Exhibit 10.3

VENOCO, INC.
AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

Notice of Stock Award

You have been granted a right to acquire restricted Common Stock of the Company
(the “Stock Award”), subject to the terms and conditions of this Notice of Stock
Award (the “Notice”), the Venoco, Inc. Amended and Restated 2005 Stock Incentive
Plan (the “Plan”), and the Stock Award Agreement (the “Agreement”) attached
hereto.  Unless otherwise defined herein, all terms used in this Notice that are
defined in the Plan shall have the meaning as defined in the Plan.

Name and Address of Participant:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of Shares of Common Stock Granted (the “Shares”):

 

 

 

 

 

Purchase Price Per Share:

 

$0.00001

 

 

 

 

 

Fair Market Value Per Share:

 

$

 

 

 

 

 

Date of Grant:

 

 

 

 

 

 

Vesting Commencement Date:

 

 

 

 

 

 

Vesting Schedule:

 

Subject to the Participant’s Continuous Service and other limitations set forth
in this Notice, the Agreement and the Plan, the Shares shall vest in accordance
with the terms set forth in Exhibit A to the Agreement. Notwithstanding the
foregoing, if the Participant’s Continuous Service is terminated by: (i) the
Company for reasons other than cause or “Misconduct” (the latter of which is
defined in the applicable employment agreement between the Participant and the
Company, if any), (ii) the Participant’s death or Disability, or (iii) a Change
of Control of the Company; then the vesting of the Shares shall fully accelerate
immediately upon such date.

 

1

--------------------------------------------------------------------------------

By your signature and the signature of the Company’s representative below, you
and the Company agree that the Shares granted are governed by the terms and
conditions of this Notice, the Agreement, and the Plan, all of which are
attached to and made a part of this document.

VENOCO, INC.

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

PARTICIPANT ACKNOWLEDGMENT

The Participant acknowledges receipt of a copy of the Agreement and the Plan,
and represents that he or she is familiar with the provisions thereof, and
hereby accepts the Shares subject to all of the terms and provisions hereof and
thereof.  The Participant has reviewed this Notice, the Agreement and the Plan
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Notice, and fully understands all provisions of this Notice,
the Agreement and the Plan.  The Participant hereby agrees that all questions of
interpretation and administration relating to this Notice, the Agreement and the
Plan shall be resolved by the Committee.  The Participant further agrees to the
venue selection in accordance with Section 16 of the Agreement.  The Participant
further agrees to notify the Company upon any change in the residence address
indicated in this Notice.

The Participant further acknowledges and fully understands that he or she
generally has the right to vote the Shares from the Date of Grant, even when
such Shares are subject to a risk of forfeiture as set forth in Section 4 of the
Agreement.  Notwithstanding the foregoing and only until such date that an
amendment to Section 10(e)(ii) of the Plan is approved by the stockholders of
the Company, the Participant hereby agrees not to vote any Shares that are
subject to a risk of forfeiture.

 

 

Signature

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

Dated

 

2

--------------------------------------------------------------------------------

VENOCO, INC.

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

Stock Award Agreement

1.                                       Grant of Shares.  Subject to the terms
and provisions of the Venoco, Inc. Amended and Restated 2005 Stock Incentive
Plan (the “Plan”), the Notice of Stock Award (the “Notice”), and this Stock
Award Agreement (the “Agreement”), the Company hereby grants to the Participant
named in the Notice, the Total Number of Shares of Common Stock Granted (the
“Shares”).  Unless otherwise defined herein, all terms used in this Agreement
that are defined in the Plan shall have the meaning as defined in the Plan.

2.                                       Purchase Price Per Share.  If the
granted Shares are subject to a purchase price, as set forth in the Notice, the
Participant shall have the right to purchase such Shares at the specified
purchase price in accordance with such procedures as may be established by the
Committee from time to time.

3.                                       Vesting.  The Shares shall vest in
accordance with the vesting schedule set forth in the Notice (the “Vesting
Schedule”).

4.                                       Risk of Forfeiture.

4.1                                 General Rule.  The Shares shall initially be
subject to a risk of forfeiture.  The Participant may not transfer, assign,
encumber, or otherwise dispose of any Shares subject to a risk of forfeiture
other than in accordance with the Notice, Agreement and the Plan.  If the
Participant transfers any such Shares in accordance with the terms of the
Notice, Agreement and the Plan, then this Section 4 shall apply to the
transferee to the same extent as to the transferor.

4.2                                 Lapse of Risk of Forfeiture.  The risk of
forfeiture shall lapse as the Participant vests in the Shares in accordance with
the Vesting Schedule.

4.3                                 Forfeiture of Shares.  The Shares subject to
a risk of forfeiture shall automatically be forfeited and immediately returned
to the Company upon the Participant’s termination of Continuous Service;
provided that if any such Shares were purchased by the Participant, then upon
the Participant’s termination of Continuous Service, the Company shall have the
right to repurchase such Shares at the original price paid by the Participant at
any time during the 90-day period following the date of the Participant’s
termination of Continuous Service.  The certificates evidencing such Shares
shall have stamped on them a special legend referring to the Company’s right of
repurchase.

4.4                                 Vesting if Sale Prohibited by Insider
Trading Policy.  The Company has established an insider trading policy (as such
policy may be amended from time to time, the “Policy”) relative to trading while
in possession of material, undisclosed information.  The Policy prohibits
officers, directors, employees, and consultants of the Company and its
subsidiaries from trading in securities of the Company during certain “Blackout
Periods” as described in the Policy.  If a scheduled vesting date for Shares
falls on a day during such a Blackout Period, then the Shares that would
otherwise have vested on such date shall not vest on such date, but shall
instead vest, provided the Participant remains in Continuous Service with the

1

--------------------------------------------------------------------------------

Company, on the second business day after the last day of the Blackout Period
applicable to the Shares.

5.                                       Transfer Restrictions.  The Shares
issued to the Participant hereunder may not be sold, transferred by gift,
pledged, hypothecated, or otherwise transferred or disposed of by the
Participant prior to the date when the Shares become vested pursuant to the
Vesting Schedule.  Any attempt to transfer Shares in violation of this Section 5
shall be null and void and shall be disregarded.

6.                                       Escrow of Shares.  For purposes of
facilitating the enforcement of the provisions of this Agreement, the
Participant agrees, immediately upon receipt of the certificate(s) for the
Shares, to deliver such certificate(s), together with an Assignment Separate
from Certificate in the form attached hereto as Exhibit B, executed in blank by
the Participant with respect to each such stock certificate, to the Secretary or
Assistant Secretary of the Company, or their designee, to hold in escrow for so
long as such Shares have not vested pursuant to the Vesting Schedule, with the
authority to take all such actions and to effectuate all such transfers and/or
releases as may be necessary or appropriate to accomplish the objectives of this
Agreement in accordance with the terms hereof.  The Participant hereby
acknowledges that the appointment of the Secretary or Assistant Secretary of the
Company (or their designee) as the escrow holder hereunder with the stated
authorities is a material inducement to the Company to make this Agreement and
that such appointment is coupled with an interest and is accordingly
irrevocable.  The Participant agrees that such escrow holder shall not be liable
to any party hereto (or to any other party) for any actions or omissions unless
such escrow holder is grossly negligent relative thereto.  The escrow holder may
rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time.  Upon the vesting of Shares,
the escrow holder will, without further order or instruction, transmit to the
Participant the certificate evidencing such Shares, subject, however, to
satisfaction of any withholding obligations provided in Section 9, below.

7.                                       Additional Securities.  Any securities
or cash received (other than a “Regular Dividend,” as defined in Section 8,
below) as the result of ownership of the Shares (the “Additional Securities”),
including, but not by way of limitation, warrants, options and securities
received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization or other similar change in the Company’s
capital structure, shall be retained in escrow in the same manner and subject to
the same conditions and restrictions as the Shares with respect to which they
were issued, including, without limitation, the Vesting Schedule.  The
Participant shall be entitled to direct the Company to exercise any warrant or
option received as Additional Securities upon supplying the funds necessary to
do so, in which event the securities so purchased shall constitute Additional
Securities, but the Participant may not direct the Company to sell any such
warrant or option.  If Additional Securities consist of a convertible security,
the Participant may exercise any conversion right, and any securities so
acquired shall constitute Additional Securities.  In the event of any change in
certificates evidencing the Shares or the Additional Securities by reason of any
recapitalization, reorganization or other transaction that results in the
creation of Additional Securities, the escrow holder is authorized to deliver to

2

--------------------------------------------------------------------------------

the issuer the certificates evidencing the Shares or the Additional Securities
in exchange for the certificates of the replacement securities.

8.                                       Distributions.  The Company shall
disburse to the Participant all Regular Dividends with respect to the Shares and
Additional Securities, whether vested or otherwise, less any applicable
withholding obligations.  For purposes of Sections 7 and 8, the term Regular
Dividends means any distribution of cash or property other than securities that
is considered to be received as a result of a sale or exchange of the Shares for
purposes of the Code.

9.                                       Taxes.

9.1                                 Section 83(b) Election.  If the Participant
makes a timely election pursuant to Section 83(b) of the Code or similar
provision of state law (collectively, an “83(b) Election”), the Participant
shall immediately pay the Company the amount necessary to satisfy any applicable
United States federal, state, local or non-U.S. income and employment tax
withholding obligations.  If the Participant does not make a timely 83(b)
Election, the Participant shall, as Shares shall vest or at the time withholding
is otherwise required by any Applicable Law, pay the Company the amount
necessary to satisfy any applicable United States federal, state, local or
non-U.S. income and employment tax withholding obligations.  In the event the
Participant determines to make an 83(b) Election (a form of which is attached
hereto as Exhibit C), the Participant hereby represents that he or she
understands (i) the contents and requirements of the 83(b) Election, (ii) the
application of Section 83(b) to the receipt of the Shares by the Participant
pursuant to this Agreement, (iii) the nature of the election to be made by the
Participant under Section 83(b), (iv) the effect and requirements of the 83(b)
Election under relevant state and local tax laws, (v) that the 83(b) Election
must be filed with the Internal Revenue Service within thirty (30) days
following the date of this Agreement, and (vi) that the Participant must submit
a copy of such election to the Company and with his or her federal tax return
for the calendar year in which the date of this Agreement falls.

9.2                                 Tax Liability.  The Participant is
ultimately liable and responsible for all taxes owed by the Participant in
connection with the grant of the Shares, regardless of any action the Company or
any Affiliate takes with respect to any tax withholding obligations that arise
in connection with the grant of such Shares.  Neither the Company nor any
Affiliate makes any representation or undertaking regarding the treatment of any
tax withholding in connection with the grant, vesting or the subsequent sale of
Shares.  The Company and its Affiliates do not commit and are under no
obligation to structure the grant of the Shares to reduce or eliminate the
Participant’s tax liability.

9.3                                 Payment of Withholding Taxes.  Prior to any
event in connection with the Shares (e.g., vesting) that the Company determines
may result in any tax withholding obligation, whether United States federal,
state, local or non-U.S., including any employment tax obligation, the
Participant must arrange for the satisfaction of the minimum amount of such tax
withholding obligation in accordance with Section 10(g) of the Plan, but only to
the extent as permitted by the Committee in its sole and absolute discretion.

10.                                 Stop-Transfer Notices.  In order to ensure
compliance with the restrictions on transfer set forth in this Agreement, the
Notice or the Plan, the Company may issue appropriate

3

--------------------------------------------------------------------------------

“stop transfer” instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

11.                                 Refusal to Transfer.  The Company shall not
be required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.

12.                                 Restrictive Legends.  The certificates
evidencing the Shares shall bear legends substantially equivalent to the
following:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THAT
CERTAIN STOCK AWARD AGREEMENT BETWEEN VENOCO, INC. (THE “COMPANY”) AND THE NAMED
STOCKHOLDER.  THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.”

13.                                 Entire Agreement/Governing Law.  The Notice,
this Agreement, and the Plan constitute the entire contract between the parties
hereto with regard to the subject matter hereof.  They supersede any other
agreements, representations, or understandings (whether oral or written and
whether express or implied) that relate to the subject matter hereof.  These
agreements are to be construed in accordance with and governed by the internal
laws of the State of Delaware without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties. 
Should any provision of this Notice or this Agreement be determined to be
illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.

14.                                 Construction.  The captions used in the
Notice and this Agreement are inserted for convenience and shall not be deemed a
part of the Shares for construction or interpretation.  Except when otherwise
indicated by the context, the singular shall include the plural and the plural
shall include the singular.  Use of the term “or” is not intended to be
exclusive, unless the context clearly requires otherwise.

15.                                 Administration and Interpretation.  Any
question or dispute regarding the administration or interpretation of the
Notice, the Plan or this Agreement shall be submitted by the Participant or by
the Company to the Committee.  The resolution of such question or dispute by the
Committee shall be final and binding on all persons.

16.                                 Venue.  The Company, the Participant and the
Participant’s assignees agree that any suit, action or proceeding arising out of
or related to the Notice, the Plan or this Agreement shall be brought in the
United States District Court for the District of Colorado (or should such court
lack jurisdiction to hear such action, suit or proceeding, in a Colorado state
court in the County of Denver) and that all parties shall submit to the
jurisdiction of such court.  The parties

4

--------------------------------------------------------------------------------

irrevocably waive, to the fullest extent permitted by law, any objection the
party may have to the laying of venue for any such suit, action or proceeding
brought in such court.  If any one or more provisions of this Section 16 shall
for any reason be held invalid or unenforceable, it is the specific intent of
the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

17.                                 Notices.  Any notice required or permitted
hereunder shall be given in writing and shall be deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally recognized
express mail courier service or upon deposit in the United States mail by
certified mail (if the parties are within the United States), with postage and
fees prepaid, addressed to the other party at its address as shown in these
instruments, or to such other address as such party may designate in writing
from time to time to the other party.

*   *   *   *   *

5

--------------------------------------------------------------------------------

VENOCO, INC.

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

Vesting Schedule Pursuant to LTIP

This Vesting Schedule is entered into pursuant to the terms of the Plan and the
Venoco, Inc. 2007 Long-Term Incentive Program (the “LTIP”).

Target Shares:

 

 

 

Grant Cycle:

 

 

 

Comparative Group:

 

As provided on Exhibit A to the LTIP

 

Vesting:

 

Vesting is subject to a four-year graded vesting schedule that annually measures
TSR of the Company over the Grant Cycle against TSR of the Comparative Group.
Twenty-five percent (25%) of the Shares are first eligible for vesting each
calendar year, beginning with the first year of the Grant Cycle. Each “Tranche”
shall consist of the shares first eligible for vesting in a calendar year, plus
the “Roll Forward Shares” defined below. Vesting shall be based on the Company’s
TSR during each year of the Grant Cycle relative to the Comparative Group.

 

Company TSR Relative to Comparative Group

 

Vesting Amount

 

 

 

Equal to or greater than 75th percentile

 

100% of available shares in Tranche

 

 

 

Equal to or greater than 50th percentile but less than 75th percentile

 

50% of available shares in Tranche, plus 4% of the remaining available shares in
Tranche for every percentile the Company’s TSR is above the 50th percentile
relative to the Comparative Group

 

 

 

Less than 50th percentile

 

No vesting

 

Any Shares not vested for a calendar year (the “Roll Forward Shares”) will be
rolled forward and included in the Tranche for the following year.  Any Shares
not vested as of the end of the Grant Cycle will be forfeited.

Example: Assume Company grants 100,000 shares of which 25,000 are first eligible
for vesting with respect to 2007 TSR.  If the Company’s TSR for 2007 is at the
60th percentile, 70% of the first Tranche will vest (50%, plus 10 x 4% x
remaining 50%) or 17,500 shares.  The balance of 7,500 shares will be available
for vesting in the 2008 Tranche, together with the 25,000 shares first eligible
for vesting with respect to 2008 TSR, for a total available Tranche of 32,500
shares.

Vesting Date:

The Committee shall make the determination of whether the above vesting schedule
is satisfied using the information available to it on the last trading day of
each calendar year. Such determination shall occur as soon as administratively
possible following such calendar year, and in no event later than March 15th of
the calendar year following the calendar year for which TSR was measured.

 

--------------------------------------------------------------------------------