CONFIDENTIAL — DRAFT — NOT FOR FILING

CONFIDENTIAL — DRAFT — NOT FOR FILING
NEW YORK STOCK EXCHANGE
ORIGINAL LISTING APPLICATION
Application No. NYSE-2022-04218
Applicant: CALLOWAY-BRIGGS RENEWABLES INC.
Proposed Ticker Symbol: CBRI
Date of Application: April 11, 2022
STATUS: DRAFT — NOT FILED Offering Placed in Dormant Status June 17, 2022
Prepared by:
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
C&H Matter No. 1015-00001
Contact for Applicant:
Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Issuer's Counsel Contact:
Jennifer Kwon, Partner Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
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PART I — GENERAL INFORMATION
Section 1 — Identification of Applicant
The following information is provided for the identification of the applicant seeking an original listing on the New York Stock Exchange (the "NYSE" or the "Exchange").
Full Legal Name of Applicant: Calloway-Briggs Renewables Inc. (hereinafter referred to as the "Company," the "Applicant," or "CBR").
State or Jurisdiction of Incorporation: The Company is incorporated under the laws of the State of Delaware pursuant to the Delaware General Corporation Law ("DGCL").
Date of Incorporation: The Company was originally incorporated in the State of Delaware in 2014. In connection with the proposed initial public offering described in this Application, the Company intends to adopt an Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, each to become effective upon the closing of the initial public offering. Copies of the draft Amended and Restated Certificate of Incorporation and the draft Amended and Restated Bylaws are attached hereto as Exhibit A and Exhibit B, respectively.
Employer Identification Number (EIN): 83-4027615
Principal Executive Office Address:
Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Registered Agent in State of Incorporation:
Capitol Statutory Services, Inc. 1209 Orange Street Wilmington, DE 19801
Telephone Number of Principal Office: [To be inserted]
Website: [To be inserted]
Industry Classification / SIC Code: The Company operates in the renewable energy sector, with principal activities encompassing the development, construction, ownership, and operation of utility-scale solar photovoltaic ("solar PV") generation facilities, onshore wind generation facilities, and battery energy storage systems ("BESS"). The Company's operations span regulated and unregulated utility power generation and fall within the Standard Industrial Classification codes applicable to electric services and renewable energy generation.
Fiscal Year End: December 31
Independent Auditor:
Ashford & Pemberton LLP 30 Rockefeller Plaza, Suite 2800 New York, NY 10112
Lead Engagement Partner: Gregory Sondheim, CPA
Ashford & Pemberton LLP is an independent registered public accounting firm registered with the Public Company Accounting Oversight Board ("PCAOB") and has served as the Company's independent auditor since fiscal year 2018. Ashford & Pemberton LLP has audited the Company's consolidated financial statements for the fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021, each of which is included in the Company's Registration Statement on Form S-1 (as amended) filed with the Securities and Exchange Commission ("SEC").
Transfer Agent and Registrar:
Continental Shareowner Services, Inc. 1 Ashbury Asset Advisors Plaza, 30th Floor New York, NY 10004
Contact: Maria Costello, Vice President, Corporate Actions
Continental Shareowner Services, Inc. has been engaged as the transfer agent and registrar for the Company's common stock in connection with the proposed initial public offering. The Company will coordinate with Continental Shareowner Services, Inc. to ensure DTC eligibility and book-entry transfer capability prior to the listing date.
Issuer's Counsel:
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
Contact: Jennifer Kwon, Partner
Underwriters' Counsel:
Prescott, Danforth & Yee LLP 1271 Avenue of the Americas New York, NY 10020
Section 2 — Description of Securities to Be Listed
This Section 2 sets forth the material terms and characteristics of the securities for which listing on the New York Stock Exchange is sought.
Type of Security: Common Stock, par value $0.01 per share (the "Common Stock").
Proposed Ticker Symbol: CBRI
CUSIP Number: To be determined. The Company will cause a CUSIP number to be assigned to the Common Stock by CUSIP Global Services prior to the listing date. The assigned CUSIP number will be communicated to the Exchange promptly upon assignment.
Authorized Shares: The total number of authorized shares of Common Stock will be as set forth in the Amended and Restated Certificate of Incorporation of the Company, a draft of which is attached hereto as Exhibit A. The Amended and Restated Certificate of Incorporation is expected to be filed with the Delaware Secretary of State upon or immediately prior to the closing of the initial public offering.
Pre-IPO Shares Outstanding: Prior to the initial public offering, and after giving effect to the reclassification of the Company's existing equity interests into shares of Common Stock and the conversion or exchange of all outstanding convertible or exchangeable securities on a fully diluted basis, the Company will have 100,000,000 shares of Common Stock outstanding (the "Pre-IPO Shares"). The reclassification will be effected pursuant to the Amended and Restated Certificate of Incorporation and related corporate actions approved by the Board of Directors and existing stockholders.
Shares to Be Issued in the Initial Public Offering (Base Offering): The Company is proposing to offer and sell, together with the selling stockholder identified below, a total of 23,713,636 shares of Common Stock in the base offering, allocated as follows:
(a) Primary Shares: 16,895,455 shares of Common Stock to be issued and sold by the Company in a primary offering; and
(b) Secondary Shares: 6,818,182 shares of Common Stock to be sold by Pinnacle Vista Capital Partners III, LP (the "Selling Stockholder") in a secondary offering. The Company will not receive any proceeds from the sale of secondary shares by the Selling Stockholder.
Overallotment Option (Greenshoe) Shares: The Company and the Selling Stockholder have agreed to grant the underwriters an option, exercisable within 30 days of the date of the final prospectus, to purchase up to an additional 3,559,091 shares of Common Stock (representing 15% of the base offering shares) solely to cover over-allotments, if any. The allocation of overallotment shares between primary and secondary shares will be determined at the time of exercise in consultation with the underwriters.
Total Shares to Be Listed: The Company is seeking to list up to 127,272,727 shares of Common Stock on the New York Stock Exchange, calculated as follows:
•  Pre-IPO Shares Outstanding: 100,000,000 shares
•  Plus: IPO Shares (base offering): 23,713,636 shares
•  Plus: Overallotment Option Shares (full exercise): 3,559,091 shares
•  Total: Up to 127,272,727 shares
Post-IPO Shares Outstanding:
•  Base offering (no overallotment exercise): 123,713,636 shares
•  Full overallotment exercise: 127,272,727 shares
Assumed IPO Price: For purposes of this Application, the Company has assumed an initial public offering price of $22.00 per share, which represents the midpoint of the anticipated filing range. The actual offering price will be determined through the book-building process in consultation with the underwriters and may differ materially from this assumed price.
Aggregate Offering Size: Based on the assumed IPO price of $22.00 per share and the full exercise of the overallotment option, the aggregate offering size is expected to be approximately $600,000,000, calculated as follows:
•  Base offering: 23,713,636 shares × $22.00 = $521,700,000 (approximately)
•  Overallotment: 3,559,091 shares × $22.00 = $78,300,000 (approximately)
•  Total (full exercise): $600,000,000 (approximately)
Voting Rights: Each share of Common Stock entitles the holder thereof to one vote on all matters submitted to a vote of stockholders. The Company will not have any dual-class or multi-vote stock structure in effect at the time of listing. The Amended and Restated Certificate of Incorporation does not provide for any shares of capital stock with voting rights in excess of one vote per share. The Amended and Restated Certificate of Incorporation includes a sundown provision with respect to any future consideration of differential voting rights. All voting rights are subject to the provisions of the Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws, the Amended and Restated Stockholders' Agreement, and applicable law.
Dividend Rights: The Company does not currently anticipate paying any cash dividends on shares of Common Stock for the foreseeable future. The Company intends to retain all available funds and any future earnings for use in the operation and expansion of its business, including the development and construction of its renewable energy project pipeline. The declaration and payment of dividends are at the sole discretion of the Board of Directors and will depend on range factors, including the Company's financial condition, results of operations, capital requirements, contractual restrictions, and other factors the Board of Directors may deem relevant. The Company's existing credit agreements with Veltrano National Bank, as administrative agent, contain covenants that restrict the Company's ability to pay dividends, and additional restrictions may be imposed under future financing arrangements.
Liquidation Rights: In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Common Stock will be entitled to receive, on a pro rata basis, all remaining assets of the Company available for distribution to stockholders after payment of, or adequate provision for, all debts and other liabilities of the Company and the satisfaction of any liquidation preferences applicable to any outstanding shares of preferred stock (of which none are currently outstanding or proposed to be outstanding upon listing).
DTC Eligibility: The shares of Common Stock to be listed will be eligible for deposit and book-entry transfer through The Depository Trust Company ("DTC"). The Company will coordinate with Continental Shareowner Services, Inc. (as transfer agent and registrar) to submit the necessary DTC eligibility request letter and related documentation to ensure that the Common Stock is DTC-eligible on or prior to the listing date. The Company anticipates that shares of Common Stock will be evidenced solely in book-entry form through the facilities of DTC and its participants, and that no physical stock certificates will be issued in connection with the initial public offering.
Section 3 — Registration Statement
The Company has prepared and filed with the Securities and Exchange Commission a Registration Statement on Form S-1 under the Securities Act of 1933, as amended (the "Securities Act"), relating to the initial public offering of the Common Stock described in this Application.
Form of Registration Statement: Form S-1 (Securities Act of 1933, as amended). The Company has not previously filed any registration statement with the SEC and is not eligible to use short-form registration on Form S-3 at this time.
Confidential Submission under the JOBS Act: Yes. The Company initially submitted its Draft Registration Statement on Form DRS-1 on a confidential basis pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The Company qualifies as an "emerging growth company" as defined in Section 2(a)(19) of the Securities Act, as amended by the JOBS Act, on the basis that the Company's total annual gross revenues for its most recently completed fiscal year (FY 2021: $487.3 million) were below the $1.235 billion threshold applicable as of the date of filing. As an emerging growth company, the Company is entitled to certain scaled disclosure accommodations and exemptions as described more fully in the Registration Statement and in Section 17 of this Application.
SEC CIK Number: 0001948372
EDGAR Filing History:
The following is a summary of the principal filings made with the SEC in connection with the proposed initial public offering:
(a) Initial Draft Registration Statement (DRS-1): EDGAR Accession No. 0001948372-22-000001, filed April 11, 2022. This filing constituted the initial confidential submission of the Company's Draft Registration Statement on Form S-1 pursuant to the JOBS Act.
(b) Amendment No. 1 to Draft Registration Statement (DRS/A-1): EDGAR Accession No. 0001948372-22-000002, filed May 20, 2022. This amendment was filed in response to the first round of SEC staff comments and included revisions to the prospectus disclosure relating to, among other things, risk factors, management's discussion and analysis, and certain financial statement presentation matters.
(c) Amendment No. 2 to Draft Registration Statement (DRS/A-2): EDGAR Accession No. 0001948372-22-000003, filed June 10, 2022. This amendment was filed in response to the second round of SEC staff comments and included additional revisions and supplemental information requested by the staff.
SEC Comment History: The SEC Division of Corporation Finance issued two rounds of written comments with respect to the Company's Draft Registration Statement, as summarized below:
•  First Round of Comments: Received May 6, 2022. The first comment letter contained 18 comments addressing various aspects of the prospectus disclosure, including (i) the description of the Company's revenue recognition policies and practices, (ii) the presentation of non-GAAP financial measures (including Adjusted EBITDA), (iii) the adequacy of risk factor disclosure relating to the Company's reliance on government tax incentives and subsidies, (iv) the disclosure of related-party transactions, (v) the presentation of the Company's project pipeline, and (vi) various financial statement and accounting matters. The Company filed a response letter and Amendment No. 1 on May 20, 2022.
•  Second Round of Comments: Received June 3, 2022. The second comment letter contained 7 comments, consisting primarily of follow-up comments relating to (i) the Company's Adjusted EBITDA reconciliation, (ii) the disclosure of the tax-equity partnership structure for the Solaris West project, and (iii) certain legal proceedings disclosure. The Company filed a response letter and Amendment No. 2 on June 10, 2022.
•  Total Comments: 25 comments received across both rounds. All comments have been resolved to the satisfaction of the SEC staff.
•  Oral Clearance: The SEC staff provided oral clearance on June 14, 2022, indicating that no further comments were forthcoming and that the Registration Statement would be eligible for declaration of effectiveness upon the filing of a pricing amendment (including final pricing information, underwriting discounts, and related terms).
Status of Registration Statement: As of the date of this Application, the Registration Statement on Form S-1 has not been declared effective by the SEC. Following the receipt of oral clearance on June 14, 2022, the Company and its advisors determined, in light of prevailing market conditions and other strategic considerations, to place the proposed initial public offering in dormant status. The offering was formally placed in dormant status on June 17, 2022. The Company retains the ability to reactivate the offering and to proceed with the effectiveness of the Registration Statement, subject to the filing of any necessary amendments to update the disclosure contained therein and to reflect any material developments since the date of the most recent filing.
PART II — LISTING STANDARDS QUALIFICATION
Section 4 — Financial Standards
This Section 4 sets forth the financial and quantitative data demonstrating the Company's compliance with the initial listing standards of the New York Stock Exchange, as set forth in Section 102.01 of the NYSE Listed Company Manual. The Company relies primarily on the Global Market Capitalization / Revenue Test described in Section 4.2 below as the basis for its financial qualification for listing.
4.1 — Earnings Test (Alternative)
The Company does not rely on the earnings test set forth in Section 102.01A of the NYSE Listed Company Manual as its primary listing standard. The following information is presented solely for informational purposes and to provide the Exchange with a complete picture of the Company's historical earnings performance.
•  Fiscal Year 2021 Net Income: $41.7 million
•  Fiscal Year 2020 Net Income: $14.1 million
•  Fiscal Year 2019 Net Loss: ($22.4 million)
The NYSE earnings test under Section 102.01A requires aggregate pre-tax income of at least $10 million over the three most recent fiscal years, with positive pre-tax income in each of the two most recent fiscal years, and minimum pre-tax income of $2 million in each of the two most recent fiscal years. While the Company reported positive net income in each of fiscal years 2020 and 2021, the Company reported a net loss of ($22.4 million) in fiscal year 2019. The aggregate pre-tax income for the three fiscal years ended December 31, 2021, when taking into account the fiscal year 2019 loss, does not satisfy the $10 million aggregate threshold requirement with certainty depending on the applicable pre-tax income adjustments. Accordingly, the Company has elected to rely on the Global Market Capitalization / Revenue Test described in Section 4.2 below as the basis for its financial qualification for listing.
4.2 — Global Market Capitalization / Revenue Test
The Company satisfies the initial listing standards of the NYSE under Section 102.01C of the NYSE Listed Company Manual (Global Market Capitalization / Revenue Test). The relevant data and analysis are set forth below.
Pre-Money Equity Valuation:
The Company's pre-money equity valuation, calculated as the product of the Pre-IPO Shares outstanding (100,000,000 shares) and the assumed IPO price of $22.00 per share, is $2,200,000,000.
Post-Money Equity Valuation (Base Offering):
The Company's post-money equity valuation, calculated as the product of the post-IPO shares outstanding on a base offering basis (123,713,636 shares) and the assumed IPO price of $22.00 per share, is $2,721,700,000 (approximately).
Enterprise Value (Fiscal Year 2021):
The Company's enterprise value as of December 31, 2021, on a pro forma basis reflecting the completion of the base offering, is approximately $4,246,700,000, calculated as follows:
•  Post-money equity valuation: $2,721,700,000
•  Plus: Total debt (as of December 31, 2021): $1,710,000,000
•  Less: Estimated cash and cash equivalents (as of December 31, 2021): ($185,000,000)
•  Enterprise Value: approximately $4,246,700,000
EV/EBITDA Multiple (Fiscal Year 2021):
The Company's enterprise value to Adjusted EBITDA multiple for fiscal year 2021 is approximately 19.4x, calculated as enterprise value of approximately $4,246,700,000 divided by fiscal year 2021 Adjusted EBITDA of $218,600,000.
Revenue:
The Company's audited revenue for the three most recent fiscal years and unaudited revenue for the most recent interim period are as follows:
•  Fiscal Year 2021 Revenue: $487,300,000 (audited by Ashford & Pemberton LLP)
•  Fiscal Year 2020 Revenue: $401,500,000 (audited by Ashford & Pemberton LLP)
•  Fiscal Year 2019 Revenue: $312,800,000 (audited by Ashford & Pemberton LLP)
•  First Quarter 2022 Revenue (unaudited): $131,400,000
Adjusted EBITDA (Fiscal Year 2021): The Company's Adjusted EBITDA for fiscal year 2021 was $218,600,000. Adjusted EBITDA is a non-GAAP financial measure and is defined and reconciled to the most directly comparable GAAP measure (net income) in the Company's Registration Statement on Form S-1.
Total Assets (December 31, 2021): $3,940,000,000
Total Debt (December 31, 2021): $1,710,000,000
Estimated Cash and Cash Equivalents (December 31, 2021): $185,000,000
Qualification Summary: Based on the foregoing, the Company satisfies the Global Market Capitalization / Revenue Test under Section 102.01C of the NYSE Listed Company Manual as follows:
(a) The Company's post-money market capitalization of approximately $2,721,700,000 significantly exceeds the minimum requirement of $200 million in global market capitalization;
(b) The Company's fiscal year 2021 revenue of $487,300,000 significantly exceeds the minimum requirement of $100 million in revenue in the most recent 12-month period; and
(c) The aggregate market value of the Company's publicly-held shares (as described in Section 4.3 below) will significantly exceed $100 million upon completion of the initial public offering.
4.3 — Minimum Public Float and Share Distribution
The Company demonstrates compliance with the NYSE's minimum public float and share distribution requirements as follows:
Shares to Be Distributed to Public Investors in the IPO:
•  Base offering: 23,713,636 shares
•  Full overallotment exercise: 27,272,727 shares
Minimum Round-Lot Holders Requirement: Section 102.01A of the NYSE Listed Company Manual requires a minimum of 400 holders of 100 shares or more (round-lot holders). The Company anticipates that it will exceed this threshold based on the distribution capabilities of the underwriter syndicate, which consists of five underwriting firms with extensive retail and institutional distribution networks:
•  Hargrove Keating & Co. (Lead-Left Book-Running Manager)
•  Linden Pratt Securities LLC (Joint Book-Running Manager)
•  Graymont Brothers Inc. (Joint Book-Running Manager)
•  Barfield Stuart & Co. (Co-Manager)
•  Crane Whitley Capital LLC (Co-Manager)
Based on the anticipated size of the offering and the breadth of the underwriter syndicate, the Company expects to have well in excess of 400 round-lot holders upon completion of the initial public offering. The lead-left book-running manager, Hargrove Keating & Co., has indicated that it expects institutional and retail demand sufficient to support broad distribution of the offering shares.
Minimum Publicly Held Shares: Section 102.01A of the NYSE Listed Company Manual requires a minimum of 1,100,000 publicly held shares at the time of listing. Upon completion of the base offering, the Company will have at minimum 23,713,636 publicly held shares, which significantly exceeds this requirement.
Minimum Market Value of Publicly Held Shares: Section 102.01B of the NYSE Listed Company Manual requires a minimum aggregate market value of publicly held shares of $40,000,000. At the assumed IPO price of $22.00 per share, the aggregate market value of the minimum publicly held shares (base offering) is approximately $521,700,000, calculated as 23,713,636 shares multiplied by $22.00 per share. This amount significantly exceeds the minimum requirement.
4.4 — Minimum Price Requirement
Section 102.01A of the NYSE Listed Company Manual requires that the price per share be at least $4.00 at the time of listing.
Assumed IPO Price per Share: $22.00 (representing the midpoint of the anticipated filing range).
The Company satisfies this requirement. The assumed IPO price of $22.00 per share is substantially in excess of the $4.00 minimum per-share price required by the NYSE for initial listing.
Section 5 — Share Distribution Projections
The following table sets forth the projected distribution of the Company's Common Stock upon completion of the initial public offering, presented on both a base offering basis (assuming no exercise of the overallotment option) and a full exercise basis (assuming full exercise of the overallotment option).
The following supplemental information is provided with respect to the projected share distribution:
Pinnacle Vista Capital Partners III, LP Pre-IPO Ownership: Pinnacle Vista Capital Partners III, LP currently holds approximately 62% of the Company's fully diluted common equity, representing approximately 62,000,000 shares of Common Stock. Pinnacle Vista Capital Partners III, LP made its initial investment in the Company in 2017 and provided follow-on capital in 2019.
Pinnacle Vista Capital Partners III, LP Post-IPO Ownership (Base Offering, After Secondary Sale): Following the completion of the base offering, in which Pinnacle Vista Capital Partners III, LP will sell 6,818,182 shares as the Selling Stockholder, Pinnacle Vista Capital Partners III, LP will hold approximately 55,181,818 shares, representing approximately 44.6% of the total post-IPO shares outstanding on a base offering basis (55,181,818 shares divided by 123,713,636 shares).
Pinnacle Vista Capital Partners III, LP Post-IPO Ownership (Full Overallotment Exercise): Assuming full exercise of the overallotment option (and assuming that additional overallotment shares are allocated entirely to primary shares issued by the Company or that Pinnacle Vista does not sell additional secondary shares in the overallotment), Pinnacle Vista Capital Partners III, LP will hold approximately 55,181,818 shares, representing approximately 43.4% of the total post-IPO shares outstanding on a full exercise basis (55,181,818 shares divided by 127,272,727 shares).
Selling Stockholder (Secondary Offering) Details: In the base offering, Pinnacle Vista Capital Partners III, LP will sell 6,818,182 shares of Common Stock at the assumed IPO price of $22.00 per share, for aggregate gross proceeds of approximately $150,000,000. The Company will sell 16,895,455 primary shares for aggregate gross proceeds of approximately $371,700,000 at the assumed IPO price. The Company will not receive any proceeds from the sale of secondary shares by Pinnacle Vista Capital Partners III, LP. A more detailed projected share distribution schedule is attached hereto as Exhibit P.
Section 6 — Lock-Up Arrangements
In connection with the proposed initial public offering, certain stockholders, directors, and executive officers of the Company will be subject to lock-up agreements restricting the sale, transfer, or other disposition of shares of Common Stock for a specified period following the offering. The material terms of the lock-up arrangements are as follows.
Lock-Up Period: 180 days following the date of the final prospectus relating to the initial public offering (the "Lock-Up Period").
Lock-Up Parties: The following persons and entities are expected to enter into lock-up agreements with the underwriters:
(a) All seven (7) members of the Board of Directors, consisting of Garrett Calloway, Elaine Briggs, Hugh Pemberton, Diane Kovac, Warren Okoro, Catherine Liang, and Richard Estavez;
(b) All six (6) named executive officers of the Company;
(c) Pinnacle Vista Capital Partners III, LP; and
(d) All other holders of 1% or more of the Company's pre-IPO Common Stock.
In total, approximately 18 persons and entities are expected to execute lock-up agreements.
Lock-Up Release Conditions: The lock-up restrictions may be released prior to the expiration of the 180-day Lock-Up Period only upon:
(a) the prior written consent of Hargrove Keating & Co., as representative of the underwriters; or
(b) the occurrence of a Change of Control of the Company (as such term is defined in the underwriting agreement).
Issuer Lock-Up: In addition to the individual lock-up agreements described above, the Company itself has agreed that it will not, without the prior written consent of Hargrove Keating & Co. (as representative of the underwriters), issue, sell, offer to sell, contract to sell, grant any option for the sale of, or otherwise dispose of or register any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock, for a period of 180 days following the date of the final prospectus. This issuer lock-up is subject to customary exceptions, including:
(a) the issuance of shares of Common Stock pursuant to employee equity compensation plans (including the 2022 Omnibus Equity Incentive Plan and the 2022 Employee Stock Purchase Plan);
(b) the issuance of shares of Common Stock or securities convertible into Common Stock in connection with bona fide acquisitions or strategic transactions, subject to the requirement that the recipients of such shares enter into lock-up agreements for the balance of the Lock-Up Period; and
(c) the filing of a registration statement on Form S-8 relating to employee equity compensation plans.
Lock-Up Carve-Outs: The individual lock-up agreements contain certain customary exceptions permitting the following transfers during the Lock-Up Period without the prior consent of the underwriters' representative:
(a) transfers to affiliates (including transfers by Pinnacle Vista Capital Partners III, LP to affiliated funds or entities), provided that the transferee agrees to be bound by the lock-up restrictions;
(b) estate-planning transfers, including transfers to trusts for the benefit of the lock-up party or members of the lock-up party's immediate family, provided that the transferee agrees to be bound by the lock-up restrictions;
(c) the establishment of a trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, provided that no sales or other dispositions may be effected under such plan during the Lock-Up Period; and
(d) pledges of shares to lenders as collateral for bona fide indebtedness, provided that any foreclosure or other disposition pursuant to such pledge during the Lock-Up Period requires the prior written consent of Hargrove Keating & Co.
Execution Status as of June 17, 2022: As of the date the offering was placed in dormant status (June 17, 2022), 15 of the 18 anticipated lock-up agreements had been fully executed and delivered to the underwriters' counsel. The remaining three lock-up agreements remain outstanding and unexecuted as a result of the decision to place the offering in dormant status. If the offering is reactivated, the Company will cause all remaining lock-up agreements to be executed prior to the pricing of the offering.
PART III — CORPORATE GOVERNANCE CERTIFICATIONS
Section 7 — Board of Directors
This Section 7 sets forth the composition of the Company's Board of Directors and the independence determinations made in connection with the proposed listing on the New York Stock Exchange.
7.1 — Board Composition
The Company's Board of Directors currently consists of seven (7) members. The following table sets forth the name, affiliation, and independence status of each director, as determined by the Board of Directors in accordance with the independence standards set forth in Section 303A of the NYSE Listed Company Manual and Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Summary of Independence Determinations:
•  Total Board Members: 7
•  Independent Directors: 3 of 7 (Warren Okoro, Catherine Liang, and Richard Estavez)
•  Non-Independent Directors: 4 of 7
The four non-independent directors consist of two members of the Company's management (Garrett Calloway and Elaine Briggs) and two designees of Pinnacle Vista Capital Partners III, LP (Hugh Pemberton and Diane Kovac). Messrs. Calloway and Briggs are not independent because they serve as executive officers of the Company. Messrs. Pemberton and Kovac are not independent because they are affiliated with Pinnacle Vista Capital Partners, the Company's controlling stockholder, and have a material relationship with the Company by virtue of the Pinnacle Vista management-services agreement described in Section 9.4 of this Application and the board designation rights described in Section 7.3 below.
The Board of Directors has affirmatively determined that each of Warren Okoro, Catherine Liang, and Richard Estavez qualifies as "independent" within the meaning of Section 303A.02 of the NYSE Listed Company Manual and has no material relationship with the Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company). In making these independence determinations, the Board of Directors considered all relevant facts and circumstances, including the directors' business, familial, and other relationships with the Company, its management, and Pinnacle Vista Capital Partners.
7.2 — Controlled-Company Status
The Company expects to qualify as a "controlled company" within the meaning of Section 303A.00 of the NYSE Listed Company Manual upon the completion of the initial public offering and the listing of its Common Stock on the NYSE. Under the NYSE rules, a "controlled company" is a listed company of which more than 50% of the voting power for the election of directors is held by an individual, a group, or another company.
Pinnacle Vista Capital Partners III, LP will hold approximately 44.6% of the outstanding shares of Common Stock immediately following the completion of the base offering (or approximately 43.4% assuming full exercise of the overallotment option). However, pursuant to the Amended and Restated Stockholders' Agreement, which will become effective upon the closing of the initial public offering, Pinnacle Vista Capital Partners III, LP and the Founders (Garrett Calloway and Elaine Briggs, who collectively hold approximately 19.4% of the outstanding shares) have agreed to vote their shares together on certain matters, including the election of directors. The combined voting power of Pinnacle Vista and the Founders under the voting agreement provisions of the Stockholders' Agreement represents approximately 64.0% of the total voting power of the Company's outstanding shares on a base offering basis, thereby exceeding the 50% threshold required for controlled-company status.
Exemptions Relied Upon: As a controlled company, the Company intends to rely upon the following exemptions from the NYSE corporate governance requirements:
(a) The requirement that a majority of the Board of Directors be composed of independent directors (Section 303A.01);
(b) The requirement that the compensation committee be composed entirely of independent directors (Section 303A.05); and
(c) The requirement that the nominating/corporate governance committee be composed entirely of independent directors (Section 303A.04).
Audit Committee Independence — No Exemption Available: The Company acknowledges that the controlled-company exemption does not extend to the audit committee independence requirements. Section 303A.06 of the NYSE Listed Company Manual and SEC Rule 10A-3 under the Securities Exchange Act of 1934 require that the audit committee be composed entirely of independent directors, regardless of controlled-company status. As described in Section 8.1 below, the Company's Audit Committee is composed entirely of independent directors.
Phase-In Compliance: Notwithstanding its reliance on the controlled-company exemptions, the Company has voluntarily established the following fully constituted board committees in advance of listing:
(a) An Audit Committee composed entirely of independent directors (as required, without regard to controlled-company status);
(b) A Compensation Committee composed entirely of independent directors (voluntarily, notwithstanding the availability of the controlled-company exemption); and
(c) A Nominating and Corporate Governance Committee, of which two of three members are independent directors (Hugh Pemberton, a non-independent director, serves as a member pursuant to the controlled-company exemption).
The Company intends to transition to full compliance with all NYSE corporate governance requirements, including the majority-independent board requirement and the fully independent committee requirements, upon the earlier of (i) ceasing to qualify as a controlled company or (ii) such time as the Board of Directors determines is appropriate, subject to applicable phase-in periods under Section 303A.00 of the NYSE Listed Company Manual.
7.3 — Board Designation Rights
Under the Amended and Restated Stockholders' Agreement, which will become effective upon the closing of the initial public offering (a draft of which is attached hereto as Exhibit K), the following board designation rights have been established:
Pinnacle Vista Designation Rights: Pinnacle Vista Capital Partners III, LP has the right to designate a specified number of directors to the Board of Directors based on its ownership of the Company's outstanding Common Stock, subject to the following step-down thresholds:
(a) For so long as Pinnacle Vista holds 40% or more of the outstanding Common Stock, Pinnacle Vista shall have the right to designate three (3) directors;
(b) For so long as Pinnacle Vista holds 30% or more but less than 40% of the outstanding Common Stock, Pinnacle Vista shall have the right to designate two (2) directors;
(c) For so long as Pinnacle Vista holds 15% or more but less than 30% of the outstanding Common Stock, Pinnacle Vista shall have the right to designate one (1) director; and
(d) If Pinnacle Vista holds less than 15% of the outstanding Common Stock, Pinnacle Vista shall have no further board designation rights.
Founder Designation Rights: The Founders (Garrett Calloway and Elaine Briggs) have certain designation rights under the Stockholders' Agreement, including the right to designate themselves to the Board of Directors for so long as they remain executive officers of the Company and continue to hold a specified minimum percentage of the Company's outstanding Common Stock.
Transfer Restrictions and Standstill: The Amended and Restated Stockholders' Agreement contains transfer restrictions applicable to the pre-IPO stockholders, including customary tag-along and drag-along provisions, rights of first refusal, and standstill provisions applicable to Pinnacle Vista Capital Partners III, LP. These provisions are described in detail in the Stockholders' Agreement attached as Exhibit K.
Section 8 — Board Committees
The following is a description of each standing committee of the Board of Directors, including the composition, independence status, charter, and principal responsibilities of each committee.
8.1 — Audit Committee
Members:
•  Warren Okoro (Chair)
•  Catherine Liang
•  Richard Estavez
Independence: All three members of the Audit Committee have been determined by the Board of Directors to be "independent" within the meaning of Section 303A.07 of the NYSE Listed Company Manual and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Each member of the Audit Committee satisfies the enhanced independence requirements applicable to audit committee members, including the prohibition on receiving any compensatory fees from the Company (other than director fees) and the prohibition on being an affiliated person of the Company or any of its subsidiaries.
Audit Committee Financial Expert: The Board of Directors has determined that Warren Okoro qualifies as an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K promulgated by the SEC. Mr. Okoro's qualifications include his experience as a former chief financial officer of a publicly traded company and his extensive familiarity with generally accepted accounting principles, internal controls over financial reporting, and audit committee functions.
Charter: The Board of Directors has adopted a written charter for the Audit Committee, a copy of which is attached hereto as Exhibit C. The Audit Committee Charter sets forth the committee's purpose, composition, authority, and responsibilities and is consistent with the requirements of Section 303A.07 of the NYSE Listed Company Manual and Rule 10A-3 under the Securities Exchange Act of 1934.
Principal Responsibilities: The Audit Committee is responsible for, among other things:
(a) Overseeing the integrity of the Company's financial statements and financial reporting processes;
(b) Appointing, retaining, compensating, evaluating, and overseeing the work of the Company's independent auditor (currently Ashford & Pemberton LLP), including the approval of all audit and non-audit services;
(c) Reviewing and discussing with management and the independent auditor the Company's annual and quarterly financial statements and earnings releases;
(d) Overseeing the adequacy and effectiveness of the Company's internal controls over financial reporting and disclosure controls and procedures;
(e) Overseeing the Company's risk management framework, including enterprise risk management and cybersecurity risk;
(f) Reviewing and approving related-party transactions in accordance with the Company's Related-Party Transaction Policy; and
(g) Establishing and maintaining procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, including confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
8.2 — Compensation Committee
Members:
•  Catherine Liang (Chair)
•  Richard Estavez
•  Warren Okoro
Independence: All three members of the Compensation Committee have been determined by the Board of Directors to be "independent" within the meaning of Section 303A.05 of the NYSE Listed Company Manual. The Company notes that, as a controlled company, it is eligible for the exemption from the requirement that the compensation committee be composed entirely of independent directors. Notwithstanding this exemption, the Company has voluntarily composed the Compensation Committee entirely of independent directors.
Each member of the Compensation Committee also qualifies as a "non-employee director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and satisfies the enhanced independence factors applicable to compensation committee members under Section 303A.05(b) of the NYSE Listed Company Manual.
Charter: The Board of Directors has adopted a written charter for the Compensation Committee, a copy of which is attached hereto as Exhibit D. The Compensation Committee Charter sets forth the committee's purpose, composition, authority, and responsibilities and is consistent with the requirements of Section 303A.05 of the NYSE Listed Company Manual.
Principal Responsibilities: The Compensation Committee is responsible for, among other things:
(a) Reviewing and approving the compensation of the Company's Chief Executive Officer and other executive officers, including base salary, annual incentive compensation, long-term incentive compensation, and other benefits;
(b) Administering the Company's equity compensation plans, including the 2022 Omnibus Equity Incentive Plan and the 2022 Employee Stock Purchase Plan;
(c) Reviewing and making recommendations to the Board of Directors regarding director compensation;
(d) Reviewing and approving employment agreements, severance arrangements, change-of-control agreements, and other compensatory arrangements with executive officers;
(e) Overseeing the Company's compensation risk assessment and compensation-related regulatory compliance; and
(f) Engaging and overseeing the work of the Compensation Committee's independent compensation consultant. The Compensation Committee has engaged Clarendon Rowe Advisory Group LLC (Patricia Voss, lead consultant) as its independent compensation consultant to advise on executive and director compensation matters in connection with the initial public offering and the Company's transition to public-company compensation practices.
8.3 — Nominating and Corporate Governance Committee
Members:
•  Richard Estavez (Chair)
•  Catherine Liang
•  Hugh Pemberton
Independence: Two of the three members of the Nominating and Corporate Governance Committee — Richard Estavez and Catherine Liang — have been determined by the Board of Directors to be "independent" within the meaning of Section 303A.04 of the NYSE Listed Company Manual. Hugh Pemberton is not independent due to his affiliation with Pinnacle Vista Capital Partners, the Company's controlling stockholder. The inclusion of Mr. Pemberton on the Nominating and Corporate Governance Committee is permissible under the controlled-company exemption set forth in Section 303A.00 of the NYSE Listed Company Manual, which exempts controlled companies from the requirement that the nominating/corporate governance committee be composed entirely of independent directors.
Charter: The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a copy of which is attached hereto as Exhibit E. The charter sets forth the committee's purpose, composition, authority, and responsibilities.
Principal Responsibilities: The Nominating and Corporate Governance Committee is responsible for, among other things:
(a) Identifying and evaluating candidates for nomination to the Board of Directors, including candidates proposed by stockholders;
(b) Recommending to the Board of Directors the slate of director nominees for each annual meeting of stockholders;
(c) Overseeing the composition, structure, and size of the Board of Directors and its committees;
(d) Developing and recommending to the Board of Directors corporate governance guidelines and policies for the Company;
(e) Overseeing annual evaluations of the Board of Directors and its committees; and
(f) Monitoring developments in corporate governance best practices and recommending appropriate changes to the Company's governance framework.
Section 9 — Corporate Governance Standards Compliance
The Company has adopted or intends to adopt, prior to the listing of its Common Stock on the NYSE, the following corporate governance policies, procedures, and standards, as required by the NYSE Listed Company Manual and applicable SEC rules and regulations.
9.1 — Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines that address the key governance principles and practices applicable to the Company, including the role and responsibilities of the Board of Directors, director qualifications and independence, board meetings and procedures, executive sessions of non-management directors, access to management and outside advisors, director orientation and continuing education, management succession planning, and the annual self-evaluation of the Board of Directors and its committees. The Corporate Governance Guidelines are consistent with the requirements of Section 303A.09 of the NYSE Listed Company Manual. A copy of the Corporate Governance Guidelines is attached hereto as Exhibit G.
9.2 — Code of Business Conduct and Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all directors, officers, and employees of the Company and its subsidiaries. The Code of Business Conduct and Ethics addresses, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of company assets, compliance with laws and regulations (including insider trading laws), and the reporting of illegal or unethical behavior. The Code of Business Conduct and Ethics satisfies the requirements of Section 303A.10 of the NYSE Listed Company Manual and the disclosure requirements of Item 406 of Regulation S-K. A copy of the Code of Business Conduct and Ethics is attached hereto as Exhibit F.
9.3 — Insider Trading Policy
The Board of Directors has adopted a comprehensive Insider Trading Policy that governs the purchase, sale, and other dispositions of the Company's securities by all directors, officers, employees, and other insiders of the Company and its subsidiaries. The Insider Trading Policy is designed to prevent insider trading and tipping in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The policy includes, among other things, quarterly trading blackout periods, preclearance requirements for trades by Section 16 reporting persons, procedures for the establishment of Rule 10b5-1 trading plans, and restrictions on hedging and pledging transactions involving Company securities. The Company will designate a compliance officer responsible for the administration and enforcement of the Insider Trading Policy.
9.4 — Related-Party Transaction Policy
The Board of Directors has adopted a Related-Party Transaction Policy that requires the prior review and approval (or ratification) of all related-party transactions by the Audit Committee. For purposes of this policy, a "related-party transaction" is generally defined as any transaction or series of related transactions in which the Company is a participant and in which any related person (as defined in Item 404 of Regulation S-K) has or will have a direct or indirect material interest, subject to certain customary exceptions for compensation arrangements and other transactions that are below specified dollar thresholds or that are otherwise approved by the Board of Directors.
The following related-party transactions have been identified and disclosed in the Company's Registration Statement on Form S-1:
(a) Pinnacle Vista Management-Services Agreement: The Company is party to a management-services agreement with Pinnacle Vista Capital Management LLC (an affiliate of Pinnacle Vista Capital Partners III, LP), pursuant to which Pinnacle Vista Capital Management LLC provides certain advisory and management services to the Company in exchange for an annual fee of $2,400,000, plus reimbursement of reasonable out-of-pocket expenses. This management-services agreement will terminate upon the completion of the initial public offering, and a one-time termination payment will be made to Pinnacle Vista Capital Management LLC in accordance with the terms thereof.
(b) Founder Employment Agreements: The Company has entered into employment agreements with each of Garrett Calloway and Elaine Briggs, providing for their respective base salaries, annual incentive compensation opportunities, equity-based compensation, and severance and change-of-control protections. The terms of these employment agreements are described in detail in the Registration Statement.
9.5 — Whistleblower Procedures
The Company has established procedures for the receipt, retention, and treatment of complaints and concerns regarding accounting, internal accounting controls, auditing matters, and potential violations of the Company's Code of Business Conduct and Ethics, applicable laws, or regulations. The Company maintains an anonymous reporting mechanism through an independent third-party reporting hotline and online portal, which allows employees, directors, and other stakeholders to submit reports on a confidential and anonymous basis. All reports received through the whistleblower procedures are reviewed and investigated as appropriate under the oversight of the Audit Committee. The Company prohibits retaliation against any person who makes a good-faith report of suspected wrongdoing.
9.6 — Disclosure Controls and Procedures / Internal Controls
The Company is in the process of implementing disclosure controls and procedures and internal controls over financial reporting in preparation for its obligations as a public company under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
Disclosure Controls and Procedures: The Company is designing and implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Internal Controls Over Financial Reporting: The Company is designing and implementing internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. In connection with the preparation of the Registration Statement, the Company identified certain material weaknesses in its internal controls over financial reporting, which are being remediated prior to the effectiveness of the Registration Statement. The nature and status of remediation of these material weaknesses are described in the Registration Statement.
SOX Section 404 Compliance: As an emerging growth company under the JOBS Act, the Company will be exempt from the requirement to include an attestation report of the Company's independent registered public accounting firm on the effectiveness of the Company's internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. This exemption will remain available to the Company for the period permitted under the JOBS Act (i.e., until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the completion of the initial public offering, (ii) the first fiscal year in which the Company's total annual gross revenues exceed $1.235 billion, (iii) the date on which the Company has issued more than $1 billion in non-convertible debt securities during the preceding three-year period, or (iv) the date on which the Company qualifies as a "large accelerated filer" under SEC rules). Notwithstanding this exemption, the Company will be required to include management's assessment of the effectiveness of the Company's internal controls over financial reporting beginning with the Company's second annual report on Form 10-K.
9.7 — CEO Certification Requirement
The Company acknowledges its obligation, upon listing on the NYSE, to submit annual CEO certifications to the NYSE as required by Section 303A.12 of the NYSE Listed Company Manual. Garrett Calloway, in his capacity as Chairman of the Board and Chief Executive Officer of the Company, will submit the annual CEO certification to the NYSE, certifying that the CEO is not aware of any violation by the Company of NYSE corporate governance listing standards. The first such certification will be submitted within 30 days after the Company's first annual meeting of stockholders following listing, and annually thereafter. In addition, the Company will provide prompt written notification to the NYSE in the event of any material non-compliance with any applicable provision of Section 303A of the NYSE Listed Company Manual.
PART IV — UNDERWRITING AND DISTRIBUTION ARRANGEMENTS
Section 10 — Underwriters
The following table sets forth the members of the underwriting syndicate for the proposed initial public offering, together with the role, allocation percentage, base share allocation, and dollar amount attributable to each underwriter, based on the assumed IPO price of $22.00 per share.
Hargrove Keating & Co. is serving as the lead-left book-running manager and coordinating underwriter for the offering. In that capacity, Hargrove Keating & Co. is responsible for, among other things, managing the book-building process, coordinating the roadshow, and acting as the representative of the underwriters for purposes of the underwriting agreement and the lock-up agreements described in Section 6 of this Application. The underwriting agreement will be entered into among the Company, the Selling Stockholder, and the several underwriters named therein, and will contain customary representations, warranties, covenants, and indemnification provisions.
The overallotment option (greenshoe) of up to 3,559,091 additional shares will be allocated among the underwriters in proportion to their respective commitments set forth above.
Section 11 — Underwriting Economics
The following is a summary of the principal economic terms of the underwriting arrangements for the proposed initial public offering.
Gross Spread: The underwriting discount (gross spread) is 5.50% of the public offering price per share. This gross spread is within the customary range for initial public offerings of this size.
Total Underwriting discount:
•  Base offering: $521,700,000 × 5.50% = $28,693,500
•  Full overallotment exercise (including greenshoe): $600,000,000 × 5.50% = $33,000,000
Allocation of Gross Spread: The gross spread will be allocated among the management fee, underwriting fee, and selling concession components as follows (amounts shown on a full-exercise basis):
•  Management Fee: 20% of gross spread = $6,600,000
•  Underwriting Fee: 20% of gross spread = $6,600,000
•  Selling Concession: 60% of gross spread = $19,800,000
•  Total Gross Spread (full exercise): $33,000,000
The management fee is payable to the lead-left book-running manager and the joint book-running managers. The underwriting fee is allocated among all underwriters based on their respective commitments. The selling concession is payable to the underwriters and selected dealers based on the number of shares actually sold by each firm to investors.
Underwriter Expense Reimbursement Cap: The Company has agreed to reimburse the underwriters for certain out-of-pocket expenses, including FINRA-related filing fees and expenses, up to an aggregate cap of $350,000. This reimbursement is in addition to the underwriting discount described above.
FINRA Filing: The underwriting arrangements for the proposed initial public offering have been submitted to the Financial Industry Regulatory Authority, Inc. ("FINRA") for review in connection with its review of the underwriting compensation and arrangements. The FINRA filing number is 20221129-01.
Section 12 — Use of Proceeds
The following is a summary of the estimated net proceeds to the Company from the primary offering and the intended uses of such proceeds.
Net Proceeds to the Company (Primary Offering, Base, After Underwriting discount):
•  Gross proceeds from primary offering (base): 16,895,455 shares × $22.00 = approximately $371,700,000
•  Less: Underwriting discount on primary shares (5.50%): approximately $20,443,500
•  Estimated net proceeds to the Company (base): approximately $351,256,500
Intended Use of Net Proceeds: The Company intends to use the net proceeds from the primary offering as follows:
(a) Repayment of Indebtedness — Approximately $200,000,000: The Company intends to use approximately $200,000,000 of the net proceeds to repay a portion of the outstanding indebtedness under its Corporate Term Loan B facility. The Corporate Term Loan B facility was entered into with Veltrano National Bank, as administrative agent, and a syndicate of lenders, with an original commitment amount of $650,000,000, of which approximately $612,500,000 was outstanding as of December 31, 2021. The Corporate Term Loan B matures in January 2029 and bears interest at a variable rate based on SOFR plus an applicable margin. The prepayment of $200,000,000 will be subject to a prepayment premium of 1.00% of the principal amount prepaid, resulting in a prepayment premium of approximately $2,000,000. Following such prepayment, the outstanding balance under the Corporate Term Loan B is expected to be approximately $412,500,000.
(b) Construction of Cimarron Solar Project — Approximately $100,000,000: The Company intends to use approximately $100,000,000 of the net proceeds to fund a portion of the construction costs of the Cimarron Solar project, a 350 MW solar photovoltaic generation facility located in Doña Ana County, New Mexico. The total expected const