2009 ROWAN COMPANIES, INC. INCENTIVE PLAN

 

2012 RESTRICTED STOCK NOTICE

 

1.Grant of Restricted Shares.    To carry out the purposes of the 2009 Rowan
Companies, Inc. Incentive Plan (the “Plan”), and subject to the conditions
described in this Notice and the Plan, Rowan Companies, Inc., a Delaware
corporation (the “Company”) hereby grants to you (the “Participant”) all right,
title and interest in the record and beneficial ownership of ______ shares (the
“Restricted Shares”) of Common Stock, effective as of ________, 20__ (the “Grant
Date”). All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan; the Plan is incorporated herein by reference as
part of this Notice.

 

2.Issuance and Transferability.   The Restricted Shares may be evidenced in such
a manner as the Committee shall deem appropriate. Any certificates representing
the Restricted Shares granted hereunder shall be issued in the name of the
Participant as of the Grant Date and shall be marked with the following legend:

 

“The shares represented by this certificate have been issued pursuant to the
terms of the 2009 Rowan Companies, Inc. Incentive Plan and may not be sold,
pledged, transferred, assigned or otherwise encumbered in any manner except as
is set forth in the terms of such award dated _______, 20__.”

 

Until restrictions lapse, the Restricted Share certificates shall be left on
deposit with the Company or the Company’s stock plan administrator, along with a
stock power (substantially in the form attached hereto as Exhibit A) endorsed in
blank and shall not be transferable except by will or the laws of descent and
distribution. No right or benefit hereunder shall in any manner be liable for or
subject to any debts, contracts, liabilities, or torts of the Participant. Any
purported assignment, alienation, pledge, attachment, sale, transfer or other
encumbrance of the Restricted Shares, prior to the lapse of restrictions, that
does not satisfy the requirements hereunder shall be void and unenforceable
against the Company. Notwithstanding the foregoing, in the case of the
Participant’s Disability or death, the Participant’s rights under this Notice
may be exercised by the Participant’s guardian or the legal representative of
his or her estate (or the person who acquires the rights under this Notice by
bequest or inheritance or by the reason of the death of the Participant), as
applicable.

 

3.Vesting/Forfeiture.   The Participant shall vest in his or her rights under
the Restricted Shares, and any accumulated dividends described in Section 7
hereof, and the Company’s right to reclaim such shares or dividends shall lapse
with respect to one-third of the Restricted Shares on the first anniversary of
the Grant Date and an additional one-third of the Restricted Shares on each of
the second and third anniversaries of the Grant Date (each anniversary, a
“Vesting Date”), provided that the Participant remains continuously employed by
the Company or an Affiliate from the Grant Date to such Vesting Date.
Notwithstanding the foregoing, however, all Restricted Shares not then vested
shall vest immediately upon termination if the Participant’s Employment
terminates by reason of the Participant’s Disability or death. In the event of
the Participant’s Retirement (as defined in Section 4 below) prior to vesting,
the Committee may, in its sole discretion, accelerate vesting. If the
Participant’s Employment terminates other than by reason of Retirement,
Disability or death, the Restricted Shares (to the extent not then vested) shall
be forfeited as of the date the Participant’s Employment so terminates. As soon
as administratively feasible following the vesting of the Restricted Shares, a
stock certificate evidencing the vested Restricted Shares, less the amount of
Common Stock withheld pursuant to Section 8 hereof, if any, shall be delivered
without charge to the Participant, or his or her designated representative,
without restrictive legend. If, for any reason, the restrictions imposed by the
Committee upon the Restricted Shares are not satisfied at the end of the
Restricted Period, any Restricted Shares remaining subject to such restrictions
shall be forfeited by the Participant.

 

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4.Retirement. For purposes of this Notice, “Retirement” of an Employee shall
have occurred if, as of the Employee’s date of termination of Employment, the
Employee is a minimum of 60 years old and has satisfied the requirements for
normal retirement pursuant to the policies of the Company in place at the time
of termination.

 

Determination of the date of termination of Employment by reason of Retirement
and the satisfaction of the requirements for Retirement shall be based on such
evidence as the Committee may require and a determination by the Committee of
such date of termination and satisfaction shall be final and controlling on all
interested parties.

 

5.Disability. For purposes of this Notice, “Disability” means the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or to last for a continuous period of not
less than 12 months, receiving disability benefits under the applicable
disability plan of the Company (or of an Affiliate).

 

Determination of the date of termination of Employment by reason of Disability
and the satisfaction of the requirements for Disability shall be based on such
evidence as the Committee may require and a determination by the Committee of
such date of termination and satisfaction shall be final and controlling on all
interested parties.

 

6.Employment Relationship. For purposes of this Notice and the Restricted
Shares, the Participant shall be considered to be in the Employment of the
Company or an Affiliate as long as the Participant is actively providing
services to the Company or an Affiliate. In the event the Participant ceases to
be in the Employment of the Company or an Affiliate (for any reason whatsoever,
whether or not later found to be invalid or in breach of employment laws in the
jurisdiction where the Participant is employed or the terms of the Participant's
employment agreement, if any), unless otherwise provided in this Notice or
determined by the Company, the Participant’s right to vest in Restricted Shares
under the Plan, if any, will terminate effective as of the date that the
Participant is no longer actively providing services and will not be extended by
any notice period (e.g., the Participant's period of active service would not
include any contractual notice period or any period of “garden leave” or similar
period mandated under employment laws in the jurisdiction where the Participant
is employed or the terms of the Participant's employment agreement, if any).

 

Any question as to whether and when there has been a termination of such
Employment shall be based on such evidence as the Committee may require and a
determination by the Committee as to the date of such termination shall be final
and controlling on all interested parties.

 

7.Dividends.   Any cash dividends that may be paid on the Restricted Shares
after the Grant Date shall be accumulated either in cash or share equivalents
and held in an account or in escrow by the Company until such time as the
Participant shall vest in the Restricted Shares to which such dividends are
attributable as described in Section 3 above. The Participant shall receive a
cash payment or a number of shares equal to the accumulated dividends paid
(reduced by the amount of any Tax-Related Items, as defined below) with respect
to the Restricted Shares as they become vested. All accumulated dividends
attributable to unvested Restricted Shares shall be forfeited, if and to the
extent that the underlying Restricted Shares are forfeited.

 

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8.Responsibility for Taxes. The Participant acknowledges that, regardless of any
action by the Company or, if different, the Participant's employer (the
“Employer”), the ultimate liability for all income tax, social insurance,
payroll tax, fringe benefits tax, payment on account or other tax-related items
related to the Participant's participation in the Plan and legally applicable to
the Participant (“Tax-Related Items”) is and remains the Participant's
responsibility and may exceed the amount actually withheld by the Company or the
Employer. The Participant further acknowledges that the Company and/or the
Employer (i) make no representations or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the Restricted Shares,
including, but not limited to, the grant or vesting of the Restricted Shares,
the release of shares of Common Stock from restrictions, the subsequent sale of
any shares of Common Stock acquired pursuant to the Restricted Shares and the
receipt of any dividends, and (ii) do not commit to and are under no obligation
to structure the terms of the grant or any aspect of the Restricted Shares to
reduce or eliminate the Participant's liability for Tax-Related Items or achieve
any particular tax result. Further, if the Participant is subject to Tax-Related
Items in more than one jurisdiction between the date of grant and the date of
any relevant taxable or tax withholding event, as applicable, the Participant
acknowledges that the Company and/or the Employer (or former employer, as
applicable) may be required to withhold or account for Tax-Related Items in more
than one jurisdiction.

 

Prior to any relevant taxable or tax withholding event, as applicable, the
Participant agrees to make adequate arrangements satisfactory to the Company
and/or the Employer to satisfy all Tax-Related Items. In this regard, the
Participant authorizes the Company and/or the Employer, or their respective
agents, at their discretion to satisfy the obligations with regard to all
Tax-Related Items by one or a combination of the following:

 

(a)     withholding from the Participant's wages or other cash payment
(including the cash payment referred to in Section 7 above) made to the
Participant by the Company and/or the Employer;

 

(b)     withholding from proceeds of the sale of shares of Common Stock acquired
pursuant to the Restricted Shares either through a voluntary sale or through a
mandatory sale arranged by the Company (on the Participant's behalf pursuant to
this authorization without further consent); or

 

(c)     allowing the Participant to surrender or sell to the Company or its
designee a number of shares of Common Stock acquired pursuant to the Restricted
Shares.

 

Depending on the withholding method, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding rates
or other applicable withholding rates, including maximum applicable rates in
which case the Participant will receive a refund of any over-withheld amount in
cash and will have no entitlement to the Common Stock equivalent.

 

The Participant agrees to pay to the Company or the Employer, any amount of
Tax-Related Items that the Company or the Employer may be required to withhold
or account for as a result of the Participant's participation in the Plan that
cannot be satisfied by the means previously described. The Company may refuse to
issue or deliver the shares or the proceeds of the sale of shares of Common
Stock, if the Participant fails to comply with the Participant's obligations in
connection with the Tax-Related Items.

 

For Participants subject to tax in the United Kingdom, if payment or withholding
of the income tax due in connection with the Restricted Shares is not made
within ninety (90) days of any event giving rise to the income tax liability or
such other period specified in Section 222(1)(c) of the U.K. Income Tax
(Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected
income tax shall constitute a loan owed by the Participant to the Employer,
effective on the Due Date. The loan will bear interest at the then-current
official rate of Her Majesty’s Revenue and Customs (“HMRC”), it will be
immediately due and repayable, and the Company or the Employer may recover it at
any time thereafter by any of the means referred to herein or otherwise
permitted under the Plan. Notwithstanding the foregoing, if the Participant is a
director or executive officer of the Company (within the meaning of Section
13(k) of the Exchange Act), the Participant shall not be eligible for a loan to
cover the income tax due as described above. In the event the Participant is
such a director or executive officer and the income tax due is not collected
from or paid by the Participant by the Due Date, the amount of any uncollected
income tax will constitute a benefit to the Participant on which additional
income tax and national insurance contributions (“NICs”) will be payable. The
Company or the Employer may recover any such additional income tax and NICs at
any time thereafter by any of the means referred to herein or otherwise
permitted under the Plan. The Participant will also be responsible for reporting
and paying any income tax due on this additional benefit directly to HMRC under
the self-assessment regime.

 

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9.Reorganization of the Company.   The existence of this Notice shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; any merger or
consolidation of the Company; any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof; the dissolution or liquidation of the Company; any sale or transfer of
all or any part of its assets or business; or any other corporate act or
proceeding, whether of a similar character or otherwise.

 

10.Recapitalization Events.   In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving the
Company (“Recapitalization Events”), then for all purposes references herein to
Common Stock or to Restricted Shares shall mean and include all securities or
other property (other than cash) that holders of Common Stock are entitled to
receive in respect of Common Stock by reason of each successive Recapitalization
Event, which securities or other property (other than cash) shall be treated in
the same manner and shall be subject to the same restrictions as the underlying
Restricted Shares.

 

11.Status of Common Stock. The Company intends to register for issuance under
the Securities Act of 1933, as amended (the “Act”), the shares of Common Stock
acquired pursuant to this Notice and to keep such registration effective. In the
absence of such effective registration or an available exemption from
registration under the Act, issuance of shares of Common Stock acquired pursuant
to this Notice will be delayed until registration of such shares is effective or
an exemption from registration under the Act is available. In the event
exemption from registration under the Act is available, the Participant (or the
person permitted to receive the Participant’s shares in the event of the
Participant’s Disability or death), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require assuring compliance with applicable
securities laws. The Company shall incur no liability to the Participant for
failure to register the Common Stock or maintain the registration.

 

The shares of Common Stock which the Participant may acquire pursuant to this
Notice will not be sold or otherwise disposed of in any manner that would
constitute a violation of any applicable securities laws, whether federal or
state. The Participant is hereby notified (i) that the certificates representing
the shares of Common Stock may bear such legend or legends as the Committee
deems appropriate in order to assure compliance with applicable securities laws,
(ii) that the Company may refuse to register the transfer of the shares of
Common Stock acquired pursuant to this Notice on the stock transfer records of
the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of such shares.

 

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12.Certain Restrictions.   By accepting the Restricted Shares granted under this
Notice, the Participant acknowledges that he will enter into such written
representations, warranties and Notices and execute such documents as the
Company may reasonably request in order to comply with the terms of this Notice
or the Plan, or securities laws or any other applicable laws, rules or
regulations.

 

13.Recoupment.   Notwithstanding any provision of this Notice to the contrary,
the Committee may, in its sole discretion:

 

(a)     recoup from the Participant all or a portion of the Common Stock issued
or cash paid under this Notice if the Company’s reported financial or operating
results are materially and negatively restated within five years of the grant or
payment of such amounts; and

 

(b)     recoup from the Participant if, in the Committee’s judgment, the
Participant engaged in conduct which was fraudulent, negligent or not in good
faith, and which disrupted, damaged, impaired or interfered with the business,
reputation or Employees of the Company or its Affiliates or which caused a
subsequent adjustment or restatement of the Company’s reported financial
statements, all or a portion of the Common Stock issued or cash paid under this
Notice within five years of such conduct.

 

In addition, the Restricted Shares are subject to the requirements of (i)
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(regarding recovery of erroneously awarded compensation) and any implementing
rules and regulations thereunder, (ii) similar rules under the laws of any other
jurisdiction and (iii) any policies adopted by the Company to implement such
requirements, all to the extent determined by the Company in its discretion to
be applicable to the Participant.

 

14.Code Section 409A; No Guarantee of Tax Consequences.   This award of
Restricted Shares is intended to be exempt from Code Section 409A and the
provisions hereof shall be interpreted and administered consistently with such
intent. The Company makes no commitment or guarantee to the Participant that any
federal or state tax treatment will apply or be available to any person eligible
for benefits under this Notice.

 

15.Data Privacy. The Participant explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Participant’s
personal data as described in this Notice and any other grant materials by and
among the Company, the Employer and any Affiliates for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the
Plan.

 

The Participant understands that the Company, the Employer and any Affiliates
may hold certain personal information about the Participant, including, but not
limited to, the Participant’s name, home address and telephone number, date of
birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the
Company, details of all Restricted Shares or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in the
Participant’s favor, for the exclusive purpose of implementing, administering
and managing the Plan (“Data”).

 

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The Participant understands that Data will be transferred to such stock plan
service provider as may be selected by the Company, which is assisting the
Company with the implementation, administration and management of the Plan. The
recipients of Data may be located in the United States or elsewhere, and the
recipients’ country (e.g., the United States) may have different data privacy
laws and protections than the Participant’s country. The Participant may request
a list with the names and addresses of any potential recipients of Data by
contacting his or her human resources representative. The Participant authorizes
the Company and any other possible recipients which may assist the Company
(presently or in the future) with implementing, administering and managing the
Plan to receive, possess, use, retain and transfer Data, in electronic or other
form, for the sole purpose of implementing, administering and managing his or
her participation in the Plan. Data will be held only as long as is necessary to
implement, administer and manage the Participant’s participation in the Plan.
The Participant may, at any time, view Data, request additional information
about the storage and processing of Data, require any necessary amendments to
Data or refuse or withdraw the consents herein, in any case without cost, by
contacting in writing his or her human resources representative. Further, the
Participant is providing his or her consents herein on a purely voluntary basis.
If the Participant does not consent, or if the Participant later seeks to revoke
his or her consent, his or her Employment status or service and career with the
Employer will not be adversely affected; the only adverse consequence of
refusing or withdrawing the Participant's consent is that the Company would not
be able to grant Restricted Shares or other equity awards to the Participant or
administer or maintain such awards. Therefore, the Participant’s refusal or
withdrawal of his or her consent may affect the Participant’s ability to
participate in the Plan. For more information on the consequences of the
Participant’s refusal to consent or withdrawal of consent, the Participant may
contact his or her human resources representative.

 

16.Electronic Delivery and Participation. The Company may, in its sole
discretion, decide to deliver any documents related to current or future
participation in the Plan by electronic means. The Participant hereby consents
to receive such documents by electronic delivery and agrees to participate in
the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company.

 

17.Nature of Grant. In accepting the Restricted Shares, the Participant
acknowledges, understands and agrees that:

 

(a)     the Plan is established voluntarily by the company, it is discretionary
in nature and it may be modified, amended, suspended or terminated by the
Company at any time, to the extent permitted by the Plan;

 

(b)     the grant of the Restricted Shares is voluntary and occasional and does
not create any contractual or other right to receive future grants of Restricted
Shares, or benefits in lieu of Restricted Shares, even if Restricted Shares have
been granted in the past;

 

(c)     all decisions with respect to future Restricted Shares or other grants,
if any, will be at the sole discretion of the Company.

 

(d)     the grant of Restricted Shares and the Participant's participation in
the Plan shall not create a right to Employment or be interpreted as forming an
Employment or service contract with the Company, the Employer or any Affiliate
and shall not interfere with the ability of the Company, the Employer or any
Affiliate, as applicable, to terminate the Participant's Employment relationship
(if any);

 

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(e)     the Participant is voluntarily participating in the Plan;

 

(f)     the Restricted Shares and the shares of Common Stock subject to the
Restricted Shares are not intended to replace any pension rights or
compensation;

 

(g)     the Restricted Shares and the shares of Common Stock subject to the
Restricted Shares are not part of normal or expected compensation for purposes
of calculating any severance, resignation, termination, redundancy, dismissal,
end-of-service payments, bonuses, long service awards, pension or retirement or
welfare benefits or similar payments;

 

(h)     the future value of the underlying shares of Common Stock is unknown and
cannot be predicted with certainty;

 

(i)     no claim or entitlement to compensation or damages shall arise from
forfeiture of the Restricted Shares resulting from the termination of
Participant's Employment or other service relationship to the Company or the
Employer (for any reason whatsoever whether or not later found to be invalid or
in breach of employment laws in the jurisdiction where the Participant is
employed or the terms of the Participant's employment agreement, if any), and in
consideration of the Restricted Shares to which the Participant is otherwise not
entitled, the Participant irrevocably agrees never to institute any claim
against the Company, its Affiliates or the Employer, waives his or her ability,
if any, to bring any such claim, and releases the Company, its Affiliates and
the Employer from any such claim; if, notwithstanding the foregoing, any such
claim is allowed by a court of competent jurisdiction, then, by participating in
the Plan, the Participant shall be deemed irrevocably to have agreed not to
pursue such claim and agrees to execute any and all documents necessary to
request dismissal or withdrawal of such claim;

 

(j)     unless otherwise provided in the Plan or by the Company in its
discretion, the Restricted Shares and the benefits evidenced by this Notice do
not create any entitlement to have the Restricted Shares or any such benefits
transferred to, or assumed by, another company nor to be exchanged, cashed out
or substituted for, in connection with any corporate transaction affecting the
shares of the Company; and

 

(k)     the following provisions apply only if the Participant is employed
outside the United States:

 

(i)     the Restricted Shares and the shares of Common Stock subject to the
Restricted Shares are not part of normal or expected compensation or salary for
any purpose; and

 

(ii)     neither the Company, the Employer nor any Affiliate shall be liable for
any foreign exchange rate fluctuation between the Participant's local currency
and the United States Dollar that may affect the value of the Restricted Shares
or of any amounts due to the Participant pursuant to the settlement of the
Restricted Shares or the subsequent sale of any shares of Common Stock acquired
upon settlement.

 

18.No Advice Regarding Grant. The Company is not providing any tax, legal or
financial advice, nor is the Company making any recommendations regarding the
Participant's participation in the Plan, or the Participant's acquisition or
sale of the underlying shares of Common Stock. The Participant is hereby advised
to consult with his or her own personal tax, legal and financial advisors
regarding his or her participation in the Plan before taking any action related
to the Plan.

 

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19.Amendment and Termination. Except as otherwise provided in the Plan or this
Notice, no amendment of this Notice that adversely affects the Participant's
rights hereunder in any material respect or termination of this Notice shall be
made by the Company without the written consent of the Participant.

 

20.Binding Effect. This Notice shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under the
Participant.

 

21.Governing Law and Venue. This Notice shall be governed by, and construed in
accordance with, the laws of the State of Texas. The courts in Harris County,
Texas shall be the exclusive venue for any dispute regarding the Plan or this
Notice.

 

22.Severability.   In the event that any provision of this Notice shall be held
illegal, invalid, or unenforceable for any reason, such provision shall be fully
severable and shall not affect the remaining provisions of this Notice, and this
Notice shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

 

23.Imposition of Other Requirements. The Company reserves the right to impose
other requirements on the Participant's participation in the Plan, on the
Restricted Shares and on any shares of Common Stock issued under the Plan, to
the extent the Company determines it is necessary or advisable for legal or
administrative reasons, and to require the Participant to sign any additional
agreements or undertakings that may be necessary to accomplish the foregoing.

 

24.Waiver. A waiver by the Company of breach of any provision of this Notice
shall not operate or be construed as a waiver of any other provision of this
Notice, or of any subsequent breach by the Participant or any other
Participants.

 

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Exhibit A

STOCK POWER

 

FOR VALUE RECEIVED, ___________ (“Transferor”) hereby sells, assigns and
transfers unto Rowan Companies, Inc., ____________ shares of the common stock,
$.125 par value (“Common Stock”), of Rowan Companies, Inc., a Delaware
corporation (the “Company”), which shares of Common Stock are represented by
certificate no(s).____________, and hereby irrevocably appoints
__________________ as attorney-in-fact to transfer such shares of Common Stock
on the books of the Company, with full power of substitution on the premises.

 

Dated: ____________, 20__

 

  TRANSFEROR:                                   Printed Name:  

 

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2009 ROWAN COMPANIES, INC. INCENTIVE PLAN

 

STOCK APPRECIATION RIGHT NOTICE

 

1.Grant of SAR. To carry out the purposes of the 2009 Rowan Companies, Inc.
Incentive Plan (the “Plan”), and subject to the conditions described in this
Notice and the Plan, Rowan Companies, Inc., a Delaware corporation (the
“Company”) hereby grants to you (the “Participant”) stock appreciation rights
(“SAR”) with respect to ______ shares of Common Stock, effective as of
__________, 20__ (the “Grant Date”). All capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan; the Plan is incorporated
herein by reference as a part of this Notice.

 

2.Exercise Price. The exercise price of Common Stock purchased pursuant to the
exercise of this SAR shall be $            per share.

 

3.Exercise of SAR. This SAR shall be exercisable in the manner described below
for one-third of the aggregate number of shares of Common Stock subject to the
SAR on and after the first anniversary of the Grant Date and an additional
one-third on and after each of the second and third anniversaries of the Grant
Date; provided, however, a SAR may be exercised only prior to its expiration
date and, except as otherwise provided below, only while the Participant remains
an Employee of the Company or an Affiliate. This SAR shall not be exercisable in
any event after the expiration of ten years from the Grant Date hereof. The SAR
will terminate and cease to be exercisable upon the Participant’s termination of
Employment with the Company and its Affiliates, except that:

 

(a)If the Participant’s Employment terminates by reason of Retirement, the
Participant may exercise this SAR at any time during the period of five years
following the date of such termination, but only as to the number of shares that
the Participant was entitled to purchase hereunder as of the date his or her
Employment so terminates, plus such additional number of shares, if any, that
the Committee, in its sole discretion, determines may be purchased pursuant to
the SAR as of such Retirement.

 

(b)If the Participant dies within the five-year period following the date of the
Participant’s termination of Employment by reason of Retirement, the legal
representative of the Participant’s estate, or the person who acquires this SAR
by bequest or inheritance or otherwise by reason of the death of the
Participant, may exercise this SAR at any time during the period of two years
following the date of the Participant’s death, but only as to the number of
shares the Participant was entitled to purchase hereunder as of the date the
Participant’s Employment terminated by reason of Retirement.

 

(c)If the Participant’s Employment terminates by reason of Disability, the
Participant may exercise this SAR in full at any time during the period of five
years following the date of such termination, but only as to the number of
shares that the Participant was entitled to purchase hereunder as of the date
his or her Employment so terminates, plus such additional number of shares, if
any, that the Committee, in its sole discretion, may be purchased pursuant to
the SAR as of such Disability.

 

(d)If the Participant dies while an Employee or within the five-year period
following the date of the Participant’s termination of Employment by reason of
Disability, the legal representative of the Participant’s estate, or the person
who acquires this SAR by bequest or inheritance or by reason of the death of the
Participant, may exercise this SAR in full at any time during the period of two
years following the date of the Participant’s death.

 

 

 

(e)If the Participant’s Employment terminates other than by reason of
Retirement, Disability, or death, this SAR (to the extent vested as of the date
of termination and not exercised prior thereto) may be exercised during the 90
days following the date the Participant’s Employment so terminates and shall
terminate thereafter.

 

4.Exercise. Subject to the limitations set forth herein and in the Plan, this
SAR may be exercised by written notice provided to the Company’s stock plan
administrator, and may only be exercised with respect to a number of shares of
Common Stock with respect to which the SAR is then exercisable. Upon exercise of
the SAR, the product of the number of the shares of Common Stock as to which the
SAR is exercised multiplied by the excess of the Fair Market Value (determined
in accordance with the terms of the Plan) over the Exercise Price shall become
payable to the Participant in shares of Common Stock, or, in the sole discretion
of the Committee, in cash. Such Common Stock issuance or single lump-sum cash
payment shall be made as soon as practicable after the date of exercise, but no
later than 45 days thereafter. Notwithstanding anything to the contrary
contained herein, the Participant agrees that he or she will not exercise the
SAR granted pursuant hereto, and that the Company will not be obligated to issue
any Common Stock pursuant to this Notice, if the exercise of the SAR or the
issuance of such Common Stock would constitute a violation by the Participant or
by the Company of any provision of any law or regulation of any governmental
authority or any stock exchange or transaction quotation system.

 

5.Retirement. For purposes of this Notice, “Retirement” of an Employee shall
have occurred if, as of the Employee’s date of termination of Employment, the
Employee is a minimum of 60 years old and has satisfied the requirements for
normal retirement pursuant to the policies of the Company in place at the time
of termination.

 

Determination of the date of termination of Employment by reason of Retirement
and the satisfaction of the requirements for Retirement shall be based on such
evidence as the Committee may require and a determination by the Committee of
such date of termination and satisfaction shall be final and controlling on all
interested parties.

 

6.Disability. For purposes of this Notice, “Disability” means the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or to last for a continuous period of not
less than 12 months, receiving disability benefits under the applicable
disability plan of the Company (or of an Affiliate).

 

Determination of the date of termination of Employment by reason of Disability
and the satisfaction of the requirements for Disability shall be based on such
evidence as the Committee may require and a determination by the Committee of
such date of termination and satisfaction shall be final and controlling on all
interested parties.

 

7.Employment Relationship. For purposes of this Notice and the SAR, the
Participant shall be considered to be in the Employment of the Company or an
Affiliate as long as the Participant is actively providing services to the
Company or an Affiliate. In the event the Participant ceases to be in the
Employment of the Company or an Affiliate (for any reason whatsoever, whether or
not later found to be invalid or in breach of employment laws in the
jurisdiction where the Participant is employed or the terms of the Participant's
employment agreement, if any), unless otherwise provided in this Notice or
determined by the Company, the Participant’s right to vest in the SAR under the
Plan, if any, will terminate effective as of the date the Participant is no
longer actively providing services and will not be extended by any notice period
(e.g., the Participant’s period of active service would not include any
contractual notice period or any period of “garden leave” or similar period
mandated under employment laws in the jurisdiction where the Participant is
employed or the terms of the Participant's employment agreement, if any);
furthermore, the period of time during which the Participant has the right to
exercise the SAR after termination of Employment, if any, will be measured from
the date that the Participant is no longer actively providing services and will
not be extended by any notice period.

 

2

 

 

Any question as to whether and when there has been a termination of such
Employment shall be based on such evidence as the Committee may require and a
determination by the Committee as to the date of such termination shall be final
and controlling on all interested parties.

 

8.Responsibility for Taxes. The Participant acknowledges that, regardless of any
action by the Company or, if different, the Participant's employer (the
“Employer”), the ultimate liability for all income tax, social insurance,
payroll tax, fringe benefits tax, payment on account or other tax-related items
related to the Participant's participation in the Plan and legally applicable to
the Participant (“Tax-Related Items”) is and remains the Participant's
responsibility and may exceed the amount actually withheld by the Company or the
Employer. The Participant further acknowledges that the Company and/or the
Employer (i) make no representations or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the SAR, including, but
not limited to, the grant or exercise of the SAR, the issuance of shares of
Common Stock upon exercise of the SAR, the subsequent sale of shares of Common
Stock acquired pursuant to such issuance and the receipt of any dividends, and
(ii) do not commit to and are under no obligation to structure the terms of the
grant or any aspect of the SAR to reduce or eliminate the Participant's
liability for Tax-Related Items or achieve any particular tax result. Further,
if the Participant is subject to Tax-Related Items in more than one jurisdiction
between the date of grant and the date of any relevant taxable or tax
withholding event, as applicable, the Participant acknowledges that the Company
and/or the Employer (or former employer, as applicable) may be required to
withhold or account for Tax-Related Items in more than one jurisdiction.

 

Prior to any relevant taxable or tax withholding event, as applicable, the
Participant agrees to make adequate arrangements satisfactory to the Company
and/or the Employer to satisfy all Tax-Related Items. In this regard, the
Participant authorizes the Company and/or the Employer, or their respective
agents, at their discretion to satisfy the obligations with regard to all
Tax-Related Items by one or a combination of the following:

 

(a)withholding from the Participant's wages or other cash compensation paid to
the Participant by the Company and/or the Employer;

 

(b)withholding from proceeds of the sale of shares of Common Stock acquired upon
exercise of the SAR either through a voluntary sale or through a mandatory sale
arranged by the Company (on the Participant's behalf pursuant to this
authorization without further consent); or

 

(c)withholding in shares of Common Stock to be issued upon exercise of the SAR,
provided, however, that if the Participant is a Section 16 officer of the
Company under the Exchange Act, the Participant may elect the method of
withholding from alternatives (a) – (c) herein in advance of any relevant
withholding event, and in the absence of the Participant’s timely election, the
Company will conduct tax withholding using alternative (b) herein.

 

3

 

 

Depending on the withholding method, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding rates
or other applicable withholding rates, including maximum applicable rates in
which case the Participant will receive a refund of any over-withheld amount in
cash and will have no entitlement to the Common Stock equivalent. If the
obligation for Tax-Related Items is satisfied by withholding in shares of Common
Stock, for tax purposes, the Participant is deemed to have been issued the full
number of shares of Common Stock subject to the exercised portion of the SAR,
notwithstanding that a number of the shares of Common Stock are held back solely
for the purpose of paying the Tax-Related Items.

 

The Participant agrees to pay to the Company or the Employer, any amount of
Tax-Related Items that the Company or the Employer may be required to withhold
or account for as a result of the Participant's participation in the Plan that
cannot be satisfied by the means previously described. The Company may refuse to
issue or deliver the shares or the proceeds of the sale of shares of Common
Stock, if the Participant fails to comply with the Participant's obligations in
connection with the Tax-Related Items.

 

For Participants subject to tax in the United Kingdom, if payment or withholding
of the income tax due in connection with the SAR is not made within ninety (90)
days of any event giving rise to the income tax liability or such other period
specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions)
Act 2003 (the “Due Date”), the amount of any uncollected income tax shall
constitute a loan owed by the Participant to the Employer, effective on the Due
Date. The loan will bear interest at the then-current official rate of Her
Majesty’s Revenue and Customs (“HMRC”), it will be immediately due and
repayable, and the Company or the Employer may recover it at any time thereafter
by any of the means referred to herein or otherwise permitted under the Plan.
Notwithstanding the foregoing, if the Participant is a director or executive
officer of the Company (within the meaning of Section 13(k) of the Exchange
Act), the Participant shall not be eligible for a loan to cover the income tax
due as described above. In the event the Participant is such a director or
executive officer and the income tax due is not collected from or paid by the
Participant by the Due Date, the amount of any uncollected income tax will
constitute a benefit to the Participant on which additional income tax and
national insurance contributions (“NICs”) will be payable. The Company or the
Employer may recover any such additional income tax and NICs at any time
thereafter by any of the means referred to herein or otherwise permitted under
the Plan. The Participant will also be responsible for reporting and paying any
income tax due on this additional benefit directly to HMRC under the
self-assessment regime.

 

9.Reorganization of the Company.   The existence of this Notice shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; any merger or
consolidation of the Company; any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof; the dissolution or liquidation of the Company; any sale or transfer of
all or any part of its assets or business; or any other corporate act or
proceeding, whether of a similar character or otherwise.

 

10.Recapitalization Events.   In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving the
Company (“Recapitalization Events”), then for all purposes references herein to
Common Stock shall mean and include all securities or other property (other than
cash) that holders of Common Stock are entitled to receive in respect of Common
Stock by reason of each successive Recapitalization Event, and the exercise
price of the SAR shall be adjusted as deemed necessary or appropriate in the
sole discretion of the Committee to prevent enlargement or dilution of the
Participant’s rights under this Notice.

 

4

 

 

11.Status of Common Stock. The Company intends to register for issuance under
the Securities Act of 1933, as amended (the “Act”), the shares of Common Stock
acquirable upon exercise of this SAR and to keep such registration effective
throughout the period that this SAR is exercisable. In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of shares of Common Stock acquirable upon exercise of the SAR will
be delayed until registration of such shares is effective or an exemption from
registration under the Act is available. In the event exemption from
registration under the Act is available upon an exercise of this SAR, the
Participant (or the person permitted to exercise this SAR in the event of the
Participant’s Disability or death), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require assuring compliance with applicable
securities laws. The Company shall incur no liability to the Participant for
failure to register the Common Stock or maintain the registration.

 

The shares of Common Stock which the Participant may acquire by exercising this
SAR will not be sold or otherwise disposed of in any manner that would
constitute a violation of any applicable securities laws, whether federal or
state. The Participant is hereby notified (i) that the certificates representing
the shares of Common Stock purchased under this SAR may bear such legend or
legends as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register the
transfer of the shares of Common Stock purchased under this SAR on the stock
transfer records of the Company if such proposed transfer would in the opinion
of counsel satisfactory to the Company constitute a violation of any applicable
securities law and (iii) that the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of such shares.

 

12.Transfer of SAR. Except as provided herein, all rights granted hereunder
shall not be transferable other than by will or the laws of descent and
distribution and shall be exercisable during the Participant’s lifetime only by
the Participant or, in the case of the Participant’s death, the legal
representative of the Participant’s estate or the person who acquires this SAR
by bequest or inheritance or by reason of the death of the Participant, or in
the case of the Participant’s Disability, by the Participant’s guardian (if
applicable). Any purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance of this SAR that does not satisfy the requirements set
forth hereunder shall be void and unenforceable against the Company.

 

13.Certain Restrictions.   By accepting the SAR granted under this Notice, the
Participant acknowledges that he will enter into such written representations,
warranties and Notices and execute such documents as the Company may reasonably
request in order to comply with the terms of this Notice or the Plan, or
securities laws or any other applicable laws, rules or regulations.

 

14.Recoupment.   Notwithstanding any provision of this Notice to the contrary,
the Committee may, in its sole discretion:

 

(a)recoup from the Participant all or a portion of the Common Stock issued or
cash paid under this Notice if the Company’s reported financial or operating
results are materially and negatively restated within five years of the issuance
or payment of such amounts and may cancel any portion of the SAR not yet
exercised (whether or not vested); and

 

5

 

 

(b)recoup from the Participant if, in the Committee’s judgment, the Participant
engaged in conduct which was fraudulent, negligent or not in good faith, and
which disrupted, damaged, impaired or interfered with the business, reputation
or Employees of the Company or its Affiliates or which caused a subsequent
adjustment or restatement of the Company’s reported financial statements, all or
a portion of the Common Stock issued or cash paid under this Notice within five
years of such conduct and may cancel any portion of the SAR not yet exercised
(whether or not vested).

 

In addition, the SAR is subject to the requirements of (i) Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of
erroneously awarded compensation) and any implementing rules and regulations
thereunder, (ii) similar rules under the laws of any other jurisdiction and
(iii) any policies adopted by the Company to implement such requirements, all to
the extent determined by the Company in its discretion to be applicable to the
Participant.

 

15.Stockholder Rights.   Prior to exercise and receipt of any underlying Common
Stock, a Participant shall have no rights of a stockholder with respect to the
shares of Common Stock subject to the SAR.

 

16.Code Section 409A; No Guarantee of Tax Consequences.   This award of the SAR
is intended to be exempt from Code Section 409A and the provisions hereof shall
be interpreted and administered consistently with such intent. The Company makes
no commitment or guarantee to the Participant that any federal or state tax
treatment will apply or be available to any person eligible for benefits under
this Notice.

 

17.Data Privacy. The Participant explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Participant’s
personal data as described in this Notice and any other grant materials by and
among the Company, the Employer and any Affiliates for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the
Plan.

 

The Participant understands that the Company, the Employer and any Affiliates
may hold certain personal information about the Participant, including, but not
limited to, the Participant’s name, home address and telephone number, date of
birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the
Company, details of any SAR or any other entitlement to shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in the Participant’s favor,
for the exclusive purpose of implementing, administering and managing the Plan
(“Data”).

 

The Participant understands that Data will be transferred to such stock plan
service provider as may be selected by the Company in the future, which is
assisting the Company with the implementation, administration and management of
the Plan. The recipients of Data may be located in the United States or
elsewhere, and the recipients’ country (e.g., the United States) may have
different data privacy laws and protections than the Participant’s country. The
Participant may request a list with the names and addresses of any potential
recipients of Data by contacting his or her human resources representative. The
Participant authorizes the Company and any other possible recipients which may
assist the Company (presently or in the future) with implementing, administering
and managing the Plan to receive, possess, use, retain and transfer Data, in
electronic or other form, for the sole purpose of implementing, administering
and managing his or her participation in the Plan. Data will be held only as
long as is necessary to implement, administer and manage the Participant’s
participation in the Plan. The Participant may, at any time, view Data, request
additional information about the storage and processing of Data, require any
necessary amendments to Data or refuse or withdraw the consents herein, in any
case without cost, by contacting in writing his or her human resources
representative. Further, the Participant is providing his or her consents herein
on a purely voluntary basis. If the Participant does not consent, or if the
Participant later seeks to revoke his or her consent, his or her Employment
status or service and career with the Employer will not be adversely affected;
the only adverse consequence of refusing or withdrawing the Participant's
consent is that the Company would not be able to grant the SAR or other equity
awards to the Participant or administer or maintain such awards. Therefore, the
Participant’s refusal or withdrawal of his or her consent may affect the
Participant’s ability to participate in the Plan. For more information on the
consequences of the Participant’s refusal to consent or withdrawal of consent,
the Participant may contact his or her human resources representative.

 

6

 

 

18.Electronic Delivery and Participation. The Company may, in its sole
discretion, decide to deliver any documents related to current or future
participation in the Plan by electronic means. The Participant hereby consents
to receive such documents by electronic delivery and agrees to participate in
the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company.

 

19.Nature of Grant. In accepting the SAR, the Participant acknowledges,
understands and agrees that:

 

(a)     the Plan is established voluntarily by the company, it is discretionary
in nature and it may be modified, amended, suspended or terminated by the
Company at any time, to the extent permitted by the Plan;

 

(b)     the grant of the SAR is voluntary and occasional and does not create any
contractual or other right to receive future grants of stock appreciation
rights, or benefits in lieu of stock appreciation rights, even if stock
appreciation rights have been granted in the past;

 

(c)     all decisions with respect to future stock appreciation rights or other
grants, if any, will be at the sole discretion of the Company.

 

(d)     the grant of the SAR and the Participant's participation in the Plan
shall not create a right to Employment or be interpreted as forming an
Employment or service contract with the Company, the Employer or any Affiliate
and shall not interfere with the ability of the Company, the Employer or any
Affiliate, as applicable, to terminate the Participant's Employment relationship
(if any);

 

(e)     the Participant is voluntarily participating in the Plan;

 

(f)     the SAR and the shares of Common Stock subject to the SAR are not
intended to replace any pension rights or compensation;

 

(g)     the SAR and the shares of Common Stock subject to the SAR are not part
of normal or expected compensation for purposes of calculating any severance,
resignation, termination, redundancy, dismissal, end-of-service payments,
bonuses, long service awards, pension or retirement or welfare benefits or
similar payments;

 

7

 

 

(h)     the future value of the underlying shares of Common Stock is unknown and
cannot be predicted with certainty;

 

(i)     no claim or entitlement to compensation or damages shall arise from
forfeiture of the SAR resulting from the termination of Participant's Employment
or other service relationship with the Company or the Employer (for any reason
whatsoever whether or not later found to be invalid or in breach of employment
laws in the jurisdiction where the Participant is employed or the terms of the
Participant's employment agreement, if any), and in consideration of the grant
of the SAR to which the Participant is otherwise not entitled, the Participant
irrevocably agrees never to institute any claim against the Company, its
Affiliates or the Employer, waives his or her ability, if any, to bring any such
claim, and releases the Company, its Affiliates and the Employer from any such
claim; if, notwithstanding the foregoing, any such claim is allowed by a court
of competent jurisdiction, then, by participating in the Plan, the Participant
shall be deemed irrevocably to have agreed not to pursue such claim and agrees
to execute any and all documents necessary to request dismissal or withdrawal of
such claim;

 

(j)     unless otherwise provided in the Plan or by the Company in its
discretion, the SAR and the benefits evidenced by this Notice do not create any
entitlement to have the SAR or any such benefits transferred to, or assumed by,
another company nor to be exchanged, cashed out or substituted for, in
connection with any corporate transaction affecting the shares of the Company;
and

 

(k)     the following provisions apply only if the Participant is employed
outside the United States:

 

(i)     the SAR and the shares of Common Stock subject to the SAR are not part
of normal or expected compensation or salary for any purpose; and

 

(ii)     neither the Company, the Employer nor any Affiliate shall be liable for
any foreign exchange rate fluctuation between the Participant's local currency
and the United States Dollar that may affect the value of the Common Stock or of
any amounts due to the Participant pursuant to the exercise of the SAR or the
subsequent sale of any shares of Common Stock acquired upon exercise.

 

20.No Advice Regarding Grant. The Company is not providing any tax, legal or
financial advice, nor is the Company making any recommendations regarding the
Participant's participation in the Plan, or the Participant's acquisition or
sale of the underlying shares of Common Stock. The Participant is hereby advised
to consult with his or her own personal tax, legal and financial advisors
regarding his or her participation in the Plan before taking any action related
to the Plan.

 

21.Amendment and Termination.   Except as otherwise provided in the Plan or this
Notice, no amendment of this Notice that adversely affects the Participant’s
rights hereunder in any material respect or termination of this Notice shall be
made by the Company without the written consent of the Participant.

 

22.Binding Effect. This Notice shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under the
Participant.

 

23.Governing Law and Venue. This Notice shall be governed by, and construed in
accordance with, the laws of the State of Texas. The courts in Harris County,
Texas shall be the exclusive venue for any dispute regarding the Plan or this
Notice.

 

8

 

 

24.Severability.   In the event that any provision of this Notice shall be held
illegal, invalid, or unenforceable for any reason, such provision shall be fully
severable and shall not affect the remaining provisions of this Notice, and this
Notice shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never been included herein.

 

25.Imposition of Other Requirements. The Company reserves the right to impose
other requirements on the Participant's participation in the Plan, on the SAR
and on any shares of Common Stock issued under the Plan, to the extent the
Company determines it is necessary or advisable for legal or administrative
reasons, and to require the Participant to sign any additional agreements or
undertakings that may be necessary to accomplish the foregoing.

 

26.Waiver. A waiver by the Company of breach of any provision of this Notice
shall not operate or be construed as a waiver of any other provision of this
Notice, or of any subsequent breach by the Participant or any other
Participants.

 

9

 

 

2009 ROWAN COMPANIES, INC. INCENTIVE PLAN

 

PERFORMANCE UNIT AWARD NOTICE

 

1.Grant of Performance Units. To carry out the purposes of the 2009 Rowan
Companies, Inc. Incentive Plan (the “Plan”), and subject to the conditions
described in this Notice and the Plan, Rowan Companies, Inc., a Delaware
corporation (the “Company”) hereby grants to you (the “Participant”) _____
Performance Units at target, each valued at $100, effective as ____________,
20__ (the “Grant Date”), with respect to the three-year performance period
commencing January 1, 2012 (the “2012-2014 Grant” or “Grant”). The Grant is
intended to qualify as “qualified performance-based compensation” as described
in Code Section 162(m)(4)(C). All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Plan; the Plan is incorporated herein
by reference as a part of this Notice.

 

See Schedule A for the manner in which the actual number of Performance Units
that vest will be determined based on performance. The Performance Unit
measurements and levels (threshold, target, maximum) are provided in Schedule A.

 

2.Vesting. Subject to the adjustments described in Schedule A and certification
of the level of attainment of the performance goal by the Company’s Compensation
Committee in accordance with the requirements of Code Section 162(m), the
2012-2014 Grant shall be vested on the basis of the certified level of
attainment on the third anniversary of the Grant Date; if the Employment of the
Participant terminates for any reason prior to such date, the 2012-2014 Grant
shall be forfeited.

 

In the event of a Change in Control, the greater of the number of Performance
Units (a) initially granted at target under Section 1 above or (b) based on the
then-current expected level of attainment as determined by the Compensation
Committee as of the date of the Change in Control shall be fully vested
immediately prior to the Change in Control. Notwithstanding any provisions or
definitions contained in the Plan, for purposes of the 2012-2014 Grant, a merger
or other transaction shall not constitute a Change in Control if it is effected
for the purpose of changing the place of incorporation or form of organization
of the Company or the ultimate parent company of the Company and its Affiliates.

 

3.establishment of Accounts. The Company shall maintain an appropriate
bookkeeping record that from time to time will reflect the Participant’s name,
the number of Performance Units initially credited to the Participant (and as
subsequently measured as provided in Schedule A) and the value of the
Performance Units credited to the Participant (the “Account”) as determined by
the Compensation Committee. The 2012-2014 Grant of Performance Units at target
shall be credited to the Participant’s Account effective as of the Grant Date
and thereafter adjusted as provided in Schedule A.

 

4.Reorganization of the Company. The existence of this Notice shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; any merger or
consolidation of the Company; any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof; the dissolution or liquidation of the Company; any sale or transfer of
all or any part of its assets or business; or any other corporate act or
proceeding whether of a similar character or otherwise.

 

 

 

5.Recapitalization Events. In the event of stock dividends, spin-offs of assets
or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving the
Company (“Recapitalization Events”), then for all purposes references herein to
Common Stock or to Performance Units shall mean and include all securities or
other property (other than cash) that holders of Common Stock are entitled to
receive in respect of Common Stock by reason of each successive Recapitalization
Event, which securities or other property (other than cash) shall be treated in
the same manner and shall be subject to the same restrictions as the underlying
Performance Units.

 

6.Amount of Payment. The amount of the payout of the Performance Units will be
finally determined on the third anniversary of the Grant Date.

 

7.Time and Form of Payment; Forfeiture. As soon as administratively practicable
following the earlier of (i) the third anniversary of the Grant Date or (ii) a
Change in Control, payment to the Participant of amounts due hereunder shall be
made in Common Stock, in cash or a combination of Common Stock and cash, as
determined in the sole discretion of the Committee; provided, however, that in
no event shall payment be made later than the 15th day of the third month
following the end of the calendar year in which vesting occurs (as provided in
Section 2 above). Upon termination of Employment for any reason prior to the
earlier of (i) the third anniversary of the Grant Date and (ii) a Change in
Control, the Performance Units shall be forfeited immediately upon termination.

 

8.Transfer of Performance Units. No right to receive payment hereunder shall be
transferable or assignable by the Participant, except by will or the laws of
descent and distribution in the event of a Participant’s death after vesting as
provided in Section 2 above.

 

9.Certain Restrictions. The Participant acknowledges that he or she will enter
into such written representations, warranties and agreements and execute such
documents as the Company may reasonably request in order to comply with the
terms of this Notice or the Plan, or securities laws or any other applicable
laws, rules or regulations.

 

10.Recoupment. Notwithstanding any provision of this Notice to the contrary, the
Committee may, in its sole discretion:

 

(a)recoup from the Participant all or a portion of the Common Stock issued or
cash paid under this Notice if the Company’s reported financial or operating
results are materially and negatively restated within five years of the grant or
payment of such amounts; and

 

(b)recoup from the Participant if, in the Committee’s judgment, the Participant
engaged in conduct which was fraudulent, negligent or not in good faith, and
which disrupted, damaged, impaired or interfered with the business, reputation
or Employees of the Company or its Affiliates or which caused a subsequent
adjustment or restatement of the Company’s reported financial statements, all or
a portion of the Common Stock issued or cash paid under this Notice within five
years of such conduct.

 

In addition, the Grant is subject to the requirements of (i) Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of
erroneously awarded compensation) and any implementing rules and regulations
thereunder, (ii) similar rules under the laws of any other jurisdiction and
(iii) any policies adopted by the Company to implement such requirements, all to
the extent determined by Company in its discretion to be applicable to the
Participant.

 

2

 

 

11.Code Section 409A; No Guarantee of Tax Consequences. This award of
Performance Units is intended to be exempt from Code Section 409A and the
provisions hereof shall be interpreted and administered consistently with such
intent. The Company makes no commitment or guarantee to the Participant that any
federal or state tax treatment will apply or be available to any person eligible
for benefits under this Notice.

 

12.Responsibility for Taxes. The Participant acknowledges that, regardless of
any action taken by the Company or, if different, the Participant’s employer
(the “Employer”), the ultimate liability for all income tax, social insurance
contributions, national insurance contributions, payroll tax, fringe benefits
tax, payment on account or other tax-related items related to the Participant’s
participation in the Plan and legally applicable to the Participant
(“Tax-Related Items”) is and remains the Participant’s responsibility and may
exceed the amount actually withheld by the Company or the Employer. The Company
and/or the Employer (i) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of the Grant,
including, but not limited to, the grant, vesting or payment of the Performance
Units, the issuance of shares of Common Stock or cash pursuant to such payment,
the subsequent sale of any shares of Common Stock acquired pursuant to such
issuance and the receipt of any dividends, and (ii) do not commit to and are
under no obligation to structure the terms of the Grant or any aspect of the
Performance Units to reduce or eliminate the Participant’s liability for
Tax-Related Items or achieve any particular tax result. Further, if the
Participant is subject to Tax-Related Items in more than one jurisdiction
between the Grant Date and the date of any relevant taxable or tax withholding
event, as applicable, the Participant acknowledges that the Company and/or the
Employer (or former employer, as applicable) may be required to withhold or
account for Tax-Related Items in more than one jurisdiction.

 

Prior to any relevant taxable or tax withholding event, as applicable, the
Participant agrees to make adequate arrangements satisfactory to the Company
and/or the Employer to satisfy all Tax-Related Items. In this regard, the
Participant authorizes the Company and/or the Employer, or their respective
agents, at their discretion, to satisfy the obligations with regard to all
Tax-Related Items by one or a combination of the following:

 

(a)withholding from the Participant’s wages or other cash compensation paid to
the Participant by the Company and/or the Employer; or

 

(b)withholding from payout of the Performance Units either through withholding
of cash or, if paid in shares of Common Stock, a voluntary sale or through a
mandatory sale arranged by the Company (on the Participant’s behalf pursuant to
this authorization); or

 

(c)if the Performance Units are paid in shares of Common Stock, withholding in
shares of Common Stock to be issued upon payment of the Performance Units,
provided, however, that if the Participant is a Section 16 officer of the
Company under the Exchange Act, the Participant may elect the method of
withholding from alternatives (a) – (c) herein in advance of any relevant
withholding event, and in the absence of the Participant’s timely election, the
Company will withhold in shares of Common Stock upon the relevant withholding
event.

 

Depending on the withholding method, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding
amounts or other applicable withholding rates, including maximum applicable
rates in which case the Participant will receive a refund of any over-withheld
amount in cash and will have no entitlement to the Common Stock equivalent. If
the obligation for Tax-Related Items is satisfied by withholding in shares of
Common Stock, for tax purposes, the Participant is deemed to have been issued
the full number of shares of Common Stock subject to the vested portion of the
Performance Units, notwithstanding that a number of the shares of Common Stock
are held back solely for the purpose of paying the Tax-Related Items.

 

3

 

 

The Participant agrees to pay to the Company or the Employer, any amount of
Tax-Related Items that the Company or the Employer may be required to withhold
or account for as a result of the Participant’s participation in the Plan that
cannot be satisfied by the means previously described. The Company may refuse to
pay amounts due hereunder if the Participant fails to comply with the
Participant’s obligations in connection with the Tax-Related Items.

 

For Participants subject to tax in the United Kingdom, if payment or withholding
of the income tax due in connection with the Grant is not made within ninety
(90) days of any event giving rise to the income tax liability or such other
period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and
Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax
shall constitute a loan owed by you to the Employer, effective on the Due Date.
The loan will bear interest at the then-current official rate of Her Majesty’s
Revenue and Customs (“HMRC”), it will be immediately due and repayable, and the
Company or the Employer may recover it at any time thereafter by any of the
means referred to herein or otherwise permitted under the Plan. Notwithstanding
the foregoing, if the Participant is a director or executive officer of the
Company (within the meaning of Section 13(k) of the Exchange Act), the
Participant shall not be eligible for a loan to cover the income tax due as
described above. In the event the Participant is such a director or executive
officer and the income tax due is not collected from or paid by the Participant
by the Due Date, the amount of any uncollected income tax will constitute a
benefit to the Participant on which additional income tax and national insurance
contributions (“NICs”) will be payable. The Company or the Employer may recover
any such additional income tax and NICs at any time thereafter by any of the
means referred to herein or otherwise permitted under the Plan. The Participant
will also be responsible for reporting and paying any income tax due on this
additional benefit directly to HMRC under the self-assessment regime.

 

13.Data Privacy. The Participant explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Participant’s
personal data as described in this Notice and any other Grant materials by and
among the Company, the Employer and any Affiliates for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the
Plan.

 

The Participant understands that the Company, the Employer and any Affiliates
may hold certain personal information about the Participant, including, but not
limited to, the Participant’s name, home address and telephone number, date of
birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the
Company, details of all Performance Units or any other entitlement to cash or
shares of stock awarded, canceled, exercised, vested, unvested or outstanding in
the Participant’s favor, for the exclusive purpose of implementing,
administering and managing the Plan (“Data”).

 

The Participant understands that Data will be transferred to such stock plan
service provider as may be selected by the Company in the future, which is
assisting the Company with the implementation, administration and management of
the Plan. The recipients of Data may be located in the United States or
elsewhere, and the recipients’ country (e.g., the United States) may have
different data privacy laws and protections than the Participant’s country. The
Participant may request a list with the names and addresses of any potential
recipients of Data by contacting his or her human resources representative. The
Participant authorizes the Company and any other possible recipients which may
assist the Company (presently or in the future) with implementing, administering
and managing the Plan to receive, possess, use, retain and transfer Data, in
electronic or other form, for the sole purpose of implementing, administering
and managing his or her participation in the Plan. Data will be held only as
long as is necessary to implement, administer and manage the Participant’s
participation in the Plan. The Participant may, at any time, view Data, request
additional information about the storage and processing of Data, require any
necessary amendments to Data or refuse or withdraw the consents herein, in any
case without cost, by contacting in writing his or her human resources
representative. Further, the Participant is providing his or her consents herein
on a purely voluntary basis. If the Participant does not consent, or if the
Participant later seeks to revoke his or her consent, his or her Employment
status or service and career with the Employer will not be adversely affected;
the only adverse consequence of refusing or withdrawing the Participant's
consent is that the Company would not be able to grant the Performance Units or
other equity awards to the Participant or administer or maintain such awards.
Therefore, the Participant’s refusal or withdrawal of his or her consent may
affect the Participant’s ability to participate in the Plan. For more
information on the consequences of the Participant’s refusal to consent or
withdrawal of consent, the Participant may contact his or her human resources
representative.

 

4

 

 

14.Electronic Delivery and Participation. The Company may, in its sole
discretion, decide to deliver any documents related to current or future
participation in the Plan by electronic means. The Participant hereby consents
to receive such documents by electronic delivery and agrees to participate in
the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company.

 

15.Nature of Grant. The Participant acknowledges and agrees that:

 

(a)the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, to the extent permitted by the Plan;

 

(b)the Grant is voluntary and occasional and does not create any contractual or
other right to receive future grants of Performance Units, or benefits in lieu
of Performance Units, even if Performance Units have been granted in the past;

 

(c)all decisions with respect to future Performance Units or other awards, if
any, will be at the sole discretion of the Company;

 

(d)the Grant and the Participant’s participation in the Plan shall not create a
right to Employment or be interpreted as forming an Employment or services
contract with the Company, the Employer or any Affiliate and shall not interfere
with the ability of the Company, the Employer or any Affiliate, as applicable,
to terminate the Participant’s Employment relationship (if any);

 

(e)the Participant is voluntarily participating in the Plan;

 

(f)the Performance Units are not intended to replace any pension rights or
compensation;

 

5

 

 

(g)the Performance Units and the income and value of same, are not part of
normal or expected compensation for purposes of calculating any severance,
resignation, termination, redundancy, dismissal, end-of-service payments,
bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments;

 

(h)no claim or entitlement to compensation or damages shall arise from
forfeiture of the Performance Units resulting from the Participant ceasing to
provide Employment or other services to the Company or the Employer (for any
reason whatsoever whether or not later found to be invalid or in breach of
employment laws in the jurisdiction where the Participant is employed or the
terms of the Participant's employment agreement, if any), and in consideration
of the Grant to which the Participant is otherwise not entitled, the Participant
irrevocably agrees never to institute any claim against the Company, its
Affiliates or the Employer, waives his or her ability, if any, to bring any such
claim, and releases the Company, its Affiliates and the Employer from any such
claim; if, notwithstanding the foregoing, any such claim is allowed by a court
of competent jurisdiction, then, by participating in the Plan, the Participant
shall be deemed irrevocably to have agreed not to pursue such claim and agrees
to execute any and all documents necessary to request dismissal or withdrawal of
such claim;

 

(i)for purposes of this Grant, the Participant will no longer be considered an
Employee as of the date the Participant ceases to actively provide services
to the Company or an Affiliate; further, in the event the Participant ceases to
be an Employee (for any reason whatsoever, whether or not later to be found
invalid or in breach of employment laws in the jurisdiction where the
Participant is employed or the terms of the Participant's employment agreement,
if any), unless otherwise provided in this Notice or determined by the Company,
the Participant’s right to vest in or received payment pursuant to the
Performance Units under the Plan, if any, will terminate effective as of the
date that the Participant is no longer actively providing services and will not
be extended by any notice period (e.g., active service would not include any
contractual notice period or any period of “garden leave” or similar period
mandated under employment laws in the jurisdiction where the Participant is
employed or the terms of the Participant's employment agreement, if any); the
Committee shall have the exclusive discretion to determine when the Participant
is no longer actively providing services for purposes of this Grant (including
whether the Participant may still be considered to be providing services while
on an approved leave of absence);

 

(j)unless otherwise provided in the Plan or by the Company in its discretion,
the Performance Units and the benefits evidenced by this Notice do not create
any entitlement to have the Performance Units or any such benefits transferred
to, or assumed by, another company nor be exchanged, cashed out or substituted
for, in connection with any corporate transaction affecting the shares of the
Company; and

 

(k)the following provisions apply only if the Participant is employed outside
the United States:

 

(i)the Performance Units and the income and value of same are not part of normal
or expected compensation or salary for any purpose; and

 

(ii)neither the Company, the Employer nor any Affiliate shall be liable for any
foreign exchange rate fluctuation between the Participant's local currency and
the United States Dollar that may affect the value of the Performance Units or
of any amounts due to the Participant pursuant to the payment of the Performance
Units or the subsequent sale of any shares of Common Stock acquired upon
settlement.

 

6

 

 

16.No Advice Regarding Grant. The Company is not providing any tax, legal or
financial advice, nor is the Company making any recommendations regarding the
Participant’s participation in the Plan, or the Participant’s acquisition or
sale of the underlying shares of Common Stock. The Participant is hereby advised
to consult with his or her own personal tax, legal and financial advisors
regarding his or her participation in the Plan before taking any action related
to the Plan.

 

17.Amendment and Termination. Except as otherwise provided in the Plan or this
Notice, no amendment of this Notice that adversely affects the Participant’s
rights hereunder in any material respect or termination of this Notice shall be
made by the Company without the written consent of the Participant.

 

18.Binding Effect. This Notice shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under the
Participant.

 

19.Governing Law and Venue. This Notice shall be governed by, and construed in
accordance with, the laws of the State of Texas. The courts in Harris County,
Texas shall be the exclusive venue for any dispute regarding the Plan or this
Notice.

 

20.Severability. In the event that any provision of this Notice shall be held
illegal, invalid, or unenforceable for any reason, such provision shall be fully
severable and shall not affect the remaining provisions of this Notice, and this
Notice shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

 

21.Waiver. A waiver by the Company of breach of any provision of this Notice
shall not operate or be construed as a waiver of any other provision of this
Notice, or of any subsequent breach by the Participant or any other
Participants.

 

7

 

 

SCHEDULE A

 

You have been granted Performance Units (“PUs”) as of March 7, 2012, each of
which has a grant date target value of $100. The amount ultimately payable for
each PU granted, if any, is linked to the Company’s Relative Total Shareholder
Return (“TSR”) over the 2012-2014 period. Such amount would be payable after the
March 7, 2015 vesting date, and may be anywhere from $0 to $200 per unit,
depending on the Company’s TSR ranking during the three-year performance period
ending on December 31, 2014 relative to a group of peer companies (the "Peer
Group"). The Peer Group currently consists of Atwood, Diamond Offshore, Ensco,
Noble Corp, Seadrill and Transocean, but may be modified as deemed necessary by
the Committee.

 

While there will be no payout until after the vesting date, you will be notified
of the PU notional value after the end of each annual performance period as
follows:

 

January 1 – December 31, 2012 – 25% of PU value measured

 

January 1 – December 31, 2013 – 25% of PU value measured

 

January 1 – December 31, 2014 – 25% of PU value measured

 

January 1, 2012 – December 31, 2014 – remaining 25% of PU value measured

 

Each value determined above will not be subject to further adjustment, unless
deemed necessary by the Committee and only to the extent such adjustment would
not cause the PUs to fail to constitute “qualified performance-based
compensation” within the meaning of Code Section 162(m)(4)(C). As an example, if
the Company’s TSR ranked at the top of the Peer Group for the 2012 period, the
25% of PU value for the 2012 performance period would be measured at $50 (200%
of the 25% potential value). If you are still employed with the Company on the
vesting date, you would receive this value (in stock or cash) on or after the
March 7, 2015 vesting date (and in any event within the period set forth in the
Award Notice). If the Company’s 2013 TSR ranked at the bottom of the Peer Group,
the 25% of PU value for the 2013 performance period would be measured at $0,
though no change would be made the value measured for 2012.

 

TSR is calculated with respect to each performance period for the Company as the
result of dividing (a) the average closing price of the Common Stock for the
last twenty-five (25) trading days of the applicable performance period (plus
any dividends paid per share by any of the companies during the applicable
performance period), less the average closing price of Common Stock for the
twenty-five (25) trading days immediately preceding the performance period, by
(b) the average closing price of Common Stock for the twenty-five (25) trading
days immediately preceding the performance period. TSR is calculated with
respect to each performance period for the companies in the Peer Group on the
same basis as TSR is calculated for the Company. The Company’s TSR will be
interpolated between the peer ranked immediately above the Company and the peer
ranked immediately below the Company. If the Company is at the bottom of the
peer group for any period, there will be no performance unit value attributable
to that period.

 

8

 

 

The following chart demonstrates the PU value (as a % of target) for each level
of performance, and illustrates the slope of the payout line.

 

RDC Performance Rank 7th 6th 5th 4th 3rd 2nd 1st

Unit

Value

0 33% 67% 100% 133% 167% 200%

 

 

[image_001.gif]

 

By way of explanation – if Rowan is the 4th in our peer group in terms of
Relative TSR in each year and for the three year period, the PUs granted would
pay out at target, or $100 per unit (payable in cash or stock at the Committee’s
discretion)

 

 

9