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EXHIBIT 10C


THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES ACT. THIS DEBENTURE MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT AS PERMITTED BY ARTICLE FOUR HEREOF.




	 	 	 	 	 
	No.___

	 	 	$	 






ROWAN COMPANIES, INC.

SERIES __ FLOATING RATE SUBORDINATED CONVERTIBLE DEBENTURE

DUE 200__




     ROWAN COMPANIES, INC, a Delaware corporation (the “Company”), for value received, hereby
promises to pay to            or permitted and registered assigns, the principal sum of   
      
and No/100 Dollars ($ ) on      , 200 , in such coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private debts, and to pay
to the registered holder hereof as hereinafter provided interest in the amount determined as
provided in the following paragraph, in like coin or currency, from the date hereof quarterly on
each Interest Payment Date (as defined below), until payment of such principal sum has been made.
The interest so payable on any Interest Payment Date will be paid to the person in whose name this
Debenture is registered at the close of business of the business day next preceding such Interest
Payment Date, except if and to the extent the Company shall default in the payment of the interest
due on such Interest Payment Date, in which case such defaulted interest shall be paid to the
person in whose name this Debenture is registered at the close of business of the business day next
preceding the date of payment of such defaulted interest. The term “Interest Payment Date” shall
mean March 31, June 30, September 30 and December 31 of each year unless such day is not a business
day, in which case it shall mean the immediately succeeding business day. The term “business day”
shall mean any day which is not a Saturday or a Sunday or which in the City of Houston or in the
City of New York is neither a legal holiday nor a day on which banking institutions are authorized
by law or regulation to close. The period beginning on and including the date hereof and ending on
and excluding the first Interest Payment Date and each successive period beginning on and including
an Interest Payment Date and ending on and excluding the next succeeding Interest Payment Date are
each herein called an “Interest Period.” Payment of the principal and interest on this Debenture
will be made at the offices of the Company in Houston, Texas or by wire transfer of Federal Funds
to an account designated in writing by the holder hereof at such commercial bank as may be
designated by the holder hereof upon thirty (30) days’ advance written notice given to the Company.



     The interest rate (the “Interest Rate”) for the first Interest Period shall be the per annum
interest rate announced publicly by Citibank, N.A. in New York, New York from time to time as its
base rate (the “Base Rate”) as such Base Rate is in effect on the date hereof, plus 1/2% per annum
and thereafter the Interest Rate for each subsequent Interest Period



 









 





shall be the Base Rate as such Base Rate is in effect on the Second business day prior to the first
day of each such Interest Period, plus 1/2% per annum.




     The amount of interest payable on this Debenture for each Interest Period is computed by
multiplying the decimal equivalent of the applicable Interest Rate for such Interest Period by the
actual number of days in such Interest Period, dividing by 360 and multiplying the resulting
quotient by the principal amount of this Debenture. Such product shall be rounded to the nearest
cent (half a cent being rounded upward).



ARTICLE ONE

ISSUANCE




     1.01
Issuance. This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its “Series Floating Rate Subordinated Convertible Debentures due 200 ”
(the “Debentures”) and is issued pursuant to the terms and provisions of the Rowan Companies, Inc.
1998 Convertible Debenture Incentive Plan, as amended from time to time (the “Plan”). All of the
Debentures and the rights, limitations of rights, obligations, duties and immunities thereunder of
the Company and the holders of the Debentures are subject to the terms and conditions hereof and of
the Plan and each holder of this Debenture, by accepting the same, agrees to and shall be bound by
all such terms and conditions. The words “holder” or “holders” as used in this Debenture mean the
registered holder or holders of this Debenture. In the event of a conflict between the terms of
this Debenture and the terms of the Plan, the terms of the Plan shall govern. The issuance of this
Debenture is governed by the provisions of that certain Subscription Agreement dated of even dated
herewith between the Company and certain Purchasers (the “Subscription Agreement”).



ARTICLE TWO

DENOMINATIONS; REGISTERED HOLDER




     2.01 Denominations; Registered Holder. The Debentures are issuable only as registered
Debentures without coupons in denominations of $1,000 and any integral multiple of $1,000. The
Company and any paying agent may deem and treat the registered holder hereof as the absolute owner
of this Debenture (whether or not there shall be a default in payment of principal or interest
hereunder and notwithstanding any notice of ownership or writing hereon made by anyone other than
the Company), for the purpose of receiving payment hereof or on account hereof or interest hereon
and for all other purposes, and neither the Company nor any paying agent shall be affected by any
notice to the contrary, other than proper registration of an exchange or a transfer.



ARTICLE THREE

EXCHANGE




     3.01 Exchange. The Debentures may be exchanged for a like aggregate principal amount
of Debentures of other authorized denominations. Debentures to be exchanged shall be surrendered
at the principal office of the Company in Houston, Texas, and the Company shall execute and deliver
in exchange therefor the Debentures which the Debentureholder making the exchange shall be entitled
to receive.



 









 





ARTICLE FOUR

RESTRICTIONS ON TRANSFER




     4.01 Restrictions on Transfer. THE HOLDER HEREOF MAY NOT SELL, ASSIGN, TRANSFER,
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS DEBENTURE EXCEPT BY (I) WILL OR THE LAWS OF
DESCENT AND DISTRIBUTION OR (ii) A PLEDGE OF THIS DEBENTURE TO A LENDER AS SECURITY FOR LOANS TO
PROVIDE ALL OR A PART OF THE FINANCING TO PURCHASE THIS DEBENTURE. THIS DEBENTURE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT. NO TRANSFER
OF THIS DEBENTURE (OR OF THE SERIES A PREFERRED STOCK INTO WHICH THIS DEBENTURE MAY BE CONVERTIBLE
OR OF THE COMMON STOCK INTO WHICH SUCH SERIES A PREFERRED STOCK MAY BE CONVERTIBLE) SHALL BE
PERMITTED UNTIL THE TRANSFEROR SHALL HAVE COMPLIED WITH ALL RESTRICTIONS ON TRANSFER SET FORTH
HEREIN AND SUCH SECURITIES HAVE BEEN REGISTERED UNDER SUCH ACTS OR UNTIL THE COMPANY SHALL HAVE
RECEIVED A FAVORABLE OPINION FROM THE COMPANY’S LEGAL COUNSEL, OR FROM LEGAL COUNSEL ACCEPTABLE TO
THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER SUCH ACT. If this
Debenture shall be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of
otherwise than in accordance herewith, such sale, assignment, transfer, pledge, hypothecation or
other disposition shall be void, and the Company and any Debenture registrar shall not register any
such sale, assignment, transfer, pledge, hypothecation or other disposition.



     Subject to the restrictions on transfer set forth herein, upon due presentment for
registration of transfer of any Debenture at the principal office of the Company in Houston, Texas,
the Company shall register and execute and deliver in the name of the transferee or transferees a
new Debenture or Debentures for a like aggregate principal amount of authorized denominations.



     All Debentures presented or surrendered for exchange, registration of transfer, redemption,
conversion or payment shall (if so required by the Company) be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Company duly executed by the holder
thereof or his attorney duly authorized in writing.



     No service charge shall be made for any exchange or registration of transfer of Debentures,
but the Company may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.



     4.02 Pledges; Estates. The holder of this Debenture may pledge or hypothecate such
Debenture as security for loans to provide all or part of the financing to purchase such Debenture,
and shall provide the Company with advance written notice thereof, all in accordance with Section
3.04 of the Plan. The duly authorized representative of the estate of a deceased Debentureholder
may request that a Debenture held in such state be registered in the name of the person or persons
to whom such Debenture passed by will or the laws of intestate succession; provided that
such representative shall have supplied proof satisfactory to the Company of his authority and of
any other matters which the Company may deem relevant. A person who has foreclosed on a pledge or
hypothecation of a Debenture made in compliance herewith may request that such



 









 





Debenture be registered in the name of such person. The provisions of this Section 4.02 shall be
subject to the provisions of Section 4.01.




ARTICLE FIVE

REDEMPTION




     5.01 Redemption and Redemption Price. In its discretion, the Company may redeem this
Debenture (an “elective redemption”) in accordance with the provisions of this Article and the
first sentence of Section 3.5 of the Plan. The Company shall redeem this Debenture as required
pursuant to the second sentence of Section 3.5 of the Plan. Any redemption by the Company of this
Debenture shall be at a redemption price equal to the face amount of this Debenture, together with
interest hereon to the date fixed for redemption (the “redemption price”).



     5.02 Notice of Redemption. If the Company shall desire to effect an elective
redemption of this Debenture, it shall give at least five (5) days prior written notice of such
redemption to the holder of this Debenture. In the case of a redemption pursuant to the second
sentence of Section 3.5 of the Plan, no notice of redemption need be given by the Company.



     Each notice of an elective redemption shall specify the date fixed for redemption, shall state
that the redemption price will be paid upon presentation and surrender of this Debenture to the
Company at its principal office in Houston, Texas, shall state that on and after such date interest
hereon shall cease to accrue and shall state, if applicable, the conversion price, the date on
which the right to convert the Debenture will terminate and the place or places where such
Debenture may be surrendered for conversion. If the giving of notice of an elective redemption
shall have been completed as above provided, this Debenture shall become due and payable on the
date fixed for redemption at the redemption price, and on and after such date fixed for redemption
(unless the Company shall default in the payment of this Debenture at the redemption price)
interest on this Debenture shall cease to accrue. In the case of redemption other than an elective
redemption, this Debenture shall become due and payable on the next Interest Payment Date after
termination of the conversion privilege with respect to this Debenture, which next Interest Payment
Date shall be the “date fixed for redemption” with respect to such redemption. On presentation and
surrender of this Debenture to the Company at its principal office in Houston, Texas, this
Debenture shall be paid and redeemed by the Company at the redemption price.



     If any Debenture called for redemption shall not be paid upon surrender thereof for
redemption, the principal thereof shall, until paid, bear interest from the date fixed for
redemption at the Interest Rate in effect from time to time.



ARTICLE SIX

CONVERSION




     6.01 Conversion Privilege and Conversion Price. Subject to and upon compliance with
the provisions of this article and the Plan, at the option of the holder hereof, the holder may
convert portions of the Debenture into fully paid and nonassessable shares of Series A Preferred
Stock (the “Related Stock”) of the Company, at a conversion price of $1,000 per share of Related
Stock according to this schedule: (i) after one year from the date of the



 









 





Debenture but prior to the close of business on the Due Date (as defined in the Plan) hereof,
$         or any portion of the principal amount hereof which is $1,000 or an integral multiple of
$1,000 up to a maximum of $          ; (ii) after two years from the date of the Debenture but prior to
the close of business on the Due Date, an additional $        or any portion of the principal amount
hereof which is $1,000 or an integral multiple of $1,000 up to a maximum of $          ; (iii)
after three years from the date of the Debenture but prior to the close of business on the Due Date
hereof, an additional $        or any portion of the principal amount hereof which is $1,000 or an
integral multiple of $1,000 up to a maximum of $ ; and (iv) after four years from the date of
the Debenture but prior to the close of business on the Due Date hereof, an additional
$         or any portion of the principal amount hereof which is $1,000 or an integral multiple of $1,000 up
to a maximum of $         , provided in all of the foregoing cases that the conversion privilege associated with this
Debenture has not terminated or become non-exercisable pursuant to the provisions of this Debenture
or Section 3.3 of the Plan. Notwithstanding the foregoing, the ability of the Debenture to be
converted shall cease with respect to any portion of the Debenture that has been pledged to secure
a loan while pledged or in the event the pledge of such portion of the Debenture is foreclosed on.




     Anything herein to the contrary notwithstanding, if at any time the Board of Directors of the
Company determines, in its discretion, that the listing, registration or qualification upon any
securities exchange or under any state or federal law of Related Stock or of Common Stock into
which such Related Stock is convertible, or that the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection with, the issue of
such shares, (i) the Company will in good faith and at its own expense endeavor to secure such
listing, registration, qualification, consent or approval as promptly as practicable, and (ii) the
conversion privilege of this Debenture may not be exercised in whole or in part until such listing,
registration, qualification, consent or approval shall have been effected or obtained and the same
shall have been free of any conditions not acceptable to the Board of Directors. Suspension of the
right to exercise the conversion privilege shall not reduce any other rights under this Debenture.
In case of any such suspension of the conversion privilege, the Company shall promptly notify the
holder hereof of such suspension and the reason therefor. Upon termination of any such suspension,
the Company shall promptly notify the holder hereof of such termination.



     6.02 Exercise of Conversion Privilege. In order to exercise the conversion privilege
with respect to this Debenture, the holder of this Debenture shall surrender such Debenture, duly
endorsed or assigned to the Company or in blank, at the principal place of business of the Company
in Houston, Texas, accompanied by written notice to the Company at such office that the holder
elects to convert such Debenture or, if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted. No partial conversion will be permitted if,
following conversion, the remaining principal amount of the Debenture would be less than $1,000.



     This Debenture shall be deemed to have been converted immediately prior to the close of
business on the day of surrender of such Debenture for conversion in accordance with the foregoing
provisions, and at such time the rights of the holder of this Debenture as a holder shall cease,
and the person entitled to receive the Related Stock issuable upon conversion shall be treated for
all purposes as the record holder of such Related Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall



 









 





issue and shall deliver at said office a certificate or certificates for the number of full shares
of Related Stock issuable upon conversion.




     Interest will accrue on this Debenture through the day immediately preceding the date of
conversion and will be paid to the holder of the Debenture when his shares of Related Stock are
delivered. The foregoing sentence shall apply only to the converted portion of a Debenture
converted in part only.



     If this Debenture is converted in part only, upon such conversion the Company shall execute
and deliver to the holder hereof, at the expense of the Company, a new Debenture or Debentures of
authorized denominations in aggregate principal amount equal to the unconverted portion of the
principal amount of such Debenture.



     6.03 Company to Reserve Preferred Stock. The Company shall at all times reserve and
keep available, free from preemptive rights, out of its authorized but unissued Related Stock, for
the purpose of effecting the conversion of Debentures, the full number of shares of Related Stock
then issuable upon the conversion of all outstanding Debentures. The Company covenants that all
shares of Related Stock which may be issued upon conversion of Debentures will upon issue be fully
paid and nonassessable.



     6.04 Notice of Certain Corporate Action. In case:




          (a) the Company shall declare a dividend (or any other
distribution) on its Related Stock or its Common Stock payable
otherwise than in cash out of its earned surplus; or




          (b) the Company shall authorize the granting to all holders of its
Related Stock or its Common Stock of rights or warrants to subscribe
for or purchase for periods ending within 180 days any shares of
capital stock of any class or of any other rights; or




          (c) of any capital reorganization, reclassification or
recapitalization of the Company (other than a subdivision or
combination of its outstanding shares of Common Stock), of any
consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of any sale
of all or substantially all of the assets of the Company; or




          (d) of any voluntary or involuntary dissolution, liquidation or
winding up of the Company;



then the Company shall cause to be mailed to the holder of this Debenture at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable Record Date or
Effective Date, as defined herein, a notice stating (I) the date or expected date on which a record
is to be taken for the purpose of such dividend, distribution or right (the “Record Date”), or, if
a record is not to be taken, the date as of which the holders of its Related Stock or Common Stock,
as the case may be, which are to be entitled to such dividend, distribution or right are to be
determined, or (ii) the date or expected date on which




 









 








such reorganization, reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding up is to take place (the “Effective Date”) and the date as of
which it is expected that record holders of Related Stock or Common Stock, as the case may be,
shall be entitled to exchange their shares of Related Stock or Common Stock for securities, cash or
other property deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding up. Failure to give notice or
any defect therein shall not affect the legality or validity of any such action requiring such
notice, or the vote on any such action.




     6.05 Provisions in Case of Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any other corporation (other than
a consolidation or merger in which the Company is the continuing corporation and in which no change
is made in the outstanding Related Stock or Common Stock of the Company), or in case of any sale or
transfer of all or substantially all of the assets of the Company, the corporation formed by such
consolidation or the corporation resulting from such merger or the person which shall have acquired
such assets, as the case may be, shall expressly assume the Company’s obligations under this
Debenture, which assumption shall provide that the holder of each Debenture then outstanding shall
have the right thereafter (until the expiration of the conversion right of such Debenture) to
convert such Debenture at the time or times originally set forth in such Debenture into the kind
and amount of shares of stock and other securities and property receivable upon such consolidation,
merger, sale or transfer (I) if any shares of Related Stock were outstanding immediately prior to
such consolidation, merger, sale or transfer, by a holder of the number of shares of Related Stock
into which such Debenture might have been converted immediately prior to such consolidation,
merger, sale or transfer, or (ii) if no shares of Related Stock were outstanding immediately prior
to such consolidation, merger, sale or transfer, by a holder of the number of shares of Common
Stock of the Company into which the Related Stock issuable upon conversion of such Debenture might
have been converted immediately prior to such consolidation, merger, sale or transfer, in both
cases had such Debenture been convertible into Related Stock immediately prior to such
consolidation, merger, sale or transfer. Such express assumption shall also provide for
adjustments which, for events subsequent to the effective date of such assumption, shall be as
nearly equivalent as may be practicable to the adjustments provided for in Section 4 of the Related
Stock. The above provisions of this Section shall similarly apply to successive consolidations,
mergers, sales or transfers.



ARTICLE SEVEN

SUBORDINATION




     7.01 Agreement of Subordination. The Company covenants and agrees, and each holder
of this Debenture by his acceptance hereof likewise covenants and agrees, that all Debentures shall
be issued subject to the provisions of this Article; and each person holding any Debenture, whether
upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such
provisions.



     All Debentures issued pursuant to the Plan shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness.



 









 





     As used herein, “Senior Indebtedness” means (i) any indebtedness or guarantee of the Company
for money borrowed (other than any debentures issued pursuant to the Plan), whether or not
evidenced by bonds, debentures, notes or other written instruments, (ii) any deferred obligation or
guarantee thereof of the Company for the payment of the price of property or assets, and (iii) any
obligation of the Company, as lessee or guarantor, to pay rent under a lease of real or personal
property, which obligation, in the judgment of the independent public accountants of the Company,
is required to be capitalized on a balance sheet of the lessee or guarantor in accordance with
generally accepted accounting principles; whether any such indebtedness, guarantee or obligation is
outstanding on the date of execution of this Debenture or thereafter created, assumed or incurred,
together with any amendments, renewals, extensions or refundings of any such indebtedness,
guarantee or obligation, unless in any instrument or instruments evidencing or securing such
indebtedness, guarantee or obligation or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding it is provided that such indebtedness, guarantee or
obligation is not superior in right of payment to this Debenture. Senior Indebtedness shall not,
however, include indebtedness incurred in connection with the purchase of materials or services in
the ordinary course of business, indebtedness representing amounts recorded as accounts payable on
the books of the Company or indebtedness representing money borrowed by the Company from a
subsidiary.



     7.02 Payments to Holders of Debentures. No payment shall be made by the Company on
account of principal of or interest on the Debentures or on account of the purchase or other
acquisition of Debentures, if there shall have occurred a default in any payment with respect to
any Senior Indebtedness, or if there shall have occurred an event of default with respect to any
Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof, or if such
payment in respect of the Debentures would itself constitute such an event of default, unless and
until such default or event of default shall have been cured or waived or shall have ceased to
exist.



     Upon any acceleration of the principal of the Debentures or any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in
full in money or money’s worth, or payment thereof provided for, before any payment is made on
account of the principal of or interest on the Debentures; and upon any such dissolution or winding
up or liquidation or reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to which the holders of
the Debentures would be entitled except for the provisions of this Article, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in full in money or
money’s worth, after giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness, before any payment or distribution is made to the holders of the
Debentures.



 









 





     If, notwithstanding the foregoing, any payment by or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall
be received by the holders of the Debentures before all Senior Indebtedness is paid in full in
money or money’s worth, or provision is made for such payment, such payment or distribution shall
be paid over or delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in money or money’s worth, after giving
effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness
(but subject to the power of a court of competent jurisdiction to make other equitable provision,
which shall have been determined by such court to give effect to the rights conferred in this
Article upon the Senior Indebtedness and the holders thereof with respect to the Debentures or the
holders thereof, by a lawful plan of reorganization or readjustment under applicable bankruptcy
law).



     The consolidation of the Company with, or the merger of the Company into, another corporation
or the liquidation or dissolution of the Company following the conveyance or transfer of its
property as an entirety, or substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Ten shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Ten.



     The holders of Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to the holders of the Debentures, without incurring responsibility to the holders of
the Debentures and without impairing or releasing the obligations of the holders of the Debentures
thereunder to the holders of Senior Indebtedness: (I) change the manner, place or terms of payment
or change or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise
amend in any manner Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any person
liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other person.



     7.03 Subrogation of Debentures. Subject to the payment in full of all Senior
Indebtedness, the holders of the Debentures shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal of and interest on the Debentures
shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness of any cash, property or securities to which the holders of the
Debentures would be entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness by holders of the
Debentures, shall, as between the Company, its creditors other than holders of Senior Indebtedness,
and the holders of the Debentures, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness. It is understood that the provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the holders of the Debentures, on the one
hand, and the holders of Senior Indebtedness, on the other hand.



 









 





     Nothing contained in this Article or elsewhere in the Plan or in this Debenture is intended to
or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness,
and the holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and interest on the
Debentures as and when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Debentures and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein
prevent the holder of any Debenture from exercising all remedies otherwise permitted by applicable
law upon default hereunder, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.



     Upon any payment or distribution of assets of the Company referred to in this Article, the
holders of the Debentures shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or reorganization
proceedings are pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, delivered to the holders of the
Debentures, for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article.



     7.04 Authorization by Holders of Debentures. Each holder of a Debenture by his
acceptance thereof authorizes and directs the Company on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the holder of the Debenture and the holders of
Senior Indebtedness, the subordination provided in this Article and appoints the Company his
attorney-in-fact for any and all such purposes.



     7.05 Notices to Holders of Debentures and Senior Indebtedness Holders. The Company
shall give prompt written notice to the holders of the Debentures of any fact known to the Company
which would prohibit the making of any payment of moneys to such holders in respect of the
Debentures pursuant to the provision of this Article.



     The Company agrees that if any default shall occur with respect to any Senior Indebtedness,
which default permits the holders of such Senior Indebtedness to accelerate the maturity thereof,
the Company will give prompt notice in writing of such happening to all known holders of Senior
Indebtedness and shall certify to each such holder the names of the holders of all Debentures
issued pursuant to the Plan.



     7.06 No Impairment of Subordination. No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants hereof or of the Plan, regardless of any knowledge thereof which
any such holder may have or otherwise be charged with.



ARTICLE EIGHT

COVENANTS




 









 








     8.01 Payment of Principal and Interest. The Company will duly and punctually pay the
principal of and interest on the Debentures in accordance with the terms hereof.



     8.02. Money for Debenture Payments to Be Held in Trust. The Company will, on or before
each due date of the principal of or interest on any of the Debentures, segregate and hold in trust
for the benefit of the persons entitled thereto a sum sufficient to pay the principal or interest
so becoming due until such sums shall be paid to such persons or otherwise disposed of as herein
provided.



     Any money then held by the Company in trust for the payment of the principal of or interest on
any Debenture and remaining unclaimed for three years after such principal or interest has become
due and payable shall be discharged from such trust; and the holder of such Debenture shall
thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all
liability of the Company as trustee thereof, shall thereupon cease.



     8.03 Corporate Existence. Subject to Article Ten, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its corporate existence.



     8.04 Amendment of Preferred Stock. Subject to Article Ten, the Company agrees (i) to
take no action to alter or amend the terms of the Related Stock prior to its issuance unless such
alteration or amendment shall have been approved in writing by the holders of not less than 66-2/3%
of the aggregate principal amount of the Debentures at the time outstanding, (ii) to take no action
to amend its charter in any way which would adversely affect the conversion rights of the Related
Stock unless such amendment shall have been approved in writing by the holders of all shares of
Related Stock at the time outstanding and by the holders of all of the aggregate principal amount
of the Debentures at the time outstanding, and (iii) to issue the Related Stock only upon
conversion of the Debentures.



ARTICLE NINE

REMEDIES




     9.01 Events of Default. “Event of Default,” wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it shall be occasioned
by the provisions of Article Seven or be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):




	 	(1)  	default in the payment of any interest
upon any Debenture when it becomes due and payable, and
continuance of such default for a period of 30 days; or
	 
	 	(2)  	default in the payment of the
principal of any Debenture when the same shall have
become due and payable; or
	 
	 	(3)  	default in the performance, or breach,
of any covenant or warranty of the Company contained





 









 











herein (other than a covenant or warranty a default in
the performance of which or a breach of which is
elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of
60 days after there has been given, by registered or
certified mail, to the Company by the holders of at
least 10% in principal amount of the outstanding
Debentures a written notice specifying such default or
breach and requiring it to be remedied and stating that
such notice is a “Notice of Default” thereunder; or




	 	(4)  	an event of default as defined in any
one or more mortgages, indentures or instruments under
which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed
by the Company, whether such indebtedness now exists or
shall hereafter be created, which event of default shall
have resulted in an amount of such indebtedness in an
aggregate amount of $30,000,000 or more becoming or
being declared due and payable prior to the date on
which it would otherwise have become due and payable,
without such acceleration having been rescinded or
annulled within a period of 30 days after there shall
have been given, by registered or certified mail, to the
Company by the holders of at least 10% in principal
amount of the outstanding Debentures a written notice
specifying such default and requiring the Company to
cause such acceleration to be rescinded or annulled and
stating that such notice is a “Notice of Default”
hereunder; or
	 
	 	(5)  	the entry, without the consent of the
Company, by a court having jurisdiction in the premises,
of an order for relief with respect to the Company under
the United States Bankruptcy Code, 11 U.S.C. §§ 101
et seq., or any successor statute thereto (the
“Bankruptcy Code”) or of a judgment, order or decree
adjudging the Company a bankrupt or insolvent, or entry
of an order for relief for reorganization, arrangement,
adjustment or composition of or in respect of the
Company under the Bankruptcy Code or applicable state
insolvency law and the continuance of any such judgment,
order or decree unstayed and in effect for a period of
90 consecutive days; or




 









 












	 	(6)  	the institution by the Company of
proceedings for entry of an order for relief with
respect to the Company under the Bankruptcy Code or for
an adjudication of insolvency, or the consent by the
Company to the institution of bankruptcy or insolvency
proceedings against it, or the filing by the Company of
a petition seeking, or the seeking or consenting to
reorganization, arrangement, composition or relief under
the Bankruptcy Code or any applicable state law, or the
consenting by the Company to the filing of such petition
or to the appointment of a receiver, custodian,
liquidation, assignee, trustee, sequestrator or similar
official (other than a custodian pursuant to 8 Delaware
Code §226 or any similar statute under other state laws)
of the Company or of substantially all of its property,
or the making by the Company of a general assignment for
the Benefit of creditors as recognized under the
Bankruptcy Code.





     9.02. Acceleration of Maturity; Rescission and Annulment. If an Event of Default
occurs and is continuing, then and in every such case the holders of not less than 25% in principal
amount of the outstanding Debentures may declare the principal of all the Debentures to be due and
payable immediately, by a notice in writing to the Company, and upon any such declaration such
principal shall become immediately due and payable.



     At any time after such a declaration of acceleration has been made and before a judgment or
decree for payment of the money due has been obtained, the holders of a majority in principal
amount of the outstanding Debentures, by written notice to the Company, may rescind and annul such
declaration and its consequences if



     (1) the Company has paid




	 	(A)  	All overdue installments of interest on all Debentures,
	 
	 	(B)  	the principal of any Debentures which
have become due otherwise than by such declaration of
acceleration and interest thereon at the rate then borne
by the Debentures, and
	 
	 	(C)  	to the extent that payment of such
interest is lawful, interest upon overdue installments
of interest at the rate then borne by the Debentures.






and




	 	(2)  	all Events of Default, other than the
nonpayment of the principal of Debentures which have
become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 9.06.




 









 











     No such rescission shall affect any subsequent default or impair any right consequent thereon.



     9.03 Restoration of Rights and Remedies. If any holder has instituted any proceeding
to enforce any right or remedy hereunder and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such holder, then and in every such case, subject
to any determination in such proceeding, the Company and the holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights and remedies of the
holders shall continue as though no such proceeding had been instituted.



     9.04 Rights and Remedies Cumulative. No right or remedy herein conferred upon or
reserved to the holders is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.



     9.05 Delay or Omission Not Waiver. No delay or omission of any holder of any Debenture
to exercise any right or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the holders may be exercised from time to time, and
as often as may be deemed expedient, by the holders.



     9.06 Waiver of Past Defaults. The holders of not less than a majority in principal
amount of the outstanding Debentures may on behalf of the holders of all the Debentures waive any
past default hereunder and its consequences, except a default in the payment of the principal of or
interest on any Debenture.



     Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose hereof; but no such waiver shall
extend to any subsequent or other default or impair any right consequent thereon.



ARTICLE TEN

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE




     10.01 Company May Consolidate, Etc., Only on Certain Terms. The Company shall not
consolidate with or merge into any other corporation or convey, transfer or lease its properties
and assets substantially as an entirety to any person, unless:




	 	(1)  	the corporation formed by such
consolidation or into which the Company is merged or the
person





 









 











which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company
substantially as an entirety shall be a corporation
organized and existing under the laws of the United
States of America, any State thereof or the District of
Columbia and shall adopt the Plan and expressly assume,
by an assumption agreement, the due and punctual
payment of the principal of and interest on all the
Debentures and performance of every covenant herein on
the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance
with Section 6.05; and




	 	(2)  	immediately after giving effect to
such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be
continuing.





     10.02 Successor Corporation Substituted. Upon any consolidation or merger by the
Company with or into any other corporation or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with Section 10.01, the
successor corporation formed by such consolidation or into which the Company is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Debenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor corporation shall be relieved of all obligations and covenants hereunder.



ARTICLE ELEVEN

AMENDMENTS




     11.01 Without Consent of Holders. This Debenture may be amended by the Company without
the consent of the holder hereof:




	 	(1)  	to evidence the succession of another
corporation to the Company and the assumption by any
such successor of the covenants of the Company herein;
	 
	 	(2)  	to add to the covenants of the Company
for the benefit of holders or to surrender any right or
power conferred herein upon the Company;
	 
	 	(3)  	to make provision with respect to the
conversion rights of holders pursuant to the
requirements of Section 6.04;
	 
	 	(4)  	to cure any ambiguity, to correct or
supplement any provision herein which may be
inconsistent with




 









 












any other provision herein, or to make any other
provisions with respect to matters or questions arising
hereunder;




	 	(5)  	to modify this Debenture to qualify
the resulting instrument as an indenture under the Trust
Indenture Act of 1939, as amended, including but not
limited to the modification of this Debenture to make
provisions for inclusion and issuance of additional
debentures, and for an indenture trustee, a registrar, a
paying agent, and such other matters as are normally
included in an indenture qualified under the Trust
Indenture Act of 1939, as amended; or
	 
	 	(6)  	to reflect any amendment, suspension
or termination of the Plan; provided, in each
case, that no such amendment may, without the consent of
the holder hereof, terminate this Debenture or adversely
affect such holder’s rights under this Debenture in any
material respect.





     The Company shall promptly give written notice of any such amendment to the holder hereof.



     11.02 Amendment or Waiver with Consent of Majority of Holders. With the written
consent of the Company and of the holder or holders of at least 51% in aggregate principal amount
of all outstanding Debentures, any covenant, agreement or condition contained in the Debentures may
be waived (either generally or in a particular instance and either retroactively or prospectively),
or such holder or holders and the Company may from time to time enter into agreements for the
purpose of amending any covenant, agreement, or condition in the Debentures or changing in any
manner the rights of the holders of the Debentures or of the Company; provided that




	 	(a)  	no such amendment or waiver shall (I)
change the fixed maturity of the principal of the
Debentures or change the rate or extend the time of
payment of interest thereon, or change the amount of
principal thereof, or modify any of the provisions of
the Debentures with respect to the payment thereof
without the consent of the holder of each Debenture so
affected, (ii) change the conversion price at which
Debentures can be converted into Related Stock of the
Company pursuant to Section 6.01 hereof, or (iii) reduce
the percentage of holders of Debentures required to
approve any such amendment or effectuate any such
waiver, without the consent of the holders of all of the
outstanding Debentures; and




 









 









	 	(b)  	no such waiver shall extend to or
affect any obligation not expressly waived or impair any
right consequent thereon; and
	 
	 	(c)  	no such amendment or waiver may cause
the Plan to fail to meet the requirements of Rule 16b-3
under the Securities Exchange Act of 1934, as amended,
or any successor thereto as then in effect.





     11.03 Binding Effect. Any waiver or amendment described in Sections 11.01 and 11.02
above shall apply equally to all the holders of the Debentures and shall be binding upon them, upon
each future holder of any Debenture and upon the Company, whether or not such Debenture shall have
been marked to indicate such amendment or waiver, but any Debenture issued thereafter shall bear a
notation referring to any such amendment or continuing waiver.



ARTICLE TWELVE

MISCELLANEOUS




     12.01 Notices. Any notice, request, demand, authorization, direction, consent, waiver
or other document provided or permitted hereunder shall be deemed to be made upon, given, furnished
or filed if in writing and mailed, first class postage prepaid:



     If to the Company, to:




Rowan Companies, Inc.




5450
Transco Tower Building




2800 Post
Oak Boulevard




Houston, Texas 77056-6196
 



Attention: Office of the General Counsel
 


     If to the holder, at his address as it appears in the Company’s books and records.



     The Company or any holder may change such address by giving written notice of such change to
the other as provided in this Section 12.01.



     12.02 Effect of Headings. The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.



     12.03 Successors and Assigns. All covenants and agreements in this Debenture by the
Company shall bind its successors and assigns, whether so expressed or not.



     12.04 Separability Clause. In case any provision in this Debenture shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.



     12.05 Benefits of Debenture. Nothing in this Debenture, express or implied, shall give
to any person, other than the parties hereto and their successors hereunder, and the



 









 





holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim
hereunder.




     12.06 Governing Law. This Debenture 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, the Debenture or the Subscription Agreement.



     12.07 Legal Holidays. In any case where any Interest Payment Date, other payment date
or the last date on which a holder has the right to convert his Debenture shall not be a business
day, then (notwithstanding any other provision of this Debenture) payment of interest or principal
or conversion of this Debenture need not be made on such date, but may be made on the next
succeeding business day with the same force and effect as if made on the Interest Payment Date,
other payment date or on such last day for conversion, provided that no interest shall accrue for
the period from and after such Interest Payment Date, or other payment date, as the case may be.



     12.08 Recourse. No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based
on or in respect of the Plan or the Subscription Agreement or any instrument amendatory thereto,
against any incorporator, stockholder, officer or director, as such, past, present or future, of
the Company or of any predecessor or successor corporation, either directly or through the Company
or otherwise, whether by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and released by every holder or
owner hereof.



     12.09 Mutilated, Destroyed, Lost and Stolen Debentures. If any mutilated Debenture
is surrendered to the Company, the Company shall execute and deliver in exchange therefor a new
Debenture of like tenor and principal amount and bearing a number not contemporaneously
outstanding.



     If there shall be delivered to the Company (I) evidence to its satisfaction of the
destruction, loss or theft of any Debenture and (ii) such security or indemnity as may be required
by it to save it and any agent harmless, then, in the absence of notice to the Company that such
Debenture has been acquired by a bona fide purchaser, the Company shall execute and deliver, in
lieu of any such destroyed, lost or stolen Debenture, a new Debenture of like tenor and principal
amount and bearing a number not contemporaneously outstanding.



     In case any such mutilated, destroyed, lost or stolen Debenture has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a new Debenture, pay
such Debenture.



     Upon the issuance of any new Debenture under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.



     Every new Debenture issued pursuant to this Section in lieu of any destroyed, lost or stolen
Debenture shall constitute an original additional contractual obligation of the



 









 





Company, whether or not the destroyed, lost or stolen Debenture shall be at any time enforceable by
anyone.




     The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Debentures.



     Interest Rate Limitation. Each provision in this Debenture is expressly limited so that in no
event whatsoever shall the amount paid or otherwise agreed to be paid by the Company for the use,
forbearance or detention of the money to be loaned under this Debenture exceed that amount of
money which would cause the effective rate of interest to exceed the highest lawful rate of
interest that may be charged under applicable law (the “Highest Lawful Rate”), and all amounts owed
under this Debenture shall be held to be subject to reduction to the effect that such amounts so
paid or agreed to be paid which are for the use, forbearance or detention of money under this
Debenture shall in no event exceed an amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate. Notwithstanding any provision in this Debenture to the
contrary, if the maturity of this Debenture is accelerated for any reason or in the event of
prepayment of all or any portion of the obligations owing in respect hereof by the Company, earned
interest on such obligations of the Company may never exceed the maximum amount permitted by
applicable law, and any unearned interest otherwise payable under this Debenture that is in excess
of the maximum amount permitted by applicable law shall be cancelled automatically as of the date
of such acceleration or prepayment and, if theretofore paid, shall be credited on the principal of
this Debenture or, if the principal of this Debenture has been paid in full, refunded to the
Company. In determining whether or not the interest paid or payable under any specific contingency
exceeds the Highest Lawful Rate, the Company and the holder hereof shall, to the maximum extent
permitted by applicable law, amortize, prorate, allocate and spread, in equal parts during the
period of the actual term of this Debenture, all interest at any time contracted for, charged or
received in connection with this Debenture.



     IN WITNESS WHEREOF, ROWAN COMPANIES, INC. has caused this Debenture to be executed in its name by
its hereunto duly authorized President or Vice President and its corporate seal to be affixed
hereunto, and to be attested by its hereunto duly authorized
Secretary or Assistant Secretary.



Dated:     , 200




	 	 	 	 	 	 	 
	 	 	 	 	ROWAN COMPANIES, INC.
	

	 	 	 	By:
	 	 
	(SEAL)

	 	 	 	 	 	Senior Vice President
	 
	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Secretary