VENOCO, INC. 2008 EMPLOYEE STOCK PURCHASE PLAN

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Exhibit 10.6

VENOCO, INC. 2008 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I

PURPOSE

        The purpose of the Venoco, Inc. 2008 Employee Stock Purchase Plan (the "Plan") is to encourage and facilitate stock ownership by Employees by providing an opportunity to purchase Common Stock through voluntary after-tax payroll deductions. The Plan is intended to be a qualified "employee stock purchase plan" under Section 423 of the Code.

ARTICLE II

DEFINITIONS

        2.1     Definitions .    Whenever used herein, the following terms shall have the respective meanings set forth below.

        (a)    "Applicable Exchange" means the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market for the Common Stock.

        (b)    "Board" means the Board of Directors of the Company.

        (c)   " Code " means the Internal Revenue Code of 1986, as amended, including, for these purposes, any regulations promulgated by the Internal Revenue Service with respect to the provisions of the Code ("Treasury Regulations"), and any successor thereto.

        (d)   " Committee" means the Compensation Committee of the Board or such other committee of the Board as the Board shall designate.

        (e)   " Common Stock" means the common stock, par value $0.01 per share, of the Company.

        (f)    " Company" means Venoco, Inc., a Delaware corporation.

        (g)   " Compensation" means, for the relevant period, (a) the total compensation paid in cash to an Employee by the Company, including salaries, wages, and overtime pay, plus (b) any pre-tax contributions made by such Employee under Section 401(k) or pursuant to a cafeteria plan described in Section 125 of the Code, or any similar plan, program or arrangement. "Compensation" shall exclude bonuses, incentive compensation, non-cash items or benefits received under employee benefit plans or arrangements, and any other amounts paid to the Employee that are specifically excluded by the Plan Administrator.

        (h)   " Continuous Service " means the period of time, uninterrupted by a termination of employment, that an Employee has been employed by the Company immediately preceding an Offering Date. Such period of time shall include any leave of absence approved by the Plan Administrator.

        (i)     "Custodian" means the bank, trust company or other entity selected by the Plan Administrator to serve as the custodian under the Plan.

        (j)    " Disability" means, with respect to an Employee, the inability of such Employee to perform the duties of his or her employment due to illness or disability for a period of at least 180 consecutive days, as determined by the Plan Administrator acting reasonably and in good faith based on the recommendations, if any, from such Employee's physician or, at the option of the Plan Administrator, a physician selected by the Plan Administrator.

        (k)   " Employee" means any individual designated as an employee of the Company on the payroll records thereof. Employee status shall be determined consistent with Treasury Regulation section 1.421-1(h), or its successor provision.

        (l)     "Fair Market Value" means, if the Common Stock is listed on a national securities exchange as of a given date, the closing price for the Common Stock on such date on the Applicable Exchange, or if shares of Common Stock were not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which such shares were traded, all as reported by such source as the Plan Administrator may select. If the Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Plan Administrator in its good faith discretion.

        (m)  " Individual Account" means a separate account maintained by the Custodian for each Employee participating under Article V hereof.

        (n)   " Manager " means one or more employees of the Company (including the head of Human Resources) selected by the Plan Administrator to assist with the administration of the Plan, as described in Article III.

        (o)   " Offering " means the grant of Purchase Rights to purchase shares of Common Stock under the Plan to eligible Employees.

        (p)   " Offering Date" has the meaning given such term in Section 5.2.

        (q)   " Offering Period" has the meaning given such term in Section 5.2.

        (r)   " Payroll Contributions" means an Employee's after-tax contributions of Compensation by payroll deduction pursuant to Section 5.4, and authorized by the Employee pursuant to Sections 5.3.

        (s)   " Plan " means this Venoco, Inc. 2008 Employee Stock Purchase Plan, as may be amended from time to time as provided herein.

        (t)    " Plan Administrator" means a committee comprised solely of employees of the Company selected by the Board or the Committee; provided that the initial committee shall be comprised of the Chief Financial Officer, the President, the head of Human Resources and the General Counsel of the Company. References to "Plan Administrator" shall include the Plan Administrator's designees or delegees (under a delegation authorized by Article III), but solely to the extent of the delegated authority and unless the context requires otherwise.

        (u)   " Purchase Date " means one or more dates during an Offering established by the Plan Administrator on which Purchase Rights shall be exercised as described in Section 5.5.

        (v)   " Purchase Period " means a period of time specified within an Offering beginning on the Offering Date or on the next day following a Purchase Date within an Offering and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods. The Purchase Periods shall initially be of one (1) month duration.

        (w)   "Purchase Price " has the meaning set forth in Section 5.6.

        (x)   " Purchase Right " means an option to purchase shares of Common Stock granted pursuant to the Plan.

        (y)   " Terminating Event" means a participating Employee's termination of employment with the Company for any reason or any other event that causes such Employee to no longer meet the requirements of Article IV; provided , however , that, for purposes of the Plan, an individual's employment relationship is considered to be intact while such individual is on any leave of absence approved by the Plan Administrator; provided further , however , that if such period of leave of absence exceeds ninety (90) days, and the individual's right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the ninety-first (91st) day of such leave.

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        (z)   " Trading Day " means any day on which the Applicable Exchange is open for trading.

ARTICLE III

ADMINISTRATION

        The Plan shall be administered by the Plan Administrator. The Plan Administrator shall have all authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to the Plan. Without limiting the generality of the foregoing sentences of this Article III, subject to the express provisions of the Plan, the Plan Administrator shall have full and exclusive discretionary authority to interpret and construe any and all provisions of the Plan and any agreements, forms, and instruments relating to the Plan; prescribe the forms of all agreements, forms, and instruments relating to the Plan; determine eligibility to participate in the Plan; adopt rules and regulations for administering the Plan; adjudicate and determine all disputes arising under or in connection with the Plan; determine whether a particular item is included in "Compensation;" and make all other determinations deemed necessary or advisable for administering the Plan. Decisions, actions and determinations by the Plan Administrator with respect to the Plan or any agreement, form or instrument relating to the Plan shall be final, conclusive and binding on all parties. Subject to applicable laws, rules, and regulations, the Plan Administrator may, in its discretion, from time to time, delegate all or any part of its responsibilities and powers under the Plan to one or more employees of the Company (including the head of Human Resources) (the "Manager"), and revoke any such delegation. Notwithstanding the foregoing, the Board or the Committee, in its absolute discretion, may at any time and from time to time exercise any and all rights, duties and responsibilities of the Plan Administrator under the Plan, including, but not limited to, establishing procedures to be followed by the Plan Administrator.

ARTICLE IV

ELIGIBILITY

        Except as otherwise provided herein, any Employee who on an Offering Date has completed at least three months of Continuous Service may become a participant in the Plan; provided, however , that no Employee may participate in the Plan if (i) such Employee, immediately after an Offering Date, would be deemed for purposes of Section 423(b)(3) of the Code to possess five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, or (ii) such Employee, as of the Offering Date, is a "highly compensated employee" (within the meaning of Section 414(q) of the Code) if such Employee is also subject to the disclosure requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.

ARTICLE V

STOCK PURCHASES

        5.1     Stock to Be Issued .    Subject to the provisions of Section 9.5, the number of shares of Common Stock that may be issued under the Plan shall not exceed 1,500,000 shares. The shares to be delivered to Employees, or their beneficiaries, under the Plan may consist, in whole or in part, of authorized but unissued shares, not reserved for any other purpose, or shares acquired by the Custodian for purposes of the Plan in the market or otherwise. If Purchase Rights granted under the Plan shall for any reason terminate without having been exercised, the shares of Common Stock not purchased under such Purchase Right shall again become available for issuance under the Plan.

        5.2     Offering .    The Plan shall be implemented by offerings (individually, an " Offering ") of six (6) months duration (the " Offering Period ") and consisting of one or more Purchase Periods; provided, however, that the first Offering Period shall be five (5) months, commencing on February 1, 2009 and

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ending on June 30, 2009. Subsequent Offerings shall commence on each January 1 and July 1 thereafter until the Plan terminates. The first day of an Offering Period shall be the " Offering Date " for such Offering Period. In the event the Offering Date is not a Trading Day, the Offering Date shall instead be the first Trading Day after such day. Notwithstanding the foregoing provisions of this Section 5.2, prior to the commencement of an Offering, the Plan Administrator may establish an Offering Date and/or Offering Period duration of such Offering that differs from those set forth above in this Section 5.2, provided that the duration of an Offering Period may not exceed twenty-seven (27) months from the Offering Date (or the expiration of such other applicable period specified under Section 423(b)(7) of the Code or any successor provision of the Code thereto). Each Offering shall comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights shall have the same rights and privileges.

        5.3     Participation .    An Employee who meets the requirements of Article IV may participate in an Offering by completing enrollment in the form or manner prescribed by the Plan Administrator not later than the close of business for the Company on the last business day before the Offering Date of such Offering, or such earlier time as the Plan Administrator may prescribe with respect to Employees generally, and by satisfying such other conditions or restrictions as the Plan Administrator shall establish in accordance with the Plan. The Employees who elect to participate in the Plan shall at the time of such election authorize a payroll deduction from the Employee's Compensation to be made as of any future payroll period, in accordance with Section 5.4. Any such election to authorize payroll deductions shall be effective commencing on the first Offering Date immediately following completion of enrollment in the manner prescribed by the Plan Administrator.

        5.4     Employee Contributions .    An Individual Account shall be established for each participating Employee to which shall be credited the amount of any Payroll Contributions, and the number of full shares of Common Stock that are purchased by such Employee pursuant to the terms of the Plan. An Employee may authorize Payroll Contributions of at least one percent (1%) but not more than ten percent (10%) of his or her Compensation; provided, however, that an Employee shall not be permitted to purchase during any one calendar year Common Stock pursuant to the Plan (and under any other employee stock purchase plan of the Company which is intended to qualify under Section 423 of the Code) at a rate which exceeds $25,000 in Fair Market Value, determined as of the applicable Offering Dates (or such other amount as may be adjusted from time to time under applicable provisions of the Code). Except as provided in Section 5.7, if an Employee has a Terminating Event, (i) such Employee may not make further Payroll Contributions, and (ii) his or her right to purchase shares of Common Stock in the then-current Offering Period shall terminate, and any amount of cash then credited to his or her Individual Account shall be returned to the Employee or his or her designated beneficiary pursuant to the Plan, as applicable, as soon as practical thereafter. No interest shall accrue on amounts credited to any Individual Account or distributed to any Employee or designated beneficiary pursuant to the Plan.

        5.5     Purchase of Shares .    The Plan Administrator shall establish one (1) or more Purchase Dates during an Offering. The initial Purchase Dates shall be the last trading day of each calendar month during an Offering Period. Unless a participating Employee requests a withdrawal of the cash balance in the Employee's Individual Account prior to a Purchase Date, the cash balance in such Individual Account on each Purchase Date shall be used to purchase the maximum number of whole shares of Common Stock that may be purchased using such cash balance at the Purchase Price. Any Payroll Contributions accumulated in an Employee's Individual Account that are not sufficient to purchase a full share shall be retained in such account for any subsequent Purchase Date or Offering Period, subject to earlier withdrawal by the Employee as provided in Article VI. Any other monies remaining in an Employee's Individual Account after the Purchase Date shall be returned to the Employee or his or her beneficiary (as applicable) in cash, without interest, as soon as practical thereafter. If the number of shares of Common Stock that Plan participants become entitled to purchase under the Plan

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is greater than the shares of Common Stock remaining available under the Plan, the available shares of Common Stock shall be allocated by the Plan Administrator among such participants in such manner as the Plan Administrator determines is fair and equitable, in its good faith discretion.

        5.6     Purchase Price .    The purchase price per share of Common Stock (the " Purchase Price ") to be paid by each participating Employee in a given Offering shall be an amount (rounded to the nearest cent) equal to ninety-five percent (95%) of the Fair Market Value of a share of Common Stock on the Purchase Date.

        5.7     Change in Employment Status Due to Death, or Disability .    Upon a Terminating Event resulting from the participating Employee's death or Disability, the Employee, or, in the case of death, the Employee's beneficiary (as defined in Section 9.4) shall have the right to elect, by written notice given to the Plan Administrator prior to the next following Purchase Date:

        (a)   to withdraw all of the cash (without interest) and