Exhibit 10.13

 

Seventeenth Amended and Restated Rent Supplement

(McAllen Lease)

February 26, 2019

 

This Seventeenth Amended and Restated Rent Supplement (this “Seventeenth Amended
Supplement”) between Sharyland Distribution & Transmission Services, L.L.C.
(“Lessor”) and Sharyland Utilities, L.P. (“Lessee”) is executed and delivered on
February 26, 2019 to memorialize supplements to the McAllen Lease (as defined
below), effective as of January 1, 2019. Capitalized terms used herein that are
not otherwise defined will have the meanings assigned to them in the McAllen
Lease.

WHEREAS, Lessor and Lessee are Parties to a Third Amended and Restated Master
System Lease Agreement (McAllen System) dated December 1, 2014 (as amended from
time to time in accordance with its terms, the “McAllen Lease”);

WHEREAS, on December 31, 2018, the Parties executed a Sixteenth Amended and
Restated Rent Supplement (McAllen Lease) effective as of January 1, 2019 (the
“Sixteenth Amended Supplement”);

WHEREAS, the Incremental CapEx for 2018 was different than expected by the
Sixteenth Amended Supplement, and the Parties wish to effect a Rent Validation
(as set forth in Section 3.2(c) of the McAllen Lease) and to amend and restate
the Sixteenth Amended Supplement to memorialize the effect of such difference;
and

WHEREAS, as a result of this Rent Validation, a one-time payment set forth below
is owed by Lessor and will be paid within 30 days after execution hereof.

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

1.The Sixteenth Amended Supplement is hereby amended and restated in its
entirety as set forth below.

2.The McAllen Lease, except as supplemented by this Seventeenth Amended
Supplement, shall remain in full force and effect.

Incremental CapEx:

 

 

 

2010

$    2,195,000

 

2011

$       504,000

 

2012

$    1,262,963

 

2013

$  16,391,255

 

2014

$ 46,042,142

 

2015

$    2,431,198

 

2016

$       914,401

 

2017

$       928,457

 

2018

 

(Total 2018)

$                  0#

$         87,818##

$         87,818###

 

2019

 

(Total 2019)

$    2,308,270*

$    5,462,437**

$    7,770,706***

 

 

1

McAllen Lease

--------------------------------------------------------------------------------

 

# Represents the “validated” aggregate amount of 2018 distribution Incremental
CapEx, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the
McAllen Lease, and, as part of this Rent Validation, the amount of 2018
distribution Incremental CapEx has been restated to $0. The amount of 2018
distribution Incremental CapEx included in the Sixteenth Amended Supplement was
$1,368,925 with an expected weighted average in-service date of December 1,
2018.

## Represents the “validated” aggregate amount of 2018 transmission Incremental
CapEx, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the
McAllen Lease, and, as part of this Rent Validation, the Parties have restated
the aggregate amount of 2018 transmission Incremental CapEx placed in-service,
consisting of (i) the amount of 2018 transmission Incremental CapEx placed in
service as of the balance sheet date reflected in Lessee’s first 2018 Regulatory
Order (“First 2018 CapEx”); (ii) the amount of 2018 transmission Incremental
CapEx placed in service as of the balance sheet date reflected in Lessee’s
second 2018 Regulatory Order (“Second 2018 CapEx”); and (iii) the amount of 2018
transmission Incremental CapEx placed in service throughout the remainder of
2018 (“2018 Stub-Year CapEx”), together with the weighted average in-service
dates of 2018 transmission Incremental CapEx and the effective dates for the
first and second 2018 Regulatory Orders. A “Regulatory Order” is defined as
either (i) the PUCT’s approval of Lessee’s application for updated wholesale
transmission rates or (ii) final resolution or settlement of a rate case
applicable to Lessee’s transmission rates. The aggregate amount of 2018
transmission Incremental CapEx has been restated to $87,818. The aggregate
amount of estimated 2018 transmission Incremental CapEx included in the
Sixteenth Amended Supplement was $10. The Parties placed in service $0 of First
2018 CapEx, which was included in the first 2018 Regulatory Order that became
effective on June 1, 2018; $0 of Second 2018 CapEx, which was included in the
second 2018 Regulatory Order that became effective on July 23, 2018; and an
aggregate of $87,818 of 2018 Stub-Year CapEx, which has not yet been included in
a Regulatory Order. The amount of First 2018 CapEx included in the Sixteenth
Amended Supplement was $0, the amount of Second 2018 CapEx included in the
Sixteenth Amended Supplement was $0 and the aggregate amount of 2018 Stub-Year
CapEx included in the Sixteenth Amended Supplement was $10. The First 2018
CapEx, Second 2018 CapEx and 2018 Stub-Year CapEx, collectively, had a weighted
average in-service date of October 1, 2018. As set forth in the Sixteenth
Amended Supplement, the Parties expected the First 2018 CapEx, Second 2018 CapEx
and 2018 Stub-Year CapEx, collectively, to have a weighted average in-service
date of June 1, 2018. As set forth in the Sixteenth Amended Supplement, the
Parties expected the first 2018 Regulatory Order to be effective on June 1,
2018, the second 2018 Regulatory Order to be effective on September 1, 2018 and
the first 2019 Regulatory Order to be effective on May 1, 2019.

### Represents the total validated amount of transmission and distribution
Incremental CapEx that the Parties placed in service in 2018.

* Represents the aggregate amount of distribution Incremental CapEx that the
Parties expect to be placed in service in 2019, with an expected weighted
average in-service date of March 1, 2019. Rent supplements with respect to this
distribution Incremental CapEx were agreed to and memorialized as part of the
Sixteenth Amended Supplement.

** Represents the aggregate amount of transmission Incremental CapEx that the
Parties expect to be placed in service in 2019, with an expected weighted
average in-service date of March 1, 2019. Rent supplements with respect to this
transmission Incremental CapEx were agreed to and memorialized as part of the
Sixteenth Amended Supplement.

*** Represents the total amount of transmission and distribution Incremental
CapEx that the Parties expect to be placed in service in 2019 (“2019 CapEx”).

 

Lessee CapEx:

 

 

 

2010

$     666,488

 

2011

$     121,897

 

2012

$     263,733

 

2013

$      68,303

2McAllen Lease

--------------------------------------------------------------------------------

 

 

2014

$       89,405

 

2015

$     168,289

 

2016

$                0

 

2017

$                0

 

2018

$                0

 

2019

$                0

 

 

 

Base Rent:

 

 

 

2010

$  5,260,447

 

2011

$  5,453,529

 

2012

$  5,521,881

 

2013

$  6,566,290

 

2014

$  8,445,964

 

2015

$11,818,692

 

2016

$11,860,813

 

2017

$11,118,502

 

2018

$  9,332,408#

 

2019

$  9,562,393*

 

# Represents the “validated” amount of 2018 Base Rent, i.e. a Rent Validation
has occurred pursuant to Section 3.2(c) of the McAllen Lease, and, as part of
this Rent Validation, the amount of 2018 Base Rent has been restated. The amount
of 2018 Base Rent included in the Sixteenth Amended Supplement was $9,345,546,
comprised of 2018 Base Rent payments of (i) $777,867 on the 15th day of each
month beginning on March 15, 2018 through July 15, 2018 (with respect to January
2018 through May 2018); (ii) $779,459 on the 15th day of each month beginning on
August 15, 2018 through October 15, 2018 (with respect to June 2018 through
August 2018), with the increase in monthly Base Rent reflecting 2017 Stub-Year
CapEx and First 2018 CapEx and commencing June 1, 2018, which was the expected
effective date of Lessee’s first 2018 Regulatory Order; and (iii) $779,459 on
the 15th day of each month beginning on November 15, 2018 through February 15,
2019 (with respect to September 2018 through December 2018), with the increase
in monthly Base Rent reflecting Second 2018 CapEx and commencing September 1,
2018, which was the expected effective date of Lessee’s second 2018 Regulatory
Order. Lessor owes Lessee $13,152 (the difference between the amount set forth
as Base Rent above and the aggregate amount of monthly Base Rent set forth in
this footnote), in validated Base Rent, and will make the validation payment set
forth under “Validation Payment” below within 30 days of the date hereof.

* Lessee will make a 2019 Base Rent payment of $779,980 on the 15th day of each
month beginning on March 15, 2019 through May 15, 2019 (with respect to January
2019 through March 2019). Lessee will then make a 2019 Base Rent payment of
$780,868 on the 15th day of each month beginning on June 15, 2019 through
September 15, 2019 (with respect to April 2019 through July 2019), with the
increase in monthly Base Rent reflecting, in part, 2018 Stub-Year CapEx and
commencing April 1, 2019, which is the expected effective date of Lessee’s first
2019 Regulatory Order. Lessee will then make a 2019 Base Rent payment of
$819,796 on the 15th day of each month beginning on October 15, 2019 through
February 15, 2020 (with respect to August 2019 through December 2019).

 

Percentage Rent Percentages:

 

 

 

2010

36.993%

 

2011

36.972%

 

2012

36.923%

 

2013

37.0%

 

2014

36.9%

 

2015

37.2%

 

2016

32.1%

3McAllen Lease

--------------------------------------------------------------------------------

 

 

2017

31.2%

 

2018

30.3%#

 

2019

29.9%

 

# Represents the “validated” percentage applicable to 2018 Percentage Rent, i.e.
a Rent Validation has occurred pursuant to Section 3.2(c) of the McAllen Lease
and, as part of this Rent Validation, the 2018 percentage has been restated. The
2018 percentage included in the Sixteenth Amended Supplement was 30.3% (i.e.,
even though the percentage has not changed it has been “validated” pursuant to
this Rent Validation).

 

Annual Percentage Rent

 

 

Breakpoints:

 

 

 

2010

$  5,260,447

 

2011

$  5,453,529

 

2012

$  5,521,881

 

2013

$  6,566,290

 

2014

$  8,445,964

 

2015

$11,818,692

 

2016

$12,616,219

 

2017

$11,897,593

 

2018

$10,143,408#

 

2019

$10,008,422*

# Represents the “validated” 2018 Annual Percentage Rent Breakpoint, i.e. a Rent
Validation has occurred pursuant to Section 3.2(c) of the McAllen Lease, and, as
part of this Rent Validation, the 2018 Annual Percentage Rent Breakpoint has
been restated. The 2018 Annual Percentage Rent Breakpoint included in the
Sixteenth Amended Supplement was $10,156,546.

* The 2019 Annual Percentage Rent Breakpoint reflects the assumptions set forth
above regarding the timing of the first 2019 Regulatory Order, as well as the
amount of 2018 Stub-Year CapEx and 2019 CapEx.

 

Revenues Attributable to

 

 

Lessee CapEx:

 

 

 

2010

$ 60,546

 

2011

$249,481

 

2012

$289,945

 

2013

$345,693

 

2014

$355,744

 

2015

$360,527

 

2016

$206,130

 

2017

$  97,925

 

2018

$  73,431

 

2019

$  45,266

 

Validation Payment:  As a result of the validation described above, pursuant to
Section 3.2(c) of the McAllen Lease, Lessor will pay Lessee $78,608, within 30
days following execution hereof, of which $13,152 is attributable to validated
Base Rent and $65,457 is attributable to the validation of Percentage Rent.

4McAllen Lease

--------------------------------------------------------------------------------

 

 

TCOS Allocation:

before June 20, 2013:  100%

 

between June 20, 2013 and October 17, 2013:  27.8%

 

between October 17, 2013 and February 25, 2014:  11.8%

 

between February 25, 2014 and May 1, 2014:  8.2%

 

between May 1, 2014 and October 3, 2014:  8.6%

 

between October 3, 2014 and March 31, 2015: 12.0%

 

between April 1, 2015 and October 31, 2015: 11.9%

 

between November 1, 2015 and June 13, 2016: 10.6%

 

between June 14, 2016 and September 22, 2016:  9.8%

 

between September 23, 2016 and April 13, 2017:  8.5%

 

between April 14, 2017 and October 25, 2017:  8.0%

 

between October 26, 2017 and November 9, 2017:  7.5%

 

between November 10, 2017 and May 31, 2018:  5.9%

 

between June 1, 2018 and July 31, 2018:  5.7%

 

between July 23, 2018 and March 31, 2019:  5.6%

 

between April 1, 2019 and July 31, 2019:  5.5%

 

starting August 1, 2019:  5.3%

 

Term of Rent Supplement:  Expires 12/31/19

 

5McAllen Lease

--------------------------------------------------------------------------------

 

The Parties have executed this Seventeenth Amended Supplement to the McAllen
Lease as of the date set forth above.

 

 

 

SHARYLAND UTILITIES, L.P.

 

 

 

 

 

By:

/s/ Greg Wilks

 

 

Name:

Greg Wilks

 

 

Title:

Chief Financial Officer

 

 

 

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

 

 

 

 

 

By:

/s/ Brant Meleski

 

 

Name:

Brant Meleski

 

 

Title:

Chief Financial Officer

 

 

McAllen Lease