Document:

hifr-ex1013_339.htm

 

Exhibit 10.13

Eighth Amended and Restated Rent Supplement 
(CREZ Lease)

February 26, 2016

This Eighth Amended and Restated Rent Supplement (this “Eighth Amended Supplement”) between Sharyland Distribution and Transmission Services, L.L.C. (“Lessor”) and Sharyland Utilities, L.P. (“Lessee”) is executed and delivered on February 26, 2016, to memorialize supplements to the CREZ Lease (as defined below), effective as of January 1, 2016.  Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the CREZ Lease.

WHEREAS, Lessor and Lessee are Parties to a Third Amended and Restated Lease Agreement (CREZ Assets) dated as of December 4, 2015 (as amended from time to time in accordance with its terms, the “CREZ Lease”);

WHEREAS, on December 31, 2015 the Parties executed a Seventh Amended and Restated Rent Supplement (CREZ Lease) effective as of January 1, 2016 (the “Seventh Amended Supplement”); and

WHEREAS, the Incremental CapEx for 2015 was different than expected by the Eighth Amended Supplement and the Parties wish to effect a Rent Validation (as set forth in Section 3.2(c) of the CREZ Lease) and to amend and restate the Seventh 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 Seventh Amended Supplement is hereby amended and restated in its entirety as set forth below.

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

 

			
	
Incremental Cap Ex:
	
2013
	
$466,424,280

	
 
	
2014
	
$198,982,000

	
 
	
2015
	
$  3,493,096*

	
 
	
2016
	
$    5,244,389**

 

* Represents the “validated” amount of 2015 transmission Incremental CapEx, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the CREZ Lease, and, as part of this Rent Validation, the amount of 2015 transmission Incremental CapEx has been restated to $3,493,096.  The amount of 2015 transmission Incremental CapEx included in the Seventh Amended Supplement was $10,500,000.  The weighted average in-service date of November 1, 2015 did not change as a result of this Rent Validation.

** Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2016.  Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Seventh Amended Supplement.  Of the 2016 Incremental CapEx, $0 is expected to be in service as of the balance sheet date reflected in Lessee’s first 2016 Regulatory Order (“First 2016 CapEx”), an aggregate of $2,052,263 is expected to be in service as of the balance sheet date reflected in Lessee’s second 2016 Regulatory Order (“Second 2016 CapEx”), and an aggregate of $3,192,126 is expected to be placed in service throughout the remainder of 2016 (“2016 Stub-Year CapEx”).  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 Parties expect the First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx, collectively, to have a weighted average in-service date of October 1, 2016.  The Parties expect the first 2016 Regulatory Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017.  The Parties agree that any Rent Validation (within the meaning of the CREZ Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the CREZ Lease.

 

			
	
 
	
1
	
 

	
 
	
 
	
CREZ LEASE

 

 

 

			
	
Lessee Cap Ex:
	
2013
	
$0

	
 
	
2014
	
$0

	
 
	
2015
	
$0

	
 
	
2016
	
$0

 

			
	
Base Rent:
	
2013
	
$21,758,233 

	
 
	
2014
	
$67,335,947

	
 
	
2015
	
$68,524,342# 

	
 
	
2016
	
$66,210,646## 

	
 
	
2017
	
$64,049,041###

	
 
	
2018
	
$61,704,141 

	
 
	
2019
	
$59,428,972 

	
 
	
2020
	
$57,240,585 

 

# Represents the “validated” amount of 2015 Base Rent, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the CREZ Lease and, as part of this Rent Validation, the amount of 2015 Base Rent has been restated.  The amount of 2015 Base Rent included in the Seventh Amended Supplement was $68,535,384, comprised of 2015 Base Rent payments of $5,688,129 paid on the 15th day of each month beginning on March 15, 2015 through May 15, 2015 (with respect to January 2015 through March 2015), Base Rent payments of $5,712,236 on the 15th day of each month beginning on June 15, 2015 through December 15, 2015 (with respect to April 2015 through October 2015), and Base Rent payments of $5,742,672 on each of January 15, 2016 and February 15, 2016 (with respect to November and December 2015).  Lessor will pay Lessee $11,042 (which is the difference between the aggregate amount of monthly Base Rent paid by Lessee as set forth in this footnote ($68,535,384) and the amount of restated 2015 Base Rent set forth above ($68,524,342)) as a validation payment within 30 days of the date hereof (as set forth under “Validation Payment” below).

## Lessee will make a monthly 2016 Base Rent payment of $5,514,292 on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016).  Lessee will then make a monthly 2016 Base Rent payment of $5,514,292 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which is 30 days after approval of Lessee’s first 2016 Regulatory Order.  Lessee will then make a monthly 2016 Base Rent payment of $5,533,861 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which is 30 days after approval of Lessee’s second 2016 Regulatory Order.

### Lessee will make a monthly 2017 Base Rent payment of $5,315,801 on the 15th day of each month beginning on March 15, 2017 through May 15, 2017 (with respect to January 2017 through March 2017).  Lessee will then make a 2017 Base Rent payment of $5,344,626 on the 15th day of each month beginning on June 15, 2017 through February 15, 2018 (with respect to April 2017 through December 2017), with the increase in monthly Base Rent reflecting 2016 Stub-Year CapEx and commencing April 1, 2017, which is 30 days after approval of Lessee’s first 2017 Regulatory Order.  

 

			
	
Percentage Rent Percentages:
	
 

2013
	
 

29.2% 

	
 
	
2014
	
31.6% 

	
 
	
2015
	
31.3%# 

	
 
	
2016
	
30.3% 

	
 
	
2017
	
29.5% 

	
 
	
2018
	
28.5% 

	
 
	
2019
	
27.7% 

	
 
	
2020
	
26.8% 

 

# Represents the “validated” percentage applicable to 2015 Percentage Rent, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the CREZ Lease and, as part of this Rent Validation, the 2015 percentage has been restated.  The 2015 percentage included in the Seventh Amended Supplement was 31.3% (i.e., even though the percentage has not changed it has been “validated” pursuant to this Rent Validation).

 

			
	
 
	
2
	
 

	
 
	
 
	
CREZ LEASE

 

 

 

			
	
Annual Percentage Rent
	
 
	
 

	
Breakpoints:
	
2013
	
$21,758,233 

	
 
	
2014
	
$67,335,947 

	
 
	
2015
	
$68,524,342# 

	
 
	
2016
	
$66,230,214* 

	
 
	
2017
	
$64,079,575** 

	
 
	
2018
	
$61,704,141 

	
 
	
2019
	
$59,428,972 

	
 
	
2020
	
$57,240,585 

 

# Represents the “validated” 2015 Annual Percentage Rent Breakpoint, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the CREZ Lease and, as part of this Rent Validation, the 2015 Annual Percentage Rent Breakpoint has been restated.  The 2015 Annual Percentage Rent Breakpoint included in the Seventh Amended Supplement was $68,535,384.

 

* The 2016 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2016 Regulatory Order and the second 2016 Regulatory Order, as well as the amount of First 2016 CapEx and Second 2016 CapEx.

 

** The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2016 Regulatory Order, the second 2016 Regulatory Order, and the first 2017 Regulatory Order, as well as the amount of First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx.

 

			
	
Revenues Attributable to
	
 
	
 

	
Lessee Capex, by Lease Year:
	
 
	
 

	
 
	
 
	
 

	
 
	
2013
	
$0

	
 
	
2014
	
$0

	
 
	
2015
	
$0

	
 
	
2016
	
$0

 

Validation Payment:  As a result of the validation described above, pursuant to Section 3.2(c) of the CREZ Lease, Lessor will pay Lessee $7,586 within 30 days following execution hereof of which $11,042 is attributable to the validation of Base Rent and ($3,456) is attributable to the validation of Percentage Rent.

 

		
	
ERCOT Transmission Rate

Allocation
	
between June 20 and October 17, 2013:   65.3%

	
 
	
between October 17, 2013 and February 25, 2014:   84.8%

	
 
	
between February 25, 2014 and May 1, 2014: 83.3%

	
 
	
between May 1, 2014 and October 3, 2014:  80.9%

	
 
	
between October 3, 2014 and March 31, 2015:  75.8%

	
 
	
between April 1, 2015 and October 31, 2015:  72.7%

	
 
	
between November 1, 2015 and June 1, 2016: 65.6%

	
 
	
between June 1, 2016 and October 1, 2016:  64.1%

	
 
	
starting October 1, 2016:  61.9%

 

Term of Rent Supplement:  Expires 12/31/20

 

 

 

 

			
	
 
	
3
	
 

	
 
	
 
	
CREZ LEASE

 

 

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

 

	
SHARYLAND UTILITIES, L.P.

	
 
	
 

	
By:
	
/s/ Greg Wilks

	
Name:
	
Greg Wilks

	
 
	
Chief Financial Officer

 

	
SHARYLAND DISTRIBUTION &

	
TRANSMISSION SERVICES, L.L.C.

	
 
	
 

	
By:
	
/s/ Brant Meleski

	
Name:
	
Brant Meleski

	
 
	
Chief Financial Officer

 

 

			
	
 
	
 
	
 

	
 
	
 
	
CREZ LEASEhifr-ex1015_340.htm

 

Exhibit 10.15

Fifth Amended and Restated Rent Supplement

(ERCOT Transmission Lease)

February 26, 2016

 

This Fifth Amended and Restated Rent Supplement (this “Fifth Amended Supplement”) between Sharyland Distribution and Transmission Services, L.L.C. (“Lessor”) and Sharyland Utilities, L.P. (“Lessee”) is executed and delivered on February 26, 2016, to memorialize supplements to the ERCOT Transmission Lease (as defined below), effective as of January 1, 2016. Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the ERCOT Transmission Lease.  

WHEREAS, Lessor and Lessee are Parties to a Lease Agreement (ERCOT Transmission Assets) dated December 1, 2014 (as amended from time to time in accordance with its terms, the “ERCOT Transmission Lease”);

WHEREAS, on December 31, 2015 the Parties executed a Fourth Amended and Restated Rent Supplement (ERCOT Transmission Lease) effective as of January 1, 2016 (the “Fourth Amended Supplement”); and 

WHEREAS, the Incremental CapEx for 2015 was different than expected by the Fourth Amended Supplement and the Parties wish to effect a Rent Validation (as set forth in Section 3.2(c) of the ERCOT Transmission Lease) and to amend and restate the Fourth 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 Lessee 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 Fourth Amended Supplement is hereby amended and restated in its entirety as set forth below.

2.The ERCOT Transmission Lease, except as supplemented by this Fifth Amended Supplement, shall remain in full force and effect.

 

	
Incremental CapEx:
	
 
	
 

	
 
	
2014
	
$ 18,470,677

	
 
	
2015
	
$ 22,517,350*

	
 
	
2016
	
$   9,237,495**

 

* Represents the validated amount of 2015 transmission Incremental CapEx, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the ERCOT Transmission Lease, and, as part of this Rent Validation, the amount and weighted average in-service date of 2015 transmission Incremental CapEx has been restated to $22,517,350 with a weighted average in-service date of August 1, 2015.  The amount of 2015 transmission Incremental CapEx included in the Fourth Amended Supplement was $17,000,000, with a weighted average in-service date of September 1, 2015.

 

1

ERCOT Transmission Lease

 

** Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2016.  Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Fourth Amended Supplement.  Of the 2016 Incremental CapEx, an aggregate of $4,244,655 is expected to be in service as of the balance sheet date reflected in Lessee’s first 2016 Regulatory Order (“First 2016 CapEx”), an aggregate of $2,086,871 is expected to be in service as of the balance sheet date reflected in Lessee’s second 2016 Regulatory Order (“Second 2016 CapEx”), and an aggregate of $2,905,968 is expected to be placed in service throughout the remainder of 2016 (“2016 Stub-Year CapEx”).  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 Parties expect the First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx, collectively, to have a weighted average in-service date of June 1, 2016.  The Parties expect the first 2016 Regulatory Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017.  The Parties agree that any Rent Validation (within the meaning of the ERCOT Transmission Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the ERCOT Transmission Lease. 

 

	
Lessee CapEx:
	
 
	
 

	
 
	
2014
	
$ 0

	
 
	
2015
	
$ 0

	
 
	
2016
	
$ 0

 

	
Base Rent:
	
 
	
 

	
 
	
2014
	
$   484,276

	
 
	
2015
	
$2,477,452# 

	
 
	
2016
	
$4,547,412## 

	
 
	
2017
	
$4,789,842### 

	
 
	
2018
	
$4,654,206 

	
 
	
2019
	
$4,483,257 

	
 
	
2020
	
$4,323,002 

	
 
	
2021
	
$4,170,944 

	
 
	
2022
	
$4,023,029 

 

# Represents the “validated” amount of 2015 Base Rent, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the ERCOT Transmission Lease and, as part of this Rent Validation, the amount of 2015 Base Rent has been restated.  The amount of 2015 Base Rent included in the Fourth Amended Supplement was $2,219,582, comprised of 2015 Base Rent payments of $158,795 paid on the 15th day of each month beginning on March 15, 2015 through May 15, 2015 (with respect to January 2015 through March 2015), Base Rent payments of $160,497 on the 15th day of each month beginning on June 15, 2015 through December 15, 2015 (with respect to April 2015 through October 2015), and Base Rent payments of $309,857 on each of January 15, 2016 and February 15, 2016 (with respect to November and December 2015).  Lessee will pay Lessor $257,870 (which is the difference between the amount set forth as 2015 Base Rent above ($2,477,452) and the aggregate amount of monthly Base Rent set forth in this footnote ($2,219,582)) as a validation payment within 30 days of the date hereof (as set forth under “Validation Payment” below).

 

## Lessee will make a monthly 2016 Base Rent payment of $355,151 on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016).  Lessee will then make a monthly 2016 Base Rent payment of $396,049 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which is 30 days after approval of Lessee’s first 2016 Regulatory Order.  Lessee will then make a monthly 2016 Base Rent payment of $416,155 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which is 30 days after approval of Lessee’s second 2016 Regulatory Order.

 

2

ERCOT Transmission Lease

 

### Lessee will make a monthly 2017 Base Rent payment of $379,093 on the 15th day of each month beginning on March 15, 2017 through May 15, 2017 (with respect to January 2017 through March 2017).  Lessee will then make a 2017 Base Rent payment of $405,841 on the 15th day of each month beginning on June 15, 2017 through February 15, 2018 (with respect to April 2017 through December 2017), with the increase in monthly Base Rent reflecting 2016 Stub-Year CapEx and commencing April 1, 2017, which is 30 days after approval of Lessee’s first 2017 Regulatory Order.  

 

	
Percentage Rent Percentages:
	
 
	
 

	
 
	
2014
	
35.8%

	
 
	
2015
	
35.1%#

	
 
	
2016
	
31.1% 

	
 
	
2017
	
28.2% 

	
 
	
2018
	
27.2% 

	
 
	
2019
	
26.2% 

	
 
	
2020
	
25.3% 

	
 
	
2021
	
24.4% 

	
 
	
2022
	
23.5% 

 

# Represents the “validated” percentage applicable to 2015 Percentage Rent, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the ERCOT Transmission Lease and, as part of this Rent Validation, the 2015 percentage has been restated.  The 2015 percentage included in the Fourth Amended Supplement was 35.1% (i.e., even though the percentage has not changed it has been “validated” pursuant to this Rent Validation).

 

	
Annual Percentage Rent
	
 
	
 

	
Breakpoints:
	
 
	
 

	
 
	
2014
	
$   484,276

	
 
	
2015
	
$2,477,452# 

	
 
	
2016
	
$4,608,413*

	
 
	
2017
	
$4,818,146**

	
 
	
2018
	
$4,654,206 

	
 
	
2019
	
$4,483,257 

	
 
	
2020
	
$4,323,002 

	
 
	
2021
	
$4,170,944 

	
 
	
2022
	
$4,023,029 

 

# Represents the “validated” 2015 Annual Percentage Rent Breakpoint, i.e. a Rent Validation has occurred pursuant to Section 3.2(c) of the ERCOT Transmission Lease and, as part of this Rent Validation, the 2015 Annual Percentage Rent Breakpoint has been restated.  The 2015 Annual Percentage Rent Breakpoint included in the Fourth Amended Supplement was $2,219,582.

 

* The 2016 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2016 Regulatory Order and the second 2016 Regulatory Order, as well as the amount of First 2016 CapEx and Second 2016 CapEx.

 

** The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2016 Regulatory Order, the second 2016 Regulatory Order, and the first 2017 Regulatory Order, as well as the amount of First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx.

 

	
Revenues Attributable to
	
 
	
 

	
Lessee CapEx:
	
 
	
 

	
 
	
2014
	
$ 0

	
 
	
2015
	
$ 0

	
 
	
2016
	
$ 0

	
 
	
2017
	
$ 0

	
 
	
2018
	
$ 0

	
 
	
2019
	
$ 0

	
 
	
2020
	
$ 0

	
 
	
2021
	
$ 0

	
 
	
2022
	
$ 0

 

3

ERCOT Transmission Lease

 

Validation Payment:  As a result of the validation described above, pursuant to Section 3.2(c) of the ERCOT Transmission Lease, Lessee will pay Lessor $167,358 within 30 days following execution hereof of which $257,870 is attributable to the validation of Base Rent and $(90,512) is attributable to the validation of Percentage Rent.

 

ERCOT Transmission Rate

 

		
	
Allocation:
	
before October 3, 2014:  0%

	
 
	
between October 3, 2014 and March 31, 2015: 2.1%

	
 
	
between April 1, 2015 and October 31, 2015: 2.1%

	
 
	
between November 1, 2015 and June 1, 2016: 3.6%

	
 
	
between June 1, 2016 and October 1, 2016:  4.5%

	
 
	
starting October 1, 2016:  4.5%

	
 
	
 

	
Term of Rent Supplement:
	
Expires 12/31/22

	
 
	
 

 

4

ERCOT Transmission Lease

 

The Parties have executed this Fifth Amended Supplement to the ERCOT Transmission Lease as of the date set forth above.

 

	
SHARYLAND UTILITIES, L.P.

	
 
	
 

	
By:
	
/s/ Greg Wilks

	
Name:
	
Greg Wilks

	
 
	
Chief Financial Officer

 

	
SHARYLAND DISTRIBUTION & 

	
TRANSMISSION SERVICES, L.L.C.

	
 
	
 

	
By:
	
/s/ Brant Meleski

	
Name:
	
Brant Meleski

	
 
	
Chief Financial Officer

 

5

ERCOT Transmission Lease

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