Exhibit 10.3

Execution Version

GUARANTY

This GUARANTY, is made and entered into as of December 2, 2014, by QEP RESOURCES
INC., a Delaware corporation with its principal offices at 1050 17th Street,
Suite 500, Denver, Colorado 80265 (“Guarantor”), in favor of TESORO LOGISTICS
LP, a Delaware limited partnership, with its principal offices at 19100
Ridgewood Parkway, San Antonio, Texas 78259 (the “Beneficiary”).

RECITALS

 

A. QEP Field Services Company, a Delaware corporation (the “Seller”), and
Beneficiary have entered into that certain Membership Interest Purchase
Agreement dated as of October 19, 2014 (as supplemented, modified, amended or
replaced from time to time, the “Agreement”).

 

B. The Seller and its affiliates and the Beneficiary and its affiliates are
parties to certain other agreements required to be executed and delivered in
connection with the Agreement (collectively with the Agreement, the “Transaction
Agreements”).

 

C. Guarantor is the ultimate holding company of the Seller, and as such,
Guarantor has benefitted and may reasonably be expected to benefit from
Beneficiary entering into the Agreement with Seller.

 

D. Seller has requested that Guarantor provide this Guaranty in favor of the
Beneficiary in connection with Seller’s obligations under the Agreement.

NOW, THEREFORE, in consideration of Beneficiary’s agreement to enter into the
Agreement with the Seller and for then good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Guarantor does hereby
covenant and agree as follows:

AGREEMENT

1. Guaranty.

(a) Guarantor hereby unconditionally, absolutely and (subject to the express
provisions hereof with respect to termination) irrevocably guarantees the
punctual payment and performance when due, whether upon demand, at stated
maturity, upon acceleration or otherwise, of Seller’s obligations arising under
the Transaction Agreements (including any payment obligations arising on account
of the indemnification obligations of Seller under the Agreement), as the
Transaction Agreements may be amended or modified by agreement in writing
between Seller and the Beneficiary from time to time (collectively, the
“Guaranteed Obligations”). Notwithstanding any other provision of this Guaranty
to the contrary, in no event shall Guarantor’s obligations and liabilities to
Beneficiary hereunder exceed Seller’s obligations and liabilities to Beneficiary
as set forth in the Transaction Agreements.

(b) Guarantor shall reimburse the Beneficiary for all sums paid to the
Beneficiary by Seller with respect to such Guaranteed Obligations which the
Beneficiary is subsequently required to return to Seller or a representative of
Seller’s creditors as a result of Seller’s bankruptcy, insolvency, liquidation,
or similar proceeding.

(c) This Guaranty shall be a continuing guaranty of all of the Guaranteed
Obligations and shall apply to and secure any ultimate balance due or remaining
unpaid to the Beneficiary with respect to the Guaranteed Obligations; and this
Guaranty shall not be considered as wholly or partially satisfied by the payment
at any time of any sum of money if any Guaranteed Obligations remain unpaid to
the Beneficiary.

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(d) This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Beneficiary on the insolvency,
bankruptcy or reorganization of Seller or Guarantor or otherwise, all as though
such payment had not been made.

(f) Subject to Section 2(g), if, after the closing of the transactions
contemplated by the Agreement, Guarantor merges or consolidates with or into any
other entity, or dissolves, liquidates, sells, assigns, transfers or otherwise
disposes of all or substantially all of the assets owned by Guarantor, directly
or indirectly, to any other entity, then such entity shall assume in writing all
of Guarantor’s obligations under this Guaranty, and shall be deemed to have
assumed all of Guarantor’s obligations under this Guaranty, and shall be
directly liable to Beneficiary hereunder with respect to same, from and after
the date of any such merger, consolidation, sale, assignment, transfer or
disposition. Promptly following the closing of any such merger, consolidation,
sale, assignment transfer or disposition, Guarantor shall provide Beneficiary
with notice of such merger, consolidation, sale, assignment, transfer or
disposition together with a copy of the assuming entity’s assumption of the
Guarantor’s obligations hereunder.

(g) If a disposition of assets and distribution of proceeds would result in the
consolidated net worth of the Guarantor being less than three billion United
States dollars ($3,000,000,000), Guarantor shall, at least ten (10) business
days prior to such disposition and distribution, cause affiliates of Guarantor,
which when combined with the remaining net worth of Guarantor, will have a
consolidated net worth of at least three billion United States Dollars
($3,000,000,000), if such affiliates of Guarantor exist, to agree in writing to
assume all of Guarantor’s obligations under this Guaranty and to be jointly and
severally liable with Guarantor and directly liable to Beneficiary hereunder
with respect to same.

2. Guaranty Absolute. The liability of Guarantor under this Guaranty shall be
absolute and unconditional, and shall not be limited, lessened or discharged by
any act on the part of the Beneficiary or matter or thing irrespective of,
without limitation:

(a) any incapacity or disability or lack or limitation of status or power of
Seller or that Seller may not be a legal entity;

(b) the bankruptcy or insolvency of Seller;

(c) any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of the Guaranteed Obligations or the rights of the Beneficiary
with respect thereto;

(d) any lack of validity or enforceability of the Transaction Agreements;

(e) any discontinuance of or any reduction, increase or other variation of
credit granted to Seller or any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations or any
other amendment, modification, extension, renewal or waiver of or any consent to
or other acquiescence in the departure from the terms of the Transaction
Agreements, regardless of whether this Guaranty is in effect at such time; or

 

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(f) any change in the name, constitution or capacity of Seller, or Seller being
merged with another entity, in which case this Guaranty shall apply to the
liabilities of the resulting entity, and the term “Seller” shall include such
resulting corporation;

Any account settled or stated by or between the Beneficiary and Seller shall be
accepted by Guarantor in the absence of manifest error, as conclusive evidence
that the balance or amount thereof thereby appearing due by Seller to the
Beneficiary, is so due.

The obligations of Guarantor hereunder are several and are primary obligations
for which Guarantor is the principal obligor. There are no conditions precedent
to the enforcement of this Guaranty except as expressly contained herein. It
shall not be necessary for the Beneficiary, in order to enforce payment or
performance by Guarantor under this Guaranty, to exhaust any of its remedies or
recourse against Seller, any other guarantor, or any other person liable for the
payment or performance when due and shall apply regardless of whether recovery
of all such Guaranteed Obligations may be discharged or uncollectible in any
bankruptcy, insolvency or other proceeding, or be otherwise unenforceable. A
separate action or actions may be brought and prosecuted against Guarantor with
respect to the Guaranteed Obligations whether action is brought against the
Seller or whether the Seller be joined in any such action or actions; provided,
however, that except for the defenses of (i) lack of authority, (ii) failure of
consideration, and (iii) discharge as a result of bankruptcy, Guarantor reserves
all defenses and limitations of liability of Seller in the Transaction
Agreements.

3. Waiver. Guarantor hereby waives:

(a) notice of acceptance of this Guaranty, notice of the creation or existence
of any of the Guaranteed Obligations and notice of any action by the Beneficiary
in reliance hereon or in connection herewith;

(b) notice of the entry into the Transaction Agreements between Seller and the
Beneficiary and notice of any amendments, supplements or modifications thereto;
or any waiver or consent under the Transaction Agreements, including waivers of
the payment or performance of the obligations thereunder;

(c) notice of any increase, reduction or rearrangement of Seller’s obligations
under the Transaction Agreements or notice of any extension of time for the
payment of any sums due and payable to the Beneficiary under the Transaction
Agreements;

(d) except as expressly set forth herein, presentment, demand for payment or
performance, notice of dishonor or nonpayment, protest and notice of protest or
any other notice of any other kind with respect to the Guaranteed Obligations;

(e) any requirement that suit be brought against, or any other action by the
Beneficiary be taken against, or any notice of default or other notice to be
given to, or any demand be made on Sellers or any other person, or that any
other action be taken or not taken as a condition to Guarantor’s liability for
the Guaranteed Obligations under this Guaranty or as a condition to the
enforcement of this Guaranty against Guarantor;

(f) any other circumstance (including, without limitation, the failure to obtain
from any intended guarantor, other than Guarantor, a valid guaranty and any
release and discharge of any other guarantor or surety for the Guaranteed
Obligations) which might otherwise constitute a defense, set-off or counterclaim
available to, or a legal or equitable discharge of, Seller in respect of the
Guaranteed Obligations or Guarantor in respect of this Guaranty (other than the
defense of indefeasible payment in full), all of which are hereby expressly
waived by Guarantor;

 

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(g) the waiver, surrender, compromise, settlement, release or termination of any
or all of the obligations, covenants or agreements of the Seller under the
Agreement;

(h) the failure to give notice to Guarantor of the occurrence of a Default under
the Agreement;

(i) the taking or the omission of any of the actions referred to in the
Agreement including any acceleration of sums owing thereunder;

(j) any failure, omission, delay or lack on the part of Beneficiary to enforce,
assert or exercise any right, power of remedy conferred on it in the Agreement;

(k) any duty of Beneficiary to advise Guarantor of the financial condition of
the Seller and of all other circumstances bearing upon the risk of nonpayment of
amounts owing under the Agreement which diligent inquiry would reveal, as
Guarantor assumes responsibility for being and remaining informed regarding such
conditions or any such circumstances; and

(l) if other individuals or entities are added as a “Guarantor” under this
Guaranty, each person comprising Guarantor hereby waives, any rights such person
has or may have under C.R.S. § 13-50-102 or § 13-50-103 (or under any
corresponding future statute or rule of law in any jurisdiction) by reason of
any release of fewer than all of the persons or parties comprising Guarantor.

4. Subrogation. Guarantor shall be subrogated to all rights of the Beneficiary
against Seller in respect of any amounts paid by Guarantor pursuant to the
Guaranty, provided that Guarantor waives any rights it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise
(including, without limitation, any statutory rights of subrogation under
Section 509 of the Bankruptcy Code 11 U.S.C. § 509, or otherwise),
reimbursement, exoneration, contribution, indemnification, or any right to
participate in any claim or remedy of the Beneficiary against Seller or any
collateral which the Beneficiary now has or acquires, until all of the
Guaranteed Obligations shall have been irrevocably and indefeasibly paid to the
Beneficiary in full. If (a) Guarantor shall perform and shall make payment to
the Beneficiary of all or any part of the Guaranteed Obligations, and (b) all
the Guaranteed Obligations shall have been indefeasibly paid in full, the
Beneficiary shall, at Guarantor’s request, execute and deliver to Guarantor
appropriate documents necessary to evidence the transfer by subrogation to
Guarantor of any interest in the Guaranteed Obligations resulting from such
payment of Guarantor.

5. Notices. All notices and other communications that are required or may be
given pursuant to this Guaranty must be given in writing, in English and
delivered personally, by courier, by telecopy or by registered or certified
mail, postage prepaid, as follows:

If to the Beneficiary:

Tesoro Logistics LP

19100 Ridgewood Parkway

San Antonio, TX 78259

Attn: Vice President, General Counsel

 

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with a copy (which shall not constitute notice) to:

McGuireWoods LLP

600 Travis Street, Suite 7500

Houston, TX 77002

Attn: David L. Ronn

If to Guarantor:

1050 17th Street

Suite 500

Denver, Colorado 80265

Attn: General Counsel

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

811 Main Street, 37th Floor

Houston, Texas 77002

Attn: Michael E. Dillard

Each party may change its address for notice by notice to the other parties in
the manner set forth above. All notices shall be deemed to have been duly given
at the time of receipt by the party to which such notice is addressed.

6. Demand and Payment. Any demand by the Beneficiary for payment or performance
hereunder shall be in writing, reference this Guaranty, reference the Guaranteed
Obligations, and be signed by a duly authorized officer of the Beneficiary and
delivered to Guarantor pursuant to Section 5 hereof. There are no other
requirements of notice, presentment or demand. Guarantor shall pay, or cause to
be paid, such Guaranteed Obligations within ten (10) business days of receipt of
such demand, unless, within such ten (10) business day period, the default
giving rise to such demand has been remedied.

7. No Waiver; Remedies. Except as to applicable statutes of limitation, no
failure on the part of the Beneficiary to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive to any remedies provided by law.

8. Term; Termination. This Guaranty shall be and continue to be in full force
and effect from the Effective Date (as defined immediately above the signature
lines hereof) until the date the Guaranteed Obligations have been fully and
indefeasibly paid. Such termination shall not release Guarantor from liability
for any Guaranteed Obligations arising prior to the effective date of such
termination (unless indefeasibly paid in full). If at any time any payment of
any of the Guaranteed Obligations is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of Seller or
otherwise, Guarantor’s obligations hereunder with respect to such payment shall
be reinstated at such time as though such payment had not been made.

9. Assignment; Successors and Assigns. Neither party may assign or delegate any
of their respective rights or obligations hereunder without the prior written
consent of the other party. Any assignment that does not comply with the terms
of this Section 9 shall be deemed null and void and of no force or effect. This
Guaranty shall be binding upon and inure to the benefit of each party hereto and
their respective successors and permitted assigns.

 

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10. Amendments, etc. No amendment or other modification of the terms of this
Guaranty shall be effective unless in writing and signed by Guarantor and the
Beneficiary and stating that it is expressly intended to give effect to the
applicable amendment or modification hereto. No waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any event
be effective unless such waiver shall refer to this Guaranty, be in writing and
be signed by the Beneficiary and Guarantor. Any such waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given.

11. Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatsoever in
construing the terms and provisions.

12. Representations and Warranties. Guarantor represents and warrants as
follows:

(a) Guarantor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has full corporate power and
authority to execute, deliver and perform this Guaranty.

(b) The execution, delivery and performance of this Guaranty have been and
remain duly authorized by all necessary corporate action and do not contravene
(i) Guarantor’s constitutional documents or (ii) any contractual restriction
binding on Guarantor or its assets, except to the extent, in the case of clause
(ii), such contravention would not have a Material Adverse Effect (as defined in
the Agreement).

(c) This Guaranty constitutes the legal, valid and binding obligation of
Guarantor, enforceable against it by the Beneficiary in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditor’s rights
and to general equity principals.

All of the representations and warranties of Guarantor contained herein shall
survive the execution and delivery of this Guaranty.

13. Judgment Currency. The obligation of Guarantor hereunder to make payments in
any currency of payment and account shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted into any
other currency except to the extent to which such tender or recovery shall
result in the effective receipt by the Beneficiary of the full amount of such
currency of payment and account so payable and accordingly the obligation of
Guarantor shall be enforceable as an alternative or additional cause of action
for the purpose of recovery in the other currency of the amount (if any) by
which such effective receipt shall fall short of the full amount of such
currency of payment and account so payable and shall not be affected by any
judgment being obtained for any other sums due hereunder.

14. Severability. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.

 

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15. Jurisdiction. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATED TO
THIS GUARANTY SHALL BE LITIGATED IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLORADO OR ANY COLORADO STATE COURT SITTING IN DENVER, COLORADO, SO
LONG AS ONE OF SUCH COURTS SHALL HAVE SUBJECT MATTER JURISDICTION OVER SUCH
SUIT, ACTION OR PROCEEDING, AND THAT ANY CAUSE OF ACTION ARISING OUT OF THIS
GUARANTY SHALL BE DEEMED TO HAVE ARISEN FROM A TRANSACTION OF BUSINESS IN THE
STATE OF COLORADO, AND EACH OF THE PARTIES HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS (AND OF THE APPROPRIATE APPELLATE COURTS
THEREFROM) IN ANY SUCH SUIT, ACTION OR PROCEEDING AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR
WITHOUT THE JURISDICTION OF ANY SUCH COURT. WITHOUT LIMITING THE FOREGOING, EACH
PARTY AGREES THAT SERVICE OF PROCESS ON SUCH PARTY AS PROVIDED IN SECTION 5
SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS ON SUCH PARTY.

16. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER DOCUMENTS CONTEMPLATED
HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION, AND (iii) CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE.

17. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAW OF THE STATE OF COLORADO, WITHOUT REGARD TO ITS
CONFLICT OF LAWS RULES.

[Signature page follows immediately]

 

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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and
delivered by its duly authorized officer effective as of this 2nd day of
December, 2014 (the “Effective Date”).

 

QEP RESOURCES INC.,

a Delaware corporation

By:  

/s/ Richard J. Doleshek

Name:   Richard J. Doleshek Title:   Executive Vice President and Chief
Financial Officer

[Signature Page to Guaranty]

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TESORO LOGISTICS LP,

a Delaware limited partnership

By: Tesoro Logistics GP, LLC, a Delaware limited liability company and its
general partner       By:  

/s/ Phillip M. Anderson

      Name:   Phillip M. Anderson       Title:   President

 

[Signature Page to Guaranty]