UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 1, 2014

 

 

TESORO LOGISTICS LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-35143   27-4151603

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

19100 Ridgewood Pkwy

San Antonio, Texas

  78259-1828
(Address of principal executive offices)   (Zip Code)

(210) 626-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On June 23, 2014, Tesoro Logistics LP (the “Partnership”) entered into a Contribution, Conveyance and Assumption Agreement (the “Contribution Agreement”) with Tesoro Corporation (“Tesoro”), Tesoro Refining & Marketing Company LLC (“TRMC”), Tesoro Alaska Company LLC (“TAC”), Tesoro Logistics GP, LLC (the “General Partner”), Tesoro Logistics Operations LLC (the “Operating Company”) and Tesoro Logistics Pipelines LLC (“TLP”). Pursuant to the Contribution Agreement, Tesoro, TRMC and TAC agreed to contribute, through the General Partner and the Partnership to the Operating Company or TLP, as applicable, the assets described below (the “Assets”):

 

    TAC’s two-lane truck terminal, and six storage tanks with approximately 213,000 barrels of storage capacity, located in Nikiski, Alaska (collectively, the “Nikiski Assets”);

 

    all of Tesoro’s membership interests (the “TAPC Equity”) in Tesoro Alaska Pipeline Company LLC, a wholly-owned subsidiary of Tesoro, which owns the 69-mile common carrier refined products pipeline running outbound from TAC’s Nikiski Terminal;

 

    TRMC’s two-lane, clean products truck terminal, two-lane light ends truck terminal, a light ends rail loading and unloading facility, and four crude and black oil storage tanks with a shell capacity of approximately 1,500,000 barrels, all located at TRMC’s refinery in Anacortes, Washington (collectively, the “Anacortes Assets”);

 

    TRMC’s three-lane, clean products truck terminal, two-lane, light ends truck terminal and a light ends rail loading and unloading facility, all located at TRMC’s refinery in Martinez, California (collectively, the “Martinez Assets”); and

 

    certain related assets used in connection with the foregoing assets.

The consideration for the Assets will total approximately $270 million. The contribution pursuant to the Contribution Agreement will be made in two stages.

In the first stage that was completed on July 1, 2014, TRMC and TAC contributed the Nikiski Assets, the Anacortes Assets and the Martinez Assets to the General Partner in exchange for additional membership interests in the General Partner. The General Partner contributed such assets to the Partnership in consideration of the receipt by the General Partner of $214.4 million from the Partnership in cash, partly financed with borrowings under the Partnership’s revolving credit facility, and the issuance of equity securities of the Partnership with a combined fair value of $27 million. The equity was comprised of a sufficient number of general partner units to maintain the General Partner’s 2% general partner interest in the Partnership and the remainder in common units. The Partnership then contributed such assets to the Operating Company.

In the second stage, upon receiving the required regulatory approval from the Regulatory Commission of Alaska to contribute the TAPC Equity, Tesoro will contribute the TAPC Equity to the General Partner in exchange for additional membership interests in the General Partner. The General Partner will contribute such assets to the Partnership in consideration of the receipt by the General Partner of $28.6 million in cash, which may be partly financed with borrowings under the Partnership’s revolving credit facility. The Partnership will then contribute the TAPC Equity to the Operating Company and the Operating Company will contribute the TAPC Equity to TLP, each as a capital contribution.

On July 1, 2014, in connection with the consummation of the transactions contemplated by the Contribution Agreement, TAC, TRMC, the General Partner, the Partnership and the Operating Company, as applicable, entered into the following agreements, and for the agreements to which the General Partner and the Partnership are parties (other than the Omnibus Agreement and Secondment Agreement, each as defined and discussed below), the General Partner and the Partnership are parties to such agreements solely to facilitate the contribution of commercial rights to the Operating Company.

The foregoing description is not complete and is qualified in its entirety by reference to the Contribution Agreement, which is incorporated by reference as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

Terminalling Services Agreement - Nikiski

The Operating Company entered into a ten-year master terminalling services agreement (the “Nikiski TSA”) with TAC, the General Partner and the Partnership for terminalling services at the Nikiski Assets. TAC has the option to extend the term for up to two renewal terms of five years each. Pursuant to the Nikiski TSA, the Operating Company will provide TAC with certain terminalling and ancillary services in return for TAC’s commitment to throughput or store, as the case

 

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may be, a certain amount of petroleum products, ethanol and biofuels, crude oil, Transmix, intermediate products and fuel oil at the Nikiski Assets. The monthly fees and cost reimbursements payable to the Operating Company for such services will be set forth on service orders for the terminal executed by both the Operating Company and TAC. If TAC throughputs aggregate volumes less than its minimum throughput commitment for any month, TAC shall pay the Operating Company a shortfall payment. All fees under the Nikiski TSA that are to be set forth on service orders will be indexed for inflation.

During the term of the Nikiski TSA, TAC has a right of first refusal on any additional throughput that the Operating Company offers to third parties. Any time after the termination of the Nikiski TSA, and provided that the termination was not due to TAC’s default, TAC can require the Operating Company to enter into a new terminalling services agreement with TAC, provided the term of such new agreement shall not extend beyond June 30, 2034. For up to two years after the termination of the Nikiski TSA, and provided that the termination was not due to TAC’s default, TAC may exercise a right of first refusal on any terminalling services agreement the Operating Company offers to a third party.

The foregoing description is not complete and is qualified in its entirety by reference to the Nikiski TSA, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Terminalling Services Agreement - Anacortes

The Operating Company entered into a ten-year master terminalling services agreement (the “Anacortes TSA”) with TRMC, the General Partner and the Partnership for terminalling services at the Anacortes Assets. TRMC has the option to extend the term for up to two renewal terms of five years each. Pursuant to the Anacortes TSA, the Operating Company will provide TRMC with certain terminalling and ancillary services in return for TRMC’s commitment to throughput or store, as the case may be, a certain amount of propanes, butanes, pentanes, gasoline, diesel, biodiesel, ethanol and jet fuels at the Anacortes Assets. The monthly fees and cost reimbursements payable to the Operating Company for such services will be set forth on service orders for the terminal executed by both the Operating Company and TRMC. If TRMC throughputs aggregate volumes less than its minimum throughput commitment for any month, TRMC shall pay the Operating Company a shortfall payment. All fees under the Anacortes TSA that are to be set forth on service orders will be indexed for inflation.

During the term of the Anacortes TSA, TRMC has a right of first refusal on any additional throughput that the Operating Company offers to third parties. Any time after the termination of the Anacortes TSA, and provided that the termination was not due to TRMC’s default, TRMC can require the Operating Company to enter into a new terminalling services agreement with TRMC, provided the term of such new agreement shall not extend beyond June 30, 2034. For up to two years after the termination of the Anacortes TSA, and provided that the termination was not due to TRMC’s default, TRMC may exercise a right of first refusal on any terminalling services agreement the Operating Company offers to a third party.

The foregoing description is not complete and is qualified in its entirety by reference to the Anacortes TSA, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

Amendment of Anacortes Track Use and Throughput Agreement

In connection with the entry into the Anacortes TSA, the Operating Company entered into an amendment (the “ATUTA Amendment”) to the Anacortes Track Use and Throughput Agreement dated November 15, 2012, with TRMC to clarify that such agreement applies only to the throughput of crude and other black oils through the applicable assets.

The foregoing description is not complete and is qualified in its entirety by reference to the ATUTA Amendment, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Terminalling Services Agreement - Martinez

The Operating Company entered into a ten-year master terminalling services agreement (the “Martinez TSA”) with TRMC, the General Partner and the Partnership for terminalling services at the Martinez Assets. TRMC has the option to extend the term for up to two renewal terms of five years each. Pursuant to the Martinez TSA, the Operating Company will provide TRMC with certain terminalling and ancillary services in return for TRMC’s commitment to throughput or store, as the case may be, a certain amount of propanes, butanes, pentanes, gasoline, diesel, biodiesel, ethanol and jet fuels at the Martinez Assets. The monthly fees and cost reimbursements payable to the Operating Company for such services will be set forth on service orders for the terminal executed by both the Operating Company and TRMC. If TRMC throughputs aggregate volumes less than its minimum throughput commitment for any month, TRMC shall pay the Operating Company a shortfall payment. Under the Martinez TSA, TRMC shall pay a monthly storage fee throughout the term of the Martinez TSA to reserve, on a firm basis, all of the existing aggregate shell capacity of certain tanks as specified on a terminal service order. All fees under the Martinez TSA that are to be set forth on service orders will be indexed for inflation.

 

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During the term of the Martinez TSA, TRMC has a right of first refusal on any additional throughput that the Operating Company offers to third parties. Any time after the termination of the Martinez TSA, and provided that the termination was not due to TRMC’s default, TRMC can require the Operating Company to enter into a new terminalling services agreement with TRMC, provided the term of such new agreement shall not extend beyond June 30, 2034. For up to two years after the termination of the Anacortes TSA, and provided that the termination was not due to TRMC’s default, TRMC may exercise a right of first refusal on any terminalling services agreement the Operating Company offers to a third party.

The foregoing description is not complete and is qualified in its entirety by reference to the Martinez TSA, which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Storage Services Agreement - Anacortes

The Operating Company entered into the Storage Services Agreement – Anacortes, with TRMC, the General Partner and the Partnership (the “SSA”) to govern the provision of storage services by the Operating Company to TRMC with respect to crude and black oil storage tanks being contributed as part of the Anacortes Assets. The initial term of the SSA is for ten years. TRMC has the option to extend the term for up to two renewal terms of five years each. Under the SSA, the Operating Company will provide storage and handling services for crude and black oils owned by TRMC and stored in one or more of the Operating Company’s tanks. TRMC shall pay the fees specified in an applicable terminal service order to be executed by the Operating Company and TRMC related to the dedication of such tanks and any ancillary services. All fees under the SSA that are to be set forth on terminal service orders will be indexed for inflation. For up to two years after the termination of the SSA, and provided the termination was not due to TRMC’s default, TRMC may exercise a right of first refusal on any new storage agreement the Operating Company offers to a third party.

The foregoing description is not complete and is qualified in its entirety by reference to the SSA, which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.

First Amendment to Anacortes Ground Lease

The Operating Company entered into an amendment with TRMC of its Ground Lease dated November 15, 2012 related to the Anacortes Rail Facility (the “First Amendment to Anacortes Ground Lease”) to add to the existing lease (the “Existing Anacortes Ground Lease”) the real property associated with the Anacortes Assets, other than the real property under the crude and black oil storage tanks. The First Amendment to Anacortes Ground Lease does not change any of the other material terms of the Existing Anacortes Ground Lease.

The foregoing description is not complete and is qualified in its entirety by reference to the First Amendment to Anacortes Ground Lease, which is filed as Exhibit 10.6 to this Current Report on Form 8-K and incorporated herein by reference.

Additional Anacortes Ground Lease

The Operating Company entered into a new Ground Lease (the “New Anacortes Ground Lease”) with TRMC, on substantially the same terms as the Existing Anacortes Ground Lease, to lease the real property under the crude and black oil storage tanks that are part of the Anacortes Assets for a term of ninety-nine years.

The foregoing description is not complete and is qualified in its entirety by reference to the New Anacortes Ground Lease, which is filed as Exhibit 10.7 to this Current Report on Form 8-K and incorporated herein by reference.

Martinez License Agreement

The Operating Company entered into a License Agreement with TRMC (the “Martinez License Agreement”), to license the real property under the Martinez Assets until such real property can be deeded over to the Operating Company pursuant to the terms of the Martinez Rights Agreement, described below.

The foregoing description is not complete and is qualified in its entirety by reference to the Martinez License Agreement, which is filed as Exhibit 10.8 to this Current Report on Form 8-K and incorporated herein by reference.

 

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Martinez Rights Agreement

The Operating Company entered into the Martinez Rights Agreement with TRMC, the General Partner and the Partnership (the “Martinez Rights Agreement”), pursuant to which TRMC will use its commercially reasonable efforts to obtain an approval to subdivide the real property under the Martinez Assets, and upon receiving such approval, deed such real property over to the Operating Company. The Martinez Rights Agreement further requires that upon such a conveyance, the Operating Company will provide an easement over certain portions of the real property to TRMC for access in connection with TRMC’s continued operation of its adjacent refinery.

The foregoing description is not complete and is qualified in its entirety by reference to the Martinez Rights Agreement, which is filed as Exhibit 10.9 to this Current Report on Form 8-K and incorporated herein by reference.

Third Amended and Restated Omnibus Agreement

Tesoro, TRMC, TAC, Tesoro Companies, Inc. (“TCI”), the General Partner, and the Partnership entered into a Third Amended and Restated Omnibus Agreement (the “Omnibus Agreement”) to amend and restate the Second Amended and Restated Omnibus Agreement dated November 15, 2012, by and among the same parties. The Omnibus Agreement clarifies the reimbursements to be made by the Partnership to Tesoro, and from Tesoro to the Partnership. The Omnibus Agreement incorporates the Assets to its provisions and increases the annual administrative fee to be paid by the Partnership to Tesoro from $5.5 million to $5.7 million. It further adds specific operational indemnities related to the Assets.

So long as Tesoro controls the General Partner, the Omnibus Agreement will remain in full force and effect unless terminated by the parties. If Tesoro ceases to control the General Partner, either Tesoro or the General Partner may terminate the Omnibus Agreement, provided that the indemnification obligations of the parties made under the Omnibus Agreement will remain in full force and effect in accordance with their terms.

The foregoing description is not complete and is qualified in its entirety by reference to the Omnibus Agreement, which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.

Secondment and Logistics Services Agreement

TRMC, TCI, TAC, the General Partner, the Partnership and its direct and indirect subsidiaries entered into a Secondment and Logistics Services Agreement (the “Secondment Agreement”) to govern the provision of seconded employees to or from TRMC, TCI, TAC, the Partnership, and its subsidiaries, as applicable. The Secondment Agreement also governs the use of certain facilities of the parties by the various entities. The services to be provided by such seconded employees, along with the fees for such services, will be provided on the service schedules to be attached to the Secondment Agreement. Specialized services and the use of various facilities, along with the fees for such services, will be provided for in service orders to be executed by parties requesting and receiving the service. All fees to be paid pursuant to the Secondment Agreement are indexed for inflation.

The foregoing description is not complete and is qualified in its entirety by reference to the Secondment Agreement, which is filed as Exhibit 10.11 to this Current Report on Form 8-K and incorporated herein by reference.

Termination of Operational Service Agreement

In connection with the entry into the Secondment Agreement, the Partnership and certain of its subsidiaries entered into a Termination Agreement (the “Termination Agreement”) with TRMC, TCI and TAC to terminate the Amended and Restated Operational Services Agreement dated April 1, 2012, by and among the same parties.

The foregoing description is not complete and is qualified in its entirety by reference to the Termination Agreement, which is filed as Exhibit 10.12 to this Current Report on Form 8-K and incorporated herein by reference.

Martinez Rescission Rights

The Contribution Agreement provides that the Operating Company has the option, but not the obligation, to rescind the contribution contemplated with respect to the Martinez Assets if TRMC does not receive approval to subdivide the real property under the Martinez assets by the fifth anniversary of the closing date, or if TRMC is required to agree to commercially unreasonable conditions at any time as a condition of receiving such approval.

 

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If the contribution of the Martinez Assets is rescinded, the cash consideration previously paid for such assets will be reimbursed, (i) less the share of the amount that is attributable to the term before the rescission, amortized on a ten year straight-line basis calculated from the date of the closing of the Contribution Agreement through the date of the occurrence of the rescission and (ii) less any amounts received by the Operating Company from any person or entity as a result of casualty or condemnation of the applicable asset. In the event of a rescission, any commercial agreements entered into between TRMC and the Operating Company with respect to Martinez Assets shall be terminated.

Relationships

Each of the Partnership, the General Partner, TRMC, TAC, TCI and the Operating Company is a direct or indirect subsidiary of Tesoro. As a result, certain individuals, including officers and directors of Tesoro and the General Partner, serve as officers and/or directors of more than one of such other entities. After the acquisition, the General Partner, as the general partner of the Partnership, holds 1,119,138 general partner units of the Partnership, which represents a 2% general partner interest, and 3,921,777 common units of the Partnership, which represents slightly more than a 7% limited partner interest in the Partnership. Tesoro, together with TRMC, TAC and the General Partner, holds 19,481,557 common units of the Partnership, which represent an approximate 35% limited partner interest, in addition to the 2% general partner interest in the Partnership discussed above.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

Contribution, Conveyance and Assumption Agreement

The parties to the Contribution Agreement consummated the first stage of the transactions contemplated thereby on July 1, 2014. Pursuant to the Contribution Agreement:

 

    the General Partner acquired the Nikiski Assets, the Anacortes Assets and the Martinez Assets from TRMC and TAC in exchange for additional membership interests in the General Partner;

 

    the Partnership acquired the Nikiski Assets, the Anacortes Assets and the Martinez Assets from the General Partner in exchange for $241.4 million, comprised of $214.4 million in cash partly financed with borrowings under the Partnership’s revolving credit facility and the issuance of equity with a combined fair value of $27.0 million; the equity is comprised of 8,856 general partner units to restore and maintain the General Partner’s 2% general partner interest in the Partnership and 370,843 common units; and

 

    the Operating Company acquired the Nikiski Assets, the Anacortes Assets and the Martinez Assets from the Partnership as a contribution to capital.

The foregoing description is not complete and is qualified in its entirety by reference to the Contribution Agreement, which is incorporated by reference as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

The description in Item 2.01 above of the issuance of common units by the Partnership on July 1, 2014, in connection with the consummation of the transactions contemplated by the Contribution Agreement is incorporated in this Item 3.02 by reference. The foregoing transactions were undertaken in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended the (“Securities Act”) afforded by Section 4(2) thereof. The Partnership believes that exemptions other than the foregoing exemption may exist for these transactions.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Second Amended and Restated Limited Liability Company Agreement of Tesoro Logistics GP, LLC

Effective July 1, 2014, Tesoro, TAC, TRMC and the General Partner entered into the Second Amended and Restated Liability Company Agreement of Tesoro Logistics GP, LLC (the “GP LLC Agreement”). The GP LLC Agreement restates the prior agreement to add TAC as a member due to its contribution of the Nikiski Assets and adjusts the membership interests of the owners of the General Partner to reflect the transactions contemplated by the Contribution Agreement.

The foregoing description is not complete and is qualified in its entirety by reference to the GP LLC Agreement, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

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Item 7.01 Regulation FD Disclosure

On July 1, 2014, the Partnership issued a press release announcing the acquisition of the Nikiski Assets, the Anacortes Assets and the Martinez Assets. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

The information above is being furnished, not filed, pursuant to Item 7.01 of Form 8-K. Accordingly, the information in Item 7.01 of this Current Report, including Exhibit 99.1, will not be subject to liability under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any registration statement or other document filed by the Partnership under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

  2.1    Contribution, Conveyance and Assumption Agreement, dated as of June 23, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, Tesoro Logistics Operations LLC and Tesoro Logistics Pipelines LLC (incorporated by reference herein from Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed on June 23, 2014).
  3.1    Second Amended and Restated Limited Liability Company Agreement of Tesoro Logistics GP, LLC, dated as of July 1, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, and Tesoro Logistics GP, LLC.
10.1    Terminalling Services Agreement – Nikiski, dated as of July 1, 2014, among Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, and Tesoro Logistics Operations LLC.
10.2    Terminalling Services Agreement – Anacortes, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.3    Amendment No. 1 to Anacortes Track Use and Throughput Agreement, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.4    Terminalling Services Agreement – Martinez, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, and Tesoro Logistics Operations LLC.
10.5    Storage Services Agreement - Anacortes, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.6    First Amendment to Ground Lease, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.7    Ground Lease dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.

 

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10.8    Martinez License Agreement, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.9    Martinez Rights Agreement, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.10    Third Amended and Restated Omnibus Agreement, dated as of July 1, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLC.
10.11    Secondment and Logistics Services Agreement, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics Operations, LLC, Tesoro Logistics Pipelines LLC, Tesoro High Plains Pipeline Company LLC, Tesoro Logistics Northwest Pipeline LLC and Tesoro Alaska Pipeline Company LLC.
10.12    Termination Agreement, dated as of July 1, 2014, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics Operations, LLC and Tesoro High Plains Pipeline Company LLC.
99.1    Press release of the Partnership issued on July 1, 2014.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 1, 2014

 

TESORO LOGISTICS LP
By:   Tesoro Logistics GP, LLC
  its General Partner
By:  

/s/ G. SCOTT SPENDLOVE

  G. Scott Spendlove
  Vice President and Chief Financial Officer

 

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Index to Exhibits

 

  2.1    Contribution, Conveyance and Assumption Agreement, dated as of June 23, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, Tesoro Logistics Operations LLC and Tesoro Logistics Pipelines LLC (incorporated by reference herein from Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed on June 23, 2014).
  3.1    Second Amended and Restated Limited Liability Company Agreement of Tesoro Logistics GP, LLC, dated as of July 1, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, and Tesoro Logistics GP, LLC.
10.1    Terminalling Services Agreement – Nikiski, dated as of July 1, 2014, among Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, and Tesoro Logistics Operations LLC.
10.2    Terminalling Services Agreement – Anacortes, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.3    Amendment No. 1 to Anacortes Track Use and Throughput Agreement, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.4    Terminalling Services Agreement – Martinez, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP, and Tesoro Logistics Operations LLC.
10.5    Storage Services Agreement - Anacortes, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.6    First Amendment to Ground Lease, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.7    Ground Lease dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.8    Martinez License Agreement, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC and Tesoro Logistics Operations LLC.
10.9    Martinez Rights Agreement, dated as of July 1, 2014, between Tesoro Refining & Marketing Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tesoro Logistics Operations LLC.
10.10    Third Amended and Restated Omnibus Agreement, dated as of July 1, 2014, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLC.

 

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10.11    Secondment and Logistics Services Agreement, dated as of July 1, 2014, among Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics Operations, LLC, Tesoro Logistics Pipelines LLC, Tesoro High Plains Pipeline Company LLC, Tesoro Logistics Northwest Pipeline LLC and Tesoro Alaska Pipeline Company LLC.
10.12    Termination Agreement, dated as of July 1, 2014, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics GP, LLC, Tesoro Logistics Operations, LLC and Tesoro High Plains Pipeline Company LLC.
99.1    Press release of the Partnership issued on July 1, 2014.

 

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Exhibit 3.1

 

 

 

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

TESORO LOGISTICS GP, LLC

A Delaware Limited Liability Company

Dated as of

July 1, 2014

 

 

 


TABLE OF CONTENTS

 

          Page  
ARTICLE I   
DEFINITIONS   
Section 1.1    Definitions      2   
Section 1.2    Construction      6   
ARTICLE II   
ORGANIZATION   
Section 2.1    Formation      6   
Section 2.2    Name      7   
Section 2.3    Registered Office, Registered Agent, Principal Office, Other Offices      7   
Section 2.4    Purposes      7   
Section 2.5    Term      7   
Section 2.6    No State Law Partnership      7   
Section 2.7    Certain Undertakings Relating to Separateness      7   
ARTICLE III   
MEMBERSHIP   
Section 3.1    Membership Interests; Additional Members      9   
Section 3.2    Access to Information      9   
Section 3.3    Liability      10   
Section 3.4    Withdrawal      10   
Section 3.5    Meetings      10   
Section 3.6    Action by Consent of Members      10   
Section 3.7    Conference Telephone Meetings      10   
Section 3.8    Quorum      10   
ARTICLE IV   
ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS   
Section 4.1    Assignment; Admission of Assignee as a Member      11   
Section 4.2    Requirements Applicable to All Dispositions and Admissions      11   

 

i


TABLE OF CONTENTS

(continued)

Page

 

ARTICLE V

  

CAPITAL CONTRIBUTIONS

  

Section 5.1

   Capital Contributions      11   

Section 5.2

   Loans      11   

Section 5.3

   Return of Contributions      12   

ARTICLE VI

  

DISTRIBUTIONS AND ALLOCATIONS

  

Section 6.1

   Distributions      12   

Section 6.2

   Allocations of Profits and Losses      12   

Section 6.3

   Limitations on Distributions      12   

ARTICLE VII

  

MANAGEMENT

  

Section 7.1

   Management by Board of Directors      12   

Section 7.2

   Number; Qualification; Tenure      13   

Section 7.3

   Regular Meetings      13   

Section 7.4

   Special Meetings      13   

Section 7.5

   Notice      13   

Section 7.6

   Action by Consent of Board      14   

Section 7.7

   Conference Telephone Meetings      14   

Section 7.8

   Quorum and Action      14   

Section 7.9

   Vacancies; Increases in the Number of Directors      14   

Section 7.10

   Committees      14   

Section 7.11

   Removal      15   

Section 7.12

   Compensation of Directors      15   

Section 7.13

   Partnership Change of Control      16   

ARTICLE VIII

  

OFFICERS

  

Section 8.1

   Officers      16   

Section 8.2

   Election and Term of Office      16   

Section 8.3

   Chairman of the Board      17   

 

ii


TABLE OF CONTENTS

(continued)

Page

 

Section 8.4

   Chief Executive Officer      17   

Section 8.5

   President      17   

Section 8.6

   Vice Presidents      17   

Section 8.7

   Chief Financial Officer      17   

Section 8.8

   General Counsel      18   

Section 8.9

   Secretary      18   

Section 8.10

   Removal      18   

Section 8.11

   Vacancies      18   

ARTICLE IX

  

INDEMNITY AND LIMITATION OF LIABILITY

  

Section 9.1

   Indemnification      19   

Section 9.2

   Liability of Indemnitees      20   

ARTICLE X

  

TAXES

  

Section 10.1

   Taxes      21   

ARTICLE XI

  

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

  

Section 11.1

   Maintenance of Books      22   

Section 11.2

   Reports      22   

Section 11.3

   Bank Accounts      22   

ARTICLE XII

  

DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION

  

Section 12.1

   Dissolution      22   

Section 12.2

   Winding-Up and Termination      23   

Section 12.3

   Deficit Capital Accounts      23   

Section 12.4

   Certificate of Cancellation      24   

ARTICLE XIII

  

MERGER, CONSOLIDATION OR CONVERSION

  

Section 13.1

   Authority      24   

Section 13.2

   Procedure for Merger, Consolidation or Conversion      24   

 

iii


TABLE OF CONTENTS

(continued)

Page

 

Section 13.3

   Approval by Members of Merger, Consolidation or Conversion      25   

Section 13.4

   Certificate of Merger, Consolidation or Conversion      26   

ARTICLE XIV

  

GENERAL PROVISIONS

  

Section 14.1

   Offset      26   

Section 14.2

   Notices      26   

Section 14.3

   Entire Agreement; Superseding Effect      27   

Section 14.4

   Effect of Waiver or Consent      27   

Section 14.5

   Amendment or Restatement      27   

Section 14.6

   Binding Effect      27   

Section 14.7

   Governing Law; Severability      27   

Section 14.8

   Venue      28   

Section 14.9

   Further Assurances      28   

Section 14.10

   Waiver of Certain Rights      28   

Section 14.11

   Counterparts      28   

 

iv


SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

TESORO LOGISTICS GP, LLC

This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “ Agreement ”) of Tesoro Logistics GP, LLC (the “ Company ”), dated as of July 1, 2014, is adopted, executed and agreed to by and among the Persons listed on Exhibit A attached hereto as Members of the Company and any additional Persons who become Members of the Company in accordance with the provisions of this Agreement.

RECITALS :

WHEREAS , the Company was formed as a Delaware limited liability company on December 3, 2010;

WHEREAS , Tesoro Corporation, a Delaware corporation (“ Tesoro ”), as the sole member of the Company, executed the Limited Liability Company Agreement of Tesoro Logistics GP, LLC, dated to be effective as of December 3, 2010 (as amended by Amendment No. 1 thereto, dated to be effective as of December 29, 2010, the “ Original Limited Liability Company Agreement ”);

WHEREAS , Tesoro amended and restated the Original Limited Liability Company Agreement, dated to be effective as of April 25, 2011 (as amended from time to time, the “ Amended and Restated Limited Liability Company Agreement ”);

WHEREAS , Tesoro and Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ TRMC ”) executed that certain Joinder and Amendment Agreement to the Amended and Restated Limited Liability Company Agreement, dated April 1, 2012, whereby TRMC became a Member of the Company; and

WHEREAS , Tesoro, TRMC and Tesoro Alaska Company LLC, a Delaware limited liability company (“ TAC ”), entered into that certain Contribution, Conveyance and Assumption Agreement dated as of the date hereof pursuant to which Tesoro, TRMC and TAC made certain capital contributions to the Company.


NOW THEREFORE, for and in consideration of the premises, the covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Members hereby amend and restate the Amended and Restated Limited Liability Company Agreement in its entirety as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions .

(a) As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred to below:

Act ” means the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq .), as it may be amended from time to time. All references in this Agreement to provisions of the Act shall be deemed to refer, if applicable, to their successor statutory provisions to the extent appropriate in light of the context herein in which such references are used.

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; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

Agreement ” is defined in the introductory paragraph, as the same may be amended, modified, supplemented or restated from time to time.

Amended and Restated Limited Liability Company Agreement ” is defined in the Recitals.

Applicable Law ” means (a) any United States federal, state or local law, statute or ordinance or any rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental Authority and (b) any rule or listing requirement of any national securities exchange or trading market recognized by the Commission on which securities issued by the Partnership are listed or quoted.

Assignee ” means any Person that acquires a Member’s share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company or any portion thereof through a Disposition; provided, however, that an Assignee shall have no right to be admitted to the Company as a Member except in accordance with Article IV . The Assignee of a dissolved Member shall be the shareholder, partner, member or other equity owner or owners of the dissolved Member or such other Persons to whom such Member’s Membership Interest is assigned by the Person conducting the liquidation or winding up of such Member.

Audit Committee ” is defined in Section 7.10(b) .

Audit Committee Independent Director ” is defined in Section 7.10(b) .

Bankruptcy ” or “ Bankrupt ” means, with respect to any Person, that (a) such Person (i) makes a general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state

 

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bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Applicable Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i)  through (iv)  of this clause (a) ; or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties or (b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Applicable Law has been commenced against such Person and 120 days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and 90 days have expired without the appointment having been vacated or stayed, or 90 days have expired after the date of expiration of a stay, if the appointment has not previously been vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supercede and replace the definition of “Bankruptcy” set forth in the Act.

Board ” is defined in Section 7.1(c) .

Business Day ” means (a) any day on which the national securities exchange upon which securities of the Partnership are listed is open for trading or (b) in the event that no Partnership securities are listed on a national securities exchange, any day on which the New York Stock Exchange is open for trading.

Capital Contribution ” means, with respect to any Member, the amount of money and the net agreed value of any property (other than money) contributed to the Company by such Member. Any reference in this Agreement to the Capital Contribution of a Member shall include any Capital Contribution of its predecessors in interest.

Commission ” means the United States Securities and Exchange Commission.

Common Units ” is defined in the Partnership Agreement.

Company ” is defined in the introductory paragraph.

Conflicts Committee ” is defined in the Partnership Agreement.

Conflicts Committee Independent Director ” means a Director who meets the independence standards set forth in the definition of “Conflicts Committee” in the Partnership Agreement.

Delaware Certificate ” is defined in Section 2.1 .

Director ” or “ Directors ” means a member or members of the Board.

Dispose ,” “ Disposing ” or “ Disposition ” means with respect to any asset (including a Membership Interest or any portion thereof), a sale, assignment, transfer, conveyance, gift, exchange or other disposition of such asset, whether such disposition be voluntary, involuntary or by operation of Applicable Law.

 

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Disposing Member ” is defined in Section 4.1 .

Dissolution Event ” is defined in Section 12.1(a) .

Governmental Authority ” or “ Governmental ” means any federal, state or local court or governmental or regulatory agency or authority or any arbitration board, tribunal or mediator having jurisdiction over the Company or its assets or Members.

Group Member ” is defined in the Partnership Agreement.

Indemnitee ” means any of (a) the Members, (b) any Person who is or was an Affiliate of the Company (other than any Group Member), (c) any Person who is or was a member, partner, director, officer, fiduciary or trustee of the Company or any Affiliate of the Company (other than any Group Member), (d) any Person who is or was serving at the request of the Company or any Affiliate of the Company as an officer, director, member, manager, partner, fiduciary or trustee of another Person; provided, however, that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, and (e) any Person the Board designates as an “Indemnitee” for purposes of this Agreement.

Limited Partner ” and “ Limited Partners ” are defined in the Partnership Agreement.

Majority Interest ” means Membership Interests in the Company entitled to more than 50% of the Sharing Ratios.

Member ” means the Persons listed on Exhibit A attached hereto, and includes any Person hereafter admitted to the Company as a member as provided in this Agreement, each in its capacity as a member of the Company, but such term does not include any Person who has ceased to be a member of the Company.

Membership Interest ” means, with respect to any Member, that Member’s limited liability company interests in the Company, including its share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company.

Merger Agreement ” is defined in Section 13.1 .

“Notices” is defined in Section 14.2 .

Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, dated as of the date hereof, by and among Tesoro, TRMC, TCI, TAC, the Partnership, and the Company, as it may be further amended and restated, or any successor agreement.

Original Limited Liability Company Agreement ” is defined in the Recitals.

Partnership ” means Tesoro Logistics LP, a Delaware limited partnership.

 

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Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of the Partnership, to be dated as of April 26, 2011, as it may be further amended and restated, or any successor agreement.

Partnership Group ” means the Partnership and its Subsidiaries treated as a single consolidated entity.

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

Plan of Conversion ” is defined in Section 13.1 .

Secondment Agreement ” means that certain Secondment and Logistics Services Agreement, dated as of the date hereof, by and among TCI, TRMC, TAC, the Company, Tesoro Logistics Operations LLC, a Delaware limited liability company, Tesoro Logistics Pipelines LLC, a Delaware limited liability company, Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company, Tesoro Logistics Northwest Pipeline LLC, a Delaware limited liability company, and Tesoro Alaska Pipeline LLC, a Delaware limited liability company, as it may be further amended and restated, or any successor agreement.

Sharing Ratio ” means, subject in each case to adjustments in accordance with this Agreement or in connection with Dispositions of Membership Interests, (a) in the case of a Member executing this Agreement as of the date of this Agreement or a Person acquiring such Member’s Membership Interest, the percentage specified for that Member as its Sharing Ratio on Exhibit A and (b) in the case of Membership Interests issued pursuant to Section 3.1 , the Sharing Ratio established pursuant thereto; provided, however, that the total of all Sharing Ratios shall always equal 100%.

Special Approval ” is defined in the Partnership Agreement.

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 or other governing body of such Person.

Surviving Business Entity ” is defined in Section 13.1 .

 

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TAC ” is defined in the Recitals.

Tax Matters Member ” is defined in Section 10.1(a) .

TCI ” means Tesoro Companies, Inc., a Delaware corporation.

Tesoro ” is defined in Recitals.

Tesoro Entities ” means Tesoro and its Affiliates (other than the Company and the Partnership Group).

Treasury Regulations ” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Internal Revenue Code of 1986, as amended from time to time. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

TRMC ” is defined in the Recitals.

Withdraw ,” “ Withdrawing ” or “ Withdrawal ” means the resignation of a Member from the Company as a Member. Such terms shall not include any Dispositions of Membership Interests (which are governed by Article IV), even though the Member making a Disposition may cease to be a Member as a result of such Disposition.

(b) Other terms defined herein have the meanings so given them.

Section 1.2 Construction .

Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms “include,” “includes,” “including” or words of like import shall be deemed to be followed by the words “without limitation”; and (d) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

ORGANIZATION

Section 2.1 Formation .

The Company was formed as a Delaware limited liability company by the filing of a Certificate of Formation (the “ Delaware Certificate ”) on December 3, 2010 with the Secretary of State of the State of Delaware under and pursuant to the Act and by the entering into of the Original Limited Liability Company Agreement.

 

6


Section 2.2 Name .

The name of the Company is “Tesoro Logistics GP, LLC” and all Company business must be conducted in that name or such other names that comply with Applicable Law as the Board or the Members may select.

Section 2.3 Registered Office, Registered Agent, Principal Office, Other Offices .

The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial registered agent for service of process named in the Delaware Certificate or such other office (which need not be a place of business of the Company) as the Board may designate in the manner provided by Applicable Law. The registered agent for service of process of the Company in the State of Delaware shall be the initial registered agent for service of process named in the Delaware Certificate or such other Person or Persons as the Board may designate in the manner provided by Applicable Law. The principal office of the Company in the United States shall be at such a place as the Board may from time to time designate, which need not be in the State of Delaware, and the Company shall maintain records there. The Company may have such other offices as the Board of Directors may designate.

Section 2.4 Purposes .

The purpose of the Company is to own, acquire, hold, sell, transfer, assign, dispose of or otherwise deal with partnership interests in, and act as the general partner of, the Partnership as described in the Partnership Agreement and to engage in any lawful business or activity ancillary or related thereto. The Company shall possess and may exercise all the powers and privileges granted by the Act, by any other law or by this Agreement, together with any powers incidental thereto, including such powers and privileges as are necessary or appropriate to the conduct, promotion or attainment of the business, purposes or activities of the Company.

Section 2.5 Term .

The period of existence of the Company commenced on December 3, 2010 and shall end at such time as a certificate of cancellation is filed with the Secretary of State of the State of Delaware in accordance with Section 12.4 .

Section 2.6 No State Law Partnership .

The Members intend that the Company shall not be a partnership (whether general, limited or other) or joint venture, and that no Member shall be a partner or joint venturer with any other Member, for any purposes other than (if the Company has more than one Member) federal and state income tax purposes, and this Agreement may not be construed or interpreted to the contrary.

Section 2.7 Certain Undertakings Relating to Separateness .

(a) Separateness Generally . The Company shall, and shall cause the members of the Partnership Group to, conduct their respective businesses and operations separate and apart from those of any other Person (including the Tesoro Entities), except as provided in this Section 2.7 .

 

7


(b) Separate Records . The Company shall, and shall cause the Partnership to, (i) maintain their respective books and records and their respective accounts separate from those of any other Person, (ii) maintain their respective financial records, which will be used by them in their ordinary course of business, showing their respective assets and liabilities separate and apart from those of any other Person, except their consolidated Subsidiaries, and (iii) file their respective own tax returns separate from those of any other Person, except (A) to the extent that the Partnership or the Company (1) is treated as a “disregarded entity” for tax purposes or (2) is not otherwise required to file tax returns under Applicable Law or (B) as may otherwise be required by Applicable Law.

(c) Separate Assets . The Company shall not, and shall cause the Partnership to not, commingle or pool its funds or other assets with those of any other Person, except its consolidated Subsidiaries, and shall maintain its assets in a manner in which it is not costly or difficult to segregate, ascertain or otherwise identify its assets as separate from those of any other Person.

(d) Separate Name . The Company shall, and shall cause the members of the Partnership Group to, (i) conduct their respective businesses in their respective own names or in the names of their respective Subsidiaries or the Partnership, (ii) use their or the Partnership’s separate stationery, invoices, and checks, (iii) correct any known misunderstanding regarding their respective separate identities as members of the Partnership Group from that of any other Person (including the Tesoro Entities), and (iv) generally hold themselves and the Partnership Group out as entities separate from any other Person (including the Tesoro Entities).

(e) Separate Credit . The Company shall not (i) pay its own liabilities from a source other than its own funds, (ii) guarantee or become obligated for the debts of any other Person, except its Subsidiaries and the Partnership, (iii) hold out its credit as being available to satisfy the obligations of any other Person, except its Subsidiaries or the Partnership, (iv) acquire obligations or debt securities of its Affiliates (other than the Company or its Subsidiaries or the Partnership), or (v) pledge its assets for the benefit of any Person or make loans or advances to any Person, except its Subsidiaries or the Partnership; provided, however, that the Company may engage in any transaction described in clauses (ii)  through (v)  of this Section 2.7(e) if prior Special Approval has been obtained for such transaction and either (A) the Conflicts Committee has determined, or has obtained reasonable written assurance from a nationally recognized firm of independent public accountants or a nationally recognized investment banking or valuation firm, that the borrower or recipient of the credit extension is not then insolvent and will not be rendered insolvent as a result of such transaction or (B) in the case of transactions described in clause (iv) , such transaction is completed through a public auction or a national securities exchange.

(f) Separate Formalities . The Company shall, and shall cause the Partnership to, (i) observe all limited liability company or limited partnership formalities, as the case may be, and other formalities required by its organizational documents, the laws of the jurisdiction of its formation and other Applicable Laws, (ii) engage in transactions with any of the Tesoro Entities

 

8


or their respective members, shareholders or partners, as applicable, in conformity with the requirements of Section 7.9(c) of the Partnership Agreement and (iii) subject to the terms of the Omnibus Agreement and the Secondment Agreement, promptly pay, from its own funds, and on a current basis, its allocable share of general and administrative services and costs for services performed, and capital expenditures made, by any of the Tesoro Entities or their respective members, shareholders or partners, as applicable. Each material contract between the Company or the Partnership, on the one hand, and any of the Tesoro Entities or their respective members, shareholders or partners, as applicable, on the other hand, shall be in writing.

(g) No Effect . Failure by the Company to comply with any of the obligations set forth above shall not affect the status of the Company as a separate legal entity, with its separate assets and separate liabilities, or restrict or limit the Company from engaging or contracting with the Tesoro Entities for the provision of services or the purchase or sale of products, whether under the Omnibus Agreement, Secondment Agreement or otherwise.

ARTICLE III

MEMBERSHIP

Section 3.1 Membership Interests; Additional Members .

The Members of the Company are reflected on Exhibit A attached hereto. Additional Persons may be admitted to the Company as Members, and Membership Interests may be issued, on such terms and conditions as the existing Members, voting as a single class, may determine at the time of admission. The terms of admission or issuance must specify the Sharing Ratios applicable thereto and may provide for the creation of different classes or groups of Members or Membership Interests having different (including senior) rights, powers and duties. The Members may reflect the creation of any new class or group in an amendment to this Agreement, indicating the different rights, powers and duties, and such an amendment shall be approved and executed by the Members in accordance with the terms of this Agreement. Any such admission shall be effective only after such new Member has executed and delivered to the Members and the Company an instrument containing the notice address of the new Member, the new Member’s ratification of this Agreement and agreement to be bound by it.

Section 3.2 Access to Information .

Each Member shall be entitled to receive any information that it may request concerning the Company; provided, however , that this Section 3.2 shall not obligate the Company to create any information that does not already exist at the time of such request (other than to convert existing information from one medium to another, such as providing a printout of information that is stored in a computer database). Each Member shall also have the right, upon reasonable notice, and at all reasonable times during usual business hours to inspect the properties of the Company and to audit, examine and make copies of the books of account and other records of the Company. Such right may be exercised through any agent or employee of such Member designated in writing by it or by an independent public accountant, engineer, attorney or other consultant so designated. All costs and expenses incurred in any inspection, examination or audit made on such Member’s behalf shall be borne by such Member.

 

9


Section 3.3 Liability .

(a) Except as otherwise provided by the Act, no Member shall be liable for the debts, obligations or liabilities of the Company solely by reason of being a member of the Company.

(b) The Company and the Members agree that the rights, duties and obligations of the Members in their capacities as members of the Company are only as set forth in this Agreement and as otherwise arise under the Act. Furthermore, the Members agree that, to the fullest extent permitted by Applicable Law, the existence of any rights of a Member, or the exercise or forbearance from exercise of any such rights, shall not create any duties or obligations of the Member in its capacity as a member of the Company, nor shall such rights be construed to enlarge or otherwise to alter in any manner the duties and obligations of such Member.

Section 3.4 Withdrawal .

A Member does not have the right or power to Withdraw.

Section 3.5 Meetings .

A meeting of the Members may be called at any time at the request of any Member.

Section 3.6 Action by Consent of Members .

Except as otherwise required by Applicable Law or otherwise provided in this Agreement, all decisions of the Members shall require the affirmative vote of the Members owning a majority of Sharing Ratios present at a meeting at which a quorum is present in accordance with Section 3.8 . To the extent permitted by Applicable Law, the Members may act without a meeting and without notice so long as the number of Members who own the percentage of Sharing Ratios that would be required to take such action at a duly held meeting shall have executed a written consent with respect to any such action taken in lieu of a meeting.

Section 3.7 Conference Telephone Meetings .

Any Member may participate in a meeting of the Members by means of conference telephone or similar communications equipment or by such other means by which all Persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 3.8 Quorum .

The Members owning a majority of Sharing Ratios, present in person or participating in accordance with Section 3.7 , shall constitute a quorum for the transaction of business; provided , however , that, if at any meeting of the Members there shall be less than a quorum present, a majority of the Members present may adjourn the meeting from time to time without further notice. The Members present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum.

 

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ARTICLE IV

ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS

Section 4.1 Assignment; Admission of Assignee as a Member .

Subject to this Article IV , a Member may assign in whole or in part its Membership Interests. An Assignee has the right to be admitted to the Company as a Member, with the Membership Interests (and attendant Sharing Ratio) so transferred to such Assignee, only if (a) the Member making the Disposition (a “ Disposing Member ”) has granted the Assignee either (i) all, but not less than all, of such Disposing Member’s Membership Interests or (ii) the express right to be so admitted and (b) such Disposition is effected in strict compliance with this Article IV . If a Member transfers all of its Membership Interest in the Company pursuant to this Article IV , such admission shall be deemed effective immediately upon the transfer and, immediately upon such admission, the transferor Member shall cease to be a member of the Company.

Section 4.2 Requirements Applicable to All Dispositions and Admissions .

Any Disposition of Membership Interests and any admission of an Assignee as a Member shall also be subject to the following requirements, and such Disposition (and admission, if applicable) shall not be effective unless such requirements are complied with:

(a) Payment of Expenses . The Disposing Member and its Assignee shall pay, or reimburse the Company for, all reasonable costs and expenses incurred by the Company in connection with the Disposition and admission of the Assignee as a Member.

(b) No Release . No Disposition of Membership Interests shall effect a release of the Disposing Member from any liabilities to the Company or the other Members arising from events occurring prior to the Disposition, except as otherwise may be provided in any instrument or agreement pursuant to which a Disposition of Membership Interests is effected.

(c) Agreement to be Bound . The Assignee shall execute a counterpart to this Agreement or other instrument by which such Assignee agrees to be bound by this Agreement.

ARTICLE V

CAPITAL CONTRIBUTIONS

Section 5.1 Capital Contributions .

The Capital Contributions of the Members are as set forth next to their respective names on Exhibit A attached hereto.

Section 5.2 Loans .

If the Company does not have sufficient cash to pay its obligations, any Member(s) that may agree to do so may advance all or part of the needed funds to or on behalf of the Company.

 

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Any advance described in this Section 5.2 will constitute a loan from the Member to the Company, will bear interest at a lawful rate determined by the Members from the date of the advance until the date of payment and will not be a Capital Contribution.

Section 5.3 Return of Contributions .

Except as expressly provided herein, no Member is entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions. An unreturned Capital Contribution is not a liability of the Company or of any Member. A Member is not required to contribute or to lend any cash or property to the Company to enable the Company to return any Member’s Capital Contributions.

ARTICLE VI

DISTRIBUTIONS AND ALLOCATIONS

Section 6.1 Distributions .

Distributions to the Members shall be made only to all Members simultaneously in proportion to their respective Sharing Ratios (at the time the amounts of such distributions are determined) and in such aggregate amounts and at such times as shall be determined by the Board; provided, however, that any loans from Members pursuant to Section 5.2 shall be repaid prior to any distributions to Members pursuant to this Section 6.1 .

Section 6.2 Allocations of Profits and Losses .

The Company’s profits and losses shall be allocated to the Members in proportion to their respective Sharing Ratios.

Section 6.3 Limitations on Distributions .

Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate the Act or other Applicable Law.

ARTICLE VII

MANAGEMENT

Section 7.1 Management by Board of Directors .

(a) The management of the Company is fully reserved to the Members, and the Company shall not have “managers” as that term is used in the Act. The powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Members, who, except as expressly provided otherwise in this Agreement, shall make all decisions and take all actions for the Company.

 

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(b) The Members shall have the power and authority to delegate to one or more other persons the Members’ rights and power to manage and control the business and affairs, or any portion thereof, of the Company, including to delegate to agents, officers and employees of a Member or the Company, and to delegate by a management agreement with or otherwise to other Persons.

(c) The Members hereby delegate to the Board of Directors of the Company (the “ Board ”), to the fullest extent permitted under this Agreement and Delaware law and subject to Section 7.1(d) , all power and authority related to the Company’s management and control of the business and affairs of the Partnership.

(d) Notwithstanding anything herein to the contrary, without obtaining approval of Members representing a Majority Interest, the Company shall not, and shall not take any action to cause the Partnership to, (i) sell all or substantially all of the assets of the Company or the Partnership, (ii) merge or consolidate, (iii) to the fullest extent permitted by Applicable Law, dissolve or liquidate, (iv) make or consent to a general assignment for the benefit of its respective creditors; (v) file or consent to the filing of any bankruptcy, insolvency or reorganization petition for relief under the United States Bankruptcy Code naming the Company or the Partnership, as applicable, or otherwise seek, with respect to the Company or the Partnership, such relief from debtors or protection from creditors generally; or (vi) take various actions similar to those described in any of clauses (i)  through (v)  of this Section 7.1(d) .

Section 7.2 Number; Qualification; Tenure .

(a) The number of Directors constituting the Board shall be at least two and no more than nine, and may be fixed from time to time pursuant to a resolution adopted by Members representing a Majority Interest. A Director need not be a Member. Each Director shall be elected or approved by Members representing a Majority Interest at an annual meeting of the Members and shall serve as a Director of the Company for a term of one year (or their earlier death or removal from office) or until their successors are duly elected and qualified.

(b) The initial Directors of the Company in office at the date of this Agreement are set forth on Exhibit C hereto.

Section 7.3 Regular Meetings .

Regular quarterly and annual meetings of the Board shall be held at such time and place as shall be designated from time to time by resolution of the Board. Notice of such regular quarterly and annual meetings shall not be required.

Section 7.4 Special Meetings .

A special meeting of the Board may be called at any time at the request of (a) the Chairman of the Board or (b) a majority of the Directors then in office.

Section 7.5 Notice .

Written notice of all special meetings of the Board must be given to all Directors at least two Business Days prior to any special meeting of the Board. All notices and other communications to be given to Directors shall be sufficiently given for all purposes hereunder if

 

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in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or when received in the form of an e-mail or facsimile, and shall be directed to the address, email address or facsimile number as such Director shall designate by notice to the Company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice of such meeting, except for amendments to this Agreement, as provided herein. A meeting may be held at any time without notice if all the Directors are present or if those not present waive notice of the meeting either before or after such meeting.

Section 7.6 Action by Consent of Board .

To the extent permitted by Applicable Law, the Board, or any committee of the Board, may act without a meeting so long as a majority of the members of the Board or committee shall have executed a written consent with respect to any action taken in lieu of a meeting.

Section 7.7 Conference Telephone Meetings .

Directors or members of any committee of the Board may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment or by such other means by which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 7.8 Quorum and Action .

A majority of all Directors, present in person or participating in accordance with Section 7.7 , shall constitute a quorum for the transaction of business, but if at any meeting of the Board there shall be less than a quorum present, a majority of the Directors present may adjourn the meeting from time to time without further notice. Except as otherwise required by Applicable Law, all decisions of the Board, or any committee of the Board, shall require the affirmative vote of a majority of all Directors of the Board, or any committee of the Board, respectively. The Directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum.

Section 7.9 Vacancies; Increases in the Number of Directors .

Vacancies and newly created directorships resulting from any increase in the number of Directors shall be filled by the appointment of individuals approved by Members representing a Majority Interest. Any Director so appointed shall hold office until the next annual election and until his successor shall be duly elected and qualified, unless sooner displaced.

Section 7.10 Committees .

(a) The Board may establish committees of the Board and may delegate any of its responsibilities to such committees, except as prohibited by Applicable Law.

 

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(b) The Board shall have an audit committee (the “ Audit Committee ”) comprised of directors who meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder and by the New York Stock Exchange or any national securities exchange on which the Common Units are listed (each, an “ Audit Committee Independent Director ”). The Audit Committee shall establish a written audit committee charter in accordance with the rules and regulations of the Commission and the New York Stock Exchange or any national securities exchange on which the Common Units are listed from time to time, in each case as amended from time to time. Each member of the Audit Committee shall satisfy the rules and regulations of the Commission and the New York Stock Exchange or any national securities exchange on which the Common Units are listed from time to time, in each case as amended from time to time, pertaining to qualification for service on an audit committee.

(c) The Board may, from time to time, establish a Conflicts Committee. The Conflicts Committee shall be composed of one Conflicts Committee Independent Director at any time where there is only one Conflicts Committee Independent Director on the Board and shall be composed of two or more Conflicts Committee Independent Directors if there is more than one Conflicts Committee Independent Director on the Board. The Conflicts Committee shall function in the manner described in the Partnership Agreement. Notwithstanding any duty otherwise existing at law or in equity, any matter approved by the Conflicts Committee in accordance with the provisions, and subject to the limitations, of the Partnership Agreement, shall not be deemed to be a breach of any fiduciary or other duties owed by the Board or any Director to the Company or the Members.

(d) A majority of any committee, present in person or participating in accordance with Section 7.7 , shall constitute a quorum for the transaction of business of such committee.

(e) A majority of any committee may determine its action and fix the time and place of its meetings unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 7.5 . The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.

Section 7.11 Removal .

Any Director or the entire Board may be removed at any time, with or without cause, by Members representing a Majority Interest.

Section 7.12 Compensation of Directors .

Except as expressly provided in any written agreement between the Company and a Director or by resolution of the Board, no Director shall receive any compensation from the Company for services provided to the Company in its capacity as a Director, except that each Director shall be compensated for attendance at Board meetings at rates of compensation as from time to time established by the Board or a committee thereof; provided , however , that Directors who are also employees of the Company or any Affiliate thereof shall receive no compensation for their services as Directors or committee members. In addition, the Directors who are not

 

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employees of the Company or any Affiliate thereof shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in connection with attending meetings of the Board or committees thereof.

Section 7.13 Partnership Change of Control.

The Members shall provide the Company with reasonable advance notice of a Partnership Change of Control (as defined in the Omnibus Agreement) planned or to be consummated by the Members to allow the Conflicts Committee to recommend to the Board whatever actions the Conflicts Committee deems necessary or appropriate to protect the unaffiliated, public Limited Partners of the Partnership.

ARTICLE VIII

OFFICERS

Section 8.1 Officers .

(a) The Board shall elect one or more persons to be officers of the Company to assist in carrying out the Board’s decisions and the day-to-day activities of the Company in its capacity as the general partner of the Partnership. Officers are not “managers” as that term is used in the Act. Any individuals who are elected as officers of the Company shall serve at the pleasure of the Board and shall have such titles and the authority and duties specified in this Agreement or otherwise delegated to each of them, respectively, by the Board from time to time. The salaries or other compensation, if any, of the officers of the Company shall be fixed by the Board.

(b) The officers of the Company may consist of a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents, a Chief Financial Officer, a General Counsel, a Secretary and such other officers as the Board from time to time may deem proper. The Chairman of the Board, if any, shall be chosen from among the Directors. All officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article VIII . The Board may from time to time elect such other officers or appoint such agents as may be necessary or desirable for the conduct of the business of the Company. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in this Agreement or as may be prescribed by the Board, as the case may be from time to time.

Section 8.2 Election and Term of Office .

The names and titles of the officers of the Company in office as of the date of this Agreement are set forth on Exhibit D hereto. Thereafter, the officers of the Company shall be elected from time to time by the Board. Each officer shall hold office until such person’s successor shall have been duly elected and qualified or until such person’s death or until he or she shall resign or be removed pursuant to Section 8.10 .

 

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Section 8.3 Chairman of the Board .

The Chairman of the Board shall preside, if present, at all meetings of the Board and of the Limited Partners of the Partnership and shall perform such additional functions and duties as the Board may prescribe from time to time. The Directors also may elect a Vice Chairman of the Board to act in the place of the Chairman of the Board upon his or her absence or inability to act.

Section 8.4 Chief Executive Officer .

The Chief Executive Officer, who may be the Chairman or Vice Chairman of the Board and/or the President, shall have general and active management authority over the business of the Company and shall see that all orders and resolutions of the Board are carried into effect. The Chief Executive Officer may sign deeds, mortgages, bonds, contracts or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by this Agreement to some other officer or agent of the Company, or shall be required by law to be otherwise signed and executed. The Chief Executive Officer shall also perform all duties and have all powers incident to the office of Chief Executive Officer and perform such other duties and may exercise such other powers as may be assigned by this Agreement or prescribed by the Board from time to time.

Section 8.5 President .

The President shall, subject to the control of the Board and the Chief Executive Officer, in general, supervise and control all of the business and affairs of the Company. The President shall preside at all meetings of the Members. The President may sign any deeds, mortgages, bonds, contracts or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by this Agreement to some other officer or agent of the Company, or shall be required by law to be otherwise signed and executed. The President shall perform all duties and have all powers incident to the office of President and perform such other duties and may exercise such other powers as may be delegated by the Chief Executive Officer or as may be prescribed by the Board from time to time.

Section 8.6 Vice Presidents .

Any Executive Vice President, Senior Vice President and Vice President, in the order of seniority, unless otherwise determined by the Board, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President. They shall also perform the usual and customary duties and have the powers that pertain to such office and generally assist the President by executing contracts and agreements and exercising such other powers and performing such other duties as are delegated to them by the Chief Executive Officer or President or as may be prescribed by the Board from time to time.

Section 8.7 Chief Financial Officer .

The Chief Financial Officer shall perform all duties and have all powers incident to the office of the Chief Financial Officer and in general have overall supervision of the financial operations of the Company. The Chief Financial Officer shall receive and deposit all moneys and other valuables belonging to the Company in the name and to the credit of the Company and

 

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shall disburse the same and only in such manner as the Board or the appropriate officer of the Company may from time to time determine. The Chief Financial Officer shall render to the Board, the Chief Executive Officer and the President, whenever any of them request it, an account of all his or her transactions as Chief Financial Officer and of the financial condition of the Company, and shall perform such other duties and may exercise such other powers as may be delegated by the Chief Executive Officer or President or as may be prescribed by the Board from time to time. The Chief Financial Officer shall have the same power as the President and Chief Executive Officer to execute documents on behalf of the Company.

Section 8.8 General Counsel .

The General Counsel shall be the principal legal officer of the Company. The General Counsel shall have general direction of and supervision over the legal affairs of the Company and shall advise the Board and the officers of the Company on all legal matters. The General Counsel shall perform such other duties and may exercise such other powers as may be delegated by the Chief Executive Officer or President or as may be prescribed by the Board from time to time.

Section 8.9 Secretary .

The Secretary shall keep or cause to be kept, in one or more books provided for that purpose, the minutes of all meetings of the Board, the committees of the Board and the Members and of the Limited Partners. The Secretary shall see that all notices are duly given in accordance with the provisions of this Agreement and as required by Applicable Law; shall be custodian of the records and the seal of the Company (if any) and affix and attest the seal (if any) to all documents to be executed on behalf of the Company under its seal; and shall see that the books, reports, statements, certificates and other documents and records required by Applicable Law to be kept and filed are properly kept and filed; and in general, shall perform all duties and have all powers incident to the office of Secretary and perform such other duties and may exercise such other powers as may be delegated by the Chief Executive Officer or President or as may be prescribed by the Board from time to time.

Section 8.10 Removal .

Any officer elected, or agent appointed, by the Board may be removed, with or without cause, by the affirmative vote of a majority of the Board whenever, in such majority’s judgment, the best interests of the Company would be served thereby. No officer shall have any contractual rights against the Company for compensation by virtue of such election beyond the date of the election of such person’s successor, such person’s death, such person’s resignation or such person’s removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

Section 8.11 Vacancies .

A newly created elected office and a vacancy in any elected office because of death, resignation or removal may be filled by the Board for the unexpired portion of the term at any meeting of the Board.

 

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ARTICLE IX

INDEMNITY AND LIMITATION OF LIABILITY

Section 9.1 Indemnification .

(a) To the fullest extent permitted by Applicable Law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee and acting (or refraining to act) in such capacity on behalf of or for the benefit of the Company; provided, however, that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; provided further, that no indemnification pursuant to this Section 9.1 shall be made available to any of the Company’s Affiliates (other than a Group Member), or to any other Indemnitee, with respect to any such Affiliate’s obligations pursuant to the Transaction Documents. Any indemnification pursuant to this Section 9.1 shall be made only out of the assets of the Company, it being agreed that the Members shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.

(b) To the fullest extent permitted by Applicable Law, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to Section 9.1(a) in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 9.1 , the Indemnitee is not entitled to be indemnified upon receipt by the Company of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately determined that the Indemnitee is not entitled to be indemnified as authorized by this Section 9.1 .

(c) The indemnification provided by this Section 9.1 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, as a matter of law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

 

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(d) The Company may purchase and maintain (or reimburse its Affiliates for the cost of) insurance on behalf of the Indemnitees, the Company and its Affiliates and such other Persons as the Company shall determine, against any liability that may be asserted against or expense that may be incurred by such Person in connection with the Company’s activities or such Person’s activities on behalf of the Company, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement.

(e) For purposes of this Section 9.1 , the Company shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Company also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of Section 9.1 ; and action taken or omitted by it with respect to any employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the best interests of the Company.

(f) In no event may an Indemnitee subject the Members to personal liability by reason of the indemnification provisions set forth in this Agreement.

(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 9.1 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

(h) The provisions of this Section 9.1 are for the benefit of the Indemnitees, their heirs, successors, assigns, executors and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(i) No amendment, modification or repeal of this Section 9.1 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of this Section 9.1 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

(j) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SUBJECT TO SECTION 9.1(a) , THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 9.1 ARE INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSON’S NEGLIGENCE, FAULT OR OTHER CONDUCT.

Section 9.2 Liability of Indemnitees .

(a) Notwithstanding anything to the contrary set forth in this Agreement or the Partnership Agreement, no Indemnitee shall be liable for monetary damages to the Company, the Partnership, the Members or any other Person bound by this Agreement, for losses sustained

 

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or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, with respect to the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was criminal.

(b) Subject to its obligations and duties as set forth in Article VII , the Board and any committee thereof may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through the Company’s officers or agents, and neither the Board nor any committee thereof shall be responsible for any misconduct or negligence on the part of any such officer or agent appointed by the Board or any committee thereof in good faith.

(c) Except as expressly set forth in this Agreement, no Member or any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Company or any other Member and the provisions of this Agreement, to the extent that they restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the Members or any other Indemnitee otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of the Members and such other Indemnitee.

(d) No amendment, modification or repeal of this Section 9.2 or any provision hereof shall in any manner affect the limitations on the liability of any Indemnitee under this Section 9.2 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

ARTICLE X

TAXES

Section 10.1 Taxes .

(a) The Board shall from time to time designate a Member to act as the “tax matters partner” under Section 6231 of the Internal Revenue Code, subject to replacement by the Board (such Member, the “ Tax Matters Member ”). The initial Tax Matters Member will be Tesoro. The Tax Matters Member shall prepare and timely file (on behalf of the Company) all state and local tax returns, if any, required to be filed by the Company. The Company shall bear the costs of the preparation and filing of its returns.

(b) The Company and the Members acknowledge that for federal income tax purposes, the Company will be disregarded as an entity separate from the Members pursuant to Treasury Regulation § 301.7701-3 as long as all of the Membership Interests in the Company are owned by a sole Member.

 

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ARTICLE XI

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

Section 11.1 Maintenance of Books .

(a) The Board shall keep or cause to be kept at the principal office of the Company or at such other location approved by the Board complete and accurate books and records of the Company, supporting documentation of the transactions with respect to the conduct of the Company’s business and minutes of the proceedings of the Board and any other books and records that are required to be maintained by Applicable Law.

(b) The books of account of the Company shall be maintained on the basis of a fiscal year that is the calendar year and on an accrual basis in accordance with United States generally accepted accounting principles, consistently applied.

Section 11.2 Reports .

The Board shall cause to be prepared and delivered to each Member such reports, forecasts, studies, budgets and other information as the Members may reasonably request from time to time.

Section 11.3 Bank Accounts .

Funds of the Company shall be deposited in such banks or other depositories as shall be designated from time to time by the Board. All withdrawals from any such depository shall be made only as authorized by the Board and shall be made only by check, wire transfer, debit memorandum or other written instruction.

ARTICLE XII

DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION

Section 12.1 Dissolution .

(a) The Company shall dissolve and its affairs shall be wound up on the first to occur of the following events (each a “ Dissolution Event ”):

(i) the unanimous consent of the Members;

(ii) entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act; and

(iii) at any time there are no Members of the Company, unless the Company is continued in accordance with the Act or this Agreement.

(b) No other event shall cause a dissolution of the Company.

 

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(c) Upon the occurrence of any event that causes there to be no Members of the Company, to the fullest extent permitted by Applicable Law, the personal representative of the last remaining Member is hereby authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such Member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute Member of the Company, effective as of the occurrence of the event that terminated the continued membership of such Member in the Company.

(d) Notwithstanding any other provision of this Agreement, the Bankruptcy of a Member shall not cause such Member to cease to be a member of the Company and, upon the occurrence of such an event, the Company shall continue without dissolution.

Section 12.2 Winding-Up and Termination .

(a) On the occurrence of a Dissolution Event, the Members shall act as, or alternatively appoint, a liquidator. The liquidator shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The costs of winding up shall be borne as a Company expense. The steps to be accomplished by the liquidator are as follows:

(i) as promptly as possible after dissolution and again after final winding up, the liquidator shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilities, and operations through the last day of the month in which the dissolution occurs or the final winding up is completed, as applicable;

(ii) subject to the Act, the liquidator shall discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in winding up or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent, conditional and unmatured liabilities in such amount and for such term as the liquidator may reasonably determine)); and

(iii) all remaining assets of the Company shall be distributed to the Members in accordance with Section 6.1 .

(b) The distribution of cash or property to a Member in accordance with the provisions of this Section 12.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its Membership Interest and all the Company’s property and constitutes a compromise to which all Members have consented pursuant to Section 18-502(b) of the Act. To the extent that a Member returns funds to the Company, such Member shall have no claim against any other Member for those funds.

Section 12.3 Deficit Capital Accounts .

No Member will be required to pay to the Company, to any other Member or to any third party any deficit balance that may exist from time to time in the Member’s Capital Account.

 

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Section 12.4 Certificate of Cancellation .

On completion of the winding up of the Company as provided herein and under the Act, the Members (or such other Person or Persons as the Act may require or permit) shall file a certificate of cancellation with the Secretary of State of the State of Delaware and take such other actions as may be necessary to terminate the existence of the Company. Upon the filing of such certificate of cancellation, the existence of the Company shall terminate, except as may be otherwise provided by the Act or by Applicable Law.

ARTICLE XIII

MERGER, CONSOLIDATION OR CONVERSION

Section 13.1 Authority .

Subject to compliance with Section 7.1(d) , the Company may merge or consolidate with one or more domestic corporations, limited liability companies, statutory trusts or associations, real estate investment trusts, common law trusts or unincorporated businesses, including a partnership (whether general or limited (including a limited liability partnership)), or convert into any such domestic entity, pursuant to a written agreement of merger or consolidation (“ Merger Agreement ”) or a written plan of conversion (“ Plan of Conversion ”), as the case may be, in accordance with this Article 13 . The surviving entity to any such merger, consolidation or conversion is referred to herein as the “ Surviving Business Entity .”

Section 13.2 Procedure for Merger, Consolidation or Conversion .

(a) The merger, consolidation or conversion of the Company pursuant to this Article 13 requires the prior approval of a majority of the Board and compliance with Section 13.3 .

(b) If the Board shall determine to consent to a merger or consolidation, the Board shall approve the Merger Agreement, which shall set forth:

(i) the names and jurisdictions of formation or organization of each of the business entities proposing to merge or consolidate;

(ii) the name and jurisdiction of formation or organization of the Surviving Business Entity that is to survive the proposed merger or consolidation;

(iii) the terms and conditions of the proposed merger or consolidation;

(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity; and (A) if any general or limited partner interests, securities or rights of any constituent business entity are not to be exchanged or converted solely for, or into, cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity, the cash, property or interests, rights, securities or obligations of any general or limited partnership, corporation,

 

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trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity) which the holders of such general or limited partner interests, securities or rights are to receive in exchange for, or upon conversion of their interests, securities or rights, and (B) in the case of securities represented by certificates, upon the surrender of such certificates, which cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity or any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity), or evidences thereof, are to be delivered;

(v) a statement of any changes in the constituent documents or the adoption of new constituent documents (the articles or certificate of incorporation, articles of trust, declaration of trust, certificate or agreement of limited partnership, certificate of formation, limited liability company agreement or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;

(vi) the effective time of the merger, which may be the date of the filing of the certificate of merger pursuant to Section 13.4 or a later date specified in or determinable in accordance with the Merger Agreement; provided, however, that if the effective time of the merger is to be later than the date of the filing of such certificate of merger, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such certificate of merger and stated therein; and

(vii) such other provisions with respect to the proposed merger or consolidation as are deemed necessary or appropriate by the Board.

(c) If the Board shall determine to consent to a conversion of the Company, the Board shall approve and adopt a Plan of Conversion containing such terms and conditions that the Board of Directors determines to be necessary or appropriate.

Section 13.3 Approval by Members of Merger, Consolidation or Conversion .

(a) The Board, upon its approval of the Merger Agreement or Plan of Conversion, as the case may be, shall direct that the Merger Agreement or the Plan of Conversion, as applicable, be submitted to a vote of the Members, whether at a meeting or by written consent. A copy or a summary of the Merger Agreement or the Plan of Conversion, as applicable, shall be included in or enclosed with the notice of a special meeting or the written consent.

(b) The Merger Agreement or the Plan of Conversion, as applicable, shall be approved upon receiving the affirmative vote or consent of Members representing a Majority Interest.

(c) After such approval by vote or consent of the Members, and at any time prior to the filing of the certificate of merger, consolidation or conversion pursuant to Section 13.4 , the merger, consolidation or conversion may be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or the Plan of Conversion, as the case may be.

 

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Section 13.4 Certificate of Merger, Consolidation or Conversion .

(a) Upon the required approval by the Board and the Members of a Merger Agreement or a Plan of Conversion, as the case may be, a certificate of merger, consolidation or conversion, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in conformity with the requirements of the Act and shall have such effect as provided under the Act or other Applicable Law.

(b) A merger, consolidation or conversion effected pursuant to this Article 13 shall not (i) to the fullest extent permitted by Applicable Law, be deemed to result in a transfer or assignment of assets or liabilities from one entity to another having occurred or (ii) require the Company (if it is not the Surviving Business Entity) to wind up its affairs, pay its liabilities or distribute its assets as required under Article 12 of this Agreement or under the applicable provisions of the Act.

ARTICLE XIV

GENERAL PROVISIONS

Section 14.1 Offset .

Whenever the Company is to pay any sum to any Member, any amounts that Member owes the Company may be deducted from that sum before payment.

Section 14.2 Notices .

All notices, demands, requests, consents, approvals or other communications (collectively, “ Notices ”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery or facsimile, addressed to the Company as set forth below, to the Members as set forth on Exhibit B , or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by facsimile. Notice otherwise sent as provided herein shall be deemed given upon delivery of such notice:

To the Company:

Tesoro Logistics GP, LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: President

Telephone: (210) 626-6000

Fax: (210) (210) 745-4441

 

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Section 14.3 Entire Agreement; Superseding Effect .

This Agreement constitutes the entire agreement of the Members relating to the Company and the transactions contemplated hereby, and supersedes all provisions and concepts contained in all prior contracts or agreements between the Members with respect to the Company, whether oral or written.

Section 14.4 Effect of Waiver or Consent .

Except as otherwise provided in this Agreement, a waiver or consent, express or implied, to or of any breach or default by any Member in the performance by that Member of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Member of the same or any other obligations of that Member with respect to the Company. Except as otherwise provided in this Agreement, failure on the part of a Member to complain of any act of any Member or to declare any Member in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Member of its rights with respect to that default until the applicable statute-of-limitations period has run.

Section 14.5 Amendment or Restatement .

This Agreement may be amended or restated only by a written instrument executed by all Members; provided, however, that, notwithstanding anything to the contrary contained in this Agreement, each Member agrees that the Board, without the approval of any Member, may amend any provision of the Delaware Certificate and this Agreement, and may authorize any officer to execute, swear to, acknowledge, deliver, file and record any such amendment and whatever documents may be required in connection therewith, to reflect any change that does not require consent or approval (or for which such consent or approval has been obtained) under this Agreement or does not materially adversely affect the rights of the Members.

Section 14.6 Binding Effect .

Subject to the restrictions on Dispositions set forth in this Agreement, this Agreement is binding on and shall inure to the benefit of the Members and their respective successors and permitted assigns.

Section 14.7 Governing Law; Severability .

THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this Agreement and (a) any mandatory, non-waivable provision of the Act, such provision of the Act shall control. If any provision of the Act may be varied or superseded in a limited liability company agreement (or otherwise by agreement of the members or managers of a limited liability company), such provision shall be deemed superseded and waived in its entirety if this Agreement contains a provision addressing the same issue or subject matter. If any provision of this Agreement or the

 

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application thereof to any Member or circumstance is held invalid or unenforceable to any extent, (x) the remainder of this Agreement and the application of that provision to other Members or circumstances is not affected thereby, and (y) the Members shall negotiate in good faith to replace that provision with a new provision that is valid and enforceable and that puts the Members in substantially the same economic, business and legal position as they would have been in if the original provision had been valid and enforceable.

Section 14.8 Venue .

Any and all claims, suits, actions or proceedings arising out of, in connection with or relating in any way to this Agreement shall be exclusively brought in the Court of Chancery of the State of Delaware. Each party hereto unconditionally and irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware with respect to any such claim, suit, action or proceeding and waives any objection that such party may have to the laying of venue of any claim, suit, action or proceeding in the Court of Chancery of the State of Delaware.

Section 14.9 Further Assurances .

In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.

Section 14.10 Waiver of Certain Rights .

Each Member, to the fullest extent permitted by Applicable Law, irrevocably waives any right it may have to maintain any action for dissolution of the Company or for partition of the property of the Company.

Section 14.11 Counterparts .

This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The use of facsimile signatures and signatures delivered by email in portable document format (.pdf) affixed in the name and on behalf of a party is expressly permitted by this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company and the Members have executed this Agreement as of the date first set forth above.

 

THE COMPANY:
TESORO LOGISTICS GP, LLC
By:  

/s/ Phillip M. Anderson

  Phillip M. Anderson
  President
MEMBERS:
TESORO CORPORATION
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO ALASKA COMPANY LLC
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer

Signature Page to

Second Amended and Restated Limited Liability Company Agreement

of Tesoro Logistics GP, LLC


EXHIBIT A

MEMBERS

 

Member

  

Sharing Ratio

   

Capital Contribution

Tesoro Corporation      3.5   $1,000.00 plus $63 million in assets contributed on April 26, 2011 in connection with the initial public offering of Tesoro Logistics LP.
Tesoro Alaska Company LLC      .5  

The Nikiski Assets, pursuant to the Contribution, Conveyance and Assumption Agreement

dated June 23, 2014

Tesoro Refining & Marketing Company LLC

     96  

The Amorco Wharf assets, pursuant to the Contribution, Conveyance and Assumption Agreement effective date April 1, 2012.

 

The Long Beach assets, pursuant to the Contribution, Conveyance and Assumption Agreement effective date September 14, 2012.

 

The Anacortes Rail Facility assets, pursuant to the Contribution, Conveyance, and Assumption Agreement effective date November 15, 2012.

 

The BP Carson assets, pursuant to the Contribution, Conveyance and Assumption Agreement dated May 17, 2013 and effective as of June 1, 2013.

 

The BP Carson Tranche 2 assets, pursuant to the Contribution, Conveyance and Assumption Agreement dated November 18, 2013 and effective as of December 6, 2013.

 

The Anacortes Assets and Martinez Assets, pursuant to the Contribution, Conveyance and Assumption Agreement dated June 23, 2014

 

Exhibit A to

Second Amended and Restated Limited Liability Company Agreement

of Tesoro Logistics GP, LLC


EXHIBIT B

ADDRESSES FOR NOTICE PURPOSES

 

Member

  

Address

Tesoro Corporation   

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: President

Telephone: (210) 626-6000

Fax: (210) 745-4441

Tesoro Alaska Company LLC   

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: President

Telephone: (210) 626-6000

Fax: (210) 745-4441

Tesoro Refining & Marketing Company LLC

  

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: President

Telephone: (210) 626-6000

Fax: (210) 745-4441

 

Exhibit B to

Second Amended and Restated Limited Liability Company Agreement

of Tesoro Logistics GP, LLC


EXHIBIT C

DIRECTORS

 

Charles S. Parrish    Director
Gregory J. Goff    Chairman of the Board of Directors
G. Scott Spendlove    Director
James H. Lamanna    Director
Keith M. Casey    Director
Phillip M. Anderson    Director
Raymond J. Bromark    Director
Thomas C. O’Connor    Director

 

Exhibit C to

Second Amended and Restated Limited Liability Company Agreement

of Tesoro Logistics GP, LLC


EXHIBIT D

OFFICERS

 

Arlen O. Glenewinkel    Vice President and Controller
Carrie P. Ryan    Assistant Secretary
Charles S. Parrish    Vice President, General Counsel and Secretary
D. Jeffrey Haffner    Associate General Counsel and Assistant Secretary
Gregory J. Goff    Chief Executive Officer
G. Scott Spendlove    Vice President and Chief Financial Officer
John R. Sherburne    Assistant Secretary
Keith M. Casey    Vice President, Strategy
Nathan E. Weeks    Vice President, Business Development
Phillip M. Anderson    President

 

Exhibit D to

Second Amended and Restated Limited Liability Company Agreement

of Tesoro Logistics GP, LLC

Exhibit 10.1

TERMINALLING SERVICES AGREEMENT – NIKISKI

This Terminalling Services Agreement – Nikiski (the “ Agreement ”) is dated as of July 1, 2014, by and between Tesoro Alaska Company LLC, a Delaware limited liability company (“ Customer ”), and Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”), and for purposes of Section 33(a) only, Tesoro Logistics GP, LLC, a Delaware limited liability company (“ General Partner ”), and Tesoro Logistics LP, a Delaware limited partnership (“ Partnership ”).

RECITALS

WHEREAS , on the date hereof, Tesoro Corporation, a Delaware corporation (“ Tesoro ”), Customer and Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ TRMC ”), will contribute certain assets to the General Partner, the General Partner will contribute those assets to the Partnership, and the Partnership will contribute those assets to TLO, all on the terms and conditions set forth in that certain Contribution, Conveyance and Assumption Agreement dated June 23, 2014 by and among Tesoro, Customer, TRMC, the Partnership, the General Partner, TLO (the “ Contribution Agreement ”);

WHEREAS , by virtue of its indirect ownership interests in the Partnership, Customer has an economic interest in the financial and commercial success of the Partnership and its operating subsidiary, TLO; and

WHEREAS , Customer and TLO desire to enter into this Agreement to memorialize the terms of their commercial relationship related to the subject matter hereof.

NOW, THEREFORE , in consideration of the covenants and obligations contained herein, the Parties (as defined below) to this Agreement hereby agree as follows:

1. DEFINITIONS

Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.

Additized Gasoline ” has the meaning set forth in Section 7(b) .

Agreement ” has the meaning set forth in the Preamble.

Ancillary Services ” has the meaning set forth in Section 3(c) .

API ” means American Petroleum Institute.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.


ASTM ” means ASTM International, formerly known as the American Society for Testing and Materials.

Barrel ” means a volume equal to 42 U.S. gallons of 231 cubic inches each, at 60 degrees Fahrenheit under one atmosphere of pressure.

Base Gasoline ” has the meaning set forth in Section 7(b) .

Biodiesel ” has the meaning set forth in Section 8(a) .

Biodiesel Facilities ” has the meaning set forth in Section 8(a) .

Blending Instructions ” has the meaning set forth in Section 9(c) .

bpd ” means Barrels per day.

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Capacity Resolution ” has the meaning set forth in Section 28(c) .

Carrier ” means a third-party agent or contractor hired by Customer, who is in the business of transporting Products via tank trucks.

Commencement Date ” has the meaning set forth in Section 2 .

Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

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

Customer ” has the meaning set forth in the Preamble.

Customer Group ” has the meaning set forth in Section 23(a) .

Customer Termination Notice ” has the meaning set forth in Section 27(b) .

DCA ” has the meaning set forth in Section 7(b) .

Dedicated Tanks ” has the meaning set forth in Section 5(a) .

 

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Diesel Additive Facilities ” has the meaning set forth in Section 7(c) .

EPA ” has the meaning set forth in Section 7(b) .

Ethanol Services ” has the meaning set forth in Section 9(a) .

Excess Amount ” has the meaning set forth in Section 4(b) .

Extension Period ” has the meaning set forth in Section 2 .

Force Majeure ” means events or circumstances, whether foreseeable or not, not reasonably within the control of TLO and which, by the exercise of due diligence, TLO is unable to prevent or overcome, that prevent performance of TLO’s obligations, including: acts of God, strikes, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, equipment, storage tanks or lines of pipe, and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.

Force Majeure Notice ” has the meaning set forth in Section 27(a) .

Force Majeure Period ” has the meaning set forth in Section 27(a) .

General Partner ” has the meaning set forth in the Preamble.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Initial Term ” has the meaning set forth in Section 2 .

LAC ” has the meaning set forth in Section 7(b) .

Minimum Throughput Commitment ” means an aggregate volume of 91,250 Barrels of Products per Month; provided however, that the Minimum Throughput Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Month ” means a calendar month.

Operating Capacity ” means the effective storage capacity of a tank, taking into account accepted engineering principles, industry standards, API guidelines and Applicable Law, only as to Products that each tank is capable of storing, within the requirements of applicable permit requirements and under actual conditions as they may exist at any time. The Operating Capacity of each tank is listed on the applicable Terminal Service Order as of the date of such Terminal Service Order.

 

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Partnership ” has the meaning set forth in the Preamble.

Partnership Change of Control ” means Tesoro ceases to possess, directly or indirectly, the power to direct or cause the direction of the management and policies of the General Partner of the Partnership, whether through ownership of voting securities, by contract, or otherwise.

Partnership Group ” has the meaning set forth in Section 23(b) .

Party ” or “ Parties ” means that each of Customer and TLO is a “Party” and collectively are the “Parties” to this Agreement.

Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Product ” or “ Products ” means the petroleum products, ethanol or biofuels, crude oil, Transmix, intermediate products and fuel oil described herein as being handled under this Agreement.

Receiving Party Personnel ” has the meaning set forth in Section 35(d) .

Red Dye ” has the meaning set forth in Section 7(d) .

Refinery ” means Customer’s refining facilities located in Kenai, Alaska.

Replacement Customer ” has the meaning set forth in Section 32 .

Reserved Capacity ” means an aggregate volume of 107,219 Barrels of Products per Month; provided however, that the Reserved Capacity during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Restoration ” has the meaning set forth in Section 28(b) .

Shell Capacity ” means the gross storage capacity of a tank for each respective Product, based upon its dimensions, as set forth in an applicable Terminal Service Order.

Shortfall Payment ” has the meaning set forth in Section 4(d) .

Storage First Offer Period ” has the meaning set forth in Section 31 .

Storage Right of First Refusal ” has the meaning set forth in Section 31 .

Storage Services Fee ” has the meaning set forth in Section 5(a) .

Surcharge ” has the meaning set forth in Section 11(a) .

 

4


Tank Heels ” consist of the minimum quantity of Product which either (a) must remain in a tank during all periods when the tank is available for service to keep the tank in regulatory compliance or (b) is necessary for physical operation of the tank.

Term ” has the meaning set forth in Section 2 .

Terminal ” means TLO’s Nikiski Terminal, consisting of a two-lane truck terminal, and six storage tanks with approximately 213,000 Barrels of storage capacity.

Terminal Service Order ” has the meaning set forth in Section 13(a) .

Terminalling Equipment ” has the meaning set forth in Section 4(c) .

Terminalling First Offer Period ” has the meaning set forth in Section 30(b) .

Terminalling Right of First Refusal ” has the meaning set forth in Section 30(b) .

Terminalling Service Fee ” means for any Month during the Term, the total fee per Barrel of throughput paid by Customer during that Month for terminalling and Ancillary Services at the Terminal, but excluding the Storage Services Fee, as set forth on a Terminal Service Order.

Termination Notice ” has the meaning set forth in Section 27(a) .

Tesoro ” has the meaning set forth in the Recitals.

Third Amended and Restated Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Tesoro, Customer, Tesoro Companies, Inc., TRMC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

Throughput Right of First Refusal ” has the meaning set forth in Section 28(e) .

TLO ” has the meaning set forth in the Preamble.

Transmix ” has the meaning set forth in Section 6 .

TRMC ” has the meaning set forth in the Recitals.

ULSD ” means ultra-low sulfur diesel.

2. TERM

The initial term of this Agreement shall commence on the date hereof (the “ Commencement Date ”) and shall continue through July 1, 2024 (the “ Initial Term ”); provided, however, that Customer may, at its option, extend the Initial Term for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ”) by providing written notice of its intent to TLO no less than three hundred sixty-five (365) calendar days prior to the end of the Initial Term or the then-current Extension Period. The Initial Term, and any Extension Period, shall be referred to herein as the “ Term .”

 

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3. SERVICES

During the Term and subject to the terms and conditions of this Agreement and any Terminal Service Order, TLO shall make available to Customer the following services:

(a) Commingled storage and throughput capacity pursuant to Section 4 below;

(b) Dedicated storage pursuant to Section 5 below; and

(c) The services pursuant to Sections 6-9 below, other additization services as set forth on a Terminal Service Order and any and other services pursuant to a Terminal Service Order (collectively, the “ Ancillary Services ”).

4. THROUGHPUT

(a) Throughput Commitment and Terminalling Service Fee . Customer shall deliver and/or pay for the Minimum Throughput Commitment at the Terminal, and TLO shall make available to Customer at all times commingled storage and throughput capacity at the Terminal sufficient to allow Customer to throughput the Reserved Capacity. Customer shall pay the Terminalling Service Fee for such service as set forth in a Terminal Service Order. Allocation of storage and throughput capacity for separate Products at the Terminal shall be set forth in a Terminal Service Order, if applicable. TLO shall not make any commitments to third parties that would interfere with the ability of Customer to throughput the Reserved Capacity. Customer commits to deliver and/or pay for the Minimum Throughput Commitment on a Monthly basis during the Term.

(b) Excess Capacity . Customer may throughput volumes in excess of the Minimum Throughput Commitment, up to the then-available capacity of the Terminal, net of any third-party commitments, as determined by TLO at any time, which allocation of any excess capacity shall be in accordance with current practices, or as otherwise may be set forth in a Terminal Service Order. If during any Month during the Term, Customer throughputs aggregate volumes greater than the Minimum Throughput Commitment, then Customer shall pay TLO an amount equal to the fee determined by multiplying the actual volumes throughput by Customer in excess of the Minimum Throughput Commitment by the Terminalling Service Fee (the “ Excess Amount ”).

(c) Removal of Equipment from Service . If at any time during the Term, any tank, rack or other equipment or facility of TLO that is dedicated to Customer or otherwise being used to provide services hereunder (“ Terminalling Equipment ”), is removed from service, and if removal of such Terminalling Equipment restricts Customer from being able to throughput the Reserved Capacity or receive associated Ancillary Services, then until such Terminalling Equipment is restored to service, Customer’s Minimum Throughput Commitment shall be reduced by the difference between the Minimum Throughput Commitment and the amount that Customer can effectively throughput at such location without restriction until such Terminalling Equipment is restored to service.

 

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(d) Shortfall Payments . If, during any Month during the Term, Customer throughputs aggregate volumes less than the Minimum Throughput Commitment for such Month, then Customer shall pay TLO an amount (a “ Shortfall Payment ”) for any shortfall. Shortfall Payments shall be equal to the amount determined by taking the difference between (i) the Minimum Throughput Commitment multiplied by the Terminal Service Fee and (ii) the actual volumes throughput by Customer multiplied by the Terminal Service Fee. The dollar amount of any Shortfall Payment paid by Customer shall be posted as a credit to Customer’s account and may be applied against any Excess Amounts owed by Customer during any of the succeeding three (3) Months. Credits will be applied in the order in which such credits accrue and any remaining portion of the credit that is not used by Customer during the succeeding three (3) Months shall expire ( e.g ., a credit that accrues in January will be available in February, March and April, will expire at the end of April, and must be applied prior to applying any credit which accrues in February).

(e) Third Party Throughput Credit . If TLO throughputs volumes from third parties (other than Replacement Customers) at the Terminal during any Month, such volumes shall be applied as a credit to reduce the Minimum Throughput Commitment, up to a maximum amount equal to the Minimum Throughput Commitment. All volumes throughput by Replacement Customers shall be applied as a credit to reduce the Minimum Throughput Commitment.

5. DEDICATED STORAGE

(a) Storage Services Fee . Customer shall pay a Monthly fee (the “ Storage Services Fee ”) to reserve, on a firm basis, all of the existing aggregate Shell Capacity of certain tanks (the “ Dedicated Tanks ”) as specified on a Terminal Service Order. Such fee shall be payable by Customer on a Monthly basis throughout the Term of the Agreement, regardless of the actual volumes of Products stored by TLO on behalf of Customer; provided, however, that the Parties shall from time to time negotiate an appropriate adjustment to such fee if the following conditions are met: (i) Customer requires the full Operating Capacity of the Dedicated Tanks, (ii) the full Operating Capacity of the Tanks is not available to Customer for any reason (other than any reason resulting from or relating to actions or inactions by Customer), and (iii) TLO is unable to otherwise accommodate the actual volumes of Products required to be stored by Customer pursuant to the terms of this Agreement or any Terminal Service Order. Unless otherwise agreed, such adjustment shall be made in proportion to the reduction in Operating Capacity for any time period compared with the Operating Capacity then in effect for the affected Dedicated Tanks pursuant to the mutually agreed Terminal Service Orders. The Parties recognize that the existing Operating Capacity of certain tanks may be less than the Shell Capacity of such Dedicated Tanks, but the Parties acknowledge and agree that the Storage Services Fee shall be set in terms of a dollar-per-Barrel per Month rate based on Shell Capacity in the applicable Terminal Service Order. Such Storage Services Fee shall include all storage, pumping, and transshipment between and among the Dedicated Tanks.

(b) Calculation of Storage Services Fee . The Storage Services Fee shall be calculated using the per Barrel rate set forth on the initial Terminal Service Order executed effective as of the Commencement Date for the then-existing aggregate Shell Capacity of the tanks specified in such initial Terminal Service Order. The Storage Services Fee owed during the Month in which the Commencement Date occurs, if less than a full calendar month, shall be prorated in accordance with the ratio of (i) the number of days in such Month during which this Agreement is effective to (ii) the total number of days in such Month.

 

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6. PRODUCT DOWNGRADE AND INTERFACE

TLO shall account for the volume of Product downgraded, and Customer’s inventory of Products and/or interface shall be adjusted, provided that, interface volume (“ Transmix ”) received shall be allocated (a) in the case of dedicated storage, entirely to Customer and (b) in the case of commingled storage, among Customer and other customers receiving Products generating such Transmix in the same shipment or stored in commingled storage in proportion to each customer’s volume of Products in such shipment or storage. Customer shall remove its Transmix upon notice from TLO and shall be subject to applicable Transmix handling fees upon its removal, as provided in a Terminal Service Order. If Transmix is not removed within fifteen (15) Business Days after notification (such time period to be extended to the extent of any delay or hindrance by TLO, its agents or contractors for any reason), TLO shall have the right to sell such Transmix at market rates and return any proceeds to Customer, less applicable Transmix handling fees in effect at the time of such sale. Product downgraded as a result of ordinary Terminal or pipeline operations including line flushing, rack meter provings or other necessary Terminal operations shall not constitute losses for which TLO is liable to Customer.

7. ADDITIZATION OPTIONS

(a) Additive Injection Service . If available at the Terminal, TLO shall provide equipment for the injection of additives, as provided below. Customer shall designate pursuant to a Terminal Service Order which additive injection service shall be provided.

(b) DCA Additization . All gasoline Product leaving the Terminal shall be additized (“ Additized Gasoline ”). As an exception, TLO shall accommodate a request from Customer to lift base gasoline from the Terminal. In that case, the bill of lading issued by TLO shall label all such Product as base gasoline (“ Base Gasoline ”). TLO shall provide a generic Deposit Control Additive (“ DCA ”) injection service, including all required reporting and record keeping prescribed by Applicable Law. The additive supplied shall be an Environmental Protection Agency (“ EPA ”) certified DCA. Subject to the other provisions hereof, Customer may request TLO to instead inject a different proprietary DCA into certain gasoline delivered hereunder, instead of the generic DCA provided by TLO, and TLO shall accommodate such requests pursuant to a Terminal Service Order specifying the specific additization required and fees to be charged for its injection, subject to Customer providing a suitable Additized Gasoline system for such proprietary additive. TLO shall ensure that such additive is injected into all appropriate gasoline Product delivered to Customer at a rate no lower than the Lowest Allowable Concentration (“ LAC ”) at which such additive was certified. The gasoline additization rate shall be determined by Customer, but shall not be less than 1.1 times the LAC specified by the respective additive manufacturer or supplier. Notwithstanding the above, Customer shall be solely responsible for registering with the EPA or any other government agency its use of generic or proprietary additive in its fuels, as required by Applicable Law. Customer shall submit evidence of registration in compliance with 40 C.F.R. Part 80. Customer shall also be responsible for full compliance with any quarterly or other regulatory reporting, and any other requirements under Applicable Law related to use of generic or proprietary additive in Customer’s Product.

 

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(c) Lubricity and Conductivity Additization . TLO shall maintain and operate diesel lubricity and conductivity additive injection facilities (the “ Diesel Additive Facilities ”) at the Terminal in accordance with customary industry standards during the Term, including all required reporting and record keeping prescribed by Applicable Law. TLO shall arrange for purchase and delivery of any and all required lubricity and conductivity additive for injection through the Diesel Additive Facilities at the Terminal. TLO shall inject into all ULSD delivered to Customer at the Terminal an amount of lubricity and conductivity additive that TLO determines to be sufficient to comply with current ASTM diesel lubricity and conductivity specifications. TLO shall, upon request, provide Customer with documentation of additive specifications and additive injection, which TLO shall keep on file at the Terminal.

(d) Red Dye Additization . TLO shall provide a generic red dye additive (“ Red Dye ”) injection service for diesel, including all required reporting and record keeping prescribed by Applicable Law. TLO shall be responsible for determining the injection rates, Red Dye inventory levels, meter readings, and calculations of actual treat rates, in compliance with the minimum levels prescribed by the Internal Revenue Service. Customer is responsible for designating which of its accounts shall be authorized to use Red Dye diesel injection services. TLO equipment shall enable designated Carriers and accounts to inject Red Dye upon request prior to loading diesel Product at the Terminal. Customer’s Carrier shall be solely responsible for designating that a load of diesel Product be injected with Red Dye, and TLO shall have no liability with regard to whether a load of Product is additized with Red Dye. TLO shall not be responsible for any loss, damage or liability that arises from Carrier injecting or failing to inject Red Dye into Customer’s Product, unless caused by TLO’s equipment failure or negligence.

(e) Responsibility for Provision of Additive . For any additization services provided pursuant to this Section 7 , TLO shall be responsible for providing generic additives, and Customer shall be responsible for providing any special or proprietary additives requested by Customer.

(f) Special Additive Equipment . As set forth in a Terminal Service Order, and subject to the other provisions set forth herein and the availability of suitable space at the Terminal, Customer shall have the option of having TLO install and maintain at the Terminal, at Customer’s sole risk, cost and expense, such special additive equipment as may be desirable for Products to be delivered to Customer’s account hereunder. The engineering and installation of any fixture, equipment or appurtenance placed on the Terminal in respect thereof shall be subject to TLO’s prior approval and supervision. During the Term, TLO shall operate the special additive equipment with any fees therefor to be set forth in a Terminal Service Order. Upon the expiration of the Term, TLO will have the option to purchase the special additive equipment for a price to be set forth in a Terminal Service Order.

 

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8. BIODIESEL SERVICES

(a) Biodiesel Facilities . If available at the Terminal, TLO shall operate B99/B100 (“ Biodiesel ”) truck rack, tank and inbound manifold blending facilities (the “ Biodiesel Facilities ”) as provided in a Terminal Service Order. The Biodiesel Facilities are intended to provide a means to blend Biodiesel with ULSD. Customer shall be required to keep a Tank Heel inventory in the Biodiesel tanks in proportion with the number of active inventory holders in the tanks.

(b) Payment . Customer shall pay TLO for the Biodiesel blending and throughput provided by TLO as set forth in a Terminal Service Order.

(c) Biodiesel Services Provided . TLO shall (i) coordinate with Customer the scheduling of Biodiesel trucks from Customer to the Terminal; (ii) provide necessary services to convey Customer’s Biodiesel from trucks to appropriate Biodiesel storage tanks where it shall be stored until blended with ULSD and delivered to Customer; and (iii) blend and inject Customer’s Biodiesel into Customer’s ULSD in accordance with Customer’s instructions and Applicable Law. The provision of any new equipment necessary for the services in this Section 8(c) , and which Party shall own and operate such equipment during and after the Term, shall be set forth on a Terminal Service Order.

9. ETHANOL BLENDING SERVICES

(a) Services and Equipment . Where ethanol receiving, storage and blending facilities are available at the Terminal, upon Customer’s request, the Parties shall execute a Terminal Service Order pursuant to which TLO shall receive, store and blend ethanol into Customer’s gasoline at the Terminal (“ Ethanol Services ”). TLO shall provide and operate all equipment required for the Ethanol Services. The equipment shall consist of truck and/or rail unloading racks, tanks, pumps, motors, injectors, computer control, and any other ancillary equipment necessary for the providing of the Ethanol Services.

(b) Ethanol Inventories . Customer shall be solely responsible for supplying inventories of ethanol at its own expense, including the scheduling and transporting of ethanol into the Terminal, subject to notice and scheduling procedures mutually agreeable to the Parties. TLO shall receive Customer’s ethanol into fungible ethanol storage at the Terminal, unless otherwise specified in a Terminal Service Order.

(c) Blending Instructions . Upon a request from Customer for Ethanol Services, a Terminal Service Order shall provide the desired blending ratio of ethanol to gasoline at the Terminal (“ Blending Instructions ”), including the minimum Octane (R+M/2) rating for each grade of Customer’s gasoline Product, prior to blending. A change to the blending ratios shall require a Terminal Service Order.

(d) Records . TLO shall maintain for a minimum of five (5) years written or electronic records of the type and volume of oxygenate blended into Customer’s gasoline.

(e) Quality Assurance . TLO shall maintain an industry standard quality assurance oversight program of the ethanol blending process. TLO shall provide Customer with an annual report within fifteen (15) Business Days after the end of each calendar year that, at a minimum, summarizes the volume of Customer’s gasoline received by TLO, the volume of oxygenate added to Customer’s gasoline and total volume of blended gasoline.

 

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(f) Monitoring . TLO shall allow Customer or its agents to monitor the oxygenate blending operation by periodic audit, sampling, testing and/or records review to ensure the overall volumes and type of oxygenate blended into gasoline is consistent with the oxygenate claimed by Customer as required by 40 C.F.R. 80.101(d)(4)(ii)(B)(2). The scope and type of such audits will be negotiated in good faith by the Parties in advance and memorialized in writing.

(g) Customer Liability . TLO shall rely on Blending Instructions and data provided by Customer in performing its obligations under this Agreement or any Terminal Service Order. Customer agrees to be solely responsible for all claims arising from TLO’s use of or reliance on these Blending Instructions and data.

(h) Condition . When performing the Ethanol Services as per Customer’s Blending Instructions, TLO shall not certify to Customer or any third-party that blended gasoline does or shall meet ASTM D 4814 or any federal, state, or local regulatory specifications. Customer agrees that it is receiving from TLO the Blended Gasoline in an “AS IS, WHERE IS” condition without warranties of any kind, including any warranties of merchantability or fitness for a particular purpose, or its ability to meet ASTM or regulatory specifications.

10. REIMBURSEMENT FOR NEWLY IMPOSED TAXES AND REGULATORY FEES; EXCISE TAXES

(a) Prompt Reimbursement . Customer shall promptly pay or reimburse TLO for any newly imposed taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) by any federal, state or local government or agency that TLO incurs on Customer’s behalf for the services provided by TLO under this Agreement or any Terminal Service Order. If TLO is required to pay any of the foregoing, Customer shall promptly reimburse TLO in accordance with the payment terms set forth in this Agreement. Any such newly imposed taxes or regulatory fees as provided for in this Section 10(a) shall be specified in an applicable Terminal Service Order.

(b) Excise Tax Certification . Upon written request by TLO, Customer shall supply TLO with a completed signed original notification certificate of gasoline and diesel fuel registrant as required by the Internal Revenue Service’s excise tax regulation. Customer further agrees to comply with all Applicable Law with respect to such taxes.

(c) Exemption Certification . If Customer is exempt from the payment of any taxes allocated to Customer under the foregoing provisions, Customer shall furnish TLO with the proper exemption certificates.

11. EXPENDITURE REQUIRED BY NEW LAWS AND REGULATIONS

(a) Surcharge . If, during the Term, any existing laws or regulations are changed or any new laws or regulations are enacted that require TLO to make substantial and unanticipated expenditures (whether capitalized or otherwise) with respect to the Terminal, TLO may, subject to the terms of this Section 11 , impose a surcharge to increase the applicable service fee (“ Surcharge ”), to cover Customer’s pro rata share of the cost of complying with these laws or regulations, based upon the percentage of Customer’s use of the services or facilities impacted by such new laws or regulations.

 

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(b) Notification and Mitigation . TLO shall notify Customer of any proposed Surcharge to be imposed pursuant to Section 11(a) sufficient to cover the cost of any required capital projects and any ongoing increased operating costs. TLO and Customer then shall negotiate in good faith for up to thirty (30) days to mutually determine the effect of the change in law or regulation or new law or regulation, the cost thereof, and how such cost shall be amortized at an interest rate of no more than nine percent (9%) as a Surcharge, with the understanding that TLO and Customer shall use their reasonable commercial efforts to mitigate the impact of, and comply with, these laws and regulations. Without limiting the foregoing, if expenditures requiring a Surcharge may be avoided or reduced through changes in operations, then the Parties shall negotiate in good faith to set forth the appropriate changes in a Terminal Service Order to evidence the reduction of the amount of a Surcharge while leaving the Parties in the same relative economic position they held before the laws or regulations were changed or enacted.

(c) Less Than 15% Surcharge . In the event any Surcharge results in less than a fifteen percent (15%) increase in the applicable service fee, Customer will be assessed such Surcharge on all future invoices during the period in which such Surcharge is in effect for the applicable amortization period, and TLO shall not terminate the affected service from this Agreement.

(d) 15% or More Surcharge . In the event any Surcharge results in a fifteen percent (15%) or more increase in the applicable service fee, TLO shall notify Customer of the amount of the Surcharge required to reimburse TLO for its costs, plus carrying costs, together with reasonable supporting detail for the nature and amount of any such Surcharge.

(i) If within thirty (30) days of such notification provided in this Section 11(d) , Customer does not agree to pay such Surcharge or to reimburse TLO up front for its costs, TLO may elect to either:

a. require Customer to pay such Surcharge, up to a fifteen percent (15%) increase in the applicable service fee; or

b. terminate the service under this Agreement to which the Surcharge applies, upon notice to Customer.

(ii) TLO’s performance obligations under this Agreement shall be suspended or reduced during the above thirty (30) day period to the extent that TLO would be obligated to make such expenditures to continue performance during such period.

(e) Resolution of Surcharge . Following a resolution with respect to the amount and manner of payment of a Surcharge pursuant to this Section 11 , the Parties shall execute an appropriate Terminal Service Order memorializing the terms of such resolution.

 

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(f) Payment of Surcharge . In lieu of paying the Surcharge in connection with any required capital project, Customer may, at its option, elect to pay the full cost of the substantial and unanticipated expenditures upon completion of a project.

12. REIMBURSEMENT FOR TANK CLEANING AND CONVERSION

(a) Reimbursement for Tank Cleaning . If any Dedicated Tanks are removed from service or cleaning of any tanks is performed by TLO at the specific request of Customer, Customer shall bear (or reimburse TLO) for all costs to clean, degas or otherwise prepare the tank(s) including, without limitation, the cost of removal, processing, transportation, disposal, of all waste and the cost of any taxes or charges TLO may be required to pay in regard to such waste. For any tanks that are dedicated to Customer for segregated storage of Customer’s Products as set forth in any Terminal Service Order, Customer agrees to reimburse TLO for the reasonable cost of changes necessary to return the dedicated storage tanks to TLO on termination of their dedication for segregated storage under this Agreement, in the same condition as originally received less normal wear and tear, unless otherwise mutually agreed by the Parties.

(b) Reimbursement for Tank Conversion . If Customer requests that any dedicated tank be changed for storage of a different grade or type of Product, TLO shall agree to a change in such service, if the same can be accomplished in accordance with reasonable commercial standards, accepted industry and engineering guidelines, permit requirements and Applicable Law. If any such modifications, improvements, vapor recovery, cleaning, degassing, or other preparation of the tanks is performed by TLO at the request of Customer, Customer shall bear all direct costs attributable thereto, including, without limitation, the cost of removal, processing, transportation, and disposal of all waste and the cost of any taxes or mutually agreed charges TLO may be required to pay in regard to such waste, which costs shall be set forth on the applicable Terminal Service Order.

13. TERMINAL SERVICE ORDERS; PAYMENT

(a) Description . TLO and Customer shall enter into one or more terminal service orders for the Terminal substantially in the form attached hereto as Exhibit 1 (each, a “ Terminal Service Order ”). Upon a request by Customer pursuant to this Agreement or as deemed necessary or appropriate by TLO in connection with the services to be delivered pursuant hereto, TLO shall generate a Terminal Service Order to set forth the specific terms and conditions for providing the applicable services described therein and the applicable fees to be charged for such services. No Terminal Service Order shall be effective until fully executed by both TLO and Customer.

(b) Included Items . Items available for inclusion on a Terminal Service Order include, but are not limited to, the following:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

 

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(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ; and

(xi) any other services as may be agreed.

(c) Invoices . TLO shall invoice Customer on a monthly basis and Customer shall pay all amounts due under this Agreement and any Terminal Service Order no later than ten (10) calendar days after Customer’s receipt of TLO’s invoices. Any past due payments owed by Customer shall accrue interest, payable on demand, at the lesser of (i) the rate of interest announced publicly by JPMorgan Chase Bank, in New York, New York, as JPMorgan Chase Bank’s prime rate (which Parties acknowledge and agree is announced by such bank and used by the Parties for reference purposes only and may not represent the lowest or best rate available to any of the customers of such bank or the Parties), plus four percent (4%), and (ii) the highest rate of interest (if any) permitted by Applicable Law, from the due date of the payment through the actual date of payment.

(d) Fee Increases . Any fees of a fixed amount set forth in this Agreement and any Terminal Service Order shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%).

(e) Conflict between Agreement and Terminal Service Order . In case of any conflict between the terms of this Agreement and the terms of any Terminal Service Order, the terms of the applicable Terminal Service Order shall govern.

14. CUSTODY TRANSFER AND TITLE

(a) Custody of Pipeline Receipts and Deliveries . For Product received into the Terminal by pipeline, custody of the Product shall pass to TLO at the flange where it enters the Terminal’s receiving line. For Product delivered by the Terminal into a pipeline, custody of the Product shall pass to Customer at the flange where it exits the Terminal’s delivery line.

 

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(b) Custody of Truck Receipts and Deliveries . For receipts and deliveries to or from trucks, custody shall pass at the flange where the hoses at TLO’s facility interconnect with the truck.

(c) Custody of Rail Receipts and Deliveries . For Product received by rail, custody shall pass to TLO when the switching locomotive used to transfer Customer’s rail cars to the Terminal is uncoupled from such rail cars at the Terminal.

(d) Custody of Marine Receipts and Deliveries . For receipts and deliveries to or from marine vessels, custody shall pass at the flange where the Terminal interconnects with the hoses connected to the marine vessel.

(e) In-Tank . Deliveries by book transfer shall be reflected in the books of TLO.

(f) Title Transfer . Upon re-delivery of any Product to Customer’s account, Customer shall become solely responsible for any loss, damage or injury to Person or property or the environment, arising out of transportation, possession or use of such Product after transfer of custody and the loss allowance provisions hereof shall apply to Product while in TLO’s custody. Title to all of Customer’s Product received in the Terminal shall remain with Customer at all times. Both Parties acknowledge that this Agreement represents a bailment of Products by Customer to TLO and not a consignment of Products, it being understood that TLO has no authority hereunder to sell or seek purchasers for the Products of Customer, except for Transmix as provided in Section 6 above. Customer hereby warrants that it shall, at all times, have good title to and the right to deliver, throughput, store and receive Products pursuant to the terms of this Agreement and any Terminal Service Order.

15. PRODUCT QUALITY

(a) Product Specifications of Delivered Products . Customer warrants that all Products delivered under this Agreement and any Terminal Service Order shall meet the latest applicable pipeline specifications or mutually agreed upon specifications for that Product upon receipt at the Terminal and contain no deleterious substances or concentrations of any contaminants that may make it or its components commercially unacceptable in general industry application. Customer shall not deliver to the Terminal any Products which: (i) would in any way be injurious to the Terminal; (ii) would render the Terminal unfit for the proper storage of similar Products; (iii) would contaminate or otherwise downgrade the quality of the Products stored in commingled storage; (iv) may not be lawfully stored at the Terminal; or (v) otherwise do not meet applicable Product specifications for such Product that are customary in the location of the Terminal. If, however, there are Products that do not have such applicable specifications, the specifications shall be mutually agreed upon by the Parties. Should Customer’s commingled Products not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, Customer shall be liable for all loss, damage and cost incurred thereby, including damage to Products of third parties commingled with Customer’s unfit Products.

 

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(b) Product Specifications of Commingled Storage . TLO shall have the right to store compatible Products received for Customer’s account with Products belonging to TLO or third parties in TLO’s commingled storage tanks. TLO shall handle Customer’s fungible Products in accordance with TLO’s prevailing practices and procedures for handling such Products. The quality of all Products tendered into commingled storage for Customer’s account shall be verified either by Customer’s refinery analysis or supplier’s certification, such that Products so tendered shall meet TLO’s Product specifications. All costs for such analysis shall be borne solely by Customer. TLO shall have the right to sample any Product tendered to the Terminal hereunder. The cost of such sampling shall be borne solely by TLO. All Products returned to Customer shall comply with Product specifications in effect on the date the Products are delivered to Customer. Notwithstanding any other provision herein, any and all Products that leave the Terminal shall meet all relevant ASTM, EPA, federal and state specifications.

(c) Liability for Commingled Storage . TLO shall exercise reasonable care to ensure that all Products delivered by third parties into commingled storage with Customer’s Products meet applicable Product specifications for such Product that are customary in the location of the Terminal. In the event that Customer’s Products are commingled with third-party Products that do not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, TLO shall be liable for all loss, damage and cost incurred thereby.

16. MEASUREMENT AND VOLUME LOSSES

(a) Methods of Measurement .

(i) All quantities of Products received or delivered by or into trucks or marine vessels shall be measured and determined based upon the meter readings at the Terminal, as reflected by delivery tickets or bills of lading, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(ii) All quantities of Products received or delivered by or into railcars shall be measured and determined based upon the meter readings at the Terminal, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iii) All quantities of Products received and delivered by pipeline shall be measured and determined based upon the meter readings of the pipeline operator, as reflected by delivery tickets, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iv) Deliveries by book transfer shall be reflected by entries in the books of TLO.

(v) All quantities shall be adjusted to net gallons at 60° F in accordance with ASTM D-1250 Petroleum Measurement Tables, or latest revisions thereof. Meters and temperature probes shall be calibrated according to applicable API standards. Customer shall have the right, at its sole expense, and in accordance with rack location procedure,

 

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to independently certify such calibration. Storage tank gauging shall be performed by TLO’s personnel. TLO’s gauging shall be deemed accurate unless challenged by an independent certified gauger. Customer may perform joint gauging at its sole expense with TLO’s personnel at the time of delivery or receipt of Product, to verify the amount involved. If Customer should request an independent gauger, such gauger must be acceptable to TLO and such gauging shall be at Customer’s sole expense.

(b) Measurement and Volume Loss Control Practices .

(i) TLO shall have no obligation to measure volume gains and losses. In the event third-party Products are terminalled at the Terminal, the Parties shall mutually determine the measurement and volume loss control practices for the Terminal.

(ii) TLO shall be responsible to Customer only for Product losses and/or shortages resulting from the negligent or wrongful acts and omissions of TLO; provided that TLO shall not be responsible to Customer for any Product losses and/or shortages for which Customer is compensated by its cargo/inventory insurance carrier, including through the cargo/inventory insurance coverage required by Section 24 . If Customer fails to maintain the cargo/inventory insurance coverage required by Section 24 , then TLO shall also not be responsible to Customer for any Product losses and/or shortages to the extent Customer would have been compensated by its insurance carrier had Customer maintained the cargo/inventory insurance coverage required by Section 24 .

(iii) Customer shall be responsible for all Product losses and/or shortages it may suffer other than those covered by Section 16(b)(ii) .

17. PRODUCT DELIVERIES, RECEIPTS AND WITHDRAWALS

(a) Product Deliveries . All supervised deliveries, receipts and withdrawals hereunder shall be made at such times as may be required by Customer upon prior notice and approval by TLO, all in accordance with the agreed-upon scheduling. Unsupervised deliveries, receipts and withdrawals shall be made only with TLO’s prior approval and in strict accordance with TLO’s current operating procedures for the Terminal. Customer warrants that all vehicles permitted to enter the Terminal on behalf of Customer shall meet all requirements and standards promulgated by applicable regulatory authority including the Department of Transportation, the Occupational Safety and Health Administration, and the EPA. Customer further warrants that it shall only send to the Terminal those employees, agents and other representatives acting on behalf of and at Customer’s direction who have been properly instructed as to the characteristics and safe hauling methods associated with the Products to be loaded and hauled. Customer further agrees to be responsible to TLO for the performance under this Agreement by its agents and/or representatives receiving or delivering Products at the Terminal.

(b) Loading Devices . Customer shall withdraw from the Terminal only those Products that it is authorized to withdraw hereunder. Customer shall neither duplicate nor permit the duplication of any loading device (i.e., card lock access), provided hereunder. Customer shall be fully and solely responsible for all Products loaded through the use of the loading devices issued to Customer in accordance with this Agreement; provided however, that Customer shall

 

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not have any responsibility or liability hereunder in the event that the load authorization system provided hereunder fails or malfunctions in any way unless a credit department override is provided, which authorizes Customer to load the Products.

(c) Legal Compliance . Both Parties shall abide by all federal, state and local statutes, laws and ordinances and all rules and regulations which are promulgated by TLO and which are either furnished to Customer or posted at the Terminal, with respect to the use of the Terminal as herein provided. It is understood and agreed by Customer that these rules and regulations may be changed, amended or modified by TLO at any time. All changes, amendments and modifications shall become binding upon Customer ten (10) days following the posting of a copy at the Terminal or the receipt by Customer of a copy, whichever occurs sooner.

(d) Customer Representatives . For all purposes hereunder, Customer’s jobbers, distributors, Carriers, haulers and other customers designated in writing or otherwise by Customer to have loading privileges under this Agreement or having possession of any loading device furnished to Customer pursuant to this Agreement, together with their respective officers, servants and employees, shall, when they access the Terminal, be deemed to be representatives of Customer.

18. DELIVERIES INTO TRANSPORT TRUCKS

Prior to transporting any Products loaded into transport trucks at the Terminal, TLO shall make or cause to be made, the following certifications on the delivery receipt or bill of lading covering the Products received:

“If required by 49 C.F.R. 172.204, this is to certify that the above-named materials are properly classified, described, packaged, marked and labeled, and are in proper condition for transportation according to the applicable regulations of the Department of Transportation. Carrier hereby certifies that the cargo tank used for this shipment is a proper container for the commodity loaded therein and complies with Department of Transportation specifications and certifies that cargo tank is properly placarded and marked to comply with regulations pertaining to hazardous materials.”

TLO shall require each Carrier coming into the Terminal to expressly agree in writing to be bound by the provisions of a carrier access agreement with respect to withdrawals and loading of Products hereunder, to conduct its operations at the Terminal in a safe manner, in accordance with all Applicable Law.

19. ACCOUNTING PROVISIONS AND DOCUMENTATION

(a) Required Reports . TLO shall furnish Customer with the following reports covering services hereunder involving Customer’s Products:

(i) within ten (10) Business Days following the end of the Month, a statement showing, by Product: (A) Customer’s monthly aggregate deliveries into the Terminal; (B) Customer’s monthly receipts from the Terminal; (C) calculation of all Customer’s monthly storage and handling fees; (D) Customer’s opening inventory for the preceding Month; (E) appropriate volume loss adjustments (as applicable in accordance with Section 16 ); (F) Customer’s closing inventory for the preceding

 

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Month; and (G) the actual volumes of TLO third party throughput handled at the Terminal during a Month up to the Minimum Throughput Commitment, pursuant to Section 4(e) ;

(ii) a copy of any meter calibration report, to be available for inspection upon reasonable request by Customer at the Terminal following any calibration;

(iii) upon delivery from the Terminal, a hard copy bill of lading to the Carrier for each delivery; upon reasonable request only, a hard copy bill of lading shall be provided to Customer’s accounting group; upon each delivery from the Terminal, bill of lading information shall be sent electronically through a mutually agreeable system; and

(iv) transfer documents for each in-tank transfer.

(b) Required Maintenance of Truck Loading Capabilities . TLO shall be required to maintain the capabilities to support truck load authorization technologies at the Terminal.

20. AUDIT AND CLAIMS PERIOD

Each Party and its duly authorized agents and/or representatives shall have reasonable access to the accounting records and other documents maintained by the other Party which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term and for a period of up to three (3) years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within ninety (90) days after the delivery in question or shall be deemed to have been waived.

21. LIEN WAIVERS

TLO hereby waives, relinquishes and releases any and all liens, including without limitation, any and all warehouseman’s liens, custodian’s liens, rights of retention and/or similar rights under all applicable laws, which TLO would or might otherwise have under or with respect to the Products throughput, stored or handled hereunder. TLO further agrees to furnish documents reasonably acceptable to Customer and its lender(s) (if applicable), and to cooperate with Customer in assuring and demonstrating that Products titled in Customer’s name shall not be subject to any lien on the Terminal or TLO’s Products throughput or stored there.

22. LIMITATION ON LIABILITY

(a) No Special Damages . Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement, REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages actually awarded to a third party or assessed by a governmental authority and for which a Party is properly entitled to indemnification from the other Party pursuant to the express provisions of this Agreement.

 

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(b) Claims and Liability for Lost Product . TLO shall not be liable to Customer for lost or damaged Product unless Customer notifies TLO in writing within ninety (90) days of the report of any incident or the date Customer learns of any such loss or damage to the Product. TLO’s maximum liability to Customer for any lost or damaged Product shall be limited to (i) the lesser of (1) the replacement value of the Product at the time of the incident based upon the price as posted by Platts or similar publication for similar Product in the same locality, and if no other similar Product is in the locality, then in the state, or (2) the actual cost paid for the Product by Customer (copies of Customer’s invoices of cost paid must be provided), less (ii) the salvage value, if any, of the damaged Product.

(c) No Guarantees or Warranties . Except as expressly provided in the Agreement, neither Customer nor TLO makes any guarantees or warranties of any kind, expressed or implied. TLO specifically disclaims all implied warranties of any kind or nature, including any implied warranty of merchantability and/or any implied warranty of fitness for a particular purpose.

23. INDEMNITIES

(a) TLO Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TLO shall release, defend, protect, indemnify, and hold harmless Customer, its carriers, and each of its and their respective affiliates, officers, directors, employees, agents, contractors, successors, and assigns (excluding any member of the Partnership Group) (collectively the “ Customer Group ”), from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of Customer, TLO or the General Partner, and, as applicable, their carriers, customers, representatives, and agents, (ii) loss of or damage to any property, products, material, and/or equipment belonging to Customer, TLO and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein), (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of TLO or the General Partner in connection with the ownership or operation of the Terminal and the services provided hereunder, and, as applicable, their carriers, customers (other than Customer), representatives, and agents, or those of their respective employees with respect to such matters, and (iv) any losses incurred by Customer due to violations of this Agreement or any Terminal Service Order by TLO, or, as applicable, its customers (other than Customer), representatives, and agents; PROVIDED THAT TLO SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY

 

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RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP.

(b) Customer Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, Customer shall release, defend, protect, indemnify, and hold harmless TLO, General Partner, the Partnership, their subsidiaries and their respective officers, directors, members, managers, employees, agents, contractors, successors, and assigns (collectively the “ Partnership Group ”) from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TLO, the General Partner, Customer, and, as applicable, their carriers, customers, representatives, and agents; (ii) loss of or damage to any property, products, material, and/or equipment belonging to TLO, Customer, and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein); (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of Customer, in connection with Customer’s use of the Terminal and the services provided hereunder and Customer’s Products stored hereunder, and, as applicable, its Carriers, customers, representatives, and agents, or those of their respective employees with respect to such matters; and (iv) any losses incurred by TLO due to violations of this Agreement or any Terminal Service Order by Customer, or, as applicable, its carriers, customers, representatives, and agents; PROVIDED THAT CUSTOMER SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP.

(c) Written Claim . Neither Party shall be obligated to indemnify the other Party or be liable to the other Party unless a written claim for indemnity is delivered to the other Party within ninety (90) days after the date that a claim is reported or discovered, whichever is earlier.

(d) No Limitation . Except as expressly provided otherwise in this Agreement, the scope of these indemnity provisions may not be altered, restricted, limited, or changed by any other provision of this Agreement. The indemnity obligations of the Parties as set out in this Section 23 are independent of any insurance requirements as set out in Section 24 , and such indemnity obligations shall not be lessened or extinguished by reason of a Party’s failure to obtain the required insurance coverages or by any defenses asserted by a Party’s insurers.

(e) Survival . These indemnity obligations shall survive the termination of this Agreement until all applicable statutes of limitation have run regarding any claims that could be made with respect to the activities contemplated by this Agreement.

 

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(f) Mutual and Express Acknowledgement . THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED PARTY. EACH PARTY ACKNOWLEDGES THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

(g) Third Party Indemnification . If any Party has the rights to indemnification from a third party, the indemnifying party under this Agreement shall have the right of subrogation with respect to any amounts received from such third-party indemnification claim.

24. INSURANCE

(a) Minimum Limits . At all times during the Term and for a period of two (2) years after termination of this Agreement for any coverage maintained on a “claims-made” or “occurrence” basis, Customer and/or its Carrier (if applicable) shall maintain at their expense the below listed insurance in the amounts specified below, or self-insurance in such amounts as may be agreed pursuant to a Terminal Service Order. Customer shall require that Carrier cause all of its contractors providing authorized drivers or authorized vehicles, to carry such insurance, and Customer shall be liable to TLO for their failure to do so. Such insurance shall provide coverage to TLO and such policies, other than Worker’s Compensation Insurance, shall include TLO as an Additional Insured. Each policy shall provide that it is primary to and not contributory with any other insurance, including any self-insured retention, maintained by TLO (which shall be excess) and each policy shall provide the full coverage required by this Agreement. All such insurance shall be written with carriers and underwriters acceptable to TLO, and eligible to do business in the state where the Terminal is located and having and maintaining an A.M. Best financial strength rating of no less than “A-” and financial size rating no less than “VII”; provided that Customer and/or the Carrier may procure worker’s compensation insurance from the state fund of the state where the Terminal is located. All limits listed below are required MINIMUM LIMITS:

(i) Workers Compensation and Occupational Disease Insurance which fully complies with Applicable Law of the state where the Terminal is located, in limits not less than statutory requirements;

(ii) Employers Liability Insurance with a minimum limit of $1,000,000 for each accident, covering injury or death to any employee which may be outside the scope of the worker’s compensation statute of the jurisdiction in which the worker’s service is performed, and in the aggregate as respects occupational disease;

 

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(iii) Commercial General Liability Insurance, including contractual liability insurance covering Carrier’s indemnity obligations under this Agreement, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limits as may be required by TLO or by Applicable Law from time to time. This policy shall include Broad Form Contractual Liability insurance coverage which shall specifically apply to the obligations assumed in this Agreement by Customer;

(iv) Automobile Liability Insurance covering all owned, non-owned and hired vehicles, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limit(s) as may be required by Customer or by Applicable Law from time to time. Coverage must assure compliance with Sections 29 and 30 of the Motor Carrier Act of 1980 and all applicable rules and regulations of the Federal Highway Administration’s Bureau of Motor Carrier Safety and Interstate Commerce Commissioner (Form MCS 90 Endorsement). Limits of liability for this insurance must be in accordance with the financial responsibility requirement of the Motor Carrier Act, but not less than $1,000,000 per occurrence;

(v) Excess (Umbrella) Liability Insurance with limits not less than $4,000,000 per occurrence. Additional excess limits may be utilized to supplement inadequate limits in the primary policies required in items (ii), (iii), and (iv) above;

(vi) Pollution Legal Liability with limits not less than $25,000,000 per loss with an annual aggregate of $25,000,000. Coverage shall apply to bodily injury and property damage including loss of use of damaged property and property that has not been physically injured; cleanup costs, defense, including costs and expenses incurred in the investigation, defense or settlement of claim; and

(vii) Cargo/Inventory Insurance, with a limit of no less than $1,000,000, which property insurance shall be first-party insurance to adequately cover all Products owned by Customer located at the Terminal.

(b) Waiver of Subrogation . All such policies must be endorsed with a Waiver of Subrogation endorsement, effectively waiving rights of recovery under subrogation or otherwise, against TLO, and shall contain where applicable, a severability of interest clause and a standard cross liability clause.

(c) Copies of Insurance Certificates or Policies . Upon execution of this Agreement and prior to the operation of any equipment by Customer, Carrier or its authorized drivers at the Terminal, Customer and/or Carrier will furnish to TLO, and at least annually thereafter (or at any other times upon request by TLO) during the Term (and for any coverage maintained on a “claims-made” basis, for two (2) years after the termination of this Agreement), insurance certificates and/or certified copies of the original policies to evidence the insurance required herein, including on behalf of Carrier’s contractors providing authorized vehicles or authorized drivers. Such certificates shall be in the form of the “Accord” Certificate of Insurance, and reflect that they are for the benefit of TLO and shall provide that there will be no material change in or cancellation of the policies unless TLO is given at least thirty (30) days prior written notice. Certificates providing evidence of renewal of coverage shall be furnished to TLO prior to policy expiration.

 

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(d) Responsibility for Deductibles . Customer and/or Carrier shall be solely responsible for any deductibles or self-insured retention.

25. GOVERNMENT REGULATIONS

(a) Party Certification . Each Party certifies that none of the Products covered by this Agreement or any Terminal Service Order were derived from crude petroleum, petrochemical, or gas which was produced or withdrawn from storage in violation of any federal, state or other governmental law, nor in violation of any rule, regulation or promulgated by any governmental agency having jurisdiction in the premises.

(b) Licenses and Permits . TLO shall maintain all necessary licenses and permits for the storage of Products at the Terminal.

(c) Compliance with Applicable Law . The Parties are entering into this Agreement and any Terminal Service Order in reliance upon and shall comply in all material respects with all Applicable Law which directly or indirectly affects the Products throughput hereunder, or any receipt, throughput delivery, transportation, handling or storage of Products hereunder or the ownership, operation or condition of the Terminal. Each Party shall be responsible for compliance with all Applicable Law associated with such Party’s respective performance hereunder and the operation of such Party’s facilities. In the event any action or obligation imposed upon a Party under this Agreement and any Terminal Service Order shall at any time be in conflict with any requirement of Applicable Law, then this Agreement and any Terminal Service Order shall immediately be modified to conform the action or obligation so adversely affected to the requirements of the Applicable Law, and all other provisions of this Agreement and any Terminal Service Order shall remain effective.

(d) Material Change in Applicable Law . If during the Term, any new Applicable Law becomes effective or any existing Applicable Law or its interpretation is materially changed, which change is not addressed by another provision of this Agreement or any Terminal Service Order and which has a material adverse economic impact upon a Party, either Party, acting in good faith, shall have the option to request renegotiation of the relevant provisions of this Agreement or a Terminal Service Order with respect to future performance. The Parties shall then meet to negotiate in good faith amendments to this Agreement or to an applicable Terminal Service Order that will conform to the new Applicable Law while preserving the Parties’ economic, operational, commercial and competitive arrangements in accordance with the understandings set forth herein.

26. SUSPENSION OF REFINERY OPERATIONS

(a) No Termination . This Agreement shall continue in full force and effect regardless of whether Customer decides to permanently or indefinitely suspend refining operations at the Refinery for any period.

 

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(b) Continued Liability for Shortfall Payments . If refining operations at the Refinery is suspended for any reason (including Refinery turnarounds and other scheduled maintenance), then Customer shall remain liable for Shortfall Payments under this Agreement for the duration of the suspension.

27. FORCE MAJEURE

(a) Definitions and Notice . As soon as possible upon the occurrence of a Force Majeure, TLO shall provide Customer with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). TLO shall identify in such Force Majeure Notice the approximate length of time that TLO reasonably believes in good faith such Force Majeure shall continue (the “ Force Majeure Period ”). For the duration of the Force Majeure Period, Customer shall be permitted to reduce its Minimum Throughput Commitment as provided in Section 28(b) . If TLO advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive Months, then, subject to Section 28 below, at any time after TLO delivers such Force Majeure Notice, either Party may terminate this Agreement, but only upon delivery to the other Party of a notice (a “ Termination Notice ”) at least twelve (12) Months prior to the expiration of the Force Majeure Period; provided, however, that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends prior to the expiration of such twelve (12)-Month period. For the avoidance of doubt, neither Party may exercise its right under this Section 27(a) to terminate this Agreement as a result of a Force Majeure if the Terminal has been restored to working order since the applicable Force Majeure, including pursuant to a Restoration.

(b) Revocation of Customer Termination Notice . Notwithstanding the foregoing, if Customer delivers a Termination Notice to TLO (the “ Customer Termination Notice ”) and, within thirty (30) days after receiving such Customer Termination Notice, TLO notifies Customer that TLO reasonably believes in good faith that it shall be capable of fully performing its obligations under this Agreement within a reasonable period of time and Customer mutually agrees (which agreement shall not be unreasonably withheld), then the Customer Termination Notice shall be deemed revoked and the applicable portion of this Agreement shall continue in full force and effect as if such Customer Termination Notice had never been given.

28. CAPABILITIES OF FACILITIES

(a) Service Interruption . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall use reasonable commercial efforts to minimize the interruption of service at the Terminal and any portion thereof. TLO shall promptly inform Customer operational personnel of any anticipated partial or complete interruption of service at the Terminal, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions TLO is taking to resume full operations, provided that TLO shall not have any liability for any failure to notify, or delay in notifying, Customer of any such matters except to the extent Customer has been materially prejudiced or damaged by such failure or delay.

 

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(b) Restoration of Capacity . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products at least equal to the Reserved Capacity. TLO’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or any interruption of service that prevents TLO from terminalling the Reserved Capacity. To the extent TLO is prevented from terminalling volumes equal to the Reserved Capacity for reasons of Force Majeure or other interruption of service, then Customer’s obligation to throughput the Minimum Throughput Commitment and pay any Shortfall Payment shall be reduced proportionately. At such time as TLO is capable of terminalling volumes equal to the Reserved Capacity, Customer’s obligation to throughput the full Minimum Throughput Commitment shall be restored. If for any reason, including, without limitation, a Force Majeure event, the throughput capacity of the Terminal should fall below the Reserved Capacity, then within a reasonable period of time after the commencement of such reduction, TLO shall make repairs to the Terminal to restore the capacity of the Terminal to that required for throughput of the Reserved Capacity (“ Restoration ”). Except as provided below in Section 28(c) , all of such Restoration shall be at TLO’s cost and expense, unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of Customer, its employees, agents or customers or the failure of Customer’s Products to meet the specifications as provided for in Section 15(a) .

(c) Capacity Resolution . In the event of the failure of TLO to maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products equal to the Reserved Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (hereinafter defined). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration of capacity on the Terminal which will, among other things, specify steps to be taken by TLO to fully accomplish Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary terminal industry standards and shall take into consideration TLO’s economic considerations relating to costs of the repairs and Customer’s requirements concerning its refining and marketing operations. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, to the extent the Terminal has capability of doing so, during the period before Restoration is completed. In the event that Customer’s economic considerations justify incurring additional costs to restore the Terminal in a more expedited manner than the time schedule determined in accordance with the preceding sentence, Customer may require TLO to expedite the Restoration to the extent reasonably possible, subject to Customer’s payment, in advance, of the estimated incremental costs to be incurred as a result of the expedited time schedule. In the event the Parties agree to an expedited Restoration plan in which Customer agrees to fund a portion of the Restoration cost, then neither Party shall have the right to terminate this Agreement in connection with a Force Majeure, so long as such Restoration is completed with due diligence, and Customer shall pay its portion of the Restoration costs to TLO in advance based on an estimate based on reasonable engineering standards promulgated by the Association for Facilities Engineering. Upon completion, Customer shall pay the difference

 

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between the actual portion of Restoration costs to be paid by Customer pursuant to this Section 28(c) and the estimated amount paid under the preceding sentence within thirty (30) days after receipt of TLO’s invoice therefor, or, if appropriate, TLO shall pay Customer the excess of the estimate paid by Customer over TLO’s actual costs as previously described within thirty (30) days after completion of the Restoration.

(d) Restoration . If at any time after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TLO either (i) refuses or fails to meet with Customer within the period set forth in Section 28(c) , (ii) fails to agree to perform a Capacity Resolution in accordance with the standards set forth in Section 28(c) , or (iii) fails to perform its obligations in compliance with the terms of a Capacity Resolution, Customer may, as its sole remedy for any breach by TLO of any of its obligations under Section 28(c) , require TLO to complete a Restoration of the Terminal, subject to and to the extent permitted under the terms, conditions and/or restrictions of applicable leases, permits and/or Applicable Law. Any such Restoration required under this Section 28(d) shall be completed by TLO at Customer’s cost. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, during the period while such Restoration is being completed. Any work performed by TLO pursuant to this Section 28(d) shall be performed and completed in a good and workmanlike manner consistent with applicable industry standards and in accordance with all Applicable Law. Additionally, during such period after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, Customer may exercise any remedies available to it under this Agreement (other than termination), including the right to immediately seek temporary and permanent injunctive relief for specific performance by TLO of the applicable provisions of this Agreement, including, without limitation, the obligation to make Restorations as described herein.

(e) Throughput Right of First Refusal . Unless otherwise specified in a Terminal Service Order, all throughput of Customer’s volumes, along with storage related to such throughput, shall be on a fungible commingled basis, and TLO may commingle such Products with Products of third parties of like grade and kind. TLO shall have the right to enter into arrangements with third parties to throughput Products at the Terminal and provide storage related to such throughput; provided however, that (i) TLO shall not enter into any third party arrangements that would restrict or limit the ability of Customer to throughput the Reserved Capacity at the Terminal each Month without Customer’s consent, and (ii) TLO shall give Customer ninety (90) days prior written notice of any proposed throughput agreement with a third party, and if Customer makes an offer on terms no less favorable to TLO than the third-party offer, TLO shall be obligated to enter into a terminalling agreement with Customer on the terms set forth in its proposed offer (“ Throughput Right of First Refusal ”). If Customer does not exercise its Throughput Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling agreement. If no third-party terminalling agreement is consummated during such ninety-day period, the terms and conditions of this Section 28(e) shall again become effective.

(f) Storage Tank Heels . All Tank Heels shall be allocated among storage users on a pro rata basis. Tank Heels cannot be withdrawn from any tank without prior approval of TLO. For storage tanks and capacities identified on a Terminal Service Order as dedicated to and used exclusively for the storage and throughput of Customer’s Product, Customer shall be responsible for providing all Tank Heels required for operation of such tanks.

 

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29. TERMINATION

(a) Default . A Party shall be in default under this Agreement if:

(i) the Party breaches any provision of this Agreement or a Terminal Service Order, which breach has a material adverse effect on the other Party (with such material adverse effect being determined based on this Agreement and all Terminal Service Orders considered as a whole), and such breach is not excused by Force Majeure or cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party (unless such failure is not commercially reasonably capable of being cured in such fifteen (15) Business Day period in which case such Party shall have commenced remedial action to cure such breach and shall continue to diligently and timely pursue the completion of such remedial action after such notice); or

(ii) the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.

(b) Rights upon Default . If either of the Parties is in default as described above, then (A) if Customer is in default, TLO may or (B) if TLO is in default, Customer may: (1) terminate this Agreement upon notice to the defaulting Party; (2) withhold any payments due to the defaulting Party under this Agreement; and/or (3) pursue any other remedy at law or in equity.

(c) Obligation to Cure Breach . If a Party breaches any provision of this Agreement or a Terminal Service Order, which breach does not have a material adverse effect on the other Party, the breaching Party shall still have the obligation to cure such breach.

(d) Product Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove all of its Products including any downgraded and interface Product and Transmix from the Terminal, and TLO shall remove the remaining Tank Heels and tank bottoms and deliver them to Customer or Customer’s designee, within thirty (30) days of such termination or expiration. In the event all of the Product is not removed within such thirty (30) day period, Customer shall be assessed a storage fee to all Products held in storage more than thirty (30) days beyond the termination or expiration of this Agreement until such time Customer’s entire Product is removed from the Terminal; provided however, that Customer shall not be assessed any storage fees associated with the removal of Product if Customer’s ability to remove such Product is delayed or hindered by TLO, its agents or contractors for any reason.

 

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(e) Equipment Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove any and all of its owned equipment (except those purchased by TLO pursuant to Section 7(f) above), and restore the Terminal to their condition prior to the installation of such equipment.

30. RIGHT TO ENTER INTO A NEW TERMINALLING AGREEMENT

(a) New Terminalling Services Agreement . Upon termination of this Agreement or a Terminal Service Order for reasons other than (x) a default by Customer and (y) any other termination of this Agreement or a Terminal Service Order initiated by TLO pursuant to Section 29 , Customer shall have the right to require TLO to enter into a new terminalling services agreement with Customer that (i) is consistent with the terms set forth in this Agreement, (ii) relates to the Terminal, and (iii) has commercial terms that are, in the aggregate, equal to or more favorable to TLO than fair market value terms as would be agreed by similarly-situated parties negotiating at arm’s length; provided, however; that the term of any such new terminalling services agreement shall not extend beyond July 1, 2034.

(b) Terminalling Right of First Refusal . In the event that TLO proposes to enter into a terminalling services agreement with a third party within two (2) years after the termination of this Agreement for reasons other than (x) by default by Customer and (y) any other termination of this Agreement initiated by TLO pursuant to Section 29 , TLO shall give Customer ninety (90) days’ prior written notice of any proposed new terminalling services agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Terminalling First Offer Period ”) in which Customer may make a good faith offer to enter into a new terminalling agreement with TLO (the “ Terminalling Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such terminalling services agreement during the Terminalling First Offer Period, then TLO shall be obligated to enter into a terminalling services agreement with Customer on the terms set forth in Customer’s offer to TLO. If Customer does not exercise its Terminalling Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling services agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 30(b) shall again become effective.

31. STORAGE RIGHT OF FIRST REFUSAL

In the event that TLO proposes to enter into a storage agreement with a third party upon opening up any new storage opportunity at the Terminal during the Term, TLO shall give Customer ninety (90) days’ prior written notice of any proposed new storage agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Storage First Offer Period ”) in which Customer may make a good faith offer to enter into a new storage agreement with TLO (the “ Storage Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such storage agreement during the Storage First Offer Period, then TLO shall be obligated to enter into a storage agreement with Customer on the terms set forth in its proposed offer. If Customer does not

 

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exercise its Storage Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party storage agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 31 shall again become effective.

32. SUBCONTRACT

Should Customer desire to subcontract to a third party (“ Replacement Customer ”) any dedicated or commingled storage subject to a Terminal Service Order, Customer must notify TLO in writing prior to the proposed start of the subcontract. TLO has the right to approve any Replacement Customer, which approval shall not be unreasonably withheld, conditioned or delayed. Unless otherwise agreed in writing between Customer and TLO, and between Replacement Customer and TLO, Customer will continue to be liable for all terms and conditions of this Agreement related to any subcontracted storage tank, including but not limited to, remittance of any fees set forth in a Terminal Service Order applicable to the subcontracted storage tank. Customer shall be responsible for collection of any fees due to Customer from the Replacement Customer. Customer and TLO may mutually agree that operational notices concerning scheduling and similar matters can be directly provided between TLO and any Replacement Customer.

33. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment to TLO . On the Commencement Date, the General Partner shall assign all of its rights and obligations under this Agreement to the Partnership. The Partnership shall immediately assign its rights and obligations hereunder to TLO. Upon such assignment to TLO, TLO shall have all of the respective rights and obligations set forth herein during the Term.

(b) Customer Assignment to Third Party . Customer shall not assign all of its obligations hereunder or under a Terminal Service Order without TLO’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however; that Customer may assign this Agreement, without TLO’s consent, in connection with a sale by Customer of the Refinery so long as the transferee: (i) agrees to assume all of Customer’s obligations under this Agreement; and (ii) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by Customer in its reasonable judgment.

(c) TLO Assignment to Third Party . TLO shall not assign its rights or obligations under this Agreement without Customer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that (i) TLO may assign this Agreement without Customer’s consent in connection with a sale by TLO of the Terminal so long as the transferee: (A) agrees to assume all of TLO’s obligations under this Agreement; (B) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by TLO in its reasonable judgment; and (C) is not a competitor of Customer; and (ii) TLO shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO.

 

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(d) Notification of Assignment . Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required. This Agreement and any Terminal Service Orders shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(e) Partnership Change of Control . Customer’s obligations hereunder shall not terminate in connection with a Partnership Change of Control, provided however, that in the case of a Partnership Change of Control, Customer shall have the option to extend the Term as provided in Section 2 . TLO shall provide Customer with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

34. NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (a) if by transmission by hand delivery, when delivered; (b) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (c) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (d) if by e-mail, one Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to Customer, to:

Tesoro Alaska Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles A. Cavallo III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

all other notices and communications :

Attention: Dennis C. Bak

phone: 310-847-3846

email: Dennis.C.Bak@tsocorp.com

If to TLO, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

 

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For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

35. CONFIDENTIAL INFORMATION

(a) Confidential Information and Exceptions Thereto . Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 35 . Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or becomes available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of TLO that was in the possession of Customer or any of its affiliates as a result of their ownership or operation of the Terminal prior to the Commencement Date);

(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 35 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 35(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of any applicable securities exchange, any of the disclosing Party’s Confidential Information, the receiving Party

 

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shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

(c) Return of Confidential Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 35 , and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

(d) Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

(e) Survival . The obligation of confidentiality under this Section 35 shall survive the termination of this Agreement for a period of two (2) years.

36. MISCELLANEOUS

(a) Amendment or Modification . This Agreement and any Terminal Service Orders may be amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement or a Terminal Service Order may be waived in writing at any time by the Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement, a Terminal Service Order or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement or a Terminal Service Order will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

 

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(b) Integration . This Agreement, together with the Schedules and Terminal Service Orders and the other agreements executed on the date hereof in connection with the transactions contemplated by the Contribution Agreement, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. In the event of a conflict of provisions of this Agreement and the Third Amended and Restated Omnibus Agreement, the provisions of the Third Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Applicable Law; Forum, Venue and Jurisdiction . This Agreement and any Terminal Service Orders shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or any Terminal Service Order brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

 

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(e) Counterparts . This Agreement and any Terminal Service Order hereunder may be executed in one or more counterparts (including by facsimile or portable document format (.pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

(f) Severability . Whenever possible, each provision of this Agreement and any Terminal Service Order will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement, a Terminal Service Order or the application of any such provision to any Person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

(g) No Third Party Rights . Except as specifically provided in Section 23 herein, it is expressly understood that the provisions of this Agreement or any Terminal Service Order do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

(h) Jury Waiver . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

[Signature Page Follows]

 

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IN WITNESS WHEREOF , the Parties hereto have duly executed this Agreement as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO ALASKA COMPANY LLC
By:  

/s/ Phillip M. Anderson

    By:  

/s/ G. Scott Spendlove

  Phillip M. Anderson       G. Scott Spendlove
  President       Senior Vice President and Chief Financial Officer
Solely with respect to Section 33(a) :     Solely with respect to Section 33(a) :
TESORO LOGISTICS GP, LLC     TESORO LOGISTICS LP
By:  

/s/ Phillip M. Anderson

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

/s/ Phillip M. Anderson

        Phillip M. Anderson
        President

 

Signature Page to Terminalling Services Agreement - Nikiski


EXHIBIT 1

FORM OF TERMINAL SERVICE ORDER

(NIKISKI [    ]-         , 20    )

This Terminal Service Order is entered as of         , 20    , by and between Tesoro Alaska Company LLC, a Delaware limited liability company, and Tesoro Logistics Operations LLC, a Delaware limited liability company, pursuant to and in accordance with the terms of the Terminalling Services Agreement – Nikiski, dated as of July 1, 2014, by and among such parties and Tesoro Logistics GP, LLC, a Delaware limited liability company, and Tesoro Logistics LP, a Delaware limited partnership (as amended, supplemented, or otherwise modified from time to time, the “ Agreement ”).

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.

Pursuant to Section 13 of the Agreement, the parties hereto agree to the following provisions:

[Insert applicable provisions:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ; and

(xi) any other services as may be agreed.]

 

Exhibit 1 –

Terminalling Services Agreement - Nikiski


Except as set forth in this Terminal Service Order, the other terms of the Agreement shall continue in full force and effect and shall apply to the terms of this Terminal Service Order.

[Signature Page Follows]

 

Exhibit 1 –

Terminalling Services Agreement - Nikiski


IN WITNESS WHEREOF , the parties hereto have duly executed this Terminal Service Order as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC       TESORO ALASKA COMPANY LLC
By:  

 

      By:  

 

Name:         Name:  
Title:         Title:  

 

Exhibit 1 –

Terminalling Services Agreement - Nikiski

Exhibit 10.2

TERMINALLING SERVICES AGREEMENT – ANACORTES

This Terminalling Services Agreement – Anacortes (the “ Agreement ”) is dated as of July 1, 2014, by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ Customer ”), and Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”), and for purposes of Section 33(a) only, Tesoro Logistics GP, LLC, a Delaware limited liability company (“ General Partner ”), and Tesoro Logistics LP, a Delaware limited partnership (“ Partnership ”).

RECITALS

WHEREAS , on the date hereof, Tesoro Corporation, a Delaware corporation (“ Tesoro ”), Customer and Tesoro Alaska Company LLC, a Delaware limited liability company (“ TAC ”), will contribute certain assets to the General Partner, the General Partner will contribute those assets to the Partnership, and the Partnership will contribute those assets to TLO, all on the terms and conditions set forth in that certain Contribution, Conveyance and Assumption Agreement dated June 23, 2014 by and among Tesoro, Customer, TAC, the Partnership, the General Partner, TLO (the “ Contribution Agreement ”);

WHEREAS , by virtue of its indirect ownership interests in the Partnership, Customer has an economic interest in the financial and commercial success of the Partnership and its operating subsidiary, TLO; and

WHEREAS , Customer and TLO desire to enter into this Agreement to memorialize the terms of their commercial relationship related to the subject matter hereof.

NOW, THEREFORE , in consideration of the covenants and obligations contained herein, the Parties (as defined below) to this Agreement hereby agree as follows:

 

1. DEFINITIONS

Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.

Additized Gasoline ” has the meaning set forth in Section 7(b) .

Agreement ” has the meaning set forth in the Preamble.

Ancillary Services ” has the meaning set forth in Section 3(c) .

API ” means American Petroleum Institute.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.


ASTM ” means ASTM International, formerly known as the American Society for Testing and Materials.

Barrel ” means a volume equal to 42 U.S. gallons of 231 cubic inches each, at 60 degrees Fahrenheit under one atmosphere of pressure.

Base Gasoline ” has the meaning set forth in Section 7(b) .

Biodiesel ” has the meaning set forth in Section 8(a) .

Biodiesel Facilities ” has the meaning set forth in Section 8(a) .

Blending Instructions ” has the meaning set forth in Section 9(c) .

bpd ” means Barrels per day.

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Capacity Resolution ” has the meaning set forth in Section 28(c) .

Carrier ” means a third-party agent or contractor hired by Customer, who is in the business of transporting Products via tank trucks.

Clean Products ” means gasoline, diesel, biodiesel, ethanol and jet fuels.

Clean Products Reserved Capacity ” means an aggregate volume of Barrels of Clean Products per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Clean Products Reserved Capacity during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Commencement Date ” has the meaning set forth in Section 2 .

Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

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

 

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Customer ” has the meaning set forth in the Preamble.

Customer Group ” has the meaning set forth in Section 23(a) .

Customer Termination Notice ” has the meaning set forth in Section 27(b) .

DCA ” has the meaning set forth in Section 7(b) .

Dedicated Tanks ” has the meaning set forth in Section 5(a) .

Diesel Additive Facilities ” has the meaning set forth in Section 7(c) .

EPA ” has the meaning set forth in Section 7(b) .

Ethanol Services ” has the meaning set forth in Section 9(a) .

Excess Amount ” has the meaning set forth in Section 4(b) .

Extension Period ” has the meaning set forth in Section 2 .

Force Majeure ” means events or circumstances, whether foreseeable or not, not reasonably within the control of TLO and which, by the exercise of due diligence, TLO is unable to prevent or overcome, that prevent performance of TLO’s obligations, including: acts of God, strikes, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, equipment, storage tanks or lines of pipe, and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.

Force Majeure Notice ” has the meaning set forth in Section 27(a) .

Force Majeure Period ” has the meaning set forth in Section 27(a) .

General Partner ” has the meaning set forth in the Preamble.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Initial Term ” has the meaning set forth in Section 2 .

LAC ” has the meaning set forth in Section 7(b) .

Light Ends ” means propanes, butanes and pentanes.

Light Ends Reserved Capacity ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Light Ends Reserved Capacity during the Month in which the

 

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Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Clean Products Commitment ” means an aggregate volume of Barrels of Clean Products per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Minimum Products Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Light Ends Commitment ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Minimum Light Ends Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Rail Commitment ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal by loading and unloading railcars, as set forth on Exhibit 2 hereto; provided however, that the Minimum Rail Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

“Minimum Throughput Commitments ” means the Minimum Rail Commitment, the Minimum Clean Products Commitment and the Minimum Light Ends Commitment, and “ Minimum Throughput Commitment ” means any one of them.

Month ” means a calendar month.

Operating Capacity ” means the effective storage capacity of a tank, taking into account accepted engineering principles, industry standards, API guidelines and Applicable Law, only as to Products that each tank is capable of storing, within the requirements of applicable permit requirements and under actual conditions as they may exist at any time. The Operating Capacity of each tank is listed on the applicable Terminal Service Order as of the date of such Terminal Service Order.

Partnership ” has the meaning set forth in the Preamble.

Partnership Change of Control ” means Tesoro ceases to possess, directly or indirectly, the power to direct or cause the direction of the management and policies of the General Partner of the Partnership, whether through ownership of voting securities, by contract, or otherwise.

Partnership Group ” has the meaning set forth in Section 23(b) .

Party ” or “ Parties ” means that each of Customer and TLO is a “Party” and collectively are the “Parties” to this Agreement.

 

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Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Product ” or “ Products ” means the Light Ends and Clean Products described herein as being handled under this Agreement.

Rail Reserved Capacity ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal by loading and unloading railcars, as set forth on Exhibit 2 hereto; provided however, that the Rail Reserved Capacity during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Receiving Party Personnel ” has the meaning set forth in Section 35(d) .

Red Dye ” has the meaning set forth in Section 7(d) .

Refinery ” means Customer’s refining facilities located at Anacortes, Washington.

Replacement Customer ” has the meaning set forth in Section 32 .

Reserved Capacities ” means the Rail Reserved Capacity, the Light Ends Reserved Capacity and the Clean Products Reserved Capacity, and “ Reserved Capacity ” means any one of them.

Restoration ” has the meaning set forth in Section 28(b) .

Shell Capacity ” means the gross storage capacity of a tank for each respective Product, based upon its dimensions, as set forth in an applicable Terminal Service Order.

Shortfall Payment ” has the meaning set forth in Section 4(d) .

Storage First Offer Period ” has the meaning set forth in Section 31 .

Storage Right of First Refusal ” has the meaning set forth in Section 31 .

Storage Services Fee ” has the meaning set forth in Section 5(a) .

Surcharge ” has the meaning set forth in Section 11(a) .

TAC ” has the meaning set forth in the Recitals.

Tank Heels ” consist of the minimum quantity of Product which either (a) must remain in a tank during all periods when the tank is available for service to keep the tank in regulatory compliance or (b) is necessary for physical operation of the tank.

Term ” has the meaning set forth in Section 2 .

 

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Terminal ” means TLO’s Anacortes Terminal adjacent to the Refinery, consisting of a two-lane Clean Product truck terminal, a two-lane Light Ends truck terminal, a Light Ends rail loading and unloading facility and a two-lane Clean Products truck terminal under construction.

Terminal Service Order ” has the meaning set forth in Section 13(a) .

Terminalling Equipment ” has the meaning set forth in Section 4(c) .

Terminalling First Offer Period ” has the meaning set forth in Section 30(b) .

Terminalling Right of First Refusal ” has the meaning set forth in Section 30(b) .

Terminalling Service Fee ” means for any Month during the Term, the total fee per Barrel of throughput paid by Customer during that Month for terminalling and Ancillary Services at the Terminal, but excluding the Storage Services Fee, as set forth on a Terminal Service Order.

Termination Notice ” has the meaning set forth in Section 27(a) .

Tesoro ” has the meaning set forth in the Recitals.

Third Amended and Restated Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Tesoro, Customer, Tesoro Companies, Inc., TAC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

Throughput Right of First Refusal ” has the meaning set forth in Section 28(e) .

TLO ” has the meaning set forth in the Preamble.

Transmix ” has the meaning set forth in Section 6 .

ULSD ” means ultra-low sulfur diesel.

 

2. TERM

The initial term of this Agreement shall commence on the date hereof (the “ Commencement Date ”) and shall continue through July 1, 2024 (the “ Initial Term ”); provided, however, that Customer may, at its option, extend the Initial Term for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ”) by providing written notice of its intent to TLO no less than three hundred sixty-five (365) calendar days prior to the end of the Initial Term or the then-current Extension Period. The Initial Term, and any Extension Period, shall be referred to herein as the “ Term .”

 

3. SERVICES

During the Term and subject to the terms and conditions of this Agreement and any Terminal Service Order, TLO shall make available to Customer the following services:

(a) Commingled storage and throughput capacity pursuant to Section 4 below;

 

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(b) Dedicated storage pursuant to Section 5 below;

(c) Railcar loading, unloading and switching services as set forth on a Terminal Service Order; and

(d) The services pursuant to Sections 6-9 below, other additization services as set forth on a Terminal Service Order and any and other services pursuant to a Terminal Service Order (collectively, the “ Ancillary Services ”).

 

4. THROUGHPUT

(a) Throughput Commitment and Terminalling Service Fee . Customer shall deliver and/or pay for the Minimum Throughput Commitments at the Terminal, and TLO shall make available to Customer at all times commingled storage and throughput capacity at the Terminal sufficient to allow Customer to throughput the Reserved Capacities. Customer shall pay the Terminalling Service Fee for such service as set forth in a Terminal Service Order. Allocation of storage and throughput capacity for separate Products at the Terminal shall be set forth in a Terminal Service Order, if applicable. TLO shall not make any commitments to third parties that would interfere with the ability of Customer to throughput the Reserved Capacities. Customer commits to deliver and/or pay for the Minimum Throughput Commitments on a Monthly basis during the Term.

(b) Excess Capacity . Customer may throughput volumes in excess of a Minimum Throughput Commitment, up to the then-available capacity of the Terminal, net of any third-party commitments, as determined by TLO at any time, which allocation of any excess capacity shall be in accordance with current practices, or as otherwise may be set forth in a Terminal Service Order. If during any Month during the Term, Customer throughputs aggregate volumes greater than a Minimum Throughput Commitment, then Customer shall pay TLO an amount equal to the fee determined by multiplying the actual volumes throughput by Customer in excess of the applicable Minimum Throughput Commitment by the Terminalling Service Fee (the “ Excess Amount ”).

(c) Removal of Equipment from Service . If at any time during the Term, any tank, rack or other equipment or facility of TLO that is dedicated to Customer or otherwise being used to provide services hereunder (“ Terminalling Equipment ”), is removed from service, and if removal of such Terminalling Equipment restricts Customer from being able to throughput a Reserved Capacity or receive associated Ancillary Services, then until such Terminalling Equipment is restored to service, Customer’s applicable Minimum Throughput Commitment shall be reduced by the difference between the applicable Minimum Throughput Commitment and the amount that Customer can effectively throughput at such location without restriction until such Terminalling Equipment is restored to service.

(d) Shortfall Payments . If, during any Month during the Term, Customer throughputs aggregate volumes less than a Minimum Throughput Commitment for such Month, then Customer shall pay TLO an amount (a “ Shortfall Payment ”) for any shortfall. Shortfall Payments shall be equal to the amount determined by taking the difference between (i) the applicable

 

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Minimum Throughput Commitment multiplied by the Terminal Service Fee and (ii) the applicable actual volumes throughput by Customer multiplied by the Terminal Service Fee. The dollar amount of any Shortfall Payment paid by Customer shall be posted as a credit to Customer’s account and may be applied against any Excess Amounts owed by Customer during any of the succeeding three (3) Months. Credits will be applied in the order in which such credits accrue and any remaining portion of the credit that is not used by Customer during the succeeding three (3) Months shall expire ( e.g ., a credit that accrues in January will be available in February, March and April, will expire at the end of April, and must be applied prior to applying any credit which accrues in February).

(e) Third Party Throughput Credit . If TLO throughputs volumes from third parties (other than Replacement Customers) at the Terminal during any Month, such volumes shall be applied as a credit to reduce the applicable Minimum Throughput Commitment, up to a maximum amount equal to such Minimum Throughput Commitment. All volumes throughput by Replacement Customers shall be applied as a credit to reduce the applicable Minimum Throughput Commitment.

 

5. DEDICATED STORAGE

(a) Storage Services Fee . Customer shall pay a Monthly fee (the “ Storage Services Fee ”) to reserve, on a firm basis, all of the existing aggregate Shell Capacity of certain tanks (the “ Dedicated Tanks ”) as specified on a Terminal Service Order. Such fee shall be payable by Customer on a Monthly basis throughout the Term of the Agreement, regardless of the actual volumes of Products stored by TLO on behalf of Customer; provided, however, that the Parties shall from time to time negotiate an appropriate adjustment to such fee if the following conditions are met: (i) Customer requires the full Operating Capacity of the Dedicated Tanks, (ii) the full Operating Capacity of the Tanks is not available to Customer for any reason (other than any reason resulting from or relating to actions or inactions by Customer), and (iii) TLO is unable to otherwise accommodate the actual volumes of Products required to be stored by Customer pursuant to the terms of this Agreement or any Terminal Service Order. Unless otherwise agreed, such adjustment shall be made in proportion to the reduction in Operating Capacity for any time period compared with the Operating Capacity then in effect for the affected Dedicated Tanks pursuant to the mutually agreed Terminal Service Orders. The Parties recognize that the existing Operating Capacity of certain tanks may be less than the Shell Capacity of such Dedicated Tanks, but the Parties acknowledge and agree that the Storage Services Fee shall be set in terms of a dollar-per-Barrel per Month rate based on Shell Capacity in the applicable Terminal Service Order. Such Storage Services Fee shall include all storage, pumping, and transshipment between and among the Dedicated Tanks.

(b) Calculation of Storage Services Fee . The Storage Services Fee shall be calculated using the per Barrel rate set forth on the initial Terminal Service Order executed effective as of the Commencement Date for the then-existing aggregate Shell Capacity of the tanks specified in such initial Terminal Service Order. The Storage Services Fee owed during the Month in which the Commencement Date occurs, if less than a full calendar month, shall be prorated in accordance with the ratio of (i) the number of days in such Month during which this Agreement is effective to (ii) the total number of days in such Month.

 

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6. PRODUCT DOWNGRADE AND INTERFACE

TLO shall account for the volume of Product downgraded, and Customer’s inventory of Products and/or interface shall be adjusted, provided that, interface volume (“ Transmix ”) received shall be allocated (a) in the case of dedicated storage, entirely to Customer and (b) in the case of commingled storage, among Customer and other customers receiving Products generating such Transmix in the same shipment or stored in commingled storage in proportion to each customer’s volume of Products in such shipment or storage. Customer shall remove its Transmix upon notice from TLO and shall be subject to applicable Transmix handling fees upon its removal, as provided in a Terminal Service Order. If Transmix is not removed within fifteen (15) Business Days after notification (such time period to be extended to the extent of any delay or hindrance by TLO, its agents or contractors for any reason), TLO shall have the right to sell such Transmix at market rates and return any proceeds to Customer, less applicable Transmix handling fees in effect at the time of such sale. Product downgraded as a result of ordinary Terminal or pipeline operations including line flushing, rack meter provings or other necessary Terminal operations shall not constitute losses for which TLO is liable to Customer.

 

7. ADDITIZATION OPTIONS

(a) Additive Injection Service . If available at the Terminal, TLO shall provide equipment for the injection of additives, as provided below. Customer shall designate pursuant to a Terminal Service Order which additive injection service shall be provided.

(b) DCA Additization . All gasoline Product leaving the Terminal shall be additized (“ Additized Gasoline ”). As an exception, TLO shall accommodate a request from Customer to lift base gasoline from the Terminal. In that case, the bill of lading issued by TLO shall label all such Product as base gasoline (“ Base Gasoline ”). TLO shall provide a generic Deposit Control Additive (“ DCA ”) injection service, including all required reporting and record keeping prescribed by Applicable Law. The additive supplied shall be an Environmental Protection Agency (“ EPA ”) certified DCA. Subject to the other provisions hereof, Customer may request TLO to instead inject a different proprietary DCA into certain gasoline delivered hereunder, instead of the generic DCA provided by TLO, and TLO shall accommodate such requests pursuant to a Terminal Service Order specifying the specific additization required and fees to be charged for its injection, subject to Customer providing a suitable Additized Gasoline system for such proprietary additive. TLO shall ensure that such additive is injected into all appropriate gasoline Product delivered to Customer at a rate no lower than the Lowest Allowable Concentration (“ LAC ”) at which such additive was certified. The gasoline additization rate shall be determined by Customer, but shall not be less than 1.1 times the LAC specified by the respective additive manufacturer or supplier. Notwithstanding the above, Customer shall be solely responsible for registering with the EPA or any other government agency its use of generic or proprietary additive in its fuels, as required by Applicable Law. Customer shall submit evidence of registration in compliance with 40 C.F.R. Part 80. Customer shall also be responsible for full compliance with any quarterly or other regulatory reporting, and any other requirements under Applicable Law related to use of generic or proprietary additive in Customer’s Product.

 

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(c) Lubricity and Conductivity Additization . TLO shall maintain and operate diesel lubricity and conductivity additive injection facilities (the “ Diesel Additive Facilities ”) at the Terminal in accordance with customary industry standards during the Term, including all required reporting and record keeping prescribed by Applicable Law. TLO shall arrange for purchase and delivery of any and all required lubricity and conductivity additive for injection through the Diesel Additive Facilities at the Terminal. TLO shall inject into all ULSD delivered to Customer at the Terminal an amount of lubricity and conductivity additive that TLO determines to be sufficient to comply with current ASTM diesel lubricity and conductivity specifications. TLO shall, upon request, provide Customer with documentation of additive specifications and additive injection, which TLO shall keep on file at the Terminal.

(d) Red Dye Additization . TLO shall provide a generic red dye additive (“ Red Dye ”) injection service for diesel, including all required reporting and record keeping prescribed by Applicable Law. TLO shall be responsible for determining the injection rates, Red Dye inventory levels, meter readings, and calculations of actual treat rates, in compliance with the minimum levels prescribed by the Internal Revenue Service. Customer is responsible for designating which of its accounts shall be authorized to use Red Dye diesel injection services. TLO equipment shall enable designated Carriers and accounts to inject Red Dye upon request prior to loading diesel Product at the Terminal. Customer’s Carrier shall be solely responsible for designating that a load of diesel Product be injected with Red Dye, and TLO shall have no liability with regard to whether a load of Product is additized with Red Dye. TLO shall not be responsible for any loss, damage or liability that arises from Carrier injecting or failing to inject Red Dye into Customer’s Product, unless caused by TLO’s equipment failure or negligence.

(e) Responsibility for Provision of Additive . For any additization services provided pursuant to this Section 7 , TLO shall be responsible for providing generic additives, and Customer shall be responsible for providing any special or proprietary additives requested by Customer.

(f) Special Additive Equipment . As set forth in a Terminal Service Order, and subject to the other provisions set forth herein and the availability of suitable space at the Terminal, Customer shall have the option of having TLO install and maintain at the Terminal, at Customer’s sole risk, cost and expense, such special additive equipment as may be desirable for Products to be delivered to Customer’s account hereunder. The engineering and installation of any fixture, equipment or appurtenance placed on the Terminal in respect thereof shall be subject to TLO’s prior approval and supervision. During the Term, TLO shall operate the special additive equipment with any fees therefor to be set forth in a Terminal Service Order. Upon the expiration of the Term, TLO will have the option to purchase the special additive equipment for a price to be set forth in a Terminal Service Order.

 

8. BIODIESEL SERVICES

(a) Biodiesel Facilities . If available at the Terminal, TLO shall operate B99/B100 (“ Biodiesel ”) truck rack, tank and inbound manifold blending facilities (the “ Biodiesel Facilities ”) as provided in a Terminal Service Order. The Biodiesel Facilities are intended to provide a means to blend Biodiesel with ULSD. Customer shall be required to keep a Tank Heel inventory in the Biodiesel tanks in proportion with the number of active inventory holders in the tanks.

 

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(b) Payment . Customer shall pay TLO for the Biodiesel blending and throughput provided by TLO as set forth in a Terminal Service Order.

(c) Biodiesel Services Provided . TLO shall (i) coordinate with Customer the scheduling of Biodiesel trucks from Customer to the Terminal; (ii) provide necessary services to convey Customer’s Biodiesel from trucks to appropriate Biodiesel storage tanks where it shall be stored until blended with ULSD and delivered to Customer; and (iii) blend and inject Customer’s Biodiesel into Customer’s ULSD in accordance with Customer’s instructions and Applicable Law. The provision of any new equipment necessary for the services in this Section 8(c) , and which Party shall own and operate such equipment during and after the Term, shall be set forth on a Terminal Service Order.

 

9. ETHANOL BLENDING SERVICES

(a) Services and Equipment . Where ethanol receiving, storage and blending facilities are available at the Terminal, upon Customer’s request, the Parties shall execute a Terminal Service Order pursuant to which TLO shall receive, store and blend ethanol into Customer’s gasoline at the Terminal (“ Ethanol Services ”). TLO shall provide and operate all equipment required for the Ethanol Services. The equipment shall consist of truck and/or rail unloading racks, tanks, pumps, motors, injectors, computer control, and any other ancillary equipment necessary for the providing of the Ethanol Services.

(b) Ethanol Inventories . Customer shall be solely responsible for supplying inventories of ethanol at its own expense, including the scheduling and transporting of ethanol into the Terminal, subject to notice and scheduling procedures mutually agreeable to the Parties. TLO shall receive Customer’s ethanol into fungible ethanol storage at the Terminal, unless otherwise specified in a Terminal Service Order.

(c) Blending Instructions . Upon a request from Customer for Ethanol Services, a Terminal Service Order shall provide the desired blending ratio of ethanol to gasoline at the Terminal (“ Blending Instructions ”), including the minimum Octane (R+M/2) rating for each grade of Customer’s gasoline Product, prior to blending. A change to the blending ratios shall require a Terminal Service Order.

(d) Records . TLO shall maintain for a minimum of five (5) years written or electronic records of the type and volume of oxygenate blended into Customer’s gasoline.

(e) Quality Assurance . TLO shall maintain an industry standard quality assurance oversight program of the ethanol blending process. TLO shall provide Customer with an annual report within fifteen (15) Business Days after the end of each calendar year that, at a minimum, summarizes the volume of Customer’s gasoline received by TLO, the volume of oxygenate added to Customer’s gasoline and total volume of blended gasoline.

 

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(f) Monitoring . TLO shall allow Customer or its agents to monitor the oxygenate blending operation by periodic audit, sampling, testing and/or records review to ensure the overall volumes and type of oxygenate blended into gasoline is consistent with the oxygenate claimed by Customer as required by 40 C.F.R. 80.101(d)(4)(ii)(B)(2). The scope and type of such audits will be negotiated in good faith by the Parties in advance and memorialized in writing.

(g) Customer Liability . TLO shall rely on Blending Instructions and data provided by Customer in performing its obligations under this Agreement or any Terminal Service Order. Customer agrees to be solely responsible for all claims arising from TLO’s use of or reliance on these Blending Instructions and data.

(h) Condition . When performing the Ethanol Services as per Customer’s Blending Instructions, TLO shall not certify to Customer or any third-party that blended gasoline does or shall meet ASTM D 4814 or any federal, state, or local regulatory specifications. Customer agrees that it is receiving from TLO the Blended Gasoline in an “AS IS, WHERE IS” condition without warranties of any kind, including any warranties of merchantability or fitness for a particular purpose, or its ability to meet ASTM or regulatory specifications.

 

10. REIMBURSEMENT FOR NEWLY IMPOSED TAXES AND REGULATORY FEES; EXCISE TAXES

(a) Prompt Reimbursement . Customer shall promptly pay or reimburse TLO for any newly imposed taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) by any federal, state or local government or agency that TLO incurs on Customer’s behalf for the services provided by TLO under this Agreement or any Terminal Service Order. If TLO is required to pay any of the foregoing, Customer shall promptly reimburse TLO in accordance with the payment terms set forth in this Agreement. Any such newly imposed taxes or regulatory fees as provided for in this Section 10(a) shall be specified in an applicable Terminal Service Order.

(b) Excise Tax Certification . Upon written request by TLO, Customer shall supply TLO with a completed signed original notification certificate of gasoline and diesel fuel registrant as required by the Internal Revenue Service’s excise tax regulation. Customer further agrees to comply with all Applicable Law with respect to such taxes.

(c) Exemption Certification . If Customer is exempt from the payment of any taxes allocated to Customer under the foregoing provisions, Customer shall furnish TLO with the proper exemption certificates.

 

11. EXPENDITURE REQUIRED BY NEW LAWS AND REGULATIONS

(a) Surcharge . If, during the Term, any existing laws or regulations are changed or any new laws or regulations are enacted that require TLO to make substantial and unanticipated expenditures (whether capitalized or otherwise) with respect to the Terminal, TLO may, subject to the terms of this Section 11 , impose a surcharge to increase the applicable service fee (“ Surcharge ”), to cover Customer’s pro rata share of the cost of complying with these laws or regulations, based upon the percentage of Customer’s use of the services or facilities impacted by such new laws or regulations.

 

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(b) Notification and Mitigation . TLO shall notify Customer of any proposed Surcharge to be imposed pursuant to Section 11(a) sufficient to cover the cost of any required capital projects and any ongoing increased operating costs. TLO and Customer then shall negotiate in good faith for up to thirty (30) days to mutually determine the effect of the change in law or regulation or new law or regulation, the cost thereof, and how such cost shall be amortized at an interest rate of no more than nine percent (9%) as a Surcharge, with the understanding that TLO and Customer shall use their reasonable commercial efforts to mitigate the impact of, and comply with, these laws and regulations. Without limiting the foregoing, if expenditures requiring a Surcharge may be avoided or reduced through changes in operations, then the Parties shall negotiate in good faith to set forth the appropriate changes in a Terminal Service Order to evidence the reduction of the amount of a Surcharge while leaving the Parties in the same relative economic position they held before the laws or regulations were changed or enacted.

(c) Less Than 15% Surcharge . In the event any Surcharge results in less than a fifteen percent (15%) increase in the applicable service fee, Customer will be assessed such Surcharge on all future invoices during the period in which such Surcharge is in effect for the applicable amortization period, and TLO shall not terminate the affected service from this Agreement.

(d) 15% or More Surcharge . In the event any Surcharge results in a fifteen percent (15%) or more increase in the applicable service fee, TLO shall notify Customer of the amount of the Surcharge required to reimburse TLO for its costs, plus carrying costs, together with reasonable supporting detail for the nature and amount of any such Surcharge.

(i) If within thirty (30) days of such notification provided in this Section 11(d) , Customer does not agree to pay such Surcharge or to reimburse TLO up front for its costs, TLO may elect to either:

 

  a. require Customer to pay such Surcharge, up to a fifteen percent (15%) increase in the applicable service fee; or

 

  b. terminate the service under this Agreement to which the Surcharge applies, upon notice to Customer.

(ii) TLO’s performance obligations under this Agreement shall be suspended or reduced during the above thirty (30) day period to the extent that TLO would be obligated to make such expenditures to continue performance during such period.

(e) Resolution of Surcharge . Following a resolution with respect to the amount and manner of payment of a Surcharge pursuant to this Section 11 , the Parties shall execute an appropriate Terminal Service Order memorializing the terms of such resolution.

(f) Payment of Surcharge . In lieu of paying the Surcharge in connection with any required capital project, Customer may, at its option, elect to pay the full cost of the substantial and unanticipated expenditures upon completion of a project.

 

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12. REIMBURSEMENT FOR TANK CLEANING AND CONVERSION

(a) Reimbursement for Tank Cleaning . If any Dedicated Tanks are removed from service or cleaning of any tanks is performed by TLO at the specific request of Customer, Customer shall bear (or reimburse TLO) for all costs to clean, degas or otherwise prepare the tank(s) including, without limitation, the cost of removal, processing, transportation, disposal, of all waste and the cost of any taxes or charges TLO may be required to pay in regard to such waste. For any tanks that are dedicated to Customer for segregated storage of Customer’s Products as set forth in any Terminal Service Order, Customer agrees to reimburse TLO for the reasonable cost of changes necessary to return the dedicated storage tanks to TLO on termination of their dedication for segregated storage under this Agreement, in the same condition as originally received less normal wear and tear, unless otherwise mutually agreed by the Parties.

(b) Reimbursement for Tank Conversion . If Customer requests that any dedicated tank be changed for storage of a different grade or type of Product, TLO shall agree to a change in such service, if the same can be accomplished in accordance with reasonable commercial standards, accepted industry and engineering guidelines, permit requirements and Applicable Law. If any such modifications, improvements, vapor recovery, cleaning, degassing, or other preparation of the tanks is performed by TLO at the request of Customer, Customer shall bear all direct costs attributable thereto, including, without limitation, the cost of removal, processing, transportation, and disposal of all waste and the cost of any taxes or mutually agreed charges TLO may be required to pay in regard to such waste, which costs shall be set forth on the applicable Terminal Service Order.

 

13. TERMINAL SERVICE ORDERS; PAYMENT

(a) Description . TLO and Customer shall enter into one or more terminal service orders for the Terminal substantially in the form attached hereto as Exhibit 1 (each, a “ Terminal Service Order ”). Upon a request by Customer pursuant to this Agreement or as deemed necessary or appropriate by TLO in connection with the services to be delivered pursuant hereto, TLO shall generate a Terminal Service Order to set forth the specific terms and conditions for providing the applicable services described therein and the applicable fees to be charged for such services. No Terminal Service Order shall be effective until fully executed by both TLO and Customer.

(b) Included Items . Items available for inclusion on a Terminal Service Order include, but are not limited to, the following:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

 

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(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ;

(xi) terms and conditions for the provision of railcar loading, unloading and switching services; and

(xii) any other services as may be agreed.

(c) Invoices . TLO shall invoice Customer on a monthly basis and Customer shall pay all amounts due under this Agreement and any Terminal Service Order no later than ten (10) calendar days after Customer’s receipt of TLO’s invoices. Any past due payments owed by Customer shall accrue interest, payable on demand, at the lesser of (i) the rate of interest announced publicly by JPMorgan Chase Bank, in New York, New York, as JPMorgan Chase Bank’s prime rate (which Parties acknowledge and agree is announced by such bank and used by the Parties for reference purposes only and may not represent the lowest or best rate available to any of the customers of such bank or the Parties), plus four percent (4%), and (ii) the highest rate of interest (if any) permitted by Applicable Law, from the due date of the payment through the actual date of payment.

(d) Fee Increases . Any fees of a fixed amount set forth in this Agreement and any Terminal Service Order shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%).

(e) Conflict between Agreement and Terminal Service Order . In case of any conflict between the terms of this Agreement and the terms of any Terminal Service Order, the terms of the applicable Terminal Service Order shall govern.

 

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14. CUSTODY TRANSFER AND TITLE

(a) Custody of Pipeline Receipts and Deliveries . For Product received into the Terminal by pipeline, custody of the Product shall pass to TLO at the flange where it enters the Terminal’s receiving line. For Product delivered by the Terminal into a pipeline, custody of the Product shall pass to Customer at the flange where it exits the Terminal’s delivery line.

(b) Custody of Truck Receipts and Deliveries . For receipts and deliveries to or from trucks, custody shall pass at the flange where the hoses at TLO’s facility interconnect with the truck.

(c) Custody of Rail Receipts and Deliveries . For Product received by rail, custody shall pass to TLO when the switching locomotive used to transfer Customer’s rail cars to the Terminal is uncoupled from such rail cars at the Terminal.

(d) Custody of Marine Receipts and Deliveries . For receipts and deliveries to or from marine vessels, custody shall pass at the flange where the Terminal interconnects with the hoses connected to the marine vessel.

(e) In-Tank . Deliveries by book transfer shall be reflected in the books of TLO.

(f) Title Transfer . Upon re-delivery of any Product to Customer’s account, Customer shall become solely responsible for any loss, damage or injury to Person or property or the environment, arising out of transportation, possession or use of such Product after transfer of custody and the loss allowance provisions hereof shall apply to Product while in TLO’s custody. Title to all of Customer’s Product received in the Terminal shall remain with Customer at all times. Both Parties acknowledge that this Agreement represents a bailment of Products by Customer to TLO and not a consignment of Products, it being understood that TLO has no authority hereunder to sell or seek purchasers for the Products of Customer, except for Transmix as provided in Section 6 above. Customer hereby warrants that it shall, at all times, have good title to and the right to deliver, throughput, store and receive Products pursuant to the terms of this Agreement and any Terminal Service Order.

 

15. PRODUCT QUALITY

(a) Product Specifications of Delivered Products . Customer warrants that all Products delivered under this Agreement and any Terminal Service Order shall meet the latest applicable pipeline specifications or mutually agreed upon specifications for that Product upon receipt at the Terminal and contain no deleterious substances or concentrations of any contaminants that may make it or its components commercially unacceptable in general industry application. Customer shall not deliver to the Terminal any Products which: (i) would in any way be injurious to the Terminal; (ii) would render the Terminal unfit for the proper storage of similar Products; (iii) would contaminate or otherwise downgrade the quality of the Products stored in commingled storage; (iv) may not be lawfully stored at the Terminal; or (v) otherwise do not meet applicable Product specifications for such Product that are customary in the location of the Terminal. If, however, there are Products that do not have such applicable specifications, the specifications shall be mutually agreed upon by the Parties. Should Customer’s commingled Products not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, Customer shall be liable for all loss, damage and cost incurred thereby, including damage to Products of third parties commingled with Customer’s unfit Products.

 

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(b) Product Specifications of Commingled Storage . TLO shall have the right to store compatible Products received for Customer’s account with Products belonging to TLO or third parties in TLO’s commingled storage tanks. TLO shall handle Customer’s fungible Products in accordance with TLO’s prevailing practices and procedures for handling such Products. The quality of all Products tendered into commingled storage for Customer’s account shall be verified either by Customer’s refinery analysis or supplier’s certification, such that Products so tendered shall meet TLO’s Product specifications. All costs for such analysis shall be borne solely by Customer. TLO shall have the right to sample any Product tendered to the Terminal hereunder. The cost of such sampling shall be borne solely by TLO. All Products returned to Customer shall comply with Product specifications in effect on the date the Products are delivered to Customer. Notwithstanding any other provision herein, any and all Products that leave the Terminal shall meet all relevant ASTM, EPA, federal and state specifications.

(c) Liability for Commingled Storage . TLO shall exercise reasonable care to ensure that all Products delivered by third parties into commingled storage with Customer’s Products meet applicable Product specifications for such Product that are customary in the location of the Terminal. In the event that Customer’s Products are commingled with third-party Products that do not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, TLO shall be liable for all loss, damage and cost incurred thereby.

 

16. MEASUREMENT AND VOLUME LOSSES

(a) Methods of Measurement .

(i) All quantities of Products received or delivered by or into trucks or marine vessels shall be measured and determined based upon the meter readings at the Terminal, as reflected by delivery tickets or bills of lading, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(ii) All quantities of Products received or delivered by or into railcars shall be measured and determined based upon the meter readings at the Terminal, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iii) All quantities of Products received and delivered by pipeline shall be measured and determined based upon the meter readings of the pipeline operator, as reflected by delivery tickets, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iv) Deliveries by book transfer shall be reflected by entries in the books of TLO.

(v) All quantities shall be adjusted to net gallons at 60° F in accordance with ASTM D-1250 Petroleum Measurement Tables, or latest revisions thereof. Meters and temperature probes shall be calibrated according to applicable API standards. Customer shall have the right, at its sole expense, and in accordance with rack location procedure,

 

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to independently certify such calibration. Storage tank gauging shall be performed by TLO’s personnel. TLO’s gauging shall be deemed accurate unless challenged by an independent certified gauger. Customer may perform joint gauging at its sole expense with TLO’s personnel at the time of delivery or receipt of Product, to verify the amount involved. If Customer should request an independent gauger, such gauger must be acceptable to TLO and such gauging shall be at Customer’s sole expense.

(b) Measurement and Volume Loss Control Practices .

(i) TLO shall have no obligation to measure volume gains and losses. In the event third-party Products are terminalled at the Terminal, the Parties shall mutually determine the measurement and volume loss control practices for the Terminal.

(ii) TLO shall be responsible to Customer only for Product losses and/or shortages resulting from the negligent or wrongful acts and omissions of TLO; provided that TLO shall not be responsible to Customer for any Product losses and/or shortages for which Customer is compensated by its cargo/inventory insurance carrier, including through the cargo/inventory insurance coverage required by Section 24 . If Customer fails to maintain the cargo/inventory insurance coverage required by Section 24 , then TLO shall also not be responsible to Customer for any Product losses and/or shortages to the extent Customer would have been compensated by its insurance carrier had Customer maintained the cargo/inventory insurance coverage required by Section 24 .

(iii) Customer shall be responsible for all Product losses and/or shortages it may suffer other than those covered by Section 16(b)(ii) .

 

17. PRODUCT DELIVERIES, RECEIPTS AND WITHDRAWALS

(a) Product Deliveries . All supervised deliveries, receipts and withdrawals hereunder shall be made at such times as may be required by Customer upon prior notice and approval by TLO, all in accordance with the agreed-upon scheduling. Unsupervised deliveries, receipts and withdrawals shall be made only with TLO’s prior approval and in strict accordance with TLO’s current operating procedures for the Terminal. Customer warrants that all vehicles permitted to enter the Terminal on behalf of Customer shall meet all requirements and standards promulgated by applicable regulatory authority including the Department of Transportation, the Occupational Safety and Health Administration, and the EPA. Customer further warrants that it shall only send to the Terminal those employees, agents and other representatives acting on behalf of and at Customer’s direction who have been properly instructed as to the characteristics and safe hauling methods associated with the Products to be loaded and hauled. Customer further agrees to be responsible to TLO for the performance under this Agreement by its agents and/or representatives receiving or delivering Products at the Terminal.

(b) Loading Devices . Customer shall withdraw from the Terminal only those Products that it is authorized to withdraw hereunder. Customer shall neither duplicate nor permit the duplication of any loading device (i.e., card lock access), provided hereunder. Customer shall be fully and solely responsible for all Products loaded through the use of the loading devices issued to Customer in accordance with this Agreement; provided however, that Customer shall

 

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not have any responsibility or liability hereunder in the event that the load authorization system provided hereunder fails or malfunctions in any way unless a credit department override is provided, which authorizes Customer to load the Products.

(c) Legal Compliance . Both Parties shall abide by all federal, state and local statutes, laws and ordinances and all rules and regulations which are promulgated by TLO and which are either furnished to Customer or posted at the Terminal, with respect to the use of the Terminal as herein provided. It is understood and agreed by Customer that these rules and regulations may be changed, amended or modified by TLO at any time. All changes, amendments and modifications shall become binding upon Customer ten (10) days following the posting of a copy at the Terminal or the receipt by Customer of a copy, whichever occurs sooner.

(d) Customer Representatives . For all purposes hereunder, Customer’s jobbers, distributors, Carriers, haulers and other customers designated in writing or otherwise by Customer to have loading privileges under this Agreement or having possession of any loading device furnished to Customer pursuant to this Agreement, together with their respective officers, servants and employees, shall, when they access the Terminal, be deemed to be representatives of Customer.

 

18. DELIVERIES INTO TRANSPORT TRUCKS

Prior to transporting any Products loaded into transport trucks at the Terminal, TLO shall make or cause to be made, the following certifications on the delivery receipt or bill of lading covering the Products received:

“If required by 49 C.F.R. 172.204, this is to certify that the above-named materials are properly classified, described, packaged, marked and labeled, and are in proper condition for transportation according to the applicable regulations of the Department of Transportation. Carrier hereby certifies that the cargo tank used for this shipment is a proper container for the commodity loaded therein and complies with Department of Transportation specifications and certifies that cargo tank is properly placarded and marked to comply with regulations pertaining to hazardous materials.”

TLO shall require each Carrier coming into the Terminal to expressly agree in writing to be bound by the provisions of a carrier access agreement with respect to withdrawals and loading of Products hereunder, to conduct its operations at the Terminal in a safe manner, in accordance with all Applicable Law.

 

19. ACCOUNTING PROVISIONS AND DOCUMENTATION

(a) Required Reports . TLO shall furnish Customer with the following reports covering services hereunder involving Customer’s Products:

(i) within ten (10) Business Days following the end of the Month, a statement showing, by Product: (A) Customer’s monthly aggregate deliveries into the Terminal; (B) Customer’s monthly receipts from the Terminal; (C) calculation of all Customer’s monthly storage and handling fees; (D) Customer’s opening inventory for the preceding

 

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Month; (E) appropriate volume loss adjustments (as applicable in accordance with Section 16 ); (F) Customer’s closing inventory for the preceding Month; and (G) the actual volumes of TLO third party throughput handled at the Terminal during a Month up to the applicable Minimum Throughput Commitment, pursuant to Section 4(e) ;

(ii) a copy of any meter calibration report, to be available for inspection upon reasonable request by Customer at the Terminal following any calibration;

(iii) upon delivery from the Terminal, a hard copy bill of lading to the Carrier for each delivery; upon reasonable request only, a hard copy bill of lading shall be provided to Customer’s accounting group; upon each delivery from the Terminal, bill of lading information shall be sent electronically through a mutually agreeable system; and

(iv) transfer documents for each in-tank transfer.

(b) Required Maintenance of Truck Loading Capabilities . TLO shall be required to maintain the capabilities to support truck load authorization technologies at the Terminal.

 

20. AUDIT AND CLAIMS PERIOD

Each Party and its duly authorized agents and/or representatives shall have reasonable access to the accounting records and other documents maintained by the other Party which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term and for a period of up to three (3) years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within ninety (90) days after the delivery in question or shall be deemed to have been waived.

 

21. LIEN WAIVERS

TLO hereby waives, relinquishes and releases any and all liens, including without limitation, any and all warehouseman’s liens, custodian’s liens, rights of retention and/or similar rights under all applicable laws, which TLO would or might otherwise have under or with respect to the Products throughput, stored or handled hereunder. TLO further agrees to furnish documents reasonably acceptable to Customer and its lender(s) (if applicable), and to cooperate with Customer in assuring and demonstrating that Products titled in Customer’s name shall not be subject to any lien on the Terminal or TLO’s Products throughput or stored there.

 

22. LIMITATION ON LIABILITY

(a) No Special Damages . Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement, REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages actually awarded to a third party or assessed by a governmental authority and for which a Party is properly entitled to indemnification from the other Party pursuant to the express provisions of this Agreement.

 

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(b) Claims and Liability for Lost Product . TLO shall not be liable to Customer for lost or damaged Product unless Customer notifies TLO in writing within ninety (90) days of the report of any incident or the date Customer learns of any such loss or damage to the Product. TLO’s maximum liability to Customer for any lost or damaged Product shall be limited to (i) the lesser of (1) the replacement value of the Product at the time of the incident based upon the price as posted by Platts or similar publication for similar Product in the same locality, and if no other similar Product is in the locality, then in the state, or (2) the actual cost paid for the Product by Customer (copies of Customer’s invoices of cost paid must be provided), less (ii) the salvage value, if any, of the damaged Product.

(c) No Guarantees or Warranties . Except as expressly provided in the Agreement, neither Customer nor TLO makes any guarantees or warranties of any kind, expressed or implied. TLO specifically disclaims all implied warranties of any kind or nature, including any implied warranty of merchantability and/or any implied warranty of fitness for a particular purpose.

 

23. INDEMNITIES

(a) TLO Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TLO shall release, defend, protect, indemnify, and hold harmless Customer, its carriers, and each of its and their respective affiliates, officers, directors, employees, agents, contractors, successors, and assigns (excluding any member of the Partnership Group) (collectively the “ Customer Group ”), from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of Customer, TLO or the General Partner, and, as applicable, their carriers, customers, representatives, and agents, (ii) loss of or damage to any property, products, material, and/or equipment belonging to Customer, TLO and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein), (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of TLO or the General Partner in connection with the ownership or operation of the Terminal and the services provided hereunder, and, as applicable, their carriers, customers (other than Customer), representatives, and agents, or those of their respective employees with respect to such matters, and (iv) any losses incurred by Customer due to violations of this Agreement or any Terminal Service Order by TLO, or, as applicable, its customers (other than Customer), representatives, and agents; PROVIDED THAT TLO SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY

 

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RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP.

(b) Customer Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, Customer shall release, defend, protect, indemnify, and hold harmless TLO, General Partner, the Partnership, their subsidiaries and their respective officers, directors, members, managers, employees, agents, contractors, successors, and assigns (collectively the “ Partnership Group ”) from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TLO, the General Partner, Customer, and, as applicable, their carriers, customers, representatives, and agents; (ii) loss of or damage to any property, products, material, and/or equipment belonging to TLO, Customer, and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein); (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of Customer, in connection with Customer’s use of the Terminal and the services provided hereunder and Customer’s Products stored hereunder, and, as applicable, its Carriers, customers, representatives, and agents, or those of their respective employees with respect to such matters; and (iv) any losses incurred by TLO due to violations of this Agreement or any Terminal Service Order by Customer, or, as applicable, its carriers, customers, representatives, and agents; PROVIDED THAT CUSTOMER SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP.

(c) Written Claim . Neither Party shall be obligated to indemnify the other Party or be liable to the other Party unless a written claim for indemnity is delivered to the other Party within ninety (90) days after the date that a claim is reported or discovered, whichever is earlier.

(d) No Limitation . Except as expressly provided otherwise in this Agreement, the scope of these indemnity provisions may not be altered, restricted, limited, or changed by any other provision of this Agreement. The indemnity obligations of the Parties as set out in this Section 23 are independent of any insurance requirements as set out in Section 24 , and such indemnity obligations shall not be lessened or extinguished by reason of a Party’s failure to obtain the required insurance coverages or by any defenses asserted by a Party’s insurers.

(e) Survival . These indemnity obligations shall survive the termination of this Agreement until all applicable statutes of limitation have run regarding any claims that could be made with respect to the activities contemplated by this Agreement.

 

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(f) Mutual and Express Acknowledgement . THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED PARTY. EACH PARTY ACKNOWLEDGES THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

(g) Third Party Indemnification . If any Party has the rights to indemnification from a third party, the indemnifying party under this Agreement shall have the right of subrogation with respect to any amounts received from such third-party indemnification claim.

 

24. INSURANCE

(a) Minimum Limits . At all times during the Term and for a period of two (2) years after termination of this Agreement for any coverage maintained on a “claims-made” or “occurrence” basis, Customer and/or its Carrier (if applicable) shall maintain at their expense the below listed insurance in the amounts specified below, or self-insurance in such amounts as may be agreed pursuant to a Terminal Service Order. Customer shall require that Carrier cause all of its contractors providing authorized drivers or authorized vehicles, to carry such insurance, and Customer shall be liable to TLO for their failure to do so. Such insurance shall provide coverage to TLO and such policies, other than Worker’s Compensation Insurance, shall include TLO as an Additional Insured. Each policy shall provide that it is primary to and not contributory with any other insurance, including any self-insured retention, maintained by TLO (which shall be excess) and each policy shall provide the full coverage required by this Agreement. All such insurance shall be written with carriers and underwriters acceptable to TLO, and eligible to do business in the state where the Terminal is located and having and maintaining an A.M. Best financial strength rating of no less than “A-” and financial size rating no less than “VII”; provided that Customer and/or the Carrier may procure worker’s compensation insurance from the state fund of the state where the Terminal is located. All limits listed below are required MINIMUM LIMITS:

(i) Workers Compensation and Occupational Disease Insurance which fully complies with Applicable Law of the state where the Terminal is located, in limits not less than statutory requirements;

(ii) Employers Liability Insurance with a minimum limit of $1,000,000 for each accident, covering injury or death to any employee which may be outside the scope of the worker’s compensation statute of the jurisdiction in which the worker’s service is performed, and in the aggregate as respects occupational disease;

 

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(iii) Commercial General Liability Insurance, including contractual liability insurance covering Carrier’s indemnity obligations under this Agreement, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limits as may be required by TLO or by Applicable Law from time to time. This policy shall include Broad Form Contractual Liability insurance coverage which shall specifically apply to the obligations assumed in this Agreement by Customer;

(iv) Automobile Liability Insurance covering all owned, non-owned and hired vehicles, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limit(s) as may be required by Customer or by Applicable Law from time to time. Coverage must assure compliance with Sections 29 and 30 of the Motor Carrier Act of 1980 and all applicable rules and regulations of the Federal Highway Administration’s Bureau of Motor Carrier Safety and Interstate Commerce Commissioner (Form MCS 90 Endorsement). Limits of liability for this insurance must be in accordance with the financial responsibility requirement of the Motor Carrier Act, but not less than $1,000,000 per occurrence;

(v) Excess (Umbrella) Liability Insurance with limits not less than $4,000,000 per occurrence. Additional excess limits may be utilized to supplement inadequate limits in the primary policies required in items (ii), (iii), and (iv) above;

(vi) Pollution Legal Liability with limits not less than $25,000,000 per loss with an annual aggregate of $25,000,000. Coverage shall apply to bodily injury and property damage including loss of use of damaged property and property that has not been physically injured; cleanup costs, defense, including costs and expenses incurred in the investigation, defense or settlement of claim; and

(vii) Cargo/Inventory Insurance, with a limit of no less than $1,000,000, which property insurance shall be first-party insurance to adequately cover all Products owned by Customer located at the Terminal.

(b) Waiver of Subrogation . All such policies must be endorsed with a Waiver of Subrogation endorsement, effectively waiving rights of recovery under subrogation or otherwise, against TLO, and shall contain where applicable, a severability of interest clause and a standard cross liability clause.

(c) Copies of Insurance Certificates or Policies . Upon execution of this Agreement and prior to the operation of any equipment by Customer, Carrier or its authorized drivers at the Terminal, Customer and/or Carrier will furnish to TLO, and at least annually thereafter (or at any other times upon request by TLO) during the Term (and for any coverage maintained on a “claims-made” basis, for two (2) years after the termination of this Agreement), insurance certificates and/or certified copies of the original policies to evidence the insurance required herein, including on behalf of Carrier’s contractors providing authorized vehicles or authorized drivers. Such certificates shall be in the form of the “Accord” Certificate of Insurance, and reflect that they are for the benefit of TLO and shall provide that there will be no material change in or cancellation of the policies unless TLO is given at least thirty (30) days prior written notice. Certificates providing evidence of renewal of coverage shall be furnished to TLO prior to policy expiration.

 

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(d) Responsibility for Deductibles . Customer and/or Carrier shall be solely responsible for any deductibles or self-insured retention.

 

25. GOVERNMENT REGULATIONS

(a) Party Certification . Each Party certifies that none of the Products covered by this Agreement or any Terminal Service Order were derived from crude petroleum, petrochemical, or gas which was produced or withdrawn from storage in violation of any federal, state or other governmental law, nor in violation of any rule, regulation or promulgated by any governmental agency having jurisdiction in the premises.

(b) Licenses and Permits . If applicable, TLO shall maintain all necessary licenses and permits for the storage of Products at the Terminal.

(c) Compliance with Applicable Law . The Parties are entering into this Agreement and any Terminal Service Order in reliance upon and shall comply in all material respects with all Applicable Law which directly or indirectly affects the Products throughput hereunder, or any receipt, throughput delivery, transportation, handling or storage of Products hereunder or the ownership, operation or condition of the Terminal. Each Party shall be responsible for compliance with all Applicable Law associated with such Party’s respective performance hereunder and the operation of such Party’s facilities. In the event any action or obligation imposed upon a Party under this Agreement and any Terminal Service Order shall at any time be in conflict with any requirement of Applicable Law, then this Agreement and any Terminal Service Order shall immediately be modified to conform the action or obligation so adversely affected to the requirements of the Applicable Law, and all other provisions of this Agreement and any Terminal Service Order shall remain effective.

(d) Material Change in Applicable Law . If during the Term, any new Applicable Law becomes effective or any existing Applicable Law or its interpretation is materially changed, which change is not addressed by another provision of this Agreement or any Terminal Service Order and which has a material adverse economic impact upon a Party, either Party, acting in good faith, shall have the option to request renegotiation of the relevant provisions of this Agreement or a Terminal Service Order with respect to future performance. The Parties shall then meet to negotiate in good faith amendments to this Agreement or to an applicable Terminal Service Order that will conform to the new Applicable Law while preserving the Parties’ economic, operational, commercial and competitive arrangements in accordance with the understandings set forth herein.

 

26. SUSPENSION OF REFINERY OPERATIONS

(a) No Termination . This Agreement shall continue in full force and effect regardless of whether Customer decides to permanently or indefinitely suspend refining operations at the Refinery for any period.

 

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(b) Continued Liability for Shortfall Payments . If refining operations at the Refinery are suspended for any reason (including Refinery turnarounds and other scheduled maintenance), then Customer shall remain liable for Shortfall Payments under this Agreement for the duration of the suspension.

 

27. FORCE MAJEURE

(a) Definitions and Notice . As soon as possible upon the occurrence of a Force Majeure, TLO shall provide Customer with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). TLO shall identify in such Force Majeure Notice the approximate length of time that TLO reasonably believes in good faith such Force Majeure shall continue (the “ Force Majeure Period ”). For the duration of the Force Majeure Period, Customer shall be permitted to reduce the applicable Minimum Throughput Commitment as provided in Section 28(b) . If TLO advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive Months, then, subject to Section 28 below, at any time after TLO delivers such Force Majeure Notice, either Party may terminate this Agreement with respect to the terminalling service to which the Force Majeure applies, but only upon delivery to the other Party of a notice (a “ Termination Notice ”) at least twelve (12) Months prior to the expiration of the Force Majeure Period; provided, however, that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends prior to the expiration of such twelve (12)-Month period. For the avoidance of doubt, neither Party may exercise its right under this Section 27(a) to terminate this Agreement as a result of a Force Majeure if the Terminal has been restored to working order since the applicable Force Majeure, including pursuant to a Restoration.

(b) Revocation of Customer Termination Notice . Notwithstanding the foregoing, if Customer delivers a Termination Notice to TLO (the “ Customer Termination Notice ”) and, within thirty (30) days after receiving such Customer Termination Notice, TLO notifies Customer that TLO reasonably believes in good faith that it shall be capable of fully performing its obligations under this Agreement within a reasonable period of time and Customer mutually agrees (which agreement shall not be unreasonably withheld), then the Customer Termination Notice shall be deemed revoked and the applicable portion of this Agreement shall continue in full force and effect as if such Customer Termination Notice had never been given.

 

28. CAPABILITIES OF FACILITIES

(a) Service Interruption . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall use reasonable commercial efforts to minimize the interruption of service at the Terminal and any portion thereof. TLO shall promptly inform Customer operational personnel of any anticipated partial or complete interruption of service at the Terminal, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions TLO is taking to resume full operations, provided that TLO shall not have any liability for any failure to notify, or delay in notifying, Customer of any such matters except to the extent Customer has been materially prejudiced or damaged by such failure or delay.

 

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(b) Restoration of Capacity . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products at least equal to the applicable Reserved Capacity. TLO’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or any interruption of service that prevents TLO from terminalling the applicable Reserved Capacity. To the extent TLO is prevented from terminalling volumes equal to the applicable Reserved Capacity for reasons of Force Majeure or other interruption of service, then Customer’s obligation to throughput the applicable Minimum Throughput Commitment and pay any Shortfall Payment shall be reduced proportionately. At such time as TLO is capable of terminalling volumes equal to the applicable Reserved Capacity, Customer’s obligation to throughput the full, applicable Minimum Throughput Commitment shall be restored. If for any reason, including, without limitation, a Force Majeure event, the throughput capacity of the Terminal should fall below the applicable Reserved Capacity, then within a reasonable period of time after the commencement of such reduction, TLO shall make repairs to the Terminal to restore the capacity of the Terminal to that required for throughput of the applicable Reserved Capacity (“ Restoration ”). Except as provided below in Section 28(c) , all of such Restoration shall be at TLO’s cost and expense, unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of Customer, its employees, agents or customers or the failure of Customer’s Products to meet the specifications as provided for in Section 15(a) .

(c) Capacity Resolution . In the event of the failure of TLO to maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products equal to a Reserved Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (hereinafter defined). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration of capacity on the Terminal which will, among other things, specify steps to be taken by TLO to fully accomplish Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary terminal industry standards and shall take into consideration TLO’s economic considerations relating to costs of the repairs and Customer’s requirements concerning its refining and marketing operations. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, to the extent the Terminal has capability of doing so, during the period before Restoration is completed. In the event that Customer’s economic considerations justify incurring additional costs to restore the Terminal in a more expedited manner than the time schedule determined in accordance with the preceding sentence, Customer may require TLO to expedite the Restoration to the extent reasonably possible, subject to Customer’s payment, in advance, of the estimated incremental costs to be incurred as a result of the expedited time schedule. In the event the Parties agree to an expedited Restoration plan in which Customer agrees to fund a portion of the Restoration cost, then neither Party shall have the right to terminate this Agreement in connection with a Force Majeure, so long as such Restoration is completed with due diligence, and Customer shall pay its portion of the Restoration costs to TLO

 

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in advance based on an estimate based on reasonable engineering standards promulgated by the Association for Facilities Engineering. Upon completion, Customer shall pay the difference between the actual portion of Restoration costs to be paid by Customer pursuant to this Section 28(c) and the estimated amount paid under the preceding sentence within thirty (30) days after receipt of TLO’s invoice therefor, or, if appropriate, TLO shall pay Customer the excess of the estimate paid by Customer over TLO’s actual costs as previously described within thirty (30) days after completion of the Restoration.

(d) Restoration . If at any time after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TLO either (i) refuses or fails to meet with Customer within the period set forth in Section 28(c) , (ii) fails to agree to perform a Capacity Resolution in accordance with the standards set forth in Section 28(c) , or (iii) fails to perform its obligations in compliance with the terms of a Capacity Resolution, Customer may, as its sole remedy for any breach by TLO of any of its obligations under Section 28(c) , require TLO to complete a Restoration of the Terminal, subject to and to the extent permitted under the terms, conditions and/or restrictions of applicable leases, permits and/or Applicable Law. Any such Restoration required under this Section 28(d) shall be completed by TLO at Customer’s cost. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, during the period while such Restoration is being completed. Any work performed by TLO pursuant to this Section 28(d) shall be performed and completed in a good and workmanlike manner consistent with applicable industry standards and in accordance with all Applicable Law. Additionally, during such period after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, Customer may exercise any remedies available to it under this Agreement (other than termination), including the right to immediately seek temporary and permanent injunctive relief for specific performance by TLO of the applicable provisions of this Agreement, including, without limitation, the obligation to make Restorations as described herein.

(e) Throughput Right of First Refusal . Unless otherwise specified in a Terminal Service Order, all throughput of Customer’s volumes, along with storage related to such throughput, shall be on a fungible commingled basis, and TLO may commingle such Products with Products of third parties of like grade and kind. TLO shall have the right to enter into arrangements with third parties to throughput Products at the Terminal and provide storage related to such throughput; provided however, that (i) TLO shall not enter into any third party arrangements that would restrict or limit the ability of Customer to throughput the Reserved Capacities at the Terminal each Month without Customer’s consent, and (ii) TLO shall give Customer ninety (90) days prior written notice of any proposed throughput agreement with a third party, and if Customer makes an offer on terms no less favorable to TLO than the third-party offer, TLO shall be obligated to enter into a terminalling agreement with Customer on the terms set forth in its proposed offer (“ Throughput Right of First Refusal ”). If Customer does not exercise its Throughput Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling agreement. If no third-party terminalling agreement is consummated during such ninety-day period, the terms and conditions of this Section 28(e) shall again become effective.

 

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(f) Storage Tank Heels . All Tank Heels shall be allocated among storage users on a pro rata basis. Tank Heels cannot be withdrawn from any tank without prior approval of TLO. For storage tanks and capacities identified on a Terminal Service Order as dedicated to and used exclusively for the storage and throughput of Customer’s Product, Customer shall be responsible for providing all Tank Heels required for operation of such tanks.

 

29. TERMINATION

(a) Default . A Party shall be in default under this Agreement if:

(i) the Party breaches any provision of this Agreement or a Terminal Service Order, which breach has a material adverse effect on the other Party (with such material adverse effect being determined based on this Agreement and all Terminal Service Orders considered as a whole), and such breach is not excused by Force Majeure or cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party (unless such failure is not commercially reasonably capable of being cured in such fifteen (15) Business Day period in which case such Party shall have commenced remedial action to cure such breach and shall continue to diligently and timely pursue the completion of such remedial action after such notice); or

(ii) the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.

(b) Rights upon Default . If either of the Parties is in default as described above, then (A) if Customer is in default, TLO may or (B) if TLO is in default, Customer may: (1) terminate this Agreement upon notice to the defaulting Party; (2) withhold any payments due to the defaulting Party under this Agreement; and/or (3) pursue any other remedy at law or in equity.

(c) Obligation to Cure Breach . If a Party breaches any provision of this Agreement or a Terminal Service Order, which breach does not have a material adverse effect on the other Party, the breaching Party shall still have the obligation to cure such breach.

(d) Product Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove all of its Products including any downgraded and interface Product and Transmix from the Terminal, and TLO shall remove the remaining Tank Heels and tank bottoms and deliver them to Customer or Customer’s designee, within thirty (30) days of such termination or expiration. In the event all of the Product is not removed within such thirty (30) day period, Customer shall be assessed a storage fee to all Products held in storage more than thirty (30) days beyond the termination or expiration of this Agreement until such time Customer’s entire Product is removed from the Terminal; provided however, that Customer shall not be assessed any storage fees associated with the removal of Product if Customer’s ability to remove such Product is delayed or hindered by TLO, its agents or contractors for any reason.

 

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(e) Equipment Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove any and all of its owned equipment (except those purchased by TLO pursuant to Section 7(f) above), and restore the Terminal to their condition prior to the installation of such equipment.

 

30. RIGHT TO ENTER INTO A NEW TERMINALLING AGREEMENT

(a) New Terminalling Services Agreement . Upon termination of this Agreement or a Terminal Service Order for reasons other than (x) a default by Customer and (y) any other termination of this Agreement or a Terminal Service Order initiated by TLO pursuant to Section 29 , Customer shall have the right to require TLO to enter into a new terminalling services agreement with Customer that (i) is consistent with the terms set forth in this Agreement, (ii) relates to the Terminal, and (iii) has commercial terms that are, in the aggregate, equal to or more favorable to TLO than fair market value terms as would be agreed by similarly-situated parties negotiating at arm’s length; provided, however; that the term of any such new terminalling services agreement shall not extend beyond July 1, 2034.

(b) Terminalling Right of First Refusal . In the event that TLO proposes to enter into a terminalling services agreement with a third party within two (2) years after the termination of this Agreement for reasons other than (x) by default by Customer and (y) any other termination of this Agreement initiated by TLO pursuant to Section 29 , TLO shall give Customer ninety (90) days’ prior written notice of any proposed new terminalling services agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Terminalling First Offer Period ”) in which Customer may make a good faith offer to enter into a new terminalling agreement with TLO (the “ Terminalling Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such terminalling services agreement during the Terminalling First Offer Period, then TLO shall be obligated to enter into a terminalling services agreement with Customer on the terms set forth in Customer’s offer to TLO. If Customer does not exercise its Terminalling Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling services agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 30(b) shall again become effective.

 

31. STORAGE RIGHT OF FIRST REFUSAL

In the event that TLO proposes to enter into a storage agreement with a third party upon opening up any new storage opportunity at the Terminal during the Term, TLO shall give Customer ninety (90) days’ prior written notice of any proposed new storage agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Storage First Offer Period ”) in which Customer may make a good faith offer to enter into a new storage agreement with TLO (the “ Storage Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such storage agreement during the Storage First Offer Period, then TLO shall be obligated to enter into a storage agreement with Customer on the terms set forth in its proposed offer. If Customer does not

 

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exercise its Storage Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party storage agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 31 shall again become effective.

 

32. SUBCONTRACT

Should Customer desire to subcontract to a third party (“ Replacement Customer ”) any dedicated or commingled storage subject to a Terminal Service Order, Customer must notify TLO in writing prior to the proposed start of the subcontract. TLO has the right to approve any Replacement Customer, which approval shall not be unreasonably withheld, conditioned or delayed. Unless otherwise agreed in writing between Customer and TLO, and between Replacement Customer and TLO, Customer will continue to be liable for all terms and conditions of this Agreement related to any subcontracted storage tank, including but not limited to, remittance of any fees set forth in a Terminal Service Order applicable to the subcontracted storage tank. Customer shall be responsible for collection of any fees due to Customer from the Replacement Customer. Customer and TLO may mutually agree that operational notices concerning scheduling and similar matters can be directly provided between TLO and any Replacement Customer.

 

33. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment to TLO . On the Commencement Date, the General Partner shall assign all of its rights and obligations under this Agreement to the Partnership. The Partnership shall immediately assign its rights and obligations hereunder to TLO. Upon such assignment to TLO, TLO shall have all of the respective rights and obligations set forth herein during the Term.

(b) Customer Assignment to Third Party . Customer shall not assign all of its obligations hereunder or under a Terminal Service Order without TLO’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however; that Customer may assign this Agreement, without TLO’s consent, in connection with a sale by Customer of the Refinery so long as the transferee: (i) agrees to assume all of Customer’s obligations under this Agreement; and (ii) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by Customer in its reasonable judgment.

(c) TLO Assignment to Third Party . TLO shall not assign its rights or obligations under this Agreement without Customer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that (i) TLO may assign this Agreement without Customer’s consent in connection with a sale by TLO of the Terminal so long as the transferee: (A) agrees to assume all of TLO’s obligations under this Agreement; (B) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by TLO in its reasonable judgment; and (C) is not a competitor of Customer; and (ii) TLO shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO.

 

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(d) Notification of Assignment . Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required. This Agreement and any Terminal Service Orders shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(e) Partnership Change of Control . Customer’s obligations hereunder shall not terminate in connection with a Partnership Change of Control, provided however, that in the case of a Partnership Change of Control, Customer shall have the option to extend the Term as provided in Section 2 . TLO shall provide Customer with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

 

34. NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (a) if by transmission by hand delivery, when delivered; (b) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (c) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (d) if by e-mail, one Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to Customer, to:

Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles A. Cavallo III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

all other notices and communications :

Attention: Dennis C. Bak

phone: 310-847-3846

email: Dennis.C.Bak@tsocorp.com

If to TLO, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

 

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For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

 

35. CONFIDENTIAL INFORMATION

(a) Confidential Information and Exceptions Thereto . Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 35 . Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or becomes available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of TLO that was in the possession of Customer or any of its affiliates as a result of their ownership or operation of the Terminal prior to the Commencement Date);

(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 35 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 35(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of any applicable securities exchange, any of the disclosing Party’s Confidential Information, the receiving Party

 

33


shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

(c) Return of Confidential Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 35 , and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

(d) Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

(e) Survival . The obligation of confidentiality under this Section 35 shall survive the termination of this Agreement for a period of two (2) years.

 

36. MISCELLANEOUS

(a) Amendment or Modification . This Agreement and any Terminal Service Orders may be amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement or a Terminal Service Order may be waived in writing at any time by the Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement, a Terminal Service Order or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement or a Terminal Service Order will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

 

34


(b) Integration . This Agreement, together with the Schedules and Terminal Service Orders and the other agreements executed on the date hereof in connection with the transactions contemplated by the Contribution Agreement, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. In the event of a conflict of provisions of this Agreement and the Third Amended and Restated Omnibus Agreement, the provisions of the Third Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Applicable Law; Forum, Venue and Jurisdiction . This Agreement and any Terminal Service Orders shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or any Terminal Service Order brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

 

35


(e) Counterparts . This Agreement and any Terminal Service Order hereunder may be executed in one or more counterparts (including by facsimile or portable document format (.pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

(f) Severability . Whenever possible, each provision of this Agreement and any Terminal Service Order will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement, a Terminal Service Order or the application of any such provision to any Person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

(g) No Third Party Rights . Except as specifically provided in Section 23 herein, it is expressly understood that the provisions of this Agreement or any Terminal Service Order do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

(h) Jury Waiver . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

[Signature Page Follows]

 

36


IN WITNESS WHEREOF , the Parties hereto have duly executed this Agreement as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ Phillip M. Anderson

    By:  

/s/ G. Scott Spendlove

  Phillip M. Anderson       G. Scott Spendlove
  President       Senior Vice President and Chief Financial
        Officer

Solely with respect to Section 33(a) :

TESORO LOGISTICS GP, LLC

   

Solely with respect to Section 33(a) :

TESORO LOGISTICS LP

By:  

/s/ Phillip M. Anderson

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

/s/ Phillip M. Anderson

        Phillip M. Anderson
        President

 

Signature Page to Terminalling Services Agreement - Anacortes


EXHIBIT 1

FORM OF TERMINAL SERVICE ORDER

(ANACORTES [    ]-             , 20    )

This Terminal Service Order is entered as of             , 20    , by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company, and Tesoro Logistics Operations LLC, a Delaware limited liability company, pursuant to and in accordance with the terms of the Terminalling Services Agreement – Anacortes, dated as of July 1, 2014, by and among such parties and Tesoro Logistics GP, LLC, a Delaware limited liability company, and Tesoro Logistics LP, a Delaware limited partnership (as amended, supplemented, or otherwise modified from time to time, the “ Agreement ”).

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.

Pursuant to Section 13 of the Agreement, the parties hereto agree to the following provisions:

[Insert applicable provisions:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ;

(xi) terms and conditions for the provision of railcar loading, unloading and switching services; and

 

Exhibit 1 –

Terminalling Services Agreement - Anacortes


(xii) any other services as may be agreed.]

Except as set forth in this Terminal Service Order, the other terms of the Agreement shall continue in full force and effect and shall apply to the terms of this Terminal Service Order.

[Signature Page Follows]

 

Exhibit 1 –

Terminalling Services Agreement - Anacortes


IN WITNESS WHEREOF , the parties hereto have duly executed this Terminal Service Order as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO REFINING & MARKETING COMPANY LLC
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  

 

Exhibit 1 –

Terminalling Services Agreement - Anacortes


EXHIBIT 2

MINIMUM COMMITMENTS AND RESERVED CAPACITIES

 

Product

  

Minimum Commitment

  

Reserved Capacity

Light Ends via truck rack

   69,959 Barrels per Month    82,125 Barrels per Month

Light Ends via rail

   128,359 Barrels per Month    151,019 Barrels per Month

Clean Products via truck rack

   51,709 Barrels per Month    60,834 Barrels per month

 

Exhibit 2 –

Terminalling Services Agreement - Anacortes

Exhibit 10.3

AMENDMENT NO. 1 TO

ANACORTES TRACK USE AND THROUGHPUT AGREEMENT

This Amendment No. 1 to the Anacortes Track Use and Throughput Agreement (the “ Amendment No. 1 ”), dated and effective as of July 1, 2014, is by and among Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ TRMC ”), and Tesoro Logistics Operations LLC, a Delaware limited liability company (the “ Operating Company ”) The above-named entities are sometimes referred to in this Amendment No. 1 individually as a “ Party ” and collectively as the “ Parties .”

RECITALS

WHEREAS , the Parties entered into that certain Anacortes Track Use and Throughput Agreement, dated November 15, 2012 (the “ Agreement ”), pursuant to which the Operating Company provides TRMC with throughput services for crude and black oils at the Operating Company’s rail facility in Anacortes, Washington;

WHEREAS , the Parties entered into that certain Terminalling Services Agreement – Anacortes, dated as of the date hereof (the “ TSA ”), pursuant to which the Operating Company will provide throughput services for certain other petroleum products adjacent to the same facility; and

WHEREAS , in connection with the execution of the TSA, the Parties desire to enter into this Amendment No. 1 to amend the Agreement to clarify the products that will be subject to throughput services under the Agreement.

NOW, THEREFORE , 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 hereby agree as follows:

1. The definition of “Product” or “Products” in Section I ( Definitions ) of the Agreement is amended in its entirety to read as follows: “ “ Product ” or “ Products ” means Crude Oil and other black oils.”

2. Other than as set forth above, the Agreement shall remain in full force and effect as written.

3. This Amendment No. 1 shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

4. The provisions of this Amendment No. 1 are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Amendment No. 1.


5. This Amendment No. 1 shall be construed in accordance with and governed by the laws of the State of Texas, without regard to the principles of conflicts of law. Each of the Parties (a) irrevocably agrees that any claims, suits, actions or proceedings arising out of or relating in any way to this Amendment No. 1 shall be exclusively brought in any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims, (b) irrevocably submits to the exclusive jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, of the district court of Bexar County, Texas in connection with any such claim, suit, action or proceeding, (c) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (i) it is not personally subject to the jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or the district court of Bexar County, Texas, or of any other court to which proceedings in such courts may be appealed, (ii) such claim, suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such claim, suit, action or proceeding is improper, (d) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding and (e) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder or by personal service within or without the State of Texas, and agrees that service in such forms shall constitute good and sufficient service of process and notice thereof; provided, however, that nothing in clause (e) hereof shall affect or limit any right to serve process in any other manner permitted by law.

6. If any of the provisions of this Amendment No. 1 are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Amendment No. 1. Instead, this Amendment No. 1 shall be construed as if it did not contain the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Amendment No. 1 at the time of execution of this Amendment No. 1.

7. This Amendment No. 1 constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith.

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

[ Signature Page Follows ]

 

2


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

 

TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO LOGISTICS OPERATIONS LLC
By:  

/s/ Phillip M. Anderson

  Phillip M. Anderson
  President

 

Signature Page to Amendment No. 1 to

Anacortes Track Use and Throughput Agreement

Exhibit 10.4

TERMINALLING SERVICES AGREEMENT – MARTINEZ

This Terminalling Services Agreement – Martinez (the “ Agreement ”) is dated as of July 1, 2014, by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ Customer ”), and Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”), and for purposes of Section 33(a) only, Tesoro Logistics GP, LLC, a Delaware limited liability company (“ General Partner ”), and Tesoro Logistics LP, a Delaware limited partnership (“ Partnership ”).

RECITALS

WHEREAS , on the date hereof, Tesoro Corporation, a Delaware corporation (“Tesoro”), Customer and Tesoro Alaska Company LLC, a Delaware limited liability company (“ TAC ”), will contribute certain assets to the General Partner, the General Partner will contribute those assets to the Partnership, and the Partnership will contribute those assets to TLO, all on the terms and conditions set forth in that certain Contribution, Conveyance and Assumption Agreement dated June 23, 2014 by and among Tesoro, Customer, TAC, the Partnership, the General Partner, TLO (the “ Contribution Agreement ”);

WHEREAS , by virtue of its indirect ownership interests in the Partnership, Customer has an economic interest in the financial and commercial success of the Partnership and its operating subsidiary, TLO; and

WHEREAS , Customer and TLO desire to enter into this Agreement to memorialize the terms of their commercial relationship related to the subject matter hereof.

NOW, THEREFORE , in consideration of the covenants and obligations contained herein, the Parties (as defined below) to this Agreement hereby agree as follows:

 

1. DEFINITIONS

Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.

Additized Gasoline ” has the meaning set forth in Section 7(b) .

Agreement ” has the meaning set forth in the Preamble.

Ancillary Services ” has the meaning set forth in Section 3(c) .

API ” means American Petroleum Institute.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.


ASTM ” means ASTM International, formerly known as the American Society for Testing and Materials.

Barrel ” means a volume equal to 42 U.S. gallons of 231 cubic inches each, at 60 degrees Fahrenheit under one atmosphere of pressure.

Base Gasoline ” has the meaning set forth in Section 7(b) .

Biodiesel ” has the meaning set forth in Section 8(a) .

Biodiesel Facilities ” has the meaning set forth in Section 8(a) .

Blending Instructions ” has the meaning set forth in Section 9(c) .

bpd ” means Barrels per day.

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Capacity Resolution ” has the meaning set forth in Section 28(c) .

Carrier ” means a third-party agent or contractor hired by Customer, who is in the business of transporting Products via tank trucks.

Clean Products ” means gasoline, diesel, biodiesel, ethanol and jet fuels.

Clean Products Reserved Capacity ” means an aggregate volume of Barrels of Clean Products per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Clean Products Reserved Capacity during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Commencement Date ” has the meaning set forth in Section 2 .

Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

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

 

2


Customer ” has the meaning set forth in the Preamble.

Customer Group ” has the meaning set forth in Section 23(a) .

Customer Termination Notice ” has the meaning set forth in Section 27(b) .

DCA ” has the meaning set forth in Section 7(b) .

Dedicated Tanks ” has the meaning set forth in Section 5(a) .

Diesel Additive Facilities ” has the meaning set forth in Section 7(c) .

EPA ” has the meaning set forth in Section 7(b) .

Ethanol Services ” has the meaning set forth in Section 9(a) .

Excess Amount ” has the meaning set forth in Section 4(b) .

Extension Period ” has the meaning set forth in Section 2 .

Force Majeure ” means events or circumstances, whether foreseeable or not, not reasonably within the control of TLO and which, by the exercise of due diligence, TLO is unable to prevent or overcome, that prevent performance of TLO’s obligations, including: acts of God, strikes, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, equipment, storage tanks or lines of pipe, and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.

Force Majeure Notice ” has the meaning set forth in Section 27(a) .

Force Majeure Period ” has the meaning set forth in Section 27(a) .

General Partner ” has the meaning set forth in the Preamble.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Initial Term ” has the meaning set forth in Section 2 .

LAC ” has the meaning set forth in Section 7(b) .

Light Ends ” means propanes, butanes and pentanes.

Light Ends Reserved Capacity ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Light Ends Reserved Capacity during the Month in which the

 

3


Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Clean Products Commitment ” means an aggregate volume of Barrels of Clean Products per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Minimum Products Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Light Ends Commitment ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal through truck rack, as set forth on Exhibit 2 hereto; provided however, that the Minimum Light Ends Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Rail Commitment ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal by loading and unloading railcars, as set forth on Exhibit 2 hereto; provided however, that the Minimum Rail Commitment during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Minimum Throughput Commitments ” means the Minimum Rail Commitment, the Minimum Clean Products Commitment and the Minimum Light Ends Commitment, and “ Minimum Throughput Commitment ” means any one of them.

Month ” means a calendar month.

Operating Capacity ” means the effective storage capacity of a tank, taking into account accepted engineering principles, industry standards, API guidelines and Applicable Law, only as to Products that each tank is capable of storing, within the requirements of applicable permit requirements and under actual conditions as they may exist at any time. The Operating Capacity of each tank is listed on the applicable Terminal Service Order as of the date of such Terminal Service Order.

Partnership ” has the meaning set forth in the Preamble.

Partnership Change of Control ” means Tesoro ceases to possess, directly or indirectly, the power to direct or cause the direction of the management and policies of the General Partner of the Partnership, whether through ownership of voting securities, by contract, or otherwise.

Partnership Group ” has the meaning set forth in Section 23(b) .

Party ” or “ Parties ” means that each of Customer and TLO is a “Party” and collectively are the “Parties” to this Agreement.

 

4


Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Product ” or “ Products ” means the Light Ends and Clean Products described herein as being handled under this Agreement.

Rail Reserved Capacity ” means an aggregate volume of Barrels of Light Ends per Month throughput across the Terminal by loading and unloading railcars, as set forth on Exhibit 2 hereto; provided however, that the Rail Reserved Capacity during the Month in which the Commencement Date occurs shall be prorated in accordance with the ratio of the number of days including and following the Commencement Date in such Month to the total number of days in such Month.

Receiving Party Personnel ” has the meaning set forth in Section 35(d) .

Red Dye ” has the meaning set forth in Section 7(d) .

Refinery ” means Customer’s refining facilities located at Martinez, California.

Replacement Customer ” has the meaning set forth in Section 32 .

Reserved Capacities ” means the Rail Reserved Capacity, the Light Ends Reserved Capacity and the Clean Products Reserved Capacity, and “ Reserved Capacity ” means any one of them.

Restoration ” has the meaning set forth in Section 28(b) .

Shell Capacity ” means the gross storage capacity of a tank for each respective Product, based upon its dimensions, as set forth in an applicable Terminal Service Order.

Shortfall Payment ” has the meaning set forth in Section 4(d) .

Storage First Offer Period ” has the meaning set forth in Section 31 .

Storage Right of First Refusal ” has the meaning set forth in Section 31 .

Storage Services Fee ” has the meaning set forth in Section 5(a) .

Surcharge ” has the meaning set forth in Section 11(a) .

TAC ” has the meaning set forth in the Recitals.

Tank Heels ” consist of the minimum quantity of Product which either (a) must remain in a tank during all periods when the tank is available for service to keep the tank in regulatory compliance or (b) is necessary for physical operation of the tank.

Term ” has the meaning set forth in Section 2 .

 

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Terminal ” means TLO’s Martinez Terminal adjacent to the Refinery, consisting of a three-lane truck rack for the terminalling of Clean Products, and a two-lane truck terminal and a rail loading and unloading facility for the terminalling of Light Ends.

Terminal Service Order ” has the meaning set forth in Section 13(a) .

Terminalling Equipment ” has the meaning set forth in Section 4(c) .

Terminalling First Offer Period ” has the meaning set forth in Section 30(b) .

Terminalling Right of First Refusal ” has the meaning set forth in Section 30(b) .

Terminalling Service Fee ” means for any Month during the Term, the total fee per Barrel of throughput paid by Customer during that Month for terminalling and Ancillary Services at the Terminal, but excluding the Storage Services Fee, as set forth on a Terminal Service Order.

Termination Notice ” has the meaning set forth in Section 27(a) .

Tesoro ” has the meaning set forth in the Recitals.

Third Amended and Restated Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Tesoro, Customer, Tesoro Companies, Inc., TAC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

Throughput Right of First Refusal ” has the meaning set forth in Section 28(e) .

TLO ” has the meaning set forth in the Preamble.

Transmix ” has the meaning set forth in Section 6 .

ULSD ” means ultra-low sulfur diesel.

 

2. TERM

The initial term of this Agreement shall commence on the date hereof (the “ Commencement Date ”) and shall continue through July 1, 2024 (the “ Initial Term ”); provided, however, that Customer may, at its option, extend the Initial Term for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ”) by providing written notice of its intent to TLO no less than three hundred sixty-five (365) calendar days prior to the end of the Initial Term or the then-current Extension Period. The Initial Term, and any Extension Period, shall be referred to herein as the “ Term .”

 

3. SERVICES

During the Term and subject to the terms and conditions of this Agreement and any Terminal Service Order, TLO shall make available to Customer the following services:

(a) Commingled storage and throughput capacity pursuant to Section 4 below;

 

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(b) Dedicated storage pursuant to Section 5 below;

(c) Railcar loading, unloading and switching services as set forth on a Terminal Service Order; and

(d) The services pursuant to Sections 6-9 below, other additization services as set forth on a Terminal Service Order and any and other services pursuant to a Terminal Service Order (collectively, the “ Ancillary Services ”).

 

4. THROUGHPUT

(a) Throughput Commitment and Terminalling Service Fee . Customer shall deliver and/or pay for the Minimum Throughput Commitments at the Terminal, and TLO shall make available to Customer at all times commingled storage and throughput capacity at the Terminal sufficient to allow Customer to throughput the Reserved Capacities. Customer shall pay the Terminalling Service Fee for such service as set forth in a Terminal Service Order. Allocation of storage and throughput capacity for separate Products at the Terminal shall be set forth in a Terminal Service Order, if applicable. TLO shall not make any commitments to third parties that would interfere with the ability of Customer to throughput the Reserved Capacities. Customer commits to deliver and/or pay for the Minimum Throughput Commitments on a Monthly basis during the Term.

(b) Excess Capacity . Customer may throughput volumes in excess of a Minimum Throughput Commitment, up to the then-available capacity of the Terminal, net of any third-party commitments, as determined by TLO at any time, which allocation of any excess capacity shall be in accordance with current practices, or as otherwise may be set forth in a Terminal Service Order. If during any Month during the Term, Customer throughputs aggregate volumes greater than a Minimum Throughput Commitment, then Customer shall pay TLO an amount equal to the fee determined by multiplying the actual volumes throughput by Customer in excess of the applicable Minimum Throughput Commitment by the Terminalling Service Fee (the “ Excess Amount ”).

(c) Removal of Equipment from Service . If at any time during the Term, any tank, rack or other equipment or facility of TLO that is dedicated to Customer or otherwise being used to provide services hereunder (“ Terminalling Equipment ”), is removed from service, and if removal of such Terminalling Equipment restricts Customer from being able to throughput a Reserved Capacity or receive associated Ancillary Services, then until such Terminalling Equipment is restored to service, Customer’s applicable Minimum Throughput Commitment shall be reduced by the difference between the applicable Minimum Throughput Commitment and the amount that Customer can effectively throughput at such location without restriction until such Terminalling Equipment is restored to service.

(d) Shortfall Payments . If, during any Month during the Term, Customer throughputs aggregate volumes less than a Minimum Throughput Commitment for such Month, then Customer shall pay TLO an amount (a “ Shortfall Payment ”) for any shortfall. Shortfall Payments shall be equal to the amount determined by taking the difference between (i) the applicable

 

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Minimum Throughput Commitment multiplied by the Terminal Service Fee and (ii) the applicable actual volumes throughput by Customer multiplied by the Terminal Service Fee. The dollar amount of any Shortfall Payment paid by Customer shall be posted as a credit to Customer’s account and may be applied against any Excess Amounts owed by Customer during any of the succeeding three (3) Months. Credits will be applied in the order in which such credits accrue and any remaining portion of the credit that is not used by Customer during the succeeding three (3) Months shall expire ( e.g ., a credit that accrues in January will be available in February, March and April, will expire at the end of April, and must be applied prior to applying any credit which accrues in February).

(e) Third Party Throughput Credit . If TLO throughputs volumes from third parties (other than Replacement Customers) at the Terminal during any Month, such volumes shall be applied as a credit to reduce the applicable Minimum Throughput Commitment, up to a maximum amount equal to such Minimum Throughput Commitment. All volumes throughput by Replacement Customers shall be applied as a credit to reduce the applicable Minimum Throughput Commitment.

 

5. DEDICATED STORAGE

(a) Storage Services Fee . Customer shall pay a Monthly fee (the “ Storage Services Fee ”) to reserve, on a firm basis, all of the existing aggregate Shell Capacity of certain tanks (the “ Dedicated Tanks ”) as specified on a Terminal Service Order. Such fee shall be payable by Customer on a Monthly basis throughout the Term of the Agreement, regardless of the actual volumes of Products stored by TLO on behalf of Customer; provided, however, that the Parties shall from time to time negotiate an appropriate adjustment to such fee if the following conditions are met: (i) Customer requires the full Operating Capacity of the Dedicated Tanks, (ii) the full Operating Capacity of the Tanks is not available to Customer for any reason (other than any reason resulting from or relating to actions or inactions by Customer), and (iii) TLO is unable to otherwise accommodate the actual volumes of Products required to be stored by Customer pursuant to the terms of this Agreement or any Terminal Service Order. Unless otherwise agreed, such adjustment shall be made in proportion to the reduction in Operating Capacity for any time period compared with the Operating Capacity then in effect for the affected Dedicated Tanks pursuant to the mutually agreed Terminal Service Orders. The Parties recognize that the existing Operating Capacity of certain tanks may be less than the Shell Capacity of such Dedicated Tanks, but the Parties acknowledge and agree that the Storage Services Fee shall be set in terms of a dollar-per-Barrel per Month rate based on Shell Capacity in the applicable Terminal Service Order. Such Storage Services Fee shall include all storage, pumping, and transshipment between and among the Dedicated Tanks.

(b) Calculation of Storage Services Fee . The Storage Services Fee shall be calculated using the per Barrel rate set forth on the initial Terminal Service Order executed effective as of the Commencement Date for the then-existing aggregate Shell Capacity of the tanks specified in such initial Terminal Service Order. The Storage Services Fee owed during the Month in which the Commencement Date occurs, if less than a full calendar month, shall be prorated in accordance with the ratio of (i) the number of days in such Month during which this Agreement is effective to (ii) the total number of days in such Month.

 

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6. PRODUCT DOWNGRADE AND INTERFACE

TLO shall account for the volume of Product downgraded, and Customer’s inventory of Products and/or interface shall be adjusted, provided that, interface volume (“ Transmix ”) received shall be allocated (a) in the case of dedicated storage, entirely to Customer and (b) in the case of commingled storage, among Customer and other customers receiving Products generating such Transmix in the same shipment or stored in commingled storage in proportion to each customer’s volume of Products in such shipment or storage. Customer shall remove its Transmix upon notice from TLO and shall be subject to applicable Transmix handling fees upon its removal, as provided in a Terminal Service Order. If Transmix is not removed within fifteen (15) Business Days after notification (such time period to be extended to the extent of any delay or hindrance by TLO, its agents or contractors for any reason), TLO shall have the right to sell such Transmix at market rates and return any proceeds to Customer, less applicable Transmix handling fees in effect at the time of such sale. Product downgraded as a result of ordinary Terminal or pipeline operations including line flushing, rack meter provings or other necessary Terminal operations shall not constitute losses for which TLO is liable to Customer.

 

7. ADDITIZATION OPTIONS

(a) Additive Injection Service . If available at the Terminal, TLO shall provide equipment for the injection of additives, as provided below. Customer shall designate pursuant to a Terminal Service Order which additive injection service shall be provided.

(b) DCA Additization . All gasoline Product leaving the Terminal shall be additized (“ Additized Gasoline ”). As an exception, TLO shall accommodate a request from Customer to lift base gasoline from the Terminal. In that case, the bill of lading issued by TLO shall label all such Product as base gasoline (“ Base Gasoline ”). TLO shall provide a generic Deposit Control Additive (“ DCA ”) injection service, including all required reporting and record keeping prescribed by Applicable Law. The additive supplied shall be an Environmental Protection Agency (“ EPA ”) certified DCA. Subject to the other provisions hereof, Customer may request TLO to instead inject a different proprietary DCA into certain gasoline delivered hereunder, instead of the generic DCA provided by TLO, and TLO shall accommodate such requests pursuant to a Terminal Service Order specifying the specific additization required and fees to be charged for its injection, subject to Customer providing a suitable Additized Gasoline system for such proprietary additive. TLO shall ensure that such additive is injected into all appropriate gasoline Product delivered to Customer at a rate no lower than the Lowest Allowable Concentration (“ LAC ”) at which such additive was certified. The gasoline additization rate shall be determined by Customer, but shall not be less than 1.1 times the LAC specified by the respective additive manufacturer or supplier. Notwithstanding the above, Customer shall be solely responsible for registering with the EPA or any other government agency its use of generic or proprietary additive in its fuels, as required by Applicable Law. Customer shall submit evidence of registration in compliance with 40 C.F.R. Part 80. Customer shall also be responsible for full compliance with any quarterly or other regulatory reporting, and any other requirements under Applicable Law related to use of generic or proprietary additive in Customer’s Product.

 

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(c) Lubricity and Conductivity Additization . TLO shall maintain and operate diesel lubricity and conductivity additive injection facilities (the “ Diesel Additive Facilities ”) at the Terminal in accordance with customary industry standards during the Term, including all required reporting and record keeping prescribed by Applicable Law. TLO shall arrange for purchase and delivery of any and all required lubricity and conductivity additive for injection through the Diesel Additive Facilities at the Terminal. TLO shall inject into all ULSD delivered to Customer at the Terminal an amount of lubricity and conductivity additive that TLO determines to be sufficient to comply with current ASTM diesel lubricity and conductivity specifications. TLO shall, upon request, provide Customer with documentation of additive specifications and additive injection, which TLO shall keep on file at the Terminal.

(d) Red Dye Additization . TLO shall provide a generic red dye additive (“ Red Dye ”) injection service for diesel, including all required reporting and record keeping prescribed by Applicable Law. TLO shall be responsible for determining the injection rates, Red Dye inventory levels, meter readings, and calculations of actual treat rates, in compliance with the minimum levels prescribed by the Internal Revenue Service. Customer is responsible for designating which of its accounts shall be authorized to use Red Dye diesel injection services. TLO equipment shall enable designated Carriers and accounts to inject Red Dye upon request prior to loading diesel Product at the Terminal. Customer’s Carrier shall be solely responsible for designating that a load of diesel Product be injected with Red Dye, and TLO shall have no liability with regard to whether a load of Product is additized with Red Dye. TLO shall not be responsible for any loss, damage or liability that arises from Carrier injecting or failing to inject Red Dye into Customer’s Product, unless caused by TLO’s equipment failure or negligence.

(e) Responsibility for Provision of Additive . For any additization services provided pursuant to this Section 7 , TLO shall be responsible for providing generic additives, and Customer shall be responsible for providing any special or proprietary additives requested by Customer.

(f) Special Additive Equipment . As set forth in a Terminal Service Order, and subject to the other provisions set forth herein and the availability of suitable space at the Terminal, Customer shall have the option of having TLO install and maintain at the Terminal, at Customer’s sole risk, cost and expense, such special additive equipment as may be desirable for Products to be delivered to Customer’s account hereunder. The engineering and installation of any fixture, equipment or appurtenance placed on the Terminal in respect thereof shall be subject to TLO’s prior approval and supervision. During the Term, TLO shall operate the special additive equipment with any fees therefor to be set forth in a Terminal Service Order. Upon the expiration of the Term, TLO will have the option to purchase the special additive equipment for a price to be set forth in a Terminal Service Order.

 

8. BIODIESEL SERVICES

(a) Biodiesel Facilities . If available at the Terminal, TLO shall operate B99/B100 (“ Biodiesel ”) truck rack, tank and inbound manifold blending facilities (the “ Biodiesel Facilities ”) as provided in a Terminal Service Order. The Biodiesel Facilities are intended to provide a means to blend Biodiesel with ULSD. Customer shall be required to keep a Tank Heel inventory in the Biodiesel tanks in proportion with the number of active inventory holders in the tanks.

 

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(b) Payment . Customer shall pay TLO for the Biodiesel blending and throughput provided by TLO as set forth in a Terminal Service Order.

(c) Biodiesel Services Provided . TLO shall (i) coordinate with Customer the scheduling of Biodiesel trucks from Customer to the Terminal; (ii) provide necessary services to convey Customer’s Biodiesel from trucks to appropriate Biodiesel storage tanks where it shall be stored until blended with ULSD and delivered to Customer; and (iii) blend and inject Customer’s Biodiesel into Customer’s ULSD in accordance with Customer’s instructions and Applicable Law. The provision of any new equipment necessary for the services in this Section 8(c) , and which Party shall own and operate such equipment during and after the Term, shall be set forth on a Terminal Service Order.

 

9. ETHANOL BLENDING SERVICES

(a) Services and Equipment . Where ethanol receiving, storage and blending facilities are available at the Terminal, upon Customer’s request, the Parties shall execute a Terminal Service Order pursuant to which TLO shall receive, store and blend ethanol into Customer’s gasoline at the Terminal (“ Ethanol Services ”). TLO shall provide and operate all equipment required for the Ethanol Services. The equipment shall consist of truck and/or rail unloading racks, tanks, pumps, motors, injectors, computer control, and any other ancillary equipment necessary for the providing of the Ethanol Services.

(b) Ethanol Inventories . Customer shall be solely responsible for supplying inventories of ethanol at its own expense, including the scheduling and transporting of ethanol into the Terminal, subject to notice and scheduling procedures mutually agreeable to the Parties. TLO shall receive Customer’s ethanol into fungible ethanol storage at the Terminal, unless otherwise specified in a Terminal Service Order.

(c) Blending Instructions . Upon a request from Customer for Ethanol Services, a Terminal Service Order shall provide the desired blending ratio of ethanol to gasoline at the Terminal (“ Blending Instructions ”), including the minimum Octane (R+M/2) rating for each grade of Customer’s gasoline Product, prior to blending. A change to the blending ratios shall require a Terminal Service Order.

(d) Records . TLO shall maintain for a minimum of five (5) years written or electronic records of the type and volume of oxygenate blended into Customer’s gasoline.

(e) Quality Assurance . TLO shall maintain an industry standard quality assurance oversight program of the ethanol blending process. TLO shall provide Customer with an annual report within fifteen (15) Business Days after the end of each calendar year that, at a minimum, summarizes the volume of Customer’s gasoline received by TLO, the volume of oxygenate added to Customer’s gasoline and total volume of blended gasoline.

 

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(f) Monitoring . TLO shall allow Customer or its agents to monitor the oxygenate blending operation by periodic audit, sampling, testing and/or records review to ensure the overall volumes and type of oxygenate blended into gasoline is consistent with the oxygenate claimed by Customer as required by 40 C.F.R. 80.101(d)(4)(ii)(B)(2). The scope and type of such audits will be negotiated in good faith by the Parties in advance and memorialized in writing.

(g) Customer Liability . TLO shall rely on Blending Instructions and data provided by Customer in performing its obligations under this Agreement or any Terminal Service Order. Customer agrees to be solely responsible for all claims arising from TLO’s use of or reliance on these Blending Instructions and data.

(h) Condition . When performing the Ethanol Services as per Customer’s Blending Instructions, TLO shall not certify to Customer or any third-party that blended gasoline does or shall meet ASTM D 4814 or any federal, state, or local regulatory specifications. Customer agrees that it is receiving from TLO the Blended Gasoline in an “AS IS, WHERE IS” condition without warranties of any kind, including any warranties of merchantability or fitness for a particular purpose, or its ability to meet ASTM or regulatory specifications.

 

10. REIMBURSEMENT FOR NEWLY IMPOSED TAXES AND REGULATORY FEES; EXCISE TAXES

(a) Prompt Reimbursement . Customer shall promptly pay or reimburse TLO for any newly imposed taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) by any federal, state or local government or agency that TLO incurs on Customer’s behalf for the services provided by TLO under this Agreement or any Terminal Service Order. If TLO is required to pay any of the foregoing, Customer shall promptly reimburse TLO in accordance with the payment terms set forth in this Agreement. Any such newly imposed taxes or regulatory fees as provided for in this Section 10(a) shall be specified in an applicable Terminal Service Order.

(b) Excise Tax Certification . Upon written request by TLO, Customer shall supply TLO with a completed signed original notification certificate of gasoline and diesel fuel registrant as required by the Internal Revenue Service’s excise tax regulation. Customer further agrees to comply with all Applicable Law with respect to such taxes.

(c) Exemption Certification . If Customer is exempt from the payment of any taxes allocated to Customer under the foregoing provisions, Customer shall furnish TLO with the proper exemption certificates.

 

11. EXPENDITURE REQUIRED BY NEW LAWS AND REGULATIONS

(a) Surcharge . If, during the Term, any existing laws or regulations are changed or any new laws or regulations are enacted that require TLO to make substantial and unanticipated expenditures (whether capitalized or otherwise) with respect to the Terminal, TLO may, subject to the terms of this Section 11 , impose a surcharge to increase the applicable service fee (“ Surcharge ”), to cover Customer’s pro rata share of the cost of complying with these laws or regulations, based upon the percentage of Customer’s use of the services or facilities impacted by such new laws or regulations.

 

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(b) Notification and Mitigation . TLO shall notify Customer of any proposed Surcharge to be imposed pursuant to Section 11(a) sufficient to cover the cost of any required capital projects and any ongoing increased operating costs. TLO and Customer then shall negotiate in good faith for up to thirty (30) days to mutually determine the effect of the change in law or regulation or new law or regulation, the cost thereof, and how such cost shall be amortized at an interest rate of no more than nine percent (9%) as a Surcharge, with the understanding that TLO and Customer shall use their reasonable commercial efforts to mitigate the impact of, and comply with, these laws and regulations. Without limiting the foregoing, if expenditures requiring a Surcharge may be avoided or reduced through changes in operations, then the Parties shall negotiate in good faith to set forth the appropriate changes in a Terminal Service Order to evidence the reduction of the amount of a Surcharge while leaving the Parties in the same relative economic position they held before the laws or regulations were changed or enacted.

(c) Less Than 15% Surcharge . In the event any Surcharge results in less than a fifteen percent (15%) increase in the applicable service fee, Customer will be assessed such Surcharge on all future invoices during the period in which such Surcharge is in effect for the applicable amortization period, and TLO shall not terminate the affected service from this Agreement.

(d) 15% or More Surcharge . In the event any Surcharge results in a fifteen percent (15%) or more increase in the applicable service fee, TLO shall notify Customer of the amount of the Surcharge required to reimburse TLO for its costs, plus carrying costs, together with reasonable supporting detail for the nature and amount of any such Surcharge.

(i) If within thirty (30) days of such notification provided in this Section 11(d) , Customer does not agree to pay such Surcharge or to reimburse TLO up front for its costs, TLO may elect to either:

 

  a. require Customer to pay such Surcharge, up to a fifteen percent (15%) increase in the applicable service fee; or

 

  b. terminate the service under this Agreement to which the Surcharge applies, upon notice to Customer.

(ii) TLO’s performance obligations under this Agreement shall be suspended or reduced during the above thirty (30) day period to the extent that TLO would be obligated to make such expenditures to continue performance during such period.

(e) Resolution of Surcharge . Following a resolution with respect to the amount and manner of payment of a Surcharge pursuant to this Section 11 , the Parties shall execute an appropriate Terminal Service Order memorializing the terms of such resolution.

(f) Payment of Surcharge . In lieu of paying the Surcharge in connection with any required capital project, Customer may, at its option, elect to pay the full cost of the substantial and unanticipated expenditures upon completion of a project.

 

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12. REIMBURSEMENT FOR TANK CLEANING AND CONVERSION

(a) Reimbursement for Tank Cleaning . If any Dedicated Tanks are removed from service or cleaning of any tanks is performed by TLO at the specific request of Customer, Customer shall bear (or reimburse TLO) for all costs to clean, degas or otherwise prepare the tank(s) including, without limitation, the cost of removal, processing, transportation, disposal, of all waste and the cost of any taxes or charges TLO may be required to pay in regard to such waste. For any tanks that are dedicated to Customer for segregated storage of Customer’s Products as set forth in any Terminal Service Order, Customer agrees to reimburse TLO for the reasonable cost of changes necessary to return the dedicated storage tanks to TLO on termination of their dedication for segregated storage under this Agreement, in the same condition as originally received less normal wear and tear, unless otherwise mutually agreed by the Parties.

(b) Reimbursement for Tank Conversion . If Customer requests that any dedicated tank be changed for storage of a different grade or type of Product, TLO shall agree to a change in such service, if the same can be accomplished in accordance with reasonable commercial standards, accepted industry and engineering guidelines, permit requirements and Applicable Law. If any such modifications, improvements, vapor recovery, cleaning, degassing, or other preparation of the tanks is performed by TLO at the request of Customer, Customer shall bear all direct costs attributable thereto, including, without limitation, the cost of removal, processing, transportation, and disposal of all waste and the cost of any taxes or mutually agreed charges TLO may be required to pay in regard to such waste, which costs shall be set forth on the applicable Terminal Service Order.

 

13. TERMINAL SERVICE ORDERS; PAYMENT

(a) Description . TLO and Customer shall enter into one or more terminal service orders for the Terminal substantially in the form attached hereto as Exhibit 1 (each, a “ Terminal Service Order ”). Upon a request by Customer pursuant to this Agreement or as deemed necessary or appropriate by TLO in connection with the services to be delivered pursuant hereto, TLO shall generate a Terminal Service Order to set forth the specific terms and conditions for providing the applicable services described therein and the applicable fees to be charged for such services. No Terminal Service Order shall be effective until fully executed by both TLO and Customer.

(b) Included Items . Items available for inclusion on a Terminal Service Order include, but are not limited to, the following:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

 

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(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ;

(xi) terms and conditions for the provision of railcar loading, unloading and switching services; and

(xii) any other services as may be agreed.

(c) Invoices . TLO shall invoice Customer on a monthly basis and Customer shall pay all amounts due under this Agreement and any Terminal Service Order no later than ten (10) calendar days after Customer’s receipt of TLO’s invoices. Any past due payments owed by Customer shall accrue interest, payable on demand, at the lesser of (i) the rate of interest announced publicly by JPMorgan Chase Bank, in New York, New York, as JPMorgan Chase Bank’s prime rate (which Parties acknowledge and agree is announced by such bank and used by the Parties for reference purposes only and may not represent the lowest or best rate available to any of the customers of such bank or the Parties), plus four percent (4%), and (ii) the highest rate of interest (if any) permitted by Applicable Law, from the due date of the payment through the actual date of payment.

(d) Fee Increases . Any fees of a fixed amount set forth in this Agreement and any Terminal Service Order shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%).

(e) Conflict between Agreement and Terminal Service Order . In case of any conflict between the terms of this Agreement and the terms of any Terminal Service Order, the terms of the applicable Terminal Service Order shall govern.

 

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14. CUSTODY TRANSFER AND TITLE

(a) Custody of Pipeline Receipts and Deliveries . For Product received into the Terminal by pipeline, custody of the Product shall pass to TLO at the flange where it enters the Terminal’s receiving line. For Product delivered by the Terminal into a pipeline, custody of the Product shall pass to Customer at the flange where it exits the Terminal’s delivery line.

(b) Custody of Truck Receipts and Deliveries . For receipts and deliveries to or from trucks, custody shall pass at the flange where the hoses at TLO’s facility interconnect with the truck.

(c) Custody of Rail Receipts and Deliveries . For Product received by rail, custody shall pass to TLO when the switching locomotive used to transfer Customer’s rail cars to the Terminal is uncoupled from such rail cars at the Terminal.

(d) Custody of Marine Receipts and Deliveries . For receipts and deliveries to or from marine vessels, custody shall pass at the flange where the Terminal interconnects with the hoses connected to the marine vessel.

(e) In-Tank . Deliveries by book transfer shall be reflected in the books of TLO.

(f) Title Transfer . Upon re-delivery of any Product to Customer’s account, Customer shall become solely responsible for any loss, damage or injury to Person or property or the environment, arising out of transportation, possession or use of such Product after transfer of custody and the loss allowance provisions hereof shall apply to Product while in TLO’s custody. Title to all of Customer’s Product received in the Terminal shall remain with Customer at all times. Both Parties acknowledge that this Agreement represents a bailment of Products by Customer to TLO and not a consignment of Products, it being understood that TLO has no authority hereunder to sell or seek purchasers for the Products of Customer, except for Transmix as provided in Section 6 above. Customer hereby warrants that it shall, at all times, have good title to and the right to deliver, throughput, store and receive Products pursuant to the terms of this Agreement and any Terminal Service Order.

 

15. PRODUCT QUALITY

(a) Product Specifications of Delivered Products. Customer warrants that all Products delivered under this Agreement and any Terminal Service Order shall meet the latest applicable pipeline specifications or mutually agreed upon specifications for that Product upon receipt at the Terminal and contain no deleterious substances or concentrations of any contaminants that may make it or its components commercially unacceptable in general industry application. Customer shall not deliver to the Terminal any Products which: (i) would in any way be injurious to the Terminal; (ii) would render the Terminal unfit for the proper storage of similar Products; (iii) would contaminate or otherwise downgrade the quality of the Products stored in commingled storage; (iv) may not be lawfully stored at the Terminal; or (v) otherwise do not meet applicable Product specifications for such Product that are customary in the location of the Terminal. If, however, there are Products that do not have such applicable specifications, the specifications shall be mutually agreed upon by the Parties. Should Customer’s commingled Products not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, Customer shall be liable for all loss, damage and cost incurred thereby, including damage to Products of third parties commingled with Customer’s unfit Products.

 

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(b) Product Specifications of Commingled Storage . TLO shall have the right to store compatible Products received for Customer’s account with Products belonging to TLO or third parties in TLO’s commingled storage tanks. TLO shall handle Customer’s fungible Products in accordance with TLO’s prevailing practices and procedures for handling such Products. The quality of all Products tendered into commingled storage for Customer’s account shall be verified either by Customer’s refinery analysis or supplier’s certification, such that Products so tendered shall meet TLO’s Product specifications. All costs for such analysis shall be borne solely by Customer. TLO shall have the right to sample any Product tendered to the Terminal hereunder. The cost of such sampling shall be borne solely by TLO. All Products returned to Customer shall comply with Product specifications in effect on the date the Products are delivered to Customer. Notwithstanding any other provision herein, any and all Products that leave the Terminal shall meet all relevant ASTM, EPA, federal and state specifications.

(c) Liability for Commingled Storage . TLO shall exercise reasonable care to ensure that all Products delivered by third parties into commingled storage with Customer’s Products meet applicable Product specifications for such Product that are customary in the location of the Terminal. In the event that Customer’s Products are commingled with third-party Products that do not comply with the minimum quality standards set forth in this Agreement or any Terminal Service Order, TLO shall be liable for all loss, damage and cost incurred thereby.

 

16. MEASUREMENT AND VOLUME LOSSES

(a) Methods of Measurement .

(i) All quantities of Products received or delivered by or into trucks or marine vessels shall be measured and determined based upon the meter readings at the Terminal, as reflected by delivery tickets or bills of lading, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(ii) All quantities of Products received or delivered by or into railcars shall be measured and determined based upon the meter readings at the Terminal, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iii) All quantities of Products received and delivered by pipeline shall be measured and determined based upon the meter readings of the pipeline operator, as reflected by delivery tickets, or if such meters are unavailable, by applicable calibration tables, as set forth on a Terminal Service Order or pursuant to mutual agreement of the Parties.

(iv) Deliveries by book transfer shall be reflected by entries in the books of TLO.

(v) All quantities shall be adjusted to net gallons at 60° F in accordance with ASTM D-1250 Petroleum Measurement Tables, or latest revisions thereof. Meters and temperature probes shall be calibrated according to applicable API standards. Customer shall have the right, at its sole expense, and in accordance with rack location procedure,

 

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to independently certify such calibration. Storage tank gauging shall be performed by TLO’s personnel. TLO’s gauging shall be deemed accurate unless challenged by an independent certified gauger. Customer may perform joint gauging at its sole expense with TLO’s personnel at the time of delivery or receipt of Product, to verify the amount involved. If Customer should request an independent gauger, such gauger must be acceptable to TLO and such gauging shall be at Customer’s sole expense.

(b) Measurement and Volume Loss Control Practices .

(i) TLO shall have no obligation to measure volume gains and losses. In the event third-party Products are terminalled at the Terminal, the Parties shall mutually determine the measurement and volume loss control practices for the Terminal.

(ii) TLO shall be responsible to Customer only for Product losses and/or shortages resulting from the negligent or wrongful acts and omissions of TLO; provided that TLO shall not be responsible to Customer for any Product losses and/or shortages for which Customer is compensated by its cargo/inventory insurance carrier, including through the cargo/inventory insurance coverage required by Section 24 . If Customer fails to maintain the cargo/inventory insurance coverage required by Section 24 , then TLO shall also not be responsible to Customer for any Product losses and/or shortages to the extent Customer would have been compensated by its insurance carrier had Customer maintained the cargo/inventory insurance coverage required by Section 24 .

(iii) Customer shall be responsible for all Product losses and/or shortages it may suffer other than those covered by Section 16(b)(ii) .

 

17. PRODUCT DELIVERIES, RECEIPTS AND WITHDRAWALS

(a) Product Deliveries . All supervised deliveries, receipts and withdrawals hereunder shall be made at such times as may be required by Customer upon prior notice and approval by TLO, all in accordance with the agreed-upon scheduling. Unsupervised deliveries, receipts and withdrawals shall be made only with TLO’s prior approval and in strict accordance with TLO’s current operating procedures for the Terminal. Customer warrants that all vehicles permitted to enter the Terminal on behalf of Customer shall meet all requirements and standards promulgated by applicable regulatory authority including the Department of Transportation, the Occupational Safety and Health Administration, and the EPA. Customer further warrants that it shall only send to the Terminal those employees, agents and other representatives acting on behalf of and at Customer’s direction who have been properly instructed as to the characteristics and safe hauling methods associated with the Products to be loaded and hauled. Customer further agrees to be responsible to TLO for the performance under this Agreement by its agents and/or representatives receiving or delivering Products at the Terminal.

(b) Loading Devices . Customer shall withdraw from the Terminal only those Products that it is authorized to withdraw hereunder. Customer shall neither duplicate nor permit the duplication of any loading device (i.e., card lock access), provided hereunder. Customer shall be fully and solely responsible for all Products loaded through the use of the loading devices issued to Customer in accordance with this Agreement; provided however, that Customer shall

 

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not have any responsibility or liability hereunder in the event that the load authorization system provided hereunder fails or malfunctions in any way unless a credit department override is provided, which authorizes Customer to load the Products.

(c) Legal Compliance . Both Parties shall abide by all federal, state and local statutes, laws and ordinances and all rules and regulations which are promulgated by TLO and which are either furnished to Customer or posted at the Terminal, with respect to the use of the Terminal as herein provided. It is understood and agreed by Customer that these rules and regulations may be changed, amended or modified by TLO at any time. All changes, amendments and modifications shall become binding upon Customer ten (10) days following the posting of a copy at the Terminal or the receipt by Customer of a copy, whichever occurs sooner.

(d) Customer Representatives . For all purposes hereunder, Customer’s jobbers, distributors, Carriers, haulers and other customers designated in writing or otherwise by Customer to have loading privileges under this Agreement or having possession of any loading device furnished to Customer pursuant to this Agreement, together with their respective officers, servants and employees, shall, when they access the Terminal, be deemed to be representatives of Customer.

 

18. DELIVERIES INTO TRANSPORT TRUCKS

Prior to transporting any Products loaded into transport trucks at the Terminal, TLO shall make or cause to be made, the following certifications on the delivery receipt or bill of lading covering the Products received:

“If required by 49 C.F.R. 172.204, this is to certify that the above-named materials are properly classified, described, packaged, marked and labeled, and are in proper condition for transportation according to the applicable regulations of the Department of Transportation. Carrier hereby certifies that the cargo tank used for this shipment is a proper container for the commodity loaded therein and complies with Department of Transportation specifications and certifies that cargo tank is properly placarded and marked to comply with regulations pertaining to hazardous materials.”

TLO shall require each Carrier coming into the Terminal to expressly agree in writing to be bound by the provisions of a carrier access agreement with respect to withdrawals and loading of Products hereunder, to conduct its operations at the Terminal in a safe manner, in accordance with all Applicable Law.

 

19. ACCOUNTING PROVISIONS AND DOCUMENTATION

(a) Required Reports . TLO shall furnish Customer with the following reports covering services hereunder involving Customer’s Products:

(i) within ten (10) Business Days following the end of the Month, a statement showing, by Product: (A) Customer’s monthly aggregate deliveries into the Terminal; (B) Customer’s monthly receipts from the Terminal; (C) calculation of all Customer’s monthly storage and handling fees; (D) Customer’s opening inventory for the preceding

 

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Month; (E) appropriate volume loss adjustments (as applicable in accordance with Section 16 ); (F) Customer’s closing inventory for the preceding Month; and (G) the actual volumes of TLO third party throughput handled at the Terminal during a Month up to the applicable Minimum Throughput Commitment, pursuant to Section 4(e) ;

(ii) a copy of any meter calibration report, to be available for inspection upon reasonable request by Customer at the Terminal following any calibration;

(iii) upon delivery from the Terminal, a hard copy bill of lading to the Carrier for each delivery; upon reasonable request only, a hard copy bill of lading shall be provided to Customer’s accounting group; upon each delivery from the Terminal, bill of lading information shall be sent electronically through a mutually agreeable system; and

(iv) transfer documents for each in-tank transfer.

(b) Required Maintenance of Truck Loading Capabilities . TLO shall be required to maintain the capabilities to support truck load authorization technologies at the Terminal.

 

20. AUDIT AND CLAIMS PERIOD

Each Party and its duly authorized agents and/or representatives shall have reasonable access to the accounting records and other documents maintained by the other Party which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term and for a period of up to three (3) years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within ninety (90) days after the delivery in question or shall be deemed to have been waived.

 

21. LIEN WAIVERS

TLO hereby waives, relinquishes and releases any and all liens, including without limitation, any and all warehouseman’s liens, custodian’s liens, rights of retention and/or similar rights under all applicable laws, which TLO would or might otherwise have under or with respect to the Products throughput, stored or handled hereunder. TLO further agrees to furnish documents reasonably acceptable to Customer and its lender(s) (if applicable), and to cooperate with Customer in assuring and demonstrating that Products titled in Customer’s name shall not be subject to any lien on the Terminal or TLO’s Products throughput or stored there.

 

22. LIMITATION ON LIABILITY

(a) No Special Damages . Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement, REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages actually awarded to a third party or assessed by a governmental authority and for which a Party is properly entitled to indemnification from the other Party pursuant to the express provisions of this Agreement.

 

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(b) Claims and Liability for Lost Product . TLO shall not be liable to Customer for lost or damaged Product unless Customer notifies TLO in writing within ninety (90) days of the report of any incident or the date Customer learns of any such loss or damage to the Product. TLO’s maximum liability to Customer for any lost or damaged Product shall be limited to (i) the lesser of (1) the replacement value of the Product at the time of the incident based upon the price as posted by Platts or similar publication for similar Product in the same locality, and if no other similar Product is in the locality, then in the state, or (2) the actual cost paid for the Product by Customer (copies of Customer’s invoices of cost paid must be provided), less (ii) the salvage value, if any, of the damaged Product.

(c) No Guarantees or Warranties . Except as expressly provided in the Agreement, neither Customer nor TLO makes any guarantees or warranties of any kind, expressed or implied. TLO specifically disclaims all implied warranties of any kind or nature, including any implied warranty of merchantability and/or any implied warranty of fitness for a particular purpose.

 

23. INDEMNITIES

(a) TLO Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TLO shall release, defend, protect, indemnify, and hold harmless Customer, its carriers, and each of its and their respective affiliates, officers, directors, employees, agents, contractors, successors, and assigns (excluding any member of the Partnership Group) (collectively the “ Customer Group ”), from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of Customer, TLO or the General Partner, and, as applicable, their carriers, customers, representatives, and agents, (ii) loss of or damage to any property, products, material, and/or equipment belonging to Customer, TLO and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein), (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of TLO or the General Partner in connection with the ownership or operation of the Terminal and the services provided hereunder, and, as applicable, their carriers, customers (other than Customer), representatives, and agents, or those of their respective employees with respect to such matters, and (iv) any losses incurred by Customer due to violations of this Agreement or any Terminal Service Order by TLO, or, as applicable, its customers (other than Customer), representatives, and agents; PROVIDED THAT TLO SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY

 

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RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP.

(b) Customer Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, Customer shall release, defend, protect, indemnify, and hold harmless TLO, General Partner, the Partnership, their subsidiaries and their respective officers, directors, members, managers, employees, agents, contractors, successors, and assigns (collectively the “ Partnership Group ”) from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TLO, the General Partner, Customer, and, as applicable, their carriers, customers, representatives, and agents; (ii) loss of or damage to any property, products, material, and/or equipment belonging to TLO, Customer, and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein); (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of Customer, in connection with Customer’s use of the Terminal and the services provided hereunder and Customer’s Products stored hereunder, and, as applicable, its Carriers, customers, representatives, and agents, or those of their respective employees with respect to such matters; and (iv) any losses incurred by TLO due to violations of this Agreement or any Terminal Service Order by Customer, or, as applicable, its carriers, customers, representatives, and agents; PROVIDED THAT CUSTOMER SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS OR OMISSIONS OR WILLFUL MISCONDUCT OF TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP.

(c) Written Claim . Neither Party shall be obligated to indemnify the other Party or be liable to the other Party unless a written claim for indemnity is delivered to the other Party within ninety (90) days after the date that a claim is reported or discovered, whichever is earlier.

(d) No Limitation . Except as expressly provided otherwise in this Agreement, the scope of these indemnity provisions may not be altered, restricted, limited, or changed by any other provision of this Agreement. The indemnity obligations of the Parties as set out in this Section 23 are independent of any insurance requirements as set out in Section 24 , and such indemnity obligations shall not be lessened or extinguished by reason of a Party’s failure to obtain the required insurance coverages or by any defenses asserted by a Party’s insurers.

(e) Survival . These indemnity obligations shall survive the termination of this Agreement until all applicable statutes of limitation have run regarding any claims that could be made with respect to the activities contemplated by this Agreement.

 

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(f) Mutual and Express Acknowledgement . THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED PARTY. EACH PARTY ACKNOWLEDGES THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

(g) Third Party Indemnification . If any Party has the rights to indemnification from a third party, the indemnifying party under this Agreement shall have the right of subrogation with respect to any amounts received from such third-party indemnification claim.

 

24. INSURANCE

(a) Minimum Limits . At all times during the Term and for a period of two (2) years after termination of this Agreement for any coverage maintained on a “claims-made” or “occurrence” basis, Customer and/or its Carrier (if applicable) shall maintain at their expense the below listed insurance in the amounts specified below, or self-insurance in such amounts as may be agreed pursuant to a Terminal Service Order. Customer shall require that Carrier cause all of its contractors providing authorized drivers or authorized vehicles, to carry such insurance, and Customer shall be liable to TLO for their failure to do so. Such insurance shall provide coverage to TLO and such policies, other than Worker’s Compensation Insurance, shall include TLO as an Additional Insured. Each policy shall provide that it is primary to and not contributory with any other insurance, including any self-insured retention, maintained by TLO (which shall be excess) and each policy shall provide the full coverage required by this Agreement. All such insurance shall be written with carriers and underwriters acceptable to TLO, and eligible to do business in the state where the Terminal is located and having and maintaining an A.M. Best financial strength rating of no less than “A-” and financial size rating no less than “VII”; provided that Customer and/or the Carrier may procure worker’s compensation insurance from the state fund of the state where the Terminal is located. All limits listed below are required MINIMUM LIMITS:

(i) Workers Compensation and Occupational Disease Insurance which fully complies with Applicable Law of the state where the Terminal is located, in limits not less than statutory requirements;

(ii) Employers Liability Insurance with a minimum limit of $1,000,000 for each accident, covering injury or death to any employee which may be outside the scope of the worker’s compensation statute of the jurisdiction in which the worker’s service is performed, and in the aggregate as respects occupational disease;

 

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(iii) Commercial General Liability Insurance, including contractual liability insurance covering Carrier’s indemnity obligations under this Agreement, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limits as may be required by TLO or by Applicable Law from time to time. This policy shall include Broad Form Contractual Liability insurance coverage which shall specifically apply to the obligations assumed in this Agreement by Customer;

(iv) Automobile Liability Insurance covering all owned, non-owned and hired vehicles, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limit(s) as may be required by Customer or by Applicable Law from time to time. Coverage must assure compliance with Sections 29 and 30 of the Motor Carrier Act of 1980 and all applicable rules and regulations of the Federal Highway Administration’s Bureau of Motor Carrier Safety and Interstate Commerce Commissioner (Form MCS 90 Endorsement). Limits of liability for this insurance must be in accordance with the financial responsibility requirement of the Motor Carrier Act, but not less than $1,000,000 per occurrence;

(v) Excess (Umbrella) Liability Insurance with limits not less than $4,000,000 per occurrence. Additional excess limits may be utilized to supplement inadequate limits in the primary policies required in items (ii), (iii), and (iv) above;

(vi) Pollution Legal Liability with limits not less than $25,000,000 per loss with an annual aggregate of $25,000,000. Coverage shall apply to bodily injury and property damage including loss of use of damaged property and property that has not been physically injured; cleanup costs, defense, including costs and expenses incurred in the investigation, defense or settlement of claim; and

(vii) Cargo/Inventory Insurance, with a limit of no less than $1,000,000, which property insurance shall be first-party insurance to adequately cover all Products owned by Customer located at the Terminal.

(b) Waiver of Subrogation . All such policies must be endorsed with a Waiver of Subrogation endorsement, effectively waiving rights of recovery under subrogation or otherwise, against TLO, and shall contain where applicable, a severability of interest clause and a standard cross liability clause.

(c) Copies of Insurance Certificates or Policies . Upon execution of this Agreement and prior to the operation of any equipment by Customer, Carrier or its authorized drivers at the Terminal, Customer and/or Carrier will furnish to TLO, and at least annually thereafter (or at any other times upon request by TLO) during the Term (and for any coverage maintained on a “claims-made” basis, for two (2) years after the termination of this Agreement), insurance certificates and/or certified copies of the original policies to evidence the insurance required herein, including on behalf of Carrier’s contractors providing authorized vehicles or authorized drivers. Such certificates shall be in the form of the “Accord” Certificate of Insurance, and reflect that they are for the benefit of TLO and shall provide that there will be no material change in or cancellation of the policies unless TLO is given at least thirty (30) days prior written notice. Certificates providing evidence of renewal of coverage shall be furnished to TLO prior to policy expiration.

 

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(d) Responsibility for Deductibles . Customer and/or Carrier shall be solely responsible for any deductibles or self-insured retention.

 

25. GOVERNMENT REGULATIONS

(a) Party Certification . Each Party certifies that none of the Products covered by this Agreement or any Terminal Service Order were derived from crude petroleum, petrochemical, or gas which was produced or withdrawn from storage in violation of any federal, state or other governmental law, nor in violation of any rule, regulation or promulgated by any governmental agency having jurisdiction in the premises.

(b) Licenses and Permits . If applicable, TLO shall maintain all necessary licenses and permits for the storage of Products at the Terminal.

(c) Compliance with Applicable Law . The Parties are entering into this Agreement and any Terminal Service Order in reliance upon and shall comply in all material respects with all Applicable Law which directly or indirectly affects the Products throughput hereunder, or any receipt, throughput delivery, transportation, handling or storage of Products hereunder or the ownership, operation or condition of the Terminal. Each Party shall be responsible for compliance with all Applicable Law associated with such Party’s respective performance hereunder and the operation of such Party’s facilities. In the event any action or obligation imposed upon a Party under this Agreement and any Terminal Service Order shall at any time be in conflict with any requirement of Applicable Law, then this Agreement and any Terminal Service Order shall immediately be modified to conform the action or obligation so adversely affected to the requirements of the Applicable Law, and all other provisions of this Agreement and any Terminal Service Order shall remain effective.

(d) Material Change in Applicable Law . If during the Term, any new Applicable Law becomes effective or any existing Applicable Law or its interpretation is materially changed, which change is not addressed by another provision of this Agreement or any Terminal Service Order and which has a material adverse economic impact upon a Party, either Party, acting in good faith, shall have the option to request renegotiation of the relevant provisions of this Agreement or a Terminal Service Order with respect to future performance. The Parties shall then meet to negotiate in good faith amendments to this Agreement or to an applicable Terminal Service Order that will conform to the new Applicable Law while preserving the Parties’ economic, operational, commercial and competitive arrangements in accordance with the understandings set forth herein.

 

26. SUSPENSION OF REFINERY OPERATIONS

(a) No Termination . This Agreement shall continue in full force and effect regardless of whether Customer decides to permanently or indefinitely suspend refining operations at the Refinery for any period.

 

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(b) Continued Liability for Shortfall Payments . If refining operations at the Refinery are suspended for any reason (including Refinery turnarounds and other scheduled maintenance), then Customer shall remain liable for Shortfall Payments under this Agreement for the duration of the suspension.

 

27. FORCE MAJEURE

(a) Definitions and Notice . As soon as possible upon the occurrence of a Force Majeure, TLO shall provide Customer with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). TLO shall identify in such Force Majeure Notice the approximate length of time that TLO reasonably believes in good faith such Force Majeure shall continue (the “ Force Majeure Period ”). For the duration of the Force Majeure Period, Customer shall be permitted to reduce the applicable Minimum Throughput Commitment as provided in Section 28(b) . If TLO advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive Months, then, subject to Section 28 below, at any time after TLO delivers such Force Majeure Notice, either Party may terminate this Agreement with respect to the terminalling service to which the Force Majeure applies, but only upon delivery to the other Party of a notice (a “ Termination Notice ”) at least twelve (12) Months prior to the expiration of the Force Majeure Period; provided, however, that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends prior to the expiration of such twelve (12)-Month period. For the avoidance of doubt, neither Party may exercise its right under this Section 27(a) to terminate this Agreement as a result of a Force Majeure if the Terminal has been restored to working order since the applicable Force Majeure, including pursuant to a Restoration.

(b) Revocation of Customer Termination Notice . Notwithstanding the foregoing, if Customer delivers a Termination Notice to TLO (the “ Customer Termination Notice ”) and, within thirty (30) days after receiving such Customer Termination Notice, TLO notifies Customer that TLO reasonably believes in good faith that it shall be capable of fully performing its obligations under this Agreement within a reasonable period of time and Customer mutually agrees (which agreement shall not be unreasonably withheld), then the Customer Termination Notice shall be deemed revoked and the applicable portion of this Agreement shall continue in full force and effect as if such Customer Termination Notice had never been given.

 

28. CAPABILITIES OF FACILITIES

(a) Service Interruption . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall use reasonable commercial efforts to minimize the interruption of service at the Terminal and any portion thereof. TLO shall promptly inform Customer operational personnel of any anticipated partial or complete interruption of service at the Terminal, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions TLO is taking to resume full operations, provided that TLO shall not have any liability for any failure to notify, or delay in notifying, Customer of any such matters except to the extent Customer has been materially prejudiced or damaged by such failure or delay.

 

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(b) Restoration of Capacity . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products at least equal to the applicable Reserved Capacity. TLO’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or any interruption of service that prevents TLO from terminalling the applicable Reserved Capacity. To the extent TLO is prevented from terminalling volumes equal to the applicable Reserved Capacity for reasons of Force Majeure or other interruption of service, then Customer’s obligation to throughput the applicable Minimum Throughput Commitment and pay any Shortfall Payment shall be reduced proportionately. At such time as TLO is capable of terminalling volumes equal to the applicable Reserved Capacity, Customer’s obligation to throughput the full, applicable Minimum Throughput Commitment shall be restored. If for any reason, including, without limitation, a Force Majeure event, the throughput capacity of the Terminal should fall below the applicable Reserved Capacity, then within a reasonable period of time after the commencement of such reduction, TLO shall make repairs to the Terminal to restore the capacity of the Terminal to that required for throughput of the applicable Reserved Capacity (“ Restoration ”). Except as provided below in Section 28(c) , all of such Restoration shall be at TLO’s cost and expense, unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of Customer, its employees, agents or customers or the failure of Customer’s Products to meet the specifications as provided for in Section 15(a) .

(c) Capacity Resolution . In the event of the failure of TLO to maintain the Terminal in a condition and with a capacity sufficient to throughput a volume of Customer’s Products equal to a Reserved Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (hereinafter defined). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration of capacity on the Terminal which will, among other things, specify steps to be taken by TLO to fully accomplish Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary terminal industry standards and shall take into consideration TLO’s economic considerations relating to costs of the repairs and Customer’s requirements concerning its refining and marketing operations. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, to the extent the Terminal has capability of doing so, during the period before Restoration is completed. In the event that Customer’s economic considerations justify incurring additional costs to restore the Terminal in a more expedited manner than the time schedule determined in accordance with the preceding sentence, Customer may require TLO to expedite the Restoration to the extent reasonably possible, subject to Customer’s payment, in advance, of the estimated incremental costs to be incurred as a result of the expedited time schedule. In the event the Parties agree to an expedited Restoration plan in which Customer agrees to fund a portion of the Restoration cost, then neither Party shall have the right to terminate this Agreement in connection with a Force Majeure, so long as such Restoration is completed with due diligence, and Customer shall pay its portion of the Restoration costs to TLO

 

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in advance based on an estimate based on reasonable engineering standards promulgated by the Association for Facilities Engineering. Upon completion, Customer shall pay the difference between the actual portion of Restoration costs to be paid by Customer pursuant to this Section 28(c) and the estimated amount paid under the preceding sentence within thirty (30) days after receipt of TLO’s invoice therefor, or, if appropriate, TLO shall pay Customer the excess of the estimate paid by Customer over TLO’s actual costs as previously described within thirty (30) days after completion of the Restoration.

(d) Restoration . If at any time after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TLO either (i) refuses or fails to meet with Customer within the period set forth in Section 28(c) , (ii) fails to agree to perform a Capacity Resolution in accordance with the standards set forth in Section 28(c) , or (iii) fails to perform its obligations in compliance with the terms of a Capacity Resolution, Customer may, as its sole remedy for any breach by TLO of any of its obligations under Section 28(c) , require TLO to complete a Restoration of the Terminal, subject to and to the extent permitted under the terms, conditions and/or restrictions of applicable leases, permits and/or Applicable Law. Any such Restoration required under this Section 28(d) shall be completed by TLO at Customer’s cost. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the Terminal, during the period while such Restoration is being completed. Any work performed by TLO pursuant to this Section 28(d) shall be performed and completed in a good and workmanlike manner consistent with applicable industry standards and in accordance with all Applicable Law. Additionally, during such period after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, Customer may exercise any remedies available to it under this Agreement (other than termination), including the right to immediately seek temporary and permanent injunctive relief for specific performance by TLO of the applicable provisions of this Agreement, including, without limitation, the obligation to make Restorations as described herein.

(e) Throughput Right of First Refusal . Unless otherwise specified in a Terminal Service Order, all throughput of Customer’s volumes, along with storage related to such throughput, shall be on a fungible commingled basis, and TLO may commingle such Products with Products of third parties of like grade and kind. TLO shall have the right to enter into arrangements with third parties to throughput Products at the Terminal and provide storage related to such throughput; provided however, that (i) TLO shall not enter into any third party arrangements that would restrict or limit the ability of Customer to throughput the Reserved Capacities at the Terminal each Month without Customer’s consent, and (ii) TLO shall give Customer ninety (90) days prior written notice of any proposed throughput agreement with a third party, and if Customer makes an offer on terms no less favorable to TLO than the third-party offer, TLO shall be obligated to enter into a terminalling agreement with Customer on the terms set forth in its proposed offer (“ Throughput Right of First Refusal ”). If Customer does not exercise its Throughput Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling agreement. If no third-party terminalling agreement is consummated during such ninety-day period, the terms and conditions of this Section 28(e) shall again become effective.

 

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(f) Storage Tank Heels . All Tank Heels shall be allocated among storage users on a pro rata basis. Tank Heels cannot be withdrawn from any tank without prior approval of TLO. For storage tanks and capacities identified on a Terminal Service Order as dedicated to and used exclusively for the storage and throughput of Customer’s Product, Customer shall be responsible for providing all Tank Heels required for operation of such tanks.

 

29. TERMINATION

(a) Default . A Party shall be in default under this Agreement if:

(i) the Party breaches any provision of this Agreement or a Terminal Service Order, which breach has a material adverse effect on the other Party (with such material adverse effect being determined based on this Agreement and all Terminal Service Orders considered as a whole), and such breach is not excused by Force Majeure or cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party (unless such failure is not commercially reasonably capable of being cured in such fifteen (15) Business Day period in which case such Party shall have commenced remedial action to cure such breach and shall continue to diligently and timely pursue the completion of such remedial action after such notice); or

(ii) the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.

(b) Rights upon Default . If either of the Parties is in default as described above, then (A) if Customer is in default, TLO may or (B) if TLO is in default, Customer may: (1) terminate this Agreement upon notice to the defaulting Party; (2) withhold any payments due to the defaulting Party under this Agreement; and/or (3) pursue any other remedy at law or in equity.

(c) Obligation to Cure Breach . If a Party breaches any provision of this Agreement or a Terminal Service Order, which breach does not have a material adverse effect on the other Party, the breaching Party shall still have the obligation to cure such breach.

(d) Product Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove all of its Products including any downgraded and interface Product and Transmix from the Terminal, and TLO shall remove the remaining Tank Heels and tank bottoms and deliver them to Customer or Customer’s designee, within thirty (30) days of such termination or expiration. In the event all of the Product is not removed within such thirty (30) day period, Customer shall be assessed a storage fee to all Products held in storage more than thirty (30) days beyond the termination or expiration of this Agreement until such time Customer’s entire Product is removed from the Terminal; provided however, that Customer shall not be assessed any storage fees associated with the removal of Product if Customer’s ability to remove such Product is delayed or hindered by TLO, its agents or contractors for any reason.

 

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(e) Equipment Removal . Customer shall, upon expiration or termination of this Agreement, promptly remove any and all of its owned equipment (except those purchased by TLO pursuant to Section 7(f) above), and restore the Terminal to their condition prior to the installation of such equipment.

 

30. RIGHT TO ENTER INTO A NEW TERMINALLING AGREEMENT

(a) New Terminalling Services Agreement . Upon termination of this Agreement or a Terminal Service Order for reasons other than (x) a default by Customer and (y) any other termination of this Agreement or a Terminal Service Order initiated by TLO pursuant to Section 29 , Customer shall have the right to require TLO to enter into a new terminalling services agreement with Customer that (i) is consistent with the terms set forth in this Agreement, (ii) relates to the Terminal, and (iii) has commercial terms that are, in the aggregate, equal to or more favorable to TLO than fair market value terms as would be agreed by similarly-situated parties negotiating at arm’s length; provided, however; that the term of any such new terminalling services agreement shall not extend beyond July 1, 2034.

(b) Terminalling Right of First Refusal . In the event that TLO proposes to enter into a terminalling services agreement with a third party within two (2) years after the termination of this Agreement for reasons other than (x) by default by Customer and (y) any other termination of this Agreement initiated by TLO pursuant to Section 29 , TLO shall give Customer ninety (90) days’ prior written notice of any proposed new terminalling services agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Terminalling First Offer Period ”) in which Customer may make a good faith offer to enter into a new terminalling agreement with TLO (the “ Terminalling Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such terminalling services agreement during the Terminalling First Offer Period, then TLO shall be obligated to enter into a terminalling services agreement with Customer on the terms set forth in Customer’s offer to TLO. If Customer does not exercise its Terminalling Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party terminalling services agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 30(b) shall again become effective.

 

31. STORAGE RIGHT OF FIRST REFUSAL

In the event that TLO proposes to enter into a storage agreement with a third party upon opening up any new storage opportunity at the Terminal during the Term, TLO shall give Customer ninety (90) days’ prior written notice of any proposed new storage agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ Storage First Offer Period ”) in which Customer may make a good faith offer to enter into a new storage agreement with TLO (the “ Storage Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such storage agreement during the Storage First Offer Period, then TLO shall be obligated to enter into a storage agreement with Customer on the terms set forth in its proposed offer. If Customer does not

 

30


exercise its Storage Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party storage agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 31 shall again become effective.

 

32. SUBCONTRACT

Should Customer desire to subcontract to a third party (“ Replacement Customer ”) any dedicated or commingled storage subject to a Terminal Service Order, Customer must notify TLO in writing prior to the proposed start of the subcontract. TLO has the right to approve any Replacement Customer, which approval shall not be unreasonably withheld, conditioned or delayed. Unless otherwise agreed in writing between Customer and TLO, and between Replacement Customer and TLO, Customer will continue to be liable for all terms and conditions of this Agreement related to any subcontracted storage tank, including but not limited to, remittance of any fees set forth in a Terminal Service Order applicable to the subcontracted storage tank. Customer shall be responsible for collection of any fees due to Customer from the Replacement Customer. Customer and TLO may mutually agree that operational notices concerning scheduling and similar matters can be directly provided between TLO and any Replacement Customer.

 

33. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment to TLO . On the Commencement Date, the General Partner shall assign all of its rights and obligations under this Agreement to the Partnership. The Partnership shall immediately assign its rights and obligations hereunder to TLO. Upon such assignment to TLO, TLO shall have all of the respective rights and obligations set forth herein during the Term.

(b) Customer Assignment to Third Party . Customer shall not assign all of its obligations hereunder or under a Terminal Service Order without TLO’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however; that Customer may assign this Agreement, without TLO’s consent, in connection with a sale by Customer of the Refinery so long as the transferee: (i) agrees to assume all of Customer’s obligations under this Agreement; and (ii) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by Customer in its reasonable judgment.

(c) TLO Assignment to Third Party . TLO shall not assign its rights or obligations under this Agreement without Customer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that (i) TLO may assign this Agreement without Customer’s consent in connection with a sale by TLO of the Terminal so long as the transferee: (A) agrees to assume all of TLO’s obligations under this Agreement; (B) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by TLO in its reasonable judgment; and (C) is not a competitor of Customer; and (ii) TLO shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO.

 

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(d) Notification of Assignment . Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required. This Agreement and any Terminal Service Orders shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(e) Partnership Change of Control . Customer’s obligations hereunder shall not terminate in connection with a Partnership Change of Control, provided however, that in the case of a Partnership Change of Control, Customer shall have the option to extend the Term as provided in Section 2 . TLO shall provide Customer with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

 

34. NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (a) if by transmission by hand delivery, when delivered; (b) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (c) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (d) if by e-mail, one Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to Customer, to:

Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles A. Cavallo III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

all other notices and communications :

Attention: Dennis C. Bak

phone: 310-847-3846

email: Dennis.C.Bak@tsocorp.com

If to TLO, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

 

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For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

 

35. CONFIDENTIAL INFORMATION

(a) Confidential Information and Exceptions Thereto . Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 35 . Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or becomes available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of TLO that was in the possession of Customer or any of its affiliates as a result of their ownership or operation of the Terminal prior to the Commencement Date);

(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 35 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 35(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of any applicable securities exchange, any of the disclosing Party’s Confidential Information, the receiving Party

 

33


shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

(c) Return of Confidential Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 35 , and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

(d) Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

(e) Survival . The obligation of confidentiality under this Section 35 shall survive the termination of this Agreement for a period of two (2) years.

 

36. MISCELLANEOUS

(a) Amendment or Modification . This Agreement and any Terminal Service Orders may be amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement or a Terminal Service Order may be waived in writing at any time by the Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement, a Terminal Service Order or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement or a Terminal Service Order will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

 

34


(b) Integration . This Agreement, together with the Schedules and Terminal Service Orders and the other agreements executed on the date hereof in connection with the transactions contemplated by the Contribution Agreement, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. In the event of a conflict of provisions of this Agreement and the Third Amended and Restated Omnibus Agreement, the provisions of the Third Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Applicable Law; Forum, Venue and Jurisdiction . This Agreement and any Terminal Service Orders shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or any Terminal Service Order brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

 

35


(e) Counterparts . This Agreement and any Terminal Service Orders hereunder may be executed in one or more counterparts (including by facsimile or portable document format (.pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

(f) Severability . Whenever possible, each provision of this Agreement and any Terminal Service Order will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement, a Terminal Service Order or the application of any such provision to any Person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

(g) No Third Party Rights . Except as specifically provided in Section 23 herein, it is expressly understood that the provisions of this Agreement or any Terminal Service Order do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

(h) Jury Waiver . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

[Signature Page Follows]

 

36


IN WITNESS WHEREOF , the Parties hereto have duly executed this Agreement as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ Phillip M. Anderson

    By:  

/s/ G. Scott Spendlove

  Phillip M. Anderson       G. Scott Spendlove
  President       Senior Vice President and Chief Financial Officer

Solely with respect to Section 33(a) :

TESORO LOGISTICS GP, LLC

   

Solely with respect to Section 33(a) :

TESORO LOGISTICS LP

By:  

/s/ Phillip M. Anderson

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

/s/ Phillip M. Anderson

        Phillip M. Anderson
        President

 

Signature Page to Terminalling Services Agreement - Martinez


EXHIBIT 1

FORM OF TERMINAL SERVICE ORDER

(MARTINEZ [ ]-         , 20    )

This Terminal Service Order is entered as of         , 20    , by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company, and Tesoro Logistics Operations LLC, a Delaware limited liability company, pursuant to and in accordance with the terms of the Terminalling Services Agreement - Martinez, dated as of July 1, 2014, by and among such parties and Tesoro Logistics GP, LLC, a Delaware limited liability company, and Tesoro Logistics LP, a Delaware limited partnership (as amended, supplemented, or otherwise modified from time to time, the “ Agreement ”).

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.

Pursuant to Section 13 of the Agreement, the parties hereto agree to the following provisions:

[Insert applicable provisions:

(i) allocation of throughput capacity by Product, and the rates by Product for determining the Terminalling Service Fee pursuant to Section 4 ;

(ii) identification of tanks to be utilized for dedicated storage tanks and the Storage Services Fee pursuant to Section 5 ;

(iii) Transmix handling fees pursuant to Section 6 ;

(iv) additization pursuant to Section 7 ;

(v) special or proprietary additive injection services, including any installation and maintenance of special additive equipment, pursuant to Section 7(f) , and the fees related thereto;

(vi) biodiesel services and new equipment pursuant to Section 8(c) and the fees related thereto;

(vii) ethanol blending services pursuant to Section 9 and the fees related thereto;

(viii) reimbursement related to newly imposed taxes pursuant to Section 10 ;

(ix) Surcharges related to expenditures as a result of newly imposed laws and regulations pursuant to Section 11 ;

(x) tank cleaning or conversion pursuant to Section 12 ;

(xi) terms and conditions for the provision of railcar loading, unloading and switching services; and

 

 

Exhibit 1 –

Terminalling Services Agreement - Martinez


(xii) any other services as may be agreed.]

Except as set forth in this Terminal Service Order, the other terms of the Agreement shall continue in full force and effect and shall apply to the terms of this Terminal Service Order.

[Signature Page Follows]

 

Exhibit 1 –

Terminalling Services Agreement - Martinez


IN WITNESS WHEREOF , the parties hereto have duly executed this Terminal Service Order as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO REFINING & MARKETING COMPANY LLC
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  

 

Exhibit 1 –

Terminalling Services Agreement - Martinez


EXHIBIT 2

MINIMUM COMMITMENTS AND RESERVED CAPACITIES

 

Product

  

Minimum Commitment

  

Reserved Capacity

Light Ends via truck rack

   112,542 Barrels per Month    132,313 Barrels per Month

Light Ends via rail

   184,630 Barrels per Month    217,175 Barrels per Month

Clean Products via truck rack

   453,209 Barrels per Month    533,205 Barrels per Month

 

Exhibit 2 –

Terminalling Services Agreement - Martinez

Exhibit 10.5

STORAGE SERVICES AGREEMENT - ANACORTES

This Storage Services Agreement – Anacortes (the “ Agreement ”) is executed as of July 1, 2014, and dated effective as of the Commencement Date (as defined below), by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ Customer ”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”), and for purposes of Section 24(a) only, Tesoro Logistics GP, LLC, a Delaware limited liability company (the “ General Partner ”), and Tesoro Logistics LP, a Delaware limited partnership (the “ Partnership ”).

RECITALS

WHEREAS , on the date hereof, Tesoro Corporation, a Delaware corporation (“ Tesoro ”), Customer and Tesoro Alaska Company LLC, a Delaware limited liability company will contribute certain assets to the General Partner, the General Partner will contribute those assets to the Partnership and the Partnership will contribute those assets to TLO pursuant to the Contribution, Conveyance and Assumption Agreement dated as of June 23, 2014 (the “ Contribution Agreement ”), by and among Tesoro, Customer, Tesoro Alaska Company LLC, the Partnership, the General Partner and TLO;

WHEREAS , pursuant to the Contribution Agreement, TLO owns the storage facility for crude oil, refinery feedstocks and refined products located in Anacortes, Washington (referred to herein as the “ Storage Facility ”), which includes without limitation the Tanks and Pipelines defined below;

WHEREAS , TLO desires to provide storage and handling services with respect to crude oil, refinery feedstocks and refined products owned by Customer and stored in one or more of TLO’s Tanks (as defined below);

WHEREAS, TLO’s Tanks at the Storage Facility have an aggregate Shell Capacity (as defined below) of approximately 1,500,000 Barrels (as defined below);

WHEREAS, by virtue of its indirect ownership interests in the Partnership, Customer has an economic interest in the financial and commercial success of the Partnership and its operating subsidiary, TLO; and

WHEREAS , Customer and TLO desire to enter into this Agreement to memorialize the terms of their commercial relationship related to the subject matter hereof.

NOW, THEREFORE , in consideration of the covenants and obligations contained herein, the Parties (as defined below) to this Agreement hereby agree as follows:

1. DEFINITIONS

Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.

Agreement ” has the meaning set forth in the Preamble.

API ” means American Petroleum Institute.


Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.

ASTM ” means ASTM International, formerly known as the American Society for Testing and Materials.

Barrel ” means a volume equal to 42 U.S. gallons of 231 cubic inches each, at 60 degrees Fahrenheit under one atmosphere of pressure.

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Capacity Resolution ” has the meaning set forth in Section 6(b).

Commencement Date ” has the meaning set forth in Section 3.

Commitment ” has the meaning set forth in Section 2(a).

Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

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

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.

Customer ” has the meaning set forth in the Preamble.

Customer Group ” has the meaning set forth in Section 19(a).

Customer Termination Notice ” has the meaning set forth in Section 22(b).

Extension Period ” has the meaning set forth in Section 3.

First Offer Period ” has the meaning set forth in Section 21(b).

Force Majeure ” means events or circumstances, whether foreseeable or not, which are not reasonably within the control of TLO and which, by the exercise of due diligence, TLO is unable to prevent or overcome, that prevent performance of TLO’s obligations or limits Customer’s ability to make effective use of the Operating Capacity of the Storage Facility, including: acts of God, strikes, lockouts or

 

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other industrial disturbances, wars, riots, fires, floods, storms, orders of Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, equipment, storage tanks or lines of pipe, and inability to obtain or unavoidable delays in obtaining material or equipment and similar events, excluding circumstances due to market conditions.

Force Majeure Notice ” has the meaning set forth in Section 22(a).

Force Majeure Period ” has the meaning set forth in Section 22(a).

General Partner ” has the meaning set forth in the Preamble.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Month ” means the period commencing on the Commencement Date and ending on the last day of the calendar month in which service begins and each successive calendar month thereafter.

Operating Capacity ” means the effective storage capacity of a Tank, taking into account accepted engineering principles, industry standards, American Petroleum Institute guidelines and Applicable Laws, only as to Products that such Tank is capable of storing, within the requirements of applicable permit requirements and under actual conditions as they may exist at any time. The Operating Capacity of each Tank shall be listed on the applicable Terminal Service Order as of the date of such Terminal Service Order.

Operating Procedures ” has the meaning set forth in Section 14(a).

Partnership ” has the meaning set forth in the Preamble.

Partnership Change of Control ” means Tesoro ceases to Control the General Partner.

Partnership Group ” has the meaning set forth in Section 19(b).

Party ” or “ Parties ” means that each of Customer and TLO is a “Party” and collectively are the “Parties” to this Agreement.

Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Pipeline ” or “ Pipelines ” means those pipelines within each Storage Facility that connect the Tanks to one another and to the receiving and delivery flanges of such Storage Facility.

Product ” or “ Products ” means crude oil, refinery feedstocks and refined products stored in the Tanks in the ordinary course of business.

psig ” means pound per square inch gauge.

Receiving Party Personnel ” has the meaning set forth in Section 28(d).

 

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Refinery ” means Customer’s refinery located in Anacortes, Washington.

Replacement Customer ” has the meaning set forth in Section 24(c).

Restoration ” has the meaning set forth in Section 6(a).

Right of First Refusal ” has the meaning set forth in Section 21(b).

Shell Capacity ” means the gross storage capacity of a Tank for each respective Product, based upon its dimensions, as set forth for each Tank on Schedule A attached hereto and in applicable Terminal Service Orders.

Storage Facility ” has the meaning set forth in the Recitals.

Storage Services Fee ” has the meaning set forth in Section 4(a).

Surcharge ” has the meaning set forth in Section 7(b)(i).

Tank 135 Restoration ” has the meaning set forth in Section 7(a).

Tank Heels ” consist of the minimum quantity of Product which either (a) must remain in a Tank during all periods when the Tank is available for service to keep the Tank in regulatory compliance or (b) is necessary for physical operation of the Tank.

Tanks ” mean the tanks owned by TLO and listed on Schedule A attached hereto, each of which is used for the storage of Products and located at each Storage Facility.

Term ” and “ Initial Term ” each have the meaning set forth in Section 3.

Terminal Service Order ” has the meaning set forth in Section 5(a).

Termination Notice ” has the meaning set forth in Section 22(a).

Tesoro ” has the meaning set forth in the Recitals.

Third Amended and Restated Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Tesoro, Customer, Tesoro Companies, Inc., Tesoro Alaska Company LLC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

TLO ” has the meaning set forth in the Preamble.

2. STORAGE COMMITMENT

(a) Commitment . During the Term of this Agreement and subject to the terms and conditions of this Agreement and the effective Operating Capacity of each Tank and the Storage Facility as a whole, TLO shall, as applicable, store all Products tendered by Customer at the Storage Facility (the “ Commitment ”).

 

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(b) Dedicated Storage . The Tanks identified on Schedule A attached hereto shall be dedicated and used exclusively for the storage of Customer’s Products. Customer shall be responsible for maintaining all Tank Heels required for operation of the Tanks. Tank Heels cannot be withdrawn from any Tank without prior approval of TLO. Customer shall pay the fees specified in the applicable Terminal Service Order for the dedication of the Tanks.

3. TERM

The initial term of this Agreement shall commence on the date hereof (the “ Commencement Date ”) and shall continue through July 1, 2024 (the “ Initial Term ”); provided, however, that Customer may, at its option, extend the Initial Term for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ”) by providing written notice of its intent to TLO no less than three hundred sixty-five (365) calendar days prior to the end of the Initial Term or the then-current Extension Period. The Initial Term, and any Extension Period shall be referred to herein as the “ Term .”

4. STORAGE SERVICES FEE

(a) Storage Services Fee . Customer shall pay a Monthly fee (the “ Storage Services Fee ”) to reserve, on a firm basis, all of the existing aggregate Shell Capacity of all of the Tanks in the Storage Facility. Such fee shall include all storage, pumping, and transshipment between and among the Tanks. Such fee shall be payable by Customer on a Monthly basis throughout the Term of the Agreement, regardless of the actual volumes of Products stored by TLO on behalf of Customer; provided, however, that the Parties shall from time to time negotiate an appropriate adjustment to such fee if the following conditions are met: (i) Customer requires the full Operating Capacity of the Tanks, (ii) the full Operating Capacity of the Tanks is not available to Customer for any reason (other than any reason resulting from or relating to actions or inactions by Customer), and (iii) TLO is unable to otherwise accommodate the actual volumes of Products required to be stored by Customer pursuant to the terms of this Agreement. Unless otherwise agreed, such adjustment shall be made in proportion to the reduction in Operating Capacity for any time period compared with the Operating Capacity then in effect for the affected Tank or Tanks pursuant to the mutually agreed Terminal Service Orders. (For example, if the Storage Services Fee applicable to the Shell Capacity of the affected Tank is $0.80 per Barrel per month x 345,000 Barrels = $276,000, and if the Operating Capacity in the then-applicable Terminal Service Order is 301,000 Barrels, and if the Operating Capacity falls 10% to 270,900, then Customer’s Storage Services Fee for the affected Tank during the period in which the full Operating Capacity of such Tank is not available to Customer for any reason (other than any reason resulting from or relating to actions or inactions by Customer) would be reduced by 10% to $248,400.) Prior to the calculation of a reduced Storage Services Fee in the manner set forth above, there shall have been at least a consecutive twenty-four (24) hour interruption in service. The Parties recognize that the existing Operating Capacity of certain Tanks may be less than the Shell Capacity of such Tanks, but the Parties acknowledge and agree that the Storage Services Fee shall be set in terms of a dollar-per-Barrel per Month rate based on Shell Capacity in the applicable Terminal Service Order.

(b) Rate and Fee . The Storage Services Fee shall be calculated using the per Barrel rate set forth on the Terminal Service Orders executed effective as of the Commencement Date for the then-existing aggregate Shell Capacity of all of the Tanks in the Storage Facility. The Storage Services Fee owed during the Month in which the Commencement Date occurs, if less than a full calendar month, shall be prorated in accordance with the ratio of (i) the number of days in such Month during which this Agreement is effective to (ii) the total number of days in such Month.

 

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5. TERMINAL SERVICE ORDERS

(a) Description . TLO and Customer shall enter into the Terminal Service Orders referred to in Section 5(b) and may enter into additional terminal service orders substantially in the form attached hereto as Schedule A (each, a “ Terminal Service Order ”). Upon a request by Customer pursuant to this Agreement or as deemed necessary or appropriate by TLO in connection with the services to be delivered pursuant hereto, TLO shall generate a Terminal Service Order to set forth the specific terms and conditions for providing the applicable services described therein and the applicable fees to be charged for such services. No Terminal Service Order shall be effective until fully executed by both TLO and Customer.

(b) Included Items . Items available for inclusion on a Terminal Service Order include, but are not limited to, the following:

(i) the Operating Capacity and Shell Capacity of each Tank;

(ii) the Storage Services Fee pursuant to Section 4;

(iii) any reimbursement pursuant to Section 7(a);

(iv) any Surcharge pursuant to Section 7(b);

(v) any modification, cleaning, or conversion of a Tank as requested by Customer pursuant to Section 8(a);

(vi) any agreements with respect to the Storage Service Fee during periods of repair or maintenance pursuant to Section 8(b);

(vii) any reimbursement related to newly imposed taxes and regulations pursuant to Section 9;

(viii) steam services pursuant to Section 15(a);

(ix) oily water removal pursuant to Section 15(b); and

(x) any other services that may be agreed upon by the Parties.

(c) Fee Increases . Any fees of a fixed amount set forth in this Agreement and any Terminal Service Order shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%).

(d) Conflicts . In case of any conflict between the terms of this Agreement and the terms of any Terminal Service Order, the terms of the applicable Terminal Service Order shall govern.

6. CAPABILITIES OF FACILITIES

(a) Maintenance and Repair . Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall maintain each Tank and the Pipelines in a condition and with a capacity sufficient to store and handle a volume of Customer’s Products at least equal to the current Operating Capacity for the Storage Facility as a whole. TLO’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or other interruption of service, to the extent such Force Majeure or other interruption of service impairs TLO’s ability to perform such obligations. If for any reason, including, without limitation, a

 

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Force Majeure event, the condition of any Tanks and/or associated Pipelines are below the level necessary for TLO to store and handle a volume of Customer’s Products at least equal to the current Operating Capacity, then within a reasonable period of time thereafter, TLO shall make repairs to restore the capacity of such Tank and/or associated Pipeline(s) to ensure service at the current Operating Capacity (“ Restoration ”). Except as provided below in Section 6(b), all of such Restoration shall be at TLO’s cost and expense unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of Customer, its employees, agents or customers.

(b) Capacity Resolution . In the event of the failure of TLO to maintain any Pipeline or Tank in a condition and with a capacity sufficient to store and handle a volume of Customer’s Products equal to its current Operating Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (as defined below). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration of capacity of the Tank and/or its associated Pipeline(s) which will, among other things, specify steps to be taken by TLO to fully accomplish Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary terminal industry standards and shall take into consideration TLO’s economic considerations relating to costs of the repairs and Customer’s requirements concerning its refining and marketing operations. TLO shall use commercially reasonable efforts to continue to provide storage of Customer’s Products at the Storage Facility, to the extent the Storage Facility has the capability of doing so, during the period before Restoration is completed. In the event that Customer’s economic considerations justify incurring additional costs to restore the Tank and/or associated Pipeline(s) in a more expedited manner than the time schedule determined in accordance with the preceding sentences, Customer may require TLO to expedite the Restoration to the extent reasonably possible, subject to Customer’s payment upon the occurrence of mutually agreed upon milestones in the Restoration process. In the event that the Operating Capacity of a Tank is reduced, and the Parties agree that the Restoration of such Tank to its full Operating Capacity is not justified under the standards set forth in the preceding sentences, then the Parties shall negotiate an appropriate adjustment to the Storage Services Fee to account for the reduced Operating Capacity available for Customer’s use. In the event the Parties agree to an expedited Restoration plan in which Customer agrees to pay the Restoration costs based on milestone payments or if the Parties agree to a reduced Storage Services Fee, then neither Party shall have the right to terminate this Agreement or any applicable Terminal Service Order pursuant to Section 23 below, so long as any such Restoration is completed with due diligence.

(c) Customer’s Right To Cure . If at any time after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TLO either (i) refuses or fails to meet with Customer within the period set forth in Section 6(b), (ii) fails to agree to perform a Capacity Resolution in accordance with the standards set forth in Section 6(b), or (iii) fails to perform its obligations in compliance with the terms of a Capacity Resolution, Customer may, as its sole remedy for any breach by TLO of any of its obligations under Section 6(b), require TLO to complete a Restoration of the affected Pipeline or Tank, and the Storage Services Fee shall be reduced, as described in Section 6(b) above, to account for the reduced Operating Capacity available for Customer’s use until such Restoration is completed. Any such Restoration required under this Section 6(c) shall be completed by TLO at Customer’s cost. TLO shall use commercially reasonable efforts to continue to provide storage and throughput of Customer’s Products at the affected Tank or Pipeline while such Restoration is being completed. Any work performed by TLO pursuant to this Section 6(c) shall be performed and completed in a good and workmanlike manner consistent with applicable pipeline industry standards and in

 

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accordance with Applicable Law. Additionally, during such period after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, Customer may exercise any remedies available to it under this Agreement or any Terminal Service Order (other than termination), including the right to immediately seek temporary and permanent injunctive relief for specific performance by TLO of the applicable provisions of this Agreement or any Terminal Service Order, including, without limitation, the obligation to make Restorations as described herein.

7. REIMBURSEMENT; SURCHARGES

(a) Reimbursement . Customer shall reimburse TLO for all of the following: (i) the actual cost of any expenditures that TLO agrees to make upon Customer’s request, (ii) any cleaning, degassing or other preparation of the Tanks at the expiration of this Agreement, and (iii) any costs incurred by TLO to restore Tank 135 to API 653 specifications (the “ Tank 135 Restoration ”).

(b) Surcharges .

(i) If, during the Term, any existing laws or regulations are changed or any new laws or regulations are enacted that require TLO to make substantial and unanticipated expenditures (whether capitalized or otherwise) with respect to a Storage Facility or with respect to the services provided hereunder, TLO may, subject to the terms of this Section 7(b), impose a surcharge to increase the applicable service fee (a “ Surcharge ”) to cover Customer’s pro rata share of the cost of complying with these laws or regulations, based upon the percentage of Customer’s use of the services or facilities impacted by such new laws or regulations.

(ii) TLO shall notify Customer of any proposed Surcharge to be imposed pursuant to Section 7(b)(i) sufficient to cover the cost of any required capital projects and any ongoing increased operating costs. TLO and Customer then shall negotiate in good faith for up to thirty (30) days to mutually determine the effect of the change in law or regulation or new law or regulation, the cost thereof, and how such cost shall be amortized at an interest rate of no more than nine percent (9%) as a Surcharge, with the understanding that TLO and Customer shall use their reasonable commercial efforts to mitigate the impact of, and comply with, these laws and regulations. Without limiting the foregoing, if expenditures requiring a Surcharge may be avoided or reduced through changes in operations, then the Parties shall negotiate in good faith to set forth the appropriate changes to Operating Capacities or other performance standards set forth in a Terminal Service Order to evidence the reduction of the amount of a Surcharge while leaving the Parties in the same relative economic position they held before the laws or regulations were changed or enacted.

(iii) In the event any Surcharge results in less than a fifteen percent (15%) increase in the applicable service fee, Customer will be assessed such Surcharge on all future invoices during the period in which such Surcharge is in effect for the applicable amortization period, and TLO shall not terminate the affected service from this Agreement.

(iv) In the event any Surcharge results in a fifteen percent (15%) or more increase in the applicable service fee, TLO shall notify Customer of the amount of the Monthly Surcharge required to reimburse TLO for its costs, plus carrying costs, together with reasonable supporting detail for the nature and amount of any such Surcharge.

 

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(A) If within thirty (30) days of such notification provided in Section 7(b)(iv), Customer does not agree to pay such Surcharge or to reimburse TLO up front for its costs, TLO may elect to either:

(1) require Customer to pay such Surcharge, up to a fifteen percent (15%) increase in the applicable service fee; or

(2) terminate the Tank(s) or other facilities from this Agreement upon notice to Customer.

(B) TLO’s performance obligations under this Agreement shall be suspended or reduced during the above thirty (30)-day period to the extent that TLO would be obligated to make such expenditures to continue performance during such period.

(v) Following a resolution with respect to the amount and manner of payment of a Surcharge pursuant to this Section 7, the Parties shall execute an appropriate Terminal Service Order memorializing the terms of such resolution.

(vi) In lieu of paying the Surcharge in connection with any required capital project, Customer may, at its option, elect to pay the full cost of the substantial and unanticipated expenditures upon completion of a project.

8. TANK MODIFICATION, REPAIR AND CLEANING; REMOVAL OF PRODUCT

(a) Tank Modifications . Each of the Tanks shall be used for its historical service, provided however, that Customer may request that a Tank be changed for storage of a different grade or type of Product. In such an instance, TLO shall agree to a change in such service, if the same can be accomplished in accordance with reasonable commercial standards, accepted industry and engineering guidelines, permit requirements and Applicable Law. If any such modifications, improvements, vapor recovery, cleaning, degassing, or other preparation of the tanks is performed by TLO at the request of Customer, Customer shall bear all direct costs attributable thereto, including, without limitation, the cost of removal, processing, transportation, and disposal of all waste and the cost of any taxes or mutually agreed charges TLO may be required to pay in regard to such waste (subject to subparagraph (c) below), which costs shall be set forth on the applicable Terminal Service Order. TLO may require Customer to pay all such amounts prior to commencement of any remodeling work on the Tanks, or by mutual agreement, the Parties may agree upon an increase in the Storage Services Fee to reimburse TLO for its costs of such modifications, plus a reasonable return on capital. All of such costs associated with Tank modifications shall be documented by a Terminal Service Order to be executed by the Parties.

(b) Responsibility for Fees . Should TLO take any of the Tanks out of service for regulatory requirements, repair, or maintenance, Customer shall be solely responsible for any alternative storage or Product movements as required and all third-party fees associated with such movements that are not within a Storage Facility; provided that TLO shall not be reimbursed for any costs of transportation through TLO’s facilities that it might be entitled to collect under any tariff or agreement with Customer. Unless a Tank is removed specifically at Customer’s request, or as otherwise agreed pursuant to a Terminal Service Order, Customer shall not be responsible to TLO for any Storage Services Fees for any Tanks taken out of service during the period that such Tank is out of service.

(c) Removal of Product . Materials stored in or removed from any Storage Facility shall at all times remain owned by Customer or any applicable Replacement Customer, and the owner of the Product shall always remain responsible for, at the owner’s sole cost, receiving custody of all of its materials to be removed from such Storage Facility, making appropriate arrangements to receive custody at such Storage Facility in a manner acceptable to TLO, and disposal of such material after custody is returned to the owner. Customer shall be responsible for any fees and costs associated with the disposal of hazardous waste (unless caused by TLO’s negligence). TLO shall have no obligations regarding disposition of such materials, other than to return custody to the owner at such Storage Facility.

 

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9. NEWLY IMPOSED TAXES AND REGULATIONS

Customer shall promptly reimburse TLO for any newly imposed taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) by any federal, state or local government or agency that TLO incurs on Customer’s behalf for the services provided by TLO under this Agreement or any applicable Terminal Service Order. If TLO is required to pay any of the foregoing, Customer shall promptly reimburse TLO in accordance with the payment terms set forth in this Agreement. Any such newly imposed taxes shall be specified in an applicable Terminal Service Order.

10. PAYMENTS

TLO shall invoice Customer on a Monthly basis, and Customer shall pay all amounts due under this Agreement and any Terminal Service Order no later than ten (10) days after Customer’s receipt of TLO’s invoice. Any past due payments owed by Customer shall accrue interest, payable on demand, at the lesser of (i) the rate of interest announced publicly by JPMorgan Chase Bank, in New York, New York, as JPMorgan Chase Bank’s prime rate (which Parties acknowledge and agree is announced by such bank and used by the Parties for reference purposes only and may not represent the lowest or best rate available to any of the customers of such bank or the Parties), plus four percent (4%), and (ii) the highest rate of interest (if any) permitted by Applicable Law, from the due date of the payment through the actual date of payment.

11. SCHEDULING

All scheduling of delivery into and redelivery out of the Tanks shall be decided by mutual agreement of the Parties. Customer shall identify to TLO prior to the delivery of any Product to a Storage Facility, the specific Tanks to be used for receiving and storing such Product.

12. SERVICES; VOLUME LOSSES; MEASUREMENT

(a) Services . The services provided by TLO pursuant to this Agreement or any applicable Terminal Service Order shall only consist of storage of the Products at the Tanks.

(b) Measurement and Volume Loss Control Practices .

(i) TLO shall have no obligation to measure volume gains and losses. In the event third-party Products are stored at the Storage Facility, the Parties shall mutually determine the measurement and volume loss control practices for the Storage Facility.

(ii) TLO shall be responsible to Customer only for Product losses and/or shortages resulting from the negligent or wrongful acts and omissions of TLO; provided that TLO shall not be responsible to Customer for any Product losses and/or shortages for which Customer is compensated by its cargo/inventory insurance carrier, including through the cargo/inventory insurance coverage required by Section 26. If Customer fails to maintain the cargo/inventory insurance coverage required by Section 26, then TLO shall also not be responsible to Customer for any Product losses and/or shortages to the extent Customer would have been compensated by its insurance carrier had Customer maintained the cargo/inventory insurance coverage required by Section 26.

 

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(iii) Customer shall be responsible for all Product losses and/or shortages it may suffer other than those covered by Section 12(b)(ii).

(c) Pipeline Measurement . All quantities of Products received and delivered by pipeline at shall be measured and determined based upon the meter readings of the pipeline operator, as reflected by delivery tickets, or if such meters are unavailable, by applicable calibration tables. All quantities shall be adjusted to net gallons at 60° F in accordance with ASTM D-1250 Petroleum Measurement Tables, or latest revisions thereof. Meters and temperature probes shall be calibrated according to applicable API standards. Customer shall have the right, at its sole expense, and in accordance with applicable procedure, to independently certify such calibration.

(d) Storage Tank Measurement . Storage Tank gauging shall be performed by TLO’s personnel. Customer may perform joint gauging at its sole expense with TLO’s personnel at the time of delivery or receipt of Product, to verify the amount involved. If Customer requests an independent gauger, such gauger must be acceptable to TLO and such gauging shall be at Customer’s sole expense.

13. CUSTODY TRANSFER AND TITLE

TLO shall be deemed to have custody of the Product after it enters TLO’s fixed receiving flange and until the Product leaves the fixed delivery flange on the receiving manifold at the Storage Facility. Customer shall be deemed to receive custody of the Product when it enters the delivery flange into the applicable pipeline which delivers Product into the Refinery. Upon re-delivery of any Product to Customer’s account, Customer shall become solely responsible for any loss, damage or injury to Person or property or the environment, arising out of transportation, possession or use of such Product after transfer of custody. Title to all Customer’s Products received in each Storage Facility shall remain with Customer at all times. Both Parties acknowledge that this Agreement and any Terminal Service Order represent a bailment of Products by Customer to TLO and not a consignment of Products, it being understood that TLO has no authority hereunder to sell or seek purchasers for the Products of Customer. Customer hereby warrants that it shall have good title to and the right to deliver, store and receive Products pursuant to the terms of this Agreement or any applicable Terminal Service Order. Customer acknowledges that, notwithstanding anything to the contrary contained in this Agreement or in any Terminal Service Order, Customer acquires no right, title or interest in or to the Storage Facility), except the right to receive, deliver and store the Products in the Tanks. TLO shall retain control of the Storage Facility.

14. OPERATING PROCEDURES; SERVICE INTERRUPTIONS

(a) Operating Procedures for Customer . Customer hereby agrees to strictly abide by any and all procedures (the “ Operating Procedures ”) relating to the operation and use of the Storage Facility (including the Tanks) and the Pipelines that generally apply to receipt, delivery, storage, and movement of Products at the Storage Facility. TLO shall provide Customer with a current copy of its Operating Procedures and shall provide Customer with thirty (30) days’ prior written notice of any changes to the Operating Procedures, unless a shorter implementation of such revised Operating Procedures is required by Applicable Law.

(b) Operating Procedures for TLO . TLO shall carry out the handling of the Products at the Storage Facility, the Tanks, and the Pipelines in accordance with the Operating Procedures.

 

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(c) Service Interruptions . TLO shall use reasonable commercial efforts to minimize the interruption of service at each Tank and/or any of the associated Pipeline(s). TLO shall promptly inform Customer’s operational personnel of any anticipated partial or complete interruption of service at any Tank and/or associated Pipelines, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions TLO is taking to resume full operations, provided that TLO shall not have any liability for any failure to notify, or delay in notifying, Customer of any such matters except to the extent Customer has been materially prejudiced or damaged by such failure or delay.

15. STEAM SERVICES; REMOVAL OF OILY WATER

(a) Steam Services . Customer, at its sole cost and expense, shall provide TLO steam for the Storage Facility, measuring 1200 psig at 1500 ° F, pursuant to an applicable Terminal Service Order.

(b) Removal of Oily Water . Customer shall provide services for oily water removal pursuant to an applicable Terminal Service Order.

16. LIENS

TLO hereby waives, relinquishes and releases any and all liens, including without limitation, any and all warehouseman’s liens, custodian’s liens, rights of retention and/or similar rights under all applicable laws, which TLO would or might otherwise have under or with respect to all Products stored or handled hereunder. TLO further agrees to furnish documents reasonably acceptable to Customer and its lender(s) (if applicable), and to cooperate with Customer in assuring and demonstrating that Product titled in Customer’s name shall not be subject to any lien on the Storage Facility or TLO’s Product stored there.

17. COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS

(a) Compliance With Law . None of the Products covered by this Agreement or any Terminal Service Order shall be derived from any Product which was produced or withdrawn from storage in violation of any federal, state or other governmental law, nor in violation of any rule, regulation or promulgated by any governmental agency having jurisdiction.

(b) Licenses and Permits . TLO shall maintain all necessary licenses and permits for the storage of Products at the Storage Facility.

(c) Applicable Law . The Parties are entering into this Agreement and any Terminal Service Order in reliance upon and shall fully comply with all Applicable Law which directly or indirectly affects the Products hereunder, or any receipt, throughput delivery, transportation, handling or storage of Products hereunder or the ownership, operation or condition of the Storage Facility. Each Party shall be responsible for compliance with all Applicable Laws associated with such Party’s respective performance hereunder and the operation of such Party’s facilities. In the event any action or obligation imposed upon a Party under this Agreement and any Terminal Service Order shall at any time be in conflict with any requirement of Applicable Law, then this Agreement and any Terminal Service Order, shall immediately be modified to conform the action or obligation so adversely affected to the requirements of the Applicable Law, and all other provisions of this Agreement and any Terminal Service Order shall remain effective.

(d) New Or Changed Applicable Law . If during the Term, any new Applicable Law becomes effective or any existing Applicable Law or its interpretation is materially changed, which change is not addressed by another provision of this Agreement or any Terminal Service Order and which has a material adverse economic impact upon a Party, then either Party, acting in good faith, shall have the option to request renegotiation of the relevant provisions of this Agreement or any Terminal Service

 

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Order with respect to future performance. The Parties shall then meet and negotiate in good faith amendments to this Agreement or to an applicable Terminal Service Order that will conform to the new Applicable Law while preserving the Parties’ economic, operational, commercial and competitive arrangements in accordance with the understandings set forth herein.

18. LIMITATION ON LIABILITY; WARRANTIES

(a) No Special Damages . IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS OR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, NO MATTER HOW CHARACTERIZED, RELATING TO THIS AGREEMENT AND ARISING FROM ANY CAUSE WHATSOEVER, EXCEPT WITH RESPECT TO INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ACTUALLY AWARDED TO A THIRD PARTY OR ASSESSED BY A GOVERNMENTAL AUTHORITY AND FOR WHICH A PARTY IS PROPERLY ENTITLED TO INDEMNIFICATION FROM THE OTHER PARTY PURSUANT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT.

(b) Claims and Liability for Lost Product . TLO shall not be liable to Customer for lost or damaged Product unless Customer notifies TLO in writing within ninety (90) days of the report of any incident or the date Customer learns of any such loss or damage to the Product. TLO’s maximum liability to Customer for any lost or damaged Product shall be limited to (i) the lesser of (1) the replacement value of the Product at the time of the incident based upon the price as posted by Platts or similar publication for similar Product in the same locality, and if no other similar Product is in the locality, then in the state, or (2) the actual cost paid for the Product by Customer (copies of Customer’s invoices of cost paid must be provided), less (ii) the salvage value, if any, of the damaged Product.

(c) No Guarantees or Warranties. Except as expressly provided in the Agreement, neither Customer nor TLO makes any guarantees or warranties of any kind, expressed or implied. TLO specifically disclaims all implied warranties of any kind or nature, including any implied warranty of merchantability and/or any implied warranty of fitness for a particular purpose.

19. INDEMNIFICATION

(a) TLO Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TLO shall release, defend, protect, indemnify, and hold harmless Customer, its carriers, and each of its and their respective affiliates, officers, directors, employees, agents, contractors, successors, and assigns (excluding any member of the Partnership Group) (collectively the “ Customer Group ”), from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of Customer, TLO or the General Partner, and, as applicable, their carriers, customers, representatives, and agents, (ii) loss of or damage to any property, products, material, and/or equipment belonging to Customer, TLO and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein), (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of TLO or the General Partner in connection with the ownership or operation of the Pipelines or the Storage Facility and the services provided hereunder, and, as applicable, their carriers, customers

 

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(other than Customer), representatives, and agents, or those of their respective employees with respect to such matters, and (iv) any losses incurred by Customer due to violations of this Agreement or any Terminal Service Order by TLO, or, as applicable, its customers (other than Customer), representatives, and agents; PROVIDED THAT TLO SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF CUSTOMER OR ANY MEMBER OF THE CUSTOMER GROUP.

(b) Customer Indemnities . Notwithstanding anything else contained in this Agreement or any Terminal Service Order, Customer shall release, defend, protect, indemnify, and hold harmless TLO, General Partner, the Partnership, their subsidiaries and their respective officers, directors, members, managers, employees, agents, contractors, successors, and assigns (collectively the “ Partnership Group ”) from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TLO, the General Partner, Customer, and, as applicable, their carriers, customers, representatives, and agents; (ii) loss of or damage to any property, products, material, and/or equipment belonging to TLO, Customer, and, as applicable, their carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein); (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the negligent or wrongful acts or omissions of Customer, in connection with Customer’s use of the Pipelines or the Storage Facility and the services provided hereunder and Customer’s Products stored hereunder, and, as applicable, its carriers, customers, representatives, and agents, or those of their respective employees with respect to such matters; and (iv) any losses incurred by TLO due to violations of this Agreement or any Terminal Service Order by Customer, or, as applicable, its carriers, customers, representatives, and agents; PROVIDED THAT CUSTOMER SHALL NOT BE OBLIGATED TO RELEASE, INDEMNIFY OR HOLD HARMLESS TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF TLO OR ANY MEMBER OF THE PARTNERSHIP GROUP.

(c) Written Claim . Neither Party shall be obligated to indemnify the other Party or be liable to the other Party unless a written claim for indemnity is delivered to the other Party within ninety (90) days after the date that a claim is reported or discovered, whichever is earlier.

(d) No Limitation . Except as expressly provided otherwise in this Agreement, the scope of these indemnity provisions may not be altered, restricted, limited, or changed by any other provision of this Agreement. The indemnity obligations of the Parties as set out in this Section 19 are independent of any insurance requirements as set out in Section 26, and such indemnity obligations shall not be lessened or extinguished by reason of a Party’s failure to obtain the required insurance coverages or by any defenses asserted by a Party’s insurers.

(e) Survival . These indemnity obligations shall survive the termination of this Agreement until all applicable statutes of limitation have run regarding any claims that could be made with respect to the activities contemplated by this Agreement.

 

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(f) Mutual and Express Acknowledgement . THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED PARTY. EACH PARTY ACKNOWLEDGES THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

(g) Third Party Indemnification . If any Party has the rights to indemnification from a third party, the indemnifying party under this Agreement shall have the right of subrogation with respect to any amounts received from such third-party indemnification claim.

20. TERMINATION

(a) Termination for Default . A Party shall be in default under this Agreement or any Terminal Service Order if:

(i) the Party breaches any provision of this Agreement or a Terminal Service Order, which breach has a material adverse effect on the other Party (with such material adverse effect being determined based on this Agreement and all Terminal Service Orders considered as a whole), and such breach is not excused by Force Majeure or cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party (unless such failure is not commercially reasonably capable of being cured in such fifteen (15) Business Day period in which case such Party shall have commenced remedial action to cure such breach and shall continue to diligently and timely pursue the completion of such remedial action after such notice); or

(ii) the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.

If either Party is in default as described above, then (i) if Customer is in default, TLO may or (ii) if TLO is in default, Customer may: (A) terminate this Agreement and all applicable Terminal Service Orders upon notice to the defaulting Party; (B) withhold any payments due to the defaulting Party under this Agreement and the Terminal Service Orders; and/or (C) pursue any other remedy at law or in equity.

(b) Obligation to Cure . If a Party breaches any provision of this Agreement or a Terminal Service Order, which breach does not have a material adverse effect on the other Party, the breaching Party shall still have the obligation to cure such breach.

 

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(c) Obligations at Termination . Unless otherwise mutually agreed by the Parties, within thirty (30) days of the termination or expiration of this Agreement, (i) Customer shall promptly remove all of its removable Products from the Storage Facility and (ii) TLO shall remove the remaining Tank Heels and tank bottoms and deliver them to Customer or Customer’s designee. In the event all of the Product is not removed within such thirty (30) day period, Customer shall be assessed a holdover storage fee, calculated on the same basis as the Storage Services Fee, to all Products held in storage more than thirty (30) days beyond the termination or expiration of this Agreement until such time Customer’s entire Product is removed from the Tanks and the Storage Facility; provided, however, that Customer shall not be assessed any storage fees associated with the removal of Product to the extent that Customer’s ability to remove such Product is delayed or hindered by TLO, its agents, or contractors for any reason.

21. RIGHT TO ENTER INTO A NEW STORAGE AGREEMENT

(a) Right to Enter New Agreement . Upon termination of this Agreement for reasons other than (x) a default by Customer and (y) any other termination of this Agreement initiated by TLO pursuant to Section 20, Customer shall have the right to require TLO to enter into a new storage services agreement (with ancillary Terminal Service Orders, as appropriate) with Customer that (i) is consistent with the terms set forth in this Agreement and Terminal Service Orders in effect at the time of such termination, (ii) relates to the Storage Facility and the Tanks, and (iii) has commercial terms that are, in the aggregate, equal to or more favorable to TLO than fair market value terms as would be agreed by similarly-situated parties negotiating at arm’s length; provided, however, that the term of any such new storage services agreement shall not extend beyond July 1, 2034.

(b) New Agreement; Right of First Refusal . In the event that TLO proposes to enter into a storage services agreement with a third party within two (2) years after the termination of this Agreement for reasons other than (x) by default by Customer and (y) any other termination of this Agreement initiated by Customer pursuant to Section 20, TLO shall give Customer ninety (90) days’ prior written notice of any proposed new storage services agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon Customer’s receipt of such written notice) (the “ First Offer Period ”) in which Customer may make a good faith offer to enter into a new storage services agreement with TLO (the “ Right of First Refusal ”). If Customer makes an offer on terms no less favorable to TLO than the third-party offer with respect to such storage services agreement during the First Offer Period, then TLO shall be obligated to enter into a storage services agreement with Customer on the terms set forth in Customer’s offer to TLO. If Customer does not exercise its Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party storage services agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 21(b) shall again become effective.

22. FORCE MAJEURE

(a) Force Majeure Notice . As soon as possible upon the occurrence of a Force Majeure, TLO shall provide Customer with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). TLO shall identify in such Force Majeure Notice the approximate length of time that TLO reasonably believes in good faith such Force Majeure shall continue (the “ Force Majeure Period ”). For the duration of the Force Majeure Period, the Storage Services Fee shall be reduced by an amount equal to the Shell Capacity for each affected Tank, provided that if Customer is able to continue to store Product in a Tank during the Force Majeure Period, but at a reduced Operating Capacity, the Storage Services Fee shall be reduced in proportion to the amount the effective Operating Capacity is reduced. If TLO advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive Months, then, subject to Section 6 above, at

 

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any time after TLO delivers such Force Majeure Notice, either Party may terminate that portion of this Agreement or any Terminal Service Order solely with respect to the affected Tank(s) at the Storage Facility, but only upon delivery to the other Party of a notice (a “ Termination Notice ”) at least twelve (12) Months prior to the expiration of the Force Majeure Period; provided, however; that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends prior to the expiration of such twelve-Month period. For the avoidance of doubt, neither Party may exercise its right under this Section 22(a) to terminate this Agreement or any Terminal Service Order as a result of a Force Majeure with respect to any machinery, storage, tanks, lines of pipe or other equipment that has been unaffected by, or has been restored to working order since, the applicable Force Majeure, including pursuant to a Restoration under Section 6.

(b) Termination Notice . Notwithstanding the foregoing, if Customer delivers a Termination Notice to TLO (the “ Customer Termination Notice ”) and, within thirty (30) days after receiving such Customer Termination Notice, TLO notifies Customer that TLO reasonably believes in good faith that it shall be capable of fully performing its obligations under this Agreement or any Terminal Service Order within a reasonable period of time and Customer mutually agrees, which agreement shall not be unreasonably withheld, then the Customer Termination Notice shall be deemed revoked and the applicable portion of this Agreement or any Terminal Service Order shall continue in full force and effect as if such Customer Termination Notice had never been given.

23. SUSPENSION OF REFINERY OPERATIONS

This Agreement shall continue in full force and effect regardless of whether Customer decides to permanently or temporarily suspend refining operations at the Refinery. Customer is not permitted to suspend or reduce its obligations under this Agreement or any Terminal Service Order in connection with a shutdown of the Refinery for scheduled turnarounds or other regular servicing or maintenance. If refining operations at the Refinery are suspended for any reason (including Refinery turnarounds and other scheduled maintenance), then Customer shall remain liable for Storage Services Fees under this Agreement or any Terminal Service Order for the duration of the suspension. Customer shall provide at least thirty (30) days’ prior written notice of any suspension of operations at the Refinery due to a planned turnaround or scheduled maintenance.

24. ASSIGNMENT; SUBCONTRACT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment to TLO . On the Commencement Date, the General Partner shall assign all of its rights and obligations under this Agreement to the Partnership. The Partnership shall immediately assign its rights and obligations hereunder to TLO. Upon such assignment to TLO, TLO shall have all of the respective rights and obligations set forth herein during the Term of this Agreement.

(b) Customer Assignment to Third Party . Customer shall not assign any of its rights or obligations under this Agreement without TLO’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that Customer may assign this Agreement without TLO’s consent in connection with a sale by Customer of the Refinery so long as the transferee: (i) agrees to assume all of Customer’s obligations under this Agreement and (ii) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by Customer in its reasonable judgment.

(c) Subcontract . Should Customer desire to subcontract to a third party (“ Replacement Customer ”) any dedicated storage subject to a Terminal Service Order, Customer must notify TLO in writing prior to the proposed start of the subcontract. TLO has the right to approve any Replacement Customer, which approval shall not be unreasonably withheld, conditioned or delayed. Unless otherwise

 

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agreed in writing between Customer and TLO, and between Replacement Customer and TLO, Customer will continue to be liable for all terms and conditions of this Agreement related to any subcontracted Tank, including, but not limited to, remittance of any fees set forth in a Terminal Service Order applicable to the subcontracted Tank. Customer shall be responsible for collection of any fees due to Customer from the Replacement Customer. Customer and TLO may mutually agree that operational notices concerning scheduling and similar matters can be directly provided between TLO and any Replacement Customer.

(d) TLO Assignment . TLO shall not assign any of its rights or obligations under this Agreement without Customer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that (i) TLO may assign this Agreement without Customer’s consent in connection with a sale by TLO of the Storage Facility so long as the transferee: (A) agrees to assume all of TLO’s obligations under this Agreement; (B) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by TLO in its reasonable judgment; and (C) is not a competitor of Customer; and (ii) TLO shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO.

(e) Notification of Assignment . Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(f) Partnership Change of Control . Customer’s obligations hereunder shall not terminate in connection with a Partnership Change of Control, provided, however, that in the case of any Partnership Change of Control, Customer shall have the option to extend the Term of this Agreement as provided in Section 3. TLO shall provide Customer with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

25. ACCOUNTING PROVISIONS AND DOCUMENTATION; AUDIT

(a) Storage Services Fee Documentation . Within ten (10) Business Days following the end of each Month, TLO shall furnish Customer with a statement showing, by Tank, a calculation of all of Customer’s Monthly Storage Services Fees. TLO shall furnish all appropriate documentation to support the calculation of all fees, and, to the extent reasonably available, to document movement of Products through the Storage Facility.

(b) Access . Each Party and its duly authorized agents and/or representatives shall have reasonable access to the accounting records and other documents maintained by the other Party which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term and for a period of up to three (3) years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within ninety (90) days after the delivery in question or shall be deemed to have been waived.

26. INSURANCE

(a) Coverage . At all times during the Term and for a period of two (2) years after termination of this Agreement for any coverage maintained on a “claims-made” or “occurrence” basis, Customer shall maintain at its expense the below listed insurance in the amounts specified below, or self-insurance in such amounts as may be agreed pursuant to a Terminal Service Order. Such insurance shall provide coverage to TLO and such policies, other than Worker’s Compensation Insurance, shall include TLO as an Additional Insured. Each policy shall provide that it is primary to and not contributory with any other insurance, including any self-insured retention, maintained by TLO (which shall be excess) and each

 

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policy shall provide the full coverage required by this Agreement and any Terminal Service Order. All such insurance shall be written with carriers and underwriters acceptable to TLO, and eligible to do business in the state where the Storage Facility is located and having and maintaining an A.M. Best financial strength rating of no less than “A-” and financial size rating no less than “VII”; provided that Customer may procure worker’s compensation insurance from the state where the Storage Facility is located. All limits listed below are required MINIMUM LIMITS:

(i) Workers Compensation and Occupational Disease Insurance which fully complies with Applicable Law of the state where the Storage Facility is located, in limits not less than statutory requirements;

(ii) Employers Liability Insurance with a minimum limit of $1,000,000 for each accident, covering injury or death to any employee which may be outside the scope of the worker’s compensation statute of the jurisdiction in which the worker’s service is performed, and in the aggregate as respects occupational disease;

(iii) Commercial General Liability Insurance, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limits as may be required by TLO or by Applicable Law from time to time. This policy shall include Broad Form Contractual Liability insurance coverage which shall specifically apply to the obligations assumed in this Agreement and any Terminal Service Order by Customer;

(iv) Automobile Liability Insurance covering all owned, non-owned and hired vehicles, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limit(s) as may be required by Customer or by Applicable Law from time to time. Limits of liability for this insurance must be not less than $1,000,000 per occurrence;

(v) Excess (Umbrella) Liability Insurance with limits not less than $4,000,000 per occurrence. Additional excess limits may be utilized to supplement inadequate limits in the primary policies required in items (ii), (iii), and (iv) above;

(vi) Pollution Legal Liability with limits not less than $25,000,000 per loss with an annual aggregate of $25,000,000. Coverage shall apply to bodily injury and property damage including loss of use of damaged property and property that has not been physically injured; cleanup costs, defense, including costs and expenses incurred in the investigation, defense or settlement of claim; and

(vii) Cargo/Inventory Insurance, with a limit of no less than $1,000,000, which property insurance shall be first-party property insurance to adequately cover all Products owned by Customer located at the Storage Facility.

(b) Waiver of Subrogation . All such policies must be endorsed with a Waiver of Subrogation endorsement, effectively waiving rights of recovery under subrogation or otherwise, against TLO, and shall contain where applicable, a severability of interest clause and a standard cross liability clause.

(c) Insurance Certificates . Upon execution of this Agreement and prior to the operation of any equipment by Customer, Customer will furnish to TLO, and at least annually thereafter (or at any other times upon request by TLO) during the Term (and for any coverage maintained on a “claims-made” basis, for two (2) years after the termination of this Agreement or any applicable Terminal Service Order), insurance certificates and/or certified copies of the original policies to evidence the insurance required herein. Such certificates shall be in the form of the “Accord” Certificate of Insurance, and reflect that they are for the benefit of TLO and shall provide that there will be no material change in or cancellation of the policies unless TLO is given at least thirty (30) days prior written notice. Certificates providing evidence of renewal of coverage shall be furnished to TLO prior to policy expiration.

 

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(d) Self-Insurance . Customer shall be solely responsible for any deductibles or self-insured retention.

27. NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (i) if by transmission by hand delivery, when delivered; (ii) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (iii) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) by e-mail one (1) Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to Customer, to:

Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles A. Cavallo III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

For all other notices and communications :

Attention: Dennis C. Bak

phone: 310-847-3846

email: Dennis.C.Bak@tsocorp.com

If to TLO, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

 

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28. CONFIDENTIAL INFORMATION

(a) Obligations . Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 28 . Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or become available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of TLO that was in the possession of Customer or any of its affiliates as a result of their ownership or operation of the Storage Facility prior to the Commencement Date);

(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 28 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 28(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of any applicable securities exchange of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

(c) Return of Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party or destroyed with destruction certified by the receiving Party upon termination of this Agreement, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided , however , that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 28, and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

 

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(d) Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement or any Terminal Service Order (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

(e) Survival . The obligation of confidentiality under this Section 28 shall survive the termination of this Agreement for a period of two (2) years.

29. MISCELLANEOUS

(a) Modification; Waiver . This Agreement or any Terminal Service Order may be amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement or any Terminal Service Order may be waived in writing at any time by the Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement or any Terminal Service Order, or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement or any Terminal Service Order will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

(b) Integration . This Agreement, together with the Schedules and Terminal Service Orders and the other agreements executed on the date hereof in connection with the transactions contemplated by the Contribution Agreement, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. In the event of a conflict of provisions of this Agreement and the Third Amended and Restated Omnibus Agreement, the provisions of the Third Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

 

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(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Governing Law; Jurisdiction . This Agreement and any Terminal Service Order shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or any Terminal Service Order brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

(e) Counterparts . This Agreement and any Terminal Service Order may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

(f) Severability . Whenever possible, each provision of this Agreement and any Terminal Service Order will be interpreted in such manner as to be valid and effective under applicable law, but if any provision of this Agreement or any Terminal Service Order or the application of any such provision to any Person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

(g) No Third Party Beneficiaries . Except as specifically provided herein, including as set forth in Section 19, it is expressly understood that the provisions of this Agreement and any Terminal Service Order do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

(h) WAIVER OF JURY TRIAL . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

(i) Schedules and Terminal Service Orders(s) . Each of the Schedules and Terminal Service Order(s) attached hereto and referred to herein is hereby incorporated in and made a part of this Agreement as if set forth in full herein.

 

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IN WITNESS WHEREOF , the Parties hereto have duly executed this Agreement as of the date first written above.

 

TESORO LOGISTICS OPERATIONS LLC     TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ Phillip M. Anderson

    By:  

/s/ G. Scott Spendlove

  Phillip M. Anderson       G. Scott Spendlove
  President       Senior Vice President and Chief Financial Officer

Solely with respect to Section 24(a):

TESORO LOGISTICS GP, LLC

   

Solely with respect to Section 24(a):

TESORO LOGISTICS LP

By:  

/s/ Phillip M. Anderson

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

/s/ Phillip M. Anderson

        Phillip M. Anderson
        President

Signature Page to Storage Services Agreement – Anacortes


SCHEDULE A

TANKS

 

TANK NUMBER

   SHELL CAPACITY (in Barrels)  

135

     170,000   

136

     177,000   

165

     597,000   

166

     598,000   

Schedule A

Storage Services Agreement – Anacortes


EXHIBIT 1

FORM OF TERMINAL SERVICE ORDER

(ANACORTES [     ]-             , 20        )

This Terminal Service Order is entered as of             , 20        , by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and Tesoro Logistics Operations LLC, a Delaware limited liability company, pursuant to and in accordance with the terms of the Storage Services Agreement – Anacortes dated as of July 1, 2014, by and among such parties and Tesoro Logistics GP, LLC, a Delaware limited liability company, and Tesoro Logistics LP, a Delaware limited partnership (the “Agreement”).

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.

Pursuant to Section 5 of the Agreement, the parties hereto agree to the following provisions:

(i) the Operating Capacity and Shell Capacity of each Tank;

(ii) the Storage Services Fee pursuant to Section 4;

(iii) any reimbursement pursuant to Section 7(a);

(iv) any Surcharge pursuant to Section 7(b);

(v) any modification, cleaning, or conversion of a Tank as requested by Customer pursuant to Section 8(a);

(vi) any agreements with respect to the Storage Service Fee during periods of repair or maintenance pursuant to Section 8(b);

(vii) any reimbursement related to newly imposed taxes and regulations pursuant to Section 9;

(viii) steam services pursuant to Section 15(a);

(ix) oily water removal pursuant to Section 15(b); and

(x) any other services that may be agreed upon by the Parties.

Except as set forth in this Terminal Service Order, the other terms of the Agreement shall continue in full force and effect and shall apply to the terms of this Terminal Service Order.

Exhibit 1

Storage Services Agreement – Anacortes


IN WITNESS WHEREOF , the parties hereto have duly executed this Terminal Service Order as of the date first written above.

 

TESORO REFINING & MARKETING COMPANY LLC
By:    
Name:  
Title:  

 

TESORO LOGISTICS OPERATIONS LLC
By:    
Name:  
Title:  

Exhibit 1

Storage Services Agreement – Anacortes

Exhibit 10.6

FIRST AMENDMENT TO GROUND LEASE

THIS FIRST AMENDMENT TO GROUND LEASE (the “ First Amendment ”) is made and entered into as of July 1, 2014, by and between TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ Landlord ”), and TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ Tenant ”).

RECITALS

A. Landlord and Tenant entered into that certain Ground Lease dated November 15, 2012 (the “ Lease ”) with respect to a portion of that certain petrochemical refinery located in Skagit County, Washington (the “ Existing Premises ”), as more particularly described in the Lease, that is currently used as the Rail Facility (as defined in the Lease).

B. Landlord and Tenant desire, among other items, to provide for the expansion of the Existing Premises and to modify the Lease accordingly.

C. Concurrently herewith, Landlord, Tenant and certain other parties thereto have entered into that certain Terminalling Services Agreement – Anacortes dated as of the date hereof (the “ Terminalling Agreement ”).

D. Capitalized terms used but not defined in this First Amendment shall have the meanings attributed to them in the Lease.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant agree to amend the Lease as follows:

AMENDMENT

 

1. Expansion of Premises. Commencing on the date hereof, the “ Premises ” shall include the following:

 

  (a) the Existing Premises;

 

  (b) the manifest rail loading and unloading area that is located adjacent to the Existing Premises (the “ Load/Unload Facility ”); and

 

  (c) the truck rack area that is located generally to the west of the Existing Premises and the Load/Unload Facility (the “ Truck Rack ”).


The Premises (including the Existing Premises, the Load/Unload Facility and the Truck Rack) are legally described on Exhibit B attached hereto, which shall supersede and replace Exhibit B to the Lease. The Premises do not include any rail tracks owned by Landlord located on the Load/Unload Facility or on the Truck Rack. As used in the Lease as amended by this First Amendment, “Rail Facility” continues to refer only to the Existing Premises. Landlord shall at all times continue to have the right to use and maintain all rail tracks on the Load/Unload Facility and on the Truck Rack. If, subsequent to July 1, 2014, Landlord transfers to Tenant title to the rail tracks located on the Load/Unload Facility and located on the Truck Rack, then such rail tracks shall thereafter be deemed to be part of the Premises for all purposes of the Lease.

 

2. Access Easement. The first sentence of Section 1.02 of the Lease is deleted, and the following sentence is hereby substituted therefor:

Tenant is hereby granted the right of ingress and egress to and from the Premises over and across the Refinery, as reasonably needed by Tenant in order to operate the Rail Facility, the Load/Unload Facility and the Truck Rack (the “ Access Easement ”).

 

3. Rent. Article 3 of the Lease is deleted in its entirety, and the following text is hereby substituted therefor:

ARTICLE 3. RENT

The parties acknowledge that rent for the Existing Premises for entire Lease term has been paid in full in advance, in accordance with the terms of that certain Contribution, Conveyance and Assumption Agreement dated as of November 15, 2012 by and among Tesoro Corporation, Landlord, Tesoro Logistics GP, LLC, Tesoro Logistics LP and Tenant, as amended, restated, modified or supplemented from time to time (the “ 2012 Contribution Agreement ”), and that rent for the Load/Unload Facility and the Truck Rack for the entire remaining term has been paid in full in advance, in accordance with the terms of that certain Contribution, Conveyance and Assumption Agreement dated as of the same date as the First Amendment to Ground Lease by and among Tesoro Corporation, Landlord, Tesoro Logistics GP, LLC, Tesoro Logistics LP, Tenant, Tesoro Alaska Company, LLC, and Tesoro Logistics Pipelines LLC, as amended, restated, modified or supplemented from time to time (the “ 2014 Contribution Agreement ”). The 2012 Contribution Agreement and the 2014 Contribution Agreement are collectively hereafter referred to as the “ Contribution Agreement .”

 

4. Proration of Taxes. Section 4.03 of the Lease is deleted, and the following text is hereby substituted therefor:

Proration of Taxes. Real Property Taxes payable by Tenant under Section 4.01 above shall be pro-rated between Landlord and Tenant based on the number of days this Lease is in effect during the applicable year compared to 365 days. Personal Property taxes payable by Tenant under Section 4.02 above for the year in which the conveyance of such personal property occurs shall be pro-rated between Landlord and Tenant based on the tax bill for the applicable calendar year.

 

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5. Utilities. As used in Article 5 entitled “Utilities” and elsewhere in the Lease, from and after the date of this First Amendment, the term “ Operational Services Agreement ” shall collectively mean and refer to that certain that certain Secondment Agreement dated as of the date of this Amendment, by and between Landlord and Tesoro Logistics GP, LLC, as amended, restated, modified or supplemented from time to time.

 

6. Permitted Use. Section 6.01 of the Lease is deleted, and the following text is hereby substituted therefor:

6.01 Permitted Use. Tenant may use the Premises, and the specified portions thereof, only for the following uses (collectively, the “Permitted Use”): (a) the Existing Premises only as the Rail Facility, and the buildings located on the Existing Premises may be used only as administrative offices related to the operation and maintenance of the Rail Facility; (b) the Load/Unload Facility, which includes a rail loading and unloading facility for the loading and unloading of liquefied petroleum gas products and such uses as are related thereto; and (c) the Truck Rack, which includes a 2-lane truck terminal for the terminalling of gasoline and diesel products and a two-lane truck terminal for the terminalling of propane, only for the terminalling of gasoline, diesel and propane and such uses as are related thereto. Notwithstanding the foregoing, the Premises may be used for the purposes specified in the Terminalling Agreement and the Track Use Agreement.

 

7. Compliance with Laws. Article 7 of the Lease is deleted in its entirety, and the following text is hereby substituted therefor:

ARTICLE 7. COMPLIANCE WITH LAWS

7.01 Compliance with Laws . Tenant and its employees, agents and invitees shall comply with all applicable federal, state, and local laws, rules, regulations and orders in use of the Premises. Tenant shall secure and maintain current all required permits, licenses, certificates, and approvals relating to its use of the Premises. Landlord shall comply with all applicable federal, state, and local laws, rules, regulations and orders pertaining to the operation of the Refinery and the Premises to the extent reasonably necessary to enable Tenant to exercise its rights provided hereunder. Tenant shall comply with all obligations of the Contracts for Assignment to the extent applicable to the Premises.

 

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7.02 Emergencies . In the event of any emergency occurring on or about the Premises, Landlord and Tenant shall diligently cooperate in good faith to appropriately manage the emergency situation in a timely and effective manner. Such cooperation shall include, but not be limited to, providing of necessary access to all portions of the Premises and the improvements thereon.

 

8. Ownership of Buildings, Improvements and Fixtures. Section 8.3 of the Lease is deleted, and the following text is hereby substituted in its place:

8.03 Ownership of Buildings, Improvements and Fixtures . Any buildings, improvements, additions, alterations, and fixtures existing, constructed, placed or maintained on any part of the Premises during the Lease term are considered part of the real property of the Premises but shall be and remain the property of Tenant during the Lease term, including all rail lines and equipment related to the Rail Facility, all loading and unloading improvements, fixtures and equipment related to the Load/Unload Facility, and all improvements, fixtures and equipment related to the Truck Rack, whether situated on the Premises as of the Commencement Date or hereafter placed on the Premises by Tenant. Notwithstanding the foregoing, Landlord shall continue to own (unless transferred to Tenant subsequent to July 1, 2014) all rail tracks located on the Load/Unload Facility or located on the Truck Rack. In addition to Landlord’s right of entry set forth in Section 17.01 hereof, Landlord shall have the right upon not less than twenty-four hours’ notice to Tenant (except in the case of emergencies, in which no prior notice is required) to enter upon the Premises for the purposes of inspecting, maintaining, repairing, modifying and/or replacing all or any portion of the Rail Facility, Load/Unload Facility or Truck Rack located thereon, to the extent that Tenant has failed to do so and such failure to complete the maintenance, repair, modification or replacement is in violation of Tenant’s obligations hereunder. To the extent that any such maintenance, repair, modification or replacement is undertaken by Landlord, Tenant shall reimburse Landlord for all costs incurred, within thirty (30) day following receipt of an invoice from Landlord detailing such amounts.

 

9. Tenant’s Duty to Maintain and Repair. Section 10.01 of the Lease is amended by adding the following at the end thereof: “and in compliance with the terms of the Terminalling Agreement and the MUTA. Notwithstanding the foregoing, Tenant shall have no obligation to maintain and repair (and Landlord shall maintain and repair) any rail tracks located on the Load/Unload Facility and located on the Truck Rack. If, subsequent to July 1, 2014, Landlord transfers to Tenant title to the rail tracks located on the Load/Unload Facility and located on the Truck Rack, then such rail tracks shall thereafter be deemed to be part of the Premises and Tenant shall thereafter maintain and repair such rail tracks in accordance with this Section 10.01.” Section 10.02 of the Lease is hereby deleted in its entirety.

 

- 4 -


10. Insurance and Indemnification. Article 13 of the Lease is deleted in its entirety, and the following text is hereby substituted therefor:

ARTICLE 13. INSURANCE AND INDEMNIFICATION

13.01 Insurance on Buildings and Improvements. At all times during the Lease term, Tenant will keep all buildings and other improvements located or being constructed on the Premises insured against loss or damage by fire, with extended-coverage endorsement or its equivalent. This insurance is to be carried by insurance companies selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed. The insurance must be paid for by Tenant and will be in amounts not less than eighty percent (80%) of the full insurable value of the buildings and other improvements. Tenant may self-insure a greater percentage of this coverage if so agreed by Landlord and Tenant in writing. 1

13.02 Other Agreements . The liability insurance and indemnification obligations of Landlord and Tenant are set forth in the Terminalling Agreement, the Track Use Agreement, and the MUTA (collectively, the “ Commercial Agreements ”), and that certain Third Amended and Restated Omnibus Agreement (the “ Omnibus Agreement ”) among Tesoro Corporation, Landlord, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLC. In the event of a conflict of provisions of the Commercial Agreements and those of the Omnibus Agreement, the Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the Commercial Agreements.

 

11. Tenant’s Option to Purchase. Article 18 of the Lease is deleted, and the following text is hereby substituted therefor:

ARTICLE 18. TENANT’S OPTION TO PURCHASE PREMISES

18.01 Grant of Option to Purchase. Landlord hereby grants to Tenant an option to purchase the Premises upon all of the terms, covenants and conditions set forth in this Article 18 (the “ Option to Purchase ”). The Option to Purchase may be exercised with respect to the entire Premises, or with respect to the Rail Facility, the Load/Unload Facility or the Truck Rack, or a combination thereof.

18.02 Exercise of Option to Purchase. Tenant may exercise the Option to Purchase at any time during the term of this Lease, so long as (a) Tenant is not in default of any of the terms of this Lease, the Terminalling Agreement, the Track Use Agreement, that certain Anacortes Mutual

 

1   This language is subject to further review to determine if it conforms with TLO’s existing coverage.

 

- 5 -


Track Use Agreement dated as November 15, 2012 between Landlord and Tenant (the “ MUTA ”), and (b) as a condition to such exercise, Tenant agrees that for so long as Landlord is operating the Refinery and requires the operation of the Rail Facility, the Load/Unload Facility and the Truck Rack in connection therewith, Tenant and its successors and assigns will continue to operate the Rail Facility, the Load/Unload Facility and the Truck Rack on the Premises in compliance with applicable agreements between Landlord and Tenant that exist at the time. Tenant may exercise the Option to Purchase, with respect to the entire Premises or a portion thereof, by (1) providing written notice to Landlord in the manner provided in Section 20.03 below stating that Tenant is exercising the Option to Purchase, and specifying the portion of the Premises with respect to which the Option to Purchase is being exercised, and (2) depositing the purchase price in the amount of One Dollar ($1.00) with First American Title Insurance Company (the “ Closing Agent ”) or such other title insurance company as is satisfactory to the parties. The date on which Tenant exercises the Option to Purchase, whether on one or more occasions, is the “Exercise Date.”

18.03 Closing Costs; Conveyance. The closing of the sale of the Premises (or a portion thereof, if for less than the entire Premises) shall occur within six (6) months from the Exercise Date with respect to which notice was given; otherwise Tenant’s exercise of its Option to Purchase shall be void. All costs associated with the closing of an Option to Purchase shall be the responsibility of Tenant. More particularly, Tenant shall bear all costs of performing one or more lot line adjustments or other subdivision of the Premises (or the Rail Facility, the Load/Unload Facility or the Truck Rack, as appropriate, if the Option to Purchase is being exercised with respect to less than the entire Premises), such that the Rail Facility, the Load/Unload Facility and/or the Truck Rack, as necessary, are each comprised of one or more legal lots that are separate from the remainder of the Refinery, prior to the conveyance of title of such legal lots to Tenant. Landlord shall, at no expense for outside fees to Landlord, cooperate with Tenant in connection with such lot line adjustments or subdivision, and promptly following the date on which such lot line adjustments or subdivision is obtained, Tenant shall provide evidence to Landlord of the status of the Rail Facility, the Load/Unload Facility and/or the Truck Rack, as appropriate, as a separate legal lot or lots. Tenant shall pay all title, escrow and transfer fees applicable to the conveyance of the Premises or a portion thereof from Landlord to Tenant. Title to the Premises or any portion thereof shall be conveyed by Special Warranty Deed, warranting only that Landlord is the fee simple owner of the real property conveyed and that it will defend title to such real property only as to claims arising by, through or under Landlord and not otherwise.

 

- 6 -


18.04 Execution of Closing Agreement. In connection with the conveyance of the Premises or a portion thereof from Landlord to Tenant pursuant to the terms of this Article 18, Landlord and Tenant shall, in each instance of a conveyance, execute an agreement (the “ Right of First Refusal and Option Agreement ”) in substantially the form of Exhibit C attached hereto, whereby Tenant, as the fee owner of the Premises (or the Rail Facility, the Load/Unload Facility and/or the Truck Rack, as appropriate), shall grant to Landlord, as the owner and operator of the Refinery (a) a right of first refusal to purchase the Premises (or the Rail Facility, the Load/Unload Facility and/or the Truck Rack, as appropriate), which right shall be exercisable in the event that Tenant shall enter into an agreement to sell the Premises (or the Rail Facility, the Load/Unload Facility and/or the Truck Rack, as appropriate), to a third party, and (b) an option to purchase the Premises (or only the Rail Facility, the Load/Unload Facility or the Truck Rack, as appropriate), which option shall be exercisable in the event that Tenant fails to operate the portion of the Premises purchased in the same manner as if this Lease remained in existence. Additionally, in connection with such Option and Right of First Refusal Agreement, Landlord and Tenant shall execute a memorandum of agreement, in recordable form, and concurrently with the recording of the Special Warranty Deed from Landlord to Tenant, such memorandum shall be recorded in the real property records of Skagit County, giving notice to third parties of the option and right of first refusal in favor of Landlord.

Exhibit C attached hereto shall supersede and replace Exhibit C attached to the Lease.

 

12. Landlord’s Right of Recapture. The first sentence of Article 19 is deleted, and the following sentence is hereby substituted therefor:

If, during the term of this Lease, Tenant fails or has elected not to operate the Rail Facility, the Load/Unload Facility or the Truck Rack, or any of them, for a period of time (but not counting any period of time when the Refinery is not in operation) equal to (a) two (2) years continuously, or (b) a total of two (2) years within any 5-year period, then following the end of such 2-year period of non-operation, and for so long as Tenant has not resumed operating the Rail Facility, the Load/Unload Facility or the Truck Rack, as appropriate, located on the Premises, Landlord shall have the right to provide Tenant with written notice stating that Landlord has elected to recapture the Premises (or the applicable portion thereof) and terminate this Lease (the “ Recapture Notice ”).

 

13. Other Agreements. Subsection 20.07(a) of the Lease is deleted, and the following text is hereby substituted in its place:

This Lease, together with the Terminalling Agreement, the Track Use Agreement, the MUTA, the Contribution Agreement, the Operational Services Agreement, the Omnibus Agreement, and the other documents executed by Landlord and Tenant concurrently herewith, constitute the parties’ sole agreement with respect to the subject matter of this Lease and such agreements supersede any prior understandings or written or oral agreements between the parties with respect to the subject matter of this Lease.

 

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14. Effect of Amendment. Except as expressly set forth in this First Amendment, the terms of the Lease remain in full force and effect and are hereby ratified and confirmed.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

 

- 8 -


IN WITNESS WHEREOF, Landlord and Tenant have caused this First Amendment to be duly executed as of the day and year first above written.

 

LANDLORD:     TENANT:

TESORO REFINING & MARKETING

COMPANY LLC

    TESORO LOGISTICS OPERATIONS LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President

 

- 9 -


STATE OF TEXAS             )

                                               ) ss.

COUNTY OF BEXAR         )

I certify that I know or have satisfactory evidence that G. Scott Spendlove is the person who appeared before me, who signed this instrument as the Senior Vice President and Chief Financial Officer of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such company for the uses and purposes mentioned in the instrument, and on oath stated he was authorized to execute said instrument.

Dated:             , 2014

 

 

Print Name:  

 

NOTARY PUBLIC in and for the State of

 

  , residing at                                              
My appointment expires                                              

STATE OF TEXAS             )

                                               ) ss.

COUNTY OF BEXAR         )

I certify that I know or have satisfactory evidence that Phillip M. Anderson is the person who appeared before me, who signed this instrument as the President of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated he was authorized to execute said instrument.

Dated:             , 2014

 

 

Print Name:  

 

NOTARY PUBLIC in and for the State of

 

  , residing at                                              
My appointment expires                                              

 

- 10 -


EXHIBIT B

TO

FIRST AMENDMENT TO GROUND LEASE

Legal Description of Premises

ANACORTES TRUCK/PROPANE TERMINAL AREA/LPG LOADING RACKS AREA

AND RAIL FACILITY COMBINED

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOT 1, SECTION 28, GOVERNMENT LOTS 1, 2, 3 AND 4, SECTION 29, AND GOVERNMENT LOTS 7 AND 8, SECTION 32, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, ALSO BEING THAT PORTION OF LAND DESCRIBED IN MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048, RECORDS OF SKAGIT COUNTY, OREGON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

AREA T-1 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2472.20 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 87° 06'44" WEST 1003.59 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000, SAID POINT OF BEGINNING ALSO BEING A POINT WESTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID WESTERLY BOUNDARY, NORTH 86°53’09” WEST 24.22 FEET TO A POINT;

THENCE NORTH 07°58'01" WEST 8.04 FEET TO A POINT;

THENCE NORTH 42°26'45" WEST 14.46 FEET TO A POINT;

THENCE NORTH 89°52'37" WEST 16.40 FEET TO A POINT;

THENCE LEAVING SAID WESTERLY BOUNDARY, NORTH 00°48’14” EAST 42.04 FEET TO A POINT;

THENCE NORTH 89°11'46" WEST 90.25 FEET TO A POINT;

THENCE SOUTH 60°46'46" WEST 24.78 FEET TO A POINT;

 

B - 1


THENCE NORTH 52°32'10" WEST 33.62 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD;

THENCE ALONG SAID EASTERLY RIGHT OF WAY, NORTH 08°19'59" EAST 123.86 FEET TO A POINT;

THENCE NORTH 07°23'56" EAST 57.60 FEET TO A POINT;

THENCE NORTH 18°27'59" EAST 450.89 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, SOUTH 73°44'35" EAST 5.81 FEET TO A POINT TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 141.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 75°29'35", (THE CHORD BEING NORTH 55°13'56" EAST 172.63 FEET) HAVING AN ARC LENGTH OF 185.78 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°01'16" EAST 147.43 FEET TO A POINT;

THENCE SOUTH 41°53'19" EAST 51.31 FEET TO A POINT;

THENCE SOUTH 86°27'44" EAST 264.85 FEET TO A POINT;

THENCE SOUTH 26°35'07" WEST 16.34 FEET ON SAID WESTERLY BOUNDARY, SAID POINT ALSO BEING A POINT OF CURVATURE;

THENCE ALONG SAID WESTERLY BOUNDARY, ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°52'19", (THE CHORD BEING SOUTH 30°01'17" WEST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 33°27'26" WEST 221.44 FEET TO A POINT;

THENCE SOUTH 64°59'14" WEST 12.30 FEET TO A POINT;

THENCE SOUTH 03°43'39" WEST 18.74 FEET TO A POINT;

THENCE SOUTH 47°33'57" WEST 8.19 FEET TO A POINT;

THENCE NORTH 89°12'10" WEST 7.74 FEET TO A POINT;

THENCE SOUTH 16°34'12" WEST 3.31 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 21°55'06", (THE CHORD BEING SOUTH 27°31'45" WEST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 38°29'18" WEST 148.86 FEET TO A POINT;

 

B - 2


THENCE SOUTH 71°03'58" WEST 22.10 FEET TO A POINT;

THENCE SOUTH 20°08'39" WEST 38.30 FEET TO A POINT;

THENCE NORTH 63°04'10" WEST 18.24 FEET TO A POINT;

THENCE SOUTH 55°20'50" WEST 22.71 FEET TO A POINT;

THENCE SOUTH 48°19'07" WEST 199.32 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING SOUTH 33°07'20" WEST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 17°58'23" WEST 7.74 FEET TO THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 7.445 ACRES, MORE OR LESS.

AREA T-2 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2661.76 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 82° 24'54" WEST 417.18 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE SOUTH 43°15'51" WEST 46.69 FEET TO A POINT;

THENCE SOUTH 69°34'39" WEST 93.08 FEET TO A POINT;

THENCE NORTH 84°45'44" WEST 120.27 FEET TO A POINT;

THENCE NORTH 67°26'45" WEST 80.26 FEET TO A POINT ON THE EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 41°36'44" EAST 93.48 FEET TO A POINT;

THENCE NORTH 32°03'51" EAST 91.66 FEET TO A POINT;

THENCE NORTH 28°39'47" EAST 73.64 FEET TO A POINT;

THENCE NORTH 30°59'34" EAST 236.70 FEET TO A POINT;

 

B - 3


THENCE NORTH 25°27'42" EAST 694.97 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, SOUTH 87°01'06" EAST 129.04 FEET TO A POINT;

THENCE SOUTH 24°55'59" WEST 309.47 FEET TO A POINT;

THENCE SOUTH 23°06'04" WEST 270.16 FEET TO A POINT;

THENCE SOUTH 22°57'59" WEST 178.12 FEET TO A POINT;

THENCE SOUTH 18°46'41" WEST 79.22 FEET TO A POINT;

THENCE SOUTH 11°51'11" WEST 248.29 FEET THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 4.194 ACRES, MORE OR LESS.

LPG LOADING RACKS AREA

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 1330.90 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 88° 09'12" WEST 757.58 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 87°48'11" WEST 106.79 FEET TO A POINT EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 86°10'11" WEST 64.79 TO A POINT;

THENCE NORTH 02°49'52" EAST 268.66 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.56 TO A POINT;

THENCE NORTH 03°02'23" EAST 32.76 TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.45 TO A POINT;

THENCE NORTH 03°02'23" EAST 175.70 TO A POINT;

THENCE NORTH 86°57'37" WEST 4.66 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.35 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.51 TO A POINT;

 

B - 4


THENCE NORTH 03°02'23" EAST 215.61 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.36 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 188.41 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.79 TO A POINT;

THENCE NORTH 03°02'23" EAST 22.87 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.89 TO A POINT;

THENCE NORTH 14°30'48" EAST 165.26 TO A POINT;

THENCE NORTH 27°02'07" EAST 89.90' TO A POINT;

THENCE NORTH 45°47'17" EAST 30.10 TO A POINT;

THENCE NORTH 65°05'46" EAST 49.52 TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, NORTH 81°10'11" EAST 30.74 TO A POINT;

THENCE SOUTH 89°10'11" EAST 39.80 TO A POINT;

THENCE SOUTH 88°09'27" EAST 138.60 TO A POINT;

THENCE SOUTH 05°28'49" WEST 207.14 TO A POINT;

THENCE SOUTH 81°39'33" EAST 83.24 TO A POINT;

THENCE SOUTH 02°43'22" EAST 125.56 TO A POINT;

THENCE SOUTH 87°42'18" EAST 198.20 TO A POINT;

THENCE SOUTH 05°33'35" WEST 126.24 TO A POINT;

THENCE NORTH 87°02'54" WEST 201.71 TO A POINT;

THENCE SOUTH 28°39'02" WEST 69.62 TO A POINT;

THENCE NORTH 86°15'07" WEST 169.20 TO A POINT;

THENCE SOUTH 02°55'07" WEST 39.56 TO A POINT;

 

B - 5


THENCE SOUTH 50°38'24" WEST 25.27 TO A POINT;

THENCE NORTH 87°07'14" WEST 30.16 TO A POINT;

THENCE SOUTH 02°56'48" WEST 669.40 TO THE POINT OF BEGINNING.

THIS DESCRIPTION CONTAINS 7.898 ACRES, MORE OR LESS.

RAIL FACILITIES

BEGINNING AT MONUMENT 30 PER SHELL SURVEY CONTROL POINTS MAP NO. 40RA-100, DATED FEBRUARY 26, 1964, LOCATED AT THE INTERSECTION OF “G” STREET AND 8TH STREET; THENCE SOUTH 02°56'22" WEST, ALONG SAID “G” STREET, A DISTANCE OF 1999.69 FEET AS DEPICTED ON THAT CERTAIN RECORD OF SURVEY RECORDED UNDER AUDITOR’S FILE NUMBER 200101080077, RECORDS OF SKAGIT COUNTY, WASHINGTON, TO MONUMENT 26 OF SAID CONTROL POINTS MAP, LOCATED AT THE INTERSECTION OF “G” STREET AND 11TH STREET; THENCE SOUTH 52°09'16" WEST A DISTANCE OF 3276.59 FEET TO THE TRUE POINT OF BEGINNING , SAID POINT ALSO BEING SOUTH 07° 23' 06" WEST 1952.43 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 24°44'56" WEST 142.50 FEET TO A POINT;

THENCE NORTH 00°12'34" EAST 142.35 FEET TO A POINT;

THENCE NORTH 05°17'05" WEST 62.72 FEET TO A POINT;

THENCE NORTH 89°10'01" WEST 351.62 FEET TO A POINT;

THENCE NORTH 05°01'32" WEST 588.00 FEET TO A POINT;

THENCE NORTH 09°43'59" WEST 419.68 FEET TO A POINT;

THENCE NORTH 07°55'01" WEST 42.59 FEET TO A POINT;

THENCE NORTH 09°49'41" WEST 343.75 FEET TO A POINT;

THENCE NORTH 12°00'42" WEST 399.03 FEET TO A POINT;

THENCE NORTH 12°33'11" WEST 376.45 FEET TO A POINT;

THENCE NORTH 12°07'52" WEST 383.67 FEET TO A POINT;

THENCE NORTH 12°28'04" WEST 433.60 FEET TO A POINT;

THENCE NORTH 07°52'56" WEST 42.44 FEET TO A POINT;

 

B - 6


THENCE NORTH 86°52'52" WEST 44.55 FEET TO A POINT;

THENCE NORTH 12°20'01" WEST 5.96 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD, SAID POINT BEING A POINT OF CURVATURE;

THENCE ALONG SAID EASTERLY RIGHT OF WAY, ALONG THE ARC OF A 522.92 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 22°59'00", (THE CHORD BEING NORTH 00°50'31" WEST 208.36 FEET) HAVING AN ARC LENGTH OF 209.76 FEET TO A POINT OF TANGENCY;

THENCE NORTH 10°38'59" EAST 829.57 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, NORTH 49°50'04" EAST 195.57 FEET TO A POINT;

THENCE SOUTH 89°52'37" EAST 32.81 TO A POINT;

THENCE SOUTH 42°26'45" EAST 14.46 TO A POINT;

THENCE SOUTH 07°58'01" EAST 8.04 TO A POINT;

THENCE SOUTH 86°53'09" EAST 24.22 TO A POINT;

THENCE NORTH 17°58'23" EAST 7.74 TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING NORTH 33°07'20" EAST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF TANGENCY;

THENCE NORTH 48°19'07" EAST 199.32 TO A POINT;

THENCE NORTH 55°20'50" EAST 22.71 TO A POINT;

THENCE SOUTH 63°04'10" EAST 18.24 TO A POINT;

THENCE NORTH 20°08'39" EAST 38.30 TO A POINT;

THENCE NORTH 71°03'58" EAST 22.10 TO A POINT;

THENCE NORTH 38°29'18" EAST 148.86 TO A POINT;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 21°55'06" (THE CHORD BEING NORTH 27°31'45" EAST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 16°34'12" EAST 3.31 TO A POINT;

 

B - 7


THENCE SOUTH 89°12'10" EAST 7.74 TO A POINT;

THENCE NORTH 47°33'57" EAST 8.19 TO A POINT;

THENCE NORTH 03°43'39" EAST 18.74 TO A POINT;

THENCE NORTH 64°59'14" EAST 12.30 TO A POINT;

THENCE NORTH 33°27'26" EAST 221.44 TO A POINT;

THENCE ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 06°52'19" (THE CHORD BEING NORTH 30°01'17" EAST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE NORTH 26°35'07" EAST 77.07 TO A POINT;

THENCE NORTH 26°48'10" EAST 142.95 FEET TO A POINT;

THENCE NORTH 25°23'46" EAST 630.86 FEET TO A POINT;

THENCE SOUTH 64°36'02" EAST 8.55 FEET TO A POINT;

THENCE NORTH 25°23'58" EAST 115.57 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 613.11 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 54°39'15", (THE CHORD BEING NORTH 52°43'36" WEST 562.92 FEET) HAVING AN ARC LENGTH OF 584.85 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 09°56'47" WEST 1.21 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 575.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 11°41'21", (THE CHORD BEING NORTH 87°03'44" EAST 117.10 FEET) HAVING AN ARC LENGTH OF 117.31 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°05'36" EAST 258.33 FEET TO A POINT;

THENCE SOUTH 05°00'08" WEST 29.39 FEET TO A POINT;

THENCE NORTH 87°11'49" WEST 266.22 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 360.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 11°37'04", (THE CHORD BEING SOUTH 86°59'38" WEST 72.87 FEET) HAVING AN ARC LENGTH OF 73.00 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 81°11'06" WEST 38.85 FEET TO A POINT;

 

B - 8


THENCE SOUTH 84°18'00" WEST 10.12 FEET TO A POINT;

THENCE SOUTH 69°47'07" WEST 10.13 FEET TO A POINT;

THENCE SOUTH 77°11'58" WEST 10.77 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 500.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 16°27'19", (THE CHORD BEING SOUTH 68°58'18" WEST 143.11 FEET) HAVING AN ARC LENGTH OF 143.60 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 60°44'39" WEST 70.59 FEET TO A POINT;

THENCE SOUTH 56°29'41" WEST 42.75 FEET TO A POINT;

THENCE SOUTH 49°55'22" WEST 49.34 FEET TO A POINT;

THENCE SOUTH 43°09'57" WEST 58.51 FEET TO A POINT;

THENCE SOUTH 27°12'38" WEST 30.70 FEET TO A POINT;

THENCE SOUTH 06°14'42" WEST 9.16 FEET TO A POINT;

THENCE NORTH 81°15'45" WEST 7.88 FEET TO A POINT;

THENCE SOUTH 30°35'40" WEST 86.24 FEET TO A POINT;

THENCE SOUTH 26°36'03" WEST 86.65 FEET TO A POINT;

THENCE SOUTH 46°11'14" EAST 20.60 FEET TO A POINT;

THENCE SOUTH 13°54'58" WEST 25.06 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 90.61 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 42°54'14", (THE CHORD BEING SOUTH 43°22'47" WEST 66.27 FEET) HAVING AN ARC LENGTH OF 67.85 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 21°59'47" WEST 6.78 FEET TO A POINT;

THENCE NORTH 73°29'41" WEST 6.50 FEET TO A POINT;

THENCE SOUTH 25°27'42" WEST 910.40 FEET TO A POINT;

THENCE SOUTH 30°59'34" WEST 236.70 TO A POINT;

THENCE SOUTH 28°39'47" WEST 73.64 TO A POINT;

THENCE SOUTH 32°03'51" WEST 91.66 TO A POINT;

 

B - 9


THENCE SOUTH 41°36'44" WEST 146.12 TO A POINT;

THENCE SOUTH 16°08'52" WEST 58.97 FEET TO A POINT;

THENCE SOUTH 65°05'46" WEST 49.52 FEET TO A POINT;

THENCE SOUTH 45°47'17" WEST 30.10 FEET TO A POINT;

THENCE SOUTH 27°02'07" WEST 89.90 FEET TO A POINT;

THENCE SOUTH 14°30'48" WEST 165.26 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.89 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 22.87 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.79 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 188.41 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.36 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 215.61 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.51 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.35 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.66 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 175.70 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 4.45 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 32.76 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.56 FEET TO A POINT;

THENCE SOUTH 02°49'52" WEST 268.66 FEET TO A POINT;

THENCE SOUTH 86°10'11" EAST 64.79 FEET TO A POINT;

THENCE SOUTH 01°33'52" WEST 352.96 FEET TO A POINT OF NON-TANGENT CURVATURE;

 

B - 10


THENCE ALONG THE ARC OF A 560.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 32°25'38", (THE CHORD BEING SOUTH 06°15'25" EAST 312.73 FEET) HAVING AN ARC LENGTH OF 316.94 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 16°15'24" EAST 319.42 FEET TO A POINT;

THENCE SOUTH 14°57'10" EAST 140.54 FEET TO A POINT;

THENCE SOUTH 10°52'54" EAST 96.00 FEET TO A POINT;

THENCE SOUTH 13°42'27" EAST 159.08 FEET TO A POINT;

THENCE SOUTH 15°00'31" EAST 145.44 FEET TO A POINT;

THENCE SOUTH 20°07'43" EAST 132.54 FEET TO A POINT;

THENCE SOUTH 14°40'44" EAST 297.68 FEET TO A POINT;

THENCE SOUTH 13°21'25" EAST 147.08 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 2094.73 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 08°06'59", (THE CHORD BEING SOUTH 12°31'50" EAST 296.49 FEET) HAVING AN ARC LENGTH OF 296.74 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 07°46'54" EAST 68.77 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 37.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 49°12'54", (THE CHORD BEING SOUTH 03°55'29" WEST 30.81 FEET) HAVING AN ARC LENGTH OF 31.78 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 00°13'05" EAST 49.90 FEET TO A POINT;

THENCE SOUTH 08°40'52" EAST 250.61 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1340.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 09°26'37", (THE CHORD BEING SOUTH 03°57'34" EAST 220.61 FEET) HAVING AN ARC LENGTH OF 220.86 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 00°45'44" WEST 160.11 FEET TO A POINT;

THENCE SOUTH 01°28'08" EAST 176.30 FEET TO THE TRUE POINT OF BEGINNING.

THIS AREA CONTAINS 37.539 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

B - 11


EXHIBIT C

TO

FIRST AMENDMENT TO GROUND LEASE

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT

AND

AGREEMENT OF PURCHASE AND SALE

THIS RIGHT OF FIRST REFUSAL, OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE (“ Agreement ”) is made and entered into this             day of             ,             , by and between TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ TLO ”), and TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company (“ TRMC ”).

BACKGROUND

A. TLO and TRMC entered into that certain Ground Lease dated November 15, 2012, as amended by that certain First Amendment to Ground Lease dated July 1, 2014 (collectively, the “ Ground Lease ”) for certain premises located in Skagit County, Washington (the “ Premises ”). The Premises consist of three different parcels of real property on which are located the Rail Facility, the Load/Unload Facility and the Truck Rack (one or more, the “ Premises Facilities ”). Pursuant to the terms of the Ground Lease, TLO has an option to purchase the Premises Facilities, whether in one or more transactions, from TRMC. The legal description of each of the Premises Facilities is set forth on Exhibit A attached hereto.

B. TLO has validly exercised its option to purchase with respect to the                     [ specify which of the Premises Facilities ], and concurrent herewith, TRMC is conveying the                     [ specify which of the Premises Facilities ] to TLO. Pursuant to the terms of the Ground Lease (which shall terminate, either in whole or in part, as applicable, upon the closing of the sale transaction), the parties are to enter into a Right of First Refusal and Option Agreement setting forth the terms upon which TRMC has a right to repurchase the Premises Facilities previously sold to TLO, in the event that (i) TLO elects to market any of the Premises Facilities and thereafter receives a bona fide offer from a third party to purchase such Premises Facilities, or (ii) TLO fails to maintain the Premises Facilities in a condition capable of performing in accordance with the terms of (x) that certain Track Use and Throughput Agreement between TRMC and TLO dated as of the date hereof (as the same may be amended, modified and/or extended) (the “ Track Use Agreement ”); (y) that certain Anacortes Mutual Track Use Agreement between TRMC and TLO dated as of the date hereof (the “ MUTA ”); or (z) that certain Terminalling Services Agreement – Anacortes (the “ Terminalling Agreement ”) (collectively, the “ Required Operating Agreements ”).

C. The parties desire to set forth the terms pertaining to the right of first refusal and the option to repurchase, and to provide for a memorandum of agreement to be recorded in the real property records of Skagit County, Washington, giving notice of this Agreement.

 

C - 1


AGREEMENT

NOW, THEREFORE, in consideration of the mutual terms, conditions, covenants and promises set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TLO and TRMC hereby agree as follows:

 

1. Right of First Refusal.

 

  (a) Grant of Right of First Refusal . TLO hereby grants to TRMC, and TRMC hereby accepts from TLO, a right of first refusal to purchase the                     [ add appropriate description of Premises Facilities ] from TLO on the following terms and conditions (the “ Right of First Refusal ”).

 

  (b) Term of Right of First Refusal; Notification of Third-Party Offer . If TLO elects to sell the                     [ add appropriate description of Premises Facilities ] during any period of time that any of the relevant Required Operating Agreements area in effect, and TLO receives a bona fide offer from a third party that it considers acceptable (the “ Purchase Offer ”), then TLO shall provide written notice to TRMC of the Purchase Offer, which notice shall include a copy of the Purchase Offer.

 

  (c) Exercise of Right of First Refusal . TRMC shall have thirty (30) days following receipt of such notice from TLO in which to give written notice to TLO that TRMC is exercising its Right of First Refusal, agreeing to purchase the                     [ add appropriate description of Premises Facilities ] on the same terms and conditions as are contained in the Purchase Offer (the “ Exercise Notice ”). The Exercise Notice from TRMC must be postmarked within the 30-day period and sent by certified mail, return receipt requested, or personally delivered (by overnight courier or otherwise) to TLO before 5:00 p.m. Pacific Time on the final day of the 30-day period. The failure of TRMC to exercise its Right of First Refusal by the time and in the manner set forth above shall be deemed to be a termination of this Agreement by TRMC, and TLO shall be free to accept the Purchase Offer.

 

  (d) Continuing Nature of Right of First Refusal . TRMC’s Right of First Refusal to purchase the                     [ add appropriate description of Premises Facilities ] shall be continuous during the term set forth above. Therefore, if the transaction of which TRMC was previously given notice, and with respect to which TRMC declined to exercise its Right of First Refusal, fails to close, then TLO shall be obligated to provide the notice required by Section 1(b) above with respect to each subsequent Purchase Offer received.

 

  (e) Effect of Exercise of Right of First Refusal . Subject only to the provisions regarding inspection and the examination and acceptance of title to the                     [ add appropriate description of Premises Facilities ] set forth in Sections 4 and 5 below, TRMC’s Exercise Notice shall be deemed to be an irrevocable election to purchase the                     [ add appropriate description of Premises Facilities ] on the terms set forth in the Purchase Offer.

 

C - 2


2. Option to Repurchase.

 

  (a) Grant of Option . TLO hereby grants to TRMC, and TRMC hereby accepts from TLO, the right to acquire the                     [ add appropriate description of Premises Facilities ] on the terms and conditions set forth herein (the “ Option to Repurchase ”).

 

  (b) Term of Option . TRMC’s right to exercise the Option to Repurchase the                     [ add appropriate description of Premises Facilities ] as set forth in this Agreement is granted for so long as the                     [ specify appropriate Required Operating Agreement ] remains in effect.

 

  (c) Exercise of Option Rights . In the event that TLO fails to maintain the Rail Facility in a condition capable of performing in accordance with the provisions of the Track Use Agreement or the MUTA, or fails to maintain the                     [ specify other Premises Facility ] in a condition capable of performing in accordance with the provisions of the Terminalling Agreement and TLO thereafter fails to cure such default within the time period provided by the terms of the                     [ specify Track Use Agreement, MUTA or Terminalling Agreement ] after written notice specifying the nature of the default is provided by TRMC to TLO, then for so long as TLO remains in default in its ability to perform under the terms of the                     [ specify Track Use Agreement, MUTA or Terminalling Agreement ] (a “ Default Period ”), TRMC may elect, by written notice to TLO that TRMC has elected to exercise the Option to Repurchase the                     [ specify particular Premises Facility ] (the “ Option Exercise Notice ”). The Option Exercise Notice from TRMC must be sent by certified mail, return receipt requested, or personally delivered (by overnight courier or otherwise) to TLO during a Default Period. TRMC’s failure to exercise the Option to Repurchase during any particular Default Period shall not be a waiver of the Option to Repurchase at any later time that a Default Period exists.

 

  (d) Effect of Exercise . Subject only to the provisions regarding examination and acceptance of title to the Rail Facility [ or Load/Unload Facility or Truck Rack, as appropriate ] set forth in Sections 4 and 5 below, TRMC’s notification to TLO that TRMC is exercising its Option to Repurchase shall be deemed to be an irrevocable election to purchase the                     [ specify appropriate Premises Facility ] pursuant to the terms of this Agreement. The date on which TRMC exercises the Option to Repurchase is the “ Repurchase Exercise Date .”

 

  (e) Determination of Purchase Price Following Exercise of Option . If TRMC exercises its Option to Repurchase, the purchase price for the Rail Facility (the “ Repurchase Price ”) shall be determined as follows:

 

C - 3


  (1) TRMC and TLO shall each have the                     [ specify appropriate Premises Facilities ] appraised to determine its fair market value as of the Repurchase Exercise Date by an MAI certified commercial real estate appraiser conducting business in the Anacortes/Skagit County industrial market and having not less than ten (10) years active experience as an MAI certified commercial real estate appraiser. On or before the date that is sixty (60) days after the Repurchase Exercise Date, TRMC and TLO shall each provide the other with a copy of the appraisal report received from their appraiser, and shall, within fifteen (15) days after the expiration of the 60-day period, attempt to agree on the Repurchase Price for the Premises (or portion thereof, as appropriate). If the parties agree on a Repurchase Price (to be paid all cash at closing), then TRMC and TLO shall proceed to close the transaction for the transfer of the                     [ specify appropriate Premises Facilities ] as hereinafter provided, subject only to the satisfaction of the inspection contingency set forth in Section 4 below, and the contingency regarding title set forth in Section 5 below.

 

  (2) If the parties cannot agree on the Repurchase Price, then each party shall so notify their appraiser and jointly the appraisers shall, within fifteen (15) days after the date of such notification, appoint a third appraiser who meets the qualifications set forth above to act as arbitrator (the “ Arbitrator ”). The Arbitrator shall, within fifteen (15) days after his or her appointment, select as the Repurchase Price either the fair market value of the                     [ specify appropriate Premises Facilities ] set forth in TRMC’s appraisal or the fair market value set forth in TLO’s appraisal. The Arbitrator shall have no authority to average the appraised values, or to designate a Repurchase Price other than the fair market value specified in either TRMC’s appraisal or TLO’s appraisal.

Both parties may submit any information to the Arbitrator for his or her consideration, with copies to the other party. The Arbitrator may consult experts and competent authorities for factual information or evidence pertaining to the determination of the Repurchase Price. The Arbitrator shall render his or her decision by written notice to each party. The determination of the Repurchase Price by the Arbitrator will be final and binding upon TRMC and TLO, and TRMC and TLO shall proceed to close the transaction for the transfer of the                     [ specify appropriate Premises Facilities ] as hereinafter provided, subject only to the satisfaction of the inspection contingency set forth in Section 4 below, and the contingency regarding title set forth in Section 5 below. Each party shall pay the costs of its appraiser, and the party whose appraised value is not selected as the Repurchase Price shall pay the costs of the Arbitrator.

 

C - 4


3. Effective Date of Agreement.

 

  (a) Following Exercise of Right of First Refusal . If TRMC exercises its Right of First Refusal, the “ Effective Date ” of this Agreement shall be the date on which TLO receives an Exercise Notice.

 

  (b) Following Exercise of Option . In the case of TRMC’s exercise of its Option to Repurchase, the “ Effective Date ” shall be the date on which (a) the parties agree on the Repurchase Price in accordance with the terms of Section 2(e)(1) above, or (b) the Repurchase Price is determined by the Arbitrator as set forth in Section 2(e)(2) above.

Unless terminated in connection with the inspection contingency or as a result of the status of title, closing of the sale of the                     [ specify appropriate Premises Facilities ] pursuant to the exercise by TRMC of either the Right of First Refusal or the Option to Repurchase shall occur within ninety (90) days following the Effective Date (the “ Closing Date ”).

 

4. Inspection Contingency. On or before the date that is thirty (30) days after the Effective Date, TRMC shall deliver to TLO written notice of (a) TRMC’s satisfaction or waiver, in TRMC’s sole discretion, with respect to the results of the inspection contingency stated in this Section 4, or (b) the failure of this condition. If TRMC fails to timely deliver such notice to TLO, then this condition shall be deemed not satisfied, and TRMC shall be under no obligation to proceed with the repurchase of the                     [ specify appropriate Premises Facilities ]. If TRMC’s inspection contingency followed the exercise of the Right of First Refusal, then following TLO’s receipt of notice of the failure of this inspection contingency by TRMC (or TRMC’s failure to timely deliver the required notice to TLO), TLO shall be free to sell the                     [ specify appropriate Premises Facilities ] to the third party submitting the Purchase Offer on the Purchase Terms, and TRMC’s Right of First Refusal, and TLO’s obligation under this Agreement, shall be null and void and without further force or effect (but only with respect to the portion of the Premises described in the Exercise Notice or the Option Exercise Notice, as appropriate). If TLO fails to enter into a Purchase and Sale Agreement with the third party submitting the Purchase Offer on the Purchase Terms, or thereafter the transaction fails to close, then TRMC’s Right of First Refusal shall continue in accordance with the terms of this Agreement for so long as TLO owns the                     [ specify appropriate Premises Facilities ]. If TRMC timely notifies TLO of the satisfaction of this condition, then TRMC shall deposit into escrow, with First American Title Insurance Company or such other title insurance company as is satisfactory to the parties (the “ Title Company ”), an amount equal to two percent (2%) of the Repurchase Price, and the parties shall proceed to close the repurchase transaction within sixty (60) days thereafter.

 

  (a)

TLO shall make available for inspection by TRMC and its agents as soon as possible, but no later than ten (10) days after the Effective Date, all documents in the possession of TLO or its agents relating to the ownership and operation of the                     [ specify appropriate Premises Facilities ], including without

 

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  limitation; (i) statements for real estate taxes, assessments, and utilities; (ii) plans, specifications, permits, drawings, surveys, reports, and maintenance records; (iii) accounting records and audit reports; (iv) all current operating agreements and contracts affecting the                     [ specify appropriate Premises Facilities ] with                     or other third parties, and (v) any environmental reports, or portions thereof, relating to the                     [ specify appropriate Premises Facilities ].

 

  (b) TLO shall permit TRMC and its agents, at TRMC’s sole expense and risk, to conduct inspections concerning the structural condition of the improvements, all mechanical, electrical and plumbing systems, hazardous materials (which may include Phase II environmental site assessments if deemed advisable by TRMC) or other matters affecting the                     [ specify appropriate Premises Facilities ]. TRMC shall provide TLO with sufficient evidence that TRMC’s agents are adequately covered by policies of insurance issued by a carrier reasonably acceptable to TLO, insuring TRMC’s agents against any and all liens or liability arising out of the inspections conducted upon the                     [ specify appropriate Premises Facilities ] by TRMC or its agents, including, without limitation, any loss or damage to the                     [ specify appropriate Premises Facilities ], with coverage in the amount of not less than $500,000 per occurrence. With respect to any Phase I or Phase II environmental site assessments, TRMC agrees to (i) provide TLO with a copy of any and all test results and written reports in draft form for review and approval by TLO before final publication of the same occurs; (ii) provide TLO with a copy of the final written report; and (iii) keep confidential any and all test results and written reports. TRMC agrees to indemnify and defend TLO from all liens, claims, liabilities, losses, damages, costs and expenses, including attorneys’ and experts’ fees, arising from or relating to TRMC’s inspection of the                     [ specify appropriate Premises Facilities ] in connection with the exercise of its Right of First Refusal or Option to Repurchase. This agreement to indemnify and defend TLO shall survive the closing of the purchase and sale transaction.

 

5. Preliminary Commitment for Title Insurance; Status of Title.

 

  (a) Within five (5) days after the Effective Date, TLO shall deliver to TRMC a preliminary commitment for title insurance covering the                     [ specify appropriate Premises Facilities ], together with legible copies of all exceptions shown therein, showing TLO’s title to the                     [ specify appropriate Premises Facilities ] to be good, marketable and insurable (the “ Preliminary Commitment ”), which Preliminary Commitment shall be issued by the Title Company.

 

  (b) Within ten (10) days of its receipt of the Preliminary Commitment, TRMC shall notify TLO in writing of any exceptions to title that are wholly or conditionally unacceptable to TRMC. The notice shall set forth in reasonable detail the reasons for any disapproval and, if appropriate, the conditions that must be met to make conditionally unacceptable exceptions fully acceptable to TRMC. TRMC may, however, object only to exceptions that are either monetary encumbrances or that are conditions, covenants, easements or restrictions inconsistent with TRMC’s intended use of the                     [ specify appropriate Premises Facilities ].

 

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  (c) Within five (5) days following the date of receipt of TRMC’s notice of disapproved exceptions described in Section 5(b) above, TLO shall advise TRMC in writing of the exceptions it will clear prior to the Closing Date, which exceptions shall include all monetary exceptions to title (unless arising through or created by TRMC). Thereafter, TRMC shall have ten (10) days within which to make an election to accept TLO’s title or to terminate and cancel this Agreement (but such termination and cancellation shall only apply to the Right of First Refusal or the Option to Repurchase with respect to which the Preliminary Commitment was obtained, and otherwise this Agreement shall remain in effect with respect to any other event giving rise to TRMC’s ability to exercise its rights hereunder), which election shall be made in writing to TLO with the 10-day period. TRMC’s acceptance of title, or TRMC’s failure to provide TLO with such written election within the 10-day period, shall be deemed an irrevocable election by TRMC to accept the status of TLO’s title, and TRMC shall thereafter be irrevocably committed to close the sale of the                     [ specify appropriate Premises Facilities ].

 

  (d) The date on which such notice regarding the Preliminary Commitment is provided (or the date on which the 10-day period expires), as well as its determination of satisfaction or waiver of the inspection contingency under Section 4, shall be referred to as the “ Acceptance Date .”

 

6. Creation of Escrow.

 

  (a) Creation of Escrow . Promptly following the Acceptance Date, an escrow (herein referred to as the “ Escrow ”) shall be created and established with the Title Company or other escrow company chosen by the parties (which Title Company, when acting in its escrow capacity, or other escrow company, shall be herein referred to as the “ Escrow Agent ”), for the closing of this transaction and for the receipt and delivery of funds, the deed and other documents and instruments to be delivered upon the terms and conditions of this Agreement.

 

  (b) Escrow Instructions . The parties hereto agree to execute and deliver escrow instructions and such other reasonable documents and instruments as may be required by the Escrow Agent to consummate this transaction pursuant to the terms of this Agreement and to convey the                     [ specify appropriate Premises Facilities ] from TLO to TRMC; provided , however , that it is specifically understood and agreed that the escrow instructions so executed and delivered shall not in any way supersede or replace the terms and provisions of this Agreement, but shall be deemed to be supplemental to the terms hereof and a means of carrying out and consummating the transaction contained in this Agreement.

 

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  (c) Deposits into Escrow by TLO . TLO shall deposit in Escrow with the Escrow Agent, on or before the Closing Date, the following documents:

 

  (1) A Special Warranty Deed (the “ Deed ”) covering the                     [ specify appropriate Premises Facilities ], fully-executed by TLO and acknowledged, which Deed shall be in form sufficient for recording and subject only to (A) real estate taxes and local improvement district assessments not then due and payable, and (B) those exceptions in the Preliminary Commitment not removed as provided in Section 5 above, conveying fee title to the                     [ specify appropriate Premises Facilities ] (and the improvements located thereon) to TRMC.

 

  (2) A fully-executed and acknowledged Real Estate Excise Tax Affidavit covering the conveyance of the                     [ specify appropriate Premises Facilities ] (and the improvements located thereon) to TRMC by the Deed.

 

  (3) A commitment from the Title Company to issue an owner’s standard coverage policy of title insurance covering the                     [ specify appropriate Premises Facilities ] and insuring the purchaser in an amount equal to the Repurchase Price (determined either in accordance with Section 1(c) or Section 2 above), with no exceptions other than those accepted by TRMC under Section 5 above.

 

  (d) Deposits into Escrow by TRMC . TRMC will deposit in Escrow with the Escrow Agent, on or before the Closing Date, the Repurchase Price of the                     [ specify appropriate Premises Facilities ], in the form of cash, cashier’s or certified check or wire-transfer of funds.

 

(e) Closing Costs .

 

  (1) At closing, TLO shall pay the following charges and expenses:

 

  (A) Real estate excise tax in the full amount which is required in order to validly record the Deed;

 

  (B) An amount equal to the premium, and applicable taxes, for the issuance of Title Company’s standard form owner’s title insurance policy in which TRMC shall be named as owner and pursuant to which the title to the                     [ specify appropriate Premises Facilities ] shall be insured in an amount equal to the Repurchase Price and subject to only those exceptions set forth above;

 

  (C) One-half (1/2) escrow fees, and taxes thereon;

 

  (D) TLO’s portion of the items to be prorated to the Closing Date as set forth in Section 7 below; and

 

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  (E) All fees and expenses of TLO’s counsel for the transaction.

 

  (2) At closing, TRMC shall pay the following charges and expenses:

 

  (A) The cost of the premium for any extended coverage title coverage and any endorsements that TRMC desires to obtain with respect to the policy of title insurance issued at closing;

 

  (B) Any sales tax due on the transfer of any personal property used in connection with the                     [ specify appropriate Premises Facilities ] and sold to TRMC at closing;

 

  (C) The cost of all inspections, tests or reports incurred in connection with the inspection of the                     [ specify appropriate Premises Facilities ];

 

  (D) One-half (1/2) escrow fees, and taxes thereon;

 

  (E) The cost of recording the Deed;

 

  (F) TRMC’s portion of the items to be prorated to the Closing Date as set forth in Section 7 below; and

 

  (G) All fees and expenses associated with TRMC’s counsel for the transaction.

 

  (f) Possession . TRMC shall be entitled to have possession of the                     [ specify appropriate Premises Facilities ] on the Closing Date.

 

7. Apportionments as of Date of Closing. All utilities, real estate taxes and assessments shall be apportioned to the Closing Date of the calendar year for which assessed. If the Closing Date occurs before the tax rate is fixed, the apportionment of taxes shall be upon the basis of the tax rate for the next preceding year applied to the latest assessed valuation.

 

8. Eminent Domain.

 

  (a) Taking . If, prior to the Closing Date, all or a substantial part of the                     [ specify appropriate Premises Facilities ] is taken or threatened with taking by the power of eminent domain, then TRMC may, by written notice to TLO within ten (10) days of the date of notification to TRMC of such taking, or threat thereof, elect to terminate this Agreement. In the event that TRMC so elects, both parties shall be relieved of and released from any further liability hereunder.

 

  (b) Assignment of Awards . Unless this Agreement is so terminated, it shall remain in full force and effect and if closing occurs, TLO shall assign, transfer and set over to TRMC all of TLO’s right, title and interest in and to any awards that may be made for such taking and there shall be no adjustment in the Repurchase Price. The legal description of the                     [ specify appropriate Premises Facilities ] shall be adjusted at closing to delete any of the real property so taken.

 

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  (c) Definition . For the purpose hereof, the words “substantial part” shall mean an amount in excess of ten percent (10%) of the             [ specify appropriate Premises Facilities ] or a taking which impairs the use of the real property for             [ specify “rail transportation” or other applicable purposes ] purposes.

 

9. Notices. Any notices required or desired to be given under this Agreement shall be in writing and personally delivered, delivered by reliable overnight courier or given by mail. Any notice or payment given by mail shall be sent, postage prepaid, by certified mail, return receipt requested and addressed to the party to receive the same at the following address or at such other address or addresses as the parties may from time to time direct in writing:

 

TRMC:       Tesoro Refining & Marketing Company LLC
      19100 Ridgewood Parkway
      San Antonio, Texas 78259
      Attention: Vice President, Logistics
   With a copy to:    Tesoro Refining & Marketing Company LLC
      19100 Ridgewood Parkway
      San Antonio, Texas 78259
      Attention: General Counsel
TLO :       Tesoro Logistics Operations, LLC
      19100 Ridgewood Parkway
      San Antonio, Texas 78259
      Attention: Vice President, Logistics

Any notice shall be deemed to have been given if delivered, when delivered, and if mailed, forty-eight (48) hours after deposit at any post office in the United States of America, postage prepaid certified mail with return receipt requested and addressed to the party to receive the same as set forth above.

 

10. Assignment. This Agreement may be assigned by TRMC without the prior written approval of TLO to any party succeeding to the ownership of the oil refinery currently operated by TRMC in Anacortes, Washington. In the event of assignment, the assignee shall assume all obligations and obtain all benefits hereunder from and after the date of assignment.

 

11. Default.

 

  (a) Default by TRMC . In the event that TRMC defaults hereunder, TLO shall have all rights and remedies available to it at law or in equity.

 

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  (b) Default by TLO . In the event of a default by TLO hereunder, TRMC shall have as its sole remedy the right to sue for specific performance of this Agreement; provided , however , that if specific performance of this Agreement is not available, then TRMC may sue for the damages suffered by TRMC.

 

12. Miscellaneous.

 

  (a) Entire Agreement . This Agreement constitutes the entire Agreement between the parties and all prior and contemporaneous negotiations, understandings and agreements, whether oral or written, are merged herein and the rights and obligations of the parties shall be as set forth herein.

 

  (b) Binding Nature . All rights and obligations arising out of this Agreement shall inure to the benefit of and binding upon the respective successors, heirs, assigns, administrators and executors of the parties hereto.

 

  (c) Washington Law . This Agreement shall be construed, interpreted and enforced pursuant to the laws of the State of Washington.

 

  (d) Attorneys’ Fees . In the event any action or legal proceedings are commenced to enforce any of the terms and conditions hereof, or to terminate this Agreement (whether the same shall proceed to judgment or otherwise), the prevailing party shall receive from the other a reasonable sum as attorneys’ fees together with costs.

 

  (e) Time . Time is of the essence hereof.

 

  (f) Captions . The captions and Section headings hereof are inserted for convenience purposes only and shall not be deemed to limit or expand the meaning of any section.

 

  (g) Invalidity . If any provisions of this Agreement are determined to be invalid, void or illegal, it shall in no way affect, impair or invalidate any of the other provisions hereof.

 

  (h) Counterparts . This Agreement may be signed in counterparts, any one of which shall be deemed an original.

 

  (i) Recording of Memorandum . The parties shall record a memorandum of this Agreement, in the form of Exhibit B attached hereto. TRMC shall pay all recording fees due by reason of such recording.

 

  (j) Good Faith . Both parties shall act reasonably and in good faith in order to consummate this transaction and TLO shall neither sell nor dispose of any of the                     [ specify appropriate Premises Facilities ] in violation of the terms of this Agreement, nor cause or suffer the creation of any matter of record, or defect in the title to the                     [ specify appropriate Premises Facilities ], in bad faith, for the purpose of avoiding its obligation to close. Notwithstanding the foregoing, nothing in this Agreement shall restrict or waive TRMC’s right to terminate this Agreement for any reason prior to its exercise of the Right of First Refusal or the Option to Repurchase.

 

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  (k) Authorization . TLO and TRMC each warrants that it has the right and authority to enter into and to perform this Agreement in accordance with its terms. Neither the execution of this Agreement nor its performance by TLO or TRMC will conflict with or result in the breach of any restriction, covenant, agreement or other undertaking whatever.

[SIGNATURE BLOCKS ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement the date and year set forth opposite their respective names.

 

  TLO:
  TESORO LOGISTICS OPERATIONS LLC,
  a Delaware limited liability company
Date:                                              By:  

 

    Its:  

 

  TRMC:
  TESORO REFINING & MARKETING
  COMPANY LLC, a Delaware limited liability company
Date:                                              By:  

 

    Its:  

 

 

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STATE OF                                     )

                                                         ) ss.

COUNTY OF                                 )

On this             day of                         , before me personally appeared                     , to me known to be the                     of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, the limited liability company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company for the uses and purposes therein mentioned, and on oath stated                     was authorized to execute the said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

 

 

(Signature)

 

(Please print name legibly)
Notary Public in and for the
State of                                                                           
My commission expires                                                 

STATE OF                                     )

                                                         ) ss.

COUNTY OF                                 )

On this             day of                     , before me personally appeared                     , to me known to be the                     of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company for the uses and purposes therein mentioned, and on oath stated             was authorized to execute the said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

 

 

(Signature)

 

(Please print name legibly)
Notary Public in and for the
State of                                                                           
My commission expires                                                 

 

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EXHIBIT A

TO

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE

ANACORTES TRUCK/PROPANE TERMINAL AREA/LPG LOADING RACKS AREA AND RAIL FACILITY COMBINED

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOT 1, SECTION 28, GOVERNMENT LOTS 1, 2, 3 AND 4, SECTION 29, AND GOVERNMENT LOTS 7 AND 8, SECTION 32, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, ALSO BEING THAT PORTION OF LAND DESCRIBED IN MEMORANDUM OF GROUND LEASE, TENANT'S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048, RECORDS OF SKAGIT COUNTY, OREGON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

AREA T-1 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2472.20 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 87° 06'44" WEST 1003.59 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000, SAID POINT OF BEGINNING ALSO BEING A POINT WESTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048; THENCE ALONG SAID WESTERLY BOUNDARY, NORTH 86°53'09" WEST 24.22 FEET TO A POINT;

THENCE NORTH 07°58'01" WEST 8.04 FEET TO A POINT;

THENCE NORTH 42°26'45" WEST 14.46 FEET TO A POINT;

THENCE NORTH 89°52'37" WEST 16.40 FEET TO A POINT;

THENCE LEAVING SAID WESTERLY BOUNDARY, NORTH 00°48'14" EAST 42.04 FEET TO A POINT;

THENCE NORTH 89°11'46" WEST 90.25 FEET TO A POINT;

THENCE SOUTH 60°46'46" WEST 24.78 FEET TO A POINT;

THENCE NORTH 52°32'10" WEST 33.62 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD;

THENCE ALONG SAID EASTERLY RIGHT OF WAY, NORTH 08°19'59" EAST 123.86 FEET TO A POINT;

 

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THENCE NORTH 07°23'56" EAST 57.60 FEET TO A POINT;

THENCE NORTH 18°27'59" EAST 450.89 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, SOUTH 73°44'35" EAST 5.81 FEET TO A POINT TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 141.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 75°29'35", (THE CHORD BEING NORTH 55°13'56" EAST 172.63 FEET) HAVING AN ARC LENGTH OF 185.78 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°01'16" EAST 147.43 FEET TO A POINT;

THENCE SOUTH 41°53'19" EAST 51.31 FEET TO A POINT;

THENCE SOUTH 86°27'44" EAST 264.85 FEET TO A POINT;

THENCE SOUTH 26°35'07" WEST 16.34 FEET ON SAID WESTERLY BOUNDARY, SAID POINT ALSO BEING A POINT OF CURVATURE;

THENCE ALONG SAID WESTERLY BOUNDARY, ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°52'19", (THE CHORD BEING SOUTH 30°01'17" WEST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 33°27'26" WEST 221.44 FEET TO A POINT;

THENCE SOUTH 64°59'14" WEST 12.30 FEET TO A POINT;

THENCE SOUTH 03°43'39" WEST 18.74 FEET TO A POINT;

THENCE SOUTH 47°33'57" WEST 8.19 FEET TO A POINT;

THENCE NORTH 89°12'10" WEST 7.74 FEET TO A POINT;

THENCE SOUTH 16°34'12" WEST 3.31 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 21°55'06", (THE CHORD BEING SOUTH 27°31'45" WEST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 38°29'18" WEST 148.86 FEET TO A POINT;

THENCE SOUTH 71°03'58" WEST 22.10 FEET TO A POINT;

THENCE SOUTH 20°08'39" WEST 38.30 FEET TO A POINT;

THENCE NORTH 63°04'10" WEST 18.24 FEET TO A POINT;

 

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THENCE SOUTH 55°20'50" WEST 22.71 FEET TO A POINT;

THENCE SOUTH 48°19'07" WEST 199.32 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING SOUTH 33°07'20" WEST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 17°58'23" WEST 7.74 FEET TO THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 7.445 ACRES, MORE OR LESS.

AREA T-2 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2661.76 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 82° 24'54" WEST 417.18 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE SOUTH 43°15'51" WEST 46.69 FEET TO A POINT;

THENCE SOUTH 69°34'39" WEST 93.08 FEET TO A POINT;

THENCE NORTH 84°45'44" WEST 120.27 FEET TO A POINT;

THENCE NORTH 67°26'45" WEST 80.26 FEET TO A POINT ON THE EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT'S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 41°36'44" EAST 93.48 FEET TO A POINT;

THENCE NORTH 32°03'51" EAST 91.66 FEET TO A POINT;

THENCE NORTH 28°39'47" EAST 73.64 FEET TO A POINT;

THENCE NORTH 30°59'34" EAST 236.70 FEET TO A POINT;

THENCE NORTH 25°27'42" EAST 694.97 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, SOUTH 87°01'06" EAST 129.04 FEET TO A POINT;

THENCE SOUTH 24°55'59" WEST 309.47 FEET TO A POINT;

 

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THENCE SOUTH 23°06'04" WEST 270.16 FEET TO A POINT;

THENCE SOUTH 22°57'59" WEST 178.12 FEET TO A POINT;

THENCE SOUTH 18°46'41" WEST 79.22 FEET TO A POINT;

THENCE SOUTH 11°51'11" WEST 248.29 FEET THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 4.194 ACRES, MORE OR LESS.

LPG LOADING RACKS AREA

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 1330.90 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 88° 09'12" WEST 757.58 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 87°48'11" WEST 106.79 FEET TO A POINT EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 86°10'11" WEST 64.79 TO A POINT;

THENCE NORTH 02°49'52" EAST 268.66 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.56 TO A POINT;

THENCE NORTH 03°02'23" EAST 32.76 TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.45 TO A POINT;

THENCE NORTH 03°02'23" EAST 175.70 TO A POINT;

THENCE NORTH 86°57'37" WEST 4.66 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.35 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.51 TO A POINT;

THENCE NORTH 03°02'23" EAST 215.61 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.36 TO A POINT;

 

C - 18


THENCE SOUTH 86°57'37" EAST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 188.41 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.79 TO A POINT;

THENCE NORTH 03°02'23" EAST 22.87 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.89 TO A POINT;

THENCE NORTH 14°30'48" EAST 165.26 TO A POINT;

THENCE NORTH 27°02'07" EAST 89.90' TO A POINT;

THENCE NORTH 45°47'17" EAST 30.10 TO A POINT;

THENCE NORTH 65°05'46" EAST 49.52 TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, NORTH 81°10'11" EAST 30.74 TO A POINT;

THENCE SOUTH 89°10'11" EAST 39.80 TO A POINT;

THENCE SOUTH 88°09'27" EAST 138.60 TO A POINT;

THENCE SOUTH 05°28'49" WEST 207.14 TO A POINT;

THENCE SOUTH 81°39'33" EAST 83.24 TO A POINT;

THENCE SOUTH 02°43'22" EAST 125.56 TO A POINT;

THENCE SOUTH 87°42'18" EAST 198.20 TO A POINT;

THENCE SOUTH 05°33'35" WEST 126.24 TO A POINT;

THENCE NORTH 87°02'54" WEST 201.71 TO A POINT;

THENCE SOUTH 28°39'02" WEST 69.62 TO A POINT;

THENCE NORTH 86°15'07" WEST 169.20 TO A POINT;

THENCE SOUTH 02°55'07" WEST 39.56 TO A POINT;

THENCE SOUTH 50°38'24" WEST 25.27 TO A POINT;

THENCE NORTH 87°07'14" WEST 30.16 TO A POINT;

THENCE SOUTH 02°56'48" WEST 669.40 TO THE POINT OF BEGINNING.

THIS DESCRIPTION CONTAINS 7.898 ACRES, MORE OR LESS.

 

C - 19


RAIL FACILITIES

BEGINNING AT MONUMENT 30 PER SHELL SURVEY CONTROL POINTS MAP NO. 40RA-100, DATED FEBRUARY 26, 1964, LOCATED AT THE INTERSECTION OF “G” STREET AND 8TH STREET; THENCE SOUTH 02°56'22" WEST, ALONG SAID “G” STREET, A DISTANCE OF 1999.69 FEET AS DEPICTED ON THAT CERTAIN RECORD OF SURVEY RECORDED UNDER AUDITOR’S FILE NUMBER 200101080077, RECORDS OF SKAGIT COUNTY, WASHINGTON, TO MONUMENT 26 OF SAID CONTROL POINTS MAP, LOCATED AT THE INTERSECTION OF “G” STREET AND 11TH STREET; THENCE SOUTH 52°09'16" WEST A DISTANCE OF 3276.59 FEET TO THE TRUE POINT OF BEGINNING , SAID POINT ALSO BEING SOUTH 07° 23' 06" WEST 1952.43 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 24°44'56" WEST 142.50 FEET TO A POINT;

THENCE NORTH 00°12'34" EAST 142.35 FEET TO A POINT;

THENCE NORTH 05°17'05" WEST 62.72 FEET TO A POINT;

THENCE NORTH 89°10'01" WEST 351.62 FEET TO A POINT;

THENCE NORTH 05°01'32" WEST 588.00 FEET TO A POINT;

THENCE NORTH 09°43'59" WEST 419.68 FEET TO A POINT;

THENCE NORTH 07°55'01" WEST 42.59 FEET TO A POINT;

THENCE NORTH 09°49'41" WEST 343.75 FEET TO A POINT;

THENCE NORTH 12°00'42" WEST 399.03 FEET TO A POINT;

THENCE NORTH 12°33'11" WEST 376.45 FEET TO A POINT;

THENCE NORTH 12°07'52" WEST 383.67 FEET TO A POINT;

THENCE NORTH 12°28'04" WEST 433.60 FEET TO A POINT;

THENCE NORTH 07°52'56" WEST 42.44 FEET TO A POINT;

THENCE NORTH 86°52'52" WEST 44.55 FEET TO A POINT;

THENCE NORTH 12°20'01" WEST 5.96 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD, SAID POINT BEING A POINT OF CURVATURE;

 

C - 20


THENCE ALONG SAID EASTERLY RIGHT OF WAY, ALONG THE ARC OF A 522.92 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 22°59'00", (THE CHORD BEING NORTH 00°50'31" WEST 208.36 FEET) HAVING AN ARC LENGTH OF 209.76 FEET TO A POINT OF TANGENCY;

THENCE NORTH 10°38'59" EAST 829.57 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, NORTH 49°50'04" EAST 195.57 FEET TO A POINT;

THENCE SOUTH 89°52'37" EAST 32.81 TO A POINT;

THENCE SOUTH 42°26'45" EAST 14.46 TO A POINT;

THENCE SOUTH 07°58'01" EAST 8.04 TO A POINT;

THENCE SOUTH 86°53'09" EAST 24.22 TO A POINT;

THENCE NORTH 17°58'23" EAST 7.74 TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING NORTH 33°07'20" EAST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF TANGENCY;

THENCE NORTH 48°19'07" EAST 199.32 TO A POINT;

THENCE NORTH 55°20'50" EAST 22.71 TO A POINT;

THENCE SOUTH 63°04'10" EAST 18.24 TO A POINT;

THENCE NORTH 20°08'39" EAST 38.30 TO A POINT;

THENCE NORTH 71°03'58" EAST 22.10 TO A POINT;

THENCE NORTH 38°29'18" EAST 148.86 TO A POINT;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 21°55'06" (THE CHORD BEING NORTH 27°31'45" EAST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 16°34'12" EAST 3.31 TO A POINT;

THENCE SOUTH 89°12'10" EAST 7.74 TO A POINT;

THENCE NORTH 47°33'57" EAST 8.19 TO A POINT;

THENCE NORTH 03°43'39" EAST 18.74 TO A POINT;

THENCE NORTH 64°59'14" EAST 12.30 TO A POINT;

THENCE NORTH 33°27'26" EAST 221.44 TO A POINT;

 

C - 21


THENCE ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 06°52'19" (THE CHORD BEING NORTH 30°01'17" EAST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE NORTH 26°35'07" EAST 77.07 TO A POINT;

THENCE NORTH 26°48'10" EAST 142.95 FEET TO A POINT;

THENCE NORTH 25°23'46" EAST 630.86 FEET TO A POINT;

THENCE SOUTH 64°36'02" EAST 8.55 FEET TO A POINT;

THENCE NORTH 25°23'58" EAST 115.57 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 613.11 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 54°39'15", (THE CHORD BEING NORTH 52°43'36" WEST 562.92 FEET) HAVING AN ARC LENGTH OF 584.85 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 09°56'47" WEST 1.21 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 575.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 11°41'21", (THE CHORD BEING NORTH 87°03'44" EAST 117.10 FEET) HAVING AN ARC LENGTH OF 117.31 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°05'36" EAST 258.33 FEET TO A POINT;

THENCE SOUTH 05°00'08" WEST 29.39 FEET TO A POINT;

THENCE NORTH 87°11'49" WEST 266.22 FEET TO A POINT OF CURVATURE; THENCE ALONG THE ARC OF A 360.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 11°37'04", (THE CHORD BEING SOUTH 86°59'38" WEST 72.87 FEET) HAVING AN ARC LENGTH OF 73.00 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 81°11'06" WEST 38.85 FEET TO A POINT;

THENCE SOUTH 84°18'00" WEST 10.12 FEET TO A POINT;

THENCE SOUTH 69°47'07" WEST 10.13 FEET TO A POINT;

THENCE SOUTH 77°11'58" WEST 10.77 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 500.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 16°27'19", (THE CHORD BEING SOUTH 68°58'18" WEST 143.11 FEET) HAVING AN ARC LENGTH OF 143.60 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 60°44'39" WEST 70.59 FEET TO A POINT;

 

C - 22


THENCE SOUTH 56°29'41" WEST 42.75 FEET TO A POINT;

THENCE SOUTH 49°55'22" WEST 49.34 FEET TO A POINT;

THENCE SOUTH 43°09'57" WEST 58.51 FEET TO A POINT;

THENCE SOUTH 27°12'38" WEST 30.70 FEET TO A POINT;

THENCE SOUTH 06°14'42" WEST 9.16 FEET TO A POINT;

THENCE NORTH 81°15'45" WEST 7.88 FEET TO A POINT;

THENCE SOUTH 30°35'40" WEST 86.24 FEET TO A POINT;

THENCE SOUTH 26°36'03" WEST 86.65 FEET TO A POINT;

THENCE SOUTH 46°11'14" EAST 20.60 FEET TO A POINT;

THENCE SOUTH 13°54'58" WEST 25.06 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 90.61 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 42°54'14", (THE CHORD BEING SOUTH 43°22'47"WEST 66.27 FEET) HAVING AN ARC LENGTH OF 67.85 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 21°59'47" WEST 6.78 FEET TO A POINT;

THENCE NORTH 73°29'41" WEST 6.50 FEET TO A POINT;

THENCE SOUTH 25°27'42" WEST 910.40 FEET TO A POINT;

THENCE SOUTH 30°59'34" WEST 236.70 TO A POINT;

THENCE SOUTH 28°39'47" WEST 73.64 TO A POINT;

THENCE SOUTH 32°03'51" WEST 91.66 TO A POINT;

THENCE SOUTH 41°36'44" WEST 146.12 TO A POINT;

THENCE SOUTH 16°08'52" WEST 58.97 FEET TO A POINT;

THENCE SOUTH 65°05'46" WEST 49.52 FEET TO A POINT;

THENCE SOUTH 45°47'17" WEST 30.10 FEET TO A POINT;

THENCE SOUTH 27°02'07" WEST 89.90 FEET TO A POINT;

THENCE SOUTH 14°30'48" WEST 165.26 FEET TO A POINT;

 

C - 23


THENCE NORTH 86°57'37" WEST 9.89 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 22.87 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.79 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 188.41 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.36 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 215.61 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.51 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.35 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.66 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 175.70 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 4.45 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 32.76 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.56 FEET TO A POINT;

THENCE SOUTH 02°49'52" WEST 268.66 FEET TO A POINT;

THENCE SOUTH 86°10'11" EAST 64.79 FEET TO A POINT;

THENCE SOUTH 01°33'52" WEST 352.96 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 560.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 32°25'38", (THE CHORD BEING SOUTH 06°15'25" EAST 312.73 FEET) HAVING AN ARC LENGTH OF 316.94 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 16°15'24" EAST 319.42 FEET TO A POINT;

THENCE SOUTH 14°57'10" EAST 140.54 FEET TO A POINT;

THENCE SOUTH 10°52'54" EAST 96.00 FEET TO A POINT;

THENCE SOUTH 13°42'27" EAST 159.08 FEET TO A POINT;

 

C - 24


THENCE SOUTH 15°00'31" EAST 145.44 FEET TO A POINT;

THENCE SOUTH 20°07'43" EAST 132.54 FEET TO A POINT;

THENCE SOUTH 14°40'44" EAST 297.68 FEET TO A POINT;

THENCE SOUTH 13°21'25" EAST 147.08 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 2094.73 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 08°06'59", (THE CHORD BEING SOUTH 12°31'50" EAST 296.49 FEET) HAVING AN ARC LENGTH OF 296.74 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 07°46'54" EAST 68.77 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 37.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 49°12'54", (THE CHORD BEING SOUTH 03°55'29" WEST 30.81 FEET) HAVING AN ARC LENGTH OF 31.78 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 00°13'05" EAST 49.90 FEET TO A POINT;

THENCE SOUTH 08°40'52" EAST 250.61 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1340.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 09°26'37", (THE CHORD BEING SOUTH 03°57'34" EAST 220.61 FEET) HAVING AN ARC LENGTH OF 220.86 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 00°45'44" WEST 160.11 FEET TO A POINT;

THENCE SOUTH 01°28'08" EAST 176.30 FEET TO THE TRUE POINT OF BEGINNING.

THIS AREA CONTAINS 37.539 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

C - 25


EXHIBIT B

TO

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE

Memorandum of Right of First Refusal and Option Agreement

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

Graham & Dunn PC

Pier 70, 2801 Alaskan Way, Suite 300

Seattle, WA 98121

Attn: Maren K. Gaylor

MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT

 

GRANTOR:    TESORO LOGISTICS OPERATIONS LLC,   
   a Delaware limited liability company   
GRANTEE:    TESORO REFINING & MARKETING COMPANY LLC,   
   a Delaware limited liability company   
LEGAL         
DESCRIPTION:         

Abbreviated:

        

Full:

   See Exhibit A attached hereto      
TAX PARCEL         
NUMBERS:   

 

  

 

  
  

 

  

 

  
RECORDING NO.         
OF RELATED         
DOCUMENTS:    N/A      

 

C - 26


THIS MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT is made and entered into as of this         day of                     , by and between TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ TLO ”), and TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company (“ TRMC ”).

RECITALS:

TLO and TRMC have entered into that certain Right of First Refusal, Option Agreement and Agreement of Purchase and Sale (the “ Right of First Refusal and Option Agreement ”) with an effective date of                     , the terms, provisions and conditions of which are incorporated herein by reference to the same extent as if recited in their entirety herein, whereby TLO has granted to TRMC both a right of first refusal and option to purchase certain facilities (the “ Premises Facilities ”) located in Skagit County, Washington, each of which Premises Facilities is more particularly described in Exhibit A attached hereto.

Special reference is hereby made to the following terms and provisions of the Right of First Refusal and Option Agreement:

1. Right of First Refusal . If TLO elects to sell the                     [ specify appropriate Premises Facilities ] during any period of time that the                     [ specify appropriate Required Operating Agreements ] (each as defined in the Right of First Refusal and Option Agreement) is in effect, and TLO receives a bona fide offer from a third party that it considers acceptable (the “ Purchase Offer ”), then TLO shall provide written notice to TRMC of the Purchase Offer, which notice shall include a copy of the Purchase Offer. TRMC shall have thirty (30) days following receipt of such notice from TLO in which to give written notice to TLO that TRMC is exercising its Right of First Refusal, agreeing to purchase the                     [ specify appropriate Premises Facilities ] on the same terms and conditions as are contained in the Purchase Offer.

2. Option to Repurchase . TRMC shall have a right to exercise its Option to Repurchase the                     [ specify appropriate Premises Facilities ] for so long as the                     [ specify appropriate Required Operating Agreements ] remains in effect, or (ii) TLO fails to operate the                     [ specify appropriate Premises Facilities ] in a condition capable of performing in accordance with the provisions of the                     [ specify appropriate Required Operating Agreements ], and TLO thereafter fails to cure such default within the time period provided by the terms of the                     [ specify appropriate Required Operating Agreements ] after written notice specifying the nature of the default is provided by TRMC to TLO.

This Memorandum is executed for the purpose of recordation in the Official Records of Skagit County, Washington, in order to give notice of the terms and provisions of the Right of First Refusal and Option Agreement, and is not intended and shall not be construed to define, limit or modify the Right of First Refusal and Option Agreement. In the event of a conflict between the terms hereof and the terms of the Right of First Refusal and Option Agreement, the terms of the Right of First Refusal and Option Agreement shall control. This Memorandum may be executed in counterparts.

 

C - 27


IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Right of First Refusal and Option Agreement as of the day and year first above written.

 

    TLO:
   

TESORO LOGISTICS OPERATIONS LLC,

a Delaware limited liability company

Date:                                     

    By:  

 

      Its:                                                                                                                  

 

    TRMC:
   

TESORO REFINING & MARKETINGCOMPANY LLC,

a Delaware limited liability company

Date:                                     

    By:  

 

      Its:                                                                                                                   

 

C - 28


STATE OF                                )   
  ) ss.   
COUNTY OF                        )   

On this         day of                    , before me personally appeared                    , to me known to be the                    of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, the limited liability company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company for the uses and purposes therein mentioned, and on oath stated         was authorized to execute the said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

 

   

 

  (Signature)
 

 

 

(Please print name legibly)

 

Notary Public in and for the

 

State of                                                                            

 

My commission expires                                               

 

STATE OF                                )   
  ) ss.   
COUNTY OF                        )   

On this             day of                     , before me personally appeared                    , to me known to be the                     of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company for the uses and purposes therein mentioned, and on oath stated             was authorized to execute the said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

 

   

 

  (Signature)
 

 

 

(Please print name legibly)

 

Notary Public in and for the

 

State of                                                                            

 

My commission expires                                               

 

C - 29


EXHIBIT A

TO

MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT

ANACORTES TRUCK/PROPANE TERMINAL AREA/LPG LOADING RACKS AREA

AND RAIL FACILITY COMBINED

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOT 1, SECTION 28, GOVERNMENT LOTS 1, 2, 3 AND 4, SECTION 29, AND GOVERNMENT LOTS 7 AND 8, SECTION 32, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, ALSO BEING THAT PORTION OF LAND DESCRIBED IN MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048, RECORDS OF SKAGIT COUNTY, OREGON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

AREA T-1 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2472.20 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 87° 06'44" WEST 1003.59 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000, SAID POINT OF BEGINNING ALSO BEING A POINT WESTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID WESTERLY BOUNDARY, NORTH 86°53'09" WEST 24.22 FEET TO A POINT;

THENCE NORTH 07°58'01" WEST 8.04 FEET TO A POINT;

THENCE NORTH 42°26'45" WEST 14.46 FEET TO A POINT;

THENCE NORTH 89°52'37" WEST 16.40 FEET TO A POINT;

THENCE LEAVING SAID WESTERLY BOUNDARY, NORTH 00°48'14" EAST 42.04 FEET TO A POINT;

THENCE NORTH 89°11'46" WEST 90.25 FEET TO A POINT;

THENCE SOUTH 60°46'46" WEST 24.78 FEET TO A POINT;

THENCE NORTH 52°32'10" WEST 33.62 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD;

THENCE ALONG SAID EASTERLY RIGHT OF WAY, NORTH 08°19'59" EAST 123.86 FEET TO A POINT;

 

C - 30


THENCE NORTH 07°23'56" EAST 57.60 FEET TO A POINT;

THENCE NORTH 18°27'59" EAST 450.89 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, SOUTH 73°44'35" EAST 5.81 FEET TO A POINT TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 141.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 75°29'35", (THE CHORD BEING NORTH 55°13'56" EAST 172.63 FEET) HAVING AN ARC LENGTH OF 185.78 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°01'16" EAST 147.43 FEET TO A POINT;

THENCE SOUTH 41°53'19" EAST 51.31 FEET TO A POINT;

THENCE SOUTH 86°27'44" EAST 264.85 FEET TO A POINT;

THENCE SOUTH 26°35'07" WEST 16.34 FEET ON SAID WESTERLY BOUNDARY, SAID POINT ALSO BEING A POINT OF CURVATURE;

THENCE ALONG SAID WESTERLY BOUNDARY, ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°52'19", (THE CHORD BEING SOUTH 30°01'17" WEST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 33°27'26" WEST 221.44 FEET TO A POINT;

THENCE SOUTH 64°59'14" WEST 12.30 FEET TO A POINT;

THENCE SOUTH 03°43'39" WEST 18.74 FEET TO A POINT;

THENCE SOUTH 47°33'57" WEST 8.19 FEET TO A POINT;

THENCE NORTH 89°12'10" WEST 7.74 FEET TO A POINT;

THENCE SOUTH 16°34'12" WEST 3.31 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 21°55'06", (THE CHORD BEING SOUTH 27°31'45" WEST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 38°29'18" WEST 148.86 FEET TO A POINT;

THENCE SOUTH 71°03'58" WEST 22.10 FEET TO A POINT;

THENCE SOUTH 20°08'39" WEST 38.30 FEET TO A POINT;

THENCE NORTH 63°04'10" WEST 18.24 FEET TO A POINT;

 

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THENCE SOUTH 55°20'50" WEST 22.71 FEET TO A POINT;

THENCE SOUTH 48°19'07" WEST 199.32 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING SOUTH 33°07'20” WEST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 17°58'23" WEST 7.74 FEET TO THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 7.445 ACRES, MORE OR LESS.

AREA T-2 (ANACORTES TRUCK/PROPANE TERMINAL AREA)

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 2661.76 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 82° 24'54" WEST 417.18 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE SOUTH 43°15'51" WEST 46.69 FEET TO A POINT;

THENCE SOUTH 69°34'39" WEST 93.08 FEET TO A POINT;

THENCE NORTH 84°45'44" WEST 120.27 FEET TO A POINT;

THENCE NORTH 67°26'45" WEST 80.26 FEET TO A POINT ON THE EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 41°36'44" EAST 93.48 FEET TO A POINT;

THENCE NORTH 32°03'51" EAST 91.66 FEET TO A POINT;

THENCE NORTH 28°39'47" EAST 73.64 FEET TO A POINT;

THENCE NORTH 30°59'34" EAST 236.70 FEET TO A POINT;

THENCE NORTH 25°27'42" EAST 694.97 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, SOUTH 87°01'06" EAST 129.04 FEET TO A POINT;

THENCE SOUTH 24°55'59" WEST 309.47 FEET TO A POINT;

 

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THENCE SOUTH 23°06'04" WEST 270.16 FEET TO A POINT;

THENCE SOUTH 22°57'59" WEST 178.12 FEET TO A POINT;

THENCE SOUTH 18°46'41" WEST 79.22 FEET TO A POINT;

THENCE SOUTH 11°51'11" WEST 248.29 FEET THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 4.194 ACRES, MORE OR LESS.

LPG LOADING RACKS AREA

BEGINNING AT A POINT BEARING NORTH 02° 53' 32" EAST 1330.90 FEET ALONG THE SECTION LINE COMMON TO SAID SECTIONS 28 AND 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., AND NORTH 88° 09'12" WEST 757.58 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 87°48'11" WEST 106.79 FEET TO A POINT EASTERLY BOUNDARY OF THAT AREA DESCRIBED IS SAID MEMORANDUM OF GROUND LEASE, TENANT’S OPTION TO PURCHASE; RIGHT OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT, RECORDED AS AUDITORS FILE NUMBER 201301080048;

THENCE ALONG SAID EASTERLY BOUNDARY, NORTH 86°10'11" WEST 64.79 TO A POINT;

THENCE NORTH 02°49'52" EAST 268.66 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.56 TO A POINT;

THENCE NORTH 03°02'23" EAST 32.76 TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.45 TO A POINT;

THENCE NORTH 03°02'23" EAST 175.70 TO A POINT;

THENCE NORTH 86°57'37" WEST 4.66 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.35 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.51 TO A POINT;

THENCE NORTH 03°02'23" EAST 215.61 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 23.36 TO A POINT;

 

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THENCE SOUTH 86°57'37" EAST 9.94 TO A POINT;

THENCE NORTH 03°02'23" EAST 188.41 TO A POINT;

THENCE NORTH 86°57'37" WEST 9.79 TO A POINT;

THENCE NORTH 03°02'23" EAST 22.87 TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.89 TO A POINT;

THENCE NORTH 14°30'48" EAST 165.26 TO A POINT;

THENCE NORTH 27°02'07" EAST 89.90' TO A POINT;

THENCE NORTH 45°47'17" EAST 30.10 TO A POINT;

THENCE NORTH 65°05'46" EAST 49.52 TO A POINT;

THENCE LEAVING SAID EASTERLY BOUNDARY, NORTH 81°10'11" EAST 30.74 TO A POINT;

THENCE SOUTH 89°10'11" EAST 39.80 TO A POINT;

THENCE SOUTH 88°09'27" EAST 138.60 TO A POINT;

THENCE SOUTH 05°28'49" WEST 207.14 TO A POINT;

THENCE SOUTH 81°39'33" EAST 83.24 TO A POINT;

THENCE SOUTH 02°43'22" EAST 125.56 TO A POINT;

THENCE SOUTH 87°42'18" EAST 198.20 TO A POINT;

THENCE SOUTH 05°33'35" WEST 126.24 TO A POINT;

THENCE NORTH 87°02'54" WEST 201.71 TO A POINT;

THENCE SOUTH 28°39'02" WEST 69.62 TO A POINT;

THENCE NORTH 86°15'07" WEST 169.20 TO A POINT;

THENCE SOUTH 02°55'07" WEST 39.56 TO A POINT;

THENCE SOUTH 50°38'24" WEST 25.27 TO A POINT;

THENCE NORTH 87°07'14" WEST 30.16 TO A POINT;

THENCE SOUTH 02°56'48" WEST 669.40 TO THE POINT OF BEGINNING.

 

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THIS DESCRIPTION CONTAINS 7.898 ACRES, MORE OR LESS.

RAIL FACILITIES

BEGINNING AT MONUMENT 30 PER SHELL SURVEY CONTROL POINTS MAP NO. 40RA-100, DATED FEBRUARY 26, 1964, LOCATED AT THE INTERSECTION OF “G” STREET AND 8TH STREET; THENCE SOUTH 02°56'22" WEST, ALONG SAID “G” STREET, A DISTANCE OF 1999.69 FEET AS DEPICTED ON THAT CERTAIN RECORD OF SURVEY RECORDED UNDER AUDITOR’S FILE NUMBER 200101080077, RECORDS OF SKAGIT COUNTY, WASHINGTON, TO MONUMENT 26 OF SAID CONTROL POINTS MAP, LOCATED AT THE INTERSECTION OF “G” STREET AND 11TH STREET; THENCE SOUTH 52°09'16" WEST A DISTANCE OF 3276.59 FEET TO THE TRUE POINT OF BEGINNING , SAID POINT ALSO BEING SOUTH 07° 23' 06" WEST 1952.43 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 24°44'56" WEST 142.50 FEET TO A POINT;

THENCE NORTH 00°12'34" EAST 142.35 FEET TO A POINT;

THENCE NORTH 05°17'05" WEST 62.72 FEET TO A POINT;

THENCE NORTH 89°10'01" WEST 351.62 FEET TO A POINT;

THENCE NORTH 05°01'32" WEST 588.00 FEET TO A POINT;

THENCE NORTH 09°43'59" WEST 419.68 FEET TO A POINT;

THENCE NORTH 07°55'01" WEST 42.59 FEET TO A POINT;

THENCE NORTH 09°49'41" WEST 343.75 FEET TO A POINT;

THENCE NORTH 12°00'42" WEST 399.03 FEET TO A POINT;

THENCE NORTH 12°33'11" WEST 376.45 FEET TO A POINT;

THENCE NORTH 12°07'52" WEST 383.67 FEET TO A POINT;

THENCE NORTH 12°28'04" WEST 433.60 FEET TO A POINT;

THENCE NORTH 07°52'56" WEST 42.44 FEET TO A POINT;

THENCE NORTH 86°52'52" WEST 44.55 FEET TO A POINT;

THENCE NORTH 12°20'01" WEST 5.96 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY (BEING 25.00 FEET FROM WHEN MEASURED AT RIGHT ANGLES TO THE CENTERLINE) OF MARCH’S POINT ROAD, SAID POINT BEING A POINT OF CURVATURE;

 

C - 35


THENCE ALONG SAID EASTERLY RIGHT OF WAY, ALONG THE ARC OF A 522.92 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 22°59'00", (THE CHORD BEING NORTH 00°50'31" WEST 208.36 FEET) HAVING AN ARC LENGTH OF 209.76 FEET TO A POINT OF TANGENCY;

THENCE NORTH 10°38'59" EAST 829.57 FEET TO A POINT;

THENCE LEAVING SAID EASTERLY RIGHT OF WAY, NORTH 49°50'04" EAST 195.57 FEET TO A POINT;

THENCE SOUTH 89°52'37" EAST 32.81 TO A POINT;

THENCE SOUTH 42°26'45" EAST 14.46 TO A POINT;

THENCE SOUTH 07°58'01" EAST 8.04 TO A POINT;

THENCE SOUTH 86°53'09" EAST 24.22 TO A POINT;

THENCE NORTH 17°58'23" EAST 7.74 TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 55.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 30°17'53", (THE CHORD BEING NORTH 33°07'20" EAST 28.75 FEET) HAVING AN ARC LENGTH OF 29.08 FEET TO A POINT OF TANGENCY;

THENCE NORTH 48°19'07" EAST 199.32 TO A POINT;

THENCE NORTH 55°20'50" EAST 22.71 TO A POINT;

THENCE SOUTH 63°04'10" EAST 18.24 TO A POINT;

THENCE NORTH 20°08'39" EAST 38.30 TO A POINT;

THENCE NORTH 71°03'58" EAST 22.10 TO A POINT;

THENCE NORTH 38°29'18" EAST 148.86 TO A POINT;

THENCE ALONG THE ARC OF A 95.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 21°55'06" (THE CHORD BEING NORTH 27°31'45" EAST 36.12 FEET) HAVING AN ARC LENGTH OF 36.34 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 16°34'12" EAST 3.31 TO A POINT;

THENCE SOUTH 89°12'10" EAST 7.74 TO A POINT;

THENCE NORTH 47°33'57" EAST 8.19 TO A POINT;

THENCE NORTH 03°43'39" EAST 18.74 TO A POINT;

 

C - 36


THENCE NORTH 64°59'14" EAST 12.30 TO A POINT;

THENCE NORTH 33°27'26" EAST 221.44 TO A POINT;

THENCE ALONG THE ARC OF A 1170.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 06°52'19" (THE CHORD BEING NORTH 30°01'17" EAST 140.24 FEET) HAVING AN ARC LENGTH OF 140.33 FEET TO A POINT OF TANGENCY;

THENCE NORTH 26°35'07" EAST 77.07 TO A POINT;

THENCE NORTH 26°48'10" EAST 142.95 FEET TO A POINT;

THENCE NORTH 25°23'46" EAST 630.86 FEET TO A POINT;

THENCE SOUTH 64°36'02" EAST 8.55 FEET TO A POINT;

THENCE NORTH 25°23'58" EAST 115.57 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 613.11 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 54°39'15", (THE CHORD BEING NORTH 52°43'36" WEST 562.92 FEET) HAVING AN ARC LENGTH OF 584.85 FEET TO A POINT OF NON-TANGENCY;

THENCE NORTH 09°56'47" WEST 1.21 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 575.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 11°41'21", (THE CHORD BEING NORTH 87°03'44" EAST 117.10 FEET) HAVING AN ARC LENGTH OF 117.31 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 87°05'36" EAST 258.33 FEET TO A POINT;

THENCE SOUTH 05°00'08" WEST 29.39 FEET TO A POINT;

THENCE NORTH 87°11'49" WEST 266.22 FEET TO A POINT OF CURVATURE; THENCE ALONG THE ARC OF A 360.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 11°37'04", (THE CHORD BEING SOUTH 86°59'38" WEST 72.87 FEET) HAVING AN ARC LENGTH OF 73.00 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 81°11'06" WEST 38.85 FEET TO A POINT;

THENCE SOUTH 84°18'00" WEST 10.12 FEET TO A POINT;

THENCE SOUTH 69°47'07" WEST 10.13 FEET TO A POINT;

THENCE SOUTH 77°11'58" WEST 10.77 FEET TO A POINT OF CURVATURE;

 

C - 37


THENCE ALONG THE ARC OF A 500.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 16°27'19", (THE CHORD BEING SOUTH 68°58'18" WEST 143.11 FEET) HAVING AN ARC LENGTH OF 143.60 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 60°44'39" WEST 70.59 FEET TO A POINT;

THENCE SOUTH 56°29'41" WEST 42.75 FEET TO A POINT;

THENCE SOUTH 49°55'22" WEST 49.34 FEET TO A POINT;

THENCE SOUTH 43°09'57" WEST 58.51 FEET TO A POINT;

THENCE SOUTH 27°12'38" WEST 30.70 FEET TO A POINT;

THENCE SOUTH 06°14'42" WEST 9.16 FEET TO A POINT;

THENCE NORTH 81°15'45" WEST 7.88 FEET TO A POINT;

THENCE SOUTH 30°35'40" WEST 86.24 FEET TO A POINT;

THENCE SOUTH 26°36'03" WEST 86.65 FEET TO A POINT;

THENCE SOUTH 46°11'14" EAST 20.60 FEET TO A POINT;

THENCE SOUTH 13°54'58" WEST 25.06 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 90.61 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 42°54'14", (THE CHORD BEING SOUTH 43°22'47"WEST 66.27 FEET) HAVING AN ARC LENGTH OF 67.85 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 21°59'47" WEST 6.78 FEET TO A POINT;

THENCE NORTH 73°29'41" WEST 6.50 FEET TO A POINT;

THENCE SOUTH 25°27'42" WEST 910.40 FEET TO A POINT;

THENCE SOUTH 30°59'34" WEST 236.70 TO A POINT;

THENCE SOUTH 28°39'47" WEST 73.64 TO A POINT;

THENCE SOUTH 32°03'51" WEST 91.66 TO A POINT;

THENCE SOUTH 41°36'44" WEST 146.12 TO A POINT;

THENCE SOUTH 16°08'52" WEST 58.97 FEET TO A POINT;

THENCE SOUTH 65°05'46" WEST 49.52 FEET TO A POINT;

 

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THENCE SOUTH 45°47'17" WEST 30.10 FEET TO A POINT;

THENCE SOUTH 27°02'07" WEST 89.90 FEET TO A POINT;

THENCE SOUTH 14°30'48" WEST 165.26 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.89 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 22.87 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.79 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 188.41 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.36 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.94 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 215.61 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 9.51 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 23.35 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 4.66 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 175.70 FEET TO A POINT;

THENCE NORTH 86°57'37" WEST 4.45 FEET TO A POINT;

THENCE SOUTH 03°02'23" WEST 32.76 FEET TO A POINT;

THENCE SOUTH 86°57'37" EAST 9.56 FEET TO A POINT;

THENCE SOUTH 02°49'52" WEST 268.66 FEET TO A POINT;

THENCE SOUTH 86°10'11" EAST 64.79 FEET TO A POINT;

THENCE SOUTH 01°33'52" WEST 352.96 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 560.00 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 32°25'38", (THE CHORD BEING SOUTH 06°15'25" EAST 312.73 FEET) HAVING AN ARC LENGTH OF 316.94 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 16°15'24" EAST 319.42 FEET TO A POINT;

 

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THENCE SOUTH 14°57'10" EAST 140.54 FEET TO A POINT;

THENCE SOUTH 10°52'54" EAST 96.00 FEET TO A POINT;

THENCE SOUTH 13°42'27" EAST 159.08 FEET TO A POINT;

THENCE SOUTH 15°00'31" EAST 145.44 FEET TO A POINT;

THENCE SOUTH 20°07'43" EAST 132.54 FEET TO A POINT;

THENCE SOUTH 14°40'44" EAST 297.68 FEET TO A POINT;

THENCE SOUTH 13°21'25" EAST 147.08 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 2094.73 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 08°06'59", (THE CHORD BEING SOUTH 12°31'50" EAST 296.49 FEET) HAVING AN ARC LENGTH OF 296.74 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 07°46'54" EAST 68.77 FEET TO A POINT OF NON-TANGENT CURVATURE;

THENCE ALONG THE ARC OF A 37.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 49°12'54", (THE CHORD BEING SOUTH 03°55'29" WEST 30.81 FEET) HAVING AN ARC LENGTH OF 31.78 FEET TO A POINT OF NON-TANGENCY;

THENCE SOUTH 00°13'05" EAST 49.90 FEET TO A POINT;

THENCE SOUTH 08°40'52" EAST 250.61 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1340.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 09°26'37", (THE CHORD BEING SOUTH 03°57'34" EAST 220.61 FEET) HAVING AN ARC LENGTH OF 220.86 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 00°45'44" WEST 160.11 FEET TO A POINT;

THENCE SOUTH 01°28'08" EAST 176.30 FEET TO THE TRUE POINT OF BEGINNING.

THIS AREA CONTAINS 37.539 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

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Exhibit 10.7

GROUND LEASE

BETWEEN

TESORO REFINING & MARKETING COMPANY LLC,

AS LANDLORD,

AND

TESORO LOGISTICS OPERATIONS LLC,

AS TENANT

Anacortes Marine Crude Storage Facility


GROUND LEASE

This Ground Lease (the “ Lease ”) is entered into as of July 1, 2014 (the “ Commencement Date ”), between TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company (“ Landlord ”), and TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ Tenant ”).

A. Landlord is the owner of a petrochemical refinery situated in Skagit County, Washington, situated upon that certain real property more particularly described on Exhibit A attached hereto and incorporated herein by reference (the “ Refinery ”).

B. Tenant desires to lease from Landlord and Landlord desires to lease to Tenant the portion of the Refinery described on Exhibit B attached hereto and incorporated herein by reference (with the exception of the improvements situated thereon, which the parties acknowledge hereby are owned by Tenant) (the “ Premises ”).

C. The Premises are the location of an existing storage facility for crude and other black oils (the “ Marine Crude Storage Facility ”). In order for Tenant to have access to the Premises to operate the Marine Crude Storage Facility, and for pedestrian and vehicular ingress and egress thereto and for certain utilities, Tenant must enter upon a portion of the Refinery. In order to allow for such access, Landlord is granting to Tenant an easement in connection with this Lease.

ARTICLE 1. DEMISE OF PREMISES AND GRANT OF ACCESS EASEMENT

1.01 Demise of Premises. In consideration of the mutual covenants and agreements of this Lease, and other good and valuable consideration, Landlord demises and leases to Tenant, and Tenant leases from Landlord, the Premises.

1.02 Access Easement. Tenant is hereby granted the right of ingress and egress to and from the Premises over and across the Refinery, as reasonably needed by Tenant in order to operate the Marine Crude Storage Facility (the “ Access Easement ”). Landlord shall have the right to designate a reasonable course through which Tenant and its employees, agents, contractors and invitees must follow across the Refinery in order to access the Premises, and to otherwise establish reasonable restrictions upon Tenant’s use of the Refinery for access to the Premises pursuant to Article 7 hereof.

ARTICLE 2. LEASE TERM

2.01 Fixed Beginning and Termination Date. The term of this Lease is ninety-nine (99) years, beginning on the Commencement Date, and ending on July 1, 2113, unless terminated sooner as provided in this Lease.


2.02 Termination.

(a) This Lease will terminate without further notice when the term specified in Section 2.01 expires, and any holding over by Tenant after that term expires will not constitute a renewal of the Lease or give Tenant any rights under the Lease in or to the Premises.

(b) In the event this Lease terminates for any reason, the Access Easement shall also terminate automatically.

2.03 Holdover. If Tenant holds over and continues in possession of the Premises after the Lease term, Tenant will be considered to be occupying the Premises at will, subject to all the terms of this Lease.

ARTICLE 3. RENT

The parties acknowledge that rent for the entire Lease term has been paid in full in advance, in accordance with the terms of that certain Contribution, Conveyance and Assumption Agreement dated as of the date hereof by and among Tesoro Corporation, Landlord, Tesoro Logistics GP, LLC, Tesoro Logistics LP, Tenant, Tesoro Alaska Company LLC, and Tesoro Logistics Pipelines LLC, as amended, restated, modified or supplemented from time to time (the “ Contribution Agreement ”).

ARTICLE 4. TAXES

4.01 Payment of Real Property Taxes by Tenant. After the Commencement Date, Landlord shall endeavor to effectuate the recognition of the Premises by the appropriate taxing entities as a separate parcel for purposes of the assessment of Taxes (as hereinafter defined), and Tenant shall cooperate with Landlord in all reasonable respects in this regard. If Landlord is unable to cause the Premises to be separately assessed, then Landlord shall work with Skagit County to cause the County, if possible, with respect to each tax parcel on which any portion of the Premises are located, to make an allocation between the area leased by Tenant and the area retained by Landlord. For any parcel of the Refinery that is currently designated as having an “Open Space Farm and Agricultural” use, Tenant will be responsible for the payment of all taxes, penalties and interest that becomes due and payable based on a change in use, and will pay such amount to Landlord (or directly to Skagit County, if so directed) within thirty (30) days of the delivery of Landlord’s invoice therefor accompanied by reasonably detailed supporting documentation. If Skagit County is able to make an allocation between “Open Space Farm and Agricultural” use and commercial uses with respect to any tax parcel that is currently designated for such open use, then Landlord will be responsible for the payment of taxes for that portion of the parcel that continues to be designated for open use, and Tenant shall be responsible for the payment of taxes for that portion of the parcel that is newly designated for commercial uses; such allocation may not be evident on tax statements received from Skagit County, but may be available through the Skagit County Assessor’s Office. With respect to any parcel on which improvements are located, but with respect to which there has not been a segregation made by Skagit County, the parties shall make good faith efforts to allocate the value of the improvements between those owned by Landlord and those owned by Tenant, so as to appropriately allocate the liability for taxes payable based on the value of

 

– 2 –


the improvements. Unless and until the Premises are separately assessed for taxing purposes, Tenant will pay to Landlord that portion of the real property taxes, general and special assessments, and other governmental charges of any kind (the “ Real Property Taxes ”) levied on or assessed against the Refinery which are allocable to the Premises, as more particularly described herein, within thirty (30) days following the delivery of Landlord’s invoice therefor accompanied by reasonably detailed supporting documentation. Landlord reserves all rights to contest, protest or challenge the Taxes by appropriate proceedings, and Tenant shall cooperate with Landlord in connection therewith in all reasonable respects.

4.02 Payment of Personal Property Taxes. Tenant shall pay, before they become delinquent, all personal property taxes, assessments and other governmental charges assessed against any equipment or other personal property of Tenant situated on the Premises. Effective as of the Commencement Date, such personal property and equipment is being transferred by Landlord to Tenant by Bill of Sale, the form of which is attached to the Contribution Agreement.

4.03 Proration of Taxes During First and Last Years. Real Property Taxes payable by Tenant under Section 4.01 above shall be pro-rated between Landlord and Tenant based on the number of days this Lease is in effect during the applicable year compared to 365 days. Personal Property taxes payable by Tenant under Section 4.02 above for the year in which the conveyance of such personal property occurs shall be pro-rated between Landlord and Tenant based on the tax bill for the applicable calendar year.

ARTICLE 5. UTILITIES

The parties acknowledge that as of the Commencement Date, the utilities serving all or a portion of the Premises and some of the improvements located thereon, being electricity, water, and septic system (the “ Utilities ”) are interconnected to Landlord’s utility infrastructure at the Refinery. The provisions of this Article 5 shall be subject to the terms of that certain Secondment Agreement dated as of the Commencement Date, by and between Landlord and Tesoro Logistics GP, LLC, as amended, restated, modified or supplemented from time to time (the “ Secondment Agreement ”), and for so long as the Secondment Agreement is in effect between the parties, the provisions of that agreement shall control in the event that its terms and the terms of this Article 5 are inconsistent with one another. In the event that the Secondment Agreement is no longer in effect, the terms of this Article 5 shall control.

The parties agree that the Premises shall be separately metered for electricity as soon as reasonably practicable following the Commencement Date hereof. All costs required to effectuate such separate metering shall be borne equally by Landlord and Tenant. The parties shall cooperate with each other in all reasonable respects in connection therewith. Thereafter Tenant shall pay all charges for electricity serving the Premises directly to the Utility provider. Until such time as electricity is separately metered to the Premises, electricity to the Premises shall continue to be interconnected to Landlord’s utility infrastructure, and shall be provided to Tenant and paid for in the same manner and subject to the same conditions as all other Utilities are provided to Tenant. With regard to electricity until it is separately metered and with regard to all other Utilities, Tenant shall pay Landlord for Tenant’s usage thereof (without any surcharge being added by Landlord for

 

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overhead) in amounts as reasonably determined by Landlord, subject to Tenant’s reasonable approval. Such payment shall be due within thirty (30) days following delivery of Landlord’s invoice therefor accompanied by reasonably detailed support. Landlord shall not invoice Tenant for Utility usage more frequently than monthly. The following restrictions shall apply with respect to Tenant’s usage of Landlord’s oily water sewer system: (i) only wastewaters containing oily water and petroleum products may be discharged therein, (ii) only wastewaters generated from Tenant’s operations on the Premises may be discharged therein, (iii) Tenant shall comply with all applicable laws, rules and regulations regarding the use thereof and the discharge of substances therein, and (iv) the daily volume of oily water discharged therein may not materially exceed the volume of the typical daily discharge therein resulting from Landlord’s operation of the Refinery prior to the Commencement Date. Landlord shall have no obligation to provide telephone service to the Premises or any other utility service of any kind except as set forth in this paragraph or in the Storage Services Agreement. Landlord shall in no event be liable or responsible for any cessation or interruption in, or damage caused by, any utility services provided to the Premises, whether by Landlord or otherwise, unless the cessation or interruption results from Landlord’s intentional misconduct or gross negligence.

ARTICLE 6. USE OF PREMISES

6.01 Permitted Use . The Premises is currently improved with four (4) crude and black-oils storage tanks with a total shell capacity of 1,500,000 barrels, including 945,000 barrels of heated storage, and pipelines and other appurtenances that allow the transport of the crude oil to and from the nearby dock and to and from other facilities located at the Refinery (collectively, the “ Storage Area Improvements ”). Tenant may use the Premises and the Storage Area Improvements only for the storage and transport of crude and other black oils and such other uses as are directly related to the operation and maintenance of the Marine Crude Storage Facility (collectively, the “ Permitted Use ”).

ARTICLE 7. COMPLIANCE WITH LAWS

7.01 Compliance with Laws. Tenant and its employees, agents and invitees shall comply with all applicable federal, state, and local laws, rules, regulations and orders in use of the Premises. Tenant shall secure and maintain current all required permits, licenses, certificates, and approvals relating to its use of the Premises. Landlord shall comply with all applicable federal, state, and local laws, rules, regulations and orders pertaining to the operation of the Refinery and the Premises to the extent reasonably necessary to enable Tenant to exercise its rights provided hereunder.

7.02 Emergencies. In the event of any emergency occurring on or about the Premises, Landlord and Tenant shall diligently cooperate in good faith to appropriately manage the emergency situation in a timely and effective manner. Such cooperation shall include, but not be limited to, providing of necessary access to all portions of the Premises and the improvements thereon.

 

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ARTICLE 8. CONSTRUCTION BY TENANT

8.01 General Conditions. Tenant may, at any time and from time to time during the Lease term, erect, maintain, alter, remodel, reconstruct, rebuild, replace, and remove buildings and other improvements on the Premises, subject to the following:

(a) Tenant bears the cost of any such work.

(b) The Premises must at all times be kept free of mechanics’ and materialmens’ liens.

(c) Landlord must be notified of the time for beginning and the general nature of any such work, other than routine maintenance of existing buildings or improvements, at the time the work begins.

(d) The conditions of Section 8.02 concerning Landlord’s approval of plans must be followed.

(e) Such work is reasonably necessary for Tenant’s permitted operations on the Premises.

8.02 Landlord’s Approval of Plans. The following rules govern Landlord’s approving construction, additions, and alterations of buildings or other improvements on the Premises:

(a) Written Approval Required . No building or other improvement may be constructed on the Premises unless the plans, specifications, and proposed location of the building or other improvement have received Landlord’s written approval, which shall not be unreasonably withheld, conditioned or delayed, and the building or other improvement complies with the approved plans, specifications, and proposed location. No material addition to or alteration of any building or structure erected on the Premises may be begun until plans and specifications covering the proposed addition or alteration have been first submitted to and approved by Landlord, which shall not be unreasonably withheld, conditioned or delayed.

(b) Submission of Plans . With respect to any construction, additions or alterations for which Landlord’s approval is required under Section 8.02(a) above, Tenant must submit two (2) copies of detailed working drawings, plans, and specifications for any such projects for Landlord’s approval before the project begins.

(c) Landlord’s Approval . Landlord will promptly review and approve all plans submitted under Section 8.02(b) above or note in writing any required changes or corrections that must be made to the plans. Any required changes or corrections must be made, and the plans resubmitted to Landlord, within twenty (20) days after the corrections or changes have been noted. Landlord’s failure to object to the resubmitted plans and specifications within twenty (20) days constitutes its approval of the changes. Minor changes in work or materials not affecting the general character of the building project may be made at any time without Landlord’s approval, but a copy of the altered plans and specifications must be furnished to Landlord.

 

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(d) Exception to Landlord’s Approval . The following items do not require submission to, and approval by, Landlord:

(i) Minor repairs and alterations necessary to maintain existing structures and improvements in a useful state of repair and operation.

(ii) Changes and alterations required by an authorized public official with authority or jurisdiction over the buildings or improvements, to comply with legal requirements.

(e) Effect of Approval . Landlord, by approving the plans and specifications, assumes no liability or responsibility for the architectural or engineering design or for any defect in any building or improvement constructed from the plans or specifications.

8.03 Ownership of Buildings, Improvements and Fixtures . Any buildings, improvements, additions, alterations, and fixtures existing, constructed, placed or maintained on any part of the Premises during the Lease term are considered part of the real property of the Premises but shall be and remain the property of Tenant during the Lease term, including all Storage Area Improvements and equipment related to the Marine Crude Storage Facility situated on the Premises as of the Commencement Date or hereafter placed on the Premises by Tenant. In addition to Landlord’s right of entry set forth in Section 17.01 hereof, Landlord shall have the right upon not less than twenty-four hours’ notice to Tenant (except in the case of emergencies, in which no prior notice is required) to enter upon the Premises for the purposes of inspecting, maintaining, repairing, modifying and/or replacing all or any portion of the Storage Area Improvements located thereon, to the extent that Tenant has failed to do so and such failure to complete the maintenance, repair, modification or replacement is in violation of Tenant’s obligations hereunder. To the extent that any such maintenance, repair, modification or replacement is undertaken by Landlord, Tenant shall reimburse Landlord for all costs incurred, within thirty (30) day following receipt of an invoice from Landlord detailing such amounts.

8.04 Right to Remove Tenant’s Property. Tenant may, at any time while it occupies the Premises, remove any furniture, machinery, equipment, fixtures or other improvements owned or placed by Tenant in, under, or on the Premises, so long as such removal does not result in the violation of any terms of this Lease. If this Lease has not been terminated prior to its stated expiration date, then at least six (6) months before the stated expiration date, Landlord shall give written notice to Tenant informing it of any improvements or other property located on the Premises that Landlord will require Tenant to remove, and if so, specifying which improvements or property are to be removed (the “ Removal Notice ”). Tenant shall, at its sole cost and expense, cause those improvements and property specified by the Removal Notice to be removed from the Premises, and cause any damage to the Premises resulting therefrom to be repaired and the Premises restored to a safe condition, prior to the expiration of the Lease term. Upon termination of this Lease, all such property and improvements remaining on the Premises shall become the property of Landlord, and Landlord may keep, change or dispose of such property and improvements in Landlord’s sole and absolute discretion, without any liability to Tenant therefor. If Tenant has failed to remove any improvements or property as required by the Removal Notice or has failed to repair and restore the Premises as required by terms of this Section 8.04, then Tenant shall pay to Landlord the actual costs incurred by Landlord to do so.

 

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ARTICLE 9. ENCUMBRANCE OF LEASEHOLD ESTATE

9.01 Tenant’s Right to Encumber. Tenant may, at any time and from time to time, encumber the leasehold interest, by deed of trust, mortgage, or other security instrument, without obtaining Landlord’s consent, but no such encumbrance constitutes a lien on Landlord’s fee title. The indebtedness secured by the encumbrance will at all times be and remain inferior and subordinate to all the conditions, covenants, and obligations of this Lease and to all Landlord’s rights under this Lease. References in this Lease to “‘Lender’” refer to any person or entity to whom Tenant has encumbered its leasehold interest.

9.02 Notices to Lender. At any time after execution and recordation in Skagit County, Washington, of any mortgage or deed of trust encumbering Tenant’s leasehold interest, Lender shall notify Landlord in writing that the mortgage or deed of trust has been given and executed by Tenant and furnish Landlord with the address to which copies of all notices to Tenant by Landlord are to be mailed. Landlord must mail to Lender, at the addresses given, copies of all written notices that Landlord gives or serves on Tenant under the terms of this Lease after receiving such notice from Lender.

9.03 Lender’s Consent Required for Modification. Landlord and Tenant will neither modify in any material respect nor terminate this Lease by mutual consent without Lender’s written consent.

9.04 Lender’s Right to Prevent Forfeiture. Lender may do any act required of Tenant to prevent forfeiture of Tenant’s leasehold interest; all such acts are as effective to prevent a forfeiture of Tenant’s rights under this Lease as if done by Tenant.

9.05 Lender’s Right to Foreclose. Lender may realize on the security afforded by the leasehold estate by exercising foreclosure proceedings or power of sale or other remedy afforded in law or equity or by the security documents and may transfer, convey, or assign Tenant’s title to the leasehold estate created by this Lease to any purchaser at any such foreclosure sale. Lender also may acquire and succeed to Tenant’s interest under this Lease by virtue of any such foreclosure sale. Lender will not be or become liable to Landlord as an assignee of this Lease or otherwise unless it assumes such liability in writing, and no assumption may be inferred from or result from foreclosure or other appropriate proceedings in the nature of foreclosure or as the result of any other action or remedy provided for by the mortgage or deed of trust or other instrument or from a conveyance from Tenant under which the buyer at foreclosure or grantee acquires Tenant’s rights and interest under this Lease. Any purchaser of the property at a foreclosure sale becomes obligated to Landlord as the Tenant under the Lease, and such party must be satisfactory to Landlord, in Landlord’s sole and absolute discretion, such that it will be in a position to provide the services required of Tenant hereunder, and that each and every covenant, condition or obligation imposed upon Tenant by this Lease and each and every right, remedy or benefit afforded Landlord by this Lease, shall not be impaired or diminished as of result of such assignment of the leasehold interest.

 

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ARTICLE 10. REPAIRS, MAINTENANCE, AND RESTORATION

10.01 Tenant’s Duty to Maintain and Repair. At all times during the Lease term, Tenant will keep and maintain, or cause to be kept and maintained, all buildings and improvements erected on the Premises in a good state of appearance and repair (except for reasonable wear and tear) at Tenant’s own expense, in compliance with the terms of that certain Anacortes Storage Services Agreement dated as of the date hereof (as the same may be amended, modified and/or extended from time to time) by and between Landlord and Tenant (the “ Storage Services Agreement ”) and the provisions of Section 7.01 above.

ARTICLE 11. MECHANICS’ LIENS

Tenant will not cause or permit any mechanics’ liens or other liens to be filed against the fee of the Premises or against Tenant’s leasehold interest (excluding any leasehold mortgage) in the land or any buildings or improvements on the Premises by reason of any work, labor, services, or materials supplied or claimed to have been supplied to Tenant or anyone holding the Premises or any part of them through or under Tenant. If such a mechanics’ lien or materialmens’ lien is recorded against the Premises or any buildings or improvements on them, Tenant must either cause it to be released or, if Tenant in good faith wishes to contest the lien, take timely action to do so, at Tenant’s sole expense. If Tenant contests the lien, Tenant will indemnify Landlord and hold it harmless from all liability for damages occasioned by the lien or the lien contest and will, in the event of a judgment of foreclosure on the lien, cause the lien to be discharged and released before enforcement of the judgment is completed.

ARTICLE 12. CONDEMNATION

12.01 Parties’ Interests. If the Premises or any part of them are taken for public or quasi-public purposes by condemnation as a result of any action or proceeding in eminent domain, or are transferred in lieu of condemnation to any authority entitled to exercise the power of eminent domain, this article governs Landlord’s and Tenant’s interests in the award or consideration for the transfer and the effect of the taking or transfer on this Lease.

12.02 Total Taking—Termination. If the entire Premises are taken or so transferred as described in Section 12.01, this Lease and all of the rights, titles, and interests under it will cease on the date that title to the Premises or part of them vests in the condemning authority.

12.03 Partial Taking—Termination. If only part of the Premises is taken or transferred as described in Section 12.01, Tenant may terminate this Lease by providing notice of termination to Landlord within a reasonable time after title to the portion of the Premises taken or transferred vests in the condemning authority.

 

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12.04 Allocation of Condemnation Award.

(a) Lease Not Terminated . In the event of a condemnation of any portion of the Premises and if this Lease is not terminated, the award paid by the condemning authority (after payment of expenses incurred in connection with collecting the same) shall be allocated as follows:

(i) First, Tenant shall receive so much of the award as is necessary to restore the Improvements and for the value of the Improvements taken; and

(ii) Second, Landlord shall receive the balance of the award.

(b) Lease Terminated . In the event of a condemnation and this Lease is terminated as herein provided, the parties shall use reasonable efforts to cause the condemning authority to make separate awards to Landlord, on the one hand, and Tenant, on the other hand, as to their respective interests. If the condemning authority does not make such separate awards, then the award paid by the condemning authority (after payment of expenses incurred in connection with collecting the same) shall be divided between Landlord and Tenant so that each party shall receive that portion of the award which bears the same proportion of the total award as the value of such party’s interests in the Premises bears to the total value of all interests in the Premises. The value of Landlord’s interests shall include the value of the land; the value of Landlord’s interest in this Lease had the Premises not been condemned, including the right to receive payment of all sums required to be paid by Tenant to Landlord hereunder for the remainder of the Lease term; and the value of Landlord’s residual right to the improvements located on the Premises upon termination of this Lease. The value of Tenant’s interest shall include the value of the improvements located on the Premises reduced by the value of Landlord’s reversionary interest therein; and the value of Tenant’s leasehold estate hereunder had the Premises not been condemned, including the right to use and occupy the Premises for the remainder of the Lease term subject to the obligation of Tenant to pay the amounts due hereunder. Tenant shall be entitled to claim in any condemnation proceedings such award as may be allowed for relocation costs or other consequential damages, but only to the extent that the same shall not reduce, and shall be in addition to, the award for the Premises and the improvements located on the Premises.

ARTICLE 13. INSURANCE AND INDEMNIFICATION

13.01 Insurance on Buildings and Improvements. At all times during the Lease term, Tenant will keep all buildings and other improvements located or being constructed on the Premises insured against loss or damage by fire, with extended-coverage endorsement or its equivalent. This insurance is to be carried by insurance companies selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed. The insurance must be paid for by Tenant and will be in amounts not less than eighty percent (80%) of the full insurable value of the buildings and other improvements. Tenant may self-insure a greater percentage of this coverage if so agreed by Landlord and Tenant in writing.

 

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13.02 Other Agreements . The insurance and indemnification obligations of Landlord and Tenant are set forth in the Storage Services Agreement and that certain Third Amended and Restated Omnibus Agreement (the “ Omnibus Agreement ”) among Tesoro Corporation, Landlord, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLC. In the event of a conflict of provisions of the Storage Services Agreement and those of the Omnibus Agreement, the Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the Storage Services Agreement.

ARTICLE 14. ASSIGNMENT AND SUBLEASE

Tenant may not transfer, assign or sublease its leasehold estate or any portion thereof or any of its right, title or interest in this Lease (collectively, a “ Transfer ”) without the prior written consent of Landlord, which Landlord may withhold in its sole and absolute discretion. Any merger, consolidation or transfer of the direct or indirect beneficial ownership interest in Tenant that results in a direct or indirect change in the right to control the management of Tenant shall constitute a Transfer as defined above.

ARTICLE 15. DEFAULT AND REMEDIES

15.01 Termination on Default. Except as otherwise specifically noted in this Lease to the contrary, if Tenant defaults in performing any covenant or term of this Lease and does not correct the default within thirty (30) days after receipt of written notice from Landlord to Tenant, Landlord may declare this Lease, and all rights and interests created by it, terminated; provided , however , that in the event such default cannot, in the exercise of reasonable diligence, be cured within such thirty (30) day period, Landlord may not exercise its remedies under this Article unless Tenant (i) fails to commence the cure of the default within such thirty (30) day period, or (ii) thereafter fails to proceed with curative measures with reasonable diligence. If Landlord elects to terminate, this Lease will cease as if the day of Landlord’s election were the day originally fixed in the Lease for its expiration, and Landlord or its agent or attorney may resume possession of the Premises.

15.02 Other Remedies. Any termination of this Lease as provided in this Article 15 will not relieve Tenant from paying any sum or sums due and payable to Landlord under the Lease at the time of termination, or any claim for damages then or previously accruing against Tenant under this Lease. Any such termination will not prevent Landlord from enforcing the payment of any such sum or sums or claim for damages by any remedy provided for by law, or from recovering damages from Tenant for any default under the Lease. All Landlord’s rights, options, and remedies under this Lease will be construed to be cumulative, and no one of them is exclusive of the other. Landlord may pursue any or all such remedies or any other remedy or relief provided by law, whether or not stated in this Lease. No waiver by Landlord of a breach of any of the covenants or conditions of this Lease may be construed a waiver of any succeeding or preceding breach of the same or any other covenant or condition of this Lease.

 

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ARTICLE 16. DISCLAIMER; COVENANTS

16.01 Disclaimer of Warranties. TENANT IS LEASING THE PREMISES “AS-IS,” WITH ANY AND ALL LATENT AND PATENT DEFECTS. TENANT ACKNOWLEDGES THAT TENANT IS NOT RELYING UPON ANY REPRESENTATION, STATEMENT OR OTHER ASSERTION OF LANDLORD OR LANDLORD’S AGENTS, OFFICERS, EMPLOYEES OR REPRESENTATIVES WITH RESPECT TO THE CONDITION OF THE PREMISES, BUT IS RELYING UPON TENANT’S EXAMINATION OF THE PREMISES. TENANT ACCEPTS THIS LEASE UNDER THE EXPRESS UNDERSTANDING THAT THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF LANDLORD WITH REGARD TO THE PREMISES, INCLUDING, WITHOUT LIMITATION, SUITABILITY FOR TENANT’S INTENDED USE THEREOF (EXCEPT FOR THE WARRANTY SET FORTH IN SECTION 16.02 AND SUCH WARRANTIES AS MAY BE SET FORTH IN THE CONTRIBUTION AGREEMENT).

16.02 Warranty of Quiet Enjoyment. Landlord covenants that as long as Tenant observes the covenants and terms of this Lease, Tenant will lawfully and quietly hold, occupy, and enjoy the Premises during the Lease term without being disturbed by Landlord or any person claiming under Landlord, except for any portion of the Premises that is taken under the power of eminent domain.

ARTICLE 17. GENERAL PROTECTIVE PROVISIONS

17.01 Right of Entry and Inspection. Tenant acknowledges that a substantial portion of the Premises are located outdoors and within the boundaries of the Refinery. Accordingly, Tenant will permit Landlord or its agents, representatives, or employees to enter the Premises consisting of outdoor areas at all times, without notice, in connection with Landlord’s operations at the Refinery, and to at all times have access to and the right to use any and all roads that are located on the Premises. Accordingly, Tenant shall keep any existing roads that cross the Premises unobstructed. With respect to any portion of the Premises consisting of buildings, Tenant will permit Landlord or its agents, representatives, or employees to enter such buildings at reasonable times and upon reasonable prior notice (except in the event of an emergency, when no prior notice will be required) for the purposes of inspection, determining whether Tenant is complying with this Lease, and maintaining, repairing, or altering the Premises in accordance with the terms hereof.

17.02 No Partnership or Joint Venture. The relationship between Landlord and Tenant is at all times solely that of landlord and tenant and may not be deemed a partnership or a joint venture.

17.03 No Termination on Bankruptcy. Bankruptcy, insolvency, assignment for the benefit of creditors, or the appointment of a receiver will not affect this Lease as long as Tenant and Landlord or their respective successors or legal representatives continue to perform all covenants of this Lease.

 

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17.04 No Waiver. No waiver by either party of any default or breach of any covenant or term of this Lease may be treated as a waiver of any subsequent default or breach of the same or any other covenant or term of this Lease.

17.05 Release of Landlord. If Landlord sells or transfers all or part of the Premises and as a part of the transaction assigns its interest as Landlord in this Lease, then as of the effective date of the sale, assignment, or transfer, Landlord will have no further liability under this Lease to Tenant, except with respect to liability matters that have accrued and are unsatisfied as of that date. Underlying this release is the parties’ intent that Landlord’s covenants and obligations under this Lease will bind Landlord and its successors and assigns only during and in respect of their respective successive periods of ownership of the fee.

ARTICLE 18. TENANT’S OPTION TO PURCHASE PREMISES

18.01 Grant of Option to Purchase. Landlord hereby grants to Tenant an option to purchase the Premises upon all of the terms, covenants and conditions set forth in this Article 18 (the “ Option to Purchase ”).

18.02 Exercise of Option to Purchase. Tenant may exercise the Option to Purchase at any time during the term of this Lease, so long as (a) Tenant is not in default of any of the terms of this Lease, the Storage Services Agreement or the Omnibus Agreement (with regard to the Premises), and (b) as a condition to such exercise, Tenant agrees that for so long as Landlord is operating the Refinery and requires the operation of the Marine Crude Storage Facility in connection therewith, Tenant and its successors and assigns will continue to operate the Marine Crude Storage Facility on the Premises in compliance with applicable agreements between Landlord and Tenant that exist at the time. Tenant may exercise the Option to Purchase by providing written notice to Landlord in the manner provided in Section 20.03 below stating that Tenant is exercising the Option to Purchase, and (2) depositing the purchase price in the amount of One Dollar ($1.00) with First American Title Insurance Company (the “ Closing Agent ”) or such other title insurance company as is satisfactory to the parties. The date on which Tenant exercises the Option to Purchase is the “Exercise Date.”

18.03 Closing Costs; Conveyance. The closing of the sale of the Premises shall occur within six (6) months from the Exercise Date; otherwise Tenant’s exercise of its Option to Purchase shall be void. All costs associated with the closing of the Option to Purchase shall be the responsibility of Tenant. More particularly, Tenant shall bear all costs of performing a lot line adjustment or other subdivision of the Premises, such that the Premises are a separate legal lot from the remainder of the Refinery, prior to the conveyance of title to Tenant. Landlord shall, at no expense for outside fees to Landlord, cooperate with Tenant in connection with such subdivision, and promptly following the date on which such subdivision is obtained, Tenant shall provide evidence to Landlord of the status of the Premises as a separate legal lot. Tenant shall pay all title, escrow and transfer fees applicable to the conveyance of the Premises from Landlord to Tenant. Title to the Premises shall be conveyed by Special Warranty Deed, warranting only that Landlord is the fee simple owner of the Premises and that it will defend title to the Premises only as to claims arising by, through or under Landlord and not otherwise.

 

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18.04 Execution of Closing Agreement. In connection with the conveyance of the Premises from Landlord to Tenant pursuant to the terms of this Article 18, Landlord and Tenant shall execute an agreement (the “ Right of First Refusal and Option Agreement ”) in substantially the form of Exhibit F attached hereto, whereby Tenant, as the fee owner of the Premises, shall grant to Landlord, as the owner and operator of the Refinery (a) a right of first refusal to purchase the Premises, which right shall be exercisable in the event that Tenant shall enter into an agreement to sell the Premises to a third party, and (b) an option to purchase the Premises, which option shall be exercisable in the event that Tenant fails to operate the Marine Crude Storage Facility in the same manner as if this Lease remained in existence. Additionally, in connection with such Option and Right of First Refusal Agreement, Landlord and Tenant shall execute a memorandum of agreement, in recordable form, and concurrently with the recording of the Special Warranty Deed from Landlord to Tenant, such memorandum shall be recorded in the real property records of Skagit County, giving notice to third parties of the option and right of first refusal in favor of Landlord.

ARTICLE 19. LANDLORD’S RIGHT OF RECAPTURE

If, during the term of this Lease, Tenant fails or has elected not to operate the Marine Crude Storage Facility for a period of time (but not counting any period of time when the Refinery is not in operation) equal to (a) two (2) years continuously, or (b) a total of two (2) years within any 5-year period, then following the end of such 2-year period of non-operation, and for so long as Tenant has not resumed operating the Marine Crude Storage Facility located on the Premises, Landlord shall have the right to provide Tenant with written notice stating that Landlord has elected to recapture the Premises and terminate this Lease (the “ Recapture Notice ”). In such event, the Lease shall be deemed to have terminated as of the date of the Recapture Notice, as if such date were the date fixed for expiration of this Lease. Landlord shall promptly arrange to have the fair market value of the improvements located on the Premises determined by appraisal, shall have the appraisal completed within sixty (60) days of the date on which the Recapture Notice is given, and shall thereafter provide a copy of such appraisal to Tenant (the “ Appraisal Delivery Date ”). Within thirty (30) days after the Appraisal Delivery Date (the “ Response Date ”), Tenant shall notify Landlord (x) that it is in agreement with the fair market value set forth in Landlord’s appraisal, or (b) that it objects to the fair market value set forth in Landlord’s appraisal, in which event it shall provide its own determination of fair market value of the improvements, also as determined by appraisal, when it provides its objection by the Response Date. If Tenant is in agreement with the fair market value determined by Landlord’s appraisal or if Tenant fails to provide an objection by the Response Date, then the amount determined by Landlord’s appraisal shall be paid by Landlord to Tenant, in immediately available funds, within ten (10) days following the Response Date. If Tenant objects to the fair market value of the improvements as determined by Landlord’s appraisal and provides notice of such objection to Landlord on or before the Response Date, then within ten (10) days after the Response Date, each of the appraisers initially retained by Landlord and Tenant to make the determination as to the fair market value of the improvements shall appoint a third appraiser to act as arbitrator (the “ Arbitrator ”). The Arbitrator shall, within fifteen (15) days after his or her appointment, select as the fair market value of the improvements either the fair market value set forth in Landlord’s appraisal or the fair market value set forth in Tenant’s appraisal and inform both Landlord and Tenant, in writing, of such selection. The Arbitrator shall have no

 

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authority to average the appraised values, or to designate an amount other than the fair market value specified in either Landlord’s appraisal or Tenant’s appraisal. Within ten (10) days following the date on which the parties receive written notice of the Arbitrator’s selection, the amount selected as the fair market value of the improvements shall be paid by Landlord to Tenant, in immediately available funds. Following the payment by Landlord to Tenant applicable to the fair market value of the improvements, neither Landlord nor Tenant shall have any further rights under or obligations arising from this Lease.

The appraisers retained to make a determination regarding the fair market value of the improvements located on the Premises shall each be an MAI certified commercial real estate appraiser conducting business in the Anacortes/Skagit County industrial market and having not less than ten (10) years active experience as an MAI commercial real estate appraiser.

ARTICLE 20. MISCELLANEOUS

20.01 Title Policy and Survey. Tenant shall have the right, at its sole expense, to obtain a survey of the Premises and title insurance coverage of its interest in the Premises, and the interest of any Lender. Landlord shall have no obligation to provide Tenant with any such survey or title insurance.

20.02 Memorandum of Lease. The parties agree not to place this Lease of record, but each party shall, at the request of the other, execute and acknowledge so that the same may be recorded a memorandum of lease containing such provisions as the requesting part shall reasonably request. The requesting party shall pay all costs, taxes, fees and other expenses in connection with or prerequisite to recording.

20.03 Delivery of Notices. All sums owed hereunder, notices, demands, or requests from one party to another may be personally delivered or delivered by reliable overnight courier, or sent by mail, certified or registered, postage prepaid, to the addresses stated below and are considered to have been given at the time of delivery or of mailing:

 

To Landlord :    Tesoro Refining & Marketing Company LLC
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: Vice President, Logistics
        With a copy to:    Tesoro Refining & Marketing Company LLC
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: General Counsel
To Tenant :    Tesoro Logistics Operations, LLC
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: Vice President, Logistics

 

– 14 –


A party may change its address for notice under this Section 20.03 by providing notice of such change in accordance with this Section 20.03.

20.04 Parties Bound. This agreement binds, and inures to the benefit of, the parties to the Lease and their respective heirs, executors, administrators, legal representatives, successors, and assigns.

20.05 Washington Law to Apply. This agreement is to be construed under the internal laws of the State of Washington.

20.06 Legal Construction. If any one or more of the provisions contained in this Lease are for any reason held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability will not affect any other provision of the Lease, which will be construed as if it had not included the invalid, illegal, or unenforceable provision.

20.07 Other Agreements.

(a) This Lease, together with the Storage Services Agreement, the Contribution Agreement, the Secondment Agreement, the Omnibus Agreement, and the other documents executed by Landlord and Tenant concurrently herewith, constitute the parties’ sole agreement with respect to the subject matter of this Lease and such agreements supersede any prior understandings or written or oral agreements between the parties with respect to the subject matter of this Lease.

(b) In the event of any conflict between the provisions of this Lease and the provisions of the Contribution Agreement, the provisions of the Contribution Agreement shall control.

20.08 Amendment. No amendment, modification, or alteration of this Lease is binding unless in writing, dated subsequent to the date of this Lease, and duly executed by the parties.

20.09 Rights and Remedies Cumulative. The rights and remedies provided by this Lease are cumulative, and either party’s using any right or remedy will not preclude or waive its right to use any other remedy. The rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise.

20.10 Attorneys’ Fees and Costs. If, as a result of either party’s breaching this Lease, the other party employs an attorney to enforce its rights under this Lease, then the breaching or defaulting party will pay the other party the reasonable attorneys’ fees and costs incurred to enforce this Lease.

20.11 Time of Essence. Time is of the essence of this Lease.

20.12 Further Documents. Landlord and Tenant will from time to time and at any reasonable time execute and deliver to the other party, when the other party reasonably requests, other instruments and assurances approving, ratifying, and confirming this Lease and the leasehold estate created by it and certifying that this Lease is in full force and that no default under this Lease on the other party’s part exists; or if the other party is in default, specifying in such instrument each such default.

 

– 15 –


20.13 Captions. The captions used in connection with the Articles and Sections of this Lease are for convenience only, and are not intended in any way to limit or amplify the meaning of the language contained in this Lease, or be used as interpreting the meanings and provisions of this Lease.

20.14 Construction. Both parties to this Lease were involved in its drafting and negotiation, and as a result, this Lease shall be construed based on its fair meaning and interpretation and shall not be strictly construed against either party.

[SIGNATURE BLOCKS ON THE FOLLOWING PAGE.]

 

– 16 –


IN WITNESS WHEREOF, THIS LEASE has been executed by the parties on the date and year first above written.

 

LANDLORD:     TENANT:
TESORO REFINING & MARKETING
COMPANY LLC
    TESORO LOGISTICS OPERATIONS LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

       G. Scott Spendlove            Phillip M. Anderson
 

     Senior Vice President and Chief

     Financial Officer

           President

Signature Page to Ground Lease


STATE OF TEXAS    )  
   )   ss.
COUNTY OF BEXAR    )  

I certify that I know or have satisfactory evidence that G. Scott Spendlove is the person who appeared before me, who signed this instrument as the Senior Vice President and Chief Financial Officer of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such company for the uses and purposes mentioned in the instrument, and on oath stated he was authorized to execute said instrument.

Dated:             , 2014

 

                                                                               

Print Name:                                                          

NOTARY PUBLIC in and for the State of

                     , residing at                                     

My appointment expires                                                  

 

STATE OF TEXAS    )  
   )   ss.
COUNTY OF BEXAR    )  

I certify that I know or have satisfactory evidence that Phillip M. Anderson is the person who appeared before me, who signed this instrument as the President of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated he was authorized to execute said instrument.

Dated:             , 2014

 

                                                                               

Print Name:                                                          

NOTARY PUBLIC in and for the State of

                     , residing at                                     

My appointment expires                                     


EXHIBIT A

Legal Description of Refinery

PARCEL “A-1”

GOVERNMENT LOT 1; THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER; THE EAST HALF OF THE NORTHWEST QUARTER; AND THE SOUTHWEST QUARTER OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD.

TOGETHER WITH THOSE PORTIONS OF THE FOLLOWING DESCRIBED FIRST CLASS TIDELANDS OF THE ANACORTES HARBOR LYING IN FRONT OF AND ABUTTING SAID GOVERNMENT LOT 1:

TRACT 1 OF PLATE 14, LYING IN SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M.

TRACTS 1 AND 2 OF PLATE 15, LYING IN SECTION 20, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

TRACT 1 OF PLATE 15, LYING IN SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

TRACT 1 OF PLATE 15, LYING IN SECTION 21, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

ALSO TOGETHER WITH SECOND CLASS TIDELANDS, IF ANY, IN FRONT OF AND ABUTTING SAID GOVERNMENT LOT 1.

PARCEL “A-2”

GOVERNMENT LOTS 2 AND 3 OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD; ALSO EXCEPT THAT PORTION OF GOVERNMENT LOT 3 CONVEYED TO DAVID J. BOST BY DEED RECORDED AS AUDITOR’S FILE NO. 8607110070.

TOGETHER WITH THE FOLLOWING DESCRIBED FIRST CLASS TIDELANDS OF THE ANACORTES HARBOR LYING IN FRONT OF AND ABUTTING SAID GOVERNMENT LOT 2:

TRACT 2 OF PLATE 15, LYING IN SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

 

A - 1


EXCEPT THAT PORTION LYING SOUTHERLY OF THOSE TIDELANDS CONVEYED TO THE SHELL OIL COMPANY BY AUDITOR’S FILE NO. 636027.

ALSO TOGETHER WITH SECOND CLASS TIDELANDS, IF ANY, IN FRONT OF AND ABUTTING SAID GOVERNMENT LOT 2; EXCEPT THAT PORTION LYING SOUTHERLY OF THOSE TIDELANDS CONVEYED TO THE SHELL OIL COMPANY BY AUDITOR’S FILE NO. 636027.

PARCEL “A-3”

GOVERNMENT LOTS 4 AND 5 AND THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD.

ALSO EXCEPT THOSE PORTIONS OF GOVERNMENT LOT 4 CONVEYED TO THE FOLLOWING DESCRIBED PARTIES:

 

A) DAVID J. BOST BY DEEDS RECORDED AS AUDITOR’S FILE NOS. 8607110070 AND 9304140064;

 

B) JOHN R. WATCHER, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 745889;

 

C) HAROLD M. YEOMAN, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 616035;

 

D) THOMAS A. MCCORMICK, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 563786;

ALSO EXCEPT THAT PORTION OF GOVERNMENT LOT 5 CONVEYED TO ROBERT W. EVANS AND JOANNE B. EVANS, HUSBAND AND WIFE, BY DEED RECORDED AS AUDITOR’S FILE NO. 8211090017;

ALSO EXCEPT THAT PORTION OF GOVERNMENT LOT 5 CONVEYED TO WILLIAM R. KIESSER, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 547521.

PARCEL “B-1”

THAT PORTION OF GOVERNMENT LOT 8 OF SECTION 32, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., LYING EASTERLY OF THAT CERTAIN TRACT OF LAND CONVEYED TO THE TEXAS COMPANY BY DEED RECORDED AS AUDITOR’S FILE NO. 556825.

 

A - 2


PARCEL “B-2”

THE NORTH HALF OF GOVERNMENT LOT 7 OF SECTION 32, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., LYING EASTERLY OF THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD; EXCEPT THAT PORTION THEREOF CONVEYED TO THE TEXAS COMPANY BY DEED RECORDED AS AUDITOR’S FILE NO. 556825; ALSO EXCEPT ANY PORTION THEREOF LYING SOUTH OF THE SOUTH LINE OF THE VACATED PLAT OF “BURDON’S FIRST ADDITION TO ANACORTES WASHINGTON,” AS PER PLAT RECORDED IN VOLUME 3 OF PLATS, PAGE 22.

TOGETHER WITH THOSE RIGHTS TO A 50-FOOT WIDE STRIP OF LAND IN GOVERNMENT LOTS 6 AND 7 OF SECTION 32 AND IN THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 33, ALL IN TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., AS CONVEYED TO SHELL OIL COMPANY BY THE GREAT NORTHERN RAILWAY COMPANY BY DEED RECORDED AS AUDITOR’S FILE NO. 568629.

PARCEL “C-1”

THOSE PORTIONS OF GOVERNMENT LOTS 2, 3, AND 4 OF SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., LYING EASTERLY OF THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD, EXCEPT THE TWO FOLLOWING DESCRIBED PORTIONS THEREOF:

 

1) THAT PORTION OF GOVERNMENT LOTS 3 AND 4 CONVEYED TO THE TEXAS COMPANY BY AUDITOR’S FILE NO. 556825;

 

2) THAT PORTION OF GOVERNMENT LOT 2 LYING WESTERLY AND NORTHERLY OF THE FOLLOWING DESCRIBED LINE:

BEGINNING AT A POINT SOUTH 17º 21' EAST 300 FEET FROM THE SOUTHWEST CORNER OF THE PLAT OF “MARCH’S POINT TRACTS,” ACCORDING TO THE RECORDED PLAT THEREOF IN THE OFFICE OF THE AUDITOR OF SKAGIT COUNTY, WASHINGTON, IN VOLUME 5 OF PLATS, PAGE 25, SAID POINT BEING IN GOVERNMENT LOT 1 OF SAID SECTION 29; THENCE SOUTH 11º 23' 45" WEST 365.67 FEET TO A POINT ON THE NORTHERLY LINE OF THAT CERTAIN TRACT CONVEYED TO R.C. CANNON AND VERA V. CANNON, HUSBAND AND WIFE, BY DEED DATED JULY 23, 1951, AND RECORDED AUGUST 1, 1951, UNDER AUDITOR’S FILE NO. 463956, RECORDS OF SAID COUNTY; THENCE NORTH 77º 23' WEST ALONG THE NORTH LINE OF SAID CANNON TRACT TO THE EASTERLY RIGHT-OF-WAY LINE OF THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD, THE TERMINUS OF THIS LINE DESCRIPTION.

 

A - 3


PARCEL “C-2”

THAT PORTION OF GOVERNMENT LOT 1 OF SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., LYING EASTERLY OF THE FOLLOWING DESCRIBED LINE:

BEGIN AT THE SOUTHEAST CORNER OF GOVERNMENT LOT 2 OF SAID SECTION 29; THENCE NORTH 1º 55' 40" EAST ALONG THE EAST LINE OF SAID SUBDIVISION, A DISTANCE OF 527.54 FEET; THENCE NORTH 17º 20' WEST TO A POINT ON THE MEANDER LINE ALONG THE NORTHWESTERLY LINE OF SAID SUBDIVISION, THE TERMINUS OF THIS LINE DESCRIPTION;

EXCEPT THAT PORTION THEREOF LYING WITHIN THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD.

ALSO TOGETHER WITH THAT PORTION OF SAID GOVERNMENT LOT 1 LYING WESTERLY OF THE ABOVE DESCRIBED LINE AND WITHIN THOSE PREMISES CONVEYED TO SHELL OIL COMPANY BY DEED RECORDED IN VOLUME 260 OF DEEDS, PAGE 271 UNDER AUDITOR’S FILE NUMBER 496851.

TOGETHER WITH THOSE PORTIONS OF THE FOLLOWING DESCRIBED FIRST CLASS TIDELANDS OF THE ANACORTES HARBOR LYING IN FRONT OF AND ABUTTING SAID PREMISES:

TRACT 1 OF PLATE 14, LYING IN SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

TRACTS 1 AND 2 OF PLATE 15, LYING IN SECTION 20, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.,

ALSO TOGETHER WITH SECOND CLASS TIDELANDS, IF ANY, IN FRONT OF AND ABUTTING SAID PREMISES.

PARCEL “C-3”

THAT PORTION OF GOVERNMENT LOT 1 OF SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., DESCRIBED AS FOLLOWS:

BEGIN AT A POINT ON THE EAST LINE OF GOVERNMENT LOT 2 WHICH IS 522.5 FEET NORTH OF THE SOUTHEAST CORNER OF SAID GOVERNMENT LOT 2; THENCE NORTH 17º 21' WEST 1697.8 FEET, MORE OR LESS, TO THE MEANDER LINE ALONG THE NORTHWESTERLY LINE OF SAID GOVERNMENT LOT 1, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH 17º 21' EAST TO A POINT WHICH IS 200 FEET SOUTHEASTERLY OF THE SOUTHEASTERLY LINE OF THE COUNTY ROAD RIGHT-OF-

 

A - 4


WAY KNOWN AS THE MARCH’S POINT ROAD; THENCE SOUTHWESTERLY PARALLEL WITH THE SOUTHEASTERLY LINE OF THE MARCH’S POINT ROAD, A DISTANCE OF 100 FEET; THENCE NORTH 17º 21' WEST TO THE MEANDER LINE; THENCE NORTHEASTERLY ALONG THE MEANDER LINE TO THE TRUE POINT OF BEGINNING; EXCEPT THE FOLLOWING DESCRIBED PORTION THEREOF:

COMMENCING AT A POINT WHICH BEARS SOUTH 17º 21' EAST A DISTANCE OF 300 FEET FROM THE SOUTHWEST CORNER OF THE PLAT OF “MARCH’S POINT TRACTS” (PLATTED SOUTH 17º 20' EAST), ACCORDING TO THE RECORDED PLAT THEREOF IN VOLUME 5 OF PLATS, PAGE 25, RECORDS OF SKAGIT COUNTY, WASHINGTON, ALSO BEING THE MOST NORTHERLY CORNER OF THAT CERTAIN TRACT OF LAND CONVEYED TO SHELL OIL COMPANY BY WARRANTY DEED RECORDED IN VOLUME 260 OF DEEDS, PAGE 271, UNDER AUDITOR’S FILE NO. 496851, RECORDS OF SAID COUNTY; THENCE NORTH 17º 21' WEST A DISTANCE OF 667.48 FEET TO THE INTERSECTION WITH THE SOUTH MARGIN OF THE COUNTY ROAD AND SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH 17º 21' EAST A DISTANCE OF 200 FEET; THENCE SOUTH 36º 55' WEST, PARALLEL WITH THE SOUTH ROAD MARGIN OF SAID COUNTY ROAD A DISTANCE OF 100 FEET; THENCE NORTH 17º 21' WEST A DISTANCE OF 200 FEET TO THE INTERSECTION WITH THE SOUTH MARGIN OF THE COUNTY ROAD; THENCE NORTH 36º 55' EAST, ALONG THE SAID MARGIN, A DISTANCE OF 100 FEET TO THE TRUE POINT OF BEGINNING.

ALSO EXCEPT THAT PORTION THEREOF LYING WITHIN THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD.

TOGETHER WITH THOSE PORTIONS OF THE FOLLOWING DESCRIBED FIRST CLASS TIDELANDS OF THE ANACORTES HARBOR LYING BETWEEN THE EASTERLY AND WESTERLY LINES OF SAID PREMISES EXTENDED NORTHERLY:

TRACT 1 OF PLAT 14, LYING IN SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

TRACTS 1 AND 2 OF PLATE 15, LYING IN SECTION 20, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

ALSO TOGETHER WITH SECOND CLASS TIDELANDS, IF ANY, BETWEEN THE EASTERLY AND WESTERLY LINES OF SAID PREMISES EXTENDED NORTHERLY, EXCEPT ANY PORTION THEREOF LYING BELOW THE LINE OF MEAN LOW TIDE.

PARCEL “C-4”

THAT PORTION OF GOVERNMENT LOTS 1 AND 2 OF SECTION 29, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., DESCRIBED AS FOLLOWS:

 

A - 5


COMMENCING AT A POINT SOUTH 17° 21' EAST A DISTANCE OF 300 FEET FROM THE SOUTHWEST CORNER OF THE PLAT OF “MARCH’S POINT TRACTS” (PLATTED SOUTH 17° 20' EAST), ACCORDING TO THE RECORDED PLAT THEREOF IN VOLUME 5 OF PLATS, PAGE 25, RECORDS OF SKAGIT COUNTY, WASHINGTON, ALSO BEING THE MOST NORTHERLY CORNER OF THAT CERTAIN TRACT OF LAND CONVEYED TO THE SHELL OIL COMPANY, BY WARRANTY DEED, RECORDED IN VOLUME 260 OF DEEDS, PAGE 271, UNDER AUDITOR’S FILE NO. 496851, RECORDS OF SAID COUNTY; THENCE SOUTH 11° 25' 30" WEST (DEED SOUTH 11° 23' 45" WEST) ALONG THE WESTERLY LINE OF SAID SHELL TRACT A DISTANCE OF 122.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 57° 30' 45" WEST TO THE INTERSECTION WITH THE EASTERLY MARGIN OF THE COUNTY ROAD; THENCE SOUTHERLY ALONG THE SAID ROAD MARGIN A DISTANCE OF 440.27 FEET TO THE NORTHWEST CORNER OF THAT CERTAIN TRACT CONVEYED TO SHELL OIL COMPANY BY STATUTORY WARRANTY DEED RECORDED UNDER AUDITOR’S FILE NO. 605021, RECORDS OF SAID COUNTY; THENCE SOUTH 77° 23' 00" EAST ALONG THE NORTH LINE OF SAID TRACT A DISTANCE OF 353.69 FEET TO THE MOST NORTHERLY CORNER OF THAT CERTAIN TRACT CONVEYED TO SHELL OIL COMPANY BY STATUTORY WARRANTY DEED RECORDED UNDER AUDITOR’S FILE NO. 496862, RECORDS OF SAID COUNTY; THENCE SOUTH 77° 20' 12" EAST ALONG THE NORTH LINE OF SAID TRACT A DISTANCE OF 256.11 FEET TO THE INTERSECTION WITH THE WEST LINE OF THAT CERTAIN TRACT CONVEYED UNDER AUDITOR’S FILE NO. 496851; THENCE NORTH 11° 25' 30" EAST ALONG SAID WEST LINE A DISTANCE OF 242.69 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH FIRST CLASS TIDELANDS LYING WITHIN TRACT NO. 1, PLATE NO. 15, ANACORTES HARBOR, IN SECTION 20, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., LYING NORTHERLY OF THE FOLLOWING LINE:

COMMENCING AT THE SOUTHEAST CORNER OF GOVERNMENT LOT 2, SAID SECTION 29; THENCE NORTH ALONG THE EAST LINE OF SAID LOT 2 A DISTANCE OF 522.5 FEET; THENCE NORTH 17° 21' WEST 1697.8 FEET, MORE OR LESS TO THE NORTH MEANDER LINE OF GOVERNMENT LOT 1; THENCE SOUTHWESTERLY ALONG THE MEANDER LINE IN FRONT OF GOVERNMENT LOT 1 A DISTANCE OF 509.0 FEET; THENCE CONTINUING ALONG SAID MEANER LINE SOUTH 35° 48' 30" WEST 70 FEET TO THE TRUE POINT OF BEGINNING OF THIS LINE DESCRIPTION; THENCE AT RIGHT ANGLES NORTH 54° 11' 30" WEST TO THE WESTERLY LINE OF SAID TRACT NO. 1, PLATE NO. 14; AND WESTERLY OF THAT CERTAIN PARCEL CONVEYED TO SHELL OIL COMPANY, A DELAWARE CORPORATION BY WARRANTY DEED DATED NOVEMBER 8, 1963, RECORDED NOVEMBER 12, 1963, UNDER AUDITOR’S FILE NO. 643083.

 

A - 6


PARCEL “D”

GOVERNMENT LOTS 1, 2, AND 3 OF SECTION 21, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD.

TOGETHER WITH THE FOLLOWING DESCRIBED FIRST CLASS TIDELANDS OF THE ANACORTES HARBOR, LYING IN FRONT OF AND ABUTTING SAID PREMISES:

TRACTS 1, 2, AND 3 OF PLATE 15, LYING IN SECTION 21, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M.

ALSO TOGETHER WITH SECOND CLASS TIDELANDS, IF ANY, IN FRONT OF AND ABUTTING SAID PREMISES.

PARCEL “E-1”

THE NORTH HALF OF THE NORTHWEST QUARTER AND THE NORTH HALF OF THE SOUTH HALF OF THE NORTHWEST QUARTER OF SECTION 33, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THAT PORTION THEREOF, IF ANY, LYING WITHIN THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE NORTH TEXAS COUNTY ROAD.

PARCEL “E-2”

THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER AND THE NORTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION 33, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THAT PORTION OF SAID NORTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER LYING SOUTHERLY OF THE NORTH LINE OF THE COUNTY ROAD KNOWN AS THE NORTH TEXAS COUNTY ROAD AND ALSO EXCEPT THAT PORTION OF SAID NORTH HALF LYING EASTERLY OF THE FOLLOWING DESCRIBED LINE:

BEGINNING AT A POINT ON THE NORTHERLY LINE OF THE NORTH TEXAS ROAD (ALSO KNOWN AS THE COUNTY ROAD NO. 591), WHICH POINT IS DISTANT 15.68 FEET NORTH AND 194.49 FEET EAST OF THE SOUTHWEST CORNER OF SAID SUBDIVISION (THE WESTERLY LINE OF SAID SUBDIVISION BEARS NORTH 1° 12' 30" EAST); THENCE NORTH 1° 34' EAST A DISTANCE OF 639.7 FEET TO A POINT ON THE NORTH LINE OF SAID SUBDIVISION, THE TERMINUS OF THIS LINE DESCRIPTION.

PARCEL “E-3”

THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 33, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHERLY OF THE FOLLOWING DESCRIBED LINE:

 

A - 7


BEGIN AT THE SOUTHEAST CORNER OF THAT CERTAIN TRACT OF LAND CONVEYED TO THE SHELL OIL COMPANY BY DEED RECORDED JUNE 20, 1994, AS AUDITOR’S FILE NO. 9406200099, SAID POINT BEING ON THE SOUTH LINE OF THE SUBDIVISION; THENCE NORTH 00° 42' 12" EAST, A DISTANCE OF 150.18 FEET TO THE NORTHEAST CORNER OF SAID SHELL TRACT; THENCE SOUTH 89° 18' 40" EAST ALONG THE NORTH LINE OF THOSE TRACTS CONVEYED TO DENZIL E. STAM, ET AL, BY DEEDS RECORDED AS AUDITOR’S FILE NOS.724698 AND 9406200100, TO THE MEANDER LINE ALONG THE EAST LINE OF GOVERNMENT LOT 1 OF SECTION 34, TOWNSHIP 34 NORTH, RANGE 2 EAST W.M., THE TERMINUS OF THIS LINE DESCRIPTION; ALSO EXCEPT THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD; ALSO EXCEPT THAT CERTAIN NORTHEASTERLY PORTION THEREOF AS CONVEYED TO WILLIAM R. KIESSER, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 547521.

PARCEL “E-4”

THE NORTH HALF OF THE SOUTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 33, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THAT PORTION THEREOF LYING SOUTHERLY OF THE NORTH LINE OF THE COUNTY ROAD KNOWN AS THE NORTH TEXAS COUNTY ROAD; ALSO EXCEPT THAT WESTERLY PORTION THEREOF LYING WITHIN THE COUNTY ROAD KNOWN AS THE BETTERTON EXTENSION ROAD.

PARCEL “F-1”

GOVERNMENT LOT 1 OF SECTION 34, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THOSE SOUTHERLY PORTIONS THEREOF LYING WITHIN THOSE CERTAIN TRACTS CONVEYED TO DENZIL E. STAM, ET AL, BY AUDITOR’S FILE NOS. 724698 AND 9406200100; ALSO EXCEPT THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD; ALSO EXCEPT THAT PORTION THEREOF CONVEYED TO WILLIAM R. KIESSER, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 547521.

PARCEL “F-2”

THE NORTH 5 ACRES OF GOVERNMENT LOT 2 OF SECTION 34, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THE AS BUILT AND EXISTING MARCH’S POINT COUNTY ROAD RUNNING THROUGH SAID 5 ACRES, AND ALSO EXCEPT THAT PORTION OF THE NORTH 16 FEET THEREOF LYING WEST OF THE MARCH’S POINT ROAD BEING RESERVED FOR ROAD PURPOSES BY DEED RECORDED OCTOBER 21, 1903, UNDER AUDITOR’S FILE NO. 43838, IN VOLUME 52 OF DEEDS, PAGE 599, RECORDS OF SKAGIT COUNTY, WASHINGTON.

 

A - 8


PARCEL “G”

GOVERNMENT LOT 1 OF SECTION 27, TOWNSHIP 35 NORTH, RANGE 2 EAST W.M., EXCEPT THE COUNTY ROAD RIGHT-OF-WAY KNOWN AS THE MARCH’S POINT ROAD; ALSO EXCEPT THAT PORTION THEREOF CONVEYED TO WILLIAM R. KIESSER, ET UX, BY DEED RECORDED AS AUDITOR’S FILE NO. 547521.

 

A - 9


EXHIBIT B

LEGAL DESCRIPTION

ANACORTES CRUDE STORAGE AREA

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOTS 1 AND 2, SECTION 21, GOVERNMENT LOT 2 AND THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT BEARING NORTH 29° 37' 21" EAST 5215.34 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 02°46'07" EAST 614.35 FEET TO A POINT;

THENCE NORTH 06°03'23" WEST 56.08 FEET TO A POINT;

THENCE NORTH 02°30'04" EAST 401.03 FEET TO A POINT;

THENCE NORTH 08°19'57" WEST 107.72 FEET TO A POINT ON THE SOUTHERLY RIGHT OF WAY OF MARCH’S POINT ROAD;

THENCE ALONG SAID SOUTHERLY RIGHT OF WAY, NORTH 78°06'59" EAST 157.95 FEET TO A POINT;

THENCE NORTH 79°10'59" EAST 219.07 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 708.56 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 10°55'00", (THE CHORD BEING NORTH 84°38'29" EAST 134.80 FEET) HAVING AN ARC LENGTH OF 135.00 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 146.02 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 48°12'30", (THE CHORD BEING SOUTH 65°47'46" EAST 119.26 FEET) HAVING AN ARC LENGTH OF 122.86 FEET TO A POINT OF COMPOUND CURVATURE;

 

B - 1


THENCE ALONG THE ARC OF A 197.27 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 36°05'00", (THE CHORD BEING SOUTH 23°39'01" EAST 122.19 FEET) HAVING AN ARC LENGTH OF 124.24 FEET TO A POINT OF TANGENCY, AND BY DIRECTIONAL CHANGE, SAID SOUTHERLY RIGHT OF WAY BECOMING THE WESTERLY RIGHT OF WAY OF SAID MARCH’S POINT ROAD;

THENCE SOUTH 05°36'31" EAST 121.02 FEET TO A POINT;

THENCE SOUTH 02°43'01" EAST 311.35 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1121.28 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°40'00", (THE CHORD BEING SOUTH 00°36'59" WEST 130.39 FEET) HAVING AN ARC LENGTH OF 130.47 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 03°56'59" WEST 146.56 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 741.78 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 13°22'00", (THE CHORD BEING SOUTH 02°44'01" EAST 172.66 FEET) HAVING AN ARC LENGTH OF 173.05 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 849.91 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 12°11'16", (THE CHORD BEING SOUTH 15°30'39" EAST 180.45 FEET) HAVING AN ARC LENGTH OF 180.79 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 984.93 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 00°20'37", (THE CHORD BEING SOUTH 18°46'48" EAST 5.91 FEET) HAVING AN ARC LENGTH OF 5.91 FEET TO A POINT OF NON TANGENCY, AND POINT OF INTERSECTION WITH THE WESTERLY STRIP OF A 60.00 FOOT RIGHT OF WAY GRANTED PER RIGHT OF WAY DEED RECORDED SEPTEMBER 1, 1966, IN VOLUME 357, PAGE 775, SKAGIT COUNTY DEED RECORDS;

THENCE LEAVING SAID WESTERLY 50.00 FOOT RIGHT OF WAY, AND CONTINUING ALONG SAID 60.00 FOOT RIGHT OF WAY, SOUTH 18°57'06" EAST 52.10 FEET TO A POINT;

THENCE LEAVING SAID 60.00 FOOT RIGHT OF WAY, SOUTH 53°05'29" WEST 68.06 FEET TO A POINT;

THENCE SOUTH 67°00'09" WEST 38.38 FEET TO A POINT;

 

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THENCE SOUTH 77°52'56" WEST 32.60 FEET TO A POINT;

THENCE NORTH 12°07'04" WEST 18.25 FEET TO A POINT;

THENCE NORTH 87°27'24" WEST 631.02 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 23.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 90°13'31", (THE CHORD BEING NORTH 42°20'39" WEST 32.59 FEET) HAVING AN ARC LENGTH OF 36.22 FEET TO A POINT OF TANGENCY AND THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 20.014 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

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EXHIBIT C

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT

AND

AGREEMENT OF PURCHASE AND SALE

THIS RIGHT OF FIRST REFUSAL, OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE (“ Agreement ”) is made and entered into this             day of             , 2014, by and between TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ TLO ”), and TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company (“ TRMC ”).

BACKGROUND

A. TLO and TRMC entered into that certain Ground Lease dated July 1, 2014 (the “ Ground Lease ”) for certain premises located in Skagit County, Washington (the “ Marine Crude Storage Facility ”). Pursuant to the terms of the Ground Lease, TLO has an option to purchase the Marine Crude Storage Facility from TRMC. The legal description of the Marine Crude Storage Facility is set forth on Exhibit A attached hereto.

B. TLO validly exercised its option to purchase, and concurrent herewith, TRMC is conveying the Marine Crude Storage Facility to TLO. Pursuant to the terms of the Ground Lease (which shall terminate upon the closing of the sale transaction), the parties are to enter into a Right of First Refusal and Option Agreement setting forth the terms upon which TRMC has a right to repurchase the Marine Crude Storage Facility from TLO, in the event that (i) TLO elects to market the Marine Crude Storage Facility and thereafter receives a bona fide offer from a third party to purchase the Marine Crude Storage Facility, or (ii) TLO fails to maintain the Marine Crude Storage Facility in a condition capable of performing in accordance with the terms of that certain Anacortes Storage Services Agreement between TRMC and TLO dated as of the date hereof (as the same may be amended, modified and/or extended).

C. The parties desire to set forth the terms pertaining to the right of first refusal and the option to repurchase, and to provide for a memorandum of agreement to be recorded in the real property records of Skagit County, Washington, giving notice of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual terms, conditions, covenants and promises set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TLO and TRMC hereby agree as follows:

 

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1. Right of First Refusal.

 

  (a) Grant of Right of First Refusal . TLO hereby grants to TRMC, and TRMC hereby accepts from TLO, a right of first refusal to purchase the Marine Crude Storage Facility from TLO on the following terms and conditions (the “ Right of First Refusal ”).

 

  (b) Term of Right of First Refusal; Notification of Third-Party Offer . If TLO elects to sell the Marine Crude Storage Facility during any period of time that the Storage Services Agreement is in effect, and TLO receives a bona fide offer from a third party that it considers acceptable (the “ Purchase Offer ”), then TLO shall provide written notice to TRMC of the Purchase Offer, which notice shall include a copy of the Purchase Offer.

 

  (c) Exercise of Right of First Refusal . TRMC shall have thirty (30) days following receipt of such notice from TLO in which to give written notice to TLO that TRMC is exercising its Right of First Refusal, agreeing to purchase the Marine Crude Storage Facility on the same terms and conditions as are contained in the Purchase Offer (the “ Exercise Notice ”). The Exercise Notice from TRMC must be postmarked within the 30-day period and sent by certified mail, return receipt requested, or personally delivered (by overnight courier or otherwise) to TLO before 5:00 p.m. Pacific Time on the final day of the 30-day period. The failure of TRMC to exercise its Right of First Refusal by the time and in the manner set forth above shall be deemed to be a termination of this Agreement by TRMC, and TLO shall be free to accept the Purchase Offer.

 

  (d) Continuing Nature of Right of First Refusal . TRMC’s Right of First Refusal to purchase the Marine Crude Storage Facility shall be continuous during the term set forth above. Therefore, if the transaction of which TRMC was previously given notice, and with respect to which TRMC declined to exercise its Right of First Refusal, fails to close, then TLO shall be obligated to provide the notice required by Section 1(b) above with respect to each subsequent Purchase Offer received.

 

  (e) Effect of Exercise of Right of First Refusal . Subject only to the provisions regarding inspection and the examination and acceptance of title to the Marine Crude Storage Facility set forth in Sections 4 and 5 below, TRMC’s Exercise Notice shall be deemed to be an irrevocable election to purchase the Marine Crude Storage Facility on the terms set forth in the Purchase Offer.

 

2. Option to Repurchase.

 

  (a) Grant of Option . TLO hereby grants to TRMC, and TRMC hereby accepts from TLO, the right to acquire the Marine Crude Storage Facility on the terms and conditions set forth herein (the “ Option to Repurchase ”).

 

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  (b) Term of Option . TRMC’s right to exercise the Option to Repurchase the Marine Crude Storage Facility as set forth in this Agreement is granted for so long as the Storage Services Agreement remains in effect.

 

  (c) Exercise of Option Rights . In the event that TLO fails to maintain the Marine Crude Storage Facility in a condition capable of performing in accordance with the provisions of the Storage Services Agreement, and TLO thereafter fails to cure such default within the time period provided by the terms of the Storage Services Agreement after written notice specifying the nature of the default is provided by TRMC to TLO, then for so long as TLO remains in default in its capability to perform under the terms of the Storage Services Agreement (a “ Default Period ”), TRMC may elect, by written notice to TLO that TRMC has elected to exercise the Option to Repurchase the Marine Crude Storage Facility (the “ Option Exercise Notice ”). The Option Exercise Notice from TRMC must be sent by certified mail, return receipt requested, or personally delivered (by overnight courier or otherwise) to TLO during a Default Period. TRMC’s failure to exercise the Option to Repurchase during any particular Default Period shall not be a waiver of the Option to Repurchase at any later time that a Default Period exists.

 

  (d) Effect of Exercise . Subject only to the provisions regarding examination and acceptance of title to the Marine Crude Storage Facility set forth in Sections 4 and 5 below, TRMC’s notification to TLO that TRMC is exercising its Option shall be deemed to be an irrevocable election to purchase the Marine Crude Storage Facility pursuant to the terms of this Agreement. The date on which TRMC exercises the Option to Repurchase is the “ Repurchase Exercise Date .”

 

  (e) Determination of Purchase Price Following Exercise of Option . If TRMC exercises its Option to Repurchase, the purchase price for the Marine Crude Storage Facility (the “ Repurchase Price ”) shall be determined as follows:

 

  (1) TRMC and TLO shall each have the Marine Crude Storage Facility appraised to determine its fair market value as of the Repurchase Exercise Date by an MAI certified commercial real estate appraiser conducting business in the Anacortes/Skagit County industrial market and having not less than ten (10) years active experience as an MAI certified commercial real estate appraiser. On or before the date that is sixty (60) days after the Repurchase Exercise Date, TRMC and TLO shall each provide the other with a copy of the appraisal report received from their appraiser, and shall, within fifteen (15) days after the expiration of the 60-day period, attempt to agree on the Repurchase Price for the Premises. If the parties agree on a Repurchase Price (to be paid all cash at closing), then TRMC and TLO shall proceed to close the transaction for the transfer of the Marine Crude Storage Facility as hereinafter provided, subject only to the satisfaction of the inspection contingency set forth in Section 4 below, and the contingency regarding title set forth in Section 5 below.

 

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  (2) If the parties cannot agree on the Repurchase Price, then each party shall so notify their appraiser and jointly the appraisers shall, within fifteen days after the date of such notification, appoint a third appraiser who meets the qualifications set forth above to act as arbitrator (the “ Arbitrator ”). The Arbitrator shall, within fifteen (15) days after his or her appointment, select as the Repurchase Price either the fair market value of the Premises set forth in TRMC’s appraisal or the fair market value set forth in TLO’s appraisal. The Arbitrator shall have no authority to average the appraised values, or to designate a Repurchase Price other than the fair market value specified in either TRMC’s appraisal or TLO’s appraisal.

Both parties may submit any information to the Arbitrator for his or her consideration, with copies to the other party. The Arbitrator may consult experts and competent authorities for factual information or evidence pertaining to the determination of the Repurchase Price. The Arbitrator shall render his or her decision by written notice to each party. The determination of the Repurchase Price by the Arbitrator will be final and binding upon TRMC and TLO, and TRMC and TLO shall proceed to close the transaction for the transfer of the Marine Crude Storage Facility as hereinafter provided, subject only to the satisfaction of the inspection contingency set forth in Section 4 below, and the contingency regarding title set forth in Section 5 below. Each party shall pay the costs of its appraiser, and the party whose appraised value is not selected as the Repurchase Price shall pay the costs of the Arbitrator.

 

3. Effective Date of Agreement.

 

  (a) Following Exercise of Right of First Refusal . If TRMC exercises its Right of First Refusal, the “ Effective Date ” of this Agreement shall be the date on which TLO receives an Exercise Notice.

 

  (b) Following Exercise of Option . In the case of TRMC’s exercise of its Option to Repurchase, the “ Effective Date ” shall be the date on which (a) the parties agree on the Repurchase Price in accordance with the terms of Section 2(e)(1) above, or (b) the Repurchase Price is determined by the Arbitrator as set forth in Section 2(e)(2) above.

Unless terminated in connection with the inspection contingency or as a result of the status of title, closing of the sale of the Marine Crude Storage Facility pursuant to the exercise by TRMC of either the Right of First Refusal or the Option to Repurchase shall occur within ninety (90) days following the Effective Date (the “ Closing Date ”).

 

4.

Inspection Contingency. On or before the date that is thirty (30) days after the Effective Date, TRMC shall deliver to TLO written notice of (a) TRMC’s satisfaction or waiver, in TRMC’s sole discretion, with respect to the results of the inspection contingency stated in this Section 4, or (b) the failure of this condition. If TRMC fails to timely deliver such

 

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  notice to TLO, then this condition shall be deemed not satisfied, and TRMC shall be under no obligation to proceed with the repurchase of the Marine Crude Storage Facility. If TRMC’s inspection contingency followed the exercise of the Right of First Refusal, then following TLO’s receipt of notice of the failure of this inspection contingency by TRMC (or TRMC’s failure to timely deliver the required notice to TLO), TLO shall be free to sell the Marine Crude Storage Facility to the third party submitting the Purchase Offer on the Purchase Terms, and TRMC’s Right of First Refusal, and TLO’s obligation under this Agreement, shall be null and void and without further force or effect. If TLO fails to enter into a Purchase and Sale Agreement with the third party submitting the Purchase Offer on the Purchase Terms, or thereafter the transaction fails to close, then TRMC’s Right of First Refusal shall continue in accordance with the terms of this Agreement for so long as TLO owns the Marine Crude Storage Facility. If TRMC timely notifies TLO of the satisfaction of this condition, then TRMC shall deposit into escrow, with First American Title Insurance Company or such other title insurance company as is satisfactory to the parties (the “ Title Company ”), an amount equal to two percent (2%) of the Repurchase Price, and the parties shall proceed to close the repurchase transaction within sixty (60) days thereafter.

 

  (a) TLO shall make available for inspection by TRMC and its agents as soon as possible, but no later than ten (10) days after the Effective Date, all documents in the possession of TLO or its agents relating to the ownership and operation of the Marine Crude Storage Facility, including without limitation; (i) statements for real estate taxes, assessments, and utilities; (ii) plans, specifications, permits, drawings, surveys, reports, and maintenance records; (iii) accounting records and audit reports; (iv) all current operating agreements and contracts affecting the Marine Crude Storage Facility with third parties, and (v) any environmental reports, or portions thereof, relating to the Marine Crude Storage Facility.

 

  (b)

TLO shall permit TRMC and its agents, at TRMC’s sole expense and risk, to conduct inspections concerning the structural condition of the improvements, all mechanical, electrical and plumbing systems, hazardous materials (which may include Phase II environmental site assessments if deemed advisable by TRMC) or other matters affecting the Marine Crude Storage Facility. TRMC shall provide TLO with sufficient evidence that TRMC’s agents are adequately covered by policies of insurance issued by a carrier reasonably acceptable to TLO, insuring TRMC’s agents against any and all liens or liability arising out of the inspections conducted upon the Marine Crude Storage Facility by TRMC or its agents, including, without limitation, any loss or damage to the Marine Crude Storage Facility, with coverage in the amount of not less than $500,000 per occurrence. With respect to any Phase I or Phase II environmental site assessments, TRMC agrees to (i) provide TLO with a copy of any and all test results and written reports in draft form for review and approval by TLO before final publication of the same occurs; (ii) provide TLO with a copy of the final written report; and (iii) keep confidential any and all test results and written reports. TRMC agrees to indemnify and defend TLO from all liens, claims, liabilities, losses, damages, costs and expenses, including attorneys’ and experts’

 

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  fees, arising from or relating to TRMC’s inspection of the Marine Crude Storage Facility in connection with the exercise of its Right of First Refusal or Option to Repurchase. This agreement to indemnify and defend TLO shall survive the closing of the purchase and sale transaction.

 

5. Preliminary Commitment for Title Insurance; Status of Title.

 

  (a) Within five (5) days after the Effective Date, TLO shall deliver to TRMC a preliminary commitment for title insurance covering the Marine Crude Storage Facility, together with legible copies of all exceptions shown therein, showing TLO’s title to the Marine Crude Storage Facility to be good, marketable and insurable (the “ Preliminary Commitment ”), which Preliminary Commitment shall be issued by the Title Company.

 

  (b) Within ten (10) days of its receipt of the Preliminary Commitment, TRMC shall notify TLO in writing of any exceptions to title that are wholly or conditionally unacceptable to TRMC. The notice shall set forth in reasonable detail the reasons for any disapproval and, if appropriate, the conditions that must be met to make conditionally unacceptable exceptions fully acceptable to TRMC. TRMC may, however, object only to exceptions that are either monetary encumbrances or that are conditions, covenants, easements or restrictions inconsistent with TRMC’s intended use of the Marine Crude Storage Facility.

 

  (c) Within five (5) days following the date of receipt of TRMC’s notice of disapproved exceptions described in Section 5(b) above, TLO shall advise TRMC in writing of the exceptions it will clear prior to the Closing Date, which exceptions shall include all monetary exceptions to title (unless arising through or created by TRMC). Thereafter, TRMC shall have ten (10) days within which to make an election to accept TLO’s title or to terminate and cancel this Agreement (but such termination and cancellation shall only apply to the Right of First Refusal or the Option to Repurchase with respect to which the Preliminary Commitment was obtained, and otherwise this Agreement shall remain in effect with respect to any other event giving rise to TRMC’s ability to exercise its rights hereunder), which election shall be made in writing to TLO with the 10-day period. TRMC’s acceptance of title, or TRMC’s failure to provide TLO with such written election within the 10-day period, shall be deemed an irrevocable election by TRMC to accept the status of TLO’s title, and TRMC shall thereafter be irrevocably committed to close the sale of the Marine Crude Storage Facility.

 

  (d) The date on which such notice regarding the Preliminary Commitment is provided (or the date on which the 10-day period expires), as well as its determination of satisfaction or waiver of the inspection contingency under Section4, shall be referred to as the “ Acceptance Date .”

 

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6. Creation of Escrow.

 

  (a) Creation of Escrow . Promptly following the Acceptance Date, an escrow (herein referred to as the “ Escrow ”) shall be created and established with the Title Company or other escrow company chosen by the parties (which Title Company, when acting in its escrow capacity, or other escrow company, shall be herein referred to as the “ Escrow Agent ”), for the closing of this transaction and for the receipt and delivery of funds, the deed and other documents and instruments to be delivered upon the terms and conditions of this Agreement.

 

  (b) Escrow Instructions . The parties hereto agree to execute and deliver escrow instructions and such other reasonable documents and instruments as may be required by the Escrow Agent to consummate this transaction pursuant to the terms of this Agreement and to convey the Marine Crude Storage Facility from TLO to TRMC; provided , however , that it is specifically understood and agreed that the escrow instructions so executed and delivered shall not in any way supersede or replace the terms and provisions of this Agreement, but shall be deemed to be supplemental to the terms hereof and a means of carrying out and consummating the transaction contained in this Agreement.

 

  (c) Deposits into Escrow by TLO . TLO shall deposit in Escrow with the Escrow Agent, on or before the Closing Date, the following documents:

 

  (1) A Special warranty deed (the “ Deed ”) covering the Marine Crude Storage Facility, fully-executed by TLO and acknowledged, which Deed shall be in form sufficient for recording and subject only to (A) real estate taxes and local improvement district assessments not then due and payable, and (B) those exceptions in the Preliminary Commitment not removed as provided in Section 5 above, conveying fee title to the Marine Crude Storage Facility (and the improvements located thereon) to TRMC.

 

  (2) A fully-executed and acknowledged Real Estate Excise Tax Affidavit covering the conveyance of the Marine Crude Storage Facility (and the improvements located thereon) to TRMC by the Deed.

 

  (3) A commitment from the Title Company to issue an owner’s standard coverage policy of title insurance covering the Marine Crude Storage Facility and insuring the purchaser in an amount equal to the Repurchase Price (determined either in accordance with Section 1(c) or Section 2 above), with no exceptions other than those accepted by TRMC under Section 5 above.

 

  (d) Deposits into Escrow by TRMC . TRMC will deposit in Escrow with the Escrow Agent, on or before the Closing Date, the Repurchase Price of the Marine Crude Storage Facility, in the form of cash, cashier’s or certified check or wire-transfer of funds.

 

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  (e) Closing Costs .

 

  (1) At closing, TLO shall pay the following charges and expenses:

 

  (A) Real estate excise tax in the full amount which is required in order to validly record the Deed;

 

  (B) An amount equal to the premium, and applicable taxes, for the issuance of Title Company’s standard form owner’s title insurance policy in which TRMC shall be named as owner and pursuant to which the title to the Marine Crude Storage Facility shall be insured in an amount equal to the Repurchase Price and subject to only those exceptions set forth above;

 

  (C) One-half (1/2) escrow fees, and taxes thereon;

 

  (D) TLO’s portion of the items to be prorated to the Closing Date as set forth in Section 7 below; and

 

  (E) All fees and expenses of TLO’s counsel for the transaction.

 

  (2) At closing, TRMC shall pay the following charges and expenses:

 

  (A) The cost of the premium for any extended coverage title coverage and any endorsements that TRMC desires to obtain with respect to the policy of title insurance issued at closing;

 

  (B) Any sales tax due on the transfer of any personal property used in connection with the Marine Crude Storage Facility and sold to TRMC at closing;

 

  (C) The cost of all inspections, tests or reports incurred in connection with the inspection of the Marine Crude Storage Facility;

 

  (D) One-half (1/2) escrow fees, and taxes thereon;

 

  (E) The cost of recording the Deed;

 

  (F) TRMC’s portion of the items to be prorated to the Closing Date as set forth in Section 7 below; and

 

  (G) All fees and expenses associated with TRMC’s counsel for the transaction.

 

 

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  (f) Possession . TRMC shall be entitled to have possession of the Marine Crude Storage Facility on the Closing Date.

 

7. Apportionments as of Date of Closing. All utilities, real estate taxes and assessments shall be apportioned to the Closing Date of the calendar year for which assessed. If the Closing Date occurs before the tax rate is fixed, the apportionment of taxes shall be upon the basis of the tax rate for the next preceding year applied to the latest assessed valuation.

 

8. Eminent Domain.

 

  (a) Taking . If, prior to the Closing Date, all or a substantial part of the Marine Crude Storage Facility is taken or threatened with taking by the power of eminent domain, then TRMC may, by written notice to TLO within ten (10) days of the date of notification to TRMC of such taking, or threat thereof, elect to terminate this Agreement. In the event that TRMC so elects, both parties shall be relieved of and released from any further liability hereunder.

 

  (b) Assignment of Awards . Unless this Agreement is so terminated, it shall remain in full force and effect and if closing occurs, TLO shall assign, transfer and set over to TRMC all of TLO’s right, title and interest in and to any awards that may be made for such taking and there shall be no adjustment in the Repurchase Price. The legal description of the Marine Crude Storage Facility shall be adjusted at closing to delete any of the real property so taken.

 

  (c) Definition . For the purpose hereof, the words “substantial part” shall mean an amount in excess of ten percent (10%) of the Marine Crude Storage Facility or a taking which impairs the use of the real property for crude storage purposes.

 

9. Notices. Any notices required or desired to be given under this Agreement shall be in writing and personally delivered, delivered by reliable overnight courier or given by mail. Any notice or payment given by mail shall be sent, postage prepaid, by certified mail, return receipt requested and addressed to the party to receive the same at the following address or at such other address or addresses as the parties may from time to time direct in writing:

 

TRMC:    Tesoro Marketing and Refining Company
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: Vice President, Logistics
        With a copy to:    Tesoro Marketing and Refining Company
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: General Counsel

 

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TLO:    Tesoro Logistics Operations, LLC
   19100 Ridgewood Parkway
   San Antonio, Texas 78259
   Attention: Vice President, Logistics

Any notice shall be deemed to have been given if delivered, when delivered, and if mailed, forty-eight (48) hours after deposit at any post office in the United States of America, postage prepaid certified mail with return receipt requested and addressed to the party to receive the same as set forth above.

 

10. Assignment. This Agreement may be assigned by TRMC without the prior written approval of TLO to any party succeeding to the ownership of the oil refinery currently operated by TRMC in Anacortes, Washington. In the event of assignment, the assignee shall assume all obligations and obtain all benefits hereunder from and after the date of assignment.

 

11. Default.

 

  (a) Default by TRMC . In the event that TRMC defaults hereunder, TLO shall have all rights and remedies available to it at law or in equity.

 

  (b) Default by TLO . In the event of a default by TLO hereunder, TRMC shall have as its sole remedy the right to sue for specific performance of this Agreement; provided , however , that if specific performance of this Agreement is not available, then TRMC may sue for the damages suffered by TRMC.

 

12. Miscellaneous.

 

  (a) Entire Agreement . This Agreement constitutes the entire Agreement between the parties and all prior and contemporaneous negotiations, understandings and agreements, whether oral or written, are merged herein and the rights and obligations of the parties shall be as set forth herein.

 

  (b) Binding Nature . All rights and obligations arising out of this Agreement shall inure to the benefit of and binding upon the respective successors, heirs, assigns, administrators and executors of the parties hereto.

 

  (c) Washington Law . This Agreement shall be construed, interpreted and enforced pursuant to the laws of the State of Washington.

 

  (d) Attorney’s Fees . In the event any action or legal proceedings are commenced to enforce any of the terms and conditions hereof, or to terminate this Agreement (whether the same shall proceed to judgment or otherwise), the prevailing party shall receive from the other a reasonable sum as attorneys’ fees together with costs.

 

  (e) Time . Time is of the essence hereof.

 

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  (f) Captions . The captions and Section headings hereof are inserted for convenience purposes only and shall not be deemed to limit or expand the meaning of any section.

 

  (g) Invalidity . If any provisions of this Agreement are determined to be invalid, void or illegal, it shall in no way affect, impair or invalidate any of the other provisions hereof.

 

  (h) Counterparts . This Agreement may be signed in counterparts, any one of which shall be deemed an original.

 

  (i) Recording of Memorandum . The parties shall record a memorandum of this Agreement, in the form of Exhibit B attached hereto. TRMC shall pay all recording fees due by reason of such recording.

 

  (j) Good Faith . Both parties shall act reasonably and in good faith in order to consummate this transaction and TLO shall neither sell nor dispose of any of the Marine Crude Storage Facility in violation of the terms of this Agreement, nor cause or suffer the creation of any matter of record, or defect in the title to the Marine Crude Storage Facility, in bad faith, for the purpose of avoiding its obligation to close. Notwithstanding the foregoing, nothing in this Agreement shall restrict or waive TRMC’s right to terminate this Agreement for any reason prior to its exercise of the Right of First Refusal or the Option to Repurchase.

 

  (l) Authorization . TLO and TRMC each warrants that it has the right and authority to enter into and to perform this Agreement in accordance with its terms. Neither the execution of this Agreement nor its performance by TLO or TRMC will conflict with or result in the breach of any restriction, covenant, agreement or other undertaking whatever.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement the date and year set forth opposite their respective names.

 

   

TLO:

    TESORO LOGISTICS OPERATIONS LLC,
    a Delaware limited liability company
Date:                                                By:  

 

      Its:  

 

    TRMC:
    TESORO REFINING & MARKETING COMPANY LLC,
    a Delaware limited liability company
Date:                                              By:  

 

      Its:  

 

 

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STATE OF                                 )  
   )   ss.
COUNTY OF                             )  

I certify that I know or have satisfactory evidence that                     is the person who appeared before me, who signed this instrument as the                     of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated                     was authorized to execute said instrument.

Dated:                     , 2014

 

                                                                               

Print Name:                                                           

NOTARY PUBLIC in and for the State of

                     , residing at                                       

My appointment expires                                     

 

STATE OF                                 )  
   )   ss.
COUNTY OF                             )  

I certify that I know or have satisfactory evidence that                     is the person who appeared before me, who signed this instrument as the                     of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated                     was authorized to execute said instrument.

Dated:                     , 2014

 

                                                                               

Print Name:                                                           

NOTARY PUBLIC in and for the State of

                     , residing at                                      

My appointment expires                                     

 

C - 13


EXHIBIT A

TO

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE

Legal Description of the Marine Crude Storage Facility

LEGAL DESCRIPTION

ANACORTES CRUDE STORAGE AREA

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOTS 1 AND 2, SECTION 21, GOVERNMENT LOT 2 AND THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT BEARING NORTH 29° 37' 21" EAST 5215.34 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 02°46'07" EAST 614.35 FEET TO A POINT;

THENCE NORTH 06°03'23" WEST 56.08 FEET TO A POINT;

THENCE NORTH 02°30'04" EAST 401.03 FEET TO A POINT;

THENCE NORTH 08°19'57" WEST 107.72 FEET TO A POINT ON THE SOUTHERLY RIGHT OF WAY OF MARCH’S POINT ROAD;

THENCE ALONG SAID SOUTHERLY RIGHT OF WAY, NORTH 78°06'59" EAST 157.95 FEET TO A POINT;

THENCE NORTH 79°10'59" EAST 219.07 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 708.56 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 10°55'00", (THE CHORD BEING NORTH 84°38'29" EAST 134.80 FEET) HAVING AN ARC LENGTH OF 135.00 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 146.02 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 48°12'30", (THE CHORD BEING SOUTH 65°47'46" EAST 119.26 FEET) HAVING AN ARC LENGTH OF 122.86 FEET TO A POINT OF COMPOUND CURVATURE;

 

C - 14


THENCE ALONG THE ARC OF A 197.27 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 36°05'00", (THE CHORD BEING SOUTH 23°39'01" EAST 122.19 FEET) HAVING AN ARC LENGTH OF 124.24 FEET TO A POINT OF TANGENCY, AND BY DIRECTIONAL CHANGE, SAID SOUTHERLY RIGHT OF WAY BECOMING THE WESTERLY RIGHT OF WAY OF SAID MARCH’S POINT ROAD;

THENCE SOUTH 05°36'31" EAST 121.02 FEET TO A POINT;

THENCE SOUTH 02°43'01" EAST 311.35 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1121.28 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°40'00", (THE CHORD BEING SOUTH 00°36'59" WEST 130.39 FEET) HAVING AN ARC LENGTH OF 130.47 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 03°56'59" WEST 146.56 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 741.78 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 13°22'00", (THE CHORD BEING SOUTH 02°44'01" EAST 172.66 FEET) HAVING AN ARC LENGTH OF 173.05 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 849.91 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 12°11'16", (THE CHORD BEING SOUTH 15°30'39" EAST 180.45 FEET) HAVING AN ARC LENGTH OF 180.79 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 984.93 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 00°20'37", (THE CHORD BEING SOUTH 18°46'48" EAST 5.91 FEET) HAVING AN ARC LENGTH OF 5.91 FEET TO A POINT OF NON TANGENCY, AND POINT OF INTERSECTION WITH THE WESTERLY STRIP OF A 60.00 FOOT RIGHT OF WAY GRANTED PER RIGHT OF WAY DEED RECORDED SEPTEMBER 1, 1966, IN VOLUME 357, PAGE 775, SKAGIT COUNTY DEED RECORDS;

THENCE LEAVING SAID WESTERLY 50.00 FOOT RIGHT OF WAY, AND CONTINUING ALONG SAID 60.00 FOOT RIGHT OF WAY, SOUTH 18°57'06" EAST 52.10 FEET TO A POINT;

THENCE LEAVING SAID 60.00 FOOT RIGHT OF WAY, SOUTH 53°05'29" WEST 68.06 FEET TO A POINT;

THENCE SOUTH 67°00'09" WEST 38.38 FEET TO A POINT;

 

C - 15


THENCE SOUTH 77°52'56" WEST 32.60 FEET TO A POINT;

THENCE NORTH 12°07'04" WEST 18.25 FEET TO A POINT;

THENCE NORTH 87°27'24" WEST 631.02 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 23.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 90°13'31", (THE CHORD BEING NORTH 42°20'39" WEST 32.59 FEET) HAVING AN ARC LENGTH OF 36.22 FEET TO A POINT OF TANGENCY AND THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 20.014 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

C - 16


EXHIBIT B

TO

RIGHT OF FIRST REFUSAL,

OPTION AGREEMENT AND AGREEMENT OF PURCHASE AND SALE

Memorandum of Right of First Refusal and Option Agreement

 

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

 

Graham & Dunn PC

Pier 70, 2801 Alaskan Way, Suite 300

Seattle, WA 98121

Attn: Maren K. Gaylor

MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT

 

GRANTOR:    TESORO LOGISTICS OPERATIONS LLC,   
   a Delaware limited liability company   
GRANTEE:    TESORO REFINING & MARKETING COMPANY LLC,   
   a Delaware limited liability company   
LEGAL         
DESCRIPTION:         

Abbreviated:

        

Full:

   See Exhibit A attached hereto      
TAX PARCEL         
NUMBERS:   

 

  

 

  
  

 

  

 

  
RECORDING NO.         
OF RELATED         
DOCUMENTS:    N/A      

 

C - 17


THIS MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT is made and entered into as of this             day of                     , by and between TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company (“ TLO ”), and TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company (“ TRMC ”).

RECITALS:

TLO and TRMC have entered into that certain Right of First Refusal, Option Agreement and Agreement of Purchase and Sale (the “ Right of First Refusal and Option Agreement ”) with an effective date of                     , the terms, provisions and conditions of which are incorporated herein by reference to the same extent as if recited in their entirety herein, whereby TLO has granted to TRMC both a right of first refusal and option to purchase the Marine Crude Storage Facility (“Marine Crude Storage Facility”) located in Skagit County, Washington, said Marine Crude Storage Facility being more particularly described in Exhibit A attached hereto.

Special reference is hereby made to the following terms and provisions of the Right of First Refusal and Option Agreement:

1. Right of First Refusal . If TLO elects to sell the Marine Crude Storage Facility during any period of time that the Storage Services Agreement (as defined in the Right of First Refusal and Option Agreement) is in effect, and TLO receives a bona fide offer from a third party that it considers acceptable (the “ Purchase Offer ”), then TLO shall provide written notice to TRMC of the Purchase Offer, which notice shall include a copy of the Purchase Offer. TRMC shall have thirty (30) days following receipt of such notice from TLO in which to give written notice to TLO that TRMC is exercising its Right of First Refusal, agreeing to purchase the Marine Crude Storage Facility on the same terms and conditions as are contained in the Purchase Offer.

2. Option to Repurchase . TRMC shall have a right to exercise its Option to Repurchase the Marine Crude Storage Facility for so long as the Storage Services Agreement remains in effect, TLO fails to operate the Marine Crude Storage Facility in a condition capable of performing in accordance with the provisions of the Storage Services Agreement, and TLO thereafter fails to cure such default within the time period provided by the terms of the Storage Services Agreement after written notice specifying the nature of the default is provided by TRMC to TLO.

This Memorandum is executed for the purpose of recordation in the Official Records of Skagit County, Washington, in order to give notice of the terms and provisions of the Right of First Refusal and Option Agreement, and is not intended and shall not be construed to define, limit or modify the Right of First Refusal and Option Agreement. In the event of a conflict between the terms hereof and the terms of the Right of First Refusal and Option Agreement, the terms of the Right of First Refusal and Option Agreement shall control. This Memorandum may be executed in counterparts.

 

C - 18


IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Right of First Refusal and Option Agreement as of the day and year first above written.

 

    TLO:
    TESORO LOGISTICS OPERATIONS LLC,
a Delaware limited liability company
Date:                                                By:  

 

      Its:  

 

    TRMC:
   

TESORO REFINING & MARKETING COMPANY LLC,

a Delaware limited liability company

Date:                                                By:  

 

      Its:  

 

 

C - 19


STATE OF                          )  
   )   ss.
COUNTY OF                      )  

I certify that I know or have satisfactory evidence that                     is the person who appeared before me, who signed this instrument as the                     of TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated             was authorized to execute said instrument.

Dated:                     , 2014

 

                                                                               

Print Name:                                                          

NOTARY PUBLIC in and for the State of

                     , residing at                                     

My appointment expires                                     

 

STATE OF                          )  
   )   ss.
COUNTY OF                      )  

I certify that I know or have satisfactory evidence that                     is the person who appeared before me, who signed this instrument as the                     of TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company, and acknowledged it to be the free and voluntary act of such limited liability company for the uses and purposes mentioned in the instrument, and on oath stated             was authorized to execute said instrument.

Dated:                     , 2014

 

                                                                               

Print Name:                                                          

NOTARY PUBLIC in and for the State of

                     , residing at                                     

My appointment expires                                     

 

C - 20


EXHIBIT A

TO

MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT

Legal Description of Marine Crude Storage Facility

LEGAL DESCRIPTION

ANACORTES CRUDE STORAGE AREA

A PORTION OF LAND BEING LOCATED WITHIN GOVERNMENT LOTS 1 AND 2, SECTION 21, GOVERNMENT LOT 2 AND THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SECTION 28, TOWNSHIP 35 NORTH, RANGE 2 EAST, OF THE WILLAMETTE MERIDIAN, SKAGIT COUNTY, WASHINGTON, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT BEARING NORTH 29° 37' 21" EAST 5215.34 FEET FROM THE SECTION CORNER COMMON TO SECTIONS 28/29/32/33, TOWNSHIP 35 NORTH, RANGE 2 EAST, W.M., SAID SECTION CORNER BEING MARKED BY A 3  1 4 INCH DIAMETER ALUMINUM CAP MARKED DEPT. OF NATURAL RESOURCES, WASHINGTON T35N R2E S28, S29, S32, S33 PLS 31444, 2000;

THENCE NORTH 02°46'07" EAST 614.35 FEET TO A POINT;

THENCE NORTH 06°03'23" WEST 56.08 FEET TO A POINT;

THENCE NORTH 02°30'04" EAST 401.03 FEET TO A POINT;

THENCE NORTH 08°19'57" WEST 107.72 FEET TO A POINT ON THE SOUTHERLY RIGHT OF WAY OF MARCH’S POINT ROAD;

THENCE ALONG SAID SOUTHERLY RIGHT OF WAY, NORTH 78°06'59" EAST 157.95 FEET TO A POINT;

THENCE NORTH 79°10'59" EAST 219.07 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 708.56 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 10°55'00", (THE CHORD BEING NORTH 84°38'29" EAST 134.80 FEET) HAVING AN ARC LENGTH OF 135.00 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 146.02 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 48°12'30", (THE CHORD BEING SOUTH 65°47'46" EAST 119.26 FEET) HAVING AN ARC LENGTH OF 122.86 FEET TO A POINT OF COMPOUND CURVATURE;

 

C - 21


THENCE ALONG THE ARC OF A 197.27 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 36°05'00", (THE CHORD BEING SOUTH 23°39'01" EAST 122.19 FEET) HAVING AN ARC LENGTH OF 124.24 FEET TO A POINT OF TANGENCY, AND BY DIRECTIONAL CHANGE, SAID SOUTHERLY RIGHT OF WAY BECOMING THE WESTERLY RIGHT OF WAY OF SAID MARCH’S POINT ROAD;

THENCE SOUTH 05°36'31" EAST 121.02 FEET TO A POINT;

THENCE SOUTH 02°43'01" EAST 311.35 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 1121.28 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 06°40'00", (THE CHORD BEING SOUTH 00°36'59" WEST 130.39 FEET) HAVING AN ARC LENGTH OF 130.47 FEET TO A POINT OF TANGENCY;

THENCE SOUTH 03°56'59" WEST 146.56 FEET TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 741.78 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 13°22'00", (THE CHORD BEING SOUTH 02°44'01" EAST 172.66 FEET) HAVING AN ARC LENGTH OF 173.05 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 849.91 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 12°11'16", (THE CHORD BEING SOUTH 15°30'39" EAST 180.45 FEET) HAVING AN ARC LENGTH OF 180.79 FEET TO A POINT OF COMPOUND CURVATURE;

THENCE ALONG THE ARC OF A 984.93 FOOT RADIUS CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 00°20'37", (THE CHORD BEING SOUTH 18°46'48" EAST 5.91 FEET) HAVING AN ARC LENGTH OF 5.91 FEET TO A POINT OF NON TANGENCY, AND POINT OF INTERSECTION WITH THE WESTERLY STRIP OF A 60.00 FOOT RIGHT OF WAY GRANTED PER RIGHT OF WAY DEED RECORDED SEPTEMBER 1, 1966, IN VOLUME 357, PAGE 775, SKAGIT COUNTY DEED RECORDS;

THENCE LEAVING SAID WESTERLY 50.00 FOOT RIGHT OF WAY, AND CONTINUING ALONG SAID 60.00 FOOT RIGHT OF WAY, SOUTH 18°57'06" EAST 52.10 FEET TO A POINT;

THENCE LEAVING SAID 60.00 FOOT RIGHT OF WAY, SOUTH 53°05'29" WEST 68.06 FEET TO A POINT;

THENCE SOUTH 67°00'09" WEST 38.38 FEET TO A POINT;

THENCE SOUTH 77°52'56" WEST 32.60 FEET TO A POINT;

 

C - 22


THENCE NORTH 12°07'04" WEST 18.25 FEET TO A POINT;

THENCE NORTH 87°27'24" WEST 631.02 FEET TO A POINT TO A POINT OF CURVATURE;

THENCE ALONG THE ARC OF A 23.00 FOOT RADIUS CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 90°13'31", (THE CHORD BEING NORTH 42°20'39" WEST 32.59 FEET) HAVING AN ARC LENGTH OF 36.22 FEET TO A POINT OF TANGENCY AND THE POINT OF BEGINNING;

THIS DESCRIPTION CONTAINS 20.014 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED UPON THE WASHINGTON COORDINATE SYSTEM, NORTH ZONE (NAD83) 2011.

 

C - 23

Exhibit 10.8

MARTINEZ LICENSE AGREEMENT

THIS MARTINEZ LICENSE AGREEMENT (“Agreement”) is made as of July 1, 2014, by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“Licensor”), and Tesoro Logistics Operations LLC, a Delaware limited liability company (“Licensee”). The above-named entities are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties.”

RECITALS

A. Concurrently herewith, Licensor and Licensee have entered into that certain Martinez Terminalling Services Agreement (the “Terminalling Agreement”), under which Licensor has agreed to perform certain services for Licensor.

B. Licensor desires to license Licensee to use area identified on Exhibit A hereto as “Proposed Parcel” (the “License Area”) for the purpose of providing the services specified in the Terminalling Agreement.

W I T N E S S E T H:

Now, therefore, inconsideration of the Terminalling Agreement, Licensor and Licensee hereby agree as follows:

1. Licensor hereby grants to Licensee a license to use the License Area for the sole purpose of performing the services specified in the Terminalling Agreement.

2. Licensor hereby grants to Licensee a right of access to the License Area over Licensor’s adjacent property identified on Exhibit B hereto as “Proposed Easement Area” (the “Access Area”)

3. Licensee shall indemnify, defend and save harmless Licensor, its officers, directors, shareholders, partners, agents and employees against and from all costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, claims and demands of every kind or nature, including reasonable attorneys’ fees, by or on behalf of any person, party or governmental authority whatsoever arising out of Licensee’s use of the License Area or the Access Area.

4. Licensee hereby assumes any and all risk of loss with regard to any improvements located on the Licensee Area and shall assure that upon termination of this Agreement all such improvements are in the same condition as of the date of this Agreement except for ordinary wear and tear.


5. All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (a) if by transmission by hand delivery, when delivered; (b) if mailed via the official governmental mail system, five business days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (c) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one business day after deposit therewith prepaid; or (d) if by e-mail, one business day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to Licensor, to:

Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles A. Cavallo III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

all other notices and communications :

Attention: Dennis C. Bak

phone: 310-847-3846

email: Dennis.C.Bak@tsocorp.com

If to Licensee, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other person as either Party will have last designated by notice to the other Party.

6. This Agreement is terminable by either Party upon 30 days’ prior written notice to the other party.

7. All other rights and obligations of the arties hereto with regard to the License Area and the Access Area shall be governed by the Terminalling Agreement and that certain Contribution, Conveyance and Assumption Agreement entered into concurrently herewith.

 

2


IN WITNESS WHEREOF , Licensor and Licensee have duly executed this instrument the day and year first written above.

 

LICENSOR:

TESORO REFINING & MARKETING COMPANY LLC,

a Delaware limited liability company

By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
LICENSEE:

TESORO LOGISTICS OPERATIONS LLC,

a Delaware limited liability company

By:  

/s/ Phillip M. Anderson

  Phillip M. Anderson
  President

Signature Page to Martinez License Agreement


EXHIBIT “A” TO LICENSE AGREEMENT

MARTINEZ REFINERY

LICENSE AREA

A PORTION OF SWAMP AND OVERFLOW SURVEYS NO. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP;

THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD, SOUTH 71°22’28” WEST, A DISTANCE OF 989.48 FEET;

THENCE PERPENDICULAR WITH SAID LINE, NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING ;

THENCE SOUTH 71°22’28” WEST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF THE NORTHERLY LINE OF SAID COUNTY ROAD, A DISTANCE OF 702.03 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 52.52 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 38.63 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 292.47 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 201.14 FEET;

THENCE NORTH 20°37’15” EAST, A DISTANCE OF 453.24 FEET;

THENCE SOUTH 89°47’20” EAST, A DISTANCE OF 235.90 FEET;

THENCE SOUTH 36°14’56” EAST, A DISTANCE OF 597.90 FEET;

THENCE NORTH 71°22’28” EAST, A DISTANCE OF 250.77 FEET;

 

Exhibit A – Martinez License Agreement


THENCE SOUTH 18°37’32” EAST, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING .

SAID PARCEL CONTAINS 6.839 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.

NOTHING IN THIS DOCUMENT IS MEANT TO SUBVERT STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (b)

PER STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (e) THE ABOVE DESCRIBED REAL PROPERTY MAY BE CONSIDERED IN AN OFFER TO SELL, LEASE, OR FINANCE OR TO CONSTRUCT IMPROVEMENTS THEREON AS LONG AS SAID REAL PROPERTY IS EXPRESSLY CONDITIONED UPON THE APPROVAL AND FILING OF A FINAL SUBDIVISION MAP OR PARCEL MAP, AS REQUIRED UNDER THIS DIVISION.

 

Exhibit A – Martinez License Agreement


EXHIBIT “B” TO LICENSE AGREEMENT

MARTINEZ REFINERY LICENSE AREA

ACCESS EASEMENT

A PORTION OF SWAMP AND OVERFLOW SURVEYS No. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. AND THE COUNTY ROAD ABANDONED BY PARCEL TWO IN QUIT-CLAIM DEED RECORDED FEBRUARY 8, 1996 AS DOC. NO. 1996-23625 O.R., ALL IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP, THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD SOUTH 71°22’28” WEST A DISTANCE OF 1566.16 FEET TO THE TRUE POINT OF BEGINNING; THENCE PERPENDICULAR WITH SAID NORTHERLY LINE SOUTH 18°37’32” EAST, A DISTANCE OF 60.00 FEET TO THE SOUTHERLY LINE OF SAID COUNTY ROAD; THENCE SOUTH 71°22’28” WEST, ALONG SAID SOUTHERLY LINE, A DISTANCE OF 1334.23 FEET TO A POINT ON THE WESTERLY LINE OF SAID PARCEL TWO OF DOC. NO. 1996-23625; THENCE DEPARTING SAID SOUTHERLY LINE, PERPENDICULAR TO SAID LINE NORTH 18°37’32” WEST, A DISTANCE OF 71.86 FEET; THENCE NORTH 75°52’58” EAST, A DISTANCE OF 150.86 FEET TO A POINT ON SAID NORTHERLY LINE; THENCE NORTH 71°22’28” EAST, ALONG SAID NORTHERLY LINE, A DISTANCE OF 1068.84 FEET; THENCE DEPARTING SAID NORTHERLY LINE, PERPENDICULAR TO SAID LINE NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET; THENCE NORTH 71°22’28” EAST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF SAID NORTHERLY LINE, A DISTANCE OF 115.00 FEET; THENCE SOUTH 18°37’32 EAST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING.

SAID PARCEL CONTAINS 2.149 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.

 

Exhibit B – Martinez License Agreement

Exhibit 10.9

MARTINEZ RIGHTS AGREEMENT

This Martinez Rights Agreement (this “ Agreement ”), dated as of July 1, 2014 (the “ Effective Date ”), is by and between Tesoro Logistics Operations LLC, a Delaware limited liability company (the “ Operating Company ”), and for purposes of Section 3.1 only, Tesoro Logistics GP, LLC, a Delaware limited liability company (the “ General Partner ”), and Tesoro Logistics LP, a Delaware limited partnership (the “ Partnership ”), on the one hand and Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ TRMC ”), on the other hand. The above-named entities are sometimes referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties .”

RECITALS

WHEREAS , TRMC is the owner of that certain real property in Martinez, California (the “ Martinez Terminal Property ”), described in the deed attached hereto as Exhibit A (the “Deed”), and that certain real property in Martinez, California (the “ Martinez Easement Area ”), described in the access easement attached hereto as Exhibit B (the “ Easement ”);

WHEREAS , the Parties, Tesoro Corporation, a Delaware corporation, Tesoro Alaska Company LLC, a Delaware limited liability company, and Tesoro Logistics Pipelines LLC, a Delaware limited liability company, entered into that certain Contribution, Conveyance and Assumption Agreement dated June 23, 2014, pursuant to which TRMC agreed to contribute certain assets to the Operating Company (the “ Contribution Agreement ”);

WHEREAS , in connection with the transactions contemplated by the Contribution Agreement, TRMC desires to convey its interest in the Martinez Terminal Property to the Operating Company upon the approval by the County of Contra Costa and recordation of a parcel map subdividing the Martinez Terminal Property from TRMC’s adjacent property in the Official Records of the County of Contra Costa (the “Parcel Map Approval”); and

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

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

ARTICLE I

DEFINITIONS

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

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

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


Deed ” has the meaning set forth in the Recitals.

Easement ” has the meaning set forth in the Recitals.

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

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

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

Martinez Easement Area ” has the meaning set forth in the Recitals.

Martinez Terminal Property ” has the meaning set forth in the Recitals.

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

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

Parcel Map Approval ” has the meaning set forth in the Recitals.

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

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

ARTICLE II

CONVEYANCE

Section 2.1 Immediately following the Effective Date, TRMC shall use all commercially reasonable efforts to obtain the Parcel Map Approval as soon as is reasonably practical; provided that TRMC shall not be required to agree to any commercially unreasonable terms as a condition of the Parcel Map Approval. Whether any terms imposed as a condition of the Parcel Map Approval by the County of Contra Costa are commercially unreasonable shall be determined by TRMC in its sole discretion. If TRMC determines that the terms imposed as a condition of the Parcel Map Approval are commercially unreasonable, TRMC shall provide written notice of such determination to the Operating Company.

Section 2.2 Upon receiving the Parcel Map Approval, (a) TRMC shall convey the Martinez Terminal Property to Operating Company pursuant to the Deed, (b) TRMC shall grant Operating Company an easement over the Martinez Easement Area pursuant to the Easement, and (c) the Parties shall enter into an Access and Remediation Agreement in the form of Exhibit C hereto. Upon the conveyance of the Martinez Terminal Property to Operating Company pursuant to the Deed, the License Agreement between TRMC and Operating Company with regard to the Martinez Terminal Property and the Martinez Easement Area shall be terminated.

 

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ARTICLE III

MISCELLANEOUS

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

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

Section 3.3 Headings; References; Interpretation . All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including, without limitation, all Schedules and Exhibits attached hereto, and not to any particular provision of this Agreement. All references herein to Articles, Sections, Schedules and Exhibits shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

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

Section 3.5 No Third Party Rights . The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

Section 3.6 Counterparts . This Agreement may be executed in any number of counterparts (including facsimile or .pdf copies) with the same effect as if all Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

Section 3.7 Applicable Law; Forum, Venue and Jurisdiction . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without regard to the principles of conflicts of law. Each of the Parties (a) irrevocably agrees that any claims,

 

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suits, actions or proceedings arising out of or relating in any way to this Agreement shall be exclusively brought in any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims, (b) irrevocably submits to the exclusive jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, of the district court of Bexar County, Texas in connection with any such claim, suit, action or proceeding, (c) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (i) it is not personally subject to the jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or the district court of Bexar County, Texas, or of any other court to which proceedings in such courts may be appealed, (ii) such claim, suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such claim, suit, action or proceeding is improper, (d) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding and (e) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder or by personal service within or without the State of Texas, and agrees that service in such forms shall constitute good and sufficient service of process and notice thereof; provided, however, that nothing in clause (e) hereof shall affect or limit any right to serve process in any other manner permitted by law.

Section 3.8 Severability . If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

Section 3.9 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face as an amendment to this Agreement.

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

Section 3.11 Specific Performance . The Parties agree that money damages may not be a sufficient remedy for any breach of this Agreement and that in addition to any other remedy available at law or equity, the Parties shall be entitled to seek specific performance and

 

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injunctive or other equitable relief as a remedy for any Party’s breach of this Agreement. The Parties agree that no bond shall be required for any injunctive relief in connection with a breach of this Agreement.

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

If to TRMC:

Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Charles A. Cavallo III

Facsimile: (210) 745-4494

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

Tesoro Logistics LP

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

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Barron W. Dowling

Facsimile: (210) 745-4494

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties to this Agreement have caused it to be duly executed as of the Effective Date.

 

 

TESORO REFINING & MARKETING

COMPANY LLC

 

With respect to Section 3.1 only:

TESORO LOGISTICS GP, LLC

  By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

    G. Scott Spendlove       Phillip M. Anderson
    Senior Vice President and Chief       President
    Financial Officer      
       

With respect to Section 3.1 only:

TESORO LOGISTICS LP

        By:  

Tesoro Logistics GP, LLC,

its general partner

        By:  

/s/ Phillip M. Anderson

          Phillip M. Anderson
          President
        TESORO LOGISTICS OPERATIONS LLC
        By:  

/s/ Phillip M. Anderson

         

Phillip M. Anderson

President

Signature Page to

Martinez Rights Agreement


EXHIBIT A

WHEN RECORDED MAIL TO:

Tesoro Companies, Inc.

19100 Ridgewood Parkway

San Antonio, Texas 78259

Attention: Brooks Meltzer

MAIL TAX STATEMENTS TO:

Tesoro Companies, Inc.

P.O. Box 592809

San Antonio, Texas 78259-2809

Attention: Chip Twomey

 

 

(Above Space for Recorder’s Use Only)

GRANT DEED

Documentary Transfer Tax not shown

pursuant to Section 11932 of the Revenue

and Taxation Code, as amended.

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ Grantor ”), hereby GRANTS to Tesoro Logistics Operations LLC, a Delaware limited liability company (“ Grantee ”), the following described real property (the “ Property ”) located in the City of Martinez, County of Contra Costa, State of California:

PER LEGAL DESCRIPTION ATTACHED AS EXHIBIT 1

SUBJECT TO:

1. Real property taxes and assessments, not delinquent.

2. All covenants, conditions, restrictions, reservations, rights, rights of way, easements, encumbrances, liens and all other matters of record as of the date hereof affecting title to such Property.


IN WITNESS WHEREOF, Grantor has caused this Grant Deed to be executed as of the     day of             , 201    .

 

GRANTOR:
TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company
EXHIBIT ONLY
By:  

 

Printed Name: G. Scott Spendlove
Title: Senior Vice President and Chief Financial Officer


STATE OF TEXAS    )
   )
COUNTY OF BEXAR    )

On                     , before me,                     , personally appeared                     , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Notary Public

(Seal)


Exhibit 1

A PORTION OF SWAMP AND OVERFLOW SURVEYS NO. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP;

THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD, SOUTH 71°22’28” WEST, A DISTANCE OF 989.48 FEET;

THENCE PERPENDICULAR WITH SAID LINE, NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING ;

THENCE SOUTH 71°22’28” WEST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF THE NORTHERLY LINE OF SAID COUNTY ROAD, A DISTANCE OF 702.03 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 52.52 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 38.63 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 292.47 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 201.14 FEET;

THENCE NORTH 20°37’15” EAST, A DISTANCE OF 453.24 FEET;

THENCE SOUTH 89°47’20” EAST, A DISTANCE OF 235.90 FEET;

THENCE SOUTH 36°14’56” EAST, A DISTANCE OF 597.90 FEET;

THENCE NORTH 71°22’28” EAST, A DISTANCE OF 250.77 FEET;


THENCE SOUTH 18°37’32” EAST, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING .

SAID PARCEL CONTAINS 6.839 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.

NOTHING IN THIS DOCUMENT IS MEANT TO SUBVERT STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (b)

PER STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (e) THE ABOVE DESCRIBED REAL PROPERTY MAY BE CONSIDERED IN AN OFFER TO SELL, LEASE, OR FINANCE OR TO CONSTRUCT IMPROVEMENTS THEREON AS LONG AS SAID REAL PROPERTY IS EXPRESSLY CONDITIONED UPON THE APPROVAL AND FILING OF A FINAL SUBDIVISION MAP OR PARCEL MAP, AS REQUIRED UNDER THIS DIVISION.


STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION

NOT BE MADE A PART OF THE PERMANENT RECORD

IN THE OFFICE OF THE COUNTY RECORDER

(PURSUANT TO SECTION 11932 REVENUE AND TAXATION CODE)

 

TO: Recorder

County of Contra Costa

Request is hereby made in accordance with the provisions of the Documentary Transfer Tax Act that the amount of the tax due not be shown on the original document which names:

 

Grantor:    Tesoro Refining & Marketing LLC, a Delaware limited liability company
Grantee:    Tesoro Logistics Operations LLC, a Delaware limited liability company

The property described in the accompanying document is located in the City of Martinez, County of Contra Costa, State of California.

The amount of tax due on the accompanying document is $            .

 

        Computed on full value of property conveyed.

 

         Computed on full value, less liens and encumbrances remaining at the time of sale.

 

TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company
By:  

 

Printed Name: G. Scott Spendlove
Title: Senior Vice President and Chief Financial Officer
Date:               , 201    

 

Note :    After the permanent record is made, this form will be affixed to the conveying document and returned with it.


EXHIBIT B

WHEN RECORDED RETURN TO:

Tesoro Companies, Inc.

19100 Ridgewood Parkway

San Antonio, Texas 78259

Attention: Brooks Meltzer

 

 

SPACE ABOVE THIS LINE FOR RECORDER’S USE    

GRANT OF EASEMENT

(Access)

This GRANT OF EASEMENT is made as of this     day of             , 201    , by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ Grantor ”) and Tesoro Logistics Operations LLC, a Delaware limited liability company (“ Grantee ”):

BACKGROUND

The following recitals of fact are a material part of this instrument:

A. Grantor owns certain land in Contra Costa County on which Grantor operates a petroleum refinery (“ Property ”).

B. Grantee desires to obtain from Grantor an easement for access over and through a portion of the Property on the terms and conditions hereunder.

NOW, THEREFORE, in consideration of Ten Dollars and other good and valuable consideration received by Grantor from Grantee, the receipt and sufficiency of which are hereby acknowledged, the following grants, agreements, and covenants and restrictions are made:

1. GRANT OF EASEMENT . Grantor grants unto Grantee a non-exclusive easement and right-of-way (“ Easement ”) for ingress and egress across, over and through portions of the Property (the “ Easement Area ,” as described in Exhibit 1 attached hereto and made a part hereof) for access to Grantee’s land described in Exhibit 2 (the “ Grantee Property ”). Grantor makes no representations or warranties regarding the Easement Area, and Grantee accepts the Easement Area “AS IS, WHERE IS” for purposes of this Easement.

2. USE AND LIMITATIONS ON USE OF EASEMENT AREAS . The Easement and rights hereby granted are non-exclusive and are subject to any and all other easements or rights in the Easement Area heretofore granted to or reserved by others, whether or not the instruments containing such grants and/or reservations are recorded. Grantee shall use the Easement Area in such manner as not to interfere with, damage or disturb any use of the Property and/or any operations thereon. Grantee shall restore and maintain, or reimburse


Grantor for restoring and maintaining, the original grade and condition of the surface, as well as any paving or other surfacing thereof, whenever and wherever disturbed by Grantee in the exercise of the Easement or by any operation or activity by or for Grantee in connection therewith.

3. OBLIGATION TO COMPLY WITH ALL LAWS AND REGULATIONS . Grantee shall comply with all applicable governmental or quasi-governmental laws, ordinances, rules, regulations of every kind pertaining to the Easement Area or to the use and occupancy thereof, including without limitation, any applicable law, ordinance, rule or regulation regarding or relating to environmental protection, pollution, sanitation or safety (collectively referred to herein as “ Legal Requirements ”). Grantee shall not commit or suffer any waste at the Property and shall not use or permit any use of the Easement Area for any illegal purpose or in any such way as to constitute a public nuisance or in any way so as to violate or breach any applicable law, rule, regulation or ordinance to which the Easement Area is subject.

4. RESERVATION OF RIGHTS BY GRANTOR . Grantor reserves the right to use, and to grant to other parties the rights to use the Property in any ways not inconsistent with the Easement.

5. TERMINATION . This Easement shall continue in effect so long as the rights are exercised by Grantee, but may be terminated: (a) by Grantee at any time by giving Grantor written notice, (b) if Grantee abandons or ceases to use the Grantee Property for sixty (60) consecutive months, or (c) upon mutual written agreement of Grantor and Grantee. After such termination, Grantee, at Grantee’s expense, shall upon demand, within sixty (60) days, remove any and all of Grantee’s property and facilities from the Property (if any as permitted by Grantor) and restore the Easement Area to Grantor’s reasonable satisfaction. This Easement shall not be terminated based on any breach by Grantee of any of the covenants or conditions outlined above; provided, however, that if Grantee fails to cure any such breach within thirty (30) days following receipt of written notice from Grantor, Grantor shall have the right (in addition to any other right available to Grantor at law, other than the right to terminate the Easement) without further notice to cure the breach at Grantee’s expense. Grantee shall reimburse to Grantor the actual expenses incurred by Grantor in effecting such cure not later than thirty (30) days following Grantee’s receipt from Grantor of a demand for payment accompanied by invoices evidencing Grantor’s expenses.

6. CONTAMINATION . Grantee hereby represents, warrants and covenants that it will in no way discharge, dump, bury or store on the Property in violation of Legal Requirements, any pollutants of any nature or kind, including but not limited to pollutants such as oil, chemicals, toxic substances or materials, hazardous wastes or hazardous substances (including, but not by way of limitation, such hazardous wastes or hazardous substances as same are defined by any and all applicable Legal Requirements).

7. INDEMNIFICATION . Grantee hereby waives and releases any claims against Grantor and its officers, directors, shareholders, members, partners, employees and affiliates (collectively, the “ Indemnified Parties ”) in respect of, and agrees to indemnify, defend and hold the Indemnified Parties harmless from and against, all liabilities, damages, actions, fines, penalties, sanctions, causes of action, claims, suits, obligations, responsibilities, liens, violation


of law, rule or regulation, costs and expenses including, without limitation, reasonable attorneys’ fees and costs of litigation (collectively referred to herein as the “ Claims ”), known or unknown, whether currently existing or that may arise in the future, whether in contract or tort or under applicable law, arising out of or relating to Grantee’s exercise of its rights under this Easement, except to the extent that such Claims results from the gross negligence or intentional misconduct of the Indemnified Parties.

8. INSURANCE . Grantee shall maintain, at its sole cost, at all times during the term of this Easement, the following minimum types and limits of insurance (the “ Insurance ”) in compliance with all Legal Requirements and reasonably satisfactory to Grantor: (a) Commercial General Liability (CGL) Insurance (including, but not limited to, contractual liability and all operations hereunder) with combined bodily/personal injury and property damage limits of not less than $3,000,000 per each occurrence; and (b) Excess or Umbrella Liability Insurance with limits of not less than $2,000,000 per each occurrence and $2,000,000 general aggregate to be in excess of the above liability policies. Whenever requested, Grantee shall furnish evidence satisfactory to Grantor that such Insurance is in effect. To the maximum extent permitted by applicable law, all insurance policies maintained by Grantee in accordance with this Paragraph and any other insurance maintained applicable to Grantee’s performance hereunder shall provide a waiver of subrogation in favor of the Indemnified Parties, and naming the Indemnified Parties as additional insureds without restrictions and allow for the separation of insureds. All insurance policies shall give Grantee thirty (30) days written notice of cancellation or material change and any deductible or retention of insurable risks shall be for Grantee’s account. Grantee may self-insure against any loss or damage which could be covered by a CGL insurance policy.

9. QUITCLAIM DEED . Upon termination of the rights hereby granted, Grantee shall execute and deliver to Grantor, within thirty (30) days after written demand therefor, a good and sufficient quitclaim deed to the rights hereby granted. Should Grantee fail or refuse to deliver to Grantor a quitclaim deed, as provided herein, a written notice by Grantor reciting the failure or refusal of Grantee to execute and deliver said quitclaim deed and terminating said grant, shall, after ten (10) days from the date of recordation of said notice, be conclusive evidence against Grantee and all persons claiming under Grantee of the termination of said grant.

10. ASSIGNMENT . Grantee shall not voluntarily or involuntarily assign its interest in the Easement, nor sublet all or part of the Easement Areas nor grant licenses upon the Easement Areas, without the prior consent of Grantor in each instance, which consent shall not be unreasonably withheld, conditioned or delayed and such consent shall not constitute a waiver of the necessity for consent of Grantor for subsequent assignments and subletting. Assignment or subletting without the prior consent of Grantor shall constitute an event of default under this Grant of Easement; provided that the provisions of this Paragraph 10 shall not apply to an assignment of this Grant of Easement by Grantee (a) by operation of law; (b) as a result of a merger or other business reorganization; or (c) to an affiliated entity if such affiliate agrees directly with Grantor to be bound to perform all the duties and obligations of Grantee hereunder. “ Affiliate ” means any legal entity that controls, is controlled by, or is under common control with another legal entity. An entity is deemed to “control” another if it owns directly or indirectly at least fifty percent (50%) of either of the following: (i) the shares entitled to vote at


a general election of directors of such other entity; or (ii) the voting interest in such other entity if such entity does not have either shares or directors. Assignment of this Grant of Easement by Grantee by operation of law, due to a merger or other business reorganization or to an Affiliate shall not relieve Grantee of primary liability under the terms, conditions and provisions of this Grant of Easement. Any collection directly by Grantor from the assignee or subtenant shall not be construed to constitute a novation or a release of Grantee from the further performance of its obligations under this Grant of Easement.

11. NOTICES . All notices hereunder must be in writing and shall be deemed validly given if sent by certified mail, return receipt requested or by commercial courier, provided the courier’s regular business is delivery service and provided further that it guarantees delivery to the addressee by the end of the next business day following the courier’s receipt from the sender, addressed as follows (or any other address that the party to be notified may have designated to the sender by like notice):

 

GRANTEE:    Tesoro Logistics Operations LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attention: Vice President Operations
With a copy to:    Tesoro Logistics Operations LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attention: General Counsel
GRANTOR:    Tesoro Refining & Marketing Company LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attention: Vice President Logistics
With a copy to:    Tesoro Refining & Marketing Company LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attention: General Counsel

Notice shall be effective upon actual receipt or refusal as shown on the receipt obtained pursuant to the foregoing.

12. CONSTRUCTION . In case any one or more of the provisions contained in this Grant of Easement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof and this Grant of Easement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

13. GOVERNING LAW . This Agreement shall be construed under and in accordance with the laws of the State of California.

14. SUCCESSORS AND ASSIGNS . The terms, conditions and provisions hereof shall extend to and be binding upon the parties hereto, their successors and assigns.


Remainder of page intentionally left blank


EXECUTED this     day of             , 201    .

 

GRANTOR:
TESORO REFINING & MARKETING COMPANY LLC, a Delaware limited liability company
EXHIBIT ONLY
By:  

 

Printed Name: G. Scott Spendlove
Title: Senior Vice President and Chief Financial Officer
GRANTEE:
TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company
EXHIBIT ONLY
By  

 

Printed Name: Phillip M. Anderson
Title: President

Signature Page to Grant of Easement (Access)


GRANTOR ACKNOWLEDGMENT

 

STATE OF TEXAS    )
   )
COUNTY OF BEXAR    )

On                     , before me,                     , personally appeared                    , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of                     that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Notary Public

(Seal)

Grantor Acknowledgment – Grant of Easement (Access)


GRANTEE ACKNOWLEDGMENT

 

STATE OF TEXAS    )
   )
COUNTY OF BEXAR    )

On                     , before me,                     , personally appeared                    , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of                     that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Notary Public

(Seal)

Grantee Acknowledgment – Grant of Easement (Access)


Exhibit 1 To Form of Access Easement Agreement Exhibit B

Legal Description of Easement Area

A PORTION OF SWAMP AND OVERFLOW SURVEYS No. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. AND THE COUNTY ROAD ABANDONED BY PARCEL TWO IN QUIT-CLAIM DEED RECORDED FEBRUARY 8, 1996 AS DOC. NO. 1996-23625 O.R., ALL IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP, THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD SOUTH 71°22’28” WEST A DISTANCE OF 1566.16 FEET TO THE TRUE POINT OF BEGINNING; THENCE PERPENDICULAR WITH SAID NORTHERLY LINE SOUTH 18°37’32” EAST, A DISTANCE OF 60.00 FEET TO THE SOUTHERLY LINE OF SAID COUNTY ROAD; THENCE SOUTH 71°22’28” WEST, ALONG SAID SOUTHERLY LINE, A DISTANCE OF 1334.23 FEET TO A POINT ON THE WESTERLY LINE OF SAID PARCEL TWO OF DOC. NO. 1996-23625; THENCE DEPARTING SAID SOUTHERLY LINE, PERPENDICULAR TO SAID LINE NORTH 18°37’32” WEST, A DISTANCE OF 71.86 FEET; THENCE NORTH 75°52’58” EAST, A DISTANCE OF 150.86 FEET TO A POINT ON SAID NORTHERLY LINE; THENCE NORTH 71°22’28” EAST, ALONG SAID NORTHERLY LINE, A DISTANCE OF 1068.84 FEET; THENCE DEPARTING SAID NORTHERLY LINE, PERPENDICULAR TO SAID LINE NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET; THENCE NORTH 71°22’28” EAST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF SAID NORTHERLY LINE, A DISTANCE OF 115.00 FEET; THENCE SOUTH 18°37’32 EAST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING.

SAID PARCEL CONTAINS 2.149 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.


Exhibit 2 To Form of Access Easement Agreement Exhibit B

Legal Description of Grantee Property

A PORTION OF SWAMP AND OVERFLOW SURVEYS NO. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP;

THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD, SOUTH 71°22’28” WEST, A DISTANCE OF 989.48 FEET;

THENCE PERPENDICULAR WITH SAID LINE, NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING ;

THENCE SOUTH 71°22’28” WEST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF THE NORTHERLY LINE OF SAID COUNTY ROAD, A DISTANCE OF 702.03 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 52.52 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 38.63 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 292.47 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 201.14 FEET;

THENCE NORTH 20°37’15” EAST, A DISTANCE OF 453.24 FEET;

THENCE SOUTH 89°47’20” EAST, A DISTANCE OF 235.90 FEET;

THENCE SOUTH 36°14’56” EAST, A DISTANCE OF 597.90 FEET;


THENCE NORTH 71°22’28” EAST, A DISTANCE OF 250.77 FEET;

THENCE SOUTH 18°37’32” EAST, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING .

SAID PARCEL CONTAINS 6.839 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.

NOTHING IN THIS DOCUMENT IS MEANT TO SUBVERT STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (b)

PER STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (e) THE ABOVE DESCRIBED REAL PROPERTY MAY BE CONSIDERED IN AN OFFER TO SELL, LEASE, OR FINANCE OR TO CONSTRUCT IMPROVEMENTS THEREON AS LONG AS SAID REAL PROPERTY IS EXPRESSLY CONDITIONED UPON THE APPROVAL AND FILING OF A FINAL SUBDIVISION MAP OR PARCEL MAP, AS REQUIRED UNDER THIS DIVISION.


EXHIBIT C

ACCESS AND REMEDIATION AGREEMENT

Right of Entry Agreement

 

RECORDING REQUESTED BY  
 
Tesoro Refining & Marketing Company LLC  
 
AND WHEN RECORDED MAIL TO  
 

Name

  Tesoro Refining & Marketing Company LLC  
 

Street

  19100 Ridgewood Parkway  
 

Address

  San Antonio, Texas 78259  
 
Attention:  

Brooks Meltzer, Esq.

 

   

SPACE ABOVE THIS LINE FOR RECORDER’S USE        

 

  APN: To Be Determined

RIGHT OF ENTRY AGREEMENT

FOR ASSESSMENT, REMEDIATION AND CLOSURE ACTIVITIES

MARTINEZ TERMINAL

CITY OF MARTNEZ, COUNTY OF CONTRA COSTA, CALIFORNIA

This Right of Entry Agreement (“Agreement”) is made and entered into between Tesoro Refining & Marketing Company LLC (“TRMC”), a Delaware limited liability company, and Tesoro Logistics Operations LLC (“TLO”), a Delaware limited liability company, regarding the property described in Exhibit 1 (the “Property”), effective as of the date of execution below.

TRMC desires to access the Property and TLO hereby grants TRMC (and its consultants, agents, contractors, subcontractors, and employees) access to the Property, to conduct activities at, on, and about the Property as required by the California Department of Toxic Substances Control, California Regional Water Quality Control Board, local Certified Unified Program Agency, or any other applicable regulatory agency (“Agency”) in connection with remedial activities at the Property (“Activities”), including but not limited to: (i) the excavation, trenching, stockpiling, storage, treatment, and backfilling of soil; (ii) the treatment or removal of soil vapor, groundwater, or surface water; (iii) the removal or closure of tanks, containment trenches and associated piping; (iv) the installation, monitoring, maintenance, storage, operation and closure

 

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of borings, wells, fixtures, installations, and equipment (e.g., injection wells, monitoring wells, extraction wells, treatment systems); (v) storage of vehicles, portable containers and/or tanks and equipment on the Property; and (vi) any other activities necessary to remediate the Property.

 

  1. It is understood by the parties hereto, that the Activities shall be conducted under the oversight of the California Department of Toxic Substances Control, California Regional Water Quality Control Board, local Certified Unified Program Agency, or Agency, and that such agency has authority under applicable law to direct the schedule and scope of the Activities, including the sole discretion to determine when the Activities are complete.

 

  2. TRMC agrees to hold harmless and indemnify TLO from and against all claims, causes of action, damages, costs, and expenses arising out of or resulting from TRMC’s negligence, or the negligence of its consultants, agents, contractors, subcontractors, and employees, in conducting the Activities.

 

  3. TRMC or its consultants, agents, contractors, subcontractors or employees shall promptly remove from the Property, at TRMC’s sole expense, all waste material generated by its Activities, or the Activities of TRMC’s consultants, agents, contractors, subcontractors or employees in the exercise of TRMC’s rights under this Agreement.

 

  4. TRMC, or its consultants, agents, contractors, subcontractors or employees, at TRMC’s sole expense, shall keep the work area clean and neat following the Activities, and restore as much as reasonably possible, the surface appearance of the Property to its original, pre-existing condition upon completion of the Activities.

 

  5. This Agreement shall terminate when the California Department of Toxic Substances Control, California Regional Water Quality Control Board, local Certified Unified Program Agency, or Agency determines in writing that no further Activities are required on the Property, or as otherwise agreed between the parties in writing, and all equipment described in this Agreement are either removed or abandoned in place.

 

  6. Nothing in this Agreement shall be construed as an obligation by TRMC to remediate the Property or to comply with any California Department of Toxic Substances Control, California Regional Water Quality Control Board, local Certified Unified Program Agency, or Agency directive; provided, however, this Section 6 shall not affect any terms or provisions of any other agreement between the parties hereto.

 

  7. Any notice with respect to this Agreement shall be provided as follows:

 

    To TRMC:    Tesoro Refining & Marketing Company LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attn: Brooks Meltzer, Esq.

 

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    To TLO:    Tesoro Logistics Operations LLC
   19100 Ridgewood Parkway
   San Antonio, TX 78259
   Attn: Charles S. Parrish, Esq.

 

  8. This Agreement shall be binding upon TRMC and TLO and their successors and assigns.

 

  9. TRMC shall have the right to record or file this Agreement or a memorandum in the real property records of the County of Contra Costa. TLO agrees to execute (sign) such documents as may be necessary to accomplish such recording.

 

  10. This Agreement contains a complete expression of the agreement between the parties with respect to the subject matter hereof, and there are no promises, representations or inducements, verbal or written with respect to the subject matter hereof, except such as are herein provided. The terms of the Agreement cannot be modified except by written agreement of the parties.

 

  11. If any provision of this Agreement shall be held invalid, illegal or unenforceable in any respect, such provision shall not affect any other provision hereof or the validity of the remainder of this Agreement.

 

  12. This Agreement shall be construed, interpreted, and governed by and in accordance with the laws of California, without regard to its choice of law provisions.

 

  13. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same Agreement.

[ Signature Page Follows ]

 

3


IN WITNESS WHEREOF, the parties authorized representatives have signed this Agreement on the latter signature date specified below.

 

TESORO REFINING & MARKETING, COMPANY LLC, a Delaware limited liability company     TESORO LOGISTICS OPERATIONS LLC, a Delaware limited liability company
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  
Date:       Date:  

Signature Page to Right of Entry Agreement

Martinez


STATE OF                            }
      }ss
COUNTY OF                            }

On                     , before me,                     , a Notary Public in and for said state, personally appeared                     ,                      of Tesoro Refining & Marketing Company LLC, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

Signature  

 

 

STATE OF                            }
      }ss
COUNTY OF                            }

On                     , before me,                     , a Notary Public in and for said state, personally appeared                     ,                      of Tesoro Logistics Operations LLC, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

Signature  

 

Notary Page to Right of Entry Agreement

Martinez


EXHIBIT 1

LEGAL DESCRIPTION OF PROPERTY

the County of Contra Costa, State of

California, described as follows:

A PORTION OF SWAMP AND OVERFLOW SURVEYS NO. 87 AS DESCRIBED IN THE PATENT RECORDED NOVEMBER 30, 1875 IN BOOK 2 OF PATENTS, PAGE 310; AND DEED RECORDED MAY 17, 2002 AS DOC. NO. 2002-0177826 O.R. IN THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS

COMMENCING AT THE INTERSECTION OF THE NORTHERLY LINE OF THE COUNTY ROAD RUNNING FROM AVON TO BAY POINT AS DESCRIBED IN DEED TO THE COUNTY OF CONTRA COSTA, RECORDED JUNE 18, 1913, IN BOOK 205 OF DEEDS, PAGE 141, WITH THE EASTERLY LINE OF THAT CERTAIN 305.931 ACRE PARCEL SHOWN ON LICENSE SURVEY MAP RECORDED DECEMBER 31, 1954 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY IN BOOK 16 OF LICENSE SURVEY MAPS PAGE 36, SAID INTERSECTION SHOWN AS A RAILROAD SPIKE ON SAID LICENSE SURVEY MAP;

THENCE ALONG THE NORTHERLY LINE OF SAID COUNTY ROAD, SOUTH 71°22’28” WEST, A DISTANCE OF 989.48 FEET;

THENCE PERPENDICULAR WITH SAID LINE, NORTH 18°37’32” WEST, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING ;

THENCE SOUTH 71°22’28” WEST, ALONG A LINE PARALLEL WITH AND 110.00 FEET NORTH OF THE NORTHERLY LINE OF SAID COUNTY ROAD, A DISTANCE OF 702.03 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 52.52 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 38.63 FEET;

THENCE NORTH 18°37’32” WEST, A DISTANCE OF 292.47 FEET;

THENCE SOUTH 71°22’28” WEST, A DISTANCE OF 201.14 FEET;

THENCE NORTH 20°37’15” EAST, A DISTANCE OF 453.24 FEET;

THENCE SOUTH 89°47’20” EAST, A DISTANCE OF 235.90 FEET;

THENCE SOUTH 36°14’56” EAST, A DISTANCE OF 597.90 FEET;

THENCE NORTH 71°22’28” EAST, A DISTANCE OF 250.77 FEET;

THENCE SOUTH 18°37’32” EAST, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING .

 

3


SAID PARCEL CONTAINS 6.839 ACRES, MORE OR LESS.

HEREIN DESCRIBED BEARINGS ARE BASED ON CALIFORNIA COORDINATE SYSTEM (CCS83) (NSRS2007) EPOCH 2011.0 ZONE 3.

NOTHING IN THIS DOCUMENT IS MEANT TO SUBVERT STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (b)

PER STATE OF CALIFORNIA GOVERNMENT CODE TITLE 7 PLANNING AND LAND USE DIVISION 3 SECTION 66499.30 (e) THE ABOVE DESCRIBED REAL PROPERTY MAY BE CONSIDERED IN AN OFFER TO SELL, LEASE, OR FINANCE OR TO CONSTRUCT IMPROVEMENTS THEREON AS LONG AS SAID REAL PROPERTY IS EXPRESSLY CONDITIONED UPON THE APPROVAL AND FILING OF A FINAL SUBDIVISION MAP OR PARCEL MAP, AS REQUIRED UNDER THIS DIVISION.

 

4

Exhibit 10.10

THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT

This THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT (the “ Agreement ”) is entered into on, and effective as of, July 1, 2014, among Tesoro Corporation, a Delaware corporation (“ Tesoro ”), on behalf of itself and the other Tesoro Entities (as defined herein), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ TRMC ”), Tesoro Companies, Inc., a Delaware corporation (“ Tesoro Companies ”), Tesoro Alaska Company LLC, a Delaware limited liability company and formerly known as Tesoro Alaska 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 executed that certain Second Amended and Restated Omnibus Agreement dated as of November 15, 2012, amended by that certain Amendment No. 1 to Second Amended and Restated Omnibus Agreement dated as of June 1, 2013, and Amendment No. 2 to Second Amended and Restated Omnibus Agreement dated as of December 6, 2013 (collectively, the “ Second Omnibus Agreement ”).

2. The Parties desired by their execution of the Second Omnibus 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.

3. The Parties desired by their execution of the Second Omnibus 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.

4. The Parties desired by their execution of the Second Omnibus 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 Tesoro Entities (as defined herein) for and on behalf of the Partnership Group (as defined herein).

5. The Parties desired by their execution of the Second Omnibus 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 the Tesoro Entities to the Partnership Group.

6. The Parties desired by their execution of the Second Omnibus 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).

7. The Parties desired by their execution of the Second Omnibus 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.


8. The Parties desired by their execution of the Second Omnibus 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 the Tesoro Entities to the General Partner and the Partnership Group’s right to use certain vehicles leased by the General Partner.

9. The Parties desire to amend and restate the Second Omnibus Agreement to allow, among other items, for the application of the terms hereof to additional contributions of assets from the Tesoro Entities to the Partnership Group.

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 logistics assets, including, but not limited to, all gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, wharves, rail tracks, 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 a Contribution Agreement to any member of the Partnership Group, or, with respect to a Contribution Agreement, 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 applicable Closing Date.

Closing Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement.

Conflicts Committee ” is defined in the Partnership Agreement.

Contribution Agreement ” means the applicable contribution agreement identified on Schedule VII to this Agreement, together with the applicable 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 (a) through ownership of 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, (b) by contract, or (c) otherwise.

 

2


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 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.

First Deadline Date ” means the applicable date for each Contribution Agreement set forth on Schedule VII to this Agreement.

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) the First Deadline Date, and (b) the earlier of (i) the Second Deadline 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 with respect to a Contribution Agreement, the Partnership Group or the Tesoro Indemnifying Parties, as the case may be, in their respective 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.

 

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Marks ” is defined in Section 7.1 .

Name ” is defined in Section 7.1 .

Non-Covered Environmental Losses ” is defined in Section 3.1(b) .

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 April 26, 2011.

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.

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.

Pipeline Rate Regulatory Agencies ” means the applicable federal, state and local governmental or regulatory agencies having jurisdiction over rates to be charged for services provided with respect to the Assets contributed under a Contribution Agreement.

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, terminalling and rail industries and (b) the standards applied or followed by the Tesoro Entities in the performance of similar tasks or projects, or by the General Partner or the Partnership Group in the performance of similar tasks or projects.

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

Retained Assets ” means with respect to a particular Contribution Agreement, all assets owned by any of the Tesoro Entities that were not directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group pursuant to that Contribution Agreement or the other documents referred to in that Contribution Agreement, including, for the avoidance of

 

4


doubt, 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 and located in Hawaii; provided, however, that once any such assets have been directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group pursuant to any other Contribution Agreement or the other documents referred to in any other Contribution Agreement, such assets shall not be included in the definition of “Retained Assets” for purposes of the first-referenced Contribution Agreement in this definition with respect to the period on or after the Closing Date under that other Contribution Agreement.

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) .

Second Deadline Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement.

Second Omnibus Agreement ” is defined in the recitals to this Agreement.

Schedules ” means Schedules I through VII attached to this Agreement, as may be amended and restated pursuant to Section 9.2.

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

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.

 

5


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

Tesoro Indemnifying Parties ” is defined in Section 3.1(a) .

Tesoro Indemnified Parties ” is defined in Section 3.4 .

Third Deadline Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement.

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

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 investing in any business that owns or operates crude oil or refined products pipelines, terminals or storage facilities in the United States.

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:

(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 April 26, 2011 (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

 

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(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 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 the Offer, 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

 

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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.

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 and with respect to Assets conveyed, contributed or otherwise transferred pursuant to a Contribution Agreement, each of the Tesoro Entities set forth on Schedule VII attached to this Agreement with respect to that Contribution Agreement (the “ Tesoro Indemnifying Parties ”), 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,

 

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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 legal action pending as of the applicable Closing Date against the Tesoro Entities, a true and correct summary of which with respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement is described on Schedule I to this Agreement; and

(iv) any event, condition or environmental matter associated with or arising from the Retained Assets, whether occurring before or after the applicable 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 conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement, the Tesoro Indemnifying Parties 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 for that Contribution Agreement under then-applicable Environmental Laws and (y)(i) such violation, event, condition or environmental matter is set forth on Schedule II to this Agreement or (ii) Tesoro is notified in writing of such violation, event, condition or environmental matter prior to the applicable Identification Deadline ( Sections 3.1(a)(i) through (iv)  collectively, with respect to that Contribution Agreement being “ 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 applicable

 

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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 the Tesoro Indemnifying Parties under this Article III without giving effect to the Annual Environmental Deductible. The Losses covered by this Section 3.1(b) are hereinafter referred to as ‘ Non-Covered Environmental Losses .”

3.2 Right of Way Indemnification . Subject to Section 3.7 , and with respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement, each of the Tesoro Indemnifying Parties as set forth on Schedule VII with respect to that Contribution Agreement, 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 (or other party specified on Schedule VII ) 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, wharf, storage tank, terminal, rail tracks or truck rack or any related facility or equipment conveyed or contributed to the applicable Partnership Group Member on the applicable Closing Date is located as of such 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 applicable Closing Date; (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 applicable 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 such Closing Date; 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 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 Reserved .

3.4 Represented Employees . With respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement, and if applicable, the General Partner shall indemnify, defend and hold harmless each of the Tesoro Entities set forth on Schedule VII attached to this Agreement with respect to that Contribution Agreement (the “ Tesoro Indemnified Parties ”) from and against any Losses suffered or incurred by the Tesoro Indemnified Parties 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 the Tesoro Indemnified Parties with respect to the Represented Employees in connection with applicable collective bargaining agreements covering such Represented Employees.

 

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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 and with respect to a respective Contribution Agreement, each of the Tesoro Indemnifying Parties, 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 applicable Closing Date (other than Covered Environmental Losses and Non-Covered Environmental Losses, which are 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 the Third Deadline Date, (ii) any pending (as of the applicable Closing Date) legal actions against the Tesoro Entities set forth on Schedule III to this Agreement, (iii) events and conditions associated with the Retained Assets and whether occurring before or after the applicable Closing Date, (iv) the failure to obtain any necessary consent from the Pipeline Rate Regulatory Agencies, if applicable, and (v) all federal, state and local income tax liabilities attributable to the ownership or operation of the Assets prior to the applicable 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 applicable Closing Date.

(b) In addition to and not in limitation of the indemnification provided under Sections 3.1(a) , 3.2 , and 3.3 , with respect to the “West Coast Assets Contribution Agreement” set forth on Schedule VII :

(i) Tesoro Alaska shall indemnify, defend and hold harmless the Partnership Group from and against any Losses incurred by the Partnership Group, directly or indirectly, by reason of or arising out of a failure of the Tesoro Alaska Pipeline due to “Level 1 Risks” identified pursuant to Coffman Engineers report dated May 8, 2014, until the earlier of (A) the completion of the actions items identified in such report or (B) December 31, 2015;

(ii) Tesoro Alaska shall indemnify defend and hold harmless the Partnership Group from and against any Losses incurred by the Partnership Group, directly or indirectly, by reason of or arising out of the fire water supply system at the Nikiski Terminal (as defined in the West Coast Assets Contribution Agreement) until the earlier of (A) the completion of the repairs or action items identified in the fire water supply study, or (B) December 31, 2015; and

(iii) TRMC shall indemnify defend and hold harmless the Partnership Group from and against any Losses incurred by the Partnership Group, directly or indirectly, by reason of or arising out of the existing excess flow shutoff valves at any of the Anacortes light ends rail facility, the Anacortes light ends truck loading rack or the Martinez clean products truck loading rack until the earlier of (A) the completion of the installation of replacement excess flow shutoff valves at the applicable facility or (B) December 31, 2015.

Notwithstanding the foregoing, the General Partner shall not, and agrees to cause the Partnership Group not to, change the operational parameters of the assets described in Sections 3.5(b)(i )

 

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through (iii)  above from the operational parameters of such assets in effect as of the applicable Closing Date without the prior written consent of the applicable Tesoro Entity. Any change to the operational parameters in violation of this Section 3.5(b) shall terminate the indemnity provided by this Section 3.5(b) as of the date of such change, provided, however, that such termination shall not affect any obligation of the applicable Tesoro Entities that arose before the date of termination.

(c) 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 applicable Closing Date (other than the Covered Environmental Losses and Non-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 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

 

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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 Losses 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) The Tesoro Indemnifying Parties shall not, 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 the amount listed on Schedule VIII under “Annual Environmental Deductible” (the “ Annual Environmental Deductible ”), at which time the Tesoro Indemnifying Parties 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. The Tesoro Indemnifying Parties shall not, 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 the amount listed on Schedule VIII under “Annual ROW Deductible” (the “ Annual ROW Deductible ”), at which time the Tesoro Indemnifying Parties 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) , each of the Tesoro Indemnifying Parties 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 such Tesoro Indemnifying Party.

(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,

 

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REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages actually awarded to a third party or assessed by a governmental authority and for which a Party is properly entitled to indemnification pursuant to the express provisions of this Agreement.

3.8 The Parties agree to the special indemnification provisions set forth on Schedule IX .

ARTICLE IV

CORPORATE SERVICES

4.1 General .

(a) Tesoro agrees to provide, and agrees to cause the applicable Tesoro Entities to provide, on behalf of the General Partner, for the Partnership Group’s benefit all of the centralized corporate services that Tesoro and the applicable Tesoro Entities 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 a monthly administrative fee in the amount set forth in Schedule VIII to this Agreement (the “ Administrative Fee ”), payable on or before the tenth business day of each month, commencing in the first month following the date hereof. Tesoro may increase the Administrative Fee on July 1 of each year, commencing on July 1, 2015, by a percentage equal to the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, rounded to the nearest one-tenth (1/10) of one percent (1%), 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 the Tesoro Entities 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 the Tesoro Entities 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, without duplication of any reimbursements made pursuant to Section 7.4 of the Partnership Agreement, for all other direct or allocated costs and expenses incurred by the Tesoro Entities on behalf of the Partnership Group, including, but not limited to the following; provided, however, that the costs and expenses described in subsections (i) through (vi) below shall not apply with respect to employees of the General Partner or the Tesoro Entities that are providing the services listed on Schedule IV :

(i) salaries of employees of the General Partner or the applicable Tesoro Entities, 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 services to the Partnership Group;

 

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(ii) except as otherwise provided in Section 4.1(c)(vi) below, the cost of employee benefits relating to employees of the General Partner or the applicable Tesoro Entities, 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 the applicable Tesoro Entities for insurance coverage with respect to the Assets or the business of the Partnership Group;

(iv) all expenses and expenditures incurred by the applicable Tesoro Entities 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;

(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 the applicable Tesoro Entities to the Partnership Group pursuant to Section 4.1(a) ;

(vi) any severance or similar amounts (“ Severance Amounts ”) due to the President of the General Partner or the Vice President, Operations of the General Partner in the event of a Change of Control (or similar term, in each case as defined in the applicable management stability agreement) of Tesoro under the terms of their respective management stability agreements with Tesoro, provided that such reimbursement shall be based on the percentage of time spent by such employee on the business of the Partnership Group during the last completed payroll period immediately preceding the date of such Change of Control. Notwithstanding anything in this Agreement to the contrary, in no event will the Partnership Group reimburse Tesoro for, or otherwise in any way be responsible for, (A) any Severance Amounts due to any employee of the General Partner or the applicable Tesoro Entities (other than the President of the General Partner or the Vice President, Operations of the General Partner) in the event of a Change of Control (or similar term, in each case as defined in the applicable Employment Agreement) of Tesoro, or (B) any Tesoro stock-based compensation expense related to accelerated vesting of Tesoro equity awards. For the purposes of this Section 4.1(c)(vi) , the term “ Employment Agreement ” shall include any employment agreement, management stability agreement or similar agreement between Tesoro and any employee of the General Partner or the applicable Tesoro Entities; and

(vii) any other expenses listed on Schedule IV and identified as applicable to this clause (vii).

 

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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, TRMC or Tesoro Alaska, as applicable, will either reimburse the Partnership or reimburse the General Partner and the General Partner will reimburse the Partnership, as applicable, on a dollar-for-dollar basis, without duplication, for each of the following:

(a) during the period commencing on April 26, 2011 and ending on the Second Deadline 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) during the period commencing on the applicable Closing Date and ending on the fifth anniversary of the applicable Closing Date, the expenses incurred by the Partnership Group for repairs and maintenance to storage tanks, pressure vessels and pipelines included as part of the Assets and expenses that are made solely in order to comply with current minimum standards under (i) the U.S. Department of Transportation’s Pipeline Integrity Management Rule 49 CFR 195.452 (ii) American Petroleum Institute (API) Standard 653 for Aboveground Storage Tanks, and (iii) applicable pressure vessel codes as required to allow a terminal to provide services to TRMC under an applicable terminal service agreement, but only if and to the extent that such repairs and maintenance are identified before, during or as a result of the first scheduled API 653 inspections, pressure vessel inspection or pipeline inspections or tests that occur after the applicable Closing Date, and this clause (b) shall apply only to the contribution agreements indicated on Schedule VII ; and

(c) those certain capital and expense projects related to the Assets and described on Schedule VI to this Agreement.

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 until April 26, 2021 (the “ ROFO Period ”) on any ROFO Asset set forth next to such ROFO Asset Owner’s name on Schedule V to this Agreement to the extent that such ROFO

 

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Asset Owner proposes to Transfer any ROFO Asset (other than to any other Tesoro Entity who agrees in writing that such ROFO Asset remains subject to the provisions of this Article VI and such Tesoro Entity 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 another Tesoro Entity) 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-Tesoro Entities 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 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);

 

17


(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 ROFO Asset Owner 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

(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)(v) 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.

 

18


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 date hereof 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 .

ARTICLE VIII

REPRESENTED EMPLOYEES; VEHICLE LEASES

8.1 Transfer of Represented Employees . The Parties acknowledge and agree that certain TRMC employees then covered by collective bargaining agreements with TRMC existing as of an applicable Closing Date (the “ Represented Employees ”) have been or will be transferred to and shall become employees of the General Partner on or before the end of the fiscal year in which that Closing Date occurred. 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.

 

19


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 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

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Charles S. Parrish

Facsimile: (210) 745-4494

If to the Partnership Group:

Tesoro Logistics LP

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

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: Charles S. Parrish

Facsimile: (210) 745-4494

9.3 Entire Agreement . This Agreement together with the Schedules attached hereto (which are incorporated herein by reference) constitute 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.

 

20


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.

9.11 Amendment and Restatement . This Agreement amends and restates the Original Agreement in its entirety and the Parties agree that the terms and provisions of this Agreement replace the terms and provisions of the Original Agreement, which is no longer in force, as of the date hereof.

9.12 Amendment of Schedules . The Parties may amend and restate the Schedules at any time without otherwise amending or restating this Agreement by the execution by all of the Parties of a cover page to the amended Schedules in the form attached hereto as Exhibit A . Such amended and restated Schedules shall replace the prior Schedules as of the date of execution of the cover page and shall be incorporated by reference into this Agreement for all purposes.

[ Signature Page Follows ]

 

21


IN WITNESS WHEREOF , the Parties have executed this Agreement on, and effective as of, the date first written above.

 

TESORO CORPORATION
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO COMPANIES, INC.
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer
TESORO ALASKA COMPANY LLC
By:  

/s/ G. Scott Spendlove

  G. Scott Spendlove
  Senior Vice President and Chief Financial Officer

 

Signature Page 1 of 2 to

Third Amended and Restated Omnibus Agreement


TESORO LOGISTICS LP
By:   Tesoro Logistics GP, LLC,
  its general partner
By:  

/s/ Phillip M. Anderson

  Phillip M. Anderson
  President
TESORO LOGISTICS GP, LLC
By:  

/s/ Phillip M. Anderson

  Phillip M. Anderson
  President

 

Signature Page 2 of 2 to

Third Amended and Restated Omnibus Agreement


EXHIBIT A

FORM OF COVER PAGE FOR

AMENDMENT AND RESTATEMENT OF SCHEDULES

TO THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT

A Third Amended and Restated Omnibus Agreement was executed as of July 1, 2014 (the “Third Amended and Restated Omnibus Agreement”), among Tesoro Corporation, on behalf of itself and the other Tesoro Entities, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLC. Capitalized terms not otherwise defined in this document shall have the terms set forth in the Third Amended and Restated Omnibus Agreement.

The Parties agree that the Schedules are hereby amended and restated in their entirety as of the date hereof to be as attached hereto. Pursuant to Section 9.12 of the Third Amended and Restated Omnibus Agreement, such amended and restated Schedules shall replace the prior Schedules as of the date hereof and shall be incorporated by reference into the Third Amended and Restated Omnibus Agreement for all purposes.

Executed as of             , 20    .

 

TESORO CORPORATION
By:  

 

Name:  

 

Title:  

 

TESORO REFINING & MARKETING COMPANY LLC
By:  

 

Name:  

 

Title:  

 

TESORO COMPANIES, INC.
By:  

 

Name:  

 

Title:  

 

TESORO ALASKA COMPANY LLC
By:  

 

Name:  

 

Title:  

 

 

Page 1 of 2 of

Exhibit A to Third Amended and Restated Omnibus Agreement


TESORO LOGISTICS LP
By:   Tesoro Logistics GP, LLC,
  its general partner
By:  

 

Name:  

 

Title:  

 

TESORO LOGISTICS GP, LLC
By:  

 

Name:  

 

Title:  

 

 

Page 2 of 2 of

Exhibit A to Third Amended and Restated Omnibus Agreement


Schedule I

Pending Environmental Litigation

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

The soil and groundwater on the southern central portion of the site near the 24 inch crude oil line have been impacted with hydrocarbons from a release from the line first observed in September 2011. The California Regional Water Quality Control Board issued an Investigative Order dated September 30, 2011 and to date all requirements of the order have been met. Additional investigative or remedial activities may be required.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement dated as of December 6, 2013 (“ Carson Assets Indemnity Agreement ”), among the Partnership, the General Partner, Tesoro Logistics Operations LLC (the “ Operating Company ”) and TRMC, supersede in their entirety the environmental indemnification provisions of Article III of the Third Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Third Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For West Coast Assets Contribution Agreement listed on Schedule VII:

None

 

Page 1 of 1 of

Schedule I to Third Amended and Restated Omnibus Agreement


Schedule II

Environmental Matters

For Initial Contribution Agreement set forth on Schedule VII :

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.

 

Page 1 of 3 of

Schedule II to Third Amended and Restated Omnibus Agreement


Schedule II

Environmental Matters

(continued)

 

For Amorco Contribution Agreement set forth on Schedule VII :

1. The soil and groundwater on the site of the Tankage, as defined in the Amorco Contribution Agreement, have been impacted by methyl tertiary butyl ether releases from previously buried pipelines. The site is considered characterized and is currently undergoing removal of methyl tertiary butyl ether from the water table, groundwater treatment, and long-term monitoring.

2. Any environmental violation or contamination due to SHPL, as defined in the Amorco Contribution Agreement, being underground prior to the Closing Date.

For Long Beach Contribution Agreement listed on Schedule VII :

1. Any environmental violation or contamination, as defined in the Long Beach Contribution Agreement, prior to the Closing Date.

2. Any anomalies in the Pipeline System that require repair as discovered by the first internal line inspection of any portion of the Pipeline System for which TRMC is notified in writing prior to the First Deadline Date.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Third Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Third Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

 

Page 2 of 3 of

Schedule II to Third Amended and Restated Omnibus Agreement


Schedule II

Environmental Matters

(continued)

 

For West Coast Assets Contribution Agreement listed on Schedule VII:

1. Nikiski Terminal. Subsurface soil and groundwater has not been assessed at this facility. There have been no historic releases that have prompted a soil and groundwater investigations. The area within the tank containment berms was lined with low-permeability soils in the early 1990s. The loading rack, fuel filters and piping manifolds are above concrete secondary containment.

2. Anacortes Light Ends Rail Facility and planned diesel truck rack areas. Subsurface soil and groundwater has not been assessed at this area of the Anacortes refinery. There have been no historic releases that have prompted a soil and groundwater investigation.

3. Anacortes Storage Facility . Historic tank overtopping events and tank bottom corrosion releases have impacted soil and groundwater in the shore tank area of the Anacortes refinery. Groundwater near the shore tanks is monitored for natural attenuation. Groundwater between the tanks and the nearby shoreline has not been characterized, however the hydrocarbon concentrations in this area is not expected to be a threat to human health or the environment.

4. Martinez Refinery LPG Loading Area . Past waste disposal and hydrocarbon releases have impacted areas surrounding the Martinez Refinery LPG loading rack, pad and tanks. Areas north and northeast of the rack were used for past waste disposal. There are documented intra-refinery pipeline releases in the north and western boundaries of the LPG rack concrete pad. The refinery plans to excavate and cap the nearby waste disposal area in 2017. The pipeline releases are being remediated as part of the overall Martinez refinery cleanup. Soil and groundwater directly beneath the loading rack, propane tanks and truck pad have not been sampled.

5. Tesoro Alaska Pipeline.

 

    The pump station for the Tesoro Alaska Pipeline is adjacent to the Kenai Refinery Lower Tank Farm. Multiple historic tank and buried pipeline releases have impacted soil and groundwater in the area; however there are no documented releases from the pipeline pump station. The soil and groundwater surrounding the pump station is considered characterized and undergoing groundwater monitoring and treatment.

 

    A pipeline release in 2001 resulted in soil, groundwater and surface water impacts in an undeveloped area of the Kenai Peninsula. The quantity of the release is not known. Soil surrounding the release was excavated and stockpiled at the Kenai Refinery while groundwater and surface water were remediated on-site. The Alaska Department of Environmental Conservation issued a No Further Action letter for this cleanup effort in 2008. There are no other known release sites on the pipeline between the Kenai Refinery and Anchorage.

 

    Historic spills and releases have impacted the Anchorage #1 terminal, including past releases from the Tesoro Alaska Pipeline receiving station. Groundwater remediation monitoring is ongoing across the Anchorage #1 terminal. In addition, a soil vapor venting system is being installed to address a flame suppressant compound detected in soils near the receiving station control room.

 

Page 3 of 3 of

Schedule II to Third Amended and Restated Omnibus Agreement


Schedule III

Pending Litigation

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

None.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII:

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII:

None.

For West Coast Assets Contribution Agreement listed on Schedule VII:

None

 

Page 1 of 1 of

Schedule III to Third Amended and Restated Omnibus Agreement


Schedule IV

Section 4.1(a): 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

Section 4.1(c)(vii): Other Reimbursable Expenses

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

None.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

None.

 

Page 1 of 2 of

Schedule IV to Third Amended and Restated Omnibus Agreement


Schedule IV

Other Reimbursable Expenses

(continued)

 

For West Coast Assets Contribution Agreement listed on Schedule VII:

None.

 

Page 2 of 2 of

Schedule IV to Third Amended and Restated Omnibus Agreement


Schedule V

ROFO Assets

 

Asset

  

Owner

Golden Eagle Avon 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.    TRMC
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
Anacortes Marine Terminal (Anacortes, Washington). A marine terminal located at the Anacortes Refinery consisting of a crude oil and refined products wharf facility. The marine terminal receives 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.    TRMC

 

Page 1 of 1 of

Schedule V to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

For Initial Contribution Agreement listed on Schedule VII :

Expense Projects

None.

Capital Projects

1. 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. This project has been completed.

2. That certain project AFE# 112120005 at the Mandan refinery, to update additive equipment to allow the offering of Shell additized gasoline. This project has been completed.

3. 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.

4. That certain project AFE# 104100015-M at the Mandan refinery, to update the truck rack sprinkler system. This project has been completed.

5. That certain project number AFE# 122120002 (TCM Idea# 2010113017) at the Mandan refinery, to upgrade the rack blending hydraulic system to reduce/eliminate inaccurate blends at the load rack.

6. That certain project number TCM Idea # 2011433001 at the Mandan refinery, to move the JP8 to new bay and have three bays for loading product across the rack. This project has been cancelled.

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

 

Page 1 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

For Amorco Contribution Agreement listed on Schedule VII :

Expense Projects

All major expense projects that are within the scope of open Work Orders as of the applicable Closing Date.

Capital Projects

1. That certain project related to AFE# 097100014 and AFE# 107100014 at the Amorco terminal, which provide repairs and upgrades to the wharf regarding MOTEMS standards.

2. That certain project related to AFE# 112100001 at the Amorco terminal, which installs a jet mixer system for crude lab testing.

For Long Beach Contribution Agreement listed on Schedule VII :

Expense Projects

1. Any cost that may be incurred to adjust diesel fuel tank vents near light fixtures after a review is conducted and if action is deemed necessary.

2. Costs related to substantial repair or replacement project scheduled for 2012 and 2013 for the pipeline segments in the portion of the Southern California Edison right-of-way area immediately adjacent to the marine terminal to address corrosion, and include IO# 3021407 titled “SCA.Wilmington Edison Reroute” and IO# 3021749 titled “SCA.Edison Reroute 24 inch, 16 inch, 14 inch”.

Capital Projects

1. That certain project related to AFE# 072104079LBT titled “UG Piping – LBT” related to underground pipeline repairs at the Terminal. In addition, any subsequent new projects to address the same specific under-ground piping issues per AFE# 072104079LBT (i.e. a second phase UG Piping project) that would occur on or before the end of year 2015.

2. That certain project related to the TCM Idea# 2012433432 AFE# 125120020 titled “LBT Berth 84a Loading Arm Replacement” which repairs or replaces the loading arms at the Terminal and any related AFE project that will occur upon final project approval to substantially repair or replace the loading arms at the Terminal.

3. That certain project related to the TCM Idea# 2012433433 AFE# 125120021 titled “LBT Berth 86 Loading Arm Replacement” which repairs or replaces the loading arms at the Terminal and any related AFE project that will occur upon final project approval to substantially repair or replace the loading arms at the Terminal.

4. Any remaining costs of those certain projects related to the leak detection on the Terminal and Terminal Pipelines which are substantially complete and include AFE# 107110002, AFE# 117110001, AFE# 117110003, AFE# 117110002, and AFE# 125120002.

 

Page 2 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

Expense Projects

None.

Capital Projects

Any capital costs or expenses that may be incurred for the installation of a custody transfer meter related to the AFE# 125120017 titled “CROF Custody Transfer Meter and Station”.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

Expense Projects

Expenses associated with the API 653 internal inspection, the Carson Crude Terminal Tank 401 (AFE# 13E1219120001BP/WBS 19125.E012.975) scheduled to start in November 2013, including without limitation, cleaning of such Tank (including any waste removal) and any repairs to such Tank required as a result of such inspection.

Capital Projects

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

Expense Projects

1. All 2013 and 2014 costs related to AFE# 136104215BP-M (PRISM ID 32503) for a partial replacement of Rhodia Sulfuric Acid Line 29 will be reimbursed by TRMC to cover the 2014 expenditure of $1.1 million for line neutralization, the pig run and tie-ins. Subject to confirmation with the refinery on exact outage dates, the bulk of this cost will be incurred in March and April.

2. All 2013 costs or 2013 carry-over costs related to AFE# 13E1012000002BP-M12 & 13E1012000002BP-M5 [PRISM ID 32518 (under the 2013 AFE # 13E1012000002BP)] for the Manual Entry Corrosion Program at Terminal 2 will be reimbursed by TRMC. All 2014 costs will be covered by the Partnership’s 2013 budget.

 

Page 3 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

3. All remaining 2013 inspection and repair costs related to AFE# 13E1012000002BP-M2 (PRISM ID 32549) associated with the Marine Terminal 2 – TK 218 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

4. All remaining 2013 inspection and repair costs related to AFE# 13E1212000001-M (PRISM ID 31418) associated with the Marine Terminal 2 – TK 205 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

5. Remaining expenses related to AFE# 13E1179000001-M (PRISM ID 32040) to upgrade PLC systems in the LA Basin will be reimbursed by TRMC.

6. All remaining 2013 inspection and repair costs related to AFE# 13E1212000002-M (PRISM ID 31419) associated with the Marine Terminal 2 – TK 217 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

7. All remaining expenses related to AFE# 136104222BP-M (PRISM ID 32556) associated with the Pipeline OQ Verification will be reimbursed by TRMC.

8. All remaining 2013 inspection and repair costs related to AFE# 13E1012000006-M (PRISM ID 31409) associated with the Carson Products – TK VH1 – API 653 Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.

Capital Projects

1. Maintenance capital expenditures related to that certain AFE# 136104194BP-M (PRISM ID 32480) at Terminal 2 to replace all fire water piping at Berths 76, 77 and 78 areas of Terminal 2 in Long Beach, CA with new piping. This project will also replace all associated valves, fixtures, monitors, and fire-fighting accessories.

2. Maintenance capital expenditures related to that certain TCM Idea# 2013434229 (PRISM ID 25829) at Terminal 2 to replace the existing bladder type foam tank with two atmospheric tanks and foam skids located at either end of the facility along with new piping to support the installation.

 

Page 4 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

3. Maintenance capital expenditures related to that certain TCM Idea# 2013434243 (PRISM ID 20054) at Terminal 2 to replace the existing loading arms at T2’s Berth 77 and 78. The current parts are so old that they are no longer readily available, so in order to properly maintain this equipment to minimize down-time for repairs, these arms should be replaced with the newest models.

4. All capital expenditures related to that certain AFE# 136104077BP-M (PRISM ID 32481) for MOTEMS dock side piping upgrades at Terminal 2.

5. Maintenance capital expenditures related to that certain AFE# 145120008 (PRISM ID 32560) at Terminal 2 to replace the main 12kV electrical switchgear that experienced electrical damage due to several factors: nearing its equipment service life, component degradation, exposure to the elements. The main copper busbar component of the switchgear was recently replaced and dipped in epoxy coating. However, during the repairs, cracks on the insulation of the main horizontal operating bus were discovered. The exterior enclosure is slowly showing signs of corrosion and the glastic insulation materials are degrading.

6. Upon TRMC’s approval to complete the following projects, all capital costs incurred to connect the Los Angeles Wilmington and Carson refinery systems, as well as the crude and product pipeline systems: TCM Idea# 2013434786, AFE# 132110022-M (TCM Idea# 2013434419), TCM Idea# 2013434788, AFE# 132110023-M (TCM Idea# 2013434417), AFE# 132110025-M (TCM Idea# 2013434418), AFE# 132110030-M (TCM Idea# 2013434420), AFE# 132110031-M (TCM Idea# 2013434784), TCM Idea# 2013434785 and AFE# 132110026 (TCM Idea# 2013434137).

7. Upon TRMC’s approval to complete the project, all capital costs related to the project at Terminal 2 targeted to reduce Tesoro’s demurrage cost due to barge delivered additive alternative, under AFE# 132110024-M (TCM Idea# 2013434220).

8. All capital costs related to AFE# 131907046, the implementation of an equivalent solution using Tesoro ECC 6 MOC module, including necessary configuration changes and customization of interfaces to be completed and executed in line with other transformation projects identified as part of integrating other BP assets such as TMS5 to DTN Guardian3, Load Tracker, etc. in the Logistics area.

9. All capital costs related to AFE# 131907047. As a part of the BP Carson Tranche 1 Contribution Agreement, Tesoro acquired Maximo, i-Maintain, Maximo Mobile and Primavera. These applications are used for scheduling and managing routine maintenance tasks and planning capital projects (Primavera). These business functions will be transitioned to SAP PM (using GWOS) and a TSO instance of Primavera. This initiative should be performed in line with Maximo to SAP PM transformation project and with other logistics and refining projects.

10. All capital costs related to AFE# 131907045. This project, in conjunction with Tesoro’s acquisition of the BP Carson City Refinery, is designed to transition and successfully integrate the Southwest’s Logistics Mechanical Integrity Inspection System Information Technology assets into the Tesoro Information Technology application landscape.

 

Page 5 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

For West Coast Assets Contribution Agreement listed on Schedule VII:

Expense Projects

1. Nikiski Terminal . Tesoro Alaska shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to reinstate water supply to the Operating Company’s Nikiski Terminal in connection with the water suppression system.

2. Anacortes Light Ends Rail Facility. TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    to determine the adequacy of fire water at the facility;

 

    with respect to any modifications needed to be made to fire water system to provide adequate fire water; and

 

    for relocation of the knockout drum, if relocation is required.

3. Anacortes Storage Facility

 

    TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group to restore Tank 135 to API 653 specifications. TRMC shall be deemed to be the generator of all hazardous waste and other waste removed from Tank 135 in connection with such cleaning and restoration and shall be responsible for all obligations arising as the generator of such hazardous waste and other waste.

 

    At the General Partner’s direction, a third party engineering firm shall review support for current API 653 inspection interval timing for the tanks at the Anacortes Storage Facility other than Tank 135. Recommendations regarding the inspection timing and scope are expected by year-end 2014. If the recommended first inspection falls within the period specified in Section 5.1(b) of this Agreement, TRMC shall reimburse the Partnership Group in accordance with the terms and conditions of Section 5.1(b) . If the recommended first inspection does not fall within such period, TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for tank floor repairs or replacement to meet API 653 standards through the first API inspection cycle. If TRMC fails to timely renew the Storage Services Agreement – Anacortes, dated as of July 1, 2014, by and among TRMC, the General Partner, the Partnership and the Operating Company (the “ Storage Agreement ”), in accordance with the terms thereof, TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for floor replacement to meet API 653 standards if the Partnership Group chooses to accelerate API 653 inspections prior to the expiration of the Storage Agreement.

 

    TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for decommissioning and repair of sewer lines for Tanks 165 and 166.

 

Page 6 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

4. Martinez Light Ends Rail Facility . TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    to determine the adequacy of fire water at the facility; and

 

    with respect to any modifications needed to be made to fire water system to provide adequate fire water.

5. Martinez Clean Products Truck Rack . TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    if required to supplement data currently available in the baseline inspections records in order to properly document corrosion, to carry out new tank corrosion inspections on Tanks 777, 778 and 890, as well as any repairs resulting from such inspections to meet API 653 standards; and

 

    with respect to Tank 777, the tank berm size and tank proximity evaluation scheduled to completed by year-end 2014, as well as any required adjustments resulting therefrom.

6. Martinez Light Ends Storage . If required to supplement data currently available in the baseline inspection records in order to properly document pipe integrity, TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for inspections and analyses conducted to confirm baseline pipe integrity by year-end 2014, as well as any repairs arising from defects identified through such inspections.

7. Tesoro Alaska Pipeline

 

    Tesoro shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to carry out the repairs and tests identified in the Coffman Engineers report dated May 8, 2014, including the planned hydro-test in 2015 and any resulting repairs therefrom.

 

    Tesoro shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to carry out repairs identified pursuant to the inspection on the Tesoro Alaska Pipeline as a result of the inspection scheduled to begin June 30, 2014.

Capital Projects

1. All capital costs related to AFE# 125100055 - Additive reservoir tank and pumping system for the Nikiski Terminal truck loading rack.

 

Page 7 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VI

Capital and Expense Projects

(continued)

 

2. All capital costs related to AFE# 127100012 - Design, procure, and install Biodiesel Blending Facility at existing Martinez Tract 3 Truck Loading Rack.

3. All capital costs related to AFE# 132100017 – Martinez gasoline loading rack filtration.

4. All capital costs related to AFE# 125110005 - Fabrication and installation of a skid-mounted clay treatment system at the Tesoro Alaska Pipeline Port of Anchorage delivery facility.

5. All capital costs related to AFE# 125110007 – Provision of inline strainers upstream of the Kenai Pump station pipeline pumps and upstream of the Anchorage receiving station control valve.

6. All capital costs related to AFE# 124100034 - Purchase and installation of (5) IP CCTV Cameras, and security video monitoring station for Tesoro Alaska Pipeline Anchorage control room (located at the Port of Anchorage Industrial Park), MLV 7 on Northernlights Blvd, and the ASIG Filter Building located at Ted Stevens International Airport.

7. All capital costs related to AFE# 145110002 regarding the installation of semi-deep cathodic protection wells, a new rectifier and electrical service at the Tesoro Alaska Pipeline.

8. All capital costs related to AFE# 124100030 regarding new CCTV monitoring system at the Nikiski Terminal.

9. All capital costs related to AFE# 145120005 regarding a new cathodic protection anode bed and rectifier for the Nikiski Terminal.

10. All capital costs related to AFE# TBD regarding Fall Protection for Top Loading Tank Cars and Trucks.

11. All capital costs related to AFE# 132100017 regarding the installation of a new Tract 3 Gasoline Loading Rack Filtration System to replace the existing rental units.

12. All capital costs related to AFE# PTS 12475 regarding LPG Tank Car Loading Rack Improvements.

13. All capital costs related to AFE# TBD regarding the installation of a system to add ExxonMobil additives to gasoline at the Tr. 3 truck loading rack.

14. All capital costs related to AFE# 145110009 regarding the implementation of Tesoro Alaska Pipeline mainline delivery strainer.

 

Page 8 of 8 of

Schedule VI to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

Initial Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement, dated as April 26, 2011, among the Partnership, the General Partner, the Operating Company, Tesoro, Tesoro Alaska, TRMC and Tesoro High Plains Pipeline Company LLC    April 26, 2011    April 26, 2013    April 26, 2016    TRMC and Tesoro Alaska    TRMC    April 26, 2021    Yes

 

Page 1 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

Amorco Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement dated as of April 1, 2012, among the Partnership, the General Partner, the Operating Company, Tesoro and TRMC    April 1, 2012    April 1, 2014    April 1, 2017    TRMC    TRMC    April 1, 2022    Yes

 

Page 2 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

Long Beach Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of September 14, 2012, among the Partnership, the General Partner, the Operating Company, Tesoro and TRMC    Execution Date is September 14, 2012, and various Effective Times are upon receipt of the Long Beach Approval, the CDFG Approval and the Other Approvals as set forth in the agreement, as applicable    September 14, 2014    September 14, 2017    TRMC    TRMC    September 14, 2022    Yes

 

Page 3 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

Anacortes Rail Facility Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of November 15, 2012, among the Partnership, the General Partner, the Operating Company, Tesoro and TRMC    November 15, 2012    November 15, 2014    November 15, 2017    TRMC    TRMC    November 15, 2022    No

 

Page 4 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

BP Carson Tranche 1 Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of May 17, 2013, among the Partnership, the General Partner, the Operating Company, Tesoro and TRMC    June 1, 2013    Not Applicable    Not Applicable    Not Applicable    Not Applicable    Not Applicable    No

 

Page 5 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

BP Carson Tranche 2 Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of November 18, 2013, among the Partnership, the General Partner, the Operating Company, Tesoro, TRMC and Carson Cogeneration Company    December 6, 2013    Not Applicable    Not Applicable    Not Applicable    Not Applicable    Not Applicable    No

 

Page 6 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements and Applicable Terms

(continued)

 

West Coast Assets Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Tesoro
Indemnifying
Parties

  

Tesoro
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section 5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of June 23, 2014, among the Partnership, the General Partner, the Operating Company, Tesoro Logistics Pipelines LLC, Tesoro, TRMC and Tesoro Alaska   

First Closing Date: July 1, 2014

Second Closing Date has the meaning set forth in this Contribution Agreement

   The second (2 nd ) anniversary of the First Closing Date or the Second Closing Date, as applicable   

With respect to Section 3.1(a): Not applicable

With respect to Section 3.2: The fifth (5 th ) anniversary of the First Closing Date or the Second Closing Date, as applicable

   Tesoro, TRMC, Tesoro Alaska    Tesoro, TRMC, Tesoro Alaska    The tenth (10 th ) anniversary of the First Closing Date or the Second Closing Date, as applicable.    Yes

 

Page 7 of 7 of

Schedule VII to Third Amended and Restated Omnibus Agreement


Schedule VIII

Administrative Fee and Indemnification Deductibles

Monthly Administrative Fee

$475,000.00

Annual Environmental Deductible

$600,000

Annual ROW Deductible

$600,000

 

Page 1 of 1 of

Schedule VIII to Third Amended and Restated Omnibus Agreement


Schedule IX

Special Indemnification Provisions

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

Addition to Right of Way Indemnification . As of the Closing Date for the Amorco Contribution Agreement, TRMC shall own the leasehold rights in the “Wharf Lease” issued by the California State Lands Commission and the easements, rights of way and permits for the “SHPL,” all as defined in the Amorco Contribution Agreement, and the Partnership Group shall provide operational, maintenance and management services with respect to such Assets pursuant to the MTUTA. Title to Wharf Lease rights and the SHPL are scheduled to be contributed to the Partnership Group at a later date, as set forth in the Amorco Contribution Agreement. The Right of Way Indemnification set forth in Section 3.2 herein applies to the extent that a Loss arises with respect to a Partnership Group Member’s interests under the MTUTA before title to such Assets is contributed to the Partnership Group Member or with respect to a Partnership Group Member’s failure to become the owner of such valid and indefeasible easement rights or fee ownership or leasehold interests in such Assets after they are finally contributed to the Partnership Group as contemplated in the Amorco Contribution Agreement. The Closing Date provided for in this Agreement shall be as set forth above, without regard to when title to these Assets is finally contributed to a Partnership Group Member.

For Long Beach Contribution Agreement listed on Schedule VII :

Addition to Right of Way Indemnification . As of the Closing Date for the Long Beach Contribution Agreement, TRMC shall own the leasehold rights in the “Terminal Lease” issued by the Port of Long Beach and the easements, rights of way and permits for the “Terminal Pipelines,” all as defined in the Long Beach Contribution Agreement, and the Partnership Group shall provide operational, maintenance and management services with respect to such Assets pursuant to the Long Beach Operating Agreement, as defined in the Long Beach Contribution Agreement. Title to Terminal Lease rights and the Terminal Pipelines are scheduled to be contributed to the Partnership Group at a later date, as set forth in the Long Beach Contribution Agreement. The Right of Way Indemnification set forth in Section 3.2 herein applies to the extent that a Loss arises with respect to a Partnership Group Member’s interests under the BAUTA before title to such Assets is contributed to the Partnership Group Member or with respect to a Partnership Group Member’s failure to become the owner of such valid and indefeasible easement rights or fee ownership or leasehold interests in such Assets after they are finally contributed to the Partnership Group as contemplated in the Long Beach Contribution Agreement. The Closing Date provided for in this Agreement shall be as set forth above, without regard to when title to these Assets is finally contributed to a Partnership Group Member.

 

Page 1 of 4 of

Schedule IX to Third Amended and Restated Omnibus Agreement


Schedule IX

Special Indemnification Provisions

(continued)

 

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

Other . Notwithstanding any other provisions of (i) the Third Amended and Restated Omnibus Agreement, (ii) the Anacortes Track Use and Throughput Agreement among the General Partner, the Partnership, the Operating Company and TRMC, (iii) the Anacortes Mutual Track Use Agreement among the General Partner, the Partnership, the Operating Company and TRMC, and (iv) the Ground Lease between TRMC and the Operating Company, all dated as of November 15, 2012, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. For the avoidance of doubt, the indemnification provisions of the Third Amended and Restated Omnibus Agreement shall be subordinate to the respective indemnification provisions of each of the other agreements referenced above.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

Other . Notwithstanding any other provisions of (i) the Third Amended and Restated Omnibus Agreement, (ii) the BP Carson Tranche 1 Contribution Agreement listed on Schedule VII , (iii) the Master Terminalling Services Agreement – Southern California among TRMC, the General Partner, the Partnership and the Operating Company dated as of June 1, 2013, as amended, and (iv) the Carson Storage Services Agreement among TRMC, the General Partner, the Partnership and the Operating Company dated as of June 1, 2013, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Carson Assets Indemnity Agreement, the provisions of the Carson Assets Indemnity Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements. Notwithstanding anything to the contrary in the Third Amended and Restated Omnibus Agreement, the indemnification provisions of Sections 3.2 and 3.5 thereof shall not apply to the Assets as defined in the BP Carson Tranche 1 Contribution Agreement listed on Schedule VII .

 

Page 2 of 4 of

Schedule IX to Third Amended and Restated Omnibus Agreement


Schedule IX

Special Indemnification Provisions

(continued)

 

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

Other . Notwithstanding any other provisions of (i) the Third Amended and Restated Omnibus Agreement, (ii) the BP Carson Tranche 2 Contribution Agreement listed on Schedule VII , (iii) the Amended and Restated Master Terminalling Services Agreement – Southern California among TRMC, the General Partner, the Partnership and the Operating Company dated as of December 6, 2013, (iv) the Long Beach Storage Services Agreement among TRMC, the General Partner, the Partnership and the Operating Company dated as of December 6, 2013, (v) the Berth 121 Operating Agreement between the Operating Company and Carson Cogeneration Company, dated as of December 6, 2013, (vi) the Terminals 2 and 3 Operating Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (vii) the Amended and Restated Long Beach Berth Access Use and Throughput Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (viii) the Long Beach Berth Throughput Agreement among the Partnership, the General Partner, the Operating Company, TRMC and Carson Cogeneration Company, dated as of December 6, 2013, (ix) the SoCal Transportation Services Agreement between TRMC and Tesoro SoCal Pipeline Company LLC, dated as of December 6, 2013, (x) the Long Beach Pipeline Throughput Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (xi) the Carson Coke Handling Services Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (xii) the Coke Barn Lease Agreement between the Operating Company and TRMC, dated as of December 6, 2013 and (xiii) the Terminals 2 and 3 Ground Lease between the Operating Company and TRMC, dated as of December 6, 2013, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Carson Assets Indemnity Agreement, the provisions of the Carson Assets Indemnity Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

 

Page 3 of 4 of

Schedule IX to Third Amended and Restated Omnibus Agreement


Schedule IX

Special Indemnification Provisions

(continued)

 

For West Coast Assets Contribution Agreement listed on Schedule VII:

Other . Notwithstanding any other provisions of (i) the Third Amended and Restated Omnibus Agreement, (ii) the Terminalling Services Agreement – Nikiski, among the General Partner, the Partnership, the Operating Company and Tesoro Alaska, (iii) the Terminalling Services Agreement – Anacortes, among the General Partner, the Partnership, the Operating Company and TRMC, (iv) the Terminalling Services Agreement – Martinez, among the General Partner, the Partnership, the Operating Company and TRMC, and (v) the Storage Services Agreement – Anacortes, the Terminalling Services Agreement – Anacortes, among the General Partner, the Partnership, the Operating Company and TRMC, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Third Amended and Restated Omnibus Agreement, the provisions of the Third Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

 

Page 4 of 4 of

Schedule IX to Third Amended and Restated Omnibus Agreement

Exhibit 10.11

SECONDMENT AND LOGISTICS SERVICES AGREEMENT

THIS SECONDMENT AND LOGISTICS SERVICES AGREEMENT (this “ Agreement ”), dated as of July 1, 2014, is made and entered into by and among Tesoro Companies, Inc., a Delaware corporation (“ TCI ”), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“ TRMC ”), Tesoro Alaska Company LLC, a Delaware limited liability company (“ TAC ” and, together with TCI and TRMC, the “ Tesoro Group ”), Tesoro Logistics GP, LLC, a Delaware limited liability company (the “ General Partner ”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”), Tesoro Logistics Pipelines LLC, a Delaware limited liability company (“ TLP ”), Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company (“ THPPC ”), Tesoro Logistics Northwest Pipeline LLC, a Delaware limited liability company (“ TLNP ”), and Tesoro Alaska Pipeline Company LLC, a Delaware limited liability company (“ TAPC ” and together with the General Partner, TLO, TLP, THPPC and TLNP, the “ Logistics Group ”). Each of TCI, TRMC, TAC, the General Partner, TLO, TLP, THPPC, TLNP and TAPC, is referred to herein as a “Party” and collectively as the “Parties.”

RECITALS:

WHEREAS , on April 1, 2012, certain of the Parties entered into that certain Amended and Restated Operational Services Agreement (the “ Operational Services Agreement ”) pursuant to which the Tesoro Group agreed to provide to the Logistics Group certain services necessary to operate, manage, maintain and report the operating results of the Logistics Group’s assets, including gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and other assets or portions thereof of the Logistics Group;

WHEREAS , subsequent to April 1, 2012, the Logistics Group has expanded to include TLP, TLNP and TAPC, who are to become Parties to this Agreement;

WHEREAS , the Parties desire to supersede the Operational Services Agreement as of the date hereof and enter into this Agreement to allow, among other things, for the Tesoro Group to second certain of their personnel to the General Partner and the General Partner to second certain of its personnel to the Tesoro Group in addition to the provision of certain services previously covered by the Operational Services Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1. DEFINITIONS

As used in this Agreement, the following capitalized terms have the meanings set forth below:

AFE ” shall mean an approval for expenditure.

Affiliate ” means, with respect to any Person, (a) any other Person directly or indirectly controlling, controlled by or under common control with such Person or (b) any Person owning or controlling fifty percent (50%) or more of the voting interests of such Person. For purposes of this definition, the term “controls,” “is controlled by” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.


Agreement ” has the meaning set forth in the Preamble.

Allocation Percentage ” has the meaning set forth in Section 3(d) .

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.

Assets ” means the Logistics Assets and the Tesoro Assets.

Benefit Plans ” means each employee benefit plan, as defined in Section 3(3) of ERISA, and any other material plan, policy, program, practice, agreement, understanding or arrangement (whether written or oral) providing compensation or other benefits to any Seconded Employee (or to any dependent or beneficiary thereof), including, without limitation, any stock bonus, stock ownership, stock option, stock purchase, stock appreciation rights, phantom stock, restricted stock or other equity-based compensation plans, policies, programs, practices or arrangements, and any bonus or incentive compensation plan, deferred compensation, profit sharing, holiday, cafeteria, medical, disability or other employee benefit plan, program, policy, agreement or arrangement sponsored, maintained, or contributed to by the Tesoro Group or the General Partner, as the case may be, or any of their ERISA Affiliates, or under which either the Tesoro Group or the General Partner, or any ERISA Affiliate may have any obligation or liability, whether actual or contingent, in respect of or for the benefit of any Seconded Employee (but excluding workers’ compensation benefits (whether through insured or self-insured arrangements) and directors and officers liability insurance).

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Claim ” means any existing or threatened future claim, including third-party claims, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.

Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

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.

 

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ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” means any entity that would be treated as a single employer with such other entity under Sections 414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder or Section 4001(b)(1) of ERISA.

Extension Period ” has the meaning set forth in Section 6 .

Facilities ” means the facilities related to each of the entities in the Logistics Group.

Force Majeure ” means circumstances not reasonably within the control of the Service Provider and which, by the exercise of due diligence, the Service Provider is unable to prevent or overcome that prevent performance of the Service Provider’s obligations, including: acts of God, strikes, work stoppages, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of courts or Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, storage tanks or lines of pipe and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.

Force Majeure Notice ” has the meaning set forth in Section 12(a) .

General Partner ” means Tesoro Logistics GP, LLC, and its successors and assigns, who is the general partner of the Partnership.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Group ” shall mean either the Tesoro Group or the Logistics Group.

Initial Term ” shall have the meaning set forth in Section 6 .

Licensed Premises ” shall have the meaning set forth in Section 4(b) .

Licensee Group ” shall have the meaning set forth in Section 4(b) .

Licensor Group ” shall have the meaning set forth in Section 4(b) .

Logistics Assets ” means the assets owned by, leased by or necessary for the operation of the business, properties or assets of any entity in the Logistics Group, and any future expansions thereof.

Logistics Group ” has the meaning set forth in the Preamble.

Logistics Group Indemnified Parties ” has the meaning set forth in Section 11(a) .

Logistics Services ” means the Operational Services, Specialized Services and Other Services with respect to the Logistics Assets either as set forth on the Service Schedules or as agreed upon by the applicable Parties pursuant to a Service Order.

 

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Loss ” and “ Losses ” shall have the meaning set forth in Section 11(a) .

Operational Services ” means labor and other services performed for the purpose of providing operational and maintenance services related to the applicable Assets.

Operational Services Agreement ” has the meaning set forth in the Recitals.

Other Services ” means services that are provided to directly support the applicable Assets that may be agreed upon between the Parties from time to time pursuant to a Service Order, in addition to Operational Services and Specialized Services.

Partnership ” means Tesoro Logistics LP, a Delaware limited partnership.

Partnership Change of Control ” means Tesoro Corporation ceases to Control the General Partner.

Partnership Seconded Employees ” has the meaning set forth in Section 2(a)(ii) .

Periods of Secondment ” has the meaning set forth in Section 2(d) .

Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Receiving Party Personnel ” has the meaning set forth in Section 15(d) .

Seconded Employees ” means the Tesoro Seconded Employees and the Partnership Seconded Employees.

Seconded Employee Expenses ” has the meaning set forth in Section 3(b) .

Seconded Services ” shall mean the Logistics Services and/or the Tesoro Services, as applicable, performed by the applicable Seconded Employees.

Secondment ” means each assignment of any Seconded Employees to a Secondment Recipient in accordance with the terms of this Agreement.

Secondment Provider ” has the meaning set forth in Section 3(a) .

Secondment Recipient ” has the meaning set forth in Section 3(a) .

Service Orders ” shall mean documents to be executed by the Parties with respect to the terms and conditions of professional and Logistics Services or Tesoro Services that may be agreed upon from time to time.

Services Reimbursement ” has the meaning set forth in Section 3(a) .

Service Schedules ” has the meaning set forth in Section 2(b)(i) .

Specialized Services ” means services requiring professional or other highly skilled and trained employees, which are provided to directly support the applicable Assets and repairs, replacements, improvements and expansions thereto, including engineering, procurement, environmental, safety and similar services.

 

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TAC ” has the meaning set forth in the Preamble.

TAPC ” has the meaning set forth in the Preamble.

TCI ” has the meaning set forth in the Preamble.

Term ” shall have the meaning set forth in Section 6 .

Terminated Service ” has the meaning set forth in Section 9(a) .

Tesoro Assets ” means the assets owned by, leased by or necessary for the operation of the business, properties or assets of any entity in the Tesoro Group.

Tesoro Group ” has the meaning set forth in the Preamble.

Tesoro Group Indemnified Parties ” has the meaning set forth in Section 11(b) .

Tesoro Seconded Employees ” has the meaning set forth in Section 2(a)(i) .

Tesoro Services ” means the Operational Services, Specialized Services and Other Services with respect to the Tesoro Assets either as set forth on the Service Schedules or as agreed upon by the applicable Parties pursuant to a Service Order.

Third Amended and Restated Omnibus Agreement ” means that certain Third Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Tesoro Corporation, TRMC, TCI, TAC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

THPPC ” has the meaning set forth in the Preamble.

TLNP ” has the meaning set forth in the Preamble.

TLO ” has the meaning set forth in the Preamble.

TLP ” has the meaning set forth in the Preamble.

TRMC ” has the meaning set forth in the Preamble.

 

2. SECONDED EMPLOYEES

(a) Employees .

(i) Subject to the terms of this Agreement, the Tesoro Group agrees to second the Tesoro Seconded Employees to the General Partner, and the General Partner agrees to accept the Secondment of the Tesoro Seconded Employees for the purpose of performing the Logistics Services. When used herein, the term “ Tesoro Seconded Employees ” means those employees of any member of the Tesoro Group who are engaged in providing the Logistics Services to the General Partner from time to time. The Tesoro Seconded Employees will remain at all times the employees of their respective employer in the Tesoro Group, but shall work under the direction, supervision and control of the General Partner when they are serving as Tesoro Seconded Employees.

 

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(ii) Subject to the terms of this Agreement, the General Partner agrees to second the Partnership Seconded Employees to the Tesoro Group, and the Tesoro Group agrees to accept the Secondment of the Partnership Seconded Employees for the purpose of performing the Tesoro Services. When used herein, the term “ Partnership Seconded Employees ” means those employees of the General Partner who are engaged in providing the Tesoro Services to the Tesoro Group from time to time. The Partnership Seconded Employees will remain at all times the employees of the General Partner, but shall work under the direction, supervision and control of the Tesoro Group when they are serving as Partnership Seconded Employees.

(b) Services .

(i) The Tesoro Seconded Employees shall provide to the Logistics Group the Operational Services more particularly described in Schedule A attached to this Agreement for each respective Facility (the “ Service Schedules ”), which Operational Services, the Parties agree, shall be performed under the direction and control of the General Partner. In addition, the Parties acknowledge and agree that some Operational Services listed on the Service Schedules may be expanded, discontinued or modified in scope. These items will be negotiated in good faith by the Parties and the Service Schedules will be revised in writing by the Parties as required. Further, Tesoro Seconded Employees will provide assistance to the Logistics Group from time to time with respect to Specialized Services and Other Services. The terms applicable to Logistics Services will be negotiated in good faith by the applicable Parties and will be reflected in individual Service Orders executed by the applicable Parties identifying the specific Logistics Services to be provided, the timing of those Logistics Services, the method of compensation for those Logistics Services and other terms that may be applicable to those Logistics Services, in addition to the provisions of this Agreement and the other agreements among the Parties.

(ii) The Partnership Seconded Employees shall provide to the Tesoro Group the Tesoro Services more particularly described in the Service Schedules for each respective Facility, which Tesoro Services, the Parties agree, shall be performed under the direction and control of the Tesoro Group. The Parties may from time to time, by mutual agreement, agree on various Tesoro Services to be provided by the Partnership Seconded Employees. The Tesoro Services shall be exclusive of the primary services being provided by TLO to the Tesoro Group under the commercial agreements executed by the applicable Parties and the administrative services being provided under the Third Amended and Restated Omnibus Agreement. Specific terms applicable to Tesoro Services will be negotiated in good faith by the applicable Parties and will be reflected in individual Service Orders executed by the applicable Parties identifying the specific Tesoro Services to be provided, the timing of those Tesoro Services, the method of compensation for those Tesoro Services and other terms that may be applicable to those Tesoro Services, in addition to the provisions of this Agreement and the other agreements among the Parties.

(c) Authority; Former Seconded Employees . Tesoro Seconded Employees shall have no authority or apparent authority to act on behalf of the Tesoro Group while performing Logistics Services under Secondment to the General Partner, and Partnership Seconded Employees shall have no authority or apparent authority to act on behalf of the General Partner while performing Tesoro Services under the Secondment to the Tesoro Group. Those rights and obligations of the Parties under this Agreement that relate to individuals while performing as Seconded Employees will survive after such individuals are no longer serving as Seconded Employees, to the extent necessary to enforce such rights and obligations.

 

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(d) Periods of Secondment . The Seconded Employees will be seconded hereunder from time to time to the General Partner or the Tesoro Group, respectively, starting on the date hereof and continuing, during the periods (and only during the periods) that the Seconded Employees are performing Seconded Services for the General Partner or the Tesoro Group (as applicable), until the earliest of:

(i) the end of the term of this Agreement;

(ii) such end date for any Seconded Services as may be mutually agreed by the applicable Parties;

(iii) a withdrawal, departure, resignation or termination of such Seconded Employees performing Seconded Services hereunder; and

(iv) a termination of Secondment of such Seconded Employees under Section 2(f) .

The Parties acknowledge that the Seconded Employees will also provide services to their primary employer, and the Parties intend that such Seconded Employees shall only be seconded to the General Partner or the Tesoro Group, as the case may be, during those specific times when the Seconded Employees are performing Seconded Services hereunder for the Secondment Recipient, and that services performed for such Seconded Employees’ primary employer shall not be Seconded Services covered by this Agreement. The specific periods of time that any Seconded Employee is seconded by his or her employer to the General Partner or the Tesoro Group and is providing Logistics Services or Tesoro Services, as the case may be, is referred to herein as the “ Periods of Secondment .”

(e) Change of Seconded Employees . If any Seconded Employee tenders his or her resignation to his or her employer, or if the employment of any Seconded Employee is terminated by his or her employer, the employer will promptly replace such Seconded Employee with another Seconded Employee of equivalent skill and training as required to perform the Seconded Services. Unless otherwise specifically agreed in writing by the Parties, the Parties acknowledge and agree that multiple employees may be tasked to provide Seconded Services during any Periods of Secondment, and that the individual employees who provide such Seconded Services may change or rotate their assignments, and that the employees actually providing such Seconded Services shall be Seconded Employees during the period of time that they are actually providing such Seconded Services for the Secondment Recipient. Unless otherwise specifically agreed in writing by the Parties, the Secondment Provider shall have the right to designate which of its employees shall provide Seconded Services to the Secondment Recipient during any Periods of Secondment. The identification of Seconded Employees who may provide Specialized Services or Other Services shall be addressed in individual Service Orders covering such Seconded Services.

(f) Termination of Secondment . Subject to any restrictions contained in any collective bargaining agreement to which any member of the Tesoro Group is a party, the General Partner will have the right to terminate the Secondment of any Tesoro Seconded Employee for any reason at any time. The Tesoro Group will have the right to terminate the Secondment of any Partnership Seconded Employee for any reason at any time. Upon the termination of any Seconded Employee’s Periods of Secondment, the primary employer of such Seconded Employee will be solely liable for any costs or expenses associated with the termination of the Secondment, except as otherwise specifically set forth in this Agreement.

 

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(g) Supervision of Tesoro Seconded Employees .

During each of the Periods of Secondment for Tesoro Seconded Employees, the General Partner shall:

(i) be ultimately and fully responsible for the work assignments of the Tesoro Seconded Employees during those times that the Tesoro Seconded Employees are performing Logistics Services for the Logistics Group hereunder, including supervision of normal work activities and performance consistent with the job functions associated with the Logistics Services;

(ii) set the hours of work and schedules in collaboration with the Tesoro Group; and

(iii) have the right to determine training that should be received by the Tesoro Seconded Employees in order for them to properly perform their duties as Seconded Employees performing Logistics Services.

In the course and scope of performing any Tesoro Seconded Employee’s job functions, the Tesoro Seconded Employees will report into the General Partner’s management structure, and will be under the management and control of the General Partner during the Periods of Secondment in which such Seconded Employees are providing Logistics Services.

(h) Supervision of Partnership Seconded Employees .

During each of the Periods of Secondment for Partnership Seconded Employees, the applicable Tesoro Group entity shall:

(i) be ultimately and fully responsible for the work assignments of the Partnership Seconded Employees during those times that the Partnership Seconded Employees are performing services for a member of the Tesoro Group hereunder, including supervision of their normal work activities and performance consistent with the job functions associated with the Tesoro Services;

(ii) set the hours of work and schedules in collaboration with the General Partner; and

(iii) have the right to determine training that should be received by the Partnership Seconded Employees in order for them to properly perform their duties as Seconded Employees performing Tesoro Services.

In the course and scope of performing any Partnership Seconded Employee’s job functions, the Partnership Seconded Employees will report into such entity’s management structure, and will be under the management and control of the applicable Tesoro Group entity during the Periods of Secondment in which such Seconded Employees are providing Tesoro Services.

(i) Seconded Employees Qualifications; Approval . The Tesoro Group and the General Partner will each provide such suitably qualified and experienced Seconded Employees as they are reasonably able to make available to the General Partner and the Tesoro Group, respectively. To the extent that the Seconded Employees are required to undergo any training or certification to perform Seconded Services, the Secondment Provider shall be responsible for ensuring that such Seconded Employees have obtained such training and certifications, unless otherwise specified in a Service Order. The General Partner will have the right to approve such Tesoro Seconded Employees and the applicable entity in the Tesoro Group will have the right to approve such Partnership Seconded Employees.

 

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(j) Workers Compensation . At all times, the Seconded Employee’s employer will maintain workers’ compensation or similar insurance (either through an insurance company or self-insured arrangement) applicable to the Seconded Employees, as required by applicable state and federal workers’ compensation and similar laws, and will name the General Partner or the applicable Tesoro Group entity, as the case may be, as an additional named insured under each such insurance policy

(k) Benefit Plans .

(i) The Parties acknowledge that non-union represented employees of the Tesoro Group and employees of the Logistics Group are currently covered by a single Benefit Plan, and this Agreement and the Secondment is not intended to modify any existing matters related to such Benefit Plan or the application to individual employees. To the extent that the Tesoro Group and the Logistics Group should have separate Benefit Plans for any employees, then the Secondment of the Tesoro Seconded Employees shall not cause the General Partner or any member of the Logistics Group to be deemed to be a participating employer in any Benefit Plan of any member of the Tesoro Group during the Periods of Secondment. Subject to the General Partner’s reimbursement obligations hereunder, the Tesoro Group shall remain responsible for all obligations and liabilities arising under the express terms of the Benefit Plans of any member of the Tesoro Group as the employer of the Tesoro Seconded Employees, and the Tesoro Seconded Employees will be covered under the Benefit Plans of any member of the Tesoro Group subject to and in accordance with their respective terms and conditions, as they may be amended from time to time. The Tesoro Group and their ERISA Affiliates may amend or terminate any Benefit Plan of any member of the Tesoro Group in whole or in part at any time (subject to the applicable provisions of any collective bargaining agreement covering Tesoro Seconded Employees, if any). To the extent that the Tesoro Group and the Logistics Group should have separate Benefit Plans for any employees, then the Secondment of the Tesoro Seconded Employees shall not cause the General Partner or any member of the Logistics Group to assume any Benefit Plan of any member of the Tesoro Group or to have any obligations, liabilities or rights arising under the express terms of the Benefit Plans of any member of the Tesoro Group, in each case except for cost reimbursement pursuant to this Agreement.

(ii) The Secondment of the Partnership Seconded Employees, shall not cause the Tesoro Group entities to be deemed to be a participating employer in any Benefit Plan of the General Partner during the Periods of Secondment. Subject to the Tesoro Group’s reimbursement obligations hereunder, the General Partner shall remain responsible for all obligations and liabilities arising under the express terms of the Benefit Plans of the General Partner as the employer of the Tesoro Seconded Employees, and the Partnership Seconded Employees will be covered under their Benefit Plans subject to and in accordance with their respective terms and conditions, as they may be amended from time to time. The General Partner and its ERISA Affiliates may amend or terminate any Benefit Plan of the General Partner in whole or in part at any time. The Secondment of the Tesoro Seconded Employees shall not cause the Tesoro Group to assume any Benefit Plan of the General Partner or to have any obligations, liabilities or rights arising under the express terms of the Benefit Plans of the General Partner, in each case except for cost reimbursement pursuant to this Agreement.

(l) Represented Employees . The Parties acknowledge that certain employees of the Tesoro Group who may provide Logistics Services and certain employees of the General Partner who may provide Seconded Services hereunder are represented under one of more collective bargaining agreements with members of the Tesoro Group. This Agreement and the Secondment hereunder is not intended to interfere with or modify those collective bargaining agreements or the rights of the union represented employees or other parties thereto. To the extent that Seconded Services are provided hereunder by union represented employees, the Parties acknowledge that the terms of the collective employment agreements shall apply to such Seconded Services to the same extent that they would apply if such services were not

 

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being performed as Seconded Services, and that for purposes of any matters arising under the collective bargaining agreements with union represented employees, the members of the Tesoro Group who are parties to such collective bargaining agreements shall have the right to represent the interests of the Parties hereto.

 

3. SERVICES REIMBURSEMENT

(a) Operational Expenses . The Party providing the Logistics Services or the Tesoro Services (the “ Secondment Provider ”), as the case may be, shall invoice the recipient of Logistics Services or Tesoro Services performed by the Seconded Employees (the “ Secondment Recipient ”) on or before the tenth (10 th ) Business Day after the end of each month during the Period of Secondment. The itemized invoice (in a form mutually agreed upon by the Parties) shall list the flat monthly fees for Operational Services, as provided under Section 3(e) and detail all other reimbursable Seconded Services, as provided under Section 3(b) that are incurred by the Secondment Recipient with respect to the Seconded Employees in connection with the performance of the applicable Seconded Services during the preceding month (the “ Services Reimbursement ”). The Secondment Recipient shall, within ten (10) calendar days of receipt, pay such invoice, except for any amounts therein being disputed in good faith by the Secondment Provider. Any amounts that the Secondment Provider has disputed in good faith and that are later determined by any court or other competent authority having jurisdiction, or by agreement of the Parties, to be owing from the Secondment Provider to the Secondment Recipient shall be paid in full within ten (10) days of such determination.

(b) Services Reimbursement . Subject to Sections 3(c) and 3(d) , the Services Reimbursement shall include reimbursement for costs and expenses incurred by the Secondment Provider for the Seconded Employees, including the following (collectively, the “ Seconded Employee Expenses ”):

(i) salary and wages (including payroll and withholding taxes associated therewith);

(ii) cash bonuses;

(iii) costs of matching and other employer 401(k) contributions;

(iv) costs of pension benefit accruals;

(v) any cash expense associated with any deferred compensation plan;

(vi) vacation, sick leave, personal leave, maternity leave and any other federal or state mandated leave;

(vii) healthcare coverage, including medical, dental, vision and prescription drug coverage;

(viii) flexible benefits plan, including medical care and dependent care expense reimbursement programs;

(ix) short-term disability benefits and long-term disability insurance premiums;

(x) workers’ compensation insurance;

 

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(xi) premiums for life insurance, accidental death and dismemberment insurance and any other insurance provided to the Seconded Employees;

(xii) the vesting of any long-term incentive awards, whether granted before or during the Period of Secondment;

(xiii) business travel expenses and other business expenses reimbursed in the normal course by the Secondment Provider, such as subscriptions to business-related periodicals and dues to professional business organizations;

(xiv) any other employee benefit or compensation arrangement customarily provided to all employees by the Secondment Provider for which the Secondment Provider incurs costs with respect to Seconded Employees; and

(xv) any sales taxes imposed upon the provision of any taxable services provided under this Agreement; provided , however, that, the General Partner and the Tesoro Group contemplate that the services provided pursuant to this Agreement are not taxable services for sales and use tax purposes.

(c) Adjustments Based on Periods of Secondment . It is understood and agreed that the Secondment Recipient shall be liable for Seconded Employee Expenses to the extent, and only to the extent, they are attributable to the Seconded Services performed by such Seconded Employee.

(d) Adjustments . The Seconded Employee’s employer will determine in good faith the percentage of each Seconded Employee’s time spent providing services to a Secondment Recipient (the “ Allocation Percentage”) . The amount of the Services Reimbursement payable with respect to each Seconded Employee shall be determined by multiplying the Seconded Employee Expenses for such Seconded Employee times the Allocation Percentage for such Seconded Employee; provided, however, that certain Second Employee Expenses shall not be allocated based on the Allocation Percentage but rather shall be allocated as follows:

(i) travel expenses and other specific identifiable expenses incurred with respect to and/or reimbursable to a Seconded Employee shall be paid by the Tesoro Group or the Logistics Group for whom the Seconded Services related to such expenses were performed, except that expenses related to activities that benefit both the Tesoro Group and the Logistics Group shall be shared in accordance with the Allocation Percentage (or such other allocation as may be agreed between the affected Parties); and

(ii) the taxes described in Section 3(b)(xv)  shall be reimbursable in full by the Secondment Recipient.

(e) Allocations for Operational Services . The Parties shall determine an average amount of costs and expenses expected to be incurred for performance of Operational Services, (whether Logistics Services and Tesoro Services) based upon historical employee time spent on performing such services, the level of employees performing such Operational Services, the compensation factors outlined in Sections 3(b) , (c)  and (d)  above, any anticipated changes in the nature and level of Operational Services to be performed and any other reasonable factors used to determine the correct amount of reimbursement to cover the Secondment Provider’s costs of providing such Operational Services. Such amounts shall be fixed as a flat monthly fee for performance of each type of Operational Services at each Facility, and such flat monthly fee shall be invoiced and paid as provided in Section 3(a) above. The initial reimbursable fees payable for such Operational Services shall be as provided on the attached Service Schedules, which fees shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage

 

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equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the U.S. Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%). The Parties shall periodically, but not less than annually, review the existing fee structure for each Operational Service, to determine if it accurately reflects the actual costs and expenses incurred by the Secondment Provider in performing such Operational Services, and the Parties shall negotiate in good faith and make such adjustments as are appropriate to cause the fees for each such Operational Service to reflect the Secondment Provider’s actual costs and expenses in providing the Operational Services. In the event that the level of Operational Services are increased during any month above the anticipated levels used to determine the flat monthly fee, or if the Secondment Provider incurs any travel expense or other specific identifiable reimbursable expenses associated with providing Operational Services that are not included in the factors used to calculate flat monthly fees, then the Parties shall negotiate in good faith to determine an additional amount that the Secondment Provider may charge during such month to cover its increased costs of providing Operational Services during such month.

(f) Where it is not reasonably practicable to determine the amount of any such cost or expense described above, the Tesoro Group and the General Partner shall mutually agree on the method of determining or estimating such cost or expense, which may include the application of an agreed percentage benefit load to a Seconded Employee’s salary and wages in order to value certain of the benefits listed above. If the actual amount of any cost or expense, once known, varies from the estimate used for billing purposes hereunder, the difference, once determined, shall be reflected and adjusted in such manner as may be agreed upon between the Tesoro Group and the General Partner at the time such variance is identified.

 

4. FACILITIES, EQUIPMENT AND OFFICES

(a) Materials, Equipment and Supplies . Either Party may supply or provide materials, equipment and supplies associated with Logistics Services or Tesoro Services. In addition, a Party may incur costs and expenses relating to permits, licenses, utilities, communications, consultants, security, and similar matters that are related to Logistics Services or Tesoro Services. The Parties shall establish procedures whereby the costs and expenses of providing such items are allocated to and paid by the Parties in accordance with the extent to which each Party realizes the benefit of each such item. If one Party incurs the costs and expenses for any such item that is used solely for the benefit of another Party, then the Party that pays for such item shall be entitled to reimbursement from the Party who received the benefit of such item. If any items benefit both the Tesoro Group and the Logistics Group, then the Group who incurs the costs and expenses associated with such items shall be entitled to reimbursement from the other Group in proportion to the benefits received by each Group from the incurrence of such costs and expenses. The Parties shall negotiate such allocations in good faith with respect to each such item at the time the reimbursement is determined. For items that are associated with Operational Expenses, the allocation may be included in the flat monthly fees reflected on the Service Schedules.

(b) Use of Offices, Facilities and Equipment . The Parties may agree, pursuant to a Service Order, to allow employees and contractors of one Group (the “ Licensee Group ”) to have access to and utilize certain offices, facilities and equipment (the “ Licensed Premises ”) of the other Group (the “ Licensor Group ”) for purposes of conducting Operational Services. These Operational Services may include both Seconded Services and other services that are performed by employees of the Licensee Group related to its own Assets. In the event that the Parties so agree pursuant to a Service Order, the employees and contractors of the Licensee Group shall have a license to access and use those offices, facilities and equipment. All such access to and use of the Licensed Premises shall be subject to all rules, policies and procedures of the Licensor Party regarding access and use of the Licensed Premises and adjacent areas by its own employees and contractors, including all reasonable security requirements

 

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applicable to accessing the premises and any systems, technologies, or assets of the Licensor Group. The Licensor Group shall have the right to exclude access to any employee or contractor of the Licensee Group who is in violation of such rules, policies and procedures. The Licensor Group shall have the right to designate on the Service Order, the specific areas, facilities and equipment that are within the Licensed Premises, to restrict access to and use of any areas, facilities and equipment that are not included within the Licensed Premises, and to designate specific routes for ingress and egress to the Licensed Premises. Unless otherwise specified on such Service Order, access to office space shall include access to common parking areas, restrooms and break areas that are utilized by employees of the Licensor Group occupying areas included within or immediately adjacent to the Licensed Premises, together with use of computer servers, telephone lines, other communication equipment, copiers and similar office equipment that serve the Licensed Premises. The Licensor Group may charge the Licensee Group a fee for providing such access in amount to be mutually agreed upon between the Parties pursuant to the applicable Service Order. The identification of the Licensed Premises, the fees to be charged for use of such Licensed Premises and any other special provisions or restrictions regarding use and access of the Licensed Premises shall be set forth in Services Orders entered into between the Parties.

 

5. BOOKS AND RECORDS

The Parties shall keep books of account and other records, in reasonable detail and in accordance with generally accepted accounting principles and industry standards, consistently applied, with respect to the provision of the Seconded Services and the fees charged, as well as costs and expenses for materials, equipment, supplies, communications, utilities and other charges that are charged by one Group to the other Group, including support for allocations. Allocations of Seconded Employee Expenses that are payable other than through flat monthly fees shall be documented by AFEs, Service Orders or other standard documentation to establish an Allocation Percentage and the amount of any reimbursable Seconded Employee Expenses. Books of account and other records shall be open for the Secondment Recipient’s inspection during normal business hours upon at least five (5) Business Days’ prior written notice for twelve (12) months following the end of the calendar year in which such Seconded Services were rendered. This inspection right will include the right of the Secondment Recipient to have its accountants or auditors review such books and records. If an audit reveals that the Secondment Recipient paid more than the applicable fees for any applicable audited period or service, the Secondment Provider shall reimburse the Secondment Recipient for any amounts overpaid together with interest at a rate equal to the prime rate of interest on the original due date published by The Wall Street Journal , accruing from the date paid by the Secondment Recipient to the date reimbursed by the Secondment Provider.

 

6. TERM; RENEWAL

This Agreement shall have a term beginning on July 1, 2014, and shall terminate on July 1, 2024 (the “ Initial Term ”). This Agreement may be extended by the Tesoro Group for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ,” and together with the Initial Term, the “ Term ”). To commence an Extension Period, the Tesoro Group shall provide written notice of its intent to the Logistics Group no less than ninety (90) days prior to the end of the Initial Term or the then-current Extension Period.

 

7. COVENANTS

(a) Access to Premises . In addition to the access to the Licensed Premises provided in Section 4 above, each Party shall give the other Parties reasonable access to its premises as may be required for the Seconded Employees to provide or receive the Seconded Services, as applicable, hereunder. Unless otherwise agreed to in writing by the Parties or in connection with use of the Licensed Premises, the Seconded Employees shall: (i) use the premises of the other Parties solely for the purpose of

 

13


providing or receiving the Seconded Services and not to provide goods or services to or for the benefit of any third party or for any unlawful purpose; (ii) comply with all policies and procedures governing access to and use of such premises made known to such Party in advance, including all reasonable security requirements applicable to accessing the premises and any systems, technologies, or assets of the other Parties; (iii) instruct its employees and personnel, when visiting the premises, not to photograph or record, duplicate, remove, disclose, or transmit to a third party any of the other Parties’ Confidential Information, except as necessary to perform or receive the Seconded Services; and (iv) return such space to the other Parties in the same condition it was in prior to such Party’s use of such space, ordinary wear and tear excepted.

(b) Data Back Up and Security . The Parties shall maintain industry standard data back up and recovery procedures, as well as an industry standard disaster avoidance and recovery plan, in connection with all of its systems used in performing the Seconded Services. The Parties shall maintain and enforce physical, technical and logical security procedures with respect to the access and maintenance of any Confidential Information of the other Parties that is in the Secondment Provider’s possession, which procedures shall: (i) be at least equal to industry standards; (ii) be in full compliance with Applicable Law; and (iii) provide reasonably appropriate physical, technical and organizational safeguards against accidental or unlawful destruction, loss, alteration, unauthorized disclosure, theft or misuse.

(c) Taxes . The Secondment Recipient shall pay or cause to be paid all taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) imposed by any federal, state or local government that the Secondment Provider incurs on its behalf for the Seconded Services provided by the Seconded Employees under this Agreement. If the Secondment Provider is required to pay any of the foregoing, the Secondment Recipient shall promptly reimburse the Secondment Provider in accordance with the payment terms set forth in this Agreement.

 

8. STANDARD OF PERFORMANCE

The Parties shall cause the Seconded Employees shall perform the Seconded Services, as applicable, using at least the same level of care, quality, timeliness, skill and adherence to applicable industry standards, in providing the Seconded Services, as applicable, as such Parties do in providing the Seconded Services to such Party’s subsidiaries and Affiliates.

 

9. TERMINATION

(a) Termination for Convenience . Any specific Operational Service provided by Seconded Employees from the Service Schedules may be terminated by the Secondment Recipient (each such specific Operational Service that has been terminated by the Secondment Recipient, a “ Terminated Service ”) upon ninety (90) days’ prior written notice to the Secondment Provider.

(b) Termination for Default .

A Party shall be in default under this Agreement if:

(i) the Party materially breaches any provision of this Agreement and such breach is not cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party;

 

14


(ii) the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets; or

(iii) If any of the Parties is in default as described above, then the non-defaulting Party may: (A) terminate this Agreement upon notice to the defaulting Parties; (B) withhold any payments due to the defaulting Parties under this Agreement; and/or (C) pursue any other remedy at law or in equity.

(c) Effect of Termination . Upon expiration or termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate; provided, however , that such termination shall not affect or excuse the performance of any Party (i) for any breach of this Agreement occurring prior to such termination, (ii) the payment of any amounts due but not yet payable under this Agreement, or (iii) under any of the following provisions of this Agreement that survive the termination of this Agreement indefinitely: Section 11 ; Section 15 ; and Section 16 . Upon expiration or termination of this Agreement or any Operational Service, each Party shall return to the other Party any equipment or other property or materials of such other Party (including but not limited to any materials containing Confidential Information) that are in the possession or control of such Party or any Seconded Employees (except to the extent they are required for use in connection with any non-terminated Operational Services provided by Seconded Employees).

 

10. RELATIONSHIP OF THE PARTIES AND TO OTHER AGREEMENTS

(a) This Agreement does not form a partnership or joint venture between the Parties. This Agreement does not make any member of the Tesoro Group an agent or a legal representative of any member of the Logistics Group or any member of the Logistics Group an agent or a legal representative of any member of the Tesoro Group. No member of the Tesoro Group shall assume or create any obligation, liability, or responsibility, expressed or implied, on behalf of or in the name of any member of the Logistics Group in connection with the transactions contemplated by this Agreement. No member of the Logistics Group shall assume or create any obligation, liability or responsibility, expressed or implied, on behalf of or in the name of any member of the Tesoro Group in connection with the transactions contemplated by this Agreement.

(b) Except for the Operational Services Agreement, this Agreement does not amend or supersede any other agreements between the Parties that may relate to reimbursement or indemnities for costs and expenses, including the Third Amended and Restated Omnibus Agreement and the various commercial agreements between the Parties.

 

11. INDEMNIFICATION

(a) Indemnification by the Tesoro Group . The Tesoro Group, jointly and severally, shall indemnify and hold harmless the Logistics Group, and the officers, directors, employees, agents and representatives of each member of the Logistics Group (collectively, the “ Logistics Group Indemnified Parties ”) from and against all Claims, and upon demand by the Logistics Group, shall protect and defend the Logistics Group Indemnified Parties from the same, alleged, asserted or suffered by or arising in favor of any Person, and shall pay any and all judgments or settlements of any kind or nature (to include interest) as well as court costs, reasonable attorneys’ fees and expenses, and any expenses incurred in

 

15


enforcing this indemnity provision (each a “ Loss ” and collectively, “ Losses ”), incurred by, imposed upon or rendered against one or more of the Logistics Group Indemnified Parties, whether based on contract, or tort, or pursuant to any statute, rule or regulation, and regardless of whether the Claims are foreseeable or unforeseeable, all to the extent that such Losses are in respect of or arise from (i) breaches by the Tesoro Group of this Agreement, or (ii) Claims by a third-party relating to (A) breaches by the Tesoro Group of this Agreement or (B) the Tesoro Group’s negligence, willful misconduct or violation of law in connection with the performance of the Logistics Services, PROVIDED THAT THE TESORO GROUP SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE LOGISTICS GROUP INDEMNIFIED PARTIES FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF ANY LOGISTICS GROUP INDEMNIFIED PARTY. THE INDEMNITIES UNDER THIS SECTION 11(a) SHALL NOT APPLY TO CLAIMS OR LOSSES THAT ARE CAUSED BY ACTIONS OR OMISSIONS OF TESORO SECONDED EMPLOYEES WHILE ACTING IN THE COURSE OF SECONDMENT TO THE LOGISTICS GROUP.

(b) Indemnification by the Logistics Group . The Logistics Group shall indemnify and hold harmless the Tesoro Group, and the officers, directors, employees, agents and representatives of the Tesoro Group (collectively, the “ Tesoro Group Indemnified Parties ”) from and against all Claims, and upon demand by the Tesoro Group, shall protect and defend the Tesoro Group Indemnified Parties from the same, alleged, asserted or suffered by or arising in favor of any Person, and shall pay any and all Losses incurred by, imposed upon or rendered against one or more of the Tesoro Group Indemnified Parties, whether based on contract, or tort, or pursuant to any statute, rule or regulation, and regardless of whether the Claims are foreseeable or unforeseeable, all to the extent that such Losses are in respect of or arise from (i) breaches by the Logistics Group of this Agreement or (ii) Claims by a third-party relating to (A) breaches by the Logistics Group of this Agreement or (B) the Logistics Group’s negligence, willful misconduct or violation of law in connection with the performance of the Tesoro Services, PROVIDED THAT THE LOGISTICS GROUP SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE TESORO GROUP INDEMNIFIED PARTIES FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF ANY TESORO GROUP INDEMNIFIED PARTY. THE INDEMNITIES UNDER THIS SECTION 11(b) SHALL NOT APPLY TO CLAIMS OR LOSSES THAT ARE CAUSED BY ACTIONS OR OMISSIONS OF LOGISTICS SECONDED EMPLOYEES WHILE ACTING IN THE COURSE OF SECONDMENT TO THE LOGISTICS GROUP.

(c) The indemnifying Parties agree that, notwithstanding anything to the contrary contained in Sections 11(a) and 11(b):

(i) the Secondment Recipient shall indemnify and hold harmless the Secondment Provider and its officers, directors, employees, agents and representatives from and against any and all Losses and Claims brought or raised by any individual who is, or at one time was, a Seconded Employee relating to any act or omission of the Secondment Recipient, its officers, directors, employees, agents or representatives, including, without limitation, workers’ compensation, discrimination, harassment, constructive dismissal, wages paid and hours worked, or any other employment-related Claim; and

(ii) the Secondment Provider shall indemnify and hold harmless the Secondment Recipient and its officers, directors, employees, agents and representatives from and against any and all Losses and Claims brought or raised by any individual who is, or at one time was, a Seconded Employee relating to any act or omission of the Secondment Provider, its officers, directors,

 

16


employees, agents or representatives, including, without limitation, workers’ compensation, discrimination, harassment, constructive dismissal, wages paid and hours worked, or any other employment-related Claim.

(d) Indemnification Procedure . 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 Section 11 , it will provide notice thereof in writing to the indemnifying Party, specifying the nature of and specific basis for such Claim.

(i) 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 Section 11 , 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.

(ii) The indemnified Party agrees to cooperate fully with the indemnifying Party, with respect to all aspects of the defense of any Claims covered by the indemnification under this Section 11 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 and the making available to the indemnifying Party of any employees 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 11(d) . 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 Section 11 ; 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.

(iii) 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.

(e) Limitation on Liability . Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s Affiliates for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its Affiliates that arise out of or relate to this Agreement, regardless of whether any such Claim arises under or results from contract, tort, or strict liability; provided that the foregoing limitation is not intended and shall not affect special damages imposed in favor of unaffiliated Persons that are not Parties to this Agreement.

 

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12. FORCE MAJEURE

(a) Notice . The Secondment Provider’s obligations under this Agreement may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure. As soon as possible upon the occurrence of a Force Majeure, the Secondment Provider shall provide the Secondment Recipient with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). The Secondment Provider shall identify in such Force Majeure Notice the approximate length of time that it reasonably believes in good faith such Force Majeure shall continue. During the period of the Force Majeure event, the Seconded Employees shall be excused from the performance with respect to its obligations related to the provision of the applicable Seconded Service(s) hereunder, but only to the extent that such Force Majeure event actually precludes such Seconded Employees from providing each Seconded Service. The Secondment Recipient shall not be required to pay fees for any affected Seconded Services during the period while its performance is precluded by the Force Majeure. The Secondment Provider shall use commercially reasonable efforts to mitigate and to overcome the effects of such event or circumstances and shall resume performance of its obligations as soon as practicable and shall continue to perform all Seconded Services that are not precluded by the Force Majeure.

(b) Continuation . If a Force Majeure preventing performance of any of the Seconded Services hereunder continues for twelve (12) consecutive months or more, either Party shall have the right to terminate its obligations under this Agreement with respect to the applicable Seconded Service suspended by such Force Majeure.

 

13. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment . Neither the Logistics Group nor the Tesoro Group may assign this Agreement without the prior written consent of the other Party; provided, however, that either Party may subcontract any of the Seconded Services provided hereunder so long as such Seconded Services continue to be provided in a manner consistent with past practices and industry standards and in accordance with Section 8 above. Notwithstanding the foregoing, the Logistics Group shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(b) Partnership Change of Control . The Tesoro Group may terminate this Agreement upon a Partnership Change of Control. The Logistics Group shall provide the Tesoro Group with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

 

14. NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (i) if by transmission by hand delivery, when delivered; (ii) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (iii) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) by e-mail one (1) Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to the Tesoro Group, to:

c/o Tesoro Refining & Marketing Company LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

 

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For legal notices :

Attention: Charles A. Cavallo, III, Managing Attorney - Commercial

phone: (210) 626-4045

email: Charles.A.Cavallo@tsocorp.com

For all other notices and communications :

Attention: Brian S. Coffman

phone: (210) 626-6861

email: Brian.S.Coffman@tsocorp.com

If to the Logistics Group, to:

c/o Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

For legal notices :

Attention: Charles S. Parrish, General Counsel

phone: (210) 626-4280

email: Charles.S.Parrish@tsocorp.com

For all other notices and communications :

Attention: Rick D. Weyen, Vice President, Logistics

phone: (210) 626-4379

email: Rick.D.Weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

 

15. CONFIDENTIAL INFORMATION

(a) Obligations . Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 15 . Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or becomes available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of the Logistics Group that was in the possession of the Tesoro Group or any of its Affiliates as a result of their ownership or operation of the Logistics Assets prior to the date hereof);

 

19


(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 15 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 15(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of the New York Stock Exchange, any of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

(c) Return of Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided , however , that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 15 , and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

(d) Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Seconded Employees who receive or access any Confidential Information of a Secondment Recipient shall be bound to protect such Confidential Information to the same extent and in the same manner as if they received or accessed such Confidential Information as direct employees of the Secondment Recipient, and they shall be representatives of the Secondment Recipient with respect to use or disclosure of the Confidential Information so received or accessed. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

 

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(e) Survival . The obligation of confidentiality under this Section 15 shall survive the termination of this Agreement for a period of two (2) years.

 

16. MISCELLANEOUS

(a) Modification; Waiver . This Agreement may be terminated, amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement may be waived in writing at any time by the Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement, or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

(b) Integration . This Agreement, together with the Service Orders, Service Schedules and the other agreements executed on the date hereof in connection with the other documents executed among the Parties on the date of the Third Amended and Restated Omnibus Agreement, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. In the event of a conflict of provisions of this Agreement and the Third Amended and Restated Omnibus Agreement or amendments thereto, the provisions of the Third Amended and Restated Omnibus Agreement, as it may be amended, shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the Seconded Services provided as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Governing Law; Jurisdiction . This Agreement shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States

 

21


District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such Claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

(e) Counterparts . This Agreement may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

(f) Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement or the application of any such provision to any person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

(g) No Third Party Beneficiaries . Except as specifically provided herein, including as set forth in Section 11 , it is expressly understood that the provisions of this Agreement do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

(h) WAIVER OF JURY TRIAL . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

(i) Schedules and Amendment of Schedules . Each of the Schedules attached hereto and referred to herein is hereby incorporated in and made a part of this Agreement as if set forth in full herein. The Parties may amend and restate the Schedules at any time without otherwise amending or restating this Agreement by the execution by all of the Parties of a cover page to the amended Schedules in the form attached hereto as Exhibit A . Such amended and restated Schedules shall replace the prior Schedules as of the date of execution of the cover page and shall be incorporated by reference into this Agreement for all purposes.

(j) Operational Services Agreement . This Agreement supersedes the Operational Services Agreement in its entirety and the Parties agree that the terms and provisions of this Agreement replace the terms and provisions of the Operational Services Agreement, which is no longer in effect, as of the date hereof. Any references in any other agreements between the Parties and any of their Affiliates that reference the Operational Services Agreement shall be deemed to refer to the Secondment Agreement as its successor.

[Signatures of the Parties follow on the next page.]

 

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IN WITNESS WHEREOF , the Parties hereto have duly executed this Agreement as of the date first written above.

 

TESORO COMPANIES, INC.     TESORO LOGISTICS GP, LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
TESORO REFINING & MARKETING COMPANY LLC     TESORO LOGISTICS OPERATIONS LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
TESORO ALASKA COMPANY LLC     TESORO HIGH PLAINS PIPELINE COMPANY LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
TESORO ALASKA PIPELINE COMPANY LLC     TESORO LOGISTICS PIPELINES LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
      TESORO LOGISTICS NORTHWEST PIPELINE LLC
      By:  

/s/ Phillip M. Anderson

        Phillip M. Anderson
        President

Signature Page to Secondment and Services Agreement


SCHEDULE A-1 to A-32

SERVICE SCHEDULES

See below

Schedule A

Service Schedules


Schedule A-1

Mandan Rack, North Dakota

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of
Seconded
Employees
  Activities of Seconded Employees

Communications

     

Electricity

  $ 32,342       

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

Natural Gas

     

Water

     

Wastewater

     

Personnel Support – Operations, Supply & Trading, Marketing, Security and Maintenance

  $ 163,670       
 

 

 

     

Total

  $ 196,012       
 

 

 

     

 

Schedule A-1

Service Schedules


Schedule A-2

Anchorage Terminal, Alaska

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

 

Schedule A-2

Service Schedules


Schedule A-3

Salt Lake City Rack, Utah

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

Plant Air

     

Steam

     

Water

     

Wastewater

     

 

Schedule A-3

Service Schedules


Schedule A-4

Salt Lake City Storage Facility, Utah

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees
   Activities of Seconded Employees

Communications

        

Electricity

        

Environmental Compliance Maintenance

        

Facility Maintenance

        

Fire and Safety

        

Water

        

Wastewater

        

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
  Activities of Seconded Employees

Partnership Seconded Employees to Tesoro Group (Personnel Support – Maintenance and Operations)

  $ 61,736 (annually   Operator   Operational support
provided for the SLC
remote tank farm
(TRMC).
 

 

 

     

Total

  $ 61,736       
 

 

 

     

 

Schedule A-4

Service Schedules


Schedule A-5

Vancouver Terminal, Washington

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

 

Schedule A-5

Service Schedules


Schedule A-6

Boise Terminal, Idaho

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

 

Schedule A-6

Service Schedules


Schedule A-7

Burley Terminal, Idaho

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

Water

     

Wastewater

     

 

Schedule A-7

Service Schedules


Schedule A-8

Stockton Terminal, California

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

Wastewater

     

 

Schedule A-8

Service Schedules


Schedule A-9

Wilmington Terminal, California

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees      Categories of Seconded
Employees
   Activities of Seconded Employees

Communications

        

Electricity

        

Environmental Compliance Maintenance

        

Facility Maintenance

        

Fire and Safety

        

Water

        

Wastewater

        

Tesoro Seconded Employee to Logistics Group

   $ 51,447       Sr. Project Engineer    Creation and review of
project documentation
  

 

 

       

Total

   $ 51,447         
  

 

 

       

 

Schedule A-9

Service Schedules


Schedule A-10

Salt Lake City Pipelines, Utah

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

Water

     

Wastewater

     

 

Schedule A-10

Service Schedules


Schedule A-11

High Plains Pipeline System, North Dakota and Montana

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

 

Schedule A-11

Service Schedules


Schedule A-12

Amorco Terminal, Suisan Bay, California

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Booming

  $ 190,268       

Communications

     

Environmental Compliance Maintenance

     

Facility Maintenance

     

Fire and Safety

     

General Security

     

Internal Oil Spill Response Drill

  $ 11,967       

Personnel Support

     

Programmable Logic Control and Digital Control System

     

Routine Engineering Support

     

Routine support and repair of fiber optic line

     

Security at site of Wharf and Tankage

  $ 253,691       

Software Services

     

Wastewater Handling

     

 

Schedule A-12

Service Schedules


Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Tesoro Seconded Employees to Logistics Group

  $ 740,729      Gas Rack Operator B

Tank Car Operator B

LPG -HLPR Operator B
LPG B Operator

LPG A Operator

Operator D (Over 6 Months)
Operator D (0-6 Months)

 

Locomotive Engineer – moves groups of tank cars on and off track

 

Track Switchman – works with Engineer and operates tank switches to direct tank car placement

 

Avon Wharf tram operator – drives tram back and forth between the dock and Land’s End

 

Ship Tie-Up and Release –Assists TPIC in tying up and releasing vessels at either Amorco or Avon

 

Wharf Helper – monitors the hoses and ship positions while cargo operations are underway at Avon and Amorco Wharves

 

 

 

     

Total

  $ 1,196,655       
 

 

 

     

 

Schedule A-12

Service Schedules


Schedule A-13

Long Beach Terminal, Port of Long Beach, California

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

Communications

        

Environmental Compliance Maintenance

        

Facility Maintenance

        

Fire and Safety

        

General Security

        

Tesoro Seconded Employee to Logistics Group

   $ 29,351       Fire Marshall    Review fire safety issues, processes and procedures

Programmable Logic Control and Digital Control System

        

Routine Engineering Support

        

Routine support and repair of fiber optic line

        

Software Services

        

Wastewater Handling

        

Wharf Support Personnel

        
  

 

 

       

Total

   $ 29,351         
  

 

 

       

 

Schedule A-13

Service Schedules


Note that the following services shall be direct billed to TLO from third parties and shall not be part of the Agreement:

 

  a) Electricity (SoCal Edison);

 

  b) Gas (City of Long Beach);

 

  c) Water (Long Beach Water);

 

  d) Right-of-Way Payments (SoCal Edison); and

 

  e) Outside services (e.g., Environmental and Engineering Consulting) through direct bill work orders.

 

Schedule A-13

Service Schedules


Schedule A-14

Anacortes Rail Facility, Anacortes, Washington

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees     Categories of Seconded
Employees

Communications

    

Environmental Compliance Maintenance

    

Facility Maintenance

    

Fire and Safety

    

General Security

    

Personnel Support

    

Programmable Logic Control and Digital Control System

    

Routine Engineering Support

    

Routine support and repair of fiber optic line

    

Software Services

    

Wastewater Handling (Anacortes Refinery)

    

Electricity (PSE)

   $ 365,273     

Water (City of Anacortes, including potable, non-potable and fire water)

    
  

 

 

   

Total

   $ 365,273  
  

 

 

   

 

* This amount is applicable until separate metering is installed pursuant to the ground lease executed in connection with the Contribution, Conveyance and Assumption Agreement related to the Anacortes Rail Facility.

 

Schedule A-14

Service Schedules


Note that the following services shall be direct billed to TLO from third parties and shall not be part of the Agreement: Outside services (e.g., Environmental and Engineering Consulting) through direct bill work orders.

 

Schedule A-14

Service Schedules


Schedule A-15

San Diego Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Personnel Support (Management support provided from Partnership Seconded Employees to Tesoro Group to support fleet operations)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: SDG&E

 

  b) Gas: SDG&E

 

  c) Water & Sewer: City of San Diego

 

  d) Telephone: Sprint

 

Schedule A-15

Service Schedules


Schedule A-16

Colton Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Personnel Support (Management support provided from Partnership Seconded Employees to Tesoro Group to support fleet operations)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: Southern California Edison

 

  b) Water: West Valley Water District Sewage/ - City of Rialto

 

  c) Telephone: AT&T

 

Schedule A-16

Service Schedules


Schedule A-17

Hathaway Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: Southern California Edison

 

  b) Gas: Southern California Gas Co.

 

  c) Telephone: Verizon & AT&T

 

Schedule A-17

Service Schedules


Schedule A-18

Hynes Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: Southern California Edison

 

  b) Gas: Southern California Gas Co.

 

Schedule A-18

Service Schedules


Schedule A-19

Vinvale Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: Southern California Edison

 

  b) Gas: Southern California Gas Co.

 

  c) Water/Sewer: City of South Gate

 

  d) Telephone: Verizon/AT&T

 

Schedule A-19

Service Schedules


Schedule A-20

Carson Crude Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

Note that the following services shall be direct billed to TLO from third parties and shall not be part of this Agreement:

 

  a) Electricity: Southern California Edison

 

Schedule A-20

Service Schedules


Schedule A-21

City of Los Angeles, Port of Long Beach, Berth 121

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

 

Schedule A-21

Service Schedules


Schedule A-22

City of Los Angeles, Port of Long Beach, Terminal 2 and associated tank farms

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

 

Schedule A-22

Service Schedules


Schedule A-23

Storage facilities at City of Los Angeles, Port of Long Beach, Terminal 3

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

 

Schedule A-23

Service Schedules


Schedule A-24

Tesoro SoCal Pipeline System

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

 

Schedule A-24

Service Schedules


Schedule A-25

Carson Products Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

General Security

     

Wastewater Handling (occasional use of the refinery vacuum truck and refinery processing of terminal wastewater)

     

 

Schedule A-25

Service Schedules


Schedule A-26

Coke Handling Warehouse

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Fire and Safety

     

General Security

     

Wastewater Handling (removal of runoff from retention locations, use of the refinery vacuum truck as needed and disposal according to documented procedures)

     

 

Schedule A-26

Service Schedules


Schedule A-27

Carson Overhead Support

Unless otherwise noted, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement:

 

Service

   Fees    Categories of Seconded
Employees

Environmental, Health and Safety Management Support (in support of retail fleet and transportation business)

     

Planning and Optimization Management Support (in support of retail fleet and transportation business)

     

Other Fleet Management Support

     

 

Schedule A-27

Service Schedules


Schedule A-28

Martinez Terminal and Rail Facility

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Electricity

  $ 190,000       

Water

     

Communications

     

General Security

  $ 105,000       

Fire and Safety

     

Wastewater Handling

     

Tesoro Seconded Employees to Logistics Group

  $ 290,051      Operator Helper Trainee
(0-12 Months); (24-36
Months); (over 36
Months)
 

Truck and Trailer –in charge of incoming propane stream from refinery and loading propane trucks

 

Tankcars –in charges of loading/unloading tankcars and tracking movements of the two propylene tanks 646/7

 

Gas Rack – in charge of unloading ethanol and biodiesel trucks and certifying drivers

 

 

 

     

Total

  $ 585,051       
 

 

 

     

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement.

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Partnership Seconded Employees to Tesoro Group

  $ 1,352,006      Gas Rack Operator B
Tank Car Operator B

LPG - HLPR Operator B

LPG B Operator

LPG A Operator
Operator D (Over 6
Months)

 

Locomotive Engineer – moves groups of tank cars on and off track

 

Track Switchman – works with Engineer and operates tank switches to direct tank car placement

 

Avon Wharf tram operator – drives tram back and forth between the dock and Land’s End

 

Schedule A-28

Service Schedules


Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

    Operator D
(0-6 Months)
 

Ship Tie-Up and Release –Assists TPIC in tying up and releasing vessels at either Amorco or Avon

 

Wharf Helper – monitors the hoses and ship positions while cargo operations are underway at Avon and Amorco Wharves

 

 

 

     

Total

  $ 1,352,006       
 

 

 

     

 

Schedule A-28

Service Schedules


Schedule A-29

Anacortes Truck and Propane Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Electricity

  $ 60,000       

Water

     

Communications

     

General Security

  $ 100,000       

Fire and Safety

     

Wastewater Handling

     

Tesoro Seconded Employees to Logistics Group

     
  $ 411,923      Operator 1 – Loader/
Gauger on Tank Car
Rack (TCR):
  Does all loading and unloading of tank cars.
  $ 47,557      Operator 1 – Asphalt   Responds to truck rack as needed for alarms, bill of lading, and operational problems
  $ 102,437      Operator 1 Special
Logistics Board
Operator:
  Monitors shore tanks as part of board duties including: Deals with propane truck drivers at the truck rack to address issues; Directs other operators to address shore tanks, tank car rack and truck rack as needed based on board readings, alarms and notifications.
  $ 128,600      Shift Supervisor:   Directs and supervises all operators; Addresses issues that are beyond the operators experience or authority to address on equipment; May direct response during an emergency situation.
    Temporary Supervisor:   Fills in for Shift Supervisor when needed due to vacation or illness.
 

 

 

     

Total

  $ 850,517       
 

 

 

     

 

Schedule A-29

Service Schedules


Schedule A-30

Anacortes Marine Crude Storage

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Electricity

  $ 10,000       

Water

     

Communications

     

General Security

  $ 28,000       

Fire and Safety

     

Wastewater Handling

     

Tesoro Seconded Employees to Logistics Group

     
  $ 45,769      Operator 1 – Tank
Farm
  Deals with issues on shore tank including lineups, gauging and water draining; Also walks the shore tanks for visual inspections as part of rounds.
  $ 51,218      Operator 1 special –
Logistics Board
Operator
  Monitors shore tanks as part of board duties including; Deals with propane truck drivers at the truck rack to address issues; Directs other operators to address shore tanks, tank car rack and truck rack as needed based on board readings, alarms and notifications.
  $ 32,150      Shift Supervisor   Directs and supervises all operators; Addresses issues that are beyond the operator’s experience or authority to address on equipment; May direct response during an emergency situation.
    Temporary Supervisor   Fills in for Shift Supervisor when needed due to vacation or illness.
 

 

 

     

Total

  $ 167,137       
 

 

 

     

 

Schedule A-30

Service Schedules


Schedule A-31

Tesoro Alaska Pipeline

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

  Fees     Categories of Seconded
Employees
 

Activities of Seconded Employees

Electricity

  $ 365,000       

Water

     

Security

  $ 95,000       

Communications

     

General Security

  $ 5,000       

Fire and Safety

     

Wastewater Handling

     

Tesoro Seconded Employees to Logistics Group

     
  $ 141,156      Pumper I  
  $ 292,640      Operations/Oil
Movements Supervisor
 
  $ 80,420      Manager Oil Movements  
 

 

 

     

Total

  $ 979,216       
 

 

 

     

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement.

 

Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

Partnership Seconded Employees to Tesoro Group

        
   $ 102,524       Area Manager    Management oversight

 

Schedule A-31

Service Schedules


Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

   $ 21,528       Oil Movement, Staff
Assistant
   Clerical work
   $ 93,150       Control Center
Operator
   Monitoring of tank movement, vessel loading and offloading, direct Pumpers on tasks performed for KPL and Refinery tank farm.
   $ 42,850       E/I Technician    Maintain electrical and instrumentation equipment
  

 

 

       

Total

   $ 260,052         
  

 

 

       

 

Schedule A-31

Service Schedules


Schedule A-32

Nikiski Alaska Truck Terminal

Unless otherwise noted below, the Tesoro Seconded Employees will provide the following Operational Services to the Logistics Group in accordance with Section 2 of the Agreement:

 

Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

Communications

        

Water

        

Security

   $ 48,000         

General Security

   $ 15,000         

Fire and Safety

        

Wastewater Handling

        

Tesoro Seconded Employees to Logistics Group

        
   $ 141,156       Pumper I   
   $ 126,659       Pumper II   
   $ 48,773       Operations/Oil
Movements
Supervisor
   Supervision of day to day operations
   $ 13,403       Manager Oil
Movements
   Management Oversight
  

 

 

       

Total

   $ 392,991         
  

 

 

       

Unless otherwise noted below, the Partnership Seconded Employees will provide the following Tesoro Services to the Tesoro Group in accordance with Section 2 of the Agreement.

 

Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

Partnership Seconded Employees to Tesoro Group

        
   $ 51,262       Area Manager    Management oversight

 

Schedule A-32

Service Schedules


Service

   Fees      Categories of Seconded
Employees
  

Activities of Seconded Employees

   $ 7,176       Oil Movement, Staff
Assistant
   Clerical work
   $ 93,150       Control Center
Operator
   Monitoring of tank movement, vessel loading and offloading, direct Pumpers on tasks performed for KPL and Refinery tank farm.
   $ 42,850       E/I Technician    Maintain electrical and instrumentation equipment
  

 

 

       

Total

   $ 194,438         
  

 

 

       

 

Schedule A-32

Service Schedules


EXHIBIT A

FORM OF COVER PAGE FOR

AMENDMENT AND RESTATEMENT OF SERVICE SCHEDULES

TO SECONDMENT AND SERVICES AGREEMENT

A Secondment and Services Agreement was executed as of July 1, 2014 (the “Secondment Agreement”), among Tesoro Companies, Inc., Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, Tesoro Alaska Pipeline Company LLC, Logistics GP, LLC, Tesoro Logistics Operations LLC, Tesoro Logistics Pipelines LLC, Tesoro High Plains Pipeline Company LLC and Tesoro Logistics Northwest Pipeline LLC. Capitalized terms not otherwise defined in this document shall have the terms set forth in the Secondment Agreement.

The Parties agree that the Service Schedules are hereby amended and restated in their entirety as of the date hereof to be as attached hereto. Pursuant to Section 16(j) of the Secondment Agreement, such amended and restated Service Schedules shall replace the prior Service Schedules as of the date hereof and shall be incorporated by reference into the Secondment Agreement for all purposes.

Executed as of             , 20    .

 

TESORO COMPANIES, INC.     TESORO LOGISTICS GP, LLC
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  

TESORO REFINING & MARKETING COMPANY LLC

   

TESORO LOGISTICS OPERATIONS LLC

By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  

Exhibit A


TESORO ALASKA COMPANY LLC     TESORO HIGH PLAINS PIPELINE COMPANY LLC
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  
TESORO ALASKA PIPELINE COMPANY LLC     TESORO LOGISTICS PIPELINES LLC
By:  

 

    By:  

 

Name:       Name:  
Title:       Title:  
      TESORO LOGISTICS NORTHWEST PIPELINE LLC
      By:  

 

      Name:  
      Title:  

Exhibit 10.12

TERMINATION AGREEMENT

This Termination Agreement (this “Agreement”), is entered into as of July 1, 2014 by and among Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ TRMC ”), Tesoro Alaska Company LLC, a Delaware limited liability company and formerly known as Tesoro Alaska Company (“ TAC ”), Tesoro Companies, Inc., a Delaware corporation (“ TCI ”), Tesoro Logistics GP, LLC, a Delaware limited liability company (“ TLGP ”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“ TLO ”) and Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company (“ THPPC ”). The above-named entities are sometimes referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties .”

WHEREAS , the Parties entered into that certain Amended and Restated Operational Services Agreement dated April 1, 2012, as amended (the “ OSA ”);

WHEREAS , the Parties entered into that certain Secondment and Logistics Services Agreement, dated as of the date hereof (the “ Secondment Agreement ”), which is intended supersede the terms of the OSA;

WHEREAS , in connection with their entry into the Secondment Agreement, the Parties desire to terminate the OSA.

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants, agreements and conditions contained herein, the Parties hereto agree as follows:

1. The Parties hereto agree that the OSA is terminated and of no further force or effect as of the date hereof.

2. The Secondment Agreement supersedes the OSA in its entirety and the Parties agree that the terms and provisions of the Secondment Agreement replace the terms and provisions of the OSA, which is no longer in effect, as of the date hereof. Any references in any other agreements between the Parties and any of their Affiliates that reference the OSA shall be deemed to refer to the Secondment Agreement as its successor.

3. The Parties agree that any obligations that arose pursuant to the OSA prior to the date hereof shall survive the termination of the OSA.

4. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

5. The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

6. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without regard to the principles of conflicts of law. Each of the Parties (a)


irrevocably agrees that any claims, suits, actions or proceedings arising out of or relating in any way to this Agreement shall be exclusively brought in any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims, (b) irrevocably submits to the exclusive jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, of the district court of Bexar County, Texas in connection with any such claim, suit, action or proceeding, (c) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (i) it is not personally subject to the jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or the district court of Bexar County, Texas, or of any other court to which proceedings in such courts may be appealed, (ii) such claim, suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such claim, suit, action or proceeding is improper, (d) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding and (e) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder or by personal service within or without the State of Texas, and agrees that service in such forms shall constitute good and sufficient service of process and notice thereof; provided, however, that nothing in clause (e) hereof shall affect or limit any right to serve process in any other manner permitted by law.

7. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

8. This Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith.

9. 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.

[ Signature Page Follows ]

 

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IN WITNESS WHEREOF , the Parties have caused this Agreement to be executed and delivered by their respective officers as of the day and year first above written.

 

TESORO REFINING & MARKETING COMPANY LLC     TESORO LOGISTICS GP, LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
TESORO ALASKA COMPANY LLC     TESORO LOGISTICS OPERATIONS LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President
TESORO COMPANIES, INC.     TESORO HIGH PLAINS PIPELINE COMPANY LLC
By:  

/s/ G. Scott Spendlove

    By:  

/s/ Phillip M. Anderson

  G. Scott Spendlove       Phillip M. Anderson
  Senior Vice President and Chief Financial Officer       President

Signature Page to Termination Agreement

Exhibit 99.1

 

LOGO

Tesoro Logistics Closes Acquisition of Certain Tesoro Corporation Terminalling and Storage Assets

SAN ANTONIO – July 1, 2014— Tesoro Corporation (NYSE:TSO) (“Tesoro”) and Tesoro Logistics LP (NYSE:TLLP) (the “Partnership” or “TLLP”) today announced that they have closed TLLP’s acquisition of certain terminalling and storage assets (the “West Coast Logistics Assets”) owned by Tesoro and certain of its subsidiaries. TLLP acquired three marketing terminals and a storage facility for total consideration of $241 million, and expects to close the acquisition of the refined products pipeline at a later date.

Consideration for this portion of the transaction included cash proceeds of $214.4 million and Partnership equity valued at approximately $27 million. The equity consideration was based on the average daily closing price of TLLP’s common units for the 10 trading days prior to closing, or $71.11 per unit, with 370,843 units in the form of common units and 8,856 units in the form of general partner units. TLLP expects to close and fund the remaining $29 million portion of this acquisition in the third quarter or early in the fourth quarter of 2014.

In connection with the closing of the transaction, Tesoro and the Partnership will enter into throughput and use agreements for the marketing and storage terminal facilities. The terminalling agreement includes a minimum throughput commitment and the storage agreement requires Tesoro to pay a monthly fee to reserve the existing shell capacity of the dedicated storage facilities.

About Tesoro Logistics LP

Tesoro Logistics LP, headquartered in San Antonio, Texas, is a fee-based, growth-oriented Delaware limited partnership formed by Tesoro Corporation to own, operate, develop and acquire crude oil and refined products logistics assets.

This press release contains certain statements that are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 concerning our expectations regarding closing dates for the transaction. For more information concerning factors that could affect these statements, see the respective annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K for Tesoro Corporation and Tesoro Logistics LP, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof.

Contact:

Investors:

Evan Barbosa, Investor Relations Manager, (210) 626-7202

Media:

Tesoro Media Relations, media@tsocorp.com , (210) 626-7702