Document:

EX-10.7

 Exhibit 10.7 

Execution Version 

THIRD AMENDED AND RESTATED 

MASTER SYSTEM LEASE AGREEMENT 

(MCALLEN SYSTEM) 

between 
 SHARYLAND
DISTRIBUTION & TRANSMISSION SERVICES, L.L.C. 
 and 

SHARYLAND UTILITIES, L.P. 

as of December 1, 2014 

SYSTEM LEASE AGREEMENT 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
		
	 ARTICLE I LEASE
	  	 	1	  
			
	 1.1.
	  	Lease of System	  	 	1	  
	 1.2.
	  	Exclusive Rights	  	 	2	  
	 1.3.
	  	Absolute Net Lease	  	 	3	  
	 1.4.
	  	Waiver by Lessee	  	 	3	  
	 1.5.
	  	Quiet Enjoyment	  	 	3	  
		
	 ARTICLE II TERM OF LEASE
	  	 	3	  
			
	 2.1.
	  	Term	  	 	3	  
	 2.2.
	  	Approvals upon Expiration or Termination	  	 	3	  
	 2.3.
	  	Purchase Option upon Expiration or Termination	  	 	4	  
		
	 ARTICLE III RENT
	  	 	4	  
			
	 3.1.
	  	Rent	  	 	4	  
	 3.2.
	  	Rent Supplements	  	 	8	  
	 3.3.
	  	Confirmation of Percentage Rent	  	 	10	  
	 3.4.
	  	Additional Rent	  	 	11	  
	 3.5.
	  	No Set Off	  	 	11	  
	 3.6.
	  	Late Payment Penalty	  	 	12	  
	 3.7.
	  	Credit Support	  	 	12	  
	 3.8.
	  	Other Revenue	  	 	12	  
		
	 ARTICLE IV LESSEE’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	 	12	  
			
	 4.1.
	  	Maintenance, Operation and Repair of the System	  	 	12	  
	 4.2.
	  	Licenses and Permits	  	 	13	  
	 4.3.
	  	Property Taxes, and other Assessments and Fees	  	 	13	  
	 4.4.
	  	Requirements of Governmental Agencies and Regulatory Authorities	  	 	14	  
	 4.5.
	  	Liens	  	 	14	  
	 4.6.
	  	Hazardous Materials	  	 	14	  
	 4.7.
	  	Indebtedness	  	 	15	  
	 4.8.
	  	Records	  	 	15	  
	 4.9.
	  	Surrender	  	 	15	  
	 4.10.
	  	Cooperation; Transition Services	  	 	16	  
	 4.11.
	  	Lessee’s Authority	  	 	16	  
	 4.12.
	  	Litigation	  	 	16	  
	 4.13.
	  	Financing	  	 	16	  

  
 SYSTEM
LEASE AGREEMENT 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
		
	 ARTICLE V LESSOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	 	18	  
			
	 5.1.
	  	Lessor’s Authority	  	 	18	  
	 5.2.
	  	Liens and Tenants	  	 	18	  
	 5.3.
	  	Condition of Assets	  	 	18	  
	 5.4.
	  	Requirements of Governmental Agencies	  	 	18	  
	 5.5.
	  	Hazardous Materials	  	 	19	  
	 5.6.
	  	Litigation	  	 	19	  
	 5.7.
	  	Limitation	  	 	19	  
		
	 ARTICLE VI LOSS AND DAMAGE; INSURANCE
	  	 	19	  
			
	 6.1.
	  	Loss and Damage to the System	  	 	19	  
	 6.2.
	  	Insurance	  	 	20	  
		
	 ARTICLE VII REPORTING
	  	 	21	  
			
	 7.1.
	  	Private Financing Arrangements	  	 	21	  
	 7.2.
	  	Public Company and Regulatory Information and Cooperation	  	 	22	  
	 7.3.
	  	Mutual Obligations	  	 	23	  
		
	 ARTICLE VIII ASSIGNMENT
	  	 	23	  
		
	 ARTICLE IX DEFAULT
	  	 	24	  
			
	 9.1.
	  	Lessee Default	  	 	24	  
	 9.2.
	  	Lessor Default	  	 	25	  
	 9.3.
	  	Right to Cure	  	 	25	  
	 9.4.
	  	Remedies	  	 	25	  
		
	 ARTICLE X CAPITAL EXPENDITURES
	  	 	25	  
			
	 10.1.
	  	Capital Expenditures Generally	  	 	25	  
	 10.2.
	  	Capital Expenditures Funded by Lessor	  	 	26	  
	 10.3.
	  	Capital Expenditures Funded by Lessee	  	 	26	  
	 10.4.
	  	Footprint Project Construction Activities	  	 	27	  
	 10.5.
	  	Ownership of Footprint Projects	  	 	27	  
	 10.6.
	  	Asset Acquisitions	  	 	27	  
	 10.7.
	  	Reimbursements	  	 	28	  
		
	 ARTICLE XI REGULATORY COOPERATION
	  	 	28	  
			
	 11.1.
	  	Jurisdiction	  	 	28	  
	 11.2.
	  	Cooperation	  	 	28	  
		
	 ARTICLE XII INDEMNITY
	  	 	29	  
			
	 12.1.
	  	General Indemnity	  	 	29	  
	 12.2.
	  	Environmental Indemnity	  	 	29	  

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
		
	 ARTICLE XIII MISCELLANEOUS
	  	 	30	  
			
	 13.1.
	  	Limitation of Damages	  	 	30	  
	 13.2.
	  	Condemnation	  	 	30	  
	 13.3.
	  	Confidentiality	  	 	30	  
	 13.4.
	  	Successors and Assigns	  	 	31	  
	 13.5.
	  	Rent Obligations Not Excused by Force Majeure, Etc.	  	 	31	  
	 13.6.
	  	Further Assurances; Policies and Procedures	  	 	31	  
	 13.7.
	  	Arbitration	  	 	31	  
	 13.8.
	  	Notices	  	 	33	  
	 13.9.
	  	Entire Agreement; Amendments	  	 	33	  
	 13.10.
	  	Legal Matters	  	 	34	  
	 13.11.
	  	Partial Invalidity	  	 	34	  
	 13.12.
	  	Recording	  	 	34	  
	 13.13.
	  	Intention of Parties; True Lease	  	 	34	  

 APPENDICES: 

Appendix A — Definitions 

EXHIBITS: 
  

			
	Exhibit A —     System Area
	Exhibit B —     Amarillo Operation Center Legal Description
	Exhibit C —     Subordinated Debt Terms
	Exhibit D —     Insurance

 SCHEDULES: 
  

			
	Schedule 3.2(b)	  	Form – Rent Supplement

 THIRD AMENDED AND RESTATED 

MASTER SYSTEM LEASE AGREEMENT 

This THIRD AMENDED AND RESTATED MASTER SYSTEM LEASE AGREEMENT (this “Agreement”) is entered into on December 1, 2014
(the “Effective Date”), between Sharyland Distribution & Transmission Services, L.L.C. (together with its transferees, successors and assigns, “Lessor”), and Sharyland Utilities, L.P. (together with its
transferees, successors and assigns, “Lessee”), and in connection herewith, Lessor and Lessee agree, covenant and contract as set forth in this Agreement. Lessor and Lessee are sometimes referred to in this Agreement as a
“Party” or collectively as the “Parties”. 
 Certain capitalized terms used in this Agreement have the
meaning assigned to them in Appendix A attached hereto. 
 WITNESSETH: 

WHEREAS, Lessor and Lessee entered into that certain Second Amended and Restated Master System Lease Agreement dated as of July 1, 2012,
as amended (as amended, restated, supplemented or otherwise modified from time to time, the “Second Amended and Restated Lease”), pursuant to which Lessee leases the Leased System from Lessor; and 

WHEREAS, Lessor is an indirect subsidiary of InfraREIT Partners, LP, whose general partner (the “REIT”) intends to
raise equity capital through an initial public offering (the “REIT IPO”), and, in connection with the REIT IPO, Lessor and Lessee desire to amend the terms of the Second Amended and Restated Lease in certain respects and restate the
Second Amended and Restated Lease as so amended; 
 NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties hereto hereby amend and restate the terms of the Second Amended and Restated Lease as follows: 

ARTICLE I 
 LEASE

 1.1. Lease of System. 

(a) Upon the terms and conditions set forth in this Agreement, Lessor hereby grants to Lessee the exclusive right to use and operate the Leased
System. Subject to necessary regulatory approvals and the penultimate sentence of this Section 1.1, this Agreement is intended by Lessor and Lessee to be a master lease of the Leased System, as it existed as of December 31, 2009 (the
“Original Lease Date”), and as it has been or may continue to be altered or expanded thereafter by Footprint Projects in which Lessor has an interest. 

(b) The System shall consist of (x) the original assets leased by Lessor to Lessee as of the Original Lease Date (the “Original
Assets”), (y) assets that constitute Footprint Projects, other than any such Footprint Projects funded by Lessee pursuant to Section 10.3, and (z) any components of the System that are repaired or replaced pursuant to
Section 6.1. The System shall consist of each of the following components which are owned or leased by Lessor as of the Original Lease Date (or that are described within clause (y) or clause (z) above) and that are located within the
area depicted on Exhibit A and Exhibit B: 
  

SYSTEM LEASE AGREEMENT 

 (i) towers and poles affixed to the land, and all necessary and proper
foundations, footings, crossarms and other appliances and fixtures for use in connection with said towers, poles and lines; 

(ii) overhead, underground and underwater electrical distribution, transmission and communications lines, together with related
ductwork and insulators; 
 (iii) distribution transformers mounted on towers or poles and/or anchored to concrete pads; 

(iv) electric substation and switching facilities, including all associated transformers, circuit breakers, resistors,
capacitors, buses, interconnection and switching facilities, control and protection equipment which monitors the System, and the building housing the foregoing items; 

(v) all facilities associated with any high-voltage direct current interconnections (“HVDC Ties”), including
alternating current (“AC”) / direct current (“DC”) converter stations; 
 (vi) electric
meters affixed to buildings or residences or otherwise required to operate the System; 
 (vii) real estate assets, including
real property, interests in real property or real property rights (as defined in Section 856(c)(5)(B) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, and not otherwise included in Sections 1.1(b)(i)
– 1.1(b)(vi) above) owned or leased by Lessor; 
 (viii) all other systems or property owned or leased by Lessor, as
identified in the uniform system of accounts for major electric utilities, 18 C.F.R. Part 101, as adopted and amended from time to time by FERC (not otherwise included in Sections 1.1(b)(i) – 1.1(b)(vii) above). 

The System will also include, as a Footprint Project, the premises described on Exhibit B along with all leasehold improvements
constructed thereon that are funded by Lessor as Footprint Projects pursuant hereto. Notwithstanding anything to the contrary in this Agreement, the parties do not intend or agree to enter into a lease with respect to any Footprint Project or other
alteration, expansion or addition to the System (and the Lessee shall not be authorized to use or operate such Footprint Project, alteration, expansion or addition to the System) unless and until such time as the parties first execute a Rent
Supplement for the underlying Footprint Project and such Footprint Project is placed in service, and such Rent Supplement together with this Agreement shall be treated as a new lease with respect to such Footprint Project. The parties further agree
and acknowledge that a Rent Supplement will be executed with respect to each Footprint Project before such Footprint Project is placed in service, and references in this Agreement to the “System” rely on the assumption that this is the
case. 
  
 SYSTEM LEASE
AGREEMENT 

  
 2 

 1.2. Exclusive Rights. Throughout the Term of this Agreement, Lessee shall
have the exclusive right (i) to operate and use the Leased System for the transmission and distribution of electricity in accordance with applicable rules and regulations of all regulatory agencies having regulatory jurisdiction over the
System, including without limitation, the PUCT, as well as applicable rules and regulations of ERCOT, TRE, NERC and other Regulatory Authorities, and (ii) to utilize the Leased System (and the associated easements, rights of way and similar
rights) for other opportunities and uses (provided that such other uses do not interfere with the current or future transmission and delivery of electricity), subject to the approval of the Lessor, such approval not to be unreasonably withheld,
conditioned or delayed. Throughout the Term of this Agreement, Lessor shall have access to the System at all reasonable times for purposes of inspection and for the purposes of improving, expanding or modernizing the System in accordance with
Article X. Except in the case of emergency, prior to Lessor’s access of the System, Lessor will provide written notification to Lessee’s operations personnel. 

1.3. Absolute Net Lease. This Agreement is intended by the Parties to be an absolute net lease (and, except as otherwise
specified herein, the expenses associated with the lease, servicing, insuring, maintenance, repair and operation of the System shall be for the account of the Lessee, unless expressly stated that such expenses are for the account of Lessor or some
other person or entity). Other than as expressly provided herein, (a) Lessee’s obligation to make all payments of Rent as and when the same shall become due and payable in accordance with the terms of this Agreement shall be absolute,
irrevocable and unconditional and shall not be affected by any circumstance or subject to any abatement or diminution by set-off, deduction, counterclaim, recoupment, agreement, defense, suspension, deferment, interruption or otherwise, and
(b) until such time as all Rent required to be paid has been paid, Lessee shall have no right to terminate this Agreement or to be released, relieved or discharged from its obligation to make, and shall not suspend or discontinue, any payment
of Rent for any reason whatsoever. 
 1.4. Waiver by Lessee. Lessee hereby waives, to the extent
permitted by Applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to modify, terminate, cancel, quit or surrender this Agreement except in accordance with the
express terms hereof. 
 1.5. Quiet Enjoyment. Lessee shall be entitled to the peaceful and quiet enjoyment of
the System, subject to the terms of this Agreement, so long as Lessee is not in default of this Agreement beyond applicable notice and cure periods. 
  

SYSTEM LEASE AGREEMENT 

  
 3 

 ARTICLE II 

TERM OF LEASE 
 2.1.
Term. Subject to the provisions of Section 2.2 of this Agreement, or as otherwise stated herein, this Agreement became effective on the Original Lease Date and shall continue through December 31, 2019 unless otherwise
terminated in a manner consistent herewith (the “Initial Term”). Thereafter, this Agreement may be renewed for subsequent terms (each, a “Renewal Term” and, collectively with the Initial Term, the
“Term”) by mutual agreement of the Parties; provided, however, that the Rent for any Renewal Term shall be targeted to provide the Lessor with a Comparable Rate of Return on the then-current Rate Base of the System. 

2.2. Approvals upon Expiration or Termination 

(a) Notwithstanding any provisions to the contrary herein, Lessee shall not surrender, resign, transfer, assign or otherwise cease to be the
operator of the System at any time, including upon the termination of this Agreement or at the expiration of the Term, without first acquiring any necessary regulatory approvals from the PUCT or other Regulatory Authorities regarding such surrender,
resignation, transfer, assignment or cessation of such operatorship; provided that, in the event of expiration or termination, the Parties shall use commercially reasonable efforts to obtain all necessary regulatory approvals of the transfer of such
operatorship as soon as reasonably practicable. 
 (b) During such extended period of operatorship, Lessee shall continue to operate the
System and shall continue to pay all Extended Period Rent; provided, however, that if regulatory approval is not obtained within twelve (12) months of initiation of the approval process and such delay is (a) due to Lessor’s failure to
reasonably pursue such approval, then the amounts payable as Rent will be eighty percent (80%) of such amount, or (b) due to Lessee’s failure to reasonably pursue such approval, then the amounts payable as Rent will be one hundred
five percent (105%) of such amount. 
 (c) Upon the expiration of the Term or termination of this Agreement, Lessee shall use
commercially reasonable efforts to obtain all necessary regulatory approvals as soon as reasonably practicable from the PUCT or other Regulatory Authorities to transfer or assign the CCNs for the System to Lessor or a third party designated by
Lessor and acceptable to the PUCT or other Regulatory Authorities. 
 2.3. Purchase Option upon Expiration or
Termination. Upon the expiration of the Term or termination of this Agreement, Lessor shall have the option to purchase from Lessee any equipment or other property, tangible or intangible, owned by Lessee and principally used
in connection with and necessary for the operation of the System (including any Nonseverable Footprint Projects owned by Lessee, if any), subject to any required regulatory approvals. The purchase price for such property or equipment shall be the
greater of (i) the net book value thereof plus 10% and (ii) the fair market value thereof as determined by mutual agreement of Lessor and Lessee. If the Parties fail to agree on the amount of the purchase price, the purchase price shall be
determined by arbitration pursuant to Section 13.7. In the event Lessor purchases such equipment, Lessee shall have the right to continue to use such equipment for no cost during the period of any extended operations by Lessee under
Section 2.2. 
  
 SYSTEM LEASE
AGREEMENT 

  
 4 

 ARTICLE III 

RENT 
 3.1.
Rent. Lessee will pay to Lessor in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, at Lessor’s address set forth in Section 13.8 hereof or at such other
place or to such other Person, as Lessor from time to time may designate in a Notice, all Rent contemplated hereby during the Term on the basis hereinafter set forth. If there is a dispute as to the amount of Rent to be paid by Lessee, either Party
may submit the dispute to arbitration pursuant to Section 13.7. However, Lessee shall be required to pay, as and when Rent is due and payable hereunder, the Undisputed Rent until such time as the dispute is resolved by agreement between the
Parties or by arbitration pursuant to Section 13.7. 
 (a) Base Rent: Lessee shall pay to Lessor an amount of base rent equal to
the amount set forth on the then effective Rent Supplement, which shall be payable monthly in arrears 45 days after the conclusion of the month. The amount of base rent owed pursuant to this Section 3.1(a) may be supplemented by the Parties
from time to time in accordance with Section 3.2. The amount of base rent payable pursuant to this Section 3.1(a), as supplemented from time to time pursuant to Section 3.2, is referred to as “Base Rent.” 

(b) Percentage Rent: In addition to the Base Rent set forth above, Lessee covenants and agrees to pay to Lessor, as percentage rent, an annual
amount equal to the percent of Gross Revenues during the applicable Lease Year in excess of the Annual Percentage Rent Breakpoint for such Lease Year, all as set forth on the then-effective Rent Supplement. The percentage amounts used for the
calculation of percentage rent owed pursuant to this Section 3.1(b) (the “Percentage Rent Percentages”) may be supplemented by the Parties from time to time in accordance with Section 3.2 to account for additions to the
System. The percentage rent payable pursuant to this Section 3.1(b), as supplemented from time to time pursuant to Section 3.2, is referred to as “Percentage Rent.” 

(c) Percentage Rent Breakpoints: With respect to the Annual Percentage Rent Breakpoint for each Lease Year: (1) the “First Lease
Quarter Percentage Rent Breakpoint” shall be 25% of the Annual Percentage Rent Breakpoint for such Lease Year; (2) the “Second Lease Quarter Percentage Rent Breakpoint” shall be 50% of the Annual Percentage Rent
Breakpoint for such Lease Year; and (3) the “Third Lease Quarter Percentage Rent Breakpoint” shall be 75% of the Annual Percentage Rent Breakpoint for such Lease Year. 

(d) Gross Revenues: 
 (i) As used
in this Agreement, subject to Section 3.1(d)(ii), the “Gross Revenues” of the System shall mean and include all fees, charges and other revenues generated by or otherwise (x) received by or payable to Lessee in connection
with or which are the result of the operation of the System (and any assets related to the System owned by Lessee), as set forth in Account Nos. 440, 442, 444, 445, 449, 451, and 456 (but excluding any fees, charges or other revenues set forth in
Account No. 555) of the FERC Uniform System of Accounts for electric utilities or such other accounts as may be applicable from time to time in which Lessee records its revenues from operation of the System; (y) received by or payable to
Lessee from other opportunities and 
  
 SYSTEM
LEASE AGREEMENT 

  
 5 

 
uses of the System pursuant to Section 1.2 hereof; or (z) that are insurance proceeds for business income lost from an insured event related to the System Assets; provided that,
“Gross Revenues” shall not include (1) any payment received by Lessee as CIAC; (2) any items which are of a pure pass-through nature where such items are charged to and collected from customers of Lessee but which carry
regulatory responsibility to remit such collections without offset or deduction to a third party, including, but not limited to, items such as: (A) sales taxes or other charges collected by Lessee on behalf of a taxing authority; (B) fees,
charges and other revenues collected by Lessee that can be specifically traced to any regulatory approved costs incurred by Lessee that have been ordered or permitted by the PUCT to be recovered through Lessee’s rates such as system benefit
fund, purchase power costs, wheeling charges, Purchase Power Cost Recovery Factor and Transmission Cost Recovery Factor; (C) fees, charges and other revenues collected by Lessee that can be specifically traced to any deferred costs funded by
Lessee that have been ordered or permitted by the PUCT to be recovered through a tariff rider; and (D) such other items that Lessor and Lessee agree to in good faith are consistent with the foregoing and should be included prospectively in the
list set forth in this clause (2) and in the event the Lessor and Lessee cannot agree on what items should be included on such list after 60 days of negotiating in good faith, then either Lessor or Lessee may submit such matter to arbitration
pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine which such items shall be included on such list, based on submissions by each of the Lessee and the Lessor; and
(3) Revenues Attributable to Lessee CapEx. The term “Unadjusted Gross Revenues” means the amount of Gross Revenue, calculated in accordance with this Section 3.1(d)(i), without giving effect to the offset set forth in
clause (3), above, related to Revenues Attributable to Lessee CapEx. 
 (ii) Except as set forth below, all ERCOT Transmission Revenues will
be allocated to the System covered by this Agreement based upon the following formula: Multiply (x) total ERCOT Transmission Revenues received by Lessee by (y) a fraction, the numerator of which is the Transmission Net Plant in Service for
the System covered by this Agreement and the denominator of which is the total Transmission Net Plant in Service for all regulated electric transmission systems owned by Lessor or an affiliate thereof and operated by Lessee or a subsidiary thereof
within ERCOT (the “TCOS Allocation”). As of the Effective Date, all regulated electric transmission systems operated by Lessee or a subsidiary thereof within ERCOT are owned by Lessor or a subsidiary or parent entity thereof. As
long as that is the case, Transmission Net Plant in Service and Transmission Gross Plant in service shall be derived exclusively from the financial statements of Lessor and agreed to by Lessee. If Lessee operates any electric transmission systems
within ERCOT that are not leased from Lessor or an affiliate thereof, then the Parties will negotiate in good faith an equitable and appropriate mechanism for allocating ERCOT Transmission Revenues based on the Transmission Net Plant in Service of
the respective electric transmission systems and in the event the Parties cannot agree on an equitable and appropriate mechanism after 60 days of negotiating in good faith, then either Party may submit such matter to arbitration pursuant to
Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine such equitable and appropriate mechanism, based on submissions by each of the Lessee and the Lessor. The most recent TCOS Allocation agreed
to by Lessor and Lessee will govern the allocation described in this Section 3.1(d)(ii), which TCOS Allocation may be set forth in a Rent Supplement, but will not be required to be included in a Rent Supplement to be effective. Either Party may
request a revision to such TCOS Allocation, based on the most recent available monthly balance sheet, no more 
  

SYSTEM LEASE AGREEMENT 

  
 6 

 
frequently than once every sixty (60) days or in connection with any Rent Supplement or Rent Validation executed and delivered by the Parties. If the Parties are unable to agree to an
allocation, such matter will be submitted to arbitration pursuant to Section 13.7. “Gross Revenues,” for purposes hereof, will consist of the amount of such ERCOT Transmission Revenues allocated to the System pursuant to this
Section 3.1(d)(ii), plus any other amounts, such as distribution revenue, that constitute Gross Revenues pursuant hereto, minus Revenues Attributable to Lessee CapEx. 

(iii) The Parties contemplate that there may be Capital Expenditures for assets that are placed in service and that are related and fairly
allocable to the System and are classified as Lessee CapEx. Unless the Parties agree otherwise based on appropriate factors at the time of the negotiation, Capital Expenditures that qualify as Lessee CapEx will qualify as Lessee CapEx on the date
that the assets developed with such Capital Expenditures are placed in service. In such a case, Revenues Attributable to Lessee CapEx shall be determined and such portion shall be excluded from Unadjusted Gross Revenues. For these purposes, Revenues
Attributable to Lessee CapEx shall be targeted to equal that portion of the Unadjusted Gross Revenues collected by Lessee which equals the amount needed to provide Lessee with the equivalent of a Comparable Rate of Return on any such Lessee CapEx
(except that, in determining such Comparable Rate of Return, the Parties will not consider Lessee’s creditworthiness and there will be no Agreed-to-Discount). It is understood and agreed that such determinations of the Revenues Attributable to
Lessee CapEx are intended to provide an accurate and reasonably administrable means of ensuring that the Lessee (and not the Lessor) will receive a Comparable Rate of Return attributable to the capital invested by Lessee in the Lessee CapEx. The
Revenues Attributable to Lessee CapEx shall be determined solely to provide a Comparable Rate of Return on such Lessee CapEx and shall not be determined with reference to, or with any intention to true up, the effect of any difference between the
initially anticipated and the actual return of or on prior Lessee CapEx. The Parties understand that there may be Capital Expenditures that relate to both the System and to other transmission and/or distribution systems owned or operated by Lessee
or an affiliate thereof, and, in such circumstance, the Parties will negotiate in good faith to determine the portion of such Capital Expenditures that constitute Lessee CapEx hereunder and in the event the Parties cannot determine such portion
after 60 days of negotiating in good faith, then either Party may submit such matter to arbitration pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine such portion of Capital
Expenditures that constitute Lessee CapEx hereunder, based on submissions by each of the Lessee and the Lessor. Lessee agrees to provide Lessor with sufficient information regarding Lessee CapEx so that Lessor can monitor amounts actually spent on
Lessee CapEx. If Lessee expects there will be any Lessee CapEx, Lessee may request, no more frequently than annually, that the Parties determine the Revenues Attributable to Lessee CapEx which relate to such Lessee CapEx for each subsequent Lease
Year. Lessee will use reasonable efforts to make such request coincide with a Rent Supplement pursuant to Section 3.2(a). Each supplement and related determination of Revenues Attributable to Lessee CapEx for any Lease Year which is specified
in this Section 3.1(d)(iii) shall be memorialized in the manner specified in Section 3.2(b). 
 (e) Payment of Percentage Rent:
Percentage Rent shall be paid by Lessee to Lessor not later than the date forty-five (45) days after the end of each Lease Quarter as herein provided. Lessee shall record Gross Revenues in order to provide an audit trail for the Gross Revenues.

  
 SYSTEM LEASE
AGREEMENT 

  
 7 

 
Lessee shall deliver a written statement to Lessor, accompanied by a CFO Certificate, within forty-five (45) days after the end of each Lease Quarter, stating (1) the Gross Revenues for
that Lease Quarter, (2) the cumulative total through the end of that Lease Quarter of Gross Revenues for such Lease Year, (3) the Percentage Rent Breakpoint (the First Lease Quarter Percentage Rent Breakpoint, the Second Lease Quarter
Percentage Rent Breakpoint, the Third Lease Quarter Percentage Rent Breakpoint or the Annual Percentage Rent Breakpoint for such Lease Year, as applicable), utilized by Lessee and applicable to Lessee’s calculation of Percentage Rent through
the end of that Lease Quarter, and (4) the cumulative total of any Percentage Rent then due and the cumulative total of any Percentage Rent previously paid with respect to any prior Lease Quarter(s) within such Lease Year. If such CFO
Certificate indicates that any Percentage Rent is due for such Lease Quarter (or such Lease Year, as applicable), based upon the cumulative total of Gross Revenues through the end of such Lease Quarter and the applicable Percentage Rent Breakpoint
reflected in such statement, then Lessee shall pay and deliver any Percentage Rent then due with the statement and CFO Certificate for such Lease Quarter (or such Lease Year, as applicable). With respect to the final Percentage Rent calculation for
any Lease Year, Lessee shall receive a credit for any Percentage Rent previously paid with respect to such Lease Year. If the Percentage Rent payments previously made by Lessee to Lessor for the first three Lease Quarters of a Lease Year, on a
cumulative basis, exceed the annual amount of Percentage Rent payable by Lessee to Lessor for such Lease Year, then Lessee shall receive a credit for such excess amount against the next Percentage Rent payment(s) becoming due and payable by Lessee
to Lessor under this Agreement. All statements deliverable by Lessee to Lessor under this Agreement shall be delivered to the place where rent is then payable, or to such other place or places as Lessor may from time to time direct by written notice
to Lessee. 
 3.2. Rent Supplements. 

(a) The Parties have executed a Rent Supplement with respect to the Rent in effect as of the Effective Date. This Section 3.2(a) will not
require any amendment to Rent unless the Parties expect Incremental CapEx and the Parties have not previously entered into a Rent Supplement with respect to such Incremental CapEx. If the Parties expect that, during any Lease Year there will be
Incremental CapEx, then the Parties will negotiate in good faith to supplement Rent and other matters in accordance with this Section 3.2. In connection therewith, the Parties will negotiate the pre-tax rate of return that Lessor should earn on
such Incremental CapEx, which will be based generally on an agreed-to discount from the rate of return that public utility companies generally earn in the State of Texas at the time of such Rent Supplement negotiation, adjusted in the manner agreed
to by the Parties (if justified) to take into account the creditworthiness of Lessee at the time of such Rent Supplement negotiation (the “Agreed-to-Discount”). Such discount will be based on the comparable discount the parties
negotiated and agreed to on or around the Original Lease Date, as modified to take into account appropriate factors at the time of such Rent Supplement negotiation. Such pre-tax rate of return, as determined in accordance with this paragraph, is
referred to as a “Comparable Rate of Return.” The following will apply to the determination of the matters set forth on the Rent Supplement: 

(i) The Parties will supplement Base Rent and Percentage Rent in a manner intended to provide a Comparable Rate of Return for
Lessor on its Incremental CapEx. Such Comparable Rate of Return will be achieved by a split between Base Rent and Percentage Rent in the proportions requested by Lessor and agreed to by Lessee. 

 
 SYSTEM LEASE AGREEMENT

  
 8 

 (ii) Unless the Parties agree otherwise based on appropriate factors at the time
of the negotiation, Capital Expenditures will qualify as Incremental CapEx on the date such Capital Expenditures are placed in service, which differentiates these Capital Expenditures from the Capital Expenditures included in CapEx Budgets pursuant
to Article X, which are measured under this Agreement based on the date the related Capital Expenditures are incurred. 

(iii) Notwithstanding anything herein to the contrary, such supplement shall be determined solely to provide a Comparable Rate
of Return on such Incremental CapEx and shall not be determined with reference to, or with any intention to true up, the effect of any difference between the initially anticipated and the actual return of or on, or the Base Rent or Percentage Rent
payable with respect to, the System as in place prior to the additions resulting from such Incremental CapEx. 
 (iv) Base
Rent shall at all times be at least equal to the aggregate amount of scheduled principal and interest due and payable by Lessor for such period with respect to indebtedness incurred by Lessor in connection with the acquisition of the Original Assets
and all indebtedness incurred by Lessor in connection with its funding of any Footprint Projects. 
 (v) For clarity, in no
event will this Section 3.2 require a reduction in Rent if there is no Incremental CapEx. 
 (b) The Parties will memorialize the
results of all Incremental CapEx supplements and Lessee CapEx supplement negotiations by executing and delivering a Rent Supplement, which will set forth the amount of contemplated Incremental CapEx, new Base Rent, a new Percentage Rent Schedule,
new Revenues Attributable to Lessee CapEx, Lessee CapEx, new Accumulated Deficit, new TCOS Allocation (if applicable), the effective date on which such changes will occur and the term of such Rent Supplement (if applicable). In no event will any new
Base Rent or new Percentage Rent be payable, or any Revenues Attributable to Lessee CapEx be taken into account as a reduction to Unadjusted Gross Revenues, before the assets funded by the related Incremental CapEx or Lessee CapEx are placed in
service. The Rent Supplement may also include the projected in-service date of the Incremental CapEx or Lessee CapEx to which the Rent Supplement applies. Upon execution and delivery of any such Rent Supplement, this Agreement will be deemed amended
thereby. The Rent Supplement shall have the term set forth therein, not to extend past the then-current Term of this Agreement. At the end of the term of each Rent Supplement, the Parties shall negotiate a new Rent Supplement for the Lessee CapEx
and Incremental CapEx covered by such prior Rent Supplement using the Comparable Rate of Return methodology set forth in Sections 3.1(d)(iii) and 3.2(a). Notwithstanding the foregoing, the Percentage Rent Percentages and Annual Percentage Rent
Breakpoints reflected on such new Rent Supplement with respect to the Rate Base covered by such prior Rent Supplement shall be as set forth on the Percentage Rent Schedule of such prior Rent Supplement. If necessary, Exhibit A will be supplemented
to reflect new assets funded by Incremental CapEx. 
  

SYSTEM LEASE AGREEMENT 

  
 9 

 (c) If following a Rent Supplement there is a difference in (i) the amount of actual
Incremental CapEx compared to the amount contemplated by the then-effective Rent Supplement, (ii) the amount of actual Lessee CapEx compared to the amount contemplated by the then-effective Rent Supplement, or (iii) the placed-in-service
date of such Incremental CapEx or Lessee CapEx compared to what was contemplated at the time of the then-effective Rent Supplement, then, at any time within two years of the date the Parties agree to a Rent Supplement, either Party may request a
Rent Validation. If there has been such a difference, the Parties will supplement Incremental CapEx, Base Rent, Percentage Rent Percentages, Annual Percentage Rent Breakpoints, Revenues Attributable to Lessee CapEx, Lessee CapEx and/or Accumulated
Deficit, as applicable, to what they would have been, at the time of the Rent Supplement, to reflect (1) the amount of actual Incremental CapEx and Lessee CapEx and/or (2) the actual dates such Incremental CapEx and/or Lessee CapEx was
placed in service, but keeping fixed all other relevant assumptions and inputs, including the Comparable Rate of Return. For the avoidance of doubt, in no circumstance will a Rent Validation occur to account for any difference between the initially
anticipated and the actual return of or on the Incremental CapEx and/or Lessee CapEx, and no such difference will be taken in to account as part of such Rent Validation. The Parties also will negotiate in good faith to determine (A) whether one
Party should make a lump sum payment to the other Party as a result of excess or deficient Rent Lessee paid, prior to the date of the effective date of the Rent Validation, in connection with the Rent Supplement, given any negotiated supplement,
and, (B) if applicable, the amount of any such lump sum payment. The Parties will memorialize the result of any Rent Validation negotiation by executing and delivering a revised Rent Supplement, which will set forth revised expected Incremental
CapEx, Lessee CapEx, Base Rent, Percentage Rent Percentages, Annual Percentage Rent Breakpoints, Revenues Attributable to Lessee CapEx and/or Accumulated Deficit, as applicable, the effective date on which such changes will occur and, if applicable,
the amount of the lump sum payment that one Party must make to the other Party (which payment must be made within 30 days of the execution and delivery of such revised Rent Supplement). Any lump sum payments received by Lessor under this
Section 3.2(c) shall be treated as Rent by the Parties. Upon execution and delivery of any such revised Rent Supplement, this Agreement will be deemed amended thereby. The Parties will reasonably cooperate to minimize the number of Rent
Validations, and prospective Rent Supplements and Rent Validations may be combined into one revised, amended and restated Rent Supplement. 

(d) In connection with the foregoing provisions of this Section 3.2, Lessor and Lessee shall use good faith efforts to agree to a Rent
Supplement, renewal of a Rent Supplement or Rent Validation, as applicable, within 60 days of a request therefor by either Party. If, by the end of such 60 day period, Lessee and Lessor cannot in good faith agree to the terms of a Rent Supplement,
renewal of a Rent Supplement or Rent Validation, such dispute shall be submitted to arbitration in accordance with Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine the terms of such Rent
Supplement, renewal of a Rent Supplement or Rent Validation (including any lump sum payment amount), based on submissions by each of the Lessee and the Lessor. 

3.3. Confirmation of Percentage Rent. 

(a) In the event that Lessee determines that the Percentage Rent paid with respect to any Lease Year exceeded the amount of Percentage
Rent actually due for such Lease Year (such overage being the “Excess Percentage Rent”), Lessee shall promptly notify Lessor of such fact and shall deliver a new CFO Certificate (the “Revised Certificate”) setting
forth the corrected  
  
 SYSTEM
LEASE AGREEMENT 

  
 10 

 
calculations of the Percentage Rent due for such Lease Year and identifying the amount of the Excess Percentage Rent. Upon Lessor’s reasonable verification of the information set forth in
the Revised Certificate, Lessor shall refund to Lessee the Excess Percentage Rent. Notwithstanding anything to the contrary contained herein, in no event shall Lessor have any obligation under this Section 3.3(a) to refund any Excess Percentage
Rent if Lessor has not received the Revised Certificate by March 31 of the year following the Lease Year for which the Excess Percentage Rent was paid. 

(b) Lessee shall utilize, or cause to be utilized, an accounting system for the System in accordance with the FERC Uniform System of Accounts
for electric utilities, that will accurately record all data necessary to compute Percentage Rent, and Lessee shall retain and shall allow Lessor and its representatives to have reasonable access to, for at least five (5) years after the
expiration of each Lease Year, reasonably adequate records conforming to such accounting system showing all data necessary to conduct Lessor’s Audit and to compute Percentage Rent for the applicable Lease Years and to otherwise file or defend
tax returns and reports to any Regulatory Authority. 
 (c) Lessor shall have the right from time to time to cause its accountants or
representatives to conduct an inspection, examination and/or audit (a “Lessor’s Audit”) of all of Lessee’s records, including supporting data, sales and excise tax returns and the records described in Section 3.3(b),
reasonably required to complete such Lessor’s Audit and to verify Percentage Rent, subject to any prohibitions or limitations on disclosure of any such data under applicable laws, regulations and governmental requirements. If any Lessor’s
Audit discloses a deficiency in the payment of Percentage Rent, and either Lessee agrees with the result of Lessor’s Audit or the matter is otherwise determined or compromised, Lessee shall forthwith pay to Lessor the amount of the deficiency,
as finally agreed or determined, together with interest at the Overdue Rate from the date when said payment should have been made to the date of payment thereof. In addition to the amounts described above in this Section 3.3(c), if any
Lessor’s Audit discloses a deficiency in the payment of Percentage Rent which, as finally agreed or determined, exceeds 3% of the amount paid, Lessee shall pay the costs of Lessor’s Audit. In no event shall Lessor undertake a Lessor’s
Audit after March 31 of the second year following the Lease Year for which such audit is requested. 
 (d) Any proprietary information
obtained by Lessor pursuant to the provisions of this Section 3.3 shall be treated as confidential, except that such information may be used, subject to appropriate confidentiality safeguards, in any litigation or arbitration between the
Parties and except further that Lessor may disclose such information to lenders and investors, including prospective lenders or investors and to any other persons to whom disclosure is necessary or appropriate to comply with applicable laws,
regulations and governmental requirements and to comply with any reporting requirements applicable to Lessor or Lessee under any applicable securities laws or regulations or any listing requirements of any applicable securities exchange. 

(e) The obligations of Lessee and Lessor contained in this Section 3.3 shall survive the expiration or earlier termination of this
Agreement. Any dispute as to the existence or amount of any deficiency in the payment of Percentage Rent as disclosed by Lessor’s Audit shall, if not otherwise settled by the Parties, be submitted to arbitration pursuant to the provisions of
Section 13.7. 
  
 SYSTEM LEASE
AGREEMENT 

  
 11 

 3.4. Additional Rent. In addition to Base Rent and Percentage Rent, Lessee
also will pay and discharge as and when due and payable all other amounts, liabilities, obligations and impositions that Lessee assumes or agrees to pay under this Agreement, including without limitation, the expenses described in Section 1.3
and any reimbursement for such amounts and other damages to Lessor in the event that Lessor pays such expenses or performs such obligations on behalf of Lessee (collectively, “Additional Rent”). 

3.5. No Set Off. Rent shall be paid to Lessor without set off, deduction or counterclaim; provided, however, that Lessee
shall have the right to assert any claim or counterclaim in a separate action brought by Lessee under this Agreement or to assert any mandatory counterclaim in any action brought by Lessor under this Agreement. 

3.6. Late Payment Penalty. If Lessee fails to make any payment of Rent to Lessor within five (5) days after
it is due, interest shall accrue on the overdue amount, from the date overdue until the date paid, at the Overdue Rate. 
 3.7. Credit
Support. If Lessor has reasonable grounds for insecurity regarding the performance of Lessee’s obligations hereunder, Lessor may require Lessee to provide credit support in the amount, form and for the term reasonably
acceptable to Lessor, including but not limited to, a letter of credit, a prepayment, or a guaranty. 
 3.8. Other Revenue. If
Lessee receives or expects to receive any fees, charges or Other Revenues and other than de minimis amounts not to exceed $100,000 in any calendar year, then, unless Lessee reasonably believes that such Other Revenue will not operate to reduce
Lessee’s tariff within the State of Texas, Lessee and Lessor will negotiate in good faith to amend this Agreement or a similar lease to characterize the portion of such Other Revenue which Lessor reasonably expects will operate to reduce
Lessee’s tariff within the State of Texas as Unadjusted Gross Revenue hereunder or under such other similar lease. In the event the Lessee and Lessor cannot agree on the terms of such amendment of this Agreement or of a similar lease after 60
days of negotiating in good faith, then either the Lessee or the Lessor may submit such matters to arbitration pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to characterize the portion of
such Other Revenue which Lessor reasonably expects will operate to reduce Lessee’s tariff within the State of Texas as Unadjusted Gross Revenue hereunder or under such other similar lease, based on submissions by each of the Lessee and the
Lessor. 
 ARTICLE IV 

LESSEE’S REPRESENTATIONS, WARRANTIES AND COVENANTS 

Lessee hereby represents, warrants and covenants to Lessor that: 

4.1. Maintenance, Operation and Repair of the System. 

(a) Lessee, at its own cost and expense, shall maintain (including both scheduled and unscheduled maintenance), operate, repair and make all
modifications (other than Footprint Projects) to the System and any components thereof (whether owned by Lessor or Lessee), including directing all operations of and supplying all personnel necessary for the operation of the System, in each case, as
reasonable and prudent and consistent with Good Utility Practice 
  

SYSTEM LEASE AGREEMENT 

  
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and as required by Applicable Law. Lessee shall carry out all obligations under this Agreement as reasonable and prudent and consistent with Good Utility Practice and in accordance with
manufacturers’ warranty requirements (during any applicable warranty period) and the Lessee’s established operating procedures and maintenance, rebuild and repair programs so as to keep the System in good working order, ordinary wear and
tear excepted, and in such condition as shall comply in all material respects with all Applicable Laws. Lessee will operate the System in a reliable and safe manner in compliance with all applicable requirements and regulations of Regulatory
Authorities. Lessee will not operate the System or any component thereof in any manner excluded from coverage by any insurance in effect as required by the terms hereof. 

(b) If inspections of the System by Lessor show that the System does not meet industry standards or Good Utility Practice for maintenance and
repair and/or fails to meet the requirements of any Applicable Law, Lessee shall promptly, but in any event within thirty (30) days after such initial notification, (i) develop a plan for Lessor’s review by which the System can be
modified to comply with the standards, and (ii) complete any and all such modifications consistent with all applicable reliability and safety standards established by regulations, orders or requirements of Regulatory Authorities. 

4.2. Licenses and Permits. Lessee shall obtain and maintain any and all licenses, permits and other governmental
and third-party consents and approvals required by Applicable Law in order to carry out its obligations under this Agreement. 
 4.3.
Property Taxes, and other Assessments and Fees. Lessee shall bear and timely pay all ad valorem or property taxes, sales and use taxes, or other assessments, governmental charges or fees that shall or may during the Term
be imposed on, or arise in connection with, the repair, maintenance or operation of the System (including all Footprint Projects as described and provided for in Section 10.1 of this Agreement) (“Lessee Taxes”); provided that
Lessee shall not be obligated to pay any net income taxes imposed upon Lessor or any sales and use taxes which arise in connection with Lessor’s acquisition of Footprint Projects (“Lessor Taxes”). Upon the written request by
Lessor, Lessee shall provide Lessor with evidence of the payment of any such Lessee Taxes, the failure of which to be paid would cause the imposition of a Lien upon the System or any component thereof or interest therein. Lessee shall assume full
responsibility for preparing and furnishing to Lessor for execution all filings with any governmental authority of or in the state and/or locality in which the System is located in respect of any and all taxes; except that, where required or
permitted by Applicable Law, Lessee shall make such filings on behalf of Lessor in the name of Lessor or in Lessee’s own name. In each case in which Lessee furnishes a tax return or any other form to be executed by Lessor for filing with or
delivery to any taxing authority, Lessee shall certify to Lessor that such document is in the proper form, is required to be filed under Applicable Law and does not impose any tax or other liability on Lessor or any of its affiliates which is not
indemnified by Lessee. Lessee shall be permitted to contest, in its own name when permitted by law but otherwise on behalf of Lessor, in good faith and upon consultation with Lessor, any taxes it is obligated to pay hereunder. 

4.4. Requirements of Governmental Agencies and Regulatory Authorities. Lessee, at its expense, shall comply with
all Applicable Laws, including without limitation all requirements of the Regulatory Authorities. Lessee shall have the right, in its reasonable discretion and at its cost and expense, to contest by appropriate legal proceedings, the validity or
applicability to the 
  
 SYSTEM LEASE
AGREEMENT 

  
 13 

 
System of any Applicable Law made or issued by any federal, state, county, local or other governmental agency or entity. Any such contest or proceeding shall be controlled and directed by Lessee.
Notwithstanding the foregoing, Lessee shall provide Lessor written notice of the commencement and, at reasonable intervals after commencement, the progress of any such legal proceedings. 

4.5. Liens. Lessee shall keep the System free and clear of all Liens other than Permitted Liens; provided,
however, that if Lessee wishes to contest any such Lien (other than a Permitted Lien), Lessee shall, promptly, and in any event within thirty (30) days after it receives notice of the filing of such Lien, remove or bond over such lien from the
System pursuant to Applicable Law. If Lessee fails to promptly remove or bond over any such Lien, Lessor may, after providing notice to Lessee, take reasonable action to satisfy, defend, settle or otherwise remove the Lien at Lessee’s expense.

 4.6. Hazardous Materials. 

(a) Lessee shall operate and maintain the System and conduct all of its other activities in respect thereof in compliance in all material
respects with any Applicable Laws relating to air, water, land and the generation, storage, use, handling, transportation, treatment or disposal of Hazardous Material. Lessee shall promptly notify Lessor of any such violation and, to the extent
Lessee becomes aware of any environmental, health, safety or security matter that requires a corrective action, Lessee shall, in consultation with Lessor, undertake and complete such corrective action. Lessee shall have the obligation to report any
such violations to the appropriate Regulatory Authorities in accordance with Applicable Law and, if practicable, shall give notice thereof to Lessor prior to making such report. 

(b) Without limiting the generality of the foregoing, Lessee shall not (i) place or locate any underground tanks on the property
underlying the System, (ii) generate, manufacture, transport, produce, use, treat, store, release, dispose of or otherwise deposit Hazardous Materials in or on the System, the property underlying the System or any portion thereof other than as
permitted by Applicable Laws that govern the same or are applicable thereto, (iii) permit any other substances, materials or conditions in, on or emanating from the System, the property underlying the System or any portion thereof which may
support a claim or cause of action under any Applicable Law or (iv) undertake any action that would reasonably be expected to cause an unauthorized release of Hazardous Materials at the property underlying the System. 

(c) Lessee shall periodically, at intervals determined in its reasonable discretion in accordance with Good Utility Practice or as required by
Applicable Law, at Lessee’s sole expense, conduct inspections of all components of the System to ensure compliance with Applicable Laws and with this Section 4.6, and shall promptly notify Lessor of the results of any such inspections.
Lessor may, at Lessor’s expense, conduct its own testing at times determined in its reasonable discretion, and after reasonable consultation with Lessee, to ensure Lessee’s compliance with Applicable Laws and with this Section 4.6,
provided, however, that Lessor agrees to indemnify Lessee, in accordance with Section 12.2, from and against any and all Claims arising from such testing. 
  

SYSTEM LEASE AGREEMENT 

  
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 4.7. Indebtedness. Lessee shall not incur Indebtedness other than:
(i) Indebtedness in an aggregate principal amount of up to the greater of (A) $5,000,000 and (B) an amount equal to one percent (1%) of the sum of, without duplication, (x) the total amount of the Consolidated Net Plant of
Lessee, plus (y) the total amount of the Consolidated Net Plant of any guarantor(s) of Lessee’s obligations under any Lease to which Lessee is a party as a lessee, plus (z) the total amount of Leased Consolidated Net Plant of Lessee,
in each case on a senior secured basis, (ii) Indebtedness in an aggregate principal amount of up to the greater of (A) $10,000,000 and (B) an amount equal to one-and-a-half percent (1.5%) of the sum of, without duplication,
(x) the total amount of the Consolidated Net Plant of Lessee, plus (y) the total amount of the Consolidated Net Plant of any guarantor(s) of Lessee’s obligations under any Lease to which Lessee is a party as a lessee, plus
(z) the total amount of Leased Consolidated Net Plant of Lessee, in each case on an unsecured subordinated basis on terms substantially similar to the terms set forth on Exhibit C and (iii) loans, in an aggregate principal amount
not to exceed $10,000,000 at any time outstanding, made by InfraREIT Partners, LP or a subsidiary thereof to Lessee from time to time for the purpose of financing capital expenditures. For purposes of clauses (i) and (ii) of the preceding
sentence, any Consolidated Qualified Lessees of Lessee will be treated as Lessee. In addition to the foregoing, any of Lessee’s subsidiaries may incur Indebtedness in an aggregate principal amount of up to the product of (x) Lessee’s
aggregate Consolidated Net Plant multiplied by (y) the lesser of (A) the sum of Lessee’s then-current PUCT-regulated debt-to-equity ratio (expressed as a percentage) and five percent (5%) or (B) sixty-five percent (65%);
provided, however, that such Indebtedness must be Non-Recourse Debt to Lessee. For purposes of this Section 4.7, Lessee’s Consolidated Net Plant will be derived from its most recently prepared consolidated balance sheet, prepared in
accordance with GAAP but adjusted to reverse the effects of failed sale-leaseback accounting in a manner reasonably determined by Lessee in good faith. Without limiting the amount of Indebtedness permitted by the foregoing, Lessee may also incur
Indebtedness (x) in the form of a pledge of equity interests in a subsidiary of Lessee as security for Non-Recourse Debt of such subsidiary and (y) in amounts otherwise permitted under the Debt Agreements. 

4.8. Records. In addition to the records referred to in Section 3.3, Lessee shall maintain proper books of
record and account in conformity with GAAP and all applicable Regulatory Authorities and each other governmental agency or authority having legal or regulatory jurisdiction over Lessee. Additionally, Lessee shall maintain or cause to be maintained
all logs, drawings, manuals, specifications and data and inspection, modification and maintenance records and other materials required to be maintained in respect of the System by Applicable Laws or by prudent and Good Utility Practice. Lessee shall
allow Lessor and its representatives to have reasonable access to, for at least five (5) years after the expiration of each Lease Year, the records referred to in this Section 4.8. 

4.9. Surrender. Upon expiration or earlier termination of this Agreement in accordance with its terms (but subject to
Section 2.2 and the requirements of all Applicable Laws), and in a manner calculated to avoid any disruption of electrical service, Lessee shall vacate and surrender possession of all components of the System (other than in respect of Footprint
Projects funded by Lessee as described in Section 10.5(a)) to Lessor, or to such other person or entity as Lessor may direct. At the time of such surrender, the System shall be free and clear of Liens and other rights of third parties (other
than Permitted Liens), and shall be in the same condition as on the Original Lease Date, ordinary wear and tear and subsequent Footprint 
  

SYSTEM LEASE AGREEMENT 

  
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Projects excepted. Lessee shall deliver or cause to be delivered to Lessor, or to such other person or entity as Lessor may direct, copies of all title documents, logs, drawings, manuals,
specifications and data and inspection, modification and maintenance records, billing records, reports and other documents in respect of the System which are necessary to determine the condition of the System or for the continued maintenance, repair
or general operation of the System and are in Lessee’s possession at such time. In connection with the surrender of the System, Lessor shall pay to Lessee the aggregate purchase price for any Footprint Projects, equipment or other property
purchased by Lessor in accordance with Section 2.3 or Section 10.5(b). 
 4.10. Cooperation; Transition
Services. 
 (a) During the period after notice of termination and prior to the termination of the Agreement, with reasonable
notice, Lessee will cooperate in all reasonable respects with the efforts of Lessor to sell or lease the System (or any component thereof) or any interest therein, including, without limitation, permitting prospective purchasers or lessees to fully
inspect the System and any logs, drawings, manuals, specifications, data and maintenance records relating thereto; provided, that such cooperation shall not unreasonably interfere with the normal operation of the System or cause Lessee to incur any
additional expenses other than as specifically provided herein. All information obtained in connection with such inspection shall be subject to confidentiality requirements at least as restrictive as those contained in Section 13.3. 

(b) Upon expiration or termination of this Agreement, Lessee shall continue to lease and operate the System pursuant to the terms of
Section 2.2, if required thereunder. During such period Lessee shall perform all duties and retain all obligations under Article IV in all respects, as if the Agreement had not expired or been terminated. 

4.11. Lessee’s Authority. Lessee has all requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. Lessee has taken all action necessary to execute and deliver this Agreement and to perform its obligations hereunder, and no other action or proceeding on the part of Lessee is necessary to authorize this
Agreement. This Agreement constitutes the legally valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Applicable Laws affecting the enforcement of creditors’ rights generally and equitable principles. 

4.12. Litigation. If Lessee becomes aware of any actions, claims or other legal or administrative proceedings that are pending,
threatened or anticipated with respect to, or which could materially and adversely affect, the System, Lessee shall promptly deliver notice thereof to Lessor. 

4.13. Financing. Lessee acknowledges that Lessor has advised Lessee that Lessor has obtained financing secured by, among
other things, the System and this Agreement. In connection with such financing, Lessor made certain representations, warranties and covenants set forth in that certain (i) Amended and Restated Note Purchase Agreement entered into by Lessor and
dated as of September 14, 2010 (as amended, restated, supplemented or otherwise 
  

SYSTEM LEASE AGREEMENT 

  
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modified from time to time, the “2009 Note Purchase Agreement”), a copy of which has been provided to and reviewed by Lessee, (ii) Amended and Restated Note Purchase
Agreement entered into by Lessor and dated as of July 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “2010 Note Purchase Agreement” and, together with the 2009 Note Purchase Agreement,
the “Note Purchase Agreements”), a copy of which has been provided to and reviewed by Lessee and (iii) Second Amended and Restated Credit Agreement entered into by Lessor and dated as of June 28, 2013 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement” and, together with the Note Purchase Agreements, the “Debt Agreements”), a copy of which has been provided
to and reviewed by Lessee.  
 Lessee hereby covenants and agrees with Lessor that, during the term of the 2009 Note Purchase
Agreement, Lessee will comply with the covenants set forth in Sections 9.08 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as defined in the 2009 Note Purchase Agreement), 10.04
(Terrorism Sanctions Regulations), 10.10 (Sale of Assets, Etc.), 10.11 (Sale or Discount of Receivables), 10.12 (Amendments to Organizational Documents), 10.16 (Project Documents) and 10.17 (Regulation) of
the 2009 Note Purchase Agreement. 
 Lessee hereby covenants and agrees with Lessor that, during the term of the 2010 Note Purchase
Agreement, Lessee will comply with the covenants set forth in Sections 9.8 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as defined in the 2010 Note Purchase Agreement), 10.4
(Terrorism Sanctions Regulations), 10.10 (Sale of Assets, Etc.), 10.11 (Sale or Discount of Receivables), 10.12 (Amendments to Organizational Documents), 10.16 (Project Documents) and 10.17 (Regulation) of
the 2010 Note Purchase Agreement.  
 Lessee hereby agrees with Lessor that, to the extent not otherwise covered by the terms
of this Agreement, (i) Lessee hereby makes the same representations and warranties to Lessor as Lessor makes to the Lender (as defined in the Credit Agreement) in Sections 6.3 (Disclosure), 6.5 (Financial Condition; Financial
Instruments), 6.6 (Compliance with Laws, Other Instruments, Etc.), 6.7 (Governmental Authorizations, Etc.), 6.8 (Litigation; Observance of Agreements, Statutes and Orders), 6.9 (Taxes), 6.10 (Title to Property;
Leases), 6.11 (Insurance), 6.12 (Licenses, Permits, Etc.; Material Project Documents), 6.16 (Foreign Assets and Control Regulations, Etc.), 6.17 (Status under Certain Statutes), 6.18 (Environmental Matters),
6.19 (Force Majeure Events; Employees) and 6.20 (Collateral) of the Credit Agreement (or equivalent provisions), to the extent that such representations and warranties relate to (x) Lessee, whether in its capacity as Lessee or
otherwise, including, without limitation, Lessee’s status or operations as a public utility, or (y) Lessee’s ownership of the System on or before the date hereof, and (ii) Lessee hereby covenants and agrees with Lessor that,
during the term of the Credit Agreement, Lessee will comply with the covenants set forth in Sections 7.10 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as defined in the Credit
Agreement), 8.4 (Terrorism Sanctions Regulations), 8.10 (Sale of Assets, Etc.), 8.11 (Sale or Discount of Receivables), 8.12 (Amendments to Organizational Documents), 8.16 (Material Projects Documents) and 8.17
(Regulation) of the Credit Agreement (or equivalent provisions).  
  

SYSTEM LEASE AGREEMENT 

  
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 Lessee may not lease, or agree or otherwise commit to lease, any transmission or distribution
facilities other than pursuant to a Lease. Further, Lessee shall not permit Persons other than Hunt Family Members to acquire any interest in the Lessee, directly or indirectly, in a manner that would result in a Change in Control of Lessee. The
Parties agree to amend, alter or supplement this Section 4.13 from time to time to give effect to the obligations under Lessor’s then-current credit arrangements. 

ARTICLE V 
 LESSOR’S
REPRESENTATIONS, WARRANTIES AND COVENANTS 
 Lessor hereby represents, warrants and covenants as follow: 

5.1. Lessor’s Authority. Lessor has all requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. Lessor has taken all action necessary to execute and deliver this Agreement and to perform its obligations hereunder, and no other action or proceeding on the part of Lessor is necessary to authorize this
Agreement. This Agreement constitutes the legally valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Applicable Laws affecting the enforcement of creditors’ rights generally and equitable principles. 

5.2. Liens and Tenants. Lessor represents that Lessor has good and valid title to the System, there are no
unrecorded liens, encumbrances, leases, mortgages, deeds of trust (except as disclosed to Lessee in writing or as arise by operation of law), or other exceptions (collectively, “Liens”) arising as a result of any acts or omissions
to act of Lessor by, through or under Lessor to Lessor’s right, title or interest in the System other than any such of the foregoing that does not materially impair the Lessee’s use of the System, and, to Lessor’s knowledge, there
exist no rights or interests of any third party relating to the System that are not contemplated herein. Except for Permitted Liens or as may be disclosed in the applicable real property records in the State of Texas, or as disclosed by Lessor in
writing to Lessee, Lessor represents that there are no mortgages, deeds of trust, or similar liens or security interests encumbering all or any portion of the System. Lessor shall fully cooperate and assist Lessee, at no out-of-pocket expense to
Lessor, in obtaining a subordination and non-disturbance agreement from each party that holds a Lien that might reasonably be expected to interfere in any material respect with Lessee’s rights under this Agreement. Notwithstanding the
foregoing, Lessor and its affiliates shall have the right to incur Permitted Liens encumbering the System or any component thereof solely for the benefit of Lessor in connection with any existing or future financing or refinancing pursuant to which
the System (or any component thereof) is pledged as collateral and Lessee agrees to enter into such acknowledgments and agreements in respect thereof with the lenders, or a trustee or agent for the lenders as the Lessor may reasonably request. 

5.3. Condition of Assets. Lessor has not taken any action or failed to take any action that would cause the System
not to be in good operating condition and repair, ordinary wear and tear excepted, or adequate for the uses to which it is being put. 
  

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 5.4. Requirements of Governmental Agencies. Lessor shall assist and
fully cooperate with Lessee, in complying with or obtaining any material land use permits and approvals, building permits, environmental impact reviews or any other approvals reasonably required for the maintenance or operation of the System,
including execution of applications for such approvals, and including participating in any appeals or regulatory proceedings respecting the System at Lessee’s cost and expense, if requested by Lessee. 

5.5. Hazardous Materials. Lessor shall conduct its activities in respect of the System in compliance in all
material respects with applicable Environmental Laws. 
 5.6. Litigation. If Lessor becomes aware of any
actions, claims or other legal or administrative proceedings that are pending, threatened or anticipated with respect to, or which could materially and adversely affect, the System, Lessor shall promptly deliver notice thereof to Lessee. 

5.7. Limitation. EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE V, LESSOR (A) MAKES NO AND
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO THE SYSTEM OR ANY PORTION THEREOF, (II) ANY ESTIMATES OF THE VALUE OF THE SYSTEM OR FUTURE REVENUES THAT MIGHT BE GENERATED BY THE SYSTEM, (III) THE
MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE SYSTEM, (IV) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO
LESSEE OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND (B) FURTHER
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY PORTION OF THE SYSTEM, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES
HERETO THAT THE SYSTEM IS BEING LEASED “AS IS, WHERE IS,” WITH ALL FAULTS AND DEFECTS, AND THAT LESSEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS LESSEE DEEMS APPROPRIATE. 

ARTICLE VI 
 LOSS AND
DAMAGE; INSURANCE 
 6.1. Loss and Damage to the System. 

(a) In the event of any damage or loss to any component of the System, Lessee shall promptly repair or replace such component to the standards
required by Section 4.1 (regardless of whether such repair or replacement constitutes a Repair or a Footprint Project). Any such repaired or replaced component will immediately become part of the System owned by Lessor and the cost of any
repair or replacement shall be borne as described in Sections 6.1(b)-(d) below. 
  

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 (b) If such repair or replacement constitutes a Repair, the cost of repairing or replacing such
damage or loss, whether actually covered in whole or in part by insurance, shall be the responsibility of Lessee. Lessee shall be entitled to retain any insurance proceeds in excess of the amount necessary in connection with such Repair. 

(c) If such repair or replacement constitutes a Footprint Project, then, as long as the related costs have been included in a CapEx Budget, the
cost of repairing or replacing such damage or loss, whether actually covered in whole or in part by insurance, shall be the responsibility of Lessor. In such circumstance, unless otherwise agreed by the Parties, (i) if the damage or loss is
covered by insurance, Lessor shall be responsible for payment of any deductible, and (ii) any damage or loss not covered by insurance (exclusive of any deductible) shall be the responsibility of Lessor. If the sum of such deductible and
insurance proceeds exceeds the cost of such Footprint Project, then such excess will first reduce Lessor’s obligation to fund the deductible hereunder, and any excess thereafter will be retained by Lessee. If such repair or replacement
constitutes a Footprint Project that is not included in a CapEx Budget, the provisions of Article X shall apply. 
 (d) Lessee shall be
solely responsible for all costs of repairing or replacing any damaged property and equipment that is not part of the System and owned by Lessee, whether covered by Lessee’s insurance under Section 6.2 or otherwise. Nothing in this
provision shall preclude Lessee from seeking recovery of such costs in a rate proceeding at the PUCT. 
 (e) If Lessor funds Lessee’s
Personal Property pursuant to Section 10.1(b) of this Agreement, then all such funded Personal Property will be treated as a Footprint Project, and not a Repair, for purposes of this Section 6.1. 

6.2. Insurance. Lessee will maintain, with financially sound and reputable insurers, insurance with respect to its
business and properties and the System against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated, but in no event less than the insurance set forth in this Section 6.2 and Exhibit D. 

(a) Lessee shall procure at its own expense and maintain in full force and effect at all times throughout the term of this insurance policies
with insurance companies rated A-, 8 or higher by A.M. Best or acceptable to Lessor if not so rated, and authorized to do business in the State of Texas. 

(b) Lessor may at any time amend the requirements and approved insurance companies described in this Section 6.2 or Exhibit D due
to (i) new information not previously known by Lessor prior to the date of this Agreement or (ii) changed circumstances after the date of this Agreement, which in the reasonable judgment of Lessor either renders a required coverage to be
materially inadequate or materially reduces the financial ability of the approved insurance companies to pay claims. 
  

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 (c) On the first Business Day of each year, and promptly at such other times as Lessor may
reasonably request, Lessee shall furnish Lessor with approved certification of all required insurance. Such certification shall be executed by each insurer or by an authorized representative of each insurer where it is not practical for such insurer
to execute the certificate itself. Such certification shall identify underwriters, the type of insurance, the insurance limits, and the policy term, and shall specifically list the special provisions enumerated for such insurance required by this
Section 6.2. Upon request, Lessee will promptly furnish Lessor with copies of all insurance certificates, binders, and cover notes or other evidence of such insurance relating to the System. 

(d) Concurrently with the furnishing of the certification referred to in Section 6.2(c) and on an annual basis thereafter, Lessee shall
furnish Lessor with a certificate, signed by an officer of Lessee, stating that all premiums then due have been paid and that the insurance then carried or to be renewed is in accordance with the terms of this Section 6.2. and Exhibit D.

 (e) In the event Lessee fails to take out or maintain the full insurance coverage required by this Section 6.2 and Exhibit D,
Lessor, upon thirty (30) days’ prior notice (unless the aforementioned insurance would lapse within such period, in which event notice should be given as soon as reasonably possible) to Lessee of any such failure, may (but shall not be
obligated to) take out the required policies of insurance and pay the premiums on the same. All amounts so advanced thereof by Lessor shall become an additional obligation of Lessee to Lessor, and Lessee shall forthwith pay such amounts to Lessor.

 (f) No provision of this Section 6.2 or Exhibit D or any other provision of this Agreement shall impose on Lessor any duty or
obligation to verify the existence or adequacy of the insurance coverage maintained by Lessee, nor shall Lessor be responsible for any representations or warranties made by or on behalf of Lessee to any insurance company or underwriter. 

ARTICLE VII 
 REPORTING

 7.1. Private Financing Arrangements. Lessee understands that Lessor, or an affiliate thereof, has raised equity
and debt capital secured by the System and this Agreement and that Lessor or its affiliates have reporting obligations in connection with such arrangements, including obligations to provide financial statements prepared in accordance with GAAP, to
prepare an annual strategic plan and to update such annual strategic plan in the event of certain material deviations therefrom. Lessee understands that Lessor relies on Lessee in order to comply with such obligations. From time to time, Lessor or
an affiliate thereof may enter into additional arrangements that impose similar obligations. Accordingly, Lessee agrees to provide Lessor in a timely manner audited year-end financial statements, quarterly unaudited financial statements for the
first three quarters of each year (certified by a financial officer of Lessee), estimates of Percentage Rent, and such acknowledgements, certificates, permits, licenses, instruments, documents and other information as Lessor may reasonably request
from time to time in connection with, or to enable Lessor and its affiliates to comply with any such debt or equity financing arrangements or with Applicable Law. The Parties will negotiate in good faith the time frames during which Lessee will
provide such information, with the intention that 
  

SYSTEM LEASE AGREEMENT 

  
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Lessee provide such information in a manner that is not unduly burdensome but that also allows Lessor sufficient time to comply with its reporting obligations. Lessee will also cooperate with
Lessor to enable Lessor to satisfy its obligations in respect of annual strategic plans, including providing Lessor with requested information in advance of the due date of such annual strategic plan and keeping Lessor apprised of deviations in
capital expenditures, construction activity or revenues of Lessee from amounts that were originally provided by Lessee in preparing such annual strategic plan. Lessee agrees to use reasonable efforts to advise Lessor if Lessee will be unable to meet
the reporting requirements set forth herein in a timely manner and to reasonably cooperate with Lessor to remedy the effects of such non-compliance. 

7.2. Public Company and Regulatory Information and Cooperation. 

(a) Lessee agrees to provide audited full-year and unaudited (but SAS 100 reviewed) interim financial statements and the consent of
Lessee’s auditors to the inclusion of their opinion regarding such financial statements in filings with the Securities and Exchange Commission made by Lessor or an affiliate of Lessor. Lessor may also request that Lessee provide evidence of a
SAS 100 review from Lessee’s auditors with respect to any unaudited interim financial statements included in any such filing. Lessor shall have the right to share any such financial statements with its lenders under the Debt Agreements. Lessee
covenants that (i) such financial statements will fairly present in all material respects the financial condition, results of operations and cash flows of Lessee as of, and for, the periods presented, and (ii) Lessee will endeavor to cause
such financial statements to comply with any applicable laws, rules or regulations that Lessee and Lessor conclude in good faith are applicable to such financial statements by virtue of their inclusion in the securities law filings of Lessor or an
affiliate thereof. 
 (b) Lessee agrees that, in connection with any underwritten offering of the securities of Lessor or any affiliate
thereof, Lessee will use commercially reasonable efforts to cause its auditors to provide a comfort letter (or its equivalent) to such underwriters, if requested by Lessor. 

(c) Lessee agrees to cooperate with Lessor when Lessor or an affiliate provides estimates to analysts and or investors regarding Lessor’s
expectations of its future operating results (including capital expenditures) and to cooperate with Lessor with respect to analysts and investors to the extent such expectations change in any material respect. 

(d) Lessee and Lessor agree to reasonably cooperate to ensure that, to the extent they require information from the other party in order to
prepare their financial statements, to obtain audits of those financial statements and, if required, of their internal control over financial reporting, to respond to comments of the Securities and Exchange Commission on such financial statements or
statements related to internal control over financial reporting or disclosure controls and procedures, or to ensure the efficacy of their internal controls or disclosure controls and procedures, they will reasonably cooperate in order to ensure that
each Party is able to meet its obligations in respect thereof. Lessee agrees to promptly notify Lessor of or provide to Lessor, as applicable, (i) any material communication, written or otherwise, submitted to the Lessee by its auditors,
including, but not limited to an audit response letter, accountant’s management letter or other written report submitted to Lessee by its accountants or any governmental agency in connection with an annual or interim audit of Lessee’s
books, (ii) any material correspondence with, reports of or reports to any Regulatory Authority with respect to the System and (iii) any notices of violations of Applicable Law with respect to the System, in each case taking into account
the REIT’s reporting obligations as a public company. 
  

SYSTEM LEASE AGREEMENT 

  
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 (e) Lessor agrees to inform Lessee of the time periods in which each of the items identified in
this Section 7.2 will be required, which may change. Lessee agrees to use reasonable efforts to advise Lessor if Lessee will be unable to meet the reporting requirements set forth herein in a timely manner and to reasonably cooperate with
Lessor to remedy the effects of such non-compliance. 
 (f) If Lessor identifies additional matters with respect to which Lessee input,
assistance or information is required in order for Lessor and its affiliates to comply with any applicable securities laws, the rules or regulations of any exchange on which the securities of such affiliate are traded or any similar laws, rules or
regulations, the Parties agree to cooperate and negotiate in good faith in order to determine the manner in which Lessee can provide such input, assistance or information in a manner that positions Lessor and its affiliates to comply in a timely
manner with such laws, rules or regulations, as efficiently as is feasible so as to minimize the burden that the provision of such input, assistance or information imposes on Lessee. 

7.3. Mutual Obligations. Each Party shall as promptly as reasonably practicable furnish or cause to be furnished to the
other Party, upon request from such Party, such information as may be required to enable such Party to file any reports required to be filed with any governmental or Regulatory Authority due to such Party’s ownership interest in or operation
and control of the System, as applicable. 
 ARTICLE VIII 

ASSIGNMENT 
 This Agreement
shall not be assignable by either Party, nor shall the System or any part thereof be subleased by Lessee, except with the prior written consent of the other Party and the prior approval of any Regulatory Authority whose approval is required for the
effectiveness of such assignment or sublease. For purposes of this Article VIII, an “assignment” by Lessee shall mean and include, in addition to any direct transfer by Lessee to a third party of all or any part of Lessee’s rights,
estate or interests under this Agreement, any direct or indirect, voluntary or involuntary transfer of or encumbrance on all or any part of Lessee’s rights, estate or interests under this Agreement (i) by operation of law and/or
(ii) by direct or collateral transfer of all or any part of the legal or beneficial ownership interest in Lessee by merger, consolidation or otherwise, provided, in the case of clause (ii), any such transaction or transactions will only
constitute an assignment hereunder to the extent they result in a Change of Control. Notwithstanding the foregoing, Lessor shall have the right, without Lessee’s consent but subject to obtaining regulatory approval as described in the foregoing
sentence, (a) to assign, pledge or grant a security interest in any or all of its interest in the Agreement to a lender or lenders, or a trustee acting on behalf of such lenders, in connection with a financing or refinancing in which such
interest is pledged as collateral, and Lessee agrees to enter into such acknowledgments and agreements in respect thereof as the Lessor may reasonably request and (b) to assign its interest in this Agreement to a successor owner of the System.

  
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AGREEMENT 

  
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 ARTICLE IX 

DEFAULT 
 9.1. Lessee
Default. Subject to Section 9.3, Lessee shall be in default in the event of any of the following: 
 (a) Except as
provided in Section 9.1(g), Lessee’s failure to make any payment of Rent when due; 
 (b) Lessee (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; 
 (c) a court or a Regulatory Authority or other governmental agency of competent jurisdiction enters an
order appointing, without consent by Lessee, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of Lessee or any such petition
shall be filed against Lessee and such petition shall not be dismissed within 90 days; 
 (d) Any representation or warranty made by Lessee
herein shall prove to have been inaccurate in any material respect at the time made; 
 (e) a final judgment or judgments for the payment of
money aggregating in excess of $1,000,000 are rendered against Lessee and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such
stay; 
 (f) Lessee shall have breached or failed to comply in any material respect with any other covenant or agreement contained herein; or

 (g) Notwithstanding Section 9.1(a), Lessee’s failure to pay Rent when due shall not constitute a default if (i) such
failure is due to unforeseeable circumstances arising from a physical event beyond the control of the Lessee, including the incurrence of costs and expenditures as a result of such an event that are materially in excess of budgeted costs and
expenditures or an unforeseen material decline in electricity usage as a result of such event and (ii) such failure is cured within ninety (90) days after the date such rent was due through Lessee’s payment of the entire amount of
such unpaid Rent, plus interest thereon at a rate equal to six percent (6%) per annum or the maximum rate allowed by law, whichever is lesser, from the date such Rent was originally due until the date of payment. 

 
 SYSTEM LEASE AGREEMENT

  
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 9.2. Lessor Default. Subject to Section 9.3, Lessor shall be in
default in the event any representation or warranty made by Lessor herein shall prove to have been inaccurate in any material respect at the time made, or in the event Lessor breaches or fails to comply in any material respect with any covenant or
agreement contained herein. 
 9.3. Right to Cure. If a Party (the “Defaulting Party”) defaults
pursuant to an Event of Default, such Defaulting Party shall not be in default of the terms of this Agreement if (other than in the event of a default described in Sections 9.1(a), 9.1(b) and/or 9.1(c) above), (a) in the case of a Monetary
Default, the Defaulting Party pays the past due amount within thirty (30) days of receiving a Notice of Default from the other Party (the “Non-Defaulting Party”), and (b) in the case of a Non-Monetary Default, the Event of
Default is cured within forty-five (45) days of receiving the Notice of Default; provided, that if the nature of the Non-Monetary Default requires, in the exercise of commercially reasonable diligence, more than forty-five (45) days to
cure then the Defaulting Party shall not be in default as long as it commences performance of the cure within forty-five (45) days and thereafter completes such cure with commercially reasonable diligence. 

9.4. Remedies. 

(a) Should an Event of Default remain uncured by the Defaulting Party, the Non-Defaulting Party shall have and shall be entitled to exercise
the remedies provided in this Section 9.4 and any and all other remedies available to it at law or in equity, all of which remedies shall be cumulative; provided, that the exercise of any remedies hereunder shall be subject to PUCT and other
required regulatory approvals to the extent applicable. 
 (b) In no way limiting the provisions of Section 9.4(a), in the case of an
Event of Default of Lessee, Lessor shall have the right to (i) terminate the Agreement upon notice to Lessee, and recover from Lessee all damages to which Lessor is entitled under Applicable Laws, (ii) terminate Lessee’s right to use
and operate the System while keeping this Agreement in effect, and recover from Lessee all damages to which Lessor is entitled under Applicable Laws, and (iii) take reasonable action to cure Lessee’s default at Lessee’s expense;
provided, that in the event of a violation of Applicable Laws by Lessee, an emergency or government or regulatory action in respect of which Lessor, in its reasonable discretion, determines immediate action is necessary, Lessor shall have the right
to step in and take such action on behalf of Lessee at Lessee’s cost and expense immediately upon giving notice to Lessee, notwithstanding any applicable cure period. 

(c) Any amounts recovered by Lessor from Lessee in the event of a default shall, to the maximum extent permissible under Applicable Laws, be
deemed to be in respect of past or future Rent owing under this Agreement. 
  

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 ARTICLE X 

CAPITAL EXPENDITURES 

10.1. Capital Expenditures Generally. 

(a) Lessee has provided to Lessor in the CapEx Budget the approximate amounts of Capital Expenditures that Lessee expects will be needed for
purposes of funding Footprint Projects in each Lease Year through 2017. On or before October 15 of each calendar year, Lessee shall review and revise the CapEx Budget on a rolling three-year basis (which shall include, if applicable, any year
in such three-year period following the end of the then-current Term and assume the renewal of this Agreement pursuant to Section 2.1), taking into account any changed circumstances that (i) make it no longer feasible to incur one or more
of the costs reflected on the prevailing CapEx Budget, (ii) make it necessary to amend the nature or amounts reflected for a particular Footprint Project or (iii) dictate that additional Footprint Projects be added (such budget, as so
updated and revised, is referred to herein as the “CapEx Budget”). Lessee agrees to revise the CapEx Budget to include any Footprint Projects (x) required by Regulatory Authorities or (y) reasonably necessary to satisfy
Lessee’s obligation as a regulated utility to serve its customers or to maintain the safety or reliability of the System. Capital Expenditures included in a CapEx Budget will be included based on the date such Capital Expenditures are to be
incurred, which differentiates these Capital Expenditures from Incremental CapEx and Lessee CapEx, which are measured under this Agreement based on when the assets developed with such Capital Expenditures are placed in service, and not when they are
incurred. 
 (b) If requested by Lessor, Lessee will also provide an estimate of any Capital Expenditures that Lessee expects for purposes of
funding Personal Property related to the System. If Lessor and Lessee agree, Lessor will fund such Capital Expenditures pursuant to this Agreement, through a loan or through a separate lease. Amounts Lessor provides pursuant to this Agreement to
fund any such Personal Property will be treated in a manner similar to any amounts Lessor provides to fund Footprint Projects for purposes of Section 3.2 and elsewhere herein. Lessee will cause any such Personal Property to be titled in
Lessor’s name and will reasonably cooperate with Lessor in order to enable any secured lender of Lessor or any secured lender of an affiliate of Lessor to perfect its security interest in any such Personal Property. In the alternative, Lessor
may elect to fund such Capital Expenditures through a TRS or to loan (or cause such TRS to loan) Lessee the cash to acquire any such Personal Property in a transaction in which Lessor or a TRS may retain a security interest in such Personal
Property. In such case the Parties shall negotiate in good faith the terms under which Lessor or such TRS shall fund any such Personal Property, including the terms of any lease between Lessee and the TRS or other financing arrangements provided by
the Lessor or the TRS. Any such funded amounts, regardless of the form in which they are funded, will be included in the calculation of whether there is Incremental CapEx, and, if such funded amounts constitute Incremental CapEx, the Parties’
intention is to provide Lessor with a Comparable Rate of Return on all such funded amounts. 
 10.2. Capital Expenditures Funded by
Lessor. Lessor agrees to fund any Footprint Projects contained in the CapEx Budget (as revised from time to time). Lessor’s obligation to fund Footprint Projects pursuant to this Section 10.2 shall include any costs
associated with such Footprint Projects that Lessee is not allowed to recover through its PUCT-approved rates. Any Footprint Projects funded by Lessor under this Section 10.2 shall be deemed to be part of the System upon completion. 

10.3. Capital Expenditures Funded by Lessee. Except as set forth in this Section 10.3, Lessee may not fund
any Footprint Projects. In the event Lessor fails to fund any Footprint Projects, Lessee may at its sole discretion fund the needed capital expenditures (and Lessee shall 
  

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be entitled to applicable damages, if any, as a result of funding any such Footprint Projects); provided that, in such circumstance, Lessee may fund Severable Footprint Projects without
restriction under this Section 10.3 but may only fund Nonseverable Footprint Projects which are required in order to comply with Applicable Law or which are required by any Regulatory Authority. Any Footprint Projects funded by Lessee under
this Section 10.3 shall not be considered part of the System for purposes of this Agreement; provided however, that any part of the System that is built with CIAC funds shall be considered a leasehold improvement that is part of
the System and reverts to the Lessor upon termination of this Agreement without further payment from Lessor to Lessee under Section 2.3. 

10.4. Footprint Project Construction Activities. Lessee will either use its personnel, or either Lessee or Lessor
will contract with third parties, to construct Footprint Projects. Lessee shall be responsible for the oversight of such construction activities, regardless of whether the Footprint Project is funded by Lessor or Lessee. Lessee’s construction
activities and oversight shall be intended to ensure that such construction is performed in a manner consistent with Good Utility Practice and does not adversely affect the reliability and safety of the System or the ERCOT electric grid. In
connection therewith, Lessor will reimburse Lessee for all Project Management Costs that Lessee incurs in connection with constructing such Footprint Project, provided that any costs and expenses of Lessee under this Section 10.4 must be
included in any CapEx Budget submitted by Lessee under Section 10.1 or approved by Lessor to qualify for reimbursement by Lessor hereunder. 

10.5. Ownership of Footprint Projects. 

(a) Each Footprint Project shall be owned by the Party that funded the capital expenditures used to construct such Footprint Project;
provided however, that any part of the System that is built with CIAC funds shall be considered a leasehold improvement that is part of the System and shall revert to the Lessor upon termination of this Agreement without further
payment from Lessor to Lessee under Section 2.3. 
 (b) Upon the expiration or termination of this Agreement, Lessor shall have the
right (but not the obligation) to purchase, subject to required regulatory approvals, any Nonseverable Footprint Projects or Severable Footprint Projects owned by Lessee at the greater of (i) net book value plus ten percent (10%) and
(ii) the fair market value thereof as determined by mutual agreement of Lessor and Lessee. If the Parties fail to agree on the amount of the purchase price, the purchase price shall be submitted to arbitration in accordance with
Section 13.7 of this agreement, pursuant to which the Arbitration Panel shall be empowered to determine the amount of the purchase price, based on submissions by each of the Lessee and the Lessor. Lessee shall be entitled to remove any
Severable Footprint Projects owned by Lessee upon the expiration or termination of this Agreement in the event such Severable Footprint Projects are not purchased by Lessor, subject to any required regulatory approvals. 

10.6. Asset Acquisitions. Lessee and Lessor will cooperate in good faith to ensure that all assets comprising the System
(“System Assets”) are acquired in Lessor’s name or are acquired by Lessee and subsequently transferred to Lessor. In connection therewith, Lessee agrees (a) to transfer to Lessor all previously acquired System Assets,
(b) that any future-acquired System Assets will be deemed automatically transferred to Lessor, (c) to take reasonable actions as are 
  

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 27 

 
necessary and appropriate to document the transfer of any such System Assets to Lessor and, if applicable, to memorialize the security interest in such System Assets required to be granted
pursuant to the terms of the Debt Agreements, including through the delivery and recordation of mortgages, deeds of trust or UCC financing statements, and (d) to take reasonable steps to record the transfer and such security interest in the
records of the applicable county or other applicable locale in which the System Assets are located. 
 10.7. Reimbursements.
From time to time, Lessee may enter into interconnect or similar agreements that obligate the counterparty to such agreements to reimburse Lessee for Capital Expenditures in certain circumstances. Such reimbursement obligation may, in some
circumstances, be accompanied by additional security such as parent guaranty or a letter of credit. If and to the extent that (a) Lessor funds Capital Expenditures that are used for the construction or development pursuant to any of these
interconnect agreements, and (b) Lessee becomes entitled to assert any reimbursement or other rights pursuant to any such interconnect agreements, then, unless Lessor agrees otherwise, Lessee will enforce such reimbursement or other rights and
will in turn reimburse Lessor for the amount of related Capital Expenditures that Lessor has funded pursuant hereto. Lessee further agrees to reimburse Lessor for other Capital Expenditures that Lessor has funded pursuant to this Agreement to the
extent required by the Policies and Procedures. 
 ARTICLE XI 

REGULATORY COOPERATION 

11.1. Jurisdiction. The Parties recognize that (i) the System and the operation thereof are subject to the
jurisdiction of the PUCT and to certain reliability and safety requirements of ERCOT and TRE, and (ii) Lessee holds the CCN for operation of the System. The Parties agree that, as the lessee hereunder, as operator of the System and as the
holder of the CCN, Lessee shall be responsible for compliance with all regulatory requirements related to the System, including but not limited to, taking all actions reasonably necessary or advisable to comply with such requirements; preparing and
filing all necessary notices, reports, applications, and other materials with the PUCT, ERCOT and TRE; and initiating, prosecuting, defending or participating in any administrative or judicial proceeding reasonably necessary or advisable to operate
the System in an economical and efficient manner. Lessee shall consult with Lessor prior to initiating any rate proceeding with the PUCT to change the rates Lessee can lawfully charge, provided that, with or without Lessor consent, Lessee shall be
authorized to initiate any such rate proceeding. Upon Lessor’s request, Lessee shall file a rate proceeding before the PUCT; provided that, Lessor shall be responsible for reimbursing Lessee for all costs associated with prosecution of such
proceeding to the extent that such costs are not recoverable in Lessee’s PUCT-approved rates. 
 11.2. Cooperation.
The Parties agree that during the term of this Agreement they will cooperate to assure compliance with all applicable regulations, orders or lawful requests of any governmental or Regulatory Authorities that relate to the System and
Lessee’s obligations as the holder of the CCN and will provide such information to such governmental and Regulatory Authorities as the other Party or such governmental or Regulatory Authorities may reasonably 

 
 SYSTEM LEASE AGREEMENT

  
 28 

 
request in connection therewith. Lessor further agrees to use its best efforts to cooperate and promptly respond to any lawful requests from Lessee relating to Lessee’s efforts to comply
with all regulatory requirements or to participate in any necessary or advisable legal proceedings, whether judicial or administrative. Each Party shall bear its own costs in complying with this paragraph. 

ARTICLE XII 
 INDEMNITY

 12.1. General Indemnity. EACH PARTY (THE “INDEMNIFYING PARTY”) SHALL DEFEND, INDEMNIFY
AND HOLD HARMLESS THE OTHER PARTY AND THE OTHER PARTY’S RELATED PERSONS (EACH, AN “INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL CLAIMS, LITIGATION, ACTIONS, PROCEEDINGS, LOSSES, DAMAGES, LIABILITIES, OBLIGATIONS, COSTS AND
EXPENSES, INCLUDING ATTORNEYS’, INVESTIGATORS’ AND CONSULTING FEES, COURT COSTS AND LITIGATION EXPENSES (COLLECTIVELY, “CLAIMS”) SUFFERED OR INCURRED BY SUCH INDEMNIFIED PARTY, EVEN IF SUCH LIABILITIES ARE CAUSED
SOLELY OR IN PART BY THE NEGLIGENCE OF ANY INDEMNIFIED PARTY, ARISING FROM THE ACTS OR OMISSIONS TO ACT OF THE INDEMNIFYING PARTY (A) ARISING IN THE CASE OF THE LESSEE AS THE INDEMNIFYING PARTY, FROM THE OPERATION OF THE SYSTEM,
(B) FOR PHYSICAL DAMAGE TO THE SYSTEM, TO THE EXTENT CAUSED BY THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF, (C) FOR PHYSICAL INJURIES OR DEATH (INCLUDING BY REASON OF OPERATING THE SYSTEM) TO OR OF THE INDEMNIFIED PARTY OR THE
PUBLIC, TO THE EXTENT CAUSED BY THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF, (D) ANY BREACH OF ANY COVENANT OR ANY FAILURE TO BE TRUE OF ANY REPRESENTATION OR WARRANTY, MADE BY THE INDEMNIFYING PARTY UNDER THIS AGREEMENT OR
(E) THE NEGLIGENCE, RECKLESSNESS OR INTENTIONAL MISCONDUCT OF THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE INDEMNIFYING PARTY BE RESPONSIBLE FOR DEFENDING, INDEMNIFYING OR HOLDING HARMLESS
ANY INDEMNIFIED PARTY TO THE EXTENT OF ANY CLAIM CAUSED BY, ARISING FROM OR CONTRIBUTED TO BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. AS USED HEREIN, THE TERM “RELATED PERSON” SHALL MEAN ANY AFFILIATES,
CONTRACTORS, LESSEES, AND SUBLESSEES, AND EACH OF THEIR RESPECTIVE, PRINCIPALS, OFFICERS, EMPLOYEES, SERVANTS, AGENTS, REPRESENTATIVES, SUBCONTRACTORS, LICENSEES, INVITEES, GUESTS, SUCCESSORS AND/OR ASSIGNS OF A PARTY; PROVIDED, THAT IN NO EVENT
SHALL A PARTY BE DEEMED A RELATED PERSON WITH RESPECT TO THE OTHER PARTY. 
 12.2. Environmental Indemnity. 

(a) To the fullest extent permitted by law, Lessee shall defend, indemnify and hold harmless Lessor and Lessor’s Related Persons from
Claims (including, without limitation, any costs and expenses of clean up or other mitigation) suffered or incurred by such persons resulting from any of the following occurring from and after the date hereof or the date on which Lessee 

 
 SYSTEM LEASE AGREEMENT

  
 29 

 
assumed operational control over the relevant property: (i) the presence or release of Hazardous Materials in, under or about the System which are or were brought or permitted to be brought
onto the System by the Lessee or Lessee’s Related Persons, (ii) creation of any hazardous or potentially hazardous environmental conditions or exacerbation of a pre-existing environmental condition, (iii) the violation of any
Environmental Law by Lessee or Lessee’s Related Persons or (iv) any other failure to comply with Section 4.6 by Lessee or Lessee’s Related Persons. 

(b) To the fullest extent permitted by law, Lessor shall defend, indemnify and hold harmless Lessee and Lessee’s Related Persons from
Claims (including, without limitation, any costs and expenses of clean up or other mitigation) suffered or incurred by such persons resulting from (i) the presence or release of any Hazardous Material or hazardous or potentially hazardous
condition in, under or about the System that was present in, under or about the System as of the date Lessee assumed operational control over the relevant property (except to the extent such existing Hazardous Material or condition is exacerbated by
Lessee or Lessee’s Related Persons), (ii) the presence or release of Hazardous Materials in, under or about the System which are or were brought or permitted to be brought onto the System by Lessor or Lessor’s Related Persons during
construction of any improvement or addition to the System, (iii) the violation of any Applicable Law by Lessor or Lessor’s Related Persons, or (iv) testing conducted under Section 4.6 by Lessor or Lessor’s Related Persons.

 ARTICLE XIII 

MISCELLANEOUS 
 13.1.
Limitation of Damages. NEITHER PARTY SHALL BE LIABLE FOR ANY LOST OR PROSPECTIVE PROFITS, AND IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY OTHER SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR INDIRECT
LOSSES OR DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR IN RESPECT OF THIS AGREEMENT OR FOR ANY FAILURE OF PERFORMANCE RELATED HERETO, HOWSOEVER CAUSED. 

13.2. Condemnation. In the case of a condemnation or taking, this Agreement shall continue in effect; provided,
that this Agreement shall terminate if 75% or more of the System is subject to the condemnation or taking. Lessor shall be entitled to all sums received by reason of any such taking or condemnation, except for that portion of such award, if any,
which is expressly awarded for the Lessee’s leasehold interest under this Agreement or which is awarded for any property owned by Lessee (including any Footprint Projects funded by Lessee). 

13.3. Confidentiality. To the full extent allowed by Applicable Law, each Party (the “Receiving
Party”) shall maintain, for the benefit of the other Party (the “Disclosing Party”), in the strictest confidence all information pertaining to the financial terms of or payments under this Agreement, the Disclosing
Party’s methods of operation, methods of the System, and the like, whether disclosed by the Disclosing Party or discovered by the Receiving Party, unless such information either (i) is in the public domain by reason of prior publication
through no act or omission of the Receiving Party or its employees or agents, (ii) was already known to the Receiving Party at the time of disclosure and which the Receiving Party is free to use or disclose without breach of any obligation to
any person or entity or (iii) is required to be disclosed by the PUCT or other Regulatory Authorities, or must be disclosed in accordance with applicable 
  

SYSTEM LEASE AGREEMENT 

  
 30 

 
securities laws or the rules of any applicable securities exchange on which the securities of the Receiving Party (or an affiliate thereof) are traded. To the full extent permitted by law,
neither Party shall use such information for its own benefit, publish or otherwise disclose it to others, or permit its use by others for their benefit or to the detriment of the other Party. Notwithstanding the foregoing, the Receiving Party may
disclose such information to any auditor or to the Receiving Party’s lenders, attorneys, accountants and other personal advisors; any prospective purchaser of the System; or pursuant to lawful process, subpoena or court order; provided the
Receiving Party, in making such disclosure, advises the party receiving the information of the confidentiality of the information and obtains the agreement of said party not to disclose the information. 

13.4. Successors and Assigns. The Agreement shall inure to the benefit of and be binding upon Lessor and Lessee
and, to the extent provided in any assignment or other transfer under Article VIII hereof, any assignee, and their respective heirs, transferees, successors and assigns, and all persons claiming under them. References to Lessee in this Agreement
shall be deemed to include assignees that hold a direct ownership interest in this Agreement and actually are exercising rights under this Agreement to the extent consistent with such interest. 

13.5. Rent Obligations Not Excused by Force Majeure, Etc. Lessee shall not be excused from its obligation to pay Rent during any
Force Majeure Event or a condemnation or casualty of all or any part of the System. 
 13.6. Further Assurances; Policies and
Procedures. 
 (a) Each Party will, from time to time, execute, cause to be acknowledged and deliver such documents or
instruments, and provide such certificates, as the other Party may reasonably request to carry out and fulfill the transactions, and permit the exercise and performance of the rights and obligations, as are contemplated hereunder. Each Party will
cooperate with the other Party to effectuate fully the purposes and intent of this Agreement. In no way limiting the foregoing, the Parties shall cooperate to obtain any necessary regulatory approvals, including, without limitation, providing timely
responses to discovery requests, participating in regulatory proceedings to the extent necessary and generally providing assistance as required. 

(b) From time to time, the Parties shall agree to policies and procedures regarding matters arising under this Agreement including,
without limitation, the treatment of Capital Expenditures for canceled Footprint Projects, each Party’s reporting obligations and such additional matters as the Parties may identify (the “Policies and Procedures”). The Parties
agree to cooperate and negotiate in good faith the Policies and Procedures, and any amendment or revision thereto that may be reasonably requested by either Party, and to memorialize the same in a writing executed by a representative of each Party.
In the event the Parties cannot agree on the terms of such Policies and Procedures after 60 days of negotiating in good faith, then either the Lessee or the Lessor may submit such matters to arbitration pursuant to Section 13.7 of this
Agreement, pursuant to which the Arbitration Panel shall be empowered to determine Policies and Procedures that take into account the REIT’s reporting obligations as a public company and Lessee’s obligations as a regulated utility.

  
 SYSTEM LEASE
AGREEMENT 

  
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 13.7. Arbitration. Except for a dispute regarding the payment of
Undisputed Rent, any dispute under this Agreement shall, if not resolved by the Parties within ninety (90) days after notice of such dispute is served by one Party to the other (or, if different, the period provided for resolution by the
Parties in the provision of this Agreement under which such dispute is brought), be submitted to an “Arbitration Panel” comprised of three (3) members. No more than one (1) panel member may be with the same firm, and no
panel member may have an economic interest in the outcome of the arbitration. In addition to the foregoing, the failure by the Lessee and the Lessor to reach an agreement or make a mutual determination or characterization required by Sections 2.2(b)
(with respect to the determination of Extended Period Rent); 3.1(d)(i); 3.1(d)(ii); 3.1(d)(iii); 3.2(a); 3.2(b) (with respect to the terms of any renewed Rent Supplement that has expired during the term of this Agreement); 3.2(c); 3.2(d); 3.8 or
13.6(b), in each case after 60 days of negotiating in good faith, shall be deemed to be a “dispute” for purposes of this Section 13.7, to be resolved in accordance with this Section. 

(a) The Arbitration Panel shall be selected as follows: Within five (5) Business Days after the expiration of the period referenced above,
Lessee shall select its panel member meeting the criteria of the above paragraph (the “Lessee Panel Member”) and Lessor shall select its panel member meeting the criteria of the above paragraph (the “Lessor Panel
Member”). If a Party fails to timely select its respective panel member, the other Party may notify such Party in writing of such failure, and if such Party fails to select its respective panel member within three (3) Business Days
from such notice, then the other Party may select such panel member on such Party’s behalf. Within five (5) Business Days after the selection of the Lessor Panel Member and the Lessee Panel Member, the Lessee Panel Member and the Lessor
Panel Member shall jointly select a third panel member meeting the criteria of the above paragraph (the “Third Panel Member”). If the Lessor Panel Member and the Lessee Panel Member fail to timely select the Third Panel Member and
such failure continues for more than three (3) Business Days after written notice of such failure is delivered to the Lessor Panel Member and Lessee Panel Member by either Lessor or Lessee, either Lessor or Lessee may request the managing
officer of the American Arbitration Association to appoint the Third Panel Member. 
 (b) Within ten (10) Business Days after the
selection of the Arbitration Panel, each Party shall submit to the Arbitration Panel a written statement identifying its summary of the issues and claims, including, if applicable, its calculation of Rent. Any Party may also request an evidentiary
hearing on the merits in addition to the submission of written statements. The Arbitration Panel shall make its decision within twenty (20) days after the later of (i) the submission of such written statements of particulars, and
(ii) the conclusion of any evidentiary hearing on the merits, and shall take into consideration the relative risks and rewards undertaken and capital invested by each Party and shall use the Comparable Rate of Return concept described in
Section 3.2(a) in determining any Rent disputes. The Arbitration Panel shall reach its decision by majority vote and shall communicate its decision by written notice to the Parties. 

(c) The decision by the Arbitration Panel shall be final, binding and conclusive and shall be non-appealable and enforceable in any court
having jurisdiction. All hearings and proceedings held by the Arbitration Panel shall take place in Dallas, Texas. 
  

SYSTEM LEASE AGREEMENT 

  
 32 

 (d) The resolution procedure described herein shall be governed by the Commercial Rules of the
American Arbitration Association and subject to the Texas General Arbitration Act to the extent such act is applicable hereto. 
 (e) In the
case of an arbitration proceeding involving a determination of Rent and Percentage Rent, until Rent and Percentage Rent have been finally determined, Lessee shall pay Rent and Percentage Rent based upon prevailing rates therefor, and an appropriate
refund shall be made to or additional Rent shall be paid by Lessee within ten (10) days after a final determination is made. 
 (f) The
Parties shall bear equally the fees, costs and expenses of the Arbitration Panel in conducting the arbitration. 
 13.8.
Notices. All notices or other communications required or permitted by this Agreement, including payments to Lessor, shall be in writing and shall be served personally or by reputable express courier service or by
facsimile transmission addressed to the relevant parties at the address stated below or at any other address notified by that Party to the other as its address for service. Any notice so given personally shall be deemed to have been served on
delivery, any notice so given by express courier service shall be deemed to have been served the next Business Day after the same shall have been delivered to the relevant courier, and any notice so given by facsimile transmission shall be deemed to
have been served on dispatch. As proof of such service it shall be sufficient to produce a receipt showing personal service, the receipt of a reputable courier company showing the correct address of the addressee or an activity report of the
sender’s facsimile machine showing the correct facsimile number of the parties on whom notice is served and the correct number of pages transmitted. All communications, other than routine correspondence in the ordinary course of business,
between the Parties pursuant to this Agreement shall be sent by the same method of communication by the Party sending the communication. The Parties’ addresses for service are: 

If to Lessor: 
 Sharyland
Distribution & Transmission Services, L.L.C. 
 1807 Ross Avenue, 4th Floor

 Dallas, Texas 75201 

Attention: Chief Executive Officer and General Counsel 

If to Lessee: 
 Sharyland
Utilities, L.P. 
 1807 Ross Avenue, 4th Floor 

Dallas, Texas 75201 
 Attention:
Hunter Hunt 
 With a copy to: 

General Counsel 
 Fax:
(214) 855-6965 
  
 SYSTEM LEASE
AGREEMENT 

  
 33 

 Any Party may change its address for purposes of this paragraph by giving written notice of such change to the
other parties in the manner provided in this paragraph. 
 13.9. Entire Agreement; Amendments. This Agreement
constitutes the entire agreement between Lessor and Lessee respecting its subject matter, and supersedes any and all oral or written agreements. Any agreement, understanding or representation respecting the System, or any other matter referenced
herein not expressly set forth in this Agreement or a subsequent writing signed by both Parties is null and void. For avoidance of doubt, the Second Amended and Restated Lease is hereby replaced in its entirety by this Agreement. This Agreement
shall not be modified or amended except in a writing signed by both Parties. No purported modifications or amendments, including without limitation any oral agreement (even if supported by new consideration), course of conduct or absence of a
response to a unilateral communication, shall be binding on either Party. 
 13.10. Legal Matters. This
Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas, without regard to its conflicts of law principles. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved in
favor of either Party shall not be employed in the interpretation of this Agreement and is hereby waived. 
 13.11. Partial
Invalidity. Should any provision of this Agreement be held, in a final and unappealable decision by a court of competent jurisdiction, to be either invalid, void or unenforceable, the remaining provisions hereof shall remain in
full force and effect, unimpaired by the holding. 
 13.12. Recording. Lessee shall not record this
Agreement without the prior written consent of the Lessor. Lessee may record at its expense a memorandum of this Agreement in form and substance reasonably approved by Lessor. 

13.13. Intention of Parties; True Lease. 

(a) The Parties hereby declare that their relationship in and to the Leased System is and will be that of lessor and lessee, expressly subject
to the terms, conditions, limitations and requirements set forth in this Agreement. Nothing contained in this Agreement will be deemed to constitute the Parties as partners or joint venturers or as principal and agent. The Parties intend for this
Agreement to constitute a true lease with respect to the Leased System for US Federal, state and local income tax purposes, and each Party shall treat the Agreement as a true lease with respect to the Leased System for federal income tax reporting
purposes. 
 (b) The Parties acknowledge that Lessor is owned, directly or indirectly, in whole or in part, by an entity intending to qualify
as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and the Parties agree to negotiate in good faith any modification or amendment to this Agreement requested by Lessor to facilitate such qualification; provided
that Lessee shall not be obligated to agree to any such modification or amendment if such modification or amendment would materially adversely affect Lessee or would be in conflict with Applicable Law or any regulations or orders of any Regulatory
Authority. 
  
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 IN WITNESS WHEREOF, Lessor and Lessee, acting through their duly authorized representatives, have
executed this Agreement with the intent that it be effective as of the Effective Date, and certify that they have read, understand and agree to the terms and conditions of this Agreement. 

 

					
	LESSOR:
	
	 SHARYLAND DISTRIBUTION & TRANSMISSION

SERVICES, L.L.C.

		
	By:	 	 /s/ Brant Meleski

		 	Name:	 	Brant Meleski
		 	Title:	 	Senior Vice President and
		 		 	Chief Financial Officer
	
	LESSEE:
	
	SHARYLAND UTILITIES, L.P.
		
	By:	 	 /s/ Mark Caskey

		 	Name:	 	Mark Caskey
		 	Title:	 	President

 Signature Page to McAllen Lease Agreement 

 APPENDIX A 

DEFINITIONS 
 “2009 Note
Purchase Agreement” has the meaning set forth in Section 4.13. 
 “2010 Note Purchase Agreement” has the meaning set
forth in Section 4.13. 
 “AC” has the meaning set forth in Section 1.1(b)(v). 

“Accumulated Deficit” for any Lease Year means the aggregate amounts by which Qualified CapEx has been less than Original Base CapEx
during prior Lease Years, as set forth in a then-effective Rent Supplement. 
 “Additional Rent” has the meaning set forth in
Section 3.4. 
 “AFUDC” means allowance for funds used during construction. 

“Agreed-to-Discount” has the meaning set forth in Section 3.2(a). 

“Agreement” has the meaning set forth in the Preamble. 

“Annual Percentage Rent Breakpoint” means the dollar amount of annual Gross Revenues that must be exceeded in a particular Lease
Year before Percentage Rent is owed, as set forth on the then-effective Rent Supplement for such Lease Year. 
 “Applicable Laws”
means all laws, ordinances, statutes, orders and regulations of any federal, state, or local government, regulatory or administrative authority, any agency or commission thereof, or any court or tribunal, including without limitation all
requirements of the Regulatory Authorities. 
 “Arbitration Panel” has the meaning set forth in Section 13.7. 

“Base Rent” has the meaning set forth in Section 3.1(a). 

“Business Day” means a day other than a Saturday, Sunday or other day on which federal agencies are authorized or required by law to
close. 
 “CapEx Budget” has the meaning set forth in Section 10.1(a). 

“Capital Expenditures” means expenditures that are or are expected to be capitalized under GAAP. 

“CCN” means a Certificate of Convenience and Necessity or amendment thereto issued by the PUCT. 

“CFO Certificate” means a document signed by the Chief Financial Officer of Lessee and certifying to the accuracy and completeness
of the statement of Gross Revenues. 

 “Change in Control” means Hunt Family Members cease to possess, directly or indirectly,
the power to direct or cause the direction of the management or policies of Lessee, whether through the ability to exercise voting power, by contract or otherwise. 

“CIAC” means any contributions in aid of construction from current or prospective customers, plus any additional payments as a tax
gross up for such contributions, with respect to which Lessee does not anticipate receiving an increase in its regulatory rate base. 

“Claims” has the meaning set forth in Section 12.1. 

“Comparable Rate of Return” has the meaning set forth in Section 3.2(a). 

“Consolidated Net Plant” means, with respect to any Person, as of the date of determination, the net plant set forth on the face of
the consolidated balance sheet of such Person or absent such amount on the consolidated balance sheet, the total plant of such Person on a consolidated basis minus accumulated depreciation as set forth in the footnotes of the consolidated financial
statements, in each case, for the fiscal quarter ended on the date of the last financial statements delivered pursuant to Section 7.1 of the Credit Agreement. 

“Consolidated Qualified Lessee” means any Qualified Lessee that is consolidated into the financial statements of another Qualified
Lessee. 
 “Covered Revenue” means any fees, charges or other revenues (a) that are characterized as Unadjusted Gross
Revenues (or Gross Revenues) for purposes hereof or for purposes of any other similar lease (x) between Lessee and Lessor or an affiliate thereof or (y) between Lessee and any of its wholly-owned subsidiaries or (b) that are generated
from the Rate Base of regulated assets owned or operated by a party other than Lessor or a subsidiary thereof. 
 “Credit
Agreement” has the meaning set forth in Section 4.13. 
 “CREZ Lease” means the Second Amended and Restated Lease
Agreement (CREZ Assets) between Sharyland Projects, L.L.C. and Lessee effective as of the Effective Date, as the same may be amended from time to time. 

“DC” has the meaning set forth in Section 1.1(b)(v). 

“Debt Agreements” has the meaning set forth in Section 4.13. 

“Defaulting Party” has the meaning set forth in Section 9.3. 

“Disclosing Party” has the meaning set forth in Section 13.3. 

“Effective Date” has the meaning set forth in the Preamble. 

“Entity” means any general partnership, limited partnership, proprietorship, corporation, joint venture, joint stock company,
limited liability company, limited liability partnership, business trust, estate, governmental entity, cooperative, association or other foreign or domestic enterprise. 

 “Environmental Law” means any and all Legal Requirements regulating, relating to or
imposing liability or standards of conduct concerning protection of natural resources or the environment, or environmental impacts on human health as now or may at any time hereafter be in effect. 

“ERCOT” means the Electric Reliability Council of Texas, or its successors. 

“ERCOT Transmission Lease” means the Lease Agreement (ERCOT Transmission Assets) between Lessor and Lessee effective as of the
Effective Date, as the same may be amended from time to time. 
 “ERCOT Transmission Revenues” means Lessee’s Unadjusted
Gross Revenues from regulated electric transmission systems operated by Lessee within ERCOT pursuant to the PUCT’s transmission cost of service mechanism. 

“Event of Default” means an event described in Section 9.1 or Section 9.2. 

“Excess Percentage Rent” has the meaning set forth in Section 3.3(a). 

“Extended Period Rent” means Rent that applies during any extended period of operatorship beyond the Term, which will be negotiated
using the Comparable Rate of Return methodology set forth in Article III. 
 “FERC” means the Federal Energy Regulatory
Commission, or its successors. 
 “First Lease Quarter Percentage Rent Breakpoint” has the meaning set forth in
Section 3.1(c). 
 “Footprint Projects” means T&D Projects that are (i) (A) located in the distribution service
territory of the System, (B) transmission assets that are added to an existing transmission substation within the System or hang from transmission towers within the System or (C) Reclassified Projects and (ii) funded by expenditures
that are or are expected to be capitalized under GAAP and that are within the items described in Section 1.1(b)(i)-(vii) (specifically excluding Section 1.1(b)(viii)). 

“Force Majeure Event” means, except to the extent resulting from the action or inaction of Lessee or within the control of Lessee,
fire, earthquake, hurricane, flood, or other casualty or accident; strikes or labor disputes; war, civil strife or other violence; any law, order, proclamation, regulation, ordinance, action, demand or requirement of any government agency or
utility; or any other act or condition beyond the reasonable control of Lessee. 
 “GAAP” means generally accepted accounting
principles in effect in the United States of America. 
 “Good Utility Practice” shall be as defined from time to time by PUCT
and, as of the date hereof, means any of the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts that, in the
exercise of reasonable judgment in light of the facts known at the 

 
time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good
utility practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather is intended to include acceptable practices, methods, and acts generally accepted in the region. 

“Gross Revenues” has the meaning set forth in Section 3.1(d)(i). 

“Hazardous Material” means (A) any substance which is listed, defined, designated or classified under any Applicable Law as a
(i) hazardous material, substance, constituent or waste, (ii) toxic material, substance, constituent or waste, (iii) radioactive material, substance, constituent or waste, (iv) dangerous material, substance, constituent or waste,
(v) pollutant, (vi) contaminant, or (vii) special waste; (B) any material, substance, constituent or waste regulated under any Applicable Laws; or (C) petroleum, petroleum products, radioactive matters, polychlorinated
biphenyl, pesticides, asbestos or asbestos-containing materials. 
 “Hunt Family Members” means (i) Ray L. Hunt;
(ii) the spouse of Ray L. Hunt and each of his children and siblings; (iii) the spouse and lineal descendants of any Person identified in the foregoing clause (ii); (iv) any trust or account primarily for the benefit of any Person or
Persons identified in the foregoing clauses (i), (ii) or (iii); (v) any corporation, partnership or other Entity in which any of the Persons identified in the foregoing clauses (i), (ii), (iii) or (iv) are the beneficial owners
of substantially all of the shares of capital stock, membership interests, partnership interests or other equity interests and options or warrants to acquire, or securities convertible into, capital stock, membership interests, partnership interests
or other equity securities of an Entity; and (vi) the personal representative or guardian of any of the Persons identified in the foregoing clauses (i), (ii) and (iii) upon such Person’s death for purposes of the administration
of such Person’s estate or upon such Person’s disability or incompetency for purposes of the protection and management of the assets of such Person. 

“HVDC Ties” has the meaning set forth in Section 1.1(b)(v). 

“Incremental CapEx” for any Lease Year means Qualified CapEx for that Lease Year, minus Original Base CapEx for such Lease Year,
minus Accumulated Deficit for such Lease Year (if there is any Accumulated Deficit for such Lease Year). 
 “Indebtedness” with
respect to any Person means, at any time, without duplication (a) such Person’s liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable preferred stock; (b) its liabilities for the deferred
purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to
any such property); (c)(i) all liabilities appearing on its balance sheet prepared in accordance with GAAP in respect of capital leases and (ii) all liabilities which would appear on its balance sheet prepared in accordance with GAAP in respect
of Synthetic Leases assuming such Synthetic Leases were accounted for as capital leases; provided, however, that for purposes of this definition (including with respect to clauses (i) and (ii) hereof), (x) this Agreement and any
similar lease between Lessor (or any subsidiary) and Lessee and (y) any lease between Lessee and any of its wholly-owned subsidiaries shall not be 

 
treated as a capital lease; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); (e) all of its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing
obligations for borrowed money), provided, however, that for purposes of this definition, any surety bonds or indemnification agreements entered into by Lessee (with respect to which Lessee or a subsidiary has a reimbursement or backstop obligation)
in connection with condemnation proceedings shall be excluded; (f) the aggregate Swap Termination Value of all Swap Contracts of such Person; and (g) any guaranty of such Person with respect to liabilities of a type described in any of
clauses (a) through (f) hereof. Indebtedness of a Person shall include all obligations of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that
any such obligation is deemed to be extinguished under GAAP. 
 “Indemnified Party” has the meaning set forth in
Section 12.1. 
 “Indemnifying Party” has the meaning set forth in Section 12.1. 

“Initial Term” has the meaning set forth in Section 2.1. 

“Lease” or “Leases” means (i) this Agreement, the Stanton/Brady/Celeste Lease, the CREZ Lease, the ERCOT Transmission
Lease and the Stanton Transmission Loop Lease and any other leases of transmission and distribution and related assets to a Qualified Lessee under which Lessor or any subsidiary of Lessor is a party as a lessor, and (ii) any lease of
transmission and distribution and related assets pursuant to which Lessee is the lessee and a subsidiary of Lessee or another Person controlled by one or more Hunt Family Members is the lessor; provided, no such lease will qualify as a
“Lease” hereunder if each of the three following criteria apply: (x) Lessee is the lessee, (y) cash rental payments have become due and payable pursuant thereto and (z) none of Lessor, a subsidiary of Lessor or a subsidiary
of Lessee is the lessor. 
 “Lease Quarter” means each calendar quarter during each Lease Year. 

“Lease Year” means each calendar year during the Term of this Agreement. 

“Leased Consolidated Net Plant” means that portion of the Consolidated Net Plant of the lessor of a Lease between such lessor and a
Qualified Lessee that is the subject of such Lease. 
 “Leased System” means the System, excluding any Footprint Project included
in the definition of the “System,” unless (i) such Footprint Project has been placed in service and (ii) a Rent Supplement has been executed with respect to such Footprint Project. 

“Legal Requirements” means, as to any Person, the certificate of incorporation and by-laws, limited liability company agreement,
partnership agreement or other organizational or governing documents of such Person, any law (including common law), statute, code, treaty, rule, regulation, ordinance including any government rule or determination of an arbitrator a court or other
government authority, or any requirement under a Permit, in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its property is subject. 

 “Lessee” has the meaning set forth in the Preamble. 

“Lessee CapEx” means Capital Expenditures that are related and fairly allocable to the System and are funded by Lessee. 

“Lessee Panel Member” has the meaning set forth in Section 13.7(a). 

“Lessee Taxes” has the meaning set forth in Section 4.3. 

“Lessor” has the meaning set forth in the Preamble. 

“Lessor’s Audit” has the meaning set forth in Section 3.3(c). 

“Lessor Panel Member” has the meaning set forth in Section 13.7(a). 

“Lessor Taxes” has the meaning set forth in Section 4.3. 

“Liens” has the meaning set forth in Section 5.2. 

“Monetary Default” means the failure to pay when due any amounts payable under this Agreement. 

“NERC” means North American Electric Reliability Corporation, or its successors. 

“Non-Defaulting Party” has the meaning set forth in Section 9.3. 

“Non-Monetary Default” means an Event of Default other than a Monetary Default. 

“Non-Recourse Debt” means Indebtedness of a subsidiary of Lessee that, if secured, is secured solely by a pledge of collateral owned
by such subsidiary and the equity interests in such subsidiary, and for which no Person other than such subsidiary is personally liable. 

“Nonseverable Footprint Projects” means those Footprint Projects that cannot be readily removed from the System without causing
diminution in value to the System. 
 “Note Purchase Agreements” has the meaning set forth in Section 4.13. 

“Notice of Default” means written notice of the Event of Default. 

“Original Assets” has the meaning set forth in Section 1.1(b). 

“Original Base CapEx” for a Lease Year means the amounts identified as such on a then-effective Rent Supplement. 

“Original Lease Date” has the meaning set forth in Section 1.1(a). 

“Other Revenue” means revenue generated from activities as a regulated utility within the State of Texas other than Covered Revenue.

 “Overdue Rate” means a rate equal to ten percent (10%) per annum or the maximum
rate allowed by law, whichever is lesser. 
 “Party” or “Parties” has the meaning set forth in the Preamble. 

“Percentage Rent” has the meaning set forth in Section 3.1(b). 

“Percentage Rent Breakpoint” means individually any of the Annual Percentage Rent Breakpoint, the First Lease Quarter Percentage
Rent Breakpoint, the Second Lease Quarter Percentage Rent Breakpoint or the Third Lease Quarter Percentage Rent Breakpoint (collectively referred to as the “Percentage Rent Breakpoints”). 

“Percentage Rent Percentages” has the meaning set forth in Section 3.1(b). 

“Percentage Rent Schedule” means the schedule attached to the then-current Rent Supplement setting forth the Percentage Rent
Percentages and Annual Percentage Rent Breakpoints for the System through the end of the Term. 
 “Permitted Liens” means: 

(i) The Liens granted by the Lessor to any lender or trustee for any lender which finances the Lessor’s interest in the
System; 
 (ii) Liens imposed by any governmental authority for any tax, assessment or other charge relating to the System to
the extent not yet past due or being contested in good faith and by appropriate proceedings; 
 (iii) mechanics’,
warehousemen’s, carriers’, workers’, repairers’, landlords’, and other similar liens arising or incurred in the ordinary course of business and (i) which do not in the aggregate materially detract from the value of
property or assets subject to such Liens or materially impair the continued use thereof in the operation of the System or (ii) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or asset subject to such Liens and for which cash reserves consistent with GAAP have been established on the books of Lessee or Lessor, or other Liens incurred or deposits made in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, trade contracts, leases, government
contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); 

(iv) Liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith
and for the payment of which adequate cash reserves consistent with GAAP have been established on the books of Lessee or Lessor, bonds or other security acceptable to the Lessor in its reasonable discretion have been provided or are fully covered by
insurance; 

 (v) zoning, entitlement, restriction, and other land use and environmental
regulations by governmental authorities and encroachments, easements, rights of way, covenants, restrictions or agreements which do not materially interfere with the continued use of any asset as currently used in the conduct of the business of the
Lessee; 
 (vi) any encumbrances set forth in any franchise or governing ordinance under which any portion of the business of
the Lessee is conducted and which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the operation of the System; and 

(vii) all rights of condemnation, eminent domain, or other similar right of any person. 

“Person” means any natural person, corporation, limited liability company, partnership, firm, association, government authority or
other entity whether acting in an individual, fiduciary or other capacity. 
 “Personal Property” means all assets, or rights
therein, related to or used in connection with the System, other than assets of the type and nature described in Section 1.1(b)(i)-(vii). Examples of Personal Property include rolling stock, computers and software programs. 

“Policies and Procedures” has the meaning set forth in Section 13.6(b). 

“Project Management Costs” means all actual out-of-pocket costs incurred by Lessee pursuant to this Agreement or a separate
construction management agreement in connection with the construction activities, including (i) all direct wages and salaries (including benefits, payroll burden and overtime) which the Lessee pays to personnel employed or retained to conduct
such construction activities and a fair allocation of the direct wages and salaries (including benefits, payroll burden and overtime) of Lessee’s other personnel conducting such construction activities; (ii) the fair market value of
materials or equipment provided directly by Lessee or its affiliates (including the standard corporate day rate for any vehicles and equipment that are so utilized); (iii) a fair allocation of the lease payments of any leased vehicles and
equipment that are so utilized; (iv) all other third-party costs incurred by Lessee in the performance of such construction activities; and (v) all sales, use, transfer or similar taxes (excluding those taxes based upon Lessee’s net
income, gross receipts, net worth or similar taxes) incurred or paid by Lessee in conducting such construction activities or providing materials, if any (provided, that in managing its affairs, Lessee will attempt to minimize, to the extent
practicable, all such taxes incurred on behalf of Lessor and, in this regard, Lessor agrees to cooperate and provide Lessee any assistance necessary including providing appropriate evidence of any exemptions from tax). 

“PUCT” means the Public Utility Commission of Texas or its successors. 

“Qualified CapEx” means Lessor-funded Capital Expenditures related to the System Assets that are placed in service, as and when such
System Assets are placed in service, as adjusted (y) for any applicable AFUDC and/or depreciation, and (z) to reflect the effect of the deferred tax liability or deferred tax asset, as applicable. 

 “Qualified Lessee” means Lessee and/or any other utility that is (x) approved or
authorized by the applicable public utility commission or similar regulatory authority to operate and/or lease the transmission and/or distribution assets of Lessor or any subsidiary and (y) a party to a then-effective lease agreement with
Lessor or a subsidiary thereof pursuant to which such utility leases and operates such entity’s transmission and/or distribution assets 

“Rate Base” means, with respect to any transmission and distribution assets, gross electric plant in service under GAAP, which is
the aggregate amount of capital expenditures used to construct such assets plus AFUDC, less accumulated depreciation, and adjusted for accumulated deferred income taxes. 

“Receiving Party” has the meaning set forth in Section 13.3. 

“Reclassified Projects” means any T&D Project that does not otherwise meet the definition of Footprint Project but Lessee and
Lessor jointly agree, in their sole discretion, to classify such T&D Project as a Footprint Project based upon such factors that the Parties deem relevant, including (a) the expected Rate Base of the T&D Project, it being understood
that the Parties generally expect that only T&D Projects with an expected Rate Base of less than $25 million could constitute a Reclassified Project; (b) whether the T&D Project is physically connected to the System; and
(c) whether the T&D Project is necessary to serve distribution customers situated in the service territories of the System. 

“Regulatory Authorities” means the PUCT, ERCOT, TRE, NERC and any other governmental agency with jurisdiction over Lessee, Lessor or
the System. 
 “REIT” has the meaning set forth in the Recitals. 

“REIT IPO” has the meaning set forth in the Recitals. 

“Related Person” has the meaning set forth in Section 12.1. 

“Renewal Term” has the meaning set forth in Section 2.1. 

“Rent” means the sum of Base Rent, Percentage Rent, Additional Rent and Extended Period Rent. 

“Rent Supplement” means a supplement to this Agreement in the form of Schedule 3.2(b) agreed to in accordance with
Section 3.2(b). 
 “Rent Validation” means the process of validating any Rent Supplement pursuant to
Section 3.2(c).“Repairs” means all replacements, repairs or remedial activity undertaken directly on a then-existing portion of the System that are not Footprint Projects and that are expensed and not capitalized under GAAP. 

“Revenues Attributable to Lessee CapEx” means the portion of Unadjusted Gross Revenues from the System which is attributable to
Lessee CapEx as determined in accordance with Section 3.1(d)(iii). 

 “Revised Certificate” has the meaning set forth in Section 3.3(a). 

“Second Amended and Restated Lease” has the meaning set forth in the Recitals. 

“Severable Footprint Projects” means any Footprint Projects that can be readily removed from the System without causing diminution
in value to the System. 
 “Stanton/Brady/Celeste Lease” means the Second Amended and Restated Lease Agreement
(Stanton/Brady/Celeste Assets) between Lessor and Lessee effective as of the Effective Date, as the same may be amended from time to time. 

“Stanton Transmission Loop Lease” means the Third Amended and Restated Lease Agreement (Stanton Transmission Loop Assets) between
SDTS FERC, L.L.C., a wholly-owned subsidiary of Lessor, and SU FERC, L.L.C., a wholly-owned subsidiary of Lessee, effective as of the Effective Date (f/k/a FERC Lease), as the same may be amended from time to time. 

“Swap Contract” means (a) any and all interest rate swap transactions, basis swap transactions, credit derivative transactions,
forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap transactions, floor
transactions, currency options, spot contracts or any other similar transactions of any of the foregoing (including, without limitation, any options to enter into any of the foregoing), and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement. 

“Swap Termination Value” means, in respect of one or more Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (x) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and
(y) for any date prior to the date referenced in clause (x), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts. 
 “Synthetic Lease” means, at any time, any lease (including a lease that may be
terminated by the lessee at any time) of any property by a Person (i) that is accounted for as an operating lease under GAAP and (ii) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal
income tax purposes, other than any lease under which such Person is the lessor. 
 “System” means the integrated electrical
transmission and distribution facilities connected to the ERCOT electric grid owned by Lessor and located within the area depicted on Exhibit A and Exhibit B and the systems and other property necessary to operate such transmission and
distribution facilities, together with the exclusive right to occupy and use all of Lessor’s interest (whether by fee ownership, easement, lease, sublease, franchise or license) (other than to the extent expressly reserved to Lessor herein) in
the premises upon which such facilities are situated and Footprint Projects that add, expand or alter the assets from time to time pursuant to Rent Supplements, as modified by Section 1.1(b). 

 “System Assets” has the meaning set forth in Section 10.6. 

“TCOS Allocation” has the meaning set forth in Section 3.1(d)(ii). 

“T&D Project” means a business, project or assets relating primarily to the transmission and/or distribution of electricity.

 “Term” has the meaning set forth in Section 2.1. 

“Third Lease Quarter Percentage Rent Breakpoint” has the meaning set forth in Section 3.1(c). 

“Third Panel Member” has the meaning set forth in Section 13.7(a). 

“Transmission Gross Plant” means electric transmission plant as determined in accordance with the FERC Uniform System of Accounts.

 “Transmission Net Plant in Service” means Transmission Gross Plant in service less accumulated depreciation as determined in
accordance with the FERC Uniform System of Accounts. 
 “TRE” means the Texas Reliability Entity, or its successor entity. 

“TRS” means taxable REIT subsidiary. 

“Unadjusted Gross Revenues” has the meaning set forth in Section 3.1(d)(i). 

“Undisputed Rent” means the greater of (i) the undisputed amount of Rent the Parties agree is due and payable and
(ii) during the term of the Debt Agreements, the amount necessary, when taken together with Rent payments made by Lessee to Lessor under other leases between the Parties, required for Lessor to comply with the covenants set forth in
Section 9.08 of the 2009 Note Purchase Agreement, Section 9.8 of the 2010 Note Purchase Agreement and Section 7.10 of the Credit Agreement. 
  

 EXHIBIT A 

System Area 
  

SYSTEM LEASE AGREEMENT 

 

 
  
 SYSTEM
LEASE AGREEMENT 

 EXHIBIT B 

Amarillo Operation Center Legal Description 

Real Property Located at 4909 Canyon Drive, Amarillo, Texas 79118 

A 2.75 acre tract of land being all of the northeasterly 400 feet of Block 8, McCarty Addition Unit No. 2, an addition to the City of Amarillo, Randall
County, Texas, according to the recorded map or plat thereof, of record in Volume 200, Page 468 of the Deed Records of Randall County, Texas, and described in that certain Warranty Deed recorded in Volume 514, Page 137 of the Deed Records of Randall
County, Texas, and all of that strip of land that lies between the west line of said Block 8 and the east right-of-way line of Interstate Highway 27, save and except therefrom all of Lot 1, Block 8, McCarty Addition Unit No. 14 an addition to
the City of Amarillo, Randall County, Texas, according to the recorded map or plat thereof, of record in Volume 1463, Page 386 of the Deed Records of Randall County, Texas, said 2.75 acre tract of land being more particularly described by metes and
bounds as follows: 
 BEGINNING at a  1⁄2” rebar with
a cap stamped “KEYS R.P.L.S. 2507” found at the intersection of the North line of said Block 8 and east right-of-way line of said Interstate Highway 27; 

THENCE S 54°40’33” E – bearings contained herein are relative to true North as determined from GPS observations – at a distance
of 1.00 feet pass a  1⁄2” rebar found at northwest corner of said Block 8, continue along the southwesterly right-of-way line of James Louis Drive for a
total distance of 240.94 feet to a  1⁄2” rebar with a cap stamped “KEYS R.P.L.S. 2507” found at the most northerly corner of said Lot 1, Block
8, McCarty Addition Unit No. 14; 
 THENCE S 35°20’49” W, 309.99 feet to a  1⁄2” rebar with a cap stamped “KEYS R.P.L.S. 2507” found at the most westerly corner of said Lot 1; 

THENCE S 54°40’02” E, 260.10 feet to a
 1⁄2” rebar with a cap stamped “KEYS R.P.L.S. 2507” found at the most southerly corner of said Lot 1 same being a point on the northwesterly
right-of-way line of said McCarty Boulevard; 
  
 SYSTEM
LEASE AGREEMENT 

 THENCE S 35°11’38” W along the northwesterly right-of-way line of said McCarty Boulevard
89.73 feet to an “X” cut in concrete found at the most southerly corner of this tract of land; 
 THENCE N 54°42’28” W, at
500.27 feet pass an “X’ cut in concrete found in the northwesterly line of said Block 8, continue for a total distance of 501.15 feet to an “X” cut in concrete found at the most westerly corner of this tract of land and the east
right-of-way line of said Interstate Highway 27; 
 THENCE S 35°19’41” E, along the east right-of-way line of said Interstate Highway
27, 400.04 feet to the POINT OF BEGINNING of this tract of land. 
 Said tract contains a computed area of 2.75 acres of land as described. 

 
 SYSTEM LEASE AGREEMENT

 

 
  
 SYSTEM
LEASE AGREEMENT 

 EXHIBIT C 

SUBORDINATED DEBT TERMS 

Reference is made to that certain Second Amended and Restated Collateral Agency Agreement (as amended, restated, supplemented or otherwise
modified, the “Collateral Agency Agreement”), to be entered into by and among The Bank of New York Mellon Trust Company, N.A., as collateral agent (together with its successors and assigns, the “Collateral Agent”),
Sharyland Distribution & Transmission Services, L.L.C., a Texas limited liability company (the “Company”), and the holders of the Permitted Secured Indebtedness (as defined therein) from time to time party thereto. 

Section 1. Definitions and Rules of Interpretation. Capitalized terms used herein without definition shall have the meanings assigned to such
terms in the Collateral Agency Agreement. The rules of interpretation set forth in Schedule A of the Collateral Agency Agreement shall apply to this Exhibit C as if fully set forth herein. In addition, the following terms shall have the following
meanings: 
  

	1.1	“Entitled Party” shall mean the Company unless the Collateral Agent or the Company has given notice to the Subordinated Lender that the Collateral Agent has, on behalf of the Secured Parties and
pursuant to the Collateral Agency Agreement or related documents, properly exercised its remedies to foreclose on the Company’s interest in any System Lease and receive payments pursuant to any System Lease directly from Sharyland, in which
case the Entitled Party shall mean the Collateral Agent, acting for the benefit of the Secured Parties. 

  

	1.2	“Governmental Authority” shall mean 

  

	 	(a)	the government of: 

  

	 	(i)	The United States of America or any State or other political subdivision thereof, or 

  

	 	(ii)	any other jurisdictions in which the Company conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company, or 

 

	 	(b)	any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of, or pertaining to, any such government, or 

 

	 	(c)	the Electric Reliability Council of Texas or any successor thereto (“ERCOT”), or 

  

	 	(d)	the Texas Regional Entity. 

  

	1.3	“Insolvency Event” means the occurrence of any of the following: 

  

	 	(a)	Sharyland (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the 

 
 SYSTEM LEASE AGREEMENT

	 	
filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes a corporate action for the purpose of any of the foregoing; or 

 

	 	(b)	a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by Sharyland, a custodian, receiver, trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation of Sharyland or any such petition shall be filed against Sharyland and such petition shall not be dismissed within 60 days. 

 

	1.4	“Reorganization Securities” shall mean any debt or equity securities issued on account of all or any portion of the Subordinated Indebtedness in connection with an Insolvency Event that are in each case
subordinated in liquidation to the Obligations (or any debt or equity securities issued on account of any Obligations) to at least the same extent that the Subordinated Indebtedness are subordinated to the Obligations hereunder. 

 

	1.5	“Sharyland” shall mean Sharyland Utilities, L.P. 

  

	1.6	“Subordinated Indebtedness” shall mean, with respect to Sharyland, Indebtedness (as defined under the applicable Financing Agreement or such other similar term) that is incurred in accordance with the
terms of such Financing Agreement and is required to be subordinated to the applicable Obligations. 

  

	1.7	“Subordinated Lenders” shall mean each and every Person to whom any of the Subordinated Indebtedness are owed. 

  

	1.8	“Subordinated Loan Documents” shall mean all documentation evidencing the Subordinated Indebtedness. 

  

	1.9	“System Leases” shall mean any and all leases of transmission and distribution and related assets pursuant to which Sharyland is the lessee and the Company or any Subsidiary of the Company is a party as
a lessor, and supplements thereto, each as amended, restated, supplemented or otherwise modified from time to time, or any new lease entered into in replacement thereof. 

 

	1.10	“System Lease Obligations” shall mean any and all Rent or other similar term (as such term is defined in the System Leases) then due and payable under the System Leases. 

	1.11	“Texas Regional Entity” shall mean the division of ERCOT authorized to develop, monitor, assess and enforce compliance with NERC Reliability Standards within geographic boundaries of ERCOT and any
successor thereto. 

 Section 2. Subordination of Subordinated Indebtedness. Until the indefeasible payment in full in cash of all
the System Lease Obligations and the termination of any commitments to lend under any Permitted Secured Indebtedness, the Subordinated Lenders and Sharyland hereby agree that (i) all Subordinated Indebtedness is and shall be subordinated in
right of liquidation in relation to all System Lease Obligations to the extent and in the manner hereinafter set forth, (ii) upon the occurrence and during the continuance of any default or event of default under any System Lease (or if after
giving effect to a proposed distribution in respect of any part of the Subordinated Indebtedness, a default or event of default under any System Lease will exist), no payments or other distributions whatsoever in respect of any part of the
Subordinated Indebtedness shall be made, (iii) upon the occurrence and during the continuance of an Insolvency Event, no payments or other distributions whatsoever-in respect of any part of the Subordinated Indebtedness shall be made nor shall
any property or assets of Sharyland be applied to the purchase or other acquisition or retirement of any part of the Subordinated Indebtedness, and (iv) upon the occurrence and during the continuance of an Insolvency Event, the Subordinated
Lenders shall not accept any payment by or on behalf of Sharyland on account of the principal of, premium or interest on, or any other amount in respect of, the Subordinated Indebtedness other than the payment of indemnity obligations and reasonable
out of pocket costs and expenses (including reasonable attorney’s fees) in each case as and when due and payable in accordance with the terms of the Subordinated Debt Documents. 

Section 3. Liquidation, Dissolution, Bankruptcy. Until the indefeasible payment in full in cash of all the System Lease Obligations and the
termination of any commitments to lend under any Permitted Secured Indebtedness, and without limitation to the rights of the Secured Parties under the terms of the Financing Agreements or the rights of the Company under the System Leases: 

 

	3.1	upon the occurrence and during the continuance of any Insolvency Event: 

  

	 	3.1.1	the System Lease Obligations then due and payable shall first be irrevocably and indefeasibly paid in full to the Entitled Party before any of the Subordinated Lenders shall be entitled to receive any payment (other
than Reorganization Securities) on account of the Subordinated Indebtedness whether in cash, securities or other assets (other than Reorganization Securities); 

  

	 	3.1.2	any payment or distribution of assets of Sharyland of any kind or character in respect of the Subordinated Indebtedness to which any of the Subordinated Lenders would be entitled if the Subordinated Indebtedness were
not subordinated pursuant to the terms hereof shall be made by the trustee, liquidator or agent or other Person making such payment or distribution, directly to the Entitled Party until the System Lease Obligations then due and payable are paid in
full and each of the Subordinated Lenders and, unless the Company is. the Entitled Party, Sharyland irrevocably authorizes and empowers the Entitled Party to receive. and collect on its behalf any and all such payments or distributions; and

	 	3.1.3	the Subordinated Lenders agree not to, directly or indirectly, initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity or priority of the System Lease
Obligations then due and payable. 

 Section 4. Incorrect Payments. If, for any reason whatsoever and whether pursuant to an
Insolvency Event or otherwise, Sharyland shall make or any of the Subordinated Lenders shall receive any payment or distribution of any kind or character, whether in cash, securities or other property (other than Reorganization Securities), on
account or in respect of the Subordinated Indebtedness in contravention of any of the terms set forth herein, such Subordinated Lender shall hold any such payment or distribution in trust for the benefit of the Secured Parties, promptly notify the
Entitled Party of the receipt of such payment or distribution and promptly pay over or deliver such distribution or payment to the Entitled Party or to any other Person nominated by the Entitled Party, to hold for the account of the Secured Parties.

 Section 5. Non-Impairment. To the fullest extent permitted by applicable Law, no change of law or circumstances shall release or diminish any
of the Subordinated Lender’s obligations, liabilities, agreements or duties hereunder, or affect the provisions set forth herein in any way. 

Section 6. Benefit of Subordination Provisions. These subordination provisions are intended solely to define the relative rights of the Secured
Parties, the Collateral Agent, the Company, the Subordinated Lenders, and their respective successors and permitted assigns. 
 Section 7.
Termination and Reinstatement. Notwithstanding anything to the contrary contained herein, the Subordinated Indebtedness shall no longer be subordinated in right of liquidation pursuant to the terms contained herein otherwise at such time as
the Secured Parties no longer have a lien on or security interest in the System Lease Obligations. If any payment to any of the Entitled Party, the Company, the Collateral Agent or the Secured Parties by Sharyland or any other Person in respect of
any of the System Lease Obligations is held to constitute a preference or a voidable transfer under applicable Law, or if for any other reason any such party is required to refund such payment to Sharyland or to such Person or to pay the amount
thereof to any other Person, each Subordinated Lender agrees and acknowledges that the provisions set forth herein shall continue to be effective or shall be reinstated, as the case may be, to the extent of any such payment or payments. 

Section 8. Restrictions on Transfers. None of the Subordinated Lenders may transfer (by sale, novation or otherwise) any of its rights or
obligations under the Subordinated Indebtedness unless the transferee of such interest first agrees in writing to be bound by the terms of this Exhibit C applicable to the transferor of such interest and executes an instrument to that effect. 

 Section 9. Exercise of Powers. 

 

	9.1	After the occurrence and during the continuance of an Insolvency Event, the Entitled Party shall be entitled to exercise its rights and powers under these subordination provisions in such a manner and at such times as
the Entitled Party in its absolute discretion may determine. 

  

	9.2	The Subordinated Lenders alone shall be responsible for their contracts, engagements, acts, omissions, defaults and losses and for liabilities incurred by them. 

 EXHIBIT D 

INSURANCE 
 Subject to Section 6.2(b) of
this Agreement, during the term of the Note Purchase Agreements, the Credit Agreement or until otherwise agreed by Lessee and Lessor, Lessee shall comply with the insurance requirements set forth in this Exhibit D. Capitalized terms used
herein but not otherwise defined in this Agreement have the meanings assigned to such terms in the Note Purchase Agreements or the Credit Agreement, as applicable. 
  

	A.	Coverages. 

  

			
	Property Insurance (Operational):
	Cover:	  	All assets comprising the System against “all risks” of physical loss or damage (including but not limited to machinery breakdown, earthquake, flood, windstorm and terrorism)
		
	Principal Exclusions:	  	War and civil war
		
		  	Nuclear risks
		
		  	Theft and mysterious disappearance revealed in the course of inventory undertaking
		
		  	The cost of making good wear and tear, gradual deterioration, etc., but not the consequential damage
		
		  	Consequential loss not otherwise excluded
		
		  	Fraud and misrepresentation
		
	Sum Insured:	  	Full replacement cost subject to the following sublimits.
		
	Sublimits: 	  	Earthquake – full replacement cost
		  	Flood – full replacement cost
		  	Windstorm – full replacement cost
		
	Deductible:	  	$250,000 per loss or occurrence, except $250,000 earthquake and flood and $250,000 windstorm
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	The Prudential Insurance Company of America, as Purchaser

  

SYSTEM LEASE AGREEMENT 

			
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	Royal Bank of Canada, as Lender
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	The Secured Parties to the Note Purchase Agreement
		  	The Secured Parties to the Credit Agreement
		
	Mortgagee:	  	Bank of New York Mellon Trust Company, N.A. as Collateral Agent for the benefit of the Secured Parties
		
	Loss Payee:	  	The Bank of New York Mellon Trust Company, N.A. as Collateral Agent, as first loss payee
		
	Conditions:	  	30 days’ notice of cancellation or non-renewal except 10 days for non-payment of premium
		
		  	Acceptable loss payable clause
		
		  	Non-vitiation wording in favor of the Collateral Agent and the Secured Parties
		
		  	Waiver of subrogation in favor of the additional insureds
	
	General Liability Insurance:
		
	Cover:	  	Lessee against any liability arising out of claims for personal injury and property damage.
		  	
		
	Sum Insured:	  	$1,000,000 per occurrence up to a minimum of $2,000,000 aggregate limit (except that the fire damage legal liability coverage may be limited to $100,000 per fire and the medical expense coverage may be limited to $5,000 for any one
injured person).
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
		
	Conditions:	  	Occurrence policy wording or Aegis claims-first-made policy form Worldwide territory

			
	 Automobile Liability Insurance:
  

	Cover:	  	Lessee for liability arising out of claims for personal injury (including bodily injury and death) and property damage covering all owned (if any), leased, non-owned and hired vehicles of Lessee, including loading and
unloading.
		
	Sum Insured:	  	$1,000,000 each accident.
		
	Deductible:	  	$1,000 each accident.
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
	
	 Workers’ Compensation and Employer’s Liability Insurance:

 

	Cover:	  	Lessee will maintain workers’ compensation insurance as required by applicable state laws and employer’s liability insurance insuring Lessee for liability arising out of injury to or death of employees.
		
	Sum Insured:	  	$1,000,000 each accident.
		
	Insured:	  	Lessee
		  	Lessor
	
	 Excess or Umbrella Insurance:
  

	Cover:	  	Insurance covering claims in excess of the underlying insurance described in the foregoing.
		
	Sum Insured:	  	$25,000,000 each occurrence and in the aggregate
		
	Deductible:	  	$1,000,000 any one occurrence or amount of underlying insurance.
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
		
	Conditions:	  	Following form

	B.	Company Conditions and Requirements. 

 1. Loss Notification. Lessee shall promptly
notify Lessor of any single loss or event likely to give rise to a claim against an insurer for an amount in excess of $1,000,000 covered by any insurance policies required by this Exhibit D. 

2. Payment of Loss Proceeds. The Collateral Agent, on behalf of the Secured Parties, shall be named as the first loss payee in
applicable insurance policies (pursuant to a standard lender’s loss payable endorsement equivalent to a CP 1218). 
 3. Compliance
With Policy Requirements. Lessee shall not violate or permit to be violated any of the conditions, provisions or requirements of any insurance policy required by this Exhibit D, and Lessee shall perform, satisfy and comply with, or cause
to be performed, satisfied and complied with, all conditions, provisions and requirements of all insurance policies. 
 4. Waiver of
Subrogation. Lessee hereby waives any and every claim for recovery from the Secured Parties for any and all loss or damage covered by any of the insurance policies to be maintained under this Agreement to the extent that such loss or damage is
recovered under any such policy. If the foregoing waiver will preclude the assignment of any such claim to the extent of such recovery, by subrogation (or otherwise), to an insurance company (or other Person), Lessee shall give written notice of the
terms of such waiver to each insurance company which has issued, or which may issue in the future, any such policy of insurance (if such notice is required by the insurance policy) and shall cause each such insurance policy to be properly endorsed
by Lessee to, or to otherwise contain one or more provisions that prevent the invalidation of the insurance coverage provided thereby by reason of such waiver. 

5. Notices. Lessee will advise Lessor in writing promptly of (i) any material changes in the coverage or limits provided under any
policy required by Section 6.2 of this Agreement and this Exhibit D and (ii) any default in the payment of any premium and of any other act or omission on the part of Lessee which may invalidate or render unenforceable, in whole or
in part, any insurance being maintained by Lessee pursuant to this Exhibit D. 
  

	C.	Insurance Policy Conditions and Requirements. 

 1. Permitted Insurers.
Lessee shall obtain the insurance required by this Exhibit D from responsible insurance companies authorized to do business in Texas (if required by law or regulation) with an A.M. Best Insurance Reports rating of A-, 8 or better. 

2. Control of Loss. If commercially feasible all policies of insurance required to be maintained pursuant to this Exhibit D,
wherein more than one insurer provides the coverage on any single policy, shall have a clause (or a separate agreement among the insurers) wherein all insurers have agreed that the lead insurer shall have full settlement authority on behalf of the
other insurers. 

 3. Loss Survey. All policies of insurance required to be maintained pursuant to this
Exhibit D wherein more than one insurer provides the coverage on any single policy, shall have a clause (or a separate agreement among the insurers) wherein all insurers have agreed upon the employment of a single firm to survey and
investigate all losses on behalf of the insurers. 
 4. Policy Cancellation and Change. All policies of insurance required to be
maintained pursuant to this Exhibit D shall be endorsed so that if at any time they are canceled, or their coverage is reduced (by any party including the insured) so as to affect the interests of the Collateral Agent, the Holders and any
other Secured Party, such cancellation or reduction shall not be effective as to the Secured Parties for thirty (30) days, except for non-payment of premium which shall be for ten (10) days, after receipt by the Collateral Agent and the
Secured Parties of written notice from such insurer of such cancellation or reduction. 
 5. Miscellaneous Policy Provisions. All
insurance policies providing operational property damage, (i) shall name the Collateral Agent, on behalf of the Secured Parties, as the first loss payee, (ii) shall include a Lender’s loss payable clause in favor of the Collateral
Agent, on behalf of the Secured Parties. 
 6. Separation of Interests. All policies (other than in respect to workers compensation
insurance) shall insure the interests of the Secured Parties regardless of any breach or violation by Lessee or any other party of warranties, declarations or conditions contained in such policies, any action or inaction of Lessee or others, or any
foreclosure relating to the System. 
 7. Waiver of Subrogation. All policies of insurance required by this Exhibit D shall
provide for waivers of subrogation in favor of the Secured Parties and their respective officers and employees. 
 8. Liability Insurance
Endorsements. All policies of liability insurance required to be maintained by Lessee shall be endorsed as follows: 
 (i) To name the
Secured Parties as additional insureds; 
 (ii) To provide a severability of interests and cross liability clause; and 

(iii) That the insurance shall be primary and not excess to or contributing with any insurance or self-insurance maintained by Lessee. 

D. Acceptable Policy Terms and Conditions. All policies of insurance required to be maintained pursuant to this Exhibit D shall contain terms
and conditions reasonably acceptable to Lessor. 

 SCHEDULE 3.2(b) 

FORM OF LEASE SUPPLEMENT 
 Rent
Supplement 
 Pursuant to Section 3.2(b) of Lease 

[Date of Supplement] 
 Incremental CapEx: 

Lessee CapEx: 
 Base Rent: 

Percentage Rent Percentages: 
 Annual Percentage Rent Breakpoints:

 Revenues Attributable to Lessee CapEx: 
 Original Base CapEx:

 Accumulated Deficit: 
 ERCOT Transmission Rate Allocation:

 Term of Rent Supplement: 
  

			
	Executed this              day of
                    , 20    .
	
	SHARYLAND UTILITIES, L.P.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	SHARYLAND DISTRIBUTION &
	TRANSMISSION SERVICES, L.L.C.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  
 SYSTEM
LEASE AGREEMENTEX-10.9

 Exhibit 10.9 

Execution Version 

SECOND AMENDED AND RESTATED 

LEASE AGREEMENT 

(STANTON/BRADY/CELESTE ASSETS) 

between 
 SHARYLAND
DISTRIBUTION & TRANSMISSION SERVICES, L.L.C. 
 and 

SHARYLAND UTILITIES, L.P. 

as of December 1, 2014 

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
	 ARTICLE I LEASE
	  	 	1	  
			
	 1.1.
	  	Lease of Stanton/Brady/Celeste Assets	  	 	1	  
	 1.2.
	  	Exclusive Rights	  	 	3	  
	 1.3.
	  	Absolute Net Lease	  	 	3	  
	 1.4.
	  	Waiver by Lessee	  	 	3	  
	 1.5.
	  	Quiet Enjoyment	  	 	3	  
		
	 ARTICLE II TERM OF LEASE
	  	 	4	  
			
	 2.1.
	  	Term	  	 	4	  
	 2.2.
	  	Approvals upon Expiration or Termination	  	 	4	  
	 2.3.
	  	Purchase Option upon Expiration or Termination	  	 	4	  
		
	 ARTICLE III RENT
	  	 	5	  
			
	 3.1.
	  	Rent	  	 	5	  
	 3.2.
	  	Rent Supplements	  	 	8	  
	 3.3.
	  	Confirmation of Percentage Rent	  	 	11	  
	 3.4.
	  	Additional Rent	  	 	12	  
	 3.5.
	  	No Set Off	  	 	12	  
	 3.6.
	  	Late Payment Penalty	  	 	12	  
	 3.7.
	  	Credit Support	  	 	12	  
	 3.8.
	  	Other Revenue	  	 	12	  
		
	 ARTICLE IV LESSEE’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	 	13	  
			
	 4.1.
	  	Maintenance, Operation and Repair of the Stanton/Brady/Celeste Assets	  	 	13	  
	 4.2.
	  	Licenses and Permits	  	 	14	  
	 4.3.
	  	Property Taxes, and other Assessments and Fees	  	 	14	  
	 4.4.
	  	Requirements of Governmental Agencies and Regulatory Authorities	  	 	14	  
	 4.5.
	  	Liens	  	 	14	  
	 4.6.
	  	Hazardous Materials	  	 	15	  
	 4.7.
	  	Indebtedness	  	 	15	  
	 4.8.
	  	Records	  	 	16	  
	 4.9.
	  	Surrender	  	 	16	  
	 4.10.
	  	Cooperation; Transition Services	  	 	17	  
	 4.11.
	  	Lessee’s Authority	  	 	17	  
	 4.12.
	  	Litigation	  	 	17	  
	 4.13.
	  	Financing	  	 	17	  
		
	 ARTICLE V LESSOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	 	19	  
			
	 5.1.
	  	Lessor’s Authority	  	 	19	  
	 5.2.
	  	Liens and Tenants	  	 	19	  

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
	 5.3.
	  	Condition of Assets	  	 	19	  
	 5.4.
	  	Requirements of Governmental Agencies	  	 	19	  
	 5.5.
	  	Hazardous Materials	  	 	20	  
	 5.6.
	  	Litigation	  	 	20	  
	 5.7.
	  	Limitation	  	 	20	  
		
	 ARTICLE VI LOSS AND DAMAGE; INSURANCE
	  	 	20	  
			
	 6.1.
	  	Loss and Damage to the Stanton/Brady/Celeste Assets	  	 	20	  
	 6.2.
	  	Insurance	  	 	21	  
		
	 ARTICLE VII REPORTING
	  	 	22	  
			
	 7.1.
	  	Private Financing Arrangements	  	 	22	  
	 7.2.
	  	Public Company and Regulatory Information and Cooperation	  	 	23	  
	 7.3.
	  	Mutual Obligations	  	 	24	  
		
	 ARTICLE VIII ASSIGNMENT
	  	 	24	  
		
	 ARTICLE IX DEFAULT
	  	 	25	  
			
	 9.1.
	  	Lessee Default	  	 	25	  
	 9.2.
	  	Lessor Default	  	 	26	  
	 9.3.
	  	Right to Cure	  	 	26	  
	 9.4.
	  	Remedies	  	 	26	  
		
	 ARTICLE X CAPITAL EXPENDITURES
	  	 	27	  
			
	 10.1.
	  	Capital Expenditures Generally	  	 	27	  
	 10.2.
	  	Capital Expenditures Funded by Lessor	  	 	28	  
	 10.3.
	  	Capital Expenditures Funded by Lessee	  	 	28	  
	 10.4.
	  	Footprint Project Construction Activities	  	 	28	  
	 10.5.
	  	Ownership of Footprint Projects	  	 	29	  
	 10.6.
	  	Asset Acquisitions	  	 	29	  
	 10.7.
	  	Reimbursements	  	 	29	  
		
	 ARTICLE XI REGULATORY COOPERATION
	  	 	30	  
			
	 11.1.
	  	Jurisdiction	  	 	30	  
	 11.2.
	  	Cooperation	  	 	30	  
		
	ARTICLE XII INDEMNITY	  	 	30	  
			
	 12.1.
	  	General Indemnity	  	 	30	  
	 12.2.
	  	Environmental Indemnity	  	 	31	  

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 TABLE OF CONTENTS 

 

							
	 ARTICLE XIII MISCELLANEOUS
	  	 	32	  
			
	 13.1.
	  	Limitation of Damages	  	 	32	  
	 13.2.
	  	Condemnation	  	 	32	  
	 13.3.
	  	Confidentiality	  	 	32	  
	 13.4.
	  	Successors and Assigns	  	 	33	  
	 13.5.
	  	Rent Obligations Not Excused by Force Majeure, Etc.	  	 	33	  
	 13.6.
	  	Further Assurances; Policies and Procedures	  	 	33	  
	 13.7.
	  	Arbitration	  	 	33	  
	 13.8.
	  	Notices	  	 	35	  
	 13.9.
	  	Entire Agreement; Amendments	  	 	35	  
	 13.10.
	  	Legal Matters	  	 	36	  
	 13.11.
	  	Partial Invalidity	  	 	36	  
	 13.12.
	  	Recording	  	 	36	  
	 13.13.
	  	Intention of Parties; True Lease	  	 	36	  

 APPENDICES: 
 Appendix A
— Definitions 
 EXHIBITS: 
 Exhibit A —
Assets 
 Exhibit B — Subordinated Debt Terms 
 Exhibit C
— Insurance 
 SCHEDULES: 
 Schedule 3.2(b) Form
– Rent Supplement 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 SECOND AMENDED AND RESTATED 

LEASE AGREEMENT 

(STANTON/BRADY/CELESTE ASSETS) 

This SECOND AMENDED AND RESTATED LEASE AGREEMENT (STANTON/BRADY/CELESTE ASSETS) (this “Agreement”) is entered into on
December 1, 2014 (the “Effective Date”), between Sharyland Distribution & Transmission Services, L.L.C. (together with its transferees, successors and assigns, “Lessor”), and Sharyland Utilities, L.P.
(together with its transferees, successors and assigns, “Lessee”), and in connection herewith, Lessor and Lessee agree, covenant and contract as set forth in this Agreement. Lessor and Lessee are sometimes referred to in this
Agreement as a “Party” or collectively as the “Parties”. 
 Certain capitalized terms used in this
Agreement have the meaning assigned to them in Appendix A attached hereto. 
 WITNESSETH: 

WHEREAS, Lessor and Lessee entered into that certain Amended and Restated Lease Agreement dated as of July 1, 2012, as amended (as
amended, restated, supplemented or otherwise modified from time to time, the “Amended and Restated Lease”), pursuant to which Lessee leases the Stanton/Brady/Celeste Lease Assets from Lessor; and 

WHEREAS, Lessor is an indirect subsidiary of InfraREIT Partners, LP, whose general partner (the “REIT”) intends to raise
equity capital through an initial public offering (the “REIT IPO”), and, in connection with the REIT IPO, Lessor and Lessee desire to amend the terms of the Amended and Restated Lease in certain respects and restate the Amended and
Restated Lease as so amended; 
 NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt
of which is hereby acknowledged, the Parties hereto hereby amend and restate the terms of the Amended and Restated Lease as follows: 

ARTICLE I 
 LEASE

 1.1. Lease of Stanton/Brady/Celeste Assets. 

(a) Upon the terms and conditions set forth in this Agreement, Lessor hereby grants to Lessee the exclusive right to use and operate the
Stanton/Brady/Celeste Lease Assets. Subject to necessary regulatory approvals and the penultimate sentence of this Section 1.1, this Agreement is intended by Lessor and Lessee to be a master lease of the Stanton/Brady/Celeste Lease Assets, as
it existed as of July 13, 2010 (the “Original Lease Date”), and as it has been or may continue to be altered or expanded thereafter by Footprint Projects in which Lessor has an interest. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 (b) The Stanton/Brady/Celeste Assets shall consist of (x) the original assets leased by
Lessor to Lessee as of the Original Lease Date (the “Original Assets”), (y) assets that constitute Footprint Projects, other than any such Footprint Projects funded by Lessee pursuant to Section 10.3, and (z) any
components of the Stanton/Brady/Celeste Assets that are repaired or replaced pursuant to Section 6.1. The Stanton/Brady/Celeste Assets shall consist of each of the following components which are owned by Lessor as of the Original Lease Date (or
that are described within clause (y) or clause (z) above) and that are located within the area depicted on Exhibit A: 

(i) towers and poles affixed to the land, and all necessary and proper foundations, footings, crossarms and other appliances
and fixtures for use in connection with said towers, poles and lines; 
 (ii) overhead, underground and underwater electrical
distribution, transmission and communications lines, together with related ductwork and insulators; 
 (iii) distribution
transformers mounted on towers or poles and/or anchored to concrete pads; 
 (iv) electric substation and switching
facilities, including all associated transformers, circuit breakers, resistors, capacitors, buses, interconnection and switching facilities, control and protection equipment which monitors the Stanton/Brady/Celeste Assets, and the building housing
the foregoing items; 
 (v) all facilities associated with any high-voltage direct current interconnections (“HVDC
Ties”), including alternating current (“AC”) / direct current (“DC”) converter stations; 

(vi) electric meters affixed to buildings or residences or otherwise required to operate the Stanton/Brady/Celeste Assets; 

(vii) real estate assets, including real property, interests in real property or real property rights (as defined in
Section 856(c)(5)(B) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, and not otherwise included in Sections 1.1(b)(i) – 1.1(b)(vi) above) owned or leased by Lessor; or 

(viii) all other systems or property owned or leased by Lessor, as identified in the uniform system of accounts for major
electric utilities, 18 C.F.R. Part 101, as adopted and amended from time to time by FERC (not otherwise included in Sections 1.1(b)(i) – 1.1(b)(vii) above). 

Notwithstanding anything to the contrary in this Agreement, the parties do not intend or agree to enter into a lease with respect to any
Footprint Project or other alteration, expansion or addition to the Stanton/Brady/Celeste Assets (and the Lessee shall not be authorized to use or operate such Footprint Project, alteration, expansion or addition to the Stanton/Brady/Celeste Assets)
unless and until such time as the parties first execute a Rent Supplement for the underlying Footprint Project and such Footprint Project is placed in service, and such Rent 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 2 

 
Supplement together with this Agreement shall be treated as a new lease with respect to such Footprint Project. The parties further agree and acknowledge that a Rent Supplement will be executed
with respect to each Footprint Project before such Footprint Project is placed in service, and references in this Agreement to “Stanton/Brady/Celeste Assets” rely on the assumption that this is the case. 

1.2. Exclusive Rights. Throughout the Term of this Agreement, Lessee shall have the exclusive right
(i) to operate and use the Stanton/Brady/Celeste Lease Assets for the transmission and distribution of electricity in accordance with applicable rules and regulations of all regulatory agencies having regulatory jurisdiction over the
Stanton/Brady/Celeste Assets, including without limitation, the PUCT, as well as applicable rules and regulations of ERCOT, TRE, NERC and other Regulatory Authorities, and (ii) to utilize the Stanton/Brady/Celeste Lease Assets (and the
associated easements, rights of way and similar rights) for other opportunities and uses (provided that such other uses do not interfere with the current or future transmission and delivery of electricity), subject to the approval of the Lessor,
such approval not to be unreasonably withheld, conditioned or delayed. Throughout the Term of this Agreement, Lessor shall have access to the Stanton/Brady/Celeste Assets at all reasonable times for purposes of inspection and for the purposes of
improving, expanding or modernizing the Stanton/Brady/Celeste Assets in accordance with Article X. Except in the case of emergency, prior to Lessor’s access of the Stanton/Brady/Celeste Assets, Lessor will provide written notification to
Lessee’s operations personnel. 
 1.3. Absolute Net Lease. This Agreement is intended by the Parties to be an
absolute net lease (and, except as otherwise specified herein, the expenses associated with the lease, servicing, insuring, maintenance, repair and operation of the Stanton/Brady/Celeste Assets shall be for the account of the Lessee, unless
expressly stated that such expenses are for the account of Lessor or some other person or entity). Other than as expressly provided herein, (a) Lessee’s obligation to make all payments of Rent as and when the same shall become due and
payable in accordance with the terms of this Agreement shall be absolute, irrevocable and unconditional and shall not be affected by any circumstance or subject to any abatement or diminution by set-off, deduction, counterclaim, recoupment,
agreement, defense, suspension, deferment, interruption or otherwise, and (b) until such time as all Rent required to be paid has been paid, Lessee shall have no right to terminate this Agreement or to be released, relieved or discharged from
its obligation to make, and shall not suspend or discontinue, any payment of Rent for any reason whatsoever. 
 1.4. Waiver by
Lessee. Lessee hereby waives, to the extent permitted by Applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to modify, terminate, cancel, quit or
surrender this Agreement except in accordance with the express terms hereof. 
 1.5. Quiet Enjoyment. Lessee shall be
entitled to the peaceful and quiet enjoyment of the Stanton/Brady/Celeste Assets, subject to the terms of this Agreement, so long as Lessee is not in default of this Agreement beyond applicable notice and cure periods. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 3 

 ARTICLE II 

TERM OF LEASE 

2.1. Term. Subject to the provisions of Section 2.2 of this Agreement, or as otherwise stated herein,
this Agreement became effective on the Original Lease Date and shall continue through December 31, 2015 unless otherwise terminated in a manner consistent herewith (the “Initial Term”). Thereafter, this Agreement may be renewed
for subsequent terms (each, a “Renewal Term” and, collectively with the Initial Term, the “Term”) by mutual agreement of the Parties; provided, however, that the Rent for any Renewal Term shall be targeted to
provide the Lessor with a Comparable Rate of Return on the then-current Rate Base of the Stanton/Brady/Celeste Assets. 
 2.2.
Approvals upon Expiration or Termination.  
 (a) Notwithstanding any provisions to the contrary
herein, Lessee shall not surrender, resign, transfer, assign or otherwise cease to be the operator of the Stanton/Brady/Celeste Assets at any time, including upon the termination of this Agreement or at the expiration of the Term, without first
acquiring any necessary regulatory approvals from the PUCT or other Regulatory Authorities regarding such surrender, resignation, transfer, assignment or cessation of such operatorship; provided that, in the event of expiration or termination, the
Parties shall use commercially reasonable efforts to obtain all necessary regulatory approvals of the transfer of such operatorship as soon as reasonably practicable. 

(b) During such extended period of operatorship, Lessee shall continue to operate the Stanton/Brady/Celeste Assets and shall continue to pay
all Extended Period Rent; provided, however, that if regulatory approval is not obtained within twelve (12) months of initiation of the approval process and such delay is (a) due to Lessor’s failure to reasonably pursue such approval,
then the amounts payable as Rent will be eighty percent (80%) of such amount, or (b) due to Lessee’s failure to reasonably pursue such approval, then the amounts payable as Rent will be one hundred five percent (105%) of such
amount. 
 (c) Upon the expiration of the Term or termination of this Agreement, Lessee shall use commercially reasonable efforts to obtain
all necessary regulatory approvals as soon as reasonably practicable from the PUCT or other Regulatory Authorities to transfer or assign the CCNs for the Stanton/Brady/Celeste Assets to Lessor or a third party designated by Lessor and acceptable to
the PUCT or other Regulatory Authorities. 
 2.3. Purchase Option upon Expiration or Termination. Upon
the expiration of the Term or termination of this Agreement, Lessor shall have the option to purchase from Lessee any equipment or other property, tangible or intangible, owned by Lessee and principally used in connection with and necessary for the
operation of the Stanton/Brady/Celeste Assets (including any Nonseverable Footprint Projects owned by Lessee, if any), subject to any required regulatory approvals. The purchase price for such property or equipment shall be the greater of
(i) the net book value thereof plus 10% and (ii) the fair market value thereof as determined by mutual agreement of Lessor and Lessee. If the Parties fail to agree on the amount of the purchase price, the purchase price shall be determined
by arbitration pursuant to Section 13.7. In the event Lessor purchases such equipment, Lessee shall have the right to continue to use such equipment for no cost during the period of any extended operations by Lessee under Section 2.2. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 4 

 ARTICLE III 

RENT 
 3.1.
Rent. Lessee will pay to Lessor in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, at Lessor’s address set forth in Section 13.8 hereof or at such
other place or to such other Person, as Lessor from time to time may designate in a Notice, all Rent contemplated hereby during the Term on the basis hereinafter set forth. If there is a dispute as to the amount of Rent to be paid by Lessee, either
Party may submit the dispute to arbitration pursuant to Section 13.7. However, Lessee shall be required to pay, as and when Rent is due and payable hereunder, the Undisputed Rent until such time as the dispute is resolved by agreement between
the Parties or by arbitration pursuant to Section 13.7. 
 (a) Base Rent: Lessee shall pay to Lessor an amount of base rent equal
to the amount set forth on the then-effective Rent Supplement, which shall be payable monthly in arrears 45 days after the conclusion of the month. The amount of base rent owed pursuant to this Section 3.1(a) may also be supplemented by the
Parties from time to time in accordance with Section 3.2. The amount of base rent payable pursuant to this Section 3.1(a), as supplemented from time to time pursuant to Section 3.2, is referred to as “Base Rent.”

 (b) Percentage Rent: In addition to the Base Rent set forth above, Lessee covenants and agrees to pay to Lessor, as percentage
rent, an annual amount equal to the percent of Gross Revenues during the applicable Lease Year in excess of the Annual Percentage Rent Breakpoint for such Lease Year, all as set forth on the then-effective Rent Supplement. The percentage amounts
used for the calculation of percentage rent owed pursuant to this Section 3.1(b) (the “Percentage Rent Percentages”) may be supplemented by the Parties from time to time in accordance with Section 3.2 to account for
additions to the Stanton/Brady/Celeste Assets. The percentage rent payable pursuant to this Section 3.1(b), as supplemented from time to time pursuant to Section 3.2, is referred to as “Percentage Rent.” 

(c) Percentage Rent Breakpoints: With respect to the Annual Percentage Rent Breakpoint for each Lease Year: (1) the “First Lease
Quarter Percentage Rent Breakpoint” shall be 25% of the Annual Percentage Rent Breakpoint for such Lease Year; (2) the “Second Lease Quarter Percentage Rent Breakpoint” shall be 50% of the Annual Percentage Rent
Breakpoint for such Lease Year; and (3) the “Third Lease Quarter Percentage Rent Breakpoint” shall be 75% of the Annual Percentage Rent Breakpoint for such Lease Year. 

  

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 (d) Gross Revenues: 

(i) As used in this Agreement, subject to Section 3.1(d)(ii), the “Gross Revenues” of the Stanton/Brady/Celeste Assets
shall mean and include all fees, charges and other revenues generated by or otherwise (x) received by or payable to Lessee in connection with or which are the result of the operation of the Stanton/Brady/Celeste Assets (and any assets related
to the Stanton/Brady/Celeste Assets owned by Lessee), as set forth in Account Nos. 440, 442, 444, 445, 449, 451, and 456 (but excluding any fees, charges or other revenues set forth in Account No. 555) of the FERC Uniform System of Accounts for
electric utilities or such other accounts as may be applicable from time to time in which Lessee records its revenues from operation of the Stanton/Brady/Celeste Assets; (y) received by or payable to Lessee from other opportunities and uses of
the Stanton/Brady/Celeste Assets pursuant to Section 1.2 hereof; or (z) that are insurance proceeds for business income lost from an insured event related to the Stanton/Brady/Celeste Assets; provided that, “Gross
Revenues” shall not include (1) any payment received by Lessee as CIAC; (2) any items which are of a pure pass-through nature where such items are charged to and collected from customers of Lessee but which carry regulatory
responsibility to remit such collections without offset or deduction to a third party, including, but not limited to, items such as: (A) sales taxes or other charges collected by Lessee on behalf of a taxing authority; (B) fees, charges
and other revenues collected by Lessee that can be specifically traced to any regulatory approved costs incurred by Lessee that have been ordered or permitted by the PUCT to be recovered through Lessee’s rates such as system benefit fund,
purchase power costs, wheeling charges, Purchase Power Cost Recovery Factor and Transmission Cost Recovery Factor; (C) fees, charges and other revenues collected by Lessee that can be specifically traced to any deferred costs funded by Lessee
that have been ordered or permitted by the PUCT to be recovered through a tariff rider; and (D) such other items that Lessor and Lessee agree to in good faith are consistent with the foregoing and should be included prospectively in the list
set forth in this clause (2) and in the event the Lessor and Lessee cannot agree on what items should be included on such list after 60 days of negotiating in good faith, then either Lessor or Lessee may submit such matter to arbitration
pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine which such items shall be included on such list, based on submissions by each of the Lessee and the Lessor; and
(3) Revenues Attributable to Lessee CapEx. The term “Unadjusted Gross Revenues” means the amount of Gross Revenue, calculated in accordance with this Section 3.1(d)(i), without giving effect to the offset set forth in
clause (3), above, related to Revenues Attributable to Lessee CapEx. 
 (ii) Except as set forth below, all ERCOT Transmission Revenues will
be allocated to the Stanton/Brady/Celeste Assets covered by this Agreement based upon the following formula: Multiply (x) total ERCOT Transmission Revenues received by Lessee by (y) a fraction, the numerator of which is the Transmission
Net Plant in Service for the Stanton/Brady/Celeste Assets covered by this Agreement and the denominator of which is the total Transmission Net Plant in Service for all regulated electric transmission systems owned by Lessor or an affiliate thereof
and operated by Lessee or a subsidiary thereof within ERCOT (the “TCOS Allocation”). As of the Effective Date, all regulated electric transmission systems operated by Lessee or a subsidiary thereof within ERCOT are owned by Lessor
or a subsidiary or parent entity thereof. As long as that is the case, Transmission Net Plant in Service and Transmission Gross Plant in service shall be derived exclusively from the financial statements of Lessor and agreed to by Lessee. If Lessee
operates any electric transmission systems within ERCOT that are not leased from Lessor or an affiliate thereof, then the Parties will negotiate in good faith an equitable and appropriate mechanism for allocating ERCOT Transmission Revenues based on
the 

  

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Transmission Net Plant in Service of the respective electric transmission systems and in the event the Parties cannot agree on an equitable and appropriate mechanism after 60 days of negotiating
in good faith, then either Party may submit such matter to arbitration pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine such equitable and appropriate mechanism, based on
submissions by each of the Lessee and the Lessor. The most recent TCOS Allocation agreed to by Lessor and Lessee will govern the allocation described in this Section 3.1(d)(ii), which TCOS Allocation may be set forth in a Rent Supplement but
will not be required to be included in a Rent Supplement to be effective. Either Party may request a revision to such TCOS Allocation, based on the most recent available monthly balance sheet, no more frequently than once every sixty (60) days
or in connection with any Rent Supplement or Rent Validation executed and delivered by the Parties. If the Parties are unable to agree to an allocation, such matter will be submitted to arbitration pursuant to Section 13.7. “Gross
Revenues,” for purposes hereof, will consist of the amount of such ERCOT Transmission Revenues allocated to the Stanton/Brady/Celeste Assets pursuant to this Section 3.1(d)(ii), if any, plus any other amounts, such as distribution revenue,
that constitute Gross Revenues pursuant hereto, minus Revenues Attributable to Lessee CapEx. 
 (iii) The Parties contemplate that there may
be Capital Expenditures for assets that are placed in service and that are related and fairly allocable to the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets and are classified as Lessee CapEx. Unless the Parties agree
otherwise based on appropriate factors at the time of the negotiation, Capital Expenditures that qualify as Lessee CapEx will qualify as Lessee CapEx on the date that the assets developed with such Capital Expenditures are placed in service. In such
a case, Revenues Attributable to Lessee CapEx shall be determined and such portion shall be excluded from Unadjusted Gross Revenues. For these purposes, Revenues Attributable to Lessee CapEx shall be targeted to equal that portion of the Unadjusted
Gross Revenues collected by Lessee which equals the amount needed to provide Lessee with the equivalent of a Comparable Rate of Return on any such Lessee CapEx (except that, in determining such Comparable Rate of Return, the Parties will not
consider Lessee’s creditworthiness and there will be no Agreed-to-Discount). It is understood and agreed that such determinations of the Revenues Attributable to Lessee CapEx are intended to provide an accurate and reasonably administrable
means of ensuring that the Lessee (and not the Lessor) will receive a Comparable Rate of Return attributable to the capital invested by Lessee in the Lessee CapEx. The Revenues Attributable to Lessee CapEx shall be determined solely to provide a
Comparable Rate of Return on such Lessee CapEx and shall not be determined with reference to, or with any intention to true up, the effect of any difference between the initially anticipated and the actual return of or on prior Lessee CapEx. The
Parties understand that there may be Capital Expenditures that relate to both (1) the Stanton/Brady/Celeste Assets and/or the Stanton Transmission Loop Assets and (2) to other transmission and/or distribution systems owned or operated by
Lessee or an affiliate thereof, and, in such circumstance, the Parties will negotiate in good faith to determine the portion of such Capital Expenditures that constitute Lessee CapEx hereunder and in the event the Parties cannot determine such
portion after 60 days of negotiating in good faith, then either Party may submit such matter to arbitration pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine such portion of
Capital Expenditures that constitute Lessee CapEx hereunder, based on submissions by each of the Lessee and the Lessor. 

  

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Lessee agrees to provide Lessor with sufficient information regarding Lessee CapEx so that Lessor can monitor amounts actually spent on Lessee CapEx. If Lessee expects there will be any Lessee
CapEx, Lessee may request, no more frequently than annually, that the Parties determine the Revenues Attributable to Lessee CapEx which relate to such Lessee CapEx for each subsequent Lease Year. Lessee will use reasonable efforts to make such
request coincide with a Rent Supplement pursuant to Section 3.2(a). Each supplement and related determination of Revenues Attributable to Lessee CapEx for any Lease Year which is specified in this Section 3.1(d)(iii) shall be memorialized
in the manner specified in Section 3.2(b). 
 (e) Payment of Percentage Rent: Percentage Rent shall be paid by Lessee to Lessor not
later than the date forty-five (45) days after the end of each Lease Quarter as herein provided. Lessee shall record Gross Revenues in order to provide an audit trail for the Gross Revenues. Lessee shall deliver a written statement to Lessor,
accompanied by a CFO Certificate, within forty-five (45) days after the end of each Lease Quarter, stating (1) the Gross Revenues for that Lease Quarter, (2) the cumulative total through the end of that Lease Quarter of Gross Revenues
for such Lease Year, (3) the Percentage Rent Breakpoint (the First Lease Quarter Percentage Rent Breakpoint, the Second Lease Quarter Percentage Rent Breakpoint, the Third Lease Quarter Percentage Rent Breakpoint or the Annual Percentage Rent
Breakpoint for such Lease Year, as applicable), utilized by Lessee and applicable to Lessee’s calculation of Percentage Rent through the end of that Lease Quarter, and (4) the cumulative total of any Percentage Rent then due and the
cumulative total of any Percentage Rent previously paid with respect to any prior Lease Quarter(s) within such Lease Year. If such CFO Certificate indicates that any Percentage Rent is due for such Lease Quarter (or such Lease Year, as applicable),
based upon the cumulative total of Gross Revenues through the end of such Lease Quarter and the applicable Percentage Rent Breakpoint reflected in such statement, then Lessee shall pay and deliver any Percentage Rent then due with the statement and
CFO Certificate for such Lease Quarter (or such Lease Year, as applicable). With respect to the final Percentage Rent calculation for any Lease Year, Lessee shall receive a credit for any Percentage Rent previously paid with respect to such Lease
Year. If the Percentage Rent payments previously made by Lessee to Lessor for the first three Lease Quarters of a Lease Year, on a cumulative basis, exceed the annual amount of Percentage Rent payable by Lessee to Lessor for such Lease Year, then
Lessee shall receive a credit for such excess amount against the next Percentage Rent payment(s) becoming due and payable by Lessee to Lessor under this Agreement. All statements deliverable by Lessee to Lessor under this Agreement shall be
delivered to the place where rent is then payable, or to such other place or places as Lessor may from time to time direct by written notice to Lessee. 

3.2. Rent Supplements. 

(a) The Parties have executed a Rent Supplement with respect to the Rent in effect as of the Effective Date. This Section 3.2(a) will not
require any amendment to Rent unless the Parties expect Incremental CapEx and the Parties have not previously entered into a Rent Supplement with respect to such Incremental CapEx. If the Parties expect that during any Lease Year there will be
Incremental CapEx, then the Parties will negotiate in good faith to supplement Rent and other matters in accordance with this Section 3.2. In connection therewith, the Parties will negotiate the pre-tax rate of return that Lessor should earn on
such Incremental CapEx, which will be based generally on an agreed-to discount from the rate of return that public utility 

  

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companies generally earn in the State of Texas at the time of such Rent Supplement negotiation, adjusted in the manner agreed to by the Parties (if justified) to take into account the
creditworthiness of Lessee at the time of such Rent Supplement negotiation (the “Agreed-to-Discount”). Such discount will be based on the comparable discount agreed to in connection with the negotiation of rent pursuant to the
McAllen Lease and other leases between Lessee and Lessor (or an affiliate thereof), as modified to take into account appropriate factors at the time of such Rent Supplement negotiation. Such pre-tax rate of return, as determined in accordance with
this paragraph, is referred to as a “Comparable Rate of Return.” The following will apply to the determination of the matters set forth on the Rent Supplement:  

(i) The Parties will supplement Base Rent and Percentage Rent in a manner intended to provide a Comparable Rate of Return for
Lessor on its Incremental CapEx. Such Comparable Rate of Return will be achieved by a split between Base Rent and Percentage Rent in the proportions requested by Lessor and agreed to by Lessee. 

(ii) Unless the Parties agree otherwise based on appropriate factors at the time of the negotiation, Capital Expenditures will
qualify as Incremental CapEx on the date such Capital Expenditures are placed in service, which differentiates these Capital Expenditures from the Capital Expenditures included in CapEx Budgets pursuant to Article X, which are measured under this
Agreement based on the date the related Capital Expenditures are incurred. 
 (iii) Notwithstanding anything herein to the
contrary, such supplement shall be determined solely to provide a Comparable Rate of Return on such Incremental CapEx and shall not be determined with reference to, or with any intention to true up, the effect of any difference between the initially
anticipated and the actual return of or on, or the Base Rent or Percentage Rent payable with respect to, the Stanton/Brady/Celeste Assets as in place prior to the additions resulting from such Incremental CapEx. 

(iv) Base Rent shall at all times be at least equal to the aggregate amount of scheduled principal and interest due and payable
by Lessor for such period with respect to indebtedness incurred by Lessor in connection with the acquisition of the Original Assets and all indebtedness incurred by Lessor in connection with its funding of any Footprint Projects. 

(v) For clarity, in no event will this Section 3.2 require a reduction in Rent if there is no Incremental CapEx. 

(b) The Parties will memorialize the results of all Incremental CapEx supplements and Lessee CapEx supplement negotiations by executing and
delivering a Rent Supplement, which will set forth the amount of contemplated Incremental CapEx, new Base Rent, a new Percentage Rent Schedule, new Revenues Attributable to Lessee CapEx, Lessee CapEx, new Accumulated Deficit (if applicable), new
TCOS Allocation (if applicable), the effective date on which such changes will occur and the term of such Rent Supplement (if applicable). In no event will any new Base Rent or new Percentage Rent be payable, or any Revenues Attributable to Lessee
CapEx be taken into account as a reduction to Unadjusted Gross Revenues, before the 

  

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assets funded by the related Incremental CapEx or Lessee CapEx are placed in service. The Rent Supplement may also include the projected in-service date of the Incremental CapEx or Lessee CapEx
to which the Rent Supplement applies. Upon execution and delivery of any such Rent Supplement, this Agreement will be deemed amended thereby. The Rent Supplement shall have the term set forth therein, not to extend past the then-current Term of this
Agreement. At the end of the term of each Rent Supplement, the Parties shall negotiate a new Rent Supplement for the Lessee CapEx and Incremental CapEx covered by such prior Rent Supplement using the Comparable Rate of Return methodology set forth
in Sections 3.1(d)(iii) and 3.2(a). Notwithstanding the foregoing, the Percentage Rent Percentages and Annual Percentage Rent Breakpoints reflected on such new Rent Supplement with respect to the Rate Base covered by such prior Rent Supplement shall
be as set forth on the Percentage Rent Schedule of such prior Rent Supplement. If necessary, Exhibit A will be supplemented to reflect new assets funded by Incremental CapEx. 

(c) If following a Rent Supplement there is a difference in (i) the amount of actual Incremental CapEx compared to the amount contemplated
by the then-effective Rent Supplement, (ii) the amount of actual Lessee CapEx compared to the amount contemplated by the then-effective Rent Supplement, or (iii) the placed-in-service date of such Incremental CapEx or Lessee CapEx compared
to what was contemplated at the time of the then-effective Rent Supplement, then, at any time within two years of the date the Parties agree to a Rent Supplement, either Party may request a Rent Validation. If there has been such a difference, the
Parties will supplement Incremental CapEx, Base Rent, Percentage Rent Percentages, Annual Percentage Rent Breakpoints, Revenues Attributable to Lessee CapEx, Lessee CapEx and/or Accumulated Deficit, as applicable, to what they would have been, at
the time of the Rent Supplement, to reflect (1) the amount of actual Incremental CapEx and Lessee CapEx and/or (2) the actual dates such Incremental CapEx and/or Lessee CapEx was placed in service, but keeping fixed all other relevant
assumptions and inputs, including the Comparable Rate of Return. For the avoidance of doubt, in no circumstance will a Rent Validation occur to account for any difference between the initially anticipated and the actual return of or on the
Incremental CapEx and/or Lessee CapEx, and no such difference will be taken into account as part of such Rent Validation. The Parties also will negotiate in good faith to determine (A) whether one Party should make a lump sum payment to the
other Party as a result of excess or deficient Rent Lessee paid, prior to the date of the effective date of the Rent Validation, in connection with the Rent Supplement, given any negotiated supplement, and, (B) if applicable, the amount of any
such lump sum payment. The Parties will memorialize the result of any Rent Validation negotiation by executing and delivering a revised Rent Supplement, which will set forth revised expected Incremental CapEx, Lessee CapEx, Base Rent, Percentage
Rent Percentages, Annual Percentage Rent Breakpoints, Revenues Attributable to Lessee CapEx and/or Accumulated Deficit, as applicable, the effective date on which such changes will occur and, if applicable, the amount of the lump sum payment that
one Party must make to the other Party (which payment must be made within 30 days of the execution and delivery of such revised Rent Supplement). Any lump sum payments received by Lessor under this Section 3.2(c) shall be treated as Rent by the
Parties. Upon execution and delivery of any such revised Rent Supplement, this Agreement will be deemed amended thereby. The Parties will reasonably cooperate to minimize the number of Rent Validations, and prospective Rent Supplements and Rent
Validations may be combined into one revised, amended and restated Rent Supplement. 

  

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 (d) In connection with the foregoing provisions of this Section 3.2, Lessor and Lessee shall
use good faith efforts to agree to a Rent Supplement, renewal of a Rent Supplement or Rent Validation, as applicable, within 60 days of a request therefor by either Party. If, by the end of such 60 day period, Lessee and Lessor cannot in good faith
agree to the terms of a Rent Supplement, renewal of a Rent Supplement or Rent Validation, such dispute shall be submitted to arbitration in accordance with Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be
empowered to determine the terms of such Rent Supplement, renewal of a Rent Supplement or Rent Validation (including any lump sum payment amount), based on submissions by each of the Lessee and the Lessor. 

3.3. Confirmation of Percentage Rent. 

(a) In the event that Lessee determines that the Percentage Rent paid with respect to any Lease Year exceeded the amount of Percentage
Rent actually due for such Lease Year (such overage being the “Excess Percentage Rent”), Lessee shall promptly notify Lessor of such fact and shall deliver a new CFO Certificate (the “Revised Certificate”) setting
forth the corrected calculations of the Percentage Rent due for such Lease Year and identifying the amount of the Excess Percentage Rent. Upon Lessor’s reasonable verification of the information set forth in the Revised Certificate, Lessor
shall refund to Lessee the Excess Percentage Rent. Notwithstanding anything to the contrary contained herein, in no event shall Lessor have any obligation under this Section 3.3(a) to refund any Excess Percentage Rent if Lessor has not received
the Revised Certificate by March 31 of the year following the Lease Year for which the Excess Percentage Rent was paid. 
 (b)
Lessee shall utilize, or cause to be utilized, an accounting system for the Stanton/Brady/Celeste Assets in accordance with the FERC Uniform System of Accounts for electric utilities, that will accurately record all data necessary to compute
Percentage Rent, and Lessee shall retain and shall allow Lessor and its representatives to have reasonable access to, for at least five (5) years after the expiration of each Lease Year, reasonably adequate records conforming to such accounting
system showing all data necessary to conduct Lessor’s Audit and to compute Percentage Rent for the applicable Lease Years and to otherwise file or defend tax returns and reports to any Regulatory Authority. 

(c) Lessor shall have the right from time to time to cause its accountants or representatives to conduct an inspection, examination and/or
audit (a “Lessor’s Audit”) of all of Lessee’s records, including supporting data, sales and excise tax returns and the records described in Section 3.3(b), reasonably required to complete such Lessor’s Audit and
to verify Percentage Rent, subject to any prohibitions or limitations on disclosure of any such data under applicable laws, regulations and governmental requirements. If any Lessor’s Audit discloses a deficiency in the payment of Percentage
Rent, and either Lessee agrees with the result of Lessor’s Audit or the matter is otherwise determined or compromised, Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally agreed or determined, together with interest at
the Overdue Rate from the date when said payment should have been made to the date of 

  

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payment thereof. In addition to the amounts described above in this Section 3.3(c), if any Lessor’s Audit discloses a deficiency in the payment of Percentage Rent which, as finally
agreed or determined, exceeds 3% of the amount paid, Lessee shall pay the costs of Lessor’s Audit. In no event shall Lessor undertake a Lessor’s Audit after March 31 of the second year following the Lease Year for which such audit is
requested. 
 (d) Any proprietary information obtained by Lessor pursuant to the provisions of this Section 3.3 shall be treated as
confidential, except that such information may be used, subject to appropriate confidentiality safeguards, in any litigation or arbitration between the Parties and except further that Lessor may disclose such information to lenders and investors,
including prospective lenders or investors and to any other persons to whom disclosure is necessary or appropriate to comply with applicable laws, regulations and governmental requirements and to comply with any reporting requirements applicable to
Lessor or Lessee under any applicable securities laws or regulations or any listing requirements of any applicable securities exchange. 

(e) The obligations of Lessee and Lessor contained in this Section 3.3 shall survive the expiration or earlier termination of this
Agreement. Any dispute as to the existence or amount of any deficiency in the payment of Percentage Rent as disclosed by Lessor’s Audit shall, if not otherwise settled by the Parties, be submitted to arbitration pursuant to the provisions of
Section 13.7. 
 3.4. Additional Rent. In addition to Base Rent and Percentage Rent, Lessee
also will pay and discharge as and when due and payable all other amounts, liabilities, obligations and impositions that Lessee assumes or agrees to pay under this Agreement, including without limitation, the expenses described in Section 1.3
and any reimbursement for such amounts and other damages to Lessor in the event that Lessor pays such expenses or performs such obligations on behalf of Lessee (collectively, “Additional Rent”). 

3.5. No Set Off. Rent shall be paid to Lessor without set off, deduction or counterclaim; provided, however, that Lessee
shall have the right to assert any claim or counterclaim in a separate action brought by Lessee under this Agreement or to assert any mandatory counterclaim in any action brought by Lessor under this Agreement. 

3.6. Late Payment Penalty. If Lessee fails to make any payment of Rent to Lessor within five (5) days after it is
due, interest shall accrue on the overdue amount, from the date overdue until the date paid, at the Overdue Rate. 
 3.7.
Credit Support. If Lessor has reasonable grounds for insecurity regarding the performance of Lessee’s obligations hereunder, Lessor may require Lessee to provide credit support in the amount, form and for the term reasonably
acceptable to Lessor, including but not limited to, a letter of credit, a prepayment, or a guaranty. 
 3.8. Other
Revenue. If Lessee receives or expects to receive any fees, charges or Other Revenues and other than de minimis amounts not to exceed $100,000 in any calendar year, then, unless Lessee reasonably believes that such Other Revenue will not
operate to reduce Lessee’s tariff within the State of Texas, Lessee and Lessor will negotiate in good faith to amend this 

  

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Agreement or a similar lease to characterize the portion of such Other Revenue which Lessor reasonably expects will operate to reduce Lessee’s tariff within the State of Texas as Unadjusted
Gross Revenue hereunder or under such other similar lease. In the event the Lessee and Lessor cannot agree on the terms of such amendment of this Agreement or of a similar lease after 60 days of negotiating in good faith, then either the Lessee or
the Lessor may submit such matters to arbitration pursuant to Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to characterize the portion of such Other Revenue which Lessor reasonably expects will
operate to reduce Lessee’s tariff within the State of Texas as Unadjusted Gross Revenue hereunder or under such other similar lease, based on submissions by each of the Lessee and the Lessor. 

ARTICLE IV 

LESSEE’S REPRESENTATIONS, WARRANTIES AND COVENANTS 

Lessee hereby represents, warrants and covenants to Lessor that: 

4.1. Maintenance, Operation and Repair of the Stanton/Brady/Celeste Assets.  

(a) Lessee, at its own cost and expense, shall maintain (including both scheduled and unscheduled maintenance), operate, repair and make all
modifications (other than Footprint Projects) to the Stanton/Brady/Celeste Assets and any components thereof (whether owned by Lessor or Lessee), including directing all operations of and supplying all personnel necessary for the operation of the
Stanton/Brady/Celeste Assets, in each case, as reasonable and prudent and consistent with Good Utility Practice and as required by Applicable Law. Lessee shall carry out all obligations under this Agreement as reasonable and prudent and consistent
with Good Utility Practice and in accordance with manufacturers’ warranty requirements (during any applicable warranty period) and the Lessee’s established operating procedures and maintenance, rebuild and repair programs so as to keep the
Stanton/Brady/Celeste Assets in good working order, ordinary wear and tear excepted, and in such condition as shall comply in all material respects with all Applicable Laws. Lessee will operate the Stanton/Brady/Celeste Assets in a reliable and safe
manner in compliance with all applicable requirements and regulations of Regulatory Authorities. Lessee will not operate the Stanton/Brady/Celeste Assets or any component thereof in any manner excluded from coverage by any insurance in effect as
required by the terms hereof. 
 (b) If inspections of the Stanton/Brady/Celeste Assets by Lessor show that the Stanton/Brady/Celeste Assets
do not meet industry standards or Good Utility Practice for maintenance and repair and/or fail to meet the requirements of any Applicable Law, Lessee shall promptly, but in any event within thirty (30) days after such initial notification,
(i) develop a plan for Lessor’s review by which the Stanton/Brady/Celeste Assets can be modified to comply with the standards, and (ii) complete any and all such modifications consistent with all applicable reliability and safety
standards established by regulations, orders or requirements of Regulatory Authorities. 

  

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 4.2. Licenses and Permits. Lessee shall obtain and maintain any and all
licenses, permits and other governmental and third-party consents and approvals required by Applicable Law in order to carry out its obligations under this Agreement. 

4.3. Property Taxes, and other Assessments and Fees. Lessee shall bear and timely pay all ad valorem or property taxes,
sales and use taxes, or other assessments, governmental charges or fees that shall or may during the Term be imposed on, or arise in connection with, the repair, maintenance or operation of the Stanton/Brady/Celeste Assets (including all Footprint
Projects as described and provided for in Section 10.1 of this Agreement) (“Lessee Taxes”); provided that Lessee shall not be obligated to pay any net income taxes imposed upon Lessor or any sales and use taxes which arise in
connection with Lessor’s acquisition of Footprint Projects (“Lessor Taxes”). Upon the written request by Lessor, Lessee shall provide Lessor with evidence of the payment of any such Lessee Taxes, the failure of which to be paid
would cause the imposition of a Lien upon the Stanton/Brady/Celeste Assets or any component thereof or interest therein. Lessee shall assume full responsibility for preparing and furnishing to Lessor for execution all filings with any governmental
authority of or in the state and/or locality in which the Stanton/Brady/Celeste Assets is located in respect of any and all taxes; except that, where required or permitted by Applicable Law, Lessee shall make such filings on behalf of Lessor in the
name of Lessor or in Lessee’s own name. In each case in which Lessee furnishes a tax return or any other form to be executed by Lessor for filing with or delivery to any taxing authority, Lessee shall certify to Lessor that such document is in
the proper form, is required to be filed under Applicable Law and does not impose any tax or other liability on Lessor or any of its affiliates which is not indemnified by Lessee. Lessee shall be permitted to contest, in its own name when permitted
by law but otherwise on behalf of Lessor, in good faith and upon consultation with Lessor, any taxes it is obligated to pay hereunder. 

4.4. Requirements of Governmental Agencies and Regulatory Authorities. Lessee, at its expense, shall comply
with all Applicable Laws, including without limitation all requirements of the Regulatory Authorities. Lessee shall have the right, in its reasonable discretion and at its cost and expense, to contest by appropriate legal proceedings, the validity
or applicability to the Stanton/Brady/Celeste Assets of any Applicable Law made or issued by any federal, state, county, local or other governmental agency or entity. Any such contest or proceeding shall be controlled and directed by Lessee.
Notwithstanding the foregoing, Lessee shall provide Lessor written notice of the commencement and, at reasonable intervals after commencement, the progress of any such legal proceedings. 

4.5. Liens. Lessee shall keep the Stanton/Brady/Celeste Assets free and clear of all Liens other than Permitted Liens;
provided, however, that if Lessee wishes to contest any such Lien (other than a Permitted Lien), Lessee shall, promptly, and in any event within thirty (30) days after it receives notice of the filing of such Lien, remove or bond over such lien
from the Stanton/Brady/Celeste Assets pursuant to Applicable Law. If Lessee fails to promptly remove or bond over any such Lien, Lessor may, after providing notice to Lessee, take reasonable action to satisfy, defend, settle or otherwise remove the
Lien at Lessee’s expense. 

  

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 4.6. Hazardous Materials. 

(a) Lessee shall operate and maintain the Stanton/Brady/Celeste Assets and conduct all of its other activities in respect thereof in compliance
in all material respects with any Applicable Laws relating to air, water, land and the generation, storage, use, handling, transportation, treatment or disposal of Hazardous Material. Lessee shall promptly notify Lessor of any such violation and, to
the extent Lessee becomes aware of any environmental, health, safety or security matter that requires a corrective action, Lessee shall, in consultation with Lessor, undertake and complete such corrective action. Lessee shall have the obligation to
report any such violations to the appropriate Regulatory Authorities in accordance with Applicable Law and, if practicable, shall give notice thereof to Lessor prior to making such report. 

(b) Without limiting the generality of the foregoing, Lessee shall not (i) place or locate any underground tanks on the property
underlying the Stanton/Brady/Celeste Assets, (ii) generate, manufacture, transport, produce, use, treat, store, release, dispose of or otherwise deposit Hazardous Materials in or on the Stanton/Brady/Celeste Assets, the property underlying the
Stanton/Brady/Celeste Assets or any portion thereof other than as permitted by Applicable Laws that govern the same or are applicable thereto, (iii) permit any other substances, materials or conditions in, on or emanating from the
Stanton/Brady/Celeste Assets, the property underlying the Stanton/Brady/Celeste Assets or any portion thereof which may support a claim or cause of action under any Applicable Law or (iv) undertake any action that would reasonably be expected
to cause an unauthorized release of Hazardous Materials at the property underlying the Stanton/Brady/Celeste Assets. 
 (c) Lessee shall
periodically, at intervals determined in its reasonable discretion in accordance with Good Utility Practice or as required by Applicable Law, at Lessee’s sole expense, conduct inspections of all components of the Stanton/Brady/Celeste Assets to
ensure compliance with Applicable Laws and with this Section 4.6, and shall promptly notify Lessor of the results of any such inspections. Lessor may, at Lessor’s expense, conduct its own testing at times determined in its reasonable
discretion, and after reasonable consultation with Lessee, to ensure Lessee’s compliance with Applicable Laws and with this Section 4.6, provided, however, that Lessor agrees to indemnify Lessee, in accordance with Section 12.2, from
and against any and all Claims arising from such testing. 
 4.7. Indebtedness. Lessee shall not incur
Indebtedness other than: (i) Indebtedness in an aggregate principal amount of up to the greater of (A) $5,000,000 and (B) an amount equal to one percent (1%) of the sum of, without duplication, (x) the total amount of the
Consolidated Net Plant of Lessee, plus (y) the total amount of the Consolidated Net Plant of any guarantor(s) of Lessee’s obligations under any Lease to which Lessee is a party as a lessee, plus (z) the total amount of Leased
Consolidated Net Plant of Lessee, in each case on a senior secured basis, (ii) Indebtedness in an aggregate principal amount of up to the greater of (A) $10,000,000 and (B) an amount equal to one-and-a-half percent (1.5%) of the
sum of, without duplication, (x) the total amount of the Consolidated Net Plant of Lessee, plus (y) the total amount of the Consolidated Net Plant of any guarantor(s) of Lessee’s obligations under any Lease to which Lessee is a party
as a lessee, plus (z) the total amount of Leased Consolidated Net Plant of Lessee, in each case on an unsecured subordinated basis on terms substantially similar to the terms set forth on Exhibit B and (iii) loans, in an aggregate
principal amount not to exceed $10,000,000 at any time outstanding, made by InfraREIT Partners, LP or a subsidiary thereof to Lessee from time to time 

  

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for the purpose of financing capital expenditures. For purposes of clauses (i) and (ii) of the preceding sentence, any Consolidated Qualified Lessees of Lessee will be treated as
Lessee. In addition to the foregoing, any of Lessee’s subsidiaries may incur Indebtedness in an aggregate principal amount of up to the product of (x) Lessee’s aggregate Consolidated Net Plant multiplied by (y) the lesser of
(A) the sum of Lessee’s then-current PUCT-regulated debt-to-equity ratio (expressed as a percentage) and five percent (5%) or (B) sixty-five percent (65%); provided, however, that such Indebtedness must be Non-Recourse Debt to
Lessee. For purposes of this Section 4.7, Lessee’s Consolidated Net Plant will be derived from its most recently prepared consolidated balance sheet, prepared in accordance with GAAP but adjusted to reverse the effects of failed
sale-leaseback accounting in a manner reasonably determined by Lessee in good faith. Without limiting the amount of Indebtedness permitted by the foregoing, Lessee may also incur Indebtedness (x) in the form of a pledge of equity interests in a
subsidiary of Lessee as security for Non-Recourse Debt of such subsidiary and (y) in amounts otherwise permitted under the Debt Agreements. 

4.8. Records. In addition to the records referred to in Section 3.3, Lessee shall maintain proper
books of record and account in conformity with GAAP and all applicable Regulatory Authorities and each other governmental agency or authority having legal or regulatory jurisdiction over Lessee. Additionally, Lessee shall maintain or cause to be
maintained all logs, drawings, manuals, specifications and data and inspection, modification and maintenance records and other materials required to be maintained in respect of the Stanton/Brady/Celeste Assets by Applicable Laws or by prudent and
Good Utility Practice. Lessee shall allow Lessor and its representatives to have reasonable access to, for at least five (5) years after the expiration of each Lease Year, the records referred to in this Section 4.8. 

4.9. Surrender. Upon expiration or earlier termination of this Agreement in accordance with its terms (but
subject to Section 2.2 and the requirements of all Applicable Laws), and in a manner calculated to avoid any disruption of electrical service, Lessee shall vacate and surrender possession of all components of the Stanton/Brady/Celeste Assets
(other than in respect of Footprint Projects funded by Lessee as described in Section 10.5(a)) to Lessor, or to such other person or entity as Lessor may direct. At the time of such surrender, the Stanton/Brady/Celeste Assets shall be free and
clear of Liens and other rights of third parties (other than Permitted Liens), and shall be in the same condition as on the Original Lease Date, ordinary wear and tear and subsequent Footprint Projects excepted. Lessee shall deliver or cause to be
delivered to Lessor, or to such other person or entity as Lessor may direct, copies of all title documents, logs, drawings, manuals, specifications and data and inspection, modification and maintenance records, billing records, reports and other
documents in respect of the Stanton/Brady/Celeste Assets which are necessary to determine the condition of the Stanton/Brady/Celeste Assets or for the continued maintenance, repair or general operation of the Stanton/Brady/Celeste Assets and are in
Lessee’s possession at such time. In connection with the surrender of the Stanton/Brady/Celeste Assets, Lessor shall pay to Lessee the aggregate purchase price for any Footprint Projects, equipment or other property purchased by Lessor in
accordance with Section 2.3 or Section 10.5(b). 

  

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 4.10. Cooperation; Transition Services. 

(a) During the period after notice of termination and prior to the termination of the Agreement, with reasonable notice, Lessee will cooperate
in all reasonable respects with the efforts of Lessor to sell or lease the Stanton/Brady/Celeste Assets (or any component thereof) or any interest therein, including, without limitation, permitting prospective purchasers or lessees to fully inspect
the Stanton/Brady/Celeste Assets and any logs, drawings, manuals, specifications, data and maintenance records relating thereto; provided, that such cooperation shall not unreasonably interfere with the normal operation of the Stanton/Brady/Celeste
Assets or cause Lessee to incur any additional expenses other than as specifically provided herein. All information obtained in connection with such inspection shall be subject to confidentiality requirements at least as restrictive as those
contained in Section 13.3. 
 (b) Upon expiration or termination of this Agreement, Lessee shall continue to operate the
Stanton/Brady/Celeste Assets pursuant to the terms of Section 2.2, if required thereunder. During such period Lessee shall perform all duties and retain all obligations under Article IV in all respects, as if the Agreement had not expired or
been terminated. 
 4.11. Lessee’s Authority. Lessee has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. Lessee has taken all action necessary to execute and deliver this Agreement and to perform its obligations hereunder, and no other action or proceeding on the part of
Lessee is necessary to authorize this Agreement. This Agreement constitutes the legally valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting the enforcement of creditors’ rights generally and equitable principles. 

4.12. Litigation. If Lessee becomes aware of any actions, claims or other legal or administrative
proceedings that are pending, threatened or anticipated with respect to, or which could materially and adversely affect, the Stanton/Brady/Celeste Assets, Lessee shall promptly deliver notice thereof to Lessor. 

4.13. Financing. Lessee acknowledges that Lessor has advised Lessee that Lessor has obtained financing
secured by, among other things, the Stanton/Brady/Celeste Assets and this Agreement. In connection with such financing, Lessor made certain representations, warranties and covenants set forth in that certain (i) Amended and Restated Note
Purchase Agreement entered into by Lessor and dated as of September 14, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “2009 Note Purchase Agreement”), a copy of which has been provided to
and reviewed by Lessee, (ii) Amended and Restated Note Purchase Agreement entered into by Lessor and dated as of July 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “2010 Note Purchase
Agreement” and, together with the 2009 Note Purchase Agreement, the “Note Purchase Agreements”), a copy of which has been provided to and reviewed by Lessee and (iii) Second Amended and Restated Credit Agreement
entered into by Lessor and dated as of June 28, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement” and, together with the Note Purchase Agreements, the
“Debt Agreements”), a copy of which has been provided to and reviewed by Lessee. 

  

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 17 

 Lessee hereby covenants and agrees with Lessor that, during the term of the 2009 Note Purchase
Agreement, Lessee will comply with the covenants set forth in Sections 9.08 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as defined in the 2009 Note Purchase Agreement), 10.04
(Terrorism Sanctions Regulations), 10.10 (Sale of Assets, Etc.), 10.11 (Sale or Discount of Receivables), 10.12 (Amendments to Organizational Documents), 10.16 (Project Documents) and 10.17 (Regulation) of
the 2009 Note Purchase Agreement. 
 Lessee hereby covenants and agrees with Lessor that, during the term of the 2010 Note Purchase
Agreement, Lessee will comply with the covenants set forth in Sections 9.8 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as defined in the 2010 Note Purchase Agreement), 10.4
(Terrorism Sanctions Regulations), 10.10 (Sale of Assets, Etc.), 10.11 (Sale or Discount of Receivables), 10.12 (Amendments to Organizational Documents), 10.16 (Project Documents) and 10.17
(Regulation) of the 2010 Note Purchase Agreement. 
 Lessee hereby agrees with Lessor that, to the extent not otherwise covered by
the terms of this Agreement, (i) Lessee hereby makes the same representations and warranties to Lessor as Lessor makes to the Lender (as defined in the Credit Agreement) in Sections 6.3 (Disclosure), 6.5 (Financial Condition;
Financial Instruments), 6.6 (Compliance with Laws, Other Instruments, Etc.), 6.7 (Governmental Authorizations, Etc.), 6.8 (Litigation; Observance of Agreements, Statutes and Orders), 6.9 (Taxes), 6.10 (Title to
Property; Leases), 6.11 (Insurance), 6.12 (Licenses, Permits, Etc.; Material Project Documentation), 6.16 (Foreign Assets and Control Regulations, Etc.), 6.17 (Status under Certain Statutes), 6.18 (Environmental
Matters), 6.19 (Force Majeure Events; Employees) and 6.20 (Collateral) of the Credit Agreement (or equivalent provisions), to the extent that such representations and warranties relate to (x) Lessee, whether in its capacity as
Lessee or otherwise, including, without limitation, Lessee’s status or operations as a public utility, or (y) Lessee’s ownership of the Stanton/Brady/Celeste Assets on or before the date hereof, and (ii) Lessee hereby covenants
and agrees with Lessor that, during the term of the Credit Agreement, Lessee will comply with the covenants set forth in Sections 7.10 (Material Project Documents) (to the extent that Lessee is a party to any Material Project Documents, as
defined in the Credit Agreement), 8.4 (Terrorism Sanctions Regulations), 8.10 (Sale of Assets, Etc.), 8.11 (Sale or Discount of Receivables), 8.12 (Amendments to Organizational Documents), 8.16 (Material Projects
Documents) and 8.17 (Regulation) of the Credit Agreement (or equivalent provisions). 
 Lessee may not lease, or agree or
otherwise commit to lease, any transmission or distribution facilities other than pursuant to a Lease. Further, Lessee shall not permit Persons other than Hunt Family Members to acquire any interest in the Lessee, directly or indirectly, in a manner
that would result in a Change in Control of Lessee. The Parties agree to amend, alter or supplement this Section 4.13 from time to time to give effect to the obligations under Lessor’s then-current credit arrangements. 

  

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 ARTICLE V 

LESSOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS 

Lessor hereby represents, warrants and covenants as follow: 

5.1. Lessor’s Authority. Lessor has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. Lessor has taken all action necessary to execute and deliver this Agreement and to perform its obligations hereunder, and no other action or proceeding on the part of Lessor is necessary to
authorize this Agreement. This Agreement constitutes the legally valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Applicable Laws affecting the enforcement of creditors’ rights generally and equitable principles. 

5.2. Liens and Tenants. Lessor represents that Lessor has good and valid title to the Stanton/Brady/Celeste
Assets, there are no unrecorded liens, encumbrances, leases, mortgages, deeds of trust (except as disclosed to Lessee in writing or as arise by operation of law), or other exceptions (collectively, “Liens”) arising as a result of
any acts or omissions to act of Lessor by, through or under Lessor to Lessor’s right, title or interest in the Stanton/Brady/Celeste Assets other than any such of the foregoing that does not materially impair the Lessee’s use of the
Stanton/Brady/Celeste Assets, and, to Lessor’s knowledge, there exist no rights or interests of any third party relating to the Stanton/Brady/Celeste Assets that are not contemplated herein. Except for Permitted Liens or as may be disclosed in
the applicable real property records in the State of Texas, or as disclosed by Lessor in writing to Lessee, Lessor represents that there are no mortgages, deeds of trust, or similar liens or security interests encumbering all or any portion of the
Stanton/Brady/Celeste Assets. Lessor shall fully cooperate and assist Lessee, at no out-of-pocket expense to Lessor, in obtaining a subordination and non-disturbance agreement from each party that holds a Lien that might reasonably be expected to
interfere in any material respect with Lessee’s rights under this Agreement. Notwithstanding the foregoing, Lessor and its affiliates shall have the right to incur Permitted Liens encumbering the Stanton/Brady/Celeste Assets or any component
thereof solely for the benefit of Lessor in connection with any existing or future financing or refinancing pursuant to which the Stanton/Brady/Celeste Assets (or any component thereof) is pledged as collateral and Lessee agrees to enter into such
acknowledgments and agreements in respect thereof with the lenders, or a trustee or agent for the lenders as the Lessor may reasonably request. 

5.3. Condition of Assets. Lessor has not taken any action or failed to take any action that would cause the
Stanton/Brady/Celeste Assets not to be in good operating condition and repair, ordinary wear and tear excepted, or adequate for the uses to which it is being put. 

5.4. Requirements of Governmental Agencies. Lessor shall assist and fully cooperate with Lessee, in
complying with or obtaining any material land use permits and approvals, building permits, environmental impact reviews or any other approvals reasonably required for the maintenance or operation of the Stanton/Brady/Celeste Assets, including
execution of applications for such approvals, and including participating in any appeals or regulatory proceedings respecting the Stanton/Brady/Celeste Assets at Lessee’s cost and expense, if requested by Lessee. 

  

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 5.5. Hazardous Materials. Lessor shall conduct its activities
in respect of the Stanton/Brady/Celeste Assets in compliance in all material respects with applicable Environmental Laws. 
 5.6.
Litigation. If Lessor becomes aware of any actions, claims or other legal or administrative proceedings that are pending, threatened or anticipated with respect to, or which could materially and adversely affect, the
Stanton/Brady/Celeste Assets, Lessor shall promptly deliver notice thereof to Lessee. 
 5.7. Limitation.
EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE V, LESSOR (A) MAKES NO AND EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO THE STANTON/BRADY/CELESTE ASSETS OR ANY PORTION THEREOF,
(II) ANY ESTIMATES OF THE VALUE OF THE STANTON/BRADY/CELESTE ASSETS OR FUTURE REVENUES THAT MIGHT BE GENERATED BY THE STANTON/BRADY/CELESTE ASSETS, (III) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF
THE STANTON/BRADY/CELESTE ASSETS, (IV) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO LESSEE OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND (B) FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY PORTION OF THE STANTON/BRADY/CELESTE ASSETS, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT THE
STANTON/BRADY/CELESTE ASSETS ARE BEING LEASED “AS IS, WHERE IS,” WITH ALL FAULTS AND DEFECTS, AND THAT LESSEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS LESSEE DEEMS APPROPRIATE. 

ARTICLE VI 
 LOSS AND
DAMAGE; INSURANCE 
 6.1. Loss and Damage to the Stanton/Brady/Celeste Assets.  

(a) In the event of any damage or loss to any component of the Stanton/Brady/Celeste Assets, Lessee shall promptly repair or replace such
component to the standards required by Section 4.1 (regardless of whether such repair or replacement constitutes a Repair or a Footprint Project). Any such repaired or replaced component will immediately become part of the Stanton/Brady/Celeste
Assets owned by Lessor and the cost of any repair or replacement shall be borne as described in Sections 6.1(b)-(d) below. 

  

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 (b) If such repair or replacement constitutes a Repair, the cost of repairing or replacing such
damage or loss, whether actually covered in whole or in part by insurance, shall be the responsibility of Lessee. Lessee shall be entitled to retain any insurance proceeds in excess of the amount necessary in connection with such Repair. 

(c) If such repair or replacement constitutes a Footprint Project, then, as long as the related costs have been included in a CapEx Budget, the
cost of repairing or replacing such damage or loss, whether actually covered in whole or in part by insurance, shall be the responsibility of Lessor. In such circumstance, unless otherwise agreed by the Parties, (i) if the damage or loss is
covered by insurance, Lessor shall be responsible for payment of any deductible, and (ii) any damage or loss not covered by insurance (exclusive of any deductible) shall be the responsibility of Lessor. If the sum of such deductible and
insurance proceeds exceeds the cost of such Footprint Project, then such excess will first reduce Lessor’s obligation to fund the deductible hereunder, and any excess thereafter will be retained by Lessee. If such repair or replacement
constitutes a Footprint Project that is not included in a CapEx Budget, the provisions of Article X shall apply. 
 (d) Lessee shall be
solely responsible for all costs of repairing or replacing any damaged property and equipment that is not part of the Stanton/Brady/Celeste Assets and owned by Lessee, whether covered by Lessee’s insurance under Section 6.2 or otherwise.
Nothing in this provision shall preclude Lessee from seeking recovery of such costs in a rate proceeding at the PUCT. 
 (e) If Lessor funds
Lessee’s Personal Property pursuant to Section 10.1(b) of this Agreement, then all such funded Personal Property will be treated as a Footprint Project, and not a Repair, for purposes of this Section 6.1. 

6.2. Insurance. Lessee will maintain, with financially sound and reputable insurers, insurance with respect
to its business and properties and the Stanton/Brady/Celeste Assets against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated, but in no event less than the insurance set forth in this Section 6.2 and
Exhibit C. 
 (a) Lessee shall procure at its own expense and maintain in full force and effect at all times throughout the term of
this insurance policies with insurance companies rated A-, 8 or higher by A.M. Best or acceptable to Lessor if not so rated, and authorized to do business in the State of Texas. 

(b) Lessor may at any time amend the requirements and approved insurance companies described in this Section 6.2 or Exhibit C due
to (i) new information not previously known by Lessor prior to the date of this Agreement or (ii) changed circumstances after the date of this Agreement, which in the reasonable judgment of Lessor either renders a required coverage to be
materially inadequate or materially reduces the financial ability of the approved insurance companies to pay claims. 

  

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 (c) On the first Business Day of each year, and promptly at such other times as Lessor may
reasonably request, Lessee shall furnish Lessor with approved certification of all required insurance. Such certification shall be executed by each insurer or by an authorized representative of each insurer where it is not practical for such insurer
to execute the certificate itself. Such certification shall identify underwriters, the type of insurance, the insurance limits, and the policy term, and shall specifically list the special provisions enumerated for such insurance required by this
Section 6.2. Upon request, Lessee will promptly furnish Lessor with copies of all insurance certificates, binders, and cover notes or other evidence of such insurance relating to the Stanton/Brady/Celeste Assets. 

(d) Concurrently with the furnishing of the certification referred to in Section 6.2(c) and on an annual basis thereafter, Lessee shall
furnish Lessor with a certificate, signed by an officer of Lessee, stating that all premiums then due have been paid and that the insurance then carried or to be renewed is in accordance with the terms of this Section 6.2. and Exhibit C.

 (e) In the event Lessee fails to take out or maintain the full insurance coverage required by this Section 6.2 and Exhibit C,
Lessor, upon thirty (30) days’ prior notice (unless the aforementioned insurance would lapse within such period, in which event notice should be given as soon as reasonably possible) to Lessee of any such failure, may (but shall not be
obligated to) take out the required policies of insurance and pay the premiums on the same. All amounts so advanced thereof by Lessor shall become an additional obligation of Lessee to Lessor, and Lessee shall forthwith pay such amounts to Lessor.

 (f) No provision of this Section 6.2 or Exhibit C or any other provision of this Agreement shall impose on Lessor any duty or
obligation to verify the existence or adequacy of the insurance coverage maintained by Lessee, nor shall Lessor be responsible for any representations or warranties made by or on behalf of Lessee to any insurance company or underwriter. 

ARTICLE VII 
 REPORTING

 7.1. Private Financing Arrangements. Lessee understands that Lessor, or an affiliate thereof, has
raised equity and debt capital secured by the Stanton/Brady/Celeste Assets and this Agreement and that Lessor or its affiliates have reporting obligations in connection with such arrangements, including obligations to provide financial statements
prepared in accordance with GAAP, to prepare an annual strategic plan and to update such annual strategic plan in the event of certain material deviations therefrom. Lessee understands that Lessor relies on Lessee in order to comply with such
obligations. From time to time, Lessor or an affiliate thereof may enter into additional arrangements that impose similar obligations. Accordingly, Lessee agrees to provide Lessor in a timely manner audited year-end financial statements, quarterly
unaudited financial statements for the first three quarters of each year (certified by a financial officer of Lessee), estimates of Percentage Rent, and such acknowledgements, certificates, permits, licenses, instruments, documents and other
information as Lessor may reasonably request from time to time in connection with, or to enable Lessor and its affiliates to comply with any such debt or equity financing arrangements or with Applicable Law. The Parties will negotiate in 

  

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good faith the time frames during which Lessee will provide such information, with the intention that Lessee provide such information in a manner that is not unduly burdensome but that also
allows Lessor sufficient time to comply with its reporting obligations. Lessee will also cooperate with Lessor to enable Lessor to satisfy its obligations in respect of annual strategic plans, including providing Lessor with requested information in
advance of the due date of such annual strategic plan and keeping Lessor apprised of deviations in capital expenditures, construction activity or revenues of Lessee from amounts that were originally provided by Lessee in preparing such annual
strategic plan. Lessee agrees to use reasonable efforts to advise Lessor if Lessee will be unable to meet the reporting requirements set forth herein in a timely manner and to reasonably cooperate with Lessor to remedy the effects of such
non-compliance. 
 7.2. Public Company and Regulatory Information and Cooperation. 

(a) Lessee agrees to provide audited full-year and unaudited (but SAS 100 reviewed) interim financial statements and the consent of
Lessee’s auditors to the inclusion of their opinion regarding such financial statements in filings with the Securities and Exchange Commission made by Lessor or an affiliate of Lessor. Lessor may also request that Lessee provide evidence of a
SAS 100 review from Lessee’s auditors with respect to any unaudited interim financial statements included in any such filing. Lessor shall have the right to share any such financial statements with its lenders under the Debt Agreements. Lessee
covenants that (i) such financial statements will fairly present in all material respects the financial condition, results of operations and cash flows of Lessee as of, and for, the periods presented, and (ii) Lessee will endeavor to cause
such financial statements to comply with any applicable laws, rules or regulations that Lessee and Lessor conclude in good faith are applicable to such financial statements by virtue of their inclusion in the securities law filings of Lessor or an
affiliate thereof. 
 (b) Lessee agrees that, in connection with any underwritten offering of the securities of Lessor or any affiliate
thereof, Lessee will use commercially reasonable efforts to cause its auditors to provide a comfort letter (or its equivalent) to such underwriters, if requested by Lessor. 

(c) Lessee agrees to cooperate with Lessor when Lessor or an affiliate provides estimates to analysts and or investors regarding Lessor’s
expectations of its future operating results (including capital expenditures) and to cooperate with Lessor with respect to analysts and investors to the extent such expectations change in any material respect. 

(d) Lessee and Lessor agree to reasonably cooperate to ensure that, to the extent they require information from the other party in order to
prepare their financial statements, to obtain audits of those financial statements and, if required, of their internal control over financial reporting, to respond to comments of the Securities and Exchange Commission on such financial statements or
statements related to internal control over financial reporting or disclosure controls and procedures, or to ensure the efficacy of their internal controls or disclosure controls and procedures, they will reasonably cooperate in order to ensure that
each Party is able to meet its obligations in respect thereof. Lessee agrees to promptly notify Lessor of or provide to Lessor, as applicable, (i) any material communication, written or otherwise, submitted to the Lessee by its auditors,
including, but not limited to an audit response letter, accountant’s management letter 

  

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or other written report submitted to Lessee by its accountants or any governmental agency in connection with an annual or interim audit of Lessee’s books, (ii) any material
correspondence with, reports of or reports to any Regulatory Authority with respect to the Stanton/Brady/Celeste Assets and (iii) any notices of violations of Applicable Law with respect to the Stanton/Brady/Celeste Assets, in each case taking
into account the REIT’s reporting obligations as a public company. 
 (e) Lessor agrees to inform Lessee of the time periods in which
each of the items identified in this Section 7.2 will be required, which may change. Lessee agrees to use reasonable efforts to advise Lessor if Lessee will be unable to meet the reporting requirements set forth herein in a timely manner and to
reasonably cooperate with Lessor to remedy the effects of such non-compliance. 
 (f) If Lessor identifies additional matters with respect to
which Lessee input, assistance or information is required in order for Lessor and its affiliates to comply with any applicable securities laws, the rules or regulations of any exchange on which the securities of such affiliate are traded or any
similar laws, rules or regulations, the Parties agree to cooperate and negotiate in good faith in order to determine the manner in which Lessee can provide such input, assistance or information in a manner that positions Lessor and its affiliates to
comply in a timely manner with such laws, rules or regulations, as efficiently as is feasible so as to minimize the burden that the provision of such input, assistance or information imposes on Lessee. 

7.3. Mutual Obligations. Each Party shall as promptly as reasonably practicable furnish or cause to be
furnished to the other Party, upon request from such Party, such information as may be required to enable such Party to file any reports required to be filed with any governmental or Regulatory Authority due to such Party’s ownership interest
in or operation and control of the Stanton/Brady/Celeste Assets, as applicable. 
 ARTICLE VIII 

ASSIGNMENT 
 This Agreement
shall not be assignable by either Party, nor shall the Stanton/Brady/Celeste Assets or any part thereof be subleased by Lessee, except with the prior written consent of the other Party and the prior approval of any Regulatory Authority whose
approval is required for the effectiveness of such assignment or sublease. For purposes of this Article VIII, an “assignment” by Lessee shall mean and include, in addition to any direct transfer by Lessee to a third party of all or any
part of Lessee’s rights, estate or interests under this Agreement, any direct or indirect, voluntary or involuntary transfer of or encumbrance on all or any part of Lessee’s rights, estate or interests under this Agreement (i) by
operation of law and/or (ii) by direct or collateral transfer of all or any part of the legal or beneficial ownership interest in Lessee by merger, consolidation or otherwise, provided, in the case of clause (ii), any such transaction or
transactions will only constitute an assignment hereunder to the extent they result in a Change of Control. Notwithstanding the foregoing, Lessor shall have the right, without Lessee’s consent but subject to obtaining regulatory approval as
described in the foregoing sentence, (a) to assign, pledge or grant a security interest in any or all of its interest in the Agreement to a lender or lenders, or a trustee acting on behalf of such lenders, in connection

  

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with a financing or refinancing in which such interest is pledged as collateral, and Lessee agrees to enter into such acknowledgments and agreements in respect thereof as the Lessor may
reasonably request and (b) to assign its interest in this Agreement to a successor owner of the Stanton/Brady/Celeste Assets. 

ARTICLE IX 
 DEFAULT

 9.1. Lessee Default. Subject to Section 9.3, Lessee shall be in default in the event of any
of the following: 
 (a) Except as provided in Section 9.1(g), Lessee’s failure to make any payment of Rent when due; 

(b) Lessee (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; 

(c) a court or a Regulatory Authority or other governmental agency of competent jurisdiction enters an order appointing, without consent by
Lessee, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of Lessee or any such petition shall be filed against Lessee and
such petition shall not be dismissed within 90 days; 
 (d) Any representation or warranty made by Lessee herein shall prove to have been
inaccurate in any material respect at the time made; 
 (e) a final judgment or judgments for the payment of money aggregating in excess of
$1,000,000 are rendered against Lessee and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; 

(f) Lessee shall have breached or failed to comply in any material respect with any other covenant or agreement contained herein; or 

  

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 (g) Notwithstanding Section 9.1(a), Lessee’s failure to pay Rent when due shall not
constitute a default if (i) such failure is due to unforeseeable circumstances arising from a physical event beyond the control of the Lessee, including the incurrence of costs and expenditures as a result of such an event that are materially
in excess of budgeted costs and expenditures or an unforeseen material decline in electricity usage as a result of such event and (ii) such failure is cured within ninety (90) days after the date such rent was due through Lessee’s
payment of the entire amount of such unpaid Rent, plus interest thereon at a rate equal to six percent (6%) per annum or the maximum rate allowed by law, whichever is lesser, from the date such Rent was originally due until the date of payment.

 9.2. Lessor Default. Subject to Section 9.3, Lessor shall be in default in the event any
representation or warranty made by Lessor herein shall prove to have been inaccurate in any material respect at the time made, or in the event Lessor breaches or fails to comply in any material respect with any covenant or agreement contained
herein. 
 9.3. Right to Cure. If a Party (the “Defaulting Party”) defaults pursuant to
an Event of Default, such Defaulting Party shall not be in default of the terms of this Agreement if (other than in the event of a default described in Sections 9.1(a), 9.1(b) and/or 9.1(c) above), (a) in the case of a Monetary Default,
the Defaulting Party pays the past due amount within thirty (30) days of receiving a Notice of Default from the other Party (the “Non-Defaulting Party”), and (b) in the case of a Non-Monetary Default, the Event of Default
is cured within forty-five (45) days of receiving the Notice of Default; provided, that if the nature of the Non-Monetary Default requires, in the exercise of commercially reasonable diligence, more than forty-five (45) days to cure then
the Defaulting Party shall not be in default as long as it commences performance of the cure within forty-five (45) days and thereafter completes such cure with commercially reasonable diligence. 

9.4. Remedies. 

(a) Should an Event of Default remain uncured by the Defaulting Party, the Non-Defaulting Party shall have and shall be entitled to exercise
the remedies provided in this Section 9.4 and any and all other remedies available to it at law or in equity, all of which remedies shall be cumulative; provided, that the exercise of any remedies hereunder shall be subject to PUCT and other
required regulatory approvals to the extent applicable. 
 (b) In no way limiting the provisions of Section 9.4(a), in the case of an
Event of Default of Lessee, Lessor shall have the right to (i) terminate the Agreement upon notice to Lessee, and recover from Lessee all damages to which Lessor is entitled under Applicable Laws, (ii) terminate Lessee’s right to use
and operate the Stanton/Brady/Celeste Assets while keeping this Agreement in effect, and recover from Lessee all damages to which Lessor is entitled under Applicable Laws, and (iii) take reasonable action to cure Lessee’s default at
Lessee’s expense; provided, that in the event of a violation of Applicable Laws by Lessee, an emergency or government or regulatory action in respect of which Lessor, in its reasonable discretion, determines immediate action is necessary,
Lessor shall have the right to step in and take such action on behalf of Lessee at Lessee’s cost and expense immediately upon giving notice to Lessee, notwithstanding any applicable cure period. 

  

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 (c) Any amounts recovered by Lessor from Lessee in the event of a default shall, to the maximum
extent permissible under Applicable Laws, be deemed to be in respect of past or future Rent owing under this Agreement. 
 ARTICLE X

 CAPITAL EXPENDITURES 

10.1. Capital Expenditures Generally. 

(a) Lessee has provided to Lessor in the CapEx Budget the approximate amounts of Capital Expenditures that Lessee expects will be needed for
purposes of funding Footprint Projects in each Lease Year through 2017 (assuming the renewal of this Agreement pursuant to Section 2.1). On or before October 15 of each calendar year, Lessee shall review and revise the CapEx Budget on a
rolling three-year basis (which shall include, if applicable, any year in such three-year period following the end of the then-current Term and assume the renewal of this Agreement pursuant to Section 2.1), taking into account any changed
circumstances that (i) make it no longer feasible to incur one or more of the costs reflected on the prevailing CapEx Budget, (ii) make it necessary to amend the nature or amounts reflected for a particular Footprint Project or
(iii) dictate that additional Footprint Projects be added (such budget, as so updated and revised, is referred to herein as the “CapEx Budget”). Lessee agrees to revise the CapEx Budget to include any Footprint Projects
(x) required by Regulatory Authorities or (y) reasonably necessary to satisfy Lessee’s obligation as a regulated utility to serve its customers or to maintain the safety or reliability of the Stanton/Brady/Celeste Assets and the
Stanton Transmission Loop Assets. Capital Expenditures included in a CapEx Budget will be included based on the date such Capital Expenditures are to be incurred, which differentiates these Capital Expenditures from Incremental CapEx and Lessee
CapEx, which are measured under this Agreement based on when the assets developed with such Capital Expenditures are placed in service, and not when they are incurred. 

(b) If requested by Lessor, Lessee will also provide an estimate of any Capital Expenditures that Lessee expects for purposes of funding
Personal Property related to the Stanton/Brady/Celeste Assets and the Stanton Transmission Loop Assets. If Lessor and Lessee agree, Lessor will fund such Capital Expenditures pursuant to this Agreement, through a loan or through a separate lease.
Amounts Lessor provides pursuant to this Agreement to fund any such Personal Property will be treated in a manner similar to any amounts Lessor provides to fund Footprint Projects for purposes of Section 3.2 and elsewhere herein. Lessee will
cause any such Personal Property to be titled in Lessor’s name and will reasonably cooperate with Lessor in order to enable any secured lender of Lessor or any secured lender of an affiliate of Lessor to perfect its security interest in any
such Personal Property. In the alternative, Lessor may elect to fund such Capital Expenditures through a TRS or to loan (or cause such TRS to loan) Lessee the cash to acquire any such Personal Property in a transaction in which Lessor or a TRS may
retain a security interest in such Personal Property. In such case the Parties shall negotiate in good faith the terms under which Lessor or such TRS shall fund any such Personal Property, including the terms of any lease between Lessee and the TRS
or other financing arrangements provided by the Lessor or the TRS. Any such funded amounts, regardless of the form in which they are funded, will be included in the calculation of whether there is Incremental CapEx, and, if such funded amounts
constitute Incremental CapEx, the Parties’ intention is to provide Lessor with a Comparable Rate of Return on all such funded amounts. 

  

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 10.2. Capital Expenditures Funded by Lessor. Lessor agrees to
fund any Footprint Projects contained in the CapEx Budget (as revised from time to time). Lessor’s obligation to fund Footprint Projects pursuant to this Section 10.2 shall include any costs associated with such Footprint Projects that
Lessee is not allowed to recover through its PUCT-approved rates. Any Footprint Projects funded by Lessor under this Section 10.2 shall be deemed to be part of the Stanton/Brady/Celeste Assets upon completion. 

10.3. Capital Expenditures Funded by Lessee. Except as set forth in this Section 10.3, Lessee may not
fund any Footprint Projects. In the event Lessor fails to fund any Footprint Projects, Lessee may at its sole discretion fund the needed capital expenditures (and Lessee shall be entitled to applicable damages, if any, as a result of funding any
such Footprint Projects); provided that, in such circumstance, Lessee may fund Severable Footprint Projects without restriction under this Section 10.3 but may only fund Nonseverable Footprint Projects which are required in order to comply with
Applicable Law or which are required by any Regulatory Authority. Any Footprint Projects funded by Lessee under this Section 10.3 shall not be considered part of the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets for
purposes of this Agreement; provided however, that any part of the Stanton/Brady/Celeste Assets and the Stanton Transmission Loop Assets that is built with CIAC funds shall be considered a leasehold improvement that is part of the
Stanton/Brady/Celeste Assets and reverts to the Lessor upon termination of this Agreement without further payment from Lessor to Lessee under Section 2.3. 

10.4. Footprint Project Construction Activities. Lessee will either use its personnel, or either Lessee or
Lessor will contract with third parties, to construct Footprint Projects. Lessee shall be responsible for the oversight of such construction activities, regardless of whether the Footprint Project is funded by Lessor or Lessee. Lessee’s
construction activities and oversight shall be intended to ensure that such construction is performed in a manner consistent with Good Utility Practice and does not adversely affect the reliability and safety of the Stanton/Brady/Celeste Assets and
the Stanton Transmission Loop Assets or the ERCOT electric grid. In connection therewith, Lessor will reimburse Lessee for all Project Management Costs that Lessee incurs in connection with constructing such Footprint Project, provided that any
costs and expenses of Lessee under this Section 10.4 must be included in any CapEx Budget submitted by Lessee under Section 10.1 or approved by Lessor to qualify for reimbursement by Lessor hereunder. 

  

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 10.5. Ownership of Footprint Projects. 

(a) Each Footprint Project shall be owned by the Party that funded the capital expenditures used to construct such Footprint Project;
provided however, that any part of the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets that is built with CIAC funds shall be considered a leasehold improvement that is part of the Stanton/Brady/Celeste Assets and
shall revert to the Lessor upon termination of this Agreement without further payment from Lessor to Lessee under Section 2.3. 
 (b)
Upon the expiration or termination of this Agreement, Lessor shall have the right (but not the obligation) to purchase, subject to required regulatory approvals, any Nonseverable Footprint Projects or Severable Footprint Projects owned by Lessee at
the greater of (i) net book value plus ten percent (10%) and (ii) the fair market value thereof as determined by mutual agreement of Lessor and Lessee. If the Parties fail to agree on the amount of the purchase price, the purchase
price shall be submitted to arbitration in accordance with Section 13.7 of this Agreement, pursuant to which the Arbitration Panel shall be empowered to determine the amount of the purchase price, based on submissions by each of the Lessee and
the Lessor. Lessee shall be entitled to remove any Severable Footprint Projects owned by Lessee upon the expiration or termination of this Agreement in the event such Severable Footprint Projects are not purchased by Lessor, subject to any required
regulatory approvals. 
 10.6. Asset Acquisitions. Lessee and Lessor will cooperate in good faith to
ensure that all Stanton/Brady/Celeste Assets (including Footprint Projects relating to the Stanton Transmission Loop Assets) are acquired in Lessor’s name or are acquired by Lessee and subsequently transferred to Lessor. In connection
therewith, Lessee agrees (a) to transfer to Lessor all previously acquired Stanton/Brady/Celeste Assets (including Footprint Projects relating to the Stanton Transmission Loop Assets), (b) that any future-acquired Stanton/Brady/Celeste
Assets will be deemed automatically transferred to Lessor, (c) to take reasonable actions as are necessary and appropriate to document the transfer of any such Stanton/Brady/Celeste Assets (including Footprint Projects relating to the Stanton
Transmission Loop Assets) to Lessor and, if applicable, to memorialize the security interest in such Stanton/Brady/Celeste Assets (including Footprint Projects relating to the Stanton Transmission Loop Assets) required to be granted pursuant to the
terms of the Debt Agreements, including through the delivery and recordation of mortgages, deeds of trust or UCC financing statements, and (d) to take reasonable steps to record the transfer and such security interest in the records of the
applicable county or other applicable locale in which the Stanton/Brady/Celeste Assets (including Footprint Projects relating to the Stanton Transmission Loop Assets) are located. 

10.7. Reimbursements. From time to time, Lessee may enter into interconnect or similar agreements that
obligate the counterparty to such agreements to reimburse Lessee for Capital Expenditures in certain circumstances. Such reimbursement obligation may, in some circumstances, be accompanied by additional security such as parent guaranty or a letter
of credit. If and to the extent that (a) Lessor funds Capital Expenditures that are used for the construction or development pursuant to any of these interconnect agreements, and (b) Lessee becomes entitled to assert any reimbursement or
other rights pursuant to any such interconnect agreements, then, unless Lessor agrees otherwise, Lessee will enforce such reimbursement or 

  

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other rights and will in turn reimburse Lessor for the amount of related Capital Expenditures that Lessor has funded pursuant hereto. Lessee further agrees to reimburse Lessor for other Capital
Expenditures that Lessor has funded pursuant to this Agreement to the extent required by the Policies and Procedures. 
 ARTICLE XI

 REGULATORY COOPERATION 

11.1. Jurisdiction. The Parties recognize that (i) the Stanton/Brady/Celeste Assets and the operation
thereof are subject to the jurisdiction of the PUCT and to certain reliability and safety requirements of ERCOT and TRE, and (ii) Lessee holds the CCNs for operation of the Stanton/Brady/Celeste Assets. The Parties agree that, as the lessee
hereunder, as operator of the Stanton/Brady/Celeste Assets and as the holder of the CCNs, Lessee shall be responsible for compliance with all regulatory requirements related to the Stanton/Brady/Celeste Assets, including but not limited to, taking
all actions reasonably necessary or advisable to comply with such requirements; preparing and filing all necessary notices, reports, applications, and other materials with the PUCT, ERCOT, TRE and NERC; and initiating, prosecuting, defending or
participating in any administrative or judicial proceeding reasonably necessary or advisable to operate the Stanton/Brady/Celeste Assets in an economical and efficient manner. Lessee shall consult with Lessor prior to initiating any rate proceeding
with the PUCT to change the rates Lessee can lawfully charge, provided that, with or without Lessor consent, Lessee shall be authorized to initiate any such rate proceeding. Upon Lessor’s request, Lessee shall file a rate proceeding before the
PUCT; provided that, Lessor shall be responsible for reimbursing Lessee for all costs associated with prosecution of such proceeding to the extent that such costs are not recoverable in Lessee’s PUCT-approved rates. 

11.2. Cooperation. The Parties agree that during the term of this Agreement they will cooperate to assure
compliance with all applicable regulations, orders or lawful requests of any governmental or Regulatory Authorities that relate to the Stanton/Brady/Celeste Assets and Lessee’s obligations as the holder of the CCNs and will provide such
information to such governmental and Regulatory Authorities as the other Party or such governmental or Regulatory Authorities may reasonably request in connection therewith. Lessor further agrees to use its best efforts to cooperate and promptly
respond to any lawful requests from Lessee relating to Lessee’s efforts to comply with all regulatory requirements or to participate in any necessary or advisable legal proceedings, whether judicial or administrative. Each Party shall bear its
own costs in complying with this paragraph. 
 ARTICLE XII 

INDEMNITY 
 12.1.
General Indemnity. EACH PARTY (THE “INDEMNIFYING PARTY”) SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY AND THE OTHER PARTY’S RELATED PERSONS (EACH, AN “INDEMNIFIED
PARTY”) FROM AND AGAINST ANY AND ALL CLAIMS, LITIGATION, ACTIONS, PROCEEDINGS, LOSSES, DAMAGES, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES, INCLUDING ATTORNEYS’, INVESTIGATORS’ AND CONSULTING FEES, COURT COSTS AND 

  

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LITIGATION EXPENSES (COLLECTIVELY, “CLAIMS”) SUFFERED OR INCURRED BY SUCH INDEMNIFIED PARTY, EVEN IF SUCH LIABILITIES ARE CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF ANY
INDEMNIFIED PARTY, ARISING FROM THE ACTS OR OMISSIONS TO ACT OF THE INDEMNIFYING PARTY (A) ARISING IN THE CASE OF THE LESSEE AS THE INDEMNIFYING PARTY, FROM THE OPERATION OF THE STANTON/BRADY/CELESTE ASSETS, (B) FOR PHYSICAL DAMAGE
TO THE STANTON/BRADY/CELESTE ASSETS, TO THE EXTENT CAUSED BY THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF, (C) FOR PHYSICAL INJURIES OR DEATH (INCLUDING BY REASON OF OPERATING THE STANTON/BRADY/CELESTE ASSETS) TO OR OF THE INDEMNIFIED
PARTY OR THE PUBLIC, TO THE EXTENT CAUSED BY THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF, (D) ANY BREACH OF ANY COVENANT OR ANY FAILURE TO BE TRUE OF ANY REPRESENTATION OR WARRANTY, MADE BY THE INDEMNIFYING PARTY UNDER THIS AGREEMENT
OR (E) THE NEGLIGENCE, RECKLESSNESS OR INTENTIONAL MISCONDUCT OF THE INDEMNIFYING PARTY OR ANY RELATED PERSON THEREOF; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE INDEMNIFYING PARTY BE RESPONSIBLE FOR DEFENDING, INDEMNIFYING OR HOLDING
HARMLESS ANY INDEMNIFIED PARTY TO THE EXTENT OF ANY CLAIM CAUSED BY, ARISING FROM OR CONTRIBUTED TO BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. AS USED HEREIN, THE TERM “RELATED PERSON” SHALL MEAN ANY
AFFILIATES, CONTRACTORS, LESSEES, AND SUBLESSEES, AND EACH OF THEIR RESPECTIVE, PRINCIPALS, OFFICERS, EMPLOYEES, SERVANTS, AGENTS, REPRESENTATIVES, SUBCONTRACTORS, LICENSEES, INVITEES, GUESTS, SUCCESSORS AND/OR ASSIGNS OF A PARTY; PROVIDED, THAT IN
NO EVENT SHALL A PARTY BE DEEMED A RELATED PERSON WITH RESPECT TO THE OTHER PARTY. 
 12.2. Environmental
Indemnity. 
 (a) To the fullest extent permitted by law, Lessee shall defend, indemnify and hold harmless Lessor and
Lessor’s Related Persons from Claims (including, without limitation, any costs and expenses of clean up or other mitigation) suffered or incurred by such persons resulting from any of the following occurring from and after the date hereof or
the date on which Lessee assumed operational control over the relevant property: (i) the presence or release of Hazardous Materials in, under or about the Stanton/Brady/Celeste Assets which are or were brought or permitted to be brought onto
the Stanton/Brady/Celeste Assets by the Lessee or Lessee’s Related Persons, (ii) creation of any hazardous or potentially hazardous environmental conditions or exacerbation of a pre-existing environmental condition, (iii) the
violation of any Environmental Law by Lessee or Lessee’s Related Persons or (iv) any other failure to comply with Section 4.6 by Lessee or Lessee’s Related Persons. 

(b) To the fullest extent permitted by law, Lessor shall defend, indemnify and hold harmless Lessee and Lessee’s Related Persons from
Claims (including, without limitation, any costs and expenses of clean up or other mitigation) suffered or incurred by such persons resulting from (i) the presence or release of any Hazardous Material or hazardous or potentially hazardous

  

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condition in, under or about the Stanton/Brady/Celeste Assets that was present in, under or about the Stanton/Brady/Celeste Assets as of the date Lessee assumed operational control over the
relevant property (except to the extent such existing Hazardous Material or condition is exacerbated by Lessee or Lessee’s Related Persons), (ii) the presence or release of Hazardous Materials in, under or about the Stanton/Brady/Celeste
Assets which are or were brought or permitted to be brought onto the Stanton/Brady/Celeste Assets by Lessor or Lessor’s Related Persons during construction of any improvement or addition to the Stanton/Brady/Celeste Assets, (iii) the
violation of any Applicable Law by Lessor or Lessor’s Related Persons, or (iv) testing conducted under Section 4.6 by Lessor or Lessor’s Related Persons. 

ARTICLE XIII 

MISCELLANEOUS 

13.1. Limitation of Damages. NEITHER PARTY SHALL BE LIABLE FOR ANY LOST OR PROSPECTIVE PROFITS, AND IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR ANY OTHER SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR INDIRECT LOSSES OR DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR IN RESPECT OF THIS AGREEMENT OR FOR ANY FAILURE OF PERFORMANCE RELATED
HERETO, HOWSOEVER CAUSED. 
 13.2. Condemnation. In the case of a condemnation or taking, this Agreement
shall continue in effect; provided, that this Agreement shall terminate if 75% or more of the Stanton/Brady/Celeste Assets is subject to the condemnation or taking. Lessor shall be entitled to all sums received by reason of any such taking or
condemnation, except for that portion of such award, if any, which is expressly awarded for the Lessee’s leasehold interest under this Agreement or which is awarded for any property owned by Lessee (including any Footprint Projects funded by
Lessee). 
 13.3. Confidentiality. To the full extent allowed by Applicable Law, each Party (the
“Receiving Party”) shall maintain, for the benefit of the other Party (the “Disclosing Party”), in the strictest confidence all information pertaining to the financial terms of or payments under this Agreement, the
Disclosing Party’s methods of operation, methods of the Stanton/Brady/Celeste Assets, and the like, whether disclosed by the Disclosing Party or discovered by the Receiving Party, unless such information either (i) is in the public domain
by reason of prior publication through no act or omission of the Receiving Party or its employees or agents, (ii) was already known to the Receiving Party at the time of disclosure and which the Receiving Party is free to use or disclose
without breach of any obligation to any person or entity or (iii) is required to be disclosed by the PUCT or other Regulatory Authorities, or must be disclosed in accordance with applicable securities laws or the rules of any applicable
securities exchange on which the securities of the Receiving Party (or an affiliate thereof) are traded. To the full extent permitted by law, neither Party shall use such information for its own benefit, publish or otherwise disclose it to others,
or permit its use by others for their benefit or to the detriment of the other Party. Notwithstanding the foregoing, the Receiving Party may disclose such information to any auditor or to the Receiving Party’s lenders, attorneys, accountants
and other personal advisors; any prospective purchaser of the Stanton/Brady/Celeste Assets; or pursuant to lawful process, subpoena or court order; provided the Receiving Party, in making such disclosure, advises the party receiving the information
of the confidentiality of the information and obtains the agreement of said party not to disclose the information. 

  

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 13.4. Successors and Assigns. The Agreement shall inure to the
benefit of and be binding upon Lessor and Lessee and, to the extent provided in any assignment or other transfer under Article VIII hereof, any assignee, and their respective heirs, transferees, successors and assigns, and all persons claiming under
them. References to Lessee in this Agreement shall be deemed to include assignees that hold a direct ownership interest in this Agreement and actually are exercising rights under this Agreement to the extent consistent with such interest. 

13.5. Rent Obligations Not Excused by Force Majeure, Etc. Lessee shall not be excused from its obligation to pay Rent
during any Force Majeure Event or a condemnation or casualty of all or any part of the Stanton/Brady/Celeste Assets. 
 13.6.
Further Assurances; Policies and Procedures. 
 (a) Each Party will, from time to time, execute, cause to be acknowledged and
deliver such documents or instruments, and provide such certificates, as the other Party may reasonably request to carry out and fulfill the transactions, and permit the exercise and performance of the rights and obligations, as are contemplated
hereunder. Each Party will cooperate with the other Party to effectuate fully the purposes and intent of this Agreement. In no way limiting the foregoing, the Parties shall cooperate to obtain any necessary regulatory approvals, including, without
limitation, providing timely responses to discovery requests, participating in regulatory proceedings to the extent necessary and generally providing assistance as required. 

(b) From time to time, the Parties shall agree to policies and procedures regarding matters arising under this Agreement including, without
limitation, the treatment of Capital Expenditures for canceled Footprint Projects, each Party’s reporting obligations and such additional matters as the Parties may identify (the “Policies and Procedures”). The Parties agree to
cooperate and negotiate in good faith the Policies and Procedures, and any amendment or revision thereto that may be reasonably requested by either Party, and to memorialize the same in a writing executed by a representative of each Party. In the
event the Parties cannot agree on the terms of such Policies and Procedures after 60 days of negotiating in good faith, then either the Lessee or the Lessor may submit such matters to arbitration pursuant to Section 13.7 of this Agreement,
pursuant to which the Arbitration Panel shall be empowered to determine Policies and Procedures that take into account the REIT’s reporting obligations as a public company and Lessee’s obligations as a regulated utility. 

13.7. Arbitration. Except for a dispute regarding the payment of Undisputed Rent, any dispute
under this Agreement shall, if not resolved by the Parties within ninety (90) days after notice of such dispute is served by one Party to the other (or, if different, the period provided for resolution by the Parties in the provision of this
Agreement under which such dispute is brought), be submitted to an “Arbitration Panel” comprised of three (3) members. No more than one (1) panel member may be with the same firm, and no panel member may have an economic
interest in the outcome of the arbitration. In addition to the foregoing, the failure by the Lessee and the Lessor to reach an agreement or make a mutual determination or characterization required by 

  

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Sections 2.2(b) (with respect to the determination of Extended Period Rent); 3.1(d)(i); 3.1(d)(ii); 3.1(d)(iii); 3.2(a); 3.2(b) (with respect to the terms of any renewed Rent Supplement that has
expired during the term of this Agreement); 3.2(c); 3.2(d); 3.8 or 13.6(b), in each case after 60 days of negotiating in good faith, shall be deemed to be a “dispute” for purposes of this Section 13.7, to be resolved in accordance
with this Section. 
 (a) The Arbitration Panel shall be selected as follows: Within five (5) Business Days after the expiration of the
period referenced above, Lessee shall select its panel member meeting the criteria of the above paragraph (the “Lessee Panel Member”) and Lessor shall select its panel member meeting the criteria of the above paragraph (the
“Lessor Panel Member”). If a Party fails to timely select its respective panel member, the other Party may notify such Party in writing of such failure, and if such Party fails to select its respective panel member within
three (3) Business Days from such notice, then the other Party may select such panel member on such Party’s behalf. Within five (5) Business Days after the selection of the Lessor Panel Member and the Lessee Panel Member, the Lessee
Panel Member and the Lessor Panel Member shall jointly select a third panel member meeting the criteria of the above paragraph (the “Third Panel Member”). If the Lessor Panel Member and the Lessee Panel Member fail to timely select
the Third Panel Member and such failure continues for more than three (3) Business Days after written notice of such failure is delivered to the Lessor Panel Member and Lessee Panel Member by either Lessor or Lessee, either Lessor or Lessee may
request the managing officer of the American Arbitration Association to appoint the Third Panel Member. 
 (b) Within ten (10) Business
Days after the selection of the Arbitration Panel, each Party shall submit to the Arbitration Panel a written statement identifying its summary of the issues and claims, including, if applicable, its calculation of Rent. Any Party may also request
an evidentiary hearing on the merits in addition to the submission of written statements. The Arbitration Panel shall make its decision within twenty (20) days after the later of (i) the submission of such written statements of
particulars, and (ii) the conclusion of any evidentiary hearing on the merits, and shall take into consideration the relative risks and rewards undertaken and capital invested by each Party and shall use the Comparable Rate of Return concept
described in Section 3.2(a) in determining any Rent disputes. The Arbitration Panel shall reach its decision by majority vote and shall communicate its decision by written notice to the Parties. 

(c) The decision by the Arbitration Panel shall be final, binding and conclusive and shall be non-appealable and enforceable in any court
having jurisdiction. All hearings and proceedings held by the Arbitration Panel shall take place in Dallas, Texas. 
 (d) The resolution
procedure described herein shall be governed by the Commercial Rules of the American Arbitration Association and subject to the Texas General Arbitration Act to the extent such act is applicable hereto. 

(e) In the case of an arbitration proceeding involving a determination of Rent and Percentage Rent, until Rent and Percentage Rent have been
finally determined, Lessee shall pay Rent and Percentage Rent based upon prevailing rates therefor, and an appropriate refund shall be made to or additional Rent shall be paid by Lessee within ten (10) days after a final determination is made.

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 34 

 (f) The Parties shall bear equally the fees, costs and expenses of the Arbitration Panel in
conducting the arbitration. 
 13.8. Notices. All notices or other communications required or permitted
by this Agreement, including payments to Lessor, shall be in writing and shall be served personally or by reputable express courier service or by facsimile transmission addressed to the relevant parties at the address stated below or at any other
address notified by that Party to the other as its address for service. Any notice so given personally shall be deemed to have been served on delivery, any notice so given by express courier service shall be deemed to have been served the next
Business Day after the same shall have been delivered to the relevant courier, and any notice so given by facsimile transmission shall be deemed to have been served on dispatch. As proof of such service it shall be sufficient to produce a receipt
showing personal service, the receipt of a reputable courier company showing the correct address of the addressee or an activity report of the sender’s facsimile machine showing the correct facsimile number of the parties on whom notice is
served and the correct number of pages transmitted. All communications, other than routine correspondence in the ordinary course of business, between the Parties pursuant to this Agreement shall be sent by the same method of communication by the
Party sending the communication. The Parties’ addresses for service are: 
 If to Lessor: 

Sharyland Distribution & Transmission Services, L.L.C. 

1807 Ross Avenue, 4th Floor 

Dallas, Texas 75201 
 Attention:
Chief Executive Officer and General Counsel 
 If to Lessee: 

Sharyland Utilities, L.P. 

1807 Ross Avenue, 4th Floor 

Dallas, Texas 75201 
 Attention:
Hunter Hunt 
 With a copy to: 

General Counsel 
 Fax:
(214) 855-6965 
 Any Party may change its address for purposes of this paragraph by giving written notice of such change to the other parties in the
manner provided in this paragraph. 
 13.9. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement between Lessor and Lessee respecting its subject matter, and supersedes any and all oral or written agreements. Any agreement, understanding or representation respecting the Stanton/Brady/Celeste Assets, or any other matter
referenced herein not expressly set forth in this Agreement or a subsequent writing signed by both Parties is null and void. For avoidance of 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 35 

 
doubt, the Amended and Restated Lease is hereby replaced in its entirety by this Agreement. This Agreement shall not be modified or amended except in a writing signed by both Parties. No
purported modifications or amendments, including without limitation any oral agreement (even if supported by new consideration), course of conduct or absence of a response to a unilateral communication, shall be binding on either Party. 

13.10. Legal Matters. This Agreement shall be governed by and interpreted in accordance with the laws of
the State of Texas, without regard to its conflicts of law principles. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved in favor of either Party shall not be employed in the interpretation of this
Agreement and is hereby waived. 
 13.11. Partial Invalidity. Should any provision of this Agreement be
held, in a final and unappealable decision by a court of competent jurisdiction, to be either invalid, void or unenforceable, the remaining provisions hereof shall remain in full force and effect, unimpaired by the holding. 

13.12. Recording. Lessee shall not record this Agreement without the prior written consent of the Lessor.
Lessee may record at its expense a memorandum of this Agreement in form and substance reasonably approved by Lessor. 
 13.13.
Intention of Parties; True Lease. 
 (a) The Parties hereby declare that their relationship in and to the
Stanton/Brady/Celeste Lease Assets is and will be that of lessor and lessee, expressly subject to the terms, conditions, limitations and requirements set forth in this Agreement. Nothing contained in this Agreement will be deemed to constitute the
Parties as partners or joint venturers or as principal and agent. The Parties intend for this Agreement to constitute a true lease with respect to the Stanton/Brady/Celeste Lease Assets for US Federal, state and local income tax purposes, and each
Party shall treat the Agreement as a true lease with respect to the Stanton/Brady/Celeste Lease Assets for federal income tax reporting purposes. 

(b) The Parties acknowledge that Lessor is owned, directly or indirectly, in whole or in part, by an entity intending to qualify as a real
estate investment trust under the Internal Revenue Code of 1986, as amended, and the Parties agree to negotiate in good faith any modification or amendment to this Agreement requested by Lessor to facilitate such qualification; provided that Lessee
shall not be obligated to agree to any such modification or amendment if such modification or amendment would materially adversely affect Lessee or would be in conflict with Applicable Law or any regulations or orders of any Regulatory Authority.

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 36 

 IN WITNESS WHEREOF, Lessor and Lessee, acting through their duly authorized representatives, have
executed this Agreement with the intent that it be effective as of the Effective Date, and certify that they have read, understand and agree to the terms and conditions of this Agreement. 

 

			
	LESSOR:
	
	SHARYLAND DISTRIBUTION & TRANSMISSION SERVICES, L.L.C.
		
	By:	 	 /s/ Brant Meleski

	Name:	 	Brant Meleski
	Title:	 	Senior Vice President and
		 	Chief Financial Officer
	
	LESSEE:
	
	SHARYLAND UTILITIES, L.P.
		
	By:	 	 /s/ Mark Caskey

	Name:	 	Mark Caskey
	Title:	 	President

 Signature Page to Stanton/Brady/Celeste Assets Lease Agreement 

 APPENDIX A 

DEFINITIONS 
 “2009 Note
Purchase Agreement” has the meaning set forth in Section 4.13. 
 “2010 Note Purchase Agreement” has the meaning set
forth in Section 4.13. 
 “AC” has the meaning set forth in Section 1.1(b)(v). 

“Accumulated Deficit” for any Lease Year means the aggregate amounts by which Qualified CapEx has been less than Original Base CapEx
during prior Lease Years, as set forth in a then-effective Rent Supplement. 
 “Additional Rent” has the meaning set forth in
Section 3.4. 
 “AFUDC” means allowance for funds used during construction. 

“Agreed-to-Discount” has the meaning set forth in Section 3.2(a). 

“Agreement” has the meaning set forth in the Preamble. 

“Annual Percentage Rent Breakpoint” means the dollar amount of annual Gross Revenues that must be exceeded in a particular Lease
Year before Percentage Rent is owed, as set forth on the then-effective Rent Supplement for such Lease Year. 
 “Applicable Laws”
means all laws, ordinances, statutes, orders and regulations of any federal, state, or local government, regulatory or administrative authority, any agency or commission thereof, or any court or tribunal, including without limitation all
requirements of the Regulatory Authorities. 
 “Arbitration Panel” has the meaning set forth in Section 13.7. 

“Base Rent” has the meaning set forth in Section 3.1(a). 

“Business Day” means a day other than a Saturday, Sunday or other day on which federal agencies are authorized or required by law to
close. 
 “CapEx Budget” has the meaning set forth in Section 10.1(a). 

“Capital Expenditures” means expenditures that are or are expected to be capitalized under GAAP. 

“CCN” means a Certificate of Convenience and Necessity or amendment thereto issued by the PUCT. 

“CFO Certificate” means a document signed by the Chief Financial Officer of Lessee and certifying to the accuracy and completeness
of the statement of Gross Revenues. 

 “Change in Control” means Hunt Family Members cease to possess, directly or indirectly,
the power to direct or cause the direction of the management or policies of Lessee, whether through the ability to exercise voting power, by contract or otherwise. 

“CIAC” means any contributions in aid of construction from current or prospective customers, plus any additional payments as a tax
gross up for such contributions, with respect to which Lessee does not anticipate receiving an increase in its regulatory rate base. 

“Claims” has the meaning set forth in Section 12.1. 

“Comparable Rate of Return” has the meaning set forth in Section 3.2(a). 

“Consolidated Net Plant” means, with respect to any Person, as of the date of determination, the net plant set forth on the face of
the consolidated balance sheet of such Person or absent such amount on the consolidated balance sheet, the total plant of such Person on a consolidated basis minus accumulated depreciation as set forth in the footnotes of the consolidated financial
statements, in each case, for the fiscal quarter ended on the date of the last financial statements delivered pursuant to Section 7.1 of the Credit Agreement. 

“Consolidated Qualified Lessee” means any Qualified Lessee that is consolidated into the financial statements of another Qualified
Lessee. 
 “Covered Revenue” means any fees, charges or other revenues (a) that are characterized as Unadjusted Gross
Revenues (or Gross Revenues) for purposes hereof or for purposes of any other similar lease (x) between Lessee and Lessor or an affiliate thereof or (y) between Lessee and any of its wholly-owned subsidiaries or (b) that are generated
from the Rate Base of regulated assets owned or operated by a party other than Lessor or a subsidiary thereof. 
 “Credit
Agreement” has the meaning set forth in Section 4.13. 
 “CREZ Lease” means the Second Amended and Restated Lease
Agreement (CREZ Assets) between Sharyland Projects, L.L.C. and Lessee effective as of the Effective Date, as the same may be amended from time to time. 

“DC” has the meaning set forth in Section 1.1(b)(v). 

“Debt Agreements” has the meaning set forth in Section 4.13. 

“Defaulting Party” has the meaning set forth in Section 9.3. 

“Disclosing Party” has the meaning set forth in Section 13.3. 

“Effective Date” has the meaning set forth in the Preamble. 

“Entity” means any general partnership, limited partnership, proprietorship, corporation, joint venture, joint stock company,
limited liability company, limited liability partnership, business trust, estate, governmental entity, cooperative, association or other foreign or domestic enterprise. 

 “Environmental Law” means any and all Legal Requirements regulating, relating to or
imposing liability or standards of conduct concerning protection of natural resources or the environment, or environmental impacts on human health as now or may at any time hereafter be in effect. 

“ERCOT” means the Electric Reliability Council of Texas, or its successors. 

“ERCOT Transmission Lease” means the Lease Agreement (ERCOT Transmission Assets) between Lessor and Lessee effective as of the
Effective Date, as the same may be amended from time to time. 
 “ERCOT Transmission Revenues” means Lessee’s Unadjusted
Gross Revenues from regulated electric transmission systems operated by Lessee within ERCOT pursuant to the PUCT’s transmission cost of service mechanism. 

“Event of Default” means an event described in Section 9.1 or Section 9.2. 

“Excess Percentage Rent” has the meaning set forth in Section 3.3(a). 

“Extended Period Rent” means Rent that applies during any extended period of operatorship beyond the Term, which will be negotiated
using the Comparable Rate of Return methodology set forth in Article III. 
 “FERC” means the Federal Energy Regulatory
Commission, or its successors. 
 “First Lease Quarter Percentage Rent Breakpoint” has the meaning set forth in
Section 3.1(c). 
 “Footprint Projects” means T&D Projects that are (i) (A) located in the distribution service
territory of the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets, (B) transmission assets that are added to an existing transmission substation that comprises a part of the Stanton/Brady/Celeste Assets or the Stanton
Transmission Loop Assets or hang from transmission towers within the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets or (C) Reclassified Projects and (ii) funded by expenditures that are or are expected to be
capitalized under GAAP and that are within the items described in Section 1.1(b)(i)-(vii) (specifically excluding Section 1.1(b)(viii)). 

“Force Majeure Event” means, except to the extent resulting from the action or inaction of Lessee or within the control of Lessee,
fire, earthquake, hurricane, flood, or other casualty or accident; strikes or labor disputes; war, civil strife or other violence; any law, order, proclamation, regulation, ordinance, action, demand or requirement of any government agency or
utility; or any other act or condition beyond the reasonable control of Lessee. 
 “GAAP” means generally accepted accounting
principles in effect in the United States of America. 

 “Good Utility Practice” shall be as defined from time to time by PUCT and, as of the
date hereof, means any of the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts that, in the exercise of
reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good
utility practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather is intended to include acceptable practices, methods, and acts generally accepted in the region. 

“Gross Revenues” has the meaning set forth in Section 3.1(d)(i). 

“Hazardous Material” means (A) any substance which is listed, defined, designated or classified under any Applicable Law as a
(i) hazardous material, substance, constituent or waste, (ii) toxic material, substance, constituent or waste, (iii) radioactive material, substance, constituent or waste, (iv) dangerous material, substance, constituent or waste,
(v) pollutant, (vi) contaminant, or (vii) special waste; (B) any material, substance, constituent or waste regulated under any Applicable Laws; or (C) petroleum, petroleum products, radioactive matters, polychlorinated
biphenyl, pesticides, asbestos or asbestos-containing materials. 
 “Hunt Family Members” means (i) Ray L. Hunt;
(ii) the spouse of Ray L. Hunt and each of his children and siblings; (iii) the spouse and lineal descendants of any Person identified in the foregoing clause (ii); (iv) any trust or account primarily for the benefit of any Person or
Persons identified in the foregoing clauses (i), (ii) or (iii); (v) any corporation, partnership or other Entity in which any of the Persons identified in the foregoing clauses (i), (ii), (iii) or (iv) are the beneficial owners
of substantially all of the shares of capital stock, membership interests, partnership interests or other equity interests and options or warrants to acquire, or securities convertible into, capital stock, membership interests, partnership interests
or other equity securities of an Entity; and (vi) the personal representative or guardian of any of the Persons identified in the foregoing clauses (i), (ii) and (iii) upon such Person’s death for purposes of the administration
of such Person’s estate or upon such Person’s disability or incompetency for purposes of the protection and management of the assets of such Person. 

“HVDC Ties” has the meaning set forth in Section 1.1(b)(v). 

“Incremental CapEx” for any Lease Year means Qualified CapEx for that Lease Year, minus Original Base CapEx for such Lease Year,
minus Accumulated Deficit for such Lease Year (if there is any Accumulated Deficit for such Lease Year). 
 “Indebtedness” with
respect to any Person means, at any time, without duplication (a) such Person’s liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable preferred stock; (b) its liabilities for the deferred
purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to
any such property); (c)(i) all liabilities appearing on its balance sheet prepared in accordance with GAAP in respect of capital leases and (ii) all liabilities which would appear on its balance sheet prepared in accordance with GAAP in respect
of Synthetic Leases assuming such Synthetic Leases were accounted for as capital leases; provided, however, that for purposes of this definition (including with respect to clauses (i) and 

 
(ii) hereof), (x) this Agreement and any similar lease between Lessor (or any subsidiary) and Lessee and (y) any lease between Lessee and any of its wholly-owned subsidiaries shall not
be treated as a capital lease; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all of its
liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money), provided, however, that
for purposes of this definition, any surety bonds or indemnification agreements entered into by Lessee (with respect to which Lessee or a subsidiary has a reimbursement or backstop obligation) in connection with condemnation proceedings shall be
excluded; (f) the aggregate Swap Termination Value of all Swap Contracts of such Person; and (g) any guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. Indebtedness
of a Person shall include all obligations of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under
GAAP. 
 “Indemnified Party” has the meaning set forth in Section 12.1. 

“Indemnifying Party” has the meaning set forth in Section 12.1. 

“Initial Term” has the meaning set forth in Section 2.1. 

“Lease” or “Leases” means (i) this Agreement, the McAllen Lease, the CREZ Lease, the ERCOT Transmission Lease and the
Stanton Transmission Loop Lease and any other leases of transmission and distribution and related assets to a Qualified Lessee under which Lessor or any subsidiary of Lessor is a party as a lessor, and (ii) any lease of transmission and
distribution and related assets pursuant to which Lessee is the lessee and a subsidiary of Lessee or another Person controlled by one or more Hunt Family Members is the lessor; provided, no such lease will qualify as a “Lease”
hereunder if each of the three following criteria apply: (x) Lessee is the lessee, (y) cash rental payments have become due and payable pursuant thereto and (z) none of Lessor, a subsidiary of Lessor or a subsidiary of Lessee is the
lessor. 
 “Lease Quarter” means each calendar quarter during each Lease Year. 

“Lease Year” means each calendar year during the Term of this Agreement. 

“Leased Consolidated Net Plant” means that portion of the Consolidated Net Plant of the lessor of a Lease between such lessor and a
Qualified Lessee that is the subject of such Lease. 
 “Legal Requirements” means, as to any Person, the certificate of
incorporation and by-laws, limited liability company agreement, partnership agreement or other organizational or governing documents of such Person, any law (including common law), statute, code, treaty, rule, regulation, ordinance including any
government rule or determination of an arbitrator a court or other government authority, or any requirement under a Permit, in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its
property is subject. 
 “Lessee” has the meaning set forth in the Preamble. 

 “Lessee CapEx” means Capital Expenditures that are related and fairly allocable to the
Stanton/Brady/Celeste Assets or Stanton Transmission Loop Assets and are funded by Lessee. 
 “Lessee Panel Member” has the
meaning set forth in Section 13.7(a). 
 “Lessee Taxes” has the meaning set forth in Section 4.3. 

“Lessor” has the meaning set forth in the Preamble. 

“Lessor’s Audit” has the meaning set forth in Section 3.3(c). 

“Lessor Panel Member” has the meaning set forth in Section 13.7(a). 

“Lessor Taxes” has the meaning set forth in Section 4.3. 

“Liens” has the meaning set forth in Section 5.2. 

“McAllen Lease” means the Third Amended and Restated Master System Lease Agreement (McAllen System) between Lessor and Lessee
effective as of the Effective Date, as the same may be amended from time to time. 
 “Monetary Default” means the failure to pay
when due any amounts payable under this Agreement. 
 “NERC” means North American Electric Reliability Corporation, or its
successors. 
 “Non-Defaulting Party” has the meaning set forth in Section 9.3. 

“Non-Monetary Default” means an Event of Default other than a Monetary Default. 

“Non-Recourse Debt” means Indebtedness of a subsidiary of Lessee that, if secured, is secured solely by a pledge of collateral owned
by such subsidiary and the equity interests in such subsidiary, and for which no Person other than such subsidiary is personally liable. 

“Nonseverable Footprint Projects” means those Footprint Projects that cannot be readily removed from the Stanton/Brady/Celeste
Assets or the Stanton Transmission Loop Assets without causing diminution in value to the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets, as applicable. 

“Note Purchase Agreements” has the meaning set forth in Section 4.13. 

“Notice of Default” means written notice of the Event of Default. 

“Original Assets” has the meaning set forth in Section 1.1(b). 

“Original Base CapEx” for a Lease Year means the amounts identified as such on a then-effective Rent Supplement. 

 “Original Lease Date” has the meaning set forth in Section 1.1(a). 

“Other Revenue” means revenue generated from activities as a regulated utility within the State of Texas other than Covered Revenue.

 “Overdue Rate” means a rate equal to ten percent (10%) per annum or the maximum rate allowed by law, whichever is lesser.

 “Party” or “Parties” has the meaning set forth in the Preamble. 

“Percentage Rent” has the meaning set forth in Section 3.1(b). 

“Percentage Rent Breakpoint” means individually any of the Annual Percentage Rent Breakpoint, the First Lease Quarter Percentage
Rent Breakpoint, the Second Lease Quarter Percentage Rent Breakpoint or the Third Lease Quarter Percentage Rent Breakpoint (collectively referred to as the “Percentage Rent Breakpoints”). 

“Percentage Rent Percentages” has the meaning set forth in Section 3.1(b). 

“Percentage Rent Schedule” means the schedule attached to the then-current Rent Supplement setting forth the Percentage Rent
Percentages and Annual Percentage Rent Breakpoints for the Stanton/Brady/Celeste Assets through the end of the Term. 
 “Permitted
Liens” means: 
 (i) The Liens granted by the Lessor to any lender or trustee for any lender which finances the
Lessor’s interest in the Stanton/Brady/Celeste Assets; 
 (ii) Liens imposed by any governmental authority for any tax,
assessment or other charge relating to the Stanton/Brady/Celeste Assets to the extent not yet past due or being contested in good faith and by appropriate proceedings; 

(iii) mechanics’, warehousemen’s, carriers’, workers’, repairers’, landlords’, and other similar
liens arising or incurred in the ordinary course of business and (i) which do not in the aggregate materially detract from the value of property or assets subject to such Liens or materially impair the continued use thereof in the operation of
the Stanton/Brady/Celeste Assets or (ii) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or asset subject to such Liens and for which
cash reserves consistent with GAAP have been established on the books of Lessee or Lessor, or other Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, trade contracts, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in
the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); 

 (iv) Liens arising out of judgments or awards so long as an appeal or proceeding
for review is being prosecuted in good faith and for the payment of which adequate cash reserves consistent with GAAP have been established on the books of Lessee or Lessor, bonds or other security acceptable to the Lessor in its reasonable
discretion have been provided or are fully covered by insurance; 
 (v) zoning, entitlement, restriction, and other land use
and environmental regulations by governmental authorities and encroachments, easements, rights of way, covenants, restrictions or agreements which do not materially interfere with the continued use of any asset as currently used in the conduct of
the business of the Lessee; 
 (vi) any encumbrances set forth in any franchise or governing ordinance under which any
portion of the business of the Lessee is conducted and which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the operation of the Stanton/Brady/Celeste Assets; and 

(vii) all rights of condemnation, eminent domain, or other similar right of any person. 

“Person” means any natural person, corporation, limited liability company, partnership, firm, association, government authority or
other entity whether acting in an individual, fiduciary or other capacity. 
 “Personal Property” means all assets, or rights
therein, related to or used in connection with the Stanton/Brady/Celeste Assets and the Stanton Transmission Loop Assets, other than assets of the type and nature described in Section 1.1(b)(i)-(vii). Examples of Personal Property include
rolling stock, computers and software programs. 
 “Policies and Procedures” has the meaning set forth in Section 13.6(b).

 “Project Management Costs” means all actual out-of-pocket costs incurred by Lessee pursuant to this Agreement or a separate
construction management agreement in connection with the construction activities, including (i) all direct wages and salaries (including benefits, payroll burden and overtime) which the Lessee pays to personnel employed or retained to conduct
such construction activities and a fair allocation of the direct wages and salaries (including benefits, payroll burden and overtime) of Lessee’s other personnel conducting such construction activities; (ii) the fair market value of
materials or equipment provided directly by Lessee or its affiliates (including the standard corporate day rate for any vehicles and equipment that are so utilized); (iii) a fair allocation of the lease payments of any leased vehicles and
equipment that are so utilized; (iv) all other third-party costs incurred by Lessee in the performance of such construction activities; and (v) all sales, use, transfer or similar taxes (excluding those taxes based upon Lessee’s net
income, gross receipts, net worth or similar taxes) incurred or paid by Lessee in conducting such construction activities or providing materials, if any (provided, that in managing its affairs, Lessee will attempt to minimize, to the extent
practicable, all such taxes incurred on behalf of Lessor and, in this regard, Lessor agrees to cooperate and provide Lessee any assistance necessary including providing appropriate evidence of any exemptions from tax). 

“PUCT” means the Public Utility Commission of Texas or its successors. 

 “Qualified CapEx” means Lessor-funded Capital Expenditures related to the
Stanton/Brady/Celeste Assets that are placed in service, as and when such Stanton/Brady/Celeste Assets are placed in service, as adjusted (y) for any applicable AFUDC and/or depreciation, and (z) to reflect the effect of the deferred tax
liability or deferred tax asset, as applicable. 
 “Qualified Lessee” means Lessee and/or any other utility that is
(x) approved or authorized by the applicable public utility commission or similar regulatory authority to operate and/or lease the transmission and/or distribution assets of Lessor or any subsidiary and (y) a party to a then-effective
lease agreement with Lessor or a subsidiary thereof pursuant to which such utility leases and operates such entity’s transmission and/or distribution assets 

“Rate Base” means, with respect to any transmission and distribution assets, gross electric plant in service under GAAP, which is
the aggregate amount of capital expenditures used to construct such assets plus AFUDC, less accumulated depreciation, and adjusted for accumulated deferred income taxes. 

“Receiving Party” has the meaning set forth in Section 13.3. 

“Reclassified Projects” means any T&D Project that does not otherwise meet the definition of Footprint Project but Lessee and
Lessor jointly agree, in their sole discretion, to classify such T&D Project as a Footprint Project based upon such factors that the Parties deem relevant, including (a) the expected Rate Base of the T&D Project, it being understood
that the Parties generally expect that only T&D Projects with an expected Rate Base of less than $25 million could constitute a Reclassified Project; (b) whether the T&D Project is physically connected to the Stanton/Brady/Celeste
Assets or the Stanton Transmission Loop Assets; and (c) whether the T&D Project is necessary to serve distribution customers situated in the service territories of the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets.

 “Regulatory Authorities” means the PUCT, ERCOT, TRE, NERC and any other governmental agency with jurisdiction over Lessee,
Lessor or the Stanton/Brady/Celeste Assets. 
 “REIT” has the meaning set forth in the Recitals. 

“REIT IPO” has the meaning set forth in the Recitals. 

“Related Person” has the meaning set forth in Section 12.1. 

“Renewal Term” has the meaning set forth in Section 2.1. 

“Rent” means the sum of Base Rent, Percentage Rent, Additional Rent and Extended Period Rent. 

“Rent Supplement” means a supplement to this Agreement in the form of Schedule 3.2(b) agreed to in accordance with
Section 3.2(b). 
 “Rent Validation” means the process of validating any Rent Supplement pursuant to Section 3.2(c).
“Repairs” means all replacements, repairs or remedial activity undertaken directly on a then-existing portion of the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets that are not Footprint Projects and that are expensed
and not capitalized under GAAP. 

 “Revenues Attributable to Lessee CapEx” means the portion of Unadjusted Gross Revenues
from the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets which is attributable to Lessee CapEx as determined in accordance with Section 3.1(d)(iii). 

“Revised Certificate” has the meaning set forth in Section 3.3(a). 

“Second Lease Quarter Percentage Rent Breakpoint” has the meaning set forth in Section 3.1(c). 

“Severable Footprint Projects” means any Footprint Projects that can be readily removed from the Stanton/Brady/Celeste Assets or the
Stanton Transmission Loop Assets without causing diminution in value to the Stanton/Brady/Celeste Assets or the Stanton Transmission Loop Assets, as applicable. 

“Stanton/Brady/Celeste Assets” means the integrated electrical transmission and distribution facilities located within the area
depicted on Exhibit A, and the systems and other property necessary to operate such transmission and distribution facilities, together with the exclusive right to occupy and use all of Lessor’s interest (whether by fee ownership,
easement, lease, sublease, franchise or license) (other than to the extent expressly reserved to Lessor herein) in the premises upon which such facilities are situated and Footprint Projects that add, expand or alter the assets identified from time
to time pursuant to Rent Supplements, as modified by Section 1.1(b). 
 “Stanton/Brady/Celeste Lease Assets” means the
Stanton/Brady/Celeste Assets, excluding any Footprint Project included in the definition of “Stanton/Brady/Celeste Assets,” unless (i) such Footprint Project has been placed in service and (ii) a Rent Supplement has been executed
with respect to such Footprint Project. 
 “Stanton Transmission Loop Assets” means the leasehold assets related to the Stanton
Transmission Loop Lease. 
 “Stanton Transmission Loop Lease” means the Third Amended and Restated Lease Agreement (Stanton
Transmission Loop Assets) between SDTS FERC, L.L.C., a wholly-owned subsidiary of Lessor, and SU FERC, L.L.C., a wholly-owned subsidiary of Lessee, effective as of the Effective Date (f/k/a FERC Lease), as the same may be amended from time to time.

 “Swap Contract” means (a) any and all interest rate swap transactions, basis swap transactions, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap
transactions, floor transactions, currency options, spot contracts or any other similar transactions of any of the foregoing (including, without limitation, any options to enter into any of the foregoing), and (b) any and all transactions of
any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange
Master Agreement. 

 “Swap Termination Value” means, in respect of one or more Swap Contracts, after taking
into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (x) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith,
such termination value(s), and (y) for any date prior to the date referenced in clause (x), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts. 
 “Synthetic Lease” means, at any time, any lease
(including a lease that may be terminated by the lessee at any time) of any property by a Person (i) that is accounted for as an operating lease under GAAP and (ii) in respect of which the lessee retains or obtains ownership of the
property so leased for U.S. federal income tax purposes, other than any lease under which such Person is the lessor. 
 “TCOS
Allocation” has the meaning set forth in Section 3.1(d)(ii). 
 “T&D Project” means a business, project or assets
relating primarily to the transmission and/or distribution of electricity. 
 “Term” has the meaning set forth in
Section 2.1. 
 “Third Lease Quarter Percentage Rent Breakpoint” has the meaning set forth in Section 3.1(c). 

“Third Panel Member” has the meaning set forth in Section 13.7(a). 

“Transmission Gross Plant” means electric transmission plant as determined in accordance with the FERC Uniform System of Accounts.

 “Transmission Net Plant in Service” means Transmission Gross Plant in service less accumulated depreciation as determined in
accordance with the FERC Uniform System of Accounts. 
 “TRE” means the Texas Reliability Entity, or its successor entity. 

“TRS” means taxable REIT subsidiary. 

“Unadjusted Gross Revenues” has the meaning set forth in Section 3.1(d)(i). 

“Undisputed Rent” means the greater of (i) the undisputed amount of Rent the Parties agree is due and payable and
(ii) during the term of the Debt Agreements, the amount necessary, when taken together with Rent payments made by Lessee to Lessor under other leases between the Parties, required for Lessor to comply with the covenants set forth in
Section 9.08 of the 2009 Note Purchase Agreement, Section 9.8 of the 2010 Note Purchase Agreement and Section 7.10 of the Credit Agreement. 

 EXHIBIT A 

Assets 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 

 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

  
 

 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 EXHIBIT B 

SUBORDINATED DEBT TERMS 

Reference is made to that certain Second Amended and Restated Collateral Agency Agreement (as amended, restated, supplemented or otherwise
modified, the “Collateral Agency Agreement”), to be entered into by and among The Bank of New York Mellon Trust Company, N.A., as collateral agent (together with its successors and assigns, the “Collateral Agent”),
Sharyland Distribution & Transmission Services, L.L.C., a Texas limited liability company (the “Company”), and the holders of the Permitted Secured Indebtedness (as defined therein) from time to time party thereto. 

Section 1. Definitions and Rules of Interpretation. Capitalized terms used herein without definition shall have the meanings assigned to such
terms in the Collateral Agency Agreement. The rules of interpretation set forth in Schedule A of the Collateral Agency Agreement shall apply to this Exhibit B as if fully set forth herein. In addition, the following terms shall have the following
meanings: 
  

	1.1	“Entitled Party” shall mean the Company unless the Collateral Agent or the Company has given notice to the Subordinated Lender that the Collateral Agent has, on behalf of the Secured Parties and
pursuant to the Collateral Agency Agreement or related documents, properly exercised its remedies to foreclose on the Company’s interest in any System Lease and receive payments pursuant to any System Lease directly from Sharyland, in which
case the Entitled Party shall mean the Collateral Agent, acting for the benefit of the Secured Parties. 

  

	1.2	“Governmental Authority” shall mean 

  

	 	(a)	the government of: 

  

	 	(i)	The United States of America or any State or other political subdivision thereof, or 

  

	 	(ii)	any other jurisdictions in which the Company conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company, or 

 

	 	(b)	any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of, or pertaining to, any such government, or 

 

	 	(c)	the Electric Reliability Council of Texas or any successor thereto (“ERCOT”), or 

  

	 	(d)	the Texas Regional Entity. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

	1.3	“Insolvency Event” means the occurrence of any of the following: 

  

	 	(a)	Sharyland (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief
or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the
benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent
or to be liquidated, or (vi) takes a corporate action for the purpose of any of the foregoing; or 

  

	 	(b)	a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by Sharyland, a custodian, receiver, trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation of Sharyland or any such petition shall be filed against Sharyland and such petition shall not be dismissed within 60 days. 

 

	1.4	“Reorganization Securities” shall mean any debt or equity securities issued on account of all or any portion of the Subordinated Indebtedness in connection with an Insolvency Event that are in each case
subordinated in liquidation to the Obligations (or any debt or equity securities issued on account of any Obligations) to at least the same extent that the Subordinated Indebtedness are subordinated to the Obligations hereunder. 

 

	1.5	“Sharyland” shall mean Sharyland Utilities, L.P. 

  

	1.6	“Subordinated Indebtedness” shall mean, with respect to Sharyland, Indebtedness (as defined under the applicable Financing Agreement or such other similar term) that is incurred in accordance with the
terms of such Financing Agreement and is required to be subordinated to the applicable Obligations. 

  

	1.7	“Subordinated Lenders” shall mean each and every Person to whom any of the Subordinated Indebtedness are owed. 

  

	1.8	“Subordinated Loan Documents” shall mean all documentation evidencing the Subordinated Indebtedness. 

  

	1.9	“System Leases” shall mean any and all leases of transmission and distribution and related assets pursuant to which Sharyland is the lessee and the Company or any Subsidiary of the Company is a party as
a lessor, and supplements thereto, each as amended, restated, supplemented or otherwise modified from time to time, or any new lease entered into in replacement thereof. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

	1.10	“System Lease Obligations” shall mean any and all Rent or other similar term (as such term is defined in the System Leases) then due and payable under the System Leases. 

 

	1.11	“Texas Regional Entity” shall mean the division of ERCOT authorized to develop, monitor, assess and enforce compliance with NERC Reliability Standards within geographic boundaries of ERCOT and any
successor thereto. 

 Section 2. Subordination of Subordinated Indebtedness. Until the indefeasible payment in full in cash of all
the Obligations and the termination of any commitments to lend under any Permitted Secured Indebtedness, the Subordinated Lenders and Sharyland hereby agree that (i) all Subordinated Indebtedness is and shall be subordinated in right of
liquidation in relation to all System Lease Obligations to the extent and in the manner hereinafter set forth, (ii) upon the occurrence and during the continuance of any default or event of default under any System Lease (or if after giving
effect to a proposed distribution in respect of any part of the Subordinated Indebtedness, a default or event of default under any System Lease will exist), no payments or other distributions whatsoever in respect of any part of the Subordinated
Indebtedness shall be made, (iii) upon the occurrence and during the continuance of an Insolvency Event, no payments or other distributions whatsoever-in respect of any part of the Subordinated Indebtedness shall be made nor shall any property
or assets of Sharyland be applied to the purchase or other acquisition or retirement of any part of the Subordinated Indebtedness, and (iv) upon the occurrence and during the continuance of an Insolvency Event, the Subordinated Lenders shall
not accept any payment by or on behalf of Sharyland on account of the principal of, premium or interest on, or any other amount in respect of, the Subordinated Indebtedness other than the payment of indemnity obligations and reasonable out of pocket
costs and expenses (including reasonable attorney’s fees) in each case as and when due and payable in accordance with the terms of the Subordinated Debt Documents. 

Section 3. Liquidation, Dissolution, Bankruptcy. Until the indefeasible payment in full in cash of all the Obligations and the termination of any
commitments to lend under any Permitted Secured Indebtedness, and without limitation to the rights of the Secured Parties under the terms of the Financing Agreements or the rights of Company under the System Leases: 

 

	3.1	upon the occurrence and during the continuance of any Insolvency Event: 

  

	 	3.1.1	the System Lease Obligations then due and payable shall first be irrevocably and indefeasibly paid in full to the Entitled Party before any of the Subordinated Lenders shall be entitled to receive any payment (other
than Reorganization Securities) on account of the Subordinated Indebtedness whether in cash, securities or other assets (other than Reorganization Securities); 

  

	 	3.1.2	any payment or distribution of assets of Sharyland of any kind or character in respect of the Subordinated Indebtedness to which any of the Subordinated Lenders would be entitled if the Subordinated Indebtedness were
not subordinated pursuant to the terms hereof shall be made by the trustee, liquidator or agent or other Person making such payment or distribution, directly to the Entitled Party until the System Lease Obligations then due and payable are paid in
full and each of the Subordinated Lenders and, unless the Company is. the Entitled Party, Sharyland irrevocably authorizes and empowers the Entitled Party to receive. and collect on its behalf any and all such payments or distributions; and

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

	 	3.1.3	the Subordinated Lenders agree not to, directly or indirectly, initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity or priority of the System Lease
Obligations then due and payable. 

 Section 4. Incorrect Payments. If, for any reason whatsoever and whether pursuant to an
Insolvency Event or otherwise, Sharyland shall make or any of the Subordinated Lenders shall receive any payment or distribution of any kind or character, whether in cash, securities or other property (other than Reorganization Securities), on
account or in respect of the Subordinated Indebtedness in contravention of any of the terms set forth herein, such Subordinated Lender shall hold any such payment or distribution in trust for the benefit of the Secured Parties, promptly notify the
Entitled Party of the receipt of such payment or distribution and promptly pay over or deliver such distribution or payment to the Entitled Party or to any other Person nominated by the Entitled Party, to hold for the account of the Secured Parties.

 Section 5. Non-Impairment. To the fullest extent permitted by applicable Law, no change of law or circumstances shall release or diminish any
of the Subordinated Lender’s obligations, liabilities, agreements or duties hereunder, or affect the provisions set forth herein in any way. 

Section 6. Benefit of Subordination Provisions. These subordination provisions are intended solely to define the relative rights of the Secured
Parties, the Collateral Agent, the Company, the Subordinated Lenders, and their respective successors and permitted assigns. 
 Section 7.
Termination and Reinstatement. Notwithstanding anything to the contrary contained herein, the Subordinated Indebtedness shall no longer be subordinated in right of liquidation pursuant to the terms contained herein otherwise at such time as
the Secured Parties no longer have a lien on or security interest in the System Lease Obligations. If any payment to any of the Entitled Party, the Company, the Collateral Agent or the Secured Parties by Sharyland or any other Person in respect of
any of the System Lease Obligations is held to constitute a preference or a voidable transfer under applicable Law, or if for any other reason any such party is required to refund such payment to Sharyland or to such Person or to pay the amount
thereof to any other Person, each Subordinated Lender agrees and acknowledges that the provisions set forth herein shall continue to be effective or shall be reinstated, as the case may be, to the extent of any such payment or payments. 

Section 8. Restrictions on Transfers. None of the Subordinated Lenders may transfer (by sale, novation or otherwise) any of its rights or
obligations under the Subordinated Indebtedness unless the transferee of such interest first agrees in writing to be bound by the terms of this Exhibit B applicable to the transferor of such interest and executes an instrument to that effect. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 Section 9. Exercise of Powers. 

 

	9.1	After the occurrence and during the continuance of an Insolvency Event, the Entitled Party shall be entitled to exercise its rights and powers under these subordination provisions in such a manner and at such times as
the Entitled Party in its absolute discretion may determine. 

  

	9.2	The Subordinated Lenders alone shall be responsible for their contracts, engagements, acts, omissions, defaults and losses and for liabilities incurred by them. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 EXHIBIT C 

INSURANCE 
 Subject to Section 6.2(b) of
this Agreement, during the term of the Note Purchase Agreements, the Credit Agreement or until otherwise agreed by Lessee and Lessor, Lessee shall comply with the insurance requirements set forth in this Exhibit C. Capitalized terms used
herein but not otherwise defined in this Agreement have the meanings assigned to such terms in the Note Purchase Agreements or the Credit Agreement, as applicable. 
  

	A.	Coverages. 

 Property Insurance (Operational): 

 

			
	Cover:	  	All assets comprising the Stanton/Brady/Celeste Assets against “all risks” of physical loss or damage (including but not limited to machinery breakdown, earthquake, flood, windstorm and terrorism)
		
	Principal Exclusions: 	  	War and civil war
		
		  	Nuclear risks
		
		  	Theft and mysterious disappearance revealed in the course of inventory undertaking
		
		  	The cost of making good wear and tear, gradual deterioration, etc., but not the consequential damage
		
		  	Consequential loss not otherwise excluded
		
		  	Fraud and misrepresentation
		
	Sum Insured:	  	Full replacement cost subject to the following sublimits.
		
	Sublimits:	  	Earthquake – full replacement cost
		  	Flood – full replacement cost
		  	Windstorm – full replacement cost
		
	Deductible:	  	$250,000 per loss or occurrence, except $250,000 earthquake and flood and $250,000 windstorm
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	 The Prudential Insurance Company of America, as Purchaser

Prudential Retirement Insurance and Annuity Company, as Purchaser

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

			
		  	Royal Bank of Canada, as Lender
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	The Secured Parties to the Note Purchase Agreement
		  	The Secured Parties to the Credit Agreement
		
	Mortgagee:	  	Bank of New York Mellon Trust Company, N.A. as Collateral Agent for the benefit of the Secured Parties
		
	Loss Payee:	  	The Bank of New York Mellon Trust Company, N.A. as Collateral Agent, as first loss payee
		
	Conditions:	  	30 days’ notice of cancellation or non-renewal except 10 days for non-payment of premium Acceptable loss payable clause
		
		  	Non-vitiation wording in favor of the Collateral Agent and the Secured Parties
		
		  	Waiver of subrogation in favor of the additional insureds
	
	General Liability Insurance:
		
	Cover:	  	Lessee against any liability arising out of claims for personal injury and property damage.
		
	Sum Insured:	  	$1,000,000 per occurrence up to a minimum of $2,000,000 aggregate limit (except that the fire damage legal liability coverage may be limited to $100,000 per fire and the medical expense coverage may be limited to $5,000 for any one
injured person).
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:    	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
		
	Conditions:	  	Occurrence policy wording or Aegis claims-first-made policy form
		  	Worldwide territory

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

			
	Automobile Liability Insurance:
		
	Cover:	  	Lessee for liability arising out of claims for personal injury (including bodily injury and death) and property damage covering all owned (if any), leased, non-owned and hired vehicles of Lessee, including loading and
unloading.
		
	Sum Insured:	  	$1,000,000 each accident.
		
	Deductible:	  	$1,000 each accident.
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
	
	Workers’ Compensation and Employer’s Liability Insurance:
		
	Cover:	  	Lessee will maintain workers’ compensation insurance as required by applicable state laws and employer’s liability insurance insuring Lessee for liability arising out of injury to or death of employees.
		
	Sum Insured:	  	$1,000,000 each accident.
		
	Insured:	  	Lessee
		  	Lessor
	
	Excess or Umbrella Insurance:
		
	Cover:	  	Insurance covering claims in excess of the underlying insurance described in the foregoing.
		
	Sum Insured:	  	$25,000,000 each occurrence and in the aggregate
		
	Deductible:	  	$1,000,000 any one occurrence or amount of underlying insurance.
		
	Insured:	  	Lessee
		  	Lessor
		
	Additional Insured:    	  	The Prudential Insurance Company of America, as Purchaser
		  	Prudential Retirement Insurance and Annuity Company, as Purchaser
		  	The Bank of New York Mellon Trust Company, N. A., as Collateral Agent
		  	Royal Bank of Canada, as Lender
		  	The Secured Parties
		
	Conditions:	  	Following form

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

	B.	Company Conditions and Requirements. 

 1. Loss Notification. Lessee shall promptly
notify Lessor of any single loss or event likely to give rise to a claim against an insurer for an amount in excess of $1,000,000 covered by any insurance policies required by this Exhibit C. 

2. Payment of Loss Proceeds. The Collateral Agent, on behalf of the Secured Parties, shall be named as the first loss payee in
applicable insurance policies (pursuant to a standard lender’s loss payable endorsement equivalent to a CP 1218). 
 3. Compliance
With Policy Requirements. Lessee shall not violate or permit to be violated any of the conditions, provisions or requirements of any insurance policy required by this Exhibit C, and Lessee shall perform, satisfy and comply with, or cause
to be performed, satisfied and complied with, all conditions, provisions and requirements of all insurance policies. 
 4. Waiver of
Subrogation. Lessee hereby waives any and every claim for recovery from the Secured Parties for any and all loss or damage covered by any of the insurance policies to be maintained under this Agreement to the extent that such loss or damage is
recovered under any such policy. If the foregoing waiver will preclude the assignment of any such claim to the extent of such recovery, by subrogation (or otherwise), to an insurance company (or other Person), Lessee shall give written notice of the
terms of such waiver to each insurance company which has issued, or which may issue in the future, any such policy of insurance (if such notice is required by the insurance policy) and shall cause each such insurance policy to be properly endorsed
by Lessee to, or to otherwise contain one or more provisions that prevent the invalidation of the insurance coverage provided thereby by reason of such waiver. 

5. Notices. Lessee will advise Lessor in writing promptly of (i) any material changes in the coverage or limits provided under any
policy required by Section 6.2 of this Agreement and this Exhibit C and (ii) any default in the payment of any premium and of any other act or omission on the part of Lessee which may invalidate or render unenforceable, in whole or
in part, any insurance being maintained by Lessee pursuant to this Exhibit C. 
  

	C.	Insurance Policy Conditions and Requirements. 

 1. Permitted Insurers.
Lessee shall obtain the insurance required by this Exhibit C from responsible insurance companies authorized to do business in Texas (if required by law or regulation) with an A.M. Best Insurance Reports rating of A-, 8 or better. 

2. Control of Loss. If commercially feasible all policies of insurance required to be maintained pursuant to this Exhibit C,
wherein more than one insurer provides the coverage on any single policy, shall have a clause (or a separate agreement among the insurers) wherein all insurers have agreed that the lead insurer shall have full settlement authority on behalf of the
other insurers. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 3. Loss Survey. All policies of insurance required to be maintained pursuant to this
Exhibit C, wherein more than one insurer provides the coverage on any single policy, shall have a clause (or a separate agreement among the insurers) wherein all insurers have agreed upon the employment of a single firm to survey and
investigate all losses on behalf of the insurers. 
 4. Policy Cancellation and Change. All
policies of insurance required to be maintained pursuant to this Exhibit C shall be endorsed so that if at any time they are canceled, or their coverage is reduced (by any party including the insured) so as to
affect the interests of the Collateral Agent, the Holders and any other Secured Party, such cancellation or reduction shall not be effective as to the Secured Parties for thirty (30) days, except for non-payment of premium which shall be for
ten (10) days, after receipt by the Collateral Agent and the Secured Parties of written notice from such insurer of such cancellation or reduction. 

5. Miscellaneous Policy Provisions. All insurance policies providing operational property damage,
(i) shall name the Collateral Agent, on behalf of the Secured Parties, as the first loss payee, (ii) shall include a Lender’s loss payable clause in favor of the Collateral Agent, on behalf of the Secured Parties. 

6. Separation of Interests. All policies (other than in respect to workers compensation insurance)
shall insure the interests of the Secured Parties regardless of any breach or violation by Lessee or any other party of warranties, declarations or conditions contained in such policies, any action or inaction of Lessee or others, or any foreclosure
relating to the Stanton/Brady/Celeste Assets.  
 7. Waiver of Subrogation. All policies of insurance required by this
Exhibit C shall provide for waivers of subrogation in favor of the Secured Parties and their respective officers and employees. 
 8.
Liability Insurance Endorsements. All policies of liability insurance required to be maintained by Lessee shall be endorsed as follows: 

(i) To name the Secured Parties as additional insureds; 

(ii) To provide a severability of interests and cross liability clause; and 

(iii) That the insurance shall be primary and not excess to or contributing with any insurance or self-insurance maintained by Lessee. 

D. Acceptable Policy Terms and Conditions. All policies of insurance required to be maintained pursuant to this Exhibit C shall contain terms
and conditions reasonably acceptable to Lessor. 

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

 SCHEDULE 3.2(b) 

FORM OF LEASE SUPPLEMENT 
 Rent
Supplement 
 Pursuant to Section 3.2(b) of Lease 

[Date of Supplement]                    

 Incremental CapEx: 
 Lessee CapEx: 

Base Rent: 
 Percentage Rent Percentages: 

Annual Percentage Rent Breakpoints: 
 Revenues Attributable to
Lessee CapEx: 
 Original Base CapEx: 
 Accumulated Deficit:

 ERCOT Transmission Rate Allocation: 
 Term of Rent
Supplement: 
  

			
	Executed this ____ day of ___________, 20___.
	
	SHARYLAND UTILITIES, L.P.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	SHARYLAND DISTRIBUTION &
	TRANSMISSION SERVICES, L.L.C.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

STANTON/BRADY/CELESTE ASSETS LEASE AGREEMENT

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