EXHIBIT 10.1

TESORO CORPORATION

AMENDED AND RESTATED EXECUTIVE SECURITY PLAN

EFFECTIVE JANUARY 1, 2009

TESORO CORPORATION

AMENDED AND RESTATED EXECUTIVE SECURITY PLAN

PREAMBLE

The principal objective of this Amended and Restated Executive Security Plan (the “Plan”) is to ensure the payment of a competitive level of retirement income in order to attract, retain and motivate selected executives. The plan is designed to provide a benefit which, when added to other retirement income of the executive, will meet the objective described above. This Plan is a complete amendment and restatement of the Plan, which was originally established as a restatement and amendment of the Tesoro Executive Post Retirement Benefit Plan and Tesoro Executive Death Benefit Plan, and subsequently amended and restated, effective January 1, 2005. The Plan, as amended and restated, effective January 1, 2009 (except as otherwise specifically noted herein), is intended to conform to the requirements of Section 409A of the Code, together with the Regulations, and is intended to qualify as an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management and highly compensated employees of the Company and its Subsidiaries.

SECTION I
DEFINITIONS

1.1		“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.
1.2		“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.
1.3		“Basic Compensation” shall have the meaning of such term, as set forth in the Tesoro Corporation Retirement Plan, as in effect on the date of a Participant’s Retirement, but determined without regard to any compensation limits imposed by the Code, and, further provided, a normal bonus otherwise includible as Basic Compensation shall be credited in the calendar year in which such bonus is earned and not in the calendar year when paid, if different.
1.4		“Beneficiary” means the person or legal entity designated in writing by a Participant to receive, after his death, any death benefits provided by the Plan. If no designation is in effect at the time of the Participant’s death, or if no designated person shall survive the Participant, the Beneficiary shall be the Participant’s estate.
1.5		“Board” means the Board of Directors of the Company.
1.6		“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,

	(i)		the Participant will not receive any future wages which would be treated as wages for purposes of the federal Social Security Act, and
	(ii)		the Participant will elect to begin receiving his Social Security Benefit as of the earliest age then allowable under said Social Security Act, or if later, at actual date of Retirement.

(b)

the Social Security Benefit, once calculated, will be frozen as of the date the Participant terminates employment.

          The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary.

SECTION II
ELIGIBILITY FOR BENEFITS

2.1		Each Participant is eligible to receive a benefit under this Plan upon his Retirement. Such benefit shall commence as provided in Section 4.1 hereof. Except as provided in Section V hereof, no benefit is payable hereunder in the event of a Participant’s Separation from Service prior to Retirement except in the event of such Participant’s Disability, as provided in Section 2.2 below, or a Change in Control, as provided in Section 4.5 below.
2.2		In the event a Participant becomes Disabled while in the active employment of the Company or an Affiliate and eligible to participate hereunder, he shall be entitled to the retirement benefit determined under Section 3.1 payable on the first day of the month following the date on which such Participant has both attained the age of 65 and is credited with at least 5 years of Service, but based upon the Service the Participant would have accrued had he remained in active employment until such date and continued at the same rate of Earnings until that date. Notwithstanding the foregoing, no Participant shall be entitled to credit for Service after the date on which such Participant is no longer considered Disabled.
2.3		Notwithstanding anything herein to the contrary, if a Participant who is receiving, or may be entitled to receive, a benefit hereunder, engages in competition with the Company (without prior authorization given by the Committee in writing) or is discharged for cause, or performs acts of willful malfeasance or gross negligence in a matter of material importance to the Company, payments thereafter payable hereunder to such Participant or such Participant’s Beneficiary will, at the discretion of the Committee, be forfeited and the Company will have no further obligation hereunder to such Participant or Beneficiary.

SECTION III
AMOUNT AND FORM OF RETIREMENT BENEFIT

3.1

The monthly retirement benefit under this Plan will equal 4% of Earnings times the first 10 years of Service, plus 2% of Earnings times the next 10 years of Service, plus 1% of Earnings times the next 10 years of Service, actuarially reduced by seven percent (7%) per year from age sixty (60) for Participants who have not attained age 55 with ten (10) years of Service by December 31, 2005 and who retire prior to age sixty (60), and offset by any Retirement Plan Benefit and any Other Retirement Income. Notwithstanding the foregoing, no credit will be included under this Plan formula for Service in excess of 30

		years. The amount payable under this Plan shall also be reduced by the amount of the vested Basic Pension paid or payable under the Funded Plan (without regard to whether a smaller, adjusted amount is in fact paid from such Funded Plan after retirement because of prior distributions made from such Funded Plan to enable the Participant to pay taxes resulting from his participation in such Funded Plan).
3.2		Each Participant may, within thirty (30) days of the date on which he is notified of his eligibility to participate in the Plan, irrevocably elect the Distribution Schedule pursuant to which benefits hereunder will be paid, subject to the restrictions of the Plan. The Participant’s election shall become effective immediately following the Committee’s receipt of the Participant’s executed participation agreement. A Participant’s failure to elect a Distribution Schedule in accordance with this Section 3.2 shall be deemed an election by the Participant to receive his benefits hereunder in the form of a single life annuity, payable for the Participant’s lifetime, unless the Participant elects an actuarially equivalent life annuity, as provided below. The Participant’s election (or deemed election) shall become irrevocable as of the last day of the 30-day period during which the Participant is permitted to make an election in accordance with this Section 3.2, except as provided below. If a Participant has timely elected an annuity form of payment, or if the Participant has failed to elect a Distribution Schedule, resulting in a deemed election of a single life annuity, the benefit determined under this Plan will be paid in the form of a single life annuity, payable for the Participant’s lifetime, unless, prior to the date on which an annuity payment has been made, and within the time and in the manner determined by the Committee, the Participant elects an actuarially equivalent life annuity, within the meaning of Section 1.409A-2(b)(2)(ii) of the Regulations. Subject to the preceding sentence. actuarially equivalent life annuities shall be calculated by using the applicable actuarial assumptions set forth in the Retirement Plan. The actuarially equivalent life annuity forms available hereunder shall be those forms of life annuity set forth in the Retirement Plan as in effect on the date of the Participant’s Separation from Service. Lump sum amounts shall be determined by using the Lump Sum Interest Rate and the Lump Sum Mortality Table.
3.3		Notwithstanding any provision herein to the contrary, effective December 12, 2008, each Participant who is actively employed by the Company or an Affiliate and who remains actively employed through the 31 st day of December, 2008, may elect to modify an existing election (or deemed election) provided that such election: (i) may apply only to amounts that would not otherwise be payable in 2008, (ii) may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008, (iii) shall be made no later than December 31, 2008 and prior to such earlier date as may be established by the Committee, and (iv) shall be made in the manner and subject to such restrictions as shall be determined by the Committee. If a Participant modifies an election (or deemed election) pursuant to this Section 3.3 and thereby elects a lump sum form of payment, such Participant will not later be eligible to elect an actuarially equivalent life annuity form of payment.

SECTION IV
PAYMENT OF RETIREMENT BENEFITS

4.1		Benefits payable in accordance with Section III will be calculated as of the first day of the month next following the month of the Participant’s Retirement and shall commence, or in the case of a lump sum payment, be distributed in full on the first day of the seventh (7 th ) calendar month beginning after the Participant’s Retirement Date. Benefits payable in the form of an annuity will continue to be paid on the first day of each succeeding month. The last such payment will be on the first day of the month in which the retired Participant dies unless another annuity form of payment that contemplates payments made subsequent to the Participant’s death, is elected in accordance with Section 3.2. The first payment will 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.
4.2		The Company shall be liable for all benefits due the Participants under the Plan.
4.3		Under all circumstances, the rights of the Participants to the assets held in a rabbi trust, if any, created with respect to the Plan shall be no greater than the rights expressed in this Plan. Nothing contained in the trust agreement which creates any such rabbi trust shall constitute a guarantee by the Company that the amounts transferred by it to the trust shall be sufficient to pay any benefits under the Plan or would place the Participant in a secured position ahead of judgment and/or general creditors should the Company become insolvent or bankrupt. Any trust agreement established with respect to the Plan must specifically set out these principles so it is clear in the trust agreement that the Participants are only unsecured general creditors of the Company with respect to their benefits under the Plan.
4.4		The Plan is only a general corporate commitment and each Participant must rely upon the general credit of the Company for the fulfillment of its obligations under the Plan. Under all circumstances the rights of Participants to any asset held by the Company shall be no greater than the rights expressed in this Plan. Nothing contained in this Plan shall constitute a guarantee by the Company that the assets of the Company will be sufficient to pay any benefits under the Plan or would place the Participant in a secured position ahead of general creditors and judgment creditors of the Company. Though the Company may establish or become a signatory to a rabbi trust and may accumulate assets to help fulfill its obligations at any time, the Plan and any trust created, shall not create any lien, claim, encumbrance, right, title or other interest of any kind in any Participant in any asset held by the Company, contributed to any trust created, or otherwise be designated to be used for payment of any of its obligations created in this agreement. No specific assets of the Company have been or will be set aside, or will be transferred to a trust or will be pledged for the performance of the Company’s obligations under the Plan which would remove those assets from being subject to the general creditors and judgment creditors of the Company. Notwithstanding the preceding provisions of this Section 4.4 to the contrary, upon a Change in Control, the Company shall, as soon as possible following the Change in Control, make an irrevocable contribution to the rabbi trust previously established, or if not so established, to a newly created rabbi trust, in an

		amount that is sufficient to pay each Plan Participant or Beneficiary the benefits to which each Plan Participant or Beneficiary would be entitled pursuant to the terms of the Plan as of the date on which the Change in Control occurred.
4.5		Upon a Change in Control, each Participant’s benefit hereunder shall be immediately vested. Payment of such benefit shall commence as of the first day of the seventh (7 th ) calendar month following the later of such Participant’s Separation from Service or Early Retirement Date. 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 hereof. The first payment will 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 later of the Participant’s Separation from Service or Early Retirement Date.
4.6		It is intended that this Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.
4.7		Notwithstanding any provision of this Section IV to the contrary, the benefits payable hereunder may, to the extent expressly provided in this Section 4.7, 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 benefit hereunder 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 Section 409A of the Code or the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the portion of his or her 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 Section 409A of the Code or the Regulations.
	(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 of the Participant’s benefit hereunder 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 of such benefit hereunder 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 such benefits 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 Section IV; 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 15 th 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 the 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.

SECTION V
PRE-RETIREMENT DEATH BENEFITS

5.1		If a Participant should die before Retirement, the Beneficiary will receive the greatest of (1), (2) and (3) where (1) is the Participant’s benefit hereunder calculated as of his date of death and payable for the life of the Beneficiary as a single life annuity, (2) is a benefit payable for the life of the Beneficiary as a single life annuity equal to the Actuarial Equivalent of 400% of the amount of the Participant’s rate of annual base pay determined as of the December 1 immediately preceding the Participant’s date of death, and (3) is the benefit the Participant would have received under Section 2.2 hereof if he had been determined to be Disabled on the date of his death (but payable immediately and reduced as provided in Section 3.1 hereof) and payable for the life of the Beneficiary as a single life annuity. “Actuarial Equivalence” as such term is used in this Section 5.1, shall be determined in accordance with Section 1.409A-2(b)(2)(ii) of the Regulations and, subject to the foregoing, shall be calculated by using the applicable actuarial assumptions set forth in the Retirement Plan.
5.2		A Beneficiary’s pre-retirement death benefit will be payable in accordance with the Participant’s Distribution Schedule; provided, however, that a Participant’s failure to elect a Distribution Schedule in accordance with Section 3.2 hereof shall be deemed an election by the Participant for the pre-retirement death benefit hereunder to be paid in the form of a single life annuity. If a Participant has timely elected an annuity form of

		payment, or if the Participant has failed to elect a Distribution Schedule, resulting in a deemed election of a single life annuity, the pre-retirement death benefit will be paid in the form of a single life annuity, payable for the Beneficiary’s lifetime, unless, prior to the date on which an annuity payment has been made, and within the time and in the manner determined by the Committee, the Beneficiary elects an actuarially equivalent life annuity, within the meaning of Section 1.409A-2(b)(2)(ii) of the Regulations. Subject to the preceding sentence, actuarially equivalent life annuities shall be calculated by using the applicable actuarial assumptions set forth in the Retirement Plan. The actuarially equivalent life annuity forms available hereunder shall be those forms of life annuity set forth in the Retirement Plan as in effect on the date of the Participant’s death. Lump sum amounts shall be determined by using the Lump Sum Interest Rate and the Lump Sum Mortality Table. Distribution of a Participant’s pre-retirement death benefit will commence or, in the case of a lump sum payment, will be made in full within sixty (60) days of the date of the Participant’s death.
5.3		Amounts otherwise payable under this Section will be reduced by any amount previously funded through any trust designated for retirement and death benefits from this Plan, and by the amount of any death benefit payable under the Funded Plan.

SECTION 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.
		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.

SECTION VII
MISCELLANEOUS

7.1		The Board, or its delegate, may, in its sole discretion, terminate, suspend or amend this Plan at any time, in whole or in part. Notwithstanding the foregoing, any amendment to the Plan which may result in a material financial impact to the Company will require review and approval by the Board. However, the termination, amendment or suspension of this Plan will not operate to decrease the benefit of (i) a retired Participant, (ii) a Participant who has reached his Early Retirement Date, or (iii) a Beneficiary who is entitled to receive a pre-retirement death benefit hereunder.
		To the extent provided by the Board or its delegate, 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.

		Notwithstanding the foregoing, the Plan shall automatically terminate, without further action of the Company, upon Insolvency of the Company. For this purpose, Insolvency shall mean the inability of the Company to continue as a going concern.
7.2		Notwithstanding any provision of the Plan to the contrary, the Committee 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.
7.3		Nothing contained herein will confer upon any Participant the right to be retained in the service of the Company, nor will it interfere with the right of the Company to discharge or otherwise deal with a Participant without regard to the existence of this Plan.
7.4		No benefit under this Plan shall be assignable or subject to any manner of alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind.
7.5		The Committee may adopt rules and regulations to assist it in the administration of the Plan and may delegate such of its duties hereunder as it may deem advisable.
7.6		This Plan is established under and will be construed according to the laws of the State of Texas.
7.7		The effective date of this amended and restated Plan, as signed this 12 th day of December, 2008, is January 1, 2009 (except as otherwise specifically noted herein).

EXHIBIT 10.2

TESORO CORPORATION

BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN

Effective January 1, 2009

TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS			1
1.1 Account			1
1.2 Aggregated Plan			1
1.3 Beneficiary			1
1.4 Board of Directors			1
1.5 Code			1
1.6 Committee			1
1.7 Common Stock			1
1.8 Corporation			2
1.9 Deferred Phantom Stock Ledger			2
1.10 Disability			2
1.11 Distribution Schedule			2
1.12 Effective Date			2
1.13 NYSE			2
1.14 Participant			2
1.15 Plan			2
1.16 Plan Year			2
1.17 Regulations			2
1.18 Retirement			2
1.19 Separation from Service			3
1.20 Unit			3
1.21 Vested Interest			3
ARTICLE II ELIGIBILITY AND PARTICIPATION			3
2.1 Eligibility to Participate			3
2.2 Participation Agreements			3
ARTICLE III DEFERRAL CONTRIBUTIONS			4
3.1 Annual Nonelective Deferral Contributions			4
3.2 Nonelective Deferral Contribution for Committee Chairmen			4
3.3 Election to Defer Fees			5
ARTICLE IV CREDITING ACCOUNTS			5
4.1 Establishing a Participant’s Account			5
4.2 Credit of Deferral Contributions			5
4.3 Crediting of Earnings and Losses			5
4.4 Crediting of Dividends and Distributions			5
4.5 Voting Rights			5
ARTICLE V VESTING			5
5.1 Annual Nonelective Deferral Contribution			5
5.2 Other Deferral Contributions			6
ARTICLE VI DISTRIBUTIONS			6
6.1 General			6
6.2 Distribution Upon Death			6
6.3 Designation of Beneficiary			6

		Page
6.4 Disability			6
6.5 Responsibility for Distributions and Withholding of Taxes			7
6.6 Change in Time of Payments			7
ARTICLE VII ADMINISTRATION			8
7.1 Committee Appointment			8
7.2 Committee Organization and Voting			8
7.3 Powers of the Committee			8
7.4 Committee Discretion			9
7.5 Annual Statements			9
7.6 Reimbursement of Expenses			9
7.7 Indemnification			9
ARTICLE VIII AMENDMENT AND/OR TERMINATION			9
8.1 Amendment or Termination of the Plan			9
8.2 No Retroactive Effect on Account			9
8.3 Effect of Termination			9
ARTICLE IX UNFUNDED PLAN			10
9.1 Benefits from General Assets of Corporation			10
9.2 No Requirement to Fund			10
9.3 Adoption of Trust			11
9.4 Status as Unsecured Creditor			11
ARTICLE X MISCELLANEOUS			11
10.1 Distributions to Incompetents or Minors			11
10.2 Nonalienation of Benefits			11
10.3 Reliance Upon Information			11
10.4 Severability			12
10.5 Notice			12
10.6 Gender and Number			12
10.7 Governing Law			12

TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED PHANTOM STOCK PLAN

     WHEREAS, Tesoro Corporation (the “Corporation”) previously established the Tesoro Corporation Board of Directors Deferred Phantom Stock Plan, effective March 6, 1997 (the “Plan”) for the benefit of non-employee members of the Board of Directors;

     WHEREAS, the Plan is a nonqualified deferred compensation plan that entitles such directors to receive annual nonelective contributions (“Annual Contributions”) for each year during which they serve as a director, subject to limitations prescribed under the Plan, and, if applicable, a single nonelective contribution with respect to services performed as a chairman of a Board committee and, further, to defer any part or all of the cash portion of directors’ fees earned with respect to their services performed as directors; and

     WHEREAS, the Corporation desires to amend the Plan to comply with Section 409A of the Code and the Regulations promulgated thereunder;

     NOW, THEREFORE, the Corporation adopts this amended and restated Tesoro Corporation Board of Directors Deferred Phantom Stock Plan, effective January 1, 2009 (except as otherwise specifically noted herein), as follows:

ARTICLE I
DEFINITIONS

      1.1 Account . “Account” means a bookkeeping account in the Deferred Phantom Stock Ledger which reflects the benefits to which a Participant is entitled under this Plan.

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

      1.3 Beneficiary . “Beneficiary” means a person or entity designated by the Participant in accordance with Section 6.3 hereof to receive amounts credited to his Account following his death.

      1.4 Board of Directors . “Board of Directors” means the Board of Directors of the Corporation.

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

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

      1.7 Common Stock . “Common Stock” means the common stock, $.16 par value, of the Corporation.

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

      1.9 Deferred Phantom Stock Ledger . “Deferred Phantom Stock Ledger” means the ledger established and maintained by the Committee to reflect each Participant’s Account under the Plan.

      1.10 Disability . “Disability” means a Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. The determination of whether a Participant suffers from a Disability shall be made by the Committee in accordance with the provisions of Code Section 409A and the Regulations promulgated thereunder.

      1.11 Distribution Schedule . “Distribution Schedule” shall mean the time and method of distributions elected (or deemed elected) by a Participant, which method may be either a lump sum payment (except that in-service lump sum payments shall not be permitted for non-elective deferral contributions) or installment payments, pursuant to which distribution of the Participant’s Vested Interest in his Account shall be made or shall commence. Such election shall be made at the time and in the manner described in Section 2.2 hereof; provided, however, that a Distribution Schedule elected by the Participant pursuant to which installment payments are to be made must require annual installments for a period not to exceed ten (10) years.

      1.12 Effective Date . “Effective Date” means January 1, 2009, except as specifically noted herein.

      1.13 NYSE . “NYSE” shall mean the New York Stock Exchange, or, if the Common Stock is no longer traded on such exchange, the principal stock exchange or other securities market on which the Common Stock is publicly traded.

      1.14 Participant . “Participant” means an eligible member of the Board of Directors described in Section 2.1 below.

      1.15 Plan . “Plan” means this amended and restated Tesoro Corporation Board of Directors Deferred Phantom Stock Plan, effective January 1, 2009 (except as specifically noted herein), as set forth in this document and as may be amended from time to time.

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

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

      1.18 Retirement . “Retirement” or “Retired” means the cessation of a Participant’s service for the Board of Directors, as determined by the Board of Directors pursuant to a written resolution adopted by its members (other than the Participant) following the Participant’s (a) attainment of the age at which he is no longer eligible for re-election under the Corporation’s Governance Policy or (b) completion of at least three (3) years of service as a director.

      1.19 Separation from Service . “Separation from Service” means the date on which the Participant ceases to be a director of the Corporation; provided that a Separation from Service shall not have occurred if the Corporation anticipates that the Participant will continue to provide services to the Corporation or a subsidiary, whether as an employee or consultant or in any other capacity. The determination of whether a Separation from Service has occurred shall be made by the Committee in accordance with Section 1.409A-1(h) of the Treasury Regulations, or such other guidance with respect to Code Section 409A that may be in effect on the date of determination.

      1.20 Unit . “Unit” shall mean a unit of beneficial interest allocated to a Participant’s Account pursuant to Article IV hereunder. The value of a Unit for purposes of this Plan shall be determined by the Committee based upon the closing quotation of the Common Stock on the NYSE on the date of the determination.

      1.21 Vested Interest . “Vested Interest” shall mean that portion of the Participant’s Account in which he has a nonforfeitable right. A Participant’s Vested Interest shall be determined in accordance with Article V hereof.

ARTICLE II
ELIGIBILITY AND PARTICIPATION

      2.1 Eligibility to Participate . All members of the Board of Directors who are not otherwise employed and have not been employed within the last three years by the Corporation or a subsidiary of the Corporation will be eligible to participate in this Plan. An eligible member of the Board of Directors will automatically become a Participant in this Plan as of the date on which his service as a member of the Board of Directors commences.

      2.2 Participation Agreements .

     (a) Elections Upon Commencement of Participation . An eligible director may elect to defer any part or all of the cash portion of his directors’ fees under the Plan by executing a participation agreement in such form and at such time as the Committee shall require, provided that the participation agreement shall be executed within thirty (30) days of the date on which his service as a member of the Board of Directors commences. The Participant’s election shall become effective immediately following the Committee’s receipt of the Participant’s executed participation agreement. The Participant may, at such time, also irrevocably elect the Distribution Schedule under which benefits hereunder will be paid, subject to the restrictions of the Plan. A Participant’s failure to timely submit a participation agreement in accordance with this paragraph (a) shall be deemed an election by the Participant to defer zero percent (0%) of his directors’ fees for the Plan Year during which the Participant first becomes eligible to participate. A Participant’s failure to elect a Distribution Schedule in accordance with this paragraph (a) shall be deemed an election by the Participant to receive his benefits hereunder in a lump sum payment within the ninety (90) day period following such Participant’s Separation from Service. The Participant’s election (or deemed election) shall become irrevocable as of the last day of the 30-day period during which the Participant is permitted to make an election in accordance with this paragraph (a).

     (b) Annual Deferral Elections . A Participant’s election (or deemed election) shall remain effective for each subsequent Plan Year for which the Participant is eligible to participate in the Plan, unless and until such election (or deemed election) is modified or revoked by the Participant in accordance with this paragraph (b). A Participant may modify or revoke an election (including a deemed election) with respect to the deferral of directors’ fees to be earned in a subsequent Plan Year by submitting an executed participation agreement to the Committee, in such form as the Committee shall require, no later than the day immediately preceding the Plan Year in which such directors’ fees will be earned.

     (c) Subsequent Elections Regarding Method of Payment . The Committee may, in its sole and absolute discretion, permit a Participant to subsequently modify a prior election (or deemed election) in order to change the method of payment to be received hereunder, provided that (i) such subsequent election shall not take effect for at least twelve (12) months following the date on which the subsequent election is made, (ii) with respect to a payment that the Participant is entitled to receive following his Separation from Service or pursuant to a Distribution Schedule, the payment with respect to which such subsequent election is made is deferred at least five (5) years from the date on which such payment would otherwise have been made absent such subsequent election (or in the case of installment payments, five (5) years from the date the first payment was scheduled to be made), and (iii) with respect to the payment of benefits hereunder pursuant to a Distribution Schedule, such subsequent election is made no less than twelve (12) months prior to the date the payment is scheduled to be made (or in the case of installment payments, five (5) years from the date the first payment was scheduled to be made).

     (d) 2008 Special Election . Notwithstanding any provision herein to the contrary, effective December 12, 2008, each Participant may elect to modify an existing election (or deemed election) provided that such election: (i) may apply only to amounts that would not otherwise be payable in 2008, (ii) may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008, (iii) shall be made no later than December 31, 2008 and prior to such earlier date as may be established by the Committee, (iv) shall not apply to non-elective deferral contributions and (v) shall be made in the manner and subject to such restrictions as shall be determined by the Committee.

ARTICLE III
DEFERRAL CONTRIBUTIONS

      3.1 Annual Nonelective Deferral Contributions . As of the last day of each Plan Year, the Committee shall credit a nonelective deferral contribution to each Participant’s Account in an amount equal to $7,250.00 (or such pro rata amount determined by the Committee based upon the actual number of days served by the Participant during the Plan Year). Notwithstanding the foregoing, the annual credits under this Section 3.1 are limited to fifteen (15) full annual credits (partial credits being aggregated for the purposes of this limitation), taking into account both the previous accruals of retirement benefits under the Director Retirement Plan (based on the effective date of such director’s service) and credits under this Plan.

      3.2 Nonelective Deferral Contribution for Committee Chairmen . Each Participant who is serving as a chairman of a committee of the Board of Directors immediately prior to his

Separation from Service and who has served at least three (3) years as a director shall have an additional nonelective deferral contribution in the amount of $5,000.00 credited to his Account as of the date of his Separation from Service.

      3.3 Election to Defer Fees . Each Participant shall have the right to irrevocably elect, on an annual basis, to defer any part or all of the cash portion of his directors’ fees in accordance with Section 2.2 hereof. The amount elected to be deferred by the Participant shall be credited to the Participant’s Account as of the last business day of the calendar quarter following the date on which such fees would otherwise have been paid.

ARTICLE IV
CREDITING ACCOUNTS

      4.1 Establishing a Participant’s Account . The Committee will establish and maintain an Account for each Participant, which shall be reflected in the Deferred Phantom Stock Ledger.

      4.2 Credit of Deferral Contributions . The Committee will credit the Participant’s Account with a number of Units equal in value to the Nonelective Deferral Contributions and the Participant deferrals, as provided in Article III above.

      4.3 Crediting of Earnings and Losses . As of the last business day of each calendar quarter, the Committee shall update the Accounts to reflect the increase or decrease in the value of the Units credited to each Participant’s Account.

      4.4 Crediting of Dividends and Distributions . As of the date on which dividends or distributions are paid with respect to Common Stock, the Committee shall credit each Participant’s Account with an amount equal to the value of such dividends or distributions as if paid with respect to the Units credited to the Participant’s Account on such date. If dividends or distributions are paid in the form of shares of Common Stock, the Participant’s Account shall be credited with a number of Units equal to the number of shares deemed distributed with respect to each Unit credited to his Account on such date. If dividends or distributions are paid in any other form, the Participant’s Account shall be credited with a number of Units equal in value to the amounts deemed distributed with respect to each Unit credited to his Account on such date. The value of any dividend or distribution that is not paid in cash or shares of Common Stock shall be determined by the Committee in its sole and absolute discretion.

      4.5 Voting Rights . No Participant shall have voting rights with respect to any Units credited to his Account.

ARTICLE V
VESTING

      5.1 Annual Nonelective Deferral Contribution . Except as otherwise provided in Section 8.3 hereof, the Participant shall be 100% vested in the nonelective deferral contributions made pursuant to Section 3.1 above as of the earlier of (a) his completion of three (3) years of service as a member of the Board of Directors or (b) his death, Retirement, or Disability. A Participant’s service, for the purpose of determining his vested interest under this Section 5.1, shall

be measured from the date on which the Participant’s service as a member of the Board of Directors commences. Amounts credited to a Participant’s Account to which he does not have a vested interest shall be forfeited as of the date of the Participant’s Separation from Service.

      5.2 Other Deferral Contributions . The Participant shall be immediately 100% vested in the nonelective and elective deferral contributions made pursuant to Sections 3.2 and 3.3, respectively.

ARTICLE VI
DISTRIBUTIONS

      6.1 General . Except to the extent otherwise provided in this Article VI, distribution of a Participant’s Vested Interest shall be made, or shall commence, in accordance with the Distribution Schedule elected (or deemed elected) by such Participant under Section 2.2 within ninety (90) days of the Participant’s Separation from Service. All distributions shall be made in cash. The amount credited to the Participant’s Account for purposes of a distribution hereunder shall be determined based upon the number of Units credited to the Participant’s Account as of the date of the Participant’s Separation from Service, increased by the amount, if any, to which the Participant is entitled under Article III after such date.

      6.2 Distribution Upon Death . Distribution of a Participant’s Vested Interest on account of death while serving as a director shall be made in a lump sum payment to his Beneficiary(ies) within the ninety (90) day period following the Participant’s death. In the event of the Participant’s death during a period of installment payments, the remainder of the Participant’s Vested Interest shall be paid to his Beneficiary(ies) in a lump sum within the ninety (90) day period following the Participant’s death.

      6.3 Designation of Beneficiary . Each Participant, at the time of making his initial deferral election, must file with the Committee a designation of one or more Beneficiaries to whom distributions otherwise due the Participant will be made in the event of his death prior to the complete distribution of the amount credited to his Account. The designation will be effective upon receipt by the Committee of a properly executed form which the Committee has approved for that purpose. The Participant may from time to time revoke or change any designation of Beneficiary by filing another approved Beneficiary designation form with the Committee. If there is no valid designation of Beneficiary on file with the Committee at the time of the Participant’s death, or if all of the Beneficiaries designated in the last Beneficiary designation have predeceased the Participant or otherwise ceased to exist, the Beneficiary will be the Participant’s spouse, if the spouse survives the Participant, or otherwise the Participant’s estate. A Beneficiary must survive the Participant by 60 days in order to be considered to be living on the date of the Participant’s death. If any Beneficiary survives the Participant but dies or otherwise ceases to exist before receiving all amounts due to the Beneficiary from the Participant’s Account, the balance of the amount that would have been paid to that Beneficiary will, unless the Participant’s designation provides otherwise, be distributed to the individual deceased Beneficiary’s estate or to the Participant’s estate in the case of a Beneficiary which is not an individual.

      6.4 Disability . Distribution of a Participant’s Vested Interest on account of Disability while serving as a director shall be made in a lump sum payment to him within the ninety (90) day

period following the Committee’s determination of the Participant’s Disability. In the event of the Participant’s Disability during a period of installment payments, the remainder of the Participant’s Vested Interest shall be paid to him in a lump sum within the ninety (90) day period following the Committee’s determination of the Participant’s Disability.

      6.5 Responsibility for Distributions and Withholding of Taxes . The Committee will furnish to the Corporation information sufficient for the Corporation to pay the amount of any distribution hereunder. The Corporation shall be authorized to calculate and withhold from any distribution such amounts as it determines necessary to satisfy its obligations to withhold for any federal, state or local income and/or employment taxes.

      6.6 Change in Time of Payments . Notwithstanding any provision of this Article VI to the contrary, the benefits payable hereunder may, to the extent expressly provided in this Section 6.6, be paid prior to or later than the date on which they would otherwise be paid to the Participant.

     (a) Distribution in the Event of Income Inclusion Under Code Section 409A . If any portion of a Participant’s Account is required to be included in income by the Participant prior to receipt due to a failure of this Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the portion of his or her Account required to be included in income as a result of the failure of the Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, or (ii) the balance of the Participant’s Account.

     (b) Distribution Necessary to Satisfy Applicable Tax Withholding . If the Corporation is required to withhold amounts to pay the Participant’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) or 3121(v)(2) with respect to amounts that are or will be paid to the Participant under the Plan before they otherwise would be paid, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the amount in the Participant’s Account or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.

     (c) Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law . In the event the Corporation reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment under this Article VI until the earliest date at which the Corporation reasonably anticipates that making of such payment would not cause such violation.

     (d) Delay for Insolvency or Compelling Business Reasons. In the event the Corporation determines that the making of any payment of benefits on the date specified hereunder would jeopardize the ability of the Corporation to continue as a going concern, the Committee may delay the payment of benefits under this Article VI until the first calendar year in which the Corporation notifies the Committee that the payment of benefits would not have such effect.

     (e) Administrative Delay in Payment . The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Article VI; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15 ^th day of the third calendar month following the date on which payment would otherwise be made. Further, if, as a result of events beyond the control of the Participant (or following the Participant’s death, the Participant’s Beneficiary), it is not administratively practicable for the Committee to calculate the amount of benefits due to Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.

     (f) No Participant Election . Notwithstanding the foregoing provisions, if the period during which payment of benefits hereunder will be made occurs, or will occur, in two calendar years, the Participant shall not be permitted to elect the calendar year in which the payment shall be made.

ARTICLE VII
ADMINISTRATION

      7.1 Committee Appointment . The Board of Directors will have the sole discretion to remove any one or more Committee members and appoint one or more replacement or additional Committee members from time to time.

      7.2 Committee Organization and Voting . The Committee will select from among its members a chairman who will preside at all of its meetings and will elect a secretary without regard to whether that person is a member of the Committee. The secretary will keep all records, documents and data pertaining to the Committee’s supervision and administration of the Plan. A majority of the members of the Committee will constitute a quorum for the transaction of business and the vote of a majority of the members present at any meeting will decide any question brought before the meeting. In addition, the Committee may decide any question by vote, taken without a meeting, of a majority of its members. A member of the Committee who is also a Participant will not vote or act on any matter relating solely to himself.

      7.3 Powers of the Committee . The Committee will have the exclusive responsibility for the general administration of the Plan according to the terms and provisions of the Plan and will have all powers necessary to accomplish those purposes, including but not by way of limitation the right, power and authority:

     (a) To make rules and regulations for the administration of the Plan;

     (b) To construe all terms, provisions, conditions and limitations of the Plan;

     (c) To correct any defect, supply any omission or reconcile any inconsistency that may appear in the Plan in the manner and to the extent it deems expedient to carry the Plan into effect for the greatest benefit of all parties at interest;

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

     (i) Differences of opinion arising between the Corporation and a Participant; and

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

     (e) To delegate those clerical and recordation duties of the Committee, as it deems necessary or advisable for the proper and efficient administration of the Plan.

      7.4 Committee Discretion . The Committee in exercising any power or authority granted under this Plan or in making any determination under this Plan shall perform or refrain from performing those acts using its sole discretion and judgment. Any decision made by the Committee or any refraining to act or any act taken by the Committee in good faith shall be final and binding on all parties. The Committee’s decision shall be final and binding on all parties and shall not be subject to review.

      7.5 Annual Statements . The Committee will cause each Participant to receive an annual statement as soon as administratively practicable after the conclusion of each Plan Year, which statement shall describe the number of Units credited to his Account during that Plan Year, the total number of Units credited to his Account as of the end of the Plan Year and the value of those Units as of the end of the Plan Year.

      7.6 Reimbursement of Expenses . The members of the Committee will serve without compensation for their services but will be reimbursed by the Corporation for all expenses properly and actually incurred in the performance of their duties under the Plan.

      7.7 Indemnification . To the extent permitted by applicable law, the Corporation shall indemnify and hold harmless each member of the Committee from and against any and all claims and expenses (including, without limitation, attorney’s fees and related costs), in connection with the performance by such member of his duties in that capacity, other than any of the foregoing arising in connection with the willful neglect or willful misconduct of the person so acting.

ARTICLE VIII
AMENDMENT AND/OR TERMINATION

      8.1 Amendment or Termination of the Plan . The Corporation may amend or terminate the Plan at any time by written instrument adopted by the members of the Board of Directors.

      8.2 No Retroactive Effect on Account . No amendment will affect the rights of any Participant to his Account or change the method of valuing the Units then credited to his Account without the Participant’s consent.

      8.3 Effect of Termination . If the Plan is terminated, each Participant’s Account shall become fully vested. In addition, to the extent provided by the Corporation in accordance with Section 8.1, the Plan may be liquidated following a termination under any of the following circumstances:

     (a) the termination and liquidation of the Plan within twelve (12) months of a complete dissolution of the Corporation taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A); provided that the amounts deferred under this Plan are included in the Participants’ gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Plan is terminated; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

     (b) the termination and liquidation of the Plan pursuant to irrevocable action taken by the Corporation within the thirty (30) days preceding or the twelve (12) months following a Change of Control; provided that all Aggregated Plans are terminated and liquidated with respect to each Participant that experienced the Change of Control, so that under the terms of the termination and liquidation, all such Participants are required to receive all amounts of deferred compensation under this Plan and any other Aggregated Plans within twelve (12) months of the date the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan and such other Aggregated Plans;

     (c) the termination and liquidation of the Plan, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the Corporation’s financial health; (2) the Corporation terminates and liquidates all Aggregated Plans; (3) no payments in liquidation of this Plan are made within twelve (12) months of the date the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan, other than payments that would be payable under the terms of this Plan if the action to terminate and liquidate this Plan had not occurred; (4) all payments are made within twenty four (24) months of the date on which the Corporation irrevocably takes all action necessary to terminate and liquidate this Plan; and (5) the Corporation does not adopt a new Aggregated Plan at any time within three (3) years following the date on which the Corporation irrevocably takes all action necessary to terminate and liquidate the Plan.

For purposes of this Section 8.3, the term “Change of Control” shall have the meaning ascribed to it under the Tesoro Board of Directors Deferred Compensation Plan, effective January 1, 2009, as may be amended from time to time.

ARTICLE IX
UNFUNDED PLAN

      9.1 Benefits from General Assets of Corporation . The Corporation may establish a trust fund for the purpose of retaining assets set aside by the Corporation pursuant to a trust agreement for payment of all or a portion of the benefits payable pursuant to Article VI of the Plan. Any such benefits not paid from a trust fund shall be paid from the Corporation’s general assets. The trust fund, if such shall be established, shall be subject to the claims of general creditors of the Corporation in the event the Corporation is Insolvent (as defined in the trust agreement).

      9.2 No Requirement to Fund . The Corporation is not required to set aside any assets for payment of the benefits provided under this Plan; however, it may do so as provided in the trust agreement, if any. A Participant shall have no security interest in any such amounts.

      9.3 Adoption of Trust . All benefits under the Plan shall be the unsecured obligations of the Corporation and, except for those assets that may be placed in a trust fund established in connection with this Plan, no assets will be placed in trust or otherwise segregated from the general assets of the Corporation for the payment of obligations hereunder. If assets are placed in a trust fund, the trust agreement, to the extent required by the Code, shall conform in all material respects to the model trust set forth in Internal Revenue Service Revenue Procedure 92-64. To the extent that any person acquires a right to receive payments hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

      9.4 Status as Unsecured Creditor . The establishment of this Plan shall not be construed as giving to any Participant or Beneficiary or any person whomsoever, any legal, equitable or other rights against the Corporation, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any equity or other interest in the assets or business of the Corporation or shares of Corporation stock or as giving any director the right to be retained in the service of the Corporation. All directors shall be subject to discharge to the same extent they would have been if this Plan had never been adopted. The rights of a Participant hereunder shall be solely those of an unsecured general creditor of the Corporation.

ARTICLE X
MISCELLANEOUS

      10.1 Distributions to Incompetents or Minors . Should a Participant become incompetent or should a Participant designate a Beneficiary who is a minor or incompetent, the Committee is authorized to distribute any funds due to the parent of the minor or to the guardian of the minor or incompetent or directly to the minor or to apply those funds for the benefit of the minor or incompetent in any manner the Committee determines in its sole discretion.

      10.2 Nonalienation of Benefits . No right or benefit provided in this Plan will be transferable by the Participant except, upon his death, to a named Beneficiary as provided in this Plan. No right or benefit under this Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void. No right or benefit under this Plan will in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to a benefit. If any Participant or any Beneficiary becomes bankrupt or attempts to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan, that right or benefit will, in the discretion of the Committee, cease. In that event, the Committee may have the Corporation hold or apply the right or benefit or any part of it to the benefit of the Participant or Beneficiary, his or her spouse, children or other dependents or any of them in any manner and in any proportion the Committee believes to be proper in its sole and absolute discretion, but is not required to do so.

      10.3 Reliance Upon Information . The Committee will not be liable for any decision or action taken in good faith in connection with the administration of this Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee when it relies upon information supplied it by any officer of the Corporation, the Corporation’s legal counsel, the Corporation’s independent accountants or other advisors in connection with the administration of this Plan will be deemed to have been taken in good faith.

      10.4 Severability . If any term, provision, covenant or condition of the Plan is held to be invalid, void or otherwise unenforceable, the rest of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated.

      10.5 Notice . Any notice or filing required or permitted to be given to the Committee or a Participant will be sufficient if in writing and hand delivered or sent by U.S. mail to the principal office of the Corporation or to the residential mailing address of the Participant. Notice will be deemed to be given as of the date of hand delivery or if delivery is by mail, as of the date shown on the postmark.

      10.6 Gender and Number . Words used in this Plan of one gender are to be construed as though they were also used in another gender in all cases where they would so apply and likewise words in the singular or plural are to be construed as though they also included the other in all cases where they would so apply.

      10.7 Governing Law . The Plan will be construed, administered and governed in all respects by the laws of the State of Texas.

      IN WITNESS WHEREOF , the Corporation has executed this document on this 12 ^th day of December, 2008, to be effective as of January 1, 2009 (except as otherwise specifically noted herein).

		TESORO CORPORATION
		By:		/s/ SUSAN A. LERETTE
		Name:		Susan A. Lerette
		Its:		SVP, Administration

EXHIBIT 10.3

TESORO CORPORATION

BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN

Effective January 1, 2009

TESORO CORPORATION
BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

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

		Page
ARTICLE VII ADMINISTRATION			8
7.1 Committee Appointment			8
7.2 Committee Organization and Voting			8
7.3 Powers of the Committee			8
7.4 Committee Discretion			9
7.5 Committee Discretion on Change of Control			9
7.6 Annual Statements			9
7.7 Reimbursement of Expenses			9
7.8 Indemnification			9
ARTICLE VIII AMENDMENT AND/OR TERMINATION			10
8.1 Amendment or Termination of the Plan			10
8.2 No Retroactive Effect on Account			10
8.3 Effect of Termination			10
ARTICLE IX UNFUNDED PLAN			11
9.1 Benefits from General Assets of Corporation			11
9.2 No Requirement to Fund			11
9.3 Adoption of Trust			11
9.4 Status as Unsecured Creditor			11
ARTICLE X MEDIATION—ARBITRATION			11
ARTICLE XI MISCELLANEOUS			12
11.1 Distributions to Incompetents or Minors			12
11.2 Nonalienation of Benefits			12
11.3 Reliance Upon Information			12
11.4 Severability			12
11.5 Notice			12
11.6 Gender and Number			12
11.7 Governing Law			13

TESORO CORPORATION

BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN

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

     WHEREAS, the Corporation desires to amend the Plan to comply with Section 409A of the Code and the Regulations promulgated thereunder;

     NOW, THEREFORE, the Corporation adopts this amended and restated Tesoro Corporation Board of Directors Deferred Compensation Plan, effective January 1, 2009 (except as otherwise specifically noted herein), as follows:

ARTICLE I
DEFINITIONS

      1.1 Account . “Account” means a bookkeeping account in the Deferred Compensation Ledger which reflects the benefits to which a Participant is entitled under this Plan.

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

      1.3 Beneficiary . “Beneficiary” means a person or entity designated by the Participant in accordance with Section 6.3 hereof to receive amounts credited to his Account following his death.

      1.4 Board of Directors . “Board of Directors” means the Board of Directors of the Corporation.

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

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

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

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

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

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

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

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

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

      1.9 Deferred Compensation Ledger . “Deferred Compensation Ledger” means the ledger established and maintained by the Committee to reflect each Participant’s Account under the Plan.

      1.10 Disability . “Disability” means a Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. The determination of whether a Participant suffers from a Disability shall be made by the Committee in accordance with the provisions of Code Section 409A and the Regulations promulgated thereunder.

      1.11 Distribution Schedule . “Distribution Schedule” shall mean the time and method of distributions elected (or deemed elected) by a Participant, which method may be either a lump sum payment or installment payments, pursuant to which distribution of the Participant’s Account shall be made or shall commence. Such election shall be made at the time and in the manner described in Article III hereof; provided, however, that a Distribution Schedule elected by the Participant pursuant to which installment payments are to be made must require annual installments for a period not to exceed ten (10) years.

      1.12 Participant . “Participant” means an eligible member of the Board of Directors who has elected to defer all or any portion of his directors’ fees under this Plan.

      1.13 Plan . “Plan” means this amended and restated Tesoro Corporation Board of Directors Deferred Compensation Plan, effective January 1, 2009 (except as specifically noted herein), as set forth in this document and as may be amended from time to time.

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

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

      1.16 Separation from Service . “Separation from Service” means the date on which the Participant ceases to be a director of the Corporation; provided that a Separation from Service shall not have occurred if the Corporation anticipates that the Participant will continue to provide services to the Corporation or a subsidiary, whether as an employee or consultant or in any other capacity. The determination of whether a Separation from Service has occurred shall be made by the Committee in accordance with Section 1.409A-1(h) of the Treasury Regulations, or such other guidance with respect to Code Section 409A that may be in effect on the date of determination.

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

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

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

ARTICLE II
ELIGIBILITY AND PARTICIPATION

     All members of the Board of Directors who are not otherwise employed by the Corporation or a subsidiary of the Corporation will be eligible to participate in this Plan. An eligible member of the Board of Directors will become a Participant in this Plan as of the date set forth in his initial deferral election under Section 3.1.

ARTICLE III
DEFERRAL CONTRIBUTIONS

      3.1 Elections Upon Commencement of Participation . An eligible director may elect to defer any part or all of the cash portion of his directors’ fees under the Plan by executing a participation agreement in such form and at such time as the Committee shall require, provided that the participation agreement shall be executed within thirty (30) days of the date on which his service as a member of the Board of Directors commences. The Participant’s election shall become effective immediately following the Committee’s receipt of the Participant’s executed participation agreement. The Participant may, at such time, also irrevocably elect the Distribution Schedule under which benefits hereunder will be paid, subject to the restrictions of the Plan. A Participant’s failure to timely submit a participation agreement in accordance with this Section 3.1 shall

be deemed an election by the Participant to defer zero percent (0%) of his directors’ fees for the Plan Year during which the Participant first becomes eligible to participate. A Participant’s failure to elect a Distribution Schedule in accordance with this Section 3.1 shall be deemed an election by the Participant to receive his benefits hereunder in a lump sum payment within the ninety (90) day period following such Participant’s Separation from Service. The Participant’s election (or deemed election) shall become irrevocable as of the last day of the 30-day period during which the Participant is permitted to make an election in accordance with this Section 3.1.

      3.2 Annual Deferral Elections . A Participant’s election (or deemed election) shall remain effective for each subsequent Plan Year for which the Participant is eligible to participate in the Plan, unless and until such election (or deemed election) is modified or revoked by the Participant in accordance with this Section. A Participant may modify or revoke an election (including a deemed election) with respect to the deferral of directors’ fees to be earned in a subsequent Plan Year by submitting an executed participation agreement to the Committee, in such form as the Committee shall require, no later than the day immediately preceding the Plan Year in which such directors’ fees will be earned.

      3.3 Subsequent Elections Regarding Method of Payment. The Committee may, in its sole and absolute discretion, permit a Participant to subsequently modify a prior election (or deemed election) in order to change the method of payment to be received hereunder, provided that (i) such subsequent election shall not take effect for at least twelve (12) months following the date on which the subsequent election is made, (ii) with respect to a payment that the Participant is entitled to receive following his Separation from Service or pursuant to a Distribution Schedule, the payment with respect to which such subsequent election is made is deferred at least five (5) years from the date on which such payment would otherwise have been made absent such subsequent election (or in the case of installment payments, five (5) years from the date the first payment was scheduled to be made), and (iii) with respect to the payment of benefits hereunder pursuant to a Distribution Schedule, such subsequent election is made no less than twelve (12) months prior to the date the payment is scheduled to be made (or in the case of installment payments, five (5) years from the date the first payment was scheduled to be made).

      3.4 2008 Special Election. Notwithstanding any provision herein to the contrary, each Participant may elect to modify an existing election (or deemed election) provided that such election: (i) may apply only to amounts that would not otherwise be payable in 2008, (ii) may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008, (iii) shall be made no later than December 31, 2008 and prior to such earlier date as may be established by the Committee, and (iv) shall be made in the manner and subject to such restrictions as shall be determined by the Committee.

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

ARTICLE IV
ACCOUNT

      4.1 Establishing a Participant’s Account . The Committee will establish and maintain an Account for each Participant, which shall be reflected in the Deferred Compensation Ledger.

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

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

ARTICLE V
VESTING

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

ARTICLE VI
DISTRIBUTIONS

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

      6.2 Distribution Upon Death . Distribution of a Participant’s Account on account of death while serving as a director shall be made in a lump sum payment to his Beneficiary(ies) within the ninety (90) day period following the Participant’s death. In the event of the Participant’s death during a period of installment payments, the remainder of the Participant’s Account shall be paid to his Beneficiary(ies) in a lump sum within the ninety (90) day period following the Participant’s death.

      6.3 Designation of Beneficiary . Each Participant, at the time of making his initial deferral election, must file with the Committee a designation of one or more Beneficiaries to whom distributions otherwise due the Participant will be made in the event of his death prior to the complete distribution of the amount credited to his Account. The designation will be effective upon receipt by the Committee of a properly executed form which the Committee has

approved for that purpose. The Participant may from time to time revoke or change any designation of Beneficiary by filing another approved Beneficiary designation form with the Committee. If there is no valid designation of Beneficiary on file with the Committee at the time of the Participant’s death, or if all of the Beneficiaries designated in the last Beneficiary designation have predeceased the Participant or otherwise ceased to exist, the Beneficiary will be the Participant’s spouse, if the spouse survives the Participant, or otherwise the Participant’s estate. A Beneficiary must survive the Participant by 60 days in order to be considered to be living on the date of the Participant’s death. If any Beneficiary survives the Participant but dies or otherwise ceases to exist before receiving all amounts due to the Beneficiary from the Participant’s Account, the balance of the amount that would have been paid to that Beneficiary will, unless the Participant’s designation provides otherwise, be distributed to the individual deceased Beneficiary’s estate or to the Participant’s estate in the case of a Beneficiary which is not an individual.

      6.4 Disability . Distribution of a Participant’s Account on account of Disability while serving as a director shall be made in a lump sum lump sum within the ninety (90) day period following the Committee’s determination of the Participant’s Disability. In the event of the Participant’s Disability during a period of installment payments, the remainder of the Participant’s Account shall be paid to him in a lump sum within the ninety (90) day period following the Committee’s determination of the Participant’s Disability.

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

      6.6 Responsibility for Distributions and Withholding of Taxes . The Committee will furnish to the Corporation information sufficient for the Corporation to pay (or cause the Trust to pay) the amount of any distribution hereunder. The Corporation shall be authorized to calculate and withhold from any distribution such amounts as it determines necessary to satisfy its obligations to withhold for any federal, state or local income and/or employment taxes.

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

      6.8 Change in Time of Payments . Notwithstanding any provision of this Article VI to the contrary, the benefits payable hereunder may, to the extent expressly provided in this Section 6.8, be paid prior to or later than the date on which they would otherwise be paid to the Participant.

     (a) Distribution in the Event of Income Inclusion Under Code Section 409A . If any portion of a Participant’s Account is required to be included in income by the Participant prior to receipt due to a failure of this Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the portion of his or her Account required to be included in income as a result of the failure of the Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, or (ii) the balance of the Participant’s Account.

     (b) Distribution Necessary to Satisfy Applicable Tax Withholding . If the Corporation is required to withhold amounts to pay the Participant’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) or 3121(v)(2) with respect to amounts that are or will be paid to the Participant under the Plan before they otherwise would be paid, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the amount in the Participant’s Account or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.

     (c) Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law . In the event the Corporation reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment under this Article VI until the earliest date at which the Corporation reasonably anticipates that making of such payment would not cause such violation.

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

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

     (e) Administrative Delay in Payment . The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Article VI; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15 ^th day of the third calendar month following the date on which payment would otherwise be made. Further, if, as a result of events beyond the control of the Participant (or following the Participant’s death, the Participant’s Beneficiary), it is not administratively practicable for the Committee to calculate the amount of benefits due to Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.

     (f) No Participant Election . Notwithstanding the foregoing provisions, if the period during which payment of benefits hereunder will be made occurs, or will occur, in two calendar years, the Participant shall not be permitted to elect the calendar year in which the payment shall be made.

ARTICLE VII
ADMINISTRATION

      7.1 Committee Appointment . Members of the Committee will be appointed by the Board of Directors. The Board of Directors will have the sole discretion to remove any one or more Committee members and appoint one or more replacement or additional Committee members from time to time.

      7.2 Committee Organization and Voting . The Committee will select from among its members a chairman who will preside at all of its meetings and will elect a secretary without regard to whether that person is a member of the Committee. The secretary will keep all records, documents and data pertaining to the Committee’s supervision and administration of the Plan. A majority of the members of the Committee will constitute a quorum for the transaction of business and the vote of a majority of the members present at any meeting will decide any question brought before the meeting. In addition, the Committee may decide any question by vote, taken without a meeting, of a majority of its members. A member of the Committee who is also a Participant will not vote or act on any matter relating solely to himself.

      7.3 Powers of the Committee . The Committee will have the exclusive responsibility for the general administration of the Plan according to the terms and provisions of the Plan and will have all powers necessary to accomplish those purposes, including but not by way of limitation the right, power and authority:

     (a) To make rules and regulations for the administration of the Plan;

     (b) To construe all terms, provisions, conditions and limitations of the Plan;

     (c) To correct any defect, supply any omission or reconcile any inconsistency that may appear in the Plan in the manner and to the extent it deems expedient to carry the Plan into effect for the greatest benefit of all parties at interest;

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

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

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

     (e) To delegate those clerical and recordation duties of the Committee, as it deems necessary or advisable for the proper and efficient administration of the Plan.

      7.4 Committee Discretion . The Committee in exercising any power or authority granted under this Plan or in making any determination under this Plan shall perform, or refrain from performing, those acts using its sole discretion and judgment. Any decision made by the Committee or any refraining to act or any act taken by the Committee in good faith shall be final and binding on all parties. The Committee’s decision shall be final and binding on the parties and shall not be subject to review.

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

      7.6 Annual Statements . The Committee will cause each Participant to receive an annual statement as soon as administratively practicable after the conclusion of each Plan Year, which statement shall describe the amounts credited to his Account for that Plan Year and the total amount credited to his Account at the end of the Plan Year.

      7.7 Reimbursement of Expenses . The members of the Committee will serve without compensation for their services but will be reimbursed by the Corporation for all expenses properly and actually incurred in the performance of their duties under the Plan.

      7.8 Indemnification . To the extent permitted by applicable law, the Corporation shall indemnify and hold harmless each member of the Committee from and against any and all claims and expenses (including, without limitation, attorney’s fees and related costs), in connection with the performance by such member of his duties in that capacity, other than any of the foregoing arising in connection with the willful neglect or willful misconduct of the person so acting.

ARTICLE VIII
AMENDMENT AND/OR TERMINATION

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

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

      8.3 Effect of Termination . If the Plan is terminated, all deferrals shall thereupon cease, but interest shall continue to be credited to the Accounts in accordance with Section 4.3 as if the Participant began receiving installment payments on the date the Plan terminated. Notwithstanding the foregoing, to the extent provided by the Corporation in accordance with Section 8.1, the Plan may be liquidated following a termination under any of the following circumstances:

     (a) the termination and liquidation of the Plan within twelve (12) months of a complete dissolution of the Corporation taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A); provided that the amounts deferred under this Plan are included in the Participants’ gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Plan is terminated; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

     (b) the termination and liquidation of the Plan pursuant to irrevocable action taken by the Corporation within the thirty (30) days preceding or the twelve (12) months following a Change of Control; provided that all Aggregated Plans are terminated and liquidated with respect to each Participant that experienced the Change of Control, so that under the terms of the termination and liquidation, all such Participants are required to receive all amounts of deferred compensation under this Plan and any other Aggregated Plans within twelve (12) months of the date the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan and such other Aggregated Plans;

     (c) the termination and liquidation of the Plan, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the Corporation’s financial health; (2) the Corporation terminates and liquidates all Aggregated Plans; (3) no payments in liquidation of this Plan are made within twelve (12) months of the date the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan, other than payments that would be payable under the terms of this Plan if the action to terminate and liquidate this Plan had not occurred; (4) all payments are made within twenty four (24) months of the date on which the Corporation irrevocably takes all action necessary to terminate and liquidate this Plan; and (5) the Corporation does not adopt a

new Aggregated Plan at any time within three (3) years following the date on which the Corporation irrevocably takes all action necessary to terminate and liquidate the Plan.

ARTICLE IX
UNFUNDED PLAN

      9.1 Benefits from General Assets of Corporation . The Corporation may establish a Trust for the purpose of retaining assets set aside by the Corporation pursuant to the trust agreement for payment of all or a portion of the benefits payable pursuant to Article VI of the Plan. Any such benefits not paid from a Trust shall be paid from the Corporation’s general assets. The Trust, if such shall be established, shall be subject to the claims of general creditors of the Corporation in the event the Corporation is Insolvent (as defined in the trust agreement).

      9.2 No Requirement to Fund . The Corporation is not required to set aside any assets for payment of the benefits provided under this Plan; however, it may do so as provided in the trust agreement, if any. A Participant shall have no security interest in any such amounts.

      9.3 Adoption of Trust . All benefits under the Plan shall be the unsecured obligations of the Corporation and, except for those assets that may be placed in a Trust established in connection with this Plan, no assets will be placed in trust or otherwise segregated from the general assets of the Corporation for the payment of obligations hereunder. If assets are placed in a Trust, the trust agreement, to the extent required by the Code, shall conform in all material respects to the model trust set forth in Internal Revenue Service Revenue Procedure 92-64. To the extent that any person acquires a right to receive payments hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

      9.4 Status as Unsecured Creditor . The establishment of this Plan shall not be construed as giving to any Participant or Beneficiary or any person whomsoever, any legal, equitable or other rights against the Corporation, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any equity or other interest in the assets or business of the Corporation or shares of Corporation stock or as giving any director the right to be retained in the service of the Corporation. All directors shall be subject to discharge to the same extent they would have been if this Plan had never been adopted. The rights of a Participant hereunder shall be solely those of an unsecured general creditor of the Corporation.

ARTICLE X
MEDIATION—ARBITRATION

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

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

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

ARTICLE XI
MISCELLANEOUS

      11.1 Distributions to Incompetents or Minors . Should a Participant become incompetent or should a Participant designate a Beneficiary who is a minor or incompetent, the Committee is authorized to pay the funds due to the parent of the minor or to the guardian of the minor or incompetent or directly to the minor or to apply those funds for the benefit of the minor or incompetent in any manner the Committee determines in its sole discretion.

      11.2 Nonalienation of Benefits . No right or benefit provided in this Plan will be transferable by the Participant except, upon his death, to a named Beneficiary as provided in this Plan. No right or benefit under this Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void. No right or benefit under this Plan will in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If any Participant or any Beneficiary becomes bankrupt or attempts to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan, that right or benefit will, in the discretion of the Committee, cease. In that event, the Committee may have the Corporation hold or apply the right or benefit or any part of it to the benefit of the Participant or Beneficiary, his or her spouse, children or other dependents or any of them in any manner and in any proportion the Committee believes to be proper in its sole and absolute discretion, but is not required to do so.

      11.3 Reliance Upon Information . The Committee will not be liable for any decision or action taken in good faith in connection with the administration of this Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee when it relies upon information supplied it by any officer of the Corporation, the Corporation’s legal counsel, the Corporation’s independent accountants or other advisors in connection with the administration of this Plan will be deemed to have been taken in good faith.

      11.4 Severability . If any term, provision, covenant or condition of the Plan is held to be invalid, void or otherwise unenforceable, the rest of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated.

      11.5 Notice . Any notice or filing required or permitted to be given to the Committee or a Participant will be sufficient if in writing and hand delivered or sent by U.S. mail to the principal office of the Corporation or to the last known residential mailing address of the Participant. Notice will be deemed to be given as of the date of hand delivery or if delivery is by mail, as of the date shown on the postmark.

      11.6 Gender and Number . Words used in this Plan of one gender are to be construed as though they were also used in another gender in all cases where they would so apply and

likewise words in the singular or plural are to be construed as though they also included the other in all cases where they would so apply.

      11.7 Governing Law . The Plan will be construed, administered and governed in all respects by the laws of the state of Texas.

      IN WITNESS WHEREOF , the Corporation has executed this document on this 12 ^th day of December, 2008, to be effective as of January 1, 2009 (except as otherwise specifically noted herein).

		TESORO CORPORATION
		By:		/s/ SUSAN A. LERETTE
		Name:		Susan A. Lerette
		Its:		SVP, Administration

EXHIBIT 10.4

TESORO CORPORATION

2006 LONG-TERM INCENTIVE PLAN

ARTICLE I
ESTABLISHMENT, PURPOSE AND DURATION

      1.1 Amendment and Restatement . The Company hereby amends and restates the Tesoro Corporation 2006 Long-Term Incentive Plan, as set forth in this document, for compliance with Section 409A of the Code, effective as of January 1, 2009.

      1.2 Purpose of the Plan . The purpose of the Plan is to reward corporate officers and other employees of the Company and its Affiliates by enabling them to acquire shares of common stock of the Company and to receive other compensation based on the increase in value of the common stock of the Company or certain other performance measures. The Plan is intended to advance the best interests of the Company, its Affiliates and its stockholders by providing those persons who have substantial responsibility for the management and growth of the Company and its Affiliates with additional performance incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment with the Company and its Affiliates.

      1.3 Duration of Authority to Make Grants Under the Plan . No Awards may be granted under the Plan on or after the tenth anniversary of the Effective Date. The applicable provisions of the Plan will continue in effect with respect to an Award granted under the Plan for as long as such Award remains outstanding.

ARTICLE II
DEFINITIONS

     The words and phrases defined in this Article shall have the meaning set out below throughout the Plan, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning.

      2.1 Affiliate . Any corporation, partnership, limited liability company or association, trust or other entity or organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (a) to vote more than 50 percent (50%) of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.

      2.2 Aggregated Plan . Any agreement, method, program or other arrangement sponsored by the Company that would be aggregated with this Plan pursuant to Section 1.409A-1(c) of the Treasury Regulations.

      2.3 Award . Individually or collectively, a grant under the Plan of Options, Restricted Stock Awards, Deferred Stock Unit Awards, Performance Stock Awards, Performance Unit Awards, Cash-Based Awards, and Other Stock-Based Awards, in each case subject to the terms and provisions of the Plan.

      2.4 Award Agreement . A written agreement or agreements that set forth the terms and conditions applicable to an Award granted under the Plan. Such agreement or agreements may be contained in one or more documents and may include, but are not limited to being contained in an employment agreement between the Company and the Holder that affects the Holder’s rights to an Award granted under the Plan.

      2.5 Board . The board of directors of the Company.

      2.6 Cash-Based Award . An Award granted to a Holder pursuant to Article IX.

      2.7 Change in Control . 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 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 one-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 director, 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 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 Rule 13d-3 under the Exchange Act) of securities of the Company representing 35 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 shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination by the Board 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.

      2.8 Code . The United States Internal Revenue Code of 1986, as amended from time to time.

      2.9 Committee . A committee of at least two persons, who are members of the Compensation Committee of the Board and are appointed by the Compensation Committee of the Board, or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board. Each member of the Committee in respect of his or her participation in any decision with respect to an Award intended to satisfy the requirements of section 162(m) of the Code must satisfy the requirements of “outside director” status within the meaning of section 162(m) of the Code; provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. As to Awards, grants or other transactions that are authorized by the Committee and that are intended to be exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the Exchange Act with respect to committee action must also be satisfied. For all purposes under the Plan, the Chief Executive Officer of the Company shall be deemed to be the “ Committee ” with respect to Options granted by him pursuant to Section 4.1.

      2.10 Company . Tesoro Corporation, a Delaware corporation, or any successor (by reincorporation, merger or otherwise).

      2.11 Corporate Change . Corporate Change shall have the meaning ascribed to that term in Section 4.5(c).

      2.12 Deferred Stock Unit . A unit credited to a Holder’s ledger account maintained by the Company pursuant to Article VII.

      2.13 Deferred Stock Unit Award . An Award granted pursuant to Article VII.

      2.14 Disability . As determined by the Committee in its discretion exercised in good faith, a physical or mental condition of the Holder that would entitle him to payment of disability income payments under the Company’s long-term disability insurance policy or plan for employees as then in effect; or in the event that the Holder is not covered, for whatever reason under the Company’s long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy, “Disability” means a permanent and total disability as defined in section 22(e)(3) of the Code. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Holder shall submit to an examination by such physician upon request by the Committee.

      2.15 Effective Date . Effective Date shall mean the date on which the Plan was originally approved by the Board, or, if later, the date on which the Plan was originally approved by the stockholders of the Company.

      2.16 Employee . A person employed by the Company or any Affiliate as a common law employee. The determination of whether a person is a common law employee shall be made by the Committee in its sole discretion.

      2.17 Exchange Act . Exchange Act means the United States Securities Exchange Act of 1934, as amended from time to time.

      2.18 Fair Market Value . Fair Market Value of the Stock as of any particular date means (1) if the Stock is traded on a stock exchange, the closing sale price of the Stock on that date as reported on the principal securities exchange on which the Stock is traded, or (2) if the Stock is traded in the over-the-counter market, the average between the high bid and low asked price on that date as reported in such over-the-counter market; provided that (a) if the Stock is not so traded, (b) if no closing price or bid and asked prices for the stock was so reported on that date or (c) if, in the discretion of the Committee, another means of determining the fair market value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another means for determining such fair market value.

      2.19 Fiscal Year . Fiscal Year means the Company’s fiscal year .

      2.20 Full Value Awards . Individually or collectively, a grant under the Plan of Restricted Stock Awards, Deferred Stock Unit Awards, Performance Stock Awards, Performance Unit Awards, and Other Stock-Based Awards in each case subject to the terms and provisions of the Plan.

      2.21 Holder . A person who has been granted an Award or any person who is entitled to receive shares of Stock under an Award.

      2.22 Mature Shares . Shares of Stock that the Holder has held for at least six months.

      2.23 Minimum Statutory Tax Withholding Obligation . The amount the Company or an Affiliate is required to withhold for federal, state and local taxes based upon the applicable minimum statutory withholding rates required by the relevant tax authorities.

      2.24 Option . An option to purchase Stock granted pursuant to Article V.

      2.25 Option Price . Option Prices shall have the meaning ascribed to that term in Section 5.4.

      2.26 Optionee . A person who is granted an Option under the Plan.

      2.27 Option Agreement . A written contract setting forth the terms and conditions of an Option. The term Option Agreement may include any employment agreement or any other agreement between the Optionee and the Company that affects the Optionee’s rights under any Award issued under the Plan.

      2.28 Other Stock-Based Award . An equity-based or equity-related Award not otherwise described by the terms and provisions of the Plan that is granted pursuant to Article X.

      2.29 Performance Goals . One or more of the criteria described in Article VIII on which the performance goals applicable to an Award are based.

      2.30 Performance Stock Award . An Award granted to a Holder pursuant to Article VIII.

      2.31 Performance Unit Award . An Award granted to a Holder pursuant to Article VIII.

      2.32 Period of Restriction . The period during which Restricted Stock is subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article VI.

      2.33 Plan . Tesoro Corporation 2006 Long-Term Incentive Plan, as set forth in this document and as it may be amended from time to time.

      2.34 Restricted Stock . Shares of restricted Stock issued or granted under the Plan pursuant to Article VI.

      2.35 Restricted Stock Award . An authorization by the Committee to issue or transfer Restricted Stock to a Holder.

      2.36 Retirement . Retirement in accordance with the terms of a retirement plan that is qualified under Section 401(a) of the Code and maintained by the Company or an Affiliate in which the Holder is a participant.

      2.37 Section 409A . Section 409A of the Code and Department of Treasury rules and regulations issued thereunder.

      2.38 Section 409A Change in Control . A Section 409A Change in Control means (i) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; (ii) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company; (iii) a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

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

      2.39 Section 409A Disability . As determined by the Committee, either (i) the Holder’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) to the extent set forth in an Award Agreement, the Holder’s receipt of income replacement benefits for a period of not less than

three months under an accident and health plan of the Company by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.

      2.40 Separation from Service . A reasonably anticipated permanent reduction in the level of bona fide services performed by a Holder for the Company and its Affiliates to 20% or less of the average level of bona fide services performed by the Holder 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 Holder 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.

      2.41 Specified Employee . A key employee of the Company as defined in Section 416(i) of the Code without regard to paragraph (5) thereof. The determination of whether a Holder is a Specified Employee shall be made by the Committee as of the specified employee identification date adopted by the Company in accordance with the provisions of Section 409A.

      2.42 Stock . The common stock of the Company, $0.16 ¹ / ₂ par value per share (or such other par value as may be designated by act of the Company’s stockholders).

      2.43 Substantial Risk of Forfeiture . An Award is subject to a Substantial Risk of Forfeiture if entitlement to the Award is conditioned on the performance of substantial future services of the Holder or the occurrence of a condition related to a purpose of the Award, and the possibility of forfeiture is substantial, as provided in Section 409A.

      2.44 Termination of Employment . The termination of the Holder’s employment relationship with the Company and all Affiliates.

ARTICLE III
ELIGIBILITY AND PARTICIPATION

      3.1 Eligibility . The persons who are eligible to receive Awards under the Plan are Employees.

      3.2 Participation . Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the Employees to whom Awards shall be granted and shall determine the nature and amount of each Award.

ARTICLE IV
GENERAL PROVISIONS RELATING TO AWARDS

      4.1 Authority to Grant Awards . The Committee may grant Awards to those Employees as the Committee shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of Stock or other value to be covered by any Award to be granted under the Plan shall be as determined by the Committee in its sole discretion. However, the Chief Executive Officer of the Company is authorized to grant Options, with respect to no more than 10,000 shares of Stock per

Fiscal Year, as inducements to hire prospective Employees who will not be officers of the Company subject to the provisions of Section 16 of the Exchange Act.

      4.2 Dedicated Shares; Maximum Awards . The aggregate maximum number of shares of Stock reserved for issuance under the Plan is 6,000,000 shares of Stock. The aggregate number of shares of Stock with respect to which Full Value Awards may be granted under the Plan is 2,750,000. The aggregate number of shares of Stock with respect to which Options may be granted under the Plan is 5,250,000. The maximum number of shares of Stock with respect to which Options may be granted to an Employee during a Fiscal Year is 562,500. The maximum number of shares of Stock with respect to which any Full Value Award may be granted to an Employee during a Fiscal Year may not exceed 187,500. Each of the foregoing numerical limits stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. The number of shares of Stock stated in this Section 4.2 shall also be increased by such number of shares of Stock as become subject to substitute Awards granted pursuant to Article X; provided, however, that such increase shall be conditioned upon the approval of the stockholders of the Company to the extent stockholder approval is required by law or applicable stock exchange rules. If shares of Stock are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such shares of Stock will count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. If Shares are tendered in payment of an Option Price of an Option, such shares of Stock will not be added to the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. To the extent that any outstanding Award is forfeited or cancelled for any reason, the shares of Stock allocable to such portion of the Award may again be subject to an Award granted under the Plan.

      4.3 Non-Transferability . Except as specified in the applicable Award Agreements, Awards shall not be transferable by the Holder other than by will or under the laws of descent and distribution, and shall be exercisable, during the Holder’s lifetime, only by him or her. In the discretion of the Committee, any attempt to transfer an Award other than under the terms of the Plan and the applicable Award Agreement may terminate the Award.

      4.4 Requirements of Law . The Company shall not be required to sell or issue any shares of Stock under any Award if issuing those shares of Stock would constitute or result in a violation by the Holder or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be required to issue any shares of Stock unless the Committee has received evidence satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable securities laws of any country or any political subdivision. In the event the shares of Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law, or, should the shares of Stock be represented by book or electronic entry rather than a

certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause or enable the exercise of an Option or any other Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of any governmental authority.

      4.5 Changes in the Company’s Capital Structure . The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

     (a) If the Company shall effect a subdivision or consolidation of Stock or other capital readjustment, the payment of a Stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (1) the number, class or series and per share price of Stock subject to outstanding Options or other Awards under the Plan shall be appropriately adjusted in such a manner as to entitle a Holder to receive upon exercise of an Option or other Award, for the same aggregate cash consideration, the equivalent total number and class or series of Stock the Holder would have received had the Holder exercised his or her Option or other Award in full immediately prior to the event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class or series of Stock then reserved, that number and class or series of Stock that would have been received by the owner of an equal number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the adjustment.

     (b) If while unexercised Options or other Awards remain outstanding under the Plan (1) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (2) the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as defined under section 424(a) of the Code and applicable Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this sentence (each such event is referred to herein as a “ Corporate Change ”), then, except as otherwise provided in an Award Agreement (provided that such exceptions shall not apply in the case of a reincorporation merger), or as a result of the Committee’s effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Award then outstanding may be exercised, and no later than ten days after the approval by the stockholders of the Company of such Corporate Change, the Committee, acting in its sole and absolute discretion without the consent or approval of any Holder, shall act to effect one or more

of the following alternatives, which may vary among individual Holders and which may vary among Awards held by any individual Holder (provided that, with respect to a reincorporation merger in which Holders of the Company’s ordinary shares will receive one ordinary share of the successor corporation for each ordinary share of the Company, none of such alternatives shall apply and, without Committee action, each Award shall automatically convert into a similar award of the successor corporation exercisable for the same number of ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock of the Company):

     (i) accelerate the time at which some or all of the Awards then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all such Awards that remain unexercised and all rights of Holders thereunder shall terminate;

     (ii) with respect to all or selected Holders, have some or all of their then outstanding Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change and which is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the Stock subject to the Award immediately after the assumption or substitution over the aggregate exercise price of such Stock is equal to the excess of the aggregate fair market value of all Stock subject to the Award immediately before such assumption or substitution over the aggregate exercise price of such Stock, and (B) the assumed rights under such existing Award or the substituted rights under such new Award as the case may be will have the same terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be;

     (iii) provide that the number and class or series of Stock covered by an Award (whether vested or unvested) theretofore granted shall be adjusted so that such Award when exercised shall thereafter cover the number and class or series of Stock or other securities or property (including, without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the Holder had been the holder of record of the number of shares of Stock then covered by such Award; or

     (iv) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine in its sole and absolute discretion that no such adjustment is necessary).

     In effecting one or more of alternatives in paragraphs (3), (4) or (5) immediately above, and except as otherwise may be provided in an Award Agreement, the Committee, in its sole and absolute discretion and without the consent or approval of any Holder, may accelerate the time at which some or all Awards then outstanding may be exercised.

     (c) In the event of changes in the outstanding Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 4.5, any outstanding Award and any Award Agreements evidencing such Award shall be subject to adjustment by the Committee in its sole and absolute discretion as to the number and price of Stock or other consideration subject to such Award. In the event of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.

     (d) After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each Holder shall be entitled to have his Restricted Stock appropriately adjusted based on the manner in which the shares of Stock were adjusted under the terms of the agreement of merger or consolidation.

     (e) The issuance by the Company of stock of any class or series, or securities convertible into, or exchangeable for, stock of any class or series, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon conversion or exchange of stock or obligations of the Company convertible into, or exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the number, class or series, or price of shares of Stock then subject to outstanding Options or other Awards.

     (f) In the event of a Change in Control of the Company, all Awards previously granted to Employees that are not already fully vested and exercisable, shall become immediately vested and fully exercisable upon such a Change in Control.

      4.6 Election Under Section 83(b) of the Code . No Holder shall exercise the election permitted under section 83(b) of the Code with respect to any Award without the written approval of the Chief Financial Officer of the Company. Any Holder who makes an election under section 83(b) of the Code with respect to any Award without the written approval of the Chief Financial Officer of the Company may, in the discretion of the Committee, forfeit any or all Awards granted to him or her under the Plan.

      4.7 Forfeiture for Cause . Notwithstanding any other provision of the Plan or an Award Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination of Employment (a) committed fraud, embezzlement, theft, felony or an act of dishonesty in the course of his employment by the Company or an Affiliate which conduct damaged the Company or an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then as of the date the Committee makes its finding, any Awards awarded to the Holder

that have not been exercised by the Holder (including all Awards that have not yet vested) will be forfeited to the Company. The findings and decision of the Committee with respect to such matter, including those regarding the acts of the Holder and the damage done to the Company, will be final for all purposes. No decision of the Committee, however, will affect the finality of the discharge of the individual by the Company or an Affiliate.

      4.8 Forfeiture Events . The Committee may specify in an Award Agreement that the Holder’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, Termination of Employment for cause, termination of the Holder’s provision of services to the Company or its Affiliates, violation of material policies of the Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the business or reputation of the Company and its Affiliates.

      4.9 Compliance with Section 409A . Awards shall be designed and operated in such manner that they are either exempt from application of, or comply with, the requirements of Section 409A.

ARTICLE V
OPTIONS

      5.1 Authority to Grant Options . Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons in such number and upon such terms as the Committee shall determine.

      5.2 Type of Options Available . Except for Substitution Awards permitted under Article X, all Options granted under the Plan shall be nonqualified stock options that are not intended to satisfy the requirements of section 422 of the Code.

      5.3 Option Agreement . Each Option grant under the Plan shall be evidenced by an Option Agreement that shall specify (a) the Option Price, (b) the duration of the Option, (c) the number of shares of Stock to which the Option pertains, (d) the exercise restrictions, if any, applicable to the Option, and (e) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.

      5.4 Option Price . The price at which shares of Stock may be purchased under an Option (the “ Option Price ”) shall not be less than 100 percent (100%) of the Fair Market Value of the shares of Stock on the date the Option is granted. Subject to the limitation set forth in the preceding sentence of this Section 5.4, the Committee shall determine the Option Price for each grant of an Option under the Plan. Except as provided in Section 4.5, the Committee shall not directly or indirectly lower the Option Price of a previously granted Option.

      5.5 Duration of Options . An Option shall not be exercisable after the earlier of (i) the general term of the Option specified in Section 5.5(a), or (ii) the period of time specified herein that follows the Optionee’s death, Disability, Retirement or other Termination of Employment. Unless the Optionee’s applicable Option Agreement specifies otherwise, an

Option shall not continue to vest after the Optionee’s Termination of Employment for any reason other than the death or Disability of the Optionee.

     (a) General Term of Option. Unless the Option Agreement specifies a shorter general term, an Option shall expire on the tenth anniversary of the date the Option is granted.

     (b) Early Termination of Option Due to Termination of Employment Other Than for Death, Disability or Retirement . Except as may be otherwise expressly provided by the Committee in an Option Agreement, an Option shall terminate on the earlier of (1) the date of the expiration of the general term of the Option or (2) the date that is one day less than three months after the date of the Optionee’s Termination of Employment, whether with or without cause, for any reason other than the death, Disability or Retirement of the Optionee, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment. The Committee shall determine whether an authorized leave of absence, absence on military or government service, or any other absence from service shall constitute a termination of the employment relationship between the Optionee and the Company and all Affiliates.

     (c) Early Termination of Option Due to Death. Unless the Committee specifies otherwise in the applicable Option Agreement, in the event of the Optionee’s Termination of Employment due to death before the date of expiration of the general term of the Option, the Optionee’s Option shall terminate on the earlier of the date of expiration of the general term of the Option or the first anniversary of the date of the Optionee’s death, during which period the Optionee’s executors or administrators or such persons to whom such Options were transferred by will or by the laws of descent and distribution, shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of his death.

     (d) Early Termination of Option Due to Disability. Unless the Committee specifies otherwise in the applicable Option Agreement, in the event of the Termination of Employment due to Disability before the date of the expiration of the general term of the Option, the Optionee’s Option shall terminate on the earlier of the expiration of the general term of the Option or the first anniversary of the date of the Termination of Employment due to Disability, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment.

     (e) Early Termination of Option Due to Retirement. Unless the Committee specifies otherwise in the applicable Option Agreement, in the event of the Optionee’s Termination of Employment due to Retirement before the date of the expiration of the general term of the Option, the Optionee’s Option shall terminate on the earlier of the expiration of the general term of the Option or the third anniversary of the date of the

Termination of Employment due to Retirement, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment.

     After the death of the Optionee, the Optionee’s executors, administrators or any person or persons to whom the Optionee’s Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the termination of the Option to exercise the Option, in respect to the number of all of the remaining unexercised and unexpired shares of Stock subject to the Option.

      5.6 Amount Exercisable . Each Option may be exercised at the time, in the manner and subject to the conditions the Committee specifies in the Option Agreement in its sole discretion. Unless the Committee specifies otherwise in an applicable Option Agreement, an Option Agreement shall set forth the following terms regarding the exercise of the Option covered by the Option Agreement:

     (a) No Option granted under the Plan may be exercised until an Optionee has completed one year of continuous employment with the Company or any subsidiary of the Company following the date of grant;

     (b) Beginning on the day after the first anniversary of the date of grant, an Option may be exercised up to 1/3 of the shares subject to the Option;

     (c) After the expiration of each succeeding anniversary date of the date of grant, the Option may be exercised up to an additional 1/3 of the shares initially subject to the Option, so that after the expiration of the third anniversary of the date of grant, the Option shall be exercisable in full;

     (d) To the extent not exercised, installments shall be cumulative and may be exercised in whole or in part until the Option expires on the tenth anniversary of the date of grant.

     However, the Committee in its discretion, may change the terms of exercise so that any Option may be exercised so long as it is valid and outstanding from time to time in part or as a whole in such manner and subject to such conditions as the Committee may set. In addition, the Committee, in its discretion, may accelerate the time in which any outstanding Option may be exercised; provided, however, that the Committee’s discretion to accelerate the time in which any outstanding Option may be exercised shall, except as provided in Section 4.5 hereof, be limited to a Holder’s death, Disability, Retirement or, in the case of a Holder who is not an officer of the Company subject to the reporting requirements of Section 16 of the Exchange Act, involuntary termination of employment as the result of a reduction in force program approved by the Board. However, in no event shall any Option be exercisable on or after the tenth anniversary of the date of the grant of the Option.

      5.7 Exercise of Options .

     (a) General Method of Exercise . Subject to the terms and provisions of the Plan and an Optionee’s Option Agreement, Options may be exercised in whole or in part from time to time by the delivery of written notice in the manner designated by the Committee stating (1) that the Optionee wishes to exercise such option on the date such notice is so delivered, (2) the number of shares of Stock with respect to which the Option is to be exercised and (3) the address to which the certificate representing such shares of Stock should be mailed. Except in the case of exercise by a third party broker as provided below, in order for the notice to be effective the notice must be accompanied by payment of the Option Price by any combination of the following: (a) cash, certified check, bank draft or postal or express money order for an amount equal to the Option Price under the Option, (b) Mature Shares with a Fair Market Value on the date of exercise equal to the Option Price under the Option (if approved in advance by the Committee or an executive officer of the Company), (c) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee or an executive officer of the Company) or (d) except as specified below, any other form of payment which is acceptable to the Committee. If Mature Shares are used for payment by the Optionee, the aggregate Fair Market Value of the shares of Stock tendered must be equal to or less than the aggregate Option Price of the shares of Stock being purchased upon exercise of the Option, and any difference must be paid by cash, certified check, bank draft or postal or express money order payable to the order of the Company.

     Whenever an Option is exercised by exchanging shares of Stock owned by the Optionee, the Optionee shall deliver to the Company or its delegate certificates registered in the name of the Optionee representing a number of shares of Stock legally and beneficially owned by the Optionee, free of all liens, claims, and encumbrances of every kind, accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by the certificates, (with signature guaranteed by a commercial bank or trust company or by a brokerage firm having a membership on a registered national stock exchange). The delivery of certificates upon the exercise of Option is subject to the condition that the person exercising the Option provide the Company with the information the Company might reasonably request pertaining to exercise, sale or other disposition of an Option.

     (b) Issuance of Shares . Subject to Section 4.4 and Section 5.7(c), as promptly as practicable after receipt of written notification and payment, in the form permitted under Section 13.3, of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option, the Company shall deliver to the Optionee certificates for the number of shares with respect to which the Option has been exercised, issued in the Optionee’s name. Delivery of the shares shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to the Optionee, at the address specified by the Optionee.

     (c) Limitations on Exercise Alternatives . The Committee shall not permit an Optionee to pay such Optionee’s Option Price upon the exercise of an Option by having the Company reduce the number of shares of Stock that will be delivered pursuant to the exercise of the Option. In addition, the Committee shall not permit an Optionee to pay

such Optionee’s Option Price upon the exercise of an Option by using shares of Stock other than Mature Shares. An Option may not be exercised for a fraction of a share of Stock.

      5.8 Transferability of Options . Except as otherwise provided in an Optionee’s Option Agreement, no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in an Optionee’s Option Agreement, all Options granted to an Optionee under the Plan shall be exercisable during his or her lifetime only by such Optionee. Any attempted assignment of an Option in violation of this Section 5.8 shall be null and void.

      5.9 No Rights as Stockholder . An Optionee shall not have any rights as a stockholder with respect to Stock covered by an Option until he exercises the Option; and, except as otherwise provided in Section 4.5, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of such exercise.

ARTICLE VI
RESTRICTED STOCK AWARDS

      6.1 Restricted Stock Awards . The Committee may make Awards of Restricted Stock to eligible persons selected by it. The amount of, the vesting and the transferability restrictions applicable to any Restricted Stock Award shall be determined by the Committee in its sole discretion. If the Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to Restricted Stock, the Committee may issue such instructions to the Company’s share transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for shares of Stock issued pursuant to a Restricted Stock Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law.

      6.2 Restricted Stock Award Agreement . Each Restricted Stock Award shall be evidenced by an Award Agreement that contains any vesting, transferability restrictions and other provisions not inconsistent with the Plan as the Committee may specify.

      6.3 Award Vesting . Unless otherwise provided by the Committee, Restricted Stock Awards shall vest ratably over a minimum of three years. The Committee shall have the discretion to accelerate the vesting of a Restricted Stock Award only in the event of a Holder’s death, Disability, Retirement or, in the case of a Holder who is not an officer of the Company subject to the reporting requirements of Section 16 of the Exchange Act, involuntary termination of employment as the result of a reduction in force program approved by the Board.

      6.4 Holder’s Rights as Stockholder . Subject to the terms and conditions of the Plan, each recipient of a Restricted Stock Award shall have all the rights of a stockholder with respect to the shares of Restricted Stock included in the Restricted Stock Award during the Period of Restriction established for the Restricted Stock Award. Dividends paid with respect to

Restricted Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be paid to the recipient of the Restricted Stock Award only at such time as the vesting restrictions on the Restricted Stock Award are satisfied and shall be paid as soon as administratively practicable following satisfaction of the vesting restrictions on the Restricted Stock; and in all instances within two and one-half (2 ¹ / 2 ) months after the end of the Fiscal Year in which the Substantial Risk of Forfeiture lapses with respect to the Restricted Stock Award. Forfeiture of the underlying Restricted Stock Award shall result in a forfeiture of any dividends paid with respect to the Restricted Stock Award. Dividends paid in shares of Stock or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock. During the Period of Restriction, certificates representing the Restricted Stock shall be registered in the Holder’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock, and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and the applicable Restricted Stock Award Agreement. Such certificates shall be deposited by the recipient with the Secretary of the Company or such other officer of the Company as may be designated by the Committee, together with all stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock which shall be forfeited in accordance with the Plan and the applicable Restricted Stock Award Agreement.

ARTICLE VII
DEFERRED STOCK UNIT AWARDS

      7.1 Authority to Grant Deferred Stock Unit Awards . Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Deferred Stock Unit Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the transferability restrictions applicable to any Deferred Stock Unit Award shall be determined by the Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account which reflects the number of Deferred Stock Units credited under the Plan for the benefit of a Holder.

      7.2 Deferred Stock Unit Awards . A Deferred Stock Unit Award shall be similar in nature to Restricted Stock Award except that no shares of Stock are actually transferred to the Holder until a later date specified in the applicable Award Agreement. Each Deferred Stock Unit shall have a value equal to the Fair Market Value of a share of Stock.

      7.3 Award Vesting . Unless otherwise provided by the Committee, Deferred Stock Unit Awards shall vest ratably over a minimum of three years. The Committee shall have the discretion to accelerate the vesting of a Deferred Stock Unit Award only in the event of a Holder’s death, Disability, Retirement or, in the case of a Holder who is not an officer of the Company subject to the reporting requirements of Section 16 of the Exchange Act, involuntary termination of employment as the result of a reduction in force program approved by the Board.

      7.4 Deferred Stock Unit Award Agreement . Each Deferred Stock Unit Award shall be evidenced by an Award Agreement that contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment provisions and other provisions not inconsistent with the Plan as the Committee may specify.

      7.5 Form of Payment Under Deferred Stock Unit Award . Payment under a Deferred Stock Unit Award shall be made in either cash or shares of Stock as specified in the Holder’s Award Agreement.

      7.6 Time of Payment Under Deferred Stock Unit Award . A Holder’s payment under a Deferred Stock Unit Award shall be made at such time as is specified in the Holder’s Award Agreement. The Award Agreement shall specify that the payment will be made (1) by a date that is no later than the date that is two and one-half (2 1/2) months after the end of the Fiscal Year in which the Deferred Stock Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) to the extent provided under an Award Agreement, at a time that is permitted under Article XI hereof.

      7.7 Holder’s Rights as Stockholder . A Holder of a Deferred Stock Unit Award shall have no rights of a stockholder with respect to the Deferred Stock Unit Award. A Holder shall have no voting rights with respect to any Deferred Stock Unit Award.

ARTICLE VIII
PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

      8.1 Authority to Grant Performance Stock Awards and Performance Unit Awards . Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Performance Stock Awards and Performance Unit Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the transferability restrictions applicable to any Performance Stock Award or Performance Unit Award shall be based upon the attainment of such Performance Goals as the Committee may determine. If the Committee imposes vesting or transferability restrictions on a recipient’s rights with respect to Performance Stock or Performance Unit Awards, the Committee may issue such instructions to the Company’s share transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for shares of Stock issued pursuant to a Performance Stock or Performance Unit Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law.

      8.2 Performance Goals . A Performance Goal must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units of the Company, or the Company as a whole, with reference to one or more of the following: earnings per share, earnings per share growth, total shareholder return, economic value added, cash return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income, stock price, market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, shareholder value, net cash flow, operating income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost ratios (per employee or per customer), proceeds from dispositions, project completion time and

budget goals, net cash flow before financing activities, customer growth and total market value. Goals may also be based on performance relative to a peer group of companies. Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and Performance Stock or Performance Unit Awards, it is intended that the Plan will conform with the standards of section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Stock or Performance Unit Awards made pursuant to the Plan shall be determined by the Committee.

      8.3 Award Vesting . Unless otherwise provided by the Committee, Performance Stock Awards and Performance Unit Awards shall vest ratably over a minimum of three years. The Committee shall have the discretion to accelerate the vesting of a Performance Stock Award or a Performance Unit Award only in the event of a Holder’s death, Disability, Retirement or, in the case of a Holder who is not an officer of the Company subject to the reporting requirements of Section 16 of the Exchange Act, involuntary termination of employment as the result of a reduction in force program approved by the Board.

      8.4 Time of Establishment of Performance Goals . A Performance Goal for a particular Performance Stock Award or Performance Unit Award must be established by the Committee prior to the earlier to occur of (a) 90 days after the commencement of the period of service to which the Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain.

      8.5 Written Agreements . Each Performance Stock Award or Performance Unit Award shall be evidenced by an Award Agreement that contains any vesting, transferability restrictions and other provisions not inconsistent with the Plan as the Committee may specify.

      8.6 Form of Payment Under Performance Unit Award . Payment under a Performance Unit Award shall be made in either cash or shares of Stock as specified in the Holder’s Award Agreement.

      8.7 Time of Payment Under Performance Unit Award . A Holder’s payment under a Performance Unit Award shall be made at such time as is specified in the Holder’s Award Agreement. The Award Agreement shall specify that the payment will be made (1) by a date that is no later than the date that is two and one-half (2 1/2) months after the end of the Fiscal Year in which the Performance Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) to the extent provided under an Award Agreement, at a time that is permitted under Article XI hereof.

      8.8 Holder’s Rights as Stockholder With Respect to a Performance Unit Award . A Holder of a Performance Unit Award shall have no rights of a stockholder with respect to the

Performance Unit Award. A Holder shall have no voting rights with respect to any Performance Unit Award.

      8.9 Holder’s Rights as Stockholder With Respect to a Performance Stock Award . Subject to the terms and conditions of the Plan, each Holder of a Performance Stock Award shall have all the rights of a stockholder with respect to the shares of Stock issued to the Holder pursuant to the Award during any period in which such issued shares of Stock are subject to forfeiture and restrictions on transfer, including without limitation, the right to vote such shares of Stock, if unrestricted shares of Stock of the same class have the right to vote. Dividends paid with respect to Performance Stock Awards in cash or property other than shares of Stock or rights to acquire shares of Stock shall be paid to the Holder as soon as administratively practicable after such time as the vesting restrictions on the Performance Stock Awards are satisfied, but in all events within two and one-half (2 ¹ / 2 ) months after the end of the Fiscal Year in which the Performance Stock Award is no longer subject to a Substantial Risk of Forfeiture. Forfeiture of the underlying Performance Stock Award shall result in a forfeiture of any dividends paid with respect to the Performance Stock Award. Dividends paid in shares of Stock or rights to acquire shares of Stock shall be added to and become a part of the Performance Stock Award.

      8.10 Increases Prohibited . None of the Committee or the Board may increase the amount of compensation payable under a Performance Stock or Performance Unit Award. If the time at which a Performance Stock or Performance Unit Award will vest is accelerated for any reason, the number of shares of Stock subject to the Performance Stock or Performance Unit Award shall be reduced pursuant to Department of Treasury Regulation section 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.

      8.11 Stockholder Approval . No payments of Stock or cash will be made pursuant to this Article VIII unless the stockholder approval requirements of Treasury Regulation section 1.162-27(e)(4) are satisfied.

ARTICLE IX
CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS

      9.1 Authority to Grant Cash-Based Awards . Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to Employees in such amounts and upon such terms, including the achievement of specific performance goals, as the Committee shall determine.

      9.2 Authority to Grant Other Stock-Based Awards . The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms and provisions of the Plan (including the grant or offer for sale of unrestricted shares of Stock) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual shares of Stock to Holders, or payment in cash or otherwise of amounts based on the value of shares of Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

      9.3 Value of Cash-Based and Other Stock-Based Awards . Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of shares of Stock or units based on shares of Stock, as determined by the Committee. The Committee may establish performance goals in its discretion for Cash-Based Awards and Other Stock-Based Awards. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Holder will depend on the extent to which the performance goals are met.

      9.4 Payment of Cash-Based Awards and Other Stock-Based Awards . A Holder’s payment under a Cash-Based Award or an Other Stock-Based Award shall be made at such time as is specified in the Holder’s Award Agreement. The Award Agreement shall specify that the payment will be made (1) by a date that is no later than the date that is two and one-half (2 ¹ / 2 ) months after the end of the Fiscal Year in which the Cash-Based Award or Other Stock-Based Award is no longer subject to a Substantial Risk of Forfeiture or (2) to the extent provided under an Award Agreement, at a time that is permitted under Article XI hereof.

      9.5 Termination of Employment . The Committee shall determine the extent to which a grantee’s rights with respect to Cash-Based Awards and Other Stock-Based Awards shall be affected by the Holder’s Termination of Employment. Such provisions shall be determined in the sole discretion of the Committee and need not be uniform among all Awards of Cash-Based Awards and Other Stock-Based Awards issued pursuant to the Plan.

      9.6 Nontransferability . Except as otherwise determined by the Committee, neither Cash-Based Awards nor Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided by the Committee, a Holder’s rights under the Plan, if exercisable, shall be exercisable during his or her lifetime only by such Holder.

ARTICLE X
SUBSTITUTION AWARDS

     Awards may be granted under the Plan from time to time in substitution for stock options and other awards held by employees of other entities who are about to become Employees, or whose employer is about to become an Affiliate as the result of a merger or consolidation of the Company with another corporation, or the acquisition by the Company of substantially all the assets of another corporation, or the acquisition by the Company of at least 50 percent (50%) of the issued and outstanding stock of another corporation as the result of which such other corporation will become a subsidiary of the Company. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the Award in substitution for which they are granted, but with respect to Options that are incentive stock options, no such variation shall be such as to affect the status of any such substitute Option as an incentive stock option under section 422 of the Code.

ARTICLE XI
SECTION 409A COMPLIANCE

      11.1 Payment Events . It is the intention of the Company that no Award shall be “deferred compensation” subject to Section 409A unless and to the extent that the Committee specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly. If the Committee determines that an Award is subject to Section 409A, then the Award shall be paid or settled only upon the Holder’s death, Section 409A Disability, Separation from Service, or upon a Section 409A Change of Control, or upon such other date(s) or pursuant to a schedule designated by the Committee, all of such events only as specified in the applicable Award Agreement, and subject to the following provisions:

     (a) Delay for Specified Employees . Notwithstanding any provision of this Plan or the terms of an Award Agreement to the contrary, an Award that is granted to a Specified Employee and that is to be paid or settled upon such Specified Employee’s Separation from Service shall not be paid or settled prior to the earlier of (i) the first day of the seventh (7th) month following the date of such Specified Employee’s Separation from Service or (ii) the Specified Employee’s death.

     (b) Distribution in the Event of Income Inclusion Under Section 409A . If an Award fails to meet the requirements of Section 409A, the Holder may receive payment in connection with the Award before the Award would otherwise be paid, provided, however, that the amount paid to the Holder shall not exceed the lesser of: (i) the amount payable under such Award, or (ii) the amount to be reported pursuant to Section 409A on the applicable Form W-2 (or Form 1099) as taxable income to the Holder.

     (c) Distribution Necessary to Satisfy Applicable Tax Withholding . If the Company is required to withhold amounts to pay the Holder’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a) or 3121(v)(2) of the Code with respect to an amount that is or will be paid to the Holder under the Award before the amount otherwise would be paid, the Committee may withhold an amount equal to the lesser of: (i) the amount payable under such Award, or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.

     (d) Delay in Payments Subject to Section 162(m) of the Code . In the event the Company reasonably anticipates that the payment of benefits under an Award would result in the loss of the Company’s Federal income tax deduction with respect to such payment due to the application of Section 162(m) of the Code, the Committee may delay the payment of all such benefits under the Award until (i) the first taxable year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment were made during such year, the deduction of such payment would not be barred by application of Section 162(m) of the Code or (ii) during the period beginning with the date of the Holder’s Separation from Service (or, for Specified Employees, the date that is six (6) months after the date of the Holder’s Separation from Service) and ending on the later of (A) the last day of the taxable year of the Company that includes such date or (B) the 15th day of the third month following the date of the Holder’s Separation from

Service (or, for Specified Employees, the date that is six (6) months after the date of the Holder’s Separation from Service).

     (e) 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 under an Award would violate Federal securities laws or other applicable law, the Committee may delay the payment until the earliest date at which the Company reasonably anticipates that making of such payment would not cause such violation.

     (f) 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 under an Award would jeopardize the ability of the Company to continue as a going concern, the Committee may delay the payment of benefits until the first calendar year in which the Company notifies the Committee that the payment of benefits would not have such effect.

     (g) Administrative Delay in Payment . In the case of administrative necessity, the payment of benefits under an Award 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 Holder (or following the Holder’s death, the Holder’s beneficiary), it is not administratively practicable to calculate the amount of benefits due to the Holder 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.

      11.2 No Holder Election . Notwithstanding the foregoing provisions of this Article XI, if the period during which payment of benefits under an Award will be made occurs, or will occur, in two calendar years, the Holder shall not be permitted to elect the calendar year in which the payment shall be made.

ARTICLE XII
ADMINISTRATION

      12.1 Awards . The Plan shall be administered by the Committee or, in the absence of the Committee, the Plan shall be administered by the Board. The members of the Committee shall serve at the discretion of the Board. The Committee shall have full and exclusive power and authority to administer the Plan and to take all actions that the Plan expressly contemplates or are necessary or appropriate in connection with the administration of the Plan with respect to Awards granted under the Plan.

      12.2 Authority of the Committee . The Committee shall have full and exclusive power to interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote

of a majority of those members present at any meeting shall decide any question brought before that meeting. Any decision or determination reduced to writing and signed by a majority of the members shall be as effective as if it had been made by a majority vote at a meeting properly called and held. All questions of interpretation and application of the Plan, or as to Awards granted under the Plan, shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and final authority and discretion, including but not limited to the following rights, powers and authorities, to:

     (a) determine the persons to whom and the time or times at which Awards will be made;

     (b) determine the number and exercise price of shares of Stock covered in each Award, subject to the terms and provisions of the Plan;

     (c) determine the terms, provisions and conditions of each Award, which need not be identical and need not match the default terms set forth in the Plan;

     (d) accelerate the time at which any outstanding Award will vest;

     (e) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and

     (f) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan.

     The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary or desirable to further the Plan’s objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan. As permitted by law and the terms and provisions of the Plan, the Committee may delegate its authority as identified in Section 12.3.

     The actions of the Committee in exercising all of the rights, powers, and authorities set out in this Article XII and all other Articles of the Plan, when performed in good faith and in its sole judgment, shall be final, conclusive and binding on all persons. The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such persons.

      12.3 Decisions Binding . All determinations and decisions made by the Committee or the Board, as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Holders and the estates and beneficiaries of Employees and Holders.

      12.4 No Liability . Under no circumstances shall the Company, the Board or the Committee incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company’s, the Committee’s or the Board’s roles in connection with the Plan.

ARTICLE XIII
AMENDMENT OR TERMINATION OF PLAN

      13.1 Amendment, Modification, Suspension, and Termination . Subject to Section 13.2 the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s stockholders and except as provided in Section 4.5, the Committee shall not directly or indirectly lower the Option Price of a previously granted Option, and no amendment of the Plan shall be made without stockholder approval if stockholder approval is required by applicable law or stock exchange rules.

      13.2 Awards Previously Granted . Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Holder holding such Award.

      13.3 Payment or Settlement of Award Upon Termination of Plan . Upon termination of the Plan, the Company may settle any outstanding Award that is not subject to Section 409A as soon as is practicable following such termination and may settle any outstanding Award that is subject to Section 409A in accordance with one of the following:

     (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 Holders’ 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 Committee within the thirty (30) days preceding or the twelve (12) months following a Section 409A Change in Control; provided that all Aggregated Plans are terminated and liquidated with respect to each Holder who experienced the Section 409A Change in Control, so that under the terms of the termination and liquidation, all such Holders 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 Committee irrevocably takes all necessary action to terminate and liquidate this Plan and the Committee takes all necessary action to terminate and liquidate such other Aggregated Plans; or

     (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 Committee terminates and liquidates all Aggregated Plans; (3) no payments in liquidation of this Plan are made within twelve (12) months of the date the Committee 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 Committee 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 Committee irrevocably takes all action necessary to terminate and liquidate the Plan.

ARTICLE XIV
MISCELLANEOUS

      14.1 Unfunded Plan/No Establishment of a Trust Fund . Holders shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Affiliates may make to aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in the Plan. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the Company for the payment of any benefit which becomes payable under the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

      14.2 No Employment Obligation . The granting of any Award shall not constitute an employment contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ or continue to employ, or utilize the services of, any Holder. The right of the Company or any Affiliate to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate any Holder’s employment at any time or for any reason not prohibited by law.

      14.3 Tax Withholding . The Company or any Affiliate shall be entitled to deduct from other compensation payable to each Holder any sums required by federal, state or local tax law (or such greater amount as the Holder may elect) to be withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award. In the alternative, the Company may require the Holder (or other person validly exercising the Award) to pay such sums (or such greater amount as the Holder may elect) for taxes directly to the Company or any Affiliate in cash or by check within one day after the date of vesting, exercise or lapse of restrictions. In the

discretion of the Committee, and with the consent of the Holder, the Company may reduce the number of shares of Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding Obligation arising upon the vesting of an Award by delivering to the Holder a reduced number of shares of Stock in the manner specified herein. If permitted by the Committee and acceptable to the Holder, at the time of vesting of shares under the Award, the Company shall (a) calculate the amount of the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption that all such shares of Stock vested under the Award are made available for delivery, (b) reduce the number of such shares of Stock made available for delivery so that the Fair Market Value of the shares of Stock withheld on the vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation and (c) in lieu of the withheld shares of Stock, remit cash to the United States Treasury and other applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding Obligation. The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the withheld shares of Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum withholding obligation in some other manner permitted under this Section 14.3. The withheld shares of Stock not made available for delivery by the Company shall be retained as treasury shares or will be cancelled and, in either case, the Holder’s right, title and interest in such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of restrictions on Restricted Stock until the Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax Withholding Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold.

      14.4 Written Agreement . Each Award shall be embodied in a written or electronic agreement or statement which shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed, written or electronically, by a member of the Committee on behalf of the Committee and the Company or by an executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed, written or electronically, by the Holder to the extent required by the Committee. The Award Agreement may specify the effect of a Change in Control on the Award. The Award Agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan. “Electronic agreement” means an agreement created, generated, sent, communicated, received or stored by electronic means. An electronic signature shall be accomplished by an electronic symbol or process attached to or logically associated with an electronic agreement and executed or adopted by a person with intent to sign the agreement.

      14.5 Indemnification of the Committee . The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further action on his or her part to indemnity from the Company for, all expenses

(including attorney’s fees, the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by such member in connection with or arising out of any action, suit or proceeding in which such member may be involved by reason of such member being or having been a member of the Committee, whether or not he or she continues to be a member of the Committee at the time of incurring the expenses, including, without limitation, matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been negligent in the performance of such member’s duty as a member of the Committee. However, this indemnity shall not include any expenses incurred by any member of the Committee in respect of matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as a member of the Committee. In addition, no right of indemnification under the Plan shall be available to or enforceable by any member of the Committee unless, within 60 days after institution of any action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. This right of indemnification shall inure to the benefit of the heirs, executors or administrators of each member of the Committee and shall be in addition to all other rights to which a member of the Committee may be entitled as a matter of law, contract or otherwise.

      14.6 Gender and Number . If the context requires, words of one gender when used in the Plan shall include the other and words used in the singular or plural shall include the other.

      14.7 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

      14.8 Headings . Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms and provisions of the Plan.

      14.9 Other Compensation Plans . The adoption of the Plan shall not affect any other option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation arrangements for Employees.

      14.10 Other Awards . The grant of an Award shall not confer upon the Holder the right to receive any future or other Awards under the Plan, whether or not Awards may be granted to similarly situated Holders, or the right to receive future Awards upon the same terms or conditions as previously granted.

      14.11 Successors . All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

      14.12 Law Limitations/Governmental Approvals . The granting of Awards and the issuance of shares of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

      14.13 Delivery of Title . The Company shall have no obligation to issue or deliver evidence of title for shares of Stock issued under the Plan prior to:

     (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

     (b) completion of any registration or other qualification of the Stock under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

      14.14 Inability to Obtain Authority . The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such shares of Stock as to which such requisite authority shall not have been obtained.

      14.15 Investment Representations . The Committee may require any person receiving Stock pursuant to an Award under the Plan to represent and warrant in writing that the person is acquiring the Shares for investment and without any present intention to sell or distribute such Stock.

      14.16 Persons Residing Outside of the United States . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company or any of its Affiliates operates or has Employees, the Committee, in its sole discretion, shall have the power and authority to:

     (a) determine which Affiliates shall be covered by the Plan;

     (b) determine which persons employed outside the United States are eligible to participate in the Plan;

     (c) amend or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to persons who reside outside the United States;

     (d) establish subplans and modify exercise procedures and other terms and procedures to the extent such actions may be necessary or advisable — any subplans and modifications to Plan terms and procedures established under this Section 13.16 by the Committee shall be attached to the Plan document as Appendices; and

     (e) take any action, before or after an Award is made, that it deems advisable to obtain or comply with any necessary local government regulatory exemptions or approvals.

     Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law or governing statute or any other applicable law.

      14.17 No Fractional Shares . No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards, or other property shall be issued or paid in lieu of fractional shares of Stock or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

      14.18 Arbitration of Disputes . Any controversy arising out of or relating to the Plan or an Award Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of the American Arbitration Association. The arbitration shall be final and binding on the parties.

      14.19 Governing Law . The provisions of the Plan and the rights of all persons claiming thereunder shall be construed, administered and governed under the laws of the State of Texas.

      IN WITNESS WHEREOF, this Plan has been executed this 12 ^th day of December, 2008, effective as of January 1, 2009.

		TESORO CORPORATION
		By:		/s/ SUSAN A. LERETTE
		Title:		SVP, Administration

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,

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.

      “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.

     (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

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 (7 ^th ) 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

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.

      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

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 15 ^th 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

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

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.

     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

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;

     (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.

      7.12 Effective Date.

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

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.

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.

      “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.

      “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.

      “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

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

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.

     (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”).

     (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

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

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

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

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 15 ^th 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.

      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.

     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.

      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

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,

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

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

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.

EXHIBIT 10.7

THIRD AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Third Amendment (the “Amendment”) is entered into as of December 12, 2008 (the “Effective Date”) as an amendment to the Amended and Restated Employment Agreement entered into by and between Tesoro Corporation (the “Company”) and Bruce A. Smith (the “Executive”) as of December 3, 2003, as subsequently amended (the “Agreement”).

     In consideration of the mutual promises, covenants and conditions set forth herein, including but not limited to Executive’s employment and the payments and benefits described herein, the sufficiency of which is hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Section 4 of the Agreement is hereby amended by deleting the first paragraph of subsection (f) thereof to read as follows:

     (f) SUPPLEMENTAL ANNUAL RETIREMENT BENEFIT. Executive shall be entitled to participate in the Company’s Amended and Restated Executive Security Plan as currently in effect or as amended hereafter, but excluding any such amendment which would reduce Executive’s benefits thereunder, and shall receive a benefit upon his Separation from Service for any reason, other than for Cause, in an amount calculated under such plan using the greater of (i) his actual “Service” or (ii) 20 years of “Service” and payable in the form of a lump sum payable first day of the seventh (7 ^th ) calendar month following Executive’s Separation from Service, determined using the actuarial equivalent of an unreduced single life annuity with a 50% right of survivorship to his current spouse, Gail H. Smith if she survives Executive.

     2. Section 19 of the Agreement is hereby amended by inserting the following subsection (f) to read as follows:

     (f) DEFERRED COMPENSATION. This Agreement is, to the extent applicable, intended to meet the requirements of Section 409A of the Code and shall be administered, construed and interpreted in a manner that is intended to meet those requirements. Notwithstanding any provision of this Agreement to the contrary, for purposes of determining the timing of any payment under this Agreement that is subject to Code Section 409A and is required to be made upon the Executive’s termination of

employment, the Executive’s employment shall not be considered terminated until he has experienced a separation from service. For purposes of this Agreement, a “separation from service” occurs when the Company and the Executive reasonably anticipate a permanent reduction in the level of bona fide services performed by the Executive for the Company and its affiliates to 20% or less of the average level of bona fide services performed by the Executive for the Company and its affiliates (whether as an employee or an independent contractor) in the immediately preceding thirty-six (36) months. The determination of whether a separation from service has occurred shall be made by the Compensation Committee in accordance with the provisions of Section 409A.

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

				TESORO CORPORATION
				/s/ Charles S. Parrish
Date: December 12, 2008				By: Charles S. Parrish
				Title: Senior Vice President, General Counsel & Secretary
Date: December 15, 2008				/s/ Bruce A. Smith
Address: 400 Elizabeth                San Antonio, Texas 78209				Bruce A. Smith, Executive