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Exhibit 10.38
Form 2A(2)
(5-03) (GLOBALSANTAFE LOGO) GLOBALSANTAFE CORPORATION NOTICE OF STOCK OPTION GRANT
AND SPECIFICATION OF THE TERMS AND CONDITIONS
OF
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTED TO [NAME OF GRANTEE] (Under the GlobalSantaFe Corporation 2003 Long-Term Incentive Plan) GLOBALSANTAFE CORPORATION(the Company), desiring to afford you an
opportunity to purchase ordinary shares of the Company, $.01 par value
(Ordinary Shares), and to provide you with an added incentive as a director
of the Company, has established the following terms and conditions under which
it has granted you an option (Option) under the GlobalSantaFe Corporation
2003 Long-Term Incentive Plan (the Plan) to purchase Ordinary Shares subject
to and upon the terms and conditions set forth below. This Option is a
non-qualified stock option and is not subject to incentive stock option
treatment under the U.S. federal Internal Revenue Code or applicable rules
thereunder. You are urged to consult your tax advisor prior to exercising this
Option and prior to disposing of any shares acquired upon such exercise.  1.
    
    Specification of Date, Number of Shares, Option Price and Term.  (a)
    
    The date of this Option is [Grant Date].(b)
    
    The number of Ordinary Shares of the Company optioned hereby
is [Total Number Of Shares Covered By The Option].(c)
    
    Subject to acceleration under Sections 2 and 5 and to
adjustments under Section 7, an installment of [1/2 Of The Number in
(b)] of the [The Number in (b)] shares optioned hereby first becomes
purchasable on [Date One Year From Grant Date], and a second
installment consisting of the remaining [1/2 Of The Number in (b)] shares first becomes purchasable on [Date Two Years From Grant
Date].(d)
    
    The per share option price under this Option is $[Dollar
Amount], subject to adjustments under Section 7.(e)
    
    The term of this Option commences [Grant Date], and expires
at the close of business at the Companys principal executive office
on [Date Ten Years Minus One Business Day From Grant Date]; upon the
expiration of such term




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Form 2A(2)
(5-03)  this Option shall expire and be cancelled
and it may not thereafter be exercised. -2-




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Form 2A(2)
(5-03)  2.
    
    Installment Provisions and Acceleration. This Option is not exercisable
in any part until the earliest of the dates specified in this Section and
in Section 5 below.The installments set forth in Section 1(c) are cumulative, so that each
matured installment or any portion thereof may be exercised at any time
until the expiration or prior termination of this Option.If a Change in Control occurs while you are a director of the Company,
the shares optioned hereby shall become fully purchasable on the date of
such Change in Control irrespective of the limitations described in
Section 1(c). Your Option shall remain exercisable throughout the Option
term.A Change in Control means the occurrence of any of the following events:(i)The acquisition by any individual, entity or group (within the
meaning of Section 13(d) or 14(d) of the U.S. Securities Exchange Act of
1934, as amended (the Exchange Act)) (a Person), other than an
Excluded Person, of the beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of 35% or more of either (A) the then
outstanding ordinary shares of the Company (the Outstanding Company
Ordinary Shares) or (B) 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 neither an acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or by any affiliate controlled by the Company nor an acquisition
by an affiliate of the Company that remains under the Companys control
will constitute a Change in Control; or(ii)Individuals who, as of the date hereof, constitute the Board (the
Incumbent Board) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election
by the Companys equityholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board will 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 either an actual or threatened
election contest (meaning a solicitation of the type that would be
subject to Rule 14a-11 of Regulation 14A under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or(iii)Approval by the equityholders of the Company of a reorganization,
merger, consolidation or similar transaction to which the Company or any
affiliate is a party,
in each case unless, following such reorganization, merger, consolidation
or similar -3-




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Form 2A(2)
(5-03)  transaction, (A) more than 50% of, respectively, the then
outstanding ordinary shares or shares of common stock of the corporation
or other entity resulting from such reorganization, merger, consolidation
or similar transaction and the combined voting power of the then
outstanding voting securities of such corporation or other entity
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Ordinary Shares and Outstanding
Company Voting Securities immediately prior to such reorganization,
merger, consolidation or similar transaction in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger, consolidation or similar transaction, of the Outstanding Company
Ordinary Shares and Outstanding Company Voting Securities, as the case
may be, (B) 50% of, respectively, the then outstanding ordinary shares or shares of common stock of the parent of the corporation or other entity
resulting from such reorganization, merger, consolidation or similar
transaction and the combined voting power of the then outstanding voting
securities of the parent of such corporation or other entity entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Ordinary
Shares and Outstanding Company Voting Securities immediately prior to
such reorganization, merger, consolidation or similar transaction, (C) no
Person (excluding the Company, any affiliate of the Company that remains
under the Companys control, any employee benefit plan (or related trust)
sponsored or maintained by the Company or by any affiliate controlled by
the Company or such corporation resulting from such reorganization,
merger, consolidation or similar transaction, and any Person beneficially
owning, immediately prior to such reorganization, merger, consolidation
or similar transaction, directly or indirectly, 35% or more of the
Outstanding Company Ordinary Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 35% or more of, respectively, the then outstanding ordinary shares or shares of common stock of the corporation or other entity
resulting from such reorganization, merger, consolidation or similar
transaction or the combined voting power of the then outstanding voting
securities of such corporation or other entity entitled to vote generally
in the election of directors, and (D) at least a majority of the members
of the board of directors of the corporation resulting from such
reorganization, merger, consolidation or similar transaction were members
of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, consolidation or
similar transaction; or(iv)Approval by the equityholders of the Company of any plan or proposal
which would result directly or indirectly in (A) a complete liquidation
or dissolution of the
Company, or (B) any sale or other disposition (or similar transaction)
(in a single -4-




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Form 2A(2)
(5-03)  transaction or series of related transactions) of (x) 50% or
more of the assets or earnings power of the Company or (y) business
operations which generated a majority of the consolidated revenues
(determined on the basis of the Companys four most recently completed
fiscal quarters for which reports have been completed) of the Company and
its affiliates immediately prior thereto, other than to an affiliate of
the Company or to a corporation or other entity with respect to which
following such sale or other disposition (I) more than 50% of,
respectively, the then outstanding ordinary shares or shares of common
stock of such corporation or other entity and the combined voting power
of the then outstanding voting securities of such corporation or other
entity entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Ordinary Shares and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportions as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Ordinary Shares and Outstanding Company Voting Securities, as the
case may be, (II) no Person (excluding the Company, any affiliate of the
Company that remains under the Companys control, any employee benefit
plan (or related trust) sponsored or maintained by the Company or by any
affiliate controlled by the Company or such corporation, and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 35% or more of the Outstanding Company Ordinary
Shares or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 35% or more of, respectively,
the then outstanding ordinary shares or shares of common stock of such
corporation or other entity or the combined voting power of the then
outstanding voting securities of such corporation or other entity
entitled to vote generally in the election of directors, and (III) at
least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets; or(v)Approval by the equityholders of the Company of a merger of equals
(which for purposes of this Subsection shall mean a merger with another
company of relatively equal size) to which the Company is a party as a
result of which the persons who were equity holders of the Company
immediately prior to the effective date of such merger shall have
beneficial ownership of less than 55% of the combined voting power for
election of members of the board (or equivalent) of the surviving entity
or its parent following the effective date of such merger, provided that
the Board shall have authority to increase said percentage as may in its
sole discretion be deemed appropriate to cover a specific transaction. -5-




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Form 2A(2)
(5-03)  For purposes of the preceding sentence, the term Excluded Person shall
mean and include (i) any corporation beneficially owned by shareholders
of the Company in substantially the same proportion as their ownership of shares of the Company and (iii) the Company and any affiliate of the
Company. Also, for purposes of the preceding sentence, the term Board
shall mean the board of directors of the Company.Nothing contained in this section shall be interpreted in a way which
permits you to purchase a number of shares in excess of the number of shares optioned hereby as specified in Section 1(b).3.
    
    Method of Exercise. This Option may be exercised from time to time, in
accordance with its terms, by written notice thereof signed and delivered
by you or another person entitled to exercise this Option to the Corporate
Secretary of the Company at its principal executive office in Houston,
Texas, or as it may hereafter be located. Such notice shall state the
number of shares being purchased and shall be accompanied by the payment
in full in cash of the option price for such number of shares. Such
payment may also be made, in whole or in part, by the surrender of
Ordinary Shares of GlobalSantaFe Corporation with a Fair Market Value
equal to the amount of the required payment; provided, however, that you
must have held the shares surrendered for at least six months, and
provided further that the Board of Directors of GlobalSantaFe Corporation
or its Compensation Committee may reject any or all shares so tendered if
the shares are deemed by either of them in their discretion to be
unacceptable. Promptly after receipt of such notice and payment, the
Company shall issue certificates to you or such other person exercising
this Option.4.
    
    Transferability.You may not transfer this Option other than by will or
by the laws of descent and distribution or, if applicable, as authorized
by the following sentence, and this Option shall be exercisable during
your lifetime only by you or, if applicable, by a transferee authorized by
the following sentence. This Option or any portion thereof may be
transferred by you to (i) your spouse, children or grandchildren
(Immediate Family Members), (ii) a trust or trusts for your exclusive
benefit and/or the exclusive benefit of Immediate Family Members, (iii) a
partnership in which you and/or Immediate Family Members are the only
partners, (iv) a transferee pursuant to a judgment, decree or order
relating to child support, alimony or marital property rights that is made
pursuant to a domestic relations law of a state or country with competent
jurisdiction (a Domestic Relations Order), or (v) such other transferee
as may be approved by the Compensation Committee of the Companys Board of
Directors in its sole and absolute discretion; provided, however, that (x)
the Board of Directors of the Company and its Compensation Committee each
reserves the right to prohibit any transfer with or without cause in its
sole and absolute discretion, and -6-




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Form 2A(2)
(5-03)  (y)subsequent transfers of this Option or any portion thereof are
prohibited except those to or by you in accordance with this Section, by
will or the laws of descent and distribution, or pursuant to a Domestic
Relations Order. Following any transfer, this Option shall continue to
be subject to the same terms and conditions as were applicable
immediately prior to transfer, and any and all references to you in this
Notice shall be deemed to refer to the transferee; provided, however,
that any and all references to service as a director or events of
termination of service as a director shall continue to mean your service
as a director or events of termination of your service as a director, and
following any such event the options shall be exercisable by the
transferee only to the extent and for the periods specified in this
Notice. Each transfer shall be effected by written notice thereof duly
signed and delivered by the transferor to the Corporate Secretary of the
Company at its principal executive office in Houston, Texas, or as it may
hereafter be located. Such notice shall state the name and address of
the transferee, the amount of this Option being transferred, and such
other information as may be requested by the Corporate Secretary. The
person or persons entitled to exercise this Option shall be that person
or those persons appearing on the registry books of the Company as the
owner or owners of this Option, and the Company may treat the person or
persons in whose name or names this Option is registered as the owner or
owners of this Option for all purposes. The Company shall have no
obligation to, or liability for any failure to, notify you or any
transferee of any termination of this Option at or prior to its normal
expiration date or of any event that will or might result in such
termination.5.
    
    Termination of Service as a Director.If your service as a director of
the Company is terminated by reason of your death, disability or
ineligibility for reelection under the provisions of the Companys
Articles of Association regarding age (retirement), or your service as a
director of the Company is terminated by the Companys shareholders other
than for cause (to mean acts of misconduct harmful to the Company,
inadequate performance or incompetence), or your service as a director of
the Company is terminated due to a failure to nominate you for reelection
as a director other than for cause, this Option will immediately become
exercisable as to the full number of shares optioned hereby as specified
in Section 1(b), to the extent not previously exercised, and will remain
exercisable as to said full number of shares until the expiration of the
term of this Option; provided, however, that if the foregoing acceleration
provision becomes operative during the six-month period immediately
following the date of this Option, then this Option shall immediately
become exercisable as to said full number of shares upon the expiration of
said six-month period and remain exercisable until the expiration of the
term of this Option. In any other case of termination of your service as a
director, including without limitation termination by the Companys
shareholders for cause, or due to a failure to nominate you for reelection
for cause, or due to your resignation or decision not to stand for
reelection, this Option shall remain exercisable, only to the extent -7-




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Form 2A(2)
(5-03)  exercisable at the date of such termination, for three months after
termination of service as a director, said period in any event not to
extend beyond the expiration of the term of this Option. Upon expiration
of the foregoing periods, this Option shall expire, terminate and be
cancelled in all respects. At the time your service as a director of the
Company terminates, this Option shall expire, terminate and be cancelled
in all respects as to all shares other than the shares as to which this
Option can be exercised at the time of or as a result of such
termination.Anything to the contrary in these Terms and Conditions notwithstanding,
if your service as a director of the Company terminates and such
termination does not and will not result in acceleration of the vesting
of all unvested installments of this Option, any unvested installment of
this Option that would have vested within the 15 days following the day
of such termination will be deemed to have vested on the day immediately
preceding the day of such termination.6.
    
    Death, Disability or Retirement. In the event of your death, disability
or retirement, you or your legal representative or representatives, or the
person or persons entitled to do so under your last will and testament or
under applicable intestate laws, shall have the right to exercise this
Option, to the extent not previously exercised, as to the lesser of the
full number of shares optioned hereby as specified in Section 1(b) hereof
or such lesser number of shares as shall have resulted from the operation
of Section 5. For purposes of Section 5 and this Section 6, the term
disability shall mean a physical or mental condition which totally and
permanently prevents you from continuing to serve as a director, as
reasonably determined in good faith by the Compensation Committee of the
Board of Directors of GlobalSantaFe Corporation.7.
    
    Adjustments. If outstanding shares of the class then subject to this
Option are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend, stock
split or reverse stock split, then there shall be substituted for each
share then subject to the unexercised portion of this Option the number
and class of shares or securities into or for which each outstanding share
of the class subject to this Option shall be so changed or exchanged, all
without any change in the aggregate purchase price for the shares then
subject to the unexercised portion of this Option, but with a
corresponding adjustment in the purchase price per share. Such
adjustments shall become effective on the effective date of any such
transaction; except that in the event of a stock dividend or of a stock
split effected by means of a stock dividend or distribution, such
adjustments shall become effective immediately after the record date
therefor.Upon a dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which -8-




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Form 2A(2)
(5-03)  the Company is not the surviving corporation, or upon a sale of
substantially all of the property of the Company (Terminating
Transactions), this Option shall terminate, unless provision be made in
writing in connection with such transaction for the assumption of options
theretofore granted under the Plan or the substitution for such options
of any options covering the stock of a successor employer corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices, in which event this Option shall
continue in the manner and under the terms so provided. If this Option
shall terminate pursuant to the foregoing sentence, the person then
entitled to exercise any unexercised portions of this Option shall have
the right, at such time immediately prior to the consummation of the
Terminating Transaction as the Company shall designate, to exercise this
Option to the extent not theretofore exercised.Adjustments under this Section 7 shall be made by the Companys Board of
Directors whose determination as to what adjustment shall be made, and
the extent thereof, shall be final, binding and conclusive. No
fractional shares of stock shall be issued under this Option or in
connection with any such adjustment.8.
    
    Limitation. You or any other person entitled to exercise this Option
shall be entitled to the privileges of stock ownership in respect of shares subject to this Option only when such shares have been issued and
delivered as fully paid shares upon exercise of this Option in accordance
with its terms.9.
    
    Requirements of Law and of Stock Exchanges. The issuance of shares upon
the exercise of this Option shall be subject to compliance with all of the
applicable requirements of law with respect to the issuance and sale of
such shares. In addition, the Company shall not be required to issue or
deliver any certificate or certificates for such purchase upon exercise of
this Option prior to the admission of such shares to listing on notice of
issuance on any stock exchange on which shares of the same class are then
listed.By accepting this Option, you represent and agree for yourself and your
transferees by will or by the laws of descent and distribution or
otherwise that unless a registration statement under the Securities Act
of 1933 is in effect as to shares purchased upon any exercise of this
Option, any and all shares so purchased shall be acquired for investment
and not for sale or distribution and each notice of the exercise of any
portion of this Option shall be accompanied by a representation and
warranty in writing, signed by the person entitled to exercise the same,
that the shares are being so acquired by good faith for investment and
not for sale or distribution. In the event the Companys legal counsel
shall, at the Companys request, advise it that registration under the
Securities Act of 1933 of the shares as to which this Option is at the
time being exercised is required prior to issuance -9-




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Form 2A(2)
(5-03)  thereof, the Company shall not be required to issue or deliver such shares unless and until such legal counsel shall advise that such
registration has been completed or is not required.10.
    
    GlobalSantaFe Corporation 2003 Long-Term Incentive Plan. This Option is
subject to, and the Company and you are bound by, all of the terms and
conditions of the GlobalSantaFe Corporation 2003 Long-Term Incentive Plan
as the same may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive you, without your
consent, of this Option or any rights hereunder. The Board of Directors
of the Company or its Committee established for such purposes is
authorized to adopt rules and regulations not inconsistent with the Plan
and to take such action in the administration of the Plan as it shall deem
proper. A copy of the Plan in its present form is available for
inspection at the Companys principal executive office during business
hours by you or any other persons entitled to exercise this Option.11.
    
    Definition of Certain Terms.Capitalized terms used in this Notice and
not defined herein are used as they are used in the GlobalSantaFe
Corporation 2003 Long-Term Incentive Plan as the same shall have been
amended from time to time. The term you, and related terms such as
your used in this document refer to the individual whose name appears in
the heading on the first page of this document. -10-