Document:

exv10w5

EXHIBIT 10.5

TESORO CORPORATION RESTORATION

RETIREMENT PLAN

ARTICLE 1

GENERAL PROVISIONS

     1.1 Establishment and Purpose.

     WHEREAS, Tesoro Corporation (the “Company”) previously established the Tesoro Corporation
Restoration Retirement Plan (the “Plan”) primarily for the purpose of providing benefits for a
select group of management and highly compensated employees of the Company and its Subsidiaries
that will restore benefits that may not otherwise be provided under the Retirement Plan solely by
reason of the limitations under Sections 401(a)(17) and 415 of the Code;

     WHEREAS, the Plan is intended to qualify as a “top hat” plan under Sections 201(2), 301(a)(3)
and 401(a)(l) of ERISA; and

     WHEREAS, the Company desires to amend the Plan to comply with Regulations under Section 409A
of the Code and the Regulations promulgated thereunder and to clarify certain operational
provisions of the Plan;

     NOW, THEREFORE, the Company adopts this amended and restated Tesoro Corporation Restoration
Retirement Plan, effective January 1, 2009, as follows:

     1.2 Definitions.

     “Affiliate” means each entity that would be considered a single employer with the Company
under Section 414(b) or Section 414(c) of the Code, except that the phrase “at least 50%” shall be
substituted for the phrase “at least 80%” as used therein.

     “Aggregated Plan” means all agreements, methods, programs and other arrangements that are
aggregated with this Plan under Section 1.409A-1(c) of the Regulations.

     “Beneficiary” means the person or persons designated by a Participant as his beneficiary
hereunder in accordance with the provisions of Article 5.

     “Board” means the Board of Directors of the Company.

     “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,

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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), other than
Company or a Subsidiary or any employee benefit plan sponsored by Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) 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.

     “Chief Executive Officer” means the Chief Executive Officer of the Company.

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

     “Committee” means the Tesoro Corporation Committee appointed by the Compensation Committee of
the Board, or such other committee designated by the Compensation Committee of the Board to
discharge the duties of the Committee hereunder.

     “Company” means Tesoro Corporation, a Delaware Corporation, or any successor thereto.

     “Compensation” shall, unless otherwise determined by the Committee, have the same meaning as
the term “Basic Compensation” in the Retirement Plan (determined without regard to any limits
imposed on compensation under the Code).

     “Disability” means Disability as such term is defined under the Retirement Plan.

     “Distribution Date” means the date on which distributions to a Participant are to commence
hereunder. Distribution Dates are determined as provided under the terms of the Plan.

     “Distribution Option” means the form in which payments to a Participant are to be paid.
Distribution Options are determined as provided in Article 3 of the Plan.

     “Insolvency” means, with respect to the Company: (1) an adjudication of bankruptcy; (2) the
assignment for the benefit of creditors of or by the Company; (3) a material part or all of the
property of the Company becomes subject to the control and direction of a receiver, which
receivership is not dismissed within sixty (60) days of such receiver’s appointment; or (4) the
filing by the Company of a petition for relief under any federal or other bankruptcy or other
insolvency law or for an arrangement with creditors.

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     “Participant” means any employee who has satisfied the eligibility requirements set forth in
Section 1.4 of the Plan.

     “Plan Year” means the twelve-month period beginning each January 1.

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

     “Restoration Retirement Benefit” means the annual benefit payable to the Participant as
provided in Article 2.

     “Retirement” means a Participant’s Separation from Service with the Company as a retiree as
determined under the provisions of the Retirement Plan.

     “Retirement Benefit” means the benefit payable to a Participant under the Retirement Plan.

     “Retirement Plan” means The Tesoro Corporation Retirement Plan, as amended.

     “Separation from Service” means a reasonably anticipated permanent reduction in the level of
bona fide services performed by the Participant for the Company and its Affiliates to 20% or less
of the average level of bona fide services performed by the Participant for the Company and its
Affiliates (whether as an employee or an independent contractor) in the immediately preceding
thirty-six (36) months (or the full period of service to the Company and its Affiliates if the
Participant has been providing services to the Company and its Affiliates for fewer than thirty-six
(36) months). The determination of whether a Separation from Service has occurred shall be made by
the Committee in accordance with the provisions of Section 409A of the Code and the Regulations
promulgated thereunder.

     “Subsidiary” means any entity in which the Company owns or otherwise controls, directly or
indirectly, stock or other ownership interests having the voting power to elect a majority of the
board of directors, or other governing group having functions similar to a board of directors, as
determined by the Committee.

     1.3 Administration.

     (a) The Committee shall administer the Plan and have sole and absolute authority and
discretion to decide all matters relating to the administration of the Plan, including,
without limitation, determining the rights and status of Participants or their Beneficiaries
under the Plan. The Committee is authorized to interpret the Plan, to adopt administrative
rules, regulations, and guidelines for the Plan, and may correct any defect, supply any
omission or reconcile any inconsistency or conflict in the Plan. The Committee’s
determinations under the Plan need not be uniform among all Participants, or classes or
categories of Participants, and may be applied to such Participants, or classes or
categories of Participants, as the Committee, in its sole and absolute discretion, considers
necessary, appropriate or desirable. All determinations by the Committee shall be final,
conclusive and binding on the Company, the Participant and any and all interested parties.

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     (b) The Committee may delegate such of its powers and authority under the Plan to the
Company’s officers or such other person(s) as it deems necessary or appropriate. In the
event of such delegation, all references to the Committee in this Plan shall be deemed
references to such officers or such other person(s) as it relates to those aspects of the
Plan that have been delegated.

     (c) Any action taken by the Committee with respect to the rights or benefits under the
Plan of any Participant shall be subject to correction by the Committee as to payments not
yet made to such person, and acceptance of any deferred compensation benefits under the Plan
constitutes acceptance of and agreement to the Committee’s or the Company’s making any
appropriate adjustments in future payments to such person (or to recover from such person)
any excess payment or underpayment previously made to him.

     (d) Notwithstanding any provision of the Plan to the contrary, if any benefit provided
under this Plan is subject to the provisions of Section 409A of the Code and the Regulations
issued thereunder, the provisions of the Plan shall be administered, interpreted and
construed in a manner necessary to comply with Section 409A and the Regulations issued
thereunder (or disregarded to the extent such provision cannot be so administered,
interpreted or construed).

     1.4 Eligibility and Participation.

     (a) Participation in the Plan is limited to those individuals who are within the
category of a select group of management and highly compensated employees as referred to in
Sections 201(2), 301(a)(3) and 401(a)(l) of ERISA, and who are within those classifications
of officers and key management employees of the Company and its Subsidiaries which are
nominated by the Chief Executive Officer and approved by the Compensation Committee of the
Board as eligible to participate in the Plan. Those employee classifications selected for
participation in the Plan are set forth on Exhibit 1 attached hereto. This Exhibit will be
modified from time to time as recommended by the Chief Executive Officer and approved by the
Compensation Committee of the Board to include or exclude certain employee classifications
as deemed appropriate.

     (b) A Participant shall cease to be a Participant upon receiving payment for the full
amount of benefits to which the Participant is entitled under the Plan or becomes ineligible
to participate based on eligibility status as determined in Section 1.4(a) of this Plan.
Once a Participant is no longer eligible to actively participate in the Plan, he shall not
be entitled to any further accrual of a Restoration Retirement Benefit hereunder.

ARTICLE 2

RESTORATION RETIREMENT BENEFITS

     2.1 Benefit Determination

     Subject to the full vesting of the Participant’s Restoration Retirement Benefit resulting from
a Change in Control, as set forth in Section 3.4, upon his Separation from Service for any reason
(including death) with a vested interest in his Restoration Retirement Benefit, a Participant shall
be entitled to receive a Restoration Retirement Benefit in the event the

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Retirement Benefit of such Participant is limited by the application of Section 401(a)(17) or
Section 415 of the Code. The Restoration Retirement Benefit shall be equal to the difference
between: (1) the Retirement Benefit paid to the Participant; and (2) the benefit that would have
otherwise been paid to the Participant under the Retirement Plan, without regard to the limitations
of Section 401(a)(17) and Section 415 of the Code, reduced by the amount of any qualified and
nonqualified retirement benefits from a prior employer of the Participant if said prior employer or
employer facility was previously acquired by or merged into the Company or any Affiliate and
benefit service with such prior employer is recognized by the Company under any qualified or
nonqualified retirement plan, pursuant to the terms of an acquisition agreement or as otherwise
provided under a separate agreement with the Company or an Affiliate. Any amount payable hereunder
will be subject to the same actuarial assumptions and discounts for early retirement as are
specified in the Retirement Plan. The Restoration Retirement Benefit described above shall be
payable to the Participant upon his Retirement, as provided in Article 3 hereof.

     2.2 Additional Time Recognition

     If an event occurs for a Participant who has an employment agreement or a management stability
agreement with the Company that causes the recognition of additional service credit under the terms
of such agreement, the additional service will be recognized only for purposes of calculating the
Restoration Retirement Benefit. The additional service will not be recognized for purposes of
vesting, retirement eligibility or classification as a retiree.

ARTICLE 3

DISTRIBUTIONS

     3.1 Distribution Dates.

     Except in the event of death, the Participant’s Restoration Retirement Benefit shall be
calculated as of the first day of the month next following the month of the Participant’s
Retirement and shall commence on the first day of the seventh (7th) calendar month
beginning after the Participant’s Retirement. Benefits will continue to be paid on the first day
of each succeeding month. The last payment will be on the first day of the month in which the
retired Participant dies unless another form of payment is elected in accordance with Section 3.2.
The first payment shall include all amounts that would otherwise have been paid during the period
commencing on the first day of the month next following the month of the Participant’s Retirement
and ending on such payment date. In the event a Participant’s Separation from Service shall occur
prior to Retirement and such Participant has a vested interest in his Restoration Retirement
Benefit, distribution of such Participant’s Restoration Retirement Benefit shall commence on the
first day of the month next following the Participant’s earliest retirement commencement date under
the Retirement Plan (but not considering early commencement for a lump sum distribution); provided,
however, that if such date is not at least six (6) months after the Participant’s Separation of
Service, distribution shall be delayed until the first day after the end of the six (6)-month
period following the Participant’s Separation from Service. Benefits will continue to be paid on
the first day of each succeeding month. The last payment will be on the first day of the month in
which the Participant dies unless another form of payment is elected in accordance with Section
3.2. The first payment shall include all amounts that would

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otherwise have been paid during the period commencing on the first day of the month next
following the Participant’s earliest retirement commencement date and ending on such payment date.
Regardless of the form of payment of a Participant’s Restoration Retirement Benefit, there shall be
no crediting of earnings resulting from a six (6) month waiting period set forth in this
Section 3.1.

     3.2 Distribution Option/Manner of Payment.

     In the absence of an affirmative election to the contrary, each Participant’s Restoration
Retirement Benefit shall be made in a form of a straight life annuity; provided, however, if the
present lump sum value of the Participant’s Restoration Retirement Benefit (determined in
accordance with the applicable actuarial assumptions set forth in the Retirement Plan, as in effect
prior to its amendment and restatement effective January 1, 2008 ) is less than $100,000, the
Restoration Retirement Benefit will be paid in a single-lump sum. All payments under the Plan
shall be made in cash. Subject to the foregoing, each Participant may elect the Distribution
Option for his Restoration Retirement Benefit, in accordance with such election procedures as are
established by the Committee, which Distribution Options shall include any actuarially equivalent
annuity form of payment permitted under the Retirement Plan, but shall not include a lump sum
payment. Actuarial equivalence shall be determined in accordance with the applicable actuarial
assumptions set forth in the Retirement Plan.

     3.3 Vesting.

     Subject to the full vesting of a Participant’s Restoration Retirement Benefit following a
Change in Control, as set forth in Section 3.4, and the provisions on vesting applicable to a
Participant’s death, as provided in Section 3.5, and Disability, as provided in Section 3.6,
Restoration Retirement Benefits will only be paid to a Participant who has a Separation from
Service following completion of five (5) years of vesting service (the calculation of such vesting
service to be determined in accordance with the provisions of the Retirement Plan). Failure to
complete the requisite vesting service will result in no Restoration Retirement Benefit being
payable, even if following Retirement.

     3.4 Change in Control.

     Notwithstanding the foregoing provisions of Article 3, upon a Change in Control, a Participant
will become fully vested in his Restoration Retirement Benefit accrued as of the Change in Control.
Restoration Retirement Benefits will not be accelerated following a Change in Control and will
only be paid in accordance with Section 3.1 to the Participant following Retirement. If a
Participant has a Separation from Service prior to Retirement and following a Change in Control,
the Restoration Retirement Benefit accrued through the date of the Change in Control will be paid
in accordance with Section 3.1 hereof following the Participant’s earliest retirement commencement
date under the Retirement Plan (but not considering early commencement for a lump sum
distribution), as provided in Section 3.1 with respect to a Participant who has a Separation from
Service prior to Retirement with a vested interest in a Restoration Retirement Benefit. All
Restoration Retirement Benefits payable to a Participant following a Change in Control will be paid
in the form determined in accordance with the provisions of Section 3.2.

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     3.5 Death.

     In the event that a Participant dies following completion of three (3) years of vesting
service (the calculation of such vesting service to be determined in accordance with the provisions
of the Retirement Plan) and prior to the commencement of his Restoration Retirement Benefit, his
Beneficiary (or Beneficiaries) will receive a monthly retirement benefit, payable for ten (10)
years certain and life thereafter, subject to the mandatory lump sum distribution provisions of
Section 3.2, effective as of the first day of the month following the date of the Participant’s
death, with payment to commence within ninety (90) days of the Participant’s death. The death
benefit shall be equal to the amount which can be provided on an actuarially equivalent basis (as
determined in accordance with applicable actuarial assumptions under the Retirement Plan) by the
present single-sum value of the Restoration Retirement Benefit to which the deceased Participant
was entitled as of the date of death. Notwithstanding the foregoing, but subject to the mandatory
lump sum distribution provisions of Section 3.2, a Participant’s Beneficiary (or Beneficiaries) may
elect any actuarially equivalent annuity form of payment permitted under the Retirement Plan, but
may not elect a lump sum payment. Actuarial equivalence shall be determined in accordance with the
applicable actuarial assumptions set forth in the Retirement Plan. Death prior to completion of
the requisite three (3) years of vesting service will result in no Restoration Retirement Benefit
being payable to the Beneficiary(ies).

     3.6 Disability.

     In the event of a Participant’s Disability prior to his or her Retirement, for purposes of
determining the Participant’s Restoration Retirement Benefit, the Participant shall be deemed to
have remained in active employment with the Company or a Subsidiary at the same rate of
Compensation until the Participant’s actual Retirement, at which point the Participant’s
Restoration Retirement Benefit shall be paid as set forth in Section 3.1.

     3.7 Change in Time of Payments.

     Notwithstanding any provision of this Article III to the contrary, the benefits payable
hereunder may, to the extent expressly provided in this Section 3.7, 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 Restoration Retirement Benefit 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 Restoration Retirement Benefit
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
remainder of the Participant’s Restoration Retirement Benefit.

     (b) Distribution Necessary to Satisfy Applicable Tax Withholding. If the
Company is required to withhold amounts to pay the Participant’s portion of the Federal

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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 of the Participant’s Restoration Retirement Benefit 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 Company 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 III until the earliest date at which the
Company reasonably anticipates that the making of such payment would not cause such
violation.

     (d) Delay for Insolvency or Compelling Business Reasons. In the event the
Company determines that the making of any payment of benefits on the date specified
hereunder would jeopardize the ability of the Company to continue as a going concern, the
Committee may delay the payment of benefits under this Article III until the first calendar
year in which the Company 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 III; 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 or Beneficiaries), 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 4

FUNDING BY COMPANY

     4.1 Unsecured Obligation of Company.

     (a) Any benefit payable pursuant to this Plan shall be paid from the general assets of
the Company. Nothing contained in this Plan and no action taken pursuant to the provisions
of this Plan shall create a trust of any kind or a fiduciary relationship between any
Participant (or any other interested person) and the Company or the

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Committee, or require the Company to maintain or set aside any specific funds for the
purpose of paying any benefit hereunder. To the extent that a Participant or any other
person acquires a right to receive payments from the Company under this Plan, such right
shall be no greater than the right of any unsecured general creditor of the Company.

     (b) If the Company maintains a separate fund or makes specific investments, including
the purchase of insurance insuring the life of a Participant, to assure its ability to pay
any benefits due under this Plan, neither the Participant nor the Participant’s Beneficiary
or Beneficiaries shall have any legal or equitable ownership interest in, or lien on, such
fund, policy, investment or any other asset of the Company. The Company, in its sole
discretion, may determine the exact nature and method of informal funding (if any) of the
obligations under this Plan. If the Company elects to maintain a separate fund or makes
specific investments to fund its obligations under this Plan, the Company reserves the
right, in its sole discretion, to terminate such method of funding at any time, in whole or
in part.

     4.2 Cooperation of Participant.

     If the Company, in its sole discretion, elects to invest in a life insurance, disability or
annuity policy on the life of Participant to assist it with the informal funding of its obligations
under this Plan, Participant shall assist the Company, from time to time, promptly upon the request
of the Company, in obtaining such insurance policy by supplying any information necessary to obtain
such policy as well as submitting to any physical examinations required therefore. The Company
shall be responsible for the payment of all premiums with respect to any whole life, variable, or
universal life insurance policy purchased in connection with this Plan unless otherwise expressly
agreed.

ARTICLE 5

BENEFICIARIES

     5.1 Beneficiary Designations.

     A designation of a Beneficiary hereunder may be made only by an instrument (in form acceptable
to the Committee) signed by the Participant and filed with the Committee prior to the Participant’s
death. In the absence of such a designation and at any other time when there is no existing
Beneficiary designated hereunder, the unpaid value of the Participant’s Restoration Retirement
Benefit to which the Participant was entitled at his death shall be distributed to the
Participant’s estate. A Beneficiary who dies or who ceases to exist shall not be entitled to any
part of any payment thereafter to be made to the Participant’s Beneficiary unless the Participant’s
designation specifically provides to the contrary. If two or more persons designated as a
Participant’s Beneficiary are in existence with respect to a Restoration Retirement Benefit, the
amount of any payment to the Beneficiary under this Plan shall be divided equally among such
persons, unless the Participant’s designation specifically provides to the contrary.

     5.2 Change in Beneficiary.

     A Participant may, at any time and from time to time, change a Beneficiary designation
hereunder without the consent of any existing Beneficiary or any other person. Any change in

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Beneficiary shall be made only by an instrument (in form acceptable to the Committee) signed
by the Participant, and any change shall be effective only if received by the Committee prior to
the death of the Participant.

ARTICLE 6

CLAIMS PROCEDURES

     6.1 Claims for Benefits.

     The Committee shall determine the rights of any Participant to any deferred compensation
benefits hereunder. Any Participant who believes that he has not received the deferred
compensation benefits to which he is entitled under the Plan may file a claim in writing with the
Committee. The Committee shall, no later than 90 days after the receipt of a claim (plus an
additional period of 90 days if required for processing, provided that notice of the extension of
time is given to the claimant within the first 90-day period), either allow or deny the claim in
writing. If a claimant does not receive written notice of the Committee’s decision on his claim
within the above-mentioned period, the claim shall be deemed to have been denied in full.

     A denial of a claim by the Committee, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:

     (a) the specific reasons for the denial;

     (b) specific reference to pertinent Plan provisions on which the denial is based;

     (c) a description of any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is necessary;
and

     (d) (an explanation of the claim review procedure and the time limits applicable to
such procedures, including a statement of the claimant’s right to bring a civil action under
Section 502(a) of ERISA.

     6.2 Appeal Provisions.

     A claimant whose claim is denied (or his duly authorized representative) may within 60 days
after receipt of denial of a claim file with the Committee a written request for a review of such
claim. If the claimant does not file a request for review of his claim within such 60-day period,
the claimant shall be deemed to have acquiesced in the original decision of the Committee on his
claim, the decision shall become final and the claimant will not be entitled to bring a civil
action under Section 502(a) of ERISA. If such an appeal is so filed within such 60-day period)
the Company (or its delegate) shall conduct a full and fair review of such claim. During such
review, the claimant (or the claimant’s authorized representative) shall be given the opportunity
to review all documents that are pertinent to his claim and to submit issues and comments in
writing.

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     The Company shall mail or deliver to the claimant a written decision on the matter based on
the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request
for review (unless special circumstances require an extension of up to 60 additional days, in which
case written notice of such extension shall be given to the claimant prior to the commencement of
such extension). Such decision shall be written in a manner calculated to be understood by the
claimant, shall state the specific reasons for the decision and the specific Plan provisions on
which the decision was based and shall, to the extent permitted by law, be final and binding on all
interested persons. If the decision on review is not furnished to the claimant within the
above-mentioned time period, the claim shall be deemed to have been denied on review.

ARTICLE 7

MISCELLANEOUS

     7.1 Withholding.

     The Company shall have the right to withhold from any Restoration Retirement Benefits payable
under the Plan or other wages payable to a Participant an amount sufficient to satisfy all federal,
state and local tax withholding requirements, if any, arising from or in connection with the
Participant’s receipt or vesting of deferred compensation benefits under the Plan.

     7.2 No Guarantee of Employment.

     Nothing in this Plan shall be construed as guaranteeing future employment to any Participant.
Without limiting the generality of the preceding sentence, except as otherwise set forth in a
written agreement, a Participant continues to be an employee of the Company solely at the will of
the Company subject to discharge at any time, with or without cause. The benefits provided for
herein for a Participant shall not be deemed to modify, affect or limit any salary or salary
increases, bonuses, profit sharing or any other type of compensation of a Participant in any manner
whatsoever. Nothing contained in this Plan shall affect the right of a Participant to participate
in or be covered by or under any qualified or nonqualified pension, profit sharing, group, bonus or
other supplemental compensation, retirement or fringe benefit Plan constituting any part of the
Company’s compensation structure whether now or hereinafter existing.

     7.3 Payment to Guardian.

     If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his property, the Committee may direct payment of
such benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or person. The Committee may require such proof of incompetency, minority,
incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Company from all liability with respect to such
benefit.

     7.4 Assignment.

     No right or interest under this Plan of any Participant or Beneficiary shall be assignable or
transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance

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or other legal process or in any manner be liable for or subject to the debts or liabilities
of the Participant or Beneficiary.

     7.5 Severability.

     If any provision of this Plan or the application thereof to any circumstance(s) or person(s)
is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the
application of such provision to other circumstances or persons shall not be affected thereby.

     7.6 Amendment and Termination.

     The Company may at any time (without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan; provided, however, that no modification,
amendment or termination of this Plan shall adversely affect the rights of a Participant under the
Plan without the consent of such Participant. Notwithstanding the foregoing or any provision of
the Plan to the contrary, the Company may at any time (without the consent of any Participant)
modify, amend or terminate any or all of the provisions of this Plan to the extent necessary to
conform the provisions of the Plan with Section 409A of the Code regardless of whether such
modification, amendment or termination of this Plan shall adversely affect the rights of a
Participant under the Plan.

     7.7 Effect of Termination.

     If the Plan is terminated, the accrual of all benefits hereunder shall thereupon cease.
Notwithstanding the foregoing, to the extent provided by the Company in accordance with Section
7.6, 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 Company 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 benefits 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 Company within the thirty (30) days preceding or the twelve (12) months following a
change of control within the meaning of Section 409A of the Code; provided that all
Aggregated Plans are terminated and liquidated with respect to each Participant that
experienced such 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 Company irrevocably takes all necessary action to terminate and liquidate this Plan
and such other Aggregated Plans;

12

 

     (c) the termination and liquidation of the Plan, provided that: (i) the termination and
liquidation does not occur proximate to a downturn in the Company’s financial health; (2)
the Company terminates and liquidates all Aggregated Plans; (3) no payments in liquidation
of this Plan are made within twelve (12) months of the date the Company 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 Company irrevocably takes all action necessary to terminate and liquidate this Plan; and
(5) the Company does not adopt a new Aggregated Plan at any time within three (3) years
following the date on which the Company irrevocably takes all action necessary to terminate
and liquidate the Plan.

     7.8 Exculpation and Indemnification.

     The Company shall indemnify and hold harmless the members of the Committee from and against
any and all liabilities, costs and expenses incurred by such persons as a result of any act, or
omission to act, in connection with the performance of such person’s duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as may result from the
gross negligence, willful misconduct, and/or criminal acts of such persons.

     7.9 Leave of Absence.

     The Company may, in its sole discretion, permit a Participant to take a leave of absence for a
period not to exceed one year. Any such leave of absence must be approved by the Company. During
this time, the Participant will still be considered to be in the employ of the Company for purposes
of this Plan.

     7.10 Gender and Number.

     For purposes of interpreting the provisions of this Plan, the masculine gender shall be deemed
to include the feminine, the feminine gender shall be deemed to include the masculine, and the
singular shall include the plural unless otherwise clearly required by the context.

     7.11 Governing Law.

     Except as otherwise preempted by the laws of the United States, this Plan shall be governed by
and construed in accordance with the laws of the State of Texas, without giving effect to its
conflict of law provisions.

13

 

     7.12 Effective Date.

     The effective date of the amended and restated Plan, as signed this 12th day of December,
2008, is January 1, 2009.

	 	 	 	 	 
	 	TESORO CORPORATION

 	 
	 	By:  	/s/ SUSAN A. LERETTE	 
	 	Name:  	Susan A. Lerette	 
	 	Title:  	SVP, Administration	 

14

 

	 	 	 	 	 

TESORO CORPORATION RESTORATION

RETIREMENT PLAN

Exhibit 1

Effective as of July 1, 2006 and continuing for purposes of this amended and restated Plan, the
following are the classifications of officers and key management employees of the Company eligible
to participate in the Tesoro Corporation Restoration Retirement Plan:

	 	u	 	Employees eligible for the Tesoro Corporation Retirement Plan classified as being
included in salary grades 43 and above with a base salary of $170,000 per year or more
but excluding any such person designated as included in the Tesoro Corporation
Executive Security Plan or who is provided a separate supplemental retirement benefit
as a part of an employment agreement with the Company.

Effective as of January 1, 2008, the classifications of officers and key management employees of
the Company eligible to participate in the Tesoro Corporation Restoration Retirement Plan include:

	 	u	 	Employees in salary grades E1 – E3 who are eligible to participate in the Tesoro
Corporation Retirement Plan, but excluding any person eligible to receive a benefit
under the Tesoro Corporation Executive Security Plan or who is provided a separate
supplemental retirement benefit as a part of an employment agreement with the Company;
and
	 
	 	u	 	Employees in salary grades 01 – 05 who are eligible to participate in the Tesoro
Corporation Retirement Plan, and who have an annual base salary of at least $170,000
per year.

15exv10w6

EXHIBIT 10.6

TESORO CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I

GENERAL PROVISIONS

     1.1 Establishment and Purpose.

     WHEREAS, Tesoro Corporation (the “Company”) previously established the Tesoro Corporation
Executive Deferred Compensation Plan (the “Plan”), as amended, primarily for the purpose of
providing benefits for a select group of management and highly compensated employees of the Company
and its Subsidiaries so as to provide benefits comparable to those not provided under the Tesoro
Corporation Thrift Plan due to salary and deferral limitations imposed under the Code;

     WHEREAS, the Plan is intended to qualify as a “top hat” plan under Sections 201(2), 301(a)(3)
and 401(a)(l) of ERISA; and

     WHEREAS, the Company desires to amend the Plan to comply with Regulations under Section 409A
of the Code and to clarify certain provisions of the Plan relating to Supplemental Discretionary
Awards;

     NOW, THEREFORE, the Company adopts this amended and restated Tesoro Corporation Executive
Deferred Compensation Plan, effective January 1, 2009, as follows:

     1.2 Definitions.

     “Affiliate” means each entity that would be considered a single employer with the Company
under Section 414(b) or Section 414(c) of the Code, except that the phrase “at least 50%” shall be
substituted for the phrase “at least 80%” as used therein.

     “Aggregated Plan” means all agreements, methods, programs and other arrangements that are
aggregated with this Plan under Section 1.409A-1(c) of the Regulations.

     “Beneficiary” means the person or persons designated by a Participant as his beneficiary
hereunder in accordance with the provisions of Article 5.

     “Board” means the Board of Directors of the Company.

     “Bonus Compensation” means, as determined in the sole discretion of the Committee, such annual
bonus or other bonus paid to a Participant including executive bonus but excluding special
compensation or bonuses paid because of service overseas, expense allowances and all other
extraordinary compensation.

     “Chief Executive Officer” means the Chief Executive Officer of the Company.

1

 

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

     “Committee” means the Employee Benefits Committee appointed by the Compensation Committee of
the Board, or such other committee designated by the Compensation Committee of the Board to
discharge the duties of the Committee hereunder.

     “Company” means Tesoro Corporation, a Delaware corporation, or any successor thereto.

     “Company Matching Contribution” means the employer matching contributions allocated to the
Participant’s account under the Thrift Plan for the Plan Year.

     “Compensation” shall, unless otherwise determined by the Committee, for purposes of Sections
2.1 and 2.2 of the Plan, have the meaning assigned thereto in the Thrift Plan (determined without
regard to any limits imposed on Compensation by the Code, but including amounts voluntarily
deferred under the terms of this Plan and any 401(k) deferrals under the Thrift Plan) and shall, as
applicable, include Bonus Compensation.

     “Corporate 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), other than Company or a
Subsidiary or any employee benefit plan sponsored by Company or a Subsidiary, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) 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.

     “Deferral Account” means the bookkeeping account(s) established on behalf of a Participant to
track the Participant’s supplemental benefits as described in Article 2 hereof.

2

 

     “Deferral Election” means an election by a Participant to defer Compensation in accordance
with the provisions of Section 2.1 of the Plan, including an election as to the Distribution Date
and Distribution Option.

     “Deferrals” shall have the meaning ascribed thereto in Section 2.1(b) hereof.

     “Disability” means disability as determined under the Retirement Plan.

     “Disability Date” means the date on which a Participant’s Separation from Service due to
Disability occurs.

     “Distribution Date” means the date on which distribution of the applicable portion of a
Participant’s Deferral Account (other than the portion, if any, of such Deferral Account that is
attributable to Supplemental Discretionary Awards) is to commence. Distribution Dates are
determined according to each Participant’s Deferral Elections for each Plan Year or as otherwise
provided under the terms of the Plan.

     “Distribution Option” means the form in which distribution of the applicable portion of a
Participant’s Deferral Account (other than the portion, if any, of such Participant’s Deferral
Account that is attributable to Supplemental Discretionary Awards) is to be made. Distribution
Options are determined according to each Participant’s Deferral Elections for each Plan Year or as
otherwise provided under the terms of the Plan.

     “Earnings” shall have the meaning ascribed thereto in Section 2.4(b) of the Plan.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time.

     “Insolvency” means, with respect to the Company: (1) an adjudication of bankruptcy; (2) an
assignment for the benefit of creditors of or by the Company; (3) a material part or all of the
property of the Company becomes subject to the control and direction of a receiver, which
receivership is not dismissed within sixty (60) days of such receiver’s appointment; or (4) the
filing by the Company of a petition for relief under any federal or other bankruptcy or other
insolvency law or for an arrangement with creditors.

     “Participant” means any employee who has satisfied the eligibility requirements set forth in
Section 1.4 of the Plan and has a credit to a Deferral Account or has completed a Deferral
Election.

     “Performance-Based Compensation” means the total amounts payable to a Participant as
remuneration based upon the Participant’s performance of services for the Company over a period of
not less than twelve (12) months, the payment of which or the amount of which is contingent on the
satisfaction of established organizational or individual performance criteria, and that otherwise
meets the definition of “performance-based compensation”, as that term is defined in Section
1.409A-2(a)(7) of the Regulations. For these purposes, Performance-Based Compensation shall be
based upon criteria established no later than 90 days following commencement of the applicable
performance period.

3

 

     “Person” means any individual, corporation, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political subdivision thereof.

     “Plan Year” means the twelve-month period beginning each January 1.

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

     “Retirement Plan” means the Tesoro Corporation Retirement Plan, as amended.

     “Separation from Service” means a reasonably anticipated permanent reduction in the level of
bona fide services performed by the Participant for the Company and its Affiliates to 20% or less
of the average level of bona fide services performed by the Participant for the Company and its
Affiliates (whether as an employee or an independent contractor) in the immediately preceding
thirty-six (36) months (or the full period of service to the Company and its Affiliates if the
Participant has been providing services to the Company and its Affiliates for fewer than thirty-six
(36) months). The determination of whether a Separation from Service has occurred shall be made by
the Committee in accordance with the provisions of Section 409A of the Code and the Regulations
promulgated thereunder.

     “Spouse” means an individual of the opposite sex that is married to the Participant.

     “Subsidiary” means any entity in which the Company owns or otherwise controls, directly or
indirectly, stock or other ownership interests having the voting power to elect a majority of the
board of directors, or other governing group having functions similar to a board of directors, as
determined by the Committee.

     “Supplemental Match” means an amount credited to the Participant’s Deferral Account pursuant
to Section 2.2(a).

     “Supplemental Discretionary Award” means a discretionary amount, if any, credited to a
Participant’s Deferral Account pursuant to Section 2.2(b).

     “Thrift Plan” means the Tesoro Corporation Thrift Plan, as amended.

     “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from
an illness or accident of the Participant, the Participant’s Spouse, or a dependent (as determined
under Section 152 of the Code, but without regard to subsections (b)(1), (b)(2) and (d)(1)(B) of
Section 152) of the Participant, 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.

     1.3 Administration.

     (a) The Committee shall administer the Plan and have sole and absolute authority and
discretion to decide all matters relating to the administration of the Plan, including,
without limitation, determining the rights and status of Participants or their

4

 

Beneficiaries under the Plan. The Committee is authorized to interpret the Plan, to
adopt administrative rules, regulations, and guidelines for the Plan, and may correct any
defect, supply any omission or reconcile any inconsistency or conflict in the Plan. The
Committee’s determinations under the Plan need not be uniform among all Participants, or
classes or categories of Participants, and may be applied to such Participants, or classes
or categories of Participants, as the Committee, in its sole and absolute discretion,
considers necessary, appropriate or desirable. All determinations by the Committee shall be
final, conclusive and binding on the Company, the Participant and any and all interested
parties.

     (b) The Committee may delegate such of its powers and authority under the Plan to the
Company’s officers or such other person(s) as it deems necessary or appropriate. In the
event of such delegation, all references to the Committee in this Plan shall be deemed
references to such officers or such other person(s) as it relates to those aspects of the
Plan that have been delegated.

     (c) Any action taken by the Committee with respect to the rights or benefits under the
Plan of any Participant shall be subject to correction by the Committee as to payments not
yet made to such person, and acceptance of any deferred compensation benefits under the Plan
constitutes acceptance of and agreement to the Committee’s or the Company’s making any
appropriate adjustments in future payments to such person (or to recover from such person)
any excess payment or underpayment previously made to him.

     (d) Notwithstanding any provision of the Plan to the contrary, if any benefit provided
under this Plan is subject to the provisions of Section 409A of the Code and the Regulations
issued thereunder, the provisions of the Plan shall be administered, interpreted and
construed in a manner necessary to comply with Section 409A and the Regulations issued
thereunder (or disregarded to the extent such provision cannot be so administered,
interpreted or construed).

     1.4 Eligibility and Participation.

     (a) Participation in the Plan is limited to those individuals who are eligible to
participate in the Thrift Plan and are within the category of a select group of management
and highly compensated employees as referred to in Sections 201(2), 301(a)(3) and 401(a)(l)
of ERISA, and who are within those classifications of officers and key management employees
of the Company and its Subsidiaries which are nominated by the Chief Executive Officer and
approved by the Compensation Committee of the Board as eligible to participate in the Plan.
Those employee classifications selected for participation in the Plan are set forth on
Exhibit 1 attached hereto. This Exhibit may be modified from time to time as recommended by
the Chief Executive Officer and approved by the Compensation Committee of the Board to
include or exclude certain employee classifications as deemed appropriate. Plan
participation shall commence as of the first day of the Plan Year or the first day of the
7th month of the Plan Year (each, a “semi-annual entry date”) as determined by the
Compensation Committee of the Board. Employees hired, promoted or reclassified to a
category of officer and key management employees of the Company and/or its Subsidiaries
eligible for participation shall become

5

 

eligible as of the semi-annual entry date determined by the Compensation Committee of
the Board. A newly eligible Participant shall make his or her Deferral Elections within the
designated time periods as set forth in Section 2.1 hereof.

     (b) A Participant shall cease to be a Participant upon receiving payment for the full
amount of benefits to which the Participant is entitled under the Plan. A Participant who
becomes ineligible to participate based on eligibility status as determined pursuant to
Section 1.4(a) of this Plan shall become an ineligible Participant at the time determined by
the Committee. Once a Participant is no longer eligible to actively participate in the
Plan, he shall not be entitled to defer Compensation pursuant to Section 2.1 or receive a
Supplemental Match or Supplemental Discretionary Award (except to the extent otherwise
provided in an Award Agreement) under Section 2.2.

ARTICLE II

SUPPLEMENTAL BENEFITS

     2.1 Supplemental Deferral Elections.

     (a) Each Participant shall be eligible to elect to defer Compensation under the Plan
with respect to a Plan Year in accordance with the terms of the Plan and the rules and
procedures established by the Committee. Deferral Elections under the Plan are entirely
voluntary and, with respect to the Plan Year to which they relate, following the end of the
election period established under Section 2.1(b), are irrevocable, except as provided in
§ 3.3 hereof.

     (b) A Participant may make a Deferral Election by filing a written or electronic
election with the Committee or its designee directing the Company to reduce the
Participant’s Compensation and/or Bonus Compensation and to credit the amount of any such
reduction (the “Deferrals”) to the Deferral Account established and maintained for such
Participant pursuant to Section 2.4 of the Plan. Deferral Elections hereunder shall be made
in accordance with the terms of the Plan and the rules established by the Committee and,
except as provided below, must be filed not later than December 31 of the calendar year
preceding the Plan Year to which the election relates (or at such earlier times as may be
established by the Committee). With regard to Performance-Based Compensation, such Deferral
Elections must be made on or before June 30 of the calendar year that coincides with the
applicable performance period in accordance with Section 409A of the Code and the
Regulations. A Participant may revoke or modify such election up until the end of the
election period established by the Committee under this Section 2.1(b). Notwithstanding the
preceding, for the first Plan Year in which a Participant is eligible to participate in the
Plan, a Participant’s initial Deferral Election may be made within thirty (30) days after
the date the Participant becomes eligible to participate in the Plan and shall apply only to
Compensation paid for services to be performed after the election. Unless otherwise
determined by the Committee, a Deferral Election must be filed each Plan Year, and will not
carry over from Plan Year to Plan Year.

6

 

     (c) Deferrals shall be credited to each Participant’s Deferral Account at such time or
times as determined by the Committee; provided, however, that Deferrals shall be credited to
each Participant’s Deferral Account not later than thirty (30) days after the date on which
such Compensation would have otherwise been paid, without regard to whether or not the
Participant has reached the limit on 401(k) deferrals under the Thrift Plan. Deferrals
shall be deemed to be invested in accordance with a Participant’s investment designations as
permitted under Section 2.4(b).

     (d) Unless otherwise determined by the Committee, a Participant may elect to defer up
to 50% of Compensation (exclusive of Bonus Compensation) and up to 100% of Bonus
Compensation payable to the Participant.

     (e) Notwithstanding the foregoing and unless otherwise determined by the Committee, a
Deferral Election shall automatically terminate on the earliest to occur of: (1) the end of
the Plan Year to which the Deferral Election applies; (2) the termination of a Participant’s
employment for any reason; (3) the Committee’s determination that the Participant is no
longer eligible to participate in the Plan; or (4) the termination or discontinuance of the
Plan.

     (f) Each Participant shall at all times be vested in the portion of his Deferral
Account attributable to Deferrals, including Earnings thereon.

     2.2 Supplemental Company Matching and Discretionary Awards.

     (a) With respect to each Plan Year and to the extent provided under this Section 2.2,
the Company shall credit a supplemental matching award (“Supplemental Match”) to each
eligible Participant’s Deferral Account. Those Participants eligible to participate in the
Company’s Executive Security Plan, or who, through the terms of an individual employment
agreement have an entitlement to supplemental retirement benefits, shall not be eligible to
participate in the Supplemental Match. In the event a Participant subsequently loses
eligibility to participate in the Executive Security Plan or his employment agreement is
amended to eliminate supplemental retirement benefits, such Participant shall regain
eligibility to share in the Supplemental Match for that portion of the Plan Year following
such Participant’s loss of eligibility to participate in the Executive Security Plan or
elimination of supplemental retirement benefits as set forth herein. Participants becoming
eligible for participation in the Executive Security Plan, or who are granted supplemental
retirement benefits through an individual employment agreement will be allowed to retain the
Supplemental Match contributed up to such eligibility, subject to the normal vesting
provisions in Section 2.2(e).

     (b) With respect to any Plan Year and to the extent provided under this Section 2.2,
the Company may credit a Supplemental Discretionary Award (the “Supplemental Discretionary
Award”) to any eligible Participant’s Deferral Account. The determination of a Participant
to whom such Supplemental Discretionary Award applies, as well as the amount of such award,
if any, shall be in the sole discretion of the Chief Executive Officer, pursuant to an
agreement between the Company and such Participant (the “Award Agreement”).

7

 

     (c) The amount of the Supplemental Match shall be applied only to Compensation in
excess of the limitations imposed under Section 401(a)(17) of the Code and shall be in such
percentage of the Participant’s Compensation in excess of the Section 401(a)(17) limit as
shall be determined by the Compensation Committee of the Board in its sole discretion from
year to year. The amount of the Supplemental Discretionary Award, if any, shall be
communicated to the applicable Participant by the Committee following determination of such
award by the Chief Executive Officer.

     (d) The Supplemental Match and the Supplemental Discretionary Award, if any, will be
credited to the Participant’s Deferral Account and shall be deemed invested in the same
manner in which the remainder of the Participant’s Deferral Account is deemed to be invested
under Section 2.4(b) and shall be credited to the Participant’s Deferral Account within
thirty (30) days of (i) the Deferral to which the Supplemental Match relates (recognizing
that the Supplemental Match relates only to Deferrals of Compensation exceeding the
statutory limit set forth in Section 2.2(c) above) and, as applicable, (ii) the
determination of a Supplemental Discretionary Award on behalf of a Participant.

     (e) Each Participant shall vest in the portion of his Deferral Account attributable to
a Supplemental Match upon the completion of three (3) years of service creditable under the
Thrift Plan for vesting purposes. A Participant shall vest in that portion of his Deferral
Account attributable to a Supplemental Discretionary Award in accordance with the provisions
of the Award Agreement pursuant to which such Supplemental Discretionary Award is credited.

     2.3 Change in Control.

     In the event of a Corporate Change in Control, the portion of a Participant’s Deferral Account
attributable to any Supplemental Match and any Supplemental Discretionary Award shall become fully
vested. A Corporate Change in Control is not an event which triggers an automatic distribution of
benefits.

     2.4 Deferral Accounts/Earnings.

     (a) Unless otherwise determined by the Committee, the Company shall maintain on behalf
of each Participant a separate Deferral Account.

     (b) The Participant’s Deferral Account shall be adjusted by an amount equal to the
amount that would have been earned (or lost) if the Deferrals under this Plan had been
invested in hypothetical investments designated by the Participant from time to time, based
on a list of hypothetical investments provided by the Committee from time to time (such
hypothetical earnings or losses shall be referred to as “Earnings”); provided, however, in
no event shall the common stock of the Company or any Subsidiary ever constitute a
hypothetical investment maintained under the Plan. The Participant shall designate the
investments used to measure Earnings from the list of authorized investments provided by the
Committee by completing the appropriate form (or electronically via the Plan’s website) or
in such other manner as the Committee may

8

 

designate from time to time. The Participant may change such designations at such
times as are permitted by the Committee, provided that the Participant shall be entitled to
change such designations at least quarterly. Earnings shall be credited to the Participant’s
Deferral Account at least annually (or more frequently at the discretion of the Committee).
Earnings shall be credited to a Deferral Account until all payments with respect to such
account have been made under this Plan. Neither the Company nor the Committee shall act as
a guarantor, or be liable or otherwise responsible for the investment performance of the
designated investments (including any losses sustained by a Participant) with respect to a
Participant’s Deferral Account.

     (c) Each Participant shall be vested in his Deferral Account balances in accordance
with the vesting designated in Sections 2.1(f), 2.2(e) and 2.3 hereof.

ARTICLE III

DISTRIBUTIONS

     3.1 Distribution Dates.

     Distribution Dates for the Participant’s Deferral Account shall be established and determined
in accordance with the Participant’s Deferral Elections. Such Deferral Elections shall be made in
accordance with Section 3.2. Except in the event of death or a Separation from Service due to
Disability, distribution payments will commence on the first day of the seventh month following the
Participant’s Separation from Service.

     3.2 Distribution Option/Manner of Payment.

     The Distribution Option for Deferral Accounts shall be determined in accordance with such
election procedures as are established by the Committee and distributions shall, at the
Participant’s option, be paid in the form of a lump sum or in installments over a period of 2-to-15
years; provided, however, that the Distribution Option must be established at the time of the
Participant’s Deferral Election and must be in a form acceptable to the Committee as determined
from time to time. Such Distribution Option may include a lump sum distribution to be paid, while
actively employed by the Company (“In-service Withdrawal”), in a future year that is at least two
years beyond the beginning of the Plan Year to which the Deferral Election relates.
Notwithstanding the preceding provisions of this Section 3.2, if a Participant fails to designate a
form of distribution, or if the balance in the Participant’s Deferral Account is less than
$100,000, the distribution will be paid in the form of a lump sum regardless of the Participant’s
Deferral Election. All payments under the Plan shall be made in cash. Distribution of that
portion of a Participant’s Deferral Account that is attributable to Supplemental Discretionary
Awards shall be made in such manner as may be designated and set forth in the Award Agreement
pursuant to which such Supplemental Discretionary Award is credited.

     3.3 Modification of Distribution Elections.

     A Participant has the right to change any Distribution Date or Distribution Option associated
with the Deferral Account previously designated by the Participant in one or more Deferral
Elections pursuant to this Article 3; provided, however, that: (1) the Participant must file an
election designating the new Distribution Date and Distribution Option at least one year

9

 

prior to the Distribution Date previously designated; (2) the new Distribution Option may
extend, but not accelerate, payments; and (3) the new election must also provide that the new
Distribution Date be a minimum of five years later than the existing Distribution Date. Any such
election shall be made in accordance with such rules and procedures as are established by the
Committee and shall not take effect for at least twelve (12) months after the date on which such
election is made.

     3.4 Separation from Service.

     Notwithstanding the foregoing provisions, in the event of a Participant’s Separation from
Service for any reason other than death or Disability, the Participant will receive a payment of
all vested amounts credited to the Participant’s Deferral Account as elected by the Participant
pursuant to Section 3.2, subject to any modifications elected by the Participant pursuant to
Section 3.3, or as otherwise provided in Section 3.2 hereof. Any portion of a Participant’s
Deferral Account attributable to a Supplemental Match or a Supplemental Discretionary Award that is
not vested on the date of such Participant’s Separation from Service shall be forfeited by the
Participant should he or she fail to satisfy the vesting conditions of Sections 2.2(e) or 2.3.
Such forfeited amount shall revert to the Company and shall remain a general corporate asset to be
used for any purpose determined by the Company.

     3.5 Death.

     The Beneficiary or Beneficiaries of a Participant shall be entitled to receive the entire
amount credited to such Participant’s Deferral Account at the time of such Participant’s death.
Any unvested amounts remaining in such Participant’s Deferral Account shall immediately become
fully vested upon the Participant’s death. The value of the Participant’s Deferral Account will be
paid to the Participant’s Beneficiary, including the Participant’s estate if designated as the
Beneficiary, in a lump sum within ninety (90) days following the Participant’s death. The
Participant shall designate his Beneficiary in accordance with the provisions of Article 5 hereof.

     3.6 Disability.

     Notwithstanding the foregoing provisions, in the event of Disability, a Participant shall
continue to accrue vesting service until fully vested in his Deferral Account or, if earlier, until
his Disability Date. The Participant will receive a payment of all vested amounts credited to the
Participant’s Deferral Account on his Disability Date, in the manner provided in his Deferral
Election or, if earlier, on his Distribution Date.

     3.7 Unforeseeable Emergency.

     The Committee may, upon request of a Participant, cause to be paid to such Participant an
amount equal to all or any part of the amounts credited to such Participant’s Deferral Account if
the Committee determines, in its absolute discretion based on such reasonable evidence that it
shall require, that such a payment or payments is necessary for the purpose of alleviating the
consequences of an Unforeseeable Emergency occurring with respect to the Participant. The amounts
distributed with respect to an Unforeseeable Emergency may not exceed the amount necessary to
satisfy the emergency plus amounts necessary to pay taxes on the distribution, after taking into
account the extent to which the hardship is or may be relieved through reimbursement

10

 

or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to
the extent liquidation would not itself cause severe financial hardship). Any such distribution
upon an Unforeseeable Emergency shall result in a termination of Deferrals that would otherwise be
credited on behalf of such Participant, together with any Supplemental Match associated with such
Deferrals.

     3.8 Change in Time of Payments.

     Notwithstanding any provision of this Article III to the contrary, the benefits payable
hereunder may, to the extent expressly provided in this Section 3.8, 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 Deferral Accounts 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 Deferral
Account.

     (b) Distribution Necessary to Satisfy Applicable Tax Withholding. If the
Company 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 Deferral Accounts 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 Company 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 III until the earliest date at which the
Company reasonably anticipates that the making of such payment would not cause such
violation.

     (d) Delay for Insolvency or Compelling Business Reasons. In the event the
Company determines that the making of any payment of benefits on the date specified
hereunder would jeopardize the ability of the Company to continue as a going concern, the
Committee may delay the payment of benefits under this Article III until the first calendar
year in which the Company 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

11

 

paragraphs of this Article III; 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 IV

FUNDING

     4.1 Unsecured Obligation of Company.

     (a) Any benefit payable pursuant to this Plan shall be paid from the general assets of
the Company. Nothing contained in this Plan and no action taken pursuant to the provisions
of this Plan shall create a trust of any kind or a fiduciary relationship between any
Participant (or any other interested person) and the Company or the Committee, or require
the Company to maintain or set aside any specific funds for the purpose of paying any
benefit hereunder. To the extent that a Participant or any other person acquires a right to
receive payments from the Company under this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company.

     (b) If the Company maintains a separate fund or makes specific investments, including
the purchase of insurance on the life of the a Participant, to assure its ability to pay any
benefits due under this Plan, neither the Participant nor the Participant’s Beneficiary
shall have any legal or equitable ownership interest in, or lien on, such fund, policy,
investment or any other asset of the Company. The Company, in its sole discretion, may
determine the exact nature and method of informal funding (if any) of the obligations under
this Plan. If the Company elects to maintain a separate fund or makes specific investments
to fund its obligations under this Plan, the Company reserves the right, in its sole
discretion, to terminate such method of funding at any time, in whole or in part. In
addition, the Company may, in its sole and absolute discretion, set aside or earmark funds
in an amount, determined by the Committee, equal to the total amounts necessary to provide
benefits under the Plan. The Committee may, at its discretion direct the Company to
establish one or more grantor trusts to provide for the ultimate payment of the Company’s
obligations under this Plan, but the trust instrument for any such trust must specifically
provide that its assets are subject to the claims of the Company’s creditors. Such grantor
trust may require that the Company fully fund said trust with respect to benefits accrued
through the date of a Corporate Change in Control following such a Corporate Change in
Control.

12

 

     4.2 Cooperation of Participant.

     If the Company, in its sole discretion, elects to invest in a life insurance, disability or
annuity policy on the life of a Participant to assist with the informal funding of its obligations
under this Plan, the Participant shall assist the Company, from time to time, promptly upon the
request of the Company, in obtaining such insurance policy by supplying any information necessary
to obtain such policy as well as submitting to any physical examinations required therefore. The
Company shall be responsible for the payment of all premiums with respect to any whole life,
variable, or universal life insurance policy purchased in connection with this Plan unless
otherwise expressly agreed.

ARTICLE V

BENEFICIARIES

     5.1 Beneficiary Designations.

     A designation of a Beneficiary hereunder may be made only by an instrument (in form acceptable
to the Committee) signed by the Participant and filed with the Committee prior to the Participant’s
death. In the absence of such a designation and at any other time when there is no existing
Beneficiary designated hereunder, the unpaid value of the Participant’s Deferral Accounts to which
the Participant was entitled at his death shall be distributed to the Participant’s estate. A
Beneficiary who dies or which ceases to exist shall not be entitled to any part of any payment
thereafter to be made to the Participant’s Beneficiary unless the Participant’s designation
specifically provides to the contrary. If two or more persons designated as a Participant’s
Beneficiary are in existence with respect to a single deferred compensation benefit, the amount of
any payment to the Beneficiary under this Plan shall be divided equally among such persons, unless
the Participant’s designation specifically provides to the contrary.

     5.2 Change in Beneficiary.

     A Participant may, at any time and from time to time, change a Beneficiary designation
hereunder without the consent of any existing Beneficiary or any other person. Any change in
Beneficiary shall be made only by an instrument (in form acceptable to the Committee) signed by the
Participant, and any change shall be effective only if received by the Committee prior to the death
of the Participant.

ARTICLE VI

CLAIMS PROCEDURES

     6.1 Claims for Benefits.

     The Committee shall determine the rights of any Participant to any deferred compensation
benefits hereunder. Any Participant who believes that he has not received the deferred
compensation benefits to which he is entitled under the Plan may file a claim in writing with the
Committee. The Committee shall, no later than 90 days after the receipt of a claim (plus an
additional period of 90 days if required for processing, provided that notice of the extension of
time is given to the claimant with the first 90-day period), either allow or deny the claim in
writing.

13

 

     A denial of a claim by the Committee, wholly or partially, shall be written in a manner
intended to be understood by the claimant and shall include:

     (a) the specific reasons for the denial;

     (b) specific reference to pertinent Plan provisions on which the denial is based;

     (c) a description of any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is necessary;
and

     (d) an explanation of the claim review procedure and the time limits applicable to such
procedures, including a statement of the claimant’s right to bring a civil action under
Section 502(a) of ERISA.

     6.2 Appeal Provisions.

     A claimant whose claim is denied (or his duly authorized representative) may within 60 days
after receipt of denial of a claim file with the Committee a written request for a review of such
claim. If the claimant does not file a request for review of his claim within such 60-day period,
the claimant shall be deemed to have acquiesced in the original decision of the Committee on his
claim, the decision shall become final and the claimant will not be entitled to bring a civil
action under Section 502(a) of ERISA. If such an appeal is so filed within such 60-day period the
Company (or its delegate) shall conduct a full and fair review of such claim. During such review,
the claimant (or the claimant’s authorized representative) shall be given the opportunity to review
all documents that are pertinent to his claim and to submit issues and comments in writing.

     The Company shall mail or deliver to the claimant a written decision on the matter based on
the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request
for review (unless special circumstances require an extension of up to 60 additional days, in which
case written notice of such extension shall be given to the claimant prior to the commencement of
such extension). Such decision shall be written in a manner intended to be understood by the
claimant, shall state the specific reasons for the decision and the specific Plan provisions on
which the decision was based and shall, to the extent permitted by law, be final and binding on all
interested persons.

ARTICLE VII

MISCELLANEOUS

     7.1 Withholding.

     The Company shall be required to withhold from any distribution payable under the Plan an
amount sufficient to satisfy all federal, state and local tax withholding requirements.

14

 

     7.2 No Guarantee of Employment.

     Nothing in this Plan shall be construed as guaranteeing future employment to any Participant.
Without limiting the generality of the preceding sentence, except as otherwise set forth in a
written agreement, a Participant continues to be an employee of the Company solely at the will of
the Company subject to discharge at any time, with or without cause. The benefits provided for
herein for a Participant shall not be deemed to modify, affect or limit any salary or salary
increases, bonuses, profit sharing or any other type of compensation of a Participant in any manner
whatsoever. Nothing contained in this Plan shall affect the right of a Participant to participate
in or be covered by or under any qualified or nonqualified pension, profit sharing, group, bonus or
other supplemental compensation, retirement or fringe benefit Plan constituting any part of the
Company’s compensation structure whether now or hereinafter existing.

     7.3 Payment to Guardian.

     If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his property, the Committee may direct payment of
such benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or person. The Committee may require such proof of incompetency, minority,
incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Company from all liability with respect to such
benefit.

     7.4 Assignment.

     No right or interest under this Plan of any Participant or Beneficiary shall be assignable or
transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or
other legal process or in any manner be liable for or subject to the debts or liabilities of the
Participant or Beneficiary.

     7.5 Severability.

     If any provision of this Plan or the application thereof to any circumstance(s) or person(s)
is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the
application of such provision to other circumstances or persons shall not be affected thereby.

     7.6 Amendment and Termination.

     The Company may at any time (without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan; provided, however, that no modification,
amendment or termination of this Plan shall adversely affect the rights of a Participant under the
Plan without the consent of such Participant. Notwithstanding the foregoing or any provision of
the Plan to the contrary, the Company may at any time (without the consent of any Participant)
modify, amend or terminate any or all of the provisions of this Plan to the extent necessary to
conform the provisions of the Plan with Section 409A of the Code regardless of whether such
modification, amendment or termination of this Plan shall adversely affect the rights of a
Participant under the Plan. Any amendment or termination of the Plan shall be at the direction of
the Compensation Committee of the Board. Notwithstanding the foregoing, the Plan shall

15

 

automatically terminate, without further action of the Company, upon Insolvency of the
Company.

     7.7 Effect of Termination.

     If the Plan is terminated, all deferrals shall thereupon cease, but Earnings shall continue to
be credited to the Deferral Accounts in accordance with Section 2.4 hereof. Notwithstanding the
foregoing, to the extent provided by the Company in accordance with Section 7.6, 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 Company 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 Company within the thirty (30) days preceding or the twelve (12) months following a
change of control within the meaning of Section 409A of the Code; provided that all
Aggregated Plans are terminated and liquidated with respect to each Participant that
experienced such 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 Company 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 Company’s financial health; (2)
the Company terminates and liquidates all Aggregated Plans; (3) no payments in liquidation
of this Plan are made within twelve (12) months of the date the Company 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 Company irrevocably takes all action necessary to terminate and liquidate this Plan; and
(5) the Company does not adopt a new Aggregated Plan at any time within three (3) years
following the date on which the Company irrevocably takes all action necessary to terminate
and liquidate the Plan.

     7.8 Exculpation and Indemnification.

     The Company shall indemnify and hold harmless the members of the Committee from and against
any and all liabilities, costs and expenses incurred by such persons as a result of any act, or
omission to act, in connection with the performance of such person’s duties,

16

 

responsibilities and obligations under the Plan, other than such liabilities, costs and
expenses as may result from the gross negligence, willful misconduct, and/or criminal acts of such
persons.

     7.9 Confidentiality.

     In further consideration of the benefits available to each Participant under this Plan, each
Participant shall agree that, except as such may be disclosed in financial statements and tax
returns, or in connection with estate planning, all terms and provisions of this Plan, and any
agreement between the Company and the Participant entered into pursuant this Plan, are and shall
forever remain confidential until the death of Participant; and the Participant shall not reveal
the terms and conditions contained in this Plan or any such agreement at any time to any person or
entity, other than his respective financial and professional advisors unless required to do so by a
court of competent jurisdiction or as otherwise may be required by law.

     7.10 Gender and Number.

     For purposes of interpreting the provisions of this Plan, the masculine gender shall be deemed
to include the feminine, the feminine gender shall be deemed to include the masculine, and the
singular shall include the plural unless otherwise clearly required by the context.

     7.11 Governing Law.

     Except as otherwise preempted by the laws of the United States, this Plan shall be governed by
and construed in accordance with the laws of the State of Texas, without giving effect to its
conflict of law provisions.

     7.12 Effective Date.

     Executed this 12th day of December, 2008, to be effective January 1, 2009.

	 	 	 	 	 	 	 
	 	 	TESORO CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ SUSAN A. LERETTE
	 	 
	 

	 	Name:
	 	Susan A. Lerette

	 	 
	 

	 	Title:
	 	SVP, Administration
	 	 
	 

	 	 	 	 

	 	 

17

 

TESORO CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

Exhibit 1

Effective as of June 1, 2008, and continuing for purposes of this amended and restated Plan, the
classifications of officers and key management employees of the Company eligible to participate in
the Tesoro Corporation Executive Deferred Compensation Plan include:

	 	•	 	Employees in salary grades E1 — E3 who are also eligible to participate in the
Tesoro Corporation Thrift Plan; and
	 
	 	•	 	Employees in salary grades 02 — 06 who are also eligible to participate in the
Tesoro Corporation Thrift Plan, and who earn a base salary of $140,000 per year or
more.

18

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