Document:

Exhibit 10.2

VENOCO, INC.

2007 LONG-TERM INCENTIVE PROGRAM

This Venoco, Inc. 2007 Long-Term Incentive Program
(the “Program”) is established pursuant to the Venoco, Inc. Amended and
Restated 2005 Stock Incentive Plan (the “Plan”) and, in addition to the terms
and conditions set forth below, is subject to the provisions of the Plan.  Unless otherwise defined herein, all terms
used in this Program that are defined in the Plan shall have the meaning as
defined in the Plan.

A.                                    PURPOSES

The Program is designed to enable eligible
executives of Venoco, Inc. (the “Company”) to share in the future success of
the Company’s business by providing them an opportunity to earn shares of the
Company’s common stock (“Common Stock”), through the award of stock grants (“Awards”)
contingent upon achieving certain performance measures.  Since the executives eligible to receive
Awards under the Program are those in positions to make significant and direct
contributions to the success of the Company, the Program is intended, accordingly,
to promote a closer identity of interests between eligible employees and
stockholders.

B.                                    AWARD TERMS AND CONDITIONS

1.                                       Eligibility and
Participation.  All elected
officers and other key employees who are considered by the Compensation
Committee (the “Committee”) of the Board of Directors of the Company (the “Board”)
to be likely to have a significant impact on the business of the Company are
eligible to be designated as participants (“Participants”) and to receive
Awards under the Program.

2.                                       Awards and
Award Cycles.  The
Committee shall, from time to time and in its sole discretion, establish such
grant cycles (the “Grant Cycles”) for the Program as it deems appropriate.  In connection with each such Grant Cycle, the
Committee shall designate those individuals or employee groups eligible to
receive Awards with respect to such Grant Cycle and the number of target shares
awarded to each such Participant (“Target Shares”).

3.                                       Vesting of
Awards.  The extent to which Awards
under the Program are vested is determined pursuant to the below performance
criteria, based on total stockholder return (“TSR”) of the Common Stock, as
determined in accordance with Section 3(c):

(a)                                  Measurement Periods.  With respect to each Grant Cycle, the
Committee shall prescribe one or more measurement periods for purposes of
determining vesting (the “Measurement Periods”).

(b)                                 TSR Peer Group
Ranking.  The portion of each Award that
becomes vested during a Measurement Period shall be determined by multiplying
(i) the number of the

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Participant’s
Target Shares eligible for vesting with respect to such Measurement Period by
(ii) the Vesting Amount, not to exceed 100%, as set forth in a schedule
established by the Committee for such Grant Cycle and based on the percentile
ranking of the TSR of the Common Stock during such Measurement Period when
compared to the TSR during such Measurement Period of the common stock of the
corporations included in the comparative group designated by the Committee (the
“Comparative Group”) in Exhibit A (attached hereto and as amended from time to
time in the sole discretion of the Committee); provided, however, that if the
TSR of the Common Stock ranks below the 50th percentile
among the corporations in the Comparative Group, then no Awards with respect to
such Measurement Period shall vest.

(c)                                  Determination of TSR.  The TSR of the Common Stock and the TSR of
the stock of each corporation included in the Comparative Group shall be equal
to the appreciation of such stock assuming reinvested dividends (at the
frequency such dividends are paid) during the applicable Measurement
Period.  For purposes of determining the
amount of a stock’s appreciation, the initial value of such stock shall be
equal to the closing price of such stock on the principal exchange on which
such stock is traded on the last trading day prior to the commencement of the
applicable Measurement Period, and the final value shall be equal to the
closing price of such stock on such exchange on the last day of such
Measurement Period.

4.                                       Status of
Awards Post-Vesting.

(a)                                  Lapse of Risk of Forfeiture.  The Participant’s Award is subject to a risk
of forfeiture until such time the Committee determines that a Participant’s
Award has vested pursuant to Section 3 above and the vesting conditions, if
any, pursuant to the Notice of  Stock
Award and Stock Award Agreement have been satisfied.  Upon vesting, restrictions on transferability
shall lapse and the shares shall be released from escrow.

(b)                                 Termination of Employment
During a Measurement Period.  Except as otherwise provided in an applicable
employment agreement between the Participant and the Company, if a Participant’s
employment is terminated for any reason prior to the end of a Measurement
Period, the Award granted to that Participant with respect to such Measurement
Period (and other Measurement Periods within a Grant Cycle to the extent not
vested) shall be forfeited and be of no further force and effect.

5.                                       Deferrals.  A Participant may elect to defer the taxation
associated with the receipt of an Award, provided such deferral is
appropriately and timely communicated to the Company in a manner acceptable to
the Company and compliant with Section 409A of the Code.  Any such deferral program shall be administered
by the Committee in accordance with the rules and procedures it adopts from
time to time, and in accordance with Section 409A of the Code.

C.                                  SECTION 162(m)

Notwithstanding any other provision of the Program
to the contrary, and solely with respect to those Awards (i) made after the “material
modification” of the Plan (within the meaning of Section 1.162-27(f)(2)(ii) of
the Treasury Regulations) and (ii) intended to comply with Section 162(m) of
the Code, such Awards shall be granted and administered in accordance

 2
 

with
the Plan and, without limiting the generality of the foregoing, shall not
exceed the limit established for long-term incentive awards pursuant to Section
4(a) of the Plan.  For each Grant Cycle,
the Committee shall establish the applicable performance goals from the list of
Qualifying Performance Criteria (as defined in Section 7(c) of the Plan) within
the period of time as required pursuant to Section 162(m).  No Award shall be awarded or credited, unless
otherwise determined by the Committee, until achievement of the applicable
performance goals have been certified by the Committee (except where
certification is not required).

D.                                    MISCELLANEOUS PROVISONS

1.                                       Other Terms.  The Committee shall determine the remaining
terms and conditions of the Awards awarded under the Program.

2.                                       Amendment,
Suspension or Termination of the Program.  The Committee may at any time amend, suspend
or terminate the Program without the approval of the Company’s stockholders.

3.                                       Section 409A of
the Code.  This
Program, including any future amendments thereto which do not expressly amend
this Section, is designed, and shall be administered and operated, in the good
faith determination of the Committee, to be exempt from Section 409A of the
Code.  Although the Company intends to
administer the Program so that it is exempt from the requirements of Section
409A of the Code, the Company does not warrant that any Award under the Program
will qualify for such exemption or for favorable tax treatment under any other
provision of federal, state, local or foreign law.  The Company shall not be liable to any
Participant for any tax, interest or penalties the Participant might owe as a
result of his or her participation in the Program.

4.                                       Savings
Clause.  This Program is intended to
comply in all respects with applicable laws and regulations.  In case any one or more of the provisions of
this Program shall be held invalid, illegal or unenforceable in any respect
under applicable law or regulation, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby and the invalid, illegal or unenforceable provision shall be deemed
null and void; provided, however, to the extent permissible by law, any
provision which could be deemed null and void shall first be construed,
interpreted or revised retroactively to permit this Program to be construed in
compliance with all applicable laws so as to foster the intent of this Program.

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EXHIBIT A

Comparative Group

Until
such time as changed in the sole and absolute discretion of the Committee, the
Comparative Group for purposes of Awards made under the Venoco, Inc. Amended
and Restated 2005 Stock Incentive Plan and pursuant to the Venoco, Inc. 2007
Long-Term Incentive Program consists of the following:

	
  

  	
  Berry Petroleum

  	
   

  	
  Plains Exploration & Production

  
	
   

  	
  Bill Barrett

  	
   

  	
  Quicksilver Resources

  
	
   

  	
  Clayton Williams Energy

  	
   

  	
  Range Resources

  
	
   

  	
  Comstock Group

  	
   

  	
  Rosetta Resources

  
	
   

  	
  Denbury Resources

  	
   

  	
  St. Mary Land & Exploration

  
	
   

  	
  Encore Acquisition

  	
   

  	
  Stone Energy

  
	
   

  	
  Harvest Natural Resources

  	
   

  	
  Swift Energy

  
	
   

  	
  Meridian Resource

  	
   

  	
  Whiting Petroleum

  

 

*   *   *  
*   *

 4Exhibit 10.3

VENOCO, INC.

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

Notice of Stock Award

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

	
  Name and Address of Participant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Purchase Price Per Share:

  	
   

  	
  $0.00001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fair Market Value Per Share:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Commencement Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Schedule:

  	
   

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

  
					

 

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

	
  

  	
  VENOCO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

PARTICIPANT
ACKNOWLEDGMENT

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

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

	
  

  	
   

  	
   

  
	
  

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated

  

 

 2

VENOCO, INC.

AMENDED
AND RESTATED 2005 STOCK INCENTIVE PLAN

Stock Award Agreement

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

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

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

4.                                       Risk of Forfeiture.

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

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

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

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

 1
 

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

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

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

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

 2
 

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

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

9.                                       Taxes.

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

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

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

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

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

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

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

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

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

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

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

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

 4
 

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

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

*   *   *  
*   *

 5

VENOCO, INC.

AMENDED
AND RESTATED 2005 STOCK INCENTIVE PLAN

Vesting Schedule Pursuant
to LTIP

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

	
  Target Shares:

  	
   

  	
   

  
	
   

  
	
  Grant Cycle:

  	
   

  	
   

  
	
   

  
	
  Comparative Group:

  	
   

  	
  As provided on
  Exhibit A to the LTIP

  
	
   

  
	
  Vesting:

  	
   

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

  
					

 

	
  Company TSR Relative to
  Comparative Group

  	
   

  	
  Vesting Amount

  
	
   

  	
   

  	
   

  
	
  Equal to or
  greater than 75th percentile

  	
   

  	
  100% of available shares in Tranche

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Less than 50th percentile

  	
   

  	
  No vesting

  

 

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

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

	
  Vesting Date:

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

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