Document:

exv10w21

 

 Exhibit 10.21

[Date]

[Name]

[Address]

Dear [Name]:

TODCO (the
“Company”) hereby awards to you effective as of                                         , 200___ (the “Award Date”)
                     Deferred Performance Units in accordance with the TODCO 2005 Long Term Incentive Plan (the
“Plan”). Each Deferred Performance Unit represents the opportunity for you to receive one share of
TODCO common stock (“Common Stock”). Your award of Deferred Performance Units is more fully
described in Appendix A, Terms and Conditions of Employee Deferred Performance Unit Award. This
letter and the attached Appendix A shall be referred to and defined herein as the “Award Letter.”

The exact amount of the shares of Common Stock you may earn will be determined based upon the
Company’s achievement of a performance standard during the Performance Cycle as described in
Appendix A. Your Deferred Performance Unit Award will become Earned Shares on the Determination
Date and will be issued in Common Stock thereafter, or in certain circumstances upon a Change in
Control in restricted shares of Common Stock, in accordance with Appendix A.

Your Deferred Performance Units are subject to the terms and conditions set forth in the enclosed
Plan, the Prospectus for the Plan, this Award Letter and any rules and regulations adopted by the
Executive Compensation Committee of the Company’s Board of Directors in accordance with the terms
of the Plan.

This Award Letter, the Plan, and any other attachments should be retained in your files for future
reference.

Congratulations on your award.

Very truly yours,

Jan Rask

Enclosures

 

 

Appendix A

Terms and Conditions of

Employee Deferred Performance Unit Award

[Date]

The Deferred Performance Unit Award by TODCO (the “Company”) to you effective as of the Award Date
provides for the opportunity for you to receive, if certain conditions are met, shares of TODCO
common stock (“Common Stock”) 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 Executive Compensation Committee of the Company’s Board of Directors (the
“Committee”), and this Award Letter. Any terms used and not defined in the Award Letter shall 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.

	1.	 	Determination of Earned Shares

(a) Earned Shares. The exact number of shares of Common Stock that will actually be
earned by and awarded to you (the “Earned Shares”) out of the total maximum number of the
Deferred Performance Units awarded to you in this Award Letter will be based upon the level
of achievement by the Company of the performance standard described below over the
three-year period commencing January 1, 2007 (the “Performance Cycle”). The determination by
the Committee with respect to the achievement of such performance standards will be made in
the first quarter of 2010 after all necessary Company and peer information is available.
The specific date on which such determination is formally made and approved by the Committee
is referred to as the “Determination Date.” After the Determination Date, the Company will
notify you of the number of Earned Shares, if any, to be actually awarded to you. The
delivery of the Earned Shares will be made no later than 2 1/2 months after the Determination
Date.

The calculation of Earned Shares shall be based on the Company’s Total Shareholder Return
ranking compared to a defined peer group at the end of the Performance Cycle as determined
by the Committee in its sole discretion. “Total Shareholder Return” is defined for a given
company as the change in share price plus cumulative dividends paid, assuming dividend
reinvestment during the Performance Cycle, over share price at the beginning of the
Performance Cycle of the applicable company. Earned Shares will be calculated by
multiplying the maximum number of Deferred Performance Units granted by the following
percentages for the percentile rank achieved. For Total Shareholder Return performance
between the percentile ranks noted below, linear interpolation will be used to calculate the
exact number of Earned Shares:

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	Percentile Rank	 	Percentage	 
	100th
	 	 	100	%
	92
	 	 	91.67	 
	84
	 	 	83.33	 
	75
	 	 	75.00	 
	68
	 	 	66.67	 
	62
	 	 	58.33	 
	56
	 	 	50.00	 
	50
	 	 	40.00	 
	44
	 	 	30.00	 
	38
	 	 	20.00	 
	32
	 	 	10.00	 
	25th or lower
	 	ZERO

The Company’s defined “Peer Group” shall consist of TODCO and the following companies: Atwood
Oceanics Inc., ENSCO International Incorporated, Global Industries Ltd., Grant Prideco, Inc., Grey
Wolf, Inc., Helmerich & Payne, Inc., Hercules Offshore, Helix Energy, Newpark Resources, Inc.,
Parker Drilling Company, Patterson — UTI Energy Inc., Pride International Inc., Rowan Companies,
Inc. and Tidewater, Inc.

     (b) Committee Determinations. In accordance with the provisions of the Plan, the
Committee shall have the exclusive authority to make all determinations hereunder, including
but not limited to the ranking of TODCO and its Peer Group. Without limiting the foregoing,
the Committee shall have absolute discretion to determine the number of Earned Shares to
which you are entitled, if any, including without limitation such adjustments as may be
necessary in the opinion of the Committee to account for changes since the date of the Award
Letter. Notwithstanding the foregoing, the Committee shall be precluded from increasing the
amount that would otherwise be obtainable upon the achievement of the performance goals
described in Section 1(a) above to the extent prescribed by Section 162(m) of the Internal
revenue Code of 1986 as amended (the “Code”) and the applicable regulations rulings and
notices thereunder. The Committee’s determination shall be final, conclusive and binding
upon you. You will not have any right or claim with respect to any shares other than Earned
Shares to which you become entitled in accordance herewith.

     (c) You will not be required to pay any purchase price for the Earned Shares; however
tax withholding is required pursuant to Section 8.

	2.	 	Vesting

     (a) Unless vested on an earlier date as provided in this Appendix A, the Earned Shares
will vest on the Determination Date. The Deferred Performance Units will only become Earned
Shares, if at all, on the Determination Date.

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     (b) As described in Section 7 below, in the event of a Change in Control, your Deferred
Performance Units may become Earned Shares and payable in Common Stock, or in certain
circumstances, restricted shares of Common Stock.

	3.	 	Restrictions

Until and unless Earned Shares become vested, you do not own any of the Common Stock potentially
subject to the Deferred Performance Units awarded to you in this Award Letter and you may not
attempt to sell, transfer, assign or pledge the Deferred Performance Units or the Common Stock that
may be awarded hereunder. Your Earned Shares, if any, will be registered in your name as of the
Determination Date. The Deferred Performance Units awarded hereunder shall be accounted for by the
Company on your behalf on a ledger. Promptly after the Determination Date (but no later than 2 1/2
months after the Determination Date), the net shares (total vested Earned Shares minus any Earned
Shares retained to satisfy the tax withholding obligation of the Company, as described in Section 8
if applicable), 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 in accordance with the Plan) or,
at the Company’s option, a certificate for such shares will be delivered to you.

	4.	 	Dividends and Voting

The Deferred Performance Units granted herein do not give you any rights as a stockholder of the
Company including, but not limited to, voting and dividend rights.

	5.	 	Termination of Employment Prior to a Change in Control

If your employment is terminated prior to the Determination Date and prior to a Change in Control
due to death, “Disability” (as defined below), “Retirement” (as defined below) or at the
convenience of the Company (as determined by the Committee), you will be entitled to receive Earned
Shares representing a “Pro Rata Share” of your Deferred Performance Units, if any become payable,
on the Determination Date. The calculation of your Pro- Rata Share is determined by multiplying the
number of Earned Shares calculated as of the Determination Date which would have otherwise been
earned had your employment not been terminated, by a fraction, the numerator of which is the number
of calendar days you were employed during the Performance Cycle after the Award Date and the
denominator of which is the total number of calendar days in the Performance Cycle after the Award
Date. Retirement is defined for the purpose of this section of Appendix A as meeting the “Rule of
70”, which requires a minimum age of 55, combined with years of service to total 70 or more. If
you retire after the age of 55, yet your age and years of service do not lead to a combined 70, you
will not be entitled to any Earned Shares. Retirement also means your retirement at the
convenience of the Company as determined by the Committee. Disability shall mean you are unable 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 twelve months or by reason of either of the foregoing you are receiving income replacement
benefits for a period of not less than three months under an accident and health plan covering
employees of the Company. Except as provided under Section 7, “Change in Control”, if your
employment is terminated for any reason other than death, Disability, Retirement, or termination
for the

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convenience of the Company, you will not be entitled to any Earned Shares. The Committee shall have
absolute discretion to determine the date and circumstances of termination of your employment under
this Section 5 and Section 7, including without limitation whether as a result of death,
Disability, Retirement, or termination for the convenience of the Company, (good reason or without
cause under Section 7) or any other reason, and its determination shall be final, conclusive and
binding upon you.

	6.	 	Beneficiary

You may designate a beneficiary to receive any Earned Shares that become due to you after your
death, and may change your beneficiary from time to time. Beneficiary designations should be filed
with the Committee of the Plan. If you fail to designate a beneficiary, Earned Shares due to you
under the Plan will be issued to the executor or administrator of your estate in the event of your
death.

	7.	 	Change in Control

     (a) Acceleration of Vesting. If you are employed by the Company on the date of a
Change in Control, the Determination Date has not occurred and a successor entity does
not assume this Award Letter, you will receive Earned Shares in an amount equal to
50% the amount of your Deferred Performance Units described in this Award Letter to be paid
no later that 2 1/2 months after the Change in Control. If you are employed by the Company on
the date of a Change in Control of the Company, the Determination Date has not occurred and
a successor entity assumes this Award Letter, you will be entitled to receive 50% of
your Deferred Performance Units in restricted shares of Common Stock (“Restricted Stock”)
which shall become vested on the last day of the first quarter of 2010; provided, however,
that if you are terminated prior to the last day of the first quarter of 2010 due to death,
Disability, your retirement, or if within 18 months after a Change in Control, you are
terminated without cause or for good reason (as determined by the Committee in its sole
discretion) you will be 100% vested in the Restricted Stock on your termination date. Such
Restricted Stock shall remain subject to the other terms of this Award Letter.

     (b) Change in Control. A Change in Control of the Company shall be deemed to have
occurred as of the first 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 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 the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not constitute a Change in
Control: (1) any acquisition directly from the Company, (2) any acquisition by the
Company (it being understood that an acquisition by an acquiror of greater than 20%
of the Outstanding Company Voting Securities

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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 Company
Voting Securities in a transaction that would otherwise constitute a Change in
Control), (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation or other entity controlled
by the Company, or (4) any acquisition by any corporation or other entity pursuant
to a transaction which complies with clauses (1), (2) and
(3) of Section 7(b)(iii);
or

(ii) Individuals who, as of the effective date of the Plan (as defined in the Plan), are
members of the Board of Directors of the Company (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board of Directors of the
Company; provided, however, that for purposes of this Section 7(b)(2)(ii), any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board, shall be
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 of Directors of
the Company; or

(iii) Consummation of a reorganization, merger, conversion or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination,
(1) all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than 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 the Company or all or substantially all of the Company’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 Company Voting Securities, (2) no Person (excluding any corporation
or other entity resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation or other entity resulting
from such Business Combination) beneficially owns, directly or indirectly, 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 (3) 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

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at the time of the execution of the initial agreement, or of the action of the Board
of Directors of the Company, providing for such Business Combination; or

(iv) Approval by the shareholders of the Company of a complete liquidation or dissolution
of the Company other than in connection with the transfer of all or substantially
all of the assets of the Company to an affiliate or a Subsidiary of the Company and
in connection with such transfer you are offered the opportunity to continue your
employment on substantially the same terms as existed immediately prior to the
transfer.

     (c) Other Restricted Stock Provisions. The following provisions shall apply to the
Restricted Stock:

     (i) Until the restrictions on your Restricted Stock have lapsed and your shares
have become vested in accordance with this Award Letter, you may not sell, transfer,
assign or pledge the shares. Stock certificates representing your Restricted Stock
will be registered in your name as of the award date after the Change in Control,
but will be held by the Company on your behalf until the restrictions on such shares
lapse. Each such stock certificate shall bear the following legend:

The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against transfer)
contained in the Award Letter for such Restricted Shares entered
into between the registered owner of such shares and TODCO. A copy
of the Award Letter is on file in the office of the secretary of
TODCO, located at 2000 W. Sam Houston Parkway South, Suite 800,
Houston, Texas 77042. 

When the restrictions on shares of your Restricted Stock lapse and the shares become
vested, a certificate representing such shares will be delivered to you (or, in the
event of your death, to your beneficiary in accordance with the Plan.

     (ii) You will have the right to vote your Restricted Stock, even if it remains
subject to forfeiture until it is forfeited. From the award date after the Change
in Control, all cash dividends payable with respect to your Restricted Stock will be
paid directly to you at the same time dividends are paid with respect to all other
shares of Common Stock unless and until any shares of the Restricted Stock are
forfeited.

     (iii) This Award Letter is subject to your satisfaction of the income tax
withholding requirements. Unless the Committee in its sole discretion determines
otherwise, to satisfy any applicable federal, state or local withholding tax
liability arising from the grant of or lapse of the risk of forfeiture on your
Restricted Stock, the Company will retain a certain number of shares of Common Stock
having a value equal to the amount of your minimum statutory withholding obligation
from

7

 

the shares otherwise deliverable to you upon your Restricted Stock becoming
free of the risk of forfeiture. As a condition of this award, you agree to waive
your right to make an election under Code Section 83(b). Accordingly, no such
election will be recognized by the Company.

	8.	 	Tax Consequences and Income Tax Withholding

     (a) You should review the Plan Prospectus for a general summary of the U.S. federal
income tax consequences to you from this award of Deferred Performance Units and any Earned
Shares based on currently applicable provisions of the Code and related regulations. The
summary does not discuss state and local tax laws or the laws of any other jurisdiction,
which may differ from U.S. federal tax law. Neither the Company nor the Committee
guarantees the tax consequences of your award herein. You are advised to consult your own
tax advisor regarding the application of the tax laws to your particular situation.

     (b) The award under the Award Letter is subject to your making of arrangements
satisfactory to the Company to satisfy any applicable U.S. federal, state or local
withholding tax liability arising from the vesting of the Earned Shares. You can either make
a cash payment to the Company of the required amount or at the discretion of the Committee
you can elect to satisfy your withholding obligation by having the Company retain Common
Stock having a value approximately equal to the amount of your withholding obligation from
the Earned Shares otherwise deliverable to you upon the vesting of such shares. You may not
elect for such withholding to be greater than the minimum statutory withholding tax
liability arising from the vesting of the Earned Shares. If you fail to satisfy your
withholding obligation in a time and manner satisfactory to the Company, no shares will be
issued to you or the Company at its discretion shall have the right to withhold the required
amount from your salary or other amounts payable to you prior to the delivery of the Common
Stock to you.

     (c) In addition, you must make arrangements satisfactory to the Company to satisfy any
applicable withholding tax liability imposed under the laws of any other jurisdiction
arising from the award hereunder. You may not elect to have the Company withhold Earned
Shares having a value in excess of the minimum statutory withholding tax liability. If you
fail to satisfy such withholding obligation in a time and manner satisfactory to the
Company, no shares will be issued to you or the Company shall have the right to withhold the
required amount from your salary or other amounts payable to you prior to the delivery of
the Common Stock to you.

	9.	 	Restrictions on Resale

Other than the restrictions referenced in paragraph 3, there are no restrictions imposed by the
Plan on the resale of Earned Shares 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

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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. These restrictions do not apply to persons who are not affiliates of the Company;
provided, however, that all employees and the award made hereby are subject to the Company’s
policies against insider trading (including black-out periods during which no sales are permitted)
and to other restrictions on resale that may be imposed by the Company from time- to- time if it
determines such restrictions are necessary or advisable to comply with applicable law.

	10.	 	Effect on Other Benefits

Income recognized by you as a result of this award of the Deferred Performance Units, vesting , or
payment of Earned Shares or dividends on your Earned Shares will not be included in the formula for
calculating benefits under any of the Company’s retirement and disability plans or any other
benefit plans.

	11.	 	Compliance With Laws

This Award Letter, the Deferred Performance Units and any Earned Shares issued 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.

	12.	 	Miscellaneous

     (a) Not an Agreement for Continued Employment or Services. This Award Letter will not,
and no provision of this Award Letter will be construed or interpreted to, create any right
to be employed by or to provide services to or continue your employment with or provide
services to the Company, the Company’s affiliates, parent, subsidiary or their affiliates.

     (b) Community Property. Each spouse individually is bound by, and such spouse’s
interest, if any, in this award of Deferred Performance Units or in any shares of Common
Stock that may be awarded hereunder is subject to the terms of this Award Letter. Nothing
in this Award Letter shall create a community property interest where none otherwise exists.

     (c) Amendment for Code Section 409A. This award of Deferred Performance Units is
intended to be exempt from Code Section 409A. If the Committee determines that this award
of Deferred Performance Units is subject to Code Section 409A, the Committee may, in its
sole discretion, amend the terms and conditions of this Award Letter to the extent necessary
to comply with Code Section 409A.

If you have any questions regarding your award of Deferred Performance Units or would like to
obtain additional information about the Plan or the Committee, please contact the Company’s

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General
Counsel. Your Award Letter, the Plan and all attachments should be retained in your
files for future reference.

10exv10w24

 

Exhibit 10.24

[Date]

[Name]

[Address]

Dear [Name],

Effective as of [date] (the “Award Date”), TODCO (the “Company”) hereby grants to you [number]
restricted shares (“Restricted Stock”) of the Company’s Common Stock in accordance with the TODCO
2005 Long Term Incentive Plan (the “Plan”). Your award is more fully described in the attached
Appendix A, Terms and Conditions of Employee Restricted Stock Award (which together with this
letter is the “Award Letter”).

Unless otherwise provided in the attached Appendix A, the restrictions on one-third (1/3) of your
shares of Restricted Stock will lapse and such shares will vest on each one (1)-year anniversary of
the Award Date, such that all of your shares of Restricted Stock will no longer be subject to
forfeiture and will be 100% vested as of the third (3rd) anniversary of the Award Date. Except as
otherwise expressly provided in Appendix A, the Restricted shares will vest and the restrictions
will lapse in accordance with the foregoing sentence provided that you are and have been
continuously employed by the Company from the Award Date through the date of vesting and the lapse
of restrictions (the “Vesting Date”). Except as expressly provided in Appendix A, all shares of
Restricted Stock as to which the restrictions thereon have not previously lapsed and are unvested
will automatically be forfeited upon your termination of employment for any reason (temporarily or
permanently) prior to the Vesting Date. In the event that a Vesting Date is a Saturday, Sunday or
holiday, such particular installment of shares will instead vest on the first business day
immediately following the Vesting Date.

Your Restricted Stock is subject to the terms and conditions set forth in the enclosed Plan, this
Award Letter, the Prospectus for the Plan, and any rules and regulations adopted by the Executive
Compensation Committee of the Company’s Board of Directors.

This Award Letter, the Plan and any
other attachments hereto should be retained in your files for future reference.

Very truly yours,

Jan Rask

President and Chief Executive Officer

Enclosures

 

 

Appendix A

Terms and Conditions of

Employee Restricted Stock Award

[Date]

The restricted shares (“Restricted Stock”) granted to you by TODCO (the “Company”) of Common Stock
of the Company are subject to the terms and conditions set forth in the TODCO 2005 Long Term
Incentive Plan (the “Plan”), any rules and regulations adopted by the Executive Compensation
Committee of the Company’s Board of Directors (the “Committee”), this Award Letter and the
Prospectus for the Plan. 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 this
Award Letter, the terms of the Plan will control.

1.   Lapse of Risk of Forfeiture and Vesting

The Restricted Stock granted pursuant to your Award Letter will no longer be subject to forfeiture
on the Vesting Dates as set forth in your Award Letter. In certain circumstances described below,
the possibility of forfeiture of your Restricted Stock may lapse and the shares may become 100%
vested before the scheduled Vesting Date.

2.   Restrictions on the Restricted Stock

Until the restrictions on your Restricted Stock have lapsed and your shares have become vested in
accordance with this Award Letter, you may not sell, transfer, assign or pledge the shares. Stock
certificates representing your Restricted Stock will be registered in your name as of the Award
Date, but will be held by the Company on your behalf until the restrictions on such shares lapse.
Each such stock certificate shall bear the following legend:

The transferability of this certificate and the shares of stock represented
hereby are subject to the restrictions, terms and conditions (including forfeiture
and restrictions against transfer) contained in the Award Letter for such Restricted
Shares entered into between the registered owner of such shares and TODCO. A copy
of the Award Letter is on file in the office of the secretary of TODCO, located at
2000 W. Sam Houston Parkway South, Suite 800, Houston, Texas 77042. 

When the restrictions on shares of your Restricted Stock lapse and the shares become vested, a
certificate representing such shares will be delivered to you (or, in the event of your death, to
your beneficiary in accordance with the Plan.

3.   Dividends and Voting

You will have the right to vote your Restricted Stock, even if it remains subject to forfeiture
until it is forfeited. From the Award Date, all cash dividends payable with respect to your
Restricted Stock will be paid directly to you at the same time dividends are paid with respect to
all other shares of Common Stock unless and until any shares of the Restricted Stock are forfeited.

	4.	 	Termination of Employment Prior to a Change in Control

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     (a) Forfeiture and Vesting. Except as provided in this Section 4 and Section 5, if
your employment is terminated your unvested shares of Restricted Stock for which the
restrictions have not lapsed shall be immediately forfeited. Any shares of Restricted Stock
forfeited hereunder shall automatically revert to the Company and become cancelled shares
and shall be again subject to the Plan as provided in Section 1.4 of the Plan.

     (b) Death or Disability. If your employment is terminated by reason of death or
disability (as determined by the Committee), all of your shares of Restricted Stock will no
longer be subject to the possibility of future forfeiture and will be 100% vested.

     (c) Convenience of the Company. If your employment is terminated by the Company for
the convenience of the Company (as determined by the Committee) or if you retire for the
convenience of the Company (as determined by the Committee), all of your shares of
Restricted Stock will no longer be subject to the possibility of future forfeiture and will
be 100% vested.

     (d) Other Termination of Employment. If your employment terminates for any reason
other than those provided in paragraphs (b) and (c) above, any of your shares of Restricted
Stock as to which the risk of forfeiture has not previously lapsed and are unvested prior to
your termination of employment will be forfeited, unless otherwise determined by the
Committee in its sole discretion.

     (e) Adjustments by the Committee. The Committee may, in its sole discretion, exercised
before or after your termination of employment, eliminate the risk of future forfeiture and
accelerate the vesting of all or any portion of your shares of Restricted Stock.

     (f) Committee Determinations. The Committee shall have absolute discretion to
determine the date and circumstances of termination of your employment, and its
determination shall be final, conclusive and binding upon you.

5.   Change in Control

     (a) Acceleration of Lapse of Restrictions. All of your shares of Restricted Stock will
no longer be subject to forfeiture immediately and will be 100% vested if you are employed
on the date of a Change in Control and a successor entity does not assume
this Award Letter. If you are employed on the date of a Change in Control and a successor
entity assumes this Award Letter, your Restricted Stock shall continue to vest in accordance
with the Vesting Dates in this Award Letter; provided, however, that the following rules
will apply to the vesting of the Restricted Shares after a Change in Control:

     (i) Forfeiture and Vesting. Except as provided in this Section 5, if your
employment is terminated after a Change in Control, your unvested shares of
Restricted Stock for which the restrictions have not lapsed shall be immediately
forfeited. Any shares of Restricted Stock forfeited hereunder shall automatically

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revert to the Company and become cancelled shares and shall be again subject to
the Plan as provided in Section 1.4 of the Plan.

     (ii) Death, Disability or Retirement. If your employment is terminated by
reason of death, disability or retirement for the convenience of the Company (as
determined by the Committee) after a Change in Control, all of your shares of
Restricted Stock will no longer be subject to the possibility of future forfeiture
and will be 100% vested.

     (iii) Termination Without Cause or for Good Reason. If your employment is
terminated by the Company without cause or by you for good reason (as determined by
the Committee), within 18 months after a Change in Control, all of your shares of
Restricted Stock will no longer be subject to the possibility of future forfeiture
and will be 100% vested.

     (iv) Other Termination of Employment. If your employment terminates for any
reason other than those provided in paragraphs (2) or (3) above, any of your shares
of Restricted Stock as to which the risk of forfeiture has not previously lapsed and
are unvested prior to your termination of employment will be forfeited, unless
otherwise determined by the Committee in its sole discretion.

     (v) Adjustments by the Committee. The Committee may, in its sole discretion,
exercised before or after your termination of employment, eliminate the risk of
future forfeiture and accelerate the vesting of all or any portion of your shares of
Restricted Stock.

     (vi) Committee Determinations. The Committee shall have absolute discretion to
determine the date and circumstances of termination of your employment, and its
determination shall be final, conclusive and binding upon you.

     (b) Change in Control. A Change in Control of the Company shall be deemed to have
occurred as of the first 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 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 the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute a
Change in Control: (1) any acquisition directly from the
Company, (2) any
acquisition by the Company (it being understood that an acquisition by an acquiror
of greater than 20% of the Outstanding Company Voting Securities directly from
TODCO shall not prevent such acquiror from causing a subsequent Change in Control if
it thereafter acquires an additional 20%

4

 

of the Outstanding Company Voting Securities in a transaction that would
otherwise constitute a Change in Control), (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation or other entity controlled by the Company, or (4) any acquisition by
any corporation or other entity pursuant to a transaction which complies with
clauses (1), (2) and (3) of Section 5(b)(iii); or

     (ii) Individuals who, as of the effective date of the Plan (as defined in the
Plan), are members of the Board of Directors of the Company (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board of Directors of
the Company; provided, however, that for purposes of this paragraph of this Section
5(b)(ii), any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent Board,
shall be 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 of Directors
of the Company; or

     (iii) Consummation of a reorganization, merger, conversion or consolidation or
sale or other disposition of all or substantially all of the assets of the Company
(a “Business Combination”), in each case, unless, following such Business
Combination, (1) all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 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 the Company or all or substantially all of the
Company’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 Company Voting Securities, (2) no Person
(excluding any corporation or other entity resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or such corporation
or other entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 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 (3) 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 of Directors of the Company,
providing for such Business Combination; or

5

 

     (iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company other than in connection with the transfer of all or
substantially all of the assets of the Company to an affiliate or a Subsidiary of
the Company and in connection with such transfer you are offered the opportunity to
continue your employment on substantially the same terms as existed immediately
prior to the transfer.

6.   Tax Consequences and Income Tax Withholding

You should review the Plan Prospectus for a general summary of the federal income tax consequences
of your shares of Restricted Stock based on currently applicable provisions of the Code and related
regulations. The summary does not discuss state and local tax laws, which may differ from the
federal tax law. Neither the Company nor the Committee guarantees the tax consequences of your
Award Letter. You are advised to consult your own tax advisor regarding the application of tax
laws to your particular situation.

This Award Letter is subject to your satisfaction of the income tax withholding requirements.
Unless the Committee in its sole discretion determines otherwise, to satisfy any applicable
federal, state or local withholding tax liability arising from the grant of or lapse of the risk of
forfeiture on your Restricted Stock, the Company will retain a certain number of shares of Common
Stock having a value equal to the amount of your minimum statutory withholding obligation from the
shares otherwise deliverable to you upon your Restricted Stock becoming free of the risk of
forfeiture. As a condition of this award, you agree to waive your right to make an election under
Code Section 83(b). Accordingly, no such election will be recognized by the Company.

7.   Restrictions on Resale

Other than the restrictions referenced in Section 2, there are no restrictions imposed by the Plan
on the resale 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. There
are no restrictions imposed by the SEC on the resale of shares acquired under the Plan by persons
who are not affiliates of the Company; provided, however, that all employees and the grant of
Restricted Stock and any Common Stock deliverable hereunder are subject to the Company’s policies
against insider trading (including black-out periods during which no sales are permitted), and to
other restrictions on resale that may be imposed by the Company from time to time if it determines
said restrictions are necessary or advisable to comply with applicable law.

	8.	 	Effect on Other Benefits

6

 

Income recognized by you as a result of your Restricted Stock award will not be included in the
formula for calculating benefits under any of the Company’s retirement and disability plans or any
other benefit plans.

9.   Compliance with Laws

This Award Letter and the Restricted Stock and any Common Stock deliverable 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.

10.   Miscellaneous

     (a) Not an Agreement for Continued Employment or Services. This Award Letter shall
not, and no provision of this Award Letter shall be construed or interpreted to, create any
right to be employed by or to provide services to or continue your employment with or
provide services to the Company, the Company’s affiliates, parent, subsidiary or their
affiliates.

     (b) Community Property. Each spouse individually is bound by, and such spouse’s
interest, if any, in the grant of Restricted Stock or in any shares of Common Stock is
subject to, the terms of this Award Letter. Nothing in this Award Letter shall create a
community property interest where none otherwise exists.

If you have any questions regarding your Restricted Stock award or would like to obtain additional
information about the Plan, please contact the Company’s General Counsel, TODCO, 2000 W. Sam
Houston Parkway South, Suite 800, Houston, Texas 77042 (telephone (713) 278 6000). Your Award
Letter and all attachments should be retained in your files for future reference.

7

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