Document:

exv10w3

 

Exhibit 10.3

MANAGEMENT INCENTIVE PLAN OF

CHEVRON CORPORATION

As Amended and Restated Effective December 7, 2005

1. Purpose.

The purpose of the Management Incentive Plan of Chevron Corporation is to obtain, develop
and retain able management personnel, stimulate constructive and imaginative thinking, and
contribute to the growth and profits of the Corporation.

2. Effective Date.

The Plan was adopted effective January 1, 1966 and approved by the Corporation’s
stockholders at the Annual Meeting on May 5, 1966. The Plan was amended and restated
effective October 9, 2001 and approved by the Corporation’s stockholders at the Annual
Meeting on May 15, 2002. The Plan was last amended and restated effective December 7, 2005.

3. Awards Under the Plan.

Awards under the Plan shall be made in the sole discretion of the Committee. After the
close of an Award Year, the Committee shall determine the dollar amount of the award to be
made to each Eligible Employee whom the Committee selects to be an award recipient for that
Award Year; provided, however, that the award amount for the chief executive officer and the
next four highest compensated officers of the corporation shall be subject to the following
limitations:

         A.     0.5% of the Corporation’s “Annual Income” shall be set aside for awards to
such officers. For this purpose, “Annual Income” shall mean reported earnings
before special items and accounting changes.

         B.     The maximum awards to the following officers shall equal the indicated
percentage of the aggregate fund set forth in A above, determined pursuant to the
following schedule:

	 	 	 
	Officer	 	Percentage
	CEO
	 	40%
	Second and third highest compensated officers
	 	20% each
	Fourth and fifth highest compensated officers
	 	10% each
	 
	 	 
	Total
	 	100%

C.     The Committee in its sole discretion may reduce the award otherwise payable
to any such officer as determined above, but in no event may

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any such reduction result in an increase of the award payable to any other
participant, including but not limited to any other such officer.

The foregoing notwithstanding, following a “change in 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”), neither the Committee nor any other entity or
individual(s) shall have the discretion to make awards under the Plan. Rather, for the
calendar year in which the Change in Control occurs and, if payment of awards for the
calendar year prior to the year in which the Change of Control occurs has not been completed
as of the date of the Change in Control, that prior calendar year, each Eligible Employee
shall be entitled to receive an award in an amount not less than that Eligible Employee’s
target bonus, as determined pursuant to the Committee’s established procedures prior to the
Change in Control. For any Eligible Employee whose employment terminates other than on the
last day of a calendar year, the award determined pursuant to the preceding sentence for the
year in which such termination occurs shall be prorated on the basis of the number of weeks
elapsed in the calendar year to the date of such termination of employment.

4. Management Compensation Committee.

The Management Compensation Committee of the Board of Directors of Chevron Corporation will
administer the Plan. If any member of the Committee does not qualify as an “outside
director” for purposes of section 162(m) of the Internal Revenue Code of 1986, as amended,
awards under the Plan for the chief executive officer and the four most highly compensated
officers of the Corporation (other than the chief executive officer) shall be administered
by a subcommittee of the Board 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 will at all times consist of at least two members who qualify
as an “outside director” for purposes of section 162(m) of the Code.

Decisions and determinations as to the number and identity of participants, as to the form
and amount of awards and as to any other matters relating to awards made under the Plan,
shall rest with the Committee. The Corporation management will make recommendations to the
Committee, but the Committee will not be bound by such recommendations and will make its own
final determinations.

Within 30 days after the occurrence of 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.
Upon such appointment, the Committee shall cease to have any responsibility with respect to
the administration of the Plan.

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5. Eligibility for Management Incentive Awards.

Regular salaried employees including directors, officers, and other individuals serving in
important executive, administrative, professional or technical capacities, as determined by
the Committee, who have been on the payroll of the Corporation or the payroll of a
participating affiliate at any time during the year, shall be eligible for participation in
the Plan. As used herein, the term “participating affiliate” shall mean any corporation in
which the Corporation holds directly or indirectly more than 50% of the voting securities
and whose financial accounts are consolidated with those of the Corporation in the financial
statement included in the Annual Report to Stockholders.

6.     Form, Amount, Time and Conditions of Awards.

          (a) Form. Awards may be made in any of the following forms or in any combination of
forms as determined by the Committee:

               (i) Units representing shares of Common Stock of the Corporation, together with dividend
equivalents, as described in Section 7 (“stock units”);

               (ii) Cash, including cash measured by stock units or any other investment performance
measurement selected by the Committee from time to time; or

               (iii) Shares of Common Stock of the Corporation.

In the case of awards in stock units or cash measured by stock units, the number of units shall be
adjusted for any stock splits, stock dividends, or other relevant changes in capitalization
occurring after the date of award.

          (b) Amount. The amount of each award shall be determined by the Committee.

          (c) Time and Conditions. Any award may be paid in a lump sum in the year in which the
award is made or in a series of annual installments, or such awards may be deferred until
retirement, death or disability, and then paid in a lump sum or installments, all as the Committee
shall determine. The Committee in its discretion may determine that interest (at such rate as may
be selected by the Committee) shall be credited to and paid at the same time and in the same manner
as a deferred award. Any award and the payment thereof may be made subject to such forfeiture and
other conditions for such period of time as the Committee shall determine. Any award which becomes
payable after the recipient’s death shall be delivered or distributed to the award recipient’s
Beneficiary or Beneficiaries. Each recipient of an award under the Plan may designate on the
prescribed form filed with the Committee one or more Beneficiaries. An award recipient may change
such designation at any time by filing the prescribed form with the Committee. If a Beneficiary
has not been designated or no designated Beneficiary survives the award recipient, any award which
becomes payable after the award recipient’s death will be made to the award recipient’s Surviving
Spouse as Beneficiary if such Spouse is still living or, if
not living, in equal shares to the then living children of the award recipient as
Beneficiaries or, if none, to the award recipient’s estate as Beneficiary. The
Committee, at its sole discretion, shall

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determine the form and time of any
distribution(s) to an award recipient’s Beneficiary or Beneficiaries.

In addition to any forfeiture condition established by the Committee with respect to any award,
until any award granted under the Plan (or a portion thereof) is delivered or distributed, such
award (or such portion) shall be forfeited under the following circumstances:

               (i) The participant is dismissed for cause or otherwise ceases to be an employee of the
Corporation or a participating affiliate at a time when cause for dismissal exists; or

               (ii) The participant, before or after the termination of his or her employment as an Employee,
engages in any activity which, in the Committee’s opinion, is prejudicial to the interests of the
Corporation or any participating affiliate; or

               (iii) The participant is indebted to the Corporation or any participating affiliate at the
time when the participant becomes entitled to payment of an award under the Plan following
termination of employment with the Corporation or any participating affiliate.

                    In such case, the payment, 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 participating affiliate shall be extinguished to
the extent of such forfeiture.

The Committee may cancel the payment of all or any part of an award under the Plan if the Committee
determines that the payment of such award or part thereof would violate any mandatory wage controls
in effect at the time payment would otherwise be made.

7. Dividend Equivalents.

The Committee may determine that any stock unit awarded (or a cash award measured by stock
units) will carry with it until paid a dividend equivalent which will entitle the holder to
receive payments from the Corporation equal to the cash dividends paid on one share of
Common Stock of the Corporation during the periods from the time of the award of the stock
units to the time the shares are delivered to the participant (or the cash award is paid).
Payment of dividend equivalents may be made in cash or stock and at such time or times as
determined by the Committee. Dividend equivalents shall be subject to the same forfeiture
and other provisions as the related stock unit.

8. Administration, Amendment and Termination of the Plan.

The Management Compensation Committee shall have the power and authority to interpret and
administer the Plan. The Board of Directors may, at any time, alter, amend or terminate the
Plan; provided, however, that no alteration, amendment or termination approved by the Board
of Directors 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”)

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shall be valid or effective if
such alteration, amendment or termination would alter the provisions of this Section 8 or
adversely affect the amount of a participant’s award under the Plan, whether or not the
participant’s employment had terminated at the time the alteration, amendment or termination
was approved; provided, however, any alteration, amendment or termination may be effected,
even if so approved after such a public announcement, if (a) the alteration, amendment or
termination 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 alteration, amendment or termination of the Plan which is approved by the Board of
Directors 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 alteration, amendment or termination approved
during the Benefit Protection Period.

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.

9. Assignability.

Except as otherwise determined by the Committee, a participant’s award, the interest, if
any, of a participant’s beneficiary and (during the period, shares of Common Stock of the
Corporation awarded under the Plan are subject to forfeiture conditions) such shares may not
be assigned, either by voluntary or involuntary assignment or by operation of law,
including, but without limitation, garnishment, attachment or other creditor’s process and
any act in violation hereof shall be void.

10. Forfeiture.

(a)     Notwithstanding any other provision of this Plan to the contrary, if a
participant engages in Misconduct the Committee (or its delegate) may determine that
(i) the participant shall not receive any future awards pursuant to the Plan and (ii)
the Corporation may demand repayment of any award received after June 29, 2005 with
respect to a period after the date of the Participant’s Misconduct.

(b)     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

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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, “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

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(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.

Any provision of this Section 10 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 10.

7exv10w4

 

Exhibit 10.4

CHEVRON CORPORATION

LONG-TERM INCENTIVE PLAN

(Amended and Restated Effective December 7, 2005)

	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 last amended and restated effective December 7, 2005
	 
	 	 	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.
	 
	 	(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

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	 	 	 	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 the chief executive officer and the four most
highly compensated officers of the Corporation (other than the chief executive
officer) 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 eighty million (80,000,000) Shares; provided, however, that the maximum
number of Shares which may be issued under the Plan subject to Full Value Awards
shall be thirty-two million (32,000,000) 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.

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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 two million
(2,000,000) 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.

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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

7

 

	 	 	 	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 earlier of
the date such interest is recorded as a book entry on the records of
the Corporation or the date of issuance of a stock certificate for such Shares. 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

8

 

	 	 	 	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 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 or shall
be issued a stock certificate in respect of such Shares of Restricted Stock. Such
certificate, if any, shall be registered in the name of such Participant and shall
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award. The Committee shall require that any such stock
certificates evidencing such Shares be held by the Corporation until the
restrictions thereon shall have lapsed, and that, as a condition of any Restricted
Stock Award, the Participant shall have delivered to the Corporation a stock power,
endorsed in blank, relating to the stock covered by such Award.
	 
	 	(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

9

 

	 	 	 	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 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 or, if applicable,
certificates for an appropriate number of unrestricted Shares shall be
delivered promptly to the Participant, and the certificates for the Shares of
Restricted Stock shall be canceled.

	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, 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

10

 

	 	 	 	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 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.

11

 

	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.
	 
	 	(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

12

 

	 	 	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.
	 
	 	 	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 may make appropriate 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 in its sole discretion, and its
determination 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

13

 

	 	 	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 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

14

 

	 	(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, “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

15

 

	 	(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.
	 
	 	 	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 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

16

 

	 	 	 	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. Notwithstanding the foregoing, no Stock Option or, as applicable,
any other Award shall be repriced under this Plan.
	 
	 	(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
earlier of the date such interest is recorded as a book entry on the records of the

17

 

	 	 	 	Corporation or the date of issuance of a stock certificate for such Shares. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date when such certificate is issued or 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.
	 
	 	(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.
	 
	 	(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

18

 

	 	 	 	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 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

19

 

	 	 	 	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 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.

20

 

	 	(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.

	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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