Exhibit 10.2
Execution Copy
CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT
by and among
TESORO LOGISTICS LP
TESORO LOGISTICS GP, LLC
TESORO LOGISTICS OPERATIONS LLC
TESORO CORPORATION
TESORO ALASKA COMPANY
TESORO REFINING AND MARKETING COMPANY
and
TESORO HIGH PLAINS PIPELINE COMPANY LLC
Dated as of April 26, 2011

 

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CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT
     This Contribution, Conveyance and Assumption Agreement, dated as of
April 26, 2011 (this “Agreement”), is by and among Tesoro Logistics LP, a
Delaware limited partnership (the “Partnership”), Tesoro Logistics GP, LLC, a
Delaware limited liability company and the general partner of the Partnership
(the “General Partner”), Tesoro Logistics Operations LLC, a Delaware limited
liability company (the “Operating Company”), Tesoro Corporation, a Delaware
corporation (“Tesoro”), Tesoro Alaska Company, a Delaware corporation (“Tesoro
Alaska”), Tesoro Refining and Marketing Company, a Delaware corporation
(“TRMC”), and Tesoro High Plains Pipeline Company LLC, a Delaware limited
liability company (“High Plains”). The above-named entities are sometimes
referred to in this Agreement individually as a “Party” and collectively as the
“Parties.” Capitalized terms used herein shall have the meanings assigned to
such terms in Article I.
RECITALS
     WHEREAS, the General Partner and Tesoro have formed the Partnership,
pursuant to the Delaware Revised Uniform Limited Partnership Act (the “Delaware
Partnership Act”), for the purpose of owning and operating crude oil and refined
products logistics assets and providing related logistics services, as well as
engaging in any other business activity that is approved by the General Partner
and that lawfully may be conducted by a limited partnership organized under the
Delaware Partnership Act.
     WHEREAS, in order to accomplish the objectives and purposes in the
preceding recital, each of the following actions has been taken prior to the
date hereof:

  1.   Tesoro formed the General Partner under the terms of the Delaware Limited
Liability Act (the “Delaware LLC Act”) and contributed $1,000 in exchange for
all of the limited liability company interests in the General Partner;     2.  
Tesoro and the General Partner formed the Partnership under the terms of the
Delaware Partnership Act and contributed $980 and $20, respectively, in exchange
for a 98% limited partner interest (the “Initial LP Interest”) and a 2% general
partner interest, respectively, in the Partnership;     3.   TRMC formed the
Operating Company under the Delaware LLC Act and contributed $1,000 in exchange
for all of the limited liability company interests in the Operating Company;    
4.   Tesoro Alaska formed Tesoro Alaska Logistics LLC, a Delaware limited
liability company (“TAL”), under the Delaware LLC Act and contributed $1,000 in
exchange for all of the limited liability company interests in TAL;     5.  
Tesoro High Plains Pipeline Company, a Delaware corporation and the predecessor
to High Plains (“THPPC”), formed Tesoro Trucking Operations LLC, a Delaware
limited liability company (“Tesoro Trucking”), under the Delaware

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      LLC Act and contributed $1,000 in exchange for all of the limited
liability company interests in Tesoro Trucking;

  6.   THPPC filed a certificate of conversion under the Delaware LLC Act and
converted from a Delaware corporation to a Delaware limited liability company;  
  7.   Pursuant to that certain Bill of Sale and Assignment, dated as of
December 7, 2010, High Plains contributed certain logistics assets to Tesoro
Trucking;     8.   Pursuant to that certain Contribution Agreement, dated as of
April 26, 2011, by and between Tesoro Alaska and TAL, Tesoro Alaska contributed
certain logistics assets (the “Tesoro Alaska Assets”) to TAL;     9.   Pursuant
to that certain Contribution Agreement, dated as of April 26, 2011, by and
between TRMC and the Operating Company, TRMC conveyed certain logistics assets
(the “TRMC Assets”) to the Operating Company;     10.   Pursuant to that certain
Assignment and Assumption Agreement, dated as of April 26, 2011, by and between
TRMC and the Operating Company, TRMC agreed to assign, subject to the consent of
the Port Authority, all of its right, title and interest in, to and under the
Vancouver Lease to the Operating Company;

     WHEREAS, immediately prior to the consummation of the transactions
contemplated hereby (the “Closing”), Tesoro will convey a portion of its limited
liability company interest in High Plains (the “HP Interest”) to the General
Partner as a capital contribution with a value equal to (a) 2% of the equity
value of the Partnership immediately after the Closing plus (b) $50 million;
     WHEREAS, concurrently with the Closing, each of the matters provided for in
Article II will occur in accordance with its respective terms;
     WHEREAS, if the Over-Allotment Option is exercised, each of the matters
provided for in Article III will occur in accordance with its respective terms;
and
     WHEREAS, the stockholders, members or partners of the Parties have taken
all corporate, limited liability company and partnership action, as the case may
be, required to approve the transactions contemplated by this Agreement.
     NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms below:

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     “Common Unit” means a common unit representing a limited partner interest
in the Partnership having the rights set forth in the Partnership Agreement.
     “Effective Time” means 8:00 a.m. Central Time on the date of the Closing.
     “Master Terminalling Agreement” means that certain Master Terminalling
Agreement, dated as of April 26, 2011, among TRMC, Tesoro Alaska and the
Operating Company, as such agreement may be amended, supplemented or restated
from time to time.
     “Offering” means the initial public offering of the Partnership’s Common
Units.
     “Omnibus Agreement” means that certain Omnibus Agreement, dated as of
April 26, 2011, among Tesoro, TRMC, Tesoro Companies, Inc., a Delaware
corporation, Tesoro Alaska, the General Partner and the Partnership, as such
agreement may be amended, supplemented or restated from time to time.
     “Option Units” means the Common Units that the Partnership will agree to
issue upon an exercise of the Over-Allotment Option.
     “Original Partnership Agreement” means that certain Agreement of Limited
Partnership of the Partnership, dated as of December 3, 2010.
     “Over-Allotment Option” has the meaning assigned to it in the Partnership
Agreement.
     “Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of the date of this Agreement.
     “Partnership Group” has the meaning set forth in the Omnibus Agreement.
     “Port Authority” means the Port of Vancouver, U.S.A.
     “Registration Statement” means the Registration Statement on Form S-1 filed
by the Partnership with the United States Securities and Exchange Commission
(Registration No. 333-171525), as amended.
     “Subordinated Units” means a subordinated unit representing a limited
partner interest in the Partnership having the rights set forth in the
Partnership Agreement.
     “Underwriters” means the underwriting syndicate listed in the Underwriting
Agreement.
     “Underwriting Agreement” means a firm commitment underwriting agreement to
be entered into between the Partnership and the underwriters named in the
Registration Statement.
     “Vancouver Lease” means that certain Lease Agreement dated October 22, 1996
by and between the Port of Vancouver, U.S.A., and Tesoro Refining and Marketing
Company (successor-in-interest to Tesoro Alaska Petroleum Company), as amended.
     “Vancouver Property” means the real property and personal property, if any,
leased by TRMC pursuant to the Vancouver Lease.

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ARTICLE II
CONTRIBUTIONS, ACKNOWLEDGEMENTS AND DISTRIBUTIONS
     The following shall be completed immediately following the Effective Time
in the order set forth herein:
     Section 2.1 Execution of the Partnership Agreement. The Partnership, the
General Partner and Tesoro shall amend and restate the Original Partnership
Agreement by executing the Partnership Agreement in substantially the form
included in Appendix A to the Registration Statement, with such changes as the
Partnership, the General Partner and Tesoro may agree.
     Section 2.2 Conveyance of the HP Interest to the General Partner. Tesoro
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and
delivers to the General Partner, its successors and its assigns, for its and
their own use forever, all right, title and interest in and to the HP Interest,
and the General Partner hereby accepts the HP Interest as a contribution to the
capital of the General Partner. Notwithstanding any provision of the High Plains
Agreement (as defined below), contemporaneously with the assignment described
above, the General Partner is hereby admitted to High Plains as an additional
member of High Plains and hereby agrees that it is bound by the Limited
Liability Company Agreement of High Plains, dated as of December 2, 2010 (the
“High Plains Agreement”) as a member of High Plains.
     Section 2.3 Conveyance of the HP Interest by the General Partner to the
Partnership. The General Partner hereby grants, contributes, bargains, conveys,
assigns, transfers, sets over and delivers to the Partnership, its successors
and its assigns, for its and their own use forever, all right, title and
interest in and to the HP Interest in exchange for (a) a continuation of the
General Partner’s 2% general partner interest in the Partnership, (b) the
issuance to the General Partner of all of the equity interests in the
Partnership classified as “Incentive Distribution Rights” under the Partnership
Agreement and (c) the right to receive a $50.0 million distribution from
borrowings under the Partnership’s new credit facility (the “Borrowed Funds”),
and the Partnership hereby accepts the HP Interest as a contribution to the
capital of the Partnership. Notwithstanding any provision of the High Plains
Agreement, contemporaneously with the assignment described above, the
Partnership is hereby admitted to High Plains as a member of High Plains, and
hereby agrees that it is bound by the High Plains Agreement as a member of High
Plains. Immediately following the admission of the Partnership as a member of
High Plains, the General Partner shall and does hereby cease to be a member of
High Plains and shall thereupon cease to have or exercise any right or power as
a member of High Plains.
     Section 2.4 Conveyance of the Tesoro HP Interest by Tesoro to the
Partnership. Tesoro hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to the Partnership, its successors and its
assigns, for its and their own use forever, all right, title and interest in and
to Tesoro’s remaining limited liability company interest in High Plains (the
“Tesoro HP Interest”) in exchange for (a) 1,002,938 Common Units representing a
3.2% limited partner interest in the Partnership, (b) 6,785,124 Subordinated
Units representing a 21.8% limited partner interest in the Partnership, and
(c) the right to receive $107.4 million in proceeds from the Offering, of which
$0.2 million is to reimburse Tesoro for certain capital expenditures incurred by
Tesoro with respect to High Plains, and the Partnership hereby accepts the
Tesoro

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HP Interest as a contribution to the capital of the Partnership. Notwithstanding
any provision of the High Plains Agreement, contemporaneously with the
assignment described above, the Partnership hereby continues as a member of High
Plains with respect to the Tesoro HP Interest and Tesoro shall and does hereby
cease to be a member of High Plains and shall thereupon cease to have or
exercise any right or power as a member of High Plains. The applicable parties
hereto agree that the assignment of the HP Interest and the Tesoro HP Interest,
the admission of the Partnership as a member of High Plains and the cessation of
Tesoro as a member of High Plains shall not dissolve High Plains and that the
business of High Plains shall continue.
     Section 2.5 Conveyance of the Operating Company Interest by TRMC to the
Partnership. TRMC hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to the Partnership, its successors and its
assigns, for its and their own use forever, all right, title and interest in and
to all of the limited liability company interests in the Operating Company (the
“Operating Company Interest”) in exchange for (a) 1,169,195 Common Units
representing a 3.8% limited partner interest in the Partnership, (b) 7,909,891
Subordinated Units representing a 25.4% limited partner interest in the
Partnership, and (c) the right to receive $125.3 million in proceeds from the
Offering, of which $2.3 million is to reimburse TRMC for certain capital
expenditures incurred by TRMC with respect to the TRMC Assets, and the
Partnership hereby accepts the Operating Company Interest as a contribution to
the capital of the Partnership. Notwithstanding any provision of the Operating
Company Agreement (as defined below), contemporaneously with the assignment
described above, the Partnership is hereby admitted to the Operating Company as
a member of the Operating Company, and hereby agrees that it is bound by the
Limited Liability Company Agreement of the Operating Company, dated as of
December 2, 2010 (the “Operating Company Agreement”), as a member of the
Operating Company. Immediately following the admission of the Partnership as a
member of the Operating Company, TRMC shall and does hereby cease to be a member
of the Operating Company and shall thereupon cease to have or exercise any right
or power as a member of the Operating Company. The applicable parties hereto
agree that the assignment of the Operating Company Interest, the admission of
the Partnership as a member of the Operating Company and the cessation of TRMC
as a member of the Operating Company shall not dissolve the Operating Company
and that the business of the Operating Company shall continue.
     Section 2.6 Conveyance of the TAL Interest by Tesoro Alaska to the
Partnership. Tesoro Alaska hereby grants, contributes, bargains, conveys,
assigns, transfers, sets over and delivers to the Partnership, its successors
and its assigns, for its and their own use forever, all right, title and
interest in and to all of the limited liability company interests in TAL (the
“TAL Interest”) in exchange for (a) 82,757 Common Units representing a 0.3%
limited partner interest in the Partnership, (b) 559,875 Subordinated Units
representing a 1.8% limited partner interest in the Partnership, and (c) the
right to receive $8.9 million in proceeds from the Offering, of which
$0.1 million is to reimburse Tesoro Alaska for certain capital expenditures
incurred by Tesoro Alaska with respect to the Tesoro Alaska Assets, and the
Partnership hereby accepts the TAL Interest as a contribution to the capital of
the Partnership. Notwithstanding any provision of the TAL Agreement (as defined
below), contemporaneously with the assignment described above, the Partnership
is hereby admitted to TAL as a member of TAL, and hereby agrees that it is bound
by the Limited Liability Company Agreement of TAL, dated as of December 2, 2010
(the “TAL Agreement”), as a member of TAL. Immediately following the admission
of the Partnership as a member of TAL, Tesoro Alaska shall and does hereby cease
to be a member of

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TAL and shall thereupon cease to have or exercise any right or power as a member
of TAL. The applicable parties hereto agree that the assignment of the TAL
Interest, the admission of the Partnership as a member of TAL and the cessation
of Tesoro Alaska as a member of TAL shall not dissolve TAL and that the business
of TAL shall continue.
     Section 2.7 Public Cash Contribution. The Parties acknowledge that, in
connection with the Offering, the public, through the Underwriters, has made a
capital contribution to the Partnership of $273,000,000 in cash in exchange for
13,000,000 Common Units (the “Firm Units”) representing a 41.8% limited partner
interest in the Partnership and new limited partners are being admitted to the
Partnership in connection therewith.
     Section 2.8 Payment of Transaction Expenses and Contribution of Proceeds by
the Partnership. The Parties acknowledge (a) the payment by the Partnership, in
connection with the Closing, of transaction expenses in the amount of
approximately $9.3 million, excluding underwriting discounts of $17,062,500 in
the aggregate but including a structuring fee of 0.25% of the gross proceeds of
the Offering payable to one of the Underwriters (the “Structuring Fee”) and an
advisory fee of $2.0 million payable to a third party advisor, (b) the
distribution of approximately $107.4 million to Tesoro, in part as a
reimbursement of qualified capital expenditures, (c) the distribution of
approximately $125.3 million to TRMC, in part as a reimbursement of qualified
capital expenditures, (d) the distribution of approximately $8.9 million to
Tesoro Alaska, in part as a reimbursement of qualified capital expenditures, and
(e) the contribution by the Partnership of approximately $3.0 million to the
Operating Company to be used for working capital purposes.
     Section 2.9 Contribution of Member Interests in High Plains and TAL to the
Operating Company. The Partnership hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to the Operating Company,
its successors and its assigns, for its and their own use forever, all right,
title and interest in and to the Partnership’s limited liability company
interests in each of High Plains and TAL, as a capital contribution, and the
Operating Company hereby accepts such limited liability company interests. The
Parties acknowledge that, after such contribution, the Operating Company will
own all of the limited liability company interests in High Plains and TAL.
Notwithstanding any provision of the High Plains Agreement or the TAL Agreement,
contemporaneously with the contribution described above, the Operating Company
is hereby admitted to High Plains and TAL as a member of High Plains and TAL,
respectively, and hereby agrees that it is bound by the High Plains Agreement
and the TAL Agreement, respectively, as a member of each of High Plains and TAL.
Immediately following the admission of the Operating Company as a member of High
Plains and TAL, respectively the Partnership shall and does hereby cease to be a
member of each of High Plains and TAL and shall thereupon cease to have or
exercise any right or power as a member of each of High Plains and TAL. The
applicable parties hereto agree that the contribution of the limited liability
company interests in High Plains and TAL, the admission of the Operating Company
as a member of each of High Plains and TAL and the cessation of the Partnership
as a member of each of High Plains and TAL shall not dissolve High Plains or TAL
and that the business of High Plains and TAL shall continue.
     Section 2.10 Distribution of Member Interest in Tesoro Trucking to the
Operating Company. High Plains hereby grants, distributes, bargains, conveys,
assigns, transfers, sets over

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and delivers to the Operating Company, its successors and its assigns, for its
and their own use forever, all right, title and interest in and to all of the
limited liability company interest in Tesoro Trucking, and the Operating Company
hereby accepts such limited liability company interest. Notwithstanding any
provision of the Tesoro Trucking Agreement (as defined below), contemporaneously
with the distribution described above, the Operating Company is hereby admitted
to Tesoro Trucking as a member of Tesoro Trucking, and hereby agrees that it is
bound by the Limited Liability Company Agreement of Tesoro Trucking, dated as of
December 2, 2010 (the “Tesoro Trucking Agreement”), as a member of Tesoro
Trucking. Immediately following the admission of the Operating Company as a
member of Tesoro Trucking, High Plains shall and does hereby cease to be a
member of Tesoro Trucking and shall thereupon cease to have or exercise any
right or power as a member of Tesoro Trucking. The applicable parties hereto
agree that the distribution of the limited liability company interests in Tesoro
Trucking, the admission of the Operating Company as a member of Tesoro Trucking
and the cessation of High Plains as a member of Tesoro Trucking shall not
dissolve Tesoro Trucking and that the business of Tesoro Trucking shall
continue.
     Section 2.11 Merger of TAL and Tesoro Trucking with the Operating Company.
The Parties acknowledge that TAL and Tesoro Trucking will merge with and into
the Operating Company in accordance with Delaware law, with the Operating
Company continuing as the surviving company.
     Section 2.12 Delivery of 10-Year Note by Tesoro. The Parties acknowledge
that (a) the Partnership (i) has entered into a $150.0 million credit facility
guaranteed by the Operating Company and High Plains, (ii) will use $2.0 million
of proceeds from the Offering to pay debt finance costs associated with the
credit facility and (iii) has distributed the Borrowed Funds to the General
Partner, and (b) the General Partner has loaned the Borrowed Funds to Tesoro
pursuant to a 10-year note in the form attached as Exhibit A to this Agreement.
     Section 2.13 Redemption of the Initial LP Interest from Tesoro and Return
of Initial Capital Contribution. The Partnership hereby redeems the Initial LP
Interest held by Tesoro and hereby refunds and distributes to Tesoro the initial
contribution, in the amount of $980, made by Tesoro in connection with the
formation of the Partnership, along with any interest or other profit that
resulted from the investment or other use of such initial contribution.
ARTICLE III
EXERCISE OF OVER-ALLOTMENT OPTION
     If the Over-Allotment Option is exercised in whole or in part, the
Underwriters will contribute additional cash to the Partnership in exchange for
Option Units on the basis of the Offering price per Common Unit set forth in the
Registration Statement, net of underwriting discounts and the Structuring Fee.
The Partnership hereby agrees to redeem a number of Common Units from Tesoro,
TRMC and Tesoro Alaska, in a proportionate amount to their respective ownership
percentages of Common Units immediately prior to the exercise of the
Over-Allotment Option, equal to the number of Option Units sold by the
Partnership pursuant to the exercise of the Over-Allotment Option on the basis
of the Offering price per Common Unit set forth in the Registration Statement,
net of underwriting discounts and the Structuring Fee.

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ARTICLE IV
FURTHER ASSURANCES
     From time to time after the Effective Time, and without any further
consideration, the Parties agree to execute, acknowledge and deliver all such
additional deeds, assignments, bills of sale, conveyances, instruments, notices,
releases, acquittances and other documents, and to do all such other acts and
things, all in accordance with applicable law, as may be necessary or
appropriate (a) more fully to assure that the applicable Parties own all of the
properties, rights, titles, interests, estates, remedies, powers and privileges
granted by this Agreement, or which are intended to be so granted, (b) more
fully and effectively to vest in the applicable Parties and their respective
successors and assigns beneficial and record title to the interests contributed
and assigned by this Agreement or intended to be so and (c) more fully and
effectively to carry out the purposes and intent of this Agreement.
ARTICLE V
ORDER OF COMPLETION AND EFFECTIVE TIME
     Section 5.1 Order of Completion of Transactions. The transactions provided
for in Article II and Article III of this Agreement shall be completed
immediately following the Effective Time in the following order: first, the
transactions provided for in Article II shall be completed in the order set
forth therein; and second, following the completion of the transactions provided
for in Article II, the transactions provided for in Article III, if they occur,
shall be completed.
     Section 5.2 Effective Time. Notwithstanding anything contained in this
Agreement to the contrary, none of the provisions of Article II, Article III or
Article IV shall be operative or have any effect until the Effective Time, at
which time all such provisions shall be effective and operative in accordance
with Section 5.1 without further action by any Party.
ARTICLE VI
LICENSE TO USE LEASED PROPERTY
     Section 6.1 License.
          (a) To the extent that the Port Authority has not consented to the
assignment of the Vancouver Lease to the Operating Company by the Closing,
subject to Section 6.2, TRMC hereby grants a license (the “License”) to the
Operating Company to enter upon, access, use, expand, maintain, alter, repair,
replace and/or operate (“Operate”) the Vancouver Property for the purpose of
operating the Partnership Group’s business as described in the Registration
Statement.
          (b) The Operating Company hereby agrees to operate the Vancouver
Property with the same standard of care as used by TRMC in the use and operation
of the Vancouver Property as of the Closing, and agrees to comply with all
applicable legal, regulatory and permit requirements in conducting its
operations.
          (c) Each of the Operating Company and TRMC shall cooperate with the
other Party in connection with the Operating Company’s use of the Vancouver
Property so as to avoid

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unreasonable interference with the use and enjoyment of the Vancouver Property
by the other Party. From and after the Closing, the Operating Company shall
exclusively Operate the Vancouver Property and the Operating Company’s use of
the Vancouver Property shall be subject to the terms of the Master Terminalling
Agreement.
          (d) The Operating Company shall pay TRMC a license fee equal to
thirteen thousand dollars ($13,000.00) per month during the term of the License.
The Operating Company shall also reimburse TRMC for any actual and reasonable
costs incurred by TRMC related to or arising out of Operating Company’s use of
the Vancouver Property subject to the Vancouver Lease, excluding rent payable
under the Vancouver Lease. For any partial month during the term of the License,
the license fee shall be prorated.
     Section 6.2 Termination. The License granted pursuant to Section 6.1(a)
will terminate upon the earlier of (a) the effective date of the Port
Authority’s consent to, and the assignment of, the Vancouver Lease and (b) the
termination or expiration of the Vancouver Lease (as such may be extended from
time to time) in accordance with its terms. TRMC shall not have any obligation
to preserve and maintain the Operating Company’s right to Operate the Vancouver
Property following the termination or expiration of the Vancouver Lease.
     Section 6.3 Indemnification.
          (a) The Operating Company hereby agrees to indemnify, defend and hold
harmless TRMC from and against any losses suffered or incurred by TRMC by reason
of or arising out of any act or omission of the Operating Company, as
applicable, in contravention of the Vancouver Lease and occurring after the
Closing. For the avoidance of doubt, the foregoing indemnification is intended
to be in addition to and not in limitation of any indemnification to which TRMC
is entitled under Sections 3.1(b) or 3.5(b) of the Omnibus Agreement.
          (b) The Parties acknowledge and agree that the Operating Company, as a
member of the Partnership Group, is entitled to certain indemnification with
respect to the Vancouver Property under the terms of the Omnibus Agreement and
nothing in this Section 6.3 shall be construed to limit such indemnification.
     Section 6.4 Cooperation on Assignment. The Parties shall cooperate and use
commercially reasonable efforts to have the assignment of the Vancouver Lease
approved by the Port Authority at the earliest practicable time. In this regard,
the Operating Company shall provide such forms of financial security and meet
other requirements as may be reasonably required by the Port Authority,
consistent with the terms of the Vancouver Lease.
     Section 6.5 Operating Agreement. In the event that each of the following
conditions is satisfied: (i) The Port Authority concludes that the License or
the Operating Company’s occupancy of the Vancouver Property pursuant thereto is
a breach of the Vancouver Lease and (ii) the Port Authority has not granted its
consent for the assignment of the Lease, and the Lease has not been assigned, to
the Operating Company, then the Operating Company shall vacate the Vancouver
Property promptly upon receipt of a written revocation of the License from TRMC,
and TRMC hereby agree to enter into an operating agreement upon the following
terms:

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          (a) TRMC will appoint the Operating Company as its agent and operator
of the Vancouver Property, and the Operating Company will agree to Operate the
Vancouver Property;
          (b) As operator of the Vancouver Property, the Operating Company will
Operate the Vancouver Property and will exercise exclusive supervision and
control over the Operation of the Vancouver Assets; and
          (c) As consideration for the Operating Company’s agreement to Operate
the Vancouver Property, TRMC will pay the Operating Company an amount equal to
(i) the sum of (A) the same consideration and fees the Operating Company would
have been entitled to under the Master Terminalling Agreement with respect to
the Vancouver Property as would otherwise have been due and payable to the
Operating Company had the Lease been assigned to the Operating Company pursuant
to the Assignment and Assumption Agreement, and (B) any revenues due and payable
to TRMC under any third party terminalling services (or similar) agreements with
respect to the Vancouver Property, less (ii) any reasonable costs and expenses
(including capital costs) incurred by TRMC in connection with its continued
performance under the Lease with respect to the Vancouver Property.
ARTICLE VII
MISCELLANEOUS
     Section 7.1 Costs. Except for the transaction expenses set forth in Section
2.8, the Operating Company shall pay all expenses, fees and costs, including,
but not limited to, all sales, use and similar taxes arising out of the
contributions, conveyances and deliveries to be made under Article II and shall
pay all documentary, filing, recording, transfer, deed and conveyance taxes and
fees required in connection therewith. In addition, the Operating Company shall
be responsible for all costs, liabilities and expenses (including court costs
and reasonable attorneys’ fees) incurred in connection with the implementation
of any conveyance or delivery pursuant to Article IV (to the extent related to
any of the contributions, conveyances and deliveries to be made under
Article II).
     Section 7.2 Headings; References; Interpretation. All Article and Section
headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any of the provisions hereof.
The words “hereof,” “herein” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole, including,
without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Articles,
Sections, Schedules and Exhibits shall, unless the context requires a different
construction, be deemed to be references to the Articles and Sections of this
Agreement and the Schedules and Exhibits attached hereto, and all such Schedules
and Exhibits attached hereto are hereby incorporated herein and made a part
hereof for all purposes. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders, and the singular shall include the plural and vice versa. The use
herein of the word “including” following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not non-limiting language (such as “without limitation,”
“but

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not limited to” or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter.
     Section 7.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
assigns.
     Section 7.4 No Third Party Rights. The provisions of this Agreement are
intended to bind the Parties as to each other and are not intended to and do not
create rights in any other person or confer upon any other person any benefits,
rights or remedies, and no person is or is intended to be a third party
beneficiary of any of the provisions of this Agreement.
     Section 7.5 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all Parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same instrument.
     Section 7.6 Applicable Law; Forum, Venue and Jurisdiction. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Texas, without regard to the principles of conflicts of law. Each of the Parties
(a) irrevocably agrees that any claims, suits, actions or proceedings arising
out of or relating in any way to this Agreement shall be exclusively brought in
any federal court of competent jurisdiction situated in the United States
District Court for the Western District of Texas, San Antonio Division, or if
such federal court declines to exercise or does not have jurisdiction, in the
district court of Bexar County, Texas, in each case regardless of whether such
claims, suits, actions or proceedings sound in contract, tort, fraud or
otherwise, are based on common law, statutory, equitable, legal or other
grounds, or are derivative or direct claims; (b) irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Western
District of Texas, San Antonio Division, or if such federal court declines to
exercise or does not have jurisdiction, of the district court of Bexar County,
Texas in connection with any such claim, suit, action or proceeding; (c) agrees
not to, and waives any right to, assert in any such claim, suit, action or
proceeding that (i) it is not personally subject to the jurisdiction of the
United States District Court for the Western District of Texas, San Antonio
Division, or the district court of Bexar County, Texas, or of any other court to
which proceedings in such courts may be appealed, (ii) such claim, suit, action
or proceeding is brought in an inconvenient forum, or (iii) the venue of such
claim, suit, action or proceeding is improper; (d) expressly waives any
requirement for the posting of a bond by a party bringing such claim, suit,
action or proceeding; and (e) consents to process being served in any such
claim, suit, action or proceeding by mailing, certified mail, return receipt
requested, a copy thereof to such party at the address in effect for notices
hereunder or by personal service within or without the State of Texas, and
agrees that service in such forms shall constitute good and sufficient service
of process and notice thereof; provided, however, that nothing in clause (e)
hereof shall affect or limit any right to serve process in any other manner
permitted by law.
     Section 7.7 Severability. If any of the provisions of this Agreement are
held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not

11

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contain the particular provision or provisions held to be invalid and an
equitable adjustment shall be made and necessary provision added so as to give
effect to the intention of the Parties as expressed in this Agreement at the
time of execution of this Agreement.
     Section 7.8 Amendment or Modification. This Agreement may be amended or
modified from time to time only by the written agreement of all the Parties.
Each such instrument shall be reduced to writing and shall be designated on its
face as an amendment to this Agreement. Notwithstanding anything in the
foregoing to the contrary, any amendment executed by the Partnership or any of
its subsidiaries shall not be effective unless and until the execution of such
amendment has been approved by the conflicts committee of the General Partner’s
board of directors.
     Section 7.9 Integration. THIS AGREEMENT AND THE INSTRUMENTS REFERENCED
HEREIN SUPERSEDE ALL PREVIOUS UNDERSTANDINGS OR AGREEMENTS AMONG THE PARTIES,
WHETHER ORAL OR WRITTEN, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT
AND SUCH INSTRUMENTS. THIS AGREEMENT AND SUCH INSTRUMENTS CONTAIN THE ENTIRE
UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
THEREOF. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
UNDERSTANDING, REPRESENTATION, PROMISE OR AGREEMENT, WHETHER ORAL OR WRITTEN, IS
INTENDED TO BE OR SHALL BE INCLUDED IN OR FORM PART OF THIS AGREEMENT UNLESS IT
IS CONTAINED IN A WRITTEN AMENDMENT HERETO EXECUTED BY THE PARTIES HERETO AFTER
THE DATE OF THIS AGREEMENT.
     Section 7.10 Deed; Bill of Sale; Assignment. To the extent required and
permitted by applicable law, this Agreement shall also constitute a “deed,”
“bill of sale” or “assignment” of the assets and interests referenced herein.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly
executed as of the date first above written.

              TESORO LOGISTICS LP   TESORO CORPORATION
 
           
By:
  Tesoro Logistics GP, LLC,   By:   /s/ Gregory J. Goff
 
           
 
  its general partner        Gregory J. Goff
President
 
                    TESORO ALASKA COMPANY
 
           
By:
  /s/ Phillip M. Anderson   By:   /s/ Gregory J. Goff
 
           
 
  Phillip M. Anderson
President       Gregory J. Goff
President
 
            TESORO LOGISTICS GP, LLC   TESORO REFINING AND MARKETING COMPANY
 
           
By:
  /s/ Phillip M. Anderson   By:   /s/ Gregory J. Goff
 
           
 
  Phillip M. Anderson
President       Gregory J. Goff
President
 
            TESORO LOGISTICS OPERATIONS LLC   TESORO HIGH PLAINS PIPELINE
COMPANY LLC
 
           
By:
  /s/ Phillip M. Anderson   By:   /s/ Phillip M. Anderson
 
           
 
  Phillip M. Anderson
President       Phillip M. Anderson
President

Signature Page to Contribution, Conveyance and Assumption Agreement

 

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EXHIBIT A
Form of 10-Year Note

 

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INTERCOMPANY NOTE

$50,000,000   San Antonio, Texas     April 26, 2011     (the “Note Date”)

     FOR VALUE RECEIVED, TESORO CORPORATION, a Delaware corporation, having an
address at 19100 Ridgewood Pkwy, San Antonio, Texas 78259 (“Maker”) promises to
pay to the order of TESORO LOGISTICS GP, LLC, a Delaware limited liability
company, having an address at 19100 Ridgewood Pkwy, San Antonio, Texas 78259
(“Payee”) the principal sum of FIFTY MILLION DOLLARS ($50,000,000). Maker also
promises to pay to Payee interest on the outstanding principal amount of this
Note, from time to time, at the rate equal to the greater of (i) 4.19% and
(ii) the short-term “Applicable Federal Rate” (as defined in and determined
under Section 1274(d) of the Internal Revenue Code of 1986, as amended, in
effect on the date hereof. Interest shall be computed on the basis of a year of
365 (or 366) days and shall be due and payable in arrears on a quarterly basis
within five business days of the last day of each fiscal quarter.
     Maker shall pay all obligations in lawful money of the United States in
immediately available funds, free and clear of, and without deduction or offset
for, any present or future taxes, levies, imposts, charges, withholdings, or
liabilities with respect thereto; or any other defenses, offsets, set-offs,
claims, counterclaims, credits, or deductions of any kind. Maker’s obligations
under this Note are completely independent of all circumstances whatsoever other
than as this Note expressly states.
     1. Maturity; Prepayment. The principal and accrued but unpaid interest on
this Note shall be due and payable on demand, and if no demand has been made
prior thereto, on April 26, 2021. Maker may prepay this Note at any time, in
whole or in part, without notice, penalty, or premium, provided only that Maker
simultaneously pays interest to the date of such prepayment.
     2. Post-Maturity Interest; Etc. Any amount of principal or interest which
is not paid when due, whether at maturity or otherwise, shall bear interest from
the date when due until said principal or interest amount is paid in full,
payable on demand, at the per annum rate of six percent (6.0%).
     3. Waivers. Maker and any endorsers and guarantors of this Note, and all
others who may become liable for all or any part of the obligations evidenced by
this Note, severally waive presentment for payment, protest, notice of protest,
dishonor, notice of dishonor, demand, notice of non-payment, and the benefit of
all statutes, ordinances, judicial rulings, and other legal principles of any
kind, now or hereafter enacted or in force, affording any right of cure or any
right to a stay of execution or extension of time for payment or exempting any
property of such person from levy and sale upon execution of any judgment
obtained by the holder in respect of this Note. THE PARTIES WAIVE JURY TRIAL IN
ANY ACTION TO ENFORCE OR INTERPRET, OR OTHERWISE ARISING FROM, THIS NOTE.

 

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     4. GOVERNING LAW. THIS NOTE AND THE PARTIES’ RIGHTS UNDER THIS NOTE SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK NOTWITHSTANDING ANY PRINCIPLES OF CONFLICTS OF LAW.
     5. Severability. If any provision of this Note is invalid or unenforceable,
then the other provisions shall remain in full force and effect and shall be
liberally construed in favor of Payee.
          Maker has executed and delivered this Note as of the Note Date.

            TESORO CORPORATION
      By:           [Name]        [Title]