Exhibit 10.1

VENOCO, INC.

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

Amendment No. 1

THIS AMENDMENT No. 1 to the Venoco, Inc. Amended and Restated 2005 Stock
Incentive Plan (the ”Plan”) is dated March 27, 2007 to amend the Plan in the
following respects.

WHEREAS, the Compensation Committee (the “Committee”) of the Company’s Board of
Directors has the authority to amend the Plan pursuant to Sections 3 and 12 of
the Plan;

WHEREAS, the Committee desires to amend the Plan to increase the number of
shares of Company common stock subject to the Plan from 1,700,000 shares to
3,486,388 shares; and

WHEREAS, the Committee desires to make certain other amendments deemed necessary
or advisable to maintain compliance with applicable laws, rules and regulations.

NOW THEREFORE, the Committee hereby amends the Plan in the following respects:

1.                                       Definition of Covered Employee. 
Effective as of the date written above, the following Section 2(j) is deleted in
its entirety and replaced with the following:

“(j)                              “Covered Employee” means those persons
designated as “covered employees” under Section 162(m) of the Code.”

2.                                       Definition of Independent Director. 
Effective as of the date written above, the provision “. . . or Nasdaq rules and
regulations . . . “ in Section 2(r) shall be deleted each place it appears.

3.                                       Stock Subject to the Plan.  Effective
upon the approval of the Company’s stockholders, Section 4(a) of the Plan is
deleted in its entirety and replaced with the following:

“(a)                            Share Reserve.  Subject to the provisions of
Section 11 relating to adjustments upon changes in Common Stock, the Common
Stock that may be issued pursuant to Incentive Stock Options and other Stock
Awards shall not exceed a maximum aggregate of 3,486,338 shares of Common
Stock.  Stock appreciation rights provided for in Section 7(b) hereof that are
payable only in cash will not reduce the number of shares of Common Stock
available for Stock Awards granted under the Plan.  Subject to the provisions of
Section 11 relating to adjustments upon changes in Common Stock, the maximum
aggregate number of shares of Common Stock for which Stock Awards may be issued
to any Participant under the Plan during any calendar year shall not exceed
570,000 shares of Common Stock.  The limitation set forth in the preceding
sentence

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shall be construed in accordance with Treasury Regulations issued under Section
162(m) of the Code.”

4.                                       Qualifying Compensation as
“Performance-Based Compensation” under Section 162(m) of the Internal Revenue
Code.  Effective upon approval of the Company’s stockholders, Section 7(c) is
added to the Plan as follows:

“(c)                            Performance-Based Compensation under Section
162(m).  Notwithstanding anything herein to the contrary other than the share
reserve limitation of subsection 4(a) of the Plan, the performance criteria for
any Stock Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall be
established by the Committee based on one or more Qualifying Performance
Criteria selected by the Committee and specified in writing.

(i)                                    Qualifying Performance Criteria.  For
purposes of this Plan, the term “Qualifying Performance Criteria” shall mean any
one or more of the following performance criteria, applied to either the Company
as a whole or to a business unit, Affiliate, related corporation, or business
segment, and measured either annually or cumulatively over a period of years, on
an absolute basis or relative to a pre-established target, to previous years’
results or to a designated comparison group, in each case as specified in the
Stock Award by the Committee: (a) implementation of a strategic plan, (b) stock
price, (c) earnings per share, (d) total stockholder return, (e) operating
margin, (f) stock price as a multiple of cash flow, (g) return on equity,
(h) return on assets, (i) return on investment, (j) operating income, (k) net
operating income, (l) pre-tax income, (m) cash flow, (n) revenue, (o) expenses,
(p) earnings before interest, taxes and depreciation, (q) economic value added,
(r) reserve additions, (s) finding and development costs, (t) drilling and
work-over budget, (u) increases in average daily production, (v) return on
capital invested, (w) corporate overhead costs, (x) interest coverage ratio, (y)
consolidated leverage ratio, (z) ratio of PV 10 reserves to debt,
(aa) environmental and safety programs, (bb) stockholders’ equity, and
(cc) corporate acquisitions.

(ii)                                Certification.  Before payment of any
compensation under a Stock Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall certify the
extent to which any Qualifying Performance Criteria and any other material terms
under such Stock Award have been satisfied (other than in cases where such
relate solely to stock price).

(iii)                            Discretionary Adjustments Pursuant to Section
162(m).  Notwithstanding satisfaction or completion of any Qualifying
Performance Criteria, to the extent specified at the time of grant of a Stock
Award to Covered Employees, the number of Shares or other benefits granted,
issued, retained, or vested under a Stock Award on account of satisfaction of
such Qualifying Performance Criteria may be reduced by the Committee on the
basis of such further considerations as the Committee in its sole discretion
shall determine.”

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5.                                       Consideration for Restricted Stock
Awards.  Effective as of the date written above, Section 7(a)(i) is deleted in
its entirety and replaced with the following:

“(i)                              Consideration.  A restricted Stock Award may
be awarded for any lawful consideration permitted under the laws of the
Company’s state of incorporation.”

6.                                       Termination of Participant’s Continuous
Service.  Effective as of the date written above, Section 7(a)(iii) is deleted
in its entirety and replaced with the following:

“(iii)                      Termination of Participant’s Continuous Service. 
Unless otherwise provided in the restricted Stock Award Agreement, in the event
a Participant’s Continuous Service terminates prior to a vesting date set forth
in the restricted Stock Award Agreement, any unvested restricted Stock Award
shall be forfeited and automatically transferred to and reacquired by the
Company at no cost to the Company, and neither the Participant nor his or her
heirs, executors, administrators or successors shall have any right or interest
in the restricted Stock Award.”

7.                                       Stockholder Rights.  Effective upon the
approval of the Company’s stockholders, Section 10(e)(ii) is deleted in its
entirety and replaced with the following:

“(ii)                          Restricted Stock.  Unless otherwise provided in
and upon the terms and conditions in the Stock Award Agreement governing an
award of restricted stock, a Participant shall have the right to receive all
dividends and other distributions paid or made respecting such restricted
stock.”

8.                                       Amendment of Plan.  Effective as of the
date written above, the provision “. . . Nasdaq or . . . ” in Section 12(a)
shall be deleted each place it appears.

9.                                       Effect on Plan.  Except as otherwise
set forth in this Amendment No. 1, the Plan shall remain in full force and
effect.

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IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed
this Amendment No. 1 to the Plan effective as of the date first indicated above.

VENOCO, INC.

 

a Delaware corporation

 

 

 

 

 

By:

Timothy M. Marquez

 

 

 

 

Its:

Chief Executive Officer

 

 

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