the Tag-Along Notice, to include in such Transfer, on the same terms and conditions as Pinnacle Vista, a number of shares of Common Stock equal to such Founder's pro rata share. For purposes of this Section 3.6, "pro rata share" means, with respect to each Founder, a number of shares equal to the product of (x) the total number of shares proposed to be Transferred by Pinnacle Vista, multiplied by (y) a fraction, the numerator of which is the total number of shares of Common Stock Beneficially Owned by such Founder as of the date of the Tag-Along Notice, and the denominator of which is the aggregate number of shares of Common Stock Beneficially Owned by Pinnacle Vista and such Founder as of the date of the Tag-Along Notice.
(c) Conditions to Tag-Along. As a condition to participating in any tag-along Transfer, each participating Founder shall (i) execute such purchase agreements, representation letters, and other documentation as may be reasonably required by the proposed transferee (in the same form executed by Pinnacle Vista, with such modifications as are appropriate to reflect the nature and scope of the Founder's participation), and (ii) agree to make representations, warranties, and covenants (including indemnification obligations) on a several (and not joint) basis to the proposed transferee, in each case no more burdensome than those made by Pinnacle Vista (subject to pro rata adjustments).
(d) Reduction of Transfer. If the proposed transferee is unwilling to purchase shares from both Pinnacle Vista and the participating Founders, Pinnacle Vista shall reduce the number of shares it proposes to Transfer by the number of shares the Founders have elected to include, such that the participating Founders are able to sell their full pro rata share. If such reduction would reduce the aggregate proceeds to Pinnacle Vista below a level acceptable to Pinnacle Vista, Pinnacle Vista may withdraw its proposed Transfer.
Section 3.7 — Drag-Along Rights
(a) Drag-Along Transaction. If Pinnacle Vista (together with its Affiliates) proposes to consummate a bona fide Change of Control transaction (including a merger, consolidation, sale of substantially all assets, or tender offer) involving the sale of all or substantially all of the outstanding shares of Common Stock to a third party that is not an Affiliate of Pinnacle Vista (a "Drag-Along Transaction"), Pinnacle Vista may, by delivering written notice to each Founder (a "Drag-Along Notice"), require each Founder to:
(i) Sell (or tender), or vote in favor of the sale (or tender) of, all of such Founder's shares of Common Stock and other Equity Securities on the same terms and conditions as Pinnacle Vista; and
(ii) Take all actions and execute all documents reasonably necessary or desirable to consummate the Drag-Along Transaction, including executing merger agreements, tender agreements, letters of transmittal, powers of attorney, and any other instruments reasonably requested by Pinnacle Vista or the acquiring party.
(b) Conditions to Drag-Along. The drag-along right set forth in Section 3.7(a) shall be exercisable by Pinnacle Vista only if each of the following conditions is satisfied:
(i) The per-share consideration to be received by each Founder in the Drag-Along Transaction is equal to or greater than the per-share consideration to be received by Pinnacle Vista (and all forms of consideration shall be identical, unless otherwise agreed by the applicable Founder); and
(ii) The proposed Drag-Along Transaction has been approved by a majority of the Independent Directors.
(c) Founders' Obligations. Upon delivery of a Drag-Along Notice and satisfaction of the conditions set forth in Section 3.7(b), each Founder shall be obligated to:
(i) Vote all of such Founder's shares of Common Stock and other Equity Securities in favor of the Drag-Along Transaction at any meeting of stockholders called for such purpose (and execute any written consent in lieu of a meeting);
(ii) Refrain from exercising any appraisal or dissenters' rights under applicable law in connection with the Drag-Along Transaction;
(iii) Execute and deliver all agreements, instruments, certificates, and other documents reasonably necessary or desirable to consummate the Drag-Along Transaction; and
(iv) Make such representations, warranties, and covenants (including customary indemnification obligations) to the acquiring party as may be reasonably requested, provided that (A) no Founder shall be required to make representations and warranties other than with respect to such Founder's title to, and authority to sell, such Founder's shares, and customary representations regarding organization, authority, and enforceability, and (B) any indemnification obligations of a Founder shall be on a several (and not joint) basis and shall not exceed the proceeds received by such Founder in the Drag-Along Transaction.
(d) Termination of Drag-Along. If the Drag-Along Transaction is not consummated within one hundred eighty (180) calendar days following delivery of the Drag-Along Notice (as such period may be extended to obtain required regulatory approvals), the Drag-Along Notice shall expire and be of no further effect, and Pinnacle Vista shall be required to deliver a new Drag-Along Notice in connection with any subsequent proposed Drag-Along Transaction.
ARTICLE IV — STANDSTILL PROVISIONS
Section 4.1 — Standstill Obligations of Pinnacle Vista
For so long as Pinnacle Vista's Ownership Percentage is below seventy percent (70%) of Fully Diluted Shares, Pinnacle Vista shall not, and shall cause its Affiliates not to, without the prior written consent of a majority of the Independent Directors, directly or indirectly:
(a) Acquire, or agree, offer, propose, or seek to acquire, by purchase, tender offer, exchange offer, or otherwise, Beneficial Ownership of any additional Equity Securities if such acquisition would result in Pinnacle Vista's Ownership Percentage exceeding the higher of (i) Pinnacle Vista's Ownership Percentage as of the IPO Closing Date, or (ii) sixty-two percent (62%) of Fully Diluted Shares;
(b) Solicit proxies (as such term is defined in Rule 14a-1 under the Exchange Act) or become a "participant" in a "solicitation" (as such terms are defined in Rule 14a-1 under the Exchange Act) with respect to any matter submitted to the stockholders of the Company, or advise, encourage, or influence any other Person with respect to the voting or disposition of any Equity Securities, except as expressly contemplated by this Agreement (including the voting obligations set forth in Section 2.3);
(c) Form, join, participate in, or encourage the formation of any "group" (within the meaning of Section 13(d)(3) of the Exchange Act) for the purpose of acquiring, holding, voting, or disposing of Equity Securities, except as expressly contemplated by this Agreement;
(d) Make, or cause to be made, any public announcement (including by filing a Schedule 13D or amendment thereto, or any Schedule TO, or any similar filing with the SEC) with respect to, or publicly submit any proposal for, any merger, business combination, restructuring, recapitalization, tender offer, exchange offer, or other extraordinary transaction involving the Company or any of its Subsidiaries, or the acquisition of all or substantially all of the assets or business of the Company or any of its Subsidiaries, except as contemplated by the drag-along provisions of Section 3.7;
(e) Take any action to seek or propose, alone or in concert with others, to control, change, or influence the management, the Board, or the policies or affairs of the Company, except as expressly contemplated by Article II; or
(f) Request that the Company or any of its representatives amend or waive any provision of this Section 4.1, in each case in a manner that would require public disclosure of such request.
Section 4.2 — Exceptions to Standstill
The standstill obligations set forth in Section 4.1 shall not apply to, or prohibit, any of the following actions:
(a) The exercise by Pinnacle Vista of its designation rights under Article II of this Agreement;
(b) The exercise by Pinnacle Vista of its registration rights under the Registration Rights Agreement;
(c) Any bona fide tender offer, exchange offer, merger proposal, or other similar transaction that is made by a third party (i.e., not by Pinnacle Vista or its Affiliates) to all holders of Common Stock generally;
(d) Open-market purchases of shares of Common Stock by Pinnacle Vista in the ordinary course of its investment activities, provided that such purchases do not, in the aggregate, exceed one percent (1%) of Fully Diluted Shares in any ninety (90)-day period;