exv10w35



 





Exhibit 10.35




 




	 	  	 	 	 
	TO:

	 	                                         
	 	DATE:                      , 2003
	 
	 	 	 	 
	FROM:

	 	                                         	 	 
	 
	 	 	 	 
	SUBJECT:

	 	Performance Units for 2003-2005 Performance Cycle	 	 






Effective March 14, 2003, you have been granted             Performance Units for the
2003-2005 Performance Cycle, subject to the terms and conditions set forth in
the attachment to this memorandum. The value of each performance unit depends
on the extent to which the performance objectives described herein have been
achieved.




[Name of signing officer]



Attachment




 









 








Form 2B(1)

(3-03)




GLOBALSANTAFE CORPORATION




TERMS AND CONDITIONS

OF

AWARD OF PERFORMANCE UNITS




(2003-2005 Performance Cycle)



GlobalSantaFe Corporation (the “Company”), desiring to provide you with an
added incentive as an employee of the Company or of one or more of its
affiliates, hereby awards to you, pursuant to the GlobalSantaFe 2003 Long-Term
Incentive Plan (the “Plan”), performance units representing the right to
receive cash (“Performance Units”), subject to the terms and conditions
outlined herein (the “Terms and Conditions”) and the terms and conditions of
the Plan as amended from time to time in accordance with its terms. The target
value of each Performance Unit is $25.00 (the “Target Value”); the ultimate
value will depend upon achievement of performance goals and satisfaction of
employment requirements set forth in these Terms and Conditions. Terms used
herein and not otherwise defined shall have the meaning set forth in the Plan.





	1.	 	Award Opportunity. The value of each Performance Unit (the “Payout
Value”) shall be a percentage of the Target Value and will depend on
actual performance of the Company and its affiliates during the period
from January 1, 2003, through December 31, 2005 (the “Performance Cycle”),
as measured against (i) the Company’s return on invested capital (“ROIC”)
relative to the Company’s cost of capital (“Kc”) and (ii) the Company’s
total shareholder return (“TSR”) relative to the Company’s peer group
total shareholder return (collectively, the “Performance Objectives”).
The percentage, which will range from 0% to 200%, will be determined in
accordance with the chart provided below. The exact percentage of your
award earned will be calculated based on straight-line interpolation
between the percentages shown on the chart. Notwithstanding any contrary
provision, your Performance Units shall have a zero value unless either
(x) TSR equals or exceeds 50th percentile or (y) ROIC exceeds Kc.




 









 











Form 2B(1)

(3-03)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 
		 	 	 	 	 	 
		 	 	 	 	 	3-year TSR relative to Peers

		 	 	 	 	 	<=50th%ile
	 	>50th %ile
	 	75th%ile
	 	>90th%ile

	3-Year average ROIC relative to 3-Year average Cost of Capital	 	Kc-8%	 	 	0	%	 	 	33	%	 	 	67	%	 	 	133	%
	 	Kc-4%	 	 	0	%	 	 	41	%	 	 	75	%	 	 	142	%
	 	=Kc	 	 	17	%*	 	 	50	%	 	 	83	%	 	 	150	%
	 	 	(~9.5	%)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Kc+4%	 	 	33	%	 	 	66	%	 	 	100	%	 	 	167	%
	 	Kc+8%	 	 	67	%	 	 	100	%	 	 	133	%	 	 	200	%














	*	 	Note: Performance Units have no value unless either (x) TSR equals or
exceeds 50th percentile or (y) ROIC exceeds Kc. However, for purposes of
interpolation, if ROIC or TSR performance exceeds these levels, 17% of target
will be the baseline percentage.






For purposes of determining the Company’s relative TSR, the members of
the peer group shall be Noble Drilling Corp., Transocean Inc., ENSCO
International, Nabors Industries, Diamond Offshore, Rowan Companies, Inc.
and Pride International Inc. Any of these companies that is not
publicly-traded on the last day of the Performance Cycle shall be
excluded from the peer group. The Compensation Committee of the Board of
Directors of the Company (the “Committee”) may make such changes as it
deems appropriate to maintain a representative peer group.




	2.	 	Employment Requirement. Except as otherwise provided in Sections 4 and
5, you must remain continuously employed with the Company or any of its
affiliates throughout the Performance Cycle in order to be entitled to
payment. Any Performance Unit for which you are not entitled to payment
under this Section shall be forfeited. You will not have any rights with
respect to forfeited Performance Units.






	3.	 	Payment. Your outstanding Performance Units will be paid as soon as
practicable after the close of the Performance Cycle, upon the Committee’s
determination, in writing, that the Performance Objectives have been
satisfied. Your Performance Units shall be paid to you in the form of a
cash payment equal to the product of the Payout Value (as defined in
Section 1) and the number of Performance Units credited to you pursuant to
the cover page of this memorandum.





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Form 2B(1)

(3-03)





	4.	 	Termination of Employment.






	 	(a)	 	Involuntary Termination Without Cause. If, during the
Performance Cycle, your employment with the Company and its
affiliates is terminated by the Company and/or an affiliate without
Cause (as hereinafter defined), you will be entitled to 1/3 of your
Performance Units for each full year and each partial year that has
elapsed during the Performance Cycle prior to your termination of
employment. The balance of your Performance Units will be
forfeited.
	 
	 	(b)	 	Voluntary Termination or Termination With Cause. If, during
the Performance Cycle, you voluntarily terminate your employment
with the Company and its affiliates or your employment with the
Company and its affiliates is terminated for Cause, your Performance
Units are forfeited.
	 
	 	(c)	 	Retirement. If, during the Performance Cycle, you terminate
your employment (for any reason other than Cause) with the Company
and its affiliates and immediately commence receiving your pension
benefits pursuant to one or more of the defined benefit pension
plans of the Company in which you are participating at the time of
termination, you will continue to have the same rights that you
would have had with respect to the Performance Units had your
employment not terminated.
	 
	 	(d)	 	Termination by Reason of Death or Disability. If, during the
Performance Cycle, your employment with the Company and its
affiliates is terminated as a result of your death or disability,
you will continue to have the same rights that you would have had
with respect to the Performance Units had your employment not
terminated. For purposes of the preceding sentence, the term
“disability” shall mean any complete and permanent disability as
defined in Section 22(e)(3) of the U.S. Internal Revenue Code of
1986, as amended (the “Code”), (or any successor provision thereto)
and determined in accordance with the procedures set forth in the
regulations thereunder. If your employment terminates because of
death, payment will be made to your beneficiary or beneficiaries,
designated by you in the manner prescribed by the Committee, or if
there is no such designation or no such beneficiary survives you, to
your surviving spouse, or if none, to your issue per stirpes, or if
you have no surviving issue, to your estate.






For purposes of these Terms and Conditions, a termination of your
“employment” with the Company and its affiliates will be deemed to occur
at the close of business on the earliest of (i) the last day on which you
are assigned to a position with the Company or any of its affiliates for
the purpose of performing your occupation, in the case of termination by
reason of your death, disability or retirement, (ii) the last day of an
approved leave of absence if you do not resume the performance of your
occupation for the Company or any of its affiliates on or



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Form 2B(1)

(3-03)





before the next business day, and (iii) the last day on which you are
assigned to a position with the Company or any of its affiliates for the
purpose of performing your occupation in any other case. For purposes of
these Terms and Conditions, you shall not be considered to be an employee
for the period during which you are entitled to receive salary
continuation under any agreement, policy, plan or other arrangement with
the Company or any of its affiliates.




You may be terminated with “Cause” if you willfully engage in conduct
which is materially injurious to the Company and/or an affiliate,
monetarily or otherwise; provided, however, that (i) no termination of
your employment shall be with Cause until you have been delivered a copy
of a written notice setting forth that you were guilty of the conduct and
specifying the particulars thereof in detail and (ii) termination solely
on account of inadequate performance or incompetence shall not constitute
termination with Cause. No act or failure to act shall be considered
“willful” unless you have acted or failed to act without a reasonable
belief that your action or failure to act was in the best interest of the
Company and its affiliates. Notwithstanding anything contained in these
Terms and Conditions to the contrary, your failure to perform after
notice of termination is given shall not constitute Cause.




	5.	 	Change in Control. If a Change in Control occurs during the Performance
Cycle while your Performance Units are outstanding and not forfeited, you
will be entitled to 1/3 of your Performance Units for each full year and
each partial year that has elapsed during the Performance Cycle prior to
the Change in Control. The balance of your Performance Units will be
forfeited. Your Performance Units will be paid on the date of such Change
in Control and have a Payout Value equal to the Target Value.






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 or of any affiliate of the
Company by which you are employed or which directly or indirectly owns or
controls any affiliate by which you are employed (the “Outstanding
Company Ordinary Shares”) or (B) the combined voting power of the then
outstanding voting securities of the Company or of any affiliate of the
Company by which you are employed or which directly or indirectly owns or
controls any affiliate by which you are employed 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



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Form 2B(1)

(3-03)





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 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) at least 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



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Form 2B(1)

(3-03)





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 of any affiliate of the Company by which
you are employed, or (B) any sale or other disposition (or similar
transaction) (in a single transaction or series of related transactions)
of (x) 50% or more of the assets or earnings power of the Company or any
affiliate of the Company by which you are employed or which, directly or
indirectly, owns or controls any affiliate by which you are employed 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



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Form 2B(1)

(3-03)





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 equityholders 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.




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 (ii) 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.




	6.	 	Non-Transferable. Your rights under this memorandum are personal; no
assignment or transfer of your rights under and interest in this
memorandum may be made by you other than pursuant to a marital settlement
agreement or similar domestic relations agreement, decree or order. Any
attempted assignment or transfer in violation of this Section shall be
null and void.
	 
	7.	 	Limitation. Except as specifically provided herein, neither you or any
person claiming through you shall have any right or interest in the
Performance Units unless and until all the terms, conditions and
provisions of these Terms and Conditions and the Plan that affect you or
such other person shall have been complied with as specified herein.
	 
	8.	 	Wage Withholding and Employment Taxes. All federal, state and local
taxes that the Committee determines are required to be withheld from any
payments made pursuant to the Performance Units shall be withheld.
	 
	9.	 	Continued Employment and Future Grants. Neither the grant of Performance
Units nor the other arrangements outlined herein give you the right to
remain in





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Form 2B(1)

(3-03)





	 	 	the employ of the Company or any of its affiliates or to be selected to
receive similar or identical grants in the future.
	 
	10.	 	Company’s Rights. The existence of this memorandum or any Performance
Units shall not affect in any way the right or power of the Company or its
shareholders to undertake or accomplish any corporate act.
	 
	11.	 	Notices. Notice or other communication to the Company with respect to
these Terms and Conditions must be made in writing and delivered to:
Secretary, GlobalSantaFe Corporation, at its principal business office in
Houston, Texas.
	 
	12.	 	Governing Law. These Terms and Conditions shall be governed by, and
construed in accordance with, the laws of the state of Texas.
	 
	13.	 	Section 280G Payments.






	 	(a)	 	Gross-Up. If the Company’s independent accounting firm
determines that any payment or distribution by the Company or its
affiliates to or for the benefit of the Participant (whether paid or
payable or distributed or distributable pursuant to the terms of
this Plan or otherwise, and whether paid or payable or distributed
or distributable in cash, stock or any form) (a “Payment”)
constitutes a “parachute payment” as defined in Section 280G of the
Code (or any successor provision thereto) (“Parachute Payment”),
which would be subject to the excise tax imposed by Section 4999 of
the Code, or any interest or penalties are incurred by the
Participant with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the “Basic Excise Tax”), then the
Participant will be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount which is sufficient to cover any
and all federal, state and local income taxes and Medicare tax
applicable to the Gross-Up Payment, including, without limitation,
any further excise tax imposed by Section 4999 of the Code on or
with respect to the Gross-Up Payment, plus payment of the Basic
Excise Tax.
	 
	 	(b)	 	Gross-Up Determination. Subject to the provisions of
Subsection (d) of this Section below, all determinations required to
be made under this Section, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determinations, will
be made by the Company’s independent accounting firm, which will
provide detailed supporting calculations both to the Company and the
Participant within 15 business days of the receipt of notice from
the Participant that there has been a Payment, or such earlier time
as is requested by the Company. All fees





-8-









 










Form 2B(1)

(3-03)





	 	 	 	and disbursements of the Company’s independent accounting firm will
be paid by the Company.
	 
	 	(c)	 	Timing. Any Gross-Up Payment will be paid by the Company to
the Participant within five days of the Company’s receipt of the
determination of the Company’s independent accounting firm. If such
firm determines that no Basic Excise Tax is payable by the
Participant, it will furnish the Participant with a written opinion
that the Participant has substantial authority not to report any
Basic Excise Tax on the Participant’s federal income tax return. If
the Participant is subsequently required to make a payment of any
Basic Excise Tax, then the Company’s independent accounting firm
will determine the amount of the corresponding Gross-Up Payment, and
any such Gross-Up Payment will be promptly paid by the Company to or
for the benefit of the Participant. The fees and disbursements of
the Company’s independent accounting firm will be paid by the
Company.
	 
	 	(d)	 	Internal Revenue Service Claims. The Participant will notify
the Company in writing within 15 days of any claim by the Internal
Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment. If the Company notifies the
Participant in writing that it desires to contest such claim and
that it will bear the costs and provide the indemnification as
required by this Section, the Participant will:






	 	(i)	 	give the Company any information reasonably
requested by the Company relating to such claim,
	 
	 	(ii)	 	take such action in connection with contesting
such claim as the Company reasonably requests in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
	 
	 	(iii)	 	cooperate with the Company in good faith in
order to effectively contest such claim, and
	 
	 	(iv)	 	permit the Company to participate in any
proceedings relating to such claim; provided, however, that
the Company will bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and will indemnify and hold the
Participant harmless, on an after-tax basis, for any Basic
Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such
representation and payment of costs and expenses. The Company
will control all proceedings taken in connection with such
contest; provided, however, that if the Company directs the
Participant to pay such claim and sue for a refund, the
Company will advance the





-9-









 










Form 2B(1)

(3-03)





	 	 	 	amount of such payment to the Participant, on an
interest-free basis, and will indemnify and hold the
Participant harmless, on an after-tax basis, from any Basic
Excise Tax or income tax, including interest or penalties
with respect thereto, imposed with respect to such advance or
with respect to any imputed income with respect to such
advance.






	 	(e)	 	Refund. If, after the receipt by the Participant of an
amount advanced by the Company pursuant to Section 6(d)(4), the
Participant becomes entitled to receive any refund with respect to
such claim, the Participant will, within ten days of receipt
thereof, pay to the Company the amount of such refund, together with
any interest paid or credited thereon after taxes applicable
thereto. If, after the receipt by the Participant of an amount
advanced by the Company pursuant to Section 6(d)(4), a determination
is made that the Participant will not be entitled to any refund with
respect to such claim and the Company does not notify the
Participant in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination,
then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.






	14.	 	GlobalSantaFe 2003 Long-Term Incentive Plan, the Board of Directors and
the Committee. The Performance Units described in this memorandum are
granted to you, and any award of Performance Units is or will be made,
under and pursuant to the Plan as the same shall have been amended from
time to time in accordance with its terms. The decision of the Board of
Directors of the Company or the Committee on any questions concerning the
interpretation or administration of the Plan or any matters covered in
these Terms and Conditions will be final and conclusive. No amendment to
the Plan or decision of the Board of Directors of the Company or the
Committee will deprive you, without your consent, of any rights hereunder.
	 
	 	 	A copy of the Plan in its present form is available at the Company’s
principal office for inspection during business hours by you or other
persons who may be entitled to any of the Performance Units as
contemplated herein.






-10-









 





Exhibit 10.35




	 	 	 	 	 
	TO:

	 	                                  
	 	DATE:                , 2003
	 
	 	 	 	 
	FROM:

	 	                                  	 	 







SUBJECT: Performance Units for 2004-2006 Performance Cycle


Effective December 15, 2003, you have been granted              Performance Units for
the 2004-2006 Performance Cycle, subject to the terms and conditions set forth
in the attachment to this memorandum. The value of each performance unit
depends on the extent to which the performance objectives described herein have
been achieved.




	 	 
		[Name of signing officer]








Attachment




 









 








Form 2B(2)

(12-03)




GLOBALSANTAFE CORPORATION



TERMS AND CONDITIONS

OF

AWARD OF PERFORMANCE UNITS



(2004-2006 Performance Cycle)


GlobalSantaFe Corporation (the “Company”), desiring to provide you with an
added incentive as an employee of the Company or of one or more of its
affiliates, hereby awards to you, pursuant to the GlobalSantaFe 2003 Long-Term
Incentive Plan (the “Plan”), performance units representing the right to
receive cash (“Performance Units”), subject to the terms and conditions
outlined herein (the “Terms and Conditions”) and the terms and conditions of
the Plan as amended from time to time in accordance with its terms. The target
value of each Performance Unit is $25.00 (the “Target Value”); the ultimate
value will depend upon achievement of performance goals and satisfaction of
employment requirements set forth in these Terms and Conditions. Terms used
herein and not otherwise defined shall have the meaning set forth in the Plan.





	1.	 	Award Opportunity. The value of each Performance Unit (the “Payout
Value”) shall be a percentage of the Target Value and will depend on
actual performance of the Company and its affiliates during the period
from January 1, 2004, through December 31, 2006 (the “Performance Cycle”),
as measured against (i) the Company’s return on invested capital (“ROIC”)
relative to the Company’s cost of capital (“Kc”) and (ii) the Company’s
total shareholder return (“TSR”) relative to the Company’s peer group
total shareholder return (collectively, the “Performance Objectives”).
The percentage, which will range from 0% to 200%, will be determined in
accordance with the chart provided below. The exact percentage of your
award earned will be calculated based on straight-line interpolation
between the percentages shown on the chart. Notwithstanding any contrary
provision, your Performance Units shall have a zero value unless either
(x) TSR equals or exceeds 50th percentile or (y) ROIC exceeds Kc.




 









 





Form 2B(2)

(12-03)









	 	 	For purposes of determining the Company’s relative TSR, the members of
the peer group shall be Noble Drilling Corp., Transocean Inc., ENSCO
International, Diamond Offshore, Rowan Companies, Inc. and Pride
International Inc. Any of these companies that is not publicly-traded on
the last day of the Performance Cycle shall be excluded from the peer
group. The Compensation Committee of the Board of Directors of the
Company (the “Committee”) may make such changes as it deems appropriate
to maintain a representative peer group.
	 
	2.	 	Employment Requirement. Except as otherwise provided in Sections 4 and
5, you must remain continuously employed with the Company or any of its
affiliates throughout the Performance Cycle in order to be entitled to
payment. Any Performance Unit for which you are not entitled to payment
under this Section shall be forfeited. You will not have any rights with
respect to forfeited Performance Units.
	 
	3.	 	Payment. Your outstanding Performance Units will be paid as soon as
practicable after the close of the Performance Cycle, upon the Committee’s
determination, in writing, that the Performance Objectives have been
satisfied. Your Performance Units shall be paid to you in the form of a
cash payment equal to the product of the Payout Value (as defined in
Section 1) and the number of Performance Units credited to you pursuant to
the cover page of this memorandum.




-2-









 





Form 2B(2)

(12-03)





	4.	 	Termination of Employment.





	 	(a)	 	Involuntary Termination Without Cause. If, during the
Performance Cycle, your employment with the Company and its
affiliates is terminated by the Company and/or an affiliate without
Cause (as hereinafter defined), you will be entitled to 1/3 of your
Performance Units for each full year and each partial year that has
elapsed during the Performance Cycle prior to your termination of
employment. The balance of your Performance Units will be
forfeited.
	 
	 	(b)	 	Voluntary Termination or Termination With Cause. If, during
the Performance Cycle, you voluntarily terminate your employment
with the Company and its affiliates or your employment with the
Company and its affiliates is terminated for Cause, your Performance
Units are forfeited.
	 
	 	(c)	 	Retirement. If, during the Performance Cycle, your
employment with the Company and its affiliates terminates (for any
reason other than Cause, death or disability) and you have attained
your “early retirement date” as defined in the GlobalSantaFe
Retirement Plan for Employees (or would have attained such “early
retirement date” based on your age and service had you been eligible
to participate in such plan), you will continue to have the same
rights that you would have had with respect to the Performance Units
had your employment not terminated. If this subsection (c) and any
other subsection of this Section 4 both apply, this subsection (c)
will prevail.
	 
	 	(d)	 	Termination by Reason of Death or Disability. If, during the
Performance Cycle, your employment with the Company and its
affiliates is terminated as a result of your death or disability,
you will continue to have the same rights that you would have had
with respect to the Performance Units had your employment not
terminated. For purposes of the preceding sentence, the term
“disability” shall mean any complete and permanent disability as
defined in Section 22(e)(3) of the U.S. Internal Revenue Code of
1986, as amended (the “Code”), (or any successor provision thereto)
and determined in accordance with the procedures set forth in the
regulations thereunder. If your employment terminates because of
death, payment will be made to your beneficiary or beneficiaries,
designated by you in the manner prescribed by the Committee, or if
there is no such designation or no such beneficiary survives you, to
your surviving spouse, or if none, to your issue per stirpes, or if
you have no surviving issue, to your estate.





	 	 	For purposes of these Terms and Conditions, a termination of your
“employment” with the Company and its affiliates will be deemed to occur
at the close of business on the earliest of (i) the last day on which you
are assigned to a position with the Company or any of its affiliates for
the purpose of performing your occupation, in the case of termination by
reason of your death, disability or




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Form 2B(2)

(12-03)





	 	 	retirement, (ii) the last day of an approved leave of absence if you do
not resume the performance of your occupation for the Company or any of
its affiliates on or before the next business day, and (iii) the last day
on which you are assigned to a position with the Company or any of its
affiliates for the purpose of performing your occupation in any other
case. For purposes of these Terms and Conditions, you shall not be
considered to be an employee for the period during which you are entitled
to receive salary continuation under any agreement, policy, plan or other
arrangement with the Company or any of its affiliates.
	 
	 	 	You may be terminated with “Cause” if you willfully engage in conduct
which is materially injurious to the Company and/or an affiliate,
monetarily or otherwise; provided, however, that (i) no termination of
your employment shall be with Cause until you have been delivered a copy
of a written notice setting forth that you were guilty of the conduct and
specifying the particulars thereof in detail and (ii) termination solely
on account of inadequate performance or incompetence shall not constitute
termination with Cause. No act or failure to act shall be considered
“willful” unless you have acted or failed to act without a reasonable
belief that your action or failure to act was in the best interest of the
Company and its affiliates. Notwithstanding anything contained in these
Terms and Conditions to the contrary, your failure to perform after
notice of termination is given shall not constitute Cause.
	 
	5.	 	Change in Control. If a Change in Control occurs during the Performance
Cycle while your Performance Units are outstanding and not forfeited, you
will be entitled to 1/3 of your Performance Units for each full year and
each partial year that has elapsed during the Performance Cycle prior to
the Change in Control. The balance of your Performance Units will be
forfeited. Your Performance Units will be paid on the date of such Change
in Control and have a Payout Value equal to the Target Value.
	 
	 	 	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 or of any affiliate of the
Company by which you are employed or which directly or indirectly owns or
controls any affiliate by which you are employed (the “Outstanding
Company Ordinary Shares”) or (B) the combined voting power of the then
outstanding voting securities of the Company or of any affiliate of the
Company by which you are employed or which directly or indirectly owns or
controls any affiliate by which you are employed 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




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Form 2B(2)

(12-03)





	 	 	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 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) at least 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




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Form 2B(2)

(12-03)





	 	 	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 of any affiliate of the Company by which
you are employed, or (B) any sale or other disposition (or similar
transaction) (in a single transaction or series of related transactions)
of (x) 50% or more of the assets or earnings power of the Company or any
affiliate of the Company by which you are employed or which, directly or
indirectly, owns or controls any affiliate by which you are employed 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




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Form 2B(2)

(12-03)





	 	 	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 equityholders 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.
	 
	 	 	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 (ii) 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.
	 
	6.	 	Non-Transferable. Your rights under this memorandum are personal; no
assignment or transfer of your rights under and interest in this
memorandum may be made by you other than pursuant to a marital settlement
agreement or similar domestic relations agreement, decree or order. Any
attempted assignment or transfer in violation of this Section shall be
null and void.
	 
	7.	 	Limitation. Except as specifically provided herein, neither you or any
person claiming through you shall have any right or interest in the
Performance Units unless and until all the terms, conditions and
provisions of these Terms and Conditions and the Plan that affect you or
such other person shall have been complied with as specified herein.
	 
	8.	 	Wage Withholding and Employment Taxes. All federal, state and local
taxes that the Committee determines are required to be withheld from any
payments made pursuant to the Performance Units shall be withheld.
	 
	9.	 	Continued Employment and Future Grants. Neither the grant of Performance
Units nor the other arrangements outlined herein give you the right to
remain in the employ of the Company or any of its affiliates or to be
selected to receive similar or identical grants in the future.




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Form 2B(2)

(12-03)





	10.	 	Company’s Rights. The existence of this memorandum or any Performance
Units shall not affect in any way the right or power of the Company or its
shareholders to undertake or accomplish any corporate act.
	 
	11.	 	Notices. Notice or other communication to the Company with respect to
these Terms and Conditions must be made in writing and delivered to:
Secretary, GlobalSantaFe Corporation, at its principal business office in
Houston, Texas.
	 
	12.	 	Governing Law. These Terms and Conditions shall be governed by, and
construed in accordance with, the laws of the state of Texas.
	 
	13.	 	Section 280G Payments.





	 	(a)	 	Gross-Up. If the Company’s independent accounting firm
determines that any payment or distribution by the Company or its
affiliates to or for the benefit of the Participant (whether paid or
payable or distributed or distributable pursuant to the terms of
this Plan or otherwise, and whether paid or payable or distributed
or distributable in cash, stock or any form) (a “Payment”)
constitutes a “parachute payment” as defined in Section 280G of the
Code (or any successor provision thereto) (“Parachute Payment”),
which would be subject to the excise tax imposed by Section 4999 of
the Code, or any interest or penalties are incurred by the
Participant with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the “Basic Excise Tax”), then the
Participant will be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount which is sufficient to cover any
and all federal, state and local income taxes and Medicare tax
applicable to the Gross-Up Payment, including, without limitation,
any further excise tax imposed by Section 4999 of the Code on or
with respect to the Gross-Up Payment, plus payment of the Basic
Excise Tax.
	 
	 	(b)	 	Gross-Up Determination. Subject to the provisions of
Subsection (d) of this Section below, all determinations required to
be made under this Section, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determinations, will
be made by the Company’s independent accounting firm, which will
provide detailed supporting calculations both to the Company and the
Participant within 15 business days of the receipt of notice from
the Participant that there has been a Payment, or such earlier time
as is requested by the Company. All fees and disbursements of the
Company’s independent accounting firm will be paid by the Company.
	 
	 	(c)	 	Timing. Any Gross-Up Payment will be paid by the Company to
the Participant within five days of the Company’s receipt of the
determination of the Company’s independent accounting firm. If such
firm determines




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Form 2B(2)

(12-03)





	 	 	 	that no Basic Excise Tax is payable by the Participant, it will
furnish the Participant with a written opinion that the Participant
has substantial authority not to report any Basic Excise Tax on the
Participant’s federal income tax return. If the Participant is
subsequently required to make a payment of any Basic Excise Tax,
then the Company’s independent accounting firm will determine the
amount of the corresponding Gross-Up Payment, and any such Gross-Up
Payment will be promptly paid by the Company to or for the benefit
of the Participant. The fees and disbursements of the Company’s
independent accounting firm will be paid by the Company.
	 
	 	(d)	 	Internal Revenue Service Claims. The Participant will notify
the Company in writing within 15 days of any claim by the Internal
Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment. If the Company notifies the
Participant in writing that it desires to contest such claim and
that it will bear the costs and provide the indemnification as
required by this Section, the Participant will:





	 	(i)	 	give the Company any information reasonably
requested by the Company relating to such claim,
	 
	 	(ii)	 	take such action in connection with contesting
such claim as the Company reasonably requests in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
	 
	 	(iii)	 	cooperate with the Company in good faith in
order to effectively contest such claim, and
	 
	 	(iv)	 	permit the Company to participate in any
proceedings relating to such claim; provided, however, that
the Company will bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and will indemnify and hold the
Participant harmless, on an after-tax basis, for any Basic
Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such
representation and payment of costs and expenses. The Company
will control all proceedings taken in connection with such
contest; provided, however, that if the Company directs the
Participant to pay such claim and sue for a refund, the
Company will advance the amount of such payment to the
Participant, on an interest-free basis, and will indemnify and
hold the Participant harmless, on an after-tax basis, from any
Basic Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such
advance or with respect to any imputed income with respect to
such advance.




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Form 2B(2)

(12-03)





	 	(e)	 	Refund. If, after the receipt by the Participant of an
amount advanced by the Company pursuant to Section 6(d)(4), the
Participant becomes entitled to receive any refund with respect to
such claim, the Participant will, within ten days of receipt
thereof, pay to the Company the amount of such refund, together with
any interest paid or credited thereon after taxes applicable
thereto. If, after the receipt by the Participant of an amount
advanced by the Company pursuant to Section 6(d)(4), a determination
is made that the Participant will not be entitled to any refund with
respect to such claim and the Company does not notify the
Participant in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination,
then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.





	14.	 	GlobalSantaFe 2003 Long-Term Incentive Plan, the Board of Directors and
the Committee. The Performance Units described in this memorandum are
granted to you, and any award of Performance Units is or will be made,
under and pursuant to the Plan as the same shall have been amended from
time to time in accordance with its terms. The decision of the Board of
Directors of the Company or the Committee on any questions concerning the
interpretation or administration of the Plan or any matters covered in
these Terms and Conditions will be final and conclusive. No amendment to
the Plan or decision of the Board of Directors of the Company or the
Committee will deprive you, without your consent, of any rights hereunder.
	 
	 	 	A copy of the Plan in its present form is available at the Company’s
principal office for inspection during business hours by you or other
persons who may be entitled to any of the Performance Units as
contemplated herein.





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