exv10w12



 





Exhibit
10.12








TODCO

SEVERANCE POLICY

(as of February 26, 2007)




SCOPE



This policy applies to all US shore-based salaried employees of the Company and designated US
Payroll Employees.




RESPONSIBILITY



Human Resources




PURPOSE



The purpose of this policy is to define the severance policy of the Company.




ELIGIBILITY



This policy shall apply to US shore-based salaried employees and designated US Payroll
Employees of the Company with the job titles identified in Exhibit “A” attached hereto and Tier 3
and Tier 4 Executives identified in Exhibit “B” attached hereto (“Eligible Employees”). No benefit
shall be payable under this policy to employees who by written employment agreement are entitled to
other severance payments in the event of a Change of Control. As a condition precedent to
eligibility each employee will be required to execute a binding release satisfactory to the Company
pursuant to which such employee releases the Company from any and all claims arising out of any
acts occurring at or prior to termination of the employee’s employment by the Company. This
release shall not release any rights an employee may be entitled to pursuant to indemnification
arrangements with the Company or under the Company’s certificate of incorporation or bylaws. Each
employee may also be required to enter into a mutual non-disparagement agreement with the Company.




POLICY



In the event of (i) involuntary termination other than for “Cause” (as defined below) or (ii)
a Qualifying Termination (as defined below) of the employment of an Eligible Employee by the
Company within the eighteen (18) month period immediately following a “Change in Control” (as
defined below), the Company shall pay such employee a severance benefit in the amount specified
below. “Cause” shall mean termination from employment due to unacceptable performance, misconduct,
dishonesty, or any other violation of the policies of the Company, as determined by the Company. A
“Qualifying Termination” shall be deemed to have occurred when the employment of an Eligible
Employee is terminated by the Company for any reason or upon resignation by an Eligible Employee
following notification of a reduction of salary and/or target bonus under the Company’s Performance
Bonus Plan (or any successor to the plan), a relocation of employment in excess of fifty miles from
such employee’s current work site, a reduction in job title or a significant reduction of
responsibility, a reduction in welfare benefits other than a reduction for all employees of the
Company, or if this policy is terminated following a Change in Control.




BENEFIT



Senior Executives. —Tier 3 Executives shall receive an amount equal to 1.5 times the
employee’s annual base salary plus the amount of such employee’s target bonus under the Company’s
Performance Bonus Plan for the year in which the termination occurs and a continuation of the
welfare benefits of medical insurance, dental insurance, disability insurance and life insurance
for eighteen (18) months after the date




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of termination. Tier 4 Executives shall receive an amount equal to 1.0 times the employee’s annual
base salary plus the amount of such employee’s target bonus under the Company’s Performance Bonus
Plan for the year in which the termination occurs and a continuation of the welfare benefits of
medical insurance, dental insurance, disability insurance and life insurance for twelve (12) months
after the date of termination. In addition to any severance benefit that they are entitled to
receive, Tier 3 and Tier 4 Executives shall also receive payments for accrued and unused vacation
and their target bonus (assuming 100% achievement of executive performance measures) under the
Company’s Performance Bonus Plan in effect on the date of termination, pro-rated through date of
termination.



In the event the premium cost and/or level of coverage shall change for all employees of the
Company, the cost and/or coverage level, likewise, shall change for these employees in a
corresponding manner. The continuation of these welfare benefits shall be discontinued prior to
the end of the applicable period in the event the employee has available substantially similar
benefits from a subsequent employer.



Key Employees and Other Mid-Management Employees — Four weeks pay for every year of service
plus a proportionate share of such employee’s target bonus under the Company’s Performance Bonus
Plan for the year in which the termination occurs with a maximum benefit of one half of annual
salary plus one half of target bonus.



All Other US Shore-Based Non Rotational Salaried Employees. — Two weeks salary for every
year of service with a minimum payment of 4 weeks pay and a maximum benefit of one half of annual
salary.



For purposes of this policy the date used for establishing seniority will be the actual hire date
by TODCO, Transocean Inc., their affiliates or predecessors.




CHANGE IN CONTROL



“Change in Control.” A Change in Control of TODCO shall be deemed to have occurred as of the
first (1st) day any one or more of the following conditions shall have been satisfied:





	 	(i)	 	The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares representing 20% or more of the combined voting power of the then
outstanding voting securities of TODCO entitled to vote generally in the
election of directors (the “Outstanding TODCO Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (A) any acquisition directly from
TODCO, (B) any acquisition by TODCO (it being understood that an acquisition
by an acquiror of greater than 20% of the Outstanding TODCO Voting Securities
directly from TODCO shall not prevent such acquiror from causing a subsequent
Change in Control if it thereafter acquires an additional 20% of the
Outstanding TODCO Voting Securities in a transaction that would otherwise
constitute a Change of Control), (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by TODCO or any corporation or
other entity controlled by TODCO, (D) any acquisition by any corporation or
other entity pursuant to a transaction which complies with clauses (A), (B)
and (C) of Section (iii) below;
	 
	 	(ii)	 	Individuals who, as of the date hereof, are members of the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that for purposes of this
definition, any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by TODCO’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be




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	 	 	 	considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;
	 
	 	(iii)	 	Consummation of a reorganization, merger, conversion or
consolidation or sale or other disposition of all or substantially all of the
assets of TODCO (a “Business Combination”), in each case, unless, following
such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
TODCO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of the
then outstanding combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation or other entity resulting from such Business Combination
(including, without limitation, a corporation or other entity which as a
result of such transaction owns TODCO or all or substantially all of TODCO’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding TODCO Voting Securities, (B) no Person
(excluding any corporation or other entity resulting from such Business
Combination or any employee benefit plan (or related trust) of TODCO or such
corporation or other entity resulting from such Business Combination)
beneficially owns, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the then outstanding voting securities of the
corporation or other entity resulting from such Business Combination except to
the extent that such ownership existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation or other entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
	 
	 	(iv)	 	Approval by the shareholders of TODCO of a complete
liquidation or dissolution of TODCO other than in connection with the transfer
of all or substantially all of the assets of TODCO to an affiliate or a
subsidiary of TODCO and in connection with such transfer the Eligible Employee
is offered the opportunity to continue his employment on substantially the
same terms as he did prior to the transfer.






Notwithstanding the foregoing, no Business Combination between TODCO and its own
subsidiaries shall constitute a Change in Control under this Policy.




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EXHIBIT A




ELIGIBLE EMPLOYEES




US PAYROLL EMPLOYEES




Mid Management 1



 





	 	 	 
	Accountant

	 	Manager, Int’l Accounting
	Administrator, Bids

	 	Manager, IT
	Administrator, Bids & Contract

	 	Manager, Maint. & Proj. Support
	Administrator, Casualty Claims

	 	Manager, Marketing
	Assistant Controller

	 	Manager, Office
	Asst. Purchasing Manager

	 	Manager, Payroll
	Attorney

	 	Manager, Purchasing
	Buyer

	 	Manager, Rig
	CAD Draftsman

	 	Manager, Rig Operations
	Control Analyst

	 	Manager, Training
	Corrosion Superintendent

	 	Manager, Marine & Compliance
	Director, Projects

	 	Manager, Shipping & Receiving
	District Controller

	 	Marine Superintendent
	Electrical Superintendent

	 	Mechanical Superintendent
	Engineering Technician

	 	Project Engineer
	Executive Assistant

	 	Scheduler/ Planner
	HR Representative

	 	Sr. Accountant
	HS&E Advisor

	 	Sr. Administrator, LAN
	Lawson Administrator

	 	Sr. Tech Support Specialist
	Legal Assistant

	 	Sr. Electrical Superintendent
	Maintenance Superintendent

	 	Sr. HS&E Advisor — Int’l
	Manager, Business Development

	 	Sr. Maintenance Supervisor
	Manager, Cash

	 	Sr. Marketing Representative
	Manager, District

	 	Sr. Mechanical Superintendent
	Manager, Facility

	 	Structural Superintendent
	Manager, HS&E

	 	Supervisor, Training
	Manager, Human Resources

	 	Technical Support Engineer
	Manager, Internal Audit

	 	Welders Superintendent








 




			
	1	 	4 weeks per year of service plus
proportionate share of target bonus, maximum 6 months pay and bonus.




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All Other U.S. Shore-Based Non Rotational Salaried Positions2



 





	 	 	 
	A/P and A/R Coordinator

	 	 

	Administrative Assistants
	 	 
	HR Administrator
	 	 
	HR Assistant
	 	 
	Tech Engineer Assistant
	 	 
	HS&E Audit Coordinator
	 	 
	Buyer
	 	 
	A/P Clerk
	 	 
	Billing Clerk
	 	 
	File Room Clerk
	 	 
	HR Data Clerk
	 	 
	Maintenance Clerk
	 	 
	Receiving Clerk
	 	 
	HR Representative
	 	 
	Project Administrator
	 	 
	Receptionist
	 	 
	Benefits Representative
	 	 
	Sr. Accounting Clerk
	 	 
	Sr. Payroll Administrator
	 	 
	Sr. A/P Clerk
	 	 








 




			
	 2	 	2 weeks per year of service, maximum 6 months
pay and bonus.




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EXHIBIT B




SENIOR EXECUTIVES




	 	 	 
	Executive Positions	 	Tier
	 
	 	 
	Tier 3 Executives
	 	 
	Vice President — Chief Financial Officer
	 	3
	Vice President — Operations
	 	3
	Vice President — General Counsel
	 	3
	Vice President — Engineering
	 	3
	 
	 	 
	Tier 4 Executives
	 	 
	Vice President — Marketing
	 	4
	Vice President — Human Resources
	 	4
	Vice President — Int’l Operations
	 	4
	Vice President — HSE
	 	4
	Vice President — Int’l Business Development
	 	4
	Treasurer
	 	4
	Controller
	 	4







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