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 originally established as a
restatement and amendment of the Tesoro Executive Post Retirement
Benefit Plan and Tesoro Executive Death Benefit Plan. The Plan, as
amended and restated is intended to conform to the requirements of
Section 409A of the Internal Revenue Code with regard to
amounts not earned and vested as of December 31, 2004. With
regard to those amounts earned and vested as of December 31,
2004, there is intended to be no material modifications to those
grandfathered benefits and the terms of the Plan in effect
immediately prior to the Amended and Restated Executive Security
Plan shall govern grandfathered benefits.
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1.1
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“Affiliate” means any
corporation, partnership or other organization which, during any
period of employment of a Participant, was at least 50% controlled
by the Company or an affiliate of the Company.
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1.2
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‘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 Internal Revenue 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.
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1.3
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“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.
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1.4
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“Change of 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 nominate 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 Act), other than Company or a subsidiary
thereof or any employee benefit plan sponsored by Company or a
subsidiary thereof, shall become the beneficiary owner (within the
meaning of Rule 13c-3 under the Securities Act) of securities
of Company representing 35 percent or more of the combined
voting power of Company’s then outstanding securities
ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, and
(B) at any time during a period of one-year thereafter,
individuals who immediately prior to the beginning of such period
constituted the Board of Directors of Company shall cease for any
reason to constitute at least a majority thereof, unless election
or the nomination by the Board of Directors for election by
Company’s shareholders of each new director during such
period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such period.
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1
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1.5
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“Committee” means the
Tesoro Corporation Employee Benefits Committee appointed by the
Board of Directors of the company.
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1.6
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“Company” means Tesoro
Corporation.
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1.7
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“Earnings” shall mean
the amount determined by dividing a Participant’s aggregate
Basic Compensation for the three (3) calendar years out of the
last seven (7) calendar years (including the year of such
Participant’s Retirement) for which the Participant’s
Basic Compensation was the greatest by the number of full calendar
months of employment during such three (3)-calendar year
period.”
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1.8
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“Grandfathered
Participant” means a Participant who had attained age 60 and
completed 5 years of Service on or before December 31, 2004,
whose benefits were then earned and vested as of that date and
grandfathered under Section 409A of the Internal Revenue
Code.
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1.9
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“Other Retirement
Income” means the monthly retirement income payable to a
Participant from the following sources:
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Non-qualified retirement plan of the
Company or any Affiliate if the Participant was included in the
Plan as of December 31, 2005.
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Non-qualified retirement and defined
contribution restoration plans of the Company, or any Affiliate if
the employee becomes a Participant after December 31,
2005.
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Qualified and non-qualified
retirement benefits from a predecessor employer of the Participant
if said predecessor employer or employer facility was acquired by
or merged into the Company or any Affiliate at any time and benefit
service with the predecessor employer is recognized by the Company
for any retirement plan, qualified or non-qualified, per the
acquisition agreement.
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Social Security Benefit—as
defined in Section 1.16.
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1.10
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“Participant” means a
senior vice President or above of the Company, or any wholly owned,
direct or indirect subsidiary of the Company recommended for
participation by the Chief Executive Officer of the Company, and
approved by the Board of Directors of the Company as eligible to
participate.
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1.11
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“Plan” means the
Company’s Amended and Restated Executive Security
Plan.
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1.12
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“Retirement” means the
termination of a Participant’s employment with the Company on
one of the retirement dates specified in
Section 2.1.
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1.13
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“Retirement Plan” means
the Company’s Retirement Plan.
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1.14
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“Retirement Plan
Benefit” means the amount of monthly benefit payable from the
Retirement Plan to a Participant in the form of a straight life
annuity.
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1.15
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“Service” means a
Participant’s benefit service defined in the Retirement
Plan.
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1.16
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“Social Security
Benefit” means the monthly primary insurance amount estimated
by the Committee to be payable to the Participant at age 65 under
the federal Social Security Act, provided, however,
that:
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(a)
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the
Social Security Benefit for a Participant who terminates employment
prior to age 65 will be calculated assuming.
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(i)
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the
Participant will not receive any future wages which would be
treated as wages for purposes of the federal Social Security Act,
and
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(ii)
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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.
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(b)
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the
Social Security Benefit, once calculated, will be frozen as of the
date the Participant terminates employment.
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1.17
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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 the
contrary.
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2.1
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Each Participant is eligible to
retire and receive a benefit under this Plan beginning on one of
the following dates:
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(a)
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“Normal Retirement
Date”, which is the first day of the month following the
month in which the Participant reaches age 65 and has 5 years
of Service.
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(b)
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“Early Retirement Date”,
which is the first day of any month fo
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