AMENDED AND RESTATED TAX SHARING AGREEMENT

Exhibit 10.1

AMENDED AND RESTATED TAX SHARING AGREEMENT

BETWEEN

TRANSOCEAN HOLDINGS INC.

AND

TODCO

TABLE OF CONTENTS

AMENDED AND RESTATED TAX SHARING AGREEMENT

          THIS AMENDED AND RESTATED TAX SHARING AGREEMENT (this “Agreement”) is entered into as of November ___, 2006 but effective as of February 4, 2004, 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, from January 31, 2001 through February 3, 2004, TODCO was a direct wholly owned subsidiary of Holdings, which in turn was a direct wholly owned subsidiary of Transocean Inc., a company organized under the laws of the Cayman Islands (“Transocean”); and

          WHEREAS, on February 4, 2004, the following events occurred in the following order:

          WHEREAS, on February 10, 2004, Holdings sold a portion of its shares of TODCO Class B common stock, which were immediately converted into shares of TODCO Class A common stock, in the IPO; and

          WHEREAS, on September 21, 2004, Holdings sold the remainder of its shares of TODCO Class B common stock and Transocean sold a portion of its shares of TODCO Class B common stock, which in each case were immediately converted into shares of TODCO Class A common stock, in a secondary public offering; and

          WHEREAS, through secondary public offerings effected on December 22, 2004 and May 18, 2005 and a sale pursuant to Rule 144 of the Securities Act of 1933, Transocean sold the remainder of its shares of TODCO Class B common stock, which in each case were immediately converted into shares of TODCO Class A common stock upon each sale; and

          WHEREAS, in 2005, a dispute arose among Transocean, Holdings, and TODCO regarding the Original Tax Sharing Agreement; and

          WHEREAS, TODCO and Holdings desire to amend and restate the Original Tax Sharing Agreement in its entirety as set forth herein in order to clarify certain matters therein.

          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 Amended and Restated Tax Sharing Agreement, which for the avoidance of doubt shall be treated as the Tax Sharing Agreement referred to in the Master Separation Agreement and other Ancillary Agreements (as defined in the Master Separation 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 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 February 4, 2004.

          “Effective Date” means February 4, 2004.

          “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 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 February 10, 2004.

          “Master Separation Agreement” means the Master Separation Agreement dated February 4, 2004 among Transocean, Transocean Holdings and TODCO

          “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 or any deduction to the extent treated as a Pre-IPO Tax Asset by reason of Section 4.4 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.

          “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 as reflected in its Tax Return.

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

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

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

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

          “Tax Return” means any report of Taxes due, any claims for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under any applicable Tax Law,

including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

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

          “TODCO” has the meaning set forth in the recital hereto.

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

          “TODCO Tax Group” means TODCO and all persons that are Subsidiaries of TODCO immediately after the IPO Closing Date, including without limitation the Subsidiaries set forth in Schedule 1.2 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.

           SECTION 2. Allocation of Income Tax Liabilities.

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

                (a) Consolidated Years.

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

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

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

               (b)  Separate Return Years .

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

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

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

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

               (a)  Combined Years .

                    (i) Except as provided in Section 2.2(a)(ii), for each Combined Year, TODCO shall be liable for and pay to Holdings (or another member of the Transocean Tax Group designated by Holdings pursuant to Section 5.5) an amount equal to the State Income Taxes attributable to the TODCO Tax Group. Such amount shall be determined as if TODCO and its eligible Subsidiaries were not required to join and did not join in the filing of a Combined Return for that Combined Year but instead

filed their own combined State Income Tax Return on which TODCO’s tax liability was calculated consistently with the principles of Treasury Regulations Section 1.1552-1(a)(2)(ii).

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

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

               (b)  Separate Return Years .

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

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

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

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

               (a)  Combined Years .

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

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

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

               (b)  Separate Return Years .

                    (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 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.

               (f)  Payroll Taxes Resulting from Exercise of Stock Options . Holdings shall be liable for all payroll Taxes, including Taxes imposed under Sections 3102, 3111, and 3301 of the Code or similar provisions under state or foreign Tax Laws, resulting from the delivery (or deemed delivery in the case of a cashless exercise) by the Transocean Tax Group of stock of Transocean to any person pursuant to the exercise of a stock option described in Section 4.4 and listed on Schedule 4.4.

          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 (x) relate solely to one or more members of the Transocean Tax Group for any Tax Year, (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, or (z) are information returns (including without limitation IRS Forms W-2 and 1099) relating solely to the delivery (or deemed delivery in the case of a cashless exercise) by the Transocean Tax Group of stock of Transocean to any person pursuant to the exercise of a stock option described in Section 4.4. In connection with the preparation of the Tax Returns specified in this Section 3.2(a), TODCO shall provide information and assistance as described in Sections 3.1(b)(ii) and (iii) in the same manner as if such Tax Returns were Consolidated Returns or Combined Returns.

               (b)  Tax Returns to be Prepared by TODCO .

                    (i) Except as otherwise provided in this Section 3.2(b), TODCO shall be responsible for preparing all Separate Returns and Other Returns which relate solely to one or more members of the TODCO Tax Group for any Tax Year ending after the IPO Closing Date and which is not a Straddle Period, but not including information returns (including without limitation IRS Forms W-2 and 1099) relating solely to the delivery (or deemed delivery in the case of a cashless exercise) by the Transocean Tax Group of stock of Transocean to any person pursuant to the exercise of a stock option described in Section 4.4. 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. Notwithstanding anything to the contrary in this Section 3 and until a final determination is made by a Taxing Authority to the contrary, TODCO shall claim (or shall cause the appropriate member of the TODCO Tax Group to claim) on the relevant Tax Return the deduction under Section 83(h) of the Code or any other relevant provision of federal Tax Law with respect to all stock options described in Section 4.4 and listed on Schedule 4.4 that have been exercised during the Tax Year covered by such Tax Return.

                    (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 at any time during which there remains a present or potential obligation of at least $5,000,000, in the aggregate, under Section 4.2(a) for TODCO to pay Holdings for the use or deemed use of any Pre-IPO Tax Asset. The determination in clause (y) shall be made without considering any stock options described in Section 4.4 and listed on Schedule 4.4. For any Tax Year in which neither of the conditions in clauses (x) or (y) are met, TODCO shall make reasonable efforts to utilize all remaining Pre-IPO Tax Assets.

               (c)  Provision of Information . Holdings shall provide to TODCO, and TODCO shall provide to Holdings, any information about members of the

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

          3.3 Special Rules Relating to the Preparation of Tax Returns .

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

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

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

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

                     (ii) Review Prior to Filing . The Company responsible for preparing any Tax Return (whether Holdings on the one hand or TODCO on the other hand) shall make the Tax Return or relevant portion thereof available to the other Company no later than thirty days before the Tax Return is due, 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 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. This provision does not apply to any Tax Asset relating to Transocean stock options.

                     (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.

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