Document:

HIBERNIA CORPORATION

                         1993 DIRECTOR STOCK OPTION PLAN

                   Amended and Restated as of January 27, 1999

1.       Definitions

         In this  Plan,  except  where  the  context  otherwise  indicates,  the
         following definitions apply:

                  a.  "Agreement" means  the written agreement  implementing the
                      grant of an Option.

                  b.  "Board" means the Board of Directors of the Corporation.

                  c.  "Code" means  the  Internal  Revenue  Code  of  1986 ,  as
                      amended.

                  d.  "Committee" means  the committee appointed by the Board to
                      administer  the  Plan,  which  committee  shall  meet  the
                      standards  imposed  by  Rule  16b-3  under the  Securities
                      Exchange  Act  of  1934,  as  amended,   or   any  similar
                      successor  rule, and  all of the members of which shall be
                      Nonemployee Directors.  Unless otherwise determined by the
                      Board or  required  by  this  Plan,  the Board  Governance
                      Committee of the Board shall be the Committee.

                  e.  "Common  Stock" means the Class A common voting stock,  no
                      par value, of the Corporation.

                  f.  "Corporation"  means  Hibernia  Corporation,  a  Louisiana
                      corporation, and any successor thereto.

                  g.  "Date of Exercise" means the date on which the Corporation
                      receives notice of the exercise of an Option in accordance
                      with the terms of Article 7.

                  h.  "Date of  Grant"  means  the date on  which an  Option  is
                      granted by the Committee or otherwise  granted pursuant to
                      the terms of the Plan.

                  i.  "Fair Market Value" of a Share means on any day the amount
                      equal to the  average  of the  reported  high and low sale
                      prices  for shares of Common  Stock on the NYSE,  or other
                      market in which the Common Stock is traded, on such day as
                      reported by such source as the Committee  may select,  or,
                      if such price quotations are not available,  then the fair
                      market  value of a Share as  determined  by the  Committee
                      pursuant to a reasonable  method adopted in good faith for
                      such purpose.

                  j.  "Nonemployee   Director"   means   a   director   of   the
                      Corporation,  other than a Retired Employee Director,  who
                      is not, and has not been for a period of at least one year
                      prior to the date as of which the  determination  is made,
                      an employee of the Corporation or a Subsidiary.

                  k.  "Nonstatutory  Stock Option" means an Option granted under
                      the Plan that is not an incentive  stock option within the
                      meaning of Section 422 of the Code.

                  l.  "NYSE" means the New York Stock Exchange, Inc.

                  m.  "Option"  means an option to  purchase  Shares  granted in
                      accordance with the terms of Article 6.

                  n.  "Option  Period"  means the period  during which an Option
                      may be exercised.

                  o.  "Option  Price"  means  the  price  per  Share at which an
                      Option may be exercised.

                  p.  "Optionee"   means  a  Nonemployee   Director  or  Retired
                      Employee Director to whom an Option has been granted.

                  q.  "Plan" means the Hibernia  Corporation 1993 Director Stock
                      Option Plan.

                  r.  "Retired  Employee  Director"  means any  Director who has
                      retired  from service as an employee of the Company or any
                      of its subsidiaries.

                  s.  "Share"  means a  share  of  authorized  but  unissued  or
                      reacquired Common Stock.

                  t.  "Subsidiary" means a corporation at least 50% of the total
                      combined  voting power of all classes of stock of which is
                      owned by the  Corporation,  either directly or through one
                      or more other Subsidiaries.

2.       Purpose

         The Plan is intended to assist in attracting and retaining  Nonemployee
         Directors and Retired Employee  Directors of outstanding ability and to
         promote  the  identification  of  their  interests  with  those of  the
         shareholders  of the Corporation.

3.       Administration

         The Plan shall be  administered  by the  Committee.  In addition to any
         other  powers  granted to the  Committee,  it shall have the  following
         powers, subject to the express provisions of the Plan:

                  a.  to  determine  all  other  terms  and  provisions  of each
                      Agreement, which need not be identical;

                  b.  to construe and interpret the Agreements and the Plan;

                  c.  to provide  for the  payment of the Option  Price in cash,
                      shares of Common  Stock valued at Fair Market Value on the
                      Date of Exercise,  or a combination  of cash and shares of
                      Common Stock;

                  d.  to provide for satisfaction of federal, state or local tax
                      liabilities  incurred in connection with the exercise of a
                      Nonstatutory  Stock Option  through,  without  limitation,
                      retention of shares of Common Stock otherwise  issuable on
                      the exercise of a Nonstatutory Stock Option or delivery of
                      Common Stock to the Corporation by the Optionee under such
                      terms and conditions as the Committee  deems  appropriate;
                      and

                  e.  to make  all  other  determinations  and  take  all  other
                      actions  necessary or advisable for the  administration of
                      the Plan.

         Any  determinations  made or actions taken by the Committee pursuant to
         the Plan shall be binding and final.

4.       Eligibility

         Options  may be  granted  only to  Nonemployee  Directors  and  Retired
         Employee  Directors.  A  Nonemployee  Director  or a  Retired  Employee
         Director  who  has been granted  an Option  may be  granted  additional
         Options as provided in the Plan.

5.       Stock Subject to the Plan

                  a.  There is hereby reserved for issuance upon the exercise of
                      Options granted under the Plan an aggregate  of  1,000,000
                      Shares.

                  b.  If an Option  expires or terminates for any reason without
                      having been fully exercised,  the unpurchased  Shares that
                      had  been  subject  to  such  Option  at the  time  of its
                      expiration or termination shall become available for other
                      Options to be granted under the Plan.

                  c.  The Shares  issued upon the exercise of an Option shall be
                      charged  against the number of Shares  subject to the Plan
                      and such number of Shares shall not become  available  for
                      the grant of other Options.

6.       Options for Nonemployee Directors and Retired Employee Directors

                  a.  Unless  prohibited by applicable  law or contract to which
                      the Corporation is a party or is otherwise subject, on the
                      date that  corresponds to the first business day after the
                      Annual Meeting of Shareholders of the Company in each year
                      commencing  in  1993,  each  Nonemployee  Director  of the
                      Company shall  automatically and without further action by
                      any person be granted an Option to purchase  5,000  shares
                      of Common  Stock at an  exercise  price  equal to the Fair
                      Market Value of the Common Stock on such Date of Grant. If
                      any such grant is prohibited by law or contract,  it shall
                      be made on the  first  business  day after  such  legal or
                      contractual   restriction   or  limitation  is  no  longer
                      effective.

                  b.  Unless  prohibited by applicable  law or contract to which
                      the Corporation is a party or is otherwise subject, on the
                      date that  corresponds to the first business day after the
                      Annual Meeting of Shareholders of the Company in each year
                      after an individual  becomes a Retired Employee  Director,
                      he or she shall  automatically  and without further action
                      by any  person be  granted  an Option  to  purchase  5,000
                      shares of Common  Stock at an exercise  price equal to the
                      Fair  Market  Value of the  Common  Stock on such  Date of
                      Grant. If any such grant is prohibited by law or contract,
                      it shall be made on the  first  business  day  after  such
                      legal  or  contractual  restriction  or  limitation  is no
                      longer effective.

                  c.  Each Option granted pursuant to this Article 6 will become
                      initially  exercisable  as to 50% of  the  Shares  subject
                      thereto on the date that is two years  following  the Date
                      of Grant,  as to an additional  25% of the Shares  subject
                      thereto on the date that is three years following the Date
                      of Grant and as to the remaining 25% of the Shares subject
                      thereto on the date that is four years  following the Date
                      of Grant.  To the extent not theretofore  exercised,  each
                      Option  will  expire  upon the earlier to occur of (i) the
                      date of any  affiliation of the Optionee with a competitor
                      of the Corporation and its  Subsidiaries or (ii) ten years
                      following the Date of Grant.

                  d.  Nonemployee Directors may not be granted Options otherwise
                      than  pursuant to this  Article 6, except that each person
                      who first becomes a Nonemployee Director after October 20,
                      1997  automatically  and  without  further  action  by any
                      person  will be  granted,  on the date such  person  first
                      becomes  a  Nonemployee  Director,  a  Nonstatutory  Stock
                      Option to purchase  5,000  Shares at an Option Price equal
                      to the Fair  Market  Value of the  Shares  on such Date of
                      Grant.  Each Option granted  pursuant to this Article 6(d)
                      will  become  exercisable  in full on the date six  months
                      following  the  Date  of  Grant  and,  to the  extent  not
                      theretofore  exercised,  will  expire  upon the earlier to
                      occur of (i) the date of any  affiliation  of the Optionee
                      with a competitor of the Corporation and its  Subsidiaries
                      or (ii) ten years following the Date of Grant.

                  e.  Retired  Employee  Directors  may not be  granted  Options
                      otherwise  than  pursuant  to this  Article 6, except that
                      each person who first becomes a Retired Employee  Director
                      after October 20, 1997  automatically  and without further
                      action by any person will be granted,  on the date that is
                      one  year  after  such  person  first  becomes  a  Retired
                      Employee Director, a Nonstatutory Stock Option to purchase
                      5,000  Shares at an Option  Price equal to the Fair Market
                      Value of the  Shares on such Date of  Grant.  Each  Option
                      granted   pursuant  to  this   Article  6(e)  will  become
                      exercisable  in full on the date six months  following the
                      Date  of  Grant  and,   to  the  extent  not   theretofore
                      exercised,  will  expire  upon the earlier to occur of (i)
                      the  date  of  any  affiliation  of  the  Optionee  with a
                      competitor of the Corporation and its Subsidiaries or (ii)
                      ten years following the Date of Grant.

7.       Exercise

         An Option may,  subject to the provisions of the Agreement  under which
         it was  granted,  be  exercised  in whole or in part by delivery to the
         Corporation  of  written  notice  of  exercise,  in  such  form  as the
         Committee  may  prescribe,  accompanied  by full payment for the Shares
         with  respect to which such  Option is  exercised.  The  Committee  may
         provide that any Option shall be immediately exercisable in full on the
         later of (i) the date on which a change of control  of the  Corporation
         occurs,  or (ii) six  months  after the Date of  Grant,  if a change of
         control of the  Corporation  has occurred prior to six months after the
         Date of Grant.  The  Committee  may define  change of control  for this
         purpose in such manner as it deems appropriate under the circumstances.

8.       Nontransferability

         Options granted under the Plan shall not be transferable otherwise than
         by will or the laws of  descent  and  distribution.  An  Option  may be
         exercised only by the Optionee during his lifetime.

9.       Capital Adjustments

         The number and class of Shares subject to each outstanding  Option, the
         Option Price  thereof and the  provisions  of Articles 5 and 6 shall be
         subject  to such  adjustment,  if any,  as the  Committee  in its  sole
         discretion deems appropriate to reflect such events as stock dividends,
         stock   splits,    recapitalizations,    mergers,   consolidations   or
         reorganizations of or by the Corporation.

10.      Termination and Amendment

         The Board shall have the power to terminate  the Plan and the Committee
         shall have the power to amend it in any  respect,  provided  that after
         the Plan has been approved by the shareholders of the Corporation,  the
         Committee  may not,  without the  approval of the  shareholders  of the
         Corporation,  amend the Plan so as to change  the  aggregate  number of
         Shares  which  may be issued  under the Plan  (except  as  provided  in
         Article 9), change the class of persons  eligible to receive Options or
         increase  materially the benefits  accruing to  participants  under the
         Plan and provided  further  that the  provisions  of  paragraph  (a) of
         Article 6 may not be amended more than once every six months other than
         to comport with changes in the Code, the Employee  Retirement  Security
         Act or the rules  thereunder.  No  termination or amendment of the Plan
         shall  adversely  affect the rights or obligations of the holder of any
         Option previously granted under the Plan.

11.      Modification, Extension and Renewal of Options

         Subject to the terms and  conditions  of the Plan,  the  Committee  may
         modify,  extend or renew outstanding Options or accept the surrender of
         outstanding  Options (to the extent not theretofore  exercised) granted
         under the Plan or under any other stock option plan of the  Corporation
         and authorize the granting of new Options in  substitution  therefor on
         such  terms  consistent  with the Plan as the  Committee  may  specify,
         provided,  however, that no modification of an Option granted under the
         Plan shall, without the consent of the Optionee, alter or impair any of
         such Optionee's rights or obligations.

12.      Effectiveness of the Plan

         The Plan and any amendments requiring  shareholder approval pursuant to
         Article 10 are subject to approval by vote of the  shareholders  of the
         Corporation  after  their  adoption  by the  Board  or  the  Committee,
         respectively. Subject to such approval, the Plan and any amendments are
         effective on the date of such adoption. Options may be granted prior to
         shareholder  approval  of the Plan or  amendments,  but any such Option
         shall be granted  subject to approval of the Plan or  amendments by the
         shareholders.  Except as may otherwise be required  under Rule 16b-3 of
         the  Exchange  Act,  the day on  which  any  Option  granted  prior  to
         shareholder approval of the Plan or such amendments is granted shall be
         the  Date of  Grant  for all  purposes  as if the  Option  had not been
         subject to such  approval.  No Option  granted  subject to  shareholder
         approval may be exercised prior to receipt of such approval.

13.      Term of the Plan

         Unless sooner  terminated by the Board pursuant to Article 10, the Plan
         shall  terminate  on January  26,  2003,  and no Options may be granted
         after  termination.  Termination  of the  Plan  shall  not  affect  the
         validity of any Option outstanding on the date of termination.

14.      Indemnification of Committee

         In addition to such other rights of indemnification as they may have as
         directors or as members of the Committee,  the members of the Committee
         shall  be  indemnified  by  the  Corporation   against  the  reasonable
         expenses,  including  attorneys' fees, actually and reasonably incurred
         in connection with the defense of any action, suit or proceeding, or in
         connection with any appeal therein, to which they or any of them may be
         a party by reason of any  action  taken or  failure  to act under or in
         connection with the Plan or any Option granted  hereunder,  and against
         all amounts  reasonably  paid by them in settlement  thereof or paid by
         them  in  satisfaction  of a  judgment  in any  such  action,  suit  or
         proceeding, to the fullest extent permitted under applicable law.

15.      General Provisions

                  a.  The  establishment  of the Plan shall not confer  upon any
                      Nonemployee  Director  or Retired  Employee  Director  any
                      legal or  equitable  right  against the  Corporation,  any
                      Subsidiary or the Committee,  except as expressly provided
                      in the Plan.

                  b.  The Plan does not constitute  inducement or  consideration
                      for the employment or service of any Nonemployee  Director
                      or Retired Employee Director, nor is it a contract between
                      the Corporation or any Subsidiary and Nonemployee Director
                      or Retired  Employee  Director.  Participation in the Plan
                      shall not give a Nonemployee  Director or Retired Employee
                      Director  any right to be  retained  in the service of the
                      Corporation or any Subsidiary.

                  c.  The  interests  of any  Nonemployee  Director  or  Retired
                      Employee  Director  under the Plan or any  Option  are not
                      subject to the  claims of  creditors  and may not,  in any
                      way, be assigned, alienated or encumbered.

                  d.  The Plan shall be governed,  construed and administered in
                      accordance with the laws of the State of Louisiana.

Adopted April 27, 1993; amended July 23, 1997; amended January 27, 1999Exhibit 10.1

                         MANAGEMENT STABILITY AGREEMENT

     This Management Stability Agreement is dated March 15, 2000, between Tesoro
Petroleum Corporation,  a  Delaware  corporation  (the  "Company"),  and Faye W.
Kurren ("Employee").

                                   Recitals:

     WHEREAS, the Board of Directors of the Company has determined that it is in
the best interest of the Company to reduce uncertainty to certain key  employees
of  the Company in the event of certain fundamental events involving the control
or existence of the Company;

     WHEREAS, the Board  of  Directors  of  the  Company  has determined that an
agreement protecting certain interests of key employees of the  Company  in  the
event  of  certain  fundamental events involving the control or existence of the
Company is in the  best  interest  of  the  Company  because  it will assist the
Company in attracting and retaining key employees such as this Employee; and

     WHEREAS, the Employee is relying on this Agreement and the  obligations  of
the Company hereunder in continuing to work for the Company.

     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1.   Termination Following Change of Control.

     Should  Employee  at any time within two years of a change of control cease
to be  an  employee  of  the  Company  (or  its  successor),  by  reason  of (i)
involuntary termination by the Company (or its successor) other than for "cause"
(following a change of control), "cause" shall be limited to the  conviction  of
or  a plea of nolo contendere to the charge of a felony (which, through lapse of
time or otherwise, is not  subject  to  appeal),  a material breach of fiduciary
duty to the Company through the misappropriation of Company funds  or  property)
or  (ii)  voluntary  termination  by  Employee  for  "good reason upon change of
control" (as  defined  below),  the  Company  (or  its  successor)  shall pay to
Employee within ten days of such termination the  following  severance  payments
and benefits:

          (a)  A  lump-sum  payment  equal to two times the base salary of
          the Employee at the then current rate; and

          (b)  A lump-sum payment equal to  (i)  two  times the sum of the
          target bonuses under all of the Company's incentive bonus  plans
          applicable to the Employee for the year in which the termination
          occurs  or  the  year  in  which the change of control occurred,
          whichever is greater,  and  (ii)  if  termination  occurs in the
          fourth quarter of a calendar year, the sum of the target bonuses
          under all of the Company's incentive bonus plans  applicable  to
          Employee  for  the year in which the termination occurs prorated
          daily based on the  number  of  days  from  the beginning of the
          calendar year in which the termination occurs to  and  including
          the date of termination.

The  Company  (or  its  successor)  shall  also  provide continuing coverage and
benefits comparable to all life, health  and disability plans of the Company for
a period of 24 months from the date of termination and shall receive  two  years
additional  service  credit under the current non-qualified supplemental pension
plans, or successors thereto, of the  Company  applicable to the Employee on the
date of termination.

               For purposes of this Agreement,  a  "change  of  control"
          shall  be  deemed  to  have  occurred  if  (i)  there shall be
          consummated (A) any consolidation or  merger of the Company in
          which  the  Company  is  not  the  continuing   or   surviving
          corporation  or  pursuant  to  which  shares  of the Company's
          Common Stock would be converted into cash, securities or other
          property, other than a merger  of the Company where a majority
          of the Board of Directors of the  surviving  corporation  are,
          and  for  a  two  year period after the merger continue to be,
          persons who were directors of the Company immediately prior to
          the merger or  were  elected  as  directors,  or nominated for
          election as directors, by a vote of at least two-thirds of the
          directors then still in  office  who  were  directors  of  the
          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 the Company, or (ii) the shareholders of the Company
          shall approve any plan or  proposal  for  the  liquidation  or
          dissolution of the Company, or (iii) (A) any "person" (as such
          term  is used in Sections 13(d) and 14(d)(2) of the Securities
          Exchange Act of 1934,  as  amended (the "Exchange Act"), other
          than the Company or  a  subsidiary  thereof  or  any  employee
          benefit plan sponsored by the Company or a subsidiary thereof,
          shall  become the beneficial owner (within the meaning of

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          Rule 13d-3  under  the  Exchange  Act)  of  securities  of the Company
          representing 20 percent or more of the combined voting  power  of  the
          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 of Directors of the Company shall cease for  any
          reason  to constitute at least a majority thereof, unless the election
          or the nomination  by  the  Board  of  Directors  for  election by the
          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.

          For purposes of this Section 1, "good reason  upon  change  of
          control" shall exist if any of the following occurs:

          (i)    without   Employee's   express   written  consent,  the
          assignment to Employee  of  any  duties  inconsistent with the
          employment of Employee immediately  prior  to  the  change  of
          control,  or a significant diminution of Employee's positions,
          duties, responsibilities  and  status  with  the  Company from
          those immediately prior to a change of control or a diminution
          in Employee's titles or offices as in effect immediately prior
          to a change of control, or any removal of  Employee  from,  or
          any failure to reelect Employee to, any of such positions;

          (ii)   a reduction by the Company in Employee's base salary in
          effect immediately prior to a change of control;

          (iii)  the  failure  by  the Company to continue in effect any
          thrift,  stock  ownership,  pension,  life  insurance, health,
          dental and accident or disability plan in  which  Employee  is
          participating or is eligible to participate at the time of the
          change   of   control   (or   plans  providing  Employee  with
          substantially similar benefits),  except as otherwise required
          by the terms of such plans as in effect at  the  time  of  any
          change  of  control or the taking of any action by the

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<PAGE>
          Company which would  adversely  affect  Employee's participation in or
          materially reduce Employee's benefits  under  any  of  such  plans  or
          deprive  Employee  of any material fringe benefits enjoyed by Employee
          at the time of the change of  control or the failure by the Company to
          provide the Employee with the number of paid vacation  days  to  which
          Employee  is  entitled in accordance with the vacation policies of the
          Company in effect at the time of a change of control;

          (iv)   the failure by the Company to continue  in  effect  any
          incentive  plan  or arrangement (including without limitation,
          the  Company's   Incentive   Compensation   Plan  and  similar
          incentive  compensation  benefits)  in   which   Employee   is
          participating  at  the  time  of  a  change  of control (or to
          substitute and continue other  plans or arrangements providing
          the Employee with substantially similar benefits),  except  as
          otherwise  required by the terms of such plans as in effect at
          the time of any change of control;

          (v)    the failure by the  Company  to  continue in effect any
          plan or arrangement with respect to securities of the  Company
          (including,  without  limitation,  any  plan or arrangement to
          receive and exercise stock options, stock appreciation rights,
          restricted stock or  grants  thereof  or  to  acquire stock or
          other  securities  of  the  Company)  in  which  Employee   is
          participating  at  the  time  of  a  change  of control (or to
          substitute and continue  plans  or  arrangements providing the
          Employee  with  substantially  similar  benefits),  except  as
          otherwise required by the terms of such plans as in effect  at
          the  time of any change of control or the taking of any action
          by  the  Company  which   would  adversely  affect  Employee's
          participation in  or  materially  reduce  Employee's  benefits
          under any such plan;

          (vi)   the  relocation of the Company's offices where Employee
          is presently based to a  location outside that office area, or
          the Company's requiring Employee to be  based  anywhere  other
          than  at  the location of the Company's offices where Employee
          is  presently  based,  except   for  required  travel  on  the
          Company's business to an extent substantially consistent  with
          Employee's  present  business  travel  obligations, or, in the
          event  Employee  consents  to

                                         4
<PAGE>
          any  such  relocation  of  the  Company's  offices  where  Employee is
          presently based, the failure by  the  Company  to  pay  (or  reimburse
          Employee  for)  all  reasonable  moving  expenses incurred by Employee
          relating to a change  of  Employee's principal residence in connection
          with such relocation  and  to  indemnify  Employee  against  any  loss
          (defined  as  the  difference  between  the  actual sale price of such
          residence and the  higher  of  (a)  Employee's aggregate investment in
          such residence or (b) the fair market value thereof as determined by a
          real estate appraiser reasonably satisfactory to both Employee and the
          Company at the time the Employee's principal residence is offered  for
          sale in connection with any such change of residence;

          (vii)  any failure by the Company  to obtain the assumption of
          this Agreement by any successor or assign of the Company;

     In the event of a change of control as "change of control"  is  defined  in
any  stock  option plan or stock option agreement pursuant to which the Employee
holds options to purchase common stock of the Company, Employee shall retain the
rights to all accelerated vesting and other benefits under the terms thereof.

     The Company shall pay any attorney  fees incurred by Employee in reasonably
seeking to enforce the terms of this Paragraph 1.

     2.   Complete Agreement.

     This Agreement constitutes the entire agreement  between  the  parties  and
cancels  and  supersedes all other agreements between the parties which may have
related to the subject matter contained in this Agreement.

     3.   Modification; Amendment; Waiver.

     No modification, amendment or  waiver  of  any provisions of this Agreement
shall be effective unless approved in writing by both parties.  The  failure  at
any  time  to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver  of  such  provisions  and  shall  not affect the right of
either party thereafter to enforce each and every provision hereof in accordance
with its terms.

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<PAGE>
     4.   Governing Law; Jurisdiction.

     This Agreement and performance under it, and all proceedings that may ensue
from its breach, shall be construed in accordance with and under the laws of the
State of Texas.

     5.   Severability.

     Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and  valid  under  applicable  law,  but  if  any
provision  of  this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be  ineffective  only to the extent of such
prohibition or invalidity, without invalidating the remainder of such  provision
or the remaining provisions of this Agreement.

     6.   Assignment.

     The  rights  and  obligations  of the parties under this Agreement shall be
binding upon and inure to  the  benefit of their respective successors, assigns,
executors, administrators and heirs, provided, however, that the Company may not
assign any duties under this Agreement without the prior written consent of  the
Employee.

     7.   Limitation.

     This  Agreement  shall not confer any right or impose any obligation on the
Company to continue the employment  of  Employee  in  any capacity, or limit the
right of the Company or Employee to terminate Employee's employment.

     8.   Notices.

     All notices and other communications  under  this  Agreement  shall  be  in
writing  and  shall be given in person or by telegraph, facsimile or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a  telegram  or  facsimile, as the case may be, to
the representative persons named below:

     If to the Company:            Corporate Secretary
                                   Tesoro Petroleum Corporation
                                   300 Concord Plaza Drive
                                   San Antonio, Texas  78216-6999

                                       6
<PAGE>
     If to the Employee:           Faye W. Kurren
                                   813 Hunakai Street
                                   Honolulu, Hawaii 96816

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the  day
and year first above written.

                    COMPANY:       TESORO PETROLEUM CORPORATION

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

                    EMPLOYEE:      /s/ FAYE W. KURREN
                                   Faye W. Kurren

                                       7

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