Form of Memorandum - Grant of Restricted Units

EXHIBIT 10.40


[LOGO] GlobalSantaFe Corporation
777 N. Eldridge Parkway
Houston, Texas 77079-4493


MEMORANDUM


Date: March 4, 2002


To:
-----------------


From:
-----------------


Subject: Restricted Units


Effective March 4, 2002, you have been granted a conditional right to receive a target award of ________ units representing ordinary shares of GlobalSantaFe Corporation, subject to the restrictions and other terms and conditions set forth in the attachment to this memorandum. The number of restricted units to be awarded will depend on your job performance and the extent to which the performance objectives described in GlobalSantaFe Corporation's 2002 Management Annual Incentive Plan have been achieved.


[Name of signing officer]


Attachment


[LOGO]


GLOBALSANTAFE CORPORATION


TERMS AND CONDITIONS
OF
AWARD OF PERFORMANCE - BASED RESTRICTED UNITS


GlobalSantaFe Corporation (the "Company"), desiring to provide you with an added incentive as an employee of the Company or of one or more of its affiliates, hereby awards to you, pursuant to the [Name of Plan] (the "Plan"), a conditional right (the "Performance Award") to receive units ("Restricted Units") representing ordinary shares of the Company ("Ordinary Shares"), subject to the restrictions and other terms and conditions outlined herein (the "Terms and Conditions") and the terms and conditions of the Plan as amended from time to time in accordance with its terms. Terms used herein and not otherwise defined shall have the meaning set forth in the Plan.


1. Calculation of Restricted Units. Effective December 31, 2002 (the "Grant
Date"), a percentage of the total number of Restricted Units stated on the
cover page of this memorandum will be credited to you, depending on actual
performance of the Company and its affiliates and on your performance
during 2002 as measured against the performance goals used in the Company's
2002 Management Annual Incentive Plan (the "Annual Incentive Plan"). The
percentage, which will range from 0% to 200%, will be determined using the
method for calculating the percentage of your 2002 target bonus payable
under the Annual Incentive Plan. You will be notified of the number of
Restricted Units credited to you following the determination of the
percentage of your 2002 target bonus to be awarded.


2. Agreement. By accepting this Performance Award and any Restricted Units
granted hereunder, you represent and agree that (i) you will abide by the
terms of the Plan and such other terms and conditions as may be imposed by
the Committee, (ii) you will not induce or solicit, directly or indirectly,
any employee of the Company and/or an affiliate to terminate such
employee's employment with the Company and/or such affiliate and (iii)
during the course of employment with the Company and at all times
thereafter, you will not disclose to others or use, whether directly or
indirectly, any Confidential Information. "Confidential Information" shall
mean the information about the Company that you learned in the course of
performing your duties with the Company, including, without limitation, any
proprietary knowledge, trade secrets, data, information and customer lists
unless such disclosure is required by law or authorized by the Company
and/or an affiliate.


3. Vesting. Except as otherwise provided in Sections 8 and 9, your Restricted
Units will vest on the third anniversary of the Grant Date; provided that
you remain continuously employed with the Company or any of its affiliates
throughout the three-year period following the Grant Date (the "Vesting
Period"). Restricted Units that do not vest shall be forfeited to the
Company, and you shall not thereafter have any rights (including rights to
dividend equivalent payments described in Section 6) with respect to such
forfeited Restricted Units.


4. Restrictions. Except as authorized by Section 5, any Restricted Units
granted hereunder may not be sold, assigned, pledged or otherwise
transferred prior to satisfaction of the payment provisions of Section 7.


5. Transfer. You may transfer Restricted Units to (i) your spouse, children or
grandchildren ("Immediate Family Members"), (ii) a trust or trusts for your
exclusive benefit or the exclusive benefit of your Immediate Family
Members, (iii) a partnership in which you and/or your Immediate Family
Members are the only partners, (iv) a transferee pursuant to a judgment,
degree or order relating to child support, alimony or marital property
rights that is made pursuant to a domestic relations law of a state or
country with competent jurisdiction (a "Domestic Relations Order"), or (v)
such other transferee as may be approved by a committee described in the
Plan (the "Committee") in its sole and absolute discretion; provided,
however, that (x) the Committee may prohibit any transfer with or without
cause in its sole and absolute discretion, and (y) subsequent transfers of
transferred Restricted Units or any portion thereof are prohibited except
those to or by you in accordance with this Section 5 or pursuant to a
Domestic Relations Order. Following any transfer, the Restricted Units will
continue to be subject to the same restrictions described in these Terms
and Conditions as were applicable immediately prior to the transfer, and
any and all terms of these Terms and Conditions, other than those in
Section 2, will apply to the transferee.


Each transfer permitted in this Section will be effected by written notice
thereof duly signed and delivered by the transferor to the Secretary of the
Company at the Company's principal business office. Such notice will state
the name and address of the transferee, the amount of Restricted Units
being transferred, and such other information as may be requested by the
Secretary. The person or persons entitled to receive dividend equivalent
payments with respect to the Restricted Units and to receive Ordinary
Shares upon vesting of the Restricted Units will be that person or those
persons appearing on the Company's registry books as the owner or owners of
the Restricted Units. The Company will have no obligation to, or liability
for any failure to, notify you or any transferee of any forfeiture of
Restricted Units or of any event that will or might result in such
forfeiture.


6. Dividend Equivalent Payments. During the period of time between the Grant
Date and the earlier of the date your Restricted Units vest or are
forfeited (the "Restricted Period"), your Restricted Units will be
evidenced by book entry registration. Upon payment during the Restricted
Period of any dividend with respect to Ordinary Shares, you will be
entitled to a cash payment equal to the amount of such dividend multiplied
by the number of Restricted Units you are granted hereunder.


7. Payment. Upon satisfaction of the vesting conditions set forth in Sections
3, 8 or 9, your Restricted Units shall be payable to you in the form of a
number of Ordinary Shares equal to the number of Restricted Units credited
to you pursuant to Section 1.


8. Termination of Employment.


(a) Termination Prior to the Grant Date. If your employment with the
Company and/or an affiliate terminates prior to the Grant Date, no
Restricted Units will be credited to you.


(b) Involuntary Termination Without Cause. If, during the Vesting Period,
your employment with the Company and/or an affiliate is terminated by
the Company and/or such affiliate without Cause (as hereinafter
defined), a portion of your Restricted Units will vest, prorated for
the nearest number of whole months you were employed during the
Vesting Period.


(c) Voluntary Termination or Termination With Cause. If, during the
Vesting Period, either you voluntarily terminate your employment with
the Company and/or an affiliate or your employment with the Company
and/or an affiliate is terminated for Cause, your Restricted Units are
forfeited.


(d) Retirement. If, during the Vesting Period, you terminate your
employment (for any reason other than Cause) with the Company and
immediately commence receiving your pension benefits pursuant to one
or more of the defined benefit pension plans of the Company and/or any
affiliate in which you are participating at the time of termination, a
portion of your Restricted Units will vest, prorated for the nearest
number of whole months you were employed during the Vesting Period.


(e) Termination by Reason of Death or Disability. If, during the Vesting
Period, your employment with the Company and/or an affiliate is
terminated as a result of your death or disability, your Restricted
Units will vest upon your termination of employment. For purposes of
the preceding sentence, the term "disability" shall mean any complete
and permanent disability as defined in Section 22(e)(3) of the Code
and determined in accordance with the procedures set forth in the
regulations, thereunder.


For purposes of this Performance Award, a termination of your "employment"
wit ...