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Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment No. 1 to Second Amended and Restated Master Terminalling Services Agreement
Effective on the Second Closing Date, TRMC, TAC and the Operating Company entered into Amendment No. 1 to the Second Amended and Restated Master Terminalling Services Agreement (the “
MTSA Amendment
”). The MTSA Amendment modifies the previously disclosed Second Amended and Restated Master Terminalling Services Agreement by and among TRMC, TAC (formerly known as Tesoro Alaska Company) and the Operating Company dated as of May 3, 2013 (the “
MTSA
”) so that the MTSA no longer applies to the terminal operated by the Operating Company in Anchorage, Alaska and to remove TAC as a party to the MTSA.
The foregoing description is not complete and is qualified in its entirety by reference to the MTSA Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Alaska Terminalling Services Agreement
Effective as of the Second Closing Date, TAC, the Operating Company, TAT, the General Partner and the Partnership entered into the Alaska Terminalling Services Agreement (the “
Alaska TSA
”) which supersedes in its entirety that certain Terminalling Services Agreement - Nikiski, dated as of July 1, 2014 by and among TAC, the Operating Company, the General Partner and the Partnership. The Alaska TSA has an initial term of ten years and TAC has the option to extend the term of the Alaska TSA for up to two renewal terms of five years each. Under the Alasksa TSA, the Operating Company will provide TAC with (i) commingled storage and throughput services at the Operating Company’s terminals in Anchorage, Fairbanks and Nikiski, Alaska (each a “
Terminal
” and collectively, the “
Terminals
”), (ii) dedicated storage and rail-loading services at its Anchorage Terminal, and (iii) various other services listed in the Alaska TSA and any terminal service order. TAC and the Operating Company have agreed on terminal minimum throughput commitments at each of the Terminals. The Operating Company will charge throughput fees for each barrel distributed through the Terminals in addition to separate fees for providing various ancillary services such as ethanol blending and additive injection. If TAC fails to throughput at any Terminal aggregate volumes for such Terminal equal to or greater than its minimum throughput commitment for such Terminal, then TAC will pay the Operating Company a shortfall payment equal to the difference between the fees that would have been charged had TAC met its throughput commitment and the amount charged for the volumes that TAC actually throughput at such Terminal. The Operating Company will also charge rail services fees and if TAC fails to throughput aggregate rail volumes that are equal to or greater than its minimum rail commitment, TAC will pay the Operating Company a shortfall payment equal to the difference between the fees that would have been charged had TAC met its minimum rail commitment and the amount actually charged for the rail throughput services. In addition to the foregoing fees, TAC will also pay dedicated storage fees to the Operating Company for the storage services it receives at the Anchorage Terminal and other pass-through charges. For up to two years after the termination of the Alaska TSA, and provided that the termination was not due to TAC’s default, TAC may exercise a right of first refusal on any new terminalling services agreement the Operating Company offers to a third party.
The foregoing description is not complete and is qualified in its entirety by reference to the Alaska TSA which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Second Amended and Restated Representation and Services Agreement for Oil Spill Contingency Planning, Response and Remediation
The parties to the Amended and Restated Representation and Services Agreement for Oil Spill Contingency Planning, Response and Remediation dated as of December 6, 2013 (the “
Prior Representation and Services Agreement
”) have entered into a Second Amended and Restated Representation and Services Agreement for Oil Spill Contingency Planning, Response and Remediation (the “
Amended Representation and Services Agreement
”) with certain additional parties that amends and restates the Prior Representation and Services Agreement to add such new parties and to clarify certain of the parties’ obligations under the agreement. Under the Amended Representation and Services Agreement, Tesoro Companies, Inc. (“
TCI
”), Tesoro Maritime Company (“
TMC
”), TRMC, TAC, Kenai Pipe Line Company (“
KPL
”), Tesoro Alaska Pipeline Company LLC (“
TAPL
”), Carson Cogeneration Company (“
CCC
”), Tesoro Great Plains Midstream LLC (“
TGP
”), Tesoro Great Plains Gathering and Marketing LLC (“
TGPGM
”), BakkenLink Pipeline LLC (“
BLP
”), ND Land Holdings LLC (“
NDLH
”), the Operating Company, Tesoro High Plains Pipeline Company LLC (“
THPP
”), Tesoro Logistics Pipelines LLC (“
TLP
”), Tesoro Logistics Northwest Pipeline LLC (“
TLNP
”), Tesoro SoCal Pipeline Company, LLC (“
TSCP
”), QEP Field Services, LLC (“
QEPFS
”), QEPM Gathering I, LLC (“
QGI
”), Green River Processing, LLC (“
GRP
”), Rendezvous Pipeline Company, LLC (“
RPL
”) and TAT are each a party, and TCI, TRMC, TAC, KPL, CCC, TGP, TGPGM, BLP and NDLH are each individually a “
Tesoro
Party
” and collectively the “
Tesoro
Parties
,” and the Operating Company, TLP, TLNP, TAPL, THPP, QEPFS, TSCP, QGI, GRP, RPL and TAT are each individually a “
TLLP
Party
” and collectively the “
TLLP Parties
.”
Pursuant to the Amended Representation and Services Agreement, the Tesoro Parties and the TLLP Parties have agreed (i) that TCI will act as the sole representative for the Tesoro Parties and the TLLP Parties as a member in the Marine Preservation Association (the “
MPA
”), and TCI shall perform the duties and responsibilities of a member in MPA on behalf of both the Tesoro Parties and the TLLP Parties; and (ii) to the allocation among and between the Tesoro Parties and TLLP Parties of costs and expenses associated with oil spill contingency planning, response and remediation activities, such costs and expenses to include: MPA operating costs; fees charged by the Marine Spill Response Corporation (“
MSRC
”) to provide oil spill response and contingency planning for property owned, leased, subleased or operated by any Tesoro Party or any TLLP Party and for vessels charted by TMC; incident response costs incurred by the MPA, MSRC, the Tesoro Parties or the TLLP Parties, and related remediation.
The Amended Representation and Services Agreement also provides for reimbursement to any TLLP Party or its parent, Tesoro, in those instances where TLLP facilities that are operated, leased or subleased by a TLLP Party, but are owned or leased by a Tesoro Party, and the Tesoro Party or Tesoro is required to post or provide a parent guaranty or a Certificate of Financial Responsibility (“
COFR
”) to demonstrate adequate financial ability to pay for any incident response costs that might be associated
with incidents at such TLLP facility. The TLLP Party operating, leasing or subleasing the TLLP facility shall release, defend, indemnify and hold harmless the Tesoro Party owning or leasing such TLLP facility, and Tesoro will be (i) subrogated to the rights of such Tesoro Party to receive such reimbursement to the extent that Tesoro is obligated to pay or guarantee payment of such incident response costs pursuant to any such parent guaranty or COFR and (ii) entitled to receive reimbursement from TLLP for any incremental costs or expenses incurred by it or a Tesoro Party in connection with the posting of a COFR for a TLLP facility.
The Amended Representation and Services Agreement continues until December 31, 2016, and thereafter renews for successive periods of one year, unless terminated by any party upon 60 days advance written notice. The parties may periodically evaluate whether the allocation and methods of paying the costs and expenses set forth in the Amended Representation and Services Agreement remain appropriate under conditions as they may exist from time to time. At any time after December 31, 2016, any party may request good faith renegotiation of all or any part of the Amended Representation and Services Agreement, and in the event the Parties are unable to reach a consensus on any appropriate adjustments, then any party may terminate the Amended Representation and Services Agreement upon ten days advance written notice as to subsequent costs incurred by TCI, but such termination will not invalidate the Amended Representation and Services Agreement as to costs incurred by TCI prior to such termination. Upon termination of the Amended Representation and Services Agreement, TCI may rescind its designation of the TLLP Parties and the Tesoro Parties as covered entities with respect to TCI’s membership in MPA.
Each of the parties to the Amended Representation and Services Agreement is either a direct or indirect subsidiary of Tesoro. As a result, certain individuals, including officers and directors of Tesoro and the General Partner, serve as officers and/or directors of more than one of such other entities.
The foregoing description is not complete and is qualified in its entirety by reference to the Amended Representation and Services Agreement which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
Third Amended and Restated Schedules to the Third Amended and Restated Omnibus Agreement
Tesoro entered into the Third Amended and Restated Schedules to the Third Amended and Restated Omnibus Agreement (“
Amended Omnibus Schedules
”) with the General Partner, the Partnership, TRMC, TAC and TCI, which amend and restate the schedules to the Third Amended and Restated Omnibus Agreement to include the TAT Units subject to the Contribution Agreement.
The foregoing description is not complete and is qualified in its entirety by reference to the Amended Omnibus Schedules, which are filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Relationships
Each of the Partnership, the General Partner, TRMC, TAC, TAT, TCI and the Operating Company is a direct or indirect subsidiary of Tesoro. As a result, certain individuals, including officers and directors of Tesoro and the General Partner, serve as officers and/or directors of more than one of such other entities. After the Second Closing, the General Partner, as the general partner of the Partnership, holds 2,083,330 general partner units of the Partnership, which represents a 2% general partner interest, and 8,783,117 common units of the Partnership, which represents an 8.43% limited partner interest in the Partnership. Tesoro, together with TRMC (including the 151,021 common units held by Carson Cogeneration Company, a wholly-owned subsidiary of TRMC), TAC and the General Partner, holds 33,194,109 common units of the Partnership, which represents an approximate 31.9% limited partner interest, in addition to the 2% general partner interest in the Partnership discussed above.