Exhibit 10.4
CHEVRON CORPORATION
LONG-TERM INCENTIVE PLAN
Amended and Restated Effective January 1, 2005
Further Amended December 7, 2005 and December 6, 2006

 

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TABLE OF CONTENTS

         
1.
  PURPOSE   1
2.
  DEFINITIONS   1
3.
  ADMINISTRATION   3
4.
  DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN   5
5.
  PERSONS ELIGIBLE FOR AWARDS; LIMITS ON INDIVIDUAL AWARDS   6
6.
  STOCK OPTIONS   6
7.
  RESTRICTED STOCK   8
8.
  OTHER SHARE-BASED AWARDS   10
9.
  NONSTOCK AWARDS   11
10.
  RECAPITALIZATION   12
11.
  FORFEITURE   13
12.
  SECURITIES LAW REQUIREMENTS   15
13.
  AMENDMENTS OF THE PLAN AND AWARDS   16
14.
  GENERAL PROVISIONS   17
15.
  APPROVAL OF STOCKHOLDERS   21

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CHEVRON CORPORATION
LONG-TERM INCENTIVE PLAN
Amended and Restated Effective January 1, 2005
Further Amended December 7, 2005 and December 6, 2006
1. PURPOSE.
The purpose of the Chevron Corporation Long-Term Incentive Plan is to promote
and advance the interests of Chevron Corporation and its stockholders by
strengthening the ability of the Corporation and its Subsidiaries to attract,
motivate and retain managerial and other employees, and to strengthen the
mutuality of interests between such employees and the Corporation’s
stockholders. The Plan was originally adopted by the Board on January 24, 1990
and was approved by the stockholders of the Corporation at the 1990 annual
meeting of stockholders. The Plan replaced the Management Contingent Incentive
Plan. The Plan has been amended on various occasions. The Plan was amended and
restated by the Board effective January 28, 2004 and approved by the
stockholders of the Corporation at the 2004 annual meeting of stockholders. The
Plan was further amended and restated effective January 1, 2005 to comply with
Section 409A of the Code. The Plan was last amended and restated effective
December 7, 2005 and December 6, 2006.
Certain capitalized terms used in the Plan have the meaning set forth in
Section 2.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall have the meanings set forth
below:

  (a)   “Award” or “Awards” means a grant of a Stock Option, Restricted Stock, a
stock appreciation right, an Other Share-Based Award or a Nonstock Award under
the Plan.     (b)   “Board” means the Board of Directors of the Corporation.    
(c)   “Code” means the Internal Revenue Code of 1986, as amended.     (d)  
“Committee” means the committee appointed by the Board to administer the Plan as
provided in Section 3.     (e)   “Common Stock” means the $0.75 par value common
stock of the Corporation or any security of the Corporation identified by the
Committee as having been issued in substitution, exchange or lieu thereof.    
(f)   “Corporation” means Chevron Corporation, a Delaware corporation, or any
successor corporation.

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  (g)   “Disability” means that because of an injury or sickness the Participant
is unable to perform any occupation for which the Participant is qualified or
may reasonably become qualified by reason of education, training, or experience,
whether or not a job involving such occupation is available within the
Corporation.     (h)   “Employee” means any individual who is an employee on the
payroll of the Corporation or any Subsidiary.     (i)   “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or any successor
statute.     (j)   “Fair Market Value” of a Share as of a specified date means a
price that is based on the opening, closing, actual, high, low or average
selling prices of Shares on the New York Stock Exchange (or other established
exchange or exchanges), on the applicable date, the preceding trading day, the
next succeeding trading day, or an average of trading days as determined by the
Committee in its discretion.     (k)   “Full Value Award” means an Award other
than in the form of a Stock Option or a stock appreciation right and which is
settled by the issuance of Shares and which does not provide for full payment in
cash or property for such Shares by the Award recipient as determined under the
Rules.     (l)   “Nonstock Award” means an Award under the Plan the amount,
value and denomination of which is not determined with reference to, or
expressed in, Shares. “Nonstock Award Agreement” means the agreement between the
Corporation and the recipient of a Nonstock Award that contains the terms and
conditions pertaining to the Nonstock Award.     (m)   “Optionee” means an
Employee who has received the grant of a Stock Option.     (n)   “Other
Share-Based Award” means an Award granted pursuant to Section 8 of the Plan.
“Other Share-Based Award Agreement” means the agreement between the Corporation
and the recipient of an Other Share-Based Award that contains the terms and
conditions pertaining to the Other Share-Based Award.     (o)   “Participant”
means an Employee who is granted an Award under the Plan.     (p)   “Plan” means
the Chevron Corporation Long-Term Incentive Plan, as amended from time to time.
    (q)   “Restricted Stock Award” means an Award granted pursuant to the
provisions of Section 7 of the Plan. “Restricted Stock” means Shares granted
pursuant to Section 7 of the Plan. “Restricted Stock Agreement” means the
agreement between the Corporation and the recipient of Restricted Stock that
contains the terms, conditions and restrictions pertaining to such Restricted
Stock.     (r)   “Rules” means regulations and rules adopted from time to time
by the Committee.

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  (s)   “Share” means one share of Common Stock, adjusted in accordance with
Section 10 (if applicable).     (t)   “Stock Option” means a nonstatutory stock
option granted pursuant to Section 6 of the Plan. “Stock Option Agreement” means
the agreement between the Corporation and the Optionee that contains the terms
and conditions pertaining to a Stock Option.     (u)   “Subsidiary” means any
corporation or entity in which the Corporation directly or indirectly controls
more than 50% of the total voting power of all classes of its stock or other
equity interests having voting power and which the Board has designated as a
Subsidiary for purposes of the Plan.

In addition, the terms “Rule 16b-3” and “Restriction Period” have the meanings
set forth below in Sections 3(a) and 7(b) respectively.
3. ADMINISTRATION.

  (a)   Composition of the Committee.

The Plan shall be administered by a Committee appointed by the Board, consisting
of not less than a sufficient number of non-employee directors so as to qualify
the Committee to administer the Plan as contemplated by Rule 16b-3 promulgated
by the Securities and Exchange Commission (the “Commission”) pursuant to the
Exchange Act, or any successor or replacement rule adopted by the Commission
(“Rule 16b-3”) and each of whom is an “independent” director as defined in the
rules of the New York Stock Exchange. The Board may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee,
however caused, shall be filled by the Board. The Board shall appoint one of the
members of the Committee as chair. The term “non-employee directors” shall be
interpreted pursuant to Rule 16b-3. The Management Compensation Committee of the
Board shall initially serve as the Committee. The Board may at any time replace
the Management Compensation Committee with another Committee. In the event that
the Management Compensation Committee shall cease to satisfy the requirements of
Rule 16b-3, the Board shall appoint another Committee that shall satisfy such
requirements. If any member of the Committee does not qualify as an “outside
director” for purposes of Section 162(m) of the Code, Awards under the Plan for
“covered employees,” as defined in Section 162(m) of the Code shall be
administered by a subcommittee consisting of each Committee member who qualifies
as an “outside director.” If fewer than two Committee members qualify as an
“outside director,” the Board shall appoint one or more other members to such
subcommittee who do qualify as “outside directors” so that it shall at all times
consist of at least two members who qualify as an “outside director” for
purposes of Section 162(m) of the Code.

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  (b)   Actions by the Committee.

The Committee shall hold meetings at such times and places as it may determine.
Acts approved by a majority of the members of the Committee present at a meeting
at which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.

  (c)   Powers of the Committee.

The Committee shall have the authority to administer the Plan in its sole
discretion. To this end, the Committee is authorized to construe and interpret
the Plan, to promulgate, amend and rescind Rules relating to the implementation
of the Plan and to make all other determinations necessary or advisable for the
administration of the Plan, including the selection of Employees who shall be
granted Awards, the number of Shares or Share equivalents to be subject to each
Award, the Award price, if any, the vesting or duration of Awards, other terms
and conditions of Awards and the disposition of Awards in the event of a
Participant’s divorce or dissolution of marriage. Subject to the requirements of
applicable law, the Committee may designate persons other than members of the
Committee to carry out its responsibilities and may prescribe such conditions
and limitations as it may deem appropriate, except that the Committee may not
delegate its authority with regard to the selection for participation of or the
granting of Awards to persons subject to Section 16 of the Exchange Act. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration, or application of the Plan shall
be final, conclusive and binding upon all persons participating in the Plan and
any person validly claiming under or through persons participating in the Plan.

  (d)   Liability of Committee Members.

No member of the Board or the Committee shall be liable for any action or
determination made in good faith by the Board or the Committee with respect to
the Plan or any Award under it.

  (e)   Administration of the Plan Following a Change in Control.

Within 30 days after the occurrence of a “change of control” of the Corporation
as defined in Article VI of the bylaws of the Corporation, as such bylaws may be
amended from time to time (a “Change in Control”), the Committee shall appoint
an independent organization which shall thereafter administer the Plan and have
all of the powers and duties formerly held and exercised by the Committee with
respect to the Plan as provided in Section 3(c). Upon such appointment, the
Committee shall cease to have any responsibility with respect to the
administration of the Plan.

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4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN.

  (a)   Duration of the Plan.

The Plan shall terminate on January 27, 2014, unless sooner terminated by the
Board.

  (b)   Shares Subject to the Plan.

Subject to stockholder approval of this amended and restated Plan, on and after
April 28, 2004, the maximum number of Shares which may be issued under the Plan
shall be one hundred sixty million (160,000,000)1 Shares; provided, however,
that the maximum number of Shares which may be issued under the Plan subject to
Full Value Awards shall be sixty-four million (64,000,000) Shares. The
limitations set forth in this Section 4(b) shall be subject to adjustment as
provided in Section 10.
Prior to April 28, 2004, the maximum number of Shares for which Awards may be
granted shall be as set forth in the Plan prior to this amendment and
restatement.

  (c)   Accounting for Number of Shares.

Shares covered by an Award shall only be counted against the limit set forth in
Section 4(b) as used to the extent that such Shares are actually issued. Any
Shares related to Awards which terminate by expiration, forfeiture, cancellation
or otherwise without the issuance of such Shares, are settled in cash in lieu of
Shares, or are exchanged, with the Committee’s permission, prior to the issuance
of Shares, for Awards not involving Shares, shall be available again for grant
under the Plan. Moreover, if the exercise price of any Stock Option granted
under the Plan or the tax withholding requirements with respect to any Award
under the Plan are satisfied by tendering Shares to the Corporation (either by
attestation or actual delivery) or if a stock appreciation right is exercised,
only the number of Shares issued, net of the Shares tendered, if any, shall be
deemed delivered for purposes of determining the maximum number of Shares
available for issuance under the Plan. The maximum number of Shares available
for issuance under the Plan under Section 4(b) shall not be reduced to reflect
any dividends or dividend equivalents that are reinvested into additional Shares
or credited with respect to any Award outstanding under the Plan.

  (d)   Source of Stock Issued Under the Plan.

Common Stock issued under the Plan may be either authorized and unissued Shares
or issued Shares that have been reacquired by the Corporation, as determined in
the sole discretion of the Committee. No fractional Shares of Common Stock shall
be issued under the Plan.
 

1   As adjusted for the 2-for-1 stock split effective for Shares on record as of
August 19, 2004.

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5. PERSONS ELIGIBLE FOR AWARDS; LIMITS ON INDIVIDUAL AWARDS.
Persons eligible for Awards under the Plan shall consist of Employees (including
officers, whether or not they are directors). A Participant may receive more
than one Award, including Awards of the same type, subject to the restrictions
of the Plan.
The following limits shall apply to grants of Awards under the Plan:

  (a)   Stock Options, Stock Appreciation Rights, Restricted Stock and Other
Share-Based Awards: The aggregate number of Shares that may be granted in the
form of Stock Options, stock appreciation rights, Restricted Stock and Other
Share-Based Awards in any one calendar year to any Participant shall not exceed
four million (4,000,000)2 Shares. This limitation shall be subject to adjustment
as provided in Section 10.     (b)   Nonstock Awards: The value of all Nonstock
Awards granted in any single calendar year to any Participant shall not exceed
$4,000,000. For this purpose, the value of a Nonstock Award shall be determined
on the date of grant without regard to any conditions imposed on the Nonstock
Award.

6. STOCK OPTIONS.
All Stock Options granted under the Plan shall be in the form of nonstatutory
stock options, that is options that are not incentive stock options within the
meaning of Section 422 of the Code. All Stock Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the
Committee in its sole discretion shall deem desirable.

  (a)   Awards of Stock Options.

Subject to the terms of the Plan, the Committee shall have complete authority in
its sole discretion to determine the persons to whom and the time or times at
which grants of Stock Options shall be made. The terms of each Stock Option
shall be set forth in a Stock Option Agreement, which shall contain such
provisions not inconsistent with the terms of the Plan, including, without
limitation, restrictions upon the exercise of the Stock Option or restrictions
on the transferability of Shares issued upon the exercise of a Stock Option, as
the Committee shall deem advisable in its sole discretion. Stock Options may be
granted alone, in addition to, or in tandem with other Awards under the Plan.

  (b)   Number of Shares.

Each Stock Option shall state the number of Shares to which it pertains and
shall provide for the adjustment thereof in accordance with the provisions of
Section 10. No fractional Shares shall be issued pursuant to the exercise of a
Stock Option.
 

2   As adjusted for the 2-for-1 stock split effective for Shares on record as of
August 19, 2004.

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  (c)   Exercise Price.

Each Stock Option shall state the price per Share, determined by the Committee
in its sole discretion, at which the Stock Option may be exercised; provided,
however, that the exercise price shall not be less than 100% of the Fair Market
Value of a Share on the date of grant.

  (d)   Method of Payment.

A Stock Option may be exercised, in whole or in part, by giving notice of
exercise in the manner prescribed by the Corporation specifying the number of
Shares to be purchased. Such notice shall be accompanied by payment in full of
the purchase price in cash or, if acceptable to the Committee in its sole
discretion, and in accordance with its Rules, (i) in Shares already owned by the
Participant (including, without limitation, by attestation to the ownership of
such Shares), (ii) by the withholding and surrender of the Shares subject to the
Stock Option, or (iii) by delivery (on a form prescribed by the Committee) of an
irrevocable direction to a securities broker approved by the Committee to sell
Shares and to deliver all or part of the sales proceeds to the Corporation in
payment of all or part of the purchase price and any withholding taxes. Payment
may also be made in any other form approved by the Committee, consistent with
applicable law, regulations and rules.

  (e)   Term and Exercise of Stock Options; Nontransferability of Stock Options.

Each Stock Option shall state the time or times when it becomes exercisable and
the time or times when any stock appreciation right granted with it may be
exercised, which shall be determined by the Committee in its sole discretion
subject to the following provisions and to the Rules, as applicable. No Stock
Option shall be exercisable before the completion of a specified period (as
determined under the Rules) of continued employment with the Corporation or a
Subsidiary from the date the Stock Option is granted (except in the case of
death or Disability). No Stock Option shall be exercisable more than ten
(10) years from the date it is granted. Except as otherwise provided in the
Rules or in a Stock Option Agreement, during the lifetime of the Optionee, the
Stock Option shall be exercisable only by the Optionee and shall not be
assignable or transferable. In the event of the Optionee’s death, any Stock
Option shall be transferred to the beneficiary designated by the Optionee for
this purpose pursuant to procedures adopted by the Committee.

  (f)   Termination of Employment.

Each Stock Option Agreement shall set forth the extent to which the Optionee
shall have the right to exercise the Stock Option following termination of the
Optionee’s employment with the Corporation and its Subsidiaries and affiliates.
Such provisions shall be determined in the sole discretion of the Committee,
need

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not be uniform among all Stock Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of employment.

  (g)   Rights as a Stockholder.

An Optionee or a transferee of an Optionee shall have no rights as a stockholder
with respect to any Shares covered by his or her Stock Option until the date
such interest is recorded as a book entry on the records of the Corporation. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the earlier of the date such interest is recorded as
a book entry in the records of the Corporation or the date such stock
certificate is issued, except as provided in Section 10.

  (h)   Stock Appreciation Rights.

In connection with the grant of any Stock Option pursuant to the Plan, the
Committee, in its sole discretion, may also grant a stock appreciation right
pursuant to which the Optionee shall have the right to surrender all or part of
the unexercised portion of such Stock Option, exercise the stock appreciation
right, and thereby obtain payment of an amount equal to (or less than, if the
Committee shall so determine in its sole discretion at the time of grant) the
difference obtained by subtracting the aggregate exercise price of the Shares
subject to the Stock Option (or the portion thereof) so surrendered from the
market price (as determined under the Rules) of such Shares on the date of such
surrender. The exercise of such stock appreciation right shall be subject to
such limitations (including, but not limited to, limitations as to time and
amount) as the Committee shall deem appropriate. The payment of a stock
appreciation right may be made in Shares (determined with reference to its Fair
Market Value on the date of exercise), or in cash, or partly in cash and in
Shares, as determined in the sole discretion of the Committee. In the event of
the exercise of a stock appreciation right, the underlying Stock Option shall be
deemed to have been exercised for all purposes under the Plan, including
Section 4.
7. RESTRICTED STOCK.
Restricted Stock Awards shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with
the express provisions of the Plan, as the Committee in its sole discretion
shall deem desirable.

  (a)   Restricted Stock Awards.

Subject to the provisions of the Plan, the Committee shall have complete
authority in its sole discretion to determine the persons to whom, and the time
or times at which, grants of Restricted Stock shall be made, the number of
Shares of Restricted Stock to be awarded, the price (if any) to be paid by the
recipient of Restricted Stock, the time or times within which such Awards may be
subject to forfeiture, and all other terms and conditions of the Awards. For any
Restricted

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Stock Award, the Corporation shall receive consideration in an amount at least
equal to any amount required to be received by the Corporation under Delaware
law for the valid issuance of fully paid and nonassesable stock. The Committee
may condition the grant of a Restricted Stock Award upon the attainment of
specified performance goals (such as earnings per share, total shareholder
return, return on capital employed, operating margin, operating expense, or cash
flow) or such other factors as the Committee may determine, in its sole
discretion. Restricted Stock Awards may be granted alone, in addition to or in
tandem with other Awards under the Plan.
The terms of each Restricted Stock Award shall be set forth in a Restricted
Stock Agreement between the Corporation and the Employee, which Restricted Stock
Agreement shall contain such provisions as the Committee determines to be
necessary or appropriate to carry out the intent of the Plan with respect to
such Award. Each Participant receiving a Restricted Stock Award shall have his
or her interest in the Restricted Stock recorded as a book entry on the records
of the Corporation.

  (b)   Restrictions and Conditions.

The Shares of Restricted Stock awarded pursuant to this Section 7 shall be
subject to the following terms, conditions and restrictions:

  (i)   Subject to the provisions of Section 14(r) below, the Committee in its
sole discretion shall specify the terms, conditions and restrictions under which
Shares of Restricted Stock shall vest or be forfeited. These terms, conditions
and restrictions must include continued employment with the Corporation or a
Subsidiary for a specified period of time (as determined under the Rules)
following the date of grant except in the case of death or Disability, and may
include termination of the Employee’s employment for specified reasons such as
death or Disability prior to the completion of the specified period, or the
attainment of certain performance objectives. The period of time commencing with
the date of such Award and ending on the date on which all Shares of Restricted
Stock in such Award either vest or are forfeited shall be known as the
“Restriction Period”. With respect to the Restricted Stock during the
Restriction Period, the Committee, in its sole discretion, may provide for the
lapse of any such term, condition or restriction in installments and may
accelerate or waive such term, condition or restriction in whole or in part,
based on service, performance, and/or such other factors or criteria as the
Committee may determine in its sole discretion. Except as otherwise provided in
the Rules or in a Restricted Stock Agreement, during the Restriction Period the
Participant shall not be permitted to sell, transfer, pledge, assign or encumber
Restricted Stock awarded under the Plan.     (ii)   Except as provided in this
paragraph (ii) and paragraph (i) above, the Participant shall have, with respect
to the Shares of Restricted Stock, all of

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      the rights of a stockholder of the Corporation, including the right to
vote the Shares and the right to receive any cash or stock dividends. The
Committee, in its sole discretion, as determined at the time of Award, may
provide that the payment of cash dividends shall or may be deferred. Any
deferred cash dividends may be reinvested as the Committee shall determine in
its sole discretion, including reinvestment in additional Shares of Restricted
Stock. Stock dividends issued with respect to Restricted Stock shall be
Restricted Stock and shall be subject to the same terms, conditions and
restrictions that apply to the Shares with respect to which such dividends are
issued. Any additional Shares of Restricted Stock issued with respect to cash or
stock dividends shall not be counted against the maximum number of Shares for
which awards may be granted under the Plan as set forth in Section 4.

  (iii)   If and when the Restriction Period applicable to Shares of Restricted
Stock expires without a prior forfeiture of the Restricted Stock, an appropriate
book entry recording the Participant’s interest in the unrestricted Shares shall
be entered on the records of the Company.

8. OTHER SHARE-BASED AWARDS.

  (a)   Grants.

Other Share-Based Awards may be granted either alone or in addition to or in
conjunction with other Awards under the Plan. The Committee may condition the
grant of an Other Share-Based Award upon the attainment of specified performance
goals (such as earnings per share, total shareholder return, return on capital
employed, operating margin, operating expense or cash flow) or such other
factors as the Committee may determine, in its sole discretion. Awards under
this Section 8 may include, but are not limited to, performance shares, stock
units, restricted stock units, stock appreciation rights not granted in
connection with the grant of any Stock Option pursuant to Section 6, dividend
equivalents, the grant of Shares conditioned upon some specified event, the
ownership for a specified period of time of Shares obtained through the exercise
of a Stock Option or the lapse of restrictions on Restricted Stock, the payment
of cash based upon the performance of the Shares or the grant of securities
convertible into Shares.
Subject to the provisions of Section 14(r) below relating to restricted stock
units and to other applicable provisions of the Plan, the Committee shall have
sole and complete authority to determine the persons to whom and the time or
times at which Other Share-Based Awards shall be made, the number of Shares or
other securities, if any, to be granted pursuant to Other Share-Based Awards,
and all other conditions of the Other Share-Based Awards, including, without
limitation, whether stock appreciation rights not granted in connection with the
grant of any Stock Option shall be settled in cash or in Shares. In making an
Other Share-Based Award, the Committee may determine that the recipient of an
Other Share-Based Award shall be entitled to receive, currently or on a deferred
basis, interest

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or dividends or dividend equivalents with respect to the Shares or other
securities covered by the Award, and the Committee may provide that such amounts
(if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested. The terms of any Other Share-Based Award shall be set
forth in an Other Share-Based Award Agreement between the Corporation and the
Employee, which Other Share-Based Award Agreement shall contain such provisions
as the Committee determines to be necessary or appropriate to carry out the
intent of the Plan with respect to such Award.

  (b)   Terms and Conditions.

In addition to the terms and conditions specified in the Other Share-Based Award
Agreement, Other Share-Based Awards made pursuant to this Section 8 shall be
subject to the following:

  (i)   Except as otherwise provided in the Rules or in an Other Share-Based
Award Agreement, any Other Share-Based Award may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
Shares are issued or the Award becomes payable, or, if later, the date on which
any applicable restriction, performance or deferral period lapses.     (ii)  
The Other Share-Based Award Agreement shall contain provisions dealing with the
disposition of such Award in the event of a termination of the Employee’s
employment prior to the exercise, realization or payment of such Award.

9. NONSTOCK AWARDS.

  (a)   Grants.

Nonstock Awards may be granted either alone or in addition to or in conjunction
with other Awards under the Plan. Awards under this Section 9 may take any form
that the Committee in its sole discretion shall determine.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the persons to whom and the time or times at
which Nonstock Awards shall be made, the amount of any Nonstock Award and all
other conditions of the Nonstock Awards. The Committee may condition the grant
of a Nonstock Award upon the attainment of specified performance goals (such as
earnings per share, total shareholder return, return on capital employed,
operating margin, operating expense or cash flow) or such other factors as the
Committee may determine, in its sole discretion. The terms of any Nonstock Award
shall be set forth in Nonstock Award Agreement between the Corporation and the
Employee, which Nonstock Award Agreement shall contain such provisions as the
Committee determines to be necessary or appropriate to carry out the intent of
the Plan with respect to such Award.

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  (b)   Terms and Conditions.

In addition to the terms and conditions specified in the Nonstock Award
Agreement, Nonstock Awards made pursuant to this Section 9 shall be subject to
the following:

  (i)   Except as otherwise provided in the Rules or in a Nonstock Award
Agreement, any Nonstock Award may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date on which the Award becomes payable, or,
if later, the date on which the requirements of any applicable restriction,
condition, performance goal or deferral period is met or lapses.     (ii)   The
Nonstock Award Agreement shall contain provisions dealing with the disposition
of such Award in the event of a termination of the Employee’s employment prior
to the exercise, realization or payment of such Award.

10. RECAPITALIZATION.
Subject to any required action by the stockholders, the number of Shares covered
by the Plan as provided in Section 4, the maximum number of Shares that may be
granted to any one individual in any calendar year as provided in Section 5, the
number of Shares covered by or referred to in each outstanding Award (other than
an Award of Restricted Stock that is outstanding at the time of the event
described in this paragraph), and the Exercise Price of each outstanding Stock
Option and any price required to be paid for Restricted Stock not yet
outstanding at the time of the event described in this paragraph or Other
Share-Based Award shall be proportionately adjusted for: (a) any increase or
decrease in the number of issued Shares resulting from a subdivision or
consolidation of Shares, (b) the payment of a stock dividend (but only of Common
Stock) or any other increase or decrease in the number of such Shares effected
without receipt of consideration by the Corporation, or (c) the declaration of a
dividend payable in cash that has a material effect on the price of issued
Shares.
Subject to any required action by the stockholders, if the Corporation is the
surviving corporation in any merger, consolidation or other reorganization, each
outstanding Award (other than an Award of Restricted Stock that is outstanding
at such time) shall pertain and apply to the securities to which a holder of the
number of Shares subject to the Award would have been entitled. In the event of
a dissolution or liquidation of the corporation or a merger, consolidation or
other reorganization in which the Corporation is not the surviving corporation,
each outstanding Stock Option, each unvested Restricted Stock Award or Other
Share-Based Award and each Nonstock Award shall be assumed by the surviving
corporation and each Stock Option, unvested Restricted Stock Award and Other
Share-Based Award shall pertain to a comparable number of shares in the
surviving corporation, unless the terms of the agreement of merger,
consolidation or reorganization call for the full vesting and cash out of such
Awards.

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In the event of a change in the Common Stock, which is limited to a change of
all of the Corporation’s authorized shares with par value into the same number
of shares with a different par value or without par value, the shares resulting
from any such change shall be deemed to be the Common Stock within the meaning
of the Plan.
The Committee shall make equitable adjustments in the number of Shares covered
by the Plan and the price or other value of any outstanding Awards in the event
of a spin-off or other distribution (other than normal cash dividends) of
Corporation assets to stockholders.
To the extent that the foregoing adjustments relate to stock or securities of
the Corporation, such adjustments shall be made by the Committee, and the action
in that respect shall be final, binding and conclusive.
Except as expressly provided in this Section 10, a Participant shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issuance by the Corporation of shares of stock of any class
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to the Stock Option.
The grant of an Award pursuant to the Plan shall not affect in any way the right
or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
The Committee shall prescribe rules governing the adjustment of the number of
shares covered by the Plan as provided in Section 4 and of Awards outstanding
under the Plan in the event that the preferred stock purchase rights issued
pursuant to the Corporation’s stockholder rights plan or any successor rights
plan detach from the Common Stock and become exercisable.
11. FORFEITURE.
Notwithstanding any other provision of this Plan to the contrary, if a
Participant engages in Misconduct the Committee (or its delegate) may:

  (a)   Rescind the exercise of any Stock Option granted on or after June 29,
2005 and exercised on or after the date the Participant’s Misconduct occurred
and cancel all Awards granted on or after June 29, 2005 and outstanding on the
date of discovery of the Participant’s Misconduct; and     (b)   Demand that the
Participant repay any cash distributed to the Participant in respect of any
Award granted on or after June 29, 2005 or pay over to the Corporation the
proceeds (less the Participant’s purchase price, if any) received by the
Participant upon the sale, transfer or other transaction involving the Shares

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      acquired upon the exercise of any Stock Option granted on or after
June 29, 2005 and exercised on or after the date the Participant’s Misconduct
occurred or upon the vesting of any Award granted on or after June 29, 2005 and
vested after the date of the Participant’s Misconduct, in such manner and on
such terms and conditions as may be required, and, without limiting any other
remedy the Corporation or its affiliates may have, the Corporation shall be
entitled to set-off against the amount of any such proceeds any amount owed the
Participant by the Corporation or its affiliates to the fullest extent permitted
by law.

  (c)   For this purpose, “Misconduct” means that:

  (i)   the Corporation has been required to prepare an accounting restatement
due to material noncompliance, as a result of misconduct, with any financial
reporting requirement under the securities laws, and the Committee (or its
delegate) has determined in its sole discretion that a Participant (i) had
knowledge of the material noncompliance or the circumstances that gave rise to
such noncompliance and failed to take reasonable steps to bring it to the
attention of appropriate individuals within the Corporation or (ii) personally
and knowingly engaged in practices which materially contributed to the
circumstances that enabled a material noncompliance to occur; or     (ii)   a
Participant discloses to others, or takes or uses for his or her own purpose or
the purpose of others, any trade secrets, confidential information, knowledge,
data or know-how or any other proprietary information or intellectual property
belonging to the Corporation and obtained by the Participant during the term of
his or her employment, whether or not they are the Participant’s work product.
Examples of such confidential information or trade secrets include, without
limitation, customer lists, supplier lists, pricing and cost data, computer
programs, delivery routes, advertising plans, wage and salary data, financial
information, research and development plans, processes, equipment, product
information and all other types and categories of information as to which the
Participant knows or has reason to know that the Corporation intends or expects
secrecy to be maintained; or     (iii)   a Participant fails to promptly return
all documents and other tangible items belonging to the Corporation in the
Participant’s possession or control, including all complete or partial copies,
recordings, abstracts, notes or reproductions of any kind made from or about
such documents or information contained therein, upon termination of employment,
whether pursuant to retirement or otherwise; or     (iv)   a Participant
directly or indirectly engages in, becomes employed by, or renders services,
advice or assistance to any business in competition with the Corporation at any
time during the twelve months following termination of employment with the
Corporation. As used herein,

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      “business in competition” means any person, organization or enterprise
which is engaged in or is about to become engaged in any line of business
engaged in by the Corporation at the time of the termination of the
Participant’s employment with the Corporation; or

  (v)   a Participant fails to inform any new employer, before accepting
employment, of the terms of this section and of the Participant’s continuing
obligation to maintain the confidentiality of the trade secrets and other
confidential information belonging to the Corporation and obtained by the
Participant during the term of his or her employment with the Corporation; or  
  (vi)   a Participant induces or attempts to induce, directly or indirectly,
any of the Corporation’s customers, employees, representatives or consultants to
terminate, discontinue or cease working with or for the Corporation, or to
breach any contract with the Corporation, in order to work with or for, or enter
into a contract with, the Participant or any third party; or     (vii)   a
Participant engages in conduct which is not in good faith and which disrupts,
damages, impairs or interferes with the business, reputation or employees of the
Corporation; or     (viii)   a Participant committed an act of embezzlement,
fraud or theft with respect to the property of the Corporation.

The Committee shall determine in its sole discretion whether the Participant has
engaged in any of the acts set forth in subsections (i) through (viii) above,
and its determination shall be conclusive and binding on all interested persons.
In addition, until any Award is delivered or distributed, such Award is subject
to forfeiture if the Participant is indebted to the Corporation or a Subsidiary
at the time when the Award becomes payable or distributable. In such case, the
Award, to the extent that the amount thereof (determined as of the date payment
is scheduled to be made) does not exceed such indebtedness, shall be forfeited
and the Participant’s indebtedness to the Corporation or Subsidiary shall be
extinguished to the extent of such forfeiture.
Any provision of this Section 11 which is determined by a court of competent
jurisdiction to be invalid or unenforceable should be construed or limited in a
manner that is valid and enforceable and that comes closest to the business
objectives intended by such invalid or unenforceable provision, without
invalidating or rendering unenforceable the remaining provisions of this
Section 11.
12. SECURITIES LAW REQUIREMENTS.
No Shares shall be issued and no Stock Options shall become exercisable pursuant
to the Plan unless and until the Corporation has determined that: (i) it and the
Participant have taken all actions required to register the Shares under the
Securities Act of 1933, as amended, or perfect an exemption from the
registration requirements thereof; (ii) any

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applicable listing requirement of any stock exchange on which the Common Stock
is listed has been satisfied; and (iii) any other applicable provision of state
or federal law has been satisfied.
13. AMENDMENTS OF THE PLAN AND AWARDS.

  (a)   Plan Amendments.

The Board may, insofar as permitted by law, from time to time, with respect to
any Shares at the time not subject to Awards, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever. However, unless the Board
specifically otherwise provides, any revision or amendment that would cause the
Plan to fail to comply with Rule 16b-3 or any other requirement of applicable
law or regulation if such amendment were not approved by the holders of the
Common Stock of the Corporation shall not be effective unless and until the
approval of the holders of Common Stock of the Corporation is obtained. The
foregoing notwithstanding, no amendment, revision, suspension or discontinuation
of the Plan (including any amendment to this Section 13) approved by the Board
after six months prior to the public announcement of the proposed transaction
which, when effected, is a Change in Control or before the date which is two
years after the date of a Change in Control (the “Benefit Protection Period”)
shall be valid or effective if such amendment, revision, suspension or
discontinuation would alter the provisions of this Section 13 or adversely
affect an Award outstanding under the Plan; provided, however, any amendment,
revision, suspension or discontinuation may be effected, even if so approved
after such a public announcement, if (a) the amendment or revision is approved
after any plans have been abandoned to effect the transaction which, if
effected, would have constituted a Change in Control and the event which would
have constituted the Change in Control has not occurred, and (b) within a period
of six months after such approval, no other event constituting a Change in
Control shall have occurred, and no public announcement of a proposed event
which would constitute a Change in Control shall have been made, unless
thereafter any plans to effect the Change in Control have been abandoned and the
event which would have constituted the Change in Control has not occurred. Any
amendment, revision, suspension or discontinuation of the Plan which is approved
by the Board prior to a Change in Control at the request of a third party who
effectuates a Change in Control shall be deemed to be an amendment, revision,
suspension or discontinuation of the Plan so approved during the Benefit
Protection Period.

  (b)   Amendments of Awards.

Subject to the terms and conditions and within the limitations of the Plan, the
Committee may amend, cancel, modify, extend or renew outstanding Awards granted
under the Plan; provided, however, that the post-termination exercise of an
outstanding Stock Option shall not be extended to a date later than the date the
Stock Option is scheduled to expire. Notwithstanding the foregoing, no Stock
Option or, as applicable, any other Award shall be repriced under this Plan.

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  (c)   Rights of Participant.

No amendment, suspension or termination of the Plan nor any amendment,
cancellation or modification of any Award outstanding under it that would
adversely affect the right of any Participant in an Award previously granted
under the Plan shall be effective without the written consent of the affected
Participant.
14. GENERAL PROVISIONS.

  (a)   Application of Funds.

The proceeds received by the Corporation from the sale of Common Stock pursuant
to the exercise of a Stock Option or the grant of Restricted Stock shall be used
for general corporate purposes.

  (b)   Employment Rights.

Neither the Plan nor any Award granted under the Plan shall be deemed to give
any individual a right to remain employed by the Corporation or a Subsidiary.
The Corporation and its Subsidiaries reserve the right to terminate the
employment of any Employee at any time and for any reason, which right is hereby
reserved.

  (c)   Stockholders’ Rights.

A Participant shall have no dividend rights, voting rights or other rights as a
stockholder with respect to any Shares covered by his or her Award prior to the
date such interest is recorded as a book entry on the records of the
Corporation. No adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date when such interest recorded.

  (d)   Creditors’ Rights.

A holder of an Other Share-Based Award or a Nonstock Award shall have no rights
other than those of a general creditor of the Corporation. Other Share-Based
Awards and Nonstock Awards shall represent unfunded and unsecured obligations of
the Corporation, subject to the terms and conditions of the applicable Other
Share-Based Award Agreement and of the Nonstock Award Agreement. Notwithstanding
the foregoing, the Committee is authorized to arrange for the creation of one or
more trusts to fund payments of Other Share-Based Awards or Nonstock Awards
payable or to become payable under the Plan. In such case the rights of affected
Participants shall be determined with reference to the terms of the applicable
trust agreement pursuant to which the trust was created.

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  (e)   No Obligation to Exercise Stock Option.

The granting of a Stock Option shall impose no obligation upon the Optionee to
exercise such Stock Option.

  (f)   Deferral Elections.

The Committee may permit or require a Participant to elect to defer receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise, the satisfaction of any requirements
or goals or lapse of restrictions of an Award made under the Plan. Any such
payment deferrals shall be governed by the terms of the Chevron Corporation
Deferred Compensation Plan for Management Employees and shall comply with the
requirements of Section 409A of the Code.

  (g)   Withholding Taxes.

  (i)   General.

To the extent required by applicable federal, state, local or foreign law, the
recipient of any payment or distribution under the Plan shall make arrangements
satisfactory to the Corporation for the satisfaction of any withholding tax
obligations that arise by reason of such payment or distribution. The
Corporation shall not be required to make such payment or distribution until
such obligations are satisfied.

  (ii)   Stock Withholding.

The Committee in its sole discretion may permit a Participant to satisfy all or
part of his or her withholding tax obligations incident to the exercise of a
Stock Option or the vesting of Restricted Stock by having the Corporation
withhold a portion of the Shares that otherwise would be issued to him or her.
The payment of withholding taxes by surrendering Shares to the Corporation, if
permitted by the Committee, shall be subject to such restrictions as the
Committee may impose, including any restrictions required by rules of the
Securities and Exchange Commission.

  (h)   Other Corporation Benefit and Compensation Programs.

Payments and other benefits received by a Participant under the Plan shall not
be deemed a part of a Participant’s regular, recurring compensation for purposes
of the termination indemnity or severance pay law of any country, state or
political subdivision thereof and shall not be included in, nor have any effect
on, the determination of benefits under any other employee benefit plan or
similar arrangement provided by the Corporation or a Subsidiary unless expressly
so provided by such other plan or arrangement, or except where the Committee
expressly determines that inclusion of an Award or portion of an Award is
necessary to accurately reflect competitive compensation practices or to
recognize

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that an Award has been made in lieu of a portion of competitive annual cash
compensation. Awards under the Plan may be made in combination with or in tandem
with, or as alternatives to, grants, awards or payments under any Corporation or
Subsidiary plans. The Plan notwithstanding, the Corporation or any Subsidiary
may adopt such other compensation programs and additional compensation
arrangements as it deems necessary to attract, retain and reward Employees for
their service with the Corporation and its Subsidiaries.

  (i)   Costs of the Plan.

The costs and expenses of administering the Plan shall be borne by the
Corporation.

  (j)   Participant’s Beneficiary.

The Rules may provide that in the case of an Award that is not forfeitable by
its terms upon the death of the Participant, the Participant may designate a
beneficiary with respect to such Award in the event of death of a Participant.
If such beneficiary is the executor or administrator of the estate of the
Participant, any rights with respect to such Award may be transferred to the
person or persons or entity (including a trust, if permitted under rules or
procedures approved by the Committee) entitled thereto by bequest of or
inheritance from the holder of such Award.

  (k)   Awards in Foreign Countries.

The Committee shall have the authority to adopt such modifications, procedures
and subplans as may be necessary or desirable to comply with provisions of the
laws of foreign countries in which the Corporation or its Subsidiaries may
operate to assure the viability of the benefits of Awards made to Participants
employed in such countries and to meet the intent of the Plan.

  (l)   Severability.

The provisions of the Plan shall be deemed severable and the validity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

  (m)   Binding Effect of Plan.

The Plan shall be binding upon and shall inure to the benefit of the
Corporation, its successors and assigns and the Corporation shall require any
successor or assign to expressly assume and agree to perform the Plan in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession or assignment had taken place. The term “the
Corporation” as used herein shall include such successors and assigns. The term
“successors and assigns” as used herein shall mean a corporation or other entity
acquiring all or

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substantially all the assets and business of the Corporation (including the
Plan) whether by operation of law or otherwise.

  (n)   No Waiver of Breach.

No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of the Plan to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions of conditions at the same or at any prior or subsequent time.

  (o)   Authority to Establish Grantor Trust.

The Committee is authorized in its sole discretion to establish a grantor trust
for the purpose of providing security for the payment of Awards under the Plan;
provided, however, that no Participant shall be considered to have a beneficial
ownership interest (or any other sort of interest) in any specific asset of the
Corporation or of its subsidiaries or affiliates as a result of the creation of
such trust or the transfer of funds or other property to such trust.

  (p)   Authority to Satisfy Obligations

The Committee shall have the authority to grant Awards as an alternative to or
as the form of payment for grants or rights earned or due under other
compensation plans or arrangements of the Corporation, including, without
limitation, any plans or arrangements of any employer acquired by the
Corporation.

  (q)   Choice of Law

The law of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

  (r)   Vesting Requirements for Restricted Stock and Restricted Stock Units

Notwithstanding any other provision of the Plan to the contrary, except with
respect to a maximum of five percent (5%) of the Shares authorized for issuance
under Section 4(b), any Awards of Restricted Stock or restricted stock units
which vest on the basis of the Participant’s continued employment with the
Corporation or a Subsidiary or affiliate shall not provide for vesting which is
any more rapid that annual pro rata vesting over a three (3) year period and any
Awards of Restricted Stock or restricted stock units which vest upon the
attainment of performance goals shall provide for a performance period of at
least twelve (12) months.

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15. APPROVAL OF STOCKHOLDERS.
Material amendments to the Plan shall be subject to approval by affirmative vote
of the stockholders of the Corporation in accordance with applicable law and the
listing requirements of the New York Stock Exchange.

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