Exhibit 10.1

EXECUTION COPY

13,000,000 Shares

TODCO

CLASS A COMMON STOCK (PAR VALUE $0.01 PER SHARE)

UNDERWRITING AGREEMENT

December 16, 2004

 

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December 16, 2004

Morgan Stanley & Co. Incorporated
Citigroup Global Markets Inc.
Goldman, Sachs & Co.

c/o   Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036   c/o   Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs and Mesdames:

     Transocean Inc., a Cayman Islands company (the “Selling Stockholder”),
proposes to sell to the several underwriters named in Schedule I hereto (the
“Underwriters”) an aggregate of 13,000,000 shares of the Class A common stock
(par value $0.01 per share) (the “Firm Shares”) of TODCO, a Delaware corporation
(the “Company").

     The Selling Stockholder also proposes to sell to the several Underwriters
not more than an additional 1,950,000 shares of the Class A common stock (par
value $0.01 per share) of the Company (the “Additional Shares”) if and to the
extent that you, as managers of the offering, shall have determined to exercise,
on behalf of the Underwriters, the right to purchase such shares of common stock
granted to the Underwriters in Section 3 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares.” The
shares of Class A common stock (par value $0.01 per share) of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the “Common Stock.”

     The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it became effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the “Securities Act”), is hereinafter
referred to as the “Registration Statement”; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the “Prospectus.”
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the “Rule 462 Registration Statement”), then any reference herein to the
term

 

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“Registration Statement” shall be deemed to include such Rule 462 Registration
Statement.

     1. Representations and Warranties of the Company and the Selling
Stockholder. The Company and the Selling Stockholder, jointly and severally,
represent and warrant to and agree with each of the Underwriters that:

          (a) The Registration Statement (excluding for this purpose any Rule
462 Registration Statement) has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
such purpose are pending before or threatened by the Commission.

          (b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
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 not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
(b) do not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information furnished to the Company in writing by any
Underwriter through you expressly for use therein.

          (c) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the general
affairs, management, financial position, stockholders’ equity or result of
operations, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).

          (d) The preliminary prospectus dated December 13, 2004 filed as part
of the registration statement relating to the Shares and any preliminary
prospectus filed as part of any subsequent amendment thereto, or filed pursuant
to Rule 424 under the Securities Act, complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder.

          (e) The statements set forth in the Prospectus under the caption
“Description of Capital Stock”, insofar as they purport to constitute a summary
of the terms of the Company’s capital stock, and under the captions “Material
U.S.

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Federal Income Tax Considerations for Non-U.S. Holders” and “Underwriters”,
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair in all material respects.

          (f) To the knowledge of the Company and the Selling Stockholder, Ernst
& Young LLP, who have certified certain financial statements of the Company, are
independent public accountants as required by the Securities Act and the rules
and regulations of the Commission thereunder.

          (g) Each of the Company and its significant subsidiaries (as defined
in Rule 1-02(w) forming part of Regulation S-X under the Securities Act, except
that the determination of whether a subsidiary is a significant subsidiary shall
be made as of the date hereof or as of the Closing Date, as applicable, rather
than as of the end of the relevant fiscal year) (each, a “Significant
Subsidiary”) has been duly organized and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
general affairs, management, financial position, stockholders’ equity or results
of operations of the Company and its subsidiaries considered as one enterprise
(a “Material Adverse Effect”).

          (h) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company.

          (i) On the Closing Date (as defined in Section 5 hereof), the Company
will have an authorized capitalization as set forth in the Prospectus, and all
of the outstanding shares of capital stock of the Company (including the Shares)
will have been duly and validly authorized and issued and will be fully paid and
non-assessable.

          (j) All of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims, except
as described in the Prospectus and except to the extent that any failure of such
shares to be free and clear of all liens, encumbrances, equities or claims would
not, individually or in the aggregate, have a Material Adverse Effect.

          (k) The Shares are duly authorized for listing on the New York Stock
Exchange, subject to notice of issuance.

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          (l) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the properties or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their properties, except, in each case other than with respect to such
Certificate of Incorporation or Bylaws, for any such conflict, breach, violation
or default which would not, individually or in the aggregate, have a Material
Adverse Effect and would not impair the Company’s ability to perform its
obligations hereunder or have any material adverse effect upon the consummation
of the transactions contemplated hereby; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the performance by the Company of
its obligations under this Agreement, except for such consents, approvals,
authorizations, registrations or qualifications as (i) have been, or will have
been prior to the Closing Date, obtained under the Securities Act or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) or (ii) may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.

          (m) Neither the Company nor any of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or Bylaws or other constituent
documents, as applicable, or in default in the performance or observance of any
material obligation, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound, except for
any such violation or default which would not, individually or in the aggregate,
have a Material Adverse Effect.

          (n) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, have a Material Adverse
Effect; and, to the best of the Company’s and the Selling Stockholder’s
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.

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          (o) The Company is not, and after giving effect to the offering and
sale of the Shares, will not be, an “investment company”, as such term is
defined in the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

          (p) Except as set forth in the Prospectus, the Company and its
Significant Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a Material Adverse Effect.

          (q) Except as set forth in the Prospectus, there are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
Material Adverse Effect.

          (r) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered pursuant to
the Registration Statement.

          (s) The Company and its Significant Subsidiaries have good and
marketable title to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, taken as a whole, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and would not,
individually or in the aggregate, have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and its Significant
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries, in each
case except as described in the Prospectus and except as would not, individually
or in the aggregate, have a Material Adverse Effect.

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          (t) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company or
any of its subsidiaries nor the Selling Stockholder has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Affect.

          (u) No labor dispute with the employees of the Company or any of its
subsidiaries exists, except as described in the Prospectus, or, to the knowledge
of the Company, is imminent, except such as would not have a Material Adverse
Effect; and neither the Company nor the Selling Stockholder is aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could have a Material
Adverse Effect on the Company and its subsidiaries, taken as a whole.

          (v) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent in the businesses in which they are engaged (such
businesses are as described in the Prospectus); and neither the Company nor the
Selling Stockholder has any reason to believe that the Company will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its businesses at a cost that would not have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole, except as described in the
Prospectus.

          (w) The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect, except as described in the Prospectus.

          (x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in

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accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

          (y) Except as described in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, (i) the Company and its subsidiaries have not incurred any
liability or obligation, direct or contingent, nor entered into any transaction
not in the ordinary course of business, except such as would not have a Material
Adverse Effect; (ii) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or distribution
of any kind on its capital stock other than ordinary and customary dividends;
and (iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries.

          (z) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Shares.

          2. Additional Representations and Warranties of the Selling
Stockholder. The Selling Stockholder represents and warrants to and agrees with
each of the Underwriters that:

          (a) This Agreement has been duly authorized, executed and delivered by
the Selling Stockholder and constitutes a valid and binding agreement of the
Selling Stockholder.

          (b) The execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of its obligations under, this Agreement,
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Selling
Stockholder or any of its subsidiaries is a party or by which the Selling
Stockholder or any of its subsidiaries is bound or to which any of the
properties or assets of the Selling Stockholder or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Memorandum and Articles of Association of the Selling Stockholder or any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Selling Stockholder or any of its subsidiaries or
any of their properties, except, in each case other than with respect to such
Memorandum and Articles of Association, for any such conflict, breach, violation
or default which would not, individually or in the aggregate, impair the Selling
Stockholder’s ability to perform its obligations

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hereunder or have any material adverse effect upon the consummation of the
transactions contemplated hereby; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the performance by the Selling Stockholder of its
obligations under this Agreement, except for such consents, approvals,
authorizations, registrations or qualifications as (i) have been, or will have
been prior to the Closing, obtained under the Securities Act or the Exchange Act
or (ii) may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters.

          (c) Assuming the Underwriters purchase the Shares to be sold by the
Selling Stockholder in good faith and without “notice of an adverse claim” (as
such phrase is used in Section 8-105 of the Uniform Commercial Code of the State
of Texas (the “Texas UCC”)), upon (i) delivery to the Underwriters of the
certificates representing such Shares endorsed in blank by an effective
endorsement and (ii) payment therefor in accordance with the terms of this
Agreement, the Underwriters will become “protected purchasers” (as defined in
Section 8-303(a) of the Texas UCC) of such Shares, free and clear of “adverse
claims” (as defined in Section 8-102 of the Texas UCC), except for any such
adverse claims created by or at the request of the Underwriters.

          (d) Except as described in the Prospectus, neither the Company nor the
Selling Stockholder has granted any option, right or warrant to purchase any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Class B common stock (par value $0.01 per share) of the
Company), in each case that would or could vest within 60 days after the date of
the Prospectus, except in the event of a change of control of the Company or
termination of employment or death.

          3. Agreements to Sell and Purchase. The Selling Stockholder hereby
agrees to sell to the several Underwriters, and each Underwriter, upon the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Selling Stockholder at $17.28 a share (the “Purchase Price”), the
number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the number of
Firm Shares to be sold by the Selling Stockholder as the number of Firm Shares
set forth in Schedule I hereto opposite the name of such Underwriter bears to
the total number of Firm Shares.

          On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholder
agrees to sell to the Underwriters the Additional Shares, and the Underwriters
shall have the right to purchase, severally and not jointly, up to 1,950,000
Additional Shares at the Purchase Price. You may exercise this right on behalf
of the Underwriters in whole or from time to time in part by giving written
notice of each election to exercise the option not later than

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30 days after the date of this Agreement. Any exercise notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Each purchase date must be at least one
business day after the written notice is given and may not be earlier than the
closing date for the Firm Shares nor later than ten business days after the date
of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. On each day, if any, that Additional
Shares are to be purchased (an “Option Closing Date”), each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Shares (subject
to such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased on such Option Closing Date as the number of Firm Shares set forth in
Schedule I hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.

          Each of the Company and the Selling Stockholder hereby agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated and
Citigroup Global Markets Inc. on behalf of the Underwriters, it will not, during
the period ending 60 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock; or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise.

          The restrictions contained in the preceding paragraph shall not apply
to (i) the Shares, (ii) the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing, (iii) transactions by any person other than the Company relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the offering of the Shares, (iv) any distribution of
shares of Common Stock by the Selling Stockholder to the holders of its ordinary
shares by means of a distribution or exchange offer, (v) grants of Common Stock
or other securities pursuant to employee benefit plans described in the
Prospectus or (vi) private sales by the Selling Stockholder of Common Stock or
other securities in which the purchaser agrees to be bound by the restrictions
contained in the preceding paragraph. In addition, the Company agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated and
Citigroup Global Markets Inc. on behalf of the Underwriters, it will not, during
the period ending 60 days after the date of the Prospectus, file any
registration statement with respect to any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock.

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     4. Terms of Public Offering. The Company and the Selling Stockholder are
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable. The
Company and the Selling Stockholder are further advised by you that the Shares
are to be offered to the public initially at $18.00 a share (the “Public
Offering Price”) and to certain dealers selected by you at a price that
represents a concession not in excess of $0.43 a share under the Public Offering
Price.

     5. Payment and Delivery. Payment for the Firm Shares to be sold by the
Selling Stockholder shall be made to the Selling Stockholder in Federal or other
funds immediately available in Houston, Texas against delivery of such Firm
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
Houston time, on December 22, 2004. The time and date of such payment are
hereinafter referred to as the “Closing Date.”

     Payment for any Additional Shares shall be made to the Selling Stockholder
in Federal or other funds immediately available in Houston, Texas against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., Houston time, on the date specified in the
corresponding notice described in Section 3 hereof or at such other time on the
same or on such other date, in any event not later than January 22, 2005, as
shall be designated in writing by you.

     The Firm Shares and Additional Shares shall be registered in such names and
in such denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the applicable Option Closing Date, as
the case may be. The Firm Shares and Additional Shares shall be delivered to you
on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.

     6. Conditions to the Underwriters’ Obligations. The obligation of the
Selling Stockholder to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 3:00 p.m. (Houston time) on the date
hereof.

     The several obligations of the Underwriters are subject to the following
further conditions:

          (a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

               (i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the

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possible change, in the rating accorded any of the Company’s securities by any
“nationally recognized statistical rating organization,” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and

               (ii) there shall not have occurred any change, or any development
involving a prospective change, in the general affairs, management, financial
position, stockholders’ equity or results of operations, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in the
reasonable judgment of Morgan Stanley & Co. Incorporated and Citigroup Global
Markets Inc., is material and adverse and that makes it, in the reasonable
judgment of Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc.,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.

          (b) The Underwriters shall have received on the Closing Date an
opinion of Walkers, Cayman Islands counsel for the Selling Stockholder, dated
the Closing Date, to the effect that:

               (i) the Selling Stockholder has been duly incorporated and is
validly existing as a company in good standing under the laws of the Cayman
Islands, with full corporate power and authority to own its properties and
conduct its business as described in the Prospectus;

               (ii) This Agreement has been duly authorized and executed and,
when delivered by the Selling Stockholder, will constitute the legal, valid and
binding obligations of the Selling Stockholder enforceable in accordance with
its terms;

               (iii) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and the compliance
by the Selling Stockholder with the terms and provisions hereof do not
contravene any law or regulation of the Cayman Islands applicable to the Selling
Stockholder or contravene the Memorandum and Articles of Association of the
Selling Stockholder; and

               (iv) neither the execution, delivery or performance of this
Agreement nor the consummation of any of the transactions contemplated hereby or
the compliance by the Selling Stockholder with the terms and provisions hereof,
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of any Cayman
Islands governmental or judicial authority or agency.

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          The opinion of Walkers described in this Section 6(b) shall be
rendered to the Underwriters at the request of the Selling Stockholder and shall
so state therein.

          (c) The Underwriters shall have received on the Closing Date an
opinion of Baker Botts L.L.P., United States counsel for the Selling
Stockholder, dated the Closing Date, to the effect that:

               (i) assuming its due authorization by the Selling Stockholder,
and further assuming its due execution and delivery by the Selling Stockholder
insofar as such matters are governed by Cayman Islands law, this Agreement has
been duly executed and delivered by the Selling Stockholder;

               (ii) the execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations under, this
Agreement will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument that is
identified as an exhibit to the Selling Stockholder’s Annual Report on Form 10-K
for the year ended December 31, 2003 or the Quarterly Reports on Form 10-Q for
the quarters ended March 31, June 30 and September 30, 2004, nor will such
action result in any violation of any statute, rule or regulation or any order
known to such counsel of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of its subsidiaries or any of
their properties, except for any such conflict, breach, violation or default
which would not, individually or in the aggregate, have a Material Adverse
Effect and could not reasonably be expected to adversely affect the Selling
Stockholder’s ability to perform its obligations under this Agreement (it being
understood that for purposes of this opinion, such counsel shall not be required
to pass upon compliance with respect to antifraud or similar provisions of any
law, rule or regulation); and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body which, to the best of such counsel’s knowledge, has jurisdiction over the
Selling Stockholder or any of its subsidiaries or any of their properties is
required under the laws of the States of New York or Texas for the performance
by the Selling Stockholder of its obligations under this Agreement, except for
such consents, approvals, authorizations, registrations or qualifications as
(A) have been obtained under the Securities Act and the Exchange Act, (B) may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters or (C) would not,
individually or in the aggregate, have a Material Adverse Effect and could not
reasonably be expected to adversely affect the Selling

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Stockholder’s ability to perform its obligations hereunder or have any material
adverse effect upon the consummation of the transactions contemplated hereby;
and

               (iii) assuming the Underwriters purchase the Shares to be sold by
the Selling Stockholder in good faith and without “notice of an adverse claim”
(as such phrase is used in Section 8-105 of the Texas UCC), upon (i) delivery to
the Underwriters of the certificates representing such Shares endorsed in blank
by an effective endorsement and (ii) payment therefor in accordance with the
terms of this Agreement, the Underwriters will become “protected purchasers” (as
defined in Section 8-303(a) of the Texas UCC) of such Shares, free and clear of
“adverse claims” (as defined in Section 8-102 of the Texas UCC), except for any
such adverse claims created by or at the request of the Underwriters.

          Such counsel may rely as to matters of Cayman Islands law upon the
opinion of Walkers furnished pursuant to Section 6(b) hereof. Such counsel may
limit the foregoing opinions in all respects to the laws of the States of New
York and Texas and applicable Federal law, in each case as in effect on the date
of such opinions.

          The opinion of Baker Botts L.L.P. described in this Section 6(c) shall
be rendered to the Underwriters at the request of the Selling Stockholder and
shall so state therein.

          (d) The Underwriters shall have received on the Closing Date an
opinion of Porter & Hedges, L.L.P., United States counsel for the Company, dated
the Closing Date, to the effect that:

               (i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and conduct
its business as described in the Prospectus;

               (ii) the Company has an authorized capitalization as set forth in
the Prospectus, and all of the outstanding shares of capital stock of the
Company (including the Shares) have been duly authorized and validly issued and
are fully paid and non-assessable;

               (iii) this Agreement has been duly authorized, executed and
delivered by the Company;

               (iv) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed

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of trust, loan agreement or other agreement or instrument that is identified as
an exhibit to the Registration Statement, assuming the due authorization,
execution and delivery by Morgan Stanley & Co. Incorporated of that certain
Waiver and Consent dated November 19, 2004, nor will such action result in any
violation of any statute, rule or regulation or any order known to such counsel
of any court or governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties, except for any such
conflict, breach, violation or default which would not, individually or in the
aggregate, have a Material Adverse Effect and could not reasonably be expected
to adversely affect the Company’s ability to perform its obligations under this
Agreement (it being understood that for purposes of this opinion, such counsel
shall not be required to pass upon compliance with respect to antifraud or
similar provisions of any law, rule or regulation); and no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body which, to the best of such counsel’s knowledge, has
jurisdiction over the Company or any of its subsidiaries or any of their
properties is required under the laws of the States of Delaware, New York or
Texas for the performance by the Company of its obligations under this
Agreement, except for such consents, approvals, authorizations, registrations or
qualifications as (A) have been obtained under the Securities Act and the
Exchange Act, (B) may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
or (C) would not, individually or in the aggregate, have a Material Adverse
Effect and could not reasonably be expected to adversely affect the Company’s
ability to perform its obligations hereunder or have any material adverse effect
upon the consummation of the transactions contemplated hereby;

               (v) the Company is not, and after giving effect to the offering
and sale of the Shares will not be, an “investment company”, as such term is
defined in the Investment Company Act;

               (vi) the statements set forth in the Prospectus under the caption
“Description of Capital Stock”, insofar as they purport to constitute a summary
of the terms of the Company’s capital stock and assuming the due conversion on
the Closing Date of all outstanding shares of Class B common stock into an equal
number of shares of Class A common stock as contemplated by the Prospectus and
Section 6(k) hereof, and under the captions “Material U.S. Federal Income Tax
Considerations For Non-U.S. Holders” and “Underwriters”, insofar as they purport
to constitute a summary of the provisions of the laws and documents referred to
therein, are accurate in all material respects; and

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               (vii) the Registration Statement and the Prospectus and any
amendments and supplements thereto made by the Company prior to the Closing Date
(other than the financial statements and schedules, the notes thereto and the
auditors’ report thereon and other financial and accounting data included
therein, or omitted therefrom, as to which such counsel need express no
opinion), when they became effective or were filed with the Commission, as the
case may be, appeared on their face to comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder.

             In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Selling Stockholder, representatives of the independent public
accountants for the Company and representatives of and counsel for the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel did not
independently verify such information and is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, except for
those referred to in the opinion in clause (vi) of this Section 6(d), on the
basis of the foregoing (relying as to materiality to a certain extent upon
statements of officers and other representatives of the Company and the Selling
Stockholder), no facts have come to such counsel’s attention that would lead
such counsel to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
Closing Date (other than the financial statements and schedules, the notes
thereto and the auditors’ report thereon and other financial and accounting data
included therein, or omitted therefrom, or the exhibits thereto, as to which
such counsel need express no opinion) contained or contains an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that, as
of its date or as of the Closing Date, the Prospectus or any amendment or
supplement thereto made by the Company prior to the Closing Date (other than the
financial statements and schedules, the notes thereto and the auditors’ report
thereon and other financial and accounting data included therein, or omitted
therefrom, as to which such counsel need express no opinion) contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

            Such counsel may limit the foregoing opinions in all respects to the
laws of the States of Delaware, New York and Texas and applicable Federal law,
in each case as in effect on the date of such opinions.

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          The opinion of Porter & Hedges, L.L.P. described in this Section 6(d)
shall be rendered to the Underwriters at the request of the Company and shall so
state therein.

          (e) The Underwriters shall have received on the Closing Date an
opinion of Eric B. Brown, Senior Vice President, General Counsel and Corporate
Secretary of the Selling Stockholder, dated the Closing Date, to the effect
that:

               (i) to the best of such counsel’s knowledge, neither the Selling
Stockholder nor any of its subsidiaries (other than the Company and its
subsidiaries) is in default in the performance or observance of any material
obligation, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject, except for any such defaults which would not, individually or in the
aggregate, have a Material Adverse Effect; and

               (ii) the execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations under, this
Agreement will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument known
to such counsel (after reasonable inquiry) to which the Selling Stockholder or
any of its subsidiaries (other than the Company and its subsidiaries) is a party
or by which the Selling Stockholder or any of its subsidiaries (other than the
Company and its subsidiaries) is subject, except for any such conflict, breach,
violation or default which would not, individually or in the aggregate, have a
Material Adverse Effect and could not reasonably be expected to adversely affect
the Selling Stockholder’s ability to perform its obligations under this
Agreement.

          Such counsel may rely as to matters of Cayman Islands law upon the
opinion of Walkers furnished pursuant to Section 6(b) hereof. Such counsel may
limit the foregoing opinions in all respects to the laws of the State of Texas
and applicable Federal law, in each case as in effect on the date of such
opinions.

          The opinion of Eric B. Brown described in this Section 6(e) shall be
rendered to the Underwriters at the request of the Selling Stockholder and shall
so state therein.

          (f) The Underwriters shall have received on the Closing Date an
opinion of Randall A. Stafford, General Counsel of the Company, dated the
Closing Date, to the effect that:

               (i) each of the Significant Subsidiaries has been duly organized,
is validly existing and in good standing under the laws of its

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jurisdiction of organization, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus; the Company
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of the State of Texas; THE Offshore
Drilling Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of the States of
Texas and Louisiana; Cliffs Drilling Company has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of the State of Texas and the Bolivarian Republic of Venezuela;
and TODCO Mexico Inc. has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of the Mexico;

               (ii) to the best of such counsel’s knowledge, neither the Company
nor any of its subsidiaries is in default in the performance or observance of
any material obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it is bound or to which any of its property
or assets is subject, except for any such defaults which would not, individually
or in the aggregate, have a Material Adverse Effect;

               (iii) to the best of such counsel’s knowledge and other than as
set forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect; and, to the
best of such counsel’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;

               (iv) all of the issued shares of capital stock of each
Significant Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and, to the best of such counsel’s
knowledge, are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims, except for any such liens, encumbrances,
equities or claims described in the Prospectus; and

               (v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such counsel
(after reasonable inquiry), including any identified as exhibits to

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the Registration Statement, to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is subject, assuming
the due authorization, execution and delivery by Morgan Stanley & Co.
Incorporated of that certain Waiver and Consent dated November 19, 2004, except
for any such conflict, breach, violation or default which would not,
individually or in the aggregate, have a Material Adverse Effect and could not
reasonably be expected to adversely affect the Company’s ability to perform its
obligations under this Agreement.

            In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Selling Stockholder, representatives of the independent public
accountants for the Company and representatives of and counsel for the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel did not
independently verify such information and is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, on the
basis of the foregoing (relying as to materiality to a certain extent upon
statements of officers and other representatives of the Company and the Selling
Stockholder), no facts have come to such counsel’s attention that would lead
such counsel to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
Closing Date (other than the financial statements and schedules, the notes
thereto and the auditors’ report thereon and other financial and accounting data
included therein, or omitted therefrom, or the exhibits thereto, as to which
such counsel need express no opinion) contained or contains an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that, as
of its date or as of the Closing Date, the Prospectus or any amendment or
supplement thereto made by the Company prior to the Closing Date (other than the
financial statements and schedules, the notes thereto and the auditors’ report
thereon and other financial and accounting data included therein, or omitted
therefrom, as to which such counsel need express no opinion) contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and such counsel does
not know of any amendment to the Registration Statement required to be filed or
any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or incorporated by
reference or described as required.

          For purposes of such counsel’s opinion to be rendered pursuant to
Section 6(f)(i) hereof with respect to Significant Subsidiaries, as to matters
of the laws of

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jurisdictions other than the State of Texas and applicable Federal law, such
counsel may rely upon opinions of foreign counsel furnished with respect to such
Significant Subsidiaries. Such counsel may limit the foregoing opinions in all
respects to the laws of the State of Texas and applicable Federal law, in each
case as in effect on the date of such opinions.

          The opinion of Randall A. Stafford described in this Section 6(f)
shall be rendered to the Underwriters at the request of the Company and shall so
state therein.

          (g) The Underwriters shall have received on the Closing Date an
opinion of Sullivan & Cromwell LLP, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in clauses (i) (but only as to
the due incorporation and valid existence of the Company), (ii) and (vi) (but
only as to the statements in the Prospectus under “Description of Capital Stock”
and “Underwriters”) and the third to last paragraph of Section 6(d) hereof.

          (h) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance agreed by you prior to the execution of this
Agreement, from Ernst & Young LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall use a
“cut-off date” not earlier than the date hereof.

          (i) The “lock-up” agreements, each substantially in the form of
Exhibit A hereto, between the Underwriters and Mr. Jan Rask, Mr. T. Scott
O’Keefe and members of the Board of Directors of the Company relating to sales
and certain other dispositions of shares of Common Stock or certain other
securities, delivered to such persons on or before the date hereof, shall be in
full force and effect on the Closing Date.

          (j) The Company and Selling Stockholder shall have furnished or caused
to be furnished to the Underwriters on the Closing Date certificates of officers
of the Company and Selling Stockholder, respectively, satisfactory to the
Underwriters as to the accuracy of the representations and warranties of the
Company and Selling Stockholder, respectively, herein at and as of such Closing
Date, as to the performance by the Company and Selling Stockholder,
respectively, of all obligations hereunder to be performed at or prior to such
Closing Date, as to the matters set forth in subsection (a) of this Section and
as to such other matters as the Underwriters may reasonably request.

          (k) The Selling Stockholder and its affiliates shall have delivered an
irrevocable notice and taken all other necessary actions, on or prior to the
Closing

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Date, to convert all the shares of Class B common stock (par value $0.01 per
share) of the Company owned by it or any of its affiliates into an equal number
of shares of Class A common stock of the Company such that at and as of the
close of business on the Closing Date no shares of the Company’s Class B common
stock will remain outstanding.

          The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares to be sold on such Option Closing Date and other matters
related to the issuance of such Additional Shares.

          7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

          (a) To furnish to you, without charge, three signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge, prior
to 5:00 p.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 7(c) hereof, as many
copies of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.

          (b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.

          (c) If, during such period after the first date of the public offering
of the Shares and prior to the expiration of nine months after the date of the
Prospectus, the Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to the dealers (whose
names and addresses you will furnish to the Company) to which Shares may have
been sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the

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Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law and if
at any time on or after the expiration of nine months after the date of the
Prospectus, any Underwriter is required to deliver a prospectus in connection
with the offering or sale of the Shares, upon the request but at the expense of
such Underwriter, to prepare and furnish to such Underwriter as many copies as
such Underwriter may request of an amended Prospectus or a supplemented
Prospectus complying with Section 10(a)(3) of the Act.

          (d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided that in connection therewith the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.

          (e) To make generally available to the Company’s security holders and
to you as soon as practicable an earning statement covering the twelve-month
period ending December 31, 2005 that satisfies the provisions of Section 11(a)
of the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158).

          8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company and the
Selling Stockholder, jointly and severally, agree to pay or cause to be paid all
expenses incident to the performance of their obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company’s and the
Selling Stockholder’s counsel (except as provided in the following sentence) and
the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all costs and expenses incident to listing the
Shares on the New York Stock Exchange, (vi) the cost of printing certificates

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representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, (ix) the document production charges and expenses associated with printing
this Agreement and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise
made in this Section 8. It is understood, however, that, except as provided in
this Section 8, Section 9 hereof, entitled “Indemnity and Contribution”, and the
last paragraph of Section 11 hereof, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make and will reimburse
the Company for the fees of foreign counsel retained to render opinions with
respect to the qualification as foreign corporations and good standing of
significant subsidiaries. Notwithstanding anything in this Section 8 to the
contrary, the Underwriters agree to reimburse the Company and the Selling
Stockholder for a portion of the aforementioned expenses in an aggregate amount
of up to $585,000.00, or $672,750.00 if the over-allotment option is exercised
in full, against delivery of original invoices or other acceptable documentation
evidencing the Company’s or the Selling Stockholder’s expenditure of each amount
for which reimbursement is sought.

     The provisions of this Section 8 shall not supersede or otherwise affect
any other written agreement that the Company and the Selling Stockholder may
otherwise have for the allocation of such expenses among themselves.

     9. Indemnity and Contribution. (a) The Company and the Selling Stockholder,
jointly and severally, agree to indemnify and hold harmless each Underwriter,
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use

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therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company has furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of material noncompliance by the Company with Section 7(a) hereof.

          (b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or the Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.

          (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a) or 9(b) hereof, such person (the “indemnified
party”) shall promptly notify the person against whom such indemnity may be
sought (the “indemnifying party”) in writing (but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection, except to the extent
that indemnifying party suffers actual prejudice as a result of such failure)
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel

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would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (i) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or who are affiliates of any Underwriter within the meaning of Rule 405
under the Securities Act and (ii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, the Selling
Stockholder, the directors of the Company, the officers of the Company who sign
the Registration Statement and each person, if any, who controls the Company or
the Selling Stockholder within the meaning of either such Section. In the case
of any such separate firm for the Underwriters and such control persons and
affiliates of any Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. In the case
of any such separate firm for the Company, and such directors, officers and
control persons of the Company or the Selling Stockholder, such firm shall be
designated in writing by the Company and the Selling Stockholder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

          (d) To the extent the indemnification provided for in Section 9(a) or
9(b) hereof is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, except to the
extent (but only to the extent) that the indemnifying party suffers actual
prejudice as a result of any failure by the indemnified party to notify the
indemnifying party of any action, proceeding or investigation as contemplated by
subsection (c) of this Section 9, each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by Section 9(d)(i)
hereof is not permitted by applicable law, or if the indemnified party failed to
give the notice required under subsection (c) above, then, except to the extent
(but only to the extent) that the indemnifying party suffers actual prejudice as
a result of any failure by the indemnified party to notify the indemnifying
party of any action, proceeding or investigation as contemplated by subsection
(c) of this Section 9, in such proportion as is appropriate to reflect not only
the relative benefits referred to in Section 9(d)(i) hereof but also the
relative fault of the

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indemnifying party or parties on the one hand and of the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
or the Selling Stockholder on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Selling Stockholder and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company
or the Selling Stockholder on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Selling Stockholder or by the Underwriters and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters’ respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.

          (e) The Company, the Selling Stockholder and the Underwriters agree
that it would not be just or equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 9(d) hereof. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

          (f) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Stockholder contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter, any
person controlling any Underwriter or any affiliate of any Underwriter, the
Selling Stockholder or any person controlling the Selling

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Stockholder, or the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares; provided,
however, that if this Agreement shall be terminated pursuant to Section 10(i),
(iii), (iv), or (v) or the second paragraph of Section 11 hereof, the Company
and the Selling Stockholder shall have no liability to you.

     10. Termination. The Underwriters may terminate this Agreement by notice
given by Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, the New York Stock Exchange or the Nasdaq
National Market, (ii) trading of any securities of the Company shall have been
suspended on the New York Stock Exchange, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any adverse change in
financial markets or any calamity or crisis that, in the reasonable judgment of
Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc., is material
and adverse and which, singly or together with any other event specified in this
clause (v), makes it, in the reasonable judgment of Morgan Stanley & Co.
Incorporated and Citigroup Global Markets Inc., impracticable or inadvisable to
proceed with the offer, sale or delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.

     11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

     If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholder for the purchase of such Firm Shares are not

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made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholder. In any such case either you, the Company or the Selling
Stockholder shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.

     If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Selling
Stockholder to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or the Selling Stockholder shall be
unable to perform its obligations under this Agreement, the Company and the
Selling Stockholder, jointly and severally, will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder, but the Company and the
Selling Stockholder shall then be under no further liability to you except as
provided in Sections 1, 8 and 9.

     12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

     13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

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     14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

              Very truly yours,
 
       

  TODCO  
 
       

  By:   /s/ Randall A. Stafford

--------------------------------------------------------------------------------

      Name: Randall A. Stafford

      Title: Vice President and General Counsel
 
            TRANSOCEAN INC.     as Selling Stockholder
 
       

  By:   /s/ Gregory L. Cauthen

--------------------------------------------------------------------------------

      Name: Gregory L. Cauthen

      Title: Senior VP & CFO

      Accepted as of the date hereof:
 
    Morgan Stanley & Co. Incorporated Citigroup Global Markets Inc. Goldman,
Sachs & Co.
 
    Acting severally on behalf of themselves

  and the several Underwriters named in

  Schedule I hereto.
 
   
By:
  Morgan Stanley & Co. Incorporated
 
   
By:
  /s/ Joshua Han Miller

--------------------------------------------------------------------------------

  Name: Joshua Han Miller

  Title: Vice President
 
   
By:
  Citigroup Global Markets Inc.
 
   
By:
  /s/ Quinn Fanning

--------------------------------------------------------------------------------

  Name: Quinn Fanning

  Title: Director

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SCHEDULE I

              Number of Firm Shares Underwriter

--------------------------------------------------------------------------------

  To Be Purchased

--------------------------------------------------------------------------------

Morgan Stanley & Co. Incorporated
    4,875,000  
Citigroup Global Markets Inc.
    4,875,000  
Goldman, Sachs & Co.
    3,250,000  
Total:
    13,000,000  

 

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EXHIBIT A

FORM OF LOCK-UP LETTER

[ ], 2004

Morgan Stanley & Co. Incorporated
Citigroup Global Markets Inc.
Goldman, Sachs & Co.

c/o   Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036   c/o   Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs and Mesdames:

     The undersigned understands that Morgan Stanley & Co. Incorporated (“Morgan
Stanley”), Citigroup Global Markets Inc. (“Citigroup”) and the several
underwriters named in Schedule I to the Underwriting Agreement (as defined
below), including Morgan Stanley and Citigroup (the “Underwriters”), propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with TODCO,
a Delaware corporation (the “Company”), and its stockholder, Transocean Inc., a
Cayman Islands company, providing for the public offering (the “Public
Offering”) by the several Underwriters of 13,000,000 shares (the “Shares”) of
the Class A common stock (par value $0.01 per share) of the Company (the “Common
Stock”).

To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley and
Citigroup on behalf of the Underwriters, he will not, during the period
commencing on the date hereof and ending 45 days after the date of the final
prospectus relating to the Public Offering (the “Prospectus”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by

A-1

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delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) transactions relating to shares of
Common Stock or other securities acquired in the Public Offering or open market
transactions after the completion of the Public Offering, (b) transfers of
shares of Common Stock or any security convertible into Common Stock as a bona
fide gift or gifts and (c) transfers of Common Stock or any security convertible
into Common Stock by will or intestacy; provided that in the case of any
transfer or distribution pursuant to clause (b), (i) each donee or distributee
shall execute and deliver to Morgan Stanley and Citigroup a duplicate form of
this Lock-up Letter and (ii) no filing by any party (donor, donee, transferor or
transferee) under Section 16(a) of the Securities Exchange Act of 1934, as
amended, shall be required or shall be made voluntarily in connection with such
transfer or distribution (other than a filing on a Form 5). In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley and
Citigroup on behalf of the Underwriters, he will not, during the period
commencing on the date hereof and ending 45 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company’s transfer
agent and registrar against the transfer of the undersigned’s share of Common
Stock except in compliance with the foregoing restrictions.

     The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.

     Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.

         

      Very truly yours,
 
       

     

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      (Name)
 
       

     

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(Address)

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