exv10w3




EXHIBIT 10.3






TESORO CORPORATION


BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN




Effective January 1, 2009















 








TESORO CORPORATION

BOARD OF DIRECTORS DEFERRED COMPENSATION 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 Change of Control
	 	 	 1	 
	1.6 Code
	 	 	 2	 
	1.7 Committee
	 	 	 2	 
	1.8 Corporation
	 	 	 2	 
	1.9 Deferred Compensation Ledger
	 	 	 2	 
	1.10 Disability
	 	 	 2	 
	1.11 Distribution Schedule
	 	 	 2	 
	1.12 Participant
	 	 	 2	 
	1.13 Plan
	 	 	 2	 
	1.14 Plan Year
	 	 	 3	 
	1.15 Regulations
	 	 	 3	 
	1.16 Separation from Service
	 	 	 3	 
	1.17 Spouse
	 	 	 3	 
	1.18 Trust
	 	 	 3	 
	1.19 Valuation Date
	 	 	 3	 
	 
	 	 	 	 
	ARTICLE II ELIGIBILITY AND PARTICIPATION
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III DEFERRAL CONTRIBUTIONS
	 	 	3	 
	 
	 	 	 	 
	3.1 Elections Upon Commencement of Participation
	 	 	 3	 
	3.2 Annual Deferral Elections
	 	 	 4	 
	3.3 Subsequent Elections Regarding Method of Payment
	 	 	 4	 
	3.4 2008 Special Election
	 	 	 4	 
	3.5 Deferral Amount
	 	 	 4	 
	 
	 	 	 	 
	ARTICLE IV ACCOUNT
	 	 	5	 
	 
	 	 	 	 
	4.1 Establishing a Participant’s Account
	 	 	 5	 
	4.2 Credit of the Participant’s Deferral
	 	 	 5	 
	4.3 Crediting of Interest
	 	 	 5	 
	 
	 	 	 	 
	ARTICLE V VESTING
	 	 	5	 
	 
	 	 	 	 
	ARTICLE VI DISTRIBUTIONS
	 	 	5	 
	 
	 	 	 	 
	6.1 General
	 	 	 5	 
	6.2 Distribution Upon Death
	 	 	 5	 
	6.3 Designation of Beneficiary
	 	 	 5	 
	6.4 Disability
	 	 	 6	 
	6.5 Unforeseeable Emergency
	 	 	 6	 
	6.6 Responsibility for Distributions and Withholding of Taxes
	 	 	 7	 
	6.7 Change of Control
	 	 	 7	 
	6.8 Change in Time of Payments
	 	 	 7	 






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	 	 	Page
	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 Committee Discretion on Change of Control
	 	 	 9	 
	7.6 Annual Statements
	 	 	 9	 
	7.7 Reimbursement of Expenses
	 	 	 9	 
	7.8 Indemnification
	 	 	 9	 
	 
	 	 	 	 
	ARTICLE VIII AMENDMENT AND/OR TERMINATION
	 	 	10	 
	 
	 	 	 	 
	8.1 Amendment or Termination of the Plan
	 	 	10	 
	8.2 No Retroactive Effect on Account
	 	 	10	 
	8.3 Effect of Termination
	 	 	10	 
	 
	 	 	 	 
	ARTICLE IX UNFUNDED PLAN
	 	 	11	 
	 
	 	 	 	 
	9.1 Benefits from General Assets of Corporation
	 	 	11	 
	9.2 No Requirement to Fund
	 	 	11	 
	9.3 Adoption of Trust
	 	 	11	 
	9.4 Status as Unsecured Creditor
	 	 	11	 
	 
	 	 	 	 
	ARTICLE X MEDIATION—ARBITRATION
	 	 	11	 
	 
	 	 	 	 
	ARTICLE XI MISCELLANEOUS
	 	 	12	 
	 
	 	 	 	 
	11.1 Distributions to Incompetents or Minors
	 	 	12	 
	11.2 Nonalienation of Benefits
	 	 	12	 
	11.3 Reliance Upon Information
	 	 	12	 
	11.4 Severability
	 	 	12	 
	11.5 Notice
	 	 	12	 
	11.6 Gender and Number
	 	 	12	 
	11.7 Governing Law
	 	 	13	 







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TESORO CORPORATION




BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN




     WHEREAS, Tesoro Corporation (the “Corporation”) previously established the Tesoro Corporation
Board of Directors Deferred Compensation Plan, effective April 1, 1995 (the “Plan”), to permit
non-employee members of the Board of Directors to defer any part or all of the cash portion of
their directors’ fees;



     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 Compensation 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 Compensation 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 Change of Control. “Change of Control” means the occurrence of any one of the following
events:




     (a) any one person, or more than one person acting as a group, acquires ownership of
stock of the Corporation that, together with stock held by such person or group, constitutes
more than 50% of the total fair market value or total voting power of the stock of the
Corporation;




     (b) any one person, or more than one person acting as a group, acquires (or has
acquired during any twelve (12) month period) ownership of stock of the Corporation
possessing 30% or more of the total voting power of the stock of the Corporation;



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     (c) a majority of the members of the Board is replaced during any twelve (12) month
period by directors whose appointment is not endorsed by a majority of the members of the
Board before the date of the appointment or election; or




     (d) any one person, or more than one person acting as a group, acquires (or has
acquired during any twelve (12) month period) assets from the Corporation that have a total
gross fair market value equal to or more than 40% of the total gross fair market value of
all of the assets of the Corporation immediately before such acquisition or acquisitions.


The determination of whether a Change of Control has occurred shall be made by the Committee in
accordance with the provisions of Code Section 409A and the Regulations promulgated thereunder.




     1.6 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     1.7 Committee. “Committee” means the committee designated by the Corporation to administer
the Plan.



     1.8 Corporation. “Corporation” means Tesoro Corporation, or any successor entity that
maintains the Plan.



     1.9 Deferred Compensation Ledger. “Deferred Compensation 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 or installment payments, pursuant to which distribution of the Participant’s Account shall
be made or shall commence. Such election shall be made at the time and in the manner described in
Article III 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 Participant. “Participant” means an eligible member of the Board of Directors who has
elected to defer all or any portion of his directors’ fees under this Plan.



     1.13 Plan. “Plan” means this amended and restated Tesoro Corporation Board of Directors
Deferred Compensation 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.



2









 





     1.14 Plan Year. “Plan Year” means the calendar year.



     1.15 Regulations. “Regulations” means the Treasury Regulations promulgated under the Code.



     1.16 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.



     1.17 Spouse. “Spouse” means, for purposes of Section 6.5, an individual of the opposite sex
who is married to the Participant and, for all other purposes, an individual who is married to the
Participant in a legal union recognized by the state in which the Participant resides.



     1.18 Trust. “Trust” means the Tesoro Corporation Board of Directors Deferred Compensation
Trust created by separate agreement.



     1.19 Valuation Date. “Valuation Date” means the last business day of each calendar quarter
during the Plan Year on which the financial markets are open.



ARTICLE II

ELIGIBILITY AND PARTICIPATION




     All members of the Board of Directors who are not otherwise employed 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 become a Participant in this Plan as of the date set forth in his
initial deferral election under Section 3.1.



ARTICLE III

DEFERRAL CONTRIBUTIONS




     3.1 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 Section
3.1 shall



3









 




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 Section 3.1 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
Section 3.1.




     3.2 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 Section. 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.



     3.3 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).



     3.4 2008 Special Election. Notwithstanding any provision herein to the contrary, 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, and (iv) shall be made in the manner and subject to such restrictions as shall be
determined by the Committee.



     3.5 Deferral Amount. A Participant may elect to defer up to one hundred percent (100%) of the
directors’ fees to be earned with respect to any Plan Year, provided, however, such election must
be made in ten percent (10%) increments and must be made with respect to at least twenty percent
(20%) of such fees.



4









 





ARTICLE IV

ACCOUNT




     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 Compensation Ledger.



     4.2 Credit of the Participant’s Deferral. The Committee will credit the amount of a
Participant’s deferrals under Article III to the Participant’s Account as of the Valuation Date
coincident with or next following the date on which fees would otherwise have been paid.



     4.3 Crediting of Interest. Except as otherwise provided herein, the Committee will credit
interest to the Participant’s Account as of each Valuation Date. Interest will be calculated at
the prime rate published in The Wall Street Journal (Southwest Edition) on the Valuation Date
plus two percentage points. Notwithstanding any provision herein to the contrary, following the
commencement of installment payments hereunder, interest shall be calculated and credited as of
each Valuation Date during the period in which installment payments are being made.



ARTICLE V

VESTING




     Each Participant shall be immediately 100% vested in all amounts credited to his Account.



ARTICLE VI

DISTRIBUTIONS




     6.1 General. Except to the extent otherwise provided in this Article VI, distribution of a
Participant’s Account shall be made, or shall commence, in accordance with the Distribution
Schedule elected (or deemed elected) by such Participant under Article III, commencing on the
January 1st following or coincident with 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 as of the Valuation Date immediately preceding or
coincident with the Participant’s Separation from Service, increased by the amount, if any, the
Participant has elected to defer after such date.



     6.2 Distribution Upon Death. Distribution of a Participant’s Account 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 Account 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



5









 




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 Account on account of Disability while
serving as a director shall be made in a lump sum lump sum within the ninety (90) day 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 Account 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 Unforeseeable Emergency. Any Participant who is in pay status may request a withdrawal on
account of an unforeseeable emergency. For these purposes, an unforeseeable emergency is a severe
financial hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s Spouse or the Participant’s dependent (as defined in Code Section 152, without regard
to Section 152(b)(1), (b)(2), and (d)(1)(B)); loss of the Participant’s property due to casualty
(including the need to rebuild a home following damage to a home not otherwise covered by
insurance); or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Whether a Participant is faced with an unforeseeable
emergency permitting a withdrawal under this Section is to be determined in the sole and absolute
discretion of the Committee based on the relevant facts and circumstances of each case, but, in any
case, a withdrawal on account of unforeseeable emergency may not be made to the extent that such
emergency is or may be relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the liquidation of such assets would not
cause a severe financial hardship), or by cessation of deferrals under the Plan. The amount of the
hardship withdrawal may not exceed the lesser of (a) the amount credited to the Participant’s
Account or (b) the amount reasonably necessary to satisfy the emergency need, including any
Federal, state, local or foreign income taxes or penalties reasonably anticipated to result from
the distribution. The Committee shall have the authority to require a Participant to provide such
proof as it deems necessary to establish the existence and nature of the Participant’s
unforeseeable emergency. The decision of the Committee regarding the existence of an unforeseeable
emergency of a Participant shall be final and binding. A withdrawal on account of the
Participant’s unforeseeable emergency that is approved by the Committee will be paid to the
Participant within ten (10) days of the Committee’s determination.



6









 





     6.6 Responsibility for Distributions and Withholding of Taxes. The Committee will furnish to
the Corporation information sufficient for the Corporation to pay (or cause the Trust 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.



     6.7 Change of Control. Notwithstanding the above, in the event of a Change of Control, all
Accounts shall be adjusted as of the date of such Change of Control, but otherwise as provided in
Article IV and, subject to Section 8.3 hereof, shall be distributed to the Participants as a lump
sum cash payment within thirty (30) days after the date of the Change of Control.



     6.8 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 6.8,
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



7









 







calendar year in which the Corporation notifies the Committee that the payment of benefits
would not have such effect.




     (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. Members of the Committee will be appointed by the Board of
Directors. 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;



8









 






     (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;




     (d) To determine all controversies relating to the administration of the Plan,
including but not limited to:




     (i) Differences of opinion arising between Corporation and a Participant except
when the difference of opinion relates to the entitlement to, the amount of or the
method or timing of payment of a benefit affected by a Change of Control; and




     (ii) Any question relating to the uniform administration of the Plan;




     (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 the parties and
shall not be subject to review.



     7.5 Committee Discretion on Change of Control. Notwithstanding the foregoing, the Committee’s
decisions, refraining to act or acting is to be subject to review by the Corporation for those
incidents occurring during the Plan Year in which a Change of Control occurs.



     7.6 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 amounts credited to his Account for that Plan Year and the total
amount credited to his Account at the end of the Plan Year.



     7.7 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.



     7.8 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.



9









 





ARTICLE VIII

AMENDMENT AND/OR TERMINATION




     8.1 Amendment or Termination of the Plan. The Corporation may amend or terminate this Plan at
any time by written instrument adopted by the members of the Board of directors who are not
eligible to participate in the Plan.



     8.2 No Retroactive Effect on Account. No amendment will affect the rights of any Participant
to the amounts credited to his Account or to change the method of calculating the interest to be
credited with respect to amounts previously deferred by him prior to the date of the amendment
without the Participant’s consent.



     8.3 Effect of Termination. If the Plan is terminated, all deferrals shall thereupon cease,
but interest shall continue to be credited to the Accounts in accordance with Section 4.3 as if the
Participant began receiving installment payments on the date the Plan terminated. Notwithstanding
the foregoing, 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:




     (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



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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.



ARTICLE IX

UNFUNDED PLAN




     9.1 Benefits from General Assets of Corporation. The Corporation may establish a Trust for
the purpose of retaining assets set aside by the Corporation pursuant to the 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 shall be paid from the Corporation’s general assets. The Trust, 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.



     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 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, 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

MEDIATION—ARBITRATION




     The Participants and Committee will attempt in good faith to resolve any controversy or claim
arising out of or relating to this Plan by mediation in accordance with the Center for Public
Resources Model Procedure for Mediation of Business Disputes.



     If the matter has not been resolved pursuant to the aforesaid mediation procedure within 60
days of the commencement of such procedure (which period may be extended by mutual agreement), or
if either party will not participate in a mediation, the controversy shall be settled by
arbitration in accordance with the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes, by a sole arbitrator. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award rendered by the



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Arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration
shall be San Antonio, Texas. The arbitrator(s) are not empowered to award damages in excess of
actual damages, including punitive damages.



ARTICLE XI

MISCELLANEOUS




     11.1 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 pay the 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.



     11.2 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 such benefits. 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.



     11.3 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.



     11.4 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.



     11.5 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 last known 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.



     11.6 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



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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.




     11.7 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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