<PAGE>
                                                                    EXHIBIT 10.4


                              TAX SHARING AGREEMENT

                                     BETWEEN

                            TRANSOCEAN HOLDINGS INC.

                                       AND

                                      TODCO


<PAGE>

                                TABLE OF CONTENTS

<Table>
<S>        <C>                                                                   <C>
SECTION 1. DEFINITION OF TERMS....................................................4

SECTION 2. ALLOCATION OF INCOME TAX LIABILITIES...................................8

   2.1   Federal Income Taxes. ...................................................8
   2.2   State Income Taxes.......................................................9
   2.3   Foreign Income Taxes....................................................10
   2.4   Other Taxes.............................................................11
   2.5   Special Rules...........................................................11
   2.6   Tax Payments and Intercompany Billings..................................12

SECTION 3. PREPARATION AND FILING OF TAX RETURNS.................................12

   3.1   Combined Returns and Consolidated Returns...............................12
   3.2   Separate Returns and Other Returns......................................13
   3.3   Special Rules Relating to the Preparation of Tax Returns................14

SECTION 4. TAX BENEFITS, REFUNDS, AND CARRYBACKS.................................15

   4.1   Compensation by Holdings for TODCO's Post-IPO Tax Assets................15
   4.2   Compensation by TODCO for Pre-IPO Tax Assets............................15
   4.3   Claims for Refund from Carrybacks.......................................16
   4.4   Tax Benefits Resulting from Exercise of Employee Stock Options..........17

SECTION 5. TAX PAYMENTS AND INTERCOMPANY BILLINGS................................17

   5.1   Consolidated and Combined Returns.......................................17
   5.2   Payment of Refunds and Tax Benefits.....................................17
   5.3   Initial Determinations and Subsequent Adjustments.......................18
   5.4   Indemnification Payments................................................19
   5.5   Payments by or to Other Members of the Groups...........................19
   5.6   Interest ...............................................................19
   5.7   Tax Consequences of Payments.  .........................................19

SECTION 6. ASSISTANCE AND COOPERATION............................................19

SECTION 7. TAX RECORDS...........................................................20

   7.1   Retention of Tax Records................................................20
   7.2   Access to Tax Records...................................................20

SECTION 8. TAX CONTESTS..........................................................20

   8.1   Notices.....   .........................................................20
   8.2   Control of Tax Contests.................................................20
   8.3   Cooperation.............................................................21
</Table>

                                      -1-
<PAGE>

<Table>
<S>         <C>                                                                  <C>
SECTION 9.  RESTRICTION ON CERTAIN POST-IPO ACTIONS OF TODCO.....................21

SECTION 10. GENERAL PROVISIONS...................................................21

   10.1  Survival of Obligations.................................................21
   10.2  Expenses................................................................21
   10.3  Breach of Agreement.....................................................21
   10.4  Disputes................................................................21
   10.5  Notices.................................................................21
   10.6  Counterparts............................................................22
   10.7  Binding Effect; Assignment..............................................22
   10.8  Severability............................................................22
   10.9  Amendment...............................................................23
   10.10 Effective Time..........................................................23
   10.11 Change in Law...........................................................23
   10.12 Authorization, Etc......................................................23
   10.13 No Third Party Beneficiaries............................................23
</Table>



                                      -2-
<PAGE>


                              TAX SHARING AGREEMENT

         THIS TAX SHARING AGREEMENT (this "Agreement") is entered into as of
___________ ___, 2003, between Transocean Holdings Inc., a Delaware corporation
("Holdings"), and TODCO (formerly named R&B Falcon Corporation), a Delaware
corporation. Capitalized terms used in this Agreement are defined herein. Unless
otherwise indicated, all "Section" references in this Agreement are to sections
of this Agreement.

                                    RECITALS

         WHEREAS, TODCO is a direct wholly owned subsidiary of Holdings, which
in turn is a direct wholly owned subsidiary of Transocean Inc., a company
organized under the laws of the Cayman Islands ("Transocean"); and

         WHEREAS, the Board of Directors of Transocean has determined that it
would be appropriate and desirable for Transocean to separate the TODCO Tax
Group from the Transocean Tax Group and, in that connection, for each Group to
acquire certain assets from and assume certain liabilities of the other Group;
and

         WHEREAS, the Board of Directors of each of TODCO and Transocean
Holdings has also approved such transactions; and

         WHEREAS, TODCO intends to acquire a portion or all of its outstanding
debt held by Transocean in exchange for newly issued shares of TODCO common
stock, and it is expected that as a result of such exchange TODCO will cease to
be a member of the Holdings Consolidated Group; and

         WHEREAS, Transocean, Holdings and TODCO currently contemplate that
TODCO will make an initial public offering ("IPO") of shares of TODCO Class A
Common Stock held by Transocean and Holdings pursuant to a registration
statement on Form S-1 filed pursuant to the Securities Act; and

         WHEREAS, Transocean wishes to retain the flexibility so that, if
following the IPO Transocean's direct and indirect ownership of the voting power
of all of the outstanding shares of Voting Stock is at least 80%, Transocean may
distribute to the holders of its ordinary shares (including any distribution in
exchange for Transocean ordinary shares or other securities), by means of a
distribution or exchange offer, shares of Voting Stock it then owns in a
transaction intended to qualify as a tax-free distribution under Section 355 of
the Code or any corresponding provision of any successor statute; and

         WHEREAS, the parties set forth in a Master Separation Agreement the
principal arrangements between them regarding the separation of the TODCO Tax
Group from the Transocean Tax Group, the IPO and any distribution; and


                                      -3-
<PAGE>

         WHEREAS, the parties desire to provide for and agree upon the
allocation between the parties of liabilities for Taxes arising prior to, as a
result of, and subsequent to the IPO, and to provide for and agree upon other
matters relating to Taxes.

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

         SECTION 1. DEFINITION OF TERMS. For purposes of this Agreement
(including the recitals hereof), the following terms have the following
meanings:

         "Agreement" means this Tax Sharing Agreement.

         "Carryback" means any net operating loss, net capital loss, tax credit
or other similar Tax Item which may or must be carried from one Tax Year to a
prior Tax Year under applicable Tax Law.

         "Code" means the U.S. Internal Revenue Code of 1986, as amended from
time to time, or any successor law.

         "Combined Return" means any State or Foreign Income Tax Return which is
filed by one or more members of the Transocean Tax Group and which includes, to
any extent, one or more members of the TODCO Tax Group or in which income,
deductions, or credits of any member of the Transocean Tax Group may be combined
with, or offset against, income, deductions, or credits of any member of the
TODCO Tax Group.

         "Combined Year" means, with respect to any State Income Tax or Foreign
Income Tax, as applicable, any Tax Year for which a Combined Return is filed;
provided, however, that Combined Year means only that portion of such Tax Year
in which one or more members of the TODCO Tax Group are included in the Combined
Return.

         "Company" means Holdings or TODCO or one of their Subsidiaries, as the
context requires.

         "Consolidated Return" means any Federal Income Tax Return which is
filed on a consolidated basis by Holdings, as common parent, and its eligible
Subsidiaries (as determined under Section 1504(a) of the Code or any successor
provision) and which includes, to any extent, TODCO and its eligible
Subsidiaries (as determined under Section 1504(a) of the Code or any successor
provision).

         "Consolidated Year" means, with respect to any Federal Income Tax, any
Tax Year for which a Consolidated Return is filed; provided, however, that
Consolidated Year means only that portion of such Tax Year in which TODCO and
its eligible Subsidiaries are included in the Consolidated Return.

         "Deconsolidation Date" means the last day, occurring on or after the
Effective Date but before the IPO Closing Date, on which TODCO is a member of
the



                                      -4-
<PAGE>

affiliated group, within the meaning of Section 1504(a) of the Code, of which
Holdings is the common parent.

         "Effective Date" means the date recited above on which the parties
entered into this Agreement.

         "Federal Income Tax" means any Income Tax imposed by the United States
federal government (including, without limitation, the Taxes imposed by Sections
11, 55, 59A and 1201(a) of the Code).

         "Federal Income Tax Return" means any report of Federal Income Taxes
due, any claims for refund of Federal Income Taxes paid, any information return
with respect to Federal Income Taxes, or any other similar report, statement,
declaration, or document required to be filed under U.S. federal income Tax Law,
including any attachments, exhibits, or other materials submitted with any of
the foregoing, and including any amendments or supplements to any of the
foregoing.

         "Foreign Country" means any country other than the United States.

         "Foreign Income Tax" means any Income Tax imposed by any Foreign
Country or any possession of the United States or by any political subdivision
of any Foreign Country or possession of the United States.

         "Group" means the Transocean Tax Group or the TODCO Tax Group, as the
context requires.

         "Holdings" has the meaning set forth in the recital hereto.

         "Holdings Consolidated Group" means Holdings and its eligible
Subsidiaries (as determined under Section 1504(a) of the Code or any successor
provision) that file a Federal Income Tax Return on a consolidated basis.

         "Income Tax" means all Taxes (i) based upon, measured by, or calculated
with respect to, net income, net profits or deemed net profits (including,
without limitation, any capital gains Tax, minimum Tax, any Tax on items of Tax
preference and depreciation recapture or clawback, but not including sales, use,
real or personal property, gross or net receipts, gross profits, transfer and
similar Taxes), (ii) imposed by a Foreign Country which qualifies under Section
903 of the Code or (iii) based upon, measured by, or calculated with respect to
multiple bases (including, but not limited to, corporate franchise and
occupation Taxes) if such Tax may be based upon, measured by, or calculated with
respect to one or more bases described in clause (i) above. Notwithstanding the
above, the Taxes described in clause (iii) shall be considered Income Taxes only
to the extent that such Taxes exceed the hypothetical amount of such Taxes that
would have been imposed had all of the bases described in clause (i) on which
such Taxes are based, measured, or calculated been equal to zero.

         "IPO" has the meaning set forth in the recital hereto.


                                      -5-
<PAGE>

         "IPO Closing Date" means the first date on which the proceeds of any
sale of TODCO Class A Common Stock to the underwriters in the IPO are received
by Transocean or any of its Subsidiaries.

         "Master Separation Agreement" means the Master Separation Agreement
entered into by Transocean and TODCO on ___________ ___, 2003.

         "Other Return" means any Tax Return which is not a Federal, State, or
Foreign Income Tax Return.

         "Other Tax" means any Tax that is not an Income Tax.

         "Payment Date" means (x) with respect to any Consolidated Return, the
due date for any required installment of estimated taxes determined under Code
Section 6655, the due date (determined without regard to extensions) for filing
the return determined under Code Section 6072, and the date the return is filed,
and (y) with respect to any Combined Return, Separate Return, or Other Return
the corresponding dates determined under the applicable Tax Law.

         "Separate Return" means any Federal, State, or Foreign Income Tax
Return which is not a Consolidated Return or Combined Return.

         "Separate Return Year" means, with respect to any Federal Income Tax,
State Income Tax or Foreign Income Tax, as applicable, a Tax Year or portion
thereof which is not a Consolidated Year or Combined Year.

         "State Income Tax" means any Income Tax imposed by any State of the
United States or by any political subdivision of any such State.

         "Straddle Period" means any Tax Year beginning on or before the IPO
Closing Date and ending after the IPO Closing Date.

         "Subsidiary" means any entity that directly or indirectly is
"controlled" by the person or entity in question. "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise.

         "Tax" or "Taxes" means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any Tax Authority and any interest, penalties, additions to
tax, or additional amounts in respect of the foregoing.

         "Tax Asset" means any Tax Item that could reduce a Tax, including a net
operating loss, net capital loss, loss deferred under Section 267(f) of the
Code, investment



                                      -6-
<PAGE>

tax credit, foreign tax credit, charitable deduction or credit related to
alternative minimum tax or any other Tax credit, but does not include the tax
basis of any asset.

         "Tax Authority" means, with respect to any Tax, the governmental entity
or political subdivision, agency, commission or authority thereof that imposes
such Tax, and the agency, commission or authority (if any) charged with the
assessment, determination or collection of such Tax for such entity or
subdivision.

         "Tax Benefit" means a reduction in the Tax liability of a taxpayer.

         "Tax Contest" means an audit, review, examination, or any other
administrative or judicial proceeding with the purpose or effect of
redetermining Taxes of any member of either Group (including any administrative
or judicial review of any claim for refund).

         "Tax Item" means, with respect to any Income Tax, any item of income,
gain, loss, deduction, credit or other attribute that may have the effect of
increasing or decreasing any Tax.

         "Tax Law" means the law of any governmental entity or political
subdivision thereof, and any controlling judicial or administrative
interpretations of such law, relating to any Tax.

         "Tax Records" means Tax Returns, Tax Return work papers, documentation
relating to any Tax Contests, and any other books of account or records required
to be maintained under applicable Tax Laws (including but not limited to Section
6001 of the Code) or under any record retention agreement with any Tax
Authority.

         "Tax Return" means any report of Taxes due, any claims for refund of
Taxes paid, any information return with respect to Taxes, or any other similar
report, statement, declaration, or document required to be filed under any
applicable Tax Law, including any attachments, exhibits, or other materials
submitted with any of the foregoing, and including any amendments or supplements
to any of the foregoing.

         "Tax Year" means, with respect to any Tax, the year, or shorter period,
if applicable, for which the Tax is reported as provided under applicable Tax
Law.

         "TODCO" has the meaning set forth in the recital hereto.

         "TODCO Business" has the meaning set forth in the Master Separation
Agreement.

         "TODCO Tax Group" means TODCO and all Persons that are Subsidiaries of
TODCO immediately after the IPO Closing Date, including without limitation the
Subsidiaries set forth in Schedule 1.1 and Persons that become Subsidiaries of
TODCO thereafter. If the Transocean Tax Group transfers any part of the TODCO
Business (including any Subsidiary) to the TODCO Tax Group, or the TODCO Tax



                                      -7-
<PAGE>

Group transfers any part of the Transocean Business (including any Subsidiary)
to the Transocean Tax Group, after the IPO Closing Date in a transaction
contemplated by Sections 2.7 and 2.8 of the Master Separation Agreement, such
transfer will be deemed to have occurred immediately before the IPO Closing
Date.

         "Transocean" has the meaning set forth in the recital hereto.

         "Transocean Business" has the meaning set forth in the Master
Separation Agreement.

         "Transocean Tax Group" means Transocean and all Persons that are
Subsidiaries of Transocean, other than members of the TODCO Tax Group,
immediately after the IPO Closing Date, including without limitation the
Subsidiaries set forth in Schedule 1.2 and Persons that become Subsidiaries of
Transocean thereafter. If the Transocean Tax Group transfers any part of the
TODCO Business (including any Subsidiary) to the TODCO Tax Group, or the TODCO
Tax Group transfers any part of the Transocean Business (including any
Subsidiary) to the Transocean Tax Group, after the IPO Closing Date in a
transaction contemplated by Article II of the Master Separation Agreement, such
transfer will be deemed to have occurred immediately before the IPO Closing
Date.

         "Treasury Regulations" means the regulations promulgated from time to
time under the Code as in effect for the relevant Tax Year.

         "Voting Stock" means the TODCO Class A Common Stock, the TODCO Class B
Common Stock and any other capital stock of TODCO entitled to vote generally in
the election of directors but excluding any class or series of capital stock
only entitled to vote in the event of dividend arrearages thereon, unless at the
time of determination there are any such dividend arrearages.

         SECTION 2. Allocation of Income Tax Liabilities.

         2.1 Federal Income Taxes. Except as provided in Section 2.5, liability
for Federal Income Taxes shall be allocated as follows:

               (a) Consolidated Years.

                    (i) Except as provided in Section 2.1(a)(ii), for each
Consolidated Year, TODCO shall be liable for and pay to Holdings an amount equal
to the Federal Income Taxes attributable to the TODCO Tax Group. Such amount
shall be determined as if TODCO and its eligible Subsidiaries were not required
to join and did not join in the filing of the Consolidated Return for that
Consolidated Year but instead filed their own consolidated Federal Income Tax
Return on which TODCO's tax liability was calculated pursuant to Treasury
Regulations Section 1.1552-1(a)(2)(ii).

                    (ii) TODCO shall not be liable for any Federal Income Taxes
attributable to the TODCO Tax Group (x) for any Consolidated Year which ends



                                      -8-
<PAGE>

on or before the IPO Closing Date or (y) in the case of a Consolidated Year
which is a Straddle Period, for the portion thereof which ends on the IPO
Closing Date.

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all Federal Income Taxes for all Consolidated Years other than amounts for
which TODCO is liable pursuant to this Section 2.1(a).

               (b) Separate Return Years.

                    (i) Except as provided in Section 2.1(b)(ii), TODCO shall be
liable for all Federal Income Taxes imposed on members of the TODCO Tax Group
with respect to all Separate Return Years.

                    (ii) TODCO shall not be liable for any Federal Income Taxes
imposed on members of the TODCO Tax Group (x) for any Separate Return Year which
ends on or before the IPO Closing Date or (y) in the case of a Separate Return
Year which is a Straddle Period, for the portion thereof which ends on the IPO
Closing Date. Notwithstanding the immediately preceding sentence, if any member
of the TODCO Tax Group becomes a member of such Group after the IPO Closing Date
(determined after the application of Section 2.5(a) of this Agreement), TODCO
shall be liable for all Federal Income Taxes imposed on such member for all
Separate Return Years.

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all Federal Income Taxes for all Tax Years which are not Consolidated Years
other than amounts for which TODCO is liable pursuant to this Section 2.1(b).

         2.2 State Income Taxes. Except as provided in Section 2.5, liability
for State Income Taxes shall be allocated as follows:

               (a) Combined Years.

                    (i) Except as provided in Section 2.2(a)(ii), for each
Combined Year, TODCO shall be liable for and pay to Holdings (or another member
of the Transocean Tax Group designated by Holdings pursuant to Section 5.5) an
amount equal to the State Income Taxes attributable to the TODCO Tax Group. Such
amount shall be determined as if TODCO and its eligible Subsidiaries were not
required to join and did not join in the filing of a Combined Return for that
Combined Year but instead filed their own combined State Income Tax Return on
which TODCO's tax liability was calculated consistently with the principles of
Treasury Regulations Section 1.1552-1(a)(2)(ii).

                    (ii) TODCO shall not be liable for any State Income Taxes
attributable to the TODCO Tax Group (x) for any Combined Year which ends on or
before the IPO Closing Date or (y) in the case of a Combined Year which is a
Straddle Period, for the portion thereof which ends on the IPO Closing Date.


                                      -9-
<PAGE>

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all State Income Taxes for all Combined Years other than amounts for which
TODCO is liable pursuant to this Section 2.2(a).

               (b) Separate Return Years.

                    (i) Except as provided in Section 2.2(b)(ii), TODCO shall be
liable for all State Income Taxes imposed on members of the TODCO Tax Group with
respect to all Separate Return Years.

                    (ii) TODCO shall not be liable for any State Income Taxes
imposed on members of the TODCO Tax Group (x) for any Separate Return Year which
ends on or before the IPO Closing Date or (y) in the case of a Separate Return
Year which is a Straddle Period, for the portion thereof which ends on the IPO
Closing Date. Notwithstanding the immediately preceding sentence, if any member
of the TODCO Tax Group becomes a member of such Group after the IPO Closing Date
(determined after the application of Section 2.5(a) of this Agreement), TODCO
shall be liable for all State Income Taxes imposed on such member for all
Separate Return Years.

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all State Income Taxes for all Separate Return Years other than amounts for
which TODCO is liable pursuant to this Section 2.2(b).

         2.3 Foreign Income Taxes. Except as provided in Section 2.5, liability
for Foreign Income Taxes shall be allocated as follows:

               (a) Combined Years.

                    (i) Except as provided in Section 2.3(a)(ii), for each
Combined Year, TODCO shall be liable for and pay to Holdings (or another member
of the Transocean Tax Group designated by Holdings pursuant to Section 5.5) an
amount equal to the Foreign Income Taxes that are attributable to the TODCO Tax
Group. Such amount shall be determined as if TODCO and its eligible Subsidiaries
were not required to join and did not join in the filing of a Combined Return
for that Combined Year but instead filed their own combined Foreign Income Tax
Return on which TODCO's tax liability was calculated consistently with the
principles of Treasury Regulations Section 1.1552-1(a)(2)(ii).

                    (ii) TODCO shall not be liable for any Foreign Income Taxes
attributable to the TODCO Tax Group (x) for any Combined Year which ends on or
before the IPO Closing Date or (y) in the case of a Combined Year which is a
Straddle Period, for the portion thereof which ends on the IPO Closing Date.

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all Foreign Income Taxes for all Combined Years other than amounts for which
TODCO is liable pursuant to this Section 2.3(a).

               (b) Separate Return Years.




                                      -10-
<PAGE>

                    (i) Except as provided in Section 2.3(b)(ii), TODCO shall be
liable for all Foreign Income Taxes imposed on members of the TODCO Tax Group
with respect to all Separate Return Years.

                    (ii) TODCO shall not be liable for any Foreign Income Taxes
imposed on the TODCO Tax Group (x) for any Separate Return Year which ends on or
before the IPO Closing Date or (y) in the case of a Separate Return Year which
is a Straddle Period, for the portion thereof which ends on the IPO Closing
Date. Notwithstanding the immediately preceding sentence, if any member of the
TODCO Tax Group becomes a member of such Group after the IPO Closing Date
(determined after the application of Section 2.5(a) of this Agreement), TODCO
shall be liable for all Foreign Income Taxes imposed on such member for all
Separate Return Years.

                    (iii) Holdings shall indemnify TODCO and its Subsidiaries
for all Foreign Income Taxes for all Separate Return Years other than amounts
for which TODCO is liable pursuant to this Section 2.3(b).

         2.4 Other Taxes. Except as provided in Section 2.5, TODCO shall be
liable for any Other Tax attributable to the TODCO Business, and Holdings shall
indemnify TODCO and its Subsidiaries for any Other Tax that is not attributable
to the TODCO Business.

         2.5 Special Rules.

               (a) Separation Transactions Occurring After the IPO Closing Date.
If the Transocean Tax Group transfers any part of the TODCO Business (including
any Subsidiary) to the TODCO Tax Group, or the TODCO Tax Group transfers any
part of the Transocean Business (including any Subsidiary) to the Transocean Tax
Group, after the IPO Closing Date in a transaction contemplated by Sections 2.7
and 2.8 of the Master Separation Agreement, such transfer will be deemed to have
occurred immediately before the IPO Closing Date for purposes of computing the
Taxes imposed on or attributable to the TODCO Tax Group and the Transocean Tax
Group.

               (b) Straddle Periods. For purposes of determining the Income
Taxes attributable to or imposed on the TODCO Tax Group for the portion of any
Straddle Period which ends on the IPO Closing Date, such Straddle Period shall
be treated as two Tax Years, one ending on the IPO Closing Date and the other
beginning on the following day, and all calculations shall be made by (x)
closing the books of the TODCO Tax Group at the end of the month preceding the
month in which the IPO Closing Date occurs, (y) closing the books of TODCO Tax
Group again at the end of the month in which the IPO Closing Date occurs, and
(z) apportioning Tax Items accruing in the month in which the IPO Closing Date
occurs to each hypothetical Tax Year pro rata in proportion to the number of
days in such month that are within each hypothetical Tax Year. Notwithstanding
the immediately preceding sentence, all Tax Items that are extraordinary items
within the meaning of Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) shall
be allocated to the hypothetical Tax Year in which they accrue;



                                      -11-
<PAGE>

provided, however, that all extraordinary items accruing after the
Deconsolidation Date and on or before the IPO Closing Date will be allocated
entirely to the hypothetical Tax Year that begins on the day following the IPO
Closing Date.

               (c) Short Years. If a Consolidated or Combined Return is filed
with respect to a Tax Year, and if TODCO and its eligible Subsidiaries are not
included in such Consolidated or Combined Return for that entire Tax Year, then
for purposes of determining the Income Taxes attributable to or imposed on the
TODCO Tax Group for the resulting short Consolidated or Combined Year and the
short Separate Return Year, all calculations shall be made by (x) closing the
books of the TODCO Tax Group at the end of the month preceding the month in
which the first short year ends, (y) closing the books of TODCO Tax Group again
at the end of the month in which the first short year ends, and (z) apportioning
Tax Items accruing in the month in which the first short year ends to each short
year pro rata in proportion to the number of days in such month that are within
each short year. Notwithstanding clause (z) of the immediately preceding
sentence, all Tax Items that are extraordinary items within the meaning of
Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) shall be allocated to the
short year in which they accrue; provided, however, that the principles of
Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) (Next Day Rule) shall apply
in determining the proper allocation of extraordinary items accruing on the last
day of the earlier short Tax Year.

               (d) Payments to Foreign Jurisdictions. If at any time after the
Deconsolidation Date any member of the TODCO Tax Group makes a payment to a
foreign Tax Authority for Taxes for which Holdings is otherwise liable under
this Agreement, Holdings shall have no obligation to indemnify such member
unless such member obtains prior written consent from Holdings to make such
payment. If Holdings fails to consent to such payment, it shall indemnify TODCO
and its Subsidiaries for any Taxes resulting from the failure to make such
payment.

         2.6 Tax Payments and Intercompany Billings. Each Company shall pay the
Taxes allocated to it by this Section 2 either to the applicable Taxing
Authority or to the other appropriate Company in accordance with Section 5.

         SECTION 3. PREPARATION AND FILING OF TAX RETURNS.

         3.1 Combined Returns and Consolidated Returns.

               (a) Preparation by Transocean and Holdings. Holdings shall be
responsible for preparing all Consolidated Returns and Combined Returns.

               (b) Provision of Information and Assistance by TODCO.

                    (i) Information with Respect to Final Returns. TODCO shall,
for each Consolidated Return or Combined Return, provide Holdings with all
information relating to members of the TODCO Tax Group which Holdings needs to
prepare such return. TODCO shall use its best efforts to provide such
information no later than the earlier of (x) thirty days prior to the due date
of such Consolidated Return or Combined Return or (y) the first day of the fifth
month following the end of the Tax



                                      -12-
<PAGE>

Year to which such information relates, but in any event shall provide such
information no later than the earlier of (x) fifteen days prior to the due date
of such Consolidated Return or Combined Return and (y) the fifteenth day of the
fifth month following the end of such Tax Year.

                    (ii) Information with Respect to Estimated Payments and
Extension Payments. TODCO shall provide Holdings with all information relating
to members of the TODCO Tax Group which Holdings needs to determine the amount
of Taxes due on any Payment Date. TODCO shall use its best efforts to provide
such information no later than fifteen days before such Payment Date, but in any
event shall provide such information no later than ten days before such Payment
Date.

                    (iii) Assistance. At the request of Holdings, TODCO shall
take any action (e.g., filing a ruling request with the relevant Tax Authority
or executing a power of attorney) that is reasonably necessary in order for
Holdings to prepare and file any Consolidated or Combined Return.

         3.2 Separate Returns and Other Returns.

               (a) Tax Returns to be Prepared by Holdings. Holdings shall be
responsible for preparing all Separate Returns and Other Returns which either
(x) relate solely to one or more members of the Transocean Tax Group for any Tax
Year or (y) relate solely to one or more members of the TODCO Tax Group for any
Tax Year ending on or before the IPO Closing Date or for any Tax Year which is a
Straddle Period. In connection with the preparation of the Tax Returns specified
in this Section 3.2(a), TODCO shall provide information and assistance as
described in Sections 3.1(b)(ii) and (iii) in the same manner as if such Tax
Returns were Consolidated Returns or Combined Returns.

               (b) Tax Returns to be Prepared by TODCO.

                    (i) Except as otherwise provided in this Section 3.2(b),
TODCO shall be responsible for preparing all Separate Returns and Other Returns
which relate solely to one or more members of the TODCO Tax Group for any Tax
Year ending after the IPO Closing Date and which is not a Straddle Period. In
preparing such Other Returns, TODCO may not take any positions that it knows, or
reasonably should know, would adversely affect any member of the Transocean Tax
Group.

                    (ii) Holdings will have the right to determine the items
specified in clauses (1), (3) and (4) of Section 3.3(a) with respect to any Tax
Return described in Section 3.2(b)(i) if either (x) such Tax Return is filed for
a Tax Year at any time during which Transocean or Holdings owned stock
possessing greater than 50% of the voting power of all of the outstanding TODCO
stock or (y) such Tax Return is filed for a Tax Year during which TODCO has an
obligation under Section 4.2 to pay Holdings for the Tax Benefits realized, if
any, in such Tax Year or a subsequent Tax Year with respect to any Tax Item
created before the IPO Closing Date.


                                      -13-
<PAGE>

               (c) Provision of Information. Holdings shall provide to TODCO,
and TODCO shall provide to Holdings, any information about members of the
Transocean Tax Group or the TODCO Tax Group, respectively, which the party
receiving such information needs to comply with Section 3.2(a) or (b). Such
information shall be provided within the time prescribed by Section 3.1(b) for
the provision of information for Consolidated Returns and Combined Returns.

         3.3 Special Rules Relating to the Preparation of Tax Returns.

               (a) General Rule. Except as otherwise provided in this Agreement,
the party responsible for filing a Tax Return pursuant to Sections 3.1 or 3.2
shall have the exclusive right, in its sole discretion, with respect to such Tax
Return to determine (1) the manner in which such Tax Return shall be prepared
and filed, including the elections, methods of accounting, positions,
conventions and principles of taxation to be used and the manner in which any
Tax Item shall be reported, (2) whether any extensions may be requested, (3) the
elections that will be made on such Tax Return, (4) whether an amended Tax
Return shall be filed, (5) whether any claims for refund shall be made, (6)
whether any refunds shall be paid by way of refund or credited against any
liability for the related Tax and (7) whether to retain outside firms to prepare
or review such Tax Return.

               (b) Election to File Consolidated or Combined Returns. Holdings
shall have the sole discretion of filing any Consolidated Return or Combined
Return, if the filing of such return is elective under the relevant Tax Law.

               (c) Returns Affecting Liability of Other Party. Insofar as a Tax
Return prepared by Holdings may affect Taxes for which TODCO is liable pursuant
to this Agreement, or vice versa:

                    (i) Tax Accounting Practices. The Tax Return shall be
prepared consistently with past Tax accounting practices to the extent
permissible under applicable Tax Law.

                    (ii) Review Prior to Filing. The Company responsible for
preparing any Tax Return (whether Holdings on the one hand or TODCO on the other
hand) shall make the Tax Return or relevant portion thereof available to the
other Company no later than thirty days before the Tax Return is due and shall
in good faith take into account any comments on such Tax Return by the other
Company.

               (d) Standard of Performance. Holdings shall prepare the Tax
Returns for which it is responsible pursuant to this Section 3 and which relate
to the TODCO Tax Group with the same general degree of care as it uses in
preparing Tax Returns relating solely to the Transocean Tax Group. Holdings
shall not be liable for any additional Taxes that result from a redetermination
in a Tax Contest and for which TODCO is otherwise liable under Section 2, unless
such additional Taxes arise solely as a result of Holdings failure to exercise
such degree of care.

                                      -14-
<PAGE>

         SECTION 4. TAX BENEFITS, REFUNDS, AND CARRYBACKS.

         4.1 Compensation by Holdings for TODCO's Post-IPO Tax Assets. In the
event that any member of the Transocean Tax Group realizes a Tax Benefit during
any Consolidated Year or Combined Year as a result of the use or absorption by
any Transocean Tax Group member of any Tax Asset of the TODCO Tax Group which
was created after the IPO Closing Date, as determined under the principles of
Section 4.2(b), then Holdings (or other appropriate member of the Transocean Tax
Group) shall pay to TODCO, in accordance with Section 5, the amount of the Tax
Benefit realized by the member of the Transocean Tax Group.

         4.2 Compensation by TODCO for Pre-IPO Tax Assets.

               (a) Payment for Tax Assets. Except as otherwise provided in
Section 4.2(f), if on any Tax Return, any member of the TODCO Tax Group uses or
absorbs any Tax Asset which was created on or before the IPO Closing Date to
reduce any Tax for which it is liable under Section 2, then TODCO shall, in
accordance with Section 5, pay to Holdings (or another member of the Transocean
Tax Group designated by Holdings pursuant to Section 5.5) an amount equal to the
value of such Tax Asset.

               (b) Time at which Tax Asset is Created. For purposes of Section
4.2(a), a Tax Asset shall be considered created in the Tax Year relating to the
Tax Return (including an information return of U.S. persons with respect to
certain foreign corporations on Internal Revenue Service Form 5471) on which the
Tax Asset is first included. However, any Tax Asset not included in a Tax Return
by reason of Sections 163(j) or 267 of the Code, Treasury Regulations Section
1.1502-13 or any similar deferral provision under federal, state or foreign Tax
Law shall be considered included in such Tax Return. A Tax Asset resulting from
foreign income tax shall be considered created in the year in which such tax
accrues, regardless of the year in which such tax is paid.

               (c) Value of Tax Assets. For purposes of Section 4.2(a), the
value of any Tax Asset shall be considered equal to:

                    (i) in the case of any deduction, loss previously deferred
under Section 267(f) of the Code, net operating loss or net capital loss, the
product of (1) the amount of such deduction or loss used or absorbed on such Tax
Return and (2) the highest statutory tax rate applicable under Section 11 of the
Code or relevant state or foreign Tax Law and

                    (ii) in the case of any tax credit, one hundred percent
(100%) of such tax credit used or absorbed on such Tax Return.

               (d) Determination of Tax Assets Used or Absorbed. The
determination of whether any Tax Asset created on or before the IPO Closing Date
has been used or absorbed on any relevant Tax Return after the IPO Closing Date
shall be determined by TODCO and reported by a nationally recognized accounting
firm no later than sixty (60) days after the date on which the relevant Tax
Return is filed. Such



                                      -15-
<PAGE>

accounting firm shall report the Tax Assets it determines are used or absorbed
on the relevant Tax Return by applying the same standards as it would in
preparing a tax return that it would sign as an "income tax return preparer" (as
defined in Section 7701(a)(36) of the Code) and such accounting firm shall sign
a letter certifying that such determination has been made in accordance with
such standards and on a fair and impartial basis. Holdings shall be given an
opportunity to review such determination and the supporting schedules and
calculations. Holdings shall be given the opportunity to ask questions of the
accounting firm, and if Holdings is not satisfied with the detail given in the
supporting schedules, the accounting firm shall provide Holdings with any
additional supporting detail as Holdings shall reasonably request. Holdings
shall have, in its sole discretion, the right to designate a nationally
recognized accounting firm and shall bear all costs associated with such firms
reporting under this Section 4.2(d).

               (e) Forecast of Tax Assets Used or Absorbed. If during any Tax
Year ending after the IPO Closing Date any Tax Asset created on or before the
IPO Closing Date continues to be available for use by any member of the TODCO
Tax Group, then TODCO shall provide Holdings with periodic forecasts of the
anticipated use of such Tax Asset during such year no later than March 15, June
15, September 15 and December 15 of such year. TODCO shall also provide
Holdings, no later than October 15 of such year, a forecast of the expected use
or absorption of any such Tax Asset in the following year.

               (f) Acceleration of Payments Upon Change of Control.
Notwithstanding Section 4.2(a), if on any day following the IPO Closing Date any
person or entity other than a member of the Transocean Tax Group owns stock (or
would be treated as owning stock if the attribution rules of Section 318(a) of
the Code were to apply) possessing greater than 50% of the voting power of all
of the outstanding TODCO stock, TODCO shall, in accordance with Section 5, pay
to Holdings (or another member of the Transocean Tax Group designated by
Holdings pursuant to Section 5.5) the amount equal to the value of all unused
Tax Assets described in Section 4.2(a) as if such Tax Assets had been used or
absorbed by TODCO immediately prior to the day such person or entity first owns
the amount of stock possessing such voting power. If (x) an unused Tax Asset is
treated by this Section 4.2(f) as being used or absorbed and (y) such Tax Asset
is a foreign tax credit under Section 9.01 of the Code, then such Tax Asset
shall be valued under Section 4.2(c)(i) as if it were a deduction rather than
under Section 4.2(c)(ii).

         4.3 Claims for Refund from Carrybacks.

               (a) Filing Claims and Making Payments for Carrybacks. If the
TODCO Tax Group generates a Carryback to a Consolidated Year or Combined Year,
then, upon request of TODCO, Holdings may, in its sole discretion, file a claim
for refund arising from such Carryback and pay such refund to TODCO in
accordance with Section 5.

               (b) Adjustment of Tax Items. In the event that a Carryback by the
TODCO Tax Group to a Consolidated Year or Combined Year increases the liability
for Taxes of the Transocean Tax Group, the amount of the refund to which the
TODCO Tax Group shall be entitled to receive, in accordance with Section 5,
shall be net of such increased liability to the Transocean Tax Group.


                                      -16-
<PAGE>

         4.4 Tax Benefits Resulting from Exercise of Employee Stock Options. If
(x) pursuant to the exercise of an employee stock option the Transocean Tax
Group delivers to an employee of the TODCO Tax Group stock of Transocean at any
time during a Tax Year, or portion thereof, that begins after the IPO Closing
Date and (y) the delivery of such stock results in a present or potential future
Tax Benefit to the TODCO Tax Group, TODCO shall pay to Holdings the deemed value
of such Tax Benefit within thirty days after the delivery of such stock. For
purposes of this Section 4.4, the deemed value of such Tax Benefit shall be an
amount equal to the product of (x) the amount of the deduction allowed to the
TODCO Tax Group by the Code with respect to the delivery of the Transocean stock
and (y) the highest statutory rate applicable under Section 11 of the Code.
However, if any deduction otherwise described in this Section 4.4 exceeds
U.S.$1.0 million, determined on an employee-by-employee basis, the Tax Benefit
relating to such deduction shall not be treated as a Tax Benefit described in
this Section 4.4, but the underlying deduction shall be treated in the same
manner as if it were a Tax Asset created on or before the IPO Closing Date, as
described in Section 4.2.

         SECTION 5. TAX PAYMENTS AND INTERCOMPANY BILLINGS.

         5.1 Consolidated and Combined Returns.

               (a) Computation and Payment of Tax Due. At least ten business
days prior to any Payment Date for a Consolidated or Combined Return, Holdings
shall compute the amount of Tax required to be paid to the relevant Tax
Authority with respect to such Tax Return on such Payment Date and shall notify
TODCO in writing of (x) the amount of Tax required to be paid on such Payment
Date, and (y) the amount, if any, of such Tax which is allocable to TODCO under
Sections 2.1(a), 2.2(a) and 2.3(a). Holdings will pay, or shall cause one or
more of its Subsidiaries (other than members of the TODCO Tax Group) to pay, the
amount described in clause (x) of the immediately preceding sentence to the
relevant Tax Authority on or before such Payment Date.

               (b) Computation and Payment of TODCO Liability With Respect to
Tax Due. Within thirty days following any Payment Date, TODCO will pay to
Holdings (or another member of the Transocean Tax Group designated by Holdings
pursuant to Section 5.5) the amount, if any, of Tax paid on such Payment Date
for which TODCO is liable in accordance with Sections 2.1(a), 2.2(a) and 2.3(a),
appropriately adjusted for prior payments made by TODCO with respect to that
Consolidated or Combined Year. If, at any time, the total amount of payments
made by TODCO to Transocean (or any of its Subsidiaries other than members of
the TODCO Tax Group) with respect to Taxes for a Combined Year exceeds the
amount for which TODCO is liable in accordance with Sections 2.1(a), 2.2(a) and
2.3(a), Holdings will promptly remit the excess to TODCO.

         5.2 Payment of Refunds and Tax Benefits. Except as otherwise provided
in this Agreement:


                                      -17-
<PAGE>

               (a) Refund or Tax Benefit Received by Transocean Tax Group. If a
member of the Transocean Tax Group receives a Tax refund with respect to Taxes
for which a member of the TODCO Tax Group is liable hereunder or receives a Tax
Benefit for which TODCO is entitled to reimbursement hereunder, Holdings, as
appropriate, shall pay to TODCO, within thirty days following the receipt of the
Tax refund or Tax Benefit, an amount equal to such Tax refund or Tax Benefit.
Unless specified otherwise in this Agreement, a Tax Benefit will be considered
received at the time the Tax Return is filed with respect to such Tax Benefit.

               (b) Refund or Tax Benefit Received or Tax Asset Used by TODCO Tax
Group. If a member of the TODCO Tax Group receives a Tax refund with respect to
Taxes for which a member of the Transocean Tax Group is liable hereunder,
receives a Tax Benefit for which Holdings is entitled to reimbursement
hereunder, or uses or absorbs a Tax Asset for which Holdings is entitled to
reimbursement, TODCO shall pay to Holdings, within thirty days after the receipt
of the Tax refund or Tax Benefit or use or absorption of the Tax Asset, an
amount equal to such Tax refund or Tax Benefit. Unless specified otherwise in
this Agreement, a Tax Benefit will be considered received, and a Tax Asset will
be considered used or absorbed, at the time the Tax Return is filed with respect
to such Tax Benefit or Tax Asset.

         5.3 Initial Determinations and Subsequent Adjustments.

               (a) General Rules. The initial determination of the amount of a
payment, if any, which one Company is required to make to another under this
Agreement shall be made on the basis of the Tax Return as filed, or, if the Tax
to which the payment relates is not reported in a Tax Return, on the basis of
the amount of Tax initially paid to the Tax Authority. Except as otherwise
provided in Section 8.3, payments will be made, as appropriate, if additional
Taxes to which such determination relates are subsequently paid, or a refund of
such Taxes or a Tax Benefit relating to such Taxes is received, whether as a
result of an audit by a Tax Authority or for any other reason. Each payment
required by the immediately preceding sentence (x) as a result of a payment of
additional Taxes will be due thirty days after the date on which the additional
Taxes were paid or, if later, thirty days after the date of a request from the
other Company for the payment or (y) as a result of the receipt of a refund or
Tax Benefit will be due thirty days after the refund or Tax Benefit was
received. If a payment is made as a result of an audit by a Tax Authority which
does not conclude the matter, further adjusting payments will be made, as
appropriate, to reflect the outcome of subsequent administrative or judicial
proceedings.

               (b) Taxes that Generate TODCO Tax Benefits. If (x) pursuant to
Section 5.3(a), Holdings indemnifies TODCO and its Subsidiaries against any
additional State Income Tax, Foreign Income Tax, or Other Tax that is
attributable to any Tax Year or portion thereof beginning before the IPO Closing
Date and (y) the payment of such Tax generates a present or potential future Tax
Benefit to the TODCO Tax Group, then TODCO shall be liable for and pay to
Holdings within thirty days after the payment of such Tax by Holdings the deemed
value of such Tax Benefit. For purposes of this Section 5.3(b), the deemed value
of such Tax Benefit shall be an amount equal to the



                                      -18-
<PAGE>

product of (x) the amount of the Tax giving rise to such Tax Benefit and (y) the
highest statutory rate applicable under Section 11 of the Code. However, if any
Tax otherwise described in this Section 5.3(b) exceeds U.S.$1.0 million,
determined separately for each Tax Contest, the Tax Benefit relating to such Tax
shall not be treated as a Tax Benefit described in this Section 5.3(b), but the
underlying deduction allowed by the Code arising from the payment of such Tax
shall be treated in the same manner as if it were a Tax Asset created on or
before the IPO Closing Date, as described in Section 4.2.

         5.4 Indemnification Payments. Except as otherwise provided in Section
2.5(d), if any member of one Group is required to make a payment to a Tax
Authority for Taxes for which a Company belonging to the other Group is liable
under this Agreement, the Company which is liable for such Taxes under this
Agreement will remit the amount for which it is liable to the appropriate other
Company within thirty days after receiving notification requesting such amount.

         5.5 Payments by or to Other Members of the Groups. When appropriate
under the circumstances to reflect the underlying liability for a Tax or
entitlement to a Tax refund or Tax Benefit, a payment which is required to be
made by or to a Company may be made by or to another member of the Group to
which that Company belongs, but nothing in this Section 5.5 shall relieve any
Company of its obligations under this Agreement.

         5.6 Interest. Payments pursuant to this Agreement that are not made
within the period prescribed in this Agreement or, if no period is prescribed,
within fifteen (15) business days after demand for payment is made (the "Payment
Period") shall bear interest for the period from and including the date
immediately following the last date of the Payment Period through and including
the date of payment at a per annum rate equal to the rate specified in Section
6.5 of the Master Separation Agreement.. Such interest will be payable at the
same time as the payment to which it relates and shall be calculated on the
basis of a year of 365 days and the actual number of days for which due.

         5.7 Tax Consequences of Payments. For all Tax purposes and to the
extent permitted by applicable law, the parties hereto shall treat any payment
made pursuant to this Agreement as a capital contribution or a dividend
distribution, as the case may be, immediately prior to the Effective Date and,
accordingly, as not includible in the taxable income of the recipient. If a Tax
Authority determines that the receipt or accrual of any payment made under this
Agreement is taxable to the payee, the payer shall pay to the payee an amount
equal to any increase in the Income Taxes of the payee as a result of receiving
the payment (grossed up to take into account such payment, if applicable).

         SECTION 6. ASSISTANCE AND COOPERATION. The parties will cooperate (and
cause their respective affiliates to cooperate) with each other and with each
other's agents, including accounting firms and legal counsel, in connection with
Tax matters, including provision of relevant documents and information in their
possession and making available to each other, as reasonably requested and
available, personnel (including officers, directors, employees and agents of the
Companies or their affiliates)


                                      -19-
<PAGE>

responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes. Any information or
documents provided under this Section 6 shall be kept confidential by the
Company receiving the information or documents, except as may otherwise be
necessary in connection with the filing of Tax Returns or in connection with any
administrative or judicial proceedings relating to Taxes.

         SECTION 7. TAX RECORDS.

         7.1 Retention of Tax Records. Each Company shall preserve, and shall
cause its affiliates to preserve, all Tax Records which are in its possession,
and which could affect the liability of any member of the other Group for Taxes,
for so long as the contents thereof may become material in the administration of
any matter under applicable Tax Law, but in any event until the later of (x) the
expiration of any applicable statutes of limitation, as extended, and (y) seven
years after the IPO Closing Date.

         7.2 Access to Tax Records. The Companies and their respective
affiliates shall make available to members of the other Group for inspection and
copying during normal business hours upon reasonable notice all Tax Records in
their possession to the extent reasonably requested by any such member of the
other Group in connection with the preparation of Tax Returns, audits,
litigation, or the resolution of items under this Agreement.

         SECTION 8. TAX CONTESTS.

         8.1 Notices. Each of the parties shall provide prompt notice to the
other party of any pending or threatened Tax audit, assessment or proceeding or
other Tax Contest of which it becomes aware relating to Taxes for which it is or
may be indemnified by the other party hereunder. Such notice shall contain
factual information (to the extent known) describing any asserted Tax liability
in reasonable detail and shall be accompanied by copies of any notice and other
documents received from any Tax Authority in respect of any such matters. If an
indemnified party has knowledge of an asserted Tax liability with respect to a
matter for which it is to be indemnified hereunder and such party fails to give
the indemnifying party prompt notice of such asserted Tax liability, then (x) if
the indemnifying party is precluded from contesting the asserted Tax liability
in any forum as a result of the failure to give prompt notice, the indemnifying
party shall have no obligation to indemnify the indemnified party for any Taxes
arising out of such asserted Tax liability, and (y) if the indemnifying party is
not precluded from contesting the asserted Tax liability in any forum, but such
failure to give prompt notice results in a monetary detriment to the
indemnifying party, then any amount which the indemnifying party is otherwise
required to pay the indemnified party pursuant to this Agreement shall be
reduced by the amount of such detriment.

         8.2 Control of Tax Contests. Each Company shall have full
responsibility and discretion in handling, settling or contesting any Tax
Contest involving a Tax for which it is liable pursuant to Section 2 of this
Agreement, except that (x)



                                      -20-
<PAGE>

Holdings shall have full responsibility and discretion in handling, settling or
contesting any Tax Contest with respect to a Consolidated Return or Combined
Return and (y) TODCO shall not, without written consent from Holdings, exercise
its discretion in handling, settling or contesting or paying Taxes subject to
any Tax Contest in a manner that TODCO knows, or reasonably should know, would
adversely affect any member of the Transocean Tax Group.

         8.3 Cooperation. The indemnified Company shall provide the Company
controlling any Tax Contest pursuant to Section 8.2 with all information
relating to the indemnified Company and its Subsidiaries which the Company
controlling the Tax Contest needs to handle, settle or contest the Tax Contest.
At the request of the Company controlling the Tax Contest, the indemnified
Company shall take any action (e.g., executing a power of attorney) that is
reasonably necessary in order for the Company controlling the Tax Contest to
handle, settle or contest the Tax Contest. TODCO shall assist Holdings in taking
any remedial actions permitted by Internal Revenue Service Revenue Procedure
99-32 in order to avoid the effects of any secondary adjustment under Section
482 of the Code. The Company controlling the Tax Contest shall have no
obligation to indemnify the indemnified Company for any additional Taxes
resulting from the Tax Contest, if the indemnified Company fails to cooperate
fully or provide complete assistance to the Company controlling the Tax Contest.

         SECTION 9. RESTRICTION ON CERTAIN POST-IPO ACTIONS OF TODCO. TODCO
agrees that it will not take or fail to take, or permit any Subsidiary of TODCO
to take or fail to take, any action where such action or failure to act would be
inconsistent with or prohibit a distribution by Transocean of its stock in TODCO
from qualifying as a tax-free distribution under Section 355 of the Code.

         SECTION 10. GENERAL PROVISIONS.

         10.1 Survival of Obligations. The representations, warranties,
covenants and agreements set forth in this Agreement shall be unconditional and
absolute and shall remain in effect without limitation as to time.

         10.2 Expenses. Each Company and its affiliates shall bear their own
expenses incurred in connection with preparation of Tax Returns, Tax Contests,
and other matters related to Taxes under the provisions of this Agreement.

         10.3 Breach of Agreement. A breach of this Agreement shall be treated
as a breach of an Ancillary Agreement within the meaning of Sections 3.3(c) or
3.4(c), as appropriate, of the Master Separation Agreement.

         10.4 Disputes. The procedures for discussion, negotiation and
arbitration set forth in Article VI of the Master Separation Agreement shall
apply to all disputes, controversies or claims (whether sounding in contract,
tort or otherwise) that may rise out of or relate to, or arise under or in
connection with this Agreement.

         10.5 Notices. All notices and other communications hereunder shall be
in writing and shall be delivered in person, by telecopy, by express or
overnight mail



                                      -21-
<PAGE>

delivered by a nationally recognized air courier (delivery charges prepaid), or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:

(a)      If to Holdings to:

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

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

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

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

(b)      If to TODCO to:

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

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

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

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

or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery or when delivery is refused. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first business day
at the place at which such notice or communication is received following the day
on which such notice or communication was sent.

         10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement. The Agreement may be
delivered by facsimile transmission of a signed copy thereof.

         10.7 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of a party, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other parties, which
consent shall not be unreasonably withheld or delayed; provided, however, that
Holdings and TODCO may assign their respective rights, interests, duties,
liabilities and obligations under this Agreement to any other member of their
Group, but such assignment shall not relieve Holdings or TODCO, as the assignor,
of its obligations hereunder.

         10.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining



                                      -22-
<PAGE>

provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

         10.9 Amendment. This Agreement may not be amended or modified in any
respect except by a written agreement signed by all of the parties hereto.

         10.10 Effective Time. This Agreement shall become effective on the
Effective Date.

         10.11 Change in Law. Any reference to a provision of the Code or any
other Tax Law shall include a reference to any applicable successor provision or
law.

         10.12 Authorization, Etc. Each of the parties hereto hereby represents
and warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such party, that this Agreement constitutes a
legal, valid and binding obligation of each such party and that the execution,
deliver and performance of this Agreement by such party does not contravene or
conflict with any provision of law or of its charter or bylaws or any agreement,
instrument or order binding such party.

         10.13 No Third Party Beneficiaries. Except as provided in Sections 3.3
and 3.4 of the Master Separation Agreement, this Agreement is solely for the
benefit of Transocean, Holdings, TODCO and their Subsidiaries and is not
intended to confer upon any other person any rights or remedies hereunder.




                                      -23-
<PAGE>


                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by the respective officers as of the date set forth above.


                                    TRANSOCEAN HOLDINGS INC.

                                            By:
                                               ---------------------------------

                                            Name:
                                            Title:


                                    TODCO

                                            By:
                                               ---------------------------------

                                            Name:
                                            Title:


                                      -24-