exv10w1



 






Exhibit 10.1




[Form of Award Letter]




«FirstLast»


(address)



Dear «Fname»:


In connection with your service as a member of the Board of Directors of TODCO (the “Company”) for
the 2005 calendar year, the Company hereby grants to you effective as of                         , 2005 (the
“Grant Date”) a Deferred Stock Unit Award which shall be paid in [             ] Shares of TODCO
Common Stock (“Common Stock”) in accordance with the TODCO 2005 Long Term Incentive Plan (the
“Plan”). The Deferred Stock Unit Award is fully vested and shall be payable in Common Stock upon
the earlier of your death or Disability, five years from the Grant Date, a Change in
Control or your separation from service as a member of the Board of Directors of the Company.
Please refer to the attached Appendix A, Terms and Conditions of Director Deferred Stock Unit
Award, for further details.



Your Deferred Stock Unit Award is subject to the terms and conditions set forth in the enclosed
Plan, the Prospectus for the Plan, any additional terms and conditions set forth in the attached
Appendix A and any rules and regulations adopted by the Board of Directors in accordance with the
terms of the Plan.



This award letter and the attachments contain the formal terms and conditions of your award and
accordingly should be retained in your files for future reference.





Congratulations on your award.




Very truly yours,




Jan Rask

Enclosures




 









 








Appendix A

To Award Letter

Terms and Conditions of

Director Deferred Stock Unit Award

[Date]




As described in the attached award letter (the “Award Letter”), effective as of the Grant Date
TODCO (the “Company”) awards you a Deferred Stock Unit Award under the TODCO 2005 Long Term
Incentive Plan which shall be paid in [            ] Shares of TODCO Common Stock (“Common Stock”).
This Deferred Stock Unit Award shall be subject to the terms and conditions set forth in the TODCO
2005 Long Term Incentive Plan (the “Plan”), the enclosed Prospectus for the Plan, any rules and
regulations adopted by the Board of Directors of the Company (the “Board”), and any additional
terms and conditions set forth in this Appendix A, all of which forms a part of the Award Letter.
Any terms used and not defined in the Award Letter have the meanings set forth in the Plan. In the
event there is an inconsistency between the terms of the Plan and the Award Letter, the terms of
the Plan will prevail. In addition, this Deferred Stock Unit Award is deferred compensation under
Section 409A of the Internal Revenue Code of 1986 as amended (the “Code”) and is intended to comply
with Code Section 409A and the guidance and regulations thereunder.




	1.  	Payment and the Determination of Amount of Shares of Common Stock






	 	(a)  	The Deferred Stock Units awarded to you shall be paid to you in Common Stock
on the earlier of the date of your separation from service as a member of the
Board of Directors of the Company, your death, your Disability, upon a Change in
Control or 5 years from the Grant Date (the “Payment Date”). For the purposes of this
Award Letter, Disability shall mean the your inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death, or last a continuous period of not less than
12 months. For the purposes of the Award Letter, Change in Control shall mean the
occurrence of any of the following events within the meaning of Code Section 409A and
the regulations, notices and rulings thereunder:






     (i) Change in ownership. A change in ownership occurs if a person, or persons acting as a
group, acquires, together with stock held by the person or group, more than 50% of the stock of
the Company, measured by the voting power of the Company’s stock or the fair market value of
the Company. Incremental increases in ownership by a person or group that already owns 50
percent of the corporation is not a change in ownership.




     (ii) Change in effective control. A change in effective control occurs if a person, or
persons acting as a group, acquire 35 percent of the voting stock of the Company over a
12-month period, or a majority of the members of the board of directors of the Company is
replaced during a 12-month period by directors not endorsed by the members of the board before
the appointment. For these purposes, a change in majority of the directors will occur only if
there is no other corporation that is a majority shareholder of the Company. Also, the
incremental increases of ownership by a person or persons acting as a group that already owns
35% of the voting stock is not a change in effective control.



 









 






     (iii) Change in ownership of a substantial portion of the Company’s assets. A change in
control based on the sale of assets occurs if a person, or persons acting as a group, acquires
40 percent or more of the gross total fair market value of the assets of the Company over a
12-month period. The acquisition by or transfer of assets to certain persons or entities that
are related to the Company or its shareholders will not qualify as a Change in Control
hereunder as provided in Code Section 409A and the guidance and regulations thereunder.




You may also elect to further delay the timing of the payment of the Common Stock awarded to
you hereunder on a form approved by the Board and receive the payment on a specified date in a
lump sum if the election does not become effective for 12 months after the election is made,
the election is made at least 12 months before the first scheduled payment, and to the extent
required by Code Section 409A, the election extends the deferral period for a period of at
least 5 years but not to exceed 15 years from the date on which the payment otherwise would
have been paid (if so elected such date is also referred to herein as the Payment Date). Any
such election shall be subject to the terms and conditions as determined by the Board and shall
comply with Code Section 409A




	 	(b)  	The number of Shares of Common Stock that you shall receive on the Payment
Date shall be                         .
	 
	 	(c)  	In accordance with the provisions of the Plan, the Board shall have the
exclusive authority to make all determinations hereunder. The Board shall have the
authority to make any amendments to this Award Letter to comply with Code Section 409A
as it shall determine in its sole discretion without your consent. The Board’s
determinations hereunder shall be final, conclusive and binding upon you. You shall
not have any right or claim with respect to any Shares other than Shares of Common
Stock to which you become entitled on the Payment Date in accordance with this Award
Letter.
	 
	 	(d)  	You will not be required to pay any purchase price for the Shares of Common
Stock when such Shares are issued to you on the Payment Date; however, you will be
responsible for taxes as described in Section 5 below.






	2.  	Vesting






All Deferred Stock Units are fully vested upon the Grant Date.




	3.  	Restrictions






Until the Payment Date, you do not own any of the Common Stock potentially subject to this
Deferred Stock Unit Award and may not attempt to sell, transfer, assign, pledge or encumber
in any manner any such Common Stock or the Deferred Stock Units. Your Shares of Common
Stock issued to you, if any, will be registered in your name as of the Payment Date. This
Deferred Stock Unit Award shall be accounted for by the Company on your behalf on a ledger
until the number of Shares of Common Stock payable hereunder is payable and may not be
transferred, sold, assigned or pledged in any manner prior to the Payment Date. Promptly
after the Payment Date, the Shares of Common Stock payable pursuant to Section 1 will be
delivered in street name to your brokerage account (or, in the event of your death, to a
brokerage account in the name of your beneficiary under the Plan) or, at the Company’s
option, a certificate for such Shares will be delivered to you.



 









 






	4.  	Dividends and Voting






After the Payment Date, all dividends (if any) that become payable with respect to your
Shares after the Payment Date will be paid directly to you at the same time dividends are
paid with respect to all other Common Stock of the Company. Any dividend payments on any
amount deferred pursuant to Section 1(a) hereof shall be reinvested in Common Stock and
paid on the Payment Date. Also, after the Payment Date, you will have the right to vote
your Shares.




	5.  	Tax Requirements






You will be responsible for all federal, state and local income or other taxes applicable
to you in connection with this Deferred Stock Unit Award and any Common Stock issued to you
hereunder, and you will report and include any such taxable amount as income for the tax
year such amount is includable under applicable laws and regulations.




	6.  	Restrictions on Resale






Other than the restrictions referenced in paragraph 3, there are no restrictions imposed by
the Plan on the resale of Shares of Common Stock acquired under the Plan. However, under
the provisions of the Securities Act of 1933 (the “Securities Act”) and the rules and
regulations of the Securities and Exchange Commission (the “SEC”), resales of Shares
acquired under the Plan by certain officers and directors of the Company who may be deemed
to be “affiliates” of the Company must be made pursuant to an appropriate effective
registration statement filed with the SEC, pursuant to the provisions of Rule 144 issued
under the Securities Act, or pursuant to another exemption from registration provided in
the Securities Act. At the present time, the Company does not have a currently effective
registration statement pursuant to which such resales may be made by affiliates.




	7.  	Compliance with Laws






This Award Letter, the Plan and any Shares of Common Stock issued to you hereunder shall be
subject to all applicable federal and state laws and the rules of the exchange on which
Shares of the Company’s common stock are traded.


If you have any questions regarding your Deferred Stock Unit Award or would like to obtain
additional information about the Plan or the Board, please contact the Company’s General Counsel.
Your Award Letter which includes this Appendix A contains the formal terms and conditions of your
Deferred Stock Unit Award and accordingly should be retained in your files for future reference.