Document:

<PAGE>
                                                                    EXHIBIT 10.4

                              TAX SHARING AGREEMENT

                                     BETWEEN

                            TRANSOCEAN HOLDINGS INC.

                                       AND

                                      TODCO

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
<S>                                                                                                   <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...................................................     13

SECTION 3. PREPARATION AND FILING OF TAX RETURNS.................................................      13

   3.1   Combined Returns and Consolidated Returns................................................     13
   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.......................................................      19
   4.4   Tax Benefits Resulting from Exercise of Employee Stock Options..........................      19

SECTION 5. TAX PAYMENTS AND INTERCOMPANY BILLINGS................................................      20

   5.1   Consolidated and Combined Returns.......................................................      20
   5.2   Payment of Refunds, Tax Benefits, and Tax Assets........................................      20
   5.3   Initial Determinations and Subsequent Adjustments.......................................      21
   5.4   Indemnification Payments................................................................      22
   5.5   Payments by or to Other Members of the Groups...........................................      22
   5.6   Interest................................................................................      22
   5.7   Tax Consequences of Payments............................................................      23
   5.8   Subordination Agreement.................................................................      23

SECTION 6. ASSISTANCE AND COOPERATION............................................................      23

SECTION 7. TAX RECORDS...........................................................................      23

   7.1   Retention of Tax Records................................................................      23
   7.2   Access to Tax Records...................................................................      23

SECTION 8. TAX CONTESTS..........................................................................      24

   8.1   Notices.................................................................................      24
   8.2   Control of Tax Contests.................................................................      24
   8.3   Cooperation.............................................................................      24
</Table>

                                      -1-
<PAGE>

<Table>
<Caption>
<S>                                                                                                   <C>
SECTION 9. RESTRICTION ON CERTAIN POST-IPO ACTIONS OF TODCO......................................      25

SECTION 10. GENERAL PROVISIONS....................................................................     25

   10.1  Survival of Obligations..................................................................     25
   10.2  Expenses.................................................................................     25
   10.3  Breach of Agreement......................................................................     25
   10.4  Disputes.................................................................................     25
   10.5  Notices..................................................................................     25
   10.6  Counterparts.............................................................................     26
   10.7  Binding Effect; Assignment...............................................................     26
   10.8  Severability.............................................................................     26
   10.9  Amendment................................................................................     26
   10.10 Effective Time...........................................................................     26
   10.11 Change in Law............................................................................     26
   10.12 Authorization, Etc.......................................................................     26
   10.13 No Third Party Beneficiaries.............................................................     27
</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 of 1933; 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.

         "Applicable Discount Rate" means, with respect to any year, the
fraction designated in Schedule 1.1.

         "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 (or any other member of the Transocean
Tax Group), 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

                                      -4-
<PAGE>

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 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 based upon, measured by,
or calculated with respect to, net income, net profits or deemed net profits,
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

                                      -5-
<PAGE>

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.

         "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.

         "Post-IPO Tax Asset" means a Tax Asset created after the IPO Closing
Date as determined under the principles of Section 4.2(b) of this Agreement.

         "Pre-IPO Tax Asset" means a Tax Asset created on or before the IPO
Closing Date as determined under the principles of Section 4.2(b) of this
Agreement.

         "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 such entity, whether through
ownership of voting securities, by contract or otherwise.

                                      -6-
<PAGE>

         "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 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.

                                      -7-
<PAGE>

         "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 1.2 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
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 1.3 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.

                                      -8-
<PAGE>

                      (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 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

                                      -9-
<PAGE>

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.

                      (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).

                                      -10-
<PAGE>

                      (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.

                      (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 or 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

                                      -11-
<PAGE>

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 the 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; provided, however, that all extraordinary items (other than items
resulting from a transaction contemplated by Article II of the Master Separation
Agreement) 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.

                 (e) Income Taxes Attributable to Trinidad and Tobago. TODCO
shall be liable for all Foreign Income Taxes imposed by the Republic of Trinidad
and Tobago that are attributable to the TODCO Business, regardless of whether
such Taxes relate to a period, or portion thereof, ending on or before the IPO
Closing Date.

                                      -12-
<PAGE>

         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, taking into account any
extensions that Holdings has given written notice to TODCO that it intends to
file, or (y) the first day of the fifth month following the end of the Tax 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, taking into account any
extensions that Holdings has given written notice to TODCO that it intends to
file, 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, file, amend or take any other action with respect to 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

                                      -13-
<PAGE>

(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), (4) and (5) 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 there remains
a present or potential obligation under Section 4.2(a) for TODCO to pay Holdings
for the use or deemed use of any Pre-IPO Tax Asset.

                  (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:

                                      -14-
<PAGE>

                      (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, taking
into account any extensions that the responsible Company files, 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.

         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 Post-IPO Tax Asset of the TODCO Tax
Group, 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 value of such Tax Asset, as determined under the
principles of Section 4.2(c) without regard to the specific rules following
clause (iii) thereof.

         4.2 Compensation by TODCO for Pre-IPO Tax Assets.

                  (a) Payment for Tax Assets. Except as otherwise provided in
Sections 4.2(f), (g) and (h), if on any Tax Return, any member of the TODCO Tax
Group uses or absorbs any Pre-IPO Tax Asset to reduce any Tax for which TODCO 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. For
purposes of this Section 4.2(a), whether the use or absorption of a Pre-IPO Tax
Asset by any member of the TODCO Tax Group has the effect of reducing any Tax
for which TODCO is liable under Section 2 shall be determined without regard to
any unused Tax Asset that, but for such Pre-IPO Tax Asset, could have otherwise
been used or absorbed to reduce such Tax.

                  (b) Time at which Tax Asset is Created. For purposes of
Section 4.2(a):

                      (i) General Rule. A Tax Asset shall be considered created
in the Tax Year relating to the Tax Return (including an information return of

                                      -15-
<PAGE>

U.S. persons with respect to certain foreign corporations on Internal Revenue
Service Form 5471) on which the Tax Asset is first included. In the case of a
Straddle Period, the principles of Section 2.5(b) shall apply to determine
whether such Tax Asset is created on or before the IPO Closing Date.

                      (ii) Exception for Certain Excluded Tax Assets. 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.

                      (iii) Exception for Tax Assets Arising out of the Payment
of Income Taxes. Any Tax Asset resulting from the payment of (x) a Foreign
Income Tax, other than a Foreign Income Tax described in Section 5.3(b), (y) a
State Income Tax or (z) an alternative minimum tax imposed by Section 55 of the
Code shall be considered created in the year in which the income or other Tax
Item to which such Tax relates accrued, regardless of the year in which such Tax
is paid or accrued.

                      (iv) Exception for Displaced Post-IPO Tax Assets. Any Tax
Asset that (x) would otherwise be treated, pursuant to Sections 4.2(b)(i)
through (iii), as created after the IPO Closing Date and (y) has the effect of
reducing, pursuant to Section 4.2(c), the value of any Pre-IPO Tax Asset shall
thereafter be treated as created on or before the IPO Closing Date.

                  (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 not
otherwise described in clause (iii) below, 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,

                      (ii) in the case of any tax credit not otherwise described
in clause (iii) below, one hundred percent (100%) of such tax credit used or
absorbed on such Tax Return, and

                      (iii) in the case of any Tax Asset that is a Pre-IPO Tax
Asset by reason of Section 4.2(b)(iv), the amount by which such Tax Asset
previously reduced, pursuant to this Section 4.2(c), the value of another
Pre-IPO Tax Asset;

provided, however, that the value of any Pre-IPO Tax Asset shall be reduced (but
not below zero) by the value of any Post-IPO Tax Asset (other than a carryback
of (1) a net operating loss, (2) tax credit or (3) any other Post-IPO Tax Asset)
to the extent that such Post-IPO Tax Asset could have otherwise been used or
absorbed by the TODCO Tax Group, but for the existence of a Pre-IPO Tax Asset,
to similarly reduce the Tax for which TODCO is liable under Section 2. For
purposes of the immediately preceding sentence, a Post-IPO Tax Asset will also
be considered eligible to have otherwise been used or absorbed if such Tax Asset
was used or absorbed on the relevant Tax Return as a

                                      -16-
<PAGE>

deduction and could have been used or absorbed as a tax credit, but for the
existence of a Pre-IPO Tax Asset. Any Post-IPO Tax Asset that TODCO (or
Holdings, by reason of Section 3.2(b)(ii)) may elect to treat either as a tax
credit or a deduction shall be valued in the following manner: (x) in the case
of a Tax Asset that is reported on the relevant Tax Return as a tax credit, the
Tax Asset shall have a value equal to 80 percent of its value determined under
Section 4.2(c)(ii), and (y) in the case of a Tax Asset that is reported on the
relevant Tax Return as a deduction, the Tax Asset shall have a value equal to 80
percent of the excess of its value as if determined under Section 4.2(c)(ii)
over its value determined under Section 4.2(c)(i).

                  (d) Determination of Tax Assets Used or Absorbed. The
determination of (x) whether any Pre-IPO Tax Asset (including any Tax Asset
treated as a Pre-IPO Tax Asset pursuant to Section 4.2(b)(iv)) has been used or
absorbed on any relevant Tax Return after the IPO Closing Date, (y) the value of
any such Tax Asset as determined pursuant to Section 4.2(c), and (z) whether any
other Tax Asset becomes described in Section 4.2(b)(iv) as a result of the use
or absorption of any Pre-IPO Tax Asset shall be made by TODCO and reported by a
nationally recognized accounting firm no later than twenty (20) days after the
date on which the relevant Tax Return is filed. Such accounting firm shall
report such determination 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 Pre-IPO Tax Asset continues to be
available for use by any member of the TODCO Tax Group, then TODCO shall provide
to Holdings, no later than March 15, June 15, September 15 and December 15 of
such year, periodic forecasts of (1) the use of such Tax Asset during such year,
(2) the value of such Tax Asset, (3) whether any other Tax Asset will become
described in Section 4.2(b)(iv) and (4) any other items reasonably requested by
Holdings. TODCO shall also provide to Holdings, no later than October 15 of such
year, a forecast of (1) the use or absorption of any such Tax Asset in the
following year, (2) the value of such Tax Asset, (3) any other Tax Asset that
will become described in Section 4.2(b)(iv) and (4) any other items reasonably
requested by Holdings.

                  (f) Acceleration of Payments Upon Change of Control. 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

                                      -17-
<PAGE>

voting power of all of the outstanding TODCO stock, all unused Pre-IPO Tax
Assets shall, for purposes of Section 4.2(a), be treated as having been used by
TODCO on a Tax Return filed immediately prior to such day. In such case, 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 product of (x) the value of all unused Pre-IPO Tax Assets and (y)
the Applicable Discount Rate for the year in which the Tax Return including such
Pre-IPO Tax Assets is treated as being filed. The value of all such unused
Pre-IPO Tax Assets shall be determined pursuant to Sections 4.2(c)(i), (ii) and
(iii), without reduction by the value of any Post-IPO Tax Asset. However, if any
such unused Pre-IPO Tax Asset (other than a Tax Asset that is a Pre-IPO Tax
Asset by reason of Section 4.2(b)(iv)) is a foreign tax credit under Section 901
of the Code, then such unused Pre-IPO 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).

                  (g) Acceleration of Payments Upon Deconsolidation. If on any
day following the IPO Closing Date any member of the TODCO Tax Group ceases to
join in the filing of a Federal Income Tax Return which is filed on a
consolidated basis by TODCO, as the common parent, and its eligible Subsidiaries
(as determined under Section 1504(a) of the Code or any successor provision),
all Pre-IPO Tax Assets attributable to such member shall, for purposes of
Section 4.2(a), be treated as having been used on a Tax Return filed immediately
prior to such day. A Tax Asset shall be attributable to a member of the TODCO
Tax Group if such member would be entitled to deduct, credit or otherwise use,
under the relevant Tax Law, such Pre-IPO Tax Asset on a Tax Return filed with
respect to any Tax Year, or portion thereof, beginning after such day. If any
Pre-IPO Tax Asset is treated as being used pursuant to this Section 4.2(g),
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 product of (x) the value of such Pre-IPO Tax Asset and (y)
the Applicable Discount Rate for the year in which the Tax Return including such
Pre-IPO Tax Asset is treated as being filed. The value of such Pre-IPO Tax Asset
shall be determined pursuant to Sections 4.2(c)(i), (ii) and (iii), without
reduction by the value of any Post-IPO Tax Asset. However, if such Pre-IPO Tax
Asset (other than a Tax Asset that is a Pre-IPO Tax Asset by reason of Section
4.2(b)(iv)) is a foreign tax credit under Section 901 of the Code, then such
Pre-IPO 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).

                  (h) Other Special Rules. The following rules shall apply for
purposes of applying this Section:

                      (i) Ordering Rules. If as a result of the application of
Section 4.2(a), Section 4.2(f) or Section 4.2(g) a Tax Asset is treated as used
or absorbed more than once, such Tax Asset shall be treated as used, for
purposes of this Section 4, only once and at the earliest possible date.

                      (ii) Alternative Minimum Tax. This Section 4 shall be
applied without regard to the alternative minimum tax and the alternative
minimum tax credit provisions of Sections 53 and 55 through 59 of the Code;
provided, however, that

                                      -18-
<PAGE>

this Section 4 shall apply to any credit under Section 53 of the Code arising
out of the payment of alternative minimum tax under Section 55 of the Code with
respect a Tax Year, or portion thereof, ending on or before the IPO Closing
Date. For purposes of Section 4.2(a), TODCO will be deemed to use or absorb any
credit under Section 53 of the Code that is a Pre-IPO Tax Asset only after it
has used or absorbed all other available credits under Section 53 of the Code.

                      (iii) Trinidad and Tobago Taxes and Tax Assets. Section
4.2(a) shall not apply, and TODCO shall have no obligation to pay Holdings, with
respect to any Pre-IPO Tax Asset, to the extent that such Tax Asset either (x)
reduces a Foreign Income Tax imposed by the Republic of Trinidad and Tobago and
the creation of such Tax Asset was attributable to the TODCO Business or (y) is
generated as a result of the payment of a Foreign Income Tax imposed by the
Republic of Trinidad and Tobago and such Foreign Income Tax was attributable to
the TODCO Business.

                      (iv) Examples. The operation of various provisions of this
Section 4 is illustrated by examples in Appendix A of this Agreement.

         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.

         4.4 Tax Benefits Resulting from Exercise of Employee Stock Options.
Except as otherwise provided in Section 5.8, 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

                                      -19-
<PAGE>

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 Consolidated or 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, Tax Benefits, and Tax Assets. Except as
otherwise provided in Section 5.8 or any other part of this Agreement:

                  (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 Received 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, TODCO shall pay to Holdings,
within thirty days after the receipt of the Tax refund, an amount equal to such
Tax refund.

                  (c) Tax Asset Used by TODCO Tax Group.

                                      -20-
<PAGE>

                  (i) Estimated Payments. TODCO shall, consistent with the
principles of Section 4.2, estimate the value of all Pre-IPO Tax Assets utilized
in determining each required installment of estimated taxes payable by any
member of the TODCO Tax Group either to Holdings under Section 5.1(b) or to a
Tax Authority under Code Section 6655 (without regard to Code Section
6655(d)(1)(B)(ii)) or other applicable Tax Law. Within thirty days following the
required payment date for such installment (and whether or not any payment is
actually made), TODCO shall pay to Holdings the estimated value of such Pre-IPO
Tax Assets, reduced by any payments previously made by TODCO to Holdings, and
increased by any payments previously made by Holdings to TODCO, pursuant to this
Section 5.2(c)(i) for the same Tax Year. If the adjustments described in the
immediately preceding sentence result in a deficit (i.e., a reduction below
zero), then Holdings will promptly remit to TODCO the amount of such deficit.

                  (ii) Date Tax Return is Due. If any member of the TODCO Tax
Group receives an extension of the due date for filing a Tax Return, as
determined under Code Section 6072 or other applicable Tax Law, TODCO shall,
consistent with the principles of Section 4.2, estimate the value of all Pre-IPO
Tax Assets that will be used or absorbed on such Tax Return. Within thirty days
following such due date (determined without regard to extensions), TODCO shall
pay to Holdings the estimated value of such Pre-IPO Tax Assets, reduced by any
payments previously made by TODCO to Holdings, and increased by any payments
previously made by Holdings to TODCO, pursuant to Section 5.2(c)(i) for the same
Tax Year. If the adjustments described in the immediately preceding sentence
result in a deficit (i.e., a reduction below zero), then Holdings will promptly
remit to TODCO the amount of such deficit.

                  (iii) Date Tax Return is Filed. Within thirty days after any
member of the TODCO Tax Group files a Tax Return for a Tax Year under Code
Section 6012 or other applicable Tax Law, TODCO shall pay to Holdings the value
of all Pre-IPO Tax Assets used or absorbed on such Tax Return as determined
under Section 4.2, reduced by any payments previously made by TODCO to Holdings,
and increased by any payments previously made by Holdings to TODCO, pursuant to
Sections 5.2(c)(i) and (ii) for the same Tax Year. If the adjustments described
in the immediately preceding sentence result in a deficit (i.e., a reduction
below zero), then Holdings will promptly remit to TODCO the amount of such
deficit.

         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 as a result
of an audit by a Tax Authority or for any other reason (x) additional Taxes to
which such determination relates are subsequently paid, (y) a refund of such
Taxes or a Tax Benefit relating to such Taxes is received, or (z) the amount or
character of any Tax Item is adjusted or redetermined. Except as otherwise
provided in Section 5.8, each payment required by the immediately

                                      -21-
<PAGE>

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,
(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, or (z) as a result of an
adjustment or redetermination of the amount or character of a Tax Item will be
due thirty days after the date on which the final action resulting in such
adjustment or redetermination is taken by a Tax Authority or either Company. 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. Except as
otherwise provided in Section 5.8, 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 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
Pre-IPO Tax Asset 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

                                      -22-
<PAGE>
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.

         5.8 Subordination Agreement. If without regard to this Section 5.8, (x)
TODCO would be required pursuant to this Agreement to make a payment to Holdings
within the period prescribed in Section 4.4 or elsewhere in this Section 5, and
(y) such payment by TODCO at such time would not be permitted under the terms of
the Subordination Agreement, dated as of ____________, 2003, by Transocean,
TODCO, and certain of their Subsidiaries, then such payment obligation shall be
deferred until permitted by the Subordination Agreement; provided, however, that
for purposes of Section 5.6 (relating to interest) such payment shall be
considered due at the time prescribed in Section 4.4 or elsewhere in this
Section 5 without regard to this Section 5.8.

         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) 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

                                      -23-
<PAGE>

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) 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, and
Holdings shall assist TODCO, in taking any remedial actions which are necessary
or desirable to minimize the effects of any adjustment made by a Tax Authority,
including without limitation those described in Internal Revenue Service Revenue
Procedure 99-32. 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.

                                      -24-
<PAGE>
         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. TODCO
also agrees that (i) TODCO has no intentions of causing its wholly owned
subsidiary, THE Offshore Drilling Company, to dispose of the assets it acquired
from R&B Falcon Holdings Inc. in a February 2003 merger of those two companies,
(ii) TODCO will cause THE Offshore Drilling Company to continue without
interruption the business it conducted prior to the February 2003 merger, and
(iii) TODCO has no intention of disposing of the stock of THE Offshore Drilling
Company that it received in the February 2003 merger.

         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 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:

                           Robert W. Kemp
                           Vice President, Tax
                           Transocean Offshore Deepwater Drilling, Inc.
                           4 Greenway Plaza, Suite 800
                           Houston, Texas 77046

                                      -25-
<PAGE>
                  (b) If to TODCO to:

                           T. Scott O'Keefe

                           Senior Vice President and Chief Financial Officer
                           TODCO
                           2000 W. Sam Houston Parkway South, Suite 800
                           Houston, Texas 77042

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 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

                                      -26-
<PAGE>

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.

                                      -27-
<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:  Robert W. Kemp
                                       Title: Vice President, Tax

                                 TODCO

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

                                       Name:  T. Scott O'Keefe
                                       Title: Senior Vice President and
                                              Chief Financial Officer

                                      -28-
<PAGE>

                                  SCHEDULE 1.1

                            Applicable Discount Rates

<Table>
<S>                                                          <C>
            2004.............................................0.80
            2005.............................................0.70
            2006.............................................0.70
            2007.............................................0.80
            2008.............................................0.80
            2009.............................................0.85
            2010.............................................0.90
            2011.............................................0.95
            2012.............................................0.95
            2013 and later years.............................1.00
</Table>

                                      -29-
<PAGE>

                                  SCHEDULE 1.2

                                 TODCO Tax Group

Cliffs Drilling (Barbados) Holdings SRL
Cliffs Drilling (Barbados) SRL
Cliffs Drilling Company
Cliffs Drilling de Venezuela, S.A.
Cliffs Drilling Trinidad L.L.C.
Cliffs Drilling Trinidad Offshore Limited
Perforaciones Falrig de Venezuela C.A.
Servicos Integrados Petroleros C.C.I., S.A.
Servicios TODCO, de RL de C.V.
THE Offshore Drilling Company
TODCO
TODCO Management Services, Inc. LLC
TODCO Mexico, Inc.
TODCO Trinidad Ltd.

                                      -30-
<PAGE>

                                  SCHEDULE 1.3

                              Transocean Tax Group

Arcade Drilling as
Asie Sonat Offshore Sdn Bhd
Cariba Ships Corporation N.V.
Caspian Sea Ventures International, Ltd.
Cliffs Drilling do Brasil Servicos de Petroleo S/C Ltda.
DeepVision LLC
Deepwater Drilling II L.L.C.
Deepwater Drilling L.L.C.
Falcon Atlantic Ltd.
Hellerup Finance International
International Chandlers Inc.
NRB Drilling Services Limited
Overseas Drilling Limited
P.T. Hitek Nusantara Offshore Drilling
Partrederiet Polar Frontier Drilling
Polar AS
Polar Frontier Drilling AS
PT RBF Offshore Drilling
R&B Falcon (A) Pty Ltd.
R&B Falcon (Caledonia) Limited
R&B Falcon (Ireland) Limited
R&B Falcon (M) Sdn. Berhad
R&B Falcon (U.K.) Limited
R&B Falcon B.V.
R&B Falcon Canada Co.
R&B Falcon Deepwater (UK) Limited
R&B Falcon Drilling (International & Deepwater) Inc. LLC
R&B Falcon Drilling Co. LLC
R&B Falcon Drilling do Brasil Ltda.
R&B Falcon Drilling Limited, LLC
R&B Falcon Exploration Co. LLC
R&B Falcon International Energy Services B.V.
R&B Falcon Offshore Limited, LLC
R&B Falcon, Inc. LLC
RB Anton Ltd.
RB Astrid Ltd.
RB Mediterranean Ltd.
RBF (Nigeria) Limited
RBF Drilling Co. LLC
RBF Drilling Services, Inc. LLC
RBF Exploration LLC
RBF Finance Co.
RBF Rig Corporation LLC

                                      -31-
<PAGE>

RBF Servicos Angola, Limitada
Reading & Bates - Demaga Perfuracoes Ltda.
Reading & Bates Coal Co. LLC
SDS Offshore Ltd.
Sea Wolf Drilling Ltd.
Sea Wolf Drillstar Ltd.
Sea Wolf Sedex Ltd.
Sedco Forex (Malaysia) Sendirian Berhad
Sedco Forex Canada Ltd.
Sedco Forex Corporation
Sedco Forex Holdings Limited
Sedco Forex International Drilling, Inc.
Sedco Forex International Resources, Ltd.
Sedco Forex International Services, S.A.
Sedco Forex International, Inc.
Sedco Forex of Nigeria Limited
Sedco Forex Offshore International N.V.
Sedco Forex Shorebase Support Ltd.
Sedco Forex Technical Services, Inc.
Sedco Forex Technology, Inc.
Sedneth Panama, S.A.
Sefora Maritime Limited
Services Petroliers Sedco Forex
Shore Services, LLC
Sonat Brasocean Servicos De Perfuracoes Ltda.
Sonat Offshore do Brasil Perfuracoes Maritimas Ltda.
Sonat Offshore SA
Transhav AS
Transocean Alaskan Ventures Inc.
Transocean AS
Transocean Brasil Ltda.
Transocean Deepwater Frontier Limited
Transocean Deepwater Pathfinder Limited
Transocean Drilling (Nigeria) Ltd.
Transocean Drilling (U.S.A.) Inc.
Transocean Drilling Company, Inc.
Transocean Drilling Ltd.
Transocean Drilling Services Inc.
Transocean Enterprise Inc.
Transocean Holdings Inc.
Transocean I AS
Transocean Inc.
Transocean International Drilling Inc.
Transocean International Drilling Limited
Transocean Investmentivos Ltda.
Transocean Management Inc.

                                      -32-
<PAGE>

Transocean Mediterranean LLC
Transocean Offshore (Cayman) Inc.
Transocean Offshore (North Sea) Ltd.
Transocean Offshore (U.K.) Inc.
Transocean Offshore Caribbean Sea, L.L.C.
Transocean Offshore D.V. Inc.
Transocean Offshore Deepwater Drilling Inc.
Transocean Offshore Drilling Services LLC
Transocean Offshore Europe Limited
Transocean Offshore Holdings ApS
Transocean Offshore International Ltd.
Transocean Offshore International Ventures Limited
Transocean Offshore Limited
Transocean Offshore Nigeria Ltd.
Transocean Offshore Norway Inc.
Transocean Offshore Services Ltd.
Transocean Offshore USA Inc.
Transocean Offshore Ventures Inc.
Transocean Sedco Forex Brasil Ltda.
Transocean Sedco Forex Ventures Limited
Transocean Services AS
Transocean Sino Ltd.
Transocean Support Services Limited
Transocean UK Ltd.
Transocean-Nabors Drilling Technology, L.L.C.
Triton Drilling Ltd.
Triton Holdings Limited
Triton Industries, Inc.
Wilrig Drilling (Canada) Inc.
Wilrig Offshore (UK) Ltd.

                                      -33-
<PAGE>

                                   APPENDIX A

         The following examples illustrate the operation of various provisions
of Section 4 of this Agreement. Each of the examples assumes (i) an income tax
rate of 35%, (ii) that the Closing Date occurred in 2003, and (iii) that TODCO
files a Separate Return with respect to all Taxes in 2004 and later years.

         Example 1. In 2004, TODCO has $100x of gross income, all of which is
from sources outside the United States, and pays $35x of Foreign Income Taxes.
TODCO has no other expenses or deductions in 2004, but has available a $100x net
operating loss ("NOL") carryforward from 2002. TODCO elects (or Holdings causes
TODCO to elect) to credit, rather than deduct, Foreign Income Taxes paid in
2004. TODCO's foreign tax credits are, however, subject to full limitation, but
solely because of the existence of the 2002 NOL. The following reflects TODCO's
2004 liability for Taxes with and without regard to the 2002 NOL:

<Table>
<Caption>
                                          Actual Return     Hypothetical Return
                                          with 2002 NOL      without 2002 NOL
<S>                                     <C>                 <C>
Gross Income                                        100x                 100x
Deductions                                           -0-                  -0-
2002 NOL                                            100x                  -0-
                                        ----------------     ----------------
Pre-Credit Tax Liability                             -0-                  35x
Credits                                              -0-                  35x
                                        ----------------     ----------------
Income Tax Liability                                 -0-                  -0-
</Table>

         Pursuant to Section 4.2(b)(i), the 2002 NOL is treated as a Pre-IPO Tax
Asset. Because the 2002 NOL has the effect of reducing Taxes for which TODCO is
liable pursuant to Section 2 (without regard to the 2004 foreign tax credits
that could have otherwise been used), TODCO must pay Holdings pursuant to
Section 4.2(a) an amount equal to the value of the 2002 NOL. Pursuant to 4.2(c),
the value of the 2002 NOL is $35x (viz., 35% x $100x), reduced by the value of
the foreign tax credits that could have been used to similarly reduce TODCO's
Taxes, but for the existence of the 2002 NOL. Pursuant to clause (x) of the last
sentence of Section 4.2(c), the value of the foreign tax credits is $28x (viz.,
80% x $35x). Accordingly, the value of the 2002 NOL, $35x, is reduced by the
value of the foreign tax credits, $28x, resulting in a $7 payment obligation by
TODCO to Holdings.

         Pursuant to Section 4.2(b)(iv), the 2004 foreign tax credits will
thereafter be treated as a Pre-IPO Tax Asset. Accordingly, if TODCO subsequently
uses those credits on a Tax Return to reduce its Taxes, it must pay Holdings
under Section 4.2(a) an amount equal to the value of those credits. The value of
those credits will be $28x, pursuant to Section 4.2(c)(iii), but subject to
reduction by any Post-IPO Tax that could have otherwise been used to similarly
reduce such Taxes. Similarly, if TODCO uses only half of those credits (i.e.,
$17.5x), TODCO must only pay Holdings an amount equal to the

                                      -34-
<PAGE>

value of half of the credits (i.e., $14x, subject to reduction by any Post-IPO
Tax that could have otherwise been used to similarly reduce such Taxes).

         Example 2. The facts are the same as in Example 1, except that TODCO
elects (or Holdings causes TODCO to elect) to deduct rather than credit Foreign
Income Taxes paid in 2004. The following reflects TODCO's 2004 liability for
Taxes with and without regard to the 2002 NOL:

<Table>
<Caption>
                                           Actual Return      Hypothetical Return
                                           with 2002 NOL        without 2002 NOL
<S>                                     <C>                   <C>
Gross Income                                          100x                   100x
Deductions                                             35x                    35x
2002 NOL                                               65x                    -0-
                                        ------------------     ------------------
Pre-Credit Tax Liability                               -0-                 22.75x
Credits                                                -0-                    -0-
                                        ------------------     ------------------
Income Tax Liability                                   -0-                 22.75x
</Table>

         Pursuant to Section 4.2(b)(i), the 2002 NOL is treated as a Pre-IPO Tax
Asset. Because $65x of the 2002 NOL has the effect of reducing Taxes for which
TODCO is liable pursuant to Section 2, TODCO must pay Holdings pursuant to
Section 4.2(a) an amount equal to the value of that portion of the 2002 NOL.
Pursuant to 4.2(c), the value of that portion of the 2002 NOL is $22.75x (viz.,
35% x $65x), reduced by the value of any Post-IPO Tax Asset that could have
otherwise been used to reduce TODCO's Taxes. Pursuant to the second sentence of
Section 4.2(c), the deduction for Foreign Income Taxes paid in 2004 will be
considered a Tax Asset that could have otherwise been so used, because TODCO
could have credited, rather than deducted, such Foreign Income Taxes but for the
existence of the 2002 NOL. Pursuant to clause (y) of the last sentence of
Section 4.2(c), the value of the such deduction shall equal $18.20x (viz., 80% x
($35x - 35% x $35x)). Accordingly, the value of $65x of the 2002 NOL, $22.75x,
is reduced by the value of the deduction for Foreign Income Taxes paid in 2004,
$18.20x, resulting in a $4.55 payment obligation by TODCO to Holdings.

         Example 3. The facts are the same as in Example 1, except that in 2008
TODCO files (or Holdings causes TODCO to file) an amended Tax Return for 2004 in
which TODCO elects to deduct, rather than credit, Foreign Income Taxes paid in
2004 (i.e., the results in Example 2). Accordingly, TODCO's obligations under
Section 4.2(a) will be recomputed taking into account the amended Tax Return,
and TODCO and Holdings will make payments between each other pursuant to Section
5.3 to reflect the adjusted obligation. On these facts, Holdings would pay TODCO
$2.45 (viz. $7 - $4.55).

         The change in the 2004 election, however, also reduces the amount of
the 2002 NOL carryforward that is used in 2004. Accordingly, a payment
obligation may arise with respect to the $35x of 2002 NOL carryforward that is
carried to 2005 or a later year.

                                      -35-
<PAGE>

         Example 4. In 2004, TODCO has $100x of gross income and pays no Foreign
Income Taxes. TODCO has no expenses or deductions in 2004, but has available a
$100x NOL carryforward from 2002. The following reflects TODCO's 2004 liability
for Taxes with and without regard to the 2002 NOL:

<Table>
<Caption>
                                           Actual Return      Hypothetical Return
                                           with 2002 NOL        without 2002 NOL
<S>                                     <C>                   <C>
Gross Income                                          100x                   100x
Deductions                                             -0-                    -0-
2002 NOL                                              100x                    -0-
                                        ------------------     ------------------
Pre-Credit Tax Liability                               -0-                    -0-
Credits                                                -0-                    -0-
                                        ------------------     ------------------
Income Tax Liability                                   -0-                    35x
</Table>

         Pursuant to Section 4.2(b)(i), the 2002 NOL is treated as a Pre-IPO Tax
Asset. Because the 2002 NOL has the effect of reducing Taxes for which TODCO is
liable pursuant to Section 2, TODCO must pay Holdings pursuant to Section 4.2(a)
an amount equal to the value of the 2002 NOL. Pursuant to 4.2(c)(i), the value
of the 2002 NOL is $35x (viz., 35% x $100x). Accordingly, TODCO must pay
Holdings $35x.

         In 2005, TODCO generates a $100x NOL. Pursuant to the "provided,
however," clause of Section 4.2(c), TODCO may not carry back the 2005 NOL to the
hypothetical 2004 Tax Return in order to reduce the value of the 2002 NOL that
was used in 2004.

         Example 5. In 2004, TODCO generates a $100x NOL. In 2005, TODCO has
$100x of gross income and pays no Foreign Income Taxes. TODCO has no expenses or
deductions in 2005, but has available a $100x NOL carryforward from 2002 and a
$100x NOL carryforward from 2004 . The following reflects TODCO's 2005 liability
for Taxes with and without regard to the 2002 NOL:

<Table>
<Caption>
                                           Actual Return        Hypothetical Return
                                           with 2002 NOL         without 2002 NOL
<S>                                     <C>                     <C>
Gross Income                                           100x                    100x
Deductions                                              -0-                     -0-
2002 NOL                                                -0-                    100x
2004 NOL                                               100x                     -0-
                                        -------------------     -------------------
Pre-Credit Tax Liability                                -0-                     -0-
Credits                                                 -0-                     -0-
                                        -------------------     -------------------
Income Tax Liability                                    -0-                     -0-
</Table>

         Pursuant to Section 4.2(b)(i), the 2002 NOL is treated as a Pre-IPO Tax
Asset. Because the 2002 NOL has the effect of reducing Taxes for which TODCO is
liable

                                      -36-
<PAGE>

pursuant to Section 2 (without regard to the 2004 NOL that could have otherwise
been used), TODCO must pay Holdings pursuant to Section 4.2(a) an amount equal
to the value of the 2002 NOL. Pursuant to 4.2(c), the value of the 2002 NOL is
$35x (viz., 35% x $100x), reduced by the value of the 2004 NOL that could have
been used to similarly reduce TODCO's Taxes, but for the existence of the 2002
NOL. Pursuant to the general rule of Section 4.2(c)(i), the value of the 2004
NOL is $35x (viz., 35% x $100x). Accordingly, the value of the 2002 NOL, $35x,
is reduced by the value of the 2004 NOL, also $35x, resulting in no payment
obligation by TODCO to Holdings.

         Pursuant to Section 4.2(b)(iv), the 2004 NOL will thereafter be treated
in the same manner as if such NOL had been created on or before the Closing
Date. Accordingly, if TODCO subsequently uses the 2004 NOL on a Tax Return to
reduce its Taxes, it must pay Holdings under Section 4.2(a) an amount equal to
the value of such NOL.

         Example 6. In 2004, TODCO has $100x of gross income from sources
outside the United States, and pays $35x of Foreign Income Taxes. TODCO also has
$100 of gross income from sources within the United States and a $100 deduction
from sources outside the United States. TODCO has no other expenses or
deductions in 2004, but has available a $100x NOL carryforward from 2002. TODCO
elects (or Holdings causes TODCO to elect) to credit, rather than deduct,
Foreign Income Taxes paid in 2004. TODCO's foreign tax credits are, however,
subject to full limitation, NOT solely because of the existence of the 2002 NOL,
but also because of the $100 deduction from sources outside the United States.
The following reflects TODCO's 2004 liability for Taxes with and without regard
to the 2002 NOL:

<Table>
<Caption>
                                           Actual Return        Hypothetical Return
                                           with 2002 NOL          without 2002 NOL
<S>                                     <C>                     <C>
Gross Income (US Source)                               100x                    100x
Gross Income (Foreign Source)                          100x                    100x
Deductions (US Source)                                  -0-                     -0-
Deductions (Foreign Source)                            100x                    100x
2002 NOL                                               100x                     -0-
                                        -------------------     -------------------
Pre-Credit Tax Liability                                -0-                     35x
Credits                                                 -0-                     -0-
                                        -------------------     -------------------
Income Tax Liability                                    -0-                     35x
</Table>

         Pursuant to Section 4.2(b)(i), the 2002 NOL is treated as a Pre-IPO Tax
Asset. Because the 2002 NOL has the effect of reducing Taxes for which TODCO is
liable pursuant to Section 2 (without regard to the 2004 foreign tax credits),
TODCO must pay Holdings pursuant to Section 4.2(a) an amount equal to the value
of the 2002 NOL. Pursuant to 4.2(c), the value of the 2002 NOL is $35x (viz.,
35% x $100x), reduced by the value of the foreign tax credits that could have
been used to similarly reduce TODCO's Taxes, but for the existence of the 2002
NOL. Because the foreign tax credits

                                      -37-
<PAGE>

could not have been used even without the existence of the 2002 NOL, there is no
reduction in the value of the 2002 NOL. Accordingly, there is a $35 payment
obligation by TODCO to Holdings. The foreign tax credits continue to be a
Post-IPO Tax Asset.

         Example 7. As of January 30, 2006, TODCO and its Subsidiaries,
collectively, have the following Tax Assets:

         o        a $1,000x NOL carryforward from 2002,

         o        a $100x foreign tax credit carryforward from 2002, and

         o        a $100x foreign tax credit carryforward from 2004 that is
                  treated as a Pre-IPO Tax Asset by reason of Section 4.2(b)(iv)
                  with a value of $80x pursuant to Section 4.2(c)(iii).

         On January 31, 2006, TODCO disposes of 30% of the stock of one its
Subsidiaries ("Subsidiary A"). As a result of such disposition, Subsidiary A
immediately thereafter ceases to join in the filing of a Federal Income Tax
Return that is filed on a consolidated basis by TODCO and its eligible
Subsidiaries (the "Deconsolidation"). Under the relevant Tax Law, Subsidiary A
will be allowed to carry forward and deduct or credit, as applicable, on a Tax
Return filed with respect to a Tax Year, or portion thereof, beginning after the
day of Deconsolidation the following Tax Assets: (1) $200x of the 2002 NOL
carryforward, (2) $20x of the 2002 foreign tax credit carryforward, and (3) $20x
of the 2004 foreign tax credit carryforward. On May 31, 2006, 51% of the TODCO
stock is acquired by a corporation unrelated to Holdings.

         As a result of the Deconsolidation, the TODCO Tax Group will, pursuant
to Section 4.2(g), be deemed to have used those Tax Assets attributable to
Subsidiary A: (1) $200x of the 2002 NOL carryforward, (2) $20x of the 2002
foreign tax credit carryforward, and (3) $20x of the 2004 foreign tax credit
carryforward. The value of these deemed used Tax Assets is determined as
follows:

    o    The value of $200x of the 2002 NOL carryforward will equal $70x (viz.,
         35% x $200), pursuant to Section 4.2(c)(i) and the penultimate
         sentence of Section 4.2(g).

    o    The value of $20x of the 2002 foreign tax credit carryforward will
         equal $7x (viz., 35% x $20), pursuant to Section 4.2(c)(i) and the
         last sentence of Section 4.2(g).

    o    The value of $20x of the 2004 foreign tax credit carryforward will
         equal $16x (viz., 20/100 x $80x), pursuant to Section 4.2(c)(iii) and
         the penultimate sentence of Section 4.2(g).

         Accordingly, TODCO will be obligated to pay Holdings $93x (viz., $70x +
$7x + $16x), pursuant to Sections 4.2(a) and (g). Such payment will be due 30
days after January 30, 2006, pursuant to Section 5.2(b). This payment is due
without regard to whether any member of the TODCO Tax Group actually uses such
Tax Assets.

                                      -38-
<PAGE>

         As a result of the acquisition of 51% of the stock of TODCO by a
corporation unrelated to Holdings, the remaining members of the TODCO Tax Group
will, pursuant to Section 4.2(f), be deemed to have used: (1) the remaining
$800x of the 2002 NOL carryforward, (2) the remaining $80x of the 2002 foreign
tax credit carryforward, and (3) the remaining $80x of the 2004 foreign tax
credit carryforward. Pursuant to Section 4.2(h)(i), TODCO will not be deemed to
have again used the Pre-IPO Tax Assets deemed used on January 30, 2006 pursuant
to Section 4.2(g). The value of these deemed used Tax Assets is determined as
follows:

    o    The value of the remaining $800x of the 2002 NOL carryforward will
         equal $280x (viz., 35% x $800), pursuant to Section 4.2(c)(i) and the
         penultimate sentence of Section 4.2(f).

    o    The value of the remaining $80x of the 2002 foreign tax credit
         carryforward will equal $28x (viz., 35% x $80), pursuant to Section
         4.2(c)(i) and the last sentence of Section 4.2(f).

    o    The value of the remaining $80x of the 2004 foreign tax credit
         carryforward will equal $64x (viz., 80/100 x $80x), pursuant to
         Section 4.2(c)(iii) and the penultimate sentence of Section 4.2(g).

         Accordingly, TODCO will be obligated to pay Holdings $372x (viz., $280x
+ $28x + $64x), pursuant to Sections 4.2(a) and (f). Such payment will be due 30
days after May 30, 2006, pursuant to Section 5.2(b). This payment is due without
regard to whether any member of the TODCO Tax Group actually uses such Tax
Assets.

                                      -39-<PAGE>

                                                                    Exhibit 10.6

                         TODCO LONG-TERM INCENTIVE PLAN

         (Effective as of the Closing Date of the IPO as defined below)

                                   I. GENERAL

1.1      PURPOSE OF THE PLAN

         The purpose of the TODCO Long-Term Incentive Plan (the "Plan") is to
provide a means whereby TODCO, a Delaware company (the "Company"), may advance
the best interests of the Company and its subsidiaries by providing Directors
and employees with additional incentives through the grant of options
("Options") to purchase Class A Common Stock of the Company, par value US $0.01
per share ("Common Stock"), stock appreciation rights ("SARs"), shares of
restricted Common Stock ("Restricted Stock"), deferred stock units ("Deferred
Units") and cash performance awards ("Cash Awards"), thereby increasing the
personal stake of such Directors and employees in the continued success and
growth of the Company.

1.2      ADMINISTRATION OF THE PLAN

         (a) With respect to awards to eligible employees, the Plan shall be
administered (i) prior to the closing date of an initial public offering of
shares of Class A Common Stock, par value $.01 per share, of TODCO (the "IPO"),
by the Board of Directors of the Company (the "Board") and (ii) on and after the
closing date of the IPO, by the Executive Compensation Committee or other
designated committee of the Board of Directors of the Company (the "Committee"),
which shall consist of at least two Directors, all of whom (1) are not eligible
for awards under the Plan, (2) are "non-employee directors" within the meaning
of Rule 16b-3 under the Securities and Exchange Act of 1934 (the "Exchange
Act"), and (3) are outside directors satisfying the requirements of Section
162(m) of the Internal Revenue Code of 1986, as amended, or any successor
thereto (the "Code"). Notwithstanding the foregoing, prior to the IPO, the
Executive Compensation Committee or other designated committee of the Board of
Directors of Transocean Inc., a Cayman Island exempted company (the "Transocean
Committee"), which shall consist of at least two directors, all of whom are
outside directors of Transocean Inc. satisfying the requirements of Section
162(m) of the Code shall designate the type and amount of awards to the
following senior executives of the Company: (i) President and Chief Executive
Officer, (ii) Vice President and Chief Financial Officer, (iii) Vice
President-Marketing, and (iv) Vice President and Controller (collectively,
referred to as the "Senior Executives").

         (b) With respect to awards to Eligible Directors (as defined in Section
1.3), the Plan shall be administered by the Board. The Board shall have
authority to interpret conclusively the provisions of the Plan, to adopt such
rules and regulations for carrying out

<PAGE>

the Plan as it may deem advisable, to decide conclusively all questions of fact
arising in the application of the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. All decisions and
acts of the Board, with respect to Eligible Directors, shall be final and
binding upon all affected Plan participants.

         (c) The Board, prior to the IPO, and the Committee, on and after the
IPO, shall designate the eligible employees, if any, to be granted awards under
the Plan, the type and amount of such awards and the time when awards will be
granted. Prior to the IPO, the Transocean Committee shall designate the type and
amount of awards to the Senior Executives. The Board shall designate the
Eligible Directors (as defined in Section 1.3), if any, to be granted awards
under the Plan, the type and amount of such awards and the time when awards will
be granted. All awards granted under the Plan shall be on the terms and subject
to the conditions hereinafter provided.

1.3      ELIGIBLE PARTICIPANTS

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

         Each Director of the Company who is not an officer or employee of the
Company or any of its Subsidiaries (an "Eligible Director") shall be eligible
for awards under the Plan. Notwithstanding the foregoing, any Eligible Director
including, without limitation, any director that is an employee of Transocean
(as defined in Section 6.10(a)), may decline any such award. Eligible Directors
shall not be entitled to receive awards under Section 2.6.

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

1.4      AWARDS UNDER THE PLAN

         Awards to eligible employees and Eligible Directors under the Plan may
be in the form of (a) Options to purchase Common Stock, (b) SARs which may be
either freestanding or issued in tandem with Options, (c) Restricted Stock, (d)
Deferred Units, (e) Supplemental Payments (as defined in Section 2.4) which may
be awarded with respect to Options, SARs, Restricted Stock and Deferred Units,
(f) performance awards payable in cash, or (g) any combination of the foregoing.

1.5      SHARES OF COMMON STOCK SUBJECT TO THE PLAN

         The aggregate number of shares of Common Stock which may be issued with
respect to awards made under the Plan shall not exceed three million shares (the
"Available Shares"). Of such authorized shares, the aggregate number of shares
of Restricted Stock and Deferred Units which may be issued pursuant to Article
III, shall not exceed 50% of the Available Shares, and the aggregate number of
shares which may be

                                      -2-
<PAGE>

subject to incentive stock options pursuant to Section 2.6 shall not exceed all
Available Shares. No employee or Eligible Director shall be granted Options,
freestanding SARs, Restricted Stock, Deferred Units, or any combination of the
foregoing, with respect to more than 25% of the Available Shares of Common Stock
in any fiscal year (subject to adjustment as provided in Section 6.2). No
employee or Eligible Director shall be granted a Supplemental Payment in any
fiscal year with respect to more than the number of shares of Common Stock
covered by Options, freestanding SARs, Restricted Stock awards and Deferred Unit
awards granted to such employee or Eligible Director in such fiscal year. Shares
of Common Stock distributed pursuant to the Plan may consist of authorized but
unissued shares of Common Stock or treasury shares of Common Stock, as shall be
determined from time to time by the Board.

         If any Option under the Plan shall expire, terminate or be canceled
(including cancellation upon the Participant's exercise of a related SAR) for
any reason without having been exercised in full, or if any Restricted Stock or
Deferred Unit award shall be forfeited to the Company, the unexercised Options
and forfeited shares of Restricted Stock shall not count against the above limit
and shall again become available for awards under the Plan (regardless of
whether the Participant received dividends or other economic benefits with
respect to such Options or shares). Shares of Common Stock equal in number to
the shares of Common Stock surrendered in payment of the option price, and
shares of Common Stock which are withheld in order to satisfy federal, state or
local tax liability, shall not count against the above limit and shall again
become available for awards under the Plan. Only the number of shares of Common
Stock actually issued upon exercise of an SAR, the payment of a Supplemental
Payment or the vesting of a Deferred Unit award shall count against the above
limit, and any shares which were estimated to be used for such purposes and were
not in fact so used shall again become available for awards under the Plan.

         Freestanding SARs which may be settled solely in cash shall be issued
with respect to no more than an aggregate of 50% of the Available Shares. Such
SARs shall not count against the limits set forth above on the number of shares
of Common Stock which may be issued under the Plan. If any freestanding SAR
shall expire, terminate, or be canceled for any reason without having been
exercised in full, the unexercised SARs shall not count against this limit and
shall again become available for awards under the Plan.

1.6      OTHER COMPENSATION PROGRAMS

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

                                      -3-
<PAGE>

                    II. OPTIONS AND STOCK APPRECIATION RIGHTS

2.1      TERMS AND CONDITIONS OF OPTIONS

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

         (a) Option Price. The option price per share of Common Stock shall not
be less than the fair market value of a share of Common Stock (as determined by
the Committee) on the date the Option is granted. Notwithstanding the foregoing,
the option price per share of Common Stock with respect to any Option granted by
the Committee prior to closing date of the first registered public offering of
the Company's Class A Common Stock after the Effective Date (as defined in
Section 6.12) shall be equal to the price to the public of a share of Class A
Common Stock sold (or other class sold) in the IPO on the closing date of the
IPO.

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

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

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

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

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

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

                                      -4-
<PAGE>

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

         (h) Change in Control. Notwithstanding the exercisability schedule
governing any Option, upon the occurrence of a Change in Control (as defined in
Section 6.10), any Option outstanding at the time of such Change in Control and
held by a Participant at the time of such Change in Control shall become
immediately exercisable and, unless the Participant agrees otherwise in writing,
shall remain exercisable for the remainder of the Option term.

2.2      SARS IN TANDEM WITH OPTIONS

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

         (b) Upon exercise of a tandem SAR, the Participant shall receive, for
each share with respect to which the tandem SAR is exercised, an amount (the
"Appreciation") equal to the amount by which the fair market value (as defined
below) of a share of Common Stock on the date of exercise of the SAR exceeds the
option price per share of the Option to which the tandem SAR relates. For
purposes of the preceding sentence, the fair market value of a share of Common
Stock shall be the average of the high and low prices of such share as reported
on the consolidated reporting system. The Appreciation shall be payable in cash,
Common Stock, or a combination of both, at the option of the Committee, and
shall be paid within 30 days of the exercise of the tandem SAR.

         (c) Notwithstanding the foregoing, if a tandem SAR is exercised within
60 days of the occurrence of a Change in Control (as defined in Section 6.10),
(i) the Appreciation and any Supplemental Payment (as defined in Section 2.4) to
which the Participant is entitled shall be payable solely in cash, and (ii) in
addition to the Appreciation and the Supplemental Payment (if any), the
Participant shall receive, in cash, (1) the amount by which the greater of (a)
the highest market price per share of Common Stock during the 60-day period
preceding exercise of the tandem SAR or (b) the highest price per share of
Common Stock (or the cash-equivalent thereof as determined by the Board of
Directors of

                                      -5-
<PAGE>

the Company) paid by an acquiring person during the 60-day period preceding a
Change in Control, exceeds the fair market value of a share of Common Stock on
the date of exercise of the tandem SAR, plus (2) if the Participant is entitled
to a Supplemental Payment, an additional payment, calculated under the same
formula as used for calculating such Participant's Supplemental Payment, with
respect to the amount referred to in clause (1) of this sentence.

2.3      FREESTANDING SARS

         (a) Base Price and Appreciation. Each freestanding SAR shall be granted
with a base price, which shall not be less than the fair market value per share
of Common Stock (as determined by the Committee) on the date the SAR is granted.
Upon exercise of a freestanding SAR, the Participant shall receive, for each
share with respect to which the SAR is exercised, an amount (the "Appreciation")
equal to the amount by which the fair market value (as defined below) of a share
of Common Stock on the date of exercise of the SAR exceeds the base price of the
SAR. For purposes of the preceding sentence, the fair market value of a share of
Common Stock shall be the average of the high and low prices of such share as
reported on the New York Stock Exchange composite tape. The Appreciation shall
be payable in cash and shall be paid within 30 days of the exercise of the SAR.

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

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

         (d) Nontransferability of SARs. No SAR or any interest therein shall be
transferable by the Participant other than by will or by the laws of descent and
distribution. During a Participant's lifetime, all SARs shall be exercisable
only by such Participant or by the guardian or legal representative of the
Participant.

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

         (f) Termination of Employment. The Committee shall have discretion to
specify in the SAR grant or an amendment thereof, provisions with respect to the
period during which the SAR may be exercised following the Participant's
termination of employment. Notwithstanding the foregoing, the Committee shall
not permit any SAR to be exercised

                                      -6-
<PAGE>

beyond the term of the SAR established pursuant to Section 2.3(b), except that
the Committee may provide that, notwithstanding such SAR term, an SAR which is
outstanding on the date of a Participant's death shall remain outstanding and
exercisable for up to one year after the Participant's death.

         (g) Change in Control. Notwithstanding the exercisability schedule
governing any SAR, upon the occurrence of a Change in Control (as defined in
Section 6.10), any SAR outstanding at the time of such Change in Control and
held by a Participant at the time of such Change in Control shall become
immediately exercisable and, unless the Participant agrees otherwise in writing,
shall remain exercisable for the remainder of the SAR term. In addition, the
Committee may provide that if a freestanding SAR is exercised within 60 days of
the occurrence of a Change in Control, in addition to the Appreciation the
holder shall receive, in cash, the amount by which the greater of (i) the
highest market price per share of Common Stock during the 60-day period
preceding exercise of the SAR or (ii) the highest price per share of Common
Stock (or the cash equivalent thereof as determined by the Board of Directors)
paid by an acquiring person during the 60-day period preceding a Change in
Control, exceeds the fair market value per share of Common Stock on the date of
exercise of the SAR.

2.4      SUPPLEMENTAL PAYMENT ON EXERCISE OF OPTIONS OR SARS

         The Committee, either at the time of grant or at the time of exercise
of any Option or tandem SAR, may provide for a supplemental payment (the
"Supplemental Payment") by the Company to the Participant with respect to the
exercise of any Option or tandem SAR. The Supplemental Payment shall be in the
amount specified by the Committee, which shall not exceed the amount necessary
to pay the income tax payable to the national government with respect to both
exercise of the Option or tandem SAR and receipt of the Supplemental Payment,
assuming the Participant is taxed at the maximum effective income tax rate
applicable thereto. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment. The Supplemental Payment shall be paid
within 30 days of the date of exercise of an Option or SAR (or, if later, within
30 days of the date on which income is recognized for federal income tax
purposes with respect to such exercise).

2.5      ELIGIBLE DIRECTOR AWARDS

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

2.6      STATUTORY OPTIONS

         Subject to the limitations on Option terms set forth in Section 2.1,
the Committee shall have the authority to grant to employees of the Company and
its Subsidiaries (a) incentive stock options within the meaning of Section 422
of the Code and (b) Options containing such terms and conditions as shall be
required to qualify such Options for

                                      -7-
<PAGE>

preferential tax treatment under the Code as in effect at the time of such
grant. Options granted pursuant to this Section 2.6 may contain such other terms
and conditions permitted by Article II of the Plan as the Committee, in its
discretion, may from time to time determine, to the extent that such terms and
conditions do not cause the Options to lose their preferential tax treatment. To
the extent the Code and regulations promulgated thereunder require a plan to
contain specified provisions in order to qualify options for preferential tax
treatment, such provisions shall be deemed to be stated in the Plan. Eligible
Directors shall not be entitled to receive incentive stock options as defined in
Section 422 of the Code.

2.7      AWARDS PRIOR TO THE IPO

         Notwithstanding the foregoing, prior to the IPO, the Board shall make
all determinations otherwise assigned to the Committee under Article II with
respect to Options, SARs and Supplemental Payment awards to eligible employees
(except for the Senior Executives). With respect to Options, SARs and
Supplemental Payment awards to the Senior Executives, prior to the IPO, the
Transocean Committee shall make all determinations otherwise assigned to the
Committee under Article II.

                    III. RESTRICTED STOCK AND DEFERRED UNITS

3.1      TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS

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

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

         (b) Stock certificates representing the shares of Restricted Stock
awarded to a Participant shall be registered in such Participant's name. Such
certificates shall either be held by the Company on behalf of the Participant,
or delivered to the Participant bearing a legend to restrict transfer of the
certificate until the shares of Restricted Stock have vested, as determined by
the Committee. The Committee shall determine whether the Participant shall have
the right to vote and/or receive dividends on the shares of Restricted Stock
before they have vested. No shares of Restricted Stock may be sold, transferred,
assigned, or pledged by the Participant until they have vested in accordance
with the terms of the Restricted Stock award. In the event of the Participant's
termination of employment before all of his shares of Restricted Stock have
vested, or in the event other conditions to the vesting of shares of Restricted
Stock have not been satisfied prior to any deadline for

                                      -8-
<PAGE>

the satisfaction of such conditions set forth in the award, the shares of
Restricted Stock which have not vested shall be forfeited and any purchase price
paid by the Participant shall be returned to such Participant. At the time the
shares of Restricted Stock vest (and, if the Participant has been issued
legended certificates representing the shares of Restricted Stock, upon the
return of such certificates to the Company), a certificate for such vested
shares shall be delivered to the Participant (or the Beneficiary designated by
such Participant in the event of death), free of all restrictions.

         (c) Notwithstanding the vesting conditions set forth in the Restricted
Stock award, (i) the Committee may in its discretion accelerate the vesting of
the shares of Restricted Stock at any time, and (ii) all shares of Restricted
Stock shall vest upon a Change in Control of the Company (as defined in Section
6.10).

3.2      TERMS AND CONDITIONS OF DEFERRED UNITS

         (a) A "Deferred Unit" is a unit that is equal to one share of Common
Stock which is used to measure the benefits payable to an employee or an
Eligible Director under a Deferred Unit award. Each Deferred Unit award shall be
subject to such terms and conditions as the Committee, in its discretion, may
from time to time determine.

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

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

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

                                      -9-
<PAGE>

         (e) Upon the vesting of the Deferred Units, as determined by the
Committee, a certificate for the number of shares of Common Stock equal to the
number of vested Deferred Units held by the Participant shall be delivered to
such Participant (or the Beneficiary designated by such Participant in the event
of death), free of all restrictions. Notwithstanding the vesting conditions set
forth in the Deferred Unit award, (i) the Committee may in its discretion
accelerate the vesting of the Deferred Units at any time, and (ii) the Deferred
Units shall vest upon a Change in Control of the Company (as defined in Section
6.10).

3.3      SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK AND DEFERRED UNITS

         The Committee, either at the time of grant or at the time of vesting of
Restricted Stock or Deferred Units, may provide for a Supplemental Payment by
the Company to the Participant in an amount specified by the Committee which
shall not exceed the amount necessary to pay the federal income tax payable with
respect to both the vesting of the Restricted Stock or Deferred Units and
receipt of the Supplemental Payment, assuming the Participant is taxed at the
maximum effective federal income tax rate applicable thereto and has not elected
to recognize income with respect to the Restricted Stock or Deferred Units
before the date such Restricted Stock or Deferred Units vest. The Supplemental
Payment shall be paid within 30 days of each date that the Restricted Stock or
Deferred Units vest. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment.

3.4      ELIGIBLE DIRECTOR AWARDS

         With respect to Restricted Stock, Deferred Units and Supplemental
Payment awards to Eligible Directors, the Board shall make all determinations
otherwise assigned to the Committee under this Article III and any reference to
"employment" shall be changed to "service."

3.5      AWARDS PRIOR TO THE IPO

         Notwithstanding the foregoing, prior to the IPO, the Board shall make
all determinations otherwise assigned to the Committee under Article III with
respect to Restricted Stock, Deferred Units and Supplemental Payment awards to
eligible employees (except for the Senior Executives). With respect to
Restricted Stock, Deferred Units and Supplemental Payment awards to the Senior
Executives, prior to the IPO, the Transocean Committee shall make all
determinations otherwise assigned to the Committee under Article III.

                                 IV. CASH AWARDS

4.1      TERMS AND CONDITIONS OF CASH AWARDS

         A "Cash Award" is a cash bonus paid solely on account of the attainment
of one or more objective performance goals that have been preestablished by the
Committee. Each Cash Award shall be subject to such terms and conditions,
restrictions and contingencies,

                                      -10-
<PAGE>

if any, as the Committee shall determine. Restrictions and contingencies
limiting the right to receive a cash payment pursuant to a Cash Award shall be
based on the achievement of single or multiple performance goals over a
performance period established by the Committee. No employee shall receive Cash
Awards during any calendar year aggregating in excess of $1 million.

4.2      ELIGIBLE DIRECTOR AWARDS

         With respect to Cash Awards to Eligible Directors, the Board shall make
all determinations otherwise assigned to the Committee under Article IV.

4.3      AWARDS PRIOR TO THE IPO

         Notwithstanding the foregoing, prior to the IPO, the Board shall make
all determinations otherwise assigned to the Committee under Article IV with
respect to Cash Awards to eligible employees (except for the Senior Executives).
With respect to Cash Awards to Senior Executives, prior to the IPO, the
Transocean Committee shall make all determinations otherwise assigned to the
Committee under Article IV.

                              V. PERFORMANCE AWARDS

5.1      TERMS AND CONDITIONS OF PERFORMANCE AWARDS

         The Committee shall have the right to designate any Option, SAR,
Supplemental Payment, Restricted Stock award, Deferred Unit award or Cash Award
as a "Performance Award." The grant or vesting of a Performance Award shall be
subject to the achievement of performance objectives (the "Performance
Objectives") established by the Committee based on one or more of the following
criteria, in each case applied to the Company on a consolidated basis and/or to
a business unit, and either as an absolute measure or as a measure of
comparative performance relative to a peer group of companies: sales, operating
profits, operating profits before interest expense and taxes, net earnings,
earnings per share, return on equity, return on assets, return on invested
capital, total shareholder return, cash flow, debt to equity ratio, market
share, price per share of Common Stock, economic value added, and market value
added.

         The Committee shall have the authority to determine whether the
Performance Objectives and other terms and conditions of the award are
satisfied, and the Committee's determination as to the achievement of
Performance Objectives relating to a Performance Award shall be made in writing.
Notwithstanding the foregoing provisions, if the Committee intends for a
Performance Award to be granted and administered in a manner designed to
preserve the deductibility of the compensation resulting from such award in
accordance with Section 162(m) of the Code, then the Performance Objectives for
such particular Performance Award relative to the particular period of service
to which the Performance Objectives relate shall be established by the Committee
in writing (a) no later than 90 days after the beginning of such period and (b)
prior to the completion of 25% of such period. The Committee shall have no
discretion to modify or waive the Performance Objectives or

                                      -11-
<PAGE>

conditions to the grant or vesting of a Performance Award unless such award is
not intended to qualify as qualified performance-based compensation under
Section 162(m) of the Code and the relevant award agreement provides for such
discretion.

5.2      AWARDS PRIOR TO THE IPO

         Notwithstanding the foregoing, prior to the IPO, the Board shall make
all determinations otherwise assigned to the Committee under Article V with
respect to Performance Awards to eligible employees (except for the Senior
Executives). With respect to Performance Awards to the Senior Executives, prior
to the IPO, the Transocean Committee shall make all determinations otherwise
assigned to the Committee under Article V.

                            VI. ADDITIONAL PROVISIONS

6.1      GENERAL RESTRICTIONS

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

         Notwithstanding the foregoing, with respect to awards to eligible
employees granted prior to the IPO and to awards to Eligible Directors, the
Board shall have the authority and discretion otherwise assigned to the
Committee under this Section 6.1. In addition, with respect to awards to the
Senior Executives granted prior to the IPO, the Transocean Committee shall have
the authority and discretion otherwise assigned to the Committee under this
Section 6.1.

6.2      ADJUSTMENTS FOR CHANGES IN CAPITALIZATION

         From and after the closing date of the IPO, in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, rights offer, liquidation, dissolution, merger, consolidation, spin-off,
sale of assets, payment of an extraordinary cash dividend, or any other change
in or affecting the corporate structure or capitalization of the Company, the
Committee (or the Board, with respect to Eligible Directors) shall make
appropriate adjustment in the number and kind of shares of Common Stock
authorized by the Plan (including any limitations on individual awards), in the
number, price or kind of shares of Common Stock covered by the awards and in any
outstanding awards

                                      -12-
<PAGE>

under the Plan; provided, however, that no such adjustment shall increase the
aggregate value of any outstanding award.

6.3      AMENDMENTS

         (a) The Board may amend the Plan from time to time. No such amendment
shall require approval by the shareholders unless shareholder approval is
required to satisfy Rule 16b-3 under the Exchange Act or Section 162(m) of the
Code, or by applicable law or stock exchange requirements.

         (b) The Committee (or the Board, with respect to Eligible Directors)
shall have the authority to amend any award to include any provision which, at
the time of such amendment, is authorized under the terms of the Plan; however,
no outstanding award may be revoked or altered in a manner unfavorable to the
Participant without the written consent of the Participant. Notwithstanding the
foregoing, with respect to awards granted to eligible employees prior to the IPO
and to awards to Eligible Directors, the Board shall have the authority and
discretion otherwise assigned to the Committee under this Section 6.3. In
addition, with respect to awards to the Senior Executives granted prior to the
IPO, the Transocean Committee shall have the authority otherwise assigned to the
Committee under this Section 6.3.

6.4      CANCELLATION OF AWARDS

         Any award granted under the Plan may be canceled at any time with the
consent of the Participant and a new award may be granted to such Participant in
lieu thereof, which award may, in the discretion of the Committee, be on more
favorable terms and conditions than the canceled award; provided, however, that
the exercise or base price of the new award shall not be less than the then
current market price of the shares of Common Stock on the date of grant of any
outstanding Option or SAR that is relinquished in connection with the grant of
such new award.

         Notwithstanding the foregoing, with respect to awards to eligible
employees granted prior to the IPO and to awards to Eligible Directors, the
Board shall have the authority and discretion otherwise assigned to the
Committee under this Section 6.4. In addition, with respect to awards to the
Senior Executives granted prior to the IPO, the Transocean Committee shall have
the authority and discretion otherwise assigned to the Committee under this
Section 6.4.

6.5      BENEFICIARY

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

                                      -13-
<PAGE>

6.6      WITHHOLDING

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

         (b) An employee entitled to receive shares of Common Stock under the
Plan who has not received a cash Supplemental Payment may elect to have the
minimum statutory withholding tax liability (or a specified portion thereof)
with respect to such shares of Common Stock satisfied by having the Company
withhold from such shares of Common Stock otherwise deliverable to the employee
a specified number of shares of Common Stock having a value equal to the amount
of the tax liability to be satisfied with respect to the shares of Common Stock
otherwise deliverable to the employee. An election to have all or a portion of
the tax liability satisfied using shares of Common Stock shall comply with such
requirements as may be imposed by the Committee (or the Board, prior to the
IPO).

6.7      NON-ASSIGNABILITY

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

6.8      NON-UNIFORM DETERMINATIONS

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

6.9      NO GUARANTEE OF EMPLOYMENT OR DIRECTORSHIP

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

6.10     CHANGE IN CONTROL

         A Change in Control of the Company shall be deemed to have occurred as
of the first day any one or more of the following conditions shall have been
satisfied:

                                      -14-
<PAGE>

         (a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of shares representing 20% or more of the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation or other entity controlled by the
Company, (iv) any acquisition by any corporation or other entity pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of Section 6.10(c),
(v) an acquisition of securities effected in connection with a distribution of
any class of Common Stock of the Company to shareholders of Transocean Inc. in a
transaction (including any distribution in exchange for shares of capital stock
or other securities of Transocean Inc.) intended to qualify as a tax-free
distribution under Section 355 of the Code (a "Tax-Free Spin-Off"), (vi) any
acquisition by Transocean Inc. or any of its affiliates excluding the Company
and its Subsidiaries (collectively, "Transocean"), (vii) any acquisition from
Transocean pursuant to a public offering of securities registered under a
registration statement filed with the Securities and Exchange Commission, or
(viii) any acquisition immediately following which Transocean has beneficial
ownership of at least 50% or more of the Outstanding Company Voting Securities;
provided that any such acquisition that, but for this clause (viii), would
otherwise constitute a Change in Control under this Section 6.10(a) shall be
deemed to be a Change in Control at the time that Transocean no longer has
beneficial ownership of at least 50% or more of the Outstanding Company Voting
Securities, if such individual, entity or group that made such acquisition
continues to own 20% or more of the Outstanding Company Voting Securities
following such time that Transocean no longer has such beneficial ownership;

         (b) Individuals who, as of the Effective Date (as defined in Section
6.12), are members of the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board of
Directors of the Company; provided, however, that for purposes of this Section
6.10, any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved
by either (i) a vote of at least a majority of the directors then comprising the
Incumbent Board or (ii) Transocean, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than either Transocean or the Board
of Directors of the Company; or

         (c) Consummation of a reorganization, merger, conversion or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the then
outstanding

                                      -15-
<PAGE>

combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation or other entity
resulting from such Business Combination (including, without limitation, a
corporation or other entity which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Voting Securities, (ii) no Person (excluding Transocean and any
corporation or other entity resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation or
other entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the then
outstanding voting securities of the corporation or other entity resulting from
such Business Combination except to the extent that such ownership existed prior
to the Business Combination and (iii) at least a majority of the members of the
board of directors of the corporation or other entity resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of Directors
of the Company, providing for such Business Combination; or

         (d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company other than in connection with the
transfer of all or substantially all of the assets of the Company to Transocean
or a transfer to an affiliate or a Subsidiary of the Company.

         Notwithstanding the foregoing, no Business Combination between
Transocean and the Company and its Subsidiaries or between the Company and its
own Subsidiaries shall constitute a Change in Control under this Section 6.10 of
the Plan.

6.11     DURATION AND TERMINATION

         (a) The Plan shall be of unlimited duration. Notwithstanding the
foregoing, no incentive stock option (within the meaning of Section 422 of the
Code) shall be granted under the Plan after tenth anniversary of the Effective
Date, but awards granted prior to such date may extend beyond such date, and the
terms of the Plan shall continue to apply to all awards granted hereunder.

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

6.12     EFFECTIVE DATE

         The Plan, as approved by the Board, is effective as of [INSERT IPO
DATE] (the "Effective Date").

                                      -16-
<PAGE>

         IN WITNESS WHEREOF, this document has been executed effective as of the
Effective Date.

                                                TODCO

                                                By:
                                                    ----------------------------
                                                    [NAME]
                                                    Corporate Secretary

                                      -17-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]