Document:

TLLP EX.10.15 12.31.2015

Exhibit 10.15

2015 Incentive Compensation Program

On February 12, 2015, the Chairman of the Board and independent directors, acting pursuant to authority delegated by the Board of Directors (the “Board”), approved the participation of the Company’s President in the Tesoro Corporation 2015 Incentive Compensation Program (the “2015 ICP” or the “2015 Program”). In addition, the Board approved the target payout at 70% of his base salary earnings during the 2015 calendar year. The 2015 Program as applied to the President consists of two equally weighted components: Tesoro Corporation’s overall performance and Partnership’s performance as a business unit performance. Each of these components is described in greater detail below. The performance results of Tesoro Corporation and the Partnership’s business may be adjusted to take into account unbudgeted business decisions, unusual or non-recurring items, and other factors, as approved by Tesoro Corporation’s Compensation Committee, to determine the total amount, if any, available under the 2015 ICP. The Chairman of the Board and independent directors of the Company have discretion to adjust individual awards, if any, for Company executives based on their assessment of an individual executive’s performance relative to successful achievement of goals, business plan execution and other leadership attributes.

Component 1 - Corporate Performance - measured against target with the range of outcomes between 0% to 200%. Tesoro Corporation performance metrics include the following:

		
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	Achievement of earnings before interest, taxes, depreciation and amortization (“EBITDA”) measured on a margin neutral basis (this is the more heavily weighted metric, constituting 50% of the bonus opportunity for the corporate performance component);

		
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	Safety - Targeted improvement in recordable incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component);

		
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	Process Safety Management - Targeted improvement in the number of process safety incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component);

		
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	Environmental - Targeted improvements in the number of environmental incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component); 

		
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	Cost Management - Measurement of non-capital cash expenditure versus budget (this metric constitutes 17.5% of the bonus opportunity for the corporate performance component); and

		
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	Business Improvement - Targeted improvements from capital improvement initiatives, synergies related to asset acquisitions and other projects & initiatives (this metric constitutes 17.5% of the bonus opportunity for the corporate performance component).

Component 2 - Business Unit Performance - measured against target with the range of outcomes between 0% to 200%. Business Unit performance is measured through balanced scorecards with performance metrics including, but not limited to:

		
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	Safety and Environmental;

		
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	Cost Management;

		
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	Improvements in EBITDA; and

		
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	Business improvement and value creation initiatives.TLLP EX.10.16 12.31.2014

Exhibit 10.16

TESORO LOGISTICS LP
NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM 

In January 2015, the Board of Directors of our general partner adopted changes to the director compensation program under which our general partner's non-employee directors are compensated for their service as directors. The changes to the compensation program became effective January 1, 2015. Each non-employee director receives a compensation package consisting of an annual retainer, an additional retainer for service as the chair of a standing committee and meeting attendance fees and may also receive grants of equity-based awards upon appointment to the Board of Directors. The annual retainer was increased by $15,000, with the new amounts shown below. 
 
Non-Employee Director Annual Retainers and Fees (a)
	
				
	 
	 
	 
	 

	Board of Directors Annual Retainer (b)
	$
	136,000
	 

	Annual Retainer for Audit and Conflicts Committee Chairs
	15,000
	 

	Board and Committee Meeting Fees (c)
	1,500 per meeting
	 

	
		
	 
	 

	(a)
	In addition to the retainers set forth above, we reimburse our non-employee directors for travel and lodging expenses that they incur in connection with attending meetings of the board of directors or its committees.

	
		
	 
	 

	(b)
	The annual retainer is payable $58,000 in cash and $78,000 in an award of service phantom units. Unit-based awards granted to non-employee directors under the annual compensation package or upon first election to the board of directors under our long-term incentive plan, generally vest one year from the date of grant. If the non-employee director termination from the board is due to death or disability, director’s service phantom units will automatically vest along with any accrued cash distribution equivalent rights.  If termination is due to any other reason, the non-employee director will receive a pro-rated award for the number of full months served as a non-employee director during the vesting period along with any accrued cash distribution equivalent rights.  The pro-rated award will vest one year from the date of grant.  Cash distribution equivalent rights accrue with respect to equity-based awards and are distributed at the time such awards vest. The number of units granted will be determined by dividing $78,000 by the average closing price of our common units on the NYSE over a ten business-day period ending on the third business day prior to the grant date and rounding any resulting fractional units to the nearest whole unit. The plan provides that unit-based awards to directors will be granted annually in conjunction with the Board's approval of our Annual Report on Form 10-K, and that any new non-employee director will receive a pro-rata award of service phantom units when commencing his or her services as a board member.

	
		
	 
	 

	(c)
	A meeting fee is paid to a non-employee director for attendance in person or by telephone.TLLP EX.10.18 12.31.2014

Exhibit 10.18

Execution Version

AMENDMENT NO. 1 TO THE THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT
THIS AMENDMENT NO. 1 TO THE THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT (the “Amendment No. 1”), is entered into and executed on February 20, 2015, and effective as of December 31, 2014 (the “Amendment No. 1 Effective Date”), among Tesoro Corporation, a Delaware corporation (“Tesoro”), on behalf of itself and the other Tesoro Entities (as defined in the Third Omnibus Agreement, defined below), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“TRMC”), Tesoro Companies, Inc., a Delaware corporation, Tesoro Alaska Company LLC, a Delaware limited liability (“Tesoro Alaska”), Tesoro Logistics LP, a Delaware limited partnership (the “Partnership”), and Tesoro Logistics GP, LLC, a Delaware limited liability company (the “General Partner”). The above-named entities are sometimes referred to in this Amendment No. 1 as “Party” and collectively as the “Parties”.
RECITALS
WHEREAS, the Parties executed that certain Third Amended and Restated Omnibus Agreement dated as of July 1, 2014 (the “Third Omnibus Agreement”);
WHEREAS, in 2013 PHMSA revised the U.S. DOT’s Pipeline Integrity Management Rule 49 CFR 195.452 (the “2013 PHMSA Interpretation”) to expressly state that pipeline operators are required to maintain records showing the maximum operating pressure of a line as evidenced by signed hydrotest charts for the useful life of the pipe;
WHEREAS, indications of a completed hydrotest for the THPP High Plains pipeline system (“High Plains System”) were located by THPP, but the signed hydrotest charts for a majority of the High Plains System have not been found;  
WHEREAS, to (i) ensure the integrity of High Plains System, (ii) to maintain proper documentation, and (iii) to ensure and maintain the High Plains System flow rate for the benefit of TRMC and avoid any possibility of a PHMSA-mandated flow rate reduction, renewed hydrotesting of High Plains System was recommended;
WHEREAS, starting in May of 2014, TLLP began hydrotesting sections of the High Plains System that run from Johnsons Corner, ND to Ramberg, ND; testing for sections from Johnsons Corner to Dunn, ND started in October 2014; and additional segments of the system are to be tested over the next three years;
WHEREAS, as of December 31, 2014, the costs incurred by TLLP in connection with the completed hydrotests were $13,100,000 (the “2014 Hydrotest Costs”);
WHEREAS, the current language in the Third Omnibus Agreement, together with the timing of the 2013 PHMSA Interpretation, allow both TRMC and TLLP to make reasonable arguments that the other party is responsible for such costs; and
WHEREAS, for the avoidance of doubt, potential dispute and any admission of non-compliance with 49 CFR 195.452, the Parties desire to amend the Third Omnibus Agreement, 

whereby (i) TRMC would agree to directly reimburse TLLP for the 2014 Hydrotest Costs, and (ii) the Parties would agree to negotiate in good faith an adjusted NDPSC tariff or tariff surcharge charged to TRMC in connection with the High Plains TSA for the recoupment of the hydrotest costs incurred by TLLP for the hydrotesting of the remaining segments on the THPP System.
NOW, THEREFORE, in consideration of the premises, and the covenants, conditions and agreements contained herein and in the Third Omnibus Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.    The Recitals are incorporated into the Third Omnibus Agreement and any capitalized terms not otherwise defined herein shall have the meanings set forth in the Third Omnibus Agreement.

2.    As of the Amendment No. 1 Effective Date, Section 5.1(b) of the Third Omnibus Agreement is hereby amended and restated in its entirety as follows:
“(b)    during the period commencing on the applicable Closing Date and ending on the fifth anniversary of the applicable Closing Date, the expenses incurred by the Partnership Group for repairs and maintenance to storage tanks, pressure vessels and pipelines included as part of the Assets and expenses that are made solely in order to comply with current minimum standards under (i) the U.S. Department of Transportation’s Pipeline Integrity Management Rule 49 CFR 195.452, including the 2013 PHMSA Interpretation thereof, (ii) American Petroleum Institute (API) Standard 653 for Aboveground Storage Tanks, and (iii) applicable pressure vessel codes as required to allow a terminal to provide services to TRMC under an applicable terminal service agreement, but only if and to the extent that such repairs and maintenance are identified before, during or as a result of the first scheduled API 653 inspections, pressure vessel inspection or pipeline inspections or tests that occur after the applicable Closing Date, and this clause (b) shall apply only to the contribution agreements indicated on Schedule VII.  For the avoidance of any doubt, potential dispute and/or admission of non-compliance with 49 CFR 195.452, the Parties hereby agree and acknowledge that the 2014 Hydrotest Costs shall be covered by this section, and that (i) TRMC will directly reimburse THPP for the 2014 Hydrotest Costs, (ii) going forward the reimbursement/recoupment mechanism for future hydrotest costs will no longer be by direct reimbursement from TRMC to TLLP, but instead by repayment through future tariff adjustments on the High Plains System, and (iii) the hydrotest costs incurred to be incurred in 2015 and 2016 for additional segments on the High Plains System will be recouped by THPP through an adjusted NDPSC tariff or tariff surcharge on intrastate transportation to a Mandan destination, such adjusted tariff surcharge to be negotiated in good faith by the Parties pursuant to the High Plains Transportation Services Agreement dated April 26, 2011.”
3.    Other than as set forth above, the Third Omnibus Agreement, as amended, shall remain in full force and effect as written.

4.    This Amendment No. 1 shall be governed by and shall be construed in accordance with the laws of the State of Texas. 

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5.    This Amendment No. 1 may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.  Delivery of an executed signature page of this Amendment No. 1 by facsimile transmission or in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart hereof.

6.    This Amendment No. 1 shall be binding upon and shall inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors, and assigns.

7.    Should any clause, sentence, paragraph, subsection or section of this Amendment No. 1 be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Amendment No. 1, and the part or parts of this Amendment No. 1 so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom, and the remainder will have the same force and effectiveness as if such stricken part or parts had never been included herein.

8.    This Amendment No. 1 sets forth all of the covenants, agreements, conditions, understandings, warranties and representations of the Parties relative to the subject matter hereof, and any previous agreement among such parties with respect to the subject matter hereof is superseded by this Amendment No. 1.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment No. 1 effective as of the date first written above.

TESORO CORPORATION

By:          /s/ GREGORY J. GOFF        
Gregory J. Goff 
Chairman, President and Chief Executive Officer 

TESORO REFINING & MARKETING COMPANY LLC

By:          /s/ GREGORY J. GOFF        
Gregory J. Goff 
Chairman of the Board of Managers and President 

TESORO COMPANIES, INC.

By:          /s/ GREGORY J. GOFF        
Gregory J. Goff 
Chairman of the Board of Directors and President 

TESORO ALASKA COMPANY LLC

By:          /s/ GREGORY J. GOFF        
Gregory J. Goff 
Chairman of the Board of Directors and President 

Signature Page 1 to Amendment No. 1 to
Third Amended and Restated Omnibus Agreement

TESORO LOGISTICS LP

		
	By:
	Tesoro Logistics GP, LLC, its

general partner

		
	By:  
	       /s/ PHILLIP M. ANDERSON         
Phillip M. Anderson  
President 

TESORO LOGISTICS GP, LLC

		
	By:  
	       /s/ PHILLIP M. ANDERSON        

Phillip M. Anderson  
President 

Signature Page 2 to Amendment No. 1 to
Third Amended and Restated Omnibus Agreement

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