Exhibit 10.6

TERMINAL 2 SUBLEASE RIGHTS AGREEMENT

This Terminal 2 Sublease Rights Agreement (this “Agreement”), dated as of
December 6, 2013 (the “Effective Date”), is by and between Tesoro Logistics
Operations LLC, a Delaware limited liability company (the “Operating Company”),
and for purposes of Section 3.1 only, Tesoro Logistics GP, LLC, a Delaware
limited liability company (the “General Partner”), and Tesoro Logistics LP, a
Delaware limited partnership (the “Partnership”), on the one hand and Tesoro
Refining & Marketing Company LLC, a Delaware limited liability company (“TRMC”),
on the other hand. The above-named entities are sometimes referred to in this
Agreement individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, TRMC is a party to that certain Lease dated February 17, 1995, with the
City of Long Beach, a municipal corporation, acting by and through its Board of
Harbor Commissioners (as such agreement may be amended, supplemented, restated
or renewed from time to time, the “Terminal 2 Port Lease”);

WHEREAS, the Parties, Tesoro Corporation, a Delaware corporation and Carson
Cogeneration Company, a Delaware corporation (“Carson Cogen”), entered into the
certain Contribution, Conveyance and Assumption Agreement dated November 18,
2013, pursuant to which Carson Cogen and TRMC agreed to contribute certain
assets to the Operating Company (the “Contribution Agreement”);

WHEREAS, in connection with the transactions contemplated by the Contribution
Agreement, TRMC desires to sublease its interest in the Terminal 2 Port Lease to
the Operating Company upon the receipt of certain required consents and
approvals; and

WHEREAS, the execution of this Agreement is a condition precedent to the
Parties’ obligations to consummate the transactions contemplated by the
Contribution Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein and in the Contribution Agreement,
the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Capitalized terms used herein have the respective meanings ascribed
to such terms below:

“Agreement” has the meaning set forth in the introduction to this Agreement.

“BP Closing Date” means June 1, 2013.

“Carson Cogen” has the meaning set forth in the Recitals.

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“CDFG” means the California Department of Fish and Game.

“CDFG Approval” means the approval of the CDFG to the issuance of a COFR to the
Operating Company.

“COFR” means the Certificate of Financial Responsibility filed with the CDFG
with respect to oil spill contingency planning and financial responsibility for
Terminal 2.

“Contribution Agreement” has the meaning set forth in the Recitals.

“Effective Date” has the meaning set forth in the introduction to this
Agreement.

“General Partner” has the meaning set forth in the introduction to this
Agreement.

“Long Beach Approval” means the approval of the City of Long Beach of the
ability of TRMC to sublease the Terminal 2 Port Lease to the Operating Company.

“Operating Company” has the meaning set forth in the introduction to this
Agreement.

“Other Approvals” means any other consents or approvals required to sublease the
Terminal 2 Port Lease to the Operating Company.

“Partnership” has the meaning set forth in the introduction to this Agreement.

“Party” or “Parties” have the meanings given to those terms in the introduction
to this Agreement.

“Terminal 2” has the meaning given to such term in the Contribution Agreement.

“Terminal 2 Port Lease” has the meaning set forth in the Recitals.

“Tesoro” has the meaning set forth in the introduction to this Agreement.

“TRMC” has the meaning set forth in the introduction to this Agreement.

ARTICLE II

SUBLEASE

Upon receiving the Long Beach Approval, the CDFG Approval and the Other
Approvals, TRMC and the Operating Company shall enter into a sublease with
respect to the Terminal 2 Port Lease, substantially in the form attached hereto
as Exhibit A.

ARTICLE III

MISCELLANEOUS

Section 3.1 Assignment. As of the Effective Date, the General Partner shall
immediately assign all of its rights and obligations hereunder to the
Partnership. The Partnership shall immediately assign all of its rights and
obligations hereunder to Operating Company. Upon such assignment to the
Operating Company, the Operating Company shall have all of the respective rights
and obligations set forth herein.

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Section 3.2 Costs. Each Party shall pay its own costs and expenses with respect
to the transactions contemplated by this Agreement.

Section 3.3 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 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 3.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and assigns.

Section 3.5 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 3.6 Counterparts. This Agreement may be executed in any number of
counterparts (including facsimile or .pdf copies) 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.

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Section 3.7 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 3.8 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 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 3.9 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 3.10 Integration. This Agreement, together with the Schedules and
Exhibits referenced herein, constitutes the entire agreement among the Parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings of the Parties in connection therewith. The Parties acknowledge
that they have executed other agreements as of the BP Closing Date and the date
hereof. In the event of conflict with regard to the subject matter hereof
between such agreements and this Agreement (together with the Schedules and
Exhibits hereto), this Agreement (together with the Schedules and Exhibits
hereto) shall control.

Section 3.11 Specific Performance. The Parties agree that money damages may not
be a sufficient remedy for any breach of this Agreement and that in addition to
any other remedy available at law or equity, the Parties shall be entitled to
seek specific performance and injunctive or other equitable relief as a remedy
for any Party’s breach of this Agreement. The Parties agree that no bond shall
be required for any injunctive relief in connection with a breach of this
Agreement.

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Section 3.12 Notice. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by facsimile to such Party. Notice
given by personal delivery or mail shall be effective upon actual receipt.
Notice given by facsimile shall be effective upon actual receipt if received
during the recipient’s normal business hours or at the beginning of the
recipient’s next business day after receipt if not received during the
recipient’s normal business hours. All notices to be sent to a Party pursuant to
this Agreement shall be sent to or made at the address set forth below or at
such other address as such Party may stipulate to the other Parties in the
manner provided in this Section 3.12.

If to Tesoro or TRMC:

Tesoro Corporation

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Charles A. Cavallo III

Facsimile: (210) 745-4494

If to the General Partner, the Partnership or the Operating Company:

Tesoro Logistics LP

c/o Tesoro Logistics GP, LLC, its General Partner

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Barron W. Dowling

Facsimile: (210) 745-4494

[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 Effective Date.

 

With respect to Section 3.1 only:

TESORO LOGISTICS GP, LLC

   

With respect to Section 3.1 only:

TESORO LOGISTICS LP

By:   /s/ Phillip M. Anderson     By:    Tesoro Logistics GP, LLC,   Phillip M.
Anderson        its general partner   President              By:    /s/ Phillip
M. Anderson          Phillip M. Anderson          President

TESORO REFINING & MARKETING

COMPANY LLC

    TESORO LOGISTICS OPERATIONS LLC By:   /s/ Gregory J. Goff     By:    /s/
Phillip M. Anderson   Gregory J. Goff        Phillip M. Anderson  

Chairman of the Board of Managers

and President

       President

Signature Page to

Terminal 2 Sublease Rights Agreement

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EXHIBIT A

Terminal 2 Sublease

[See Attached]

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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SUBLEASE AGREEMENT

BETWEEN

TESORO REFINING & MARKETING COMPANY LLC

AS SUBLESSOR

AND

TESORO LOGISTICS OPERATIONS LLC

AS SUBLESSEE

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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SUBLEASE

This Sublease (“Sublease”), dated as of the          day of                 ,
201    , is made by and between Tesoro Refining & Marketing Company LLC, a
Delaware limited liability company (“Sublessor”), and Tesoro Logistics
Operations LLC, a Delaware limited liability company (“Sublessee”) with
reference to the following:

A. Sublessor is the current tenant under that certain Lease dated February 17,
1995 (the “Master Lease”), between Sublessor, as successor-in-interest to ARCO
Terminal Services Corporation, and the City of Long Beach, a municipal
corporation, acting by and through its Board of Harbor Commissioners (“Master
Landlord”). The Master Lease governs Sublessor’s non-owned portions of the
marine terminal and related berths (“Terminal 2”) consisting of portions of
Terminal 2, Berth 78, Tank Farms 2 and 3 and that portion of Berth 77 that is
fifty percent (50%) owned by Master Landlord on Parcel IV of Assessor’s Parcel
Numbers 7436-008-001 and 7436-009-900 in Los Angeles, County, California, as
shown on the drawing attached as Exhibit A to the Master Lease (collectively,
the “Premises”).

B. Sublessor is a party to certain contracts related to the operation of the
Premises identified on Exhibit A attached hereto (the “Contracts”).

C. Sublessor is the owner of certain leasehold improvements located on the
Premises and used in connection with the operation of the Premises, including,
without limitation, the items identified on Exhibit B attached hereto (the
“Leasehold Improvements”).

D. Sublessee desires to sublease the Premises from Sublessor, and Sublessor
desires to sublease the Premises to Sublessee on the terms set forth in this
Sublease.

E. Concurrently herewith, Sublessor and Sublessee have entered into a Lease
Agreement for the fee owned portion of Terminal 2 and Terminal 3 (the “Terminal
2 & 3 Lease).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which the parties acknowledge, Sublessor and Sublessee agree as follows:

1. Sublease of Premises. Sublessor hereby subleases the Premises to Sublessee,
and Sublessee hereby subleases the Premises from Sublessor.

2. Term. The term of this Sublease (the “Term”) shall commence on the date
Master Landlord grants consent to this Sublease (“Commencement Date”) and shall
expire concurrently with the expiration of the Master Lease. As of the date of
this Sublease and until the Commencement Date, Sublessee will operate the
Premises pursuant to an operating agreement entered into by and between
Sublessor and Sublessee. If Master Landlord requires material modifications to
the terms of this Sublease as a condition of granting consent to the Sublease,
either Sublessor or Sublessee shall have the right to refuse such modifications
prior to Master Landlord granting such consent and the Sublease will not
commence.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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3. Incorporation of Terms of Master Lease. Sublessee hereby acknowledges that it
has read and is familiar with the provisions of the Master Lease and agrees that
this Sublease is and shall remain in all respects subordinate to and subject to
the Master Lease and any amendments, modifications or supplements to the Master
Lease hereafter made. The terms, provisions, covenants, stipulations,
conditions, rights, obligations, remedies and agreements contained in the Master
Lease are incorporated herein by reference and are made a part hereof, and
shall, as between Sublessor and Sublessee (as if Sublessor were the lessor under
the Master Lease and Sublessee were the lessee under the Master Lease)
constitute the terms of this Sublease. Sublessee hereby agrees to perform and
comply with, for the benefit of Sublessor and Master Landlord, the obligations
of the lessee under the Master Lease with respect to the Premises during the
Term of this Sublease. Without limiting the foregoing:

(a) Sublessee shall make payment of all rent due under the Master Lease as and
when required to be paid pursuant to the Master Lease. Such payment shall be
made by Sublessee directly to Master Landlord, with concurrent notice thereof to
Sublessor.

(b) Sublessee shall be responsible for paying required costs of maintenance and
improvements as required under the Master Lease.

(c) Sublessee shall be responsible for maintaining all of the insurance required
of the tenant under the Master Lease, endorsed to name Master Landlord and
Sublessor as additional insureds, and all insurance required by the Contracts,
endorsed to name Sublessor as an additional insured. In addition, Sublessee
shall obtain and keep in force a policy of excess liability coverage with a
liability limit of $500,000,000, including coverage for pollution events, and
all such insurance shall be endorsed to name Sublessor as an additional insured.
Up to $100,000,000 of such insurance shall also be endorsed to name Master
Landlord as an additional insured.

(d) Sublessee will operate the Premises in accordance with all legal and
regulatory requirements.

(e) Sublessee shall be responsible for preparing and delivering to Master
Landlord the financial statements required pursuant to Section 21 of the Master
Lease.

(f) Sublessee shall be responsible for complying with the obligations of the
tenant under the Master Lease with respect to hazardous materials.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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4. Contracts.

(a) Concurrently with the execution of this Sublease, Sublessor and Sublessee
shall execute an Assignment and Assumption of Contracts in the form attached
hereto as Exhibit C (the “Assignment of Contracts”). Such Assignment of
Contracts shall be effective only upon the Commencement Date of this Sublease,
and, if this Sublease does not commence, shall be void ab initio and of no
effect. During the term of the Sublease, so long as Sublessee is not in default
hereunder, Sublessee shall have the right to enter into additional contracts
relating to the Premises, provided that the same shall not obligate Sublessor
and shall not bind Sublessor following termination of the Sublease unless
Sublessor elects in its sole and absolute discretion to take an assignment of
the same. In the latter event, Sublessee shall, upon termination of the
Sublease, assign such contracts to Sublessor pursuant to an assignment in form
and substance consistent with the Assignment of Contracts. In addition, the
Contracts assigned to Sublessee by Sublessor pursuant to the Assignment of
Contracts shall revert back to Sublessor or its successor upon termination of
this Sublease or any succeeding or replacement sublease.

(b) Any capital expenditure required by the Master Lease of the Contracts shall
be made by Sublessee.

(c) In the event of any default by Sublessee under the Contracts, Sublessor (in
addition to any other remedies it may have) may cure such default and Sublessee
shall promptly reimburse Sublessor for all of Sublessor’s costs in effecting
such cure.

5. Leasehold Improvements. Subject to the terms of Section 8 below, effective
upon the Commencement Date, Sublessor shall convey to Sublessee ownership of all
Leasehold Improvements located on the Premises and owned by Sublessor. Such
conveyance shall be “as is” without representations or warranties of any kind
whatsoever, express, implied or statutory. Concurrently with the execution of
this Sublease, Sublessor shall execute a bill of sale in the form attached
hereto as Exhibit D (the “Bill of Sale”). Such Bill of Sale shall be deemed
delivered by Sublessor to Sublessee only upon the commencement of this Sublease,
and, if this Sublease does not commence, shall be void ab initio and of no
effect. In the event of a termination of this Sublease (a) by reason of a
default on the part of Sublessee; or (b) due to the expiration of the Master
Lease, the foregoing Leasehold Improvements, together with any other
improvements made subsequently, shall automatically become the property of
Sublessor. In the event of an early termination of this Sublease not due to the
expiration of the Master Lease and not due to the fault of Sublessor or
Sublessee, all such Leasehold Improvements shall be conveyed by Sublessee to
Sublessor and Sublessor shall pay to Sublessee the fair market value of the
Leasehold Improvements valued as of the date of termination and with fair market
value calculated as provided below. If the termination of the Sublease is by
reason of Sublessor’s default or as a result of Sublessor’s election to
terminate in accordance with the provisions of Section 10, below, in which case,
in addition to any other obligations of Sublessor to Sublessee, all such
Leasehold Improvements shall be conveyed by Sublessee to Sublessor and Sublessor
shall pay to Sublessee the fair market value of the Leasehold Improvements
valued as of the date of termination and with fair market value calculated as
provided below. In order to effect such conveyance (or, at Sublessor’s option in
the event of a termination for Sublessee’s default, to confirm the ownership of
such improvements), Sublessee shall take such actions and execute such documents
as Sublessor may reasonably require, including, without limitation, execution of
a bill of sale for such improvements. If Sublessee fails or refuses to execute
such documents or take such actions, Sublessee hereby appoints Sublessor as its
attorney-in-fact with authority to execute such documents and take such actions,
which appointment is coupled with an interest and is irrevocable.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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(a) Default: “Default” under this Sublease shall occur if either party shall
fail to perform any of its material obligations hereunder (except when such
failure shall be excused under other provisions hereof). Upon such default, the
non-defaulting party shall have the option to terminate this Sublease as
follows: (i) the non-defaulting party shall give written notice to the
defaulting party stating specifically the default or breach relied upon by the
non-defaulting party as justifying termination hereof. If said default or breach
is not remedied within thirty (30) days after receipt of notice, if therein
remediable, or if the defaulting party fails to commence promptly and attempt
diligently to remedy the same where said default or breach is not remediable
within thirty (30) days after receipt of said written notice, the non-defaulting
party shall have the right to terminate this Sublease. If within such thirty
(30) day period the defaulting party does remedy the default or breach, or
commences promptly and attempts diligently to remedy or remove the same where
not remediable within such thirty (30) day period, and fully indemnifies the
non-defaulting party from any and all loss and liability resulting directly from
such default or breach, the notice shall be withdrawn and this Sublease shall
continue in full force and effect.

(b) Fair Market Value: The fair market value of the Leasehold Improvements shall
be reasonably determined by Sublessor with such determination based on
information regarding, without limitation, the nature of the particular
Leasehold Improvement, its age and functionality, and the current sale price of
similar improvements in the same industry, all as valued for their highest and
best use at the time of termination of the Sublease. Sublessor shall provide
Sublessee with written notice of the determination of the fair market value of
the Leasehold Improvements within thirty (30) days after the termination of this
Sublease. If Sublessee disagrees with Sublessor’s determination of the fair
market value, and the parties cannot mutually agree upon the fair market value
within twenty (20) days after the expiration of the thirty (30) day notice
period, then the fair market value shall be determined by appraisal in the
manner set forth below:

(i) The fair market value of the Leasehold Improvements shall be appraised by an
appraiser with at least ten (10) years’ experience in the oil and gas appraisal
sector chosen by Sublessor (“First Appraisal”) and the appraisal report
forwarded to Sublessee. If the First Appraisal is deemed unacceptable by
Sublessee, then Sublessee shall so advise Sublessor in writing within ten
(10) working days after receipt of the First Appraisal and Sublessee shall have
the right to engage an appraiser with at least ten (10) years’ experience in the
oil and gas appraisal sector to appraise the Leasehold Improvements (“Second
Appraisal”) and the appraisal report forwarded to Sublessor. In the event
Sublessor shall deem the Second Appraisal to be unacceptable, then Sublessor
shall advise Sublessee within ten (10) working days after receipt of the Second
Appraisal, and the first appraiser and second appraiser shall together choose a
third appraiser with at least ten (10) years’ experience in the oil and gas
appraisal sector who shall appraise the Leasehold Improvements (“Third
Appraisal”) and forward the appraisal report to Sublessor and Sublessee. The
cost of the First Appraisal shall be borne by Sublessor, and the cost of the
Second Appraisal shall be borne by Sublessee. The cost of the Third Appraisal
shall be shared equally between Sublessor and Sublessee. The fair market value
for the Leasehold Improvements shall be the average of the two (2) closest
appraisals. Each of the appraisers shall appraise the Leasehold Improvements for
their highest and best use.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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6. Rent Negotiations. Sublessee shall conduct the compensation negotiations
required by Section 5 of the Master Lease. Sublessor shall have the right to
approve the negotiated compensation, which approval shall not be unreasonably
withheld. When the compensation has been adjusted, Sublessee shall pay the same.

7. Removal and Restoration Obligations. To the extent the Master Lease requires
removal of leasehold improvements and restoration of the Premises at the end of
the Master Lease term, Sublessee shall be responsible for such removal and
restoration. Further, in the event this Sublease is terminated by reason of
Sublessee’s default hereunder within the thirty-six month (36) period prior to
expiration of the Master Lease term, Sublessee shall be responsible, in addition
to all other damages arising from such default, for the cost incurred by
Sublessor in effecting the removal and restoration required under the Master
Lease.

8. Cross-Defaults. Certain other contracts, licenses or agreements related to
the Premises shall be cross defaulted with this Sublease (each, individually, a
“Cross-Defaulted Agreement” and collectively the “Cross-Defaulted Agreements”),
which Cross Defaulted Agreements are listed on Exhibit E attached hereto. If
Sublessee defaults under this Sublease, such default shall be a default under
each of the Cross-Defaulted Agreements. Any default by Sublessee under any of
the Cross-Defaulted Agreements shall be a default under this Sublease. Without
limitation on the above provisions or Sublessor’s other remedies as a result of
any such default, any termination of this Sublease for any reason shall
automatically terminate the Terminal 2 & 3 Lease, and any termination of the
Terminal 2 & 3 Lease shall automatically terminate this Sublease.

9. Consent of Master Landlord. The commencement of this Sublease is conditioned
upon the execution by Master Landlord of a consent in the form attached hereto
as Exhibit F, or such other form as Master Landlord may reasonably require. If,
in connection with granting consent to the Sublease, Master Landlord requires
material modifications to the terms hereof, either party shall have the right to
refuse such modifications, in which case this Sublease shall be deemed rescinded
and of no further force or effect.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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10. Early Right of Termination. If Sublessee desires to cease the conduct of
operations from the Premises, Sublessee shall have the right to deliver to
Sublessor a notice of such intent at least ninety (90) days prior to the
intended date on which operations will cease, and Sublessor shall have the
right, but not the obligation, to terminate this Sublease by delivering written
notice to Sublessee. If Sublessor has not made such election prior to the date
of such termination, Sublessor shall continue to have the right to terminate
this Sublease at any time after Sublessee ceases operations and before Sublessee
recommences operations from the Premises, to terminate this Sublease by
delivering written notice to Sublessee. Unless and until Sublessee has given the
foregoing notice to Sublessor of its intent to cease operations from the
Premises, Sublessee shall continuously operate from the Premises to an extent
reasonably consistent with prior operations from the Premises by Sublessor, and
a failure of Sublessee to so operate, unless such failure is a result of
casualty or other force majeure event, shall constitute a default on the part of
Sublessee.

11. Amendments to Master Lease. Sublessee shall have the right to seek
amendments to the terms of the Master Lease, which amendments shall be subject
to Sublessor’s consent, which consent shall not be unreasonably withheld,
conditioned or delayed. In the event of any such amendment, Sublessee shall be
responsible for complying with the amended terms of the Master Lease, and
Sublessee shall indemnify, defend and hold Sublessor harmless from and against
any loss, cost or liability arising as a result of such amendment.
Notwithstanding the foregoing, Sublessor shall have no obligation to consent to
an amendment of the Master Lease (i) that extends the term of the Master Lease
unless Sublessor is released from all further liability under the Master Lease
as of the date on which the Master Lease would otherwise have expired, or
(ii) that increases the rent or other obligations of the tenant under the Master
Lease unless Sublessor is relieved of liability for the increased rent or other
obligations.

12. Master Lease Renewal. In the event Sublessor consummates a new master lease
of the Premises following the expiration of the Master Lease, Sublessor shall
negotiate in good faith with Sublessee for a new sublease based on the terms of
the new master lease.

13. Counterparts. This Sublease may be signed by the parties in different
counterparts and the signature pages combined to create one document binding on
all parties.

[Signature Page Follows]

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first
above written.

 

Sublessor:       Sublessee: Tesoro Refining & Marketing Company LLC,      
Tesoro Logistics Operations LLC, a Delaware limited liability company       a
Delaware limited liability company By:            By:        Name:             
Name:         Title:              Title:     

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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Exhibit A

Contracts

None

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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Exhibit B

Leasehold Improvements

All machinery and equipment, mobile or otherwise, systems and other tangible
personal property owned and used by Sublessor primarily in connection with
leasing or operation of the Premises, including (a) all production units,
processing units and distillation systems, (b) all heating, lighting, and power
systems, fire prevention and fire extinguishing systems, control systems,
emergency warning and emergency preparedness systems and related assets, (c) all
storage and other tanks, meters, pumps, engines, compressors, pipes, fittings,
valves, connections, regulators, loading and unloading lines and racks, (d) all
computers, servers, printers, computer hardware, wired or mobile telephones,
on-site process control and automation systems, telecommunications assets, and
other information-technology-related equipment that is used exclusively in
connection with the Premises and that is owned by Sublessor or leased by
Sublessor, (e) all tools, (f) all furniture and furnishings, (g) all vehicles
and (h) all other tangible personal property, in each case presently owned by
Sublessor, located in or on the Premises.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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Exhibit C

Assignment and Assumption of Contracts

This Assignment and Assumption of Contracts (“Assignment”) is dated
                        , 201     and is entered into concurrently with that
certain Sublease of even date herewith (the “Sublease”) by and between Tesoro
Refining & Marketing Company LLC, a Delaware limited liability company
(“Assignor”) and Tesoro Logistics Operations LLC, a Delaware limited liability
company (“Assignee”). This Assignment shall be effective upon the commencement
of the term of the Sublease.

Assignor and Assignee agree as follows:

1. Assignor hereby assigns all of Assignor’s right, title and interest under
each of the contracts listed on Schedule 1 attached hereto (the “Contracts”) to
Assignee, and Assignee hereby accepts such assignment and agrees to assume each
and every obligation of Assignor under each of the Contracts arising or to be
performed after the date of this Assignment.

2. Assignor shall indemnify and hold Assignee harmless from and against any and
all loss, cost or liability for obligations to be performed by Assignor under
the Contracts before the date of this Assignment.

3. Assignee shall indemnify and hold Assignor harmless from and against any and
all loss, cost or liability for obligations to be performed by Assignor under
the Contracts on and after the date of this Assignment.

4. In the event any party shall commence an action to enforce or interpret any
of the provisions of this Assignment, the prevailing party in such action shall
be entitled to reimbursement from the other party of all costs and expenses,
including reasonable attorneys’ fees, incurred in connection therewith.

5. This Assignment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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

IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption of
Contracts as of the date first above written.

 

Assignor:       Assignee: Tesoro Refining & Marketing Company LLC,       Tesoro
Logistics Operations LLC, a Delaware limited liability company       a Delaware
limited liability company By:            By:         Name:               Name:
        Title:               Title:     

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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

Schedule 1 to Assignment and Assumption of Contracts

No Contracts

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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

Exhibit D

Bill of Sale

FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
the undersigned, Tesoro Refining & Marketing Company LLC, a Delaware limited
liability company (“TRMC”), does hereby transfer and assign to Tesoro Logistics
Operations LLC, a Delaware limited liability company (“TLO”), all of its right,
title and interest, if any, in and to the leasehold improvements located on the
Premises (as that term is defined in that certain Sublease dated
                     between TRMC, as sublessor, and TLO, as sublessee),
including without limitation the items listed in Schedule 1 attached hereto,
such transfer and assignment being on an “as is” basis, without any
representations or warranties, express, implied or statutory, of any kind
whatsoever.

 

Dated:                     , 201          Tesoro Refining & Marketing Company
LLC,      a Delaware limited liability company      By:              Name:     
        Title:     

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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SCHEDULE 1 TO BILL OF SALE

List of Leasehold Improvements to be Transferred from Sublessor to Sublessee

All machinery and equipment, mobile or otherwise, systems and other tangible
personal property owned and used by Sublessor primarily in connection with
leasing or operation of the Premises, including (a) all production units,
processing units and distillation systems, (b) all heating, lighting, and power
systems, fire prevention and fire extinguishing systems, control systems,
emergency warning and emergency preparedness systems and related assets, (c) all
storage and other tanks, meters, pumps, engines, compressors, pipes, fittings,
valves, connections, regulators, loading and unloading lines and racks, (d) all
computers, servers, printers, computer hardware, wired or mobile telephones,
on-site process control and automation systems, telecommunications assets, and
other information-technology-related equipment that is used exclusively in
connection with the Premises and that is owned by Sublessor or leased by
Sublessor, (e) all tools, (f) all furniture and furnishings, (g) all vehicles
and (h) all other tangible personal property, in each case presently owned by
Sublessor, located in or on the Premises.

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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EXHIBIT E

List of Cross Defaulted Agreements

1. Amended and Restated Long Beach Berth Access Use and Throughput Agreement
dated December             , 2013, by and among Tesoro Refining & Marketing
Company LLC, a Delaware limited liability company (“TRMC”), the Tesoro Logistics
GP, LLC, a Delaware limited liability company and the general partner of the
Partnership (the “General Partner”), Tesoro Logistics LP, a Delaware limited
partnership (the “Partnership”) and the Tesoro Logistics Operations LLC, a
Delaware limited liability company (the “Operating Company”) (“BAUTA”).

2. Sublease Agreement dated December             , 2013, by and among Carson
Cogeneration Company, a Delaware corporation, as sublessor, and the Operating
Company, as sublessee, for the sublease of a portion of Berth 121 (the “Berth
121 Sublease”)

3. Sublease Agreement dated December             , 2013, by and among TRMC, as
sublessor, and the Operating Company, as sublessee, for the sublease of Berths
84 and 86 (the “Long Beach Terminal Sublease”)

4. Lease Agreement to be executed by and among TRMC, as lessor, and the
Operating Company, as lessee, for the lease of Terminal 2 and Terminal 3 (the
“Terminal 2 & 3 Lease”)

 

Exhibit A –

Terminal 2 Sublease Rights Agreement

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Exhibit F

Form of Master Landlord Consent

To Be Attached

 

Exhibit A –

Terminal 2 Sublease Rights Agreement