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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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46-1347456
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1906 Towne Centre Blvd, Suite 370
Annapolis, Maryland
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21401
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.01 per value per share
|
HASI
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New York Stock Exchange
|
|
•
|
our expected returns and performance of our investments;
|
•
|
the state of government legislation, regulation and policies that support or enhance the economic feasibility of sustainable infrastructure projects, including energy efficiency and renewable energy projects and the general market demands for such projects;
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•
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market trends in our industry, energy markets, commodity prices, interest rates, the debt and lending markets or the general economy;
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•
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our business and investment strategy;
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•
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availability of opportunities to invest in projects that reduce carbon emissions or increase resilience to climate change including energy efficiency and renewable energy projects and our ability to complete potential new opportunities in our pipeline;
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•
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our relationships with originators, investors, market intermediaries and professional advisers;
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•
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competition from other providers of capital;
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•
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our or any other companies’ projected operating results;
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•
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actions and initiatives of the federal, state and local governments and changes to federal, state and local government policies, regulations, tax laws and rates and the execution and impact of these actions, initiatives and policies;
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•
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the state of the U.S. economy generally or in specific geographic regions, states or municipalities, economic trends and economic recoveries;
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•
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our ability to obtain and maintain financing arrangements on favorable terms, including securitizations;
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•
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general volatility of the securities markets in which we participate;
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•
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changes in the value of our assets, our portfolio of assets and our investment and underwriting process;
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•
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the impact of weather conditions, natural disasters, accidents or equipment failures or other events that disrupt the operation of our investments or negatively impact the value our assets;
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•
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rates of default or decreased recovery rates on our assets;
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•
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interest rate and maturity mismatches between our assets and any borrowings used to fund such assets;
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•
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changes in interest rates, including the flattening of the yield curve, and the market value of our assets and target assets;
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•
|
changes in commodity prices, including continued low natural gas prices;
|
•
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effects of hedging instruments on our assets or liabilities;
|
•
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the degree to which our hedging strategies may or may not protect us from risks, such as interest rate volatility;
|
•
|
impact of and changes in accounting guidance;
|
•
|
our ability to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;
|
•
|
our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “1940 Act”);
|
•
|
availability of and our ability to attract and retain qualified personnel;
|
•
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estimates relating to our ability to generate sufficient cash in the future to operate our business and to make distributions to our stockholders; and
|
•
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our understanding of our competition.
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Page
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|
||
Item 1.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
March 31, 2019 (unaudited)
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Equity method investments
|
$
|
458,916
|
|
|
$
|
471,044
|
|
Government receivables
|
463,715
|
|
|
497,464
|
|
||
Commercial receivables
|
453,828
|
|
|
447,196
|
|
||
Real estate
|
364,582
|
|
|
365,370
|
|
||
Investments
|
177,636
|
|
|
169,793
|
|
||
Cash and cash equivalents
|
62,091
|
|
|
21,418
|
|
||
Other assets
|
206,102
|
|
|
182,628
|
|
||
Total Assets
|
$
|
2,186,870
|
|
|
$
|
2,154,913
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable, accrued expenses and other
|
$
|
33,266
|
|
|
$
|
36,509
|
|
Deferred funding obligations
|
66,350
|
|
|
72,100
|
|
||
Credit facilities
|
283,381
|
|
|
258,592
|
|
||
Non-recourse debt (secured by assets of $1,041 million and $1,105 million, respectively)
|
814,662
|
|
|
834,738
|
|
||
Convertible notes
|
147,150
|
|
|
148,451
|
|
||
Total Liabilities
|
1,344,809
|
|
|
1,350,390
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, par value $0.01 per share, 50,000,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share, 450,000,000 shares authorized, 62,875,638 and 60,510,086 shares issued and outstanding, respectively
|
629
|
|
|
605
|
|
||
Additional paid in capital
|
1,009,346
|
|
|
965,384
|
|
||
Accumulated deficit
|
(170,953
|
)
|
|
(163,205
|
)
|
||
Accumulated other comprehensive income (loss)
|
(375
|
)
|
|
(1,684
|
)
|
||
Non-controlling interest
|
3,414
|
|
|
3,423
|
|
||
Total Stockholders’ Equity
|
842,061
|
|
|
804,523
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
2,186,870
|
|
|
$
|
2,154,913
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue
|
|
|
|
||||
Interest income, receivables
|
$
|
15,520
|
|
|
$
|
12,849
|
|
Interest income, investments
|
1,884
|
|
|
1,541
|
|
||
Rental income
|
6,476
|
|
|
5,941
|
|
||
Gain on sale of receivables and investments
|
6,839
|
|
|
6,256
|
|
||
Fee income
|
2,174
|
|
|
1,321
|
|
||
Total revenue
|
32,893
|
|
|
27,908
|
|
||
Expenses
|
|
|
|
||||
Interest expense
|
15,430
|
|
|
18,711
|
|
||
Compensation and benefits
|
7,439
|
|
|
5,321
|
|
||
General and administrative
|
3,092
|
|
|
2,801
|
|
||
Total expenses
|
25,961
|
|
|
26,833
|
|
||
Income before equity method investments
|
6,932
|
|
|
1,075
|
|
||
Income (loss) from equity method investments
|
4,506
|
|
|
(2,285
|
)
|
||
Income (loss) before income taxes
|
11,438
|
|
|
(1,210
|
)
|
||
Income tax (expense) benefit
|
2,270
|
|
|
(18
|
)
|
||
Net income (loss)
|
$
|
13,708
|
|
|
$
|
(1,228
|
)
|
Net income (loss) attributable to non-controlling interest holders
|
61
|
|
|
(5
|
)
|
||
Net income (loss) attributable to controlling stockholders
|
$
|
13,647
|
|
|
$
|
(1,223
|
)
|
Basic earnings (loss) per common share
|
$
|
0.22
|
|
|
$
|
(0.03
|
)
|
Diluted earnings (loss) per common share
|
$
|
0.21
|
|
|
$
|
(0.03
|
)
|
Weighted average common shares outstanding—basic
|
61,748,906
|
|
|
51,710,910
|
|
||
Weighted average common shares outstanding—diluted
|
62,365,271
|
|
|
51,710,910
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
13,708
|
|
|
$
|
(1,228
|
)
|
Unrealized gain (loss) on available-for-sale securities, net of tax benefit (provision) of ($0.3) million in 2019 and $0.0 million 2018
|
1,999
|
|
|
(2,728
|
)
|
||
Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of $0.0 million in 2019 and 2018
|
(684
|
)
|
|
5,897
|
|
||
Comprehensive income (loss)
|
15,023
|
|
|
1,941
|
|
||
Less: Comprehensive income (loss) attributable to non-controlling interest holders
|
69
|
|
|
12
|
|
||
Comprehensive income (loss) attributable to controlling stockholders
|
$
|
14,954
|
|
|
$
|
1,929
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Non-controlling interests
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2017
|
51,665
|
|
|
$
|
517
|
|
|
$
|
770,983
|
|
|
$
|
(131,251
|
)
|
|
$
|
(1,065
|
)
|
|
$
|
3,597
|
|
|
$
|
642,781
|
|
Net income (loss)
|
|
|
|
|
|
|
(1,223
|
)
|
|
|
|
(5
|
)
|
|
(1,228
|
)
|
||||||||||
Unrealized gain (loss) on available-for-sale securities
|
|
|
|
|
|
|
|
|
(2,714
|
)
|
|
(14
|
)
|
|
(2,728
|
)
|
||||||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
|
|
|
5,865
|
|
|
32
|
|
|
5,897
|
|
||||||||||
Issued shares of common stock
|
5
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
43
|
|
||||||||||
Equity-based compensation
|
|
|
|
|
1,739
|
|
|
|
|
|
|
9
|
|
|
1,748
|
|
||||||||||
Issuance (repurchase) of vested equity-based compensation shares
|
157
|
|
|
1
|
|
|
(1,823
|
)
|
|
|
|
|
|
|
|
(1,822
|
)
|
|||||||||
Redemption of OP Units
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
(47
|
)
|
|
(67
|
)
|
||||||||||
Dividends and distributions
|
|
|
|
|
|
|
(17,578
|
)
|
|
|
|
(94
|
)
|
|
(17,672
|
)
|
||||||||||
Balance at March 31, 2018
|
51,827
|
|
|
$
|
518
|
|
|
$
|
770,922
|
|
|
$
|
(150,052
|
)
|
|
$
|
2,086
|
|
|
$
|
3,478
|
|
|
$
|
626,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2018
|
60,510
|
|
|
$
|
605
|
|
|
$
|
965,384
|
|
|
$
|
(163,205
|
)
|
|
$
|
(1,684
|
)
|
|
$
|
3,423
|
|
|
$
|
804,523
|
|
Net income
|
|
|
|
|
|
|
13,647
|
|
|
|
|
61
|
|
|
13,708
|
|
||||||||||
Unrealized gain (loss) on available-for-sale securities
|
|
|
|
|
|
|
|
|
1,990
|
|
|
9
|
|
|
1,999
|
|
||||||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
|
|
|
(681
|
)
|
|
(3
|
)
|
|
(684
|
)
|
||||||||||
Issued shares of common stock
|
2,068
|
|
|
21
|
|
|
46,791
|
|
|
|
|
|
|
|
|
46,812
|
|
|||||||||
Equity-based compensation
|
|
|
|
|
3,596
|
|
|
|
|
|
|
17
|
|
|
3,613
|
|
||||||||||
Issuance (repurchase) of vested equity-based compensation shares
|
298
|
|
|
3
|
|
|
(6,425
|
)
|
|
|
|
|
|
|
|
(6,422
|
)
|
|||||||||
Dividends and distributions
|
|
|
|
|
|
|
(21,395
|
)
|
|
|
|
(93
|
)
|
|
(21,488
|
)
|
||||||||||
Balance at March 31, 2019
|
62,876
|
|
|
$
|
629
|
|
|
$
|
1,009,346
|
|
|
$
|
(170,953
|
)
|
|
$
|
(375
|
)
|
|
$
|
3,414
|
|
|
$
|
842,061
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
13,708
|
|
|
$
|
(1,228
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,136
|
|
|
1,116
|
|
||
Amortization of deferred financing costs
|
1,673
|
|
|
2,615
|
|
||
Equity-based compensation
|
3,578
|
|
|
1,845
|
|
||
Equity method investments
|
2,024
|
|
|
9,052
|
|
||
Non-cash gain on securitization
|
(6,610
|
)
|
|
(7,256
|
)
|
||
Changes in receivables held-for-sale
|
—
|
|
|
3,243
|
|
||
Changes in accounts payable and accrued expenses
|
(8,241
|
)
|
|
(866
|
)
|
||
Other
|
(3,815
|
)
|
|
(3,174
|
)
|
||
Net cash provided by (used in) operating activities
|
3,453
|
|
|
5,347
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Equity method investments
|
(10,448
|
)
|
|
—
|
|
||
Equity method distributions received
|
20,530
|
|
|
23,387
|
|
||
Purchases of receivables
|
(22,430
|
)
|
|
(3,441
|
)
|
||
Principal collections from receivables
|
21,345
|
|
|
10,275
|
|
||
Proceeds from sales of receivables
|
26,919
|
|
|
—
|
|
||
Purchases of investments
|
(6,809
|
)
|
|
(3,826
|
)
|
||
Principal collections from investments
|
1,325
|
|
|
744
|
|
||
Funding of escrow accounts
|
(11,869
|
)
|
|
(9,655
|
)
|
||
Withdrawal from escrow accounts
|
7,945
|
|
|
8,647
|
|
||
Other
|
69
|
|
|
(297
|
)
|
||
Net cash provided by (used in) investing activities
|
26,577
|
|
|
25,834
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from credit facilities
|
26,500
|
|
|
—
|
|
||
Principal payments on credit facilities
|
(1,925
|
)
|
|
—
|
|
||
Proceeds from issuance of non-recourse debt
|
13,923
|
|
|
30,952
|
|
||
Principal payments on non-recourse debt
|
(35,180
|
)
|
|
(28,787
|
)
|
||
Payments on deferred funding obligations
|
(5,759
|
)
|
|
(16,993
|
)
|
||
Net proceeds of common stock issuances
|
46,388
|
|
|
—
|
|
||
Payments of dividends and distributions
|
(20,518
|
)
|
|
(17,606
|
)
|
||
Other
|
(6,671
|
)
|
|
(367
|
)
|
||
Net cash provided by (used in) financing activities
|
16,758
|
|
|
(32,801
|
)
|
||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
46,788
|
|
|
(1,620
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
59,353
|
|
|
118,177
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
106,141
|
|
|
$
|
116,557
|
|
Interest paid
|
$
|
14,882
|
|
|
$
|
17,427
|
|
Non-cash changes in residual assets (investing activity)
|
(6,636
|
)
|
|
(7,761
|
)
|
1.
|
The Company
|
•
|
Equity in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables, such as loans for renewable energy and energy efficiency projects;
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases; and
|
•
|
Investments in debt securities of renewable energy or energy efficiency projects.
|
•
|
Level 2 — Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
|
•
|
Level 3 — Unobservable inputs are used when little or no market data is available.
|
|
As of March 31, 2019
|
||||||||
|
Fair Value
|
|
Carrying
Value |
|
Level
|
||||
|
(in millions)
|
|
|
||||||
Assets
|
|
|
|
|
|
||||
Government receivables
|
$
|
463
|
|
|
$
|
464
|
|
|
Level 3
|
Commercial receivables
|
449
|
|
|
454
|
|
|
Level 3
|
||
Investments
(1)
|
178
|
|
|
178
|
|
|
Level 3
|
||
Securitization residual assets
(2)
|
77
|
|
|
77
|
|
|
Level 3
|
||
Liabilities
|
|
|
|
|
|
||||
Credit facilities
(3)
|
$
|
283
|
|
|
$
|
283
|
|
|
Level 3
|
Non-recourse debt
(3)
|
828
|
|
|
831
|
|
|
Level 3
|
||
Convertible notes
(3)
|
153
|
|
|
151
|
|
|
Level 2
|
(1)
|
The amortized cost of our investments as of
March 31, 2019
, was
$179
million.
|
(2)
|
Included in other assets on the consolidated balance sheet.
|
(3)
|
Fair value and carrying value exclude unamortized debt issuance costs.
|
|
As of December 31, 2018
|
||||||||
|
Fair Value
|
|
Carrying
Value |
|
Level
|
||||
|
(in millions)
|
|
|
||||||
Assets
|
|
|
|
|
|
||||
Government receivables
|
$
|
487
|
|
|
$
|
497
|
|
|
Level 3
|
Commercial receivables
|
443
|
|
|
447
|
|
|
Level 3
|
||
Investments
(1)
|
170
|
|
|
170
|
|
|
Level 3
|
||
Securitization residual assets
(2)
|
71
|
|
|
71
|
|
|
Level 3
|
||
Liabilities
|
|
|
|
|
|
||||
Credit facilities
(3)
|
$
|
259
|
|
|
$
|
259
|
|
|
Level 3
|
Non-recourse debt
(3)
|
835
|
|
|
852
|
|
|
Level 3
|
||
Convertible notes
(3)
|
139
|
|
|
152
|
|
|
Level 2
|
|
For the three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Balance, beginning of period
|
$
|
170
|
|
|
$
|
151
|
|
Purchases of investments
|
7
|
|
|
4
|
|
||
Payments on investments
|
(1
|
)
|
|
—
|
|
||
Unrealized gains (losses) on investments recorded in AOCI
|
2
|
|
|
(3
|
)
|
||
Balance, end of period
|
$
|
178
|
|
|
$
|
152
|
|
|
Estimated Fair Value
|
|
Unrealized Losses
(1)
|
||||||||||||
|
Securities with a loss shorter than 12 months
|
|
Securities with a loss longer than 12 months
|
|
Securities with a loss shorter than 12 months
|
|
Securities with a loss longer than 12 months
|
||||||||
|
(in millions)
|
||||||||||||||
March 31, 2019
|
$
|
11
|
|
|
$
|
132
|
|
|
$
|
1
|
|
|
$
|
2
|
|
December 31, 2018
|
82
|
|
|
67
|
|
|
1
|
|
|
3
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Cash deposits
|
$
|
62
|
|
|
$
|
21
|
|
Restricted cash deposits (included in other assets)
|
44
|
|
|
38
|
|
||
Total cash deposits
|
$
|
106
|
|
|
$
|
59
|
|
Amount of cash deposits in excess of amounts federally insured
|
$
|
105
|
|
|
$
|
57
|
|
4.
|
Non-Controlling Interest
|
5.
|
Securitization of Receivables
|
|
As of and for the three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Gains on securitizations
|
$
|
7
|
|
|
$
|
6
|
|
Purchase of receivables securitized
|
302
|
|
|
129
|
|
||
Proceeds from securitizations
|
309
|
|
|
135
|
|
||
Residual and servicing assets included in other assets
|
78
|
|
|
53
|
|
||
Cash received from residual and servicing assets
|
1
|
|
|
1
|
|
6.
|
Our Portfolio
|
|
Investment Grade
|
|
|
|
|
|
|
||||||||||||||||
|
Government
(1)
|
|
Commercial Investment Grade
(2)
|
|
Commercial Non-Investment Grade
(3)
|
|
Subtotal,
Debt and Real Estate |
|
Equity
Method Investments |
|
Total
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Equity investments in renewable energy projects
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
437
|
|
|
$
|
437
|
|
Receivables
(4)
|
465
|
|
|
167
|
|
|
286
|
|
|
918
|
|
|
—
|
|
|
918
|
|
||||||
Real estate
(5)
|
—
|
|
|
364
|
|
|
—
|
|
|
364
|
|
|
22
|
|
|
386
|
|
||||||
Investments
|
104
|
|
|
74
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
178
|
|
||||||
Total
|
$
|
569
|
|
|
$
|
605
|
|
|
$
|
286
|
|
|
$
|
1,460
|
|
|
$
|
459
|
|
|
$
|
1,919
|
|
% of Debt and real estate portfolio
|
39
|
%
|
|
41
|
%
|
|
20
|
%
|
|
100
|
%
|
|
N/A
|
|
|
N/A
|
|
||||||
Average remaining balance
(6)
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
9
|
|
|
$
|
16
|
|
|
$
|
10
|
|
(1)
|
Transactions where the ultimate obligor is the U.S. federal government or state or local governments where the obligors are rated investment grade (either by an independent rating agency or based upon our internal credit analysis). This amount includes
$382
million of U.S. federal government transactions and
$187
million of transactions where the ultimate obligors are state or local governments. Transactions may have guaranties of energy savings from third party service providers, which typically are entities rated investment grade by an independent rating agency.
|
(2)
|
Transactions where the projects or the ultimate obligors are commercial entities that have been rated investment grade (either by an independent rating agency or based on our internal credit analysis). Of this total,
$9
million of the transactions have been rated investment grade by an independent rating agency.
|
(3)
|
Transactions where the projects or the ultimate obligors are commercial entities that either have ratings below investment grade (either by an independent rating agency or using our internal credit analysis) or where the nature of the subordination in the asset causes it to be considered non-investment grade. This category of assets includes
$260 million
of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies where the nature of the subordination causes it to be considered non-investment grade. These loans are secured by residential solar assets and we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. This amount also includes
$18 million
of transactions where the projects or the ultimate obligors are commercial entities that have ratings below investment grade using our internal credit analysis, and
$8 million
of loans on non-accrual status. See Receivables and Investments below for further information.
|
(4)
|
Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets.
|
(5)
|
Includes the real estate and the lease intangible assets (including those held through equity method investments) from which we receive scheduled lease payments, typically under long-term triple net lease agreements.
|
(6)
|
Excludes approximately
170
transactions each with outstanding balances that are less than
$1 million
and that in the aggregate total
$61
million.
|
Investment Date
|
|
Investee
|
|
Carrying Value
|
||
|
|
|
|
(in millions)
|
||
Various
|
|
2007 Vento I, LLC
|
|
$
|
93
|
|
December 2015
|
|
Buckeye Wind Energy Class B Holdings, LLC
|
|
71
|
|
|
Various
|
|
Northern Frontier Wind, LLC
|
|
65
|
|
|
December 2018
|
|
3D Engie, LLC
|
|
49
|
|
|
October 2016
|
|
Invenergy Gunsight Mountain Holdings, LLC
|
|
37
|
|
|
Various
|
|
Helix Fund I, LLC
|
|
26
|
|
|
Various
|
|
Other transactions
|
|
118
|
|
|
|
|
Total equity method investments
|
|
$
|
459
|
|
|
Total
|
|
Less than 1
year |
|
1-5 years
|
|
5-10 years
|
|
More than 10
years |
||||||||||
|
(dollars in millions)
|
||||||||||||||||||
Receivables
|
|
|
|
|
|
|
|
|
|
||||||||||
Maturities by period
|
$
|
918
|
|
|
$
|
3
|
|
|
$
|
22
|
|
|
$
|
78
|
|
|
$
|
815
|
|
Weighted average yield by period
|
6.6
|
%
|
|
4.5
|
%
|
|
6.2
|
%
|
|
5.3
|
%
|
|
6.7
|
%
|
|||||
Investments
|
|
|
|
|
|
|
|
|
|
||||||||||
Maturities by period
|
$
|
178
|
|
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
101
|
|
Weighted average yield by period
|
4.3
|
%
|
|
3.6
|
%
|
|
—
|
%
|
|
4.1
|
%
|
|
4.7
|
%
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Real estate
|
|
|
|
||||
Land
|
$
|
269
|
|
|
$
|
269
|
|
Lease intangibles
|
104
|
|
|
104
|
|
||
Accumulated amortization of lease intangibles
|
(8
|
)
|
|
(8
|
)
|
||
Real estate
|
$
|
365
|
|
|
$
|
365
|
|
|
Future Amortization Expense
|
|
Minimum Rental Income Payments
|
||||
|
(in millions)
|
||||||
From April 1, 2019 to December 31, 2019
|
$
|
2
|
|
|
$
|
17
|
|
2020
|
3
|
|
|
22
|
|
||
2021
|
3
|
|
|
22
|
|
||
2022
|
3
|
|
|
22
|
|
||
2023
|
3
|
|
|
23
|
|
||
2024
|
3
|
|
|
24
|
|
||
Thereafter
|
79
|
|
|
769
|
|
||
Total
|
$
|
96
|
|
|
$
|
899
|
|
|
Deferred Funding Obligations
|
||
|
(in millions)
|
||
From April 1, 2019 to December 31, 2019
|
$
|
45
|
|
2020
|
16
|
|
|
2021
|
5
|
|
|
Total
|
$
|
66
|
|
7.
|
Credit facilities
|
|
Rep-Based
Facility |
|
Approval-Based Facility
|
||||
|
(dollars in millions)
|
||||||
Outstanding balance
|
$
|
156
|
|
|
$
|
127
|
|
Value of collateral pledged to credit facility
|
208
|
|
|
205
|
|
||
Weighted average short-term borrowing rate
|
4.0
|
%
|
|
4.3
|
%
|
|
Future minimum maturities
|
||
|
(in millions)
|
||
April 1, 2019 to December 31, 2019
|
$
|
8
|
|
2020
|
8
|
|
|
2021
|
8
|
|
|
2022
|
8
|
|
|
2023
|
15
|
|
|
Total
|
$
|
47
|
|
8.
|
Long-term Debt
|
|
Outstanding Balance
as of |
|
|
|
|
|
|
|
Anticipated
Balance at Maturity |
|
Value of Assets Pledged
as of |
|
|
||||||||||||||
|
March 31, 2019
|
|
December 31, 2018
|
|
Interest
Rate |
|
|
|
Maturity Date
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Description
of Assets Pledged |
|||||||||||
|
(dollars in millions)
|
|
|
||||||||||||||||||||||||
HASI Sustainable Yield Bond 2013-1
|
$
|
38
|
|
|
$
|
55
|
|
|
2.79%
|
|
|
|
December 2019
|
|
$
|
35
|
|
|
$
|
48
|
|
|
$
|
76
|
|
|
Receivables
|
HASI Sustainable Yield Bond 2015-1A
|
89
|
|
|
90
|
|
|
4.28%
|
|
|
|
October 2034
|
|
—
|
|
|
135
|
|
|
135
|
|
|
Receivables, real estate and real estate intangibles
|
|||||
HASI Sustainable Yield Bond 2015-1B Note
|
13
|
|
|
13
|
|
|
5.41%
|
|
|
|
October 2034
|
|
—
|
|
|
135
|
|
|
135
|
|
|
Class B Bond of HASI Sustainable Yield Bond 2015-1
|
|||||
2017 Credit Agreement
|
103
|
|
|
112
|
|
|
4.12%
|
|
|
|
January 2023
|
|
—
|
|
|
116
|
|
|
151
|
|
|
Equity interests in Strong Upwind Holdings I, II, III, and IV LLC, and Northern Frontier, LLC
|
|||||
HASI SYB Loan Agreement 2015-2
|
30
|
|
|
32
|
|
|
6.67%
|
|
(1)
|
|
December 2023
|
|
—
|
|
|
71
|
|
|
72
|
|
|
Equity interest in Buckeye Wind Energy Class B Holdings LLC, related interest rate swap
|
|||||
HASI SYB Trust 2016-2
|
78
|
|
|
77
|
|
|
4.35%
|
|
|
|
April 2037
|
|
—
|
|
|
81
|
|
|
81
|
|
|
Receivables
|
|||||
2017 Master Repurchase Agreement
|
61
|
|
|
56
|
|
|
5.11%
|
|
(1)
|
|
July 2019
|
|
57
|
|
|
72
|
|
|
67
|
|
|
Receivables and investments
|
|||||
HASI ECON 101 Trust
|
133
|
|
|
133
|
|
|
3.57%
|
|
|
|
May 2041
|
|
—
|
|
|
137
|
|
|
137
|
|
|
Receivables and investments
|
|||||
HASI SYB Trust 2017-1
|
158
|
|
|
159
|
|
|
3.86%
|
|
|
|
March 2042
|
|
—
|
|
|
207
|
|
|
208
|
|
|
Receivables, real estate and real estate intangibles
|
|||||
Other non-recourse
debt
(2)
|
128
|
|
|
125
|
|
|
3.15% - 7.45%
|
|
|
|
2019 to 2046
|
|
18
|
|
|
174
|
|
|
178
|
|
|
Receivables
|
|||||
Debt issuance costs
|
(16
|
)
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Non-recourse debt
(3)
|
$
|
815
|
|
|
$
|
835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Interest rate represents the current period’s LIBOR based rate plus the spread. We have hedged the LIBOR rate exposure using interest rate swaps fixed at
2.55%
and
2.42%
for HASI SYB Loan Agreement 2015-2 and 2017 Master Repurchase Agreement, respectively.
|
(2)
|
Other non-recourse debt consists of various debt agreements used to finance certain of our receivables for their term. Debt service payment requirements, in a majority of cases, are equal to or less than the cash flows received from the underlying receivables.
|
(3)
|
The total collateral pledged against our non-recourse debt was
$1,041
million and
$1,105
million as of
March 31, 2019
and
December 31, 2018
, respectively. In addition,
$42 million
and
$35 million
of our restricted cash balance was pledged as collateral to various non-recourse loans as of
March 31, 2019
and
December 31, 2018
, respectively.
|
|
Future minimum maturities
|
||
|
(in millions)
|
||
April 1, 2019 to December 31, 2019
|
$
|
123
|
|
2020
|
24
|
|
|
2021
|
26
|
|
|
2022
|
27
|
|
|
2023
|
152
|
|
|
2024
|
34
|
|
|
Thereafter
|
445
|
|
|
Total minimum maturities
|
$
|
831
|
|
Deferred financing costs, net
|
(16
|
)
|
|
Total non-recourse debt
|
$
|
815
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Principal
|
$
|
150
|
|
|
$
|
150
|
|
Accrued interest
|
1
|
|
|
2
|
|
||
Less:
|
|
|
|
||||
Unamortized financing costs
|
(4
|
)
|
|
(4
|
)
|
||
Carrying value of convertible notes
|
$
|
147
|
|
|
$
|
148
|
|
9.
|
Commitments and Contingencies
|
Announced Date
|
|
Record Date
|
|
Pay Date
|
|
Amount per
share |
|||
2/21/2018
|
|
4/4/2018
|
|
|
4/12/2018
|
|
$
|
0.330
|
|
5/31/2018
|
|
7/5/2018
|
|
|
7/12/2018
|
|
0.330
|
|
|
9/12/2018
|
|
10/3/2018
|
|
|
10/11/2018
|
|
0.330
|
|
|
12/12/2018
|
|
12/26/2018
|
(1)
|
|
1/10/2019
|
|
0.330
|
|
|
2/21/2019
|
|
4/3/2019
|
|
|
4/11/2019
|
|
0.335
|
|
(1)
|
This dividend was treated as a distribution in
2019
for tax purposes.
|
Closing Date
|
|
Common Stock Offerings
|
|
Shares Issued
(1)
|
|
Price Per Share
|
|
Net Proceeds
(2)
|
||||||
|
|
|
|
(amounts in millions, except per share amounts)
|
||||||||||
5/18/18 to 6/25/18
|
|
ATM
|
|
0.834
|
|
|
18.76
|
|
|
(3)
|
|
$
|
15
|
|
11/15/18 to 12/11/18
|
|
ATM
|
|
2.777
|
|
|
23.37
|
|
|
(3)
|
|
64
|
|
|
12/17/2018 and 1/3/2019
|
|
Public Offering
|
|
5.465
|
|
|
21.60
|
|
|
(4)
|
|
117
|
|
|
1/23/19 to 3/21/19
|
|
ATM
|
|
1.603
|
|
|
23.39
|
|
|
(3)
|
|
37
|
|
(1)
|
Includes shares issued in connection with the exercise of the underwriters’ option to purchase additional shares.
|
(2)
|
Net proceeds from the offerings are shown after deducting underwriting discounts, commissions and other offering costs.
|
(3)
|
Represents the average price per share at which investors in our ATM offerings purchased our shares.
|
(4)
|
Represents the price per share at which the underwriters in our public offerings purchased our shares.
|
|
Restricted Shares of Common Stock
|
|
Weighted Average Share Price
|
|
Value
|
|||||
|
|
|
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2017
|
1,399,593
|
|
|
$
|
18.73
|
|
|
$
|
26.2
|
|
Granted
|
454,106
|
|
|
19.72
|
|
|
9.0
|
|
||
Vested
|
(370,072
|
)
|
|
18.88
|
|
|
(7.0
|
)
|
||
Forfeited
|
(96,871
|
)
|
|
18.92
|
|
|
(1.8
|
)
|
||
Ending Balance — December 31, 2018
|
1,386,756
|
|
|
$
|
19.00
|
|
|
$
|
26.4
|
|
Granted
|
148,401
|
|
|
23.96
|
|
|
3.5
|
|
||
Vested
|
(551,502
|
)
|
|
18.85
|
|
|
(10.4
|
)
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2019
|
983,655
|
|
|
$
|
19.83
|
|
|
$
|
19.5
|
|
|
Restricted Stock Units
|
|
Weighted Average Share Price
|
|
Value
|
|||||
|
|
|
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2017
|
255,706
|
|
|
$
|
18.99
|
|
|
$
|
4.9
|
|
Granted
|
176,128
|
|
|
20.24
|
|
|
3.5
|
|
||
Vested
|
(20,368
|
)
|
|
18.99
|
|
|
(0.4
|
)
|
||
Forfeited
|
(18,318
|
)
|
|
19.05
|
|
|
(0.3
|
)
|
||
Ending Balance — December 31, 2018
|
393,148
|
|
|
$
|
19.55
|
|
|
$
|
7.7
|
|
Granted
|
44,492
|
|
|
25.03
|
|
|
1.1
|
|
||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2019
|
437,640
|
|
|
$
|
20.10
|
|
|
$
|
8.8
|
|
|
Three Months Ended March 31,
|
||||||
Numerator:
|
2019
|
|
2018
|
||||
|
(in millions, except share and per share data)
|
||||||
Net income (loss) attributable to controlling stockholders and participating securities
|
$
|
13.6
|
|
|
$
|
(1.2
|
)
|
Less: Dividends paid on participating securities
|
(0.3
|
)
|
|
(0.5
|
)
|
||
Undistributed earnings attributable to participating securities
|
—
|
|
|
—
|
|
||
Net income (loss) attributable to controlling stockholders
|
$
|
13.3
|
|
|
$
|
(1.7
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average number of common shares — basic
|
61,748,906
|
|
|
51,710,910
|
|
||
Weighted-average number of common shares — diluted
|
62,365,271
|
|
|
51,710,910
|
|
||
Basic earnings per common share
|
$
|
0.22
|
|
|
$
|
(0.03
|
)
|
Diluted earnings per common share
|
$
|
0.21
|
|
|
$
|
(0.03
|
)
|
Other Information:
|
|
|
|
||||
Weighted-average number of OP units
|
277,586
|
|
|
283,963
|
|
||
Unvested restricted common stock outstanding (i.e., participating securities)
|
983,655
|
|
|
1,112,940
|
|
|
Buckeye Wind Energy Class B Holdings, LLC
|
|
Other Investments
(1)
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Balance Sheet
|
|
|
|
|
|
||||||
As of December 31, 2018
|
|||||||||||
Current assets
|
$
|
4
|
|
|
$
|
248
|
|
|
$
|
252
|
|
Total assets
|
276
|
|
|
3,732
|
|
|
4,008
|
|
|||
Current liabilities
|
1
|
|
|
127
|
|
|
128
|
|
|||
Total liabilities
|
12
|
|
|
1,060
|
|
|
1,072
|
|
|||
Members' equity
|
264
|
|
|
2,672
|
|
|
2,936
|
|
|||
As of December 31, 2017
|
|||||||||||
Current assets
|
3
|
|
|
131
|
|
|
134
|
|
|||
Total assets
|
286
|
|
|
2,894
|
|
|
3,180
|
|
|||
Current liabilities
|
1
|
|
|
70
|
|
|
71
|
|
|||
Total liabilities
|
11
|
|
|
319
|
|
|
330
|
|
|||
Members' equity
|
275
|
|
|
2,575
|
|
|
2,850
|
|
|||
Income Statement
|
|
|
|
|
|
||||||
For the year ended December 31, 2018
|
|||||||||||
Revenue
|
14
|
|
|
248
|
|
|
262
|
|
|||
Income from continuing operations
|
(6
|
)
|
|
(22
|
)
|
|
(28
|
)
|
|||
Net income
|
(6
|
)
|
|
(22
|
)
|
|
(28
|
)
|
|||
For the year ended December 31, 2017
|
|||||||||||
Revenue
|
12
|
|
|
254
|
|
|
266
|
|
|||
Income from continuing operations
|
(8
|
)
|
|
(49
|
)
|
|
(57
|
)
|
|||
Net income
|
(8
|
)
|
|
(49
|
)
|
|
(57
|
)
|
•
|
Behind-The-Meter ("BTM")
: distributed building or facility projects, which reduce energy usage or cost through the use of solar generation and energy storage or energy efficient improvements including heating, ventilation and air conditioning systems (“HVAC”), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems;
|
•
|
Grid Connected ("GC")
: projects that deploy cleaner energy sources, such as solar and wind to generate power where the off-taker or counterparty is part of the wholesale electric power grid; and
|
•
|
Other Sustainable Infrastructure
: upgraded transmission or distribution systems, water and storm water infrastructure, seismic retrofits and other projects, that improve water or energy efficiency, increase resiliency, positively impact the environment or more efficiently use natural resources.
|
•
|
Equity in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables or securities, such as loans for renewable energy and energy efficiency projects; and
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases.
|
•
|
Consolidation and equity method investments;
|
•
|
Impairment of our Portfolio; and
|
•
|
Securitization of receivables.
|
•
|
Equity investments in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables, such as loans for renewable energy and energy efficiency projects;
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases; and
|
•
|
Investments in debt securities of renewable energy or energy efficiency projects.
|
|
Balance
|
|
Maturity
|
||
|
(in millions)
|
|
|
||
Fixed-rate receivables, interest rates less than 5.00% per annum
|
$
|
397
|
|
|
2020 to 2046
|
Fixed-rate receivables, interest rates from 5.00% to 6.50% per annum
|
130
|
|
|
2020 to 2054
|
|
Fixed-rate receivables, interest rates greater than 6.50% per annum
|
391
|
|
|
2019 to 2069
|
|
Receivables
|
918
|
|
|
|
|
Allowance for credit losses
|
—
|
|
|
|
|
Receivables, net of allowance
|
918
|
|
|
|
|
Fixed-rate investments, interest rates less than 5.00% per annum
|
138
|
|
|
2019 to 2044
|
|
Fixed-rate investments, interest rates from 5.00% to 6.50% per annum
|
40
|
|
|
2028 to 2050
|
|
Total receivables and investments
|
$
|
1,096
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(dollars in millions)
|
||||||
Interest income, receivables
|
$
|
16
|
|
|
$
|
13
|
|
Average monthly balance of receivables
|
$
|
904
|
|
|
$
|
980
|
|
Average interest rate of receivables
|
6.9
|
%
|
|
5.2
|
%
|
||
Interest income, investments
|
$
|
2
|
|
|
$
|
2
|
|
Average monthly balance of investments
|
$
|
172
|
|
|
$
|
153
|
|
Average interest rate of investments
|
4.4
|
%
|
|
4.0
|
%
|
||
Rental income
|
$
|
6
|
|
|
$
|
6
|
|
Average monthly balance of real estate
|
$
|
365
|
|
|
$
|
340
|
|
Average yield on real estate
|
7.1
|
%
|
|
7.0
|
%
|
||
Average monthly balance of Portfolio
|
$
|
1,441
|
|
|
$
|
1,473
|
|
Average yield from Portfolio
|
6.6
|
%
|
|
5.5
|
%
|
||
Interest expense
(1)
|
$
|
13
|
|
|
$
|
14
|
|
Average monthly balance of debt
(1)
|
$
|
1,137
|
|
|
$
|
1,225
|
|
Average interest rate of debt
(1)
|
4.5
|
%
|
|
4.7
|
%
|
||
Average interest spread
(1)
|
2.1
|
%
|
|
0.8
|
%
|
||
Net investment margin
(1)
|
3.1
|
%
|
|
1.6
|
%
|
(1)
|
Excludes amounts related to the non-recourse debt used to finance the equity method investments in the renewable energy projects because our earnings from these equity investments are not included in total revenue.
|
|
Payment due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-5
years
|
|
5-10
years
|
|
More than
10 years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Receivables
|
$
|
918
|
|
|
$
|
32
|
|
|
$
|
129
|
|
|
$
|
174
|
|
|
$
|
583
|
|
Investments
|
178
|
|
|
67
|
|
|
17
|
|
|
24
|
|
|
70
|
|
•
|
the anticipated maturity dates of our receivables and investments and the weighted average yield for each range of maturities as of
March 31, 2019
,
|
•
|
the term of our leases and a schedule of our future minimum rental income under our land lease agreements as of
March 31, 2019
,
|
•
|
the credit quality of our Portfolio, and
|
•
|
the receivables on non-accrual status.
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Interest income, receivables
|
$
|
16
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
23
|
%
|
Interest income, investments
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
%
|
|||
Rental income
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
%
|
|||
Gain on sale of receivables and investments
|
7
|
|
|
6
|
|
|
1
|
|
|
17
|
%
|
|||
Fee income
|
2
|
|
|
1
|
|
|
1
|
|
|
100
|
%
|
|||
Total revenue
|
33
|
|
|
28
|
|
|
5
|
|
|
18
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
16
|
|
|
19
|
|
|
(3
|
)
|
|
(16
|
)%
|
|||
Compensation and benefits
|
7
|
|
|
5
|
|
|
2
|
|
|
40
|
%
|
|||
General and administrative
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
%
|
|||
Total expenses
|
26
|
|
|
27
|
|
|
(1
|
)
|
|
(4
|
)%
|
|||
Income before equity method investments
|
7
|
|
|
1
|
|
|
6
|
|
|
600
|
%
|
|||
Income (loss) from equity method investments
|
4
|
|
|
(2
|
)
|
|
6
|
|
|
NM
|
|
|||
Income (loss) before income taxes
|
11
|
|
|
(1
|
)
|
|
12
|
|
|
NM
|
|
|||
Income tax (expense) benefit
|
3
|
|
|
—
|
|
|
3
|
|
|
NM
|
|
|||
Net income (loss)
|
$
|
14
|
|
|
$
|
(1
|
)
|
|
$
|
15
|
|
|
NM
|
|
•
|
Net income increased by approximately
$15
million as a result of a
$5 million
increase in total revenue,
$6
million increase in income from equity method investments,
$1 million
decrease in total expenses, and a $3 million income tax
|
•
|
Total revenue grew by
$5 million
as gain on sale of receivables and investments and fee income grew by $2 million primarily due to increased securitization activity during the three months ended
March 31, 2019
, when compared to the same period in
2018
. Interest income from investments and rental income increased by $3 million as compared to the same period in the prior year due to a higher average interest rate on our receivables.
|
•
|
Interest expense decreased by
$3 million
primarily due to an decrease in total debt and its related cost during the three months ended
March 31, 2019
, when compared to the same period in
2018
.
|
•
|
Compensation and benefits increased by $2 million due to an increase in equity-based compensation expense resulting from the timing of vesting and higher Company performance when compared to the same period in
2018
.
|
•
|
Income from equity method investments increased by
$6
million primarily due to an allocation of income from one of our joint ventures due to the related project's realization of investment tax credits.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
$
|
|
Per
Share
|
|
$
|
|
Per
Share
|
||||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||||
Net income (loss) attributable to controlling stockholders
(1)
|
$
|
13,647
|
|
|
$
|
0.21
|
|
|
$
|
(1,223
|
)
|
|
$
|
(0.03
|
)
|
Core earnings adjustments:
|
|
|
|
|
|
|
|
||||||||
Reverse GAAP (income) loss from equity method investments
|
(4,506
|
)
|
|
|
|
2,285
|
|
|
|
||||||
Add back core equity method investments earnings
|
9,604
|
|
|
|
|
10,592
|
|
|
|
||||||
Non-cash equity-based compensation charges
|
3,578
|
|
|
|
|
1,845
|
|
|
|
||||||
Amortization of intangibles
|
816
|
|
|
|
|
783
|
|
|
|
||||||
Non-cash provision (benefit) for income taxes
|
(2,266
|
)
|
|
|
|
—
|
|
|
|
||||||
Current year earnings attributable to non-controlling interest
|
61
|
|
|
|
|
(5
|
)
|
|
|
||||||
Core earnings
(2)
|
$
|
20,934
|
|
|
$
|
0.33
|
|
|
$
|
14,277
|
|
|
$
|
0.27
|
|
(1)
|
This is the GAAP diluted earnings per share and is the most comparable GAAP measure to our core earnings per share.
|
(2)
|
Core earnings per share is based on
63,706,102
shares for the
three
months ended
March 31, 2019
and
53,549,878
shares for the
three
months ended
March 31, 2018
, which represents the weighted average number of fully-diluted shares outstanding including our restricted stock awards and restricted stock units and the non-controlling interest in our Operating Partnership. We include any potential common stock issuance in this calculation related to our convertible notes using the treasury stock method.
|
|
As of
|
||||||
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(dollars in millions)
|
||||||
Equity method investments
|
$
|
459
|
|
|
$
|
471
|
|
Government receivables
|
464
|
|
|
497
|
|
||
Commercial receivables
|
454
|
|
|
447
|
|
||
Real estate
|
365
|
|
|
365
|
|
||
Investments
|
178
|
|
|
170
|
|
||
Assets held in securitization trusts
|
3,596
|
|
|
3,334
|
|
||
Managed Assets
|
$
|
5,516
|
|
|
$
|
5,284
|
|
Credit losses as a percentage of assets under management
|
0.0
|
%
|
|
0.0
|
%
|
|
March 31, 2019
|
|
% of Total
|
|
December 31, 2018
|
|
% of Total
|
||||||
|
(dollars in millions)
|
|
|
|
(dollars in millions)
|
|
|
||||||
Floating-rate borrowings
|
$
|
345
|
|
|
28
|
%
|
|
$
|
317
|
|
|
26
|
%
|
Fixed-rate debt
|
900
|
|
|
72
|
%
|
|
925
|
|
|
74
|
%
|
||
Total debt
(1)
|
$
|
1,245
|
|
|
100
|
%
|
|
$
|
1,242
|
|
|
100
|
%
|
Equity
|
$
|
842
|
|
|
|
|
$
|
805
|
|
|
|
||
Leverage
|
1.5 to 1
|
|
|
|
|
1.5 to 1
|
|
|
|
(1)
|
Floating-rate borrowings include borrowings under our floating-rate credit facilities and approximately
$62 million
and
$58 million
of non-recourse debt with floating rate exposure as of
March 31, 2019
and
December 31, 2018
, respectively. Approximately
$32 million
of the
March 31, 2019
and
December 31, 2018
, floating rate exposure is hedged beginning in August 2019. Fixed-rate debt also includes the present notional value of non-recourse debt that is hedged using interest rate swaps. Debt excludes securitizations that are not consolidated on our balance sheet.
|
Period
|
|
Total number of shares purchased
|
|
Average price
per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Maximum
number of
shares that
may yet be
purchased
under the
plans or programs
|
||
March 2019
|
|
253,743
|
|
|
25.31
|
|
|
N/A
|
|
N/A
|
Exhibit
number
|
|
Exhibit description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101. PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
|
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
(Registrant)
|
|
|
|
||
Date: May 2, 2019
|
|
|
|
/s/ Jeffrey W. Eckel
|
|
|
|
|
Jeffrey W. Eckel
|
|
|
|
|
Chairman, Chief Executive Officer and President
|
|
|
|
||
Date: May 2, 2019
|
|
|
|
/s/ Charles W. Melko
|
|
|
|
|
Charles W. Melko
|
|
|
|
|
Chief Accounting Officer and Senior Vice President
|
1.
|
Term
. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to work for the Company, on the terms and conditions hereinafter set forth. The term of this Agreement will commence as of the start date of March 1, 2019 (the “
Commencement Date
”) and terminate on a date specified by the Company or the Employee in a notice given, at will, with or without Cause (as defined below), by either party to the other not less than 30 days prior to such date, unless such term is sooner terminated as herein provided.
|
2.
|
Duties
. The Employee agrees to be employed by the Company in such capacities as the Company may from time to time direct, it being the intent of the parties that the Employee will serve in the capacity of Executive Vice President, Chief Financial Officer and Treasurer, and as such, the Employee shall faithfully perform for the Company the duties of such office and shall have such responsibilities as are customary for an Executive Vice President and Chief Financial Officer employed by a public company of similar size and nature. The Employee shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, the Employee will devote his full time and exclusive attention during normal business hours to, and use his best efforts to advance, the business and welfare of the Company, its affiliates, subsidiaries and successors in interest. During the term of his employment with the Company, the Employee shall not engage in any other employment activities for any third party for any direct or indirect remuneration without the prior written consent of the Company. It is acknowledged hereunder that Employee currently serves as a Director of Congressional Bank for which he receives compensation, and such service has been approved by the Company.
|
3.
|
Compensation.
For all services provided by the Employee, the Company shall compensate Employee in such amounts and upon such terms as the parties may agree from time to time. The initial Base Salary and Annual Bonus amounts set forth in
Exhibit A
attached hereto are made a part of this Agreement. The Compensation Committee of the Board (the “
Compensation Committee
”) shall review the Employee’s Base Salary and Annual Bonus in good faith on an annual basis and may provide for increases or decreases thereto, and shall set the criteria for earning such Annual Bonus, as it may in its sole discretion deem appropriate.
|
4.
|
Other Benefits
. During the term of employment with the Company, the Employee will be eligible to participate in fringe benefit programs that the Company generally makes available to its employees, including medical and dental insurance and life insurance;
provided
that nothing herein shall be construed as restricting the Company’s right to unilaterally modify or terminate any of such programs at any time with or without notice. Without limiting the generality of this Section 4, the Employee shall be entitled to paid vacation of 20 business days per year (to be taken at reasonable times in accordance with the Company’s policies).
|
5.
|
Equity Awards
. The Employee will be eligible to receive an award of limited partner profit interests (“
LTIP Units
”) under the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan (the "
Equity Incentive Plan
") and an appropriate LTIP Unit award agreement when grants of LTIP Units are otherwise made by the Company to similarly situated executives of the Company. In the event that the Company terminates the Employee’s employment with the Company other than for Cause within 60 days before or 90 days after a Change in Control (as defined in the Equity Incentive Plan), all of the Employee’s (A) LTIP Units, (B) shares of restricted stock and (C) other stock-based compensation that were granted under the Equity Incentive Plan or any successor plan and that are outstanding at the time of such termination shall become fully vested and nonforfeitable.
|
6.
|
Death or Disability
. If the Employee dies or becomes totally disabled during the term of his employment, the Employee’s employment with the Company will automatically terminate and all obligations of the Company hereunder will terminate as of the end of the month in which such event occurs.
|
7.
|
Certain Terminations of Employment
.
|
(a)
|
In the event that (i) the Company terminates the Employee’s employment with the Company for Cause, (ii) the Employee terminates the Employee’s employment with the Company for any reason or (iii) the Employee’s employment with the Company is terminated by reason of death or disability pursuant to Section 6, the Company shall pay to the Employee (or the Employee’s estate or beneficiaries), in a lump sum payment within 30 days following the effective date the Employee’s termination of employment, an amount equal to the Base Salary, Annual Bonus and other benefits earned and accrued under this Agreement but not yet paid prior to the effective date of termination (collectively, the “
Accrued Benefits
”).
|
(b)
|
In the event that the Company terminates the Employee’s employment with the Company for reasons other than for Cause, the Company shall pay to the Employee severance compensation in a lump sum payment within 30 days following the effective date the Employee’s termination of employment in an amount equal to (i) the Accrued Benefits, (ii) the then-current monthly Base Salary payable under paragraph 3 hereof, as of the date of termination, for the nine (9) months following the date of termination, and (iii) 75% of the Employee’s average Annual Bonus payable under paragraph 3 hereof actually received in respect of the three fiscal years (or such fewer number of fiscal years with respect to which the Employee received an Annual Bonus) prior to the year of termination.
|
(c)
|
In the event that the Company terminates the Employee’s employment with the Company for reasons other than for Cause, the Company shall provide, for the period beginning on the date of the termination of the Employee's employment with the Company and ending on the earlier of (x) twelve (12) months following the Employee's termination employment and (y) the date on which the Employee's coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("
COBRA
"), terminates as provided by law (and the Employee shall notify the Company of any subsequent employment through which he is provided medical coverage), Company-paid medical coverage at the same rates as in effect prior to the date of termination of Employee's employment (so long as applicable law and regulations permit such Company payment without imposition of a tax or penalty on the Company or other plan participants or otherwise adversely affecting the Company, the applicable plan or other participants in the plan), or, at the Company's option, the cash amount necessary to obtain equivalent coverage.
|
(d)
|
For purposes of this Agreement, “
Cause
” shall mean, the Employee’s: (i) commission of, and indictment for or formal admission to, a felony involving moral turpitude, deceit, dishonesty or fraud (but excluding traffic violations); (ii) willful and material misconduct or gross misconduct in connection with the performance of the Employee’s duties, including, without limitation, embezzlement or the misappropriation of funds or property of the Company; (iii) failure to adhere to lawful directions of the Chief Executive Officer, to adhere to the Company’s policies and practices, or as required in Section 2 hereof, to devote substantially all of the Employee’s business time and efforts to the Company, which failure continues for a period of 30 business days after written demand for corrective action is delivered by the Company; or (iv) material breach of the terms and provisions of this Agreement and the failure to cure such breach within 10 days following written notice from the Company specifying such breach.
|
(e)
|
Notwithstanding any other provision of this Agreement, the Company shall not be required to provide the payments and benefits provided for under Sections 7(b) and (c) unless the Employee executes and delivers to the Company a waiver and release substantially in the form attached hereto as
Exhibit B
and such waiver and release becomes effective and irrevocable within 21 days following the date of termination.
|
8.
|
Company Policies
. The Employee acknowledges and agrees that he will carefully review each of the policies set forth in the Company Policy Handbook provided to the Employee and will acknowledge his review and acceptance of such policies and the obligations required of the Employee by signing the applicable signature blocks therein and returning the executed version to the Office of the General Counsel. Employee likewise acknowledges and agrees to abide by any revision or addition to the Company policies as may be issued by the Company from time to time throughout the term of employment.
|
9.
|
Restrictive Covenants
.
|
(a)
|
Covenants
. The Employee acknowledges that (i) the principal business of the Company (which expressly includes for purposes of this Section 9 (and any related enforcement provisions hereof), its successors and assigns) is to provide debt and equity financing for sustainable infrastructure projects that increase energy efficiency, provide cleaner energy sources, positively impact the environment and make more efficient use of natural resources (such businesses, and any and all other businesses in which, at the time of the Employee's termination, the Company is actively and regularly engaged or actively pursuing, herein being collectively referred to as the "
Business
"); (ii) the Company is one of the limited number of persons who have developed such a business; (iii) the Company's Business is national in scope; (iv) the Employee's work for the Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (v) the covenants and agreements of the Employee contained in this Section 9 are essential to the business and goodwill of the Company; and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 9. Accordingly, the Employee covenants and agrees that:
|
(i)
|
By and in consideration of the salary and benefits to be provided by the Company hereunder, including the severance arrangements set forth herein, and further in consideration of the Employee's exposure to the proprietary information of the Company, the Employee covenants and agrees that, during the period commencing on the date hereof and ending nine (9) months following the date upon which the Employee shall cease to be an employee of the Company and its affiliates (the "
Restricted Period
"), the Employee shall not in the Restricted Territory (as defined below), directly or indirectly, whether as an owner, partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity, (i) engage in the Business (other than for the Company or its affiliates) or otherwise compete with the Company or its subsidiaries in the Business or (ii) render to a person, corporation, partnership or other entity engaged in the Business the same services that the Employee renders to the Company; provided, however, that, notwithstanding the foregoing, (A) the Employee may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (x) such securities are listed on any national securities exchange, (y) the Employee is not a controlling person of, or a member of a group which controls, such entity, and (z) the Employee does not, directly or indirectly, own 5% or more of any class of securities of such entity; and (B) the Employee may continue to serve on any board of directors on which the Employee was serving as of the date of the Employee's termination of employment; and (C) the Employee may be employed by or provide services for a company (a "
Conglomerate
") with multiple lines of businesses, including a line of business competitive with the Company, so long as the following conditions are satisfied: (w) the Conglomerate derives less than ten percent (10%) of its total annual revenue from the line of business that is competitive with the Company (the "Competitive Division"), (x) the Employee is employed by or provides services to a line of business of Conglomerate that is not competitive with the Company; and (y) the Employee does not perform services for the Competitive Division; and (z) the Employee (A) provides the Company with advance notice of such employment or service and (B) informs the Conglomerate in writing of its obligations under this Section 9.
|
(ii)
|
For purposes of this Agreement, the "
Restricted Territory
" shall mean any (i) state in the United States and (ii) foreign country or jurisdiction, in the case of clause (i) or (ii), in which the Company (x) is actively conducting the Business during the Term or (y) has initiated a plan adopted by the Board to conduct the Business in the two years following the Term.
|
(iii)
|
During and after the Term, the Employee shall keep secret and retain in strictest confidence, and shall not use for the Employee’s benefit or the benefit of others, except in connection with the business and affairs of the Company and its affiliates, all non-public confidential matters relating to the Company's Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Employee heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the "
Confidential Company Information
"), and shall not disclose such Confidential Company Information to anyone outside of the Company except in the course of the Employee’s duties or with the CEO's express written consent. Confidential Company Information does not include information which is at the time of receipt or thereafter becomes publicly known through no wrongful act of the Employee or is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement or which is independently developed or obtained by the Employee on the Employee's own time without reliance upon any confidential information of the Company or use of any Company resources. Notwithstanding anything in this agreement to the contrary, the Employee may disclose Confidential Company Information where the Employee is required to do so by law, regulation, court order, subpoena, summons or other valid legal process; provided, that the Employee, so long as legally permitted to do so, first (i) promptly notifies the Company, (ii) uses commercially reasonable efforts to consult with the Company with respect to and in advance of the disclosure thereof, and (iii) reasonably cooperates with the Company to narrow the scope of the disclosure required to be made, in each case, solely at the Company’s expense.
|
(iv)
|
During the Restricted Period, the Employee shall not, without the Company's prior written consent, directly or indirectly, solicit or encourage to leave the employment or other service of the Company or any of its subsidiaries, any person or entity who is or was during the 6-month period preceding the Employee’s termination of employment, an employee, agent or independent contractor of the Company or any of its subsidiaries. During the Restricted Period, the Employee shall not, whether for the Employee’s own account or for the account of any other person, firm, corporation or other business organization, solicit for a competing business or intentionally interfere with the Company's or any of its subsidiaries’ relationship with, or endeavor to entice away from the Company for a competing business, any person who is or was during the 6-month period preceding the Employee's termination of employment, a customer, client, agent, or independent contractor of the Company or any of its subsidiaries. For purposes hereof, "customer" and "client," as such terms relate to government customers, mean the program office to which the Company is or was providing any goods or services as of the date hereof or during the one-year period prior to the date hereof.
|
(v)
|
All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof), whether visually perceptible, machine-readable or otherwise, made, produced or compiled by the Employee or made available to the Employee containing Confidential Company Information (i) shall at all times be the property of the Company (and, as applicable, any affiliates) and shall be delivered to the Company at any time upon its request, and (ii) upon the Employee's termination of employment, shall be promptly returned to the Company. This section shall not apply to materials that the Employee possessed prior to the Employee’s business relationship with the Company, to the Employee's personal effects and documents, and to materials prepared by the Employee for the purposes of seeking legal or other professional advice.
|
(vi)
|
At no time during the Employee's employment by the Company or at any time thereafter shall the Employee or any representative of the Company publish any statement or make any statement under circumstances reasonably likely to become public that is critical of the other party, or in any way otherwise be materially injurious to the Business or reputation of the other party, unless otherwise required by applicable law or regulation or by judicial order.
|
(b)
|
Rights and Remedies upon Breach
.
|
(i)
|
The parties hereto acknowledge and agree that any breach of any of the provisions of Section 9 or any subparts thereof (individually or collectively, the "
Restrictive Covenants
") may result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if either party breaches, or threatens to commit a breach of, any of the provisions of Section 9 or any subpart thereof, the other party and its affiliates, in addition to, and not in lieu of, any other rights and remedies available to the other party and its affiliates under law or in equity (including, without limitation, the recovery of damages), shall have the right and remedy to seek to have the Restrictive Covenants or other obligations herein specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to seek an entry of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, whether or not then continuing, of such covenants.
|
(ii)
|
The Employee agrees that the provisions of Section 9 of this Agreement and each subsection thereof are reasonably necessary for the protection of the Company’s legitimate business interests and if enforced, will not prevent the Employee from obtaining gainful employment should the Employee’s employment with the Company end. The Employee agrees that in any action seeking specific performance or other equitable relief, the Employee will not assert or contend that any of the provisions of this Section 9 are unreasonable or otherwise unenforceable as drafted. The existence of any claim or cause of action by the Employee, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants.
|
(c)
|
The provisions of this Paragraph 9 will survive any termination of this Agreement.
|
10.
|
Notices
. All notices and other communications required or permitted under this Agreement shall be in writing, served personally on, or mailed by registered or certified United States mail to, in the case of notices to the Employee, to the Employee’s residence set forth in the employment records of the Company and in the case of notices to the Company, to the Company’s principal executive office to the attention of the General Counsel.
|
11.
|
Entire Agreement
. This Agreement contains the entire understanding between the parties and supersedes any prior written or oral agreements between them. There are no representations, warranties, covenants, agreements or understandings oral or written, between the parties relating to the employment of the Employee which are not fully expressed herein. This Agreement shall not be modified or waived except by written instrument and signed by the parties.
|
12.
|
Severability
. The provisions of this Agreement shall be deemed severable, and if any part of any provision is held by any court of competent jurisdiction to be illegal, void, invalid or unenforceable in whole or in part as to any party, such provision may be changed, consistent with the intent of the parties hereto, to the extent reasonably necessary to make such provision, as so changed, legal, valid, binding and enforceable. If such provision cannot be changed consistent with the intent of the parties hereto to make it legal, valid, biding and enforceable, then such provision shall be stricken from this Agreement, and the remaining provisions of this Agreement shall not be affected or impaired but shall remain in full force and effect.
|
13.
|
Binding Effect
. This Agreement shall inure to the benefit of and be binding upon the parties and their respective executors, administrators, personal representatives, heirs, legatees, devises, assigns and successors in interest.
|
14.
|
Governing Law
. This Agreement has been entered into in, and shall be construed and enforced in accordance with, the laws of the State of Maryland, without giving effect to the principles of conflicts of law thereof.
|
15.
|
Counterparts; Effectiveness
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement will become effective when the Company receives a counterpart hereof executed by the Employee and the Company.
|
1.
|
General Releases and Waivers of Claims
.
|
(a)
|
Executive's Release of Company
. In consideration of the payments and benefits provided to the Executive under Section 7 of the Employment Agreement and after consultation with counsel, the Executive (or the Executive’s estate, as applicable) hereby irrevocably and unconditionally releases and forever discharges the Company and its past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, any of its or their successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, managers, supervisors, stockholders, employees and assigns, whether acting on behalf of the Company or in their individual capacities (collectively, "
Company Parties
") from any and all claims, actions, causes of action, rights, judgments, obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, "
Claims
"), including, without limitation, any Claims under any federal, state, local or foreign law, that the Executive (or the Executive’s estate, as applicable) may have, or in the future may possess, arising out of the Executive's employment relationship with and service as an employee, officer or director of the Company, and the termination of such relationship or service;
provided
,
however
, that the Executive (or the Executive’s estate, as applicable) does not release, discharge or waive (A) any rights to payments and benefits provided under the Employment Agreement, (B) any right the Executive (or the Executive’s estate, as applicable) may have to enforce this Agreement, the Award Agreements or the Employment Agreement, (C) the Executive’s rights under the Indemnification Agreement and rights to indemnification and advancement of expenses in accordance with the Company’s certificate of incorporation, bylaws or other corporate governance document, or any applicable insurance policy, (D) any claims for benefits under any employee benefit or pension plan of the Company Parties subject to the terms and conditions of such plan and applicable law including, without limitation, any such claims under the Employee Retirement Income Security Act of 1974, or (E) any right or claim that the Executive (or the Executive’s estate, as applicable) may have to obtain contributions as permitted by applicable law in an action in which both the Executive on the one hand or any Company Party on the other hand are held jointly liable.
|
(b)
|
Executive's Specific Release of ADEA Claims
. In further consideration of the payments and benefits provided to the Executive under Section 7 of the Employment Agreement, the Executive hereby unconditionally release and forever discharge the Company Parties from any and all Claims that the Executive may have as of the date the Executive signs this Agreement arising under the Federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder ("
ADEA
"). By signing this Agreement, the Executive hereby acknowledges and confirms the following: (i) the Executive was advised by the Company in connection with the Executive’s termination to consult with an attorney of the Executive’s choice prior to signing this Agreement and to have such attorney explain to the Executive the terms of this Agreement, including, without limitation, the terms relating to the Executive’s release of claims arising under ADEA, and the Executive has been given the opportunity to do so; (ii) the Executive was given a period of not fewer than 21 days to consider the terms of this Agreement and to consult with an attorney of the Executive’s choosing with respect thereto; and (iii) the Executive knowingly and voluntarily accepts the terms of this Agreement. The Executive also understands that the Executive has seven days following the date on which the Executive signs this Agreement within which to revoke the release contained in this paragraph, by providing the Company a written notice of the Executive’s revocation of the release and waiver contained in this paragraph.
|
(c)
|
No Assignment
. The Executive (or the Executive’s estate, as applicable) represents and warrants that the Executive (or the Executive’s estate, as applicable) has not assigned any of the Claims being released under this Agreement.
|
2.
|
Waiver of Relief
. The Executive (or the Executive’s estate, as applicable) acknowledges and agrees that by virtue of the foregoing, the Executive (or the Executive’s estate, as applicable) has waived any relief available to him/it (including without limitation, monetary damages and equitable relief, and reinstatement) under any of the Claims waived in paragraph 1. Therefore the Executive (or the Executive’s estate, as applicable) agrees that he/it will not accept any award or settlement from any source or proceeding (including but not limited to any proceeding brought by any other person or by any government agency) with respect to any Claim or right waived in this Agreement. Nothing in this Agreement shall be construed to prevent the Executive (or the Executive’s estate, as applicable) from cooperating with or participating in an investigation conducted by, any governmental agency, to the extent required or permitted by law.
|
3.
|
Severability Clause
. In the event any provision or part of this Agreement is found to be invalid or unenforceable, only that particular provision or part so found, and not the entire Agreement, will be inoperative.
|
4.
|
Non-admission
. Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of the Company or any other Company Party or the Executive.
|
5.
|
Governing Law
. All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Maryland applicable to contracts executed in and to be performed in that State.
|
6.
|
Notices
. All notices or communications hereunder shall be made in accordance with Section 10 of the Employment Agreement.
|
754472-4-1556-v1.4
|
754472-4-1556-v1.4
|
754472-4-1556-v1.4
|
1.
|
Acceptance of Agreement
. Grantee shall have no rights with respect to this Agreement unless Grantee has accepted this Agreement prior to the close of business on the Final Acceptance Date specified above by (i) signing and delivering to the Partnership a copy of this Agreement and (ii) unless Grantee is already a Limited Partner (as defined in the Partnership Agreement), signing, as a Limited Partner, and delivering to the Partnership a counterpart signature page to the Partnership Agreement (attached hereto as
Annex A
). If this Agreement is accepted by Grantee prior to the Final Acceptance Date, Grantee shall have all the rights of a Limited Partner of the Partnership with respect to the number of LTIP Units then issued to Grantee, as set forth in the Partnership Agreement, subject, however, to the restrictions and conditions specified in
Sections 2
,
3
and
6
, below.
|
2.
|
Vesting
. Subject to the Grantee’s continued performance of services to the Company, LTIP Units granted under the Award shall become vested and nonforfeitable (“
Earned LTIP Units
”) on [---].
|
3.
|
Restrictions and Conditions
.
|
(a)
|
The records of the Partnership evidencing the LTIP Units granted herein shall bear an appropriate legend, as determined by the Partnership in its sole discretion, to the effect that such LTIP Units are subject to restrictions as set forth herein, in the Plan and in the Partnership Agreement.
|
(b)
|
Subject to the provisions of the Plan and this Agreement, until LTIP Units become Earned LTIP Units, Grantee shall not be permitted voluntarily or involuntarily to sell, transfer, pledge, hypothecate, alienate, encumber or assign such LTIP Units (or have the LTIP Units attached or garnished).
|
4.
|
Termination of Service
.
|
(a)
|
In the event of Grantee’s Termination of Service for any reason:
|
(i)
|
Subject to clause (ii), below, upon Grantee’s Termination of Service for any reason before the vesting date set forth in Section 2, all LTIP Units under this Award shall thereupon, and with no further action, be forfeited by Grantee.
|
(ii)
|
In the event Grantee has a Termination of Service on account of death or Disability, all LTIP Units under this Award shall become Earned LTIP Units.
|
5.
|
Distributions
. Distributions on the LTIP Units underlying the Award shall be paid to Grantee in accordance with the terms of the Partnership Agreement; provided, however, that notwithstanding Section 13.02(a)(iv) of the Partnership Agreement, upon a Liquidating Event, distributions in respect of the LTIP Units pursuant to Section 13.02(a)(iv) of the Partnership Agreement shall not exceed the lesser of (i) the amount provided to be distributed in respect of the LTIP Units under Section 13.02(a)(iv) of the Partnership Agreement and (ii) the amount that would be distributed in respect of the LTIP Units under Section 13.02(a)(iv) of the Partnership Agreement if such provision provided for distribution to the Partners and Assignees in accordance with their Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods.
|
6.
|
Covenants, Representation and Warranties
. Grantee hereby covenants as follows:
|
(a)
|
So long as Grantee holds any LTIP Units granted herein, Grantee shall disclose to the Partnership in writing such information as may be reasonably requested with respect to ownership of such LTIP Units as the Partnership may deem reasonably necessary to ascertain and to establish compliance with provisions of the Code, as applicable to the Partnership or to comply with the requirements of any other appropriate tax authority.
|
(b)
|
Grantee hereby agrees to make an election under Section 83(b) of the Code with respect to the LTIP Units awarded hereunder, and has delivered with this Agreement a completed, executed copy of the election form attached hereto as
Annex B
. Grantee agrees to file the election within 30 days after the Grant Date with the Internal Revenue Service, to promptly provide a copy of such filed election to the Company, and to file a copy of such election with Grantee’s U.S. federal income tax return for the taxable year in which such LTIP Units are awarded to Grantee.
|
(c)
|
Grantee hereby agrees not to dispose of the LTIP Units subject to this Award within two years following receipt of such LTIP Units. The Partnership and Grantee hereby agree to treat Grantee as the owner of such LTIP Units from the Grant Date. Grantee hereby agrees to take into account the distributive share of Partnership income, gain, loss, deduction, and credit associated with such LTIP Units in computing Grantee’s income tax liability for the entire period during which Grantee has such LTIP Units.
|
(d)
|
Grantee hereby recognizes that the Internal Revenue Service has proposed regulations under Sections 83 and 704 of the Code that may affect the proper treatment of the LTIP Units granted herein for federal income tax purposes. In the event that those proposed regulations are finalized, Grantee hereby agrees to cooperate with the Partnership in amending this Agreement and the Partnership Agreement, and to take such other action as may be required, to conform to such regulations.
|
(e)
|
Grantee has received and read a copy of the Partnership Agreement and the Plan and has had his or her tax advisors advise him or her on the application of U.S. federal income tax laws, and the tax laws of any state, local or other taxing jurisdiction to which Grantee is or by reason of the Award may become subject to.
|
(f)
|
Grantee is an “accredited investor” as defined under Rule 501 of Regulation D of the Securities Act of 1933, as amended. Grantee is capable of evaluating the merits and risks of the acquisition and ownership of the LTIP Units and has obtained all information regarding the Partnership (and its applicable affiliates) and the LTIP Units as Grantee deems appropriate, and has relied solely upon such information, and Grantee’s own knowledge, experience and investigation, and those of his, her or its advisors, and not upon any representations of the Partnership and/or the Company, in connection with his, her or its investment decision in acquiring the LTIP Units. Grantee and his, her or its professional advisors have had an opportunity to conduct, and have so conducted if so desired, a due diligence investigation of the Partnership in connection with the decision to acquire the LTIP Units and in such regard have done all things as Grantee and they have deemed appropriate and have had an opportunity to ask questions of and receive answers from the Partnership and the Company, and have done so, as they have deemed appropriate.
|
7.
|
Clawback
. The Award is subject to any incentive compensation clawback or recoupment policy currently in effect or as may be adopted by the Board, and in each case, as may be amended from time to time.
|
8.
|
Assignment and Transfer
. Except as the Committee may otherwise permit pursuant to the Plan, the rights and interests of Grantee under this Agreement may not be sold, assigned, encumbered, pledged, or otherwise transferred except in the event of the death of Grantee, by will or by the laws of descent and distribution. In the event of any attempt by Grantee to sell, assign, encumber, pledge or otherwise transfer its rights and interests hereunder, except as provided in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company or the Partnership may require Grantee to forfeit the LTIP Units granted herein by notice to Grantee, and such LTIP Units and all rights hereunder shall thereupon become null and void. The rights and protections of the Company and the Partnership hereunder shall extend to any successors or assigns of the Company and the Partnership.
|
9.
|
Incorporation of the Plan
. This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, Grantee confirms that he or she has received a copy of the Plan and has had an opportunity to review the contents thereof. Any shares of Stock issued in exchange for partnership units into which LTIP Units may have been converted pursuant to the Partnership Agreement will be issued under the Plan.
|
10.
|
Amendment
. Grantee acknowledges that the Plan may be amended or discontinued in accordance with Section 13 thereof and that this Agreement may be amended or canceled by the Board or the Committee, on behalf of the Partnership, for the purpose of satisfying changes in law or for any other lawful purpose, provided that no such action shall materially impair Grantee’s rights under this Agreement without Grantee’s written consent.
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11.
|
No Right to Continued Service Relationship
. Neither the Plan nor this Agreement will give Grantee any right to continue to provide services to the Company, the Partnership or any of their Affiliates, affect the right of the Company, the Partnership or any of their Affiliates to discharge or discipline such Grantee at any time, or affect any right of such Grantee to terminate his or her services relationship at any time.
|
12.
|
Grant of Power of Attorney
. By executing this Agreement, Grantee, effective upon acceptance of this Agreement by Grantee, hereby irrevocably constitutes and appoints each of Steven L. Chuslo, Jeffrey A. Lipson and Katherine M. Dent (or a substitute appointed by any such person) as his, her or its attorney-in-fact, proxy and agent with full power of substitution to take any and all actions and execute and deliver any of the following agreements on Grantee’s behalf and in Grantee’s name: (i) the Partnership Agreement and any amendment to the Partnership Agreement (including any power of attorney included in the Partnership Agreement), and (ii) any other related agreements on Grantee’s behalf and in Grantee’s name, as may be deemed by any such attorney-in-fact as necessary or desirable to effectuate the transactions contemplated in this Agreement or any related agreements, and the other transactions described herein or therein. Grantee hereby grants to each such attorney-in-fact full power and authority to do and perform each and every act and thing which may be necessary, or convenient, in connection with the foregoing, as fully, to all intents and purposes, as Grantee might or could do if personally present, hereby ratifying and confirming all that each such attorney-in-fact shall lawfully do or cause to be done by authority hereof. Such power of attorney shall be deemed to be coupled with an interest and shall be irrevocable and shall survive the death, disability or dissolution of Grantee.
|
13.
|
Waiver
. The failure of Grantee or the Company to insist upon strict compliance with any provision of this Agreement or the Plan, or to assert any right Grantee or the Company, respectively, may have under this Agreement or the Plan, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement or the Plan.
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14.
|
Notices
. Notices hereunder shall be mailed or delivered to the Partnership at its principal place of business and shall be mailed or delivered to Grantee at the address on file with the Partnership or, in either case, at such other address as one party may subsequently furnish to the other party in writing.
|
15.
|
Consent to Electronic Delivery
. Grantee agrees that the Company or the Partnership may deliver by email all documents relating to the Plan or the LTIP Units granted herein (including without limitation, a copy of the Plan) and all other documents that the Company or Partnership is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities Exchange Commission). Grantee also agrees that the Company or the Partnership may deliver these documents by posting them on a website maintained by the Company or by a third-party under contract with the Company. If the Company posts these documents on a website, it shall notify Grantee by email.
|
16.
|
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. Facsimile or electronic submission of any signed original document or retransmission of any signed facsimile or other electronic transmission will be deemed the same as delivery of an original.
|
17.
|
Severability
. In the event that one or more provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been contained herein.
|
18.
|
Headings
. Section, paragraph and other headings and captions are provided solely as a convenience to facilitate reference. Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Agreement or any term or provision hereof.
|
19.
|
Governing Law
. This Agreement and all claims or disputes arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by, and construed in accordance with, the laws of the State of Maryland, applied without regard to conflict of law principles or rules that would cause the application of the domestic substantive laws of any other jurisdiction.
|
By:
|
HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.,
its general partner |
(a)
|
Until the LTIP Units vest, the Taxpayer may not transfer in any manner any portion of the LTIP Units without the consent of the Partnership.
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(b)
|
The LTIP Units are subject to forfeiture on certain terminations of services.
|
754472-4-1594-v2.0
|
754472-4-1594-v2.0
|
754472-4-1594-v2.0
|
(a)
|
Subject to clause (c) below, the period of restriction with respect to the [20--] Time-Based LTIP Units granted hereunder (the "
Restriction Period
") shall begin on the date hereof and lapse in accordance with the provisions of
Schedule I
attached hereto. Subject to the provisions of the Partnership Agreement and this Agreement, during the Restriction Period, the Grantee shall not be permitted voluntarily or involuntarily to sell, transfer, pledge, anticipate, alienate, encumber, assign or otherwise dispose of the [20--] Time-Based LTIP Units awarded under this Agreement (or have such shares attached or garnished).
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(b)
|
Except as provided in the foregoing clause (a), below in this clause (b) or in the Partnership Agreement, the Grantee shall have, in respect of the [20--] Time-Based LTIP Units, all of the rights of a partner in the Partnership, including the right to receive distributions in respect of such [20--] Time-Based LTIP Units. Unless otherwise provided by the General Partner, the Grantee shall be entitled to receive any distributions on the [20--] Time-Based LTIP Units (whether or not then subject to a substantial risk of forfeiture) which have not been forfeited if and when distributions are made in respect of Partnership units generally.
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(c)
|
The Company is a special purpose vehicle through which the members of the Company hold indirect interests in the Partnership. In order to determine equitably the rights and obligations of the Company and its members with respect to the grant of [20--] Time-Based LTIP Units to the Company, the General Partner shall be entitled to take all necessary actions and make any adjustments that are necessary or advisable to replicate, with respect to the [20--] Time-Based LTIP Units, the vesting, cancellation, forfeiture or failure to vest that occurs with respect to any corresponding [20--] Time-Based HoldCo Units. In furtherance of the foregoing, the [20--] Time-Based LTIP Units shall become vested and nonforfeitable when, as and if a corresponding number of [20--] Time-Based HoldCo Units become vested and nonforfeitable in accordance with the terms of limited liability company agreement of the Company and any applicable Unit Award Agreement with a member of the Company. Similarly, the [20--] Time-Based LTIP Units shall be forfeited by the Company without further consideration if and to the extent that a corresponding number of [20--] Time-Based HoldCo Units are forfeited by a member of the Company.
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(a)
|
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
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(b)
|
The General Partner may make such rules and regulations and establish such procedures for the administration of this Agreement as it deems appropriate. Without limiting the generality of the foregoing, the General Partner may in good faith interpret this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law, provided that the General Partner's interpretation shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations are made exclusively by a General Partner who is comprised of one or more individuals who served on the Compensation Committee of the Board of Directors of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (the "
REIT
") before the Change in Control and take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Partnership Agreement, this Agreement or the administration or interpretation thereof. In the event of any dispute or disagreement as to interpretation of the Partnership Agreement or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Partnership Agreement or this Agreement, the decision of the General Partner in accordance with the foregoing provisions of this Paragraph 3(b) shall be final and binding upon all persons.
|
(c)
|
All notices hereunder shall be in writing, and if to the Partnership or the General Partner, shall be delivered to the Partnership or mailed to its principal office, addressed to the attention of the General Partner; and if to the Grantee, shall be delivered personally, sent by facsimile transmission or mailed to the Grantee at the address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party given in accordance with this Paragraph 3(c).
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(d)
|
Without limiting the Grantee's rights as may otherwise be applicable in the event of a Change in Control, if the Partnership shall be consolidated or merged with another corporation or other entity, the Grantee may be required to deposit with the successor corporation any certificates for the stock or securities or the other property that the Grantee is entitled to receive by reason of ownership of [20--] Time-Based LTIP Units in a manner consistent with the Partnership Agreement, and such stock, securities or other property shall become subject to the restrictions and requirements imposed under this Agreement and the Partnership Agreement, and the certificates therefor or other evidence shall bear a legend similar in form and substance to the legend set forth in the Partnership Agreement.
|
(e)
|
Unless otherwise provided by the General Partner, any shares or other securities distributed to the Grantee with respect to [20--] Time-Based LTIP Units or otherwise issued in substitution of [20--] Time-Based LTIP Units shall be subject to the restrictions and requirements imposed by this Agreement and the Partnership Agreement, including depositing the certificates therefor with the Company together with a stock power and bearing a legend as provided in the Partnership Agreement.
|
(f)
|
The failure of the Grantee or the Partnership to insist upon strict compliance with any provision of this Agreement or the Partnership Agreement, or to assert any right the Grantee or the Partnership, respectively, may have under this Agreement or the Partnership Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement or the Partnership Agreement.
|
(g)
|
The Partnership shall be entitled to withhold from any payments or deemed payments any amount of tax withholding it determines to be required by law.
|
(h)
|
This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.
|
(i)
|
This Agreement may be executed in any number of counterparts, including via facsimile, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
|
(j)
|
Except as otherwise provided in the Partnership Agreement, no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties hereto.
|
(k)
|
The Grantee is an “accredited investor” as defined under Rule 501 of Regulation D of the Securities Act of 1933, as amended (the “
Securities Act
”). Grantee has duly executed and delivered to the Company an accredited investor questionnaire in the form attached as Annex A hereto indicating the basis for such representation. Grantee is capable of evaluating the merits and risks of the acquisition and ownership of the [20--] Time-Based LTIP Units and has obtained all information regarding the Partnership (and its applicable affiliates) and the [20--] Time-Based LTIP Units as Grantee deems appropriate, and has relied solely upon such information, and Grantee’s own knowledge, experience and investigation, and those of his, her or its advisors, and not upon any representations of the Partnership and/or the Company, in connection with its investment decision in acquiring the [20--] Time-Based LTIP Units. Grantee and his, her or its professional advisors have had an opportunity to conduct, and have so conducted if so desired, a due diligence investigation of the Partnership in connection with the decision to acquire the [20--] Time-Based LTIP Units and in such regard have done all things as Grantee and they have deemed appropriate and have had an opportunity to ask questions of and receive answers from the Partnership and the Company, and have done so, as they have deemed appropriate.
|
(l)
|
The Grantee shall execute the Joinder Agreement attached as Annex B hereto.
|
|
1
|
|
1.
|
Grant of [20--] Performance-Based LTIP Units
. The Partnership hereby grants to the Grantee [----] [20--] Performance-Based LTIP Units, subject to all of the terms and conditions of this Agreement and the Limited Partnership Agreement (the "
Partnership Agreement
") of Hannon Armstrong Sustainable Infrastructure, L.P., a Delaware limited partnership (the “
Partnership
”). Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by the Partnership Agreement. To the extent the terms or conditions in this Agreement conflict with any provision of the Partnership Agreement, the terms and conditions set forth in the Partnership Agreement shall govern.
|
2.
|
Restrictions
.
|
(a)
|
The [20--] Performance-Based LTIP Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered. The transfer restrictions contained in the preceding sentence shall not apply to (i) transfers to the Partnership, or (ii) transfers of [20--] Performance-Based LTIP Units by will or the laws of descent and distribution. The [20--] Performance-Based LTIP Units shall be fully vested and non-forfeitable upon the satisfaction of any requirements or restrictions otherwise contained in this Agreement.
|
3.
|
Allocations and Distributions
.
|
(a)
|
Notwithstanding anything in the Partnership Agreement to the contrary, including without limitation Section 4.06 of the Partnership Agreement, any distributions that otherwise would have been made in respect of the [20--] Performance-Based LTIP Units granted herein during the period that such [20--] Performance-Based LTIP Units have not fully vested under Exhibit A (the "
Performance Period
") shall be retained by the Partnership and paid to Grantee as soon as reasonably practicable following the completion of the Performance Period, if, and to the extent that, the [20--] Performance-Based LTIP Units become vested and are not forfeited. Solely by way of illustration and not intended to be a limitation, if only 50% of the [20--] Performance-Based LTIP Units become vested and nonforfeitable, unpaid distributions in respect of only 50% of the [20--] Performance-Based LTIP Units will be paid following the end of the Performance Period.
|
(b)
|
Notwithstanding Section 13.02(a)(iv) of the Partnership Agreement, upon a Liquidating Event, distributions in respect of the [20--] Performance-Based LTIP Units pursuant to Section 13.02(a)(iv) of the Partnership Agreement shall not exceed the lesser of (i) the amount provided to be distributed in respect of the [20--] Performance-Based LTIP Units under Section 13.02(a)(iv) of the Partnership Agreement and (ii) the amount that would be distributed in respect of the [20--] Performance-Based LTIP Units under Section 13.02(a)(iv) of the Partnership Agreement if such provision provided for distribution to the Partners and Assignees in accordance with their Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods.
|
(c)
|
Notwithstanding any provision of the Partnership Agreement to the contrary, no allocations shall be made in respect of [20--] Performance-Based LTIP Units pursuant to Section 6.02 of the Partnership Agreement unless and until the LTIP Units become vested and nonforfeitable, unless otherwise determined by the General Partner in its reasonable discretion. The foregoing shall not limit allocations in respect of [20--] Performance-Based LTIP Units pursuant to Section 6.03 of the Partnership Agreement.
|
4.
|
Restrictive Covenants
. Nothing contained herein shall reduce or limit the application or scope of any restrictive covenants in favor of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (the "
REIT
") (for example, with respect to competition, solicitation, confidentiality, interference or disparagement) to which a member of the Grantee is otherwise subject.
|
5.
|
Tax Liability
. The Grantee is responsible for all taxes and any tax-related penalties the Grantee incurs in connection with any award made in accordance with this Agreement.
|
6.
|
Section 409A Compliance
. Any award made in accordance with this Agreement is intended to be exempt from Section 409A and to be interpreted in a manner consistent therewith. Notwithstanding anything to the contrary contained in this Agreement, to the extent that the Partnership determines that the [20--] Performance-Based LTIP Unit is subject to Section 409A and fails to comply with the requirements of Section 409A, the Partnership reserves the right (without any obligation to do so or to indemnify the Grantee for failure to do so), without the consent of the Grantee, to amend or terminate the Agreement and/or to amend, restructure, terminate or replace the [20--] Performance-Based LTIP Unit in order to cause the [20--] Performance-Based LTIP Unit to either not be subject to Section 409A or to comply with the applicable provisions of such section. In no event shall the Partnership (or any employee or director thereof) have any liability to the Grantee or any other Person due to the failure of any award made in accordance with this Agreement to satisfy the requirements of Section 409A.
|
7.
|
Governing Law; Choice of Venue
. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
|
8.
|
Agreement Binding on Successors
. The terms of this Agreement shall be binding upon the Grantee and upon the Grantee’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest and upon the Company and its successors and assignees.
|
9.
|
No Assignment
. Subject to the second sentence of Section 2(a), neither this Agreement nor any rights granted herein shall be assignable by the Grantee other than (with respect to any rights that survive a member of the Grantee’s death) by will or the laws of descent and distribution. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any [20--] Performance-Based LTIP Units by any holder thereof in violation of the provisions of this Agreement will be valid, and the Company will not transfer any of said [20--] Performance-Based LTIP Units on its books nor will any [20--] Performance-Based LTIP Units be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Partnership. The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.
|
10.
|
Necessary Acts
. The Grantee hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with securities, tax and other applicable laws and regulations.
|
11.
|
Representations and Warranties of the Grantee
. The Grantee hereby represents and warrants to the Company that:
|
(a)
|
The [20--] Performance-Based LTIP Units are being acquired for the Grantee’s own account, only for investment purposes and not with a view to, or for resale in connection with, any public distribution or public offering thereof within the meaning of the Act.
|
(b)
|
The Grantee understands and acknowledges that the [20--] Performance-Based LTIP Units offered pursuant to this Agreement have not been registered under the Act or any other securities laws and is not being offered for resale in transactions that do not require registration under the Act or any other securities laws and, therefore, the [20--] Performance-Based LTIP Units will be characterized as “restricted securities” under the Act and such laws and may not be sold unless the [20--] Performance-Based LTIP Units are subsequently registered under the Act and qualified under state law or unless an exemption from such registration and such qualification is available.
|
(c)
|
The Grantee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Grantee’s prospective acquisition of the [20--] Performance-Based LTIP Units, and/or has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors to do so, and has the ability to bear the economic risks of the Grantee’s prospective acquisition.
|
(d)
|
The Grantee agrees that it has had access to such financial and other information concerning the Company and the [20--] Performance-Based LTIP Units as it has deemed necessary in connection with acquisition of the [20--] Performance-Based LTIP Units, including an opportunity to ask questions of and request information from the Partnership.
|
(e)
|
The General Partner may make such rules and regulations and establish such procedures for the administration of this Agreement as it deems appropriate. Without limiting the generality of the foregoing, the General Partner may, in good faith, (i) interpret this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law, provided that the General Partner's interpretation shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations are made exclusively by a General Partner who is comprised of one or more individuals who served on the Compensation Committee of the Board of Directors of the REIT before the Change in Control; and (ii) take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with this Agreement or the administration or interpretation thereof. In the event of any dispute or disagreement as to the interpretation of this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to this Agreement, the decision of the General Partner shall be final and binding upon all persons.
|
12.
|
Limitation on the Grantee's Rights; Not a Trust
. The [20--] Performance-Based LTIP Units granted hereunder confer no rights or interests other than as herein provided.
|
13.
|
Severability
. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original Agreement. Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, then in lieu of severing such unenforceable provision or provisions, it or they shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by a judicial body shall not affect the enforceability of such provisions or provisions in any other jurisdiction.
|
14.
|
Failure to Enforce Not a Waiver
. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of that provision or of any other provision hereof.
|
15.
|
Entire Agreement
. This Agreement contains the entire agreement and understanding among the parties as to the subject matter hereof and supersede all prior writings or understandings with respect to the grant of [20--] Performance-Based LTIP Units covered by this Agreement. The Grantee acknowledges that any summary of this Agreement provided by the Company is subject in its entirety to the terms of this Agreement. References herein to this Agreement include references to its Exhibits.
|
16.
|
Headings
. Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or description of the contents of any such Section.
|
17.
|
Counterparts
. This Agreement may be executed in any number of counterparts, including via facsimile or PDF, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
|
18.
|
Amendment
. Except as otherwise provided in Section 7, no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties hereto.
|
19.
|
Acknowledgements and Representations
. The Grantee is aware that [20--] Performance-Based LTIP Unit may be of no practical value. The Grantee has read and understands the restrictions and limitations set forth in this Agreement, which are imposed on the [20--] Performance-Based LTIP Units and the [20--] Performance-Based LTIP Unit. The Grantee confirms that the Grantee has not relied on any warranty, representation, assurance or promise of any kind whatsoever in entering into this Agreement other than as expressly set out in this Agreement.
|
20.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to the Agreement by electronic means. The Grantee hereby consents to receive such documents by electronic delivery through an online or electronic system established and maintained by the Company or a third party designated by the Company.
|
21.
|
The Grantee is an “accredited investor” as defined under Rule 501 of Regulation D of the Securities Act of 1933, as amended (the “
Securities Act
”). Grantee has duly executed and delivered to the Company an accredited investor questionnaire in the form attached as Exhibit B hereto indicating the basis for such representation. Grantee is capable of evaluating the merits and risks of the acquisition and ownership of the [20--] Performance-Based LTIP Units and has obtained all information regarding the Partnership (and its applicable affiliates) and the [20--] Performance-Based LTIP Units as Grantee deems appropriate, and has relied solely upon such information, and Grantee’s own knowledge, experience and investigation, and those of his, her or its advisors, and not upon any representations of the Partnership and/or the Company, in connection with his, her or its investment decision in acquiring the [20--] Performance-Based LTIP Units. Grantee and his, her or its professional advisors have had an opportunity to conduct, and have so conducted if so desired, a due diligence investigation of the Partnership in connection with the decision to acquire the [20--] Performance-Based LTIP Units and in such regard have done all things as Grantee and they have deemed appropriate and have had an opportunity to ask questions of and receive answers from the Partnership and the Company, and have done so, as they have deemed appropriate.
|
1.
|
Subject to Section 2 below:
|
|
1
|
|
1.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
2.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
3.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
4.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 2, 2019
|
By:
|
/s/ Jeffrey W. Eckel
|
|
Name:
Title:
|
Jeffrey W. Eckel
Chairman, Chief Executive Officer and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 2, 2019
|
By:
|
/s/ Jeffrey A. Lipson
|
|
|
Name:
Title
|
Jeffrey A. Lipson
Chief Financial Officer and Executive Vice President
|
1.
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 2, 2019
|
By:
|
/s/ Jeffrey W. Eckel
|
|
Name:
Title:
|
Jeffrey W. Eckel
Chairman, Chief Executive Officer and President
|
1.
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 2, 2019
|
By:
|
/s/ Jeffrey A. Lipson
|
|
Name:
Title:
|
Jeffrey A. Lipson
Chief Financial Officer and Executive Vice President
|