Document:

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                                                                   EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is made and entered into as of the 4th
day of December, 2001, by and between ChevronTexaco (the "Company"), and Glenn
Tilton (the "Employee"). The Company desires to retain Employee to perform
services for the Company and Employee is willing to perform such services on
terms set forth more fully below. In consideration of the mutual promises
contained herein, the parties agree as follows:

SECTION 1. SERVICES AND COMPENSATION

(A)     The Parties agree that Employee shall be initially employed with Company
        in Salary Grade 47 as its Vice Chairman. The Employee agrees to perform
        such services customary to such office as shall from time to time be
        assigned to him by the Company's Chairperson or its Board of Directors.
        Employee agrees to devote such time and effort as shall be required by
        the Company for him to timely and properly discharge the duties of Vice
        Chairman. The Employee may perform such services from New York until
        such time as he relocates to California on or after February 15, 2002.

(B)     As consideration for Employee's services, Company agrees to compensate
        Employee as follows:

        (i)    Base compensation in the annual amount of $889,600 (as increased
               from time-to-time pursuant to Company's normally applicable
               compensation policies);

        (ii)   Participation in benefit and compensation programs generally
               applicable to Company employees in Salary Grade 47 with the
               Company;

        (iii)  Supplemental Retirement Benefits; and

        (iv)   Retiree Benefits

(C)     If the Employee dies while he is an employee of the Company, he will be
        treated for purposes of this Agreement as if he resigned his employment
        with the Company effective on the day immediately preceding his death
        and his estate or beneficiaries will be entitled to any earned but
        unpaid compensation including but not limited to salary, bonus, and
        vacation plus the Supplemental Retirement Benefit and Retiree Benefits
        as set forth herein.

(D)     "Supplemental Retirement Benefits" shall be payable at the earlier of:
        1) when Employee leaves the Company for any reason, or 2) the expiration
        of the term of this Agreement :

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        The Company may require that the Employee sign a release of claims
        against the Company as a condition for qualifying for Supplemental
        Retirement Benefits.

(E)     The Supplemental Retirement Benefit shall consist of a cash payment
        equal to the sum of (i) and (ii) below:

        (i)    3.30 times the sum of Employee's highest annual base pay with the
               Company and the highest cash bonus earned by the Employee in any
               of the five years preceding the Employee's termination date; and

        (ii)   0.18 times the Employee's highest annual base pay with the
               Company.

        The Supplemental Retirement Benefit will be deferred pursuant to the
        terms of the Texaco Director and Employee Deferral Plan, or its
        successor, with payments commencing January following Employee's
        separation date and paid out over 10 years. The Supplemental Retirement
        Benefit will be credited into the Texaco Director and Employee Deferral
        Plan, or its successor, as soon after termination of employment as
        reasonably practical under all the circumstances.

(F)     Retiree Benefits shall mean, solely for purposes of this Agreement, the
        Texaco retiree medical, Texaco retiree life insurance and Tax Assistance
        Plan benefits the Employee is currently eligible for if he had retired
        from Texaco as of the date of this Agreement. This Agreement is not
        intended to change or alter his rights to these benefits nor is it
        intended to limit his rights to retiree benefits provided to Company
        employees in Salary Grade 47 with the Company.

        The Retiree Benefits, which will be provided under the terms and
        conditions of the respective plans, are summarized as follows:

        (i)    Retiree medical coverage for the Employee and his spouse pursuant
               to the terms and conditions of the Texaco Comprehensive Medical
               Plan, or its successor, as they exist on the date this Agreement
               is executed with the full Company portion of the premium paid by
               the Company;

        (ii)   Full retiree life insurance coverage pursuant to the terms and
               conditions of the Texaco Life Insurance Plans as they exist on
               the date this Agreement is executed with the full amount of
               insurance paid by the Company;

        (iii)  Continued participation under the terms and practices of the
               Company's Tax Assistance Plan for the year of termination or
               resignation and three calendar years immediately following.

"Beneficiary" shall be the Employee's spouse, is she survives him. If she does
not survive him, Employee's estate will be the Beneficiary.

SECTION 2. WAIVER OF PRIOR AGREEMENTS OR PLANS.

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Employee agrees to waive participation in and any benefits that he may have
presently accrued or might have accrued in the future under:

(A)     the Separation Pay Plan of Texaco Inc.;

(B)     the Severance Agreement between Employee and Texaco Inc. dated December
        17, 1998; and

(C)     except as provided otherwise herein, any other plan, policy, or
        agreement for the payment of severance or termination pay of
        ChevronTexaco, or any of its subsidiaries, affiliates or joint ventures
        and all of their respective predecessors.

Notwithstanding the foregoing, the Employee does not waive his rights granted by
Resolution dated December 11, 1998 approved by the Texaco Board of Directors
which provides the Employee with Gross Up payments for any excise tax imposed on
any excess parachute payments arising from any payment, plan or program etc. and
reasonable fees incurred in seeking to enforce this Resolution including but not
limited to legal and accounting fees.

SECTION 3. GROSS-UP OF EXCESS PARACHUTE PAYMENT

The Parties agree that any payments made under this Agreement constitute
compensation to Employee for services rendered after the October 9, 2001 merger
between Chevron Corporation and Texaco Inc. However, in the unlikely event that
any or all such payments are determined to be subject to the excise tax under
Internal Revenue Code (IRC) Section 4999 ("excess parachute payments"), the
Company shall pay to the Employee an additional amount (the "Gross-up Payment")
necessary to reimburse the Employee on an after-tax basis (including income,
FICA, and excise taxes) for the excise tax that may be imposed on him by the
Internal Revenue Service or by a court. In calculating the amount of the
Gross-up Payment, it shall be assumed that the Employee pays state and local
income taxes at the highest marginal rate of taxation imposed by the state and
locality in which the Employee resides and in which he is employed (or both) in
the calendar year in which the Gross-up Payment is to be made and pays FICA
taxes on wages earned. It also shall be assumed that the Employee's income tax
rate will be computed based upon the maximum effective marginal federal, state,
and local income tax rates (including FICA taxes) on earned income, with such
maximum effective federal rate to be computed with regard to IRC section 68, and
applying any available deduction of state and local income taxes for federal
income tax purposes.

SECTION 4. TERM AND TERMINATION

(A)     Term. This Agreement will commence on the date first written above and
        will continue for three years thereafter.

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(B)     Termination.

        (i)    Either the Company or the Employee may terminate this Agreement
               for any reason and in its or his sole discretion upon giving
               thirty (30) days prior written notice thereof to the other. Any
               such notice shall be addressed to Employee or the Company as
               described below.

        (ii)   This Agreement shall terminate immediately upon the Employee's
               Death except that the rights under this Agreement are payable to
               the Employee's estate or beneficiary under the terms of this
               Agreement or under the terms and conditions of the plan under
               which they are due.

        (iii)  This Agreement shall terminate automatically upon the expiration
               of its term.

(C)     Consulting Services. The Employee and the Company acknowledge that the
        Employee has extensive knowledge and expertise concerning the on-going
        business of the former Texaco Inc. and its subsidiaries, affiliates and
        joint ventures. Accordingly, if this agreement is terminated pursuant to
        Section 4(B)(i), the Employee and the Company shall enter into a written
        consulting agreement commencing on the date the Employee's employment
        terminates and extending for a term equal to the remaining term of this
        Agreement. During the term of the consulting agreement, the Employee
        will be reasonably available to accept special projects and to provide
        advice concerning the Company's on-going business operations as
        requested by the Chairperson of the Company's Board of Directors in his
        or her discretion. In exchange for such services, the Company will pay
        the Employee a consulting fee in the amount of $7,300 per day (or $3,650
        per half-day) plus expenses. As a consultant, the Employee will not be
        entitled to participate in any benefit or compensation programs
        applicable to the Company's employees.

(D)     Survival. Upon termination of the Agreement, all rights and duties of
        the Parties toward each other shall cease except the Company shall be
        obligated to pay or provide to the Employee or his Beneficiary:

        (i)    within thirty (30) days of the effective date of termination, all
               amounts owing to Employee for Services completed and accepted by
               the Company prior to the termination date. Payment or deferral
               will be made within 30 days. Such deferred amounts will be paid
               pursuant to the terms and conditions of the Texaco Director and
               Employee Deferral Plan, or its successor;

        (ii)   any Supplemental Retirement Benefit that may be payable under the
               terms of this Agreement; and

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        (iii)  the retiree medical, retiree life and tax assistance plan
               benefits, as described herein, shall each continue pursuant to
               the terms of the respective plan.

SECTION 5. ASSIGNMENT

To the extent permitted by law, neither this Agreement, nor any rights hereunder
or interest herein may be assigned, alienated, or transferred by Employee
without the express written consent of the Company.

SECTION 6. ARBITRATION AND EQUITABLE RELIEF

(A)     Disputes. Except as provided in Section 5(D) below, the Company and
        Employee agree that any dispute or controversy arising out of, relating
        to or in connection with the interpretation, validity, construction,
        performance, breach or termination of Agreement shall be settled by
        binding arbitration to be held in Contra Costa County, California, in
        accordance with the Commercial Arbitration Rules, supplemented by the
        Supplemental Procedures for Large Complex Dispute, of the American
        Arbitration Association as then in effect (the "Rules"). The arbitrator
        may grant in junctions or other relief in such dispute or controversy.
        The decision of the arbitrator shall be final, conclusive and binding on
        the parties to the arbitration. Judgment may be entered on the
        arbitrator's decision in any court of competent jurisdiction.

(B)     Consent to Personal Jurisdiction. The arbitrator(s) shall apply
        California law to the merits of any dispute or claim, without reference
        to conflicts of law rules. Employee hereby consents to the personal
        jurisdiction of the state and federal courts located in California for
        any action or proceeding arising from or relating to this Agreement or
        relating to any arbitration in which the parties are participants.

(C)     Costs. The Company shall pay the full cost and expenses of such
        arbitration. In addition, the Company will pay all reasonable fees and
        expenses incurred by the Employee in seeking to obtain or enforce any
        rights or benefits provided by this Agreement, including, all reasonable
        attorney's fees and expenses, accountant's fees and expenses, and court
        costs that may be incurred by the Employee in pursuing a claim for
        payment of benefits under this Agreement, unless a Court of competent
        jurisdiction determines that the participant's cause of action is
        frivolous.

(D)     Equitable Relief. The parties may apply to any court of competent
        jurisdiction for a temporary restraining order, preliminary injunction,
        or other interim or conservatory relief, as necessary, without breach of
        this arbitration agreement and without abridgment of the powers of the
        arbitrator.

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(E)     Acknowledgment. EMPLOYEE HAS READ AND UNDERSTANDS SECTION 5, WHICH
        DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS
        AGREEMENT, EMPLOYEE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
        TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
        VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF, TO
        BINDING ARBITRATION, EXCEPT AS PROVIDED IN SECTION 5(D), AND THAT THIS
        ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY
        TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
        ASPECTS OF THE RELATIONSHIP BETWEEN THE PARTIES.

SECTION 7. NOTICES

Any notice provided for or permitted to be given under this Agreement by any
party or to any party must be in writing, and may be served by depositing same
in the United States mail, addressed as provided below, postage prepaid,
registered or certified return receipt requested or by delivering the same in
person to such party,. Notice deposited in the mail in the manner described
above shall be deemed to have been given and received forty-eight (48) hours
after deposit in the mail. For purposes of notice, the address of each of the
parties shall be as set forth below, or such other address as such parties shall
provide to the other party pursuant to written notice.

EMPLOYEE:

Glenn F. Tilton
10 Sound Road
Rye, New York 10580

COMPANY:

ChevronTexaco
Office of the Secretary
575 Market Street
San Francisco, CA  94105

SECTION 8. GOVERNING LAW.

This Agreement shall be governed by the law of the State of California.

SECTION 9. SEVERABILITY

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The invalidity or unenforceability of any provision of this Agreement, or any
terms thereof, shall not affect the validity of this Agreement as a whole, which
shall at all times remain in full force and effect.

SECTION 10. ENTIRE AGREEMENT.

This Agreement is the entire agreement of the parties and supersedes any prior
agreements between them, whether written or oral, with respect to the subject
matter hereof. No waiver, alternation, or modification of any of the provision
of this Agreement shall be binding unless in writing and signed by duly
authorized representatives of the parties hereto.

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

GLENN TILTON

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CHEVRONTEXACO

By:
   --------------------------------

Title:
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                                                                   EXHIBIT 10.13

                          THE 1997 STOCK INCENTIVE PLAN

SECTION 1 - PURPOSE OF THE PLAN

        1.1 The 1997 Stock Incentive Plan (the "Plan") is intended to advance
the interests of Texaco Inc. (the "Company") and its stockholders by motivating
officers and other key employees of the Company and its subsidiaries and
affiliates to direct their efforts to those activities which will contribute
materially to the Company's success. The Plan also includes a feature which
supports the requirement that directors of the Company receive a portion of
their fees and retainers in the form of Company stock or stock equivalents. The
Plan is intended to serve the best interests of the stockholders by linking
employees who have substantial responsibility for the operation, administration
and management of the Company with the enhancement of stockholder values while
allowing directors and employees to increase their proprietary interest in the
Company. Finally, the Plan will enable the Company to attract and retain in its
employ highly qualified persons for the successful conduct of its business.

SECTION 2 - PARTICIPANTS

        2.1 The participants in the Plan with respect to any award shall be
those officers and key employees of the Company and its subsidiaries and
affiliates, and those former officers and key employees of the Company and its
subsidiaries and affiliates who retired during the twelve months immediately
preceding the date of such award, who are selected by the Compensation Committee
of the Company's Board of Directors ("Compensation Committee"). With respect to
the provisions of the Plan concerning payments to directors, only non-employee
members of the Board of Directors shall participate.

        2.2 Those selected to participate in the Plan shall be referred to
hereinafter as "Participants."

SECTION 3 - ADMINISTRATION OF THE PLAN

        3.1 The Plan shall be administered and interpreted by the Compensation
Committee, whose determination on all matters shall be final.

        3.2 As part of the Plan administration the Compensation Committee shall:

   A.   Determine the number and types of awards to be made under the   Plan;

   B.   Establish performance goals and guidelines on the issuance of  awards.

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   C.   Select the Participants to whom awards shall be made; and

   D.   Do such other and further acts that may be desirable or necessary to
        interpret, construe or implement the provisions of the Plan.

        3.3 Notwithstanding the foregoing, the Compensation Committee may
delegate to the Chief Executive Officer of the Company, as a Committee of One
under Delaware Law, the right to grant awards to eligible employees who are not
elected officers of the Company.

        3.4 The Compensation Committee may make, from time to time, such changes
in the Plan as it believes to be advisable; provided, however, that the Board
may not increase the maximum number of shares available for issuance to any
Participant or change the performance goals under the Plan.

       3.5 The Board may (i) grant incentive awards for proper corporate
purposes otherwise than under the Plan to any employee, officer, director or
other person or entity and (ii) grant incentive awards to, or assume incentive
awards of, any person or entity in connection with the acquisition (whether by
purchase, lease, merger, consolidation or otherwise) of the business or assets
(in whole or in part) of any person or entity.

       3.6 All awards granted under the Plan shall be granted on or before
December 31, 2006.

SECTION 4 - AWARDS UNDER THE PLAN

        4.1 Awards under the Plan may be made in any of the forms described in
Section 4.3 or such other incentive award forms as shall be consistent with the
purposes of the Plan. If other forms of awards are granted, the Compensation
Committee shall have the discretion to determine the terms and conditions
applicable to such awards.

        4.2 The total number of shares of Common Stock initially available for
issuance to Participants under all forms of awards under the Plan in any
calendar year shall be no more than one percent (1.0%) of the aggregate number
of shares of Common Stock issued and outstanding on December 31 of the previous
year plus any available shares not issued under the Plan in the previous years.
The immediately preceding sentence shall not include Substitute Awards, which
shall include awards granted in assumption of, or in substitution for,
outstanding awards previously granted by a company acquired by the Company or
with which the Company combines and any awards made

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by the Company to a newly hired employee. The following shares of Common Stock
will also be available for issuance:

    A. option shares awarded on or after May 13, 1997 that expire or are
    forfeited or are canceled without the issuance of shares or that relate to
    awards settled in cash in lieu of the issuance of shares; plus

    B. shares that are exchanged (either actually or constructively) by
    Participants as full or partial payment to the Company for the purchase
    price of shares being acquired through the exercise of a stock option
    granted under the 1989, 1993 or 1997 Stock Incentive Plans and any shares
    withheld by the Company in satisfaction of the tax-withholding obligations
    of Participants created by the exercise of a stock option.

        The payment of cash dividends and dividend equivalents in conjunction
with any awards shall not reduce the number of shares available for issuance
under the Plan.

        The maximum number of shares of Common Stock available for grant as
qualified stock options (ISOs) shall be 2,636,980 per year.

        The maximum number of shares or share equivalents, as defined in Section
4.3, which may be subject to awards granted under the Plan to any Participant in
any calendar year shall be 500,000. No more than twenty percent (20%) of the
shares of Common Stock available for awards in any year shall be issued as
Restricted Stock.

        4.3 The types of awards under the Plan shall be as follows:

    A. Stock Options. One or more stock options can be granted to any
    Participant. Each stock option so granted shall be subject to the terms of
    the grant and to the following conditions:

             (1) The exercise price per share shall be specified by the grant,
but in no event shall the exercise price be less than the fair market value of
the underlying shares of Common Stock on the date of the grant.

             (2) Except as provided in Section 5, a stock option granted under
             the Plan shall become exercisable as specified in the grant.

             (3) Except as provided in Section 5.1, each stock option shall
             expire in accordance with the terms of the grant; provided, how

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             ever, that (a) the expiration period for any option shall not
             exceed ten years, (b) in the event of a Participant's termination
             of employment, a stock option may become exercisable, or cease to
             be exercisable, in accordance with the provisions of Section 5, and
             (c) the Compensation Committee may alter the expiration period for
             any options not yet vested at its discretion.

             (4) Stock options granted hereunder may be designated as ISO or
             nonqualified, as the Compensation Committee Board so determines and
             designates in the grant. If an option is designated as an ISO, the
             terms of the grant shall comply with the statutory requirements for
             an ISO in the Internal Revenue Code.

             (5) The exercise price shall be paid in U.S. currency in cash, by
             check, bank draft, or Common Stock, Restricted Stock or Stock Units
             previously acquired and held by the Participant for at least six
             months prior to the date of exercise, any combination thereof, or
             any other acceptable payment method as established by the
             Compensation Committee. Stock, units or other property used for
             this purpose shall be valued at its fair market value on the date
             the stock option is exercised.

             (6) If a Participant exercises a stock option by actually or
             constructively presenting to the Company Common Stock, Restricted
             Stock or Units previously acquired by the Participant, the Company
             shall deliver to the Participant, in addition to the issuance of
             shares with respect to which the option is so exercised, a number
             of "restored options" equal to the number of shares of Common
             Stock, Restricted Stock or Units actually or constructively
             presented to exercise the option. The restored option shall vest
             six months after it is granted and the exercise price will be the
             fair market value of the Common Stock on the day on which the
             restored option is granted. All other features of the restored
             option, including its expiration date, shall be the same as the
             underlying option which exercise gave rise to the restored option.

   B. Restricted Stock. A Participant's ownership of a Restricted Stock award
      shall be evidenced by a book entry account in the participant's name. The
      Participant shall thereupon become a stockholder of the Company with
      respect to such Restricted Stock, and shall be entitled to vote and to
      receive the dividends on such stock; provided, however, that such
      Restricted Stock shall remain subject to the terms and provisions of the
      Plan, which shall include the following:

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              (1) Restricted Stock awards may not be sold, exchanged,
              transferred, pledged, hypothecated or otherwise disposed of except
              in accordance with the terms of the Plan and of Award Agreements
              entered into with the Participants, and each transfer agent for
              the Common Stock shall be instructed to such effect.

              (2) Upon the date specified in the grant as the "Award Maturity
              Date," or upon such earlier date as the Compensation Committee
              shall determine, the restrictions imposed by the Plan and the
              Agreement upon the Restricted Stock shall lapse, and the
              Participant shall be fully vested in the award. Notwithstanding
              the foregoing, the Award Maturity Date may be accelerated, or the
              award may be forfeited, in accordance with the provisions of
              Section 5.

              (3) Restricted Stock awards may be subject to performance criteria
              which criteria determine whether or how many of those awards will
              vest. The vesting of such awards is based on Texaco's total return
              to stockholders.

   C. Restricted Units. A specified number of Restricted Units, each of which
shall be deemed to be the equivalent of one share of Common Stock, may be
credited to the Participant's account. In addition, dollar amounts,
corresponding to dividends paid on each share of Common Stock shall be credited
to each Restricted Unit in a Participant's account. The Restricted Units
credited to a Participant's account will vest on the date specified in
Agreements entered into with the Participant. The amount payable to the
Participant on the vesting date will be either of the following, at the
Participant's election: (1) a number of shares of Common Stock equal to the
number of Restricted Units then in the Participant's account or (2) the fair
market value of shares of Common Stock equivalent to the Restricted Units then
in the Participant's account. Unless the Compensation Committee shall determine
otherwise, at its sole discretion, fair market value shall mean the average of
the closing price of the Common Stock on the twenty trading days immediately
preceding the date the Units become vested.

   D. Directors' Fees. The Board may pay all, or such portion as it shall from
time to time determine, of the retainer and fees payable to the non-employee
members of the Board (including their annual retainer, Annual Fee and any fees
payable for serving on a committee of the Board) in shares of Common Stock,
either restricted or unrestricted, or restricted units, at their full market

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value. The number and type of shares to be distributed to directors, in lieu of
the cash compensation to which they would otherwise be entitled, shall be
determined annually by the Board.

              (2) Any Restricted Shares credited to a director hereunder, may,
              at such director's election, be converted to Restricted Units no
              less than six months after the date of such award. In addition,
              any deferred cash may, at such director's election, be converted
              to Restricted Stock or Units. All of such elections shall be made
              by the director at least six months in advance of such payment, or
              such shorter or longer period as may be permitted or required
              under any applicable law or regulation in order to qualify for any
              exemption, deferral or other benefit under applicable law or
              regulation.

SECTION 5 - TERMINATION OF EMPLOYMENT AND FORFEITURE

         5.1 Death, Disability or Normal Retirement. In the event: a Participant
dies, becomes totally and permanently disabled (as defined by The Long Term
Disability Plan of Texaco Inc.), or retires on or after normal retirement date
(as defined in The Retirement Plan of Texaco Inc. or in resolutions applicable
to the retirement of directors), the terms of the grant of options, Restricted
Stock and Units shall remain unchanged, subject to the provisions of Section
5.4. It shall be within the Compensation Committee's discretion to either vest
any unvested portion of an award of options, or to accelerate the Award Maturity
Date with respect to awards of Restricted Stock and Units, subject in either
case to such conditions as the Compensation Committee may impose. In addition,
upon the death or permanent disability of a Participant, the grant may provide
that the Participant's representative shall have, at a minimum, an additional
six months to exercise an option, regardless of the expiration date.

         5.2 Early Retirement. In the event a Participant retires on or after
the Participant's early retirement date but before the Participant's normal
retirement date (as both dates are defined in The Retirement Plan of Texaco
Inc.), the terms of the grant of options, Restricted Stock and Units shall
remain unchanged subject to the provision of Section 5.4. However, it shall be
within the Compensation Committee's discretion to either (i) vest any unvested
portion of an award of options, or to accelerate the Award Maturity Date with
respect to awards of Restricted Stock and Units, subject in either case to such
conditions as the Compensation Committee may impose, or (ii) forfeit any and all
options and Restricted Stock and Units of the Participant. The Compensation
Committee may delegate to the Chief Executive Officer the authority to

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vest, accelerate, mature or forfeit those awards granted to non-officer
employees.

         5.3 In the event a Participant's employment is terminated under
circumstances not covered under Sections 5.1 and 5.2, the Participant shall
forfeit all benefits and rights with respect to any and all options and
Restricted Stock and Units of the Participant as of the date of termination of
employment. However, the Compensation Committee, in its discretion, may elect to
vest any unvested portion of an award of options, or to accelerate the Award
Maturity Date with respect to awards of Restricted Stock and Units, subject in
either case to such conditions as the Compensation Committee may impose.

         5.4 In order to protect the Company's assets, proprietary information,
corporate integrity, its compliance with the law, as well as the best interests
of the Company, the Compensation Committee may forfeit any and all options and
Restricted Stock and Units of any active, terminated or retired Participant.
Such conditions of forfeiture shall be stated in each Participant's Award
Agreement. Any forfeiture provisions contained in such Award Agreements in
accordance with this Section 5.4 shall be null and void as of the day
immediately prior to a "Change of Control" as defined in the Company's
Separation Pay Plan.

SECTION 6 - AWARD AGREEMENTS

         6.1 All awards to Participants under the Plan shall be made pursuant to
Award Agreements entered into between the Participant and the Company. The
agreements shall be in such form as the Compensation Committee approves, from
time to time, for the purpose of carrying out the provisions of the Plan.

SECTION 7 - NON-TRANSFERABILITY

         7.1 Awards under the Plan may not be transferred by the Participant
during the Participant's lifetime and may not be assigned, pledged or otherwise
transferred except by will or by the laws of descent and distribution.
Notwithstanding the prior sentence, the Compensation Committee may permit
certain awards made under the Plan to be transferred by gift to one or more
members of a Participant's immediate family. As used herein, "immediate family"
shall mean a spouse, parent, child, grandchild or trust established for such
individual.

         7.2 A Participant shall have no vested rights under the Plan nor any
interest in any award except to the extent otherwise provided pursuant to the
terms of the Plan.

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         7.3 After a Participant dies, all rights with respect to an award
granted under the Plan are exercisable by the Participant's designated
beneficiary or, if there is no designated beneficiary, by the Participant's
personal representative.

SECTION 8 - ANTIDILUTION

         8.1 In the event that the Compensation Committee determines that any
dividend, distribution (whether in the form of cash, shares of Common Stock,
other securities or other property), merger, consolidation, reorganization,
recapitalization, reclassification, spin-off, combination of shares, stock
split-up, or stock dividend, combination, repurchase, issuance of warrants or
other rights or other event affects the Common Stock such that an adjustment is
determined by the Compensation Committee to be appropriate in order to prevent
dilution or enlargement of the benefits intended to be made available under the
Plan, the Compensation Committee shall appropriately adjust (a) the aggregate
number and kind of shares subject to award hereunder and (b) rights under
outstanding awards granted hereunder, including the number of subject shares and
the option price, if any.

SECTION 9 - WITHHOLDING TAXES

         9.1 The Company shall deduct from any payment made under the Plan any
taxes it is required to deduct by law. Participants shall be required to satisfy
any liability for withholding taxes as a prerequisite to the Company's
obligation to deliver shares or other securities of the Company upon exercise of
a stock option, upon vesting of Restricted Stock or Units, and upon settlement
or payment of any award under the Plan.

         9.2 Any award under the Plan may provide that the recipient of such
award may elect to pay a portion or all of the amount of the required
withholding taxes in shares of Common Stock. In that event, the Participant
shall authorize the Company to withhold, or shall agree to deliver to the
Company, shares owned by such Participant or a portion of the shares that
otherwise would be distributed to the Participant having a fair market value on
the date of the award equal to the amount of withholding tax liability.

SECTION 10 - GOVERNING LAW

         10.1 The Plan and all action taken under it shall be governed, as to
construction and administration, by the laws of the State of New York.

SECTION 11 - EFFECTIVE DATE

                                      - 9 -

<PAGE>

         11.1 The Plan will become effective upon approval by the stockholders
at the 1997 Annual Meeting. Upon such approval, no additional awards will be
made under the 1993 Stock Incentive Plan.

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