EXHIBIT 10.2
TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN
Effective January 1, 2009

 

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TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN
TABLE OF CONTENTS

              Page
ARTICLE I DEFINITIONS
    1  
 
       
1.1 Account
    1  
1.2 Aggregated Plan
    1  
1.3 Beneficiary
    1  
1.4 Board of Directors
    1  
1.5 Code
    1  
1.6 Committee
    1  
1.7 Common Stock
    1  
1.8 Corporation
    2  
1.9 Deferred Phantom Stock Ledger
    2  
1.10 Disability
    2  
1.11 Distribution Schedule
    2  
1.12 Effective Date
    2  
1.13 NYSE
    2  
1.14 Participant
    2  
1.15 Plan
    2  
1.16 Plan Year
    2  
1.17 Regulations
    2  
1.18 Retirement
    2  
1.19 Separation from Service
    3  
1.20 Unit
    3  
1.21 Vested Interest
    3  
 
       
ARTICLE II ELIGIBILITY AND PARTICIPATION
    3  
 
       
2.1 Eligibility to Participate
    3  
2.2 Participation Agreements
    3  
 
       
ARTICLE III DEFERRAL CONTRIBUTIONS
    4  
 
       
3.1 Annual Nonelective Deferral Contributions
    4  
3.2 Nonelective Deferral Contribution for Committee Chairmen
    4  
3.3 Election to Defer Fees
    5  
 
       
ARTICLE IV CREDITING ACCOUNTS
    5  
 
       
4.1 Establishing a Participant’s Account
    5  
4.2 Credit of Deferral Contributions
    5  
4.3 Crediting of Earnings and Losses
    5  
4.4 Crediting of Dividends and Distributions
    5  
4.5 Voting Rights
    5  
 
       
ARTICLE V VESTING
    5  
 
       
5.1 Annual Nonelective Deferral Contribution
    5  
5.2 Other Deferral Contributions
    6  
 
       
ARTICLE VI DISTRIBUTIONS
    6  
 
       
6.1 General
    6  
6.2 Distribution Upon Death
    6  
6.3 Designation of Beneficiary
    6  

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              Page
6.4 Disability
    6  
6.5 Responsibility for Distributions and Withholding of Taxes
    7  
6.6 Change in Time of Payments
    7  
 
       
ARTICLE VII ADMINISTRATION
    8  
 
       
7.1 Committee Appointment
    8  
7.2 Committee Organization and Voting
    8  
7.3 Powers of the Committee
    8  
7.4 Committee Discretion
    9  
7.5 Annual Statements
    9  
7.6 Reimbursement of Expenses
    9  
7.7 Indemnification
    9  
 
       
ARTICLE VIII AMENDMENT AND/OR TERMINATION
    9  
 
       
8.1 Amendment or Termination of the Plan
    9  
8.2 No Retroactive Effect on Account
    9  
8.3 Effect of Termination
    9  
 
       
ARTICLE IX UNFUNDED PLAN
    10  
 
       
9.1 Benefits from General Assets of Corporation
    10  
9.2 No Requirement to Fund
    10  
9.3 Adoption of Trust
    11  
9.4 Status as Unsecured Creditor
    11  
 
       
ARTICLE X MISCELLANEOUS
    11  
 
       
10.1 Distributions to Incompetents or Minors
    11  
10.2 Nonalienation of Benefits
    11  
10.3 Reliance Upon Information
    11  
10.4 Severability
    12  
10.5 Notice
    12  
10.6 Gender and Number
    12  
10.7 Governing Law
    12  

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TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN
     WHEREAS, Tesoro Corporation (the “Corporation”) previously established the
Tesoro Corporation Board of Directors Deferred Phantom Stock Plan, effective
March 6, 1997 (the “Plan”) for the benefit of non-employee members of the Board
of Directors;
     WHEREAS, the Plan is a nonqualified deferred compensation plan that
entitles such directors to receive annual nonelective contributions (“Annual
Contributions”) for each year during which they serve as a director, subject to
limitations prescribed under the Plan, and, if applicable, a single nonelective
contribution with respect to services performed as a chairman of a Board
committee and, further, to defer any part or all of the cash portion of
directors’ fees earned with respect to their services performed as directors;
and
     WHEREAS, the Corporation desires to amend the Plan to comply with
Section 409A of the Code and the Regulations promulgated thereunder;
     NOW, THEREFORE, the Corporation adopts this amended and restated Tesoro
Corporation Board of Directors Deferred Phantom Stock Plan, effective January 1,
2009 (except as otherwise specifically noted herein), as follows:
ARTICLE I
DEFINITIONS
     1.1 Account. “Account” means a bookkeeping account in the Deferred Phantom
Stock Ledger which reflects the benefits to which a Participant is entitled
under this Plan.
     1.2 Aggregated Plan. “Aggregated Plan” means all agreements, methods,
programs, and other arrangements sponsored by the Corporation that would be
aggregated with this Plan under Section 1.409A-1(c) of the Regulations.
     1.3 Beneficiary. “Beneficiary” means a person or entity designated by the
Participant in accordance with Section 6.3 hereof to receive amounts credited to
his Account following his death.
     1.4 Board of Directors. “Board of Directors” means the Board of Directors
of the Corporation.
     1.5 Code. “Code” means the Internal Revenue Code of 1986, as amended from
time to time.
     1.6 Committee. “Committee” means the committee designated by the
Corporation to administer the Plan.
     1.7 Common Stock. “Common Stock” means the common stock, $.16 par value, of
the Corporation.

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     1.8 Corporation. “Corporation” means Tesoro Corporation, or any successor
entity that maintains the Plan.
     1.9 Deferred Phantom Stock Ledger. “Deferred Phantom Stock Ledger” means
the ledger established and maintained by the Committee to reflect each
Participant’s Account under the Plan.
     1.10 Disability. “Disability” means a Participant’s inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months.
The determination of whether a Participant suffers from a Disability shall be
made by the Committee in accordance with the provisions of Code Section 409A and
the Regulations promulgated thereunder.
     1.11 Distribution Schedule. “Distribution Schedule” shall mean the time and
method of distributions elected (or deemed elected) by a Participant, which
method may be either a lump sum payment (except that in-service lump sum
payments shall not be permitted for non-elective deferral contributions) or
installment payments, pursuant to which distribution of the Participant’s Vested
Interest in his Account shall be made or shall commence. Such election shall be
made at the time and in the manner described in Section 2.2 hereof; provided,
however, that a Distribution Schedule elected by the Participant pursuant to
which installment payments are to be made must require annual installments for a
period not to exceed ten (10) years.
     1.12 Effective Date. “Effective Date” means January 1, 2009, except as
specifically noted herein.
     1.13 NYSE. “NYSE” shall mean the New York Stock Exchange, or, if the Common
Stock is no longer traded on such exchange, the principal stock exchange or
other securities market on which the Common Stock is publicly traded.
     1.14 Participant. “Participant” means an eligible member of the Board of
Directors described in Section 2.1 below.
     1.15 Plan. “Plan” means this amended and restated Tesoro Corporation Board
of Directors Deferred Phantom Stock Plan, effective January 1, 2009 (except as
specifically noted herein), as set forth in this document and as may be amended
from time to time.
     1.16 Plan Year. “Plan Year” means the calendar year.
     1.17 Regulations. “Regulations” means the Treasury Regulations promulgated
under the Code.
     1.18 Retirement. “Retirement” or “Retired” means the cessation of a
Participant’s service for the Board of Directors, as determined by the Board of
Directors pursuant to a written resolution adopted by its members (other than
the Participant) following the Participant’s (a) attainment of the age at which
he is no longer eligible for re-election under the Corporation’s Governance
Policy or (b) completion of at least three (3) years of service as a director.

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     1.19 Separation from Service. “Separation from Service” means the date on
which the Participant ceases to be a director of the Corporation; provided that
a Separation from Service shall not have occurred if the Corporation anticipates
that the Participant will continue to provide services to the Corporation or a
subsidiary, whether as an employee or consultant or in any other capacity. The
determination of whether a Separation from Service has occurred shall be made by
the Committee in accordance with Section 1.409A-1(h) of the Treasury
Regulations, or such other guidance with respect to Code Section 409A that may
be in effect on the date of determination.
     1.20 Unit. “Unit” shall mean a unit of beneficial interest allocated to a
Participant’s Account pursuant to Article IV hereunder. The value of a Unit for
purposes of this Plan shall be determined by the Committee based upon the
closing quotation of the Common Stock on the NYSE on the date of the
determination.
     1.21 Vested Interest. “Vested Interest” shall mean that portion of the
Participant’s Account in which he has a nonforfeitable right. A Participant’s
Vested Interest shall be determined in accordance with Article V hereof.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
     2.1 Eligibility to Participate. All members of the Board of Directors who
are not otherwise employed and have not been employed within the last three
years by the Corporation or a subsidiary of the Corporation will be eligible to
participate in this Plan. An eligible member of the Board of Directors will
automatically become a Participant in this Plan as of the date on which his
service as a member of the Board of Directors commences.
     2.2 Participation Agreements.
     (a) Elections Upon Commencement of Participation. An eligible director may
elect to defer any part or all of the cash portion of his directors’ fees under
the Plan by executing a participation agreement in such form and at such time as
the Committee shall require, provided that the participation agreement shall be
executed within thirty (30) days of the date on which his service as a member of
the Board of Directors commences. The Participant’s election shall become
effective immediately following the Committee’s receipt of the Participant’s
executed participation agreement. The Participant may, at such time, also
irrevocably elect the Distribution Schedule under which benefits hereunder will
be paid, subject to the restrictions of the Plan. A Participant’s failure to
timely submit a participation agreement in accordance with this paragraph
(a) shall be deemed an election by the Participant to defer zero percent (0%) of
his directors’ fees for the Plan Year during which the Participant first becomes
eligible to participate. A Participant’s failure to elect a Distribution
Schedule in accordance with this paragraph (a) shall be deemed an election by
the Participant to receive his benefits hereunder in a lump sum payment within
the ninety (90) day period following such Participant’s Separation from Service.
The Participant’s election (or deemed election) shall become irrevocable as of
the last day of the 30-day period during which the Participant is permitted to
make an election in accordance with this paragraph (a).

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     (b) Annual Deferral Elections. A Participant’s election (or deemed
election) shall remain effective for each subsequent Plan Year for which the
Participant is eligible to participate in the Plan, unless and until such
election (or deemed election) is modified or revoked by the Participant in
accordance with this paragraph (b). A Participant may modify or revoke an
election (including a deemed election) with respect to the deferral of
directors’ fees to be earned in a subsequent Plan Year by submitting an executed
participation agreement to the Committee, in such form as the Committee shall
require, no later than the day immediately preceding the Plan Year in which such
directors’ fees will be earned.
     (c) Subsequent Elections Regarding Method of Payment. The Committee may, in
its sole and absolute discretion, permit a Participant to subsequently modify a
prior election (or deemed election) in order to change the method of payment to
be received hereunder, provided that (i) such subsequent election shall not take
effect for at least twelve (12) months following the date on which the
subsequent election is made, (ii) with respect to a payment that the Participant
is entitled to receive following his Separation from Service or pursuant to a
Distribution Schedule, the payment with respect to which such subsequent
election is made is deferred at least five (5) years from the date on which such
payment would otherwise have been made absent such subsequent election (or in
the case of installment payments, five (5) years from the date the first payment
was scheduled to be made), and (iii) with respect to the payment of benefits
hereunder pursuant to a Distribution Schedule, such subsequent election is made
no less than twelve (12) months prior to the date the payment is scheduled to be
made (or in the case of installment payments, five (5) years from the date the
first payment was scheduled to be made).
     (d) 2008 Special Election. Notwithstanding any provision herein to the
contrary, effective December 12, 2008, each Participant may elect to modify an
existing election (or deemed election) provided that such election: (i) may
apply only to amounts that would not otherwise be payable in 2008, (ii) may not
cause an amount to be paid in 2008 that would not otherwise be payable in 2008,
(iii) shall be made no later than December 31, 2008 and prior to such earlier
date as may be established by the Committee, (iv) shall not apply to
non-elective deferral contributions and (v) shall be made in the manner and
subject to such restrictions as shall be determined by the Committee.
ARTICLE III
DEFERRAL CONTRIBUTIONS
     3.1 Annual Nonelective Deferral Contributions. As of the last day of each
Plan Year, the Committee shall credit a nonelective deferral contribution to
each Participant’s Account in an amount equal to $7,250.00 (or such pro rata
amount determined by the Committee based upon the actual number of days served
by the Participant during the Plan Year). Notwithstanding the foregoing, the
annual credits under this Section 3.1 are limited to fifteen (15) full annual
credits (partial credits being aggregated for the purposes of this limitation),
taking into account both the previous accruals of retirement benefits under the
Director Retirement Plan (based on the effective date of such director’s
service) and credits under this Plan.
     3.2 Nonelective Deferral Contribution for Committee Chairmen. Each
Participant who is serving as a chairman of a committee of the Board of
Directors immediately prior to his

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Separation from Service and who has served at least three (3) years as a
director shall have an additional nonelective deferral contribution in the
amount of $5,000.00 credited to his Account as of the date of his Separation
from Service.
     3.3 Election to Defer Fees. Each Participant shall have the right to
irrevocably elect, on an annual basis, to defer any part or all of the cash
portion of his directors’ fees in accordance with Section 2.2 hereof. The amount
elected to be deferred by the Participant shall be credited to the Participant’s
Account as of the last business day of the calendar quarter following the date
on which such fees would otherwise have been paid.
ARTICLE IV
CREDITING ACCOUNTS
     4.1 Establishing a Participant’s Account. The Committee will establish and
maintain an Account for each Participant, which shall be reflected in the
Deferred Phantom Stock Ledger.
     4.2 Credit of Deferral Contributions. The Committee will credit the
Participant’s Account with a number of Units equal in value to the Nonelective
Deferral Contributions and the Participant deferrals, as provided in Article III
above.
     4.3 Crediting of Earnings and Losses. As of the last business day of each
calendar quarter, the Committee shall update the Accounts to reflect the
increase or decrease in the value of the Units credited to each Participant’s
Account.
     4.4 Crediting of Dividends and Distributions. As of the date on which
dividends or distributions are paid with respect to Common Stock, the Committee
shall credit each Participant’s Account with an amount equal to the value of
such dividends or distributions as if paid with respect to the Units credited to
the Participant’s Account on such date. If dividends or distributions are paid
in the form of shares of Common Stock, the Participant’s Account shall be
credited with a number of Units equal to the number of shares deemed distributed
with respect to each Unit credited to his Account on such date. If dividends or
distributions are paid in any other form, the Participant’s Account shall be
credited with a number of Units equal in value to the amounts deemed distributed
with respect to each Unit credited to his Account on such date. The value of any
dividend or distribution that is not paid in cash or shares of Common Stock
shall be determined by the Committee in its sole and absolute discretion.
     4.5 Voting Rights. No Participant shall have voting rights with respect to
any Units credited to his Account.
ARTICLE V
VESTING
     5.1 Annual Nonelective Deferral Contribution. Except as otherwise provided
in Section 8.3 hereof, the Participant shall be 100% vested in the nonelective
deferral contributions made pursuant to Section 3.1 above as of the earlier of
(a) his completion of three (3) years of service as a member of the Board of
Directors or (b) his death, Retirement, or Disability. A Participant’s service,
for the purpose of determining his vested interest under this Section 5.1, shall

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be measured from the date on which the Participant’s service as a member of the
Board of Directors commences. Amounts credited to a Participant’s Account to
which he does not have a vested interest shall be forfeited as of the date of
the Participant’s Separation from Service.
     5.2 Other Deferral Contributions. The Participant shall be immediately 100%
vested in the nonelective and elective deferral contributions made pursuant to
Sections 3.2 and 3.3, respectively.
ARTICLE VI
DISTRIBUTIONS
     6.1 General. Except to the extent otherwise provided in this Article VI,
distribution of a Participant’s Vested Interest shall be made, or shall
commence, in accordance with the Distribution Schedule elected (or deemed
elected) by such Participant under Section 2.2 within ninety (90) days of the
Participant’s Separation from Service. All distributions shall be made in cash.
The amount credited to the Participant’s Account for purposes of a distribution
hereunder shall be determined based upon the number of Units credited to the
Participant’s Account as of the date of the Participant’s Separation from
Service, increased by the amount, if any, to which the Participant is entitled
under Article III after such date.
     6.2 Distribution Upon Death. Distribution of a Participant’s Vested
Interest on account of death while serving as a director shall be made in a lump
sum payment to his Beneficiary(ies) within the ninety (90) day period following
the Participant’s death. In the event of the Participant’s death during a period
of installment payments, the remainder of the Participant’s Vested Interest
shall be paid to his Beneficiary(ies) in a lump sum within the ninety (90) day
period following the Participant’s death.
     6.3 Designation of Beneficiary. Each Participant, at the time of making his
initial deferral election, must file with the Committee a designation of one or
more Beneficiaries to whom distributions otherwise due the Participant will be
made in the event of his death prior to the complete distribution of the amount
credited to his Account. The designation will be effective upon receipt by the
Committee of a properly executed form which the Committee has approved for that
purpose. The Participant may from time to time revoke or change any designation
of Beneficiary by filing another approved Beneficiary designation form with the
Committee. If there is no valid designation of Beneficiary on file with the
Committee at the time of the Participant’s death, or if all of the Beneficiaries
designated in the last Beneficiary designation have predeceased the Participant
or otherwise ceased to exist, the Beneficiary will be the Participant’s spouse,
if the spouse survives the Participant, or otherwise the Participant’s estate. A
Beneficiary must survive the Participant by 60 days in order to be considered to
be living on the date of the Participant’s death. If any Beneficiary survives
the Participant but dies or otherwise ceases to exist before receiving all
amounts due to the Beneficiary from the Participant’s Account, the balance of
the amount that would have been paid to that Beneficiary will, unless the
Participant’s designation provides otherwise, be distributed to the individual
deceased Beneficiary’s estate or to the Participant’s estate in the case of a
Beneficiary which is not an individual.
     6.4 Disability. Distribution of a Participant’s Vested Interest on account
of Disability while serving as a director shall be made in a lump sum payment to
him within the ninety (90) day

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period following the Committee’s determination of the Participant’s Disability.
In the event of the Participant’s Disability during a period of installment
payments, the remainder of the Participant’s Vested Interest shall be paid to
him in a lump sum within the ninety (90) day period following the Committee’s
determination of the Participant’s Disability.
     6.5 Responsibility for Distributions and Withholding of Taxes. The
Committee will furnish to the Corporation information sufficient for the
Corporation to pay the amount of any distribution hereunder. The Corporation
shall be authorized to calculate and withhold from any distribution such amounts
as it determines necessary to satisfy its obligations to withhold for any
federal, state or local income and/or employment taxes.
     6.6 Change in Time of Payments. Notwithstanding any provision of this
Article VI to the contrary, the benefits payable hereunder may, to the extent
expressly provided in this Section 6.6, be paid prior to or later than the date
on which they would otherwise be paid to the Participant.
     (a) Distribution in the Event of Income Inclusion Under Code Section 409A.
If any portion of a Participant’s Account is required to be included in income
by the Participant prior to receipt due to a failure of this Plan or any
Aggregated Plan to comply with the requirements of Code Section 409A and the
Regulations, the Committee may determine that such Participant shall receive a
distribution from the Plan in an amount equal to the lesser of: (i) the portion
of his or her Account required to be included in income as a result of the
failure of the Plan or any Aggregated Plan to comply with the requirements of
Code Section 409A and the Regulations, or (ii) the balance of the Participant’s
Account.
     (b) Distribution Necessary to Satisfy Applicable Tax Withholding. If the
Corporation is required to withhold amounts to pay the Participant’s portion of
the Federal Insurance Contributions Act (FICA) tax imposed under Code
Sections 3101, 3121(a) or 3121(v)(2) with respect to amounts that are or will be
paid to the Participant under the Plan before they otherwise would be paid, the
Committee may determine that such Participant shall receive a distribution from
the Plan in an amount equal to the lesser of: (i) the amount in the
Participant’s Account or (ii) the aggregate of the FICA taxes imposed and the
income tax withholding related to such amount.
     (c) Delay for Payments in Violation of Federal Securities Laws or Other
Applicable Law. In the event the Corporation reasonably anticipates that the
payment of benefits as specified hereunder would violate Federal securities laws
or other applicable law, the Committee may delay the payment under this
Article VI until the earliest date at which the Corporation reasonably
anticipates that making of such payment would not cause such violation.
     (d) Delay for Insolvency or Compelling Business Reasons. In the event the
Corporation determines that the making of any payment of benefits on the date
specified hereunder would jeopardize the ability of the Corporation to continue
as a going concern, the Committee may delay the payment of benefits under this
Article VI until the first calendar year in which the Corporation notifies the
Committee that the payment of benefits would not have such effect.

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     (e) Administrative Delay in Payment. The payment of benefits hereunder
shall begin at the date specified in accordance with the provisions of the
foregoing paragraphs of this Article VI; provided that, in the case of
administrative necessity, the payment of such benefits may be delayed up to the
later of the last day of the calendar year in which payment would otherwise be
made or the 15th day of the third calendar month following the date on which
payment would otherwise be made. Further, if, as a result of events beyond the
control of the Participant (or following the Participant’s death, the
Participant’s Beneficiary), it is not administratively practicable for the
Committee to calculate the amount of benefits due to Participant as of the date
on which payment would otherwise be made, the payment may be delayed until the
first calendar year in which calculation of the amount is administratively
practicable.
     (f) No Participant Election. Notwithstanding the foregoing provisions, if
the period during which payment of benefits hereunder will be made occurs, or
will occur, in two calendar years, the Participant shall not be permitted to
elect the calendar year in which the payment shall be made.
ARTICLE VII
ADMINISTRATION
     7.1 Committee Appointment. The Board of Directors will have the sole
discretion to remove any one or more Committee members and appoint one or more
replacement or additional Committee members from time to time.
     7.2 Committee Organization and Voting. The Committee will select from among
its members a chairman who will preside at all of its meetings and will elect a
secretary without regard to whether that person is a member of the Committee.
The secretary will keep all records, documents and data pertaining to the
Committee’s supervision and administration of the Plan. A majority of the
members of the Committee will constitute a quorum for the transaction of
business and the vote of a majority of the members present at any meeting will
decide any question brought before the meeting. In addition, the Committee may
decide any question by vote, taken without a meeting, of a majority of its
members. A member of the Committee who is also a Participant will not vote or
act on any matter relating solely to himself.
     7.3 Powers of the Committee. The Committee will have the exclusive
responsibility for the general administration of the Plan according to the terms
and provisions of the Plan and will have all powers necessary to accomplish
those purposes, including but not by way of limitation the right, power and
authority:
     (a) To make rules and regulations for the administration of the Plan;
     (b) To construe all terms, provisions, conditions and limitations of the
Plan;
     (c) To correct any defect, supply any omission or reconcile any
inconsistency that may appear in the Plan in the manner and to the extent it
deems expedient to carry the Plan into effect for the greatest benefit of all
parties at interest;

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     (d) To determine all controversies relating to the administration of the
Plan, including but not limited to:
     (i) Differences of opinion arising between the Corporation and a
Participant; and
     (ii) Any question relating to the uniform administration of the Plan; and
     (e) To delegate those clerical and recordation duties of the Committee, as
it deems necessary or advisable for the proper and efficient administration of
the Plan.
     7.4 Committee Discretion. The Committee in exercising any power or
authority granted under this Plan or in making any determination under this Plan
shall perform or refrain from performing those acts using its sole discretion
and judgment. Any decision made by the Committee or any refraining to act or any
act taken by the Committee in good faith shall be final and binding on all
parties. The Committee’s decision shall be final and binding on all parties and
shall not be subject to review.
     7.5 Annual Statements. The Committee will cause each Participant to receive
an annual statement as soon as administratively practicable after the conclusion
of each Plan Year, which statement shall describe the number of Units credited
to his Account during that Plan Year, the total number of Units credited to his
Account as of the end of the Plan Year and the value of those Units as of the
end of the Plan Year.
     7.6 Reimbursement of Expenses. The members of the Committee will serve
without compensation for their services but will be reimbursed by the
Corporation for all expenses properly and actually incurred in the performance
of their duties under the Plan.
     7.7 Indemnification. To the extent permitted by applicable law, the
Corporation shall indemnify and hold harmless each member of the Committee from
and against any and all claims and expenses (including, without limitation,
attorney’s fees and related costs), in connection with the performance by such
member of his duties in that capacity, other than any of the foregoing arising
in connection with the willful neglect or willful misconduct of the person so
acting.
ARTICLE VIII
AMENDMENT AND/OR TERMINATION
     8.1 Amendment or Termination of the Plan. The Corporation may amend or
terminate the Plan at any time by written instrument adopted by the members of
the Board of Directors.
     8.2 No Retroactive Effect on Account. No amendment will affect the rights
of any Participant to his Account or change the method of valuing the Units then
credited to his Account without the Participant’s consent.
     8.3 Effect of Termination. If the Plan is terminated, each Participant’s
Account shall become fully vested. In addition, to the extent provided by the
Corporation in accordance with Section 8.1, the Plan may be liquidated following
a termination under any of the following circumstances:

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     (a) the termination and liquidation of the Plan within twelve (12) months
of a complete dissolution of the Corporation taxed under Section 331 of the Code
or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A);
provided that the amounts deferred under this Plan are included in the
Participants’ gross incomes in the latest of the following years (or, if
earlier, the taxable year in which the amount is actually or constructively
received): (i) the calendar year in which the Plan is terminated; (ii) the first
calendar year in which the amount is no longer subject to a substantial risk of
forfeiture; or (iii) the first calendar year in which the payment is
administratively practicable.
     (b) the termination and liquidation of the Plan pursuant to irrevocable
action taken by the Corporation within the thirty (30) days preceding or the
twelve (12) months following a Change of Control; provided that all Aggregated
Plans are terminated and liquidated with respect to each Participant that
experienced the Change of Control, so that under the terms of the termination
and liquidation, all such Participants are required to receive all amounts of
deferred compensation under this Plan and any other Aggregated Plans within
twelve (12) months of the date the Corporation irrevocably takes all necessary
action to terminate and liquidate this Plan and such other Aggregated Plans;
     (c) the termination and liquidation of the Plan, provided that: (i) the
termination and liquidation does not occur proximate to a downturn in the
Corporation’s financial health; (2) the Corporation terminates and liquidates
all Aggregated Plans; (3) no payments in liquidation of this Plan are made
within twelve (12) months of the date the Corporation irrevocably takes all
necessary action to terminate and liquidate this Plan, other than payments that
would be payable under the terms of this Plan if the action to terminate and
liquidate this Plan had not occurred; (4) all payments are made within twenty
four (24) months of the date on which the Corporation irrevocably takes all
action necessary to terminate and liquidate this Plan; and (5) the Corporation
does not adopt a new Aggregated Plan at any time within three (3) years
following the date on which the Corporation irrevocably takes all action
necessary to terminate and liquidate the Plan.
For purposes of this Section 8.3, the term “Change of Control” shall have the
meaning ascribed to it under the Tesoro Board of Directors Deferred Compensation
Plan, effective January 1, 2009, as may be amended from time to time.
ARTICLE IX
UNFUNDED PLAN
     9.1 Benefits from General Assets of Corporation. The Corporation may
establish a trust fund for the purpose of retaining assets set aside by the
Corporation pursuant to a trust agreement for payment of all or a portion of the
benefits payable pursuant to Article VI of the Plan. Any such benefits not paid
from a trust fund shall be paid from the Corporation’s general assets. The trust
fund, if such shall be established, shall be subject to the claims of general
creditors of the Corporation in the event the Corporation is Insolvent (as
defined in the trust agreement).
     9.2 No Requirement to Fund. The Corporation is not required to set aside
any assets for payment of the benefits provided under this Plan; however, it may
do so as provided in the trust agreement, if any. A Participant shall have no
security interest in any such amounts.

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     9.3 Adoption of Trust. All benefits under the Plan shall be the unsecured
obligations of the Corporation and, except for those assets that may be placed
in a trust fund established in connection with this Plan, no assets will be
placed in trust or otherwise segregated from the general assets of the
Corporation for the payment of obligations hereunder. If assets are placed in a
trust fund, the trust agreement, to the extent required by the Code, shall
conform in all material respects to the model trust set forth in Internal
Revenue Service Revenue Procedure 92-64. To the extent that any person acquires
a right to receive payments hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
     9.4 Status as Unsecured Creditor. The establishment of this Plan shall not
be construed as giving to any Participant or Beneficiary or any person
whomsoever, any legal, equitable or other rights against the Corporation, or its
officers, directors, agents or shareholders, or as giving to any Participant or
Beneficiary any equity or other interest in the assets or business of the
Corporation or shares of Corporation stock or as giving any director the right
to be retained in the service of the Corporation. All directors shall be subject
to discharge to the same extent they would have been if this Plan had never been
adopted. The rights of a Participant hereunder shall be solely those of an
unsecured general creditor of the Corporation.
ARTICLE X
MISCELLANEOUS
     10.1 Distributions to Incompetents or Minors. Should a Participant become
incompetent or should a Participant designate a Beneficiary who is a minor or
incompetent, the Committee is authorized to distribute any funds due to the
parent of the minor or to the guardian of the minor or incompetent or directly
to the minor or to apply those funds for the benefit of the minor or incompetent
in any manner the Committee determines in its sole discretion.
     10.2 Nonalienation of Benefits. No right or benefit provided in this Plan
will be transferable by the Participant except, upon his death, to a named
Beneficiary as provided in this Plan. No right or benefit under this Plan will
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge the same will be void. No right or benefit under this Plan will in any
manner be liable for or subject to any debts, contracts, liabilities or torts of
the person entitled to a benefit. If any Participant or any Beneficiary becomes
bankrupt or attempts to anticipate, alienate, sell, assign, pledge, encumber or
charge any right or benefit under this Plan, that right or benefit will, in the
discretion of the Committee, cease. In that event, the Committee may have the
Corporation hold or apply the right or benefit or any part of it to the benefit
of the Participant or Beneficiary, his or her spouse, children or other
dependents or any of them in any manner and in any proportion the Committee
believes to be proper in its sole and absolute discretion, but is not required
to do so.
     10.3 Reliance Upon Information. The Committee will not be liable for any
decision or action taken in good faith in connection with the administration of
this Plan. Without limiting the generality of the foregoing, any decision or
action taken by the Committee when it relies upon information supplied it by any
officer of the Corporation, the Corporation’s legal counsel, the Corporation’s
independent accountants or other advisors in connection with the administration
of this Plan will be deemed to have been taken in good faith.

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     10.4 Severability. If any term, provision, covenant or condition of the
Plan is held to be invalid, void or otherwise unenforceable, the rest of the
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated.
     10.5 Notice. Any notice or filing required or permitted to be given to the
Committee or a Participant will be sufficient if in writing and hand delivered
or sent by U.S. mail to the principal office of the Corporation or to the
residential mailing address of the Participant. Notice will be deemed to be
given as of the date of hand delivery or if delivery is by mail, as of the date
shown on the postmark.
     10.6 Gender and Number. Words used in this Plan of one gender are to be
construed as though they were also used in another gender in all cases where
they would so apply and likewise words in the singular or plural are to be
construed as though they also included the other in all cases where they would
so apply.
     10.7 Governing Law. The Plan will be construed, administered and governed
in all respects by the laws of the State of Texas.
     IN WITNESS WHEREOF, the Corporation has executed this document on this 12th
day of December, 2008, to be effective as of January 1, 2009 (except as
otherwise specifically noted herein).

                  TESORO CORPORATION    
 
           
 
  By:   /s/ SUSAN A. LERETTE    
 
     
 
   
 
  Name:   Susan A. Lerette    
 
  Its:   SVP, Administration    
 
     
 
   

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