Document:

exv10w3

Exhibit 10.3

FORM OF

TESORO LOGISTICS LP

2011 LONG-TERM INCENTIVE PLAN

     SECTION 1. Purpose of the Plan.

     This Tesoro Logistics LP 2011 Long-Term Incentive Plan (the “Plan”) has been adopted
by Tesoro Logistics GP, LLC, a Delaware limited liability company (the “Company”), the
general partner of Tesoro Logistics LP, a Delaware limited partnership (the “Partnership”).
The Plan is intended to promote the interests of the Partnership and the Company by providing to
Employees, Consultants and Directors incentive compensation awards based on Units to encourage
superior performance. The Plan is also contemplated to enhance the ability of the Partnership, the
Company and their Affiliates to attract and retain the services of individuals who are essential
for the growth and profitability of the Company, the Partnership and their Affiliates and to
encourage them to devote their best efforts to advancing the business of the Company, the
Partnership and their Affiliates.

     SECTION 2. Definitions.

     As used in the Plan, the following terms shall have the meanings set forth below:

     “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is under common control
with, the Person in question. As used herein, the term “control” means the possession, direct or
indirect, of the power to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.

     “ASC Topic 718” means Accounting Standards Codification Topic 718, Compensation —
Stock Compensation, or any successor accounting standard.

     “Award” means an Option, Restricted Unit, Phantom Unit, DER, Substitute Award, Unit
Appreciation Right or Unit Award granted under the Plan.

     “Award Agreement” means the written or electronic agreement by which an Award shall be
evidenced.

     “Board” means the board of directors or board of managers, as the case may be, of the
Company.

     “Cause” means, unless otherwise set forth in an Award Agreement or other written
agreement between the Company and the applicable Participant, a finding by the Committee that a
Participant, before or after his termination of Service (i) committed fraud, embezzlement, theft,
felony or an act of dishonesty in the course of his employment or service with the Company or an
Affiliate of the Company which conduct damaged the Company or an Affiliate of the Company or (ii)
disclosed trade secrets of the Company or an Affiliate of the Company. The findings and decision of
the Committee with respect to such matter, including those regarding

 

 

the acts of the Participant and the damage done to the Company or an Affiliate of the Company, will be final for all purposes.
No decision of the Committee, however, will affect the finality of the discharge of the individual
by the Company or an Affiliate of the Company.

     “Change in Control” means, and shall be deemed to have occurred upon one or more of
the following events:

     (i) any “person” or “group” within the meaning of those terms as used in Sections 13(d)
and 14(d)(2) of the Exchange Act, other than the Company or an Affiliate of the Company (as
determined immediately prior to such event), shall become the beneficial owner, by way of
merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the
combined voting power of the equity interests in the Company or the Partnership;

     (ii) the limited partners of the Partnership approve, in one or a series of
transactions, a plan of complete liquidation of the Partnership;

     (iii) the sale or other disposition by either the Company or the Partnership of all or
substantially all of its assets in one or more transactions to any Person other than the
Company or an Affiliate of the Company or the Partnership; or

     (iv) a transaction resulting in a Person other than the Company or an Affiliate of the
Company (as determined immediately prior to such event) being the sole general partner of
the Partnership.

     Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect
to any Award which provides for the deferral of compensation and is subject to Section 409A of the
Code, the transaction or event described in subsection (i), (ii), (iii) or (iv) above with respect
to such Award must also constitute a “change in control event,” as defined in Treasury Regulation
§1.409A-3(i)(5), and as relates to the holder of such Award, to the extent required to comply with
Section 409A of the Code.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” means the Board or such committee as may be appointed by the Board to
administer the Plan.

     “Consultant” means an individual who renders consulting services to the Company, the
Partnership or an Affiliate of either.

     “DER” means a distribution equivalent right, representing a contingent right to
receive an amount in cash, Units, Restricted Units and/or Phantom Units equal in value to the
distributions made by the Partnership with respect to a Unit during the period such Award is
outstanding.

     “Director” means a member of the board of directors or board of managers, as the case
may be, of the Company, the Partnership or an Affiliate who is not an Employee or a Consultant
(other than in that individual’s capacity as a Director).

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     “Disability” means as determined by the Committee in its discretion exercised in good
faith, a physical or mental condition of a Participant that would entitle him or her to payment of
disability income payments under the Company’s or Tesoro’s long-term disability insurance policy or
plan for employees as then in effect; or in the event that a Participant is not covered, for
whatever reason under the Company’s or Tesoro’s long-term disability insurance policy or plan for
employees or in the event the Company or Tesoro does not maintain such a long-term disability
insurance policy, “Disability” means a total and permanent disability within the meaning of Section
22(e)(3) of the Code; provided, however, that if a Disability constitutes a payment event with
respect to any Award which provides for the deferral of compensation and is subject to Section 409A
of the Code, then, to the extent required to comply with Section 409A of the Code, the Participant
must also be considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code. A
determination of Disability may be made by a physician selected or approved by the Committee and,
in this respect, Participants shall submit to an examination by such physician upon request by the
Committee.

     “Employee” means an employee of the Company or an Affiliate of the Company.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” means, as of any given date, the closing sales price on such date
during normal trading hours (or, if there are no reported sales on such date, on the last date
prior to such date on which there were sales) of the Units on the New York Stock Exchange or, if
not listed on such exchange, on any other national securities exchange on which the Units are
listed or on an inter-dealer quotation system, in any case, as reported in such source as the
Committee shall select. If there is no regular public trading market for the Units, the Fair
Market Value of the Units shall be determined by the Committee in good faith and in compliance with
Section 409A of the Code.

     “Option” means an option to purchase Units.

     “Other Unit-Based Award” means an award granted pursuant to Section 6(e) of the Plan.

     “Participant” means an Employee, Consultant or Director granted an Award under the
Plan and any authorized transferee of such individual.

     “Partnership Agreement” means the Agreement of Limited Partnership of the Partnership,
as it may be amended or amended and restated from time to time.

     “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d)..

     “Phantom Unit” means a notional interest granted under the Plan that, to the extent
vested, entitles the Participant to receive a Unit or an amount of cash equal to the Fair Market
Value of a Unit, as determined by the Committee in its discretion.

     “Profits Interest Unit” means to the extent authorized by the Partnership Agreement,
an interest in the Partnership that is intended to constitute a “profits interest” within the
meaning of

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the Code, Treasury Regulations promulgated thereunder, and any published guidance by the
Internal Revenue Service with respect thereto.

     “Restricted Period” means the period established by the Committee with respect to an
Award during which the Award remains subject to forfeiture and is either not exercisable by or
payable to the Participant, as the case may be.

     “Restricted Unit” means a Unit granted under the Plan that is subject to a Restricted
Period.

     “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act or any
successor rule or regulation thereto as in effect from time to time.

     “Securities Act” means the Securities Act of 1933, as amended.

     “SEC” means the Securities and Exchange Commission, or any successor thereto.

     “Service” means service as an Employee, Consultant or Director. The Committee, in its
sole discretion, shall determine the effect of all matters and questions relating to terminations
of Service, including, without limitation, the question of whether and when a termination of
Service occurred and/or resulted from a discharge for cause, and all questions of whether
particular changes in status or leaves of absence constitute a termination of Service, provided
that a termination of Service shall not be deemed to occur in the event of (a) a termination where
there is simultaneous commencement by the Participant of a relationship with the Partnership or the
Company or an Affiliate of the Partnership or the Company as an Employee, Director or Consultant or
(b) at the discretion of the Committee, a termination which results in a temporary severance of the
service relationship.

     “Substitute Award” means an award granted pursuant to Section 6(f) of the Plan.

     “Tesoro” means Tesoro Corporation, a Delaware corporation, or any successor thereto.

     “Unit” means a Common Unit of the Partnership.

     “Unit Appreciation Right” or “UAR” means a contingent right that entitles the
holder to receive the excess of the Fair Market Value of a Unit on the exercise date of the UAR
over the exercise price of the UAR.

     “Unit Award” means an award granted pursuant to Section 6(c) of the Plan.

     SECTION 3. Administration.

     (a) The Plan shall be administered by the Committee, subject to subsections (b) and (c) below;
provided, however, that, in the event that the Board is not also serving as the Committee, the
Board, in its sole discretion, may at any time and from time to time exercise any and all rights
and duties of the Committee under the Plan. The governance of the Committee shall be subject to
the charter, if any, of the Committee as approved by the Board. Subject to the terms of the Plan
and applicable law, and in addition to other express powers and authorizations

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conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of
any Award; (v) determine whether, to what extent, and under what circumstances Awards may be
settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any
instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend,
or waive such rules and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (viii) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan
or an Award Agreement in such manner and to such extent as the Committee deems necessary or
appropriate. Unless otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and
binding upon all Persons, including the Company, the Partnership, any Affiliate, any Participant,
and any beneficiary of any Participant.

     (b) To the extent permitted by applicable law and the rules of any securities exchange on
which the Units are listed, quoted or traded, the Board or Committee may from time to time delegate
to a committee of one or more members of the Board or one or more officers of the Company the
authority to grant or amend Awards or to take other administrative actions pursuant to Section
3(a); provided, however, that in no event shall an officer of the Company be delegated the
authority to grant awards to, or amend awards held by, the following individuals: (i) individuals
who are subject to Section 16 of the Exchange Act, (ii) officers of the Company (or Directors) to
whom authority to grant or amend Awards has been delegated hereunder, or (iii) to the extent that
Section 162(m) of the Code is applicable to the Company or the Partnership, any Employee who is, or
could be, a “covered employee” within the meaning of Section 162(m) of the Code; provided, further,
that any delegation of administrative authority shall only be permitted to the extent that it is
permissible under applicable provisions of the Code and applicable securities laws and the rules of
any securities exchange on which the Units are listed, quoted or traded. Any delegation hereunder
shall be subject to such restrictions and limitations as the Board or Committee specifies at the
time of such delegation, and the Board may at any time rescind the authority so delegated or
appoint a new delegatee. At all times, the delegatee appointed under this Section 3(b) shall serve
in such capacity at the pleasure of the Board and the Committee.

     (c) Notwithstanding any provision to the contrary in the Plan, for so long as the Company is
an Affiliate of Tesoro, any Award to be granted under the plan to a Participant that is an
executive officer of Tesoro shall only be granted following a recommendation made by the board of
directors or Compensation Committee of Tesoro.

     SECTION 4. Units.

     (a) Limits on Units Deliverable. Subject to adjustment as provided in Section 4(c),
the number of Units that may be delivered with respect to Awards under the Plan is Seven Hundred
Fifty Thousand (750,000). Units withheld from an Award to either satisfy the Company’s or an
Affiliate’s tax withholding obligations with respect to the Award or pay the

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exercise price of an Award shall be counted against the number of Units that may be delivered under the Plan and shall
not be available for future grants of Awards. If any Award is forfeited, cancelled, exercised,
paid, or otherwise terminates or expires without the actual delivery of Units pursuant to such
Award (for the avoidance of doubt, the grant of Restricted Units is not a delivery of Units for
this purpose), the Units subject to such Award shall again be available for Awards under the Plan.
To the extent permitted by applicable law and exchange rule, Substitute Awards and Units issued in
assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of
combination by the Partnership or any Affiliate shall not be counted against the Units available
for issuance pursuant to the Plan. There shall not be any limitation on the number of Awards that
may be paid in cash.

     (b) Sources of Units Deliverable Under Awards. Any Units delivered pursuant to an
Award shall consist, in whole or in part, of Units acquired in the open market, from any Affiliate,
the Partnership or any other Person, or Units otherwise issuable by the Partnership, or any
combination of the foregoing, as determined by the Committee in its discretion.

     (c) Anti-dilution Adjustments.

          (i) Equity Restructuring. With respect to any “equity restructuring” event that could
result in an additional compensation expense to the Company or the Partnership pursuant to the
provisions of ASC Topic 718 if adjustments to Awards with respect to such event were discretionary,
the Committee shall equitably adjust the number and type of Units covered by each outstanding Award
and the terms and conditions, including the exercise price and performance criteria (if any), of
such Award to equitably reflect such event and shall adjust the number and type of Units (or other
securities or property) with respect to which Awards may be granted under the Plan after such
event. With respect to any other similar event that would not result in an ASC Topic 718
accounting charge if the adjustment to Awards with respect to such event were subject to
discretionary action, the Committee shall have complete discretion to adjust Awards and the number
and type of Units (or other securities or property) with respect to which Awards may be granted
under the Plan in such manner as it deems appropriate with respect to such other event.

          (ii) Other Changes in Capitalization. In the event of any non-cash distribution, Unit
split, combination or exchange of Units, merger, consolidation or distribution (other than normal
cash distributions) of Partnership assets to unitholders, or any other change affecting the units
of the Partnership, other than an “equity restructuring,” the Committee may make equitable adjustments, if any, to reflect such change with respect to (A) the aggregate
number and kind of Units that may be issued under the Plan; (B) the number and kind of Units (or
other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any
outstanding Awards (including, without limitation, any applicable performance targets or criteria
with respect thereto); and (iv) the grant or exercise price per Unit for any outstanding Awards
under the Plan.

     SECTION 5. Eligibility.

     Any Employee, Consultant or Director shall be eligible to be designated a Participant and
receive an Award under the Plan.

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     SECTION 6. Awards.

     (a) Options and UARs. Subject to Section 3(c), the Committee shall have the authority
to determine the Employees, Consultants and Directors to whom Options and/or UARs shall be granted,
the number of Units to be covered by each Option or UAR, the exercise price therefor, the
Restricted Period and other conditions and limitations applicable to the exercise of the Option or
UAR, including the following terms and conditions and such additional terms and conditions, as the
Committee shall determine, that are not inconsistent with the provisions of the Plan. Options
which are intended to comply with Treasury Regulation Section 1.409A-1(b)(5)(i)(A) and Unit
Appreciation Rights which are intended to comply with Treasury Regulation Section
1.409A-1(b)(5)(i)(B) or any successor regulation may be granted only if the requirements of
Treasury Regulation Section 1.409A-1(b)(5)(iii), or any successor regulation, are satisfied.
Options and UARs that are otherwise exempt from or compliant with Section 409A of the Code may be
granted to any eligible Employee, Consultant or Director.

     (i) Exercise Price. The exercise price per Unit purchasable under an Option or
subject to a UAR shall be determined by the Committee at the time the Option or UAR is
granted but, except with respect to a Substitute Award, may not be less than the Fair Market
Value of a Unit as of the date of grant of the Option or UAR.

     (ii) Time and Method of Exercise. The Committee shall determine the exercise
terms and the Restricted Period with respect to an Option or UAR, which may include, without
limitation, a provision for accelerated vesting upon the achievement of specified
performance goals or other events, and the method or methods by which payment of the
exercise price with respect to an Option or UAR may be made or deemed to have been made,
which may include, without limitation, cash, check acceptable to the Company, withholding
Units from the Award, a “cashless” exercise through procedures approved by the Company, or
any combination of the above methods, having a Fair Market Value on the exercise date equal
to the relevant exercise price.

     (iii) Forfeitures. Except as otherwise provided in the terms of the Option or
UAR grant, upon termination of a Participant’s Service for any reason during the applicable
Restricted Period, all unvested Options and UARs shall be forfeited by the Participant. The
Committee may, in its discretion, waive in whole or in part such forfeiture with respect to
a Participant’s Options and/or UARs; provided that the waiver
contemplated under this Section shall be effective only to the extent that such waiver
will not cause the Participant’s Options and UARs that are intended to satisfy the
requirements of Section 409A of the Code to fail to satisfy such requirements.

     (iv) Exercise of Options and UARs on Termination of Service. Each Option and
UAR shall set forth the extent to which the Participant shall have the right to exercise the
Option or UAR following a termination of the Participant’s Service. Unless otherwise
determined by the Committee, if the Participant’s Service is terminated for cause, the
Participant’s right to exercise the Option or UAR shall terminate immediately on the
effective date of the Participant’s termination. To the extent the Option or UAR was not
vested and exercisable as of the termination of Service, the Option or UAR shall terminate
when the Participant’s Service terminates. Subject to the foregoing, such

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provisions shall
be determined in the sole discretion of the Committee, need not be uniform among all Options
and UARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of Service.

     (v) Term of Options and UARs. The term of each Option and UAR shall be stated
in the Award Agreement, provided, that the term shall be no more than ten (10) years from
the date of grant thereof.

     (vi) Prohibition on Repricing. Subject to Section 4(c) and Section 7(c), the
Committee shall not, without the approval of the unitholders of the Partnership, (i) reduce
the per Unit exercise price of any outstanding Option or UAR, (ii) cancel any Option or UAR
in exchange for cash or another Award when the Option or UAR price per Unit exceeds the Fair
Market Value of the underlying Units, or (iii) otherwise reprice any Option or UAR. Subject
to Section 4(c), Section 7 and Section 8(e), the Committee shall have the authority, without
the approval of the unitholders of the Partnership, to amend any outstanding Award to
increase the exercise price per Unit or to cancel and replace an Award with the grant of an
Award having an exercise price per Unit that is greater than or equal to the exercise price
per Unit of the original Award.

     (b) Restricted Units and Phantom Units. Subject to Section 3(c), the Committee shall
have the authority to determine the Employees, Consultants and Directors to whom Restricted Units
and Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted
to each such Participant, the Restricted Period, the conditions under which the Restricted Units or
Phantom Units may become vested or forfeited and such other terms and conditions, including,
without limitation, restrictions on transferability, as the Committee may establish with respect to
such Awards.

     (i) DERs. Subject to Section 3(c), the Committee shall have the authority to
determine the Employees, Consultants and Directors to whom DERs are granted, whether such
DERs are tandem or separate Awards, whether the DERs shall be paid directly to the
Participant, be credited to a bookkeeping account (with or without interest in the
discretion of the Committee) the vesting restrictions and payment provisions applicable to
the Award, and such other provisions or restrictions as determined by the Committee in its
discretion all of which shall be specified in the Award Agreements. DERs may be granted by
the Committee based on distributions made with respect to Units, to be credited as of the distribution dates during the period between the date an Award is
granted to a Participant and the date such Award vests, is exercised, is distributed or
expires, as determined by the Committee. Such DERs shall be converted to cash, Units,
Restricted Units and/or Phantom Units by such formula and at such time and subject to such
limitations as may be determined by the Committee. Tandem DERs may be subject to the same
or different vesting restrictions as the tandem Award, or be subject to such other
provisions or restrictions as determined by the Committee in its discretion. Notwithstanding
the foregoing, DERs shall only be paid in a manner that is either exempt from or in
compliance with Section 409A of the Code.

     (ii) Forfeitures. Except as otherwise provided in the terms of an Award
Agreement, upon termination of a Participant’s Service for any reason during the

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applicable Restricted Period, all outstanding, unvested Restricted Units and Phantom Units awarded the
Participant shall be automatically forfeited on such termination. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a Participant’s
Restricted Units and/or Phantom Units; provided, that the waiver contemplated under this
Section shall be effective only to the extent that such waiver will not cause the
Participant’s Restricted Units and/or Phantom Units that are intended to satisfy the
requirements of Section 409A of the Code to fail to satisfy such requirements.

(iii) Payment; Lapse of Restrictions.

     (A) Phantom Units. The Committee shall specify, or permit the
Participant to elect in accordance with the requirements of Section 409A of the
Code, the conditions and dates or events upon which the cash or Units underlying an
award of Phantom Units shall be issued, which dates or events shall not be earlier
than the date as of which the Phantom Units vest and become nonforfeitable and which
conditions and dates or events shall be subject to compliance with Section 409A of
the Code (unless the Phantom Units are exempt therefrom).

     (B) Restricted Units. Upon or as soon as reasonably practical
following the vesting of each Restricted Unit, subject to satisfying the tax
withholding obligations of Section 8(b), the Participant shall be entitled to have
the restrictions removed from his or her Unit certificate (or book-entry account, as
applicable) so that the Participant then holds an unrestricted Unit.

     (c) Unit Awards. Unit Awards may be granted under the Plan (i) to such Employees,
Consultants and/or Directors and in such amounts as the Committee, in its discretion, may select,
subject to Section 3(c), and (ii) subject to such other terms and conditions, including, without
limitation, restrictions on transferability, as the Committee may establish with respect to such
Awards.

     (d) Profits Interest Units. Any Restricted Unit award or Unit Award consisting of
Profits Interest Units may only be issued to a Participant for the performance of services to or
for the benefit of the Partnership (i) in the Participant’s capacity as a partner of the
Partnership, (ii) in anticipation of the Participant becoming a partner of the Partnership, or
(iii) as otherwise determined by the Committee, provided that the Profits Interest Units would constitute
“profits interests” within the meaning of the Code, Treasury Regulations promulgated thereunder and
any published guidance by the Internal Revenue Service with respect thereto. At the time of grant,
the Committee shall specify the date or dates on which the Profits Interest Units shall vest and
become nonforfeitable, and may specify such conditions to vesting as it deems appropriate. Profits
Interest Units shall be subject to such restrictions on transferability and other restrictions as
the Committee may impose.

     (e) Other Unit-Based Awards. Other Unit-Based Awards may be granted under the Plan to
such Employees, Consultants and/or Directors as the Committee, in its discretion, may select,
subject to Section 3(c). An Other Unit-Based Award shall be an award denominated or payable in,
valued in or otherwise based on or related to Units, in whole or in part. The

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Committee shall determine the terms and conditions of any Other Unit-Based Award. Upon vesting, an Other
Unit-Based Award may be paid in cash, Units (including Restricted Units) or any combination thereof
as provided in the Award Agreement.

     (f) Substitute Awards. Awards may be granted under the Plan in substitution of
similar awards held by individuals who become Employees, Consultants or Directors as a result of a
merger, consolidation or acquisition by the Partnership or an Affiliate of another entity or the
assets of another entity. Such Substitute Awards that are Options or UARs may have exercise prices
less than the Fair Market Value of a Unit on the date of the substitution if such substitution
complies with Section 409A of the Code and the Treasury Regulations thereunder and other applicable
laws and exchange rules.

     (g) General.

     (i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in tandem with, or
in substitution for any other Award granted under the Plan or any award granted under any
other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with
other Awards or awards granted under any other plan of the Company or any Affiliate may be
granted either at the same time as or at a different time from the grant of such other
Awards or awards.

     (ii) Limits on Transfer of Awards.

     (A) Except as provided in Paragraph (C) below, each Option and UAR shall be
exercisable only by the Participant during the Participant’s lifetime, or by the
person to whom the Participant’s rights shall pass by will or the laws of descent
and distribution.

     (B) Except as provided in Paragraph (C) below, no Award and no right under any
such Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant other than by will or the laws of descent
and distribution and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the Company,
the Partnership or any Affiliate.

     (C) The Committee may provide in an Award Agreement that an Award may, on such
terms and conditions as the Committee may from time to time establish, be
transferred by a Participant without consideration to any “family member” of the
Participant, as defined in the instructions to use of the Form S-8 Registration
Statement under the Securities Act, as applicable, or any other transferee
specifically approved by the Committee after taking into account any state, federal,
local or foreign tax and securities laws applicable to transferable Awards. In
addition, vested Units may be transferred to the extent permitted by the Partnership
Agreement and not otherwise prohibited by the Award Agreement or any other agreement
restricting the transfer of such Units.

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     (iii) Term of Awards. Subject to Section 6(a)(v) above, the term of each
Award, if any, shall be for such period as may be determined by the Committee.

     (iv) Unit Certificates. Unless otherwise determined by the Committee or
required by any applicable law, rule or regulation, neither the Company nor the Partnership
shall deliver to any Participant certificates evidencing Units issued in connection with any
Award and instead such Units shall be recorded in the books of the Partnership (or, as
applicable, its transfer agent or equity plan administrator). All certificates for Units or
other securities of the Partnership delivered under the Plan and all Units issued pursuant
to book entry procedures pursuant to any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the SEC, any securities
exchange upon which such Units or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or legends to be inscribed on
any such certificates or book entry to make appropriate reference to such restrictions.

     (v) Consideration for Grants. To the extent permitted by applicable Law,
Awards may be granted for such consideration, including services, as the Committee shall
determine.

     (vi) Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any Award Agreement to the
contrary, subject to compliance with Section 409A of the Code, the Company shall not be
required to issue or deliver any certificates or make any book entries evidencing Units
pursuant to the exercise or vesting of any Award, unless and until the Board or the
Committee has determined, with advice of counsel, that the issuance of such Units is in
compliance with all applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any exchange on which the Units are listed or traded, and
the Units are covered by an effective registration statement or applicable exemption from
registration. In addition to the terms and conditions provided herein, the Board or the
Committee may require that a Participant make such reasonable covenants, agreements, and
representations as the Board or the Committee, in its discretion, deems advisable in order
to comply with any such laws, regulations, or requirements. Without limiting the generality
of the foregoing, the delivery of Units pursuant to the exercise or vesting of an Award may
be deferred for any period during which, in the good faith determination of the Committee, the Company is not reasonably able to obtain or deliver Units pursuant
to such Award without violating applicable law or the applicable rules or regulations of any
governmental agency or authority or securities exchange. No Units or other securities shall
be delivered pursuant to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award grant agreement (including, without limitation,
any exercise price or tax withholding) is received by the Company.

     SECTION 7. Amendment and Termination.

     Except to the extent prohibited by applicable law:

-11-

 

     (a) Amendments to the Plan. Except as required by applicable law or the rules of the
principal securities exchange, if any, on which the Units are traded and subject to Section 7(b)
below, the Board or the Committee may amend, alter, suspend, discontinue, or terminate the Plan in
any manner without the consent of any partner, Participant, other holder or beneficiary of an
Award, or any other Person. The Board shall obtain securityholder approval of any Plan amendment
to the extent necessary to comply with applicable law or securities exchange listing standards or
rules.

     (b) Amendments to Awards. Subject to Section 7(a), the Committee may waive any
conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided
that no change, other than pursuant to Section 7(c), in any Award shall materially reduce the
rights or benefits of a Participant with respect to an Award without the consent of such
Participant.

     (c) Actions Upon the Occurrence of Certain Events. Upon the occurrence of a Change in
Control, any transaction or event described in Section 4(c), any change in applicable law or
regulation affecting the Plan or Awards thereunder, or any change in accounting principles
affecting the financial statements of the Company or the Partnership, the Committee, in its sole
discretion, without the consent of any Participant or holder of the Award, and on such terms and
conditions as it deems appropriate, may take any one or more of the following actions:

     (i) provide for either (A) the termination of any Award in exchange for a payment in an
amount, if any, equal to the amount that would have been attained upon the exercise of such
Award or realization of the Participant’s rights under such Award (and, for the avoidance of
doubt, if as of the date of the occurrence of such transaction or event the Committee
determines in good faith that no amount would have been attained upon the exercise of such
Award or realization of the Participant’s rights, then such Award may be terminated by the
Company without payment) or (B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion having an aggregate value not exceeding the
amount that could have been attained upon the exercise of such Award or realization of the
Participant’s rights had such Award been currently exercisable or payable or fully vested;

     (ii) provide that such Award be assumed by the successor or survivor entity, or a
parent or subsidiary thereof, or be exchanged for similar options, rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of equity interests and prices;

     (iii) make adjustments in the number and type of Units (or other securities or
property) subject to outstanding Awards, and in the number and kind of outstanding Awards or
in the terms and conditions of (including the exercise price), and the vesting and
performance criteria included in, outstanding Awards, or both;

     (iv) provide that such Award shall vest or become exercisable or payable,
notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and

-12-

 

     (v) provide that the Award cannot be exercised or become payable after such event,
i.e., shall terminate upon such event.

Notwithstanding the foregoing, (i) with respect to an above event that is an “equity restructuring”
event that would be subject to a compensation expense pursuant ASC Topic 718, the provisions in
Section 4(c) shall control to the extent they are in conflict with the discretionary provisions of
this Section 7, provided, however, that nothing in Section 7(c) or Section 4(c) shall be construed
as providing any Participant or any beneficiary any rights with respect to the “time value”,
“economic opportunity” or “intrinsic value” of an Award or limiting in any manner the Committee’s
actions that may be taken with respect to an Award as set forth above or in Section 4(c); and (ii)
no action shall be taken under this Section 7 which shall cause an Award to fail to comply with
Section 409A of the Code or the Treasury Regulations thereunder, to the extent applicable to such
Award.

     SECTION 8. General Provisions.

     (a) No Rights to Award. No Person shall have any claim to be granted any Award under
the Plan, and there is no obligation for uniformity of treatment of Participants. The terms and
conditions of Awards need not be the same with respect to each recipient.

     (b) Tax Withholding. Unless other arrangements have been made that are acceptable to
the Company, the Company or any Affiliate is authorized to deduct or withhold, or cause to be
deducted or withheld, from any Award, from any payment due or transfer made under any Award or from
any compensation or other amount owing to a Participant the amount (in cash, Units, Units that
would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable
in respect of an Award, including its grant, its exercise, the lapse of restrictions thereon, or
any payment or transfer thereunder or under the Plan, and to take such other action as may be
necessary in the opinion of the Company to satisfy its withholding obligations for the payment of
such taxes. In the event that Units that would otherwise be issued pursuant to an Award are used
to satisfy such withholding obligations, the number of Units which may be so withheld or
surrendered shall be limited to the number of Units which have a fair market value (which, in the
case of a broker-assisted transaction, shall be determined by the Committee, consistent with
applicable provisions of the Code) on the date of withholding equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to
such supplemental taxable income.

     (c) No Right to Employment or Services. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or any Affiliate,
continue consulting services or to remain on the Board, as applicable. Furthermore, the Company or
an Affiliate may at any time dismiss a Participant from employment or consulting free from any
liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award
Agreement or other written agreement.

     (d) No Rights as Unitholder. Except as otherwise provided herein, a Participant shall
have none of the rights of a unitholder with respect to Units covered by any Award until the
Participant becomes the record owner of such Units.

-13-

 

     (e) Section 409A. To the extent that the Committee determines that any Award granted
under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such Award
shall incorporate the terms and conditions required by Section 409A of the Code. To the extent
applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of
the Code and Department of Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be issued after the
effective date of the Plan. Notwithstanding any provision of the Plan to the contrary, in the
event that following the effective date of the Plan the Committee determines that any Award may be
subject to Section 409A of the Code and related Department of Treasury guidance (including such
Department of Treasury guidance as may be issued after the effective date of the Plan), the
Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with retroactive effect), or
take any other actions, that the Committee determines are necessary or appropriate to (i) exempt
the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits
provided with respect to the Award, or (ii) comply with the requirements of Section 409A of the
Code and related Department of Treasury guidance and thereby avoid the application of any penalty
taxes under such Section; provided, however, that nothing herein shall create any obligation on the
part of the Committee, the Company or any of its Affiliates to adopt any such amendment, policy or
procedure or take any such other action, nor shall the Committee, the Company or any of its
Affiliates have any liability for failing to do so. Notwithstanding any provision in the Plan to
the contrary, the time of payment with respect to any Award that is subject to Section 409A of the
Code shall not be accelerated, except as permitted under Treasury Regulation Section
1.409A-3(j)(4).

     (f) Lock-Up Agreement. Each Participant shall agree, if so requested by the Company
or the Partnership and any underwriter in connection with any public offering of securities of the
Partnership or any Affiliate, not to directly or indirectly offer, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any Units held by it for such period,
not to exceed one hundred eighty (180) days following the effective date of the relevant
registration statement filed under the Securities Act in connection with such public offering, as
such underwriter shall specify reasonably and in good faith. The Company or the Partnership may
impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. Notwithstanding the foregoing,
the 180-day period may be extended for up to such number of additional days as is deemed necessary
by such underwriter or the Company or Partnership to continue coverage by research analysts in
accordance with FINRA Rule 2711 or any successor rule.

     (g) Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan
and the issuance and delivery of Units and the payment of money under the Plan or under Awards
granted or awarded hereunder are subject to compliance with all applicable federal, state, local
and foreign laws, rules and regulations (including but not limited to state, federal and foreign
securities law and margin requirements), the rules of any securities exchange or automated
quotation system on which the Units are listed, quoted or traded, and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under the Plan shall be
subject to such restrictions, and the person acquiring such securities shall,

-14-

 

if requested by the Company, provide such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations. In the event an
Award is granted to or held by a Participant who is employed or providing services outside the
United States, the Committee may, in its sole discretion, modify the provisions of the Plan or of
such Award as they pertain to such individual to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy. The Committee may also impose conditions on the
grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such
foreign law and/or to minimize the Company’s or the Partnership’s obligations with respect to tax
equalization for Participants employed outside their home country

     (h) Governing Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the laws of the State
of Delaware without regard to its conflicts of laws principles.

     (i) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award,
or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

     (j) Other Laws. The Committee may refuse to issue or transfer any Units or other
consideration under an Award if, in its sole discretion, it determines that the issuance or
transfer of such Units or such other consideration might violate any applicable law or regulation,
the rules of the principal securities exchange on which the Units are then traded, or entitle the
Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder
or beneficiary.

     (k) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any participating Affiliate and a Participant or any other Person. To the extent that
any Person acquires a right to receive payments from the Company or any participating Affiliate
pursuant to an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.

     (l) No Fractional Units. No fractional Units shall be issued or delivered pursuant to
the Plan or any Award, and the Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Units or whether such fractional
Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.

-15-

 

     (m) Headings. Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

     (n) No Guarantee of Tax Consequences. None of the Board, the Committee, the Company
nor the Partnership makes any commitment or guarantee that any federal, state or local tax
treatment will (or will not) apply or be available to any Participant.

     (o) Clawback; Misconduct. To the extent required by applicable law or any applicable
securities exchange listing standards, Awards and amounts paid or payable pursuant to or with
respect to Awards shall be subject to clawback as determined by the Committee, which clawback may
include forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to
or with respect to Awards. In addition, and without limiting the foregoing, except as otherwise
provided by the Committee, if at any time (including after a notice of exercise has been delivered
or an award has vested) the Committee or any person designated by the Committee (each such person,
an “Authorized Officer”) reasonably believes that a Participant may have committed an Act of
Misconduct as described in this Section 8(o), the Authorized Officer, the Committee or the Board
may suspend the Participant’s rights to exercise or to vest in an Award, and/or to receive payment
for or receive Units in settlement of an Award pending a determination of whether an Act of
Misconduct has been committed.

     If the Committee or an Authorized Officer determines a Participant has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any Affiliate
of the Company, breach of fiduciary duty, violation of ethics policy or code of conduct, or
deliberate disregard of the Company’s or Affiliate of the Company’s rules resulting in loss, damage
or injury to the Company or any Affiliate of the Company, or if a Participant makes an unauthorized
disclosure of any trade secret or confidential information, solicits any employee or service
provider to leave the employ or cease providing services to the Company or any Affiliate of the
Company, breaches any intellectual property or assignment of inventions covenant, engages in any
conduct constituting unfair competition, breaches any non-competition agreement, induces any
customer to breach a contract with the Company or any Affiliate of the Company or to cease doing business with the Company or any Affiliate of the Company, or
induces any principal for whom the Company or any Affiliate of the Company acts as agent to
terminate such agency relationship (any of the foregoing acts, an “Act of Misconduct”), then except
as otherwise provided by the Committee, (i) neither the Participant nor his or her estate nor
transferee shall be entitled to exercise any Option or Unit Appreciation Right whatsoever, vest in
or have the restrictions on an Award lapse, or otherwise receive payment of an Award, (ii) the
Participant will forfeit all outstanding Awards and (iii) the Participant may be required, at the
Committee’s sole discretion, to return and/or repay to the Company or the Partnership any then
unvested Units previously granted under the Plan. In making such determination, the Committee or
an Authorized Officer shall give the Participant an opportunity to appear and present evidence on
his or her behalf at a hearing before the Committee or its designee or an opportunity to submit
written comments, documents, information and arguments to be considered by the Committee.

-16-

 

     (p) Facility Payment. Any amounts payable hereunder to any person under legal
disability or who, in the judgment of the Committee, is unable to manage properly his financial
affairs, may be paid to the legal representative of such person, or may be applied for the benefit
of such person in any manner that the Committee may select, and the Partnership, the Company and
all of their Affiliates shall be relieved of any further liability for payment of such amounts.

     SECTION 9. Term of the Plan.

     The Plan shall be effective on the date on which the Plan is adopted by the Board and shall
continue until the earliest of (i) the date terminated by the Board, or (ii) the 10th anniversary
of the date on which the Plan is adopted by the Board. However, any Award granted prior to such
termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date. The Plan shall, within twelve (12) months after the
date of the Board’s initial adoption of the Plan, be submitted for approval by a majority of the
outstanding securities of the Partnership entitled to vote.

-17-exv10w4

Exhibit 10.4

 

 

FORM OF

OMNIBUS AGREEMENT

among

TESORO CORPORATION,

TESORO REFINING AND MARKETING COMPANY,

TESORO COMPANIES, INC.,

TESORO ALASKA COMPANY,

TESORO LOGISTICS LP,

and

TESORO LOGISTICS GP, LLC

 

 

 

 

OMNIBUS AGREEMENT

          This OMNIBUS AGREEMENT (“Agreement”) is entered into on, and effective as of, the
Closing Date (as defined herein) among Tesoro Corporation, a Delaware corporation
(“Tesoro”), on behalf of itself and the other Tesoro Entities (as defined herein), Tesoro
Refining and Marketing Company, a Delaware corporation (“Tesoro Refining and Marketing”),
Tesoro Companies, Inc., a Delaware corporation (“Tesoro Companies”), Tesoro Alaska Company,
a Delaware company (“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
Agreement each as a “Party” and collectively as the “Parties.”

R E C I T A L S:

     1. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article II, with respect to certain business opportunities that the
Tesoro Entities (as defined herein) will not engage in for so long as the Partnership is an
Affiliate of Tesoro.

     2. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article III, with respect to certain indemnification obligations of
the Parties to each other.

     3. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article IV, with respect to the amount to be paid by the
Partnership for the centralized corporate services to be performed by the General Partner and its
Affiliates (as defined herein) for and on behalf of the Partnership Group (as defined herein).

     4. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article V, with respect to certain maintenance capital and other
expenditures to be reimbursed by Tesoro Refining and Marketing to the Partnership Group.

     5. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article VI, with respect to the Partnership Group’s right of first
offer with respect to the ROFO Assets (as defined herein).

     6. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article VII, with respect to the granting of a license from Tesoro
to the Partnership Group and the General Partner.

     7. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article VIII, with respect to the transfer of the Represented
Employees (as defined herein) from Tesoro Refining and Marketing to the General Partner and the
Partnership Group’s right to use certain vehicles leased by the General Partner.

 

 

          In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I

Definitions

     1.1 Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:

          “Administrative Fee” is defined in Section 4.1.

          “Affiliate” is defined in the Partnership Agreement.

          “Annual Environmental Deductible” is defined in Section 3.7.

          “Annual ROW Deductible” is defined in Section 3.7.

          “Assets” means all gathering pipelines, transportation pipelines, storage tanks,
trucks, truck racks, terminal facilities, offices and related equipment, real estate and other
assets, or portions thereof, conveyed, contributed or otherwise transferred or intended to be
conveyed, contributed or otherwise transferred pursuant to the Contribution Agreement to any member
of the Partnership Group, or owned by, leased by or necessary for the operation of the business,
properties or assets of any member of the Partnership Group, prior to or as of the Closing Date.

          “Closing Date” means [_____], 2011.

          “Common Units” is defined in the Partnership Agreement.

          “Conflicts Committee” is defined in the Partnership Agreement.

          “Contribution Agreement” means that certain Contribution, Conveyance and Assumption
Agreement, dated as of the Closing Date, among the General Partner, the Partnership, Tesoro
Logistics LLC, Tesoro High Plains Pipeline Company LLC and certain other Tesoro Entities, together
with the additional conveyance documents and instruments contemplated or referenced thereunder.

          “control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.

          “Covered Environmental Losses” is defined in Section 3.1.

          “Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and
other legally enforceable requirements and rules of common law now or hereafter in effect, relating
to pollution or protection of human health and the environment including, without limitation, the
federal Comprehensive Environmental Response, Compensation, and Liability

2

 

Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act,
the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the
Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and
other environmental conservation and protection laws, each as amended from time to time.

          “Environmental Permit” means any permit, approval, identification number, license,
registration, consent, exemption, variance or other authorization required under or issued pursuant
to any applicable Environmental Law.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Hazardous Substance” means (a) any substance that is designated, defined or
classified as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic
or hazardous substance, or terms of similar meaning, or that is otherwise regulated under any
Environmental Law, including, without limitation, any hazardous substance as defined under the
Comprehensive Environmental Response, Compensation, and Liability Act, as amended, and (b)
petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and
other refined petroleum hydrocarbons.

          “Identification Deadline” means the later of (a) [_______], 2013 [Note: Two years
after the Closing Date] and (b) the earlier of (i) [_______], 2016 [Note: Five years after the
Closing Date] and (ii) the occurrence of a Partnership Change of Control.

          “Indemnified Party” means the Partnership Group or the Tesoro Entities, as the case
may be, in its capacity as the party entitled to indemnification in accordance with Article
III.

          “Indemnifying Party” means either the Partnership Group, Tesoro Refining and Marketing
or Tesoro Alaska, as the case may be, in its capacity as the party from whom indemnification may be
sought in accordance with Article III.

          “License” is defined in Section 7.1.

          “Limited Partner” is defined in the Partnership Agreement.

          “Losses” means any losses, damages, liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court
costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or
unknown, fixed or contingent.

          “Marks” is defined in Section 7.1.

          “Name” is defined in Section 7.1.

          “NuStar Agreement” means that certain Pipeline Control Center Services Agreement dated
December 24, 2002 between Kaneb Pipe Line Operating Partnership, L.P., a Delaware limited
partnership, and Tesoro High Plains Pipeline Company, a Delaware corporation.

3

 

          “Offer” is defined in Section 2.3.

          “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of Tesoro Logistics LP, dated as of the Closing Date, as such agreement is in effect on
the Closing Date, to which reference is hereby made for all purposes of this Agreement.

          “Partnership Change of Control” means Tesoro ceases to control the general partner of
the Partnership.

          “Partnership Group” means the Partnership and any of its Subsidiaries, treated as a
single consolidated entity.

          “Partnership Group Member” means any member of the Partnership Group.

          “Partnership Security” is defined in the Partnership Agreement.

          “Party” and “Parties” are defined in the introduction to this Agreement.

          “Permitted Exceptions” is defined in Section 2.2.

          “Person” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization association, government agency or political
subdivision thereof or other entity.

          “Proposed Transaction” is defined in Section 6.2(a).

          “Prudent Industry Practice” means such practices, methods, acts, techniques, and
standards as are in effect at the time in question that are consistent with the higher of (a) the
standards generally followed by the United States pipeline and terminalling industries and (b) the
standards applied or followed by Tesoro or its Affiliates in the performance of similar tasks or
projects, or by the Partnership Group or its Affiliates in the performance of similar tasks or
projects.

          “Registration Statement” means the Registration Statement on Form S-1 filed by the
Partnership with the United States Securities and Exchange Commission (Registration No.
333-171525), as amended.

          “Represented Employees” is defined in Section 8.1(a).

          “Restricted Activities” is defined in Section 2.1.

          “Retained Assets” means all gathering pipelines, transportation pipelines, storage
tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and
other related assets, or portions thereof owned by any of the Tesoro Entities that were not
directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group
pursuant to the Contribution Agreement or the other documents referred to in the Contribution
Agreement, including, for the avoidance of doubt, all gathering pipelines, transportation
pipelines, storage

4

 

tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate
and other related assets, or portions thereof owned by any of the Tesoro Entities and located in
Hawaii.

          “ROFO Asset Owner” means, with respect to a ROFO Asset, the applicable Tesoro Entity
set forth opposite such ROFO Asset on Schedule V to this Agreement.

          “ROFO Assets” means the assets listed on Schedule V to this Agreement.

          “ROFO Notice” is defined in Section 6.2(a).

          “ROFO Period” is defined in Section 6.1(a).

          “ROFO Response” is defined in Section 6.2(a).

          “Subject Assets” is defined in Section 2.2(c).

          “Tesoro Entities” means Tesoro and any Person controlled, directly or indirectly, by
Tesoro other than the General Partner or a member of the Partnership Group; and “Tesoro
Entity” means any of the Tesoro Entities.

          “Transfer” means to, directly or indirectly, sell, assign, lease, convey, transfer or
otherwise dispose of, whether in one or a series of transactions.

          “Subsidiary” means, with respect to any Person, (a) a corporation of which more than
50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to
vote in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors, managers or other governing body of such Person.

          “Voting Stock” means securities of any class of a Person entitling the holders thereof
to vote on a regular basis in the election of members of the board of directors or other governing
body of such Person.

ARTICLE II

Business Opportunities

     2.1 Restricted Activities. Except as permitted by Section 2.2, the General
Partner and each of the Tesoro Entities shall be prohibited from owning, operating, engaging in,
acquiring, or

5

 

investing in any business that owns or operates crude oil or refined products pipelines,
terminals or storage facilities in the United States (“Restricted Activities”).

     2.2 Permitted Exceptions. Notwithstanding any provision of Section 2.1 to the
contrary, the Tesoro Entities may engage in the following activities under the following
circumstances (collectively, the “Permitted Exceptions”):

          (a) the ownership and/or operation of any of the Retained Assets (including replacements or
expansions of the Retained Assets);

          (b) the acquisition, ownership or operation of any logistics asset, including, without
limitation, any crude oil or refined products pipeline, terminal or storage facility, that is
acquired or constructed by a Tesoro Entity and that is (i) within, directly connected to,
substantially dedicated to, or an integral part of, any refinery owned, acquired or constructed by
a Tesoro Entity or (ii) acquired or constructed by a Tesoro Entity to replace an Asset of the
Partnership Group that no longer provides services to any Tesoro Entity due to the occurrence of a
force majeure event under a commercial contract between one or more Tesoro Entities and one or more
members of the Partnership Group that prevents the Partnership Group from providing services under
such commercial contract;

          (c) the acquisition, ownership or operation of any asset or group of related assets used in
the activities described in Section 2.1 that are acquired or constructed by a Tesoro Entity
after the date of this Agreement (the “Subject Assets”) if:

               (i) the fair market value of the Subject Assets (as determined in good faith by the Board of
Directors, or other governing body, of the Tesoro Entity that will own the Subject Assets) is less
than $5 million at the time of such acquisition by the Tesoro Entity or completion of construction,
as the case may be; or

               (ii) in the case of an acquisition or the construction of Subject Assets with a fair market
value (as determined in good faith by the Board of Directors, or other governing body, of the
Tesoro Entity that will own the Subject Assets) equal to or greater than $5 million at the time of
such acquisition by a Tesoro Entity or the completion of construction, as applicable, the
Partnership has been offered the opportunity to purchase the Subject Assets in accordance with
Section 2.3 and the Partnership has elected not to purchase the Subject Assets; and

          (d) the ownership of equity interests in the General Partner and the Partnership Group.

     2.3 Procedures.

          (a) If a Tesoro Entity acquires or constructs Subject Assets as described in Section
2.2(c)(ii), then not later than six months after the consummation of the acquisition or the
completion of construction by such Tesoro Entity of the Subject Assets, as the case may be, the
Tesoro Entity shall notify the General Partner in writing of such acquisition or construction and
offer the Partnership Group the opportunity to purchase such Subject Assets in accordance with this
Section 2.3 (the “Offer”). The Offer shall set forth the terms relating to the
purchase of the

6

 

Subject Assets and, if any Tesoro Entity desires to utilize the Subject Assets, the Offer will
also include the terms on which the Partnership Group will provide services to the Tesoro Entity to
enable the Tesoro Entity to utilize the Subject Assets. As soon as practicable, but in any event
within 60 days after receipt of such written notification, the General Partner shall notify the
Tesoro Entity in writing that either (i) the General Partner has elected not to cause a Partnership
Group Member to purchase the Subject Assets, in which event the Tesoro Entity shall be forever free
to continue to own or operate such Subject Assets, or (ii) the General Partner has elected to cause
a Partnership Group Member to purchase the Subject Assets, in which event the procedures outlined
in the remainder of this Section 2.3 shall apply.

          (b) If the Tesoro Entity and the General Partner are able to agree on the fair market value of
the Subject Assets that are subject to the Offer and the other terms of the Offer including,
without limitation, the terms, if any, on which the Partnership Group will provide services to the
Tesoro Entity to enable the Tesoro Entity to utilize the Subject Assets, within 60 days after
receipt by the General Partner of the Offer, a Partnership Group Member shall purchase the Subject
Assets for the agreed upon fair market value as soon as commercially practicable after such
agreement has been reached and, if applicable, enter into an agreement with the Tesoro Entity to
provide services in a manner consistent with the Offer.

          (c) If the Tesoro Entity and the General Partner are unable to agree on the fair market value
of the Subject Assets that are subject to the Offer or the other terms of the Offer including, if
applicable, the terms on which the Partnership Group will provide services to the Tesoro Entity to
enable the Tesoro Entity to utilize the Subject Assets, within 60 days after receipt by the General
Partner of the Offer, the Tesoro Entity and the General Partner will engage a mutually agreed upon,
nationally recognized investment banking firm to determine the fair market value of the Subject
Assets and any other terms on which the Partnership Group and the Tesoro Entity are unable to
agree. The investment banking firm will determine the fair market value of the Subject Assets and
any other terms on which the Partnership Group and the Tesoro Entity are unable to agree within 30
days of its engagement and furnish the Tesoro Entity and the General Partner its determination.
The fees of the investment banking firm will be split equally between the Tesoro Entity and the
Partnership Group. Once the investment banking firm has submitted its determination of the fair
market value of the Subject Assets and any other terms on which the Partnership Group and the
Tesoro Entity are unable to agree, the General Partner will have the right, but not the obligation
to cause a Partnership Group Member to purchase the Subject Assets pursuant to the Offer, as
modified by the determination of the investment banking firm. If the General Partner elects to
cause a Partnership Group Member to purchase the Subject Assets, then the Partnership Group Member
shall purchase the Subject Assets under the terms of the Offer, as modified by the determination of
the investment banking firm as soon as commercially practicable after such determination and, if
applicable, enter into an agreement with the Tesoro Entity to provide services in a manner
consistent with the Offer, as modified by the determination of the investment banking firm.

     2.4 Scope of Prohibition. Except as provided in this Article II and the
Partnership Agreement, each Tesoro Entity shall be free to engage in any business activity,
including those that may be in direct competition with any Partnership Group Member.

7

 

     2.5 Enforcement. The Tesoro Entities agree and acknowledge that the Partnership Group
does not have an adequate remedy at law for the breach by the Tesoro Entities of the covenants and
agreements set forth in this Article II, and that any breach by the Tesoro Entities of the
covenants and agreements set forth in this Article II would result in irreparable injury to
the Partnership Group. The Tesoro Entities further agree and acknowledge that any Partnership
Group Member may, in addition to the other remedies which may be available to the Partnership
Group, file a suit in equity to enjoin the Tesoro Entities from such breach, and consent to the
issuance of injunctive relief under this Agreement.

ARTICLE III

Indemnification

     3.1 Environmental Indemnification.

          (a) Subject to Section 3.2 and Section 3.7, each of Tesoro Refining and
Marketing and Tesoro Alaska, severally and not jointly, shall indemnify, defend and hold harmless
the Partnership Group from and against any Losses suffered or incurred by the Partnership Group,
directly or indirectly, or as a result of any claim by a third party, by reason of or arising out
of:

               (i) any violation or correction of violation of Environmental Laws;

               (ii) any event, condition or environmental matter associated with or arising from the
ownership or operation of the Assets (including, without limitation, the presence of Hazardous
Substances on, under, about or migrating to or from the Assets or the disposal or release of
Hazardous Substances generated by operation of the Assets at non-Asset locations) including,
without limitation, (A) the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action
required or necessary under Environmental Laws, (B) the cost or expense of the preparation and
implementation of any closure, remedial, corrective action, or other plans required or necessary
under Environmental Laws, and (C) the cost and expense of any environmental or toxic tort
pre-trial, trial, or appellate legal or litigation support work;

               (iii) any event, condition or environmental matter or currently pending legal action against
the Tesoro Entities, a true and correct summary of which is described on Schedule I
attached hereto; and

               (iv) any event, condition or environmental matter associated with or arising from the Retained
Assets, whether occurring before or after the Closing Date;

provided, however, that with respect to any violation under Section 3.1(a)(i) or any event,
condition or environmental matter included under Section 3.1(a)(ii) that is associated with
the ownership or operation of the Assets, Tesoro Refining and Marketing and Tesoro Alaska will be
obligated to indemnify the Partnership Group only to the extent that such violation, event,
condition or environmental matter (x) occurred before the Closing Date under then-applicable
Environmental Laws and (y)(i) such violation, event, condition or environmental matter is set forth
on Schedule II attached hereto or (ii) Tesoro is notified in writing of such violation,
event,

8

 

condition or environmental matter prior to the Identification Deadline (clauses (i) through
(iv) collectively, “Covered Environmental Losses”).

          (b) The Partnership Group shall indemnify, defend and hold harmless the Tesoro Entities from
and against any Losses suffered or incurred by the Tesoro Entities, directly or indirectly, or as a
result of any claim by a third party, by reason of or arising out of:

               (i) any violation or correction of violation of Environmental Laws associated with or arising
from the ownership or operation of the Assets; and

               (ii) any event, condition or environmental matter associated with or arising from the
ownership or operation of the Assets (including, but not limited to, the presence of Hazardous
Substances on, under, about or migrating to or from the Assets or the disposal or release of
Hazardous Substances generated by operation of the Assets at non-Asset locations) including,
without limitation, (A) the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action
required or necessary under Environmental Laws, (B) the cost or expense of the preparation and
implementation of any closure, remedial, corrective action, or other plans required or necessary
under Environmental Laws, and (C) the cost and expense for any environmental or toxic tort
pre-trial, trial, or appellate legal or litigation support work;

and regardless of whether such violation under Section 3.1(b)(i) or such event, condition
or environmental matter included under Section 3.1(b)(ii) occurred before or after the
Closing Date, in each case, to the extent that any of the foregoing are not Covered Environmental
Losses for which the Partnership Group is entitled to indemnification from Tesoro under this
Article III without giving effect to the Annual Environmental Deductible.

     3.2 Right of Way Indemnification. Subject to Section 3.7, each of Tesoro
Refining and Marketing and Tesoro Alaska, severally and not jointly, shall indemnify, defend and
hold harmless the Partnership Group from and against any Losses suffered or incurred by the
Partnership Group by reason of or arising out of (a) the failure of the applicable Partnership
Group Member to be the owner of such valid and indefeasible easement rights or fee ownership or
leasehold interests in and to the lands on which any crude oil or refined products pipeline or
related pump station, storage tank, terminal or truck rack or any related facility or equipment
conveyed or contributed to the applicable Partnership Group Member on the Closing Date is located
as of the Closing Date, and such failure renders the Partnership Group liable to a third party or
unable to use or operate the Assets in substantially the same manner that the Assets were used and
operated by the applicable Tesoro Entity immediately prior to the Closing Date as described in the
Registration Statement; (b) the failure of the applicable Partnership Group Member to have the
consents, licenses and permits necessary to allow any such pipeline referred to in clause
(a) of this Section 3.2 to cross the roads, waterways, railroads and other areas upon
which any such pipeline is located as of the Closing Date, and such failure renders the Partnership
Group liable to a third party or unable to use or operate the Assets in substantially the same
manner that the Assets were used and operated by the applicable Tesoro Entity immediately prior to
the Closing Date as described in the Registration Statement; and (c) the cost of curing any
condition set forth in clause (a) or (b) of this Section 3.2 that does not
allow any

9

 

Asset to be operated in accordance with Prudent Industry Practice, in each case to the extent
that Tesoro is notified in writing of any of the foregoing prior to the Identification Deadline.

     3.3 Pipeline Control Center Services Indemnification and Related Matters. Tesoro
Refining and Marketing shall indemnify, defend and hold harmless the Partnership Group from and
against any Losses suffered or incurred by the Partnership Group during the period commencing on
the Closing Date and ending on [_____], 2016 [Note: Five years after the Closing Date], in excess
of $15,000 per month as a result of (a) the non-renewal or failure to extend the terms of the
NuStar Agreement beyond December 31, 2012, (b) an increase in the service fee described in Section
2.1 of the Nustar Agreement or (c) the cost and expense of any third-party service provider or
operator or any Tesoro Entity providing control and monitoring functions (including, but not
limited to pipeline scheduling, leak detection, reconciliation of oil transfer tickets, data
reporting, customer support, SCADA systems support, satellite communication, compliance and
regulatory services, general technical support and operations, maintenance and emergency response
manuals) on or for the High Plains pipeline system, provided, however, that Tesoro Refining and
Marketing shall not be required to indemnify, defend and hold harmless the Partnership Group from
and against any Losses suffered or incurred by the Partnership Group pursuant to this Section
3.3 in excess of $2,500,000. If the Partnership Group fails to extend the term of the NuStar
Agreement beyond December 31, 2012 or is unable to procure the services of a third-party service
provider or operator or any Tesoro Entity to provide control and monitoring services, the
Partnership Group may request in writing that Tesoro Refining and Marketing construct a control
room that is adequate to enable the Partnership Group to control and monitor the High Plains
pipeline system in accordance with Prudent Industry Practice for the sole purposes of providing
such services. In the event of such request, Tesoro Refining and Marketing shall, within 30 days
of receipt of such request, notify the Partnership Group of (i) its intent to, and shall use
commercially reasonable efforts to, promptly construct or (ii) its intent to, and shall, bear the
cost of constructing, a control room, subject to a maximum amount of $2,500,000 less any amounts
previously paid to the Partnership Group under this Section 3.3.

     3.4 Represented Employees. The General Partner shall indemnify, defend and hold
harmless Tesoro Refining and Marketing from and against any Losses suffered or incurred by Tesoro
Refining and Marketing by reason of or arising out of the transfer of the Represented Employees to
the General Partner pursuant to Section 8.1 and the employment of the Represented Employees
by the General Partner, including any Losses suffered or incurred resulting from actions taken, or
liabilities incurred by Tesoro Refining and Marketing with respect to the Represented Employees in
connection with applicable collective bargaining agreements covering such Represented Employees.

     3.5 Additional Indemnification.

          (a) In addition to and not in limitation of the indemnification provided under Sections
3.1(a), 3.2, and 3.3, each of Tesoro Refining and Marketing and Tesoro Alaska,
severally and not jointly, shall indemnify, defend, and hold harmless the Partnership Group from
and against any Losses suffered or incurred by the Partnership Group by reason of or arising out of
(i) events and conditions associated with the ownership or operation of the Assets and occurring
before the Closing Date (other than Covered Environmental Losses, which are

10

 

provided for under Sections 3.1, and those Losses provided for under Section
3.2) to the extent that Tesoro is notified in writing of any of the foregoing prior to
[______], 2021 [Note: Ten years after the Closing Date], (ii) any currently pending legal actions
against the Tesoro Entities set forth on Schedule III attached hereto, (iii) events and
conditions associated with the Retained Assets and whether occurring before or after the Closing
Date, (iv) the failure to obtain any necessary consent from the North Dakota Public Service
Commission or the Federal Energy Regulatory Commission for the conveyance to the Partnership Group
of any pipelines located in North Dakota, Montana and Utah, if applicable, and (v) all federal,
state and local income tax liabilities attributable to the ownership or operation of the Assets
prior to the Closing Date, including under Treasury Regulation Section 1.1502-6 (or any similar
provision of state or local law), and any such income tax liabilities of the Tesoro Entities that
may result from the consummation of the formation transactions for the Partnership Group and the
General Partner occurring on or prior to the Closing Date.

          (b) In addition to and not in limitation of the indemnification provided under Section
3.1(b) or 3.4 or the Partnership Agreement, the Partnership Group shall indemnify,
defend, and hold harmless the Tesoro Entities from and against any Losses suffered or incurred by
the Tesoro Entities by reason of or arising out of events and conditions associated with the
ownership or operation of the Assets and occurring after the Closing Date (other than Covered
Environmental Losses which are provided for under Section 3.1), unless such indemnification
would not be permitted under the Partnership Agreement by reason of one of the provisos contained
in Section 7.7(a) of the Partnership Agreement.

     3.6 Indemnification Procedures.

          (a) The Indemnified Party agrees that within a reasonable period of time after it becomes
aware of facts giving rise to a claim for indemnification under this Article III, it will
provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific
basis for such claim.

          (b) The Indemnifying Party shall have the right to control all aspects of the defense of (and
any counterclaims with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification under this Article III, including, without limitation, the
selection of counsel, determination of whether to appeal any decision of any court and the settling
of any such claim or any matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the Indemnified Party unless it includes a
full release of the Indemnified Party from such claim.

          (c) The Indemnified Party agrees to cooperate in good faith and in a commercially reasonable
manner with the Indemnifying Party, with respect to all aspects of the defense of any claims
covered by the indemnification under this Article III, including, without limitation, the
prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto
that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized
in connection with such defense, the making available to the Indemnifying Party of any files,
records or other information of the Indemnified Party that the Indemnifying Party considers
relevant to such defense, the making available to the Indemnifying Party of any employees of the
Indemnified Party and the granting to the Indemnifying Party of

11

 

reasonable access rights to the properties and facilities of the Indemnified Party; provided,
however, that in connection therewith the Indemnifying Party agrees to use reasonable efforts to
minimize the impact thereof on the operations of the Indemnified Party and further agrees to
maintain the confidentiality of all files, records, and other information furnished by the
Indemnified Party pursuant to this Section 3.6. In no event shall the obligation of the
Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately
preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and
pay for counsel in connection with the defense of any claims covered by the indemnification set
forth in this Article III; provided, however, that the Indemnified Party may, at its own
option, cost and expense, hire and pay for counsel in connection with any such defense. The
Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to
the status of any such defense, but the Indemnifying Party shall have the right to retain sole
control over such defense.

          (d) In determining the amount of any loss, cost, damage or expense for which the Indemnified
Party is entitled to indemnification under this Agreement, the gross amount of the indemnification
will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premium that becomes due
and payable by the Indemnified Party as a result of such claim and (ii) all amounts recovered by
the Indemnified Party under contractual indemnities from third Persons.

     3.7 Limitations Regarding Indemnification.

          (a) Neither Tesoro Refining and Marketing nor Tesoro Alaska shall, in any calendar year, be
obligated to indemnify, defend and hold harmless the Partnership Group for a Covered Environmental
Loss under Section 3.1(a)(ii) until such time as the aggregate amount of all Covered
Environmental Losses in such calendar year exceeds $250,000 (the “Annual Environmental
Deductible”), at which time Tesoro Refining and Marketing and Tesoro Alaska shall be obligated
to indemnify the Partnership Group for the amount of Covered Environmental Losses under Section
3.1(a)(ii) that are in excess of the Annual Environmental Deductible that are incurred by the
Partnership Group in such calendar year. Neither Tesoro Refining and Marketing nor Tesoro Alaska
shall, in any calendar year, be obligated to indemnify, defend and hold harmless the Partnership
Group for any individual Loss under Section 3.2 until such time as the aggregate amount of
all Losses under Section 3.2 that are in such calendar year exceeds $250,000 (the
“Annual ROW Deductible”), at which time Tesoro Refining and Marketing and Tesoro Alaska
shall be obligated to indemnify the Partnership Group for all Losses under Section 3.2 in
excess of the Annual ROW Deductible that are incurred by the Partnership Group in such calendar
year.

          (b) With respect to Sections 3.1, 3.2 and 3.5(a), Tesoro Alaska shall
only be required to indemnify the Partnership Group for Covered Environmental Losses under
Section 3.1, Losses under Section 3.2 or Losses under Section 3.5(a)
incurred in connection with or related to Assets conveyed, contributed or otherwise transferred to
the Partnership Group by Tesoro Alaska, and Tesoro Refining and Marketing shall be required to
indemnify the Partnership Group for all other Covered Environmental Losses under Section 3.1 or Losses under Section 3.2 and Section 3.5(a).

12

 

          (c) For the avoidance of doubt, there is no monetary cap on the amount of indemnity coverage
provided by any Indemnifying Party under this Article III.

          (d) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY’S
INDEMNIFICATION OBLIGATION HEREUNDER COVER OR INCLUDE CONSEQUENTIAL, INDIRECT, INCIDENTAL,
PUNITIVE, EXEMPLARY, SPECIAL OR SIMILAR DAMAGES OR LOST PROFITS SUFFERED BY ANY OTHER PARTY
ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.

ARTICLE IV

Corporate Services

     4.1 General.

          (a) Tesoro agrees to provide, and agrees to cause its Affiliates to provide, on behalf of the
General Partner, for the Partnership Group’s benefit of all the centralized corporate services that
Tesoro and its Affiliates have traditionally provided in connection with the Assets including,
without limitation, the general and administrative services listed on Schedule IV to this
Agreement. As consideration for such services, the Partnership will pay Tesoro an administrative
fee (the “Administrative Fee”) of $2.5 million per year, payable in equal monthly
installments on or before the tenth business day of each month, commencing in the first month
following the Closing Date. The Administrative Fee for the 2011 fiscal year will be prorated based
on the number of days from the Closing Date to December 31, 2011. Tesoro may increase or decrease
the Administrative Fee on each anniversary of the Closing Date, commencing on the second
anniversary date of the Closing Date, by a percentage equal to the change in the Consumer Price
Index — All Urban Consumers, U.S. City Average, Not Seasonally Adjusted over the previous 12
calendar months or to reflect any increase in the cost of providing centralized corporate services
to the Partnership Group due to changes in any law, rule or regulation applicable to Tesoro or the
Partnership Group, including any interpretation of such laws, rules or regulations.

          (b) At the end of each calendar year, the Partnership will have the right to submit to Tesoro
a proposal to reduce the amount of the Administrative Fee for that year if the Partnership
believes, in good faith, that the centralized corporate services performed by Tesoro and its
Affiliates for the benefit of the Partnership Group for the year in question do not justify payment
of the full Administrative Fee for that year. If the Partnership submits such a proposal to
Tesoro, Tesoro agrees that it will negotiate in good faith with the Partnership to determine if the
Administrative Fee for that year should be reduced and, if so, the amount of such reduction. If
the Parties agree that the Administrative Fee for that year should be reduced, then Tesoro shall
promptly pay to the Partnership the amount of any reduction for that year.

          (c) The Partnership Group shall reimburse Tesoro for all other direct or allocated costs and
expenses incurred by Tesoro and its Affiliates on behalf of the Partnership Group including, but
not limited to:

               (i) salaries of employees of the General Partner, Tesoro or its Affiliates, to the extent, but
only to the extent, such employees perform services for the

13

 

Partnership Group, provided that for employees that do not devote all of their business time
to the Partnership Group, such expenses shall be based on the annual weighted average of time spent
and number of employees devoting services to the Partnership Group;

               (ii) the cost of employee benefits relating to employees of the General Partner, Tesoro or
its Affiliates, including 401(k), pension, bonuses and health insurance benefits (but excluding
Tesoro stock-based compensation expense), to the extent, but only to the extent, such employees
perform services for the Partnership Group, provided that for employees that do not devote all of
their business time to the Partnership Group, such expenses shall be based on the annual weighted
average of time spent and number of employees devoting their services to the Partnership Group;

               (iii) any expenses incurred or payments made by Tesoro or its Affiliates for insurance
coverage with respect to the Assets or the business of the Partnership Group;

               (iv) all expenses and expenditures incurred by Tesoro or its Affiliates as a result of the
Partnership becoming and continuing as a publicly traded entity, including, but not limited to,
costs associated with annual and quarterly reports, independent auditor fees, partnership
governance and compliance, registrar and transfer agent fees, tax return and Schedule K-1
preparation and distribution, legal fees and independent director compensation; and

               (v) all sales, use, excise, value added or similar taxes, if any, that may be applicable from
time to time with respect to the services provided by Tesoro and its Affiliates to the Partnership
Group pursuant to Section 4.1(a).

     Such reimbursements shall be made on or before the tenth business day of the month following
the month such costs and expenses are incurred, other than reimbursements solely related to bonuses
for employees of the General Partner, which shall be reimbursed on or prior to the last business
day of the month that such bonuses are paid. For the avoidance of doubt, the costs and expenses set
forth in Section 4.1(c) shall be paid by the Partnership Group in addition to, and not as a
part of or included in, the Administrative Fee.

ARTICLE V

Capital and Other Expenditures

     5.1 Reimbursement of Maintenance Capital and Other Expenditures. Tesoro Refining and
Marketing will reimburse the Partnership Group on a dollar-for-dollar basis, without duplication,
for each of the following:

          (a) during the period commencing on the Closing Date and ending on [_____], 2016 [Note: Five
years after the Closing Date], expenses incurred by the Partnership Group solely in order to comply
with vapor recovery or combustion and spill containment requirements associated with the Assets;

          (b) expenses incurred by the Partnership Group for repairs and maintenance to storage tanks
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

14

 

Integrity Management Rule 49 CFR 195.452 and (ii) American Petroleum Institute (API) Standard
653 for Aboveground Storage Tanks, 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 that occur
after the Closing Date; and

          (c) those certain capital projects related to the Assets and described on Schedule VI
attached hereto.

ARTICLE VI

Right of First Offer

     6.1 Right of First Offer to Purchase Certain Assets retained by Tesoro Entities.

          (a) Each ROFO Asset Owner hereby grants to the Partnership Group a right of first offer for a
period of 10 years from the Closing Date (the “ROFO Period”) on any ROFO Asset set forth
next to such ROFO Asset Owner’s name on Schedule V to the extent that such ROFO Asset Owner
proposes to Transfer any ROFO Asset (other than to an Affiliate who agrees in writing that such
ROFO Asset remains subject to the provisions of this Article VI and such Affiliate assumes the
obligations under this Article VI with respect to such ROFO Asset) or enter into any agreement to
do any of the foregoing during the ROFO Period.

          (b) The Parties acknowledge that any Transfer of ROFO Assets pursuant to the Partnership
Group’s right of first offer is subject to the terms of all existing agreements with respect to the
ROFO Assets; provided, however, that Tesoro represents and warrants that, to its knowledge after
reasonable investigation, there are no terms in such agreements that would materially impair the
rights granted to the Partnership Group pursuant to this Article VI with respect to any ROFO Asset.

     6.2 Procedures.

          (a) In the event a ROFO Asset Owner proposes to Transfer any applicable ROFO Asset (other than
to an Affiliate) during the ROFO Period (a “Proposed Transaction”), such ROFO Asset Owner
shall, prior to entering into any such Proposed Transaction, first give notice in writing to the
Partnership Group (the “ROFO Notice”) of its intention to enter into such Proposed
Transaction. The ROFO Notice shall include any material terms, conditions and details as would be
necessary for a Partnership Group Member to make a responsive offer to enter into the Proposed
Transaction with the applicable ROFO Asset Owner, which terms, conditions and details shall at a
minimum include any terms, condition or details that such ROFO Asset Owner would propose to provide
to non-Affiliates in connection with the Proposed Transaction. The Partnership Group shall have 60
days following receipt of the ROFO Notice to propose an offer to enter into the Proposed
Transaction with such ROFO Asset Owner (the “ROFO Response”). The ROFO Response shall set
forth the terms and conditions (including, without limitation, the purchase price the applicable
Partnership Group Member proposes to pay for the ROFO Asset and the other terms of the purchase
including, if requested by a Tesoro Entity, the terms on which the Partnership Group Member will
provide services to the Tesoro Entity to enable the Tesoro Entity to utilize the applicable ROFO
Asset) pursuant to which the Partnership Group would be willing to enter into a binding agreement
for the Proposed Transaction. The decision

15

 

to issue the ROFO Response and the terms of the ROFO Response shall be subject to approval by
the Conflicts Committee. If no ROFO Response is delivered by the Partnership Group within such
60-day period, then the Partnership Group shall be deemed to have waived its right of first offer
with respect to such ROFO Asset.

          (b) Unless the ROFO Response is rejected pursuant to written notice delivered by the
applicable ROFO Asset Owner to the applicable Partnership Group Member within 60 days of the
delivery of the ROFO Response, such ROFO Response shall be deemed to have been accepted by the
applicable ROFO Asset Owner and such ROFO Asset Owner shall enter into an agreement with the
applicable Partnership Group Member providing for the consummation of the Proposed Transaction upon
the terms set forth in the ROFO Response and, if applicable, the Partnership Group Member will
enter into an agreement with the Tesoro Entity setting forth the terms on which the Partnership
Group Member will provide services to the Tesoro Entity to enable the Tesoro Entity to utilize the
ROFO Asset. Unless otherwise agreed between the applicable Tesoro Entity and Partnership Group
Member, the terms of the purchase and sale agreement will include the following:

               (i) the Partnership Group Member will deliver the agreed purchase price (in cash, Partnership
Securities, an interest-bearing promissory note, or any combination thereof);

               (ii) the applicable ROFO Asset Owner will represent that it has title to the ROFO Assets that
is sufficient to operate the ROFO Assets in accordance with their intended and historical use,
subject to all recorded matters and all physical conditions in existence on the closing date for
the purchase of the applicable ROFO Asset, plus any other such matters as the Partnership Group
Member may approve. If the Partnership Group Member desires to obtain any title insurance with
respect to the ROFO Asset, the full cost and expense of obtaining the same (including but not
limited to the cost of title examination, document duplication and policy premium) shall be borne
by the Partnership Group Member;

               (iii) the applicable ROFO Asset Owner will grant to the Partnership Group Member the right,
exercisable at the Partnership Group Member’s risk and expense prior to the delivery of the ROFO
Response, to make such surveys, tests and inspections of the ROFO Asset as the Partnership Group
Member may deem desirable, so long as such surveys, tests or inspections do not damage the ROFO
Asset or interfere with the activities of the applicable ROFO Asset Owner;

               (iv) the closing date for the purchase of the ROFO Asset shall occur no later than 180 days
following receipt by Tesoro of the ROFO Response pursuant to Section 6.2(a);

               (v) the applicable ROFO Asset Owner and Partnership Group Member shall use commercially
reasonable efforts to do or cause to be done all things that may be reasonably necessary or
advisable to effectuate the consummation of any transactions contemplated by this Section
6.2(b), including causing its respective Affiliates to execute, deliver and perform all
documents, notices, amendments, certificates, instruments and consents required in connection
therewith; and

16

 

               (vi) neither the applicable ROFO Asset Owner nor the applicable Partnership Group Member shall
have any obligation to sell or buy the applicable ROFO Asset if any of the consents referred to in
Section 6.1(b) has not been obtained.

          (c) If the Partnership Group has not timely delivered a ROFO Response as specified above with
respect to a Proposed Transaction that is subject to a ROFO Notice, the applicable ROFO Asset Owner
shall be free to enter into a Proposed Transaction with any third party on terms and conditions no
more favorable to such third party than those set forth in the ROFO Notice. If a ROFO Response with
respect to any Proposed Transaction is rejected by the applicable ROFO Asset Owner, such ROFO Asset
Owner shall be free to enter into a Proposed Transaction with any third party (i) on terms and
conditions (excluding those relating to price) that are not more favorable in the aggregate to such
third party than those proposed in respect of the Partnership Group in the ROFO Response and (ii)
at a price equal to no less than 100% of the price offered by the applicable Partnership Group
Member in the ROFO Response to such ROFO Asset Owner.

ARTICLE VII

License of Name and Mark

     7.1 Grant of License. Upon the terms and conditions set forth in this Article
VII, Tesoro hereby grants and conveys to each of the entities currently or hereafter comprising
a part of the Partnership Group a nontransferable, nonexclusive, royalty-free right and license
(“License”) to use the name “Tesoro” (the “Name”) and any other trademarks owned by
Tesoro which contain the Name (collectively, the “Marks”).

     7.2 Ownership and Quality. The Partnership agrees that ownership of the Name and the
Marks and the goodwill relating thereto shall remain vested in Tesoro both during the term of this
License and thereafter, and the Partnership further agrees, and agrees to cause the other members
of the Partnership Group, never to challenge, contest or question the validity of Tesoro’s
ownership of the Name and Marks or any registration thereto by Tesoro. In connection with the use
of the Name and the Mark, the Partnership and any other member of the Partnership Group shall not
in any manner represent that they have any ownership in the Name and the Marks or registration
thereof except as set forth herein, and the Partnership, on behalf of itself and the other members
of the Partnership Group, acknowledge that the use of the Name and the Marks shall not create any
right, title or interest in or to the Name and the Mark, and all use of the Name and the Marks by
the Partnership or any other member of the Partnership Group, shall inure to the benefit of Tesoro.
The Partnership agrees, and agrees to cause the other members of the Partnership Group, to use the
Name and Marks in accordance with such quality standards established by Tesoro and communicated to
the Partnership from time to time, it being understood that the products and services offered by
the members of the Partnership Group immediately before the Closing Date are of a quality that is
acceptable to Tesoro and justifies the License.

     7.3 Termination. The License shall terminate upon a termination of this Agreement
pursuant to Section 9.4.

17

 

ARTICLE VIII

Represented Employees; Vehicle Leases

     8.1 Transfer of Represented Employees. The Parties acknowledge and agree that certain
Tesoro Refining and Marketing employees currently covered by existing collective bargaining
agreements with Tesoro Refining and Marketing (the “Represented Employees”) have been or
will be transferred to and become employees of the General Partner on or before December 31, 2011.
The Parties agree to cooperate and shall take all action necessary to effectuate such transfer and
shall comply with the terms of the applicable collective bargaining agreements with respect to the
Represented Employees.

     8.2 Vehicle Leases. The Parties acknowledge and agree that the members of the
Partnership Group shall have the right to use any vehicles leased by the General Partner for use in
the operation of the Partnership Group’s business.

ARTICLE IX

Miscellaneous

     9.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and
governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that
might refer the construction or interpretation of this Agreement to the laws of another state.
Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas
and to venue in San Antonio, Texas.

     9.2 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 such Party’s signature to this
Agreement or at such other address as such Party may stipulate to the other Parties in the manner
provided in this Section 9.2.

     If to the Tesoro Entities:

Tesoro Corporation

1900 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: [______]

Facsimile: [______]

     If to the Partnership Group:

18

 

Tesoro Logistics LP

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

1900 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: [______]

Facsimile: [______]

     9.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties
relating to the matters contained herein, superseding all prior contracts or agreements, whether
oral or written, relating to the matters contained herein.

     9.4 Termination of Agreement. This Agreement, other than the provisions set forth in
Article III hereof, may be terminated by Tesoro or the Partnership upon a Partnership
Change of Control. For the avoidance of doubt, the Parties’ indemnification obligations under
Article III shall survive the termination of this Agreement in accordance with their
respective terms.

     9.5 Amendment or Modification. This Agreement may be amended or modified from time to
time only by the written agreement of all the Parties hereto. Each such instrument shall be
reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this
Agreement.

     9.6 Assignment. No Party shall have the right to assign its rights or obligations
under this Agreement without the consent of the other Parties hereto; provided, however, that the
Partnership may make a collateral assignment of this Agreement solely to secure working capital
financing for the Partnership.

     9.7 Counterparts. This Agreement 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 Agreement by facsimile transmission or in portable document format (.pdf)
shall be effective as delivery of a manually executed counterpart hereof.

     9.8 Severability. If any provision of this Agreement shall be held invalid or
unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect.

     9.9 Further Assurances. In connection with this Agreement and all transactions
contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement and all such transactions.

     9.10 Rights of Limited Partners. The provisions of this Agreement are enforceable
solely by the Parties to this Agreement, and no Limited Partner of the Partnership shall have the
right, separate and apart from the Partnership, to enforce any provision of this Agreement or to
compel any Party to this Agreement to comply with the terms of this Agreement.

19

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Closing Date.

	 	 	 	 	 
	 	TESORO CORPORATION.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO REFINING AND MARKETING COMPANY

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO COMPANIES, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO ALASKA COMPANY

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO LOGISTICS LP

By: Tesoro Logistics GP, LLC, its general partner

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO LOGISTICS GP, LLC

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[Signature page to Omnibus Agreement]

 

 

Schedule I

Pending Environmental Litigation

None.

 

 

Schedule II

Environmental Matters

1. Anchorage #1 Terminal soil and groundwater have been impacted by gasoline and diesel releases
from previously buried pipelines. The site is considered characterized and is currently undergoing
removal of product from the water table, groundwater treatment, and long-term monitoring.

2. Anchorage #2 Terminal soil and groundwater have been impacted by gasoline releases occurring
prior to Tesoro’s purchase of the facility. The site is considered characterized and is currently
undergoing groundwater monitoring and treatment. Off-site groundwater investigations are scheduled
for 2012.

3. Stockton Terminal soil and groundwater have been impacted by gasoline and diesel releases from
pipelines and/or product storage tanks. The site is considered substantially characterized and is
undergoing groundwater treatment and groundwater monitoring. Off-site groundwater impacts are
commingled with neighboring petroleum storage terminals.

4. Burley Terminal groundwater was impacted by gasoline releases occurring prior to Tesoro’s
purchase of the facility. Groundwater impacts were commingled with neighboring petroleum storage
terminals. Hydrocarbon concentrations in groundwater samples do not exceed previously established
target levels for groundwater and surface water protection. Regulatory closure is pending.

5. Wilmington Sales Terminal soil and groundwater have been impacted by gasoline releases occurring
prior to Tesoro’s purchase of the facility. Groundwater investigation and monitoring is on-going.
Tesoro is indemnified by the previous owner for Investigation and remediation obligations.

6. Salt Lake City Terminal soil and groundwater have been impacted by gasoline and diesel releases
from pipelines and/or product storage tanks occurring prior to Tesoro’s purchase of the facility.
The site is considered characterized and is currently undergoing removal of product from the water
table and long-term monitoring. There are no known soil or groundwater impacts at the Northwest
Crude Oil tank farm.

7. The Stockton Terminal emits volatile organic compounds (VOCs) below “major source” emission
criteria. In 2010, the San Joaquin Air Quality Management District announced it is reducing its
major source threshold. When the Stockton Terminal expands its operations or increases throughput,
the potential to emit VOC will increase and the Stockton terminal will become subject to regulation
as a major source. This will require a Title V Air Operating Permit. In addition, the Stockton
facility will be required to install an automated continuous emission monitor at a cost of
approximately $75,000.

 

 

Schedule III

Pending Litigation

None.

 

 

Schedule IV

General and Administrative Services

	(1)	 	Executive management services of Tesoro employees who devote less than 50% of their business
time to the business and affairs of the Partnership, including stock based compensation
expense
	 
	(2)	 	Financial and administrative services (including, but not limited to, treasury and
accounting)
	 
	(3)	 	Information technology services
	 
	(4)	 	Legal services
	 
	(5)	 	Health, safety and environmental services
	 
	(6)	 	Human resources services
	 
	(7)	 	Insurance coverage under Tesoro insurance policies

 

 

Schedule V

ROFO Assets

	 	 	 
	Asset	 	Owner
	 
	 	 
	Golden Eagle Refined Products Terminal
(Martinez, California). A terminal located
at the Golden Eagle Refinery consisting of a
truck loading rack with three loading bays
supplied by pipeline from storage tanks
located at the Golden Eagle Refinery. The
terminal does not have refined product
storage capacity.

	 	Tesoro Refining and Marketing
	 
	 	 
	Golden Eagle Marine Terminal (Martinez,
California). A marine terminal located on
the Sacramento River near the Golden Eagle
Refinery consisting of a single-berth dock,
five crude oil storage tanks with a combined
425,000 barrels of capacity and related
pipelines. The terminal receives crude oil
through marine vessel deliveries for
delivery to the Golden Eagle Refinery and
Tesoro Refining and Marketing’s Martinez
terminal.

	 	Tesoro Refining and Marketing
	 
	 	 
	Golden Eagle Wharf Facility (Martinez,
California). A wharf facility located on the
Sacramento River near the Golden Eagle
Refinery consisting of a single-berth dock
and related pipelines. The facility does
not have crude oil or refined products
storage capacity and receives refined
products from the Golden Eagle Refinery
through interconnecting pipelines for
delivery into marine vessels. The facility
can also receive refined products and
intermediate feedstocks from marine vessels
for delivery to the Golden Eagle Refinery.

	 	Tesoro Refining and Marketing
	 
	 	 
	Tesoro Alaska Pipeline (Nikiski, Alaska). A
common carrier pipeline consisting of
approximately 69 miles of 10-inch pipeline
with capacity to transport approximately
48,000 bpd of refined products from the
Kenai Refinery to Anchorage International
Airport and to a receiving station at the
Port of Anchorage that is connected to the
Partnership Group’s Anchorage terminal as
well as third party terminals.

	 	Tesoro Alaska
	 
	 	 
	Nikiski Dock and Storage Facility (Nikiski,
Alaska). A single-berth dock and storage
facility located at the Kenai Refinery that
includes five crude oil storage tanks with a
combined capacity of approximately 930,000
barrels, ballast water treatment capability
and associated pipelines, pumps and metering
stations. The dock and storage facility
receives crude oil from marine tankers and
from local production fields via pipeline
and truck, and also delivers refined
products from the refinery to marine
vessels.

	 	Tesoro Alaska

 

 

	 	 	 
	Nikiski Refined Products Terminal (Nikiski,
Alaska). A terminal located at the Kenai
Refinery consisting of a truck loading rack
with two loading bays supplied by pipeline
from the Kenai Refinery and six refined
product storage tanks with a combined
capacity of 211,000 barrels.

	 	Tesoro Alaska
	 
	 	 
	Los Angeles Crude Oil and Refined Products
Pipeline System (Los Angeles, California). A
pipeline system located in the Los Angeles,
California metropolitan area consisting of
nine separate U.S. Department of
Transportation-regulated pipelines totaling
approximately 17 miles in length that
transport crude oil, feedstocks and refined
products between Tesoro Refining and
Marketing’s Los Angeles Refinery and Long
Beach terminal and various third party
facilities.

	 	Tesoro Refining and Marketing
	 
	 	 
	Anacortes Refined Products Terminal
(Anacortes, Washington). A terminal located
at the Anacortes Refinery consisting of a
truck loading rack with two loading bays
that receive diesel fuel from storage tanks
located at the Anacortes Refinery. The
terminal does not have refined product
storage capacity

	 	Tesoro Refining and Marketing
	 
	 	 
	Anacortes Marine Terminal and Storage
Facility (Anacortes, Washington). A marine
terminal and storage facility located at the
Anacortes Refinery consisting of a crude oil
and refined products wharf facility and four
storage tanks for crude oil and heavy
products with a combined storage capacity of
1.4 million barrels. The marine terminal and
storage facility receive crude oil and other
feedstocks from marine vessels and
third-party pipelines for delivery to the
Anacortes Refinery. The facility also
delivers refined products from the Anacortes
Refinery to marine vessels.

	 	Tesoro Refining and Marketing
	 
	 	 
	Long Beach Marine Terminal (Long Beach,
California). A marine terminal leased from
the Port of Long Beach, California
consisting of a dock with two vessel berths.
The terminal receives crude oil and other
feedstocks from marine vessels for delivery
to the Los Angeles Refinery and other
third-party refineries and terminals, and
receives refined and intermediate products
from the Los Angeles Refinery for delivery
to marine vessels.

	 	Tesoro Refining and Marketing

 

 

Schedule VI

Existing Capital Projects

Capital Projects

That certain project related to AFE # 102120001, which provides for side stream ethanol blending
into all gasoline at the Salt Lake City terminal by adding truck ethanol unloading capability,
utilizing the existing premium day tank for ethanol and delivering premium direct from the Salt
Lake City refinery tankage. New ethanol truck unloading facilities will be installed. New Pumps
will also be installed for delivering higher volumes of premium gasoline from the Salt Lake City
refinery to the Salt Lake City terminal. An ethanol injection skid will be installed along with
piping changing to the existing Salt Lake City terminal to allow the ethanol to be injected in the
gasoline stream.

That certain project number 2010113058 at the Mandan refinery, to update additive equipment to
allow the offering of Shell additized gasoline.

That certain project related to AFE # 107120005, which provides for ratio ethanol blending into
gasoline on the rack at the Burley, Idaho Terminal by adding truck ethanol unloading capability,
adding tankage for ethanol storage and installing new ethanol meters associated with each gasoline
loading arm. New ethanol truck unloading facilities will also be installed.

That certain project number 2007000263 at the Mandan refinery, to update the truck rack sprinkler
system.

That certain project number 2010113017 at the Mandan refinery, to upgrade the rack blending
hydraulic system to reduce/eliminate inaccurate blends at the load rack.

That certain project number 2011433001 at the Mandan refinery, to move the JP8 to new bay and have
three bays for loading product across the rack.

That certain project number 2011432602 at the Stockton terminal, install a continuous vapor
emission monitor on the vapor recovery unit for compliance with air quality regulations.

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