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Exhibit 10.7  

 
 

AGREEMENT FOR PURCHASE AND SALE OF LIMITED LIABILITY
  COMPANY AND MEMBERSHIP INTERESTS THEREIN    
    

        THIS AGREEMENT FOR PURCHASE AND SALE OF MEMBERSHIP INTERESTS (the "Agreement") is made and entered into effective
as of December 3, 2004 (the "Effective Date"), by, between and among Marquez Energy, LLC
("MELLC") and Timothy Marquez ("Marquez"), David Christofferson
("Christofferson"), Terry Sherban ("Sherban") and Kevin
Morrato ("Morrato") (Marquez, Christofferson, Sherban and Morrato collectively referred to herein as
"Sellers") and Venoco, Inc. ("Buyer"), with reference to the following facts: 

Recitals  

        A.    Marquez,
Christofferson, Sherban and Morroto (the "Members") collectively own one hundred percent (100%) of the
outstanding membership interests in MELLC, a Colorado limited liability company (the "Membership Interests"), in the respective percentages set forth on  Schedule A hereto ("Membership Percentage Interest"). 

        B.    MELLC
owns the oil and gas properties, associated facilities and equipment, seismic data and other rights and interests as described on  Schedule B hereto (the "Properties"). 

        C.    Sellers
desire to sell, and Buyer desires to purchase, all of Sellers' right, title and interest in and to Sellers' Membership Interests and MELLC such that at Closing
Buyer will become the sole member of MELLC. 

Agreement  

        NOW, THEREFORE, in consideration of the premises set forth above and subject to the mutual covenants, agreements, provisions, representations, warranties,
conditions and terms of this Agreement, the parties agree as follows: 

        1.     Purchase and Sale. Subject to the terms, covenants and conditions set forth in this Agreement each of the Members agrees
to sell, transfer, assign and deliver to Buyer, and Buyer hereby agrees to purchase from Sellers, all of Sellers' Membership Interests in MELLC. 

        2.     Deposit. Upon execution of this Agreement Buyer shall pay to each of the Members their Membership Percentage Interest
share of a deposit in the amount of $2,000,000.00 (the "Deposit"), which amount shall be applied to the Purchase Price at Closing, or if Closing does
not occur, either returned to Buyer or retained by Sellers as set forth in Section 11, below. 

        3.     Purchase Price. 

        3.1   The
purchase price for Sellers' Membership Interests shall be determined as set forth in subparagraph (b), below, (the "Preliminary Purchase
Price") as adjusted in subparagraph (c), below, but in no event shall it exceed a total of Twenty Five Million Dollars ($25,000,000.00). At Closing, the Preliminary Purchase
Price, less the Deposit, shall be payable to each of the Members based on their respective Membership Percentage Interests. 

        3.2   The
Preliminary Purchase Price shall be an amount equal to the Member's equity as set forth in the December 31, 2004 balance sheet of MELLC, as prepared pursuant
to Generally Accepted Accounting Principles and audited by the public accounting firm of Hein and Associates, LLP (i) adjusted to remove any effect of the Excluded Assets, (ii) less the
book value of oil and gas properties as set forth on the balance sheet, (iii) plus the value of such oil and gas properties based upon the volume of the PDP, PDNP and PUD reserve categories
(other than Excluded Reserves) as determined by Netherland, Sewell and Associates ("NSA") as of December 31, 2004, provided such reserve
calculation shall be based upon NYMEX strip pricing as as set forth on Schedule 3.2 hereto (rather than December 31, 2004), multiplied by
$1.75 for each MCFE of PDP 

 

reserves;
$1.00 for each MCFE of PDNP reserves, and $0.75 for each MCFE of PUD reserves(1) (the "Initial NSA Report"). 

	(1)
	MCFE
shall be calculated by converting each barrel of oil or condensate to an MCF of natural gas by using a conversion ratio of 1 barrel of oil = 6 MCF of natural gas. The converted
barrels shall then be added to the MCF total as determined by NSA to calculate the MCFE. 

As
used herein Excluded Assets refers to rights and interests of MELLC in the Willows and Grimes Fields in California acquired pursuant to that certain
Participation Rights Agreement between Buyer and MELLC dated as of September 1, 2004. For purposes of determining the Preliminary Purchase Price and any adjusted purchase price as provided in
subparagraph (c), below, no capital contribution value, no reserve value and no liabilities attributable to the MELLC ownership in the Participation Rights Agreement nor any future value or
liabilities attributable to any agreement between the Sellers and Merrion Oil and Gas regarding any rights Merrion Oil and Gas may have or may acquire in such Participation Rights Agreement or the
assets subject thereto shall be considered; the result being that for all purposes of determining the Preliminary Purchase Price and any adjusted purchase price, it shall be as if such Participation
Rights Agreement had never been executed. 

        3.3   The
Preliminary Purchase Price shall be subject to adjustment in January 2006 and January 2007 based on third party reserve reports prepared as of
December 31, 2005 and December 31, 2006, respectively, as such reports relate to the Properties (other than Excluded Properties) as follows: 

        3.3.1
In January 2006 Buyer shall instruct NSA (or another nationally recognized engineering firm) to calculate quantities of all reserves then attributable to the Properties(2).
Such report (the "First Supplemental Report") shall set forth the quantities of such reserves as of December 31, 2004, but using NYMEX pricing as
of the Effective Date, as if the reservoir data known at the time such report is prepared had been known as of the date of the Initial NSA Report. If the formation evaluated was classified PDP, PDNP,
or PUD on the Initial NSA Report, the comparable reserves shall be classed in the same categories on the First Supplemental Report. If the First Supplemental Report reserves are attributable to
Properties which had not been given any proved reserves in the Initial NSA Report, such reserves shall be classified as PUD as of the December 31, 2004 effective date of the First Supplemental
Report. The purpose of the Report is to determine what the Preliminary Purchase Price would have been if all reserves included in the First Supplemental Report had been included in the Initial NSA
Report in the categories they would have been included in at December 31, 2004. In the event the information contained in the First Supplemental Report indicates a value higher than the
Preliminary Purchase Price, Buyer shall within thirty (30) days of such report pay each of the Members, based on their Membership Percentage Interest, their proportionate share of such
increased amount, subject to the maximum purchase price as set forth in paragraph 3(a). 

	(2)
	For
purposes of this section 3 (c), the use of the term Properties does not include Excluded Properties. 

        3.3.2
In January 2007 the same process as described above shall occur and any increase in the value of the reserves as of December 31, 2004 shall result in Buyer paying
such differential amount to the Sellers. 

2

 

        4.     Representations and Warranties. 

        4.1   Representations and Warranties of Sellers. Sellers each represent and warrant to Buyer as follows: 

        4.1.1
Seller has all requisite power and authority to execute, deliver and perform all of Sellers' obligations under this Agreement and to consummate the transactions contemplated
hereby. This agreement has been duly executed and delivered by Sellers and is enforceable according to its terms except as enforceability may be limited by bankruptcy or other laws affecting
creditor's rights generally and limitations on equitable remedies. 

        4.1.2
Sellers each own beneficially and legally each of Sellers' Membership Percentage Interests, free and clear of all liens, encumbrances, rights, charges and assessments of every
nature and Sellers' Membership Interests are not subject to any restriction which would prevent the transfer of Sellers' Membership Interests to Buyer. No Seller has granted any option or right to
purchase or acquire any of Sellers' Membership Interests nor has any Seller entered into any contract, agreement, commitment, understanding or arrangement relating to the Sellers' Membership
Interests, or by which Seller is or may be bound or obligated to transfer or dispose of any of Sellers' Membership Interests. The transfer and delivery of the Sellers' Membership Interests to Buyer as
contemplated by this Agreement will, as of the Closing Date, transfer all of Sellers' rights to the Sellers' Membership Interests free and clear of all liens, encumbrances, rights, charges and
assessments of every nature. 

        4.1.3
Upon the transfer of Sellers' Membership Interests to Buyer hereunder, Buyer will have good and marketable legal and beneficial title to Sellers' Membership Interests, including
any and all voting rights pertaining to Sellers' Membership Interests, free and clear of all liens, encumbrances, rights, charges and assessments of any nature whatsoever. 

        4.1.4
Except with respect to MELLC's Credit Agreement with the Bank of Oklahoma, the execution, delivery and performance by Sellers of this Agreement and the consummation of the
transactions contemplated hereby do not and shall not (i) conflict with or result in any breach of any of the provisions of, (ii) constitute a default under, (iii) result in a
violation of, or (iv) require any authorization, consent, approval, license, permit, exemption or other action by or notice to or filing with any court or other governmental entity, under the
provisions of any agreement, contract, instrument, or any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of an arbitrator or
governmental entity; except where such conflict, breach, default, violation or requirement would not have a material adverse effect. 

        4.1.5
There are no actions, suits, proceedings, orders or investigations pending or, to Sellers' knowledge, threatened against or affecting such Seller at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would adversely affect Sellers' performance under
this Agreement or the consummation of the transactions contemplated hereby. 

        4.1.6
There are no claims for brokerage commissions, finders fees' or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Seller. 

        4.1.7
Except as set forth in Schedule 4.1.7, MELLC does not have any employees, agents or contractors with whom it has any contractual or other obligations, other than vendors
whose contracts are cancelable upon notice of no more than 30 days. 

3

 

        4.1.8
MELLC is not in violation of any order of any court or governmental authority or environmental law, with respect to operations on any of its properties, and there are no pending
or, to the knowledge of Sellers', threatened actions or proceedings by any regulatory entity with respect to its operations. 

        4.1.9
All material notices, permits, licenses or similar authorizations, if any, required to be obtained or filed by MELLC in connection with the operation or use of any and all property
of MELLC, including but not limited to past or present treatment, storage, disposal or release of a hazardous substance or solid waste into the environment, have been duly obtained or filed. 

        4.2   Representations and Warranties of Buyer. Buyer has all requisite power and authority to execute, deliver and perform all
of Buyer's obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and
is enforceable according to its terms except as enforceability may be limited by bankruptcy or other laws affecting creditor's rights generally and limitations on equitable remedies. 

        5.     Covenants of Sellers.

        5.1   Sellers
covenants that from the Effective Date to the Closing Date, except (a) as provided herein, (b) as required by any obligation, agreement, lease,
contract, or instrument referred to on any Exhibit hereof, or (c) as otherwise consented to in writing by Buyer, Sellers will not and will not allow MELLC to (i) act in any manner
with respect to the Properties other than in the normal, usual and customary manner, consistent with prior practice; (ii) dispose of, encumber or relinquish any of the Properties (other than
relinquishments resulting from the expiration of leases that Seller has no right or option to renew); (iii) waive, compromise or settle any material right or claim with respect to any of the
Properties; (iv) make capital or workover expenditures with respect to the Properties, except in the ordinary course of Seller's business or when required by an emergency when there shall have
been insufficient time to obtain advance consent. Seller will promptly notify Buyer of any such emergency expenditures. 

        5.2   From
January 1, 2005 until Closing MELLC shall not, and Sellers shall not cause MELLC to (i) make any distributions to its Members except as specifically
provided in Section 13.2 hereof, (ii) pay bonuses or make any other out of the ordinary payments to its Members who are also employees of MELLC, (iii) incur any debt or material
contractual commitments, without Buyer's prior written consent, or (iv) take any other action, the effect of which would be to diminish the value of MELLC. 

        6.     Due Diligence.

        6.1   Sellers
shall afford to Buyer and its authorized representatives reasonable access, at Buyer's sole risk and expense, from the date hereof until the Closing Date during
normal business hours, to (a) the Properties operated by Seller, provided, however, that Buyer shall indemnify and hold harmless Sellers from and against any and all losses, costs,
damages, obligations, claims, liabilities, expenses and causes of action arising from Buyer's inspection of the Properties, including, without limitation, claims for personal injuries, property damage
and reasonable attorneys' fees, but excluding claims arising from Seller's gross negligence or willful misconduct, and (b) Sellers' operating, accounting, contract, corporate and legal files,
records, materials, data and information regarding the Properties ("Data"); provided however, that Data shall not include (i) any legal materials
the disclosure of which Seller determines would jeopardize the assertion of a privilege in ongoing or anticipated litigation with third parties, or (ii) information, the disclosure of which
would violate any confidentiality agreement to which Sellers are bound. 

4

 

        6.2   Buyer
shall have a period of thirty-five (35) days commencing on the Effective Date (the "Due Diligence
Period") to satisfy itself that Sellers have good and marketable title to the Properties and that there are no material adverse environmental conditions affecting the
Properties. 

        6.3   If
Buyer determines, in good faith, that any title defects exist with respect to the Properties it shall promptly, but in no event later than five (5) days after
the termination of the Due Diligence Period, notify Sellers in writing describing the nature of the defects. Sellers shall have ten (10) days after receipt of such notification to cure such
defect(s). If Sellers are unable to cure such defects by the end of such period or provide Buyer assurance that such defects shall be cured by Sellers prior to Closing then, if such defects, in
Buyer's reasonable judgment diminish the value of the Properties by an amount greater than $250,000, Buyer may terminate this Agreement without further obligation to Sellers by providing written
notification to Sellers of such election. 

        6.4   If
Buyer determines in good faith that any material adverse environmental conditions exist with respect to the Properties it shall promptly, but in no event later than
five (5) days after the termination of the Due Diligence Period, notify Sellers in writing describing the nature of the condition. Sellers shall have ten (10) days after receipt of such
notification to cure such condition. If Sellers are unable to cure such condition by the end of such period or provide Buyer assurance that such condition will be cured by Sellers prior to Closing
then, if such condition, in Buyer's reasonable judgment diminish the value of the Properties by an amount greater than $250,000, Buyer may terminate this Agreement without further obligation to
Sellers by providing written notification to Sellers of such election. 

        7.     Conditions Precedent to the Obligations of Sellers. The obligations of Sellers to be performed at
the Closing are subject to the fulfillment (or waiver by Sellers in its their sole discretion), before or at the Closing, of each of the following conditions: 

        7.1   The
representations and warranties by Buyer set forth in this Agreement shall be true and correct in all material respects at and as of the Closing as though made at and
as of the Closing; and Buyer shall have performed and complied with in all material respects all covenants and agreements required to be performed and satisfied by it at or prior to Closing. 

        7.2   There
shall be no suits, actions or other proceedings pending or threatened to enjoin the consummation of the transactions contemplated by this Agreement or seeking
substantial damages against Seller in connection therewith. 

        7.3   All
consents and approvals required to be obtained for this transaction shall have been obtained by Sellers or waived by Buyer or shall have expired without being
exercised, except for those consents and approvals which are customarily obtained after closing. 

        8.     Conditions Precedent to the Obligations of Buyer. The obligations of Buyer to be performed at the Closing are subject to
the fulfillment (or waiver by Buyer in its sole discretion), before or at the Closing, of each of the following conditions: 

        8.1   The
representations and warranties by Sellers set forth in this Agreement shall be true and correct in all material respects at and as of the Closing as though made at
and as of the Closing; and Sellers, and each of them, shall have performed and complied with in all material respects all covenants and agreements required to be performed and satisfied by it at or
prior to Closing. 

        8.2   There
shall be no suits, actions or other proceedings pending or threatened to enjoin the consummation of the transactions contemplated by this Agreement or seeking
substantial damages against Buyer in connection therewith. 

5

 

        8.3   Buyer
shall have completed the private placement of $150,000,000 of its senior unsecured notes; provided that Buyer shall have no obligation to sell such senior notes
if, in its sole judgment, the terms and conditions upon which such notes may be sold are not completely satisfactory to Buyer. 

        8.4   There
shall not have been any material adverse change in the value of MELLC which change decreased the value of MELLC in an amount greater than $2,500,000 from the date
of completion of due diligence as provided for in Section 6 of this Agreement through the Closing Date. For purposes of this provision "material adverse change" shall not include (i) any
change in value related to natural gas prices and oil prices or other general industry conditions, (ii) any changes in production rates or gas and oil reserves of MELLC, or
(iii) causality losses covered by insurance. 

        8.5   The
Bank of Oklahoma shall have provided Buyer with a written consent to the transaction contemplated by this Agreement in form and substance acceptable to Buyer. 

        9.     Closing. Closing shall occur at a time and place mutually agreeable to Buyer and Sellers no later then the earlier of
(i) 90 days after the Effective Date, or (ii) February 28, 2005 (the "Closing Date"). 

        10.   Sellers' Delivery as Closing. On the Closing Date, Seller shall deliver to Buyer an Assignment of Membership Interests
for Sellers' Membership Interests in the form of Exhibit A attached hereto. 

        11.   Termination of Agreement; Breach. 

        11.1 This
Agreement may be terminated by the mutual written agreement of the parties hereto. In the event of such termination by mutual agreement, Buyer shall have no
further obligation or liability to the Sellers under this Agreement, and the Sellers shall have no further obligation or liability to the Buyer under this Agreement other than the prompt return of the
Deposit. 

        11.2 If
all of Buyer's conditions to closing have been satisfied and Sellers are ready, willing and able to close and Buyer fails or refuses to close on or prior to
February 28, 2005 Sellers may retain the Deposit and pursue any and all other remedies at law or in equity they may have for Buyer's breach. 

        11.3 If
all of Sellers' conditions to closing have been satisfied and Buyer is ready, willing and able to close and Sellers, or any one of them, refuses to close on or prior
to February 28, 2005, Sellers shall promptly return the Deposit to Buyer and Buyer may pursue any and all remedies at law or in equity, including specific performance, it may have against
Sellers. 

        11.4 This
Agreement may be terminated at the Closing Date (i) by Buyer, if all conditions to its obligations to close have not been satisfied or waived as of the
Closing Date or (ii) by Sellers, if all conditions to their obligations to close have not been satisfied or waived as of the Closing Date. Any such termination under this Section 11.4
shall be without liability to the terminating party and upon such termination, Sellers shall return the Deposit to Buyer. 

        11.5 This
Agreement may be terminated at the Closing Date (i) by Buyer, if Buyer is ready, willing and able to close and Sellers are not because, through no fault of
Sellers, any of Sellers' conditions to close are not satisfied as of the Closing Date or (ii) by Sellers, if Sellers are ready, willing and able to close and Buyer is not because, through no
fault of Buyer, any of Buyer's conditions to close are not satisfied as of the Closing Date. Any termination under this Section 11.5 shall be without liability to the terminating party and upon
such termination; Sellers shall return the Deposit to Buyer. 

6

 

        12.   Survival. The representations and warranties contained in Sections 4.1.1 through 4.1.6 and 4.2 of this Agreement shall
survive the execution of this Agreement and shall remain effective until the third anniversary of the Effective Date (the "Expiration Date"). All other
representations and warranties shall terminate at Closing. The surviving representations and warranties shall be of no further force and effect after the Expiration Date, unless and to the extent that
a claim or claims for indemnification have been asserted in writing to Seller (in the case of a claim by a Buyer Indemnitee) or to Buyer (in the case of a claim by a Seller Indemnitee) on or before
the Expiration Date. The covenants of the parties shall survive until they are fully performed or discharged. 

        13.   Further Assurances. The parties shall cooperate and use their respective best efforts promptly to prepare all necessary
documentation, to effect all necessary filings and to obtain all necessary permits, consents, approvals and authorizations of all governmental agencies and other persons necessary or useful to
complete the transactions contemplated by this Agreement. In addition, Seller shall furnish Buyer with all information concerning himself, MELLC and such other matters as may be necessary or
appropriate in connection with any statement, notice or application to be made by or on behalf of MELLC to any governmental agency in connection with the transactions contemplated by this Agreement.
At the request of either party, including after the execution hereof and without payment or any additional consideration other than reimbursement for authorized and documented
out-of-pocket expenses, the other party shall sign and deliver such further documents and take such further actions as may be reasonably requested by the requesting party in
order to give effect in the provisions of this Agreement or to assist such requesting party in connection with any lawsuit, tax audit, other inquiry, accounting review or audit, proceeding or other
matter, whether or not currently pending, which arises out of events or circumstances that precede the Effective Date and that relates to the transactions contemplated by this Agreement. 

        13.1 Single Member Eligibility. Promptly following the execution hereof, Sellers and Buyer shall take any and all actions and
shall execute any and all documents as may be necessary or required in order to authorize and permit MELLC to have a single member and to assure that Buyer will be admitted as and become the sole
member of MELLC in accordance with the terms of, and as prescribed by, MELLC's Articles of Organization and the Operating Agreement, as either or both may be amended, and any other constituent
documents and the laws of the State of Colorado. 

        13.2 Certain Tax Matters. The sale contemplated hereby shall, for federal and state income tax purposes, be complete upon
Closing. Accordingly, Sellers shall be responsible for their respective allocable share of federal and state income tax liability through Closing. MELLC shall distribute to each Member on the Closing
Date an amount equal to 27.5% of the net taxable income (as determined for federal income tax purposes) recognized by MELLC and allocated to its Members. 

        14.   General Provisions. 

        14.1 Assignments, Successors and Assignee. All representations, warranties, covenants and agreements of Buyer and Seller
shall bind their respective heirs, executors, personal representatives, successors and assignees ("Transferees") and shall inure to the benefit of their
respective Transferees. 

7

 

        14.2 Notices. Any notice, request, demand, or other communication required or permitted under this Agreement shall be in
writing and (a) delivered personally, (b) delivered by a national overnight courier (e.g., Federal Express), or (c) transmitted by facsimile, addressed as follows: 

	To Sellers at:	 	Marquez Energy, LLC

370 Seventeenth St.

Denver, CO 80202

Facsimile: (303) 626-8315
	

To Buyer at:	
 	

Venoco, Inc.

5464 Carpinteria Ave.

Carpinteria, CA 93013

Facsimile: (805) 745-1816

Notice
shall be deemed to have been delivered only upon actual delivery to the intended addressee in the case of either personal, courier, or facsimile delivery. The addresses for purposes of this
paragraph may be changed by giving written notice of such change in the manner provided herein for giving notices. Unless and until such written notice is delivered, the latest information stated by
written notice, or provided herein if no written notice of change has been delivered, shall be deemed to continue in effect for all purposes hereunder. 

        14.3 Number and Gender; Headings. Each number and gender shall be deemed to include each other number and gender as the
context may require. The heading and caption contained in this Agreement shall not constitute a part thereof and shall not be used in its construction or interpretation. 

        14.4 Construction and Interpretation. Each party has negotiated this Agreement at arm's length and agrees that its terms
shall not be construed or interpreted in favor of or against any party. 

        14.5 Severability. If any provision of this Agreement is found by any court or arbitral tribunal of competent jurisdiction to
be invalid or unenforceable, the invalidity of such provision shall not affect the other provisions of this Agreement and all provisions not affected by the invalidity shall remain in full force and
effect. 

        14.6 Amendment and Modification. This Agreement may be amended or modified only by a writing executed by both Buyer and
Seller. 

        14.7 Governing Law. The construction, interpretation and performance of this Agreement and all transactions under it shall be
governed by the internal laws of Colorado, and any actions or proceedings hereunder shall be brought in the County of Denver, State of Colorado. 

        14.8 Arbitration. Any controversy between the parties hereto arising under this Agreement and not resolved by agreement shall
be determined by a board of arbitration upon notice of submission given by either Sellers or Buyer to the other, which notice shall name a qualified, independent arbitrator. Within ten
(10) days after the receipt of such notice, the other party(ies) shall name a qualified, independent arbitrator, or failing to do so, the party giving the notice shall name the second. The two
arbitrators so appointed shall, within 15 days after the second arbitrator is named, name the third qualified, independent arbitrator, or failing to do so, the third arbitrator may be appointed
by the Senior Judge (in service) of the United State District Court for the District of Colorado. 

        14.8.1
Determination. The arbitrators selected to act hereunder shall be qualified by education and experience to pass on the particular question in dispute. The arbitrators shall
promptly hear and determine (after due notice of hearing and giving the parties a reasonable opportunity to be heard) the questions submitted, and shall render their decision within sixty 

8

 

(60) days
after appointment of the third arbitrator. The arbitration shall be held in Denver, Colorado. If within such period a decision is not rendered by the board, or majority thereof, new
arbitrators may be named and shall act hereunder at the election of either Buyer or Seller in like manner as if none had been previously named. 

        14.8.2
Decision Binding. The decision of the arbitrators, or the majority thereof, made in writing shall be final and binding upon the parties hereto as to the questions submitted, and
Buyer and Seller will abide by and comply with such decision. The expenses of arbitration, including reasonable
compensation to the arbitrators, shall be borne equally by the parties hereto, except that each party shall bear the compensation and expenses of its own counsel, witnesses, and employees. 

        14.9 Entire Agreement. This Agreement and any agreement executed simultaneously in connection herewith cover all contracts
and agreements among the parties relating to the subject matter of this Agreement. All other contracts and agreements among the parties which relate thereto are hereby terminated. 

        14.10   Authority to Make Agreement. Each party represents and warrants that it has all necessary power and
authority to enter into this Agreement and perform in accordance with the provisions thereof and that the Agreement has been duly and validly authorized, executed and delivered in accordance with all
applicable laws and governing instruments. 

        14.11   No Waiver. Each party may waive any condition precedent for its benefit or any breach by any other party,
but in order to be effective the waiver by the party must be in writing. No waiver of any breach of any of the provisions of this Agreement shall be construed to be a waiver of succeeding breach of
the same or any other provision. 

        14.12   Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, except as expressly provided in this Agreement, and each and every remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing in law or in equity or by statute or otherwise. The election of any one or more remedies shall not constitute a waiver of the right to pursue other available
remedies. 

        14.13   Attorneys. In any action or proceeding to enforce any provisions of this Agreement to seek damages for a
breach of any provision hereof or when the provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy. 

        14.14   Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed
and when delivered, shall be an original, but such counterparts shall together constitute but one and the same instrument. 

9

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above. 

	

 	
 	
"Buyer"
	
 	
 	

Venoco, Inc.
	

 	
 	

By:	
 	

/s/  GREG SCHRAGE      

	

 	
 	
"Sellers"
	
 	
 	

Marquez Energy, LLC
	

 	
 	

/s/  TERRY SHERBAN      

	

 	
 	

Timothy Marquez
	

 	
 	

/s/  TIMOTHY MARQUEZ      

	

 	
 	

David Christofferson
	

 	
 	

/s/  DAVID CHRISTOFFERSON      

	

 	
 	

Terry Sherban
	

 	
 	

/s/  TERRY SHERBAN      

	

 	
 	

Kevin Morrato
	

 	
 	

/s/  KEVIN MORRATO      

10

 
EXHIBIT A  

ASSIGNMENT OF MEMBERSHIP INTERESTS  

        This Assignment of Membership Interests is made as of December     , 2004, by and
between                        , an individual resident of Colorado
("Assignor"), and Venoco, Inc. ("Assignee"). 

        For
good and valuable consideration, receipt of which is hereby acknowledged, Assignor and Assignee agree as follows: 

        1.     Assignor
does hereby assign, transfer and convey unto Assignee all of Assignor's right, title and interest in and to Assignor's Membership Interests in Marquez Energy,
LLC, a Colorado limited liability company (the "Company"), representing            percent (    %) of the
outstanding membership
interests in Company, together with all right, title and interest in and under the operating agreement of MELLC
dated                        (the "Operating
Agreement"). 

        2.     Assignee
hereby acknowledges and accepts the foregoing assignment. 

	

 	
 	

 	
 	

ASSIGNOR:
	

 	
 	

 	
 	

	Address:	 	 	 	 	 	 
	 	 	
	 	 	 	 
	 	 	
	 	 	 	 
	 	 	
	 	 	 	 
	

 	
 	

 	
 	

ASSIGNEE:
	Address:	 	 	 	 	 	 
	 	 	
	 	 	 	 
	 	 	
	 	 	 	 
	 	 	
	 	 	 	 
	

 	
 	

 	
 	

By:	
 	

	

 	
 	

 	
 	

By:	
 	

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Exhibit 10.8  

 
 

Amendment to Sales Agreement    
    

        This Amendment to Sales Agreement ("Agreement") is entered this 21st day of March, 2005 ("Effective Date") by and among Timothy Marquez, David Christofferson,
Terry Sherban, Kevin Morrato, (each, a "Member", and collectively, the "Members"), Venoco, Inc. ("Venoco") and Marquez Energy, LLC ("MELLC"). 

RECITALS  

        WHEREAS, the Members have agreed to sell 100% of the outstanding membership interests ("Membership Interests") in MELLC to Venoco pursuant to that certain
Agreement for Purchase and Sale of Limited Liability Company and Membership Interests Therein, dated December 1, 2004, by and among the Members, MELLC and Venoco ("Sales Agreement"). Terms not
otherwise defined herein shall have the meaning ascribed to them in the Sales Agreement; and 

        WHEREAS,
the parties desire to amend the Sales Agreement; 

        NOW
THEREFORE, in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows. 

AGREEMENT  

        1.     Closing. Closing shall occur at a time and place mutually agreeable to Buyer and Sellers no later than March 22,
2005. 

        2.     Distributions to Pay Taxes. Section 13.2 of the Sales Agreement shall be replaced in its entirety by the following: 

        "13.2    Certain Tax Matters.    The sale contemplated hereby shall, for federal income tax purposes, be complete upon
Closing. Accordingly, Sellers shall be responsible for their respective allocable shares of federal and state income tax liability through Closing. MELLC shall distribute to each Member on the Closing
Date an amount equal to 27.5% of the Member's distributive share of the estimated net taxable income (as determined for federal income tax purposes) recognized by MELLC and allocated to its Members
for the calendar year 2004 (but excluding the amount of net income arising from transactions during the year between MELLC and Venoco (such amount, the "Venoco Income")). As soon as practicable after
the Closing, (i) MELLC shall cause its accountants to finalize the determination of MELLC's federal taxable income for the calendar year 2004 and to determine MELLC's federal taxable income for
the short year from January 1, 2005 through the Closing Date (the "Short Period"), and, for each Member of MELLC, (ii) MELLC and such Member shall make payments to each other so as to
cause the total cumulative net amount received by such Member under this Section 13.2 to equal the sum of 27.5% of the Member's distributive share of MELLC's federal taxable income for the
calendar year 2004 (excluding the Venoco Income) plus the Member's distributive share of MELLC's federal taxable income, if any, for Short Period, less the Member's distributive share of MELLC's
federal taxable loss, if any, for the Short Period and less the total amount distributed to the Member by MELLC during the Short Period (other than any distributions made pursuant to this
Section 13.2). The payments made to the Members with respect to their respective shares of MELLC's federal taxable income for the calendar year 2004 shall be counted as part of the purchase
price for purposes of Section 3.1. The foregoing methods for computing payments to be made under this Section 13.2 are based upon the understanding that the amount of Venoco Income
exceeds the amount of distributions made by MELLC to its Members during 2004. MELLC represents and warrants that such understanding is accurate." 

 

        3.     Reverse Exchange Option. Buyer shall have the right to elect to effect a "reverse" tax deferred exchange under Internal
Revenue Code Section 1031 and Revenue Procedure 2000-37 (a "Reverse Exchange") at any time at or before the Closing. If Buyer elects to effect a Reverse Exchange, Sellers agree to
execute instruments and agreements to effect the Reverse Exchange, provided Sellers shall incur no additional costs, expenses, fees or liabilities as a result of or connected with the Reverse
Exchange. Buyer may assign any of its rights and delegate performance of any of its duties under the Sales Agreement in whole or in part to a third party in order to effect such a Reverse Exchange;
provided that Buyer shall remain responsible to Sellers for the full and prompt performance of its delegated duties. Buyer shall indemnify and holder Sellers harmless from and against all claims,
expenses (including reasonable professional fees), loss and liabilities resulting from their participation in any Reverse Exchange undertaken pursuant to Buyer's request. 

        4.     Final Adjustments. The calculation of the Preliminary Purchase Price has been based, in part, on the December 31,
2004 unaudited balance sheet of MELLC. Promptly following the certification by Hein and Associates LLP of the December 31, 2004 financial statements, Venoco and the Members shall make payments
to each other as necessary to reflect such change in the purchase price as may be required under Section 3.2 by reason of any difference between the December 31, 2004 audited and
unaudited balance sheets. 

        5.     Effectiveness of Agreement. Except as expressly amended hereby, the Sales Agreement shall remain effective in accordance
with its terms. 

        6.     Entire Agreement. This Agreement contains the entire agreement of the parties with regard to the subject matter contained
herein and supersedes in their entirety any prior written or verbal agreements, express or implied. This Agreement shall be binding on and inure to the benefit of the parties, and their respective
heirs, assigns and personal representatives. 

        7.     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado,
without regard to its conflicts of law principles. 

        8.     Authority. Each party represents and warrants that he has the necessary legal authority and authorization to enter into
this Agreement, to perform each and every duty and/or obligation imposed by this Agreement, and that this Agreement represents a valid, binding and enforceable legal obligation of said party. 

        9.     Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of
which together shall constitute one instrument. 

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

	

 	
 	

/s/  TIMOTHY MARQUEZ      
 Timothy Marquez
	

 	
 	

/s/  DAVID CHRISTOFFERSON      
 David Christofferson
	

 	
 	

/s/  TERRY SHERBAN      
 Terry Sherban
	

 	
 	

/s/  KEVIN MORRATO      
 Kevin Morrato
	

 	
 	

VENOCO, INC.
	

 	
 	

By:	
 	

/s/  GREGORY B. SCHRAGE      
 Gregory B. Schrage
	

 	
 	

MARQUEZ ENERGY, LLC
	

 	
 	

By:	
 	

/s/  TIMOTHY MARQUEZ      
 Timothy Marquez

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Amendment to Sales Agreement

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