Document:

Exhibit 10.26 9.30.12

Exhibit 10.26

FRANKLIN RESOURCES, INC.
AMENDED AND RESTATED ANNUAL INCENTIVE COMPENSATION PLAN
(amended and restated October 22, 2012)
(amended and restated March 16, 2010)
 (amended and restated December 13, 2006)
(amended and restated December 16, 2005)
(amended and restated September 22, 2005)
(amended and restated December 16, 2004)
(amended and restated December 11, 2003)

		
	I.
	PURPOSE

Franklin Resources, Inc. has established this Amended and Restated Annual Incentive Compensation Plan to reward employees for contributions to the Company (as hereinafter defined) by providing them an opportunity to share in the organization's annual performance results. Through these incentives, the Company intends to attract, retain, and motivate eligible employees to achieve the highest levels of performance results in the financial services business.
		
	II.
	DEFINITIONS

When used in this plan document, the following words and phrases shall have the following meanings:
2.1“Award Pool” means the total dollars available for funding Incentive Awards under the Plan for an applicable Plan Year.

2.2“Bonus Opportunity” means a potential bonus target for a Participant.

2.3“Committee” means the Compensation Committee of the Board of Directors of Franklin Resources, Inc., and/or another committee of the Board of Directors to the extent of such other committee's authority granted by the Board.

2.4“Company” means Franklin Resources, Inc., a Delaware corporation, and its direct and indirect subsidiaries.

2.5“Compensation Committee” means the Compensation Committee of the Franklin Resources, Inc. Board of Directors.

2.6“Equity Award” means a grant of Stock, Options, SARs, Stock Unit Awards, Restricted Stock Awards or Restricted Stock Unit Awards under the 2002 Universal Stock Incentive Plan or successor equity compensation plan, or Mutual Fund Unit Awards.

2.7 “Incentive Award” means the actual current value of an award to a Participant, regardless of the form of the award, determined by a Committee or Management during or following the end of the Plan Year, as applicable.

2.8“Management” means the executive officers of the Company.

2.9“Mutual Fund Unit Award” means the grant of a right to receive shares in mutual funds sponsored by the Company upon the vesting of the units in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such right to receive shares in such mutual funds subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.10 “Option” means the grant of a right to purchase Stock at a specified exercise price in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with the right to purchase such shares of Stock subject to the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.11“Participant” means all employees who have been determined by a Committee or Management to be Participants pursuant to Section 3.1.

2.12“Plan” means the Amended and Restated Annual Incentive Compensation Plan as set forth in this document, as amended from time to time.

2.13“Pre-Bonus Operating Income” (hereafter “PBOI”) means the net operating income of the Company, exclusive of passive income and calculated before non-operating interest, taxes, extraordinary items, and certain special items (such as special compensation payouts on account of a merger) and before the accrual of Incentive Awards under the Plan and awards under the Company's 2004 Key Executive Incentive Compensation Plan or any successor plan.

2.14“Plan Year” means the 12-month period beginning on the first day of each fiscal year of the Company.

2.15“Restricted Stock Award” means the grant of shares of Stock in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such shares of Stock subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.16“Restricted Stock Unit Award” means the grant of a right to receive Stock upon the vesting of the units in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such right to receive Stock subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.17“SAR” means the grant of a right to receive, in cash or Stock (as determined by a Committee), value equal to (or otherwise based on) the excess of (a) the fair market value of a specified number of shares of Stock at the time of exercise over (b) a specified exercise price, in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with the right to receive such value in cash or Stock subject to the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.18“Stock” means Franklin Resources, Inc. common stock reserved for issuance under the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan or successor equity compensation plan.

2.19“Stock Unit Award” means the grant of a right to receive Stock in the future.

		
	III.
	PARTICIPATION

3.1All individuals who are employees at the beginning of the Plan Year, except employees who participate in commission-based incentive plans or other incentive arrangements determined by a Committee or Management, are eligible to be designated by a Committee or Management as Participants during that Plan Year.  Employees hired during a Plan Year may be added to the Plan as Participants in the discretion of a Committee or Management. 

3.2A Participant's Incentive Award will be based upon an evaluation of a Participant's overall performance, including the successful accomplishment of annual goals and objectives, as well as other performance factors. 

		
	IV.
	AWARD POOL FUNDING AND INDIVIDUAL AWARDS

4.1For each Plan Year, the Compensation Committee shall determine the amount to be allocated to the Award Pool, not to exceed Twenty Percent (20%) of PBOI. 

4.2A Committee or Management may generally determine the amount of Bonus Opportunities under the Plan. The Committee or Management may advise Participants of particular Bonus Opportunities or ranges of Bonus Opportunities at any time during the Plan Year.

4.3The actual amounts allocated to the Award Pool may be determined and/or revised by the Compensation Committee at any time during or after the end of each Plan Year, based upon actual or projected Company performance and PBOI.

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4.4Actual Incentive Awards may be determined during or following the end of each Plan Year. The amount of any Incentive Awards determined and paid prior to the end of a Plan Year shall be credited against the Award Pool for such Plan Year so that the net amount remaining in the Award Pool is available for Incentive Awards determined and paid after the end of such Plan Year. Actual Incentive Awards may vary from the Bonus Opportunities depending on the PBOI allocated or projected to be allocated to the Award Pool and a Participant's individual performance.

4.5To promote the highest levels of individual performance, there is no minimum or maximum which applies to individual Incentive Awards of any Participant. Amounts not allocated as Incentive Awards do not carry over to the next Plan Year, and may be used for distribution as incentive compensation to employees who are not Participants in the Plan.

4.6Notwithstanding a Participant's individual performance and anything to the contrary in this Plan, Management or a Committee may decrease (even to zero) or increase the Incentive Award payable to a Participant; provided however, that only a Committee may increase or decrease an Incentive Award payable to a member of Management.
   
		
	V.
	PAYMENT OF ANNUAL AWARDS

5.1Incentive Awards may, in a Committee's discretion, be paid in the following time and manner:

(a)Incentive Awards may be paid in cash or in a combination of cash and Equity Awards subject to restrictions and vesting, if any, determined by a Committee to be appropriate. Incentive Awards paid in Equity Awards granted under the 2002 Universal Stock Incentive Plan or successor equity compensation plan shall also be subject to the limit on the maximum number of shares that may be issued under such plan and any additional limitations on the maximum number of shares that may be awarded to any individual in any fiscal or calendar year under such plan.

(b)Any Equity Awards granted as part of an Incentive Award shall be governed by the terms of the applicable award agreement evidencing such Equity Award grant and, in the case of Equity Awards other than Mutual Fund Units, the 2002 Universal Stock Incentive Plan or any successor plan, and shall not be governed by or subject to the terms of this Plan.

(c)The cash portion of an Incentive Award shall be paid at such time and in such manner as a Committee determines. Participants shall be notified in writing as to the date and time of payment of any deferred portion of the Incentive Award.

(d)Equity Awards awarded as part of an Incentive Award shall be distributed at such time during or after the end of the Plan Year as determined by a Committee. Notwithstanding anything in the Plan to the contrary, Equity Awards and any modifications thereto shall be made by a Committee, and, if applicable, in accordance with the 2002 Universal Stock Incentive Plan or successor equity compensation plan.
  
(e)Notwithstanding the foregoing, the payment of any Incentive Awards determined by the Company to provide for a “deferral of compensation” (within the meaning of Section 1.409A-1(b) of the Treasury regulations under the Internal Revenue Code of 1986, as amended (the “Code”), and any successor thereto) shall be completed no later than two and one-half (21⁄2) months following the end of the calendar year in which such Incentive Awards are earned.

5.2Application of Code Section 409A.

Notwithstanding any other provision of this Plan to the contrary, the Company, in its sole discretion and without Participant consent, may amend or modify the Plan in any manner to provide for the application and effects of Section 409A of the Code (relating to deferred compensation arrangements) and any related regulatory or administrative guidance issued by the Internal Revenue Service, or any successors thereto.  The Company shall have the authority to delay the payment of any benefits described under the Plan to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly-traded companies) and in such event, any such payments to which a Participant would otherwise be entitled during the six (6) month period immediately following his or her separation from service will be paid on the first business day following the expiration of such six (6) month period.

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	VI.
	PAYMENT IN EVENT OF DEATH, DISABILITY, LEAVE OF ABSENCE OR RETIREMENT

6.1Death of Participant.

A Participant who dies is entitled to a pro-rated Incentive Award based on performance up to the last day worked. Payment shall be made in cash in a single payment during or as soon as practical following the end of the Plan Year in which death occurred. If the Participant dies following the end of a Plan Year but before an Incentive Award for that year has been paid, the Participant's full Incentive Award shall be paid in cash in a single payment when it would otherwise have been paid. Payment of Incentive Awards on account of death shall be paid to the person designated by the Participant as beneficiary under this Plan. If there is no such designation or the designated beneficiary fails to survive the Participant, payment shall be made to the Participant's spouse or if there is none, the Participant's estate. Notwithstanding the foregoing provisions of this Section 6.1 with respect to the payment of Incentive Awards, a Participant's full Incentive Award, a portion of his full Incentive Award, or no portion thereof may be payable to the persons specified above.  Such determination shall be made by Management or by a Committee.

6.2Disability.

A Participant who ceases to be an employee on account of disability, as a result of which the Participant shall be eligible for payments under Company long-term disability insurance policies, shall be entitled to receive a pro-rated Incentive Award based on performance up to the last day worked. Payment shall be made in cash in a single installment during or as soon as practical following the end of the Plan Year in which employment terminated. If the Participant ceases to be an employee on account of disability following the end of a Plan Year but before an Incentive Award for that Plan Year has been paid, the Participant's full Incentive Award shall be paid in cash in a single payment when it would otherwise have been paid.  Notwithstanding the foregoing provisions of this Section 6.2 with respect to the payment of Incentive Awards, a Participant may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof.  Such determination shall be made by Management or by a Committee.

6.3Leave of Absence.

A Participant on leave of absence for any portion of the Plan Year may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof.  Such determination shall be made by Management or by a Committee.

6.4Retirement.

A Participant who retires during the Plan Year is eligible to receive a pro-rated Incentive Award based on performance to the date of retirement in cash in a single payment during or as soon as practical following the end of the fiscal year in which the Participant retires. A Participant has “retired” for purposes of this Plan if he terminates employment with the Company after reaching age 55 with at least 10 years of service to the Company, including service to any entity that is acquired by the Company, provided that the Company may modify this provision as necessary to comply with applicable requirements or practices of relevant non-U.S. jurisdictions. Notwithstanding the foregoing provisions of this Section 6.4 with respect to the payment of Incentive Awards, a Participant may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof.  Such determination shall be made by Management or by a Committee.

		
	VII.
	PAYMENT IN EVENT OF TERMINATION OF EMPLOYMENT

7.1Involuntary Termination of Employment.

(a)If a Participant's employment is terminated by the Company as a result of the Company's dissatisfaction with the job related activities of the Participant or conviction of the Participant of a felony, the Participant shall forfeit any rights to any unpaid Incentive Awards under the Plan. Notwithstanding the foregoing, a Committee, in its sole discretion, may (x) pay the Participant a pro-rated Incentive Award based upon performance during the Plan Year to the date of termination or (y) pay the Participant's full Incentive Award (or any greater amount).

(b)If a Participant's employment is terminated for reasons other than those described in Sections 6 and 7.1(a) above, Management or a Committee shall have discretion to pay any or no portion of the Participant's Incentive Award (or any greater amount) following such termination.

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7.2Voluntary Termination of Employment.

If a Participant voluntarily resigns from employment at the Company prior to the payment of an Incentive Award with respect to a Plan Year, no Incentive Award with respect to such Plan Year will be paid. The Participant shall forfeit the right to any Incentive Awards for such Plan Year and any subsequent Plan Year. Notwithstanding the foregoing, a Committee may (a) pay the Participant a pro-rated Incentive Award based upon performance during the Plan Year to the date of termination or (b) pay the Participant's full Incentive Award (or any greater amount). 

		
	VIII.
	AMENDMENT OR TERMINATION

8.1Amendment.

The Compensation Committee reserves the right, in its sole discretion to amend this Plan at any time in whole or in part; provided, however, that no amendment shall result in the forfeiture or cancellation of any Participant's Incentive Award(s) earned as of the end of the fiscal year immediately preceding the date the Compensation Committee adopts the amendment, unless otherwise agreed to by the affected Participant(s).

8.2Termination.

The Compensation Committee may terminate the Plan at any time. Termination shall not result in the forfeiture or cancellation of any Participant's Incentive Award(s) which have been determined but not yet paid, unless otherwise agreed to by the affected Participant(s).

		
	IX.
	ADMINISTRATION

9.1Administration of the Plan.

This Plan has been adopted by the stockholders of Franklin Resources, Inc. and shall be administered by the Compensation Committee.

(a)The Compensation Committee shall meet at such times and places and upon such notice as the chairperson determines in consultation with the other Compensation Committee members. A majority of the Compensation Committee shall constitute a quorum. Any acts by the Compensation Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all the members of the Compensation Committee shall be valid acts of the Compensation Committee.

(b)The Compensation Committee shall have the sole authority, in its absolute discretion, to adopt, amend, and rescind such policies and procedures as, in its opinion, may be advisable in the administration of the Plan, to construe and interpret the Plan, the policies and procedures, and any instruments evidencing Incentive Awards and to make all other determinations deemed necessary or advisable for the administration of the Plan. All decisions, determinations, and interpretations of the Compensation Committee shall be binding on all Participants.

(c)The Plan is intended to meet the requirements of the rules promulgated by the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended, and shall be administered and construed accordingly.

9.2Non-alienation of Benefits.

No benefit under this Plan may be sold, assigned, transferred, conveyed, hypothecated, encumbered, anticipated, or otherwise disposed of, and any attempt to do so shall be void. No such benefit shall, prior to receipt thereof by a Participant, be in any manner subject to the debts, contracts, liabilities, engagements, or torts of such Participant.

9.3No Limitation of Rights.

Nothing in this Plan shall be construed to limit in any way the Company's general personnel policies and procedures particularly with respect to the right of the Company to terminate a Participant's employment at any time for any reason whatsoever with or without cause; nor shall it be evidence of any agreement or understanding, express or implied, that the Company (a) will 

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employ a Participant in any particular position, (b) will ensure participation in any incentive programs, or (c) will grant any awards for such programs.

9.4Applicable Law.

The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of Delaware, with the exception of Delaware's conflict of laws provisions.

9.5Mandatory Arbitration.

The Participant and the Company agree to submit all disputes arising under the Plan or the participation by Participant in the Plan exclusively to final and binding arbitration in accordance with the Company's dispute resolution policies with respect to employment arrangements and compensation plans as in effect from time to time.

		
	X.
	FORFEITURE OF INCENTIVE AWARDS PURSUANT TO RESTATEMENT OF FINANCIAL RESULTS

Notwithstanding any other provision of this Plan to the contrary, in the event that (i) the Company issues a restatement of financial results to correct a material error and (ii) the Compensation Committee determines, in good faith, that a Participant's fraud or willful misconduct was a significant contributing factor to the need to issue such restatement and (iii) some or all of the Incentive Award that was granted and/or earned prior to such restatement by the Participant would not have been granted and/or earned, as applicable, based upon the restated financial results, the Participant shall immediately return to the Company the Incentive Award, including any shares of Stock or mutual fund shares, or the pre-tax income derived from any disposition of shares of Stock or mutual fund shares previously received in settlement of the Incentive Award that would not have been granted and/or earned based upon the restated financial results (the “Repayment Obligation”).  The Company shall be able to enforce the Repayment Obligation by all legal means available, including, without limitation, by withholding such amount from other sums owed by the Company to the Participant.

* * *

This Plan was originally approved by the stockholders of Franklin Resources, Inc. on January 19, 1994. The stockholders of Franklin Resources, Inc. approved an amendment of the Plan on January 24, 1995. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 11, 2003 to (a) provide that up to 20% of PTOI may be allocated to the Award Pool by the Compensation Committee and (b) give broad discretion to the Compensation Committee in determining the amount of Incentive Awards payable to Participants in the Plan, which amendment and restatement was approved by the stockholders of Franklin Resources, Inc. on January 29, 2004. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 16, 2004 to provide that Incentive Awards may be paid in Options, SARs, Stock Unit Awards and Restricted Stock Unit Awards, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on September 22, 2005 principally to (a) provide that the allocation of actual amounts to the Award Pool, Associates' Pool(s) and/or Principals' Pool(s) for a Plan Year and the determination and payment of actual Incentive Awards for a Plan Year may be made in advance of the completion of such Plan Year and (b) make various conforming and other technical changes to the Plan, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 16, 2005 principally to change the governing law of the Plan to Delaware, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc.  The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 13, 2006 principally to make clarifying and technical changes to the Plan, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc.  The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on March 16, 2010 principally to (a) make clarifying and technical changes to the Plan, including to extend certain administrative authority to appropriate officers and members of management personnel in addition to the Compensation Committee, as well as (b) include a clawback provision providing for the forfeiture of Incentive Awards by a Participant in the context of certain material financial restatements resulting from such Participant's misconduct, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc.  The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on October 22, 2012 to permit additional committees established by the Board to act under the Plan to the extent of the authority granted to any such committee, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc.

FRANKLIN RESOURCES, INC.

6TSO EX. 10.1 11-15-2012

Exhibit 10.1

CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT

This Contribution, Conveyance and Assumption Agreement (this “Agreement”),  dated as of the Execution Date (as defined below), 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”), and Tesoro Refining and Marketing Company, a Delaware corporation (“TRMC”). The above-named entities are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties.”  
RECITALS
WHEREAS, TRMC is the owner of the newly-constructed Anacortes Rail Facility located in Anacortes, Washington (the “Facility”); and
WHEREAS, TRMC desires to contribute certain assets to the General Partner, the General Partner desires to contribute those assets to the Partnership and the Partnership desires to contribute those assets to the Operating Company, all on the terms and conditions set forth herein. 
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 herein shall have the respective meanings ascribed to such terms below:
“Agreement” has the meaning set forth in the introduction to this Agreement.
“Amended and Restated Operational Services Agreement” means that certain Amended and Restated Operational Services Agreement dated as of April 1, 2012, among Tesoro, Tesoro Companies Inc., TRMC, the General Partner, the Operating Company, Tesoro Alaska Company and Tesoro High Plains Pipeline Company.
“Assets” means the Facility, including a four-track unloading platform, two receiving and departing tracks capable of handling a 100-car unit train, two additional short track spurs to store and allow minor repair of railcars, pumps, piping and other ancillary equipment to allow for the direct offloading to the storage facility, and gates and fencing associated with the Facility, as well as certain other related assets and properties that are either located on the same parcels of real estate as those assets and properties or used in connection therewith, and all contracts, permits, licenses and other intangible rights of TRMC to the extent assignable, and to the extent used in connection with the 

ownership and operation of any of the other assets and properties described above, which assets are listed in detail on Exhibit A to this Agreement; provided, however, that with respect to Section 2.2 and Section 2.3, the Assets shall also include the TTA and the MTUA.  
“Common Unit” means a common unit representing a limited partner interest in the Partnership having the rights set forth in the Partnership Agreement.
“Excluded Assets and Liabilities” has the meaning set forth in Section 2.1(c) of this Agreement.
“Execution Date” means November 15, 2012.
“Facility” has the meaning set forth in the Recitals. 
“General Partner” has the meaning set forth in the introduction to this Agreement.
“General Partner Contribution” has the meaning set forth in Section 2.2(a) of this Agreement.
“General Partner Unit” means a general partner unit representing a general partner interest in the Partnership having the rights set forth in the Partnership Agreement.
“Material Adverse Effect” has the meaning set forth in Section 3.4(a) of this Agreement.
“MTUA” means that certain Anacortes Mutual Track Use Agreement to be executed on the Execution Date among the General Partner, the Partnership, the Operating Company and TRMC, pursuant to which the parties will specify joint use of certain railroad track, including any switches and other ancillary equipment required to use such track, effective as of the “Commencement Date” as defined therein.
“Operating Company” has the meaning set forth in the introduction to this Agreement.
“Partnership” has the meaning set forth in the introduction to this Agreement.
“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 26, 2011.
“Partnership Contribution” has the meaning set forth in Section 2.3 of this Agreement.
“Partnership Group” has the meaning set forth in the Second Amended and Restated Omnibus Agreement. 
“Party” or “Parties” is defined in the introduction to this Agreement.

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“Permitted Liens” has the meaning set forth in Section 2.1(a) of this Agreement.
“Second Amended and Restated Omnibus Agreement” means that certain Second Amended and Restated Omnibus Agreement dated as of the Execution Date, among Tesoro, TRMC, Tesoro Companies, Inc., a Delaware corporation, Tesoro Alaska Company, a Delaware corporation, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.
“Tesoro” has the meaning set forth in the introduction to this Agreement.
“TTA” means that certain Anacortes Track Use and Throughput Agreement to be executed on the Execution Date among the General Partner, the Partnership, the Operating Company and TRMC, pursuant to which the Operating Company will provide TRMC with use of the track and offloading facility as well as the service of offloading crude or other agreed products from unit trains effective as of the “Commencement Date” as defined therein.
“Transaction Documents” has the meaning set forth in Section 3.4(a) of this Agreement. 
“TRMC” has the meaning set forth in the introduction to this Agreement.
“TRMC Contribution” has the meaning set forth in Section 2.1(a) of this Agreement.
ARTICLE II
CONTRIBUTIONS AND ACKNOWLEDGEMENTS
		
	Section 2.1
	Conveyances by TRMC to the General Partner. 

(a)    Effective as of the Execution Date, TRMC hereby assigns, transfers, contributes, grants, bargains, conveys, sets over and delivers to the General Partner, its successors and its assigns, for its and their own use forever, the entire right, title, interest, responsibilities, coverages and liabilities of TRMC in and to the Assets, including any responsibilities, coverages and liabilities under any permit or license included in the Assets, free and clear of all liens and encumbrances of any kind or nature, other than as set forth on Exhibit B to this Agreement (the “Permitted Liens”).  The contribution described in this Section 2.1(a) shall be referred to in this Agreement as the “TRMC Contribution.”  TRMC makes the TRMC Contribution in exchange for an additional 7% membership interest in the General Partner, and the General Partner accepts the TRMC Contribution as a contribution to the capital of the General Partner.
(b)    The Parties hereby acknowledge and agree that TRMC owns certain assets and properties (including any and all petroleum and hydrocarbon inventory) and has certain responsibilities, coverages and liabilities that might otherwise be considered as part of the Assets as set forth on Exhibit C to this Agreement (collectively, the “Excluded Assets and Liabilities”), and that the Excluded Assets and Liabilities are 

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being retained by TRMC and are not being contributed or transferred as part of the TRMC Contribution. 
Section 2.2    Conveyances by the General Partner to the  Partnership. 
(a)    Effective as of the Execution Date and immediately after the completion of the TRMC Contribution, the General Partner hereby assigns, transfers, contributes, grants, bargains, conveys, sets over and delivers to the Partnership, its successors and its assigns, for its and their own use forever, the entire right, title, interest, responsibilities, coverages and liabilities of the General Partner in and to the Assets, including any responsibilities, coverages and liabilities under any permit or license included in such Assets, free and clear of all liens and encumbrances of any kind or nature, other than the Permitted Liens.  The contribution described in this Section 2.2(a) shall be referred to in this Agreement as the “General Partner Contribution.”  
(b)    The General Partner shall make the General Partner Contribution in exchange for the payment or issuance of the following as of the Execution Date in consideration of the conveyance and transfer of all of the Assets as of the Execution Date as set forth herein:
(i)    $162 million in cash;
(ii)    the issuance to the General Partner of 93,289 general partner units in the Partnership to restore and maintain the General Partner’s two percent (2%) general partner interest in the Partnership; and 
(iii)    the issuance to the General Partner of 309,838 Common Units, representing slightly less than a one percent (1%) limited partner interest in the Partnership. 
(c)    The Partnership hereby accepts the Assets, including the TTA and the MTUA, as a contribution to the capital of the Partnership.
Section 2.3    Conveyances by the Partnership to the Operating Company.  Effective as of the Execution Date and immediately after the completion of the General Partner Contribution, the Partnership hereby assigns, transfers, contributes, grants, bargains, conveys, sets over and delivers to the Operating Company, its successors and its assigns, for its and their own use forever, the entire right, title, interest, responsibilities, coverages and liabilities of the Partnership in and to the Assets, including any responsibilities, coverages and liabilities under any permit or license included in the Assets, free and clear of all liens and encumbrances of any kind or nature, other than the Permitted Liens.  The contribution described in this Section 2.3 shall be referred to in this Agreement as the “Partnership Contribution.”  The Partnership hereby makes the Partnership Contribution as a capital contribution to the capital of the Operating Company and the Operating Company hereby accepts the Assets, including the TTA and the MTUA, as a contribution to the capital of the Operating Company. 

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Section 2.4    Actions and Deliveries. The Parties acknowledge that the following actions and deliveries shall occur as set forth below:
(a)    if agreed upon at a future date by the General Partner and Tesoro, the General Partner shall loan the funds it shall receive pursuant to Section 2.2 to Tesoro pursuant to a 10-year promissory note in the form attached as Exhibit D to this Agreement;
(b)    as of the Execution Date, TRMC shall execute and deliver documents and instruments necessary and appropriate to convey the applicable Assets directly to the Operating Company, in the form attached hereto as Exhibit E and other customary forms as may be agreed by the Parties;
(c)    as of the Execution Date, the parties to the TTA have executed and delivered the TTA;
(d)    as of the Execution Date, the parties to the MTUA have executed and delivered the MTUA;
(e)    as of the Execution Date, the parties to the Second Amended and Restated Omnibus Agreement have executed and delivered the Second Amended and Restated Omnibus Agreement; 
(f)    as of the Execution Date, the parties to the Amended and Restated Operational Services Agreement have executed and delivered an amendment and restatement of the schedules to the Amended and Restated Operational Services Agreement;
(g)    as of the Execution Date, TRMC and the Operating Company have executed and delivered a ground lease agreement related to the real property under the Facility and such other matters as included therein in form and substance satisfactory to both parties;
(h)    as of the Execution Date, TRMC and the Operating Company have executed and delivered a quitclaim deed with respect to the Assets identified on Exhibit A applicable to such quitclaim in form and substance satisfactory to both parties;
(i)    as of the Execution Date, or at a later date if necessary pursuant to Section 3.6, TRMC and the Operating Company have executed consent and assignment agreements for the assignment of certain of the contracts listed on Exhibit A, all in form and substance satisfactory to both parties;
(j)    as of the Execution Date, the Parties and the parties to the other Transaction Documents have executed a closing escrow agreement to effect the closing into escrow with McGuireWoods LLP of all documents and instruments related to the closing as of the Execution Date; and

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(k)    as of the Execution Date, the conflicts committee of the board of the directors of the General Partner has received the opinion of Simmons International, the financial advisor to the conflicts committee of the board of directors of the General Partner, that the consideration to be paid to the General Partner pursuant to Section 2.2 of this Agreement is fair from a financial point of view to the Partnership and the holders of common units of the Partnership other than Tesoro, the General Partner or any of their respective affiliates.
ARTICLE III
REPRESENTATIONS
Section 3.1    Representations of TRMC.  TRMC hereby represents and warrants to the General Partner, the Partnership and the Operating Company as of the Execution Date as follows:
(a)    the Assets are in good working condition, suitable for the purposes for which they are being used in accordance with accepted industry standards and all applicable laws and regulations; 
(b)    TRMC has title to the Assets that is sufficient to operate the Assets in accordance with their intended and historical use, subject to all recorded matters and all physical conditions in existence as of the Execution Date; 
(c)    to TRMC’s knowledge, after reasonable investigation, there are no terms in any agreements included in the Assets that would materially impair the rights granted to the Partnership Group pursuant to the transactions contemplated by this Agreement; and
(d)    the Assets have been designed and constructed to allow the Facility to have sufficient capacity to perform at the rate of one one-hundred car unit train per day, subject to applicable permit restrictions.
Section 3.2    Representation of the General Partner.  The General Partner hereby represents and warrants to TRMC as of the Execution Date that the General Partner has full power and authority to act as general partner of the Partnership in all material respects.
Section 3.3    Representation of the Partnership.  The Partnership hereby represents and warrants to the General Partner and Tesoro as of the Execution Date that the Common Units and the general partner units of the Partnership issued to the General Partner pursuant to Section 2.2(a) have been duly authorized for issuance and sale to the General Partner and, when issued and delivered by the Partnership pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued and fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Sections 17-607 and 17-804 of the Delaware Limited Partnership Act).  

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Section 3.4    Representations of the Parties.  Each Party represents and warrants, severally as to only itself and not jointly, to the other Parties as of the Execution Date: 
(a)    The applicable Party has been duly formed or incorporated and is validly existing as a limited partnership, limited liability company or corporation, as applicable, in good standing under the laws of its jurisdiction of organization with full power and authority to enter into and perform its obligations under this Agreement and the other documents contemplated herein (the “Transaction Documents”) to which it is a party, to own or lease and to operate its properties currently owned or leased or to be owned or leased and to conduct its business.  The applicable Party is duly qualified to do business as a foreign corporation, limited liability company or limited partnership, as applicable, and is in good standing under the laws of each jurisdiction which requires such qualification, except where the failure to be so qualified or registered would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties, taken as a whole, whether or not arising from transactions in the ordinary course of business, of such Party (a “Material Adverse Effect”).
(b)    The applicable Party has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and perform its respective obligations thereunder.  All corporate, partnership and limited liability company action, as the case may be, required to be taken by the applicable Party or any of its stockholders, members or partners for the execution and delivery by the applicable Party of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby has been validly taken.
(c)    For the applicable Party, each of the Transaction Documents to which it is a party is a valid and legally binding agreement of such Party enforceable against such Party in accordance with its terms; except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); provided further; that the indemnity, contribution and exoneration provisions contained in any of the Transaction Documents may be limited by applicable laws and public policy.
(d)    Neither the execution, delivery and performance of the Transaction Documents by the applicable Party that is a party thereto nor the consummation of the transactions contemplated by the Transaction Documents conflict or will conflict with, or result or will result in, a breach or violation of or a default under (or an event that, with notice or lapse of time or both would constitute such an event), or imposition of any lien, charge or encumbrance upon any property or assets of any of the applicable Party pursuant to, (i) the partnership agreement, limited liability company agreement, certificate of limited partnership, certificate of formation or conversion, certificate of articles of incorporation, bylaws or other constituent document of the applicable Party, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement,

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loan agreement or other agreement, obligation, condition, covenant or instrument to which the applicable Party is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the applicable Party of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over such Party or any of its properties in a proceeding to which it or its property is a party, except in the case of clause (ii), liens, charges or encumbrances arising under security documents for the collateral pledged under such Party’s applicable credit agreements and except in the case of clause (iii), where such breach or violation would not reasonably be expected to have a Material Adverse Effect.
(e)    No permit, consent, approval, authorization, order, registration, filing or qualification of or with any court, governmental agency or body having jurisdiction over the applicable Party or any of its properties or assets is required in connection with the execution, delivery and performance of the Transaction Documents by the applicable Party, the execution, delivery and performance by the applicable Party that is a party thereto of its respective obligations under the Transaction Documents or the consummation of the transactions contemplated by the Transaction Documents other than (i) any filing related to the sale of the Common Units under this Agreement with federal or state securities laws authorities, and (ii) consents that have been obtained, except in the case of clause (ii) where the failure to obtain such consent would not reasonably be expected to have a Material Adverse Effect.
(f)    No action, suit, proceeding, inquiry or investigation by or before any court or governmental or other regulatory or administrative agency, authority or body or any arbitrator involving the applicable Party or its property is pending or, to the knowledge of the applicable Party, threatened or contemplated that (i) would individually or in the aggregate reasonably be expected to have a material adverse effect on the performance of the Transaction Documents or the consummation of any of the transactions contemplated therein, or (ii) would individually or in the aggregate reasonably be expected to have a Material Adverse Effect.
Section 3.5    Survival.  The Operating Company shall provide written notice to TRMC of any breach of the representation in Section 3.1(d) of this Agreement prior to the second anniversary date of the Execution Date.  After the second anniversary of the Execution Date, TRMC’s representation in Section 3.1(d) shall no longer be effective. 
Section 3.6    Cooperation on Assignment. If any of the consents and assignments referenced in Section 2.4(i) are not able to be executed on the Execution Date, the Parties shall cooperate and use commercially reasonable efforts to have such consents and assignments executed at the earliest practicable time.  To the extent that any such consents and assignments cannot be obtained, the Parties will use their commercially reasonable efforts to take such actions as may be possible without violation or breach of any applicable contract to effectively to grant the Operating Company the economic benefits of, and impose upon the Operating Company the economic burdens of, such contracts.

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ARTICLE IV
COVENANTS
Section 4.1    Further Assurances.  From time to time after the Execution Date, 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 (including any actions required to effect the assignment and conveyance of the Assets as of the Execution Date), and (c) more fully and effectively to carry out the purposes and intent of this Agreement.   Further, each Party shall grant to the other Party and their respective agents and representatives access to their respective property after the Execution Date during normal business hours and subject to standard safety and security procedures of the applicable Party for purposes of the operation of their respective businesses, as contemplated hereunder and under the documents referenced herein.
Section 4.2    Indemnity by TRMC.  TRMC shall indemnify, defend and hold harmless the Partnership and the Operating Company from and against any Losses (as defined in the Second Amended and Restated Omnibus Agreement) suffered or incurred by those Parties by reason of or arising out of TRMC’s breach of the representation in Section 3.1(d), to the extent that TRMC is notified in writing of any of the foregoing prior to the end of the survival period set forth in Section 3.5.  Such indemnification shall be made in accordance with the procedures set forth in Section 3.6 of the Second Amended and Restated Omnibus Agreement and shall also be subject to the provisions of Section 3.7(d) of the Second Amended and Restated Omnibus Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1    Costs. Each Party shall pay its own costs and expenses with respect to the transactions contemplated by this Agreement; except as follows:
(a)    the Partnership and TRMC shall each pay one-half of (i) the sales, use and similar taxes arising out of the contributions, conveyances and deliveries to be made under Article II, (ii) all documentary, filing, recording, transfer, deed and conveyance taxes and fees required in connection therewith, (iii) legal fees and costs of McGuireWoods LLP and Latham & Watkins LLP, and (iv) any other customary closing costs associated with the contributions of the Assets; and
(b)    the Partnership shall pay all of the costs and expenses of the conflicts committee of the board of directors of the General Partner, including, but not 

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limited to, the advisory and legal fees and costs of Andrews Kurth LLP and Simmons International.
Section 5.2    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 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 5.3    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
Section 5.4    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 5.5    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.
Section 5.6    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 

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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 5.7    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 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 5.8    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 5.9    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

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OF THIS AGREEMENT UNLESS IT IS CONTAINED IN A WRITTEN AMENDMENT HERETO EXECUTED BY THE PARTIES HERETO AFTER THE DATE OF THIS AGREEMENT.
Section 5.10    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.
Section 5.11    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.
Section 5.12    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 5.12.  
If to the Tesoro or TRMC: 

Tesoro Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259-1828
Attn: Charles S.  Parrish
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: Charles S.  Parrish
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 Execution Date.
	
				
	TESORO LOGISTICS LP
	TESORO CORPORATION

	 
	 
	 
	 

	By:
	Tesoro Logistics GP, LLC, its
	By:
	/s/ Daniel R. Romasko

	 
	general partner
	 
	Daniel R. Romasko

	 
	 
	 
	Executive Vice President,

	By:
	/s/ Phillip M. Anderson
	 
	Operations

	 
	Phillip M. Anderson
	 
	 

	 
	President
	 
	 

	 
	 
	 
	 

	TESORO LOGISTICS GP, LLC
	TESORO LOGISTICS OPERATIONS

	 
	 
	LLC

	By:
	/s/ Phillip M. Anderson
	 
	 

	 
	Phillip M. Anderson
	By:
	/s/ Phillip M. Anderson

	 
	President
	 
	Phillip M. Anderson

	 
	 
	 
	President

	TESORO REFINING AND MARKETING
COMPANY
	 

	 
	 
	 
	 

	By:
	/s/ Daniel R. Romasko
	 
	 

	 
	Daniel R. Romasko
	 
	 

	 
	Executive Vice President,
	 
	 

	 
	Operations
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

EXHIBIT A

Assets
	
			
	Asset Description
	 
	 

	Locomotive and Telemetry Devise Use and Liability Agreement effective as of September 1, 2012, between TRMC and BNSF Railway Company.
	 
	 

	Industry Track Agreement effective August 31, 2012, between TRMC and BNSF Railway Company (as a partial assignment and only to the extent such agreement covers assets conveyed pursuant hereto).
	 
	 

	Unit Train Facility Operations and Maintenance Service Agreement dated effective as of June 1, 2012, between TRMC and Savage Services Corporation.
	 
	 

	TTA, for purposes of Sections 2.2 and 2.3
MTUA, for purposes of Sections 2.2 and 2.3
	 
	 

	 
	 
	 

The following assets as listed on TRMC’s asset ledger as of the date hereof:	
			
	Asset
	Cost Ctr
	Description

	CRUDE PUMPS
	21370
	Three pumps. Asset Tag # 1404, 1405 and 1406.  250 HP VFD's

	OIL WATER SEWER PUMPS
	21370
	Two pumps. Asset Tag # 1408 and 1409.  200 HP motors.

	RAILROAD TRACKS
	21370
	Approximately 22,278 Track Feet (two rails).  This breakout of track excludes the track in the unloading platform.  All track is installed on ballast and concrete ties, except for the switches which are installed on wood ties.

	UNLOADING PLATFORM SYSTEM
	21370
	Oily water sewer header and discharge piping, crude header and discharge piping, firewater system surrounding the platform with monitors, vapor equalization header and branch piping, potable water system (All Piping approximately 29,400 linear feet).  
 
Ballast and 6,400 feet of railroad tracks 
installed on the unloading pad.

	ADMIN BUILDING
	21370
	Double-wide trailer, single-wide trailer, desks, chairs, and tables.

    

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	POWER DISTRIBUTION CENTER
	21370
	 

	CATHODIC PROTECTION (PIPING)
	21370
	 

	TRANSFORMER
	21370
	15kVA transformer

	INSTRUMENTATION
	21370
	 

	ELECTRICAL - POWER DISTRIBUTION
	21370
	 

	ELECTRICAL - ADMIN BUILDING
	21370
	 

	Lease related to the 2013 Ford F150 - Vin# 1FTEW1CM6DFA69044
	21370
	 

	Lease for 36' x 10' mobile office (32' x10' box).

	 
	 

	 
	 
	 

	 
	 
	 

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EXHIBIT B

Permitted Liens

Liens, claims, charges, options, encumbrances, mortgages, pledges or security interests as follows:
(a)     incurred and made in the ordinary course of business in connection with worker’s compensation;
(b)    that secure the performance of bids, tenders, leases, contracts (other than for the repayment of debt), statutory obligations, surety, customs and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business;
(c)     imposed by law, such as carriers’, warehouseman’s, mechanics’, materialmen’s, landlords’, laborers’, suppliers’ and vendors’ liens, incurred in good faith in the ordinary course of business and that secure obligations that are not yet due or delinquent or which are being contested in good faith by appropriate proceedings as to which the TRMC has set aside on its books adequate reserves;
(d)    that secure the payment of taxes, either not yet due or delinquent or being contested in good faith by appropriate legal or administrative proceedings and as to which TRMC has set aside on its books adequate reserves;
(e)     zoning restrictions, easements, licenses, rights of way, declarations, reservations, provisions, covenants, conditions, waivers or restrictions on the use of property (and with respect to leasehold interests, mortgages, obligations and liens incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee);
(f)     on property existing at the time such property was acquired by the TRMC (provided, that they were not created in contemplation of the acquisition of such property by TRMC);
(g)     created by Operating Company; and
(h)     pursuant to the Agreement, the Second Amended and Restated Omnibus Agreement, the Amended and Restated Operational Services Agreement and the TTA.

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EXHIBIT C

Excluded Assets and Liabilities 

Offsite control system in the Facility.

EXHIBIT D

Form of 10-Year Promissory Note

(See Attached.)

	
			
	 
	INTERCOMPANY NOTE
(the “Note”)
	 

	$35,875,000
	 
	San Antonio, Texas

	 
	 
	November __, 2012 
(the “Note Date”)

	 
	 
	 

	 
	 
	 

FOR VALUE RECEIVED, TESORO CORPORATION, a Delaware corporation, having an address at 19100 Ridgewood Parkway, 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 Parkway, San Antonio, Texas 78259 (“Payee”) the principal sum of THIRTY FIVE MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($35,875,000). 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) [the ________ 2012 applicable Federal interest rate that will be published by the IRS during the third week of _________ 2012] [three percent (3.00%)] and (ii) the “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 (5) 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 [________], 2022. 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.    Subordination. Payee’s rights under this Note, including rights to the payment of principal or interest, shall be expressly subordinated to the rights of the Lenders and the Agent in the Secured Obligations under Maker’s Fifth Amended and Restated Credit Agreement, dated as of March 16, 2011, among Maker, the financial institutions party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, as amended through the date hereof and as the same may be amended, restated, supplemented or otherwise modified from time to time (each capitalized 

term used in this Section 2 and not otherwise defined herein shall have the meaning given to it in such Credit Agreement).
3.    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%).
4.    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.
5.    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.
6.    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:________________________________

	 
	Gregory J. Goff

	 
	President

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EXHIBIT E

Forms of Conveyance Documents

Bill of Sale, Assignment and Assumption (see attached)

1

BILL OF SALE, ASSIGNMENT AND ASSUMPTION
This Bill of Sale, Assignment and Assumption, dated to be effective as of __________, 2012, (this “Instrument”) is made, executed and delivered by Tesoro Refining and Marketing Company, a Delaware corporation (“TRMC”) in favor of Tesoro Logistics Operations LLC, a Delaware limited liability company (“Operating Company”).  
WHEREAS, TRMC and Operating Company, along with other parties, have entered into a Contribution, Conveyance and Assumption Agreement dated as of the date hereof (the “Contribution Agreement”); and 
WHEREAS, the execution and delivery of this Instrument by TRMC and Operating Company is a condition to the obligations of all of the parties to the Contribution Agreement to consummate the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the premises above and the mutual agreements set forth in the Contribution Agreement, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.    Bill of Sale and Assignment of Assets.  TRMC hereby sells, transfers, conveys, assigns, grants, bargains, sets over, releases, delivers, vests and confirms unto Operating Company and its successors and assigns, forever, the entire right, title and interest of TRMC, free and clear of all liens and encumbrances of any kind or nature, other than Permitted Liens (as defined in the Contribution Agreement), in and to any and all of the Assets (as defined and described in the Contribution Agreement, which includes the assets set forth on Schedule A attached hereto).  Notwithstanding anything contained in this Instrument to the contrary, the Assets shall not include any of the Excluded Assets and Liabilities (both as defined in the Contribution Agreement).
2.    Assignment and Assumption.  TRMC hereby assigns to Operating Company all of TRMC’s responsibilities, coverages and liabilities of TRMC in and to the Assets, as described in the Contribution Agreement, and Operating Company hereby agrees to assume, pay, discharge and perform when due all of the those responsibilities, coverages and liabilities. Notwithstanding the foregoing, Operating Company does not assume, or agree to pay, discharge or perform when due, any Excluded Assets and Liabilities (as defined in the Contribution Agreement).
3.    Further Assurances.  TRMC hereby covenants and agrees that, at any time and from time to time after the date of this Instrument, at Operating Company's request, TRMC will execute and deliver such documents and instruments of conveyance and transfer as Operating Company may reasonably request to consummate more effectively the contribution of the Assets as contemplated by the Contribution Agreement and to vest in Operating Company title to the Assets transferred under this Instrument.

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	4.
	Miscellaneous Provisions.  

(a)    Successors in Interest.  This Instrument shall be binding upon and inure to the benefit of the parties and their respective permitted successors, permitted assigns and legal representatives.
(b)    Schedule; Number; Gender; Captions.  The schedule to this Instrument is hereby incorporated into, and made a part of, this Instrument.  Whenever the context so requires, the singular number shall include the plural and the plural shall include the singular, and the gender of any pronoun shall include the other genders.  Titles and captions of or in this Instrument are inserted only as a matter of convenience and for reference and in no way affect the scope or intent of this Instrument.
(c)    Applicable Law.  This Instrument shall be governed by and construed in accordance with the Laws of the State of Texas.
(d)    Severability.  If any provision of this Instrument shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions of this Instrument shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
(e)    Amendment.  This Instrument may not be amended except by an instrument in writing signed by Operating Company and TRMC.
(f)    Counterparts.  This Instrument may be executed in any number of counterparts (including facsimile or .pdf copies) with the same effect as if all parties hereto had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]

2

IN WITNESS WHEREOF, this Bill of Sale, Assignment and Assumption has been executed by the parties as of the date first above written.
                    
	
			
	 
	TESORO REFINING AND MARKETING COMPANY

	 
	By:________________________________

	 
	Daniel R. Romasko

	 
	Executive Vice President, Operations

	 
	 

	 
	TESORO LOGISTICS OPERATIONS LLC

	 
	By:________________________________

	 
	Phillip M. Anderson

	 
	President

SIGNATURE PAGE TO BILL OF SALE, ASSIGNMENT AND ASSUMPTION

SCHEDULE A TO 
BILL OF SALE, ASSIGNMENT AND ASSUMPTION
ASSETS
The Assets shall include (other than the Excluded Assets and Liabilities) all of TRMC’s right, title, interest, responsibilities, coverages and liabilities of TRMC in the Assets (as defined in the Contribution Agreement), including, but not limited to the following:

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