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The factories can only have four prototypes on the grid per the rules. Tech 3 could have issued Smith a CRT under the Tech 3 banner unless there was something in his contract.
Cal wants all the benefits and perks of being a factory rider, including the pay check. He should know that even with a factory Yamaha he will less than likely score any better than he is now, so why not go for the A-List treatment and the paycheck that goes with it?
Smart decision on his part IMO.