Document:

Exhibit
10.1

REGISTRATION
RIGHTS AGREEMENT

This REGISTRATION
RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of August 25, 2006, by and between Venoco, Inc., a Delaware corporation (the
“Company”), and the Marquez Trust, a trust established under the laws of
the State of Colorado (the “Trust”).

WHEREAS, as of the date hereof and prior to the
contemplated initial public offering (the “IPO”) of common stock, par
value $0.01 per share, of the Company, the Trust owns 27,692,500 shares of such
common stock; and

WHEREAS, in connection with the IPO, the parties
hereto desire to enter into this Agreement to govern certain of their rights,
duties and obligations relating to registration of the Registrable Securities
(as defined below).

NOW, THEREFORE, for good, valuable and binding
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, now agree as follows:

Section 1.               Definitions.  As used in this Agreement, the following terms
shall have the meanings set forth below:

“Commission” means the United States Securities
and Exchange Commission or any other United States federal agency at the time
administering the Securities Act.

“Common Stock” means the Company’s common
stock, par value $0.01 per share, or any other shares of capital stock or other
securities of the Company into which such stock may be reclassified or changed,
including by reason of a merger, consolidation, reorganization or
recapitalization.  If the Common Stock is
so reclassified or changed, or if the Company pays a dividend or makes a
distribution on the Common Stock in shares of capital stock, or subdivides (or
combines) its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be deemed to be
such number of shares of stock and amount of other securities to which a holder
of a share of Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or combination
would be entitled.

“Delay Period” has the meaning set forth in
Section 4(a) of this Agreement.

“Demand Notice” has the meaning set forth in
Section 2(a) of this Agreement.

“Demand Registration” has the meaning set forth
in Section 2(a) of this Agreement.

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder.

“Form S-1” has the meaning set forth in Section
2(c)(4).

 

“Form S-3” has the meaning set forth in Section
2(c)(4).

“Holder” means a person who owns Registrable
Securities and is either the Trust or a Person to whom the rights of a Holder
hereunder have been duly assigned or transferred.

“Losses” has the meaning set forth in Section
6(a).

“Misstatement/Omission” has the meaning set
forth in Section 6(a).

“Outstanding Registrable Securities” means the
securities of the Company that qualify as Registrable Securities at the time of
delivery of a Demand Notice.

“Person” means any natural person, corporation,
partnership, firm, association, trust, government, governmental agency, limited
liability company or any other entity, whether acting in an individual,
fiduciary or other capacity.

“Piggyback Registration” has the meaning set
forth in Section 3(a).

“Prospectus” means the prospectus included in
any Registration Statement, all 
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated
by reference in such prospectus.

“Registrable Securities” means the shares of
Common Stock owned by the Trust as of the date hereof; provided, however, that if as a result of
any reclassification, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or other similar transaction or event, any capital stock,
evidence of indebtedness, warrants, options, rights or other securities
(collectively, “Other Securities”) are issued or transferred to a Holder
in respect of Registrable Securities held by the Holder, references herein to
Registrable Securities shall be deemed to include such Other Securities; provided, further, that, as to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when (i) they have been sold pursuant to an offering registered
under the Securities Act, (ii) they have been sold pursuant to Rule 144 (or any
successor provision) under the Securities Act or (iii) they have been sold to
any Person to whom the rights under this Agreement are not assigned in
accordance with this Agreement.

“Registration Statement” means any registration
statement of the Company under the Securities Act that covers any of the
Registrable Securities, including the related Prospectus, amendments and
supplements to such registration statement (including pre- and post-effective
amendments), all exhibits, and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement or
Prospectus.

“Requesting Holders” has the meaning set forth
in Section 2(a).

“Securities Act” means the United States
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder.

“Trust” has the meaning set forth in the
recitals hereto.

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Section 2.               Demand
Registrations.

(a)           Right
to Demand.  Upon the terms and
subject to the conditions of this Agreement, Holders owning at least a majority
of the Outstanding Registrable Securities (the “Requesting Holders”)
shall have the right, by written notice delivered to the Company (the “Demand
Notice”), to request that the Company register for resale under and in
accordance with the provisions of the Securities Act the number of Registrable
Securities designated by such Holders (a “Demand Registration”).  Promptly following its receipt of a Demand
Notice, the Company will notify all other Holders of the proposed registration
and allow them the opportunity to include Registrable Securities in such
registration.  Holders that elect to participate
in such registration shall provide written notice of such election to the
Company within five days of their receipt of notice from the Company.

(b)           Underwriting.  If the Requesting Holders intend to
distribute the Registrable Securities described in the Demand Notice in an
underwritten offering, they shall so advise the Company in the Demand
Notice.  In that event, the underwriters
for such offering will be selected by the Company and shall be reasonably acceptable
to a majority of the Requesting Holders.

(c)           Limits
on Demand Registrations.

(1)           The
Company shall not be required to register any Registrable Securities pursuant
to this Section 2 unless the anticipated aggregate offering price to the public
in the relevant offering is expected to be at least $10.0 million.

(2)           The
Company shall not be obligated to effect more than two Demand Registrations in
any 12-month period.

(3)           The
Company shall not be obligated to file a Registration Statement with respect to
a Demand Registration within 180 days of the completion of any underwritten
offering of the Company’s securities.

(4)           Holders
shall be entitled to have a total of three Demand Registrations effected on
Form S-1 (including any successor form, “Form S-1”) and an unlimited
number of Demand Registrations on Form S-3 (including any successor Form, “Form
S-3”) at any time when the Company is eligible to use such form.  A Demand Registration effected on Form S-1
shall not reduce the number of available Demand Registrations pursuant to the
foregoing sentence if a Registration Statement with respect thereto does not
become effective under the Securities Act and remain effective for at least one
hundred-eighty (180) days (excluding any Delay Period), or until the completion
of the distribution of the Registrable Securities thereunder, whichever is
earlier.

(d)           Filing
of Registration Statement.  Subject
to Section 4(a), as soon as practicable, but in any event within 60 days of the
date on which the Company receives a Demand Notice (unless a Delay Period is in
effect, in which case within 60 days of the termination of the Delay Period),
the Company shall file with the Commission a Registration Statement on the
appropriate form for the registration and sale of the Registrable Securities

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specified in such Demand
Notice, together with the number of Registrable Securities requested to be
included in the Demand Registration by other Holders.

(e)           Effectiveness
of Registration Statement.  The
Company shall use its commercially reasonable efforts to (i) cause a Registration
Statement filed pursuant to Section 2(d) to be declared effective by the
Commission as soon as reasonably practicable and (ii) keep such Registration
Statement continuously effective and usable for the sale of Registrable
Securities until the earlier of (A) (1) in the case of a Demand Registration
for delayed or continuous offerings of Registrable Securities filed on Form
S-3, two years after the date on which the Commission declares such
Registration Statement effective (excluding any Delay Period) or (2) in the
case of any other Demand Registration, 180 days from the date on which the
Commission declares such Registration Statement effective (excluding any Delay
Period) and (B) the date on which all of the Registrable Securities included in
the registration have been sold.

(f)            Holders’
Withdrawal.  Holders of a majority of
the Registrable Securities to be included in a Demand Registration may, at any
time prior to the effective date of the Registration Statement relating
thereto, revoke such request by providing a written notice to the Company of
such revocation.

(g)           Preemption
of Demand Registration. 
Notwithstanding anything to the contrary contained herein, after
receiving a Demand Notice, the Company may elect to effect an underwritten
primary registration in lieu of the Demand Registration if the Company’s Board
of Directors believes that such primary registration would be in the best
interests of the Company. If the Company so elects to effect a primary
registration, the Company shall give prompt written notice to all Holders of
its intention to effect such a registration and shall afford the Holders the
rights set forth in Section 3 with respect to Piggyback Registrations, except
that Section 2(h) will apply in the event of any underwriter’s cutback.  The Company shall select the underwriters for
such an offering.  In the event the
Company elects to effect a primary registration after receiving a Demand
Notice, the Company shall use its commercially reasonable efforts to have the
Registration Statement relating to the primary registration declared effective
by the Commission as soon as reasonably practicable. In addition, the request
for a Demand Registration shall be deemed to have been withdrawn and such
primary registration shall not be deemed to be a Demand Registration for the
purposes of Section 2(c)(4).

(h)           Priority
in Demand Registrations.  If a Demand
Registration relates to an underwritten offering and the managing underwriter
advises the Company, in writing, that in its good faith judgment, the number of
securities requested to be included in such registration exceeds the number
that can be sold in such offering without materially and adversely affecting
the marketability of the offering, then the Company will include in such
registration the maximum number of shares that the managing underwriter advises
the Company can be sold in such offering, allocated as follows: (i) first,
the Registrable Securities requested to be included in such registration by the
Holders, with such securities to be included on a pro rata basis based on the
amount of securities requested to be included therein and (ii) second,
to the extent that any other securities may be included without exceeding the
limitation recommended by the managing underwriter, the securities the Company
proposes to sell or to include in the registration for the account of other
Persons; provided, however, that
the Company and such other Persons may agree to a different allocation with
respect to securities included pursuant to clause (ii).

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Section 3.               Piggyback
Registrations.

(a)           Right
to Piggyback Registrations.  If, at
any time subsequent to the IPO, the Company or another party having
registration rights proposes that the Company register any of the Company’s
equity securities under the Securities Act on a form that would be suitable for
a registration of Registrable Securities, the Company will give written notice
of such proposed registration to all Holders at least twenty days prior to the
anticipated filing date.  Such notice
shall offer the Holders the opportunity to register some or all of their
Registrable Securities in the registration (a “Piggyback Registration”).  Subject to Section 3(b), the Company shall
include in the Piggyback Registration all Registrable Securities requested by
Holders to be included therein to the extent written requests for inclusion are
delivered to the Company within ten days of the delivery of the Company’s
notice.  If the Registration Statement
relating to the Piggyback Registration is for an underwritten offering, such
Registrable Securities shall be included in the underwriting on the same terms
and conditions as the securities otherwise being sold through the
underwriters.  Subject to the terms of
any underwriting agreement entered into in connection with the offering, each
Holder shall be permitted to withdraw all or part of its Registrable Securities
from a Piggyback Registration at any time prior to the effectiveness of the
Registration Statement relating to such Piggyback Registration.  The amount of time for which the Company
shall keep a Registration Statement relating to a Piggyback Registration
effective and usable shall be determined by the Company; provided, however, the Company shall
provide reasonable notice to Holders participating in such a registration if it
intends to keep the Registration Statement effective and usable for less than
90 days.

(b)           Priority
in Piggyback Registrations.  If a
Piggyback Registration is an underwritten offering and the managing underwriter
advises the party or parties initiating such offering in writing that in their
good faith judgment the number of securities requested to be included in such
registration exceeds the number that can be sold in such offering without
materially and adversely affecting the marketability of the offering, then any
such registration shall include the maximum number of shares that the managing
underwriter advises can be sold in the offering allocated as follows: (i) first,
the securities the party or parties initiating such offering propose to sell,
with such securities to be included on a pro rata basis based on the amount of
securities requested to be included therein, (ii) second, to the extent
that any other securities may be included without exceeding the limitations
recommended by the managing underwriter, all securities proposed to be included
in the offering by the Company and (iii) third, to the extent that any
other securities may be included without exceeding the limitations recommended
by the managing underwriter, all other securities proposed to be included in
the offering (including Registrable Securities), with such additional
securities to be included on a pro rata basis based on the amount of securities
requested to be so included, subject, in each case, to any agreement to the
contrary between or among the relevant parties.

Section 4.               Rights
and Obligations of the Company

(a)           Delay
Period.  Notwithstanding anything to
the contrary set forth herein, the Company shall have the right to delay the
filing of any Registration Statement otherwise required to be filed pursuant to
Sections 2 or 3, or to suspend the use of any Registration Statement, for a
period not in excess of 90 consecutive calendar days in any 12-month period (a “Delay
Period”), if it determines in good faith that filing or maintaining the
effectiveness of such

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Registration Statement
(i) would require disclosure of material information that the Company has a
valid business purpose for retaining as confidential at such time or (ii) would
otherwise be detrimental to the Company or the its stockholders.

(b)           Registration
Procedures.  Whenever the Company is
required to register Registrable Securities pursuant to Sections 2 or 3 hereof,
the Company will use its commercially reasonable efforts to effect the registration
to permit the sale of such Registrable Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company will, as promptly as reasonably practicable:

(1)           prepare
and file with the Commission a Registration Statement with respect to such
Registrable Securities on a form available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof and use its commercially reasonable efforts to cause such Registration
Statement to become and remain effective for the applicable time period
specified herein;

(2)           prepare
and file with the Commission such amendments (including post-effective
amendments) to the Registration Statement and such supplements to the
Prospectus as may be necessary to keep such Registration Statement effective
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement for the
applicable time period specified herein;

(3)           furnish
to each selling Holder of Registrable Securities covered by a Registration
Statement and to each underwriter, if any, such number of copies of the
Registration Statement, each amendment and post-effective amendment thereto,
and the Prospectus included in such Registration Statement (including each
preliminary prospectus and any supplement to such Prospectus and any other
prospectus filed pursuant to Rule 424 under the Securities Act), in each case
including all exhibits, and such other documents as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder or to be disposed of by such underwriter;

(4)           use
its commercially reasonable efforts to register or qualify and, if applicable,
to cooperate with the selling Holders, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of the Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any selling Holder or underwriters (if any) shall reasonably
request, to keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however, that the Company will
not be required to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify or (ii) consent to general service
of process or taxation in any such jurisdiction where it is not otherwise so
subject;

(5)           cause
all such Registrable Securities to be listed or quoted (as the case may be) on
each national securities exchange or other securities market on which
securities of the same class as the Registrable Securities are then listed or
quoted;

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(6)           provide
a transfer agent and registrar for all such Registrable Securities and a CUSIP
number for all such Registrable Securities not later than the effective date of
such Registration Statement;

(7)           use
its commercially reasonable efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities included therein for sale in any relevant jurisdiction, and, in the
event of the issuance of any stop order suspending the effectiveness of a
Registration Statement, or of any order suspending the qualification of any
Registrable Securities included in such Registration Statement for sale in any
relevant jurisdiction, use its commercially reasonable efforts promptly to
obtain the withdrawal of such order;

(8)           promptly
notify the selling Holders and the managing underwriters, if any, and confirm
such notice in writing, when a Prospectus or any supplement or post-effective amendment
to such Prospectus has been filed, and, with respect to a Registration
Statement or any post-effective amendment thereto, when the same has become
effective, of the issuance by the Commission of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any Prospectus or the initiation of any proceedings by
any governmental authority for that purpose, of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Securities for offer or sale under the securities or blue sky laws
of any relevant jurisdiction, and of its obtaining knowledge of the occurrence
of any event or the existence of any facts that make any statement made in such
Registration Statement or Prospectus untrue in any material respect or that
require the making of any change in such Registration Statement or Prospectus
so that it will not omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (which notice shall be accompanied
by an instruction to the selling Holders and the managing underwriters, if any,
to suspend the use of the Prospectus until the requisite changes have been
made);

(9)           as
promptly as practicable upon obtaining knowledge of the occurrence of any event
contemplated by Section 4(b)(8) above, use its commercially reasonable efforts
to prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus, or any document incorporated therein by reference,
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold, the Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and

(10)         if
requested by the underwriters, if any, or a Holder of Registrable Securities
being sold, promptly incorporate in a Prospectus, supplement or post-effective
amendment such information as the requesting Person(s) reasonably request to be
included therein relating to the sale of the Registrable Securities, and make
all required filings of such Prospectus, supplement or post-effective amendment
promptly following notification of the matters to be incorporated in such
supplement or post-effective amendment;

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(11)         if
the offering is an underwritten offering, enter into such agreements (including
an underwriting agreement in form, scope and substance as is customary in
underwritten offerings) and take all such other appropriate and reasonable
actions requested by the Holders owning a majority of the Registrable
Securities included in the registration or by the managing underwriters in
order to expedite or facilitate the disposition of such Registrable Securities
(including, in the case of a Demand Registration, by causing senior executives
of the Company to participate in a reasonable number of “roadshow” or similar
meetings with potential investors);

(12)         if
the offering is an underwritten offering, use its commercially reasonable
efforts to obtain “comfort” letters and updates thereof, in customary form,
scope and substance, from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement); and

(13)         use
its commercially reasonable efforts to obtain opinions and updates thereof, in
customary form, scope and substance, from counsel to the Company to the extent
necessary or desirable.

Section 5.               Registration
Expenses.

(a)           Expenses
Payable by the Company.  The Company
shall bear all expenses incurred with respect to the registration or attempted
registration of the Registrable Securities pursuant to Sections 2 or 3 of this
Agreement as provided herein.  Such
expenses shall include, without limitation, (i) all registration, qualification
and filing fees (including, without limitation, (A) fees payable to the
Commission, (B) fees with respect to filings required to be made with the
national securities exchange or national market system on which the Common
Stock is then traded or quoted and (C) fees and expenses relating to compliance
with state securities or blue sky laws (including, without limitation, fees and
disbursements of counsel for the Company or the underwriters, or both, in
connection with blue sky qualifications of Registrable Securities), (ii) messenger
and delivery expenses, word processing, duplicating and printing expenses
(including without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust
Company, printing preliminary prospectuses, prospectuses, prospectus
supplements, including those delivered to or for the account of the Holders,
and blue sky memoranda), (iii) fees and disbursements of counsel for the
Company, (iv) fees and disbursements of all independent certificated public
accountants for the Company (including, without limitation, fees relating to
any comfort letters), (v) all out-of-pocket expenses of the Company (including,
without limitation, expenses incurred by the Company, its officers, directors,
and employees performing legal or accounting duties or preparing or
participating in “roadshow” presentations), (vi) fees and expenses incurred in
connection with the quotation or listing of shares of Common Stock on any
national securities exchange or other securities market and (vii) reasonable
fees and expenses of one firm of counsel for all holders of securities included
in the registration, which firm shall be chosen by the holders of a majority of
such securities and shall be reasonably acceptable to the Company.

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(b)           Expenses
Payable by the Holders.  Each Holder
shall pay all underwriting discounts and commissions or placement fees of
underwriters or broker’s commissions incurred in connection with the sale or
other disposition of Registrable Securities for or on behalf of such Holder.

Section 6.               Indemnification.

(a)           Indemnification
by the Company.  The Company agrees
to indemnify, to the fullest extent permitted by law, each Holder, each
affiliate of a Holder and each director, officer, employee, manager, partner,
member, counsel, agent or representative of such Holder and its affiliates and
each Person who controls any such Person (within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act) (collectively, the “Holder
Indemnified Parties”) against, and hold it and them harmless from, all
losses, claims, damages, liabilities, actions, proceedings, costs (including,
without limitation, costs of preparation and reasonable attorneys’ fees and
disbursements) and expenses, including expenses of investigation and amounts
paid in settlement (collectively, “Losses”) arising out of, caused by or
based upon any untrue or alleged untrue statement of material fact contained in
any Registration Statement, or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading (a “Misstatement/Omission”), or any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; provided,
however, that the Company shall not be liable insofar as such
Misstatement/Omission or violation is made in reliance upon and in conformity
with information furnished in writing to the Company by a Holder expressly for
use therein; provided, further, that
the Company shall not be liable for a Holder’s failure to deliver or cause to
be delivered (to the extent such delivery is required under the Securities Act)
the Prospectus contained in the Registration Statement, furnished to it by the
Company on a timely basis at or prior to the time such action is required by
the Securities Act to the person alleging a Misstatement/Omission if such Misstatement/Omission
was corrected in such Prospectus.  In
connection with an underwritten offering, the Company will agree to indemnify
the underwriters participating in the offering, their officers and directors
and each Person who controls such underwriters (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) on
customary terms set forth in the relevant underwriting agreement.

(b)           Indemnification
by the Holders.  In connection with
any Registration Statement in which a Holder is participating, each such Holder
agrees to indemnify, to the fullest extent permitted by law, the Company, each
director and officer of the Company and each Person who controls the Company
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act), and each other Holder participating in the registration,
against, and hold it harmless from, any Losses arising out of or based upon (i)
any Misstatement/Omission contained in the Registration Statement, if and to
the extent that such Misstatement/Omission was made in reliance upon and in
conformity with information furnished in writing by or on behalf of such Holder
for use therein or (ii) the failure by such Holder to deliver or cause to be
delivered (to the extent such delivery is required under the Securities Act)
the Prospectus contained in the Registration Statement furnished to it by the
Company on a timely basis at or prior to the time such action is required by
the Securities Act to the person asserting a Misstatement/Omission if such
Misstatement/Omission was corrected in such

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Prospectus.
Notwithstanding the foregoing, each Holder’s obligation to indemnify will be
individual (several and not joint) and will be limited to the net amount of
proceeds received by such Holder from the sale of Registrable Securities
pursuant to the Registration Statement giving rise to the indemnification
obligation.

(c)           Conduct
of Indemnification Proceedings.  In
case any action, claim or proceeding shall be brought against any Person
entitled to indemnification hereunder, such indemnified party shall promptly
notify each indemnifying party in writing, and the indemnifying party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof.  The failure to so notify the indemnifying
party shall relieve the indemnifying party of its indemnification obligations
to the extent that the failure to notify materially prejudiced the indemnifying
party.  Each indemnified party shall have
the right to employ separate counsel in such action, claim or proceeding and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party unless (i) the indemnifying
party has agreed to pay such expenses, (ii) the indemnifying party has failed
promptly to assume the defense of the action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both the indemnified party and the indemnifying party or an
affiliate or controlling person of the indemnifying party, and the indemnified
party shall have been advised in writing by counsel that either (x) there may
be one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party or such affiliate or
controlling person or (y) a conflict of interest may exist if such counsel
represents the indemnified party and the indemnifying party or its affiliate or
controlling person; provided, however,
that the indemnifying party shall not, in connection with any one such action,
claim or proceeding or separate but substantially similar or related actions,
claims or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be responsible hereunder for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel), which counsel shall be designated by the indemnified party or, in the
event that the indemnified party is a Holder Indemnified Party, by the Holders
of a majority of the Registrable Securities included in the relevant
registration.

(d)           Right
to Contribution.  If the
indemnification provided for in this Section 6 is unavailable to, or
insufficient to hold harmless, an indemnified party under Section 6(a) or
Section 6(b) in respect of any Losses incurred, then each applicable
indemnifying party shall have an obligation to contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and of the indemnified party, on the other, in connection with
the Misstatement/Omission or violation which resulted in such Losses, taking
into account any other relevant equitable considerations. The amount paid or
payable by a party as a result of the Losses referred to above shall be deemed
to include, subject to the limitations set forth in Section 6(c) above, any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation, lawsuit or legal or administrative action or
proceeding.

The relative fault of the indemnifying party, on the
one hand, and of the indemnified party, on the other, shall be determined by
reference to, among other things, whether the relevant Misstatement/Omission or
violation relates to information supplied by the indemnifying party or

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by the indemnified party
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such Misstatement/Omission or violation.

The parties agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 6(d), a Holder shall not be required to contribute
any amount in excess of the amount by which (i) the net amount of proceeds
received by such Holder from the sale of Registrable Securities pursuant to the
Registration Statement giving rise to the contribution obligation exceeds (ii)
the amount of any damages which such Holder has otherwise been required to pay
by reason of the relevant Misstatement/Omission or violation.

No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

(e)           Limitation
on Indemnification and Contribution. 
No indemnifying party shall be liable pursuant to this Section 6 for any
settlement effected without its written consent, which consent may not be
unreasonably delayed or withheld.  Each
indemnifying party agrees that it will not, without the indemnified party’s
prior written consent, consent to entry of any judgment or settle or compromise
any pending or threatened claim, action or proceeding in respect of which
indemnification or contribution has been sought hereunder unless the terms of
such consent, settlement or compromise includes an unconditional release, in
form and substance reasonably satisfactory to the indemnified parties, of the
indemnified parties from all liability and obligation arising therefrom. The
indemnifying party’s liability to any indemnified party hereunder shall not be
extinguished solely because any other indemnified party is not entitled to
indemnity hereunder.

(f)            Effect
of Underwriting Agreement. 
Notwithstanding anything to the contrary in this Section 6, in the event
an underwriting agreement is entered into in connection with an underwritten
offering that includes Registrable Securities, the terms of such agreement
relating to indemnification and contribution shall control if in conflict with
the terms hereof.

Section 7.               Underwritten
Registrations.  No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person’s securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, customary indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements; provided, however, that no Holder of
Registrable Securities included in any underwritten registration shall be
required to make any representations or warranties to the Company or the
underwriters except representations and warranties regarding such Holder and
such Holder’s intended method of distribution and other customary
representations and warranties reasonably requested by the Company or the
underwriters.

Section 8.               Effectiveness
of this Agreement.  This Agreement
will become effective, and the rights of the Trust and any other Holder
hereunder will become exercisable, upon the

 11
 

 

completion of the IPO and
the termination of any applicable lock-up agreement entered into in connection
with the IPO.

Section 9.               Covenants
of Holders.

(a)           Cooperation.  Each Holder hereby agrees (i) to cooperate
with the Company and to furnish to the Company all such information regarding
such Holder, its ownership of Registrable Securities and the disposition of
such securities in connection with the preparation of the Registration
Statement and any filings with any state securities commissions as the Company
may reasonably request, (ii) to the extent required by the Securities Act, to
deliver or cause delivery of the Prospectus contained in the Registration
Statement, any amendment or supplement thereto, to any purchaser of the
Registrable Securities covered by the Registration Statement from the Holder
and (iii) to notify the Company of any sale of Registrable Securities by such
Holder.

(b)           Suspension
of Use of Registration Statement. 
Each Holder agrees that, upon receipt of written notice from the Company
of the occurrence of any event of the kind described in Section 4(b)(8) or the
commencement of a Delay Period, such Holder will forthwith discontinue
disposition of such Registrable Securities covered by such Registration
Statement until (i) such Holder’s receipt of the supplemented or amended
Registration Statement contemplated by Section 4(b)(9) (or it is advised in
writing by the Company that the use of the applicable Prospectus may be
resumed), and copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Registration
Statement or (ii) the termination of the Delay Period.

(c)           Insider
Trading Laws and Policies.  Each
Holder agrees that it will not sell, transfer or otherwise dispose of
Registrable Securities in a manner contrary to the Company’s insider trading
and related policies or applicable securities laws.  A period in which one or more Holders are
prohibited from selling, transferring or disposing of Registrable Securities
pursuant to such policies or laws shall not be deemed a Delay Period for the
purposes of this Agreement.

Section 10.             Miscellaneous.

(a)           No
Superior Rights.  The Company shall
not, without the prior written consent of the Holders of a majority of the
Registrable Securities, grant any rights to any Person to register any shares
of capital stock or other securities of the Company if such rights would be
superior to the rights of the Holders granted pursuant to this Agreement with
respect to the matters addressed in Sections 2(h) or 3(b).

(b)           Remedies.  Any Person having rights under any provision
of this Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance or injunctive relief that a
remedy at law would be adequate. Accordingly, any party may in its sole
discretion apply to any court of law or equity of

 12
 

 

competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.

(c)           Amendments
and Waivers.  Except as otherwise
provided herein, the provisions of this Agreement, including the provisions of
this sentence, may be amended, modified, supplemented or waived only upon the
prior written consent of the Company and Holders of a majority of the
outstanding Registrable Securities.

(d)           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. The Holders
may assign all their rights hereunder with respect to Registrable Securities to
any transferee of such securities; provided,
however, that notice of such assignment must be provided to the
Company (it being understood that failure to provide such notice shall not
affect the validity of such assignment).

(e)           Termination
of Registration Rights.  The rights
of any Holder to cause the Company to register Registrable Securities under
Sections 2 or 3 of this Agreement shall terminate with respect to such Holder
when such Holder is legally able to dispose of all of its Registrable
Securities in one transaction pursuant to Rule 144 under the Securities Act.

(f)            Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected, it being intended that the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

(g)           Counterparts.  This Agreement may be executed in any number
of counterparts, any one of which need not contain the signatures of more than
one party, but each of which when so executed shall be deemed to be an original
and all such counterparts taken together shall constitute one and the same
Agreement.

(h)           Descriptive
Headings; Interpretation.  The
descriptive headings of this Agreement are inserted for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. The
use of the word “including” in this Agreement shall be by way of example rather
than by limitation.

(i)            Notices.  All notices, requests and other
communications provided for or permitted to be given under this Agreement must
be (i) in writing and shall be given by personal delivery, by certified or
registered United States mail (postage prepaid, return receipt requested), by a
nationally recognized overnight delivery service for next day delivery, or by
facsimile transmission and (ii) delivered via electronic mail, in each case to
the following addresses (or to such other addresses as the relevant party may
give in a notice given in accordance with the provisions hereof):

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If to the Company:

Venoco, Inc.

6267 Carpinteria Avenue

Carpinteria, California
93013-1423

Attention: Terry
Anderson, General Counsel

Fax: (805) 745-1816

Electronic mail: tanderson@venocoinc.com

with
a copy (which shall not constitute notice) to:

Davis Graham & Stubbs LLP

1550 Seventeenth Street, Suite 500

Denver, CO 80202

Attention: John Elofson

Fax: (303) 893-1379

Electronic mail: john.elofson@dgslaw.com

If to the Trust:

Timothy M. Marquez

860 Gaylord Street

Denver, CO 80206

Electronic mail: tmarquez@venocoinc.com

(j)            GOVERNING
LAW; SUBMISSION TO JURISDICTION. 
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF COLORADO WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of any federal court
located in the State of Colorado or any Colorado state court solely in respect
of the interpretation and enforcement of the provisions of this Agreement and
of the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and
the parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a Colorado state or
federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of
such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 10(i) or
in such other manner as may be permitted by law shall be valid and sufficient
service thereof.

EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS

 14
 

 

AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

(k)           Entire
Agreement.  This Agreement is
intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.

[Signature Page
Follows]

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

	
  

  	
  VENOCO, INC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William Schneider

  
	
   

  	
   

  	
  William Schneider

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE MARQUEZ TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M.
  Marquez

  
	
   

  	
   

  	
  Trustee

  

 

 16Exhibit 10.2

GROUND LEASE

This Ground Lease (“Lease”) is
made and entered into as of August 29, 2006, by and between CARPINTERIA BLUFFS,
LLC, a Colorado limited liability company (“Lessor”) and VENOCO, INC, a
Delaware corporation (“Lessee”).

RECITALS

A.                                   Pursuant to that certain Dividend Distribution
Agreement, dated as of August 29, 2006 by and among Timothy M. Marquez and
Bernadette B. Marquez, as trustees of the Marquez Trust, under Trust Agreement
dated February 26, 2002, as amended (“Trust”), Lessor and Lessee  (“Distribution Agreement”), Lessor has
acquired from Lessee and now owns (i) an undivided one hundred percent (100%)
fee interest in that certain real property improved with oil and gas processing
facilities owned by Lessee (“Processing Facilities”), located in the City of
Carpinteria, County of Santa Barbara, consisting of approximately forty six
(46) acres, comprised of five (5) separate parcels designated with APN(s)
001-170-003, 001-170-004, 001-170-022, 001-170-023, and 001-170-014 (collectively,
“Facilities Parcels”), and (ii) an undivided fifty percent (50%) fee interest (“Venoco
Parking Parcel Interest”) in that certain real property  improved with parking and access facilities for
the Casitas pier (“Casitas Pier”), located in the City of Carpinteria, County
of Santa Barbara, consisting of approximately ten (10) acres, comprised of one
(1) parcel designated with APN 001-170-021 (“Parking Parcel”).  As used in this Agreement the term “Premises”
(i) shall refer collectively to the Facilities Parcels and the Venoco Parking
Parcel Interest, and (ii) shall not include any of the improvements, Processing
Facilities (such improvements and Processing Facilities collectively, the “Reserved
Improvements”), oil and gas leases, or mineral interests located on, or
appurtenant to, or part of, the Facilities Parcels and the Venoco Parking
Parcel Interest.  The Premises is further
described in the attached Exhibit A. 
ExxonMobil Corporation owns the other undivided fifty percent (50%)
interest in the Parking Parcel (“Exxon Parking Parcel Interest”).

B.                                     Lessee is a party to that certain Purchase and
Sale Agreement, dated as of November 4, 1998, by and among Chevron U.S.A. Inc.,
a Pennsylvania corporation (“CUSA”), Chevron Pipe Line Company, a Delaware
corporation (“CPL” and together with CUSA “Chevron”), Ellwood Pipeline, Inc., a
California corporation (“Ellwood”), and Lessee, as amended by that certain
First Amendment to Purchase and Sale Agreement, dated as of January 13, 1999,
by and among the same parties described in this Recital B (collectively, “Purchase
Agreement”) pursuant to which Lessee acquired the Premises from Chevron.

C.                                     Pursuant to the Purchase Agreement, (i) Chevron
and Lessee each have certain environmental clean up and indemnity obligations
with respect to the Premises, (ii) the Premises is subject to a first priority
deed of trust (“Chevron Deed of Trust”) in favor of Chevron securing the
performance of Lessee’s abandonment obligations under the Purchase Agreement,
and (iii) the Premises is subject to certain transfer restrictions and options
to purchase in favor of Chevron.

D.                                    Pursuant to the Distribution Agreement, Lessor
has an option to purchase from Lessee the Exxon Parking Parcel Interest if such
interest is first obtained by Lessee.

  
 1
 

 

E.                                      Pursuant to the Distribution Agreement, Lessee
has reserved from the conveyance of the Premises to Lessor: (i) all interests
in the mineral rights in the Premises owned by Lessee (“Venoco Minerals”), with
the right of surface entry to explore for, remove, extract, or otherwise
exploit such minerals, (ii) all interests in the mineral rights in the Premises
owned by other parties and leased by Lessee (“Leased Minerals”), with the right
of surface entry to explore for, remove, extract, or otherwise exploit such minerals,
(iii) the lessor’s interest in all leases and all income received by Lessee
from any leases, including oil and gas leases, which encumber the Premises, and
(iv) all Reserved Improvements located on or appurtenant to the Premises
(collectively, “Property Reservations”).

F.                                      Pursuant to the Distribution Agreement, Lessor
has accepted the conveyance of the Premises to Lessor subject to the following,
in addition to the Property Reservations: 
(i) the Chevron Deed of Trust, (ii) obligations of Lessee under the
Purchase Agreement respecting the Property, and (iii) any other liens,
encumbrances, leases, tenancies or other rights of possession, oil and gas
leases, reservations, exceptions, charges, easements, rights, rights of way,
covenants, conditions, and restrictions which are (a) currently of record as
reflected in the title report for the Premises, or (b) not of record but
existing as encumbrances against the Premises resulting from Lessee’s use of
the Premises (collectively, “Property Encumbrances”).

G.                                     Pursuant to that certain Development Agreement,
dated as of August 29, 2006 by and between Lessor and Lessee (“Development
Agreement”), Lessor may desire for Lessee (i) to relocate and consolidate the
Processing Facilities (“Processing Facilities Relocation”) into and within an
approximate two (2) acre portion of the Premises (“Relocation Parcel”), (ii) to
have the right to use approximately two (2) acres of the Parking Parcel as a
parking and access area for the Casitas Pier (“Access Parcel”), (iii) to have
adequate vehicular and utility rights-of-way, easements and access to the
Relocation Parcel and the Access Parcel (“Access and Utilities Easements”), and
(iv) upon completion of the Processing Facilities Relocation, to terminate the
Lease and enter into a new ground lease for the Relocation Parcel and the
Access Parcel.

H.                                    Pursuant to the Development Agreement, if Lessee
fails to complete the Processing Facilities Relocation within the time frames
described in the Development Agreement, the rent payable to Lessor pursuant to
this Lease shall be adjusted to the fair rental value of the Premises (“Rent
Adjustment”).

I.                                         Pursuant to the Distribution Agreement, Lessor
and Lessee have agreed to enter into this Lease.

NOW, THEREFORE, for the reasons
set forth herein above, and in consideration of the obligations of the parties
under the Distribution Agreement and the mutual promises and agreements of
Lessor and Lessee hereinafter set forth, the receipt and sufficiency of which
are hereby acknowledged, Lessor and Lessee agree as follows:

I.                                         LEASE; ADDITION TO PREMISES

Lessor does hereby lease and grant the Premises to Lessee, for the term
provided herein and on the terms and conditions provided herein, and Lessee
does hereby accept and hire the Premises

  
 2
 

 

from Lessor for the term provided herein and on the terms and
conditions provided herein.  The Premises
shall include the Exxon Parking Parcel Interest, if Lessor acquires such
interest prior to the completion of the Processing Facilities Relocation.

II.                                     IMPROVEMENTS

Lessee is the owner of the Reserved Improvements which shall be
referred to also as “Improvements” in this Lease.

III.                                 TERM

The term of this Lease (“Term”) is twenty (20) years,
commencing on the Close of Escrow as defined in the Distribution Agreement (“Commencement
Date”), unless otherwise modified pursuant to the Development Agreement;
provided that, unless otherwise agreed upon by Lessor and Lessee or unless the
Lease is otherwise terminated as provided herein, the Term shall continue until
the termination of the Transfer Restrictions as defined in Section 2(a) of the
Distribution Agreement; provide further that under no circumstance shall the
term of this Lease be more than ninety nine (99) years from the Commencement
Date.

IV.                                 USE

Lessee may use the Premises as (i) for the use, operation, maintenance,
repair, improvement, and replacement from time to time of the Processing
Facilities, and (ii) for drilling and similar activities necessary or desirable
in connection with the exploration, evaluation, removal, and processing of the
Venoco Minerals and the Leased Minerals, (iii) for parking and access, and (iv)
for such other and additional similar uses as are necessary or desirable in
connection with the foregoing uses or incidental thereto.

The parties acknowledge that in order for Lessee to carry out its
intended use of the Premises, it may be necessary or desirable to obtain use,
zoning, or other land use permits or approvals relating to the Premises.  Lessor agrees, from time to time on the
reasonable request of Lessee and at Lessee’s sole cost and expense, to execute
such documents, petitions, and authorizations as may be necessary or
appropriate in order to obtain such subdivisions, zoning changes, land use
permits and approvals.

V.                                     RENT

Lessee shall pay, without abatement, deduction, or offset, as annual
rent, beginning on the commencement date and continuing throughout the term of
this Lease, the sum of One Dollar ($1.00) per year, payable in advance on the
first day of each lease year, unless otherwise modified by the Rent Adjustment
pursuant to Section 4(a) of the Development Agreement.

VI.                                 TAXES

Lessee shall pay, without abatement, deduction, or offset, all real and
personal property taxes, general and special assessments, and other charges of every
description levied on or assessed against the Premises, Improvements, personal
property located on or in the Premises or

  
 3
 

 

Improvements, the leasehold estate, or any subleasehold estate, to the
full extent of installments falling due during the term, whether belonging to
or chargeable against Lessor or Lessee. Lessor and Lessee shall mutually
cooperate in order to notify the taxing authority to directly bill Lessee for
all such payments.  Lessee shall make all
such payments directly to the taxing authority before delinquency and before
any fine, interest, or penalty shall become due or be imposed by operation of
law for their nonpayment.  If, however,
applicable law permits the payment of any or all of the above items in
installments (whether or not interest accrues on the unpaid balance), Lessee
may, at Lessee’s election, utilize the permitted installment method, but shall
pay each installment with any interest before delinquency.  All payments of taxes or assessments or both,
including permitted installment payments, shall be prorated for the tax or
assessment year in which the Lease commences and terminates.

Lessee may contest the legal validity or amount of any taxes,
assessments, or charges for which Lessee is responsible under this Lease, and
may institute such proceedings as Lessee considers necessary.  If Lessee contests any such tax, assessment
or charge, Lessee may withhold or defer payment or pay under protest, but shall
protect Lessor and the Premises from any lien created by such withholding, deferment
or protest by providing Lessor an adequate surety bond or other appropriate
security.

Lessor appoints Lessee as Lessor’s attorney-in-fact for the purpose of
making all payments to any taxing authorities and for the purpose of contesting
any taxes, assessments, or charges, conditioned on Lessee’s preventing any
liens from being levied on the premises or on Lessor (other than the statutory
lien of California Revenue and Taxation Code Section 2187).

Lessee’s obligation to pay taxes or assessments levied or charged
against the Premises or Improvements or against specified personal property
shall not include the following, whatever they may be called:  business, income, or profits taxes levied or
assessed against Lessor by federal, state or other governmental agency; estate,
succession, inheritance, or transfer taxes of Lessor; or corporation, franchise
or profits taxes imposed on the corporate owner of the fee title of the
Premises.  If, however, during the term of
this Lease, taxes are imposed, assessed or levied on the rent derived from the
Premises in lieu of all or any part of real property taxes, personal property
taxes or real and personal property taxes that Lessee would have been obligated
to pay under the foregoing provisions, and the purpose of the new taxes is more
closely akin to that of an ad valorem or use tax than to an income or franchise
tax on Lessor’s income, Lessee shall pay the taxes as provided above for
property taxes and assessments.

Lessee shall furnish to Lessor, at least 10 days before the date when
any tax, assessment or charge would become delinquent, receipts or other
appropriate evidence establishing their payment. Lessee may comply with this
requirement by retaining a tax service to notify Lessor whether the taxes have
been paid.

VII.                             RIGHT OF ENTRY

Lessor shall have the right to enter the Premises in order to inspect
the Premises or to show the Premises to prospective purchasers or lenders.  Lessor shall give Lessee reasonable prior
notice of such entry, and except in the case of an emergency, Lessor shall be
accompanied by a representative of Lessee.

  
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VIII.                         REMOVAL OF IMPROVEMENTS

 

At the expiration or sooner termination of the term of this Lease,
Lessee shall remove the Improvements and all personal property located on the Premises
and shall restore the Premises in the manner contemplated by the Purchase
Agreement.  Any and all Improvements
remaining on the Premises after (i) the completion of the Processing Facilities
Relocation on such portion of the Premises and (ii) transfer of the operation
and control of such portion of the Premises to Lessor, shall be deemed
transferred by Lessee to Lessor if Lessor retains such Improvements.

IX.                                COMPLIANCE WITH LAWS

Lessee shall comply, and shall ensure that all of its officers, directors,
shareholders, employees, agents, representatives, suppliers, contractors and
subcontractors comply, with all applicable laws, ordinances, rules, orders and
regulations in the conduct of any activity related to Lessee’s use and
operation of the Premises.

X.                                    REPAIR AND MAINTENANCE

Throughout the term, Lessee shall, at Lessee’s sole cost and expense,
maintain the Premises and all Improvements in good condition and repair,
ordinary wear and tear excepted, and in accordance with all applicable laws,
rules, ordinances, orders and regulations of (i) federal, state, county,
municipal, and other governmental agencies and bodies having or claiming
jurisdiction and all their respective departments, bureaus, and officials; (ii)
the insurance underwriting board or insurance inspection bureau having or
claiming jurisdiction; and (iii) all insurance companies insuring all or any
part of the Premises or Improvements or both.

Nothing in this provision defining the duty of maintenance shall be
construed as limiting any right given elsewhere in this Lease to alter, modify,
demolish, remove, or replace any improvement, or as limiting provisions
relating to condemnation.

XI.                                ALTERATIONS.

Lessee shall have the right to make all repairs, alterations, additions
or reconstructions of the Improvements on the Premises without the prior
approval of Lessor.  Lessee shall provide
three (3) months prior notice to Lessor of (i) material additions of
Improvements or (ii) material alterations to Improvements.

XII.                            ENCUMBRANCES.

A.                                                      Condition of Encumbrances.  The
Lessee may, at any time, or from time to time, during the term hereof mortgage
or otherwise encumber its interest in this Lease and in the leasehold estate
created hereunder and/or the Improvements upon and subject to the following
conditions:

1.                                      No deed of trust, mortgage or other encumbering
instrument (hereinafter referred to as “Leasehold Mortgage”) shall extend to or
otherwise affect the fee, rever­sionary

  
 5
 

 

interest or estate of Lessor in and to the
Premises and the Leasehold Mortgage and all rights acquired under it shall be
subject to each and all of the covenants, condi­tions and restrictions stated
in this Lease and to all rights and interests of Lessor, except as otherwise
provided in this Lease. Should there be any conflict between the provisions of
the Lease, and of any Leasehold Mortgage executed by Lessee, the provisions of
this Lease shall control.

 

2.                                      Either prior to or concurrent with the
recordation of the Leasehold Mortgage, Lessee shall cause a fully conformed
copy thereof and of the note secured thereby to be delivered to Lessor together
with a written notice contain­ing the name and post office address of the
mortgagee, trustee, beneficiary or other holder of the beneficial interest in
the Leasehold Mortgage (hereinafter referred to as “Leasehold Mortgagee”).

3.                                      Lessor agrees that it will not terminate this
Lease because of any default or breach hereunder on the part of the Lessee if
the Leasehold Mortgagee, or the trustee under such Leasehold Mortgage, within
thirty (30) days after service of written notice on the Leasehold Mortgagee by
Lessor of Lessor’s intention to terminate this Lease for such breach or
default, shall:

(a)                                    Cure such breach or default if the same can be
cured by the payment or expenditure of money provided to be paid under the
terms of this Lease, or if such default or breach is not so curable, commence,
and thereafter pursue to completion, the steps and proceedings for foreclosure
by sale, or by exercise of power of sale pursuant to and under the Leasehold
Mortgage, of the leasehold estate hereunder; and

(b)                                   Keep and perform all of the covenants and
conditions of this Lease requiring the payment or expenditure of money by
Lessee until such time as the leasehold estate created hereunder shall be sold
upon foreclosure, or by the exercise of a power of sale, or shall be released
or reconveyed under the Lease­hold Mortgage; provided, however, that if the
Leasehold Mortgagee shall fail or refuse to comply with the conditions of this
Section XII, then and thereupon Lessor shall be released from the covenants of
forbearance herein contained with respect to such breach or default.

4.                                      Lessor shall not be obligated to subordinate its
interest in the Premises to any Leasehold Mortgagee.

5.                                      No Leasehold Mortgage shall limit the ability of
Lessor and Lessee to modify the term of this Lease pursuant to the Development
Agreement.

B.                                                        Condition of Financing.

As to any Leasehold Mortgage, Lessor consents to a provision therein,
at the option of the Leasehold Mort­gagee, (1) for an assignment of Lessee’s
share of the net proceeds from any award or other compensation resulting from a
total or partial (other than temporary) taking of the Premises by condemnation,
(2) for the entry of the Leasehold Mortgagee upon the Premises during business
hours, without notice to Lessor or Lessee, to view the state of the Premises,
(3) that a default by Lessee under this Lease shall constitute a default under
the Leasehold Mortgage, (4) for an assignment of Lessee’s right, if any, to terminate,
cancel, modify, change, supple­ment, alter or amend this Lease, (5) for an
assignment of any sublease to which the Leasehold Mortgage is

  
 6
 

 

subordinated, and (6) effective upon any default in any such Leasehold
Mortgage, (i) for the foreclosure of the Leasehold Mortgage pursuant to a power
of sale, by judicial proceedings or other lawful means and the subsequent sale
of the leasehold estate to the purchaser at the foreclosure sale and a sale by
such purchaser if the purchaser is the Leasehold Mortgagee (ii) for the
appointment of a receiver, irrespective of whether the Leasehold Mortgagee
accelerates the maturity of all indebted­ness secured by the Leasehold
Mortgage, (iii) for the right of the Leasehold Mortgagee or the receiver to
enter and take possession of the Premises as a lessee pursuant to the Lessee’s
leasehold interest in the Premises in order to manage and operate the Premises
and to collect the subrentals, issues and profits therefrom and to cure any
default under the Leasehold Mortgage or any default by Lessee under this Lease,
and (iv) for an assignment of Lessee’s right, title and interest in and to any
deposit of cash, securities or other property which may be held to secure the
performance of covenants, conditions and agreements con­tained in this Lease,
the premiums for or dividends upon any insurance provided for the benefit of
any Leasehold Mortgagee or required by the terms of this Lease, as well as in
all refunds or rebates of taxes or assessments upon or other charges against
the Premises, whether paid or to be paid.

C.                                                        No Surrender of Leasehold.

For the benefit of the holder of any Leasehold Mortgage, Lessor agrees
not to accept a voluntary surrender of this Lease at any time while such
Leasehold Mortgage shall remain a lien on said leasehold; and Lessor and Lessee
further agree for the benefit of any such Leasehold Mortgagee that, so long as
any such Leasehold Mortgage shall remain a lien on said leasehold, Lessor and
Lessee will not subordinate or subject this Lease to any mortgage that may
hereafter be placed on the fee or amend or alter any terms or provisions of
this Lease or consent to any prepayment of any minimum rental without securing
the prior written consent of such Leasehold Mortgagee.

D.                                                       Notices.

Lessor shall send by certified or registered mail to any Leasehold
Mortgagee, a notice of any default by Lessee under this Lease at the same time
as and whenever any such notice of default shall be given by Lessor to Lessee,
addressed to such Leasehold Mortgagee at the address last furnished to Lessor.
No notice by Lessor shall be deemed to have been given unless and until a copy
thereof shall have been so given to such Leasehold Mortgagee. Lessee
irrevocably directs that Lessor accept, and Lessor agrees to accept, per­formance
and compliance by any such Leasehold Mortgagee of and with any term, covenant,
agreement, provisions, condition or limitation on Lessee’s part to be kept,
observed or performed hereunder with the same force and effect as though kept,
ob­served or performed by Lessee.

E.                                                         Transfer of Leasehold.

The prior written consent of Lessor shall not be required:

1.                                      To a transfer of this Lease at fore­closure sale
under the Leasehold Mortgage, under judicial foreclosure or by an assignment in
lieu of foreclosure; or

  
 7
 

 

2.                                      To the transfer of the Lease and the leasehold
estate under this Lease by the Leasehold Mortgagee if the Leasehold Mortgagee
has purchased the same at such foreclosure sale;

provided that in either such event the Leasehold Mortgagee forthwith
gives notice to Lessor in writing of any such transfer, setting forth the name
and address of the transferee, the effective date of such transfer and
including the express agreement of the transferee assuming and agreeing to
perform all of the obligations of this Lease, together with a copy of the
document by which such transfer was made. 
Any such transferee under subparagraph 1 above shall be liable to
perform the obligations of Lessee under this Lease only so long as such transferee
holds title to the leasehold, provided that upon any conveyance of title, such
transferee’s transferee expressly assumes and agrees to perform all of the
obligations of this Lease. Any subsequent transfer of the leasehold shall be
subject to the conditions relating to assignment as set forth in this Lease.

F.                                                         Request for Notice.

Upon and immediately after the recording of the Leasehold Mortgage,
Lessee, at Lessee’s expense, shall cause to be recorded in the office of the
Santa Barbara County Recorder, a written request duly executed and acknowledged
by Lessor for a copy of any notice of default and of any notice of sale under
the Leasehold Mortgage.

G.                                                        No Merger.

In the event that the title to Lessor’s estate and to Lessee’s estate
shall be acquired by the same person, firm or entity, other than as a result of
termination of this Lease, no merger shall occur if the effect of such merger
would impair the lien of any Leasehold Mortgage.

H.                                                       Estoppel Certificates.

Lessor agrees that upon request of the Lease­hold Mortgagee, it will
execute and deliver to any person, firm or entity a certificate stating that
this Lease is in full force and effect and that the documents creating or
evidencing said leasehold estate are true and correct copies and not
incomplete, provided that such be the case.

I.                                                            Insurance Endorsement.

Lessor agrees that any policy of hazard insur­ance in favor of Lessor
shall contain an endorsement waiving the insurer’s right of subrogation as
against the Leasehold Mortgagee and the Lessee.

J.                                                           Amendments to Lease.

In the event that in connection with any financing or refinancing of
the leasehold estate by Lessee any Leasehold Mortgagee requests any changes or
additions to this Lease, Lessor and Lessee shall amend this Lease to include
such changes or additions provided that such changes or additions do not impair
Lessor’s rights hereunder, increase Lessor’s obligations hereunder or decrease
the value of this Lease.

  
 8
 

 

XIII.                        ASSIGNMENT AND SUBLETTING

 

A.                                                      Assignment.  Subject to the provisions of
Section XII hereof, Lessee shall not assign, transfer, or encumber this Lease
without the prior written consent of Lessor, which shall not be unreasonably
withheld.  Notwithstanding the foregoing,
Lessee shall have the absolute right to assign or transfer the Lease to an
affiliated successor in interest, which shall include a corporation that
controls or is controlled by Lessee or to another corporation in connection
with a corporate reorganization, merger or consolidation.

B.                                                        Subletting.  Subject to the provisions of
Section XII hereof, Lessee shall not (i) sublet any portion of the Premises, or
(ii) change the terms of any existing ground lease or sublease encumbering the
Premises, without the prior written consent of Lessor, which shall not be
unreasonably withheld.  Each new sublease
shall contain a provision requiring sublessee to attorn to Lessor or, in the
event of any proceeding to foreclose any leasehold mortgage, to the Leasehold
Mortgagee, or any person designated in a notice from Leasehold Mortgagee, if
Lessee defaults under this Lease and if the sublessee is notified of Lessee’s
default and instructed to make sublessee’s rental payments to Lessor or
Leasehold Mortgagee or designated person as in this paragraph.

XIV.                        INSURANCE

A.                                                      Property Insurance. 
Throughout the term, at Lessee’s sole cost and expense, Lessee shall
keep or cause to be kept insured, for the mutual benefit of Lessor and Lessee,
the Premises and the Improvements against loss or damage by fire and such other
risks as are now or hereafter included in an extended coverage endorsement in
common use for commercial property, including vandalism and malicious
mischief.  The amount of the insurance
shall be at least 90% of the then actual replacement cost (herein “full
insurable value”).

B.                                                        Builder’s Risk Insurance.  Before
commencement of any demolition or construction, Lessee shall procure, and shall
maintain in force until completion and acceptance of the work, “all risks”
builder’s risk insurance including vandalism and malicious mischief, covering
Improvements in place and all material and equipment at the job site furnished
under contract, but excluding contractor’s, subcontractor’s, and construction
manager’s tools and equipment and property owned by contractor’s or
subcontractor’s employees, with limits customary at the time for similar
projects for all work at the job site.

C.                                                        Liability Insurance. 
Throughout the term, at Lessee’s sole cost and expense, Lessee shall
keep or cause to be kept in force, for the mutual benefit of Lessor and Lessee,
comprehensive broad form general public liability insurance against claims and
liability for personal injury, death, or property damage arising from the use,
occupancy, disuse, or condition of the Premises, Improvements, or adjoining
areas or ways, providing protection of at least $5,000,000.00 for bodily injury
or death to any one person, at least $10,000,000.00 for any one acci­dent or
occurrence, and at least $10,000,000.00 for property damage.  The minimum insurance liability limits
provided in this Section XIV shall be adjusted upward or downward as of the
Effective Date and every 5 years thereafter (adjustment date) in accordance
with percentage changes from the Effective Date to the adjustment date in the
Los Angeles-Anaheim-Riverside All

  
 9
 

 

Items Index for All Urban Consumers (1982-84 = 100) or successor
published by the United States Department of Labor, Bureau of Labor Statistics.

D.                                                       Onshore Terrorism. 
Throughout the term, at Lessee’s sole cost and expense, Lessee shall
keep or cause to be kept in force, for the mutual benefit of Lessor and Lessee,
a comprehensive insurance policy of onshore terrorism in the amount of
$29,950,000.

E.                                                         Insurance Policies.  All
insurance required by express provisions of this Lease shall be carried only in
responsible insurance companies licensed to do business in the state of Cali­fornia
and which have been previously approved by Lessor.  All such policies shall be nonassessable and
shall contain language, to the extent obtainable, to the effect that: (i) any
loss shall be payable notwithstanding any act or negli­gence of Lessor that
might otherwise result in a forfeiture of the insurance; (ii) the insurer
waives the right of subrogation against Lessor and against Lessor’s agents and
representatives; (iii) the policies are primary and noncontributing with any
insur­ance that may be carried by Lessor; and (iv) the policies cannot be can­celed
or materially changed except after 30 days’ notice by the insurer to Lessor or
Lessor’s designated representative. Lessee shall furnish Lessor with copies of
all such policies promptly on receipt of them, or with certificates evidencing
the insurance.  Lessee shall provide
Lessor proofs of such policies upon the Commencement Date.  Lessee may effect for its own account any
insurance not required under this Lease. Lessee may provide any insurance
required or permitted under this Lease by blanket insurance covering the
Premises and any other location or locations provided it is acceptable to any
Leasehold Mortgagees.

If Lessee fails or refuses to procure or to maintain insurance as
required by this Lease or fails or refuses to furnish Lessor with required
proof that the insurance has been procured and is in force and paid for, Lessor
shall have the right, at Lessor’s election and without notice, to procure and
maintain such insurance. The premiums paid by Lessor shall be treated as added
rent due from Lessee with interest at the maximum rate allowed by law, to be
paid on the first day of the month following the date on which the premiums
were paid. Lessor shall give prompt notice of the payment of such premiums,
stating the amounts paid and the names of the insurer or insurers, and interest
shall run from the date of the notice.

F.                                                         Indemnity.  Lessee shall indemnify,
defend, and hold harmless Lessor and Lessor’s employees, agents and
representatives from any loss, damage, claim, cost, lien, action, suit,
liability, or judgment (including, without limitation, attorneys’ fees and
costs) arising from, resulting from, or in any way related to the Lessee’s use
of the Premises.  This indemnity shall
survive the termination of this Lease.

XV.                            DAMAGE AND DESTRUCTION

Lessee is responsible for all costs associated with the repair or
replacement of any and all Improvements.

  
 10
 

 

XVI.                        CONDEMNATION

 

A.                                                      Definitions.  The following definitions apply
in construing provisions of this Lease relating to a taking to all or any part
of the Premises or Improvements by eminent domain or inverse condemnation:

1.                                      Taking means the taking of fee title, by eminent domain for any public or
quasi-public use under any statute.  The
transfer of title may be either a transfer resulting from the recording of a
final order in condemnation or a voluntary transfer or conveyance to the
condemning agency or entity under threat of condemnation, in avoidance of an
exercise of eminent domain, or while condemnation proceedings are pending. The
taking shall be considered to take place as of the later of (i) the date actual
physical possession is taken by the condemnor or (ii) the date on which the
right to compensation and damages accrues under the law applicable to the
Premises.

2.                                      Total taking means the taking of the fee title to all the Premises and the
Improvements, which shall be considered to include any offsite improvements
effected by Lessee to serve the Premises or the Improvements on the Premises.

3.                                      Substantial taking means the taking of so much of the Premises or
Improvements or both that the following conditions result:

(a)                                  The remaining Premises would not be economically
and feasibly used by Lessee; and

(b)                                 A reasonable amount of reconstruction would not
make the remaining Premises and Improvements reasonably suited for Lessee’s
continued occupancy and use pursuant to Section IV.

4.                                      Partial taking means any taking of the fee title that is not either a total or a substantial
taking.

5.                                      Notice of intended taking means a notice or notification expressing an
existing intention of taking as distinguished from a mere preliminary inquiry
or proposal. It includes but is not limited to the service of a condemnation
summons and complaint on a party to this Lease. 
The notice is considered to have been received when a party to this
Lease receives from the condemning agency or entity a notice of intended
taking, in writing, containing a description or map of the taking reasonably
defining the extent of the taking.

6.                                      Award
means compensation paid for the taking whether pursuant to judgment or by
agreement or otherwise.

B.                                                        Condemnation Notices.

The party receiving any notice of the kinds specified below shall
promptly give the other party notice of the receipt, contents, and date of the
notice received:

1.                                      Notice of intended taking;

  
 11
 

 

2.                                      Service of any legal process relating to
condemnation of the Premises or Improvements;

3.                                      Notice in connection with any proceedings or
negotiations with respect to such a taking; or

4.                                      Notice of intent or willingness to make or
negotiate a private purchase, sale, or transfer in lieu of condemnation.

C.                                                        Condemnation Proceedings.

Lessor, Lessee, and all persons and entities holding under Lessee shall
each have the right to represent its respective interest in each proceeding or
negotiation with respect to a taking or intended taking and to make full proof
of its claims.  No agreement, settlement,
sale, or transfer to or with the condemning authority shall be made without the
consent of Lessor and Lessee. Lessor and Lessee each agrees to execute and
deliver to the other any instruments that may be required to effectuate or
facilitate the provisions of this Lease relating to condemnation.

D.                                                       Effect of Taking.

On a total taking, Lessee’s obligation to pay rent shall terminate on,
and Lessee’s interest in the leasehold shall continue until, the date of
taking.

If a taking is so substantial that it is a substantial taking, Lessee
may, by notice to Lessor given within 30 days after Lessee receives notice of
intended taking, elect to treat the taking as a substantial taking. If Lessee
does not so notify Lessor, the taking shall be deemed a partial taking.  If Lessee gives such notice and Lessor gives
Lessee notice dis­puting Lessee’s contention within 15 days following Lessee’s
notice, the dispute shall be promptly determined by arbitration. If Lessor
gives no such notice, the taking shall be considered a substantial taking. A
substantial taking shall be treated as a total taking if (1) Lessee delivers
possession to Lessor within 30 days after determination that the taking was a
sub­stantial taking, and (2) Lessee is not in default under the Lease and has
complied with all Lease provisions concerning appor­tionment of the award. If
these conditions are not met, the taking shall be treated as a partial taking.

Lessee may continue to occupy the Premises and Improvements until the
condemnor takes physical possession. However, at any time following notice of
intended total taking, or within the time limit specified for delivering
possession in the provision on substantial taking, Lessee may elect to deliver
possession of the Premises to Lessor before the actual taking.  The election shall be made by notice
declaring the election and covenanting to pay all rents required under this
Lease to the date of taking.  Lessee’s
right to apportionment of or compen­sation from the award pursuant to Section
XVI(E) below shall then accrue as of the date that Lessee goes out of possession.

E.                                                         Apportionment of Award.

On a total taking or a substantial taking considered as a total taking
pursuant to Section XVI(D), all sums, including damages and interest, awarded
for the fee or the leasehold or

  
 12
 

 

both shall be deposited promptly with a national
banking association as escrow agent and shall be apportioned in the following
order of priority:

 

First, all real and personal property taxes constituting a lien on the
Premises or Improvements.

Second, the balance due under any Leasehold Mortgage.

Third, to Lessee an amount which is the sum of the value for the
Improvements then existing on the
Premises, the value of Lessee’s leasehold interest in the Premises, and
severance damages less any amounts previously paid for the balance due under
any Leasehold Mortgage.

Fourth, to Lessor the remainder
of said award.

F.                                                         Partial Taking.

On a partial taking, this Lease shall remain in full force and effect,
covering the remaining property.

Promptly after a partial taking, at Lessee’s expense and in the manner specified
in provisions of this Lease relating to maintenance, repairs, and alterations,
Lessee shall repair, alter, modify, or reconstruct the Improvements (hereafter
referred to as restoring) so as to make them a practical improvement.

On a partial taking, all sums, including damages and interest, awarded
for the fee title or the leasehold or both, shall be deposited promptly with a
national banking association as escrow agent and shall be distributed and
disbursed in the following order of priority:

First, to the cost of restoring the Improvements, plus any amount
assessed, awarded, paid or incurred to remove or relocate subtenants, plus any
amount awarded for detriment to business.

Second, to Lessee a sum equal to the value of the Premises taken.  Lessee may, at Lessee’s election, direct
disbursement of this portion to any mortgagee under any note executed by
Lessee.

XVII.                    DEFAULT

 

Each of the following events shall be a default by Lessee and a breach
of this Lease:

A.                                                      Vacation or abandonment of the Premises by
Lessee.

B.                                                        Failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder within 15 days of
receipt of written notice form Lessor specifying such default.

  
 13
 

 

C.                                                        Failure by Lessee to observe or perform any of
the covenants, conditions, or provisions of this Lease where such failure
continues for a period of 30 days after written notice by Lessor to Lessee;
provided, however, that if the nature of Lessee’s default is such that more
than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commences a cure within the 30-day
period and thereafter diligently prosecutes the cure to completion.

D.                                                       The subjection of any right or interest of Lessee
to attachment, execution, or other levy, or to seizure under legal process, if
not released within 15 days.

E.                                                         The appointment of a receiver to take possession
of the Premises or Improvements or of Lessee’s interest in the leasehold estate
or of Lessee’s operations on the Premises for any reason, including but not
limited to, assignment for benefit of creditors or voluntary or involuntary
bankruptcy proceedings, which is not discharged within 60 days of appointment.

F.                                                         An assignment by Lessee for the benefit of
creditors or the filing of a voluntary or involuntary petition by or against
Lessee under any law for the purpose of adjudicating Lessee a bankrupt; or for
extending time for payment, adjustment, or satisfaction of Lessee’s
liabilities; or for reorganization dissolution, or arrangement on account of or
to prevent bank­ruptcy or insolvency; unless the assignment or proceeding, and
all consequent orders, adjudications, custodies, and supervisions are
dismissed, vacated, or otherwise permanently stayed or termi­nated within 60
days after the assignment, filing, or other initial event.

G.                                                        Recordation of a Notice of Default under any
Leasehold Mortgage.

XVIII.                REMEDIES

 

If any default by Lessee shall continue uncured following notice of
default as required by this Lease, for the applicable cure period, Lessor may
(i) enforce all of Landlord’s rights and remedies allowed by law and (ii)
exercise the Rent Adjustment pursuant to Section 4(a) of the Development
Agreement if the Rent Adjustment has not been previously exercised.

XIX.                       GENERAL PROVISIONS

A.                                                      Good Faith.

Whenever in this Lease a party has the right to approve an act of
another party, the former shall exercise such discretion in good faith and
according to normal commercial standards. 
Similarly, where a party is required to satisfy a condition or complete
an act in a certain fashion or within a specified time period, that party shall
pursue such objectives in good faith and make all reasonable efforts to
accomplish the same; the other party shall likewise in good faith cooperate and
assist the other party in accomplishing this task.

  
 14
 

 

B.                                                        Other Instruments.

The parties hereto shall, whenever and as often as reasonably requested
to do so by the other party, execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered any and all documents and instruments as
may be necessary, expedient or proper in the reasonable opinion of the
requesting party to carry out the intent and purpose of this Lease.

C.                                                        Captions, Headings and Exhibits.

The captions and headings of this Lease are for convenience only and
have no force and effect in the interpretation or construction of this
Lease.  All exhibits attached hereto are
by this reference incorporated herein as though fully set forth in this Lease.

D.                                                       Severability.

If any term, provision, covenant or condition of this Lease shall be or
become illegal, null, void or against public policy, or shall be held by any
court of competent jurisdiction to be illegal, null or void or against public
policy, the remaining provisions of this Lease shall remain in full force and
effect and shall not be affected, impaired or invalidated thereby.  The term, provision, covenant or condition
that is so invalidated, voided or held to be unenforceable shall be modified or
changed by the parties to the extent possible to carry out the intentions and
directives set forth in this Lease.

E.                                                         Counterparts.

This Lease may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.

F.                                                         Successors and Assigns.

Except as restricted herein, this Lease shall be binding on and shall
inure to the benefit of the parties and their respective heirs, legal
representatives, successors and assigns.

G.                                                        Waiver.

The waiver of any breach of any provision hereunder by any party to
this Lease shall not be deemed to be a waiver of any preceding or subsequent
breach hereunder, nor shall any waiver constitute a continuing waiver.  No waiver shall be binding unless executed in
writing by the party making the waiver.

H.                                                       Governing Law.

The validity and interpretation of this Lease shall be governed by the
laws of the State of California, with venue for all purposes to be proper only
in the County of Santa Barbara, State of California.

  
 15
 

 

I.                                                            Notices.

All notices, approvals, acceptances, demands and other communica­tions
required or permitted hereunder, to be effective, shall be in writing, and
shall be delivered either in person or by mailing the same by United States
mail (postage prepaid, registered or certified, return receipt requested), by
Federal Express or other similar overnight delivery service, or by confirmed
facsimile transmission to the party to whom the notice is directed at the
address of such party as follows:

	
  To Lessor:

  	
  Carpinteria Bluffs, LLC

  	
   

  
	
   

  	
  c/o Venoco, Inc.

  	
   

  
	
   

  	
  General Counsel

  	
   

  
	
   

  	
  6267 Carpinteria
  Avenue Suite 100

  	
   

  
	
   

  	
  Carpinteria,
  California 93013

  	
   

  
	
   

  	
  Phone (805)
  745-2253

  	
   

  
	
   

  	
  Fax (805)
  745-1816

  	
   

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
  Davis O’Connor, Esq.

  	
   

  
	
   

  	
  Holland &
  Hart LLP

  	
   

  
	
   

  	
  555 - 17th
  Street, Suite 3200

  	
   

  
	
   

  	
  Denver, Colorado
  80202-3979

  	
   

  
	
   

  	
  Phone:
  303-295-8081

  	
   

  
	
   

  	
  Fax:
  303-295-8261 or 8204

  	
   

  
	
   

  	
   

  	
   

  
	
  To Lessee:

  	
  Venoco, Inc.

  	
   

  
	
   

  	
  General Counsel

  	
   

  
	
   

  	
  6267 Carpinteria
  Avenue Suite 100

  	
   

  
	
   

  	
  Carpinteria,
  California 93013

  	
   

  
	
   

  	
  Phone (805)
  745-2253

  	
   

  
	
   

  	
  Fax (805)
  745-1816

  	
   

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
  David W. Van Horne, Esq.

  	
   

  
	
   

  	
  Price Postel
  & Parma LLP

  	
   

  
	
   

  	
  200 East
  Carrillo Street, Suite 400

  	
   

  
	
   

  	
  Santa Barbara,
  California 93101-2190

  	
   

  
	
   

  	
  Phone:
  805-962-0011

  	
   

  
	
   

  	
  Fax:
  805-965-3978

  	
   

  

 

Any written communications given by mail shall be deemed delivered two
business days after such mailing date and any written communications given by
overnight delivery service shall be deemed delivered one business day after the
dispatch date.  Facsimile transmissions
shall be deemed delivered upon receipt by the receiving number.  A party may change their address by giving
the other party written notice of their new address as herein provided.

  
 16
 

 

J.                                                           Attorneys’ Fees.

If any action at law or equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Lease, the
party, if any, prevailing on the more substantial portion of its claims and
defenses shall be entitled to recover actual attorneys’ fees, which may be
determined by the court in the same action or in a separate action brought for
that purpose.  The attorneys’ fees shall
not be computed in accordance with any court schedule but shall be made as to
fully reimburse for all attorneys’ fees, paralegal fees, costs and expenses
actually incurred in good faith.  This
Section XIX(J) shall be applied pursuant to the provisions of California Civil
Code Section 1717.

K.                                                       Arbitration.

Any controversy, dispute or claim arising out of, in connection with,
or in relation to the interpretation, performance or breach of this Lease shall
be resolved, at the request of either party, by binding arbitration by a
retired judge mutually agreed upon by the parties and appointed pursuant to the
provisions of California Code of Civil Procedure Sections 638(1) et seq., and
Sections 1281 et seq., with said arbitration to be conducted in accordance with
the above statutory provisions and the California Civil Procedure and Evidence
Codes.  The parties intend this general
reference agreement to be specifically enforceable in accordance with Code of
Civil Procedure Section 638(1).  If the
parties cannot agree upon a retired judge, one shall be appointed by the
Presiding Judge of the Superior Court of Santa Barbara County, State of
California.

L.                                                         Entire Agreement; Amendment.

Except as otherwise stated in this Lease, this Lease contains the
entire agreement between the parties hereto with respect to its subject
matter.  All prior agreements,
understandings, representations or negotiations are hereby superseded,
terminated and cancelled in their entirety, and are of no further force or
effect.  No promises, representations,
warranties or covenants not included in this Lease, either oral or written,
have been or are relied upon by any party.

(Signature page follows)

  
 17
 

 

IN
WITNESS WHEREOF, the following have executed this Lease as of
the day and year first above written.

 

 

	
  LESSOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Carpinteria
  Bluffs, LLC, a Colorado limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Timothy
  Marquez

  	
   

  	
   

  
	
   

  	
  Timothy Marquez

  	
   

  
	
   

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LESSEE

  	
   

  	
   

  
	
  Venoco, Inc., a
  Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ William
  Schneider

  	
   

  	
   

  
	
   

  	
  William Schneider

  	
   

  
	
   

  	
  President

  	
   

  
					

 

  
 18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]