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EXHIBIT 10.5 TESORO CORPORATION RESTORATION
RETIREMENT PLAN ARTICLE 1
GENERAL PROVISIONS 1.1
Establishment and Purpose.
WHEREAS, Tesoro Corporation (the
"Company") previously established the Tesoro Corporation
Restoration Retirement Plan (the "Plan") primarily for the purpose
of providing benefits for a select group of management and highly
compensated employees of the Company and its Subsidiaries that will
restore benefits that may not otherwise be provided under the
Retirement Plan solely by reason of the limitations under
Sections 401(a)(17) and 415 of the Code;
WHEREAS, the Plan is intended to
qualify as a "top hat" plan under Sections 201(2), 301(a)(3)
and 401(a)(l) of ERISA; and WHEREAS,
the Company desires to amend the Plan to comply with Regulations
under Section 409A of the Code and the Regulations promulgated
thereunder and to clarify certain operational provisions of the
Plan; NOW, THEREFORE, the Company
adopts this amended and restated Tesoro Corporation Restoration
Retirement Plan, effective January 1, 2009, as follows:
1.2 Definitions.
"Affiliate" means each entity
that would be considered a single employer with the Company under
Section 414(b) or Section 414(c) of the Code, except that the
phrase "at least 50%" shall be substituted for the phrase "at least
80%" as used therein. "Aggregated
Plan" means all agreements, methods, programs and other
arrangements that are aggregated with this Plan under
Section 1.409A-1(c) of the Regulations.
"Beneficiary" means the
person or persons designated by a Participant as his beneficiary
hereunder in accordance with the provisions of Article 5.
"Board" means the Board of
Directors of the Company. "Change
in Control" means (i) there shall be consummated
(A) any consolidation or merger of Company in which Company is
not the continuing or surviving corporation or pursuant to which
shares of Company’s Common Stock would be converted into
cash, securities or other property, other than a merger of Company
where a majority of the board of directors of the surviving
corporation are, and for a one-year period after the merger
continue to be, persons who were directors of Company immediately
prior to the merger or were elected as directors, or nominated for
election as director, by a vote of at least two-thirds of the
directors then still in office who were directors of Company
immediately prior to the merger, or (B) any sale, lease,
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exchange or transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Company,
or (ii) the shareholders of Company shall approve any plan or
proposal for the liquidation or dissolution of Company, or (iii)
(A) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), other than
Company or a Subsidiary or any employee benefit plan sponsored by
Company or a Subsidiary, shall become the beneficial owner (within
the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) of securities of Company representing 35 percent or more
of the combined voting power of Company’s then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, and
(B) at any time during a period of one-year thereafter,
individuals who immediately prior to the beginning of such period
constituted the Board shall cease for any reason to constitute at
least a majority thereof, unless election or the nomination by the
Board for election by Company’s shareholders of each new
director during such period was approved by a vote of at least
two-thirds of the directors then still in office who were directors
at the beginning of such period.
"Chief Executive Officer" means the Chief Executive Officer
of the Company. "Code" means
the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Tesoro
Corporation Committee appointed by the Compensation Committee of
the Board, or such other committee designated by the Compensation
Committee of the Board to discharge the duties of the Committee
hereunder. "Company" means
Tesoro Corporation, a Delaware Corporation, or any successor
thereto. "Compensation"
shall, unless otherwise determined by the Committee, have the same
meaning as the term "Basic Compensation" in the Retirement Plan
(determined without regard to any limits imposed on compensation
under the Code). "Disability"
means Disability as such term is defined under the Retirement Plan.
"Distribution Date" means the
date on which distributions to a Participant are to commence
hereunder. Distribution Dates are determined as provided under the
terms of the Plan. "Distribution
Option" means the form in which payments to a Participant are
to be paid. Distribution Options are determined as provided in
Article 3 of the Plan.
"Insolvency" means, with respect to the Company: (1) an
adjudication of bankruptcy; (2) the assignment for the benefit
of creditors of or by the Company; (3) a material part or all
of the property of the Company becomes subject to the control and
direction of a receiver, which receivership is not dismissed within
sixty (60) days of such receiver’s appointment; or
(4) the filing by the Company of a petition for relief under
any federal or other bankruptcy or other insolvency law or for an
arrangement with creditors.
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"Participant" means any
employee who has satisfied the eligibility requirements set forth
in Section 1.4 of the Plan.
"Plan Year" means the twelve-month period beginning each
January 1. "Regulations"
means the Treasury Regulations promulgated under the Code.
"Restoration Retirement
Benefit" means the annual benefit payable to the Participant as
provided in Article 2.
"Retirement" means a Participant’s Separation from
Service with the Company as a retiree as determined under the
provisions of the Retirement Plan.
"Retirement Benefit" means the benefit payable to a
Participant under the Retirement Plan.
"Retirement Plan" means The
Tesoro Corporation Retirement Plan, as amended.
"Separation from Service"
means a reasonably anticipated permanent reduction in the level of
bona fide services performed by the Participant for the Company and
its Affiliates to 20% or less of the average level of bona fide
services performed by the Participant for the Company and its
Affiliates (whether as an employee or an independent contractor) in
the immediately preceding thirty-six (36) months (or the full
period of service to the Company and its Affiliates if the
Participant has been providing services to the Company and its
Affiliates for fewer than thirty-six (36) months). The
determination of whether a Separation from Service has occurred
shall be made by the Committee in accordance with the provisions of
Section 409A of the Code and the Regulations promulgated
thereunder. "Subsidiary"
means any entity in which the Company owns or otherwise controls,
directly or indirectly, stock or other ownership interests having
the voting power to elect a majority of the board of directors, or
other governing group having functions similar to a board of
directors, as determined by the Committee.
1.3 Administration.
(a) The Committee shall administer
the Plan and have sole and absolute authority and discretion to
decide all matters relating to the administration of the Plan,
including, without limitation, determining the rights and status of
Participants or their Beneficiaries under the Plan. The Committee
is authorized to interpret the Plan, to adopt administrative rules,
regulations, and guidelines for the Plan, and may correct any
defect, supply any omission or reconcile any inconsistency or
conflict in the Plan. The Committee’s determinations under
the Plan need not be uniform among all Participants, or classes or
categories of Participants, and may be applied to such
Participants, or classes or categories of Participants, as the
Committee, in its sole and absolute discretion, considers
necessary, appropriate or desirable. All determinations by the
Committee shall be final, conclusive and binding on the Company,
the Participant and any and all interested parties.
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(b) The Committee may delegate
such of its powers and authority under the Plan to the
Company’s officers or such other person(s) as it deems
necessary or appropriate. In the event of such delegation, all
references to the Committee in this Plan shall be deemed references
to such officers or such other person(s) as it relates to those
aspects of the Plan that have been delegated.
(c) Any action taken by the Committee
with respect to the rights or benefits under the Plan of any
Participant shall be subject to correction by the Committee as to
payments not yet made to such person, and acceptance of any
deferred compensation benefits under the Plan constitutes
acceptance of and agreement to the Committee’s or the
Company’s making any appropriate adjustments in future
payments to such person (or to recover from such person) any excess
payment or underpayment previously made to him.
(d) Notwithstanding any provision of
the Plan to the contrary, if any benefit provided under this Plan
is subject to the provisions of Section 409A of the Code and
the Regulations issued thereunder, the provisions of the Plan shall
be administered, interpreted and construed in a manner necessary to
comply with Section 409A and the Regulations issued thereunder
(or disregarded to the extent such provision cannot be so
administered, interpreted or construed).
1.4 Eligibility and
Participation. (a) Participation
in the Plan is limited to those individuals who are within the
category of a select group of management and highly compensated
employees as referred to in Sections 201(2), 301(a)(3) and
401(a)(l) of ERISA, and who are within those classifications of
officers and key management employees of the Company and its
Subsidiaries which are nominated by the Chief Executive Officer and
approved by the Compensation Committee of the Board as eligible to
participate in the Plan. Those employee classifications selected
for participation in the Plan are set forth on Exhibit 1
attached hereto. This Exhibit will be modified from time to time as
recommended by the Chief Executive Officer and approved by the
Compensation Committee of the Board to include or exclude certain
employee classifications as deemed appropriate.
(b) A Participant shall cease to be a
Participant upon receiving payment for the full amount of benefits
to which the Participant is entitled under the Plan or becomes
ineligible to participate based on eligibility status as determined
in Section 1.4(a) of this Plan. Once a Participant is no
longer eligible to actively participate in the Plan, he shall not
be entitled to any further accrual of a Restoration Retirement
Benefit hereunder. ARTICLE 2
RESTORATION RETIREMENT BENEFITS
2.1 Benefit Determination
Subject to the full vesting of the
Participant’s Restoration Retirement Benefit resulting from a
Change in Control, as set forth in Section 3.4, upon his
Separation from Service for any reason (including death) with a
vested interest in his Restoration Retirement Benefit, a
Participant shall be entitled to receive a Restoration Retirement
Benefit in the event the
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Retirement Benefit of such Participant is limited by the
application of Section 401(a)(17) or Section 415 of the
Code. The Restoration Retirement Benefit shall be equal to the
difference between: (1) the Retirement Benefit paid to the
Participant; and (2) the benefit that would have otherwise
been paid to the Participant under the Retirement Plan, without
regard to the limitations of Section 401(a)(17) and
Section 415 of the Code, reduced by the amount of any
qualified and nonqualified retirement benefits from a prior
employer of the Participant if said prior employer or employer
facility was previously acquired by or merged into the Company or
any Affiliate and benefit service with such prior employer is
recognized by the Company under any qualified or nonqualified
retirement plan, pursuant to the terms of an acquisition agreement
or as otherwise provided under a separate agreement with the
Company or an Affiliate. Any amount payable hereunder will be
subject to the same actuarial assumptions and discounts for early
retirement as are specified in the Retirement Plan. The Restoration
Retirement Benefit described above shall be payable to the
Participant upon his Retirement, as provided in Article 3
hereof. 2.2 Additional Time
Recognition If an event occurs
for a Participant who has an employment agreement or a management
stability agreement with the Company that causes the recognition of
additional service credit under the terms of such agreement, the
additional service will be recognized only for purposes of
calculating the Restoration Retirement Benefit. The additional
service will not be recognized for purposes of vesting, retirement
eligibility or classification as a retiree. ARTICLE 3
DISTRIBUTIONS 3.1
Distribution Dates. Except in the
event of death, the Participant’s Restoration Retirement
Benefit shall be calculated as of the first day of the month next
following the month of the Participant’s Retirement and shall
commence on the first day of the seventh (7th) calendar month
beginning after the Participant’s Retirement. Benefits will
continue to be paid on the first day of each succeeding month. The
last payment will be on the first day of the month in which the
retired Participant dies unless another form of payment is elected
in accordance with Section 3.2. The first payment shall
include all amounts that would otherwise have been paid during the
period commencing on the first day of the month next following the
month of the Participant’s Retirement and ending on such
payment date. In the event a Participant’s Separation from
Service shall occur prior to Retirement and such Participant has a
vested interest in his Restoration Retirement Benefit, distribution
of such Participant’s Restoration Retirement Benefit shall
commence on the first day of the month next following the
Participant’s earliest retirement commencement date under the
Retirement Plan (but not considering early commencement for a lump
sum distribution); provided, however, that if such date is not at
least six (6) months after the Participant’s Separation
of Service, distribution shall be delayed until the first day after
the end of the six (6)-month period following the
Participant’s Separation from Service. Benefits will continue
to be paid on the first day of each succeeding month. The last
payment will be on the first day of the month in which the
Participant dies unless another form of payment is elected in
accordance with Section 3.2. The first payment shall include all
amounts that would
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otherwise have been paid during the period commencing on the
first day of the month next following the Participant’s
earliest retirement commencement date and ending on such payment
date. Regardless of the form of payment of a Participant’s
Restoration Retirement Benefit, there shall be no crediting of
earnings resulting from a six (6) month waiting period set
forth in this Section 3.1.
3.2 Distribution Option/Manner of Payment.
In the absence of an affirmative
election to the contrary, each Participant’s Restoration
Retirement Benefit shall be made in a form of a straight life
annuity; provided, however, if the present lump sum value of the
Participant’s Restoration Retirement Benefit (determined in
accordance with the applicable actuarial assumptions set forth in
the Retirement Plan, as in effect prior to its amendment and
restatement effective January 1, 2008 ) is less than $100,000,
the Restoration Retirement Benefit will be paid in a single-lump
sum. All payments under the Plan shall be made in cash. Subject to
the foregoing, each Participant may elect the Distribution Option
for his Restoration Retirement Benefit, in accordance with such
election procedur
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