Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement (the “Agreement”) is entered
into as of February 1, 2010 (the “Effective Date”) by and between Tesoro
Corporation (the “Company”), and Everett D. Lewis (the “Executive”);
WITNESSETH THAT:
     WHEREAS, the Company wishes to employ the Executive as its Executive Vice
President and Chief Operating Officer and the Executive wishes to continue such
employment; and
     WHEREAS, the Company and Executive wish to formalize the continuation of
the employment relationship in accordance with the terms and conditions set
forth below in this Agreement.
     NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein, including but not limited to Executive’s employment
and the payments and benefits described herein, the sufficiency of which is
hereby acknowledged, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The term of this Agreement shall be a one (1) year period beginning on the
Effective Date and ending on January 31, 2011. The period during which Executive
is employed hereunder shall be referred to as the “Employment Period”. Either
the Company or the Executive shall have the right to terminate the Employment
Period at any time during the term hereof, in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Executive Vice President and Chief Operating
Officer of the Company. In such capacities, Executive shall perform such duties
and have the power, authority and functions commensurate with such positions in
similarly sized public companies and such other authority and functions
consistent with such positions as may be assigned to Executive from time to time
by the Chief Executive Officer.
(b) Executive shall devote substantially all of his working time, attention and
energies to the business of the Company and affiliated entities. Executive may
make and manage his personal investments (provided such investments in other
activities do not violate, in any material respect, the provisions of Section 8
of this Agreement), be involved in charitable and professional activities and,
with the consent of the Board of Directors of the Company (the “Board”) (which
shall not unreasonably be withheld or delayed) serve on

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boards of other for profit entities, provided such activities do not materially
interfere with the performance of his duties hereunder.
4. COMPENSATION AND BENEFITS.
(a) ANNUAL BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary (the “Base Salary”) at an annual rate of $700,000,
or such higher rate as may be determined from time to time by the Board. The
Base Salary shall be paid at such intervals as the Company pays executive
salaries generally. During the Employment Period, the Base Salary shall be
reviewed at least annually, beginning no more than twelve (12) months after the
last salary increase awarded to the Executive prior to the Effective Date. Any
increase in the Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Base Salary shall not be
reduced after any such increase and the term “Base Salary” shall refer to the
Base Salary as so increased.
(b) ANNUAL BONUS. In addition to the Base Salary, during the Employment Period,
Executive will be entitled to participate in an annual incentive compensation
plan of the Company. The Executive’s target annual bonus will be 90% of his Base
Salary as in effect for such year (the “Target Bonus”), and will be determined
based upon achievement of performance goals established by the Company pursuant
to such plan.
(c) OTHER COMPENSATION. During the Employment Period, Executive shall be
entitled to participate in any incentive or supplemental compensation plan or
arrangement maintained or instituted by the Company to such extent, if any, as
the Compensation Committee of the Board may in its sole discretion from time to
time specify.
(d) WELFARE BENEFIT PLANS. During the Employment Period, Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company (including, without limitation, medical,
prescription drugs, dental, vision, disability, employee life, group life,
accidental death and travel accident insurance plans and programs, pensions,
profit sharing programs, incentive compensation and savings plans and all other
similar plans and benefits which the Company from time to time makes available
to executives) to the extent applicable generally to other peer executives of
the Company.
(e) FEE REIMBURSEMENTS. During the Employment Period, the Company will reimburse
the Executive as provided in the Company’s policies, programs and procedures for
an initiation fee or fees and dues for a country, luncheon or social club or
clubs. In addition, the Company will reimburse the Executive for additional
initiation fees to the extent the Board or a duly authorized committee thereof
determines such fees are reasonable and in the best interest of the Company. All
such reimbursements will be made in any event no later than the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred. The expenses reimbursed by the Company during any taxable year of
Executive will not affect the expenses reimbursed

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by the Company in another taxable year. Further, this right to reimbursement is
not subject to liquidation or exchange for another benefit.
(f) EXPENSE REIMBURSEMENT. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the expense reimbursement policies, programs,
practices and procedures of the Company in effect for the Executive when the
Executive incurs such reimbursable expenses. All such reimbursements will be
made in any event no later than the last day of Executive’s taxable year
following the taxable year in which the expense was incurred. The expenses
reimbursed by the Company during any taxable year of Executive will not affect
the expenses reimbursed by the Company in another taxable year. Further, this
right to reimbursement is not subject to liquidation or exchange for another
benefit.
(g) OFFICE AND SUPPORT STAFF. During the Employment Period, the Executive shall
be entitled to an appropriate office at the Company’s principal place of
business.
(h) VACATION. During the Employment Period, Executive shall be entitled to
vacation each year in accordance with the Company’s executive vacation policy in
effect from time to time, but in no event less than four (4) weeks paid vacation
per calendar year and an additional one (1) week for five years of service; and
an additional second week for ten years of service. The Executive shall be
entitled to such periods of sick leave as is customarily provided by the Company
for its senior executive employees.
5. TERMINATION OF EMPLOYMENT.
Executive’s employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive’s employment hereunder shall terminate upon Executive’s
death.
(b) TOTAL DISABILITY. The Company may terminate Executive’s employment hereunder
upon Executive becoming “Totally Disabled”. For purposes of this Agreement,
Executive shall be “Totally Disabled” if Executive has been physically or
mentally incapacitated so as to render Executive incapable of performing
Executive’s material usual and customary duties, with or without reasonable
accommodation as required by law, under this Agreement for six (6) consecutive
months (such consecutive absence not being deemed interrupted by Executive’s
return to service for less than ten (10) consecutive business days if absent
thereafter for the same illness or disability). Any such termination shall be
upon thirty (30) days written notice given at any time thereafter while
Executive remains Totally Disabled, provided that a termination for Total
Disability hereunder shall not be effective if Executive returns to full
performance of his duties within such thirty (30) day period.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Executive’s
employment hereunder for “Cause” at any time. If the Company elects to terminate
Executive’s employment for Cause, the Company shall provide ten

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(10) days written notice of the Company’s intent to terminate Executive’s
employment for “Cause.”
(i) For purposes of this Agreement, the term “Cause” shall be limited to
(A) willful misconduct by Executive with regard to the Company which has a
material adverse effect on the Company; (B) the willful refusal of Executive to
follow the proper written direction of the Chief Executive Officer, provided
that the foregoing refusal shall not be “Cause” if Executive in good faith
believes that such direction is illegal, unethical or immoral and promptly so
notifies the Board; (C) the willful refusal by the Executive to perform the
duties required of him hereunder (other than any such failure resulting from
incapacity due to physical or mental illness) after a written demand for
performance is delivered to the Executive by the Chief Executive Officer which
specifically identifies the manner in which it is believed that the Executive
has willfully refused to perform his duties hereunder; (D) the material breach
by the Executive of any of the restrictive covenants of Section 8 hereof or of a
fiduciary duty to the Company; (E) the misappropriation by the Executive of
Company funds or property; or (F) the Executive being convicted of or making a
plea of nolo contendere to the charge of a felony (other than a felony involving
a traffic violation or as a result of vicarious liability). For purposes of this
paragraph, no act, or failure to act, on Executive’s part shall be considered
“willful” unless done or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interests
of the Company.
(ii) The ten (10) day notice of intent to terminate for Cause shall mean a
notice that shall indicate the specific termination provision in Section 5(c)(i)
relied upon and shall set forth in reasonable detail the facts and circumstances
which provide for a basis for termination for Cause. Further, the ten (10) day
notice of intent to terminate for Cause shall set the date of termination at
least ten (10) days after the date of the notice. Any purported termination for
Cause which is held by a court or arbitrator not to have been based on the
grounds set forth in this Agreement or not to have followed the procedures set
forth in this Agreement shall be deemed a termination by the Company without
Cause.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder with or without Good Reason at any time upon thirty (30) days written
notice to the Company.
(i) A Termination for Good Reason means a termination by Executive pursuant to a
Notice of Termination for Good Reason as described more fully below given within
thirty (30) days after the occurrence of the Good Reason event, unless such
circumstances are fully corrected prior to the date of termination specified in
the Notice of Termination for Good Reason. For purposes of this Agreement, “Good
Reason” shall mean the occurrence or failure to cause the occurrence, as the
case may be, without Executive’s express written consent, of any of the
following circumstances: (A) a material adverse change in the executive office
to whom Executive regularly reports; (B) a material adverse

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change in the bonus plans, programs or arrangements in which Executive is
entitled to participate (the “Bonus Plans”) other than a material adverse change
in the Bonus Plans that adversely affects other similarly situated executives in
a manner proportionate to the material adverse effect of such change on
Executive, (C) any material breach by the Company of any provision of this
Agreement, including without limitation Section 10 hereof; and (D) the failure
of any successor to the Company (whether direct or indirect and whether by
merger, acquisition, consolidation or otherwise) to assume in a writing
delivered to Executive upon the assignee becoming such, the obligations of the
Company hereunder. Expiration of the term of this Agreement in accordance with
the first sentence of Section 2 hereof is not a termination by the Executive for
Good Reason.
(ii) A Notice of Termination for Good Reason shall mean a written notice that
shall indicate the specific Good Reason event relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason. The failure by Executive to set forth in the Notice
of Termination for Good Reason any facts or circumstances which contribute to
the showing of Good Reason shall not waive any right of Executive hereunder or
preclude Executive from thereafter timely asserting such fact or circumstance in
enforcing his rights hereunder. The Notice of Termination for Good Reason shall
provide for a date of termination not less than thirty (30) nor more than sixty
(60) days after the date such Notice of Termination for Good Reason is given.
The Company shall have at least thirty (30) days from receipt of the notice to
remedy the condition.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive’s employment hereunder without Cause at any time upon thirty (30) days
written notice to Executive. Expiration of the term of this Agreement in
accordance with the first sentence of Section 2 hereof is not a termination by
the Company without Cause.
(f) EFFECT OF TERMINATION. Upon any termination of employment, Executive shall
immediately resign from all positions with the Company or any of its
subsidiaries held by him at such time.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive’s employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION IN THE EVENT OF DEATH. In the event that Executive’s employment
is terminated by reason of Executive’s death, the Company shall pay the
following amounts to Executive’s beneficiary or estate:
(i) Any accrued but unpaid Base Salary for services rendered to the date of
death paid pursuant to the timing arrangement under which the Company

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normally compensates employees for services performed during a payroll period,
any accrued but unpaid expenses required to be reimbursed under this Agreement
paid in accordance with Section 4(e) or (f), any unused vacation as of the date
of termination paid in accordance with the Company’s executive vacation policy,
and any earned but unpaid cash bonuses for any prior period to the same extent
as earned and paid to other similarly situated executives and a pro-rata target
annual bonus or annual incentive compensation payment for the period in which
such termination occurred, paid at the time and in the form specified for
payment under the terms of such bonus or incentive compensation plan;
(ii) Any benefits to which Executive may be entitled pursuant to the plans,
programs, policies and arrangements (including those referred to in Section 4(d)
hereof), as determined and paid in accordance with the terms of such plans,
programs, policies and arrangements;
(iii) An amount equal to the Base Salary (at the rate in effect as of the date
of Executive’s death) which would have been payable to Executive if Executive
had continued in employment for one additional year, which amount will be paid
to Executive’s estate or beneficiary in twelve (12) substantially equal monthly
installments beginning in the first calendar month after the date of Executive’s
death; and
(iv) As of the date of termination by reason of Executive’s death, stock options
and restricted stock awarded to Executive shall be fully vested and Executive’s
estate or beneficiary shall have up to one (1) year from the date of death to
exercise all such options. The treatment of any other awards, for example,
phantom stock options, performance unit awards and restricted stock units, will
be governed in accordance with the terms of the plan and the award agreement
governing such award.
(b) TERMINATION IN THE EVENT OF TOTAL DISABILITY. In the event that Executive’s
employment is terminated by reason of Executive’s Total Disability as determined
in accordance with Section 5(b), the Company shall pay the following amounts to
Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the date of
termination paid pursuant to the timing arrangement under which the Company
normally compensates employees for services performed during a payroll period,
any accrued but unpaid expenses required to be reimbursed under this Agreement
paid in accordance with Section 4(e) or (f), any unused vacation as of the date
of termination paid in accordance with the Company’s executive vacation policy,
and any earned but unpaid cash bonuses for any prior period to the same extent
as earned and paid to other similarly situated executives paid at the time and
in the form specified for payment under the terms of such bonus plan. Executive
also shall be eligible for a pro-rata target annual bonus or annual incentive
compensation payment for the year in which Executive is terminated; provided,
however, that payment of such bonus or incentive compensation will be made as

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soon as administratively practicable following six (6) months from the
Executive’s termination of employment;
(ii) Any benefits to which Executive may be entitled pursuant to the plans,
programs, policies and arrangements (including those referred to in Section 4(d)
hereof) shall be determined and paid in accordance with the terms of such plans,
programs, policies and arrangements;
(iii) An amount equal to the Base Salary (at the rate in effect as of the date
of Executive’s Total Disability) which would have been payable to Executive if
Executive had continued in active employment for one (1) year following
termination of employment, less any payments under any long-term disability plan
or arrangement paid for by the Company, which amount will be paid to Executive
one-half in a lump sum as soon as administratively practicable following six
(6) months after such termination and one-half in substantially equal monthly
installments during the two (2) year period beginning as soon as
administratively practicable following six (6) months after the date of
Executive’s termination; and
(iv) As of the date of termination by reason of Executive’s Total Disability,
Executive shall be fully vested in all stock option and restricted stock awards
and Executive shall have up to one (1) year from the date of termination by
reason of total disability to exercise all such options. The treatment of any
other awards, for example, phantom stock options, performance unit awards and
restricted stock units, will be governed in accordance with the terms of the
plan and the award agreement governing such award.

(c)   TERMINATION FOR CAUSE. In the event that Executive’s employment is
terminated by the Company for Cause, the Company shall pay the following amounts
to Executive:

(i) Any accrued but unpaid Base Salary for services rendered to the date of
termination paid pursuant to the timing arrangement under which the Company
normally compensates employees for services performed during a payroll period,
any accrued but unpaid expenses required to be reimbursed under this Agreement
paid in accordance with Section 4(e) or (f), any unused vacation as of the date
of termination paid in accordance with the Company’s executive vacation policy,
and any earned but unpaid cash bonuses for any prior period to the same extent
as earned and paid to other similarly situated executives paid at the time and
in the form specified for payment under the terms of such bonus plan; provided
that such bonuses shall not be paid until six (6) months have elapsed from
Executive’s termination of employment;
(ii) Any benefits to which Executive may be entitled pursuant to the plans,
programs, policies and arrangements (including those referred to in Section 4(d)
hereof) shall be determined and paid in accordance with the terms of such plans,
programs, policies and arrangements; and

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(iii) Any options or restricted stock that have not vested prior to the date of
such termination of employment shall be cancelled and any options held by
Executive, to the extent they have not been exercised or paid in full, shall be
cancelled, whether or not then vested. The treatment of any other awards, for
example, phantom stock options, performance unit awards and restricted stock
units, will be governed in accordance with the terms of the plan and the award
agreement governing such award.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive voluntarily
terminates employment other than for Good Reason, the Company shall pay the
following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the date of
termination paid pursuant to the timing arrangement under which the Company
normally compensates employees for services performed during a payroll period,
any accrued but unpaid expenses required to be reimbursed under this Agreement
paid in accordance with Section 4(e) or (f), any unused vacation as of the date
of termination paid in accordance with the Company’s executive vacation policy,
and any earned but unpaid cash bonuses for any prior period to the same extent
as earned and paid to other similarly situated executives paid at the time and
in the form specified for payment under the terms of such bonus plan; provided
that such bonuses shall not be paid until six (6) months have elapsed from
Executive’s termination of employment;
(ii) Any benefits to which Executive may be entitled pursuant to the plans,
programs, policies and arrangements (including those referred to in Section 4(d)
hereof) shall be determined and paid in accordance with the terms of such plans,
programs, policies and arrangements; and
(iii) The treatment of any options, restricted stock or other awards shall be
governed in accordance with the terms of such plan(s) under which the options,
restricted stock or other awards were granted.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION BY EXECUTIVE FOR GOOD
REASON. In the event that Executive’s employment is terminated by the Company
for reasons other than death, Total Disability or Cause, or Executive terminates
his employment for Good Reason, the Company shall pay the following amounts to
Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the date of
termination paid pursuant to the timing arrangement under which the Company
normally compensates employees for services performed during a payroll period,
any accrued but unpaid expenses required to be reimbursed under this Agreement
paid in accordance with Section 4(e) or (f), any unused vacation as of the date
of termination paid in accordance with the Company’s executive vacation policy,
and any earned but unpaid cash bonuses for any prior period to the same extent
as earned and paid to other similarly situated executives paid at the time and
in the

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form specified for payment under the terms of such bonus plan; provided,
however, that such earned but unpaid bonuses shall not be paid until six
(6) months have elapsed from Executive’s termination of employment;
(ii) Any benefits to which Executive may be entitled pursuant to the plans,
programs, policies and arrangements (including those referred to in Section 4(d)
hereof) shall be determined and paid in accordance with the terms of such plans,
programs, policies and arrangements;
(iii) An amount equal to $2,800,000, of which one-half shall be paid in a lump
sum as soon as administratively practicable following six (6) months after such
termination and one-half shall be paid in substantially equal monthly
installments during the two (2) year period beginning as soon as
administratively practicable following six (6) months after the date of
Executive’s termination;
(iv) Executive and Executive’s spouse and eligible dependents shall continue to
participate in, and receive group health coverage under, the Company’s group
health plans that provide group health coverage to retirees of the Company from
time to time, but only to the extent such plans continue to be available to the
Company’s retirees and only until the earliest to occur of (A) two and one-half
(21/2) years after the date of termination, (B) Executive’s death (or in the
case of coverage for a qualified beneficiary of Executive, the death of that
qualified beneficiary), or (C) the date on which Executive (or in the case of
coverage for a qualified beneficiary of Executive, the qualified beneficiary)
becomes eligible for coverage under any other group health plan of a subsequent
employer providing comparable coverage (the “Continuation Coverage Period”);
provided that the Company shall pay for 100% of such group health coverage, and
the premiums that otherwise would be charged to Executive for such coverage but
for this Section 6(e)(iv) shall be taxable to Executive; the group health plan
coverage benefits provided by the Company under this Section 6(e)(iv) during any
taxable year of Executive will not affect such benefits provided by the Company
in another taxable year during the Continuation Coverage Period; and the right
to the benefits provided under this Section 6(e)(iv) is not subject to
liquidation or exchange for another benefit;
(v) Except to the extent prohibited by law, and except as otherwise provided in
this Section 6(e), Executive will be 100% vested in all benefits, awards, and
grants accrued but unpaid as of the date of termination under any non-qualified
pension plan or supplemental executive plan in which Executive was a participant
as of the date of termination. Executive shall also be eligible for a annual
bonus or annual incentive compensation payment, at the same time, on the same
basis, and to the same extent payments are made to senior executives, pro-rated
for the fiscal year in which the Executive is terminated; provided, however,
that payment of such bonus or incentive compensation will be made as soon as
administratively practicable following six (6) months from the Executive’s
termination from employment with the Company; and

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(vi) Subject to the terms and conditions of the applicable executive long-term
incentive plans governing the option or restricted stock awards, Executive shall
continue to vest in all stock option and restricted stock awards over the two
(2) year period commencing on the date of such termination of employment. With
respect to option awards granted to Executive after February 2, 2005, Executive
shall have two (2) years after the date of termination of employment to exercise
all options, to the extent vested, unless by virtue of the particular stock
option award, the option grant expires on an earlier date. The treatment of any
other awards, for example, phantom stock options, performance unit awards and
restricted stock units, will be governed in accordance with the terms of the
plan and the award agreement governing such award.
(f) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under this
Agreement, under the Indemnity Agreement or under the terms of any incentive
compensation, employee benefit, or fringe benefit plan applicable to Executive
at the time of Executive’s termination or resignation of employment, Executive
shall have no right to receive any other compensation, or to participate in any
other plan, arrangement or benefit, with respect to future periods after such
termination or resignation.
(g) NO MITIGATION; NO SET-OFF. In the event of any termination of employment
hereunder, Executive shall be under no obligation to seek other employment and,
except as otherwise provided in Section 6(e)(iv), there shall be no offset
against any amounts due Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that Executive may
obtain. Except as otherwise provided in Section 6(e)(iv), the amounts payable
hereunder shall not be subject to setoff, counterclaim, recoupment, defense or
other right, which the Company may have against the Executive or others, except
upon obtaining by the Company of a final unappealable judgment against
Executive.
7. COMPENSATION PAYABLE FOLLOWING CHANGE IN CONTROL.
(a) PAYMENTS FOLLOWING A CHANGE IN CONTROL. Notwithstanding anything to the
contrary contained herein, should Executive at any time within two (2) years
following a change in control cease to be an employee of the Company (or its
successor), by reason of (i) involuntary termination by the Company (or its
successor) other than for “Cause” (including involuntary termination due to
Total Disability), or (ii) voluntary termination by Executive for “Good Reason”,
the Company (or its successor) shall pay to Executive except as otherwise
expressly set forth herein, commencing as soon as administratively practicable
following six (6) months from such termination of employment (the “Commencement
Date”), the following severance payments and benefits:
(i) An amount equal to $3,325,000 payable in a lump sum if the applicable change
in control qualifies as a change in control event within the meaning of
Section 409A of the Code, and otherwise such amount shall be paid one-half in a
lump sum and one-half in substantially equal monthly installments during the two

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(2) year period beginning on the Commencement Date. Payment of the amount
specified under this Paragraph 7(a)(i) shall be in lieu of any amount payable
under Paragraph 6(b)(iii) or Paragraph 6(e)(iii).
(ii) Except as otherwise provided in this Section 7(a), Executive will be 100%
vested in all benefits, awards, and grants (including stock option grants and
restricted stock awards, all of such stock options granted after February 2,
2006 remaining exercisable for a period of at least three (3) years following
the Change in Control, or the remaining stock option term if less) accrued but
unpaid as of the Change in Control under any non-qualified pension plan,
supplemental executive plan and/or incentive compensation plan, in which
Executive was a participant as of the date of termination. Executive shall also
receive a pro rata annual bonus or annual incentive compensation payment (the
“bonus payment”) equal to his Base Salary multiplied by his annual incentive
target bonus percentage, each as then in effect, pro-rated as of the effective
date of the termination. The bonus payment shall be in a lump sum. The treatment
of any other awards, for example, phantom stock options, performance unit awards
and restricted stock units, will be governed in accordance with the terms of the
plan and the award agreement governing such award. The rights under this
Paragraph 7(a)(ii) shall be in lieu of any rights the Executive would otherwise
be entitled to receive under Paragraphs 6(b)(i) and (iv) or Paragraphs 6(e)(v)
and (vi).
For purposes of this Agreement, following a Change in Control, the term
“Company” shall include the entity surviving such Change in Control.
(b) POTENTIAL REDUCTION IN PAYMENTS BY THE COMPANY.
(i) Notwithstanding any contrary provision, if any Payment would be subject to
the Excise Tax, then the Payment shall be either

  (A)   delivered in full pursuant to the terms of this Agreement or     (B)  
reduced in accordance with this Section 7(b) to the extent necessary to avoid
the Excise Tax,

based on which of (A) or (B) would result in the greater Net After-Tax Receipt
to the Executive.
For purposes of this Section 7(b),
“Payment” means any payment, distribution, or other benefit provided by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise that constitutes a “parachute payment” within the meaning of
Section 280G of the Code;
“Excise Tax” means the excise imposed by Section 4999 of the Code or any similar
or successor provision thereto; and

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“Net After-Tax Receipt” means the present value (as determined in accordance
with Section 280G of the Code) of the payments net of all applicable federal,
state and local income, employment, and other applicable taxes and the Excise
Tax.
(ii) If Payments are reduced, the reduction shall be accomplished first by
reducing cash Payments under this Agreement and then by forfeiting any
equity-based awards that vest under this Agreement, starting with the most
recently granted equity-based awards, to the extent necessary to accomplish such
reduction.
(iii) All determinations under this Section 7(b) shall be made by the Company’s
independent accountants or compensation consultants (the “Third Party”) and all
such determinations shall be conclusive, final and binding on the parties
hereto. The Company and Executive shall furnish to the Third Party such
information and documents as the Third Party may reasonably request in order to
make a determination under this Section 7(b). The Company shall bear all fees
and costs of the Third Party with respect to all determinations under or
contemplated by this Section 7(b).
(c) CHANGE IN CONTROL means (i) there shall be consummated (A) any consolidation
or merger of Company in which Company is not the continuing or surviving
corporation or pursuant to which shares of Company’s Common Stock would be
converted into cash, securities or other property, other than a merger of
Company where a majority of the board of directors of the surviving corporation
are, and for a one-year period after the merger continue to be, persons who were
directors of Company immediately prior to the merger or were elected as
directors, or nominated for election as director, by a vote of at least
two-thirds of the directors then still in office who were directors of Company
immediately prior to the merger, or (B) any sale, lease, exchange or transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of Company, or (ii) the shareholders of Company shall approve
any plan or proposal for the liquidation or dissolution of Company, or (iii)
(A) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than
Company or a subsidiary thereof or any employee benefit plan sponsored by
Company or a subsidiary thereof, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of Company
representing 35 percent or more of the combined voting power of Company’s then
outstanding securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, and (B) at any time during a period of
one-year thereafter, individuals who immediately prior to the beginning of such
period constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless election or the nomination by the Board for election by
Company’s shareholders of each new director during such period was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.

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8. RESTRICTIVE COVENANTS.
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive’s period of employment with the Company, and for one (1) year
thereafter, Executive will not engage in, assist, or have any active interest or
involvement, whether as an employee, agent, consultant, creditor, advisor,
officer, director, stockholder (excluding holding of less than 3% of the stock
of a public company), partner, proprietor or any type of principal whatsoever in
any person, firm, or business entity which, directly or indirectly, is engaged
in the business competitive with that conducted and carried on by the Company,
without the Company’s specific written consent to do so. Notwithstanding the
foregoing, Executive may be employed by or provide services to, an investment
banking firm or consulting firm that provides services to entities described in
the previous sentence, provided that Executive does not personally represent or
provide services to such entities.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times during
Executive’s period of employment with the Company, and for a period of two
(2) years after the termination thereof, whether such termination is voluntary
or involuntary by wrongful discharge, or otherwise, Executive will not directly
and personally knowingly (i) induce any customers of the Company or corporations
affiliated with the Company to patronize any similar business which competes
with any material business of the Company; (ii) request or advise any customers
of the Company or corporations affiliated with the Company to withdraw, curtail
or cancel such customer’s business with the Company; or (iii) individually or
through any person, firm, association or corporation with which he is now, or
may hereafter become associated, solicit, entice or induce any then employee of
the Company, or any subsidiary of the Company, to leave the employ of the
Company, or such other corporation, to accept employment with, or compensation
from the Executive, or any person, firm, association or corporation with which
Executive is affiliated without prior written consent of the Company. The
foregoing shall not prevent Executive from serving as a reference for employees.
(c) PROTECTED INFORMATION. Executive recognizes and acknowledges that Executive
has had and will continue to have access to various confidential or proprietary
information concerning the Company, corporations affiliated with the Company,
and its clients and third parties doing business with the Company of a special
and unique value which may include, without limitation, (i) books and records
relating to operation, finance, accounting, sales, personnel and management,
(ii) policies and matters relating particularly to operations such as customer
service requirements, costs of providing service and equipment, operating costs
and pricing matters, and (iii) various trade or business secrets including
customer lists, route sheets, business opportunities, marketing or business
diversification plans, business development and bidding techniques, methods and
processes, financial data and the like, to the extent not generally known in the
industry (collectively, the “Protected Information”). Executive therefore
covenants and agrees that Executive will not at any time, either while employed
by the Company or afterwards, knowingly make any independent use of, or
knowingly disclose to any other person or organization (except as authorized by
the Company) any of the Protected Information, provided that (I) while employed
by the Company, Executive may in good

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faith make disclosures he believes desirable, and (II) Executive may comply with
legal process.
9. ENFORCEMENT OF COVENANTS.
(a) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the covenants
set forth in Section 8 hereof will cause irreparable damage to the Company with
respect to which the Company’s remedy at law for damages may be inadequate.
Therefore, in the event of breach or threatened breach of the covenants set
forth in Section 8 by Executive, Executive and the Company agree that the
Company shall be entitled to the following particular forms of relief, in
addition to remedies otherwise available to it at law or equity: injunctions,
both preliminary and permanent, enjoining or restraining such breach or
threatened breach, and Executive hereby consents to the issuance thereof
forthwith and without bond by any court of competent jurisdiction.
(b) SEPARABILITY OF COVENANTS. The covenants contained in Section 8 hereof
constitute a series of separate covenants, one for each applicable State in the
United States and the District of Columbia, and one for each applicable foreign
country. If in any judicial proceeding, a court shall hold that any of the
covenants set forth in Section 8 exceed the time, geographic, or occupational
limitations permitted by applicable laws, Executive and the Company agree that
such provisions shall and are hereby reformed to the maximum time, geographic,
or occupational limitations permitted by such laws. Further, in the event a
court shall hold unenforceable any of the separate covenants deemed included
herein, then such unenforceable covenant or covenants shall be deemed eliminated
from the provisions of this Agreement for the purpose of such proceeding to the
extent necessary to permit the remaining separate covenants to be enforced in
such proceeding. Executive and the Company further agree that the covenants in
Section 8 shall each be construed as a separate agreement independent of any
other provisions of this Agreement, and the existence of any claim or cause of
action by Executive against the Company whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
any of the covenants of Section 8.
10. INDEMNIFICATION.
The Company shall indemnify and hold harmless Executive to the fullest extent
permitted by law and in accordance with the existing Indemnification Agreement
dated September 15, 2008 between Company and the Executive (the “Indemnification
Agreement”) for any action or inaction of Executive while serving as an officer
and director of the Company or, at the Company’s request, as an officer or
director of any other, entity or as a fiduciary of any benefit plan. The Company
shall cover the Executive under directors and officers liability insurance both
during and, while potential liability exists, after the Employment Period in the
same amount and to the same extent as the Company covers its other officers and
directors.

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11. DISPUTES AND PAYMENT OF ATTORNEY’S FEES.
The Company and the Executive each irrevocably and unconditionally waives all
right to trial by jury in any lawsuit, action, proceeding, or counterclaim
(whether based in contract, tort, or otherwise) arising out of or relating to
this Agreement or arising out of or relating to the Executive’s employment by
the Company. The Executive and the Company each further agree that the exclusive
forums for the resolution of any disputes between them are the state and Federal
courts located in Bexar County, Texas. This waiver of jury trial and forum
selection provision applies to disputes between the parties as well as any claim
by the Executive against any agent, representative, or employee of the Company.
If at any time during the term of this Agreement or for a period of four
(4) years after the expiration of this Agreement there should arise any dispute
as to the validity, interpretation or application of any term or condition of
this Agreement, the Company agrees, upon written demand by Executive, to
promptly reimburse Executive’s reasonable costs and reasonable attorney’s fees
incurred by Executive in connection with reasonably seeking to enforce the terms
of this Agreement. Such reimbursement shall be made within thirty (30) days of
Executive’s written request for reimbursement providing supporting documentation
of the expenses, but in any event not later than the last day of the Executive’s
taxable year following the taxable year in which the expense was incurred. The
expenses paid by the Company during any taxable year of Executive will not
affect the expenses paid by the Company in another taxable year. This right to
reimbursement is not subject to liquidation or exchange for another benefit.
Notwithstanding the foregoing, to the extent that Executive is not the
prevailing party on any issue contested by Executive at any level of the
process, then (a) the Company’s obligation to reimburse Executive with respect
to such issue shall cease; and (b) within sixty (60) days of the entry of an
order on any issue on which Executive does not prevail, Executive shall repay
the Company the amount of any costs and attorney’s fees previously reimbursed by
the Company that are attributable to that issue.
The provisions of this Section 11, without implication as to any other section
hereof, shall survive the expiration or termination of this Agreement and of
Executive’s employment hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.

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14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive (but any payments due hereunder which would be payable
at a time after Executive’s death shall be paid to Executive’s designated
beneficiary or, if none, his estate) and shall be assignable by the Company only
to any financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company’s business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
in a writing delivered to Executive in a form reasonably acceptable to Executive
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive’s
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed to accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
17. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded monthly, at the short-term applicable federal rate, from
the date such amounts were required or determined to have been paid or payable,
reimbursed or reimbursable to Executive, until such amounts and any interest
accrued thereon are finally and fully paid, provided, however, that in no event
shall the amount of interest contracted for, charged or received hereunder,
exceed the maximum non-usurious amount of interest allowed by applicable law.
18. NOTICES
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, by facsimile, by e-mail or by hand delivery, to those listed below at
their following respective addresses (and facsimile

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numbers), or at such other address (or facsimile numbers) as each may specify by
notice to the others:

     
To the Company:
  Tesoro Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259
Attention: Corporate Secretary

 
   
To Executive:
  Everett D. Lewis

19. MISCELLANEOUS.
(a) WAIVER. The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver thereof or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(b) SEPARABILITY. Subject to Section 9 hereof, if any term or provision of this
Agreement is declared illegal or unenforceable by any court of competent
jurisdiction and cannot be modified to be enforceable, such term or provision
shall immediately become null and void, leaving the remainder of this Agreement
in full force and effect.
(c) HEADINGS. Section headings are used herein for convenience of reference only
and shall not affect the meaning of any provision of this Agreement.
(d) RULES OF CONSTRUCTION. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.
(e) COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts will together constitute but one Agreement.
(f) DEFERRED COMPENSATION. This Agreement is intended to meet the requirements
of Section 409A of the Code and may be administered in a manner that is intended
to meet those requirements and shall be construed and interpreted in accordance
with such intent, and any reference to the termination or cessation of
employment of Executive in Sections 6 and 7 of this Agreement shall be
interpreted to require a separation from service of Executive within the meaning
of Section 409A of the Code. To the extent that an award or payment, or the
settlement or deferral thereof, is subject to Section 409A of the Code, except
as the Committee otherwise determines in writing, the award shall be granted,
paid, settled or deferred in a manner that will meet the

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requirements of Section 409A of the Code, including regulations or other
guidance issued with respect thereto, such that the grant, payment, settlement
or deferral shall not be subject to the excise tax applicable under Section 409A
of the Code. If Executive is a specified employee within the meaning of
Section 409A of the Code, then to the extent the Company determines that any
amounts payable to Executive under this Agreement upon termination of employment
that are otherwise scheduled to be paid within six (6) months following
termination of employment (the “6-month period”) cannot be paid under
Section 409A of the Code within the 6-month period, then payment of such amounts
will not occur until the 6-month period has elapsed. Any provision of this
Agreement that would cause the award or the payment, settlement or deferral
thereof to fail to satisfy Section 409A of the Code shall be amended (in a
manner that as closely as practicable achieves the original intent of this
Agreement) to comply with Section 409A of the Code on a timely basis, which may
be made on a retroactive basis, in accordance with regulations and other
guidance issued under Section 409A of the Code. In the event additional
regulations or other guidance is issued under Section 409A of the Code or a
court of competent jurisdiction provides additional authority concerning the
application of Section 409A with respect to the payments described in
Sections 4, 6 and 7 of the Agreement, then the provisions of such Sections shall
be amended to permit such payments to be made at the earliest time permitted
under such additional regulations, guidance or authority that is practicable and
achieves the original intent of this Agreement.
     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

          TESORO CORPORATION
      By:   /s/ BRUCE A. SMITH         Bruce A. Smith        Chairman of the
Board of Directors, President and Chief Executive Officer     

Date: March 17, 2010

          EXECUTIVE

Everett D. Lewis
      /s/ EVERETT D. LEWIS      

Date: March 18, 2010

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