Exhibit 10.4

 
[tsoerlogo.jpg]
Date

Private and Confidential

Tesoro Companies, Inc.
19100 Ridgewood Parkway
San Antonio, Texas 78259

First Name Last Name
FBA
Address
City, State Zip
 

Dear First Name Last Name:

I am very pleased to inform you that, effective January 28, 2016 (the "Award
Date"), the Compensation Committee of the Board of Directors of Tesoro
Corporation (the "Company"), pursuant to its authority under the Amended and
Restated Tesoro Corporation 2011 Long-Term Incentive Plan (the "Plan"), has
approved the following long-term incentive award (the "Award") to you. The
following is a summary of the terms and conditions associated with this Award.
Capitalized terms not defined in this letter will have the definitions provided
for such terms in the Plan.

Award: # Performance Shares of the Company’s common stock with a targeted value
of $XXX,XXX is contingent upon the achievement of relative Total Shareholder
Return against a Median Index of our Performance Peer Group, XLE Energy Index
and S&P 500 Index. This Award will become eligible for vesting, subject to
actual performance and continued employment, at the end of the 36 month
performance period (January 1, 2016 through December 31, 2018).

Upon vesting at the end of the performance period, the Award will be adjusted
based on the Company’s relative Total Shareholder Return against a Median Index
of the Performance Peer Group, XLE Energy Index and S&P 500 Index to calculate
the number of Shares that will be issued to you. Shares will be withheld by the
Company to cover your applicable income and employment tax withholding(s) (at
the minimum statutory level) and the net Shares will be credited to your account
with Fidelity Stock Plan Services. The Award may be further adjusted by the
Committee if the Company’s Total Shareholder Return is negative over the
performance period.

If you terminate employment due to Retirement or involuntary termination without
Cause (other than within the two years following a Change in Control), you will
be issued a pro-rated payout of Shares based on the number of full months worked
(minimum of 12 months required for an involuntary termination without Cause)
within the performance period based on the achievement of actual performance. In
addition, if you are terminated pursuant to a severance or separation agreement
under any circumstance, the Compensation Committee may, at its discretion,
further reduce the award payout percentage beyond the pro-rated reduction
described above. Shares will be issued as soon as administratively practical,
but in any event within calendar year 2019. If you terminate employment due to
death or disability, as defined under Section 409A of the Internal Revenue Code
of 1986, as amended to date and the Treasury Regulations issued thereunder
(“Disability”), you will be issued a pro-rated payout of Shares based on the
number of full months worked within the performance period based on the
achievement of target performance. Shares

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will be issued as soon as administratively practical upon termination due to
death or Disability. If you terminate employment due to a voluntary termination
(except as set forth below) or termination for Cause prior to the vesting of the
Performance Shares Award, your Award will be forfeited. In the event of a Change
in Control of the Company, the Performance Shares Award will either be assumed
or continued by the surviving or acquiring corporation or paid out at the
greater of the achievement of target performance or the achievement of actual
performance at the time of the Change in Control. If your Award is assumed or
continued following a Change in Control, the award will be converted into a
time-based award with the number of shares subject to the award equal to the
greater of the achievement of target performance or the achievement of actual
performance at the time of the Change in Control. The assumed and converted
Award will vest based upon continued employment through December 31, 2018. If
you terminate employment due to an involuntary termination without Cause or
resignation for Good Reason within two years following a Change in Control, any
such assumed and converted Award will immediately vest upon such termination of
employment.

Covenants: Your services to the Company are unique, extraordinary and essential
to the business of the Company and its affiliates, particularly in view of your
access to the Company’s or its affiliates’ confidential information and trade
secrets. Accordingly, in consideration of this Award and by accepting this
Award, you agree as follows:

(i)    You agree that you will not, without the prior written approval of the
Board, at any time during the term of your employment with the Company or its
affiliates and for a period of one year following the date on which your
employment with the Company and its affiliates terminates (the “Restricted
Period”), directly or indirectly, serve as an officer, director, owner,
contractor, consultant, or employee of any the following organizations (or any
of their respective subsidiaries or divisions): HollyFrontier Corporation;
Marathon Petroleum Corporation; PBF Energy Inc.; Phillips 66; Valero Energy
Corporation; Magellan Midstream Partners, L.P.; Enbridge Energy Partners, L.P.;
Western Gas Partners, L.P.; Buckeye Partners, L.P.; Sunoco Logistics Partners,
L.P.; EnLink Midstream Partners, L.P.; DCP Midstream Partners, L.P.; EQT
Midstream Partners L.P.; NuStar Energy L.P.; ONEOK Partners; Boardwalk Pipeline
Partners, L.P.; Genesis Energy, L.P.; Holly Energy Partners, L.P.; and MPLX
L.P., or otherwise engage in any business activity directly or indirectly
competitive with the business of the Company or its affiliates (or their
respective subsidiaries or divisions) as in effect from time to time.

(ii)     You agree that during the Restricted Period , you will not, alone or in
conjunction with another party, hire, solicit for hire, aid in or facilitate the
hire, or cause to be hired, either as an employee, contractor or consultant, any
individual who is currently engaged, or was engaged at any time during the six
(6) month period prior such event, as an employee, contractor or consultant of
the Company or any of its affiliates (or their respective subsidiaries or
divisions).

(iii)    You agree and understand that the Company and its affiliates own and/or
control information and material which is not generally available to third
parties and which the Company or its affiliates consider confidential,
including, without limitation, methods, products, processes, customer lists,
trade secrets and other information applicable to its business and that it may
from time to time acquire, improve or produce additional methods, products,
processes, customers lists, trade secrets and other information (collectively,
the “Confidential Information”). You acknowledge that each element of the
Confidential Information constitutes a unique and valuable asset of the Company
and its affiliates, and that certain items of the Confidential Information have

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been acquired from third parties upon the express condition that such items
would not be disclosed to the Company and its officers and agents other than in
the ordinary course of business. You acknowledge that disclosure of the
Confidential Information to and/or use by anyone other than in the Company’s or
its affiliates’ ordinary course of business would result in irreparable and
continuing damage to the Company and its affiliates. Accordingly, you agree to
hold the Confidential Information in the strictest secrecy, and covenant that,
during the term of your employment with the Company and its affiliates or at any
time thereafter, you will not, without the prior written consent of the Board,
directly or indirectly, allow any element of the Confidential Information to be
disclosed, published or used, nor permit the Confidential Information to be
discussed, published or used, either by himself or by any third parties, except
in effecting your duties for the Company and its affiliates in the ordinary
course of business.

(iv)    You agree that in addition to the forfeiture provisions described above,
this Award and all other equity-based compensation awards granted to you by the
Company or any affiliate, in each case, to the extent outstanding and unvested
at the time of any such breach, shall be subject to immediate forfeiture and
recoupment (in full) by the Company upon your breach, in any respect, of any of
the covenants described in clauses (i), (ii) or (iii) above.

The Award has been granted under and is subject to the terms of the Plan unless
specified within this Grant Agreement. This Award is intended to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the
Internal Revenue Code of 1986, as amended to date. To satisfy the requirements
of Section 162(m), no portion of the Award will be eligible to vest unless the
Company achieves positive net income (as determined in accordance with US GAAP)
over any calendar year during the performance period. In addition, further
information concerning your Awards will be communicated at a later date.

You are required to accept this Award on-line with Fidelity at
netbenefits.fidelity.com. Once you accept your Award, you will be able to view
the terms and conditions of the Award. This Award must be accepted prior to the
vesting date; otherwise, the Award will forfeit. If you don’t accept your Award
prior to your termination of employment and your termination is due to death or
Disability, your Award will be considered accepted and will follow the terms for
these specified terminations as noted above. You will be communicated at a later
date when your Award is viewable on the Fidelity Stock Plan Services website. If
this is the first time you are receiving this type of Award, you will receive a
“Welcome Kit” from Fidelity Stock Plan Services with additional information.

We highly value your contribution and commitment to the Company’s success and
believe that this Award provides you a financial incentive that aligns your
interests with the Company's shareholders.

Sincerely,

Gregory J. Goff
Chairman, President and Chief Executive Officer

This material has been prepared and distributed by Tesoro Corporation and Tesoro
Corporation is solely responsible for its accuracy. Tesoro Corporation is not
affiliated with Fidelity Investments (or any Fidelity entity).     
Stock plan recordkeeping and administrative services are offered through
Fidelity Stock Plan Services, LLC.

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Brokerage products and services are offered through Fidelity Brokerage Services
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