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Item 9A. Controls and Procedures

2023-02-21 compared with 2022-02-22 · 107 added, 17 removed, 227 unchanged (35% of the section changed)

5 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

GAAP and includes those policies and procedures that:

13 unchanged sentences

Other Information

Leadership Succession

On February 16, 2023, as part of the planned leadership succession process of the Company, the Board announced three key executive appointments:

Eckel, currently Chairman of our Board, President and Chief Executive Officer, will assume the role of Executive Chairman and continue leading our Board;

Lipson, currently Executive Vice President, Chief Operating Officer and Chief Financial Officer, will become the President & Chief Executive Officer;

Pangburn, currently Executive Vice President and Co-Chief Investment Officer, will become Chief Financial Officer.

Transition of Jeffrey W.

Eckel to Executive Chairman

Eckel will transition from the Companyʼs Chief Executive Officer and President and be designated to serve as our Executive Chairman, effective March 1, 2023.

Eckel will serve as Executive Chairman for two years.

On March 1, 2025, our Board will designate Mr.

Eckel to serve as our Non-Executive Chairman.

In connection with this transition, we have entered into a new employment agreement with Mr.

Eckel’s two-year employment agreement includes an annual base salary of $412,500 and a target annual bonus of 237% of Mr.

Eckelʼs base salary.

On each of March 1, 2023 and March 1, 2024, we will grant to Mr.

Eckel an equity compensation award with a target value of $3,285,750, subject to vesting and performance requirements.

During the term (and, if Mr.

Eckel’s employment is terminated during the term due to his disability or death, for the period after such termination of employment due to disability or death as is necessary for Mr.

Eckel’s disability or death to be covered by the applicable policy), we will maintain and pay the cost of (A) a term life insurance policy with a death benefit in the amount of $5,000,000 on the life of Mr.

Eckel and (B) a long-term disability insurance policy for Mr.

Eckel which would provide disability benefits to Mr.

Eckel in an annual amount not less than 300% of the Mr.

Eckel’s annual base salary.

Eckel is terminated due to his disability or death, Mr.

Eckel or his estate will receive any accrued but unpaid salary and annual bonus, plus a pro rata target bonus for the year in which his termination of employment occurs.

For 24 months following such a termination, we will subsidize the cost of Mr.

Eckel’s post-employment health coverage.

All outstanding equity awards held by Mr.

Eckel will become vested and nonforfeitable.

Eckel is terminated without cause or leaves employment for good reason, he will be entitled to severance equal to one year of his base salary, one times the greater of the average of his annual bonus for the previous three years or the target bonus for the year of his termination, as well as a pro-rata target bonus for the year of termination.

For 24 months following such a termination, we will subsidize the cost of Mr.

Eckel’s post-employment health coverage.

All outstanding equity awards held by Mr.

Eckel will become vested and nonforfeitable.

Eckel is terminated for cause, leaves employment without good reason or his term expires, he will be entitled to any accrued but unpaid base salary and annual bonus.

Appointment of Jeffrey A.

Lipson as Chief Executive Officer

We have appointed Jeffrey A.

Lipson, the Company’s Executive Vice President, Chief Operating Officer and Chief Financial Officer, to Chief Executive Officer and President, and we have entered into a new employment agreement with Mr.

Lipson, effective March 1, 2023.

Lipson’s employment agreement includes an annual base salary of $775,000 and a target annual bonus of 175% of Mr.

Lipson’s base salary.

Lipson will be eligible to receive equity compensation awards when awards are made to similarly situated senior executives of the Company.

During the term (and, if Mr.

Lipson’s employment is terminated during the term due to his disability or death, for the period after such termination of employment due to disability or death as is necessary for Mr.

Lipson’s disability or death to be covered by the applicable policy), we will maintain and pay the cost of (A) a term life insurance policy with a death benefit in the amount of $5,000,000 on the life of Mr.

Lipson and (B) a long-term disability insurance policy for Mr.

Lipson which would provide disability benefits to Mr.

Lipson in an annual amount not less than 300% of his annual base salary.

Lipson is terminated due to his disability or death, Mr.

Lipson or his estate will receive any accrued but unpaid salary and annual bonus, plus a pro rata target bonus for the year in which his termination of employment occurs.

All outstanding equity awards held by Mr.

Lipson will become vested and nonforfeitable.

Lipson is terminated without cause or leaves employment for good reason, he will be entitled to severance equal to three times the sum of (A) one year of his base salary, (B) the greater of the average of his annual bonus for the previous three years or the target bonus for the year of his termination, plus (C) a pro-rata target bonus for the year of termination.

For 24 months following such a termination, we will subsidize the cost of Mr.

Lipson’s post-employment health coverage.

All outstanding equity awards held by Mr.

Lipson will become vested and nonforfeitable.

Lipson is terminated for cause or leaves employment without good reason, he will be entitled to any accrued but unpaid base salary and annual bonus.

Appointment of Marc T.

Pangburn as Chief Financial Officer

We have appointed Marc T.

Pangburn, the Company’s Executive Vice President and Co-Chief Investment Officer, to Executive Vice President and Chief Financial Officer, and we have entered into a new employment agreement with Mr.

Pangburn, effective March 1, 2023.

Pangburn’s employment agreement includes an annual base salary of $425,000 and a target annual bonus of 150% of Mr.

Pangburnʼs base salary.

Pangburn will be eligible to receive equity compensation awards when awards are made to similarly situated senior executives of the Company.

Pangburn is terminated by reason of death or disability, his outstanding equity will become vested, and he or his estate will receive a pro rata target bonus for year of his death or a target bonus for the year in which the disability occurs.

Pangburn is terminated without cause or leaves employment for good reason, he will be entitled to severance equal to one and one-half times one year of his base salary and one and one-half times the average of his annual bonus for the previous three years.

For 18 months following such a termination, we will subsidize the cost of Mr.

Pangburn’s post-employment health coverage.

All outstanding equity awards held by Mr.

Pangburn will become vested and nonforfeitable.

Pangburn is terminated for cause or leaves employment without good reason, he will be entitled to any accrued but unpaid base salary and annual bonus.

Each of the executives are subject to typical restrictive covenant provisions following termination of the employment.

This disclosure is qualified in its entirety by the terms of the executed employment agreements, each of which is filed as an exhibit to this Annual Report on Form 10-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

64 unchanged sentences

4.8 Indenture, dated as of June 28, 2021, between HAT Holdings I LLC and HAT Holdings II LLC, as issuers, and Hannon Armstrong Sustainable Infrastructure Capital, Inc., Hannon Armstrong Sustainable Infrastructure, L.P., and Hannon Armstrong Capital, LLC, as guarantors, and U.S.

Bank National Association, as trustee (including the form of HAT Holdings I LLC and HAT Holdings II LLC’s 3.

375 % Senior Notes due 2026 ) (incorporated by reference to Exhibit 4.1 on the Registrant’s Form 8-K (No.

Bank National Association, as trustee (including the form of HAT Holdings I LLC and HAT Holdings II LLC’s 3.375% Senior Notes due 2026) (incorporated by reference to Exhibit 4.1 on the Registrant’s Form 8-K (No.

011-35877), filed on June 28, 2021)

4.9 Indenture, dated as of April 13, 2022 by and among HAT Holdings I LLC and HAT Holdings II LLC, as issuers, and Hannon Armstrong Sustainable Infrastructure Capital, Inc., Hannon Armstrong Sustainable Infrastructure, L.P., and Hannon Armstrong Capital, LLC, as guarantors, and U.S.

Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 on the Registrant’s Form 8-K (No.

011-35877) filed on April 15, 2022)

4.10 First Supplemental Indenture, dated as of April 13, 2022 by and among HAT Holdings I LLC and HAT Holdings II LLC, as issuers, and Hannon Armstrong Sustainable Infrastructure Capital, Inc., Hannon Armstrong Sustainable Infrastructure, L.P., and Hannon Armstrong Capital, LLC, as guarantors, and U.S.

Bank Trust Company, National Association, as trustee (including the form of HAT Holdings I LLC’s and HAT Holdings II LLC’s 0.00% Green Exchangeable Senior Note due 2025) (incorporated by reference to Exhibit 4.2 on the Registrant’s Form 8-K (No.

011-35877) filed on April 15, 2022)

10.1 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.5 to Amendment No.

4 unchanged sentences

001-35877), filed on May 4, 2017)

10.3 2022 Hannon Armstrong Sustainable Infrastructure Capital, Inc.

Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K (No.

001-35877), filed on June 7, 2022)

10.4 Restricted Stock Award Agreement dated April 23, 2013 between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

12 unchanged sentences

10.09 Employment Agreement, dated April 17, 2013, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Jeffrey Eckel (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-Q for the quarter ended June 30, 2013 (No.

001-35877), filed on August 9, 2013)

10.9 Employment Agreement, dated April 17, 2013, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Steven L.

41 unchanged sentences

001-35877), filed on May 7, 2021)

10.24 Second Amended and Restated Employment Agreement, dated June 30, 2021, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Jeffrey A.

Lipson (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q for the quarter ended June 30, 2021 (No.

001-35877), filed on August 6, 2021)

10.24 Employment Agreement, dated June 30, 2021, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

1 unchanged sentence

001-35877), filed on August 6, 2021)

10.26 Employment Agreement, dated June 30, 2021, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

Pangburn (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-Q for the quarter ended June 30, 2021 (No.

001-35877), filed on August 6, 2021)

10.25 At Market Issuance Sales Agreement, dated May 13, 2020, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc., B.

5 unchanged sentences

10.26 Amendment No.

1 to the At Martket Issuance Sales Agreement, dated February 26, 2021, by and among Hannon Armstrong Sustainable Infrastructure Capital, Inc., B.

1 to the At Market Issuance Sales Agreement, dated February 26, 2021, by and among Hannon Armstrong Sustainable Infrastructure Capital, Inc., B.

Riley Securities, Inc., Robert W.

6 unchanged sentences

001-35877), filed on February 11, 2022.

10.28 Registration Rights Agreement, dated as of April 13, 2022, by and among HAT Holdings I LLC, HAT Holdings II LLC, and Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and the initial purchasers party thereto.

(incorporated by reference to Exhibit 10.1 on the Registrant’s Form 8-K (No.

011-35877) filed on April 15, 2022)

10.29 Amendment No.

2 to the At Market Issuance Sales Agreement, dated March 1, 2022, by and among Hannon Armstrong Sustainable Infrastructure Capital, Inc., B.

Riley Securities, Inc., Robert W.

Incorporated, BofA Securities, Inc., Loop Capital Markets LLC, SMBC Nikko Securities America, Inc.

and Nomura Securities International, Inc.

(incorporated by reference to Exhibit 1.3 to the Registrant’s Form 8-K (No.

001-35877), filed on March 2, 2022)

10.30* Amended and Restated Employment Agreement, dated February 14, 2023, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Jeffrey Eckel

10.31* Amended and Restated Employment Agreement, dated February 14, 2023, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Jeffrey Lipson

10.32* Amended and Restated Employment Agreement, dated February 14, 2023, by and between Hannon Armstrong Sustainable Infrastructure Capital, Inc.

and Marc Pangburn

List of subsidiaries of Hannon Armstrong Sustainable Infrastructure Capital, Inc.

44 unchanged sentences

(Principal Accounting Officer)

/s/ Lizabeth Ardisana February 21, 2023

Lizabeth Ardisana

/s/ Clarence D.

2 unchanged sentences

February 21, 2023

/s/ Michael T.

February 21, 2023

Floyd February 21, 2023

/s/ Simone F.

February 22, 2022

/s/ Charles M.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures