RELATED-PARTY TRANSACTIONS

Commercial Agreements. The Partnership has various long-term, fee-based commercial agreements with Tesoro under which we provide pipeline transportation, trucking, terminal distribution and storage services to Tesoro, and Tesoro commits to provide us with minimum monthly throughput volumes of crude oil and refined products.

If, in any calendar month, Tesoro fails to meet its minimum volume commitments under these agreements, it will be required to pay us a shortfall payment. These shortfall payments may be applied as a credit against any amounts due above their minimum volume commitments for up to three months after the shortfall occurs.

We believe the terms and conditions under these agreements, as well as our other agreements with Tesoro described below, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. These commercial agreements with Tesoro include:



	Initiation Date	Term	Renewals	Term Modification Option	Termination Provisions
	Initiation Date	Term	Renewals	Term Modification Option	Refinery Shutdown Notice Period (a)	Force Majeure
Pipeline Transportation Services Agreement	April 2011	10 years	2 x 5 years		12 months	Tesoro Logistics can declare (unilateral)
Amended Trucking Transportation Services Agreement	April 2011	5 years	1 x 5 years		12 months
Master Terminalling Agreement	April 2011	10 years	2 x 5 years		12 months
Salt Lake City Storage and Transportation Services Agreement	April 2011	10 years	2 x 5 years		12 months
Salt Lake City Pipeline Transportation Services Agreement	April 2011	10 years	2 x 5 years		12 months
Martinez Marine Terminal Use and Throughput Agreement	April 2012	10 years	2 x 5 years		12 months
Long Beach Berth Access, Use and Throughput Agreement	September 2012	10 years	2 x 5 years	20 years	12 months
Los Angeles Short-haul Pipeline Agreement	September 2012	10 years	2 x 5 years	20 years	12 months
Anacortes Track Use and Throughput Agreement	November 2012	10 years	2 x 5 years		N/A

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(a) Fixed minimum volumes remain in effect during routine turnarounds.

Second Amended and Restated Omnibus Agreement. The Partnership entered into an omnibus agreement with Tesoro at the closing of the Initial Offering. The agreement has been amended for each acquisition from Tesoro including the most recent November 15, 2012 amendment, which was entered into in connection with the Anacortes Rail Facility Acquisition (the "Second Amended Omnibus Agreement"). The annual fee payable to Tesoro under the Second Amended Omnibus Agreement remained $2.5 million for the provision of various general and administrative services, including executive management, legal, accounting, treasury, human resources, health, safety and environmental, information technology, certain insurance coverage, administration and other corporate services.

Under the Second Amended Omnibus Agreement, Tesoro indemnifies us for certain matters including environmental, title and tax matters associated with the ownership of our assets at or before the closing of the Initial Offering in April 2011 and the subsequent acquisitions. The aggregate annual deductible for each type (unknown environmental liabilities, title or tax matters) of liability is $0.6 million, as of December 31, 2012, before we are entitled to indemnification in any calendar year in consideration of the initial assets and all subsequent acquisitions from Tesoro. See Note K for further discussion of the indemnification provisions.

Amended and Restated Operational Services Agreement. The Partnership entered into an operational services agreement with Tesoro at the closing of the Initial Offering. The agreement has been amended for each acquisition from Tesoro including the November 15, 2012 amendment, which was entered into in connection with the Anacortes Rail Facility Acquisition (the "Amended Operational Services Agreement"). In addition, the annual fee for operational services that was in place prior to the November 2012 amendment was adjusted, effective July 1, 2012, for an inflation escalation of approximately 3%. Under the Amended Operational Services Agreement, the annual fee we pay Tesoro is $2.0 million for support services performed by certain of Tesoro's field-level employees in support of our pipelines, terminals and storage facilities. This fee is in addition to the annual fee payable to Tesoro under the Second Amended Omnibus Agreement as outlined in the agreement and described above. Tesoro may also provide direct services or incur other direct costs on our behalf. The Partnership will reimburse Tesoro for these costs in accordance with this agreement.

Other TLLP Affiliate Transactions. Receivables from affiliates as of December 31, 2012, include $0.8 million related to third-party revenues invoiced by Tesoro on behalf of TLLP, pursuant to the provisions of the Long Beach terminal operating agreement with Tesoro, for amounts owed to TLLP under crude oil and refined product throughput contracts at the Long Beach marine terminal.

Predecessors' Affiliate Transactions. Related-party transactions of our Predecessors were settled through equity. The Predecessors' balance in receivables and accounts payable from affiliated companies, as presented in Note B, represents the amount owed from or to Tesoro related to certain affiliate transactions. Revenues from affiliates in the combined statements of operations of our Predecessors consist of revenues from Tesoro with respect to transportation regulated by the FERC and the NDPSC on our High Plains system.

Summary of Transactions. A summary of revenue and expense transactions with Tesoro, including expenses directly charged and allocated to our Predecessors, are as follows (in thousands):



	Year Ended December 31,
	2012		2011		2010
					Predecessors
Revenues	$	142,667	$	77,443	$	19,477
Operating and maintenance expenses (b)	15,397		26,735		47,027
General and administrative expenses	12,624		8,165		3,968

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(b) Operating and maintenance expenses include imbalance settlement gains of $9.7 million, $7.2 million and $3.3 million in the years ended December 31, 2012, 2011 and 2010, respectively. It also includes operating lease expenses of $0.4 million, $0.2 million and $0.4 million in the years ended December 31, 2012, 2011 and 2010, respectively, related to our subleases from Tesoro of our Anchorage terminal and Martinez Crude Oil Marine Terminal.

In accordance with our partnership agreement, our common, subordinated and general partner interests are entitled to receive quarterly distributions of available cash. We paid quarterly cash distributions to Tesoro, including IDRs, totaling $27.1 million and $9.6 million in 2012 and 2011, respectively. On January 23, 2013, we declared a quarterly cash distribution of $0.4725 per unit based on the results of the fourth quarter of 2012, including $9.2 million to Tesoro, which was paid on February 14, 2013.