Document:

hifr-ex108_774.htm

 

Exhibit 10.8

Execution Version

 

SECOND AMENDMENT

to

	
 
	
Management Agreement

 

February 26, 2019

 

This Second Amendment (this “Amendment”) to the Management Agreement (as defined below) is entered into by and among InfraREIT, Inc. (the “Company”), InfraREIT Partners, LP (the “Operating Partnership”) and Hunt Utility Services, LLC (the “Manager” and, together with the Company and the Operating Partnership, the “Parties”) effective as of January 1, 2019. Capitalized terms used herein that are not otherwise defined herein will have the meanings assigned to such terms in the Management Agreement.

 

WHEREAS, the Parties entered into that certain Management Agreement, dated January 29, 2015, as amended by that certain First Amendment to Management Agreement, dated May 16, 2018 (as so amended, the “Management Agreement”), pursuant to which the Manager manages the Company Entities’ day-to-day operations, subject to the oversight of the Company’s Board of Directors, in exchange for the compensation described in Section 9 thereof;

 

WHEREAS, the Initial Term of the Management Agreement will expire on December 31, 2019, and, unless otherwise terminated in accordance with its terms, the Management Agreement will automatically renew for a Renewal Term at such time;

 

WHEREAS, prior to the expiration of the Initial Term, a Party may request changes to the Management Agreement or the Development Agreement, to be incorporated upon renewal, subject to the provisions, including notice periods, contained in Section 16(a) of the Management Agreement; 

 

WHEREAS, notwithstanding the automatic renewal provisions of Section 16(a) of the Management Agreement, the Independent Directors may elect not to renew the Management Agreement upon the expiration of the Initial Term, subject to the provisions, including notice periods, contained in Section 16(b) of the Management Agreement;

 

WHEREAS, concurrently with the execution and delivery of this Amendment, Sharyland Distribution & Transmission Services, L.L.C., which is an indirect subsidiary of the Operating Partnership (“SDTS”), and the Manager are entering into a Services Agreement (the “Services Agreement”) pursuant to which, among other things, SDTS will agree to directly compensate the Manager for the compensation expenses incurred by the Manager in providing certain services directly to SDTS (the “Specified Services”), and such Specified Services are subject to the Management Agreement; and

 

WHEREAS, pursuant to Section 22 of the Management Agreement, the Parties desire to amend the Management Agreement to (i) provide that amounts payable by SDTS under the Services Agreement will reduce the amounts payable to the Manager under Section 9(a) of the Management Agreement and (ii) revise the notice periods required by Sections 16(a) and (b) of the Management Agreement as set forth herein.

 

 

 

 

 

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

AMENDMENT OF MANAGEMENT AGREEMENT

 

1.1Payment of Base Fee.  The second sentence of Section 9(a) of the Management Agreement is hereby amended and restated in its entirety as follows:

 

The annual Base Fee shall be payable in cash in quarterly installments in arrears on the last day of each calendar quarter (or the first business day that follows such day, if the last day of the calendar quarter is not a business day); provided that the amount payable in a particular quarter pursuant to the foregoing shall be reduced by the Quarterly Payment (as defined in the Services Agreement), if any, payable by SDTS for the corresponding quarter pursuant to Section 3 of the Services Agreement. 

 

1.2Required Notice Periods.

 

	
 
	
(a)
	
Section 16(a) of the Management Agreement is hereby amended by replacing the clause “(i) at least nine months prior to the expiration of the Initial Term” with “(i) at least six months prior to the expiration of the Initial Term.”

 

	
 
	
(b)
	
Section 16(b) of the Management Agreement is hereby amended by replacing the clause “(x) six months prior to the end of the Initial Term” with “(x) three months prior to the end of the Initial Term.”

ARTICLE II

MISCELLANEOUS

 

2.1Continuing Effect.  Except as expressly amended by this Amendment, the provisions of the Management Agreement are and shall remain in full force and effect. For the avoidance of doubt, and without limiting the generality of the foregoing, the Parties acknowledge and agree that, notwithstanding the entry by SDTS and the Manager into the Services Agreement, the Subject Services remain subject to, and will continued to be governed by, the Management Agreement. From and after the date hereof, each reference to “hereof,” “hereunder,” “herein,” “hereto” and “hereby” and each reference to “this Agreement” and each other reference of like import in the Management Agreement shall be deemed to refer to the Management Agreement, as amended pursuant to Article I hereof. 

 

2.2Incorporation by Reference.  The following provisions of the Management Agreement are hereby incorporated into and specifically made applicable to this Amendment (provided, that, in construing such incorporated provisions, any reference to “this Agreement” shall be deemed to refer to this Amendment):

 

			
	
Section 23
	
 
	
Governing Law

	
Section 24
	
 
	
Arbitration

	
Section 27
	
 
	
Cure of Invalid Provisions

 

 

			
	
 
	
 
	
 

	
 
	
 
	
 

	
Section 28
	
 
	
Construction of Agreement

	
Section 29
	
 
	
Multiple Counterparts

 

[Signatures on Following Page]

 

 

 

 

The Parties have executed this Second Amendment as of the date first set forth above.

 

 

	
 
	
HUNT UTILITY SERVICES, LLC

	
 
	
 

	
 
	
By:
	
/s/ Michael Carter

	
 
	
Name:
	
Michael Carter

	
 
	
Title:
	
Vice President

 

 

	
 
	
INFRAREIT, INC.

	
 
	
 

	
 
	
By:
	
/s/ Brant Meleski

	
 
	
Name:
	
Brant Meleski

	
 
	
Title:
	
Senior Vice President and Chief Financial Officer

 

 

	
 
	
INFRAREIT PARTNERS, LP

	
 
	
By:InfraREIT, Inc., its general partner

	
 
	
 
	
 

	
 
	
By:
	
/s/ Brant Meleski

	
 
	
Name:
	
Brant Meleski

	
 
	
Title:
	
Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Amendment to Management Agreementhifr-ex109_775.htm

 

Exhibit 10.9

Execution Version

 

SERVICES AGREEMENT

BETWEEN

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

AND

HUNT UTILITY SERVICES, LLC

This SERVICES AGREEMENT (this “Agreement”) is entered into effective as of the 1st day of January, 2019 (the “Effective Date”), between Sharyland Distribution & Transmission Services, L.L.C., a Texas limited liability company (“SDTS”), and Hunt Utility Services, LLC, a Delaware limited liability company (the “Hunt Manager”). SDTS and Hunt Manager may be referred to herein individually as a “Party” and collectively as the “Parties.” 

RECITALS

WHEREAS, Substantive Rule 25.84(e) of the Public Utility Commission of Texas (the “Commission”) requires an electric utility to reduce to writing and file with the Commission copies of contracts or agreements it has with its affiliates; and

WHEREAS, in keeping with the requirement of applicable laws, SDTS and Hunt Manager will enter into this Agreement to memorialize the terms and conditions by which Hunt Manager will perform certain services for SDTS as set forth in this Agreement;

NOW THEREFORE, in consideration of the premises and the covenants made herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, SDTS and Hunt Manager hereby agree as follows:

l. SCOPE OF WORK.  Hunt Manager shall perform for SDTS the services described in Exhibit A hereto (the “Services”), as such Exhibit may be modified from time to time.

 

2. COMPENSATION.  As consideration for performing the Services hereunder, Hunt Manager shall be paid a fee equal to the sum of all of Hunt Manager’s direct and indirect compensation expenses for providing the Services (the “Allocable Compensation Expenses”) in accordance with the terms set forth in Section 3.a. below. Notwithstanding anything to the contrary herein, the amounts charged by Hunt Manager to SDTS shall be no higher than the amounts charged by Hunt Manager to its other affiliates or to a nonaffiliated person (within the same market areas or having the same market conditions) for the same service or class of services.

 

3.PAYMENT TERMS.

 

	
 
	
a.
	
SDTS will pay Hunt Manager for the Services performed hereunder in cash on a quarterly basis (each, a “Quarterly Payment”) in arrears on the last day of each 
	
 

 

 

	
 
		
calendar quarter (each, a “Completed Quarter”) (or the first business day that follows such day, if the last day of the Completed Quarter is not a business day). Subject to Section 3.b. below, each Quarterly Payment will be an amount equal to the sum of (i) Hunt Manager’s actual Allocable Compensation Expenses for the first two months of the Completed Quarter and (ii) Hunt Manager’s reasonable estimate of its Allocable Compensation Expenses for the third month of the Completed Quarter (the “Estimated Expenses”); provided that in no event shall the Quarterly Payment with respect to a Completed Quarter exceed the amount of the quarterly installment of the Base Fee (as defined in the Management Agreement) payable by InfraREIT Partners, LP (the “Operating Partnership”) with respect to such Completed Quarter (but, for purposes of this proviso, without giving effect to any reduction of such payment for amounts payable under this Agreement).
	
 

 

	
 
	
b.
	
Following the conclusion of a Completed Quarter, Hunt Manager will review and determine whether there is a difference in the actual amount of Hunt’s Allocable Compensation Expenses for the third month of the Completed Quarter (the “Actual Expenses”) as compared to the Estimated Expenses that were utilized in calculating the Quarterly Payment. If there has been such a difference, then (i) if the Actual Expenses exceed the Estimated Expenses, the amount of such difference will be added to the Quarterly Payment payable with respect to the subsequent calendar quarter and (ii) if the Estimated Expenses exceed the Actual Expenses, the amount of such difference will be deducted from the Quarterly Payment payable with respect to the subsequent calendar quarter.
	
 

 

	
 
	
c.
	
No less than fifteen (15) days prior to the end of each Completed Quarter, Hunt Manager will submit to SDTS an accounting of (i) the Services rendered pursuant to this Agreement for such Completed Quarter (including any Estimated Expenses) and (ii) any amounts that will be added or subtracted to the Quarterly Payment pursuant to Section 3.b.
	
 

 

	
 
	
d.
	
For the avoidance of doubt, notwithstanding anything to the contrary contained herein, following any expiration or termination of this Agreement pursuant to Section 4, Hunt Manager will, as soon as reasonably practicable following the final Quarterly Payment hereunder, determine whether there was a difference between the Actual Expenses and the Estimated Expenses that were utilized in calculating the final Quarterly Payment, and shall promptly thereafter determine whether one Party should make a lump sum payment to the other Party as a result of excess or deficient compensation paid by SDTS. If any amount is determined to be due pursuant to this Section 3.d., the payment of such amount must be made promptly upon the determination of such amount.
	
 

 

4. TERM.  This Agreement shall be effective as of the Effective Date and shall continue in effect until the earlier of (a) termination by either Party, with or without cause, upon at least thirty (30) days’ prior written notice to the other Party; (b) the expiration or termination of the Management Agreement, dated as of January 29, 2015 (“Management Agreement”), among InfraREIT, Inc. (“InfraREIT”), the Operating Partnership and Hunt Manager, as amended; and (c) the Closing Date, as defined in Section 1.2 of that certain Agreement and Plan of Merger, dated as of October 18, 2018, among Oncor Electric Delivery Company LLC, 1912 Merger Sub LLC, Oncor T&D Partners LP, InfraREIT and the Operating Partnership; provided, however, that 

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SDTS’s obligation to pay for Services actually performed in accordance with Section 2 and Section 3 shall survive indefinitely.

 

 

 

 

5. CODE OF CONDUCT.  Hunt Manager shall (a) adhere to Sharyland Utilities, L.P.’s Code of Conduct (a copy of which has been delivered to Hunt Manager) (the “Code of Conduct”), as applicable, (b) work with SDTS to comply with all additional Code of Conduct requirements imposed upon SDTS by the Commission or by applicable law, and (c) ensure that its employees receive training in the Code of Conduct requirements, including training with respect to handling of confidential information and avoidance of inappropriate cross subsidization by either Party or their respective affiliates.

 

6. ETHICS.  The Services shall be provided in compliance with the Code of Conduct. In the event of any inconsistency between the provisions of this Agreement and any requirement of the Code of Conduct, the terms and provisions of the Code of Conduct shall govern and control.

 

7.GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE CONTRARY. 

 

8. TAXES.  Hunt Manager shall be solely responsible for the payment wherever payable of any state or federal income taxes or other taxes or contributions based on the compensation paid to Hunt Manager hereunder, or paid by Hunt Manager to its personnel, and shall complete and deliver to SDTS any applicable tax forms requested by SDTS such as U.S. IRS Form W-9 showing taxpayer identification number. SDTS may withhold from such compensation any amounts as may be required or allowed by applicable law. 

 

9. NO WAIVER OF BREACH.  No failure by either Party to enforce any obligation under this Agreement shall prejudice that Party’s right thereafter to enforce that or any other obligation unless specifically otherwise stated in writing. 

 

10. NON-ASSIGNABILITY.  This Agreement shall inure to the benefit of, and be binding upon, the respective successors and permitted assigns of the Parties. Notwithstanding the foregoing, neither Party shall have the right to assign its rights and obligations under this Agreement without the written consent of the other Party.

 

11. No Joint Venture.  Nothing in this Agreement shall be construed to make SDTS and Hunt Manager partners or joint venturers or impose any liability as such on either of them. 

 

3

 

 

12. NOTICES.  Notices shall be in writing, in the English language, given in person or by prepaid mail or express delivery and effective when received in person or at the address of the receiving Party shown below. Notice given by mail shall be deemed received twenty-four (24) hours after being mailed (postage prepaid) to the address of the receiving Party shown below. 

 

			
	
To SDTS:
	
 
	
Sharyland Distribution & Transmission Services, L.L.C.

	
 
	
 
	
1900 North Akard Street

	
 
	
 
	
Dallas, Texas 75201

	
 
	
 
	
Attn: General Counsel

	
 
	
 
	
Legal@huntutility.com

 

 

			
	
To Hunt Manager:
	
 
	
Sharyland Utilities, L.P.

	
 
	
 
	
1900 North Akard Street

	
 
	
 
	
Dallas, Texas 75201

	
 
	
 
	
Attn: Associate General Counsel

	
 
	
 
	
kelly.frazier@sharyland.com

 

13. ENTIRE AGREEMENT.  This Agreement (including Exhibit A attached hereto) represents the complete understanding between SDTS and Hunt Manager and supersedes all prior negotiations, representations, or agreements between the Parties, either written or oral, and any amendment hereto must be in writing and signed by both Parties. The invalidity of any particular provision of this Agreement shall not affect the validity of any other provision, and no ambiguity shall be construed against either Party on the grounds that such Party caused or should have prevented it. 

 

14. HEADINGS.  The underlined headings used throughout this Agreement are for administrative convenience only and shall be completely disregarded for the purposes of construing and enforcing this Agreement.

 

15. COUNTERPARTS.  This Agreement may be executed in identical counterparts, which shall be deemed to constitute one and the same agreement. 

 

[Signature page follows]

 

 

4

 

 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of February 26, 2019.

 

	
SDTS
	
 
	
Hunt Manager

	
Sharyland Distribution & Transmission

Services, L.L.C.
	
 
	
Hunt Utility Services, LLC

	
 
	
 
	
 

	
By:
	
/s/ Brant Meleski
	
 
	
By:
	
/s/ Michael Carter

	
Name:
	
Brant Meleski
	
 
	
Name:
	
Michael Carter

	
Title:
	
Senior Vice President and

Chief Financial Officer
	
 
	
Title:
	
Vice President

 

 

 

 

 

5

 

EXHIBIT A

 

 

SERVICES TO BE PERFORMED

 

Hunt Manager shall provide specific services as requested from time to time by SDTS, for the purpose of assisting SDTS in carrying out SDTS’s management and administrative responsibilities. SDTS’s management and administrative responsibilities that require Hunt Manager’s services include, but are not limited to, the following: 

 

	
 
	
1.
	
Implementation and operation of accounting systems, including requirements necessary with respect to regulatory bodies, studies of accounting procedures and practices to improve efficiency, preparation and analyses of financial and operating reports and other statistical matters, development of capital and operating budgets, development of cash and cost forecasts, implementation of budgetary controls, evaluation of vendor creditworthiness and obtaining short- and long-term debt and equity financing;
	
 

	
 
	
2.
	
Tax services and the management of all tax matters applicable to SDTS (and any subsidiaries), including, but not limited to (a) the preparation, review and filing of all federal, state and local tax returns (or similar reports) and the remittance by SDTS of any associated tax payments and assessments; (b) tax planning, appeals and protests; and (c) engaging and assisting any SDTS third-party tax service providers;
	
 

	
 
	
3.
	
Provision of audit services;
	
 

	
 
	
4.
	
Consultation, analysis, advice and performance of SDTS’s legal, regulatory, public affairs, corporate communications and administrative services;
	
 

	
 
	
5.
	
Administrative or project management duties; and
	
 

	
 
	
6.
	
Other corporate support services, as that term is defined in Commission Substantive Rule 25.272, as required from time to time in the course of SDTS’s business and in accordance with the Code of Conduct.

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