exv10w1






Exhibit 10.1




[Rowan Companies, Inc. letterhead]




October 31, 2008




Mr. D. F. McNease

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056-6127




Dear Danny:




          In connection with your separation from Rowan Companies, Inc., a Delaware corporation
(“Rowan”), and in consideration of your continuing agreements and valuable services to Rowan and
its subsidiaries and affiliates which are directly or indirectly controlled by Rowan (collectively,
the “Company”) as provided herein, you and Rowan have agreed to the terms and conditions as
contained in this letter agreement (the “Letter Agreement”) and in the attachment to the Letter
Agreement (the “Attachment”) to (hereinafter the Attachment and the Letter Agreement are jointly
the “Agreement”) concerning your separation from employment and resignation as a director, both
effective as of the close of business on December 31, 2008 (the “Separation Date”). The Attachment
is part of the Letter Agreement for all purposes. Your resignations as an officer and director are
attached hereto as Exhibit A.




          You affirm and agree that your employment relationship ends on your Separation Date, and as of
such date you withdraw unequivocally, completely and finally from your employment, you resign all
positions, titles, responsibilities and authority as a director, officer or employee of the
Company, and waive all rights in connection with such relationship, except with respect to vested
benefits as provided for under plan documents of the Company, the benefits and payments described
in this Agreement, and such rights as reserved under Section 13 hereof. You agree to return all
Company personal property in your possession to Rowan promptly after your Separation Date.




          Rowan agrees to provide you with the benefits, payments and other items described in this
Agreement.




          1. Consulting and Cooperation. Following the Separation Date, Rowan agrees to engage you in a
consulting capacity, and you agree to serve Rowan in a consulting capacity, for the twenty-four
month period commencing on the Separation Date and ending on December 31, 2010 (the “Consulting
Period”). During the Consulting Period, you agree to consult, cooperate with and advise the
officers of Rowan or the Board of Directors of Rowan (the “Board”) as and when requested by any of
them upon reasonable notice, with respect to matters involving the business and affairs of the
Company. It is agreed and understood that your status while performing services hereunder will for
all purposes be that of an independent contractor and not that of an employee of Rowan. You and
Rowan agree that your consulting services during the Consulting Period are not reasonably
anticipated to exceed 20% of the average level of services performed by you for the Company during
the 36-month period




 









 







immediately preceding your Separation Date as determined under Treasury
Regulation §1.409A-
1(h)(1)(ii) as promulgated under Section 409A of the Internal Revenue Code of 1986, as
amended, and the rules, notices and regulations thereunder (collectively, the “Code”). Rowan shall
provide you with the necessary resources to perform any consulting services requested by Rowan.
You acknowledge that you are responsible for payment of your estimated federal income taxes,
employment taxes, social security taxes and any other taxes that may accrue under law by reason of
the compensation for your services to be provided as a consultant hereunder. You further
acknowledge that after the Separation Date you are not entitled nor eligible to participate in any
employee benefit plans of the Company except as specifically provided in the Attachment.




          2. Confidentiality. You agree, for yourself and for your heirs, dependents, assigns, agents,
executors, administrators, trustees and legal representatives, that you will (and will use your
best efforts to cause such affiliates to) hold in a fiduciary capacity for the benefit of the
Company all trade secrets, and information, knowledge or data relating to the Company treated as
confidential by the Company which have been and will be given to you by the Company and which shall
not have been or hereafter become public knowledge (other than by your acts or the acts of your
affiliates in violation of this Agreement) (hereinafter being collectively referred to as
“Confidential Information”). Examples of “Confidential Information” include, without limitation,
rig descriptions and drawings, layouts, arrangement drawings, customer contacts and customer lists.
You agree that you shall not, without the prior written consent of Rowan or as may otherwise be
required by law or legal process, communicate or divulge any Confidential Information to anyone
other than Rowan and those designated by Rowan. In the event that you may be required by law or
legal process to communicate or divulge any Confidential Information, you agree to so notify the
General Counsel of Rowan and to exercise your commercially reasonable best efforts to assure that
confidential treatment will be accorded to such of the Confidential Information which Rowan so
designates, and you shall then disclose only that portion of the Confidential Information that is
legally required to be disclosed. Rowan shall advance and pay your reasonable legal fees (and
related legal expenses) incurred in connection with any such event. Any such payment shall be due
upon receipt by Rowan of your written request for payment, accompanied by such evidence of the
legal fees and expenses incurred by you as Rowan reasonably may require. Any such payment shall be
made on the last business day of the calendar month following the calendar month in which the
payment becomes due; provided, however, that any such payment shall be made not later than the
close of the calendar year following the calendar year in which the legal fees and expenses are
incurred by you. You will obtain the consent of the General Counsel of Rowan to your selection of
legal counsel for this purpose, which consent shall not be unreasonably withheld. You agree to
return all Confidential Information, including all photocopies, extracts and summaries thereof, and
any such information stored electronically on tapes, computer disks or in any other manner, to
Rowan as soon as practicable and in no event later than your Separation Date.




          3. Non-Competition. You acknowledge that during your employment the Company provided you with
access to Confidential Information of the Company and specialized knowledge concerning any business
in which the Company was engaged at any time in the two years preceding the Separation Date (as
described in the Forms 10-K and 10-Q of Rowan),



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including the provision of international and
domestic contract drilling services and the
production of equipment for the drilling, mining, steel and timber industries (collectively,
the “Company Business”), all of which was developed by the Company at great cost and that are of
critical importance in securing and maintaining business prospects, in retaining the accounts and
goodwill of present customers and protecting the business of the Company throughout the United
States and other locations in which it conducts the Company Business. You acknowledge that if a
competitor of the Company gained access to said Confidential Information, the competitor would be
able to unfairly compete with the Company in the Company Business anywhere in the United States,
Europe, and elsewhere. Accordingly, you agree that without the prior written consent of the Board
(which consent may be withheld in its sole discretion) (i) for the two-year period commencing on
your Separation Date, you will not in the United States or any other country where the Company
conducts operations related to the Company Business, directly or indirectly, either as an
individual, proprietor, stockholder (other than as a holder of up to one (1%) percent of the
outstanding shares of a corporation whose shares are listed on a stock exchange or traded in
accordance with the automated quotation system of the National Association of Securities Dealers),
partner, officer, employee, director (including as a director of the buyer of LeTourneau
Technologies, Inc., a Delaware corporation) or otherwise, work for, become an employee of, invest
in, provide consulting services or in any way engage in any business which provides, produces,
leases or sells products or services of the same or similar type provided, produced, leased or sold
in the Company Business in any area where the Company provided, produced, leased or sold such
products or services at any time during the two years preceding your Separation Date and (ii) you
will not accept any position with any person that has within the two years preceding the Separation
Date purchased or acquired more than one percent (1%) of the common stock or any significant assets
of the Company.




          4. Non-Solicitation. For the two-year period commencing on your Separation Date, you agree
that you will not, directly or indirectly, for your benefit or for the benefit of any other person,
firm or entity, solicit the employment or services of, or hire, any person who was employed by the
Company upon your Separation Date, or within six months prior thereto. In addition, for the
two-year period commencing on your Separation Date, you will not, directly or indirectly, and will
not encourage or assist others to, without the prior written consent of the Board (which consent
may be withheld in its sole discretion) (i) make, or in any way participate in, any “solicitation”
(as such terms are used in the Securities Exchange Act of 1934, as the same may be amended from
time to time (the “Exchange Act”), or to vote or seek to advise or influence in any manner
whatsoever any person or entity with respect to the voting of any securities of Rowan, or (ii)
form, join, or in any way communicate or associate (by phone, e-mail or otherwise) with other
stockholders of Rowan or participate in a “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any voting securities of Rowan.




          5. Employee Acknowledgements. You acknowledge and agree that: (i) the Company is and will
continue to be engaged in the Company Business; (ii) during your employment you were one of a
limited number of persons that were primarily responsible for the conduct, management, operation,
and development of the Company Business; (iii) the Company is and will be actively engaged in the
Company Business, throughout the United States, Europe,



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and elsewhere; (iv) during your employment
you occupied a position of trust and confidence
with the Company, and were familiar with the Company’s Confidential Information; and (v) the
terms and conditions set forth in the non-competition, non-solicitation and confidentiality
provisions of this Agreement (the “Post-Employment Obligations”) are reasonable and constitute an
otherwise enforceable agreement to which the Post-Employment Obligations are ancillary or a part of
as contemplated by Tex. Bus. & Com. Code Ann. sections 15.50-15.52; (vi) the consideration given by
the Company under this Agreement for the Post-Employment Obligations, including, without
limitation, the access to Confidential Information and specialized knowledge, are not illusory and
give rise to the Company’s interest in restraining and prohibiting you from engaging in the unfair
competition prohibited by the Post-Employment Obligations and your promise not to engage in the
unfair competition prohibited by the Post-Employment Obligations is designed to enforce your return
promises, including your promise to not use or disclose Confidential Information of the Company;
and (vii) compliance with the Post-Employment Obligations is a condition precedent to the Company’s
obligation to make payments of any nature to you, subject to the other provisions hereof.




          6. Remedies for a Violation of Non-Competition, Non-Solicitation and Confidentiality
Provisions. Without limiting the right of the Company to pursue all other legal and equitable
rights available to it for violation of any of the Post-Employment Obligations, you agree that a
violation of any of the Post-Employment Obligations would cause irreparable injury to the Company
for which it would have no adequate remedy at law. Any controversy or claim arising out of or
relating to the Post-Employment Obligations, or any alleged breach of the Post-Employment
Obligations, shall be settled by binding arbitration in accordance with the provisions below.
Notwithstanding the foregoing, however, the Company specifically retains the right before, during
or after the pendency of any arbitration to seek injunctive relief from a court having jurisdiction
for any actual or threatened breach of the Post-Employment Obligations without necessity of
complying with any requirement as to the posting of a bond or other security (it being understood
that you hereby waive any such requirement). Any injunctive relief shall be in addition to any
other remedies to which the Company may be entitled at law or in equity or otherwise, and the
institution and maintenance of an action or judicial proceeding for, or pursuit of, such injunctive
relief shall not constitute a waiver of the right of the Company to submit the dispute to
arbitration.




          If the provisions of the Post-Employment Obligations should ever be deemed to exceed the time,
geographic or occupational limitations permitted by the applicable law, you and Rowan agree that
such provisions shall be and are hereby reformed to the maximum time, geographic or occupational
limitations permitted by the applicable law, and the determination of whether you violated such
Post-Employment Obligations will be based solely on the limitation(s) as reformed.




          In addition to the consideration described above, you agree that 50% of the total amount of
severance payments set forth under Item A.2 of the Attachment to this Agreement constitutes
additional consideration for the Post-Employment Obligations (the “Post-Employment Obligation
Consideration”). You specifically recognize and agree that should all or any part of the
Post-Employment Obligations be held or found invalid or unenforceable for any



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reason whatsoever by
a court of competent jurisdiction in a legal proceeding between you and
Rowan, Rowan shall be entitled to immediately cease payment of any unpaid Post-Employment
Obligation Consideration and return and receipt from you of any Post-Employment Obligation
Consideration already paid to you, including interest on all amounts paid to you at the maximum
lawful rate; provided, however, that you shall not forfeit and shall have no obligation to return
any part of the Post-Employment Obligation Consideration if the Post-Employment Obligations are
held invalid or unenforceable at the request of Rowan in such legal proceeding.




          7. Non-Disparagement. You agree, for yourself and for your heirs, dependents, assigns,
agents, executors, administrators, trustees and legal representatives, that you will not (and will
use your best efforts to cause such affiliates to not) at any time engage in any form of conduct,
or make any statements or representations, including comments on any internet site, “message board”
or “chatroom”, that disparage or otherwise impair the reputation, goodwill, or commercial interests
of the Company, or any of its agents, officers, directors, employees and/or stockholders. Rowan
agrees that it will not (and will use its best efforts to cause its officers and directors to not)
issue any press release or make any statements or representations, including comments on any
internet site, “message board” or “chatroom”, that disparage or otherwise impair your business
reputation. The foregoing shall not be violated by: (i) truthful statements by either party in
response to legal process or required governmental testimony or filings; (ii) statements by
directors or officers of Rowan that they in good faith believe are necessary or appropriate to make
in connection with performing their duties to Rowan; or (iii) statements by you that you in good
faith believe are necessary or appropriate to make to refute statements of Rowan, or the directors
and officers of Rowan.




          8. Litigation Assistance. You agree to assist Rowan in litigation matters as may be
reasonably requested by Rowan’s General Counsel. Rowan and you agree to work out reasonable
accommodations for the provision of such litigation assistance so that it does not unreasonably
interfere with any of your personal affairs, business endeavors or future employment. No such
services shall be requested of you except by Rowan’s General Counsel. Rowan shall advance and pay
your reasonable legal fees (and related legal expenses) incurred in connection with any such event.
Any such payment shall be due upon receipt by Rowan of your written request for payment,
accompanied by such evidence of the legal fees and expenses incurred by you as Rowan reasonably may
require. Any such payment shall be made on the last business day of the calendar month following
the calendar month in which the payment becomes due; provided, however, that any such payment shall
be made not later than the close of the calendar year following the calendar year in which the
legal fees and expenses are incurred by you. You will obtain the consent of the General Counsel of
Rowan to your selection of legal counsel for this purpose, which consent shall not be unreasonably
withheld.




          9. Continuation of Personnel. From and after September 1, 2008, you agree that you have not
terminated and you will not terminate any officer or executive of the Company without prior
consultation with and express consent of the Board.




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          10. Legal Fees and Expenses. In any action arising out of this Agreement, the prevailing
party shall be entitled to his or its costs of action, including but not limited to reasonable
attorneys’ fees and the fees of experts.




          11. Clawback. In the event it is discovered after the Separation Date that you committed
fraud or engaged in intentional misconduct that would have required disclosure under federal
securities laws during the time period from January 1, 2006 through the Separation Date (the
“applicable period”), you shall reimburse the Company for (i) any bonus and other incentive-based
or equity-based compensation received by you from the Company during the applicable period, and
(ii) any profits realized from the sale of shares of the Company issued upon the exercise of stock
options or the vesting of restricted shares or performance shares during the applicable period.




          12. Assignment; Successors; Binding Agreement.




               (a) Except as otherwise provided in this Section 12, this Agreement may not be assigned by
either party without the prior, written consent of the other party.



               (b) This Agreement shall extend to and be binding upon any successor (whether direct or
indirect, by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all
of the business and/or assets of Rowan. Additionally, Rowan shall require any such successor by
written agreement to expressly assume and agree to perform all of the obligations of Rowan under
this Agreement upon or prior to such succession taking place. A copy of such assumption and
agreement shall be delivered to you promptly after its execution by the successor. As used in this
Agreement, “Rowan” shall have the meaning ascribed to it in the first paragraph of this Agreement
and, except in determining under Item A.8.E of the Attachment whether or not any “Change in
Control” has occurred, shall include any successor to its business or assets as aforesaid, whether
or not such successor executes and delivers the agreement provided for in this Section 12(b).
Failure of Rowan to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement, but shall not adversely affect your rights under this Agreement as
to either Rowan or the successor.



               (c) This Agreement is personal to you and you may not assign or transfer any part of your
rights or duties hereunder, or any amounts due to you hereunder, to any other person, except that
this Agreement shall inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, heirs, distributes, devises, legatees or beneficiaries
to the extent applicable.



          13. Waiver and Release. In consideration of Rowan’s agreement to provide the benefits,
payments, and other items described in this Agreement, you hereby release and forever discharge the
Company, and its officers, directors, agents, servants, employees, successors, assigns, insurers,
employee benefit plans and fiduciaries, and any and all other persons, firms, organizations and
corporations, from any and all damages, losses, causes of action, expenses, costs (including
attorneys fees), demands, liabilities and claims on behalf of yourself, your heirs, executors,
administrators and assigns, of any kind or nature whatsoever,



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known or unknown, suspected or
unsuspected, contingent or matured (“Claims”), which you at any time heretofore had or claimed to
have or which you at any time hereafter may have or claim to have, whether arising out of tort,
strict liability, misrepresentation, violation of any regulation or law, or any cause whatsoever,
including, without limitation, Claims based on Texas common
law, Claims based on the Age Discrimination in Employment Act or any other federal or state
discrimination statutes, or any and all Claims in any manner related to your employment with and/or
separation from the Company, and including, without limitation Claims caused by or attributable to
the sole, partial, and/or comparative negligence, fault or strict liability of the Company.
Further, by accepting the payments described in this Agreement, you agree not to sue the Company or
the related persons and entities described above with respect to any matters released hereunder.




          Notwithstanding the foregoing release and discharge, you shall retain all rights to (i)
indemnity, contribution, and directors and officers and other liability coverage that you may have
under any statute, the articles and bylaws of Rowan or by any other agreement, including the
Indemnification Agreement by and between Rowan and you dated March 7, 2005 and as in effect on the
Separation Date; (ii) bring a lawsuit to enforce the Rowan’s obligations under this Agreement;
(iii) file a complaint with, providing information to, or testifying or otherwise assisting in any
investigation or proceeding brought by any state, federal or local regulatory or law enforcement
agency or legislative body (but you expressly waive any right to collect any damages or other
personal recovery in such a proceeding), or (iv) file any Claims that are not permitted to be
waived or released under the Fair Labor Standards Act or under the express provisions of any other
applicable law.




          You shall have 21 days to decide whether to sign this Agreement. After you have signed this
Agreement, you may revoke the Agreement within seven days after you have signed it by delivering a
written notification to me. You have notified Rowan that you have consulted an attorney about the
meaning and contents of this Agreement, including the release contained herein. You acknowledge
that you have read this Agreement, have had an opportunity to ask questions and have it explained
to you and that you understand that the Agreement will have the effect of knowingly and voluntarily
waiving any action you might pursue, including breach of contract, personal injury, retaliation,
discrimination on the basis of race, age, sex, national origin or disability and any other claims
arising prior to the date of the Agreement.




          14. Modification; Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a writing signed by you
and such director or officer as may be specifically designated by the Board. Waiver by any party
of any breach of or failure to comply with any provision of this Agreement by the other party shall
not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other
breach of, or failure to comply with, any other provision of this Agreement.




          15. Notice. All notices, requests, demands and other communications required or permitted to
be given by either party to the other party by this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or received by



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certified or registered
mail, return receipt requested, postage prepaid, a the address of the other party, as follows:




          If to Rowan, to:



Rowan Companies, Inc.

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056

Attention: Board of Directors and Secretary



If to you, to:



D. F. McNease




          16. Severability. If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to persons or circumstances other than those
as to which it is held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.




          17. Headings. The headings in this Agreement are inserted for convenience of reference only
and shall not be a part of or control or affect the meaning of this Agreement.




          18. General Provisions. This Agreement shall be governed by and interpreted under the laws of
the State of Texas applicable to contracts entered into and performed solely in the State of Texas.
Rowan and you agree that all disputes concerning this Agreement shall be arbitrated in Houston,
Texas pursuant to the American Arbitration Association’s National Rules for the Resolution of
Employment Disputes. The award of the arbitrator shall be final and binding and shall be
enforceable in a court of competent jurisdiction.




	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ W. H. Wells
 	 
	 	W. H. Wells 	 
	 	Vice President - Finance and CFO 	 
	 



AGREED TO, ACCEPTED, and EFFECTIVE

   This 31st day of October, 2008




/s/ D. F. McNease
 

D. F. McNease




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Attachment to the Agreement dated October 31, 2008




Special Note Regarding Internal Revenue Code Section 409A




          Notwithstanding any provision of this Agreement, if the payment of any amounts or benefits
under this Agreement or any plan of deferred compensation would be subject to additional taxes and
interest under Section 409A of the Code because the timing of such payment is not delayed as
provided in Code Section 409A(a)(2)(B), then any such payments that you would otherwise be entitled
to during the first six months following your Separation Date shall not be paid within such period
but shall instead be accumulated and paid in a lump-sum, with interest credited at the Applicable
Federal Rate as in effect on your Separation Date, on the date that is six months and one day after
your Separation Date (or if such payment date does not fall on a business day of Rowan, the next
following business day of Rowan), or such earlier date upon which such amount can be paid under
Code Section 409A without being subject to such additional taxes and interest. It is the intent of
Rowan and you that the provisions of this Agreement comply with Code Section 409A, and all
provisions of this Agreement shall be construed and interpreted in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section 409A and any terms (defined or
otherwise) shall use the definition of such terms contained in Code Section 409A to the extent
applicable. In addition, “Separation Date” shall have the meaning of “Separation from Service” as
defined in Code Section 409A.




          Each payment or benefit provided under this Plan, including each payment under Items A.1 and
A.2 below shall be considered a separate payment for purposes of Code Section 409A.




          All reimbursements and in-kind benefits provided pursuant to this Agreement shall be made in
accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) such that any reimbursements or
in-kind benefits will be deemed payable at a specified time or on a fixed schedule relative to a
permissible payment event. Specifically, (i) the amounts reimbursed and in-kind benefits provided
under this Agreement, other than with respect to medical benefits provided under Items A.6 and B.2
below, during your taxable year may not affect the amounts reimbursed or in-kind benefits provided
in any other taxable year, (ii) except as otherwise provided in this Agreement, the reimbursement
of an eligible expense shall be made on or before the last day of your taxable year following the
taxable year in which the expense was incurred, and (iii) the right to reimbursement or an in-kind
benefit is not subject to liquidation or exchange for another benefit. Except as otherwise
provided in this Agreement, no reimbursement under this Agreement which is subject to the
requirements of Code Section 409A shall be made after the later of (i) the fifth anniversary of the
date of your death or (ii) the date that is 10 years from the Separation Date.




          Neither you nor any of your creditors shall have the right to subject any deferred
compensation (within the meaning of Code Section 409A) payable under this Agreement to any
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment.




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          The items described under Item A. below are conditioned upon your execution and return to
Rowan of this Agreement within 21 days of receipt and not revoking it during the seven-day period
after execution and return. The items described under Item B. below are provided regardless of
your execution of this Agreement. Except as specifically described in this Attachment to the
Agreement, all other benefits and perquisites will cease as of your Separation Date.




Item A: Subject to Execution and Non-Revocation of this Agreement




1. Consulting




          Commencing with the later of (i) the first business day of the month following the expiration
of the seven-day revocation period described above and (ii) the first business day of January,
2009, you will receive 24 monthly cash payments of $50,000.00 as compensation for your consulting
services to Rowan. Each such monthly payment will be paid on the first business day of the
particular calendar month.




2. Severance




          Commencing with the later of (i) the first business day of the month following the expiration
of the seven-day revocation period described above and (ii) the first business day of January,
2009, you will receive an initial cash payment of $80,000.00, followed by 23 monthly cash payments
of $50,000.00, and then followed by 12 monthly cash payments of $100,000.00. Each such monthly
installment will be paid on the first business day of the particular calendar month and will be
subject to applicable withholding for income and employment taxes.




3. Profit Sharing Plan




          If profit sharing is paid in respect of 2008 under Rowan’s 2008 Profit Sharing Plan, you will
receive from Rowan, at the same time as other participants in the 2008 Profit Sharing Plan but not
later than March 15, 2009, a lump-sum amount in cash as provided for under the terms of the 2008
Profit Sharing Plan. Your eligibility for such payment is not conditioned on your employment on
the date of payment.




4. Bonus Plan




          If annual bonuses are paid in respect of 2008 under Rowan’s Bonus Plan, you will receive from
Rowan, at the same time as other participants in the Bonus Plan but not later than March 15, 2009,
a lump-sum amount in cash as determined by the Rowan Compensation Committee as provided for under
the terms of the Bonus Plan. Your eligibility for such payment is not conditioned on your
employment on the date of payment.




5. Long Term Incentive Plan




          A. Performance Shares




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          As of your Separation Date, you will be eligible to receive payments in respect of the
performance shares previously granted to you and outstanding as of your Separation Date, subject to
proration based on the number of days of your employment with Rowan during each respective
performance period, and payments with respect to such performance shares for the applicable
performance periods will be made as provided under Rowan’s 2005 Long-Term Incentive Plan and the
applicable performance share agreements. Such payments, if any, shall not be made in any event
later than March 15 of the calendar year following the calendar year in which the applicable
performance period ends.




          B. Stock Options




          As of your Separation Date, you will be fully vested in the Rowan stock options previously
granted to you and outstanding as of your Separation Date, and such options will remain outstanding
and exercisable, in each case, for the period after your Separation Date, as specified in the
following table, subject to the terms and provisions of the applicable stock option agreements
except as otherwise provided in this Agreement.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Additional	 	 	 	 
	 	 	 	 	 	 	Options Vested	 	Options Vested	 	 	 	 
	 	 	 	 	 	 	Prior to	 	on Separation	 	Total Options	 	Expiration
	Grant Date	 	Exercise Price	 	Separation Date	 	Date	 	Vested	 	Date of Option
	04.26.2001
	 	$	32.00	 	 	 	60,000	 	 	 	-0-	 	 	 	60,000	 	 	 	04.26.2011	 
	07.25.2002
	 	$	18.45	 	 	 	50,000	 	 	 	-0-	 	 	 	50,000	 	 	 	07.25.2012	 
	04.25.2003
	 	$	21.19	 	 	 	250,000	 	 	 	-0-	 	 	 	250,000	 	 	 	04.25.2013	 
	07.21.2004
	 	$	25.265	 	 	 	135,000	 	 	 	-0-	 	 	 	135,000	 	 	 	12.31.2013	 
	05.17.2005
	 	$	24.98	 	 	 	32,775	 	 	 	10,925	 	 	 	43,700	 	 	 	12.31.2013	 
	04.28.2006
	 	$	43.85	 	 	 	13,652	 	 	 	6,826	 	 	 	20,478	 	 	 	12.31.2013	 






          C. Restricted Stock




          As of your Separation Date, you will be fully vested in the shares of restricted stock
previously granted to you that are outstanding as of your Separation Date, and any related accrued
dividends, subject to the terms and provisions of the applicable restricted stock agreements except
as otherwise provided in this Agreement.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accrued
	 	 	 	 	 	 	Additional	 	 	 	 	 	Dividends
	 	 	Restricted Stock	 	Restricted Stock	 	Total Restricted	 	Vested on
	 	 	Vested Prior to	 	Vested on	 	Stock Vested on	 	Separation
	Grant Date	 	Separation Date	 	Separation Date	 	Separation Date	 	Date
	05.17.2005
	 	 	15,300	 	 	 	5,100	 	 	 	5,100	 	 	$	8,160.00	 
	04.28.2006
	 	 	-0-	 	 	 	9,880	 	 	 	9,880	 	 	 	10,868.00	 
	05.08.2007
	 	 	-0-	 	 	 	34,590	 	 	 	34,590	 	 	 	24,213.00	 
	04.11.2008
	 	 	-0-	 	 	 	25,806	 	 	 	25,806	 	 	 	7,741.80	 






11









 






6. Medical Coverage




          You (and your eligible dependents) will be provided group health coverage under The Group
Health and Life Insurance Plan of Rowan Companies, Inc. (or such group health plan as may be
maintained from time to time by the Company for benefit of retired Company executives) upon the
Separation Date, with such coverage to be provided on the same terms and conditions as provided
under such plan; provided, further, that upon your attainment of age sixty (60), you (and your
eligible dependents) will be provided health coverage under such plan (or such group health plan as
may be maintained from time to time by the Company to provide health coverage to retired Company
executives) as is then provided to Company executives who retire from the Company after the
attainment of age sixty (60), with such coverage to be provided on the same terms as available to
such retired executives under the terms of the plan as then in effect.




7. Club Membership




          Rowan will cease payments related to any club memberships on your behalf, effective December
31, 2008.




8. Parachute Tax Gross-Up




          You and Rowan do not believe that any of the amounts or benefits to be provided you pursuant
to this Agreement or otherwise are “parachute payments” (as defined below) and each agree to report
that such amounts and benefits are not “parachute payments” for federal income tax purposes.
Nevertheless, Rowan will provide you the following:




          A. If any payments or benefits received or to be received by you whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the Company, or with any Person
whose actions result in a Change in Control or any Person affiliated with the Company or such
Person (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as
the “Total Payments”) are subject to the Excise Tax, Rowan shall pay to you an additional amount
(the “Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise
Tax on the Total Payments and any federal, state and local income and employment taxes and Excise
Tax upon the Gross-Up Payment, shall be equal to the Total Payments.




          B. For purposes of determining whether any of the Total Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute
payments” (within the meaning of Code Section 280G(b)(2)) unless, in the opinion of Rowan, such
payments or benefits (in whole or in part) do not constitute parachute payments, including by
reason of Code Section 280G(b)(4)(A), (ii) all “excess parachute payments” within the meaning of
Code Section 280G(b)(1) shall be treated as subject to the Excise Tax unless, in the opinion of
Rowan, such excess parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of



12









 






Code Section 280G(b)(4)(B)) in excess of the Base Amount allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by Rowan in accordance with the
principles of Code Sections 280G(d)(3) and (4). Rowan and you agree that the determination
described in this Item A.8.B shall take the form of a letter from Rowan accompanied by calculations
prepared by a national accounting firm selected by Rowan (the “Accounting Firm”).




          C. The Gross-Up Payment (or portion thereof) will be paid to you on the day of the payment of
the Total Payments (or portion thereof) that give rise to the Excise Tax; provided, however, that
if the amount of such Gross-Up Payment (or a portion thereof) cannot be fully determined on or
before the date on which payment is due, Rowan will pay to you by such date an amount estimated in
good faith by the Accounting Firm to be the minimum amount of such Gross-Up Payment (or portion
thereof) and will pay the remainder of such Gross-Up Payment (or portion thereof) (together with
interest at the rate provided in Code Section 1274(b)(2)(B)) as soon as the amount thereof can be
determined, but in no event later than 45 days after complete payment of the Total Payments.
Further, in the event that on the day of payment of the Total Payments (or portion thereof) (or the
45-day period following such payments), no Gross-Up Payment (or portion thereof) is determined by
the Accounting Firm to be due and it is subsequently determined that a Gross-Up Payment (or portion
thereof) is owing to you, such Gross-Up Payment (or portion thereof) will be made by Rowan to you
at the date that such Gross-Up Payment amount (or portion thereof) is determined by the Accounting
Firm to be payable to you. Any Gross-Up Payment that you become entitled to receive will be paid
to you as provided in this Item A.8 and in any event not later than the last day of the calendar
year after the calendar year in which you remit the related taxes, or where as a result of an audit
or litigation no taxes are remitted, not later than the last day of the calendar year in which such
audit is completed or there is a final and nonappealable settlement or other resolution of the
litigation.




          D. In the event that the Excise Tax is finally determined to be less than the amount taken
into account hereunder in calculating the Gross-Up Payment, you shall repay to Rowan, within five
business days following the later of the date that the amount of such reduction in the Excise Tax
is fully determined and the date that such amount is fully refunded to you by the Internal Revenue
Service, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of
the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment) being repaid by you, to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in your
taxable income and wages for purposes of federal, state and local income and employment taxes. In
the event that the Excise Tax is determined to exceed the amount originally remitted by you which
was taken into account hereunder in calculating the Gross-Up Payment and you are obliged to remit
additional Excise Taxes, you shall provide Rowan with written notice advising as to the amount of
additional Excise Taxes which were so remitted and the date on which they were so remitted. As
soon as practicable following receipt of such notice (but not later than the end of the taxable
year following the year in which the additional Excise Taxes were remitted by you), Rowan shall
make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by you with



13









 






respect to such excess Excise Taxes). Rowan and you shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.




          E. For purposes of this Item A.8, the following terms shall have the following meanings:




          “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act.




          “Base Amount” shall have the meaning set forth in Code Section 280G(b)(3).




          “Change in Control” shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:





     (I) any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified in
Section 13(d) and 14(d) of the Exchange Act) other than (i) Rowan or any of its subsidiaries,
(ii) any employee benefit plan of Rowan or any of its subsidiaries, (iii) any Affiliate, (iv) a
company owned, directly or indirectly, by stockholders of Rowan in substantially the same
proportions as their ownership of Rowan or (v) an underwriter temporarily holding securities
pursuant to an offering of such securities (a “Person”), becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of Rowan
representing more than 50% of the shares of voting stock of Rowan then outstanding; or




     (II) individuals who, as of the date this Agreement (the “Effective Date”), constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that for purposes of this definition of Change in Control, any
individual becoming a director subsequent to the Effective Date whose election to the Board was
approved by a vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of an election contest with respect to the election or removal of directors or other
solicitation of proxies or consents by or on behalf of a person other than the Board; or




     (III) the consummation of any merger, reorganization, business combination or consolidation
of Rowan or one of its subsidiaries (a “Business Combination”) with or into any other entity,
other than a merger, reorganization, business combination or consolidation which would result in
(i) the holders of the voting securities of Rowan outstanding immediately prior thereto holding
securities which represent immediately after such merger, reorganization, business combination
or consolidation more than 50% of the combined voting power of the voting securities of Rowan or
the surviving company or the parent of such surviving company or (ii) at least a majority of the
members of the board of directors of the corporation, or the similar managing body of a
non-corporate entity, resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of



14









 






the initial agreement, or of the action of the Board, providing for such Business Combination;
or




     (IV) the consummation of a sale or disposition by Rowan of all or substantially all of
Rowan’s assets, other than (i) a sale or disposition if the holders of the voting securities of
Rowan outstanding immediately prior thereto hold securities immediately thereafter which
represent more than 50% of the combined voting power of the voting securities of the acquirer,
or parent of the acquirer, of such assets or (ii) at least a majority of the members of the
board of directors of the corporation, or the similar managing body of a non-corporate entity,
resulting from such sale or disposition were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for such sale or
disposition; or




     (V) the stockholders of Rowan approve a plan of complete liquidation or dissolution of
Rowan.



          “Excise Tax” shall mean any excise tax imposed under Code Section 4999.




          “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) Rowan or any
of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit
plan of Rowan or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of Rowan in substantially the same proportions as their ownership of the stock of
Rowan.




9. Debentures.



As of your Separation Date, you will be considered as if you had terminated employment by reason of
“Retirement” under the 1998 Convertible Debenture Incentive Plan.




15









 








Item B: Not Subject to Execution of this Agreement




1. Vacation and Sick Pay




          On the 35th day after your Separation Date, you will receive a cash lump sum, subject to
applicable withholding for income and employment taxes, for all of your accrued, but unused,
vacation and sick pay days through your Separation Date.




2. Medical and Dental Coverage




          Rowan will provide you continued medical and dental benefits following your Separation Date on
the terms and conditions as required by the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), as currently embodied in Code Section 4980B.




3. Life Insurance and AD&D




          Life insurance, including that provided under Rowan’s Supplemental Life Insurance Plan, and
AD&D, will cease as of your Separation Date. You will have a 31-day period thereafter to exercise
the conversion options for life insurance according to the terms and conditions in effect at that
time. It will be your responsibility to complete the conversion process if you so desire.




4. STD/LTD 




          Short-term and long-term disability coverage will cease as of your Separation Date.




5. Qualified and Supplemental Retirement Plan Benefits




          Your participation in the Rowan Companies, Inc. Savings and Investment Plan, the Rowan Pension
Plan, and the Pension Benefit Restoration Plan of Rowan Companies, Inc. (the “Retirement Plans”)
will cease as of your Separation Date. You will be entitled to your vested Retirement Plan
benefits as provided under the terms of each of the Retirement Plans.




16









 








EXHIBIT A



Effective as of December 31, 2008, I do hereby resign from any and all positions I hold at Rowan
Companies, Inc. and each of its subsidiaries, including each of the following:




	 	 	 
	Rowan Companies, Inc.

	 	Chairman, President and CEO;
member of the Executive Committee
of the Board
	 
	 	 
	Aberuchill Ltd.

	 	Chairman of the Board and President
	 
	 	 
	Atlantic Maritime Services, Inc.

	 	Chairman of the Board and President
	 
	 	 
	British American Offshore Limited

	 	Chairman of the Board and President
	 
	 	 
	LeTourneau Technologies, Inc.

	 	Chairman of the Board
	 
	 	 
	LeTourneau Technologies America, Inc.

	 	Chairman of the Board
	 
	 	 
	LeTourneau Technologies Asia Pte. Ltd.

	 	Chairman of the Board and President
	 
	 	 
	LeTourneau Technologies (Australia) Pty. Ltd.

	 	Director
	 
	 	 
	LeTourneau Technologies Brazil, Inc.

	 	Chairman of the Board
	 
	 	 
	LeTourneau Technologies Canada Ltd.

	 	Director
	 
	 	 
	LeTourneau Technologies Drilling Systems, Inc.

	 	Chairman of the Board
	 
	 	 
	LeTourneau Technologies International, Inc.

	 	Chairman of the Board
	 
	 	 
	LeTourneau Technologies South America, Inc.

	 	Chairman of the Board
	 
	 	 
	RCI Drilling International, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	RCI International, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	RDC Arabia Drilling, Inc.

	 	Chairman of the Board and President
	 
	 	 
	RDC Drilling, Ltd.

	 	Director
	 
	 	 
	RDC Drilling International, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	RDC International, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	RDC Marine, Inc.

	 	Chairman of the Board and President
	 
	 	 
	RDC Qatar, Inc.

	 	Chairman of the Board and President
	 
	 	 
	Rowan 240C#3, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan 240C#4, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan Canada Limited

	 	Chairman of the Board and President
	 
	 	 
	Rowan Drilling & Aviation (Netherlands) B.V.

	 	Chairman of the Board and President
	 
	 	 
	Rowan Drilling Company, Inc.

	 	Chairman of the Board
	 
	 	 
	Rowan Drilling (U.K.) Ltd.

	 	Chairman of the Board
	 
	 	 
	Rowan Energy Investments, Inc.

	 	Director and President
	 
	 	 
	Rowan Finance Company

	 	Chairman of the Board and President
	 
	 	 
	Rowan International, Inc.

	 	Chairman of the Board and President






17









 






	 	 	 
	Rowan International (Gabon), Inc. (in process of
being dissolved)

	 	Vice President
	 
	 	 
	Rowan Marine Drilling, Inc.

	 	Chairman of the Board and President
	 
	 	 
	Rowan Marine Services, Inc.

	 	Chairman of the Board and President
	 
	 	 
	Rowan Middle East, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan North Sea, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan Petroleum, Inc.

	 	Chairman of the Board
	 
	 	 
	Rowandrill, Inc.

	 	Chairman of the Board and President
	 
	 	 
	Rowan S116E#1, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan S116E#2, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan S116E#3, Inc. (Cayman Islands)

	 	Chairman of the Board and President
	 
	 	 
	Rowan S116E#4, Inc. (Cayman Islands)

	 	Chairman of the Board and President






	 	 	 	 	 
	 	 	 
	 	                                              /s/ D. F. McNease
 	 
	 	D. F. McNease 	 
	 	
Dated: October 31, 2008 	 
	 




18