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Exhibit 10.11  

Execution Copy  

 
 

EMPLOYMENT AGREEMENT    
    

        This Employment Agreement ("Agreement") is entered into effective as of February 5, 2005 by and between Venoco, Inc., a Delaware corporation
("Company"), and William Schneider ("Employee"). 

        WHEREAS,
the Company desires to employ Employee as its President, and Employee desires to accept such employment; 

        NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows: 

        1.    Employment.    The Company hereby employs Employee, and Employee hereby accepts employment by the Company, as
the President and on the terms and conditions set forth in this Agreement. 

        2.    Term of Employment.    Subject to the provisions for earlier termination provided in the Agreement, the term of
this Agreement (the "Term") shall commence on the effective date of this Agreement as stated above and shall terminate on December 31, 2006; provided,
however, commencing on January 1, 2006 and on each January 1 thereafter, the term of this Agreement shall automatically be extended one additional year unless,
not later than September 30 of the preceding year, the Board of Directors of the Company
(the "Board") shall give written notice to Employee that the Term of the Agreement shall cease to be so extended; provided, further, that if a Change in
Control, as defined in Section 8, shall have occurred during the original or extended Term of this Agreement, the Term shall continue in effect for a period of not less than 36 months
beyond the date of such Change in Control. In no event, however, shall the Term of this Agreement extend beyond the end of the calendar month in which Employee's 65th birthday occurs. Notwithstanding
any provision of this Agreement to the contrary, termination of this Agreement shall not alter or impair any rights or benefits of Employee (or Employee's estate or beneficiaries) that have arisen
under this Agreement on or prior to such termination, including, without limitation, the provisions of Sections 9(c), 15 and 18. 

        3.    Employee's Duties.    During the Term of this Agreement, Employee shall serve as the President of the Company,
based in Denver, Colorado, and with such customary duties and responsibilities as may from time to time be assigned to him by the Board, provided that such duties are at all times consistent with the
duties of such position. 

        Employee
agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the duties and
responsibilities assigned to Employee hereunder, to use reasonable best efforts to perform faithfully and efficiently such duties and responsibilities. 

        4.    Base Compensation.    For services rendered by Employee under this Agreement, the Company shall pay to Employee
a base salary ("Base Compensation") of $285,000.00 per annum, payable in accordance with the Company's customary payroll practice for its executive officers. The amount of Base Compensation shall be
reviewed periodically and may be increased to reflect inflation or such other adjustments as the Board may deem appropriate but Base Compensation, as increased, may not be decreased thereafter. 

        5.    Signing and Annual Bonuses.    Upon Employee's execution of this Agreement, the Company shall pay to Employee a
signing bonus of $25,000.00. Additionally, Employee shall be eligible to 

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participate
in the Company's Incentive Compensation Plan; under which cash bonuses are paid to employees based upon the performance of both the Company and the employee. The target bonus for the
position of President shall be 65% of Base Compensation. The annual bonus for 2005 will be paid no later than May 31, 2006 and shall be based on Employee's performance as measured against goals
established by the Company's Compensation Committee. 

        6.    Stock Options.    Promptly after Employee commences employment, or promptly after the Company timely adopts a
Stock Incentive Plan if no such plan exists on the day Employee commences employment, Employee shall be granted options to purchase shares of Company stock that represent 4.5% of the then outstanding
shares of Company stock. Stock options will at a minimum include
provisions similar to those in Attachment I, Stock Option Description. The strike price of the shares reflecting 3.5% of the then outstanding shares of Company stock shall be $45 per share; the strike
price of the shares reflecting 0.5% of the then outstanding shares of Company stock shall be $55 per share; and the strike price of the shares reflecting 0.5% of the then outstanding shares of Company
stock shall be $65 per share. In all cases, the strike price will be adjusted for any stock splits, stock dividends, recapitalization, or similar events subsequent to signing of this agreement. Pro
rata for the various strike prices, twenty percent (20%) of such options shall vest immediately upon being granted, and the remainder shall vest in equal lots on the first, second, third, and fourth
anniversaries of the date that Employee commences employment. In the event of a Change in Control as defined in Section 8 hereof or discharge other than for Misconduct (as defined herein) all
options shall become immediately vested. Vested options shall remain exercisable for a period of two (2) years following termination of employment. Unvested options shall expire upon
termination of employment. Should the Company not adopt a Stock Incentive Plan that affords Employee such options, then the Company shall provide Employee with alternate compensation that is at least
as valuable to Employee as the options contemplated herein. 

        7.    Additional Benefits.    In addition to the other compensation and benefits provided for in this Agreement,
Employee shall be entitled to receive all fringe benefits and perquisites offered by the Company to its executive officers. Such benefits shall include, without limitation, reimbursement of relocation
expenses, including temporary housing for Employee and his family for up to 60 days, incurred by Employee in moving himself and his family to Denver, Colorado; 4 weeks paid vacation per year;
participation in the Company's 401 (k) Plan; participation in other incentive and benefit plans offered generally to key employees; participation in various employee benefit plans or programs
provided to the employees of the Company in general, subject to the regular eligibility requirements with respect to each of such benefit plans or programs; and such other benefits or prerequisites as
may be approved by the Board during the Term of this Agreement. Nothing in this paragraph shall be deemed to prohibit the Company from making any changes in any ERISA plans, programs or benefits
described in this Section 7, provided the change similarly affects all executives of the Company similarly situated. 

        8.    Change in Control.    

        For
purposes of this Agreement, a "Change in Control" shall mean the occurrence of one of the following events: 

          (i)  any
"person" (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than (a) a
trustee or other fiduciary holding securities under an employee benefit plan of the Company (b) any affiliate, or any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company, or (c) Timothy M. Marquez, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding
securities; 

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         (ii)  during
any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period
constitute the Board of Directors of the Company, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) of this Section) whose election by the Board of Directors of the Company or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was
previously so approved (hereinafter referred to as "Continuing Directors"), cease for any reason to constitute at least a majority thereof; 

        (iii)  the
stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (a) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger or consolidation or
(b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the
combined voting power of the Company's then outstanding securities; or 

        (iv)  the
stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets. For purposes of this clause (iv), the term "the sale or disposition by the Company of all or substantially all of the Company's assets" shall mean a sale or other
disposition transaction or series of related transactions involving assets of the Company or of any direct or indirect subsidiary of the Company (including the stock of any direct or indirect
subsidiary of the Company) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board of
Directors of the Company determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than two-thirds of the "fair market value of the
Company" (as hereinafter defined). For purposes of the preceding sentence, the "fair market value of the Company" shall be the aggregate market value of the Company's outstanding common stock (on a
fully diluted basis) plus the aggregate market value of the Company's other outstanding equity securities. The aggregate market value of the Company's equity securities shall be determined by
multiplying the number of shares of the Company's
common stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of such security for the ten trading days immediately preceding the Transaction Date, or if not publicly traded, by such other method as the Board of
Directors of the Company shall determine is appropriate. 

        9.    Termination.    This Agreement may be terminated prior to the end of its Term as set forth below. 

        (a)    Resignation.    Employee may resign, including by reason of retirement, his position at any time. In the event
of such resignation, except in the case of resignation on or following a Change in Control either (i) for Good Reason (as defined below) or (ii) by Employee, with or without Good Reason,
during the 30-day period following the six-month anniversary of the date of the Change in Control (the "Window Period"), Employee shall not be entitled to further compensation
pursuant to this Agreement. A resignation by Employee during the Window Period shall be treated for all purposes the same as a resignation by Employee for Good Reason. 

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        (b)    Death.    If Employee's employment is terminated due to his death, the Company shall pay Employee's
beneficiaries or legal representatives (i) within 15 days, any Base Compensation and vacation pay which had accrued hereunder at the date of Employee's death; and (ii) within
30 days, the same benefits that Employee would receive in the event of Discharge following a Change in Control as described in Section 9(c)(i), below. 

        (c)    Discharge.    

          (i)  The
Company may terminate this Agreement and Employee's employment for any reason deemed sufficient by the Company upon notice as provided in Section 12.
However, in the event that Employee's employment is terminated during the Term by the Company on or following a Change in Control and for any reason other than his Misconduct (as defined in
Section 9(c)(ii) below) then: (A) the Company shall pay in a lump sum, in cash, to Employee, within 15 days of the Date of Termination, an amount equal to three times the
sum of (1) Employee's Base Compensation, (2) an amount equal to the highest incentive award paid or payable, as the case may be, to Employee under the Company's Incentive Compensation
Plan during the current year and the three years prior to termination, (3) an amount equal to the amount of contributions that the Company made on behalf of Employee under the Company's 401(k)
Plan during the prior year disregarding any limitations on benefits or covered compensation imposed by I.R.C. Sections 401(a)(17), 401(k), 401(m) or 415; (B) for the 36-month period
after such Date of Termination, the Company shall provide or arrange to provide Employee (and Employee's dependents) with life, disability, accident and group health insurance benefits substantially
similar to those which Employee (and Employee's dependents) were receiving immediately prior to the Notice of Termination, with the Employee charged a monthly
premium(s) for such coverage(s) that does not exceed the premium(s) charged to an active employee for comparable coverage(s); benefits otherwise receivable by Employee pursuant to this
clause (B) shall be reduced to the extent comparable benefits are actually received by Employee (and Employee's dependents) during the 36-month period following Employee's
termination, and any such benefits actually received by Employee shall be reported to the Company (to the extent coverage and/or benefits received under a self-insured health plan of the
Company (any successor or affiliate) are taxable to Employee, the Company shall make Employee "whole" on a net after tax basis); (C) within 30 days of the Date of Termination or, if
later, the first date on which such payment would not subject Employee to suit under Section 16(b) of the Securities Exchange Act of 1934, if applicable, the Company shall offer to pay to
Employee for cancellation of all outstanding stock-based awards then held by Employee on the Date of Termination (collectively, "Awards"), a lump sum amount in cash equal to the sum of the value (with
respect to an option or stock appreciation right, the "spread"; and with respect to restricted stock or phantom stock, the value of an unrestricted share) of all such Awards, calculated, where
applicable, as if all corporate performance goals had been achieved (thus warranting full value of the Award) and in the case where the Company's stock is not publicly traded, using a fair market
value on the Date of Termination as determined by an independent third party agreeable to the Company and Employee. The fair market value shall be determined based on the trading values of a
comparable group of public companies as determined by the independent third party and the aggregate value discount applied for various factors including illiquidity, being private and minority
ownership shall not exceed 15%. 

         (ii)  Notwithstanding
the foregoing provisions of this Section 9, in the event Employee is terminated because of Misconduct, the Company shall have no compensation
obligations pursuant to this Agreement after the Date of Termination. As used herein, "Misconduct" means (a) the willful and continued failure by Employee to substantially perform his duties
with the Company (other than any such failure resulting from Employee's incapacity due to 

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physical
or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by Employee for Good Reason), after a written demand for substantial performance is
delivered to Employee by the Board, which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed his duties, or (b) the willful
engaging by Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes hereof, no act, or failure to act, on Employee's part shall be
deemed "willful" unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Misconduct unless and until there shall have been delivered to Employee a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to Employee and an
opportunity for Employee, together with Employee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board Employee was guilty of conduct set forth above and
specifying the particulars thereof in detail. 

        (iii)  If
the Company terminates this Agreement and Employee's employment before the expiration of the Term, other than following a Change in Control and other than for
Misconduct, the Company shall pay in a lump sum, in cash, to Employee within 15 days of the Date of Termination, an amount equal to
two times the sum of (1) Employee's Base Compensation and (2) an amount equal the greater of $185,000 or the highest incentive award paid or payable, as the case may be, during the three
years prior to termination. 

        (d)    Disability.    

          (i)  If
Employee shall have been absent from the full-time performance of Employee's duties with the Company for six consecutive months as a result of Employee's
incapacity due to physical or mental illness, as determined by Employee's physician, and within 30 days after written Notice of Termination is given by the Company Employee shall not have
returned to the full-time performance of Employee's duties, Employee's employment may be terminated by the Company for "Disability" and Employee shall upon such termination be entitled to
receive the payments described in Section 9(c)(i) as though Employee has been terminated following a Change in Control. 

         (ii)  If
Employee fails during any period during the Term to perform Employee's full-time duties with the Company as a result of incapacity due to physical or
mental illness, as determined by Employee's physician, Employee shall continue to receive his Base Compensation, together with all compensation payable to Employee under the Company's Long Term
Disability Plan or other similar plan during such period until this Agreement is terminated. 

        (e)    Resignation for Good Reason.    In the event of a Change in Control, Employee shall be entitled to terminate
his employment for Good Reason as defined herein. If Employee terminates his employment for Good Reason, Employee shall be entitled to the compensation and benefits provided in
Paragraph 9(c)(i) hereof. "Good Reason" shall mean (1) the breach of any of the Company's obligations under this Agreement without Employee's express written consent or
(2) the occurrence of any of the following circumstances without Employee's express written consent unless such breach or circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination pursuant to Subsection 9(f) given in respect thereof: 

          (i)  the
assignment to Employee of any duties that, in the good faith opinion of Employee, are inconsistent with the position in the Company that Employee held immediately
prior thereto, or an adverse alteration (as determined in good faith by Employee) in the 

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nature
or status of Employee's office, title, responsibilities, including reporting responsibilities, or the conditions of Employee's employment from those in effect immediately prior thereto or a
failure to maintain Employee as President; 

         (ii)  a
reduction in Employee's Base Compensation; 

        (iii)  the
failure by the Company to pay to Employee any portion of Employee's current compensation or to pay to Employee any portion of an installment of deferred
compensation under any deferred compensation program of the Company within seven days of the date such compensation is due; 

        (iv)  the
failure by the Company to continue in effect any compensation plan in which Employee participates that is material to Employee's total compensation unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue Employee's participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of Employee's participation relative to other
participants, as existed at the time of the Change in Control; 

         (v)  the
failure by the Company to continue to provide Employee with benefits substantially similar to those enjoyed by Employee under any of the Company's life insurance,
medical, health and accident, or disability plans in which Employee was participating at the time of this Agreement; the taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive Employee of any material fringe benefit enjoyed by Employee at the time of this Agreement, or the failure by the Company to provide Employee with the
number of paid vacation days to which Employee is entitled on the basis of years of service with the Company (and its predecessors) in accordance with the Company's normal vacation policy in effect at
the time of the Change in Control; 

        (vi)  the
failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 14
hereof; 

       (vii)  the
relocation of the Company's principal executive offices to a location outside the greater Denver, Colorado area, or the Company's requiring Employee to relocate
anywhere other than the location of the Company's principal executive offices, except for required travel on the Company's business to an extent substantially consistent with Employee's business
travel obligations immediately prior to the time of the Change in Control; 

      (viii)  the
amendment, modification or repeal of any provision of the Certificate of Incorporation, or the Bylaws of the Company which was in effect immediately prior to time
of this Agreement, if such amendment, modification or repeal would materially adversely effect Employee's right to indemnification by the Company; or 

        (ix)  any
purported termination of Employee's employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection (f) hereof,
which purported termination shall not be effective for purposes of this Agreement. 

        Notwithstanding
anything in this Agreement to the contrary, if Employee's employment with the Company terminates prior to, but within six months of, the date on which a Change in Control
occurs and it is reasonably demonstrated by Employee that such termination of employment was (i) by the Company in connection with or anticipation of the Change in Control or (ii) by
Employee under circumstances which would have constituted Good Reason if the circumstances arose on or after the Change in Control, then, for purposes of this Agreement, Employee shall be deemed to
have continued employment with the Company until the date of the Change in Control and then terminated his employment on such date for Good Reason 

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        Employee's
right to terminate employment pursuant to this subsection shall not be affected by Employee's incapacity due to physical or mental illness. In addition, Employee's continued
employment following any event, act or omission, regardless of the length of such continued employment, shall not constitute Employee's consent to, or a waiver of Employee's rights with respect to,
such event, act or omission constituting a Good Reason circumstance hereunder. 

        (f)    Notice of Termination.    On and after a Change in Control, any purported termination of Employee's employment
by the Company or by Employee shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall set forth in reasonable detail the reason for termination of Employee's employment, or in the case of resignation for Good Reason, said notice must specify
in reasonable detail the basis for such resignation. No purported termination which is not effected pursuant to this Section 9(f) shall be effective. 

        (g)    Date of Termination.    "Date of Termination" shall mean the date specified in the Notice of Termination.
Either party may, within 15 days after any Notice of Termination is given, provide notice to the other party pursuant to Section 12 hereof that a dispute exists concerning the
termination. Notwithstanding the pendency of any such dispute, the Company will continue to pay Employee his full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, Base Compensation) and continue Employee as a participant in all compensation, benefit and insurance plans in which Employee was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in accordance with Section 18 hereof, but in no event past the expiration date of this Agreement. Any payments and benefits
provided during such period of dispute shall not reduce any other payments or benefits due Employee under this Agreement nor shall Employee be liable to repay the Company for such payments and
benefits if it is finally determined the Employee is not entitled to payments under the other provisions of this Agreement following Employee's termination of employment. 

        (h)    Mitigation.    Except as otherwise provided in Section 9(c)(i) with regard to life, disability,
accident, and group health benefits, Employee shall not be required to mitigate the amount of any payment provided for in this Section 9 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by Employee as a result of employment by another employer, self-employment earnings,
by retirement benefits, by offset against any amount claimed to be owing by Employee to the Company, or otherwise. No amounts payable to Employee under any plan or program of the Company shall reduce
or offset any amounts payable to Employee under this Agreement. 

        (i)    Section 280G.    

        (1)   To
provide Employee with adequate protection in connection with his ongoing employment with the Company, this Agreement provides Employee with various benefits in the
event of termination of Employee's employment with the Company. If Employee's employment is terminated following a "change in control" of the Company, within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), a portion of those benefits could be characterized as "excess parachute payments" within the meaning of Section 280G of the Code.
Agreement are treated as an excess parachute payment. The parties, therefore, have agreed as set forth herein. 

        (2)   Anything
in this Agreement to the contrary notwithstanding, the payments and distributions by the Company or any other person to or for the benefit of Employee (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required hereunder (a 

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"Payment")
shall be reduced as provided below if the Company shall determine that (A) the Payment would be subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties would be incurred by Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise
Tax") and (B) the amount of the Payment that Employee would retain on any after-tax, present value basis would be increased as a result of such reduction by at least $5,000 or more.
The Employee may by written notice to the Company designate the order in which such parachute payments will be reduced or modified so that the Excise Tax is eliminated and the Company is not denied
any federal income tax deductions for any "parachute payments" because of Section 280G. 

        (j)    Section 409A.    

        (1)   Anything
in this Agreement to the contrary notwithstanding, if (1) on the date of termination of Employee's employment with the Company, any of the Company's
stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code) and (2) as a result of such termination, the
Employee would receive any payment that, absent the application of this paragraph 9(j), would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as
a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (i) 6 months after the
Employee's termination date, (ii) the Employee's death or (iii) such other date as will cause such payment not to be subject to such interest and additional tax. 

        (2)   It
is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of
the Code. To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to
amend this Agreement with the goal of giving Employee the economic benefits described herein in a manner that does not result in such tax being imposed. 

        10.    Non-exclusivity of Rights.    Nothing in this Agreement shall prevent or limit Employee's
continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Employee may qualify, nor shall
anything herein limit or otherwise adversely affect such rights as Employee may have under any stock option or other agreements with the Company or any of its affiliated companies. 

        11.    Assignability.    The obligations of Employee hereunder are personal and may not be assigned or delegated by
him or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to
delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate, successor or subsidiary organization or company of the Company, so long as the obligations
of the Company under this Agreement remain the obligations of the Company. 

        12.    Notice.    For the purpose of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company
at its principal office address, directed to the attention of the Board with a copy to the Secretary of the Company, and to Employee at Employee's residence address on the records of the Company or to
such other address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address shall be effective only upon receipt. 

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        13.    Validity.    The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

        14.    Successors; Binding Agreement.    

        (a)   The
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company
in the same amount and on the same terms as he would be entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used herein, the term "Company"
shall include any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 14 or which otherwise becomes bound by all terms
and provisions of this Agreement by operation of law. 

        (b)   This
Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would be payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, or other designee or, if there be no such designee, to Employee's estate. 

        15.    Indemnification.    In consideration of the premises and of the mutual agreements set forth in this Agreement,
the parties hereto further agree as follows: 

        (a)   The
Company shall pay on behalf of Employee and Employee's executors, administrators or assigns, any amount which Employee is or becomes legally obligated to pay as a
result of any claim or claims made against Employee by reason of the fact that Employee served as an employee, director and/or officer of the Company or because of any actual or alleged breach of
duty, neglect, error, misstatement, misleading statement, omission or other act done, or suffered or wrongfully attempted by Employee in Employee's capacity as an employee, Director and/or Officer of
the Company. The payments that the Company will be obligated to make hereunder shall include (without limitation) damages, judgments, settlements, costs and expenses of investigation, costs and
expenses of defense of legal actions, claims and proceedings and appeals therefrom, and costs of attachments and similar bonds; provided, however, that
the Company shall not be obligated to pay fines or other obligations or fees imposed by law or otherwise that it is prohibited by applicable law from paying as indemnity or for any other reason. 

        (b)   Costs
and expenses (including, without limitation, attorneys' fees) incurred by Employee in defending or investigating any action, suit, proceeding or claim shall be
paid by the Company in advance of the final disposition of such matter upon receipt of a written undertaking by or on behalf of Employee to repay any such amounts if it is ultimately determined that
Employee is not entitled to indemnification under the terms of this Agreement. 

        (c)   If
a claim under this Agreement is not paid by or on behalf of the Company within ninety days after a written claim has been received by the Company, Employee may at any
time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, Employee shall also be entitled to be paid the expense of prosecuting
such claim. 

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        (d)   In
the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Employee, who shall
execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to
enforce such rights. 

        (e)   The
Company shall not be liable under this Agreement to make any payment in connection with any claim made against Employee: 

        (1)   for
which payment is actually made to Employee under an insurance policy maintained by the Company, except in respect of any excess beyond the amount of payment under
such insurance; 

        (2)   for
which Employee is indemnified by the Company otherwise than pursuant to this Agreement; 

        (3)   based
upon or attributable to Employee gaining in fact any personal profit or advantage to which Employee was not legally entitled; 

        (4)   for
an accounting of profits made from the purchase or sale by Employee of securities of the Company within the meaning of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto; or 

        (5)   brought
about or contributed to by the dishonesty of Employee; provided, however,that notwithstanding the foregoing,
Employee shall be protected under this Agreement as to any claims upon which suit may be brought alleging dishonesty on the part of Employee, unless a judgment or other final adjudication thereof
adverse to Employee shall establish that Employee committed acts of active and deliberate dishonesty with actual dishonest purpose and intent, which acts were material to the cause of action so
adjudicated. 

        (f)    Employee,
as a condition precedent to his right to be indemnified under this Agreement, shall give to the Company notice in writing as soon as practicable of any claim
made against him for which indemnity will or could be sought under this Agreement. Notice to the Company shall be directed to the Company, Attention: Secretary (or such other address as the Company
shall designate in writing to Employee). Notice shall be deemed received if sent by prepaid mail properly addressed, the date of such notice being the date postmarked. In addition, Employee shall give
the Company such information and cooperation as it may reasonably require and as shall be within Employee's power. 

        (g)   Nothing
herein shall be deemed to diminish or otherwise restrict Employee's right to indemnification under any provision of the Certificate of Incorporation or Bylaws of
the Company or under Delaware law. 

        (h)   During
the Term and for a period of six years thereafter, the Company shall cause Employee to be covered by and named as an insured under a policy or contract of
insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Company or service in other
capacities at the request of the Company. The coverage provided to Employee pursuant to this Section shall be of a scope and on terms and conditions at least as favorable as the coverage provided to
Employee prior to the Change in Control. 

        16.    Miscellaneous.    No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto at any time of any breach by
the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar 

10

 

provisions
or conditions at the same or at any prior or subsequent time. This Agreement is an integration of the parties agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware. 

        17.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same instrument. 

        18.    Arbitration.    Employee shall be permitted (but not required) to elect that any dispute or controversy arising
under or in connection with this Agreement be settled by arbitration in Los Angeles, California, or in the city in which Employee then resides in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Reasonable legal fees and costs incurred by Employee in connection with the resolution
of any dispute or controversy under or in connection with this Agreement shall be paid by the Company as bills for such services are presented by Employee to the Company. 

        19.    Prior Agreements.    This agreement supersedes and replaces in full any previously existing employment
agreement (written or oral) between the parties. 

        20.    Knowledge of Terms and Conditions.    Employee has received a copy of this Agreement in advance of his
execution hereof and has consulted with his own attorney with respect to the terms and conditions hereof and the transactions contemplated under this Agreement. Employee has executed this Agreement
with full knowledge of the terms and conditions contained herein and acknowledges that he has had the opportunity to obtain information regarding the Company and concerning the terms and conditions of
this Agreement. In making his decision to enter into this Agreement, Employee has relied solely upon independent investigations he made and acknowledges that he is not relying on the Company, any
affiliate of the Company or any officer, director or employee of the Company for advice with respect to any tax or other economic considerations involved in the transactions contemplated under this
Agreement, including those arising under Section 409A of the Internal Revenue Code of 1986, as amended. 

[Remainder of page intentionally left blank]

        IN
WITNESS WHEREOF, the parties have executed this Agreement on January 25, 2005, effective for all purposes as provided above. 

	 	 	Venoco, Inc.
	 	 	 	 	 
	 	 	By:	 	/s/  TIMOTHY MARQUEZ      
 Timothy Marquez

Chairman of the Board of Directors
	 	 	 	 	 
	 	 	Employee
	 	 	 	 	 
	 	 	By:	 	/s/  WILLIAM S. SCHNEIDER      
 William S. Schneider

11

   Attachment I

Stock Option Description  

	

Term	
 	

Options shall have a term equal to 10 years.
	

Liquidity Event	
 	

"Liquidity Event(s)" means an IPO of the Company such that shares trade on a public exchange, or the sale of all or substantially all assets or common stock of the Company to an unaffiliated third party.
	

Dividends	
 	

Option Holder shall receive dividends (if declared and paid) as if he held the number of shares issuable upon exercise of the Options.
	

Rights of Holder	
 	

Option Holder will receive (as to shares acquired through exercise of options) tag-along rights related to any sale of shares by the Company's Primary Shareholder.
	

Rights of Primary Shareholder	
 	

Option Holder shall give drag-along rights to the Primary Shareholder as to shares acquired through exercise of options.
	

Alternate Liquidity Mechanism	
 	

The intent of the Company and the Option Holder is to allow the Option Holder to gain liquidity for all Option shares.
	

 	
 	

Absent a Liquidity Event, the Company will provide Option Holder with an alternate mechanism for gaining liquidity. In general, such Alternate Liquidity Mechanism ("ALM") will allow holder to liquidate his holdings at Fair Value, over a three to five
year period, and will be available beginning in 2007. In general, the Option Holder may determine the timing of sales under the ALM, but the Company will be able to reasonably alter the timing of payments to manage liquidity and maintain good
business practices.
	

 	
 	

"Fair Value" of the Company's shares shall be determined based on the trading values of a comparable group of public companies as determined by an independent third party selected by the Option Holder and the Company or as agreed by the Option Holder
and the Company. The aggregate value discount for various factors including illiquidity, private company status and minority ownership shall not exceed 15%.
	

Cashless Exercise	
 	

Options may be exercised on a cashless basis with the holder receiving the appropriate "net value" in either cash or shares. If the holder receives shares, they will be governed by the provisions set out in the Option Agreement.
	

Other	
 	

Standard provisions limiting transfer of shares (but permitting certain transfers to family members), allowing Company to repurchase shares at Fair Value, anti-dilution protection and granting lock-up related to public offering of
securities.

12

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Exhibit 10.12  

  

  

  

  

  

   

   

   

   

  

 
 

VENOCO, INC.
  2000 STOCK INCENTIVE PLAN  
  

  

   

   

   

   

   

   

  

  

  

   TABLE OF CONTENTS  

	 
	 	 
	 	 
	 	Page

	1.	 	The Plan	 	1
	

 	
 	

1.1	
 	

Purpose	
 	

1
	

 	
 	

1.2	
 	

Administration and Authorization; Power and Procedure	
 	

1
	

 	
 	

1.3	
 	

Participation	
 	

2
	

 	
 	

1.4	
 	

Shares Available for Awards; Share Limits	
 	

2
	

 	
 	

1.5	
 	

No Transferability; Limited Exception to Transfer Restrictions	
 	

2
	

 	
 	

1.6	
 	

Acceptance of Notes to Finance Exercise/Purchase	
 	

3
	

2.	
 	

Options	
 	

4
	

 	
 	

2.1	
 	

Option Grants	
 	

4
	

 	
 	

2.2	
 	

Vesting; Term; Exercise Procedure	
 	

4
	

 	
 	

2.3	
 	

Option Price	
 	

4
	

 	
 	

2.4	
 	

Limits on 10% Holders	
 	

5
	

 	
 	

2.5	
 	

Effects of Termination of Employment; Termination of Subsidiary Status; Discretionary Provisions	
 	

5
	

 	
 	

2.6	
 	

Option Repricing/Cancellation and Regrant/Waiver of Restrictions	
 	

7
	

 	
 	

2.7	
 	

Options in Substitution for Stock Options Granted by Other Corporations	
 	

7
	

3.	
 	

Restricted Stock Awards	
 	

7
	

 	
 	

3.1	
 	

Grants	
 	

7
	

 	
 	

3.2	
 	

Award Agreement	
 	

7
	

 	
 	

3.3	
 	

Vesting	
 	

8
	

 	
 	

3.4	
 	

Term	
 	

8
	

 	
 	

3.5	
 	

Purchase Price	
 	

8
	

 	
 	

3.6	
 	

Stock Certificates; Fractional Shares	
 	

8
	

 	
 	

3.7	
 	

Restrictions	
 	

8
	

 	
 	

3.8	
 	

Return to the Corporation	
 	

9
	

 	
 	

3.9	
 	

Other Sections Applicable to Restricted Stock Awards	
 	

9
	

 	
 	

3.10	
 	

Waiver of Restrictions	
 	

9
	

4.	
 	

Other Provisions	
 	

9
	

 	
 	

4.1	
 	

Rights of Eligible Persons, Participants and Beneficiaries	
 	

9
	

 	
 	

4.2	
 	

Adjustments; Acceleration	
 	

10
	

 	
 	

4.3	
 	

Compliance with Laws	
 	

11
	

 	
 	

4.4	
 	

Tax Withholding	
 	

13
	 	 	 	 	 	 	 

i

 

	

 	
 	

4.5	
 	

Plan and Award Amendments, Termination and Suspension	
 	

13
	

 	
 	

4.6	
 	

Privileges of Stock Ownership	
 	

14
	

 	
 	

4.7	
 	

Effective Date of the Plan	
 	

14
	

 	
 	

4.8	
 	

Term of the Plan	
 	

14
	

 	
 	

4.9	
 	

Governing Law/Severability	
 	

14
	

 	
 	

4.10	
 	

Captions	
 	

14
	

 	
 	

4.11	
 	

Non-Exclusivity of Plan	
 	

14
	

 	
 	

4.12	
 	

No Restriction on Corporate Powers	
 	

14
	

 	
 	

4.13	
 	

Other Company Compensation or Benefit Programs	
 	

15
	

5.	
 	

Definitions	
 	

15
	

APPENDIX A: RESTRICTIONS ON TRANSFER	
 	

 

ii

   VENOCO, INC.

2000 STOCK INCENTIVE PLAN  

	1.
	The Plan.

	1.1
	Purpose. The purpose of this Plan is to promote the success of the Company and the interests of its stockholders by attracting,
motivating, retaining and rewarding certain officers, employees, directors and other eligible persons with awards and incentives for high levels of individual performance and improved financial
performance of the Company. Capitalized terms used herein are defined in Section 5.

	1.2
	Administration and Authorization; Power and Procedure.

	1.2.1
	Committee. This Plan will be administered by and all Awards will be authorized by the Committee. Action of the Committee with respect
to its authority under this Plan shall be taken pursuant to a majority vote or by unanimous written consent of its members.

	1.2.2
	Plan Awards; Interpretation; Powers of Committee. Subject to the express provisions of this Plan and any express limitations on the
delegated authority of a Committee, the Committee will have the authority to:

	(a)
	determine
eligibility and the particular Eligible Persons who will receive Awards;

	(b)
	grant
Awards to Eligible Persons, determine the price at which securities will be offered or awarded and the amount of securities to be offered or awarded to any of such persons, and
determine the other specific terms and conditions of Awards consistent with the express limits of this Plan, establish the installments (if any) in which such Awards will become exercisable or will
vest, and the respective consequences thereof, or determine that no delayed exercisability or vesting is required, and establish the events of termination or reversion of such Awards;

	(c)
	approve
the forms of Award Agreements, which need not be identical either as to type of Award or among Participants;

	(d)
	construe
and interpret this Plan and any Award or other agreements defining the rights and obligations of the Company and Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan;

	(e)
	cancel,
modify, or waive the Corporation's rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards held by Eligible Persons, subject to any
required consent under Section 4.5;

	(f)
	accelerate
or extend the exercisability or extend the term of any or all outstanding Awards within the maximum ten-year term of Awards under Sections 2.2.2 and 3.4;

	(g)
	determine
the duration and purposes of leaves of absence that may be granted to Participants without constituting a termination of their employment for purposes of this Plan; and

	(h)
	make
all other determinations and take such other action as contemplated by this Plan or as may be necessary or advisable for the administration of this Plan and the effectuation of
its purposes.

	1.2.3
	Binding Determinations. Any action taken by, or inaction of, the Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan will be within the absolute discretion of that entity or body and will be conclusive and binding upon all persons. Subject 

1

 

only
to compliance with the express provisions hereof, the Board and Committee may act in their absolute discretion in matters within their authority related to this Plan. 

	1.2.4
	Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of experts, including employees of and professional advisors to the Corporation.

	1.2.5
	Delegation. The Committee may delegate ministerial, non-discretionary functions to individuals who are officers or
employees of the Company.

	1.2.6
	No Liability. No director, officer or agent of the Company will be liable for any action, omission or decision under the Plan taken,
made or omitted in good faith.

	1.3
	Participation. Awards may be granted by the Committee only to those persons that the Committee determines to be Eligible Persons. An
Eligible Person who has been granted an Award may, if otherwise eligible, be granted additional Awards if the Committee so determines.

	1.4
	Shares Available for Awards; Share Limits.

	1.4.1
	Shares Available. Subject to the provisions of Section 4.2, the capital stock that may be delivered under this Plan will be
shares of the Corporation's authorized but unissued Common Stock and any of its shares of Common Stock held as treasury shares. The shares may be delivered for any lawful consideration.

	1.4.2
	Share Limits. The maximum number of shares of Common Stock that may be delivered pursuant to Awards granted under this Plan will not
exceed 500,000 shares (the "Share Limit").

	1.4.3
	Share Reservation; Replenishment and Reissue of Unvested Awards. Shares subject to outstanding Awards shall be reserved for issuance.
No Award may be granted under this Plan unless, on the date of grant, the sum of (a) the maximum number of shares of Common Stock issuable at any time pursuant to such Award, plus
(b) the number of shares of Common Stock that have previously been issued pursuant to Awards granted under this Plan, other than reacquired shares available for reissue consistent with any
applicable legal limitations, plus (c) the maximum number of shares of Common Stock that may be issued at any time after such date of grant pursuant to Awards that are outstanding on such date,
does not exceed the Share Limit. Shares of Common Stock that are subject to or underlie Awards that expire or for any reason are canceled or terminated, are forfeited, fail to vest, or for any other
reason are not paid or delivered under this Plan, as well as reacquired shares, will again, except to the extent prohibited by law or the terms of this Plan, be available for subsequent Awards under
this Plan. Accordingly, shares of Common Stock issued pursuant to the terms hereof (including shares of Common Stock offset in satisfaction of applicable withholding taxes or the exercise price of an
Award) in respect of an Award shall reduce on a share-for-share basis the number of shares of Common Stock remaining available under this Plan and the number of shares
remaining subject to the Award.

	1.5
	No Transferability; Limited Exception to Transfer Restrictions.

	1.5.1
	Limit On Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 1.5, by applicable law
and by the Award Agreement, as the same may be amended:

	(a)
	all
Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;

	(b)
	Awards
will be exercised only by the Participant; and 

2

 

	(c)
	amounts
payable or shares issuable pursuant to an Award will be delivered only to (or for the account of) the Participant. 

In
addition, the shares shall be subject to the restrictions set forth in the applicable Award Agreement. 

	1.5.2
	Further Exceptions to Limits On Transfer. The exercise and transfer restrictions in Section 1.5.1 will not apply to:

	(a)
	transfers
to the Corporation or, with the express written approval of the Committee, transfers by gift to "immediate family" as that term is defined in SEC
Rule 16a-1(e) promulgated under the Exchange Act;

	(b)
	the
designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by the Participant's beneficiary, or, in the
absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution; or

	(c)
	if
the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant's duly authorized legal representative. 

Notwithstanding
anything else in this Section 1.5.2 to the contrary, Restricted Stock Awards will be subject to any and all transfer restrictions under the Code applicable to such awards or
necessary to maintain the intended tax consequences of such Awards. 

	1.6
	Acceptance of Notes to Finance Exercise/Purchase. The Corporation may, with the Committee's approval in each specific case, accept one
or more notes from any Eligible Person in connection with the exercise, purchase or acquisition of any Award; provided that any such note shall be subject to the following terms and conditions:

	(a)
	The
principal of the note shall not exceed the amount required to be paid to the Corporation upon the exercise, purchase or acquisition of one or more Awards under the Plan and the
note shall be delivered directly to the Corporation in consideration of such exercise, purchase or acquisition.

	(b)
	The
initial term of the note shall be determined by the Committee; provided that the term of the note, including extensions, shall not exceed a period of five years.

	(c)
	The
note shall provide for full recourse to the Participant and shall bear interest at a rate determined by the Committee, but not less than the interest rate necessary to avoid the
imputation of interest under the Code and to avoid any adverse accounting consequences in connection with the exercise, purchase or acquisition.

	(d)
	If
the employment or services of the Participant by or to the Company terminates, the unpaid principal balance of the note shall become due and payable on the 30th business day after
such termination; provided, however, that if a sale of such shares would cause such Participant to incur liability under Section 16(b) of the Exchange Act, the unpaid balance shall become due
and payable on the 10th business day after the first day on which a sale of such shares could have been made without incurring such liability assuming for these purposes that there are no other
transactions (or deemed transactions) in securities of the Corporation by the Participant subsequent to such termination.

	(e)
	If
required by the Committee or by applicable law, the note shall be secured by a pledge of any shares or rights financed thereby or other collateral, in compliance with applicable
law. 

3

 

	(f)
	The
terms, repayment provisions, and collateral release provisions of the note and the pledge securing the note shall conform with all applicable rules and regulations, including
those of the Federal Reserve Board and under the Delaware Corporations Code, as then in effect.

	2.
	Options.

	2.1
	Option Grants.

	2.1.1
	Approval; Number of Shares. The Committee may grant one or more Options under this Plan to any Eligible Person. Subject to the
express provisions of this Plan, the Committee will determine the number of shares of Common Stock subject to each Option. Each Option granted under the Plan shall be a nonqualified stock option and
shall not be deemed to be an "incentive stock option" within the meaning of Section 422 of the Code.

	2.1.2
	Award Agreement. Each Option will be evidenced by an Award Agreement signed by the Corporation and, to the extent required by the
Committee, by the Participant. The Award Agreement evidencing an Option shall contain the terms established by the Committee for that Option, as well as any other terms, provisions, or restrictions
that the Committee may impose on the Option or any shares of Common Stock subject to the Option.

	2.2
	Vesting; Term; Exercise Procedure.

	2.2.1
	Vesting. An Option may be exercised only to the extent that it is vested and exercisable. The Committee will determine the vesting
and/or exercisability provisions of each Option, which provisions will be set forth in the applicable Award Agreement. Unless the Committee otherwise expressly provides, no Option will be exercisable
or will vest until at least six months after the initial Award Date, and once exercisable an Option will remain exercisable until the expiration or earlier termination of the Option. To the extent
required to satisfy applicable securities laws and subject to Section 2.5, no Option (except an Option granted to an officer, director, or consultant of the Company) shall vest and become
exercisable at a rate of less than 20% per year over five years after the date the Option is granted.

	2.2.2
	Term. Each Option shall expire not more than 10 years after its date of grant. Each Option will be subject to earlier
termination as provided in or pursuant to Sections 2.5 or 4.2. Any payment of cash or delivery of stock in payment of or pursuant to an Option may be delayed until a future date if specifically
authorized by the Committee in writing and by the Participant.

	2.2.3
	Exercise Procedure. Any exercisable Option will be deemed to be exercised when the Corporation receives written notice of such
exercise from the Participant (on a form and in such manner as may be required by the Committee), together with any required payment made in accordance with Section 2.3.2 and Section 4.4
and any written statement required pursuant to Section 4.3.

	2.2.4
	Fractional Shares/Minimum Issue. Fractional share interests will be disregarded, but may be accumulated. The Committee, however, may
determine that cash, other securities, or other property will be paid or transferred in lieu of any fractional share interests. No fewer than 100 shares may be purchased on exercise of any Option at
one time unless the number purchased is the total number at the time available for purchase under the Option.

	2.3
	Option Price.

	2.3.1
	Pricing Limits. Subject to the following provisions of this Section 2.3.1, the Committee will determine the purchase price per
share of the Common Stock covered by each Option (the "exercise price" of the Option) at the time of the grant of the Option, which purchase price 

4

 

will
be set forth in the applicable Award Agreement. In no case will the exercise price of an Option be less than the greater of: 

	(a)
	the
par value of the Common Stock;

	(b)
	85%
of Fair Market Value of the Common Stock on the date of grant;

	(c)
	in
the case of an Option granted to a Participant described in Section 2.4, 110% of the Fair Market Value of the Common Stock on the date of grant.

	2.3.2
	Payment Provisions. The Corporation will not be obligated to deliver certificates for the shares of Common Stock to be purchased on
exercise of an Option unless and until it receives full payment of the exercise price therefor, all related withholding obligations under Section 4.4 have been satisfied, and all other
conditions to the exercise of the Option set forth herein or in the Award Agreement have been satisfied. The purchase price of any shares of Common Stock purchased on exercise of an Option must be
paid in full at the time of each purchase in one or a combination of the following methods:

	(a)
	in
cash or by electronic funds transfer;

	(b)
	by
certified or cashier's check payable to the order of the Corporation;

	(c)
	by
notice and third party payment in such manner as may be authorized by the Committee;

	(d)
	by
the delivery of shares of Common Stock already owned by the Participant; provided that the Committee may, in its absolute
discretion, limit the Participant's ability to exercise an Option by delivering previously owned shares, and any shares of Common Stock delivered that were initially acquired from the Corporation upon
exercise of a stock option or otherwise must have been owned by the Participant at least 6 months as of the date of delivery; or

	(e)
	if
authorized by the Committee or specified in the applicable Award Agreement, by a promissory note of the Participant consistent with the requirements of Section 1.6. 

Shares
of Common Stock used to satisfy the exercise price of an Option will be valued at their Fair Market Value on the date of exercise. 

	2.4
	Limits on 10% Holders. No Option may be granted to any person who, at the time the Option is granted, owns (or is deemed to own under
Section 424(d) of the Code) shares of outstanding stock of the Corporation (or a parent or subsidiary of the Corporation) possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation (or a parent or subsidiary of the Corporation), unless the exercise price of such Option is at least 110% of the Fair Market Value of the stock subject to the
Option.

	2.5
	Effects of Termination of Employment; Termination of Subsidiary Status; Discretionary Provisions.

	2.5.1
	Dismissal for Cause. Unless otherwise provided in the Award Agreement and subject to earlier termination pursuant to or as
contemplated by Section 2.2.2 or 4.2, if a Participant's employment by or service to the Company is terminated by the Company for Cause, the Participant's Option will terminate on the
Participant's Severance Date, whether or not the Option is then vested and/or exercisable.

	2.5.2
	Termination not upon Death or Total Disability. Unless otherwise provided in the Award Agreement (consistent with applicable
securities laws) and subject to earlier termination pursuant to or as contemplated by Section 2.2.2 or 4.2, if a Participant terminates his or her 

5

 

employment
by or service to the Company for any reason other than for Cause, death or Total Disability: 

	(a)
	the
Participant will have until the date that is 30 days after the Participant's Severance Date to exercise his or her Option (or portion thereof) to the extent that it was
vested and exercisable on the Severance Date;

	(b)
	the
Option, to the extent not vested and exercisable on the Participant's Severance Date, shall terminate on the Severance Date; and

	(c)
	the
Option, to the extent exercisable for the 30-day period following the Participant's Severance Date and not exercised during such period, shall terminate at the close
of business on the last day of the 30-day period.

	2.5.3
	Death or Total Disability. Unless otherwise provided in the Award Agreement (consistent with applicable securities laws) and subject
to earlier termination pursuant to or as contemplated by Section 2.2.2 or 4.2, if a Participant's employment by or service to the Company terminates as a result of the Participant's Total
Disability or death:

	(a)
	the
Participant (or his or her Personal Representative or Beneficiary), will have until the date that is 6 months after the Participant's Severance Date to exercise the
Participant's Option (or portion thereof) to the extent that it was vested and exercisable on the Severance Date;

	(b)
	the
Option, to the extent not vested and exercisable on the Participant's Severance Date, shall terminate on the Severance Date; and

	(c)
	the
Option, to the extent exercisable for the 6-month period following the Participant's Severance Date and not exercised during such period, shall terminate at the close
of business on the last day of the 6-month period.

	2.5.4
	Events Not Deemed a Termination of Employment. Unless Company policy or the Committee otherwise provides, a Participant's employment
or service relationship with the Company shall not be considered terminated solely due to any sick leave, military leave, or any other leave of absence authorized by the Company or the Committee;  provided that, unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave is for a period of not more than
90 days. In the case of any Eligible Person on an approved leave of absence, continued vesting of the Award while on leave from the employ of or service with the Company will be suspended until
the employees returns to service, unless the Committee otherwise provides or applicable law otherwise requires. In no event shall an Award be exercised after the expiration of the term of the Award
set forth in the Award Agreement.

	2.5.5
	Effect of Change of Subsidiary Status. For purposes of this Plan and any Award, if an entity ceases to be a Subsidiary, a termination
of employment or service will be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of another entity
within the Company.

	2.5.6
	Committee Discretion. Notwithstanding the foregoing provisions of this Section 2.5, in the event of, or in anticipation of, a
termination of employment or service with the Company for any reason, other than a discharge for Cause, the Committee may accelerate the vesting and exercisability of all or a portion of the
Participant's Award, and/or, subject to the provisions of Sections 2.2.2 and 4.2, extend the exercisability period of the Participant's Option upon such terms as the Committee determines and as
expressly set forth in or by amendment to the Award Agreement. 

6

 

	2.5.7
	Determination of Severance Date. Notwithstanding the definition of "Severance Date," the Committee may authorize by express provision
in or pursuant to an Award an extension of the date of termination of the Participant's employment by or services to the Company if the Participant's status after grant of the Award changes from one
category of Eligible Person to another (for example, employee to consultant or visa versa), or in other circumstances that the Committee deems appropriate).

	2.5.8
	Termination of Consulting or Affiliate Services. If the Participant is not an Eligible Employee or a director of the Corporation, and
provides services as an Other Eligible Person, the Committee shall be the sole judge of whether the Participant continues to render services to the Company, unless a written contract or the Award
Agreement otherwise provides. If, in these circumstances, the Company notifies the Participant in writing that a termination of the Participant's services to the Company has occurred for purposes of
this Plan, then (unless the contract or the Award Agreement otherwise expressly provides), the Participant's termination of services with the Company for purposes of this Plan shall be the date which
is 10 days after the Company's mailing of the notice or, in the case of a termination for Cause, the date of the mailing of the notice.

	2.6
	Option Repricing/Cancellation and Regrant/Waiver of Restrictions. Subject to Section 1.4 and Section 4.5 and the specific
limitations on Options contained in this Plan, the Committee from time to time may authorize, generally or in specific cases only, for the benefit of any Eligible Person, any adjustment in the
exercise price, the vesting schedule, the number of shares subject to, or the term of, an Option granted under this Plan by cancellation of an outstanding Option and a subsequent regranting of the
Option, by amendment, by substitution of an outstanding Option, by waiver or by other legally valid means. Such amendment or other action may result in, among other changes, an exercise price that is
higher or lower than the exercise price of the original or prior Option, provide for a greater or lesser number of shares of Common Stock subject to the Option, or provide for a longer or shorter
vesting or exercise period.

	2.7
	Options in Substitution for Stock Options Granted by Other Corporations. Options may be granted to Eligible Persons under this Plan in
substitution for employee stock options granted by other entities, in connection with a distribution, merger or reorganization by or with the granting entity or an affiliated entity, or the
acquisition by the Company, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity.

	3.
	Restricted Stock Awards.

	3.1
	Grants. The Committee may grant one or more Restricted Stock Awards to any Eligible Person. Subject to the provisions of this Plan, the
Committee will determine the number of shares of Common Stock subject to each Restricted Stock Award. Each Restricted Stock Award will be evidenced by an Award Agreement signed by the Corporation and,
to the extent required by the Committee, by the Participant. Upon issuance of the Restricted Stock Award, the Participant may be required to provide such further assurances and documents as the
Committee may require to enforce the restrictions thereon.

	3.2
	Award Agreement. Each Restricted Stock Award Agreement will specify the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration for such shares (but not less than the minimum lawful consideration under applicable state law) to be paid by the Participant for the shares,
the extent (if any) to which and the time (if ever) at which the Participant will be entitled to dividends, voting and other rights in respect of the shares prior to vesting, and the restrictions
(which may be based on performance criteria, passage of time or other factors or any combination thereof) imposed on such shares and the conditions of release or lapse of such restrictions. 

7

 
	3.3
	Vesting. The restrictions imposed on the shares of Common Stock subject to a Restricted Stock Award will not lapse earlier than six
months after the Award Date, except to the extent the Committee may otherwise provide. To the extent required to satisfy applicable securities laws, the restrictions imposed on the shares of Common
Stock subject to a Restricted Stock Award (other than an Award granted to an officer, director, or consultant of the Company, which may include more restrictive provisions) shall lapse as to such
shares, subject to Section 3.8, at a rate of at least 20% of the shares subject to the Award per year over the five years after the date the Award is granted.

	3.4
	Term. Any Restricted Stock Award shall either vest or be forfeited not more than 10 years after the date of grant. Each
Restricted Stock Award will be subject to earlier termination as provided in or pursuant to Section 4.2. Any payment of cash or delivery of stock in payment for a Restricted Stock Award may be
delayed until a future date if specifically authorized by the Committee in writing and by the Participant.

	3.5
	Purchase Price.

	3.5.1
	Pricing Limits. Subject to the following provisions of this Section 3.5, the Committee will determine the purchase price per
share of the Common Stock covered by each Restricted Stock Award at the time of grant of the Award. In no case will such purchase price be less than the  greater of:

	(a)
	85%
of the Fair Market Value of the Common Stock on the date of grant, or at the time the purchase is consummated; or

	(b)
	100%
of the Fair Market Value of the Common Stock on the date of grant, or at the time the purchase is consummated, in the case of any person who owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Corporation, its parent, or a Subsidiary.

	3.5.2
	Payment Provisions. The Corporation will not be obligated to issue certificates evidencing shares of Restricted Stock pending the
lapse of restrictions ("Restricted Shares') unless and until it receives full payment of the purchase price therefor and all other conditions to the purchase, as determined by the Committee, have been
satisfied. The purchase price of any Restricted Shares must be paid in full at the time of the purchase in one or a combination of the methods set forth in clauses (a) through (e) in
Section 2.3.2.

	3.6
	Stock Certificates; Fractional Shares. Stock certificates evidencing Restricted Shares will bear a legend making appropriate reference
to the restrictions imposed hereunder and will be held by the Corporation or by a third party designated by the Committee until the restrictions on such shares have lapsed and the shares have vested
in accordance with the provisions of the Award and Section 3.3 and any related loan has been repaid. Fractional share interests will be disregarded, but may be accumulated. The Committee,
however, may determine that cash, other securities, or other property will be paid or transferred in lieu of any fractional share interests.

	3.7
	Restrictions.

	3.7.1
	Pre-Vesting Restraints. Except as provided in Section 3.1, Restricted Shares comprising any Restricted Stock Award
may not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered, either voluntarily or involuntarily, until the restrictions on such shares have lapsed and the shares have
become vested.

	3.7.2
	Dividend and Voting Rights. Unless otherwise provided in the applicable Award Agreement, a Participant receiving a Restricted Stock
Award will be entitled to cash dividend and voting rights for all Restricted Shares issued even though they are not vested, but such rights will terminate immediately as to any Restricted Shares which
cease to be eligible for vesting. 

8

 

	3.7.3
	Cash Payments. The Award Agreement shall specify whether and to what extent cash or other property received in respect of Restricted
Shares must be returned (with or without an earnings factor) if the Restricted Shares fail to vest and must be returned to the Corporation in accordance with Section 3.8.

	3.8
	Return to the Corporation. Unless the Committee otherwise expressly provides, Restricted Shares subject to a Participant's Restricted
Stock Award that remain subject to restrictions at the time the Participant's employment by or service to the Company terminates, or are subject to other conditions to vesting that have not been
satisfied by the time specified in the applicable Award Agreement, will not vest and will be reacquired by the Corporation in such manner and on such terms as the Committee provides, which terms shall
include return or repayment of the lower of the Fair Market Value or the original purchase price of the Restricted Shares, without interest, to the Participant to the extent not prohibited by law. The
Restricted Stock Award shall specify any other terms r conditions of the repurchase if the Award fails to vest.

	3.9
	Other Sections Applicable to Restricted Stock Awards. The provisions of Sections 2.5.4 through 2.5.7 are applicable to Restricted Stock
Awards as well as Options.

	3.10
	Waiver of Restrictions. Subject to Section 1.4 and 4.5 and the specific limitations on Restricted Stock Awards contained in
this Plan, the Committee from time to time may authorize, generally or in specific cases only, for the benefit of any Eligible Person, any adjustment in the vesting schedule, or the restrictions upon
or the term of, a Restricted Stock Award granted under this Plan by amendment, by substitution of an outstanding Restricted Stock Award, by waiver or by other legally valid means.

	4.
	Other Provisions.

	4.1
	Rights of Eligible Persons, Participants and Beneficiaries.

	4.1.1
	Employment Status. Status as an Eligible Person will not be construed as a commitment that any Award will be granted under this Plan
to an Eligible Person or to Eligible Persons generally.

	4.1.2
	No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or related to any Award)
shall confer upon any Eligible Employee or other Participant any right to continue in the employ or other service of the Company, constitute any contract or agreement of employment or other service or
affect an employee's status as an employee at will, nor shall interfere in any way with the right of the Company to change such person's compensation or other benefits, or to terminate his or her
employment or other service, with or without cause at any time. Nothing in this Section 4.1.2, or in Section 4.2.2 or 4.12, however, is intended to adversely affect any express
independent right of such person under a separate employment or service contract. An Award Agreement shall not constitute a contract of employment or service.

	4.1.3
	Plan Not Funded. Awards payable under this Plan will be payable in shares of Common Stock or from the general assets of the
Corporation, and (except as provided in Section 1.4.3) no special or separate reserve, fund or deposit will be made to assure payment of such Awards. No Participant, Beneficiary or other person
will have any right, title or interest in any fund or in any specific asset (including shares of Common Stock) of the Company by reason of any Award hereunder. Neither the provisions of this Plan (or
of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan will create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant, Beneficiary or other person. To the extent that a Participant, Beneficiary or other person acquires a right to receive payment pursuant
to any 

9

 

Award
hereunder, such right will be no greater than the right of any unsecured general creditor of the Company. 

	4.1.4
	Charter Documents. The Certificate of Incorporation and By-Laws of the Corporation, as either of them may lawfully be
amended from time to time, may provide for additional restrictions and limitations with respect to the Common Stock (including additional restrictions and limitations on the voting or transfer of
Common Stock) or priorities, rights and preferences as to securities and interests prior in rights to the Common Stock. To the extent that these restrictions and limitations are greater than those set
forth in this Plan or any Award Agreement, such restrictions and limitations shall apply to any shares of Common Stock acquired pursuant to the exercise of Awards and are incorporated herein by this
reference.

	4.2
	Adjustments; Acceleration.

	4.2.1
	Adjustments. Upon or in contemplation of any reclassification, recapitalization, stock split (including a stock split in the form of
a stock dividend) or reverse stock split; any merger, combination, consolidation or other reorganization; any split-up; spin-off, or similar extraordinary dividend distribution
("spin-off") in respect of the Common Stock (whether in the form of securities or property); any exchange of Common Stock or other securities of the Corporation, or any similar, unusual or
extraordinary corporate transaction in respect of the Common Stock; or a sale of substantially all the assets of the Corporation as an entirety ("asset sale"); then the Committee shall, in such
manner, to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances:

	(a)
	proportionately
adjust any or all of (1) the number of shares of Common Stock or the number and type of other securities that thereafter may be made the subject of Awards
(including the specific maxima and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to
any or all outstanding Awards, (3) the grant, purchase, or exercise price of any or all outstanding Awards, or (4) the securities, cash or other property deliverable upon exercise or
vesting of any outstanding Awards, or

	(b)
	make
provision for a settlement by a cash payment or for the substitution or exchange of any or all outstanding Awards for cash, securities or other property (or for other awards)
based upon the distribution or consideration payable to holders of the Common Stock upon or in respect of such event. 

The
Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash, securities or other property settlement. In the case of Options, but without
limitation on other methodologies, the Committee may base such settlement solely upon the excess (if any) of the amount payable upon or in respect of such event over the exercise price of the Option
to the extent of the then vested and exercisable shares subject to the Option. In the case of Restricted Shares, but without limiting other methodologies, the Committee may limit the payment to either
(1) the purchase price previously paid by the Participant, or (2) the Fair Market Value of the shares, or (3) the price to be paid in the transaction for unrestricted shares. 

In
any of such events, the Committee may take such action prior to such event to the extent that the Committee deems the action necessary to permit the Participant to realize the benefits intended to
be conveyed with respect to the underlying shares in the same manner as is or will be available to stockholders generally. 

	4.2.2
	Acceleration of Awards Upon Change in Control. Subject to Sections 4.2.3 through 4.2.6, unless prior to a Change in Control Event the
Committee determines that, upon its occurrence, benefits under any or all Awards will not accelerate or determines that only certain or limited 

10

 

benefits
under any or all Awards will be accelerated and the extent to which they will be accelerated, and/or establishes a different time in respect of such event for such acceleration, then upon
(or, as may be necessary to effectuate the purposes of this acceleration, immediately prior to) the occurrence of a Change in Control Event: 

	(a)
	each
Option will become immediately vested and exercisable, and

	(b)
	Restricted
Stock will immediately vest free of restrictions. 

The
Committee may override the limitations on acceleration in this Section 4.2.2 by express provision in the Award Agreement and may accord any Eligible Person a right to refuse any
acceleration, whether pursuant to the Award Agreement or otherwise, in such circumstances as the Committee may approve. Any acceleration of Awards will comply with applicable legal requirements and,
if necessary to accomplish the purposes of the acceleration or if the circumstances otherwise require, may be deemed by the Committee to occur (subject to Sections 4.2.4 through 4.2.6) not more than
30 days before or only upon the consummation of the event. 

	4.2.3
	Possible Early Termination of Accelerated Awards. Without any limitation on the Committee's authority under Section 4.2.1, if
the vesting of any Option under this Plan has been fully accelerated as required or permitted by Section 4.2.2 but is not exercised prior to (a) a dissolution of the Corporation,
(b) an event described in Section 4.2.1 that the Corporation does not survive, or (c) the consummation of a Change in Control Event approved by the Board, the Option shall
terminate, subject to any provision that has been expressly made by the Board or the Committee for the survival, substitution, assumption, exchange or other settlement of the Option.

	4.2.4
	Possible Rescission of Acceleration. If the vesting of an Award has been accelerated in anticipation of an event or upon stockholder
approval of an event and the Committee or the Board later determines that the event will not occur, the Committee may rescind the effect of the acceleration as to any then outstanding and unexercised
or otherwise unvested Awards.

	4.2.5
	Pooling Exception. Any discretion with respect to the events addressed in this Section 4.2, including any acceleration of
vesting, shall be limited to the extent required by applicable accounting requirements in the case of a transaction intended to be accounted for as a pooling of interests transaction.

	4.2.6
	Golden Parachute Limitations. Unless otherwise specified in an Award Agreement or otherwise authorized by the Board in the specific
case, no vesting of or lapse or restrictions imposed on an Award will be accelerated under this Plan to an extent or in a manner that would result in payments that are not fully deductible by the
Company for federal income tax purposes because of Section 280G of the Code. If a Participant would be entitled to benefits or payments hereunder and under any other plan or program that would
constitute "parachute payments" as defined in Section 280G of the Code, then the Participant may by written notice to the Company designate the order in which such parachute payments will be
reduced or modified so that the Company is not denied any federal income tax deductions for any "parachute payments" because of Section 280G of the Code.

	4.3
	Compliance with Laws.

	4.3.1
	General. This Plan, the granting and vesting of Awards under this Plan, and the offer, issuance and delivery of shares of Common
Stock, the acceptance of promissory notes and/or the payment of money under this Plan or under Awards are subject to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities laws, and federal margin requirements) and to such approvals by any listing, 

11

 

regulatory
or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. In addition, any securities delivered under this Plan may
be subject to any special restrictions that the Committee may require to preserve a pooling of interests under generally accepted accounting principles. The person acquiring any securities under this
Plan will, if requested by the Corporation, provide such assurances and representations to the Corporation as the Committee may deem necessary or desirable to assure compliance with all applicable
legal and accounting requirements. 

	4.3.2
	Compliance with Securities Laws. No Participant shall sell, pledge or otherwise transfer shares of Common Stock acquired pursuant to
an Award or any interest in such shares except in accordance with the express terms of this Plan and the applicable Award Agreement. Any attempted transfer in violation of this Section 4.3
shall be void and of no effect. Without in any way limiting the provisions set forth above, no Participant shall make any disposition of all or any portion of shares of Common Stock acquired or to be
acquired pursuant to an Award, except in compliance with all applicable federal and state securities laws and unless and until:

	(a)
	there
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration
statement; or

	(b)
	such
disposition is made in accordance with Rule 144 under the Securities Act; or

	(c)
	such
Participant notifies the Corporation of the proposed disposition and furnishes the Corporation with a statement of the circumstances surrounding the proposed disposition, and, if
requested by the Corporation, furnishes to the Corporation an opinion of counsel acceptable to the Corporation's counsel, that such disposition will not require registration under the Securities Act
and will be in compliance with all applicable state securities laws. 

Notwithstanding
anything else herein to the contrary, the Company has no obligation to register the Common Stock or file any registration statement under either federal or state securities laws, nor
does the Company make any representation concerning the likelihood of a public offering of the Common Stock or any other securities of the Company. 

	4.3.3
	Share Legends. All certificates evidencing shares of Common Stock issued or delivered under this Plan shall bear the following
legends and/or any other appropriate or required legends under applicable laws: 

"OWNERSHIP
OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE
CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION." 

"THE
SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT OF FIRST REFUSAL AND CALL RIGHTS TO REPURCHASE THE SHARES UNDER THE CORPORATION'S STOCK INCENTIVE PLAN AND AGREEMENTS WITH THE CORPORATION
THEREUNDER, COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION." 

"THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 

12

 

UNDER
THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS." 

	4.3.4
	Delivery of Financial Statements. The Corporation shall deliver annually to Participants such financial statements of the Corporation
as are required to satisfy applicable securities laws.

	4.3.5
	Confidential Information. Any financial or other information relating to the Corporation obtained by Participants in connection with
or as a result of this Plan or their Awards shall be treated as confidential.

	4.4
	Tax Withholding.

	4.4.1
	Tax Withholding. Upon any exercise, vesting, or payment of any Award, the Company shall have the right at its option to:

	(a)
	require
the Participant (or Personal Representative or Beneficiary, as the case may be) to pay or provide for payment of the amount of any taxes which the Company may be required to
withhold with respect to such Award event or payment;

	(b)
	deduct
from any amount payable to the Participant (or Personal Representative or Beneficiary, as the case may be) in cash or equivalent (in respect of an Award or otherwise) the
amount of any taxes which the Company may be required to withhold with respect to such Award event or payment; or

	(c)
	reduce
the number of shares of Common Stock to be delivered by (or otherwise reacquire shares held by the Participant at least 6 months) the appropriate number of shares of
Common Stock, valued at their then Fair Market Value, to satisfy the minimum withholding obligation. 

The
Committee may, in its sole discretion (subject to Section 4.3), grant (either at the time of grant of the Award or thereafter) to the Participant the right to elect, pursuant to such rules
and subject to such conditions as the Committee may establish, to have the Corporation utilize the withholding offset under clause (c) above. 

In
no event will the value of shares withheld under (c) above exceed the minimum amount of required withholding under applicable law. 

	4.4.2
	Tax Loans. If so provided in the Award Agreement or otherwise authorized by the Committee, the Corporation may, to the extent
permitted by law, authorize a loan to an Eligible Person in the amount of any taxes that the Company may be required to withhold with respect to shares of Common Stock received (or disposed of, as the
case may be) pursuant to a transaction described in Section 4.4.1. Such a loan will be for a term not greater than 12 months and at a rate of interest and pursuant to such other terms
and conditions as the Corporation may establish, subject to compliance with applicable law. Such a loan need not otherwise comply with the provisions of Section 2.3.3.

	4.5
	Plan and Award Amendments, Termination and Suspension.

	4.5.1
	Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in
part. No Awards may be granted during any suspension of this Plan or after termination of this Plan. Unless otherwise expressly provided in this Plan or in an applicable Award Agreement, any Award
granted prior to the termination or suspension of this Plan may extend beyond the date of such termination or suspension, and all authority of the Committee with respect to Awards hereunder, including 

13

 

the
authority to amend an Award, will continue during any suspension of this Plan and in respect of Awards outstanding upon or following the termination of this Plan. 

	4.5.2
	Stockholder Approval. This Plan and any amendment to this Plan shall be subject to stockholder approval to the extent then required
under Section 422 or 424 of the Code or any other applicable law, or deemed necessary or advisable by the Board.

	4.5.3
	Amendments to Awards. Without limiting any other express authority of the Committee under but subject to the express limits of this
Plan, the Committee by resolution or otherwise may make changes to the terms and conditions of Awards and the Plan.

	4.5.4
	Limitations on Amendments to Plan and Awards. The Board and the Committee may not, without the written consent of the Participant
affected thereby, amend, terminate or suspend this Plan in any manner materially adverse to the Participant's rights or benefits under an outstanding Award or amend the Participant's Award in any
manner materially adverse to the Participant's rights or benefits thereunder. Changes contemplated by Section 4.2 do not and will not be deemed to constitute changes or amendments for purposes
of this Section 4.5.

	4.6
	Privileges of Stock Ownership. Except as otherwise expressly authorized by the Committee or this Plan or in the Award Agreement, a
Participant will not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held of record by the Participant. No adjustment will be made for
dividends or other rights as a stockholder for which a record date is prior to such date of delivery.

	4.7
	Effective Date of the Plan. This Plan is effective upon the date of its approval by the Board (the "Effective
Date"), subject to approval by the stockholders of the Corporation within twelve months after the date of Board approval.

	4.8
	Term of the Plan. Unless earlier terminated by the Board, this Plan will terminate at the close of business on the day before the 10th
anniversary of the Effective Date.

	4.9
	Governing Law/Severability.

	4.9.1
	Choice of Law. This Plan, the Awards, all documents evidencing Awards and all other related documents will be governed by, and
construed in accordance with, the laws of the state of Delaware.

	4.9.2
	Severability. If it is determined that any provision of this Plan or an Award Agreement is invalid and unenforceable, the remaining
provisions of this Plan and/or the Award Agreement, as applicable, will continue in effect provided that the essential economic terms of this Plan and the Award can still be enforced.

	4.10
	Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate
reference. Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.

	4.11
	Non-Exclusivity of Plan. Nothing in this Plan will limit or be deemed to limit the authority of the Board or the Committee
to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority.

	4.12
	No Restriction on Corporate Powers. The existence of the Plan, the Award Agreements, and the Awards granted hereunder, shall not
limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make or authorize: (a) any adjustment, recapitalization, reorganization or other
change in the Corporation's or any Subsidiary's capital structure or its business; (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation or any Subsidiary;
(c) any issue of bonds, debentures, capital, preferred or prior preference stocks ahead of or affecting the Corporation's capital stock or the rights thereof; 

14

 

(d) any
dissolution or liquidation of the Corporation or any Subsidiary; (e) any sale or transfer of all or any part of the Corporation or any Subsidiary's assets or business; or
(f) any other corporate act or proceeding by the Corporation or any Subsidiary. No Participant, Beneficiary or any other person shall have any claim under any Award or Award Agreement against
any member of the Board or the Committee, or the Corporation or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such action. 

	4.13
	Other Company Compensation or Benefit Programs. Payments and other benefits received by a Participant under an Award made pursuant to
this Plan shall not be deemed a part of a Participant's compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided
by the Corporation or any Subsidiary, except where the Committee or the Board expressly otherwise provides or authorizes in writing. Awards under this Plan may be made in addition to, in combination
with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or any Subsidiary.

	5.
	Definitions. 

"Award" means an award of any Option or Restricted Stock, or any combination thereof, whether alternative or cumulative, authorized by and granted under
this Plan. 

"Award Agreement" means any writing, approved by the Committee, setting forth the terms of an Award that has been duly authorized and approved. 

"Award Date" means the date upon which the Committee took the action granting an Award or such later date as the Committee designates as the Award Date
at the time of the grant of the Award. 

"Beneficiary" means the person, persons, trust or trusts designated by a Participant, or, in the absence of a designation, entitled by will or the laws
of descent and distribution, to receive the benefits specified in the Award Agreement and under this Plan if the Participant dies, and means the Participant's executor or administrator if no other
Beneficiary is designated and able to act under the circumstances. 

"Board" means the Board of Directors of the Corporation. 

"Cause" with respect to a Participant means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract with
the Participant that defines such term for purposes of determining the effect that a "for cause" termination has on the Participant's stock options and/or restricted stock awards) a termination of
employment or service based upon a finding by the Company, acting in good faith and based on its reasonable belief at the time, that the Participant: 

	(a)
	has
been negligent in the discharge of his or her duties to the Company, has refused to perform stated or assigned duties or is incompetent in or (other than by reason of a disability
or analogous condition) incapable of performing those duties; or

	(b)
	has
been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer
lists, trade secrets or other confidential information; or

	(c)
	has
breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Company or an affiliate; or has been convicted of, or plead
guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar offenses); or

	(d)
	has
materially breached any of the provisions of any agreement with the Company or an affiliated entity; or 

15

 

	(e)
	has
engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Company or an affiliate; or

	(f)
	has
improperly induced a vendor or customer to break or terminate any contract with the Company or an affiliate or induced a principal for whom the Company or an affiliate acts as
agent to terminate such agency relationship. 

A
termination for Cause shall be deemed to occur (subject to reinstatement upon a contrary final determination by the Committee) on the date on which the Company first delivers written notice to the
Participant of a finding of termination for Cause. 

"Change in Control Event" means any of the following: 

	(a)
	Approval
by the Board and by stockholders of the Corporation (or, if no stockholder approval is required, by the Board alone) of the dissolution or liquidation of the Corporation,
other than in the context of a transaction that does not constitute a Change in Control Event under clause (b) below;

	(b)
	Consummation
of a merger, consolidation, or other reorganization, with or into, or the sale of all or substantially all of the Corporation's business and/or assets as an entirety to,
one or more entities that are not Subsidiaries or other affiliates of the Company (a "Business Combination"),  unless (1) as a result of the Business
Combination, more than 50% of the outstanding voting power generally in the election of directors of the
surviving or resulting entity or a parent thereof (the "Successor Entity") immediately after the reorganization are, or will be, owned, directly or
indirectly, by holders of the Corporation's voting securities immediately before the Business Combination; and (2) no "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), excluding the Successor Entity or an Excluded Person, beneficially owns, directly or indirectly, more than 50% of the outstanding shares or the
combined voting power of the outstanding voting securities of the Successor Entity, after giving effect to the Business Combination, except to the extent that such ownership existed prior to the
Business Combination; or

	(c)
	Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than an Excluded Person becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 50% of the combined voting power
of the Corporation's then outstanding securities entitled to then vote generally in the election of directors of the Corporation, other than as a result of (1) an acquisition directly from the
Company, (2) an acquisition by the Company, or (3) an acquisition by an entity pursuant to a transaction which is expressly excluded under clause (b) above. 

"Code" means the Internal Revenue Code of 1986, as amended from time to time. 

"Commission" means the Securities and Exchange Commission. 

"Committee" means the Board or one or more committees of director(s) appointed by the Board to administer all or certain aspects of this Plan, each
committee to be comprised solely of one or more directors or such greater number of directors as may be required under applicable law. 

"Common Stock" means the shares of the Corporation's Common Stock, $0.01 par value, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under Section 4.2 of this Plan. 

"Company" means the Corporation and its Subsidiaries. 

"Corporation" means Venoco, Inc., a Delaware corporation, and its successors. 

16

 

"Eligible Employee" means an officer (whether or not a director) or employee of the Company. 

"Eligible Person" means an Eligible Employee, or any Other Eligible Person, designated by the Committee in its discretion. 

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. 

"Excluded Person" means (a) any person described in and satisfying the conditions of Rule 13d-1(b)(1) under the Exchange Act,
(b) the Company, (c) an employee benefit plan (or related trust) sponsored or maintained by the Company or the Successor Entity, or (d) any person who is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of more
than 25% of the Common Stock on the Effective Date (or an affiliate, successor, heir, descendant, or related party of or to such person). 

"Fair Market Value" on any date means: 

	(a)
	if
the stock is listed or admitted to trade on a national securities exchange, the closing price of the stock on the Composite Tape, as published in the Western Edition of The Wall
Street Journal, of the principal national securities exchange on which the stock is so listed or admitted to trade, on such date, or, if there is no trading of the stock on such date, then the closing
price of the stock as quoted on such Composite Tape on the next preceding date on which there was trading in such shares;

	(b)
	if
the stock is not listed or admitted to trade on a national securities exchange, the last/closing price for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting System or a similar organization if the NASD is no longer
reporting such information;

	(c)
	if
the stock is not listed or admitted to trade on a national securities exchange and is not reported on the National Market Reporting System, the mean between the bid and asked price
for the stock on such date, as furnished by the NASD or a similar organization; or

	(d)
	if
the stock is not listed or admitted to trade on a national securities exchange, is not reported on the National Market Reporting System and if bid and asked prices for the stock
are not furnished by the NASD or a similar organization, the value as established by the Committee at such time for purposes of this Plan. 

Any
determination as to fair market value made pursuant to this Plan shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse, and shall be
conclusive and binding on all persons. 

"Option" means an option to purchase Common Stock granted under this Plan. 

"Other Eligible Person" means any director of, or any individual consultant or advisor who renders or has rendered bona
fide services (other than services in connection with the offering or sale of securities
of the Company in a capital raising transaction or as a market maker or promoter of the Company's securities) to, the Company, and who is selected to participate in this Plan by the Committee. An
advisor or consultant may be selected as an Other Eligible Person only if such person's participation in this Plan would not adversely affect (a) the Corporation's eligibility to rely on the
Rule 701 from registration under the Securities Act for the offering of shares issuable under this Plan by the Company, or (b) the Corporation's compliance with any other applicable
laws. 

"Participant" means an Eligible Person who has been granted and holds an Award under this Plan. 

"Personal Representative" means the person or persons who, upon the disability or incompetence of a Participant, has acquired on behalf of the
Participant, by legal proceeding or otherwise, the power to exercise the rights or receive benefits under this Plan by virtue of having become the legal representative of the Participant. 

17

 

"Plan" means this Venoco, Inc. 2000 Stock Incentive Plan, as it may hereafter be amended from time to time. 

"Public Offering Date" means the date the Common Stock is first registered under the Exchange Act and listed or quoted on a recognized national
securities exchange or in the NASDAQ National Market Quotation System. 

"Restricted Shares" or "Restricted Stock" means shares of Common Stock awarded to a Participant under
this Plan, subject to payment of such consideration and such conditions on vesting (which may include, among others, the passage of time, specified performance objectives or other factors) and such
transfer and other restrictions as are established in or pursuant to this Plan and the related Award Agreement, to the extent such remain unvested and restricted under the terms of the applicable
Award Agreement. 

"Retirement" means retirement with the consent of the Company or, from active service as an employee or officer of the Company on or after attaining
(a) age 55 with ten or more years of employment with the Company, or (b) age 65. 

"Securities Act" means the Securities Act of 1933, as amended from time to time. 

"Severance Date" means (a) in the case of an Award granted to an Eligible Employee, the date the Eligible Employee's employment by the Company
terminates for any reason whatsoever, (b) in the case of an Award granted to an Other Eligible Person who is a director of the Corporation, the date the director ceases to be a director of the
Corporation for any reason whatsoever, or (c) in the case of any other Other Eligible Person, the date the person's services to the Company terminate for any reason whatsoever. 

"Severance Date" means the date the Participant's employment by or services to the Company terminate (for any reason whatsoever). 

"Subsidiary" means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned, directly or
indirectly, by the Corporation. 

"Total Disability" means a "total and permanent disability" within the meaning of Section 22(e)(3) of the Code and such other disabilities,
infirmities, afflictions, or conditions as the Committee may include. 

18

   APPENDIX A:

RESTRICTIONS ON TRANSFER  

A.1    Lock-Up Agreement.  

        Neither the Participant (nor any permitted transferee) may, directly or indirectly, offer, sell or transfer or dispose of any of the shares of Common Stock
acquired upon exercise of the Option (the "Shares") or any interest therein (or agree to do any thereof) (collectively, a
"Transfer") during the period commencing as of 14 days prior to and ending one year, or such lesser period of time as the relevant underwriters
may permit, after the effective date of a registration statement covering any public offering of the Corporation's securities of which the Participant has notice. (The term "Participant" includes,
where the context so requires, any permitted direct or indirect transferee of the Participant.) The Participant shall agree and consent to the entry of stop transfer instructions with the
Corporation's transfer agent against the Transfer of the Corporation's securities beneficially owned by the Participant and shall conform the limitations hereunder and under his or her Exercise
Agreement by agreement with and for the benefit of the relevant underwriters by a lock-up agreement or other agreement in customary form. Notwithstanding anything else herein to the
contrary, this Section A.1 shall not be construed so as to prohibit the Participant from participating in a registration or a public offering of the Common Stock with respect to any shares
which he or she may hold at that time, provided, however, that such participation shall be at the sole discretion of the Board. 

A.2    Limited Call Right; Mandatory Sale; Transfer Restrictions.  

        A.2.1    Corporation's Call Right.    Subject to the terms and conditions of this
Section A.2, the Corporation shall have the right (the "Call Right") (but not the obligation) to repurchase in one or more transactions (in
connection with the Participant's termination of employment or otherwise), and the Participant (or any permitted transferee) shall be obligated to sell any of the Shares acquired upon exercise of the
Option, at the Repurchase Price. To exercise the Call Right, the Corporation must give
written notice thereof to the Participant (the "Call Notice"). The Call Notice is irrevocable by the Corporation and must (a) be in writing and
signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Call Right and contain the total number of Shares to be sold to the Corporation
pursuant to the Call Right, (c) be mailed or delivered in accordance with Section A.5, and (d) be so mailed or delivered during the Notice Period (determined in accordance with
the following sentence). The "Notice Period" shall: 

	(a)
	commence
on the date that is six months and one day after the date the Participant acquired the Shares (unless an earlier date is required in order for the Call Right to be validly
exercised under applicable law); and

	(b)
	terminate
on the Public Offering Date. 

The
Call Right shall apply only to Shares owned by the Participant for at least six months after the date the Shares were acquired on exercise of the Option (unless an earlier date is required in
order for the Call Right to be validly exercised under applicable law), whether or not the purchase price is still owing under any note used to finance the purchase. 

        A.2.2    Repurchase Price.    The price per Share to be paid by the Corporation upon
settlement of the Corporation's Call Right (the "Repurchase Price") shall equal the Fair Market Value of a Share determined as of the date of the Call
Notice. 

        A.2.3    Closing.    The closing of any repurchase under this Section A.2.3 shall be at
a date to be specified by the Corporation, such date to be no later than 30 days after the date of the Call Notice. The purchase price shall be paid at the closing in the form of a check or by
cancellation of money 

A-1

 

purchase
indebtedness against surrender by the Participant of a stock certificate evidencing the Shares with duly endorsed stock powers. No adjustments (other than pursuant to Section 4.2)
shall be made to the purchase price for fluctuations in the fair market value of the Common Stock after the date of the Call Notice. 

        A.2.4    Termination of Call Right.    The Corporation's Call Right shall terminate to the
extent that it is not exercised prior to the Public Offering Date. 

        A.2.5    Assignment.    Notwithstanding anything to the contrary, the Corporation may assign
any or all of its rights under this Section A.2 to one or more stockholders of the Corporation. 

A.3    Right of First Refusal.  

        The Corporation shall have a right of first refusal, as set forth below, to purchase the Shares acquired upon exercise of the Option before the Shares (or any
interest in them) can be validly transferred to any other person or entity. 

        A.3.1    Notice of Intent to Sell.    Before there can be a valid sale or transfer of any
Shares (or any interest in them) by any holder thereof, the holder shall first give notice in writing to the Corporation, mailed or delivered in accordance with the provisions of Section A.5,
of his or her intention to sell or transfer such Shares (the "Option Notice"). 

        The
Option Notice shall specify the identity of the proposed transferee, the number of Shares to be sold or transferred to the transferee, the price per Share and the terms upon which
such holder intends to make such sale or transfer. If the payment terms for the Shares described in the Option Notice differ from delivery of cash or a check at closing, the Corporation shall have the
option, as set forth herein, of purchasing the Shares for cash (or a cash equivalent) at closing in an amount which the Corporation determines is a fair value equivalent of that payment. The
determination of a fair value equivalent shall be made in the Corporation's best judgment and such determination shall be mailed or delivered to the selling or transferring stockholder (the
"Corporation's Notice") within ten (10) days of its receipt of the Option Notice. Should the selling or transferring stockholder disagree with
the Corporation's determination of a fair value equivalent, he or she shall have the right (the "Retraction Right") to retract the proposed sale or
transfer to a third party and the offer of Shares to the Corporation pursuant to the Option Notice (such retraction to be made in writing and mailed or delivered in accordance with the provisions of
Section A.5). If the stockholder again proposes to sell or transfer the Shares, the stockholder shall again offer such Shares to the Corporation pursuant to the terms of this Section A.3
prior to any sale or transfer. 

        A.3.2    Option to Purchase.    Subject to the selling stockholder's Retraction Right, during
the 60-day period commencing upon receipt of the Option Notice by the Corporation (the "Option Period"), the Corporation shall have an
option to purchase any or all of the Shares specified in the Option Notice at the price offered therein (the "Right of First Refusal"). 

        A.3.3    Purchase of Shares.    Not more than thirty (30) days after receipt of the
Option Notice, the Corporation shall give written notice to the stockholder desiring to sell or transfer Shares of the number of such Shares to be purchased (or, if no Shares are to be purchased,
stating such fact) by the Corporation pursuant to the terms of this Section A.3 (the "Purchase Notice"). Purchases pursuant to this
Section A.3 shall be consummated within thirty (30) days after delivery of the Purchase Notice to the selling stockholder, but in no event later than the expiration of the Option Period.
The purchase price shall be paid at the closing in cash, by check, by cancellation of money purchase indebtedness, or, if the payment terms set forth in the Option Notice differ from payment in cash
or by check at closing, in accordance with the payment terms set forth in the Option Notice (or payment of the amount set forth in the Corporation's Notice in cash, by cancellation of money purchase
indebtedness, or by check). The purchase price shall be paid against surrender by the selling stockholder of a stock 

A-2

 

certificate
evidencing the number of Shares specified in the Option Notice, with duly endorsed stock powers. 

        A.3.4    Ability to Sell Unpurchased Shares.    Unless all of the Shares referred to in the
Option Notice are to be purchased as indicated in the Purchase Notice, the stockholder desiring to sell or transfer may dispose of any Shares referred to in the Option Notice that are not to be
purchased by the Corporation to the person or persons specified in the Option Notice during a period of twenty (20) days commencing upon his or her receipt of the Purchase Notice;  provided, however,
 that he or she shall not sell or transfer such Shares (a) at a lower price or on terms more favorable to the Participant or
transferee than those specified in the Option Notice, and (b) to a person other than the person or persons specified in the Option Notice; and provided
further that such transfer is consistent with the other provisions and limitations of the Plan, this Option Agreement (including these Terms), and the Exercise Agreement. If
the transfer is not consummated within such twenty (20) day period, the stockholder shall again offer such Shares to the Corporation pursuant to the terms of this Section A.3 prior to
any sale or transfer to the same or any other person. 

        A.3.5    Assignment.    Notwithstanding anything to the contrary, the Corporation may assign
any or all of its rights under this Section A.3 to one or more stockholders of the Corporation. 

        A.3.6    Termination of Right of First Refusal.    The Corporation's Right of First Refusal
shall terminate to the extent that it is not exercised prior to the Public Offering Date. 

A.4    No Stockholder Rights Following Exercise of a Call or Repurchase.  

        If the Participant (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Call
Right or the Right of First Refusal has been exercised, the Participant shall be entitled to the value of such shares in accordance with the
provisions of Section A.2 or A.3, as applicable, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a stockholder with
respect to the shares subject to the call or repurchase. To the maximum extent permitted by law, the Participant's rights following the exercise of the Call Right or Right of First Refusal shall, with
respect to the call or repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified in
Section A.2 or A.3, as applicable. 

A.5    Notices.  

        Any notice to be given under this Plan or the Individual Option Agreements shall be in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Participant at the address reflected or last reflected on the Corporation's payroll records. Any notice shall be delivered in person or shall be enclosed in a
properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained
by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given as of the date
mailed in accordance with the foregoing provisions of this Section A.5. 

A-3

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