Exhibit 10.5

 

LONG-TERM INCENTIVE PLAN

OF

TRANSOCEAN LTD.

(As Amended and Restated as of February 12, 2009)

I. GENERAL

1.1

Purpose of the Plan

The Long-Term Incentive Plan (the “Plan”) of Transocean Ltd., a Swiss
corporation (the “Company”), is intended to advance the best interests of the
Company and its subsidiaries by providing Directors and employees with
additional incentives through the grant of options (“Options”) to purchase
registered shares, par value 15.00 Swiss francs per share of the Company
(“Shares”), share appreciation rights (“SARs”), restricted Shares (“Restricted
Shares”), deferred stock units (“Deferred Units”), cash performance awards
(“Cash Awards”) and performance awards (“Performance Awards”), thereby
increasing the personal stake of such Directors and employees in the continued
success and growth of the Company.

The Plan was originally effective May 1, 1993. The Plan was amended and/or
restated effective March 13, 1997, March 12, 1998, January 1, 2000, May 8, 2003
and February 12, 2004 and further amended on July 21, 2007. Awards made under
the Plan prior to the amendment and restatement herein continue to be governed
by the terms of the applicable award agreements and the Plan as in effect
immediately prior to such amendment and restatement.

The Plan was previously maintained by Transocean Inc., a company incorporated
under the laws of the Cayman Islands (“Transocean-Cayman”). On December 18,
2008, Transocean-Cayman merged, by way of scheme of arrangement, with Transocean
Cayman Ltd., a wholly-owned subsidiary of the Company, with Transocean-Cayman as
the surviving entity. As a result of the merger, Transocean-Cayman became a
wholly-owned subsidiary of the Company, and the Company assumed sponsorship of
the Plan.

1.2

Administration of the Plan

(a)       With respect to awards to employees, the Plan shall be administered by
the Executive Compensation Committee or other designated committee (the
“Committee”) of the Board of Directors of the Company (the “Board”). The
Committee shall have authority to interpret conclusively the provisions of the
Plan, to adopt such rules and regulations for carrying out the Plan as it may
deem advisable, to decide conclusively all questions of fact arising in the
application of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. All decisions and acts of the
Committee, with respect to employees, shall be final and binding upon all
affected Plan participants.

 

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(b)       With respect to awards to Eligible Directors (as defined in
Section 1.3), the Plan shall be administered by the Board. The Board shall have
authority to interpret conclusively the provisions of the Plan, to adopt such
rules and regulations for carrying out the Plan as it may deem advisable, to
decide conclusively all questions of fact arising in the application of the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. All decisions and acts of the Board, with respect to
Eligible Directors, shall be final and binding upon all affected Plan
participants.

1.3

Eligible Participants

Employees, including officers, of the Company and its subsidiaries, and of
partnerships or joint ventures in which the Company and its subsidiaries have a
significant ownership interest as determined by the Committee (all of such
subsidiaries, partnerships and joint ventures being referred to as
“Subsidiaries”) shall be eligible for awards under the Plan.

Each Director of the Company who is not an officer or employee of the Company or
any of its Subsidiaries (an “Eligible Director”) shall be eligible for awards
under the Plan. Notwithstanding the foregoing, any Eligible Director may decline
any such award. Eligible Directors shall not be entitled to receive awards under
Section 2.5 or Article IV.

An employee or Eligible Director to whom an award is granted under the Plan may
be hereinafter referred to as a “Participant.”

1.4

Awards Under the Plan

Awards to eligible employees under the Plan may be in the form of (a) Options to
purchase Shares, (b) SARs which may be either freestanding or issued in tandem
with Options, (c) Restricted Shares, (d) Deferred Units, (e)  Cash Awards, (g)
Performance Awards, or (h) any combination of the foregoing.

Awards to Eligible Directors under the Plan may be in the form of (a) Options to
purchase Shares (other than Statutory Options as defined in Section 2.5), (b)
SARs which may be either freestanding or issued in tandem with Options,
(c) Restricted Shares, (d) Deferred Units, (f) Performance Awards, or (g) any
combination of the foregoing.

1.5

Shares Subject to the Plan

(a)       The aggregate number of Shares which may be issued with respect to
awards under the Plan (the “Available Shares”) shall not exceed 35,900,000
Shares. All Shares available for awards under the Plan may be issued pursuant to
statutory stock options as described in Section 2.5. Each Share issued pursuant
to (i) awards of Options or SARs (including those designated as Performance
Awards) granted at any time or (ii) awards of Restricted Shares or Deferred
Units (including those designated as Performance Awards) granted prior to the
Shareholder Effective Date shall reduce the Available Shares by one (1) full
Share. Each Share issued pursuant to an award of

 

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Restricted Shares or Deferred Units (including those designated as Performance
Awards) granted on or after the Shareholder Effective Date shall reduce the
Available Shares by 1.68 Shares.

At no time shall the number of Shares issued plus the number of Shares estimated
by the Committee (or the Board, with respect to Eligible Directors) to be
ultimately issued with respect to outstanding awards under the Plan exceed the
Available Shares. Shares distributed pursuant to the Plan may consist of Shares
issued from authorized capital or conditioned capital or treasury shares of the
Company (including, for the sake of clarity, Shares owned by any Subsidiary), as
shall be determined from time to time by the Board.

(b)     If any Option under the Plan shall expire, terminate or be canceled
(including cancellation upon the Participant’s exercise of a related SAR) for
any reason without having been exercised in full, or if any Restricted Shares or
Deferred Units shall be forfeited to the Company, the unexercised Options and
forfeited Restricted Shares and Deferred Units shall not count against the
Available Shares and shall again become available for grants under the Plan
(regardless of whether the Participant received dividends or other economic
benefits with respect to such Options, Restricted Shares or Deferred Units).
Shares delivered under the Plan as an award or in settlement of an award issued
or made (a) upon the assumption, substitution, conversion or replacement of
outstanding awards under a plan or arrangement of an entity acquired in a merger
or other acquisition or (b) as a post-transaction grant under such a plan or
arrangement of an acquired entity shall not reduce or be counted against the
Available Shares, to the extent that the exemption for transactions in
connection with mergers or acquisitions from the shareholder approval
requirements of the New York Stock Exchange for equity compensation plans
applies. Notwithstanding the foregoing, following the Shareholder Effective Date
the following Shares shall count against the Available Shares and may not again
be made available for issuance as awards under the Plan: (a) Shares not issued
or delivered as a result of the net settlement of an outstanding Option or SAR,
(b) Shares used to pay the exercise price or withholding taxes related to an
outstanding award, or (c) Shares repurchased on the open market with the
proceeds of the option price.

(c)       No Participant shall be granted, in any fiscal year, Options,
freestanding SARs, Restricted Shares, or Deferred Units, or any combination of
the foregoing, covering or relating to more than 600,000 Shares (subject to
adjustment as provided in Section 6.2).

(d)       The Committee may from time to time adopt and observe such rules and
procedures concerning the counting of Shares against the Available Shares as it
may deem appropriate, including rules more restrictive than those set forth
above to the extent necessary to satisfy the requirements of any stock exchange
on which the Shares are listed or any applicable regulatory requirement.

 

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1.6

Other Compensation Programs

The existence and terms of the Plan shall not limit the authority of the Board
in compensating Directors and employees of the Company and its Subsidiaries in
such other forms and amounts, including compensation pursuant to any other plans
as may be currently in effect or adopted in the future, as it may determine from
time to time.

II. OPTIONS AND SARs

2.1

Terms and Conditions of Options

Subject to the following provisions, all Options granted under the Plan shall be
in such form and shall have such terms and conditions as the Committee, in its
discretion, may from time to time determine.

(a)       Option Price. The Option price per Share shall not be less than the
Fair Market Value of the Share on the date the Option is granted.

(b)       Term of Option. The term of an Option shall not exceed ten years from
the date of grant, except as provided pursuant to Section 2.1(g) with respect to
the death of a Participant. No Option shall be exercised after the expiration of
its term.

(c)       Exercise of Options. Options shall be exercisable at such time or
times and subject to such terms and conditions as the Committee shall specify in
the Option grant. The Committee shall have discretion to, at any time, declare
all or any portion of the Options held by any Participant to be immediately
exercisable. An Option may be exercised in accordance with its terms as to any
or all Shares purchasable thereunder.

(d)       Payment for Shares. The Committee may authorize payment for shares as
to which an Option is exercised to be made in cash, in Shares or in such other
manner as the Committee in its discretion may provide. The Committee may provide
for procedures to permit the payment for Shares as to which an Option is
exercised to be made by use of proceeds to be received from the sale of Shares
issuable pursuant to an award under the Plan.

(e)       Nontransferability of Options. No Option or any interest therein shall
be transferable by the Participant other than by will, by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the Internal Revenue Code of 1986, as amended (the “Code”) or Title I of the
Employee Retirement Income Security Act (“ERISA”), or the rules thereunder.
During a Participant’s lifetime, all Options shall be exercisable only by such
Participant or by the guardian or legal representative of the Participant.

(f)        Shareholder Rights. The holder of an Option shall, as such, have none
of the rights of a shareholder.

(g)       Termination of Employment. The Committee shall have discretion to
specify in the Option grant, or an amendment thereof, provisions with respect to
the

 

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period during which the Option may be exercised following the Participant’s
termination of employment. Notwithstanding the foregoing, the Committee shall
not permit any Option to be exercised beyond the term of the Option established
pursuant to Section 2.1(b), except that the Committee may provide that,
notwithstanding such Option term, an Option which is outstanding on the date of
a Participant’s death shall remain outstanding and exercisable for up to one
year after the Participant’s death.

(h)       Change of Control. The Committee shall have discretion to specify in
the Option grant, or an amendment thereof, provisions with respect to the terms
and conditions of acceleration of exercisability of the Option upon or following
a Change of Control (as defined in Section 6.10) and to specify provisions with
respect to the period during which the Option may be exercised.

2.2

SARs in Tandem with Options

The Committee may, either at the time of grant of an Option or at any time
during the term of the Option, grant tandem SARs with respect to all or any
portion of the Shares covered by such Option.

(a)       Exercise of SARs. A tandem SAR may be exercised at any time the Option
to which it relates is then exercisable, but only to the extent the Option to
which it relates is exercisable, and shall be subject to the conditions
applicable to such Option. When a tandem SAR is exercised, the Option to which
it relates shall cease to be exercisable to the extent of the number of Shares
with respect to which the tandem SAR is exercised. Similarly, when an Option is
exercised, the tandem SARs relating to the Shares covered by such Option
exercise shall terminate. Any tandem SAR which is outstanding on the last day of
the term of the related Option (as determined pursuant to Section 2.1(b)) shall
be automatically exercised on such date for cash without any action by the
Participant.

(b)       Appreciation. Upon exercise of a tandem SAR, the Participant shall
receive, for each Share with respect to which the tandem SAR is exercised, an
amount (the “Appreciation”) equal to the amount by which the Fair Market Value
of a Share on the date of exercise of the SAR exceeds the Option price per share
of the Option to which the tandem SAR relates. The Appreciation shall be payable
in cash, Shares, or a combination of both, at the option of the Committee, and
shall be paid within 30 days of the exercise of the tandem SAR.

2.3

Freestanding SARs

The Committee may grant freestanding SARs in such form and having such terms and
conditions as the Committee, in its discretion, may from time to time determine,
subject to the following provisions.

(a)       Base Price and Appreciation. Each freestanding SAR shall be granted
with a base price, which shall not be less than the Fair Market Value of the
Shares on the date the SAR is granted. Upon exercise of a freestanding SAR, the
Participant shall receive, for each Share with respect to which the SAR is
exercised, an amount (the

 

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“Appreciation”) equal to the amount by which the Fair Market Value of a Share on
the date of exercise of the SAR exceeds the base price of the SAR. The
Appreciation shall be payable in cash and shall be paid within 30 days of the
exercise of the SAR.

(b)       Term of SAR. The term of a freestanding SAR shall not exceed ten years
from the date of grant, except as provided pursuant to Section 2.3(f) with
respect to the death of the Participant. No SAR shall be exercised after the
expiration of its term. Any freestanding SAR which is outstanding on the last
day of its term (as such term may be extended pursuant to Section 2.3(f)) and as
to which the Appreciation is a positive number on such date shall be
automatically exercised on such date for cash without any action by the
Participant.

(c)       Exercise of SARs. Freestanding SARs shall be exercisable at such time
or times and subject to such terms and conditions as the Committee may specify
in the SAR grant. The Committee shall have discretion to at any time declare all
or any portion of the freestanding SARs then outstanding to be immediately
exercisable. A freestanding SAR may be exercised in accordance with its terms in
whole or in part.

(d)       Nontransferability of SARs. No SAR or any interest therein shall be
transferable by the Participant other than by will, by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of ERISA, or the rules thereunder. During a Participant’s
lifetime, all SARs shall be exercisable only by such Participant or by the
guardian or legal representative of the Participant.

(e)       Shareholder Rights. The holder of an SAR shall, as such, have none of
the rights of a shareholder.

(f)        Termination of Employment. The Committee shall have discretion to
specify in the SAR grant, or an amendment thereof, provisions with respect to
the period during which the SAR may be exercised following the Participant’s
termination of employment. Notwithstanding the foregoing, the Committee shall
not permit any SAR to be exercised beyond the term of the SAR established
pursuant to Section 2.3(b), except that the Committee may provide that,
notwithstanding such SAR term, an SAR which is outstanding on the date of a
Participant’s death shall remain outstanding and exercisable for up to one year
after the Participant’s death.

(g)       Change of Control. The Committee shall have discretion to specify in
the SAR grant, or an amendment thereof, provisions with respect to the terms and
conditions of acceleration of exercisability of SARs upon or following a Change
of Control (as defined in Section 6.10) and to specify provisions with respect
to the period during which the SAR may be exercised.

2.4

Eligible Director Awards

With respect to Options and SARs awarded to Eligible Directors, the Board shall
make all determinations otherwise assigned to the Committee under Article II and
any reference to “employment” shall be changed to “service.”

 

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2.5

Statutory Options

Subject to the limitations on Option terms set forth in Section 2.1, the
Committee shall have the authority to grant (a) incentive stock options within
the meaning of Section 422 of the Code and (b) Options containing such terms and
conditions as shall be required to qualify such Options for preferential tax
treatment under the Code as in effect at the time of such grant. Options granted
pursuant to this Section 2.5 may contain such other terms and conditions
permitted by Article II of the Plan as the Committee, in its discretion, may
from time to time determine, to the extent that such terms and conditions do not
cause the Options to lose their preferential tax treatment. To the extent the
Code and regulations promulgated thereunder require a plan to contain specified
provisions in order to qualify options for preferential tax treatment, such
provisions shall be deemed to be stated in the Plan. Eligible Directors shall
not be entitled to receive incentive stock options as defined in Section 422 of
the Code.

III. Restricted Shares and Deferred Units

3.1

Terms and Conditions of Restricted Share Awards

Subject to the following provisions, all awards of Restricted Shares under the
Plan shall be in such form and shall have such terms and conditions as the
Committee, in its discretion, may from time to time determine.

(a)       A Restricted Share award shall specify the number of Restricted Shares
to be awarded, the price, if any, to be paid by the recipient of the Restricted
Shares, and the date or dates on which the Restricted Shares will vest. The
vesting of Restricted Shares may be conditioned upon the completion of a
specified period of employment with the Company or its Subsidiaries, upon the
attainment of specified performance goals, or upon such other criteria as the
Committee may determine in its sole discretion.

(b)       Notwithstanding the provisions of subsection (a) above, any Restricted
Share award which is a Performance Award shall not vest earlier than the first
anniversary of the initial date of such award, provided that the Committee may
provide for earlier vesting upon a termination of employment by reason of death,
disability or retirement. Any Restricted Share award which is not a Performance
Award shall not vest earlier than one-third on each of the first three
anniversaries of the date of grant of such award, provided that (i) the
Committee may provide for earlier vesting upon termination of employment by
reason of death, disability or retirement and (ii) such restriction on vesting
shall not apply to a Restricted Share award that is granted in lieu of salary or
bonus. The Committee shall have discretion to specify in the Restricted Share
award, or an amendment thereof, provisions with respect to the terms and
conditions of acceleration of vesting of Restricted Shares upon or following a
Change of Control (as defined in Section 6.10).

(c)       Restricted Shares granted to a Participant shall be registered in the
Participant’s name either by book-entry registration or in certificate form,
bearing a legend to restrict transfer of the certificate until the Restricted
Shares have vested. If

 

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certificates are registered in the Participant’s name, such certificates shall
either be held by the Company on behalf of the Participant, or delivered to the
Participant, as determined by the Committee. The Committee shall determine
whether the Participant shall have the right to vote the Restricted Shares
before they have vested or whether any dividends paid shall be held subject to
forfeiture until the Restricted Shares are vested. No Restricted Shares may be
sold, transferred, assigned, or pledged by the Participant until they have
vested in accordance with the terms of the Restricted Share award. In the event
of a Participant’s termination of employment before all of his Restricted Shares
have vested, or in the event other conditions to the vesting of Restricted
Shares have not been satisfied prior to any deadline for the satisfaction of
such conditions set forth in the award, the Restricted Shares which have not
vested shall be forfeited and any purchase price paid by the Participant shall
be returned to the Participant. At the time Restricted Shares vest, such vested
Shares shall be available to the Participant (or the Beneficiary designated by
such Participant in the event of death in accordance with Section 6.5), free of
all restrictions, which may be accomplished in such manner as determined by the
Committee, including, without limitation, through a broker selected by the
Committee or by delivery of a certificate for such vested shares (contingent
upon the Participant’s return of any legended certificates evidencing the
Restricted Shares).

3.2

Terms and Conditions of Deferred Units

(a)       A “Deferred Unit” is a unit that is equal to one Share which is used
to measure the benefits payable to a Participant under a Deferred Unit award.
Each Deferred Unit award shall be subject to such terms and conditions as the
Committee, in its discretion, may from time to time determine.

(b)       The Deferred Unit award shall specify the number of Deferred Units
awarded, the price, if any, to be paid by the recipient of the Deferred Units
and the date or dates on which the Deferred Units will vest. The vesting of
Deferred Units may be conditioned upon the completion of a specified period of
employment with the Company or its Subsidiaries, upon the attainment of
specified performance goals, or upon such other criteria as the Committee may
determine in its sole discretion.

(c)       Notwithstanding the provisions of subsection (b) above, any Deferred
Unit award which is a Performance Award shall not vest earlier than the first
anniversary of the initial date of such award, provided that the Committee may
provide for earlier vesting upon a termination of employment by reason of death,
disability or retirement. Any Deferred Unit award which is not a Performance
Award shall not vest earlier than one-third on each of the first three
anniversaries of the date of grant of such award, provided that (i) the
Committee may provide for earlier vesting upon termination of employment by
reason of death, disability or retirement and (ii) such restriction on vesting
shall not apply to a Deferred Unit award that is granted in lieu of salary or
bonus. The Committee shall have discretion to specify in the Deferred Unit
award, or an amendment thereof, provisions with respect to the terms and
conditions of acceleration of vesting of Deferred Units upon or following a
Change of Control (as defined in Section 6.10).

 

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(d)       The Company shall set up an appropriate record (the “Deferred Unit
Ledger”) that shall from time to time reflect the name of each Participant, the
number of Deferred Units awarded to him and the date or dates on which the
Deferred Units will vest.

(e)       The Committee shall determine whether the Participant shall have the
right to receive an amount equal to dividends on the Deferred Units before they
have vested. In such cases, it is intended that the amount of the payment shall
be equal to the dividend that the Participant would have received had he been
the owner of a number of Shares equal to the number of Deferred Units credited
to him in the Deferred Unit Ledger as of the dividend record date.
Notwithstanding the foregoing, no amount shall be paid to a Participant with
respect to Deferred Units held by such Participant on a dividend record date but
forfeited by him prior to the dividend payment date. No Shares subject to a
Deferred Unit award may be sold, transferred, assigned or pledged by the
Participant until the Deferred Units have vested in accordance with the terms of
the Deferred Unit award. In the event of a Participant’s termination of
employment before all of his Deferred Units have vested, or in the event other
conditions to the vesting of the Deferred Units have not been satisfied prior to
any deadline for the satisfaction of such conditions set forth in the award, the
Deferred Units which have not vested shall be forfeited and any purchase price
paid by the Participant shall be returned to such Participant.

(f)        Upon the vesting of the Deferred Units, as determined by the
Committee in accordance with this Section 3.2, the number of Shares equal to the
number of vested Deferred Units held by the Participant shall be delivered to
such Participant (or the Beneficiary designated by such Participant in the event
of death in accordance with Section 6.5), free of all restrictions.

3.3

Eligible Director Awards

With respect to Restricted Shares and Deferred Unit awards to Eligible
Directors, the Board shall make all determinations otherwise assigned to the
Committee under this Article III and any reference to “employment” shall be
changed to “service.” In addition, with respect to Eligible Directors, clause
(i) of Section 3.1(b) and 3.2(c) shall include a termination of service for the
convenience of the Company (as determined by the Board).

 

IV. CASH AWARDS

A “Cash Award” is a cash bonus paid solely on account of the attainment of one
or more objective performance goals that have been preestablished by the
Committee. Each Cash Award shall be subject to such terms and conditions,
restrictions and contingencies, if any, as the Committee shall determine.
Restrictions and contingencies limiting the right to receive a cash payment
pursuant to a Cash Award shall be based on the achievement of single or multiple
performance goals over a performance period established by the Committee. No
employee shall receive payment for Cash Awards

 

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during any calendar year aggregating in excess of $5 million. Eligible Directors
shall not be entitled to receive Cash Awards under this Plan.

 

V.

PERFORMANCE AWARDS

 

 

5.1

Terms and Conditions of Performance Awards

The Committee shall have the right to designate any Option, SAR, Restricted
Share award, Deferred Unit award or Cash Award as a Performance Award. The grant
or vesting of a Performance Award shall be subject to the achievement of
performance objectives (the ”Performance Objectives”) established by the
Committee based on one or more of the following business criteria that apply to
the employee, one or more business units or divisions of the Company or the
applicable sector, or the Company as a whole, and if so desired by the
Committee, by comparison with a peer group of companies: increased revenue; net
income measures (including but not limited to income after capital costs and
income before or after taxes); Share price measures (including but not limited
to growth measures and total shareholder return); price per Share; market share;
earnings per Share (actual or targeted growth); earnings before interest, taxes,
depreciation, and amortization (“EBITDA”); economic value added (or an
equivalent metric); market value added; debt to equity ratio; cash flow measures
(including but not limited to cash flow return on capital, cash flow return on
tangible capital, net cash flow and net cash flow before financing activities
cash flow value added, cash flow return on market capitalization); return
measures (including but not limited to return on equity, return on average
assets, return on capital, risk-adjusted return on capital, return on investors’
capital and return on average equity); operating measures (including operating
income, funds from operations, cash from operations, after-tax operating income;
sales volumes, production volumes and production efficiency); expense measures
(including but not limited to overhead cost and general and administrative
expense cost control and project management); margins; shareholder value; total
shareholder return; proceeds from dispositions; total market value and corporate
values measures (including ethics compliance, environmental, human resources
development and safety). Unless otherwise stated, such a Performance Objective
need not be based upon an increase or positive result under a particular
business criterion and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to specific
business criteria).

The Committee shall have the authority to determine whether the Performance
Objectives and other terms and conditions of the award are satisfied, and the
Committee’s determination as to the achievement of Performance Objectives
relating to a Performance Award shall be made in writing. Notwithstanding the
foregoing provisions, if the Committee intends for a Performance Award to be
granted and administered in a manner designed to preserve the deductibility of
the compensation resulting from such award in accordance with Section 162(m) of
the Code, then the Performance Objectives for such particular Performance Award
relative to the particular period of service to which the Performance Objectives
relate shall be established by the Committee in writing (a) no later than 90
days after the beginning of such period and (b)

 

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prior to the completion of 25% of such period. The Committee shall have no
discretion to modify or waive the Performance Objectives or conditions to the
grant or vesting of a Performance Award unless such award is not intended to
qualify as qualified performance-based compensation under Section 162(m) of the
Code and the relevant award agreement provides for such discretion.

VI. ADDITIONAL PROVISIONS

6.1

General Restrictions

Each award under the Plan shall be subject to the requirement that, if at any
time the Committee shall determine that (a) the listing, registration or
qualification of the Shares subject or related thereto upon any securities
exchange or under any applicable law, or (b) the consent or approval of any
government regulatory body, or (c) an agreement by the recipient of an award
with respect to the disposition of Shares is necessary or desirable (in
connection with any requirement or interpretation of any applicable securities
law, rule or regulation) as a condition of, or in connection with, the granting
of such award or the issuance, purchase or delivery of Shares thereunder, such
award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.

 

Notwithstanding the foregoing, with respect to awards to Eligible Directors, the
Board shall have the authority and discretion otherwise assigned to the
Committee under this Section 6.1.

 

Notwithstanding any provision of the Plan to the contrary, the issuance of
Shares in settlement of any award under the Plan shall be made in accordance
with applicable law, including, to the extent applicable, payment by the
Participant (or the Beneficiary designated by such Participant in the event of
death in accordance with Section 6.5) to the Company of the par value of the
Shares to be issued.

6.2

Adjustments for Changes in Capitalization

In the event of a scheme of arrangement, reorganization, recapitalization, share
split, share dividend, combination of shares, rights offer, liquidation,
dissolution, merger, demerger, conversion, consolidation, spin-off, sale of
assets, payment of an extraordinary cash dividend, or any other change in or
affecting the corporate structure or capitalization of the Company, the
Committee (or the Board, with respect to Eligible Directors) shall make
appropriate adjustment in the number and kind of shares authorized by the Plan
(including any limitations on individual awards), and in the number, price or
kind of shares covered by the awards and in any outstanding awards under the
Plan, including, if deemed appropriate, adjustment by means of delivery of cash
in an amount that the Committee (or the Board, with respect to Eligible
Directors) shall determine in its sole discretion is equal to the fair market
value of such awards on the date of such event, which in the case of Shares
subject to Options or SARs shall be the excess of the Fair Market Value of a
Share on such date over the option price or

 

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base price per Share; provided, however, that no such adjustment shall increase
the aggregate value of any outstanding award. No adjustment or substitution
pursuant to this Section 6.2 shall be made in a manner that results in
noncompliance with the requirements of Section 409A of the Code, to the extent
applicable.

6.3

Amendments

(a)       The Board may amend, alter, or discontinue the Plan from time to time,
but no amendment, alteration or discontinuation shall be made which would impair
the rights of a Participant under any award theretofore granted without the
Participant’s consent, except such an amendment made to cause the Plan to comply
with applicable law, stock exchange rules or accounting rules. In addition, no
such amendment shall be made without the approval of the Company’s shareholders
to the extent such approval is required to satisfy Rule 16b-3 under the
Securities Exchange Act or 1934, as amended (the “Exchange Act”) or Section
162(m) of the Code, or required by applicable law, agreement or stock exchange
requirements. Subject to the foregoing provisions, the Board shall have the
authority to amend the Plan to take into account changes in law and tax and
accounting rules as well as other developments, and to grant awards which
qualify for beneficial treatment under such rules without shareholder approval.

(b)       The Committee (or the Board, with respect to Eligible Directors) shall
have the authority to amend any grant, prospectively or retroactively, to
include any provision which, at the time of such amendment, is authorized under
the terms of the Plan; however, no such amendment (i) shall cause a Performance
Award intended to qualify for the Section 162(m) exemption to cease to qualify
for the Section 162(m) exemption or (ii) impair the rights of any Participant
without the Participant’s written consent except such amendment made to cause
the award to comply with applicable law, stock exchange rules or accounting
rules.

(c)       If a Participant has ceased or will cease to be a Director of the
Company for the convenience of the Company (as determined by the Board), the
Board may amend all or any portion of such Participant’s awards so as to make
such awards fully vested and exercisable and/or to specify a schedule upon which
they become vested and exercisable, and/or to permit all or any portion of such
awards to remain exercisable for such period as designated by the Board, but not
beyond the expiration of the term established pursuant to Section 2.1(b) or
2.3(b), whichever is applicable. A Participant shall not participate in any
deliberations or vote by the Board under this Section 6.3(c) with respect to his
awards. The vesting schedule and exercise period for awards established by the
Board pursuant to this Section 6.3(c) shall override the applicable provisions
of Articles II and III to the extent inconsistent therewith.

6.4

Cancellation of Awards

Any award granted under the Plan may be canceled at any time with the consent of
the Participant and a new award may be granted to such Participant in lieu
thereof, which award may, in the discretion of the Committee, be on more
favorable terms and conditions than the canceled award; provided, however, that
except as provided in

 

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Section 6.2, the terms of outstanding awards may not be amended to reduce the
option price or base price of outstanding Options or SARs or to cancel
outstanding Options or SARs in exchange for cash, other awards or Options or
SARs with an option price or base price that is less than the option price or
base price of the original Options or SARs without shareholder approval.

Notwithstanding the foregoing, with respect to awards to Eligible Directors, the
Board shall have the authority and discretion otherwise assigned to the
Committee under this Section 6.4.

6.5

Beneficiary

A Participant may file with the Company a written designation of Beneficiary, on
such form as may be prescribed by the Committee (or the Board, with respect to
Eligible Directors), to receive any Options, SARs, Restricted Shares, Deferred
Units, Shares, or any other payments that become deliverable to the Participant
pursuant to the Plan after the Participant’s death. A Participant may, from time
to time, amend or revoke a designation of Beneficiary. If no designated
Beneficiary survives the Participant, the executor or administrator of the
Participant’s estate shall be deemed to be the Participant’s Beneficiary.

6.6

Taxes and Withholding

(a)       Whenever the Company proposes or is required to issue or transfer
Shares under the Plan, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to satisfy any
applicable withholding tax liability prior to the delivery of any such Shares.
Whenever under the Plan payments are to be made in cash, such payments shall be
net of an amount sufficient to satisfy any withholding tax liability.

(b)      An employee entitled to receive Shares under the Plan may elect to have
the minimum statutory withholding tax liability (or a specified portion thereof)
with respect to such Shares satisfied by having the Company withhold from the
Shares otherwise deliverable to the employee Shares having a Fair Market Value
equal to the amount of the tax liability to be satisfied with respect to the
Shares. An election to have all or a portion of the tax liability satisfied
using Shares shall comply with such requirements as may be imposed by the
Committee.

(c)      It is intended that any Awards under the Plan satisfy the requirements
of Section 409A of the Code, an any ambiguous provision will be construed in a
manner that is compliant with or exempt from the application of Section 409A of
the Code.

6.7

Non-Assignability

Except as expressly provided in the Plan, no award under the Plan shall be
assignable or transferable by the Participant thereof except by will, by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA, or the rules thereunder.
During the life of the Participant,

 

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awards under the Plan shall be exercisable only by such Participant or by the
guardian or legal representative of such Participant.

6.8

Non-Uniform Determinations

Determinations by the Committee or the Board under the Plan (including, without
limitation, determinations of the persons to receive awards under the Plan; the
form, amount and timing of such awards; the terms and provisions of such awards
and the agreements evidencing same; and provisions with respect to termination
of employment or service) need not be uniform and may be made by it selectively
among persons who receive, or are eligible to receive, awards under the Plan,
whether or not such persons are similarly situated.

6.9

No Guarantee of Employment or Directorship

The grant of an award under the Plan shall not constitute an assurance of
continued employment for any period or any obligation of the Board to nominate
any Director for re-election by the Company’s shareholders.

6.10

Definitions

 

(a)

“Change of Control” means:

(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 50% or more of either (x) the then outstanding shares of the
Company, par value 15.00 Swiss francs per share (the “Outstanding Company
Shares”) or (y) 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 of Control: (1) any acquisition directly from the Company,
(2) any acquisition by the Company, (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 (x), (y) and (z) of subsection (iii) of this Section 6.10(a); or

(ii)       Individuals who, as of the date hereof, constitute the Board of the
Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of the Company; provided, however, that for purposes of
this Section 6.10(a) 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

 

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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 the Company; or

(iii)     Consummation of a scheme of arrangement, reorganization, merger,
demerger, 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, (x) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Shares and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares or shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, 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 Shares
and Outstanding Company Voting Securities, as the case may be, and (y) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the action of the Board 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.

 

(b)

“Fair Market Value” of a Share on a particular date means:

(i)        (A) if the Shares are at the time listed or admitted to trading on
the New York Stock Exchange, then the final closing sales price per Share as
reported on New York Stock Exchange Composite Trading Listings, or a similar
report selected by the Committee, on that date, or, if there shall have been no
such sale so reported on that date, on the last preceding date on which such a
sale was so reported, or (B) if the Shares are not listed on the New York Stock
Exchange but are listed on a securities exchange other than the New York Stock
Exchange, the mean between the lowest and highest reported sale prices of the
Shares on the date in question on the principal securities exchange on which the
Shares are then listed or admitted to trading; provided that, in the discretion
of the Committee, “Fair Market Value” for purposes of satisfying the exercise
price of an Option or SAR may be the price prevailing on the applicable exchange
at the time of exercise;

(ii)       if the Shares are not at the time listed or admitted to trading on a
securities exchange, the “Fair Market Value” shall be the mean between the
lowest reported bid price and highest reported asked price of the Shares on the
date in question in the over-the-counter market, as such prices are reported in
a publication of general circulation selected by the Committee and regularly
reporting the market price of the Shares in such market; and

 

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(iii)      if the Shares are not listed or admitted to trading on any securities
exchange or traded in the over-the-counter market, the “Fair Market Value” shall
be as determined in good faith by the Committee.

6.11

Duration and Termination

(a)       This amendment and restatement of the Plan was adopted by the Board as
of February 12, 2009, subject to the approval by the holders of a majority of
outstanding Shares (the “Majority Shareholders”) at the shareholder’s meeting to
be held on May 15, 2009 (the “Shareholder Effective Date”). If the Majority
Shareholders of the Company should fail so to approve such amendment and
restatement, then the Plan shall continue as in effect prior to this amendment
and restatement.

(b)       The Board may discontinue or terminate the Plan at any time. Such
action shall not impair any of the rights of a Participant who has an award
outstanding on the date of the Plan’s discontinuance or termination without the
Participant’s written consent.

(c)       Unless terminated earlier by the Board pursuant to subsection (b), no
awards may be made under the Plan after the tenth anniversary of the Shareholder
Effective Date.

IN WITNESS WHEREOF, this document has been executed this _____ day of _________,
2009.

 

 

TRANSOCEAN LTD.

 

 

By: _____________________________

Name: __________________________

Title: ___________________________

 

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