<PAGE>
                                                                    EXHIBIT 10cc

                                                                      DOCUMENT 3

                                CREDIT AGREEMENT

                            dated as of May 28, 2003

                                      among

                              ROWAN COMPANIES, INC.
                                  as Shipowner

                               GOVCO INCORPORATED
                                as Primary Lender

                                 CITIBANK, N.A.
                               as Alternate Lender

                                 CITIBANK, N.A.,
                                as Facility Agent

                                       and

                          CITICORP NORTH AMERICA, INC.
               as Administrative Agent for the Primary Lender and
               the commercial paper holders of the Primary Lender.

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                           <C>
SECTION 1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................................        2
   1.01      Defined Terms.............................................................        2
   1.02      Principles of Construction................................................        2

SECTION 2.  THE CREDIT FACILITY........................................................        2
   2.01      Amount....................................................................        2
   2.02      Availability..............................................................        3
   2.03      Disbursements and Minimum Amount of Utilizations..........................        3
   2.04      Relationship of Floating Rate Note and Fixed Rate Note....................        3
   2.05      Trigger Event.............................................................        3
   2.06      Extension of Commitment Termination Date; Non-Renewal Event...............        4


SECTION 3.  DISBURSEMENT REQUIREMENTS..................................................        5
   3.01      Disbursement Procedures...................................................        5

SECTION 4.  TERMS OF THE CREDIT........................................................        5
   4.01      Principal Repayment.......................................................        5
   4.02      Interest Payment..........................................................        6
   4.03      Prepayment................................................................        7
   4.04      Recapture.................................................................        8
   4.05      Evidence of Debt..........................................................        9
   4.06      Limit of United States Guarantee..........................................       10

SECTION 5. CONDITIONS PRECEDENT........................................................       10
   5.01      Conditions Precedent to Lenders' Obligations Under this Agreement.........       10
   5.02      Conditions Precedent to Each Disbursement.................................       11

SECTION 6. FEES AND EXPENSES...........................................................       11
   6.01      Fees......................................................................       11
   6.02      Taxes.....................................................................       12
   6.03      Expenses..................................................................       13
   6.04      Additional or Increased Costs.............................................       14

SECTION 7.  PAYMENTS...................................................................       15
   7.01      Method of Payment.........................................................       15
   7.02      Application of Payments...................................................       16

SECTION 8.  REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER............................       17
   8.01      Representations and Warranties of the Shipowner...........................       17
   8.02      Agreements of the Shipowner...............................................       19
</TABLE>

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<TABLE>
<S>                                                                                           <C>
SECTION 9.  CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT.............................       21
   9.01      Cancellation..............................................................       21
   9.02      Events of Default.........................................................       21

SECTION 10.  GOVERNING LAW AND JURISDICTION............................................       22
   10.01     Governing Law.............................................................       22
   10.02     Submission to Jurisdiction................................................       22
   10.03     Waiver of Security Requirements...........................................       22
   10.04     No Limitation.............................................................       23

SECTION 11.  MISCELLANEOUS.............................................................       23
   11.01     Computations..............................................................       23
   11.02     Notices...................................................................       23
   11.03     Disposition of Indebtedness...............................................       25
   11.04     Disclaimer................................................................       25
   11.05     No Waiver; Remedies Cumulative............................................       25
   11.06     Currency..................................................................       26
   11.07     Severability..............................................................       26
   11.08     Amendment or Waiver.......................................................       26
   11.09     Indemnification...........................................................       26
   11.10     Benefit of Agreement......................................................       26
   11.11     Waiver of Jury Trial......................................................       26
   11.12     Execution in Counterparts.................................................       27
   11.13     Shipowner Documents.......................................................       27
   11.14     Entire Agreement..........................................................       27
   11.15     No Proceedings............................................................       27
   11.16     Tax Disclosures...........................................................       28

SECTION 12.  ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS.............................       28
   12.01     Appointment...............................................................       28
   12.02     Rights of Facility Agent..................................................       28
   12.03     Duties....................................................................       29
   12.04     Limitation on Obligations of Facility Agent...............................       29
   12.05     Indemnification by Lenders................................................       30
   12.06     Limitation on Responsibility..............................................       30
   12.07     No Claims on Employees of Facility Agent..................................       30
   12.08     Banking Business..........................................................       30
   12.09     Resignation or Termination of Facility Agent..............................       31
   12.10     Successor to Facility Agent...............................................       31
   12.11     Discharge of Obligations..................................................       31
   12.12     Responsibilities of Lenders...............................................       31
   12.13     Agency Division...........................................................       32
   12.14     Administrative Agent......................................................       32
   12.15     Facility Agent Only Agent for the Lenders.................................       32
</TABLE>

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Exhibits

         Exhibit 1     Schedule of Definitions

Annexes

         Annex A       Form of Disbursement Requests

         Annex B       Form of Extension Request

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         THIS CREDIT AGREEMENT, dated as of May 28, 2003 is made by and among
ROWAN COMPANIES, INC., a Delaware corporation (the "Shipowner"), GOVCO
INCORPORATED, a Delaware corporation (the "Primary Lender"), CITIBANK, N.A., a
national banking association (the "Alternate Lender"), CITIBANK N.A., a national
banking association, as facility agent for both the Primary Lender and the
Alternate Lender (and their respective successors and assigns) with respect to
the Floating Rate Note, and its permitted successors and assigns (in such
capacity, the "Facility Agent"), and CITICORP NORTH AMERICA, INC., a Delaware
corporation, as administrative agent for the Primary Lender and the commercial
paper holders of the Primary Lender (and their respective successors and
assigns) (in such capacity, together with its permitted successors and assigns,
the "Administrative Agent," and together with the Facility Agent, the "Agents").
As used herein, the term "Lender" shall mean either the Primary Lender or the
Alternate Lender, as the case may be, depending on which of the two parties made
or will make the relevant disbursement of funds under this Agreement; provided,
however, that if the Primary Lender assigns its rights under this Agreement to
the Alternate Lender, the term "Lender," as used herein, shall mean only the
Alternate Lender. The term "Lenders," as used herein, shall mean collectively
the Primary Lender and the Alternate Lender.

                                   BACKGROUND

WHEREAS:

         (A)      by this Agreement, the Lenders have established a credit
facility (the "Credit Facility") in the amount of $91,198,000, pursuant to which
the Primary Lender may, in its discretion, subject to the terms and conditions
hereof, extend financing to the Shipowner (i) for the manufacture, construction,
fabrication, financing and purchase by the Shipowner of the Vessel; (ii) for the
payment of the related Construction Period Interest; and (iii) for the payment
of the Guarantee Fees; and if the Primary Lender chooses at any time not to
extend, or continue to extend, any such financing, then the Alternate Lender
shall, subject to the terms and conditions hereof, extend the undisbursed
portion of such financing;

         (B)      the establishment of the Credit Facility is in reliance upon
the commitment of the United States to guarantee the payment of the unpaid
interest on, and the unpaid balance of the principal of, the Floating Rate Note,
including interest accruing between the date of an Indenture Default under the
Floating Rate Note and the payment in full of the Guarantee;

         (C)      a condition to the Lenders' extension of the Credit Facility
under this Agreement is the Facility Agent's timely receipt of Certificates
Authorizing Disbursement and issuance of the Guarantee of the Floating Rate
Note;

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         (D)      the Facility Agent will serve as facility agent for the
benefit, and on behalf, of each of the Lenders in connection with the Credit
Facility, this Agreement and the other related documents and the Administrative
Agent will act as an administrative agent for the Primary Lender and the Primary
Lender's commercial paper holders; and

         (E)      the Credit Facility may be utilized by the Shipowner in
accordance with the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

         SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

         1.01     Defined Terms. For the purposes of this Agreement, unless
otherwise defined herein, defined terms shall have the meanings specified in
Exhibit 1 hereto.

         1.02     Principles of Construction.

         (a)      The meanings set forth for defined terms in this Agreement
shall be equally applicable to both the singular and plural forms of the terms
defined.

         (b)      Unless otherwise specified, all references in this Agreement
to Annexes or Exhibits are to Annexes or Exhibits in or to this Agreement.

         (c)      The headings of the Sections in this Agreement are included
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.

         SECTION 2. THE CREDIT FACILITY

         2.01     Amount. The Lenders hereby establish the Credit Facility, upon
the terms and conditions set forth in this Agreement, in favor of the Shipowner
in the maximum amount of $91,198,000 (the "Credit Facility Amount"), to enable
the Shipowner to finance: (i) the manufacture, construction, fabrication,
financing and purchase of the Vessel; (ii) Construction Period Interest; and
(iii) the Guarantee Fees; all as set forth in Certificates Authorizing
Disbursements submitted in accordance with this Agreement. The Primary Lender
intends (but is not obligated) to fund the Credit Facility through the issuance
and sale of Commercial Paper to investors which is exempt from the registration
requirements of the United States Securities Act of 1933, as amended. The
Primary Lender may, at its option, elect at any time not to fund the Credit
Facility or the undisbursed portion thereof, in which case the Alternate Lender
will, subject to the terms and conditions provided herein, be obligated to fund
under the Credit Facility the amount (the "Available Amount") which is equal to
the excess, if

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any, of the Credit Facility Amount over the outstanding principal amount
evidenced by the Floating Rate Note, plus the aggregate outstanding principal
amount evidenced by Fixed Rate Notes ("Outstanding Principal").

         2.02     Availability. Disbursements under the Credit Facility may be
made once a calendar month and up to and including the Final Disbursement Date.
"Final Disbursement Date" shall mean the earliest of (x) October 1, 2004, (y)
upon the request of the Secretary, the date upon which the Trigger Event (as
defined in Section 2.05) shall occur or, (z) the date on which the Available
Amount under the Credit Facility is canceled in accordance with Section 9.01 or
reduced to zero.

         2.03     Disbursements and Minimum Amount of Utilizations. Upon
satisfaction of Sections 3.01, 5.01 and 5.02, disbursements shall be made by
advances from the Primary Lender or the Alternate Lender to the Shipowner
("Disbursements") in accordance with Section 3.01. Notwithstanding anything in
this Agreement to the contrary, the Shipowner may not request a Disbursement
under the Credit Facility for an amount (a) less than the smaller of (i)
$1,000,000 or (ii) the Available Amount or (b) more than the Available Amount.

         2.04     Relationship of Floating Rate Note and Fixed Rate Note.
Disbursements from the Credit Facility shall become the indebtedness of the
Shipowner to the Lenders under the Floating Rate Note. The Shipowner shall
redeem the Floating Rate Note in full by causing to be issued one or more Fixed
Rate Notes and using the proceeds thereof to repay the Floating Rate Note in
full no later than the earliest of (i) four years from the Delivery Date, (ii)
October 1, 2008, or (iii) at the request of the Secretary, within fifteen (15)
Business Days from the date upon which the Trigger Event shall occur. At its
option, and from time to time, the Shipowner may redeem all or any portion of
the indebtedness under the Floating Rate Note by causing a Fixed Rate Note or
series of Fixed Rate Notes to be issued at any time during or after the
construction of the Vessel, so long as such redemption of the Floating Rate Note
from the proceeds of Fixed Rate Note(s) does not occur later than the earliest
of (i) four years after the Delivery Date, (ii) October 1, 2008, or (iii) at the
request of the Secretary, within fifteen (15) Business Days from the date upon
which the Trigger Event shall occur, and except for the final redemption, each
redemption is in a minimum amount of $25,000,000; and the Shipowner shall have
paid any amount payable under Section 4.04(a)(iv) or any other provision hereof
in connection therewith.

         2.05     Trigger Event. (a) The Shipowner shall redeem the outstanding
indebtedness under the Floating Rate Note in full by causing to be issued a
fixed rate obligation with a Maturity date of May 10, 2019 whenever the Treasury
constant maturities rate (10-year) as reported by the Federal Reserve Board in
statistical release H.15 (519) (the "Treasury Rate") equals or exceeds nine
percent (9%) per annum (the "Trigger Event"). If a Trigger Event should occur,
the Shipowner shall redeem the Floating Rate Note in full by causing to be
issued a fixed rate obligation and using the

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proceeds thereof to repay the Floating Rate Note in full, at the request of the
Secretary, within fifteen (15) Business Days of receiving notice of the
occurrence of the Trigger Event, pursuant to Section 2.05(d) or of having actual
notice thereof.

         (b)      Nothing in this Section 2.05 shall prevent the Shipowner from
redeeming the Floating Rate Note by issuance of a fixed-rate obligation at any
time prior to Maturity.

         (c)      The failure of the Shipowner to redeem the Floating Rate Note
by issuance of a fixed-rate obligation within fifteen (15) Business Days of
receiving notice of the occurrence of the Trigger Event pursuant to Section
2.05(d) or of having actual notice thereof, unless subsequently waived in
writing by the Secretary, shall constitute an Indenture Default without further
notice to the Shipowner or the Lenders being required under the Indenture or
this Agreement.

         (d)      The Shipowner covenants for the benefit of the Secretary that
it shall arrange for an independent reporting service or bank acceptable to the
Secretary to send the Secretary, the Facility Agent, and the Shipowner a written
interest rate report once a month on the first business day of every month
(until such time as the Floating Rate Note is redeemed in full). This interest
rate report shall specify the Treasury Rate as of the date of the report.

         2.06     Extension of Commitment Termination Date; Non-Renewal Event.
(a) The Shipowner may request that the Alternate Lender extend the then current
Commitment Termination Date for a period not to exceed 364 days following the
expiration of the current Commitment Termination Date by delivering an Extension
Request to the Facility Agent not more than 90 but not less than 60 days prior
to the expiration of the current Commitment Termination Date. If the Alternate
Lender, in its sole discretion, is willing to agree to the requested extension,
it shall return a duly executed copy of the Extension Request to the Shipowner
not later than 45 days prior to the expiration of the current Commitment
Termination Date, and upon receipt of the executed Extension Request by the
Shipowner, the Commitment Termination Date shall be so extended.

         (b)      In the event that the Alternate Lender does not timely agree
to any requested extension of the Commitment Termination Date in accordance with
Section 2.06(a) (a "Non-Renewal Event"), then the Shipowner may, at its sole
discretion, redeem the outstanding indebtedness under the Floating Rate Note in
full in accordance with Section 2.04 by causing to be issued a fixed rate
obligation with a Maturity date of May 10, 2019. If the Shipowner does not
redeem the Floating Rate Note on or before the Commitment Termination Date
expires, (i) the Primary Lender shall, prior to such date, assign to the
Alternate Lender all of its interest in its outstanding indebtedness under this
Agreement and the Floating Rate Note, and all of its

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other rights and obligations hereunder, in exchange for the Alternate Lender's
payment of an amount equal to the outstanding principal balance of the assigned
indebtedness, plus the amount of all interest and fees accrued through the date
of such assignment; and (ii) the Alternate Lender shall accept and assume all of
the Primary Lender's rights and obligations under this Agreement and the
Floating Rate Note. From and after the date of the assignment (which shall be
evidenced by an assignment agreement in form and substance acceptable to the
Lenders and the Shipowner), the Primary Lender shall cease to be a Lender
hereunder, and shall have no rights or obligations hereunder or under the
Floating Rate Note, except for any rights which by their express terms survive
the termination of this Agreement or the Floating Rate Note.

         (c)      Nothing in this Section 2.06 shall prevent the Shipowner from
redeeming the Floating Rate Note by issuance of a fixed-rate obligation at any
time prior to Maturity.

         SECTION 3. DISBURSEMENT REQUIREMENTS

         3.01     Disbursement Procedures. Upon receipt by the Facility Agent of
each Certificate Authorizing Disbursement at least five (5) Business Days prior
to the proposed disbursement date, the Primary Lender may, and if the Primary
Lender elects not to, the Alternate Lender shall, disburse funds in accordance
with the terms of such Certificate Authorizing Disbursement to the Shipowner, or
the Shipowner's designee, subject to the terms of this Agreement and such
Certificate Authorizing Disbursement; provided that, if the Certificate
Authorizing Disbursement and the request for disbursement referred to therein do
not specify a disbursement date, then the disbursement date shall be the fifth
Business Day (or such earlier or later Business Day as is requested by the
Shipowner and is acceptable to the disbursing Lender) following the Facility
Agent's receipt of such Certificate Authorizing Disbursement. Promptly following
each Disbursement, the Facility Agent shall transmit to the Indenture Trustee a
copy of the Certificate Authorizing Disbursement, a confirmation that the
Disbursement was made, and a copy of Exhibit A to the Floating Rate Note,
updated to reflect such Disbursement and other intervening, related events.

         SECTION 4. TERMS OF THE CREDIT

         4.01     Principal Repayment. The Shipowner shall repay the Outstanding
Principal of the Floating Rate Note as follows:

                  (i)      in installments in the principal amount of
                           $3,040,000, on each Payment Date commencing on
                           November 10, 2004, and continuing until May 10, 2008,
                           and

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                  (ii)     the full amount of the Outstanding Principal
                           evidenced by the Floating Rate Note, on the earliest
                           of (i) four years from the Delivery Date, (ii)
                           October 1, 2008, or (iii) at the request of the
                           Secretary, within fifteen (15) Business Days from the
                           date upon which the Trigger Event shall occur.

         4.02     Interest Payment.

                  (a)      On each Interest Payment Date, the Shipowner shall
pay to the Indenture Trustee, on behalf of the Person(s) entitled thereto,
interest on the Outstanding Principal of the Floating Rate Note, calculated at
an interest rate per annum equal to the Applicable Interest Rate therefor, as
determined for each successive Interest Period. The Indenture Trustee shall
calculate the Applicable Interest Rate based on information provided (i) by the
Administrative Agent to the Facility Agent if the Primary Lender is the Lender,
or (ii) by the Facility Agent if the Alternate Lender is the Lender. From time
to time, the Administrative Agent or Facility Agent will confirm CP Rate, LIBOR,
Base Rate, and Applicable Interest Rate to the Indenture Trustee. In the event
that the Primary Lender assigns the financing of all or any portion of the
amount outstanding under the Credit Facility (whether or not evidenced by a
Note) to the Alternate Lender or other assignee permitted by the terms of this
Agreement (including, without limitation, any assignment pursuant to Section
2.06(b)), the interest rate on such amount shall be determined by the Facility
Agent (and the Facility Agent shall notify the Indenture Trustee thereof and the
Indenture Trustee shall recalculate such interest rate based on information
provided by the Facility Agent) pursuant to clause (i) of the definition of
Applicable Interest Rate for the period prior to the effective date of such
assignment and pursuant to clause (ii) of such definition for all periods after
such date.

                  (b)      The Shipowner shall pay to the Facility Agent, on
behalf of the Person(s) entitled to any Unpaid Amount, on demand, interest on
such Unpaid Amount (to the extent permitted by applicable law) for each Post
Maturity Period at an interest rate per annum equal to the sum (the "Post
Maturity Interest Rate") of (1) two percent (2%), plus (2) the Applicable
Interest Rate, provided, that if such Unpaid Amount consists of principal on the
Floating Rate Note as to which guaranteed interest continues to accrue, the Post
Maturity Interest Rate on such Unpaid Amount shall be limited to the incremental
amount of additional interest required to be paid under this Section 4.02(b) and
shall equal two percent (2.0%) per annum. In the absence of an Indenture
Default, any interest which shall have accrued under this Section 4.02(b) in
respect of an Unpaid Amount shall be due and payable and shall be paid by the
Shipowner on demand on such dates as the Person to whom such Unpaid Amount is
owed may specify by written notice to the Shipowner, or if there is an Indenture
Default, any interest which shall have accrued under this Section 4.02(b) in
respect of an Unpaid Amount shall be due and payable immediately and shall be
paid by the

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Shipowner without demand and any payment by, or on behalf of, the Shipowner
hereunder shall be governed by Section 7.02 and the provisions of the last
paragraph of Section 9.02.

         As used herein, "Unpaid Amount" means all or any part of principal,
accrued interest, fees or other amounts owing to the Lenders under this
Agreement or the Floating Rate Note which is not paid in full when and as due
and payable, whether at Stated Maturity, by acceleration or otherwise, or any
sum due and payable by the Shipowner to the Lenders under any judgment of any
court or arbitral tribunal in connection with this Agreement which is not paid
on the date of such judgment. "LIBOR" shall mean, in relation to any Post
Maturity Period (other than the first Post Maturity Period contemplated by
clause (iii) of Section 4.02(b)), the rate of interest per annum (rounded
upward, if necessary, to the nearest 1/16 of 1%) last quoted by the principal
London office of CITIBANK, N.A., prior to the close of business at such London
office on the Quotation Date for the offering to leading banks in the London
interbank market of U.S. Dollar deposits on an overnight basis and in an amount
comparable to the Unpaid Amount to which LIBOR is to apply. "Accelerated
Repayment" shall mean any part of the principal of the Floating Rate Note that
became due and payable on a day other than its Payment Date. "Post Maturity
Period" shall mean with respect to the period from the date an Unpaid Amount was
due until such amount shall have been paid in full, each successive period, the
first of which shall start on the date such Unpaid Amount was due (or the date
of any such judgment or arbitral award, if earlier) and each other of which
shall start on the last day of the preceding such period, and the duration of
each of which shall be one day, or if LIBOR applies, then from and including the
Quotation Date for such Post Maturity Period to but excluding the next Quotation
Date or such other duration selected by the Person to whom such Unpaid Amount is
due; provided, however, that in the case of any Accelerated Repayment, the first
such Post Maturity Period applicable thereto shall be of a duration equal to the
unexpired portion of its then applicable Interest Period. "Quotation Date" in
relation to any Post Maturity Period means the day on which quotations would
ordinarily be given by CITIBANK, N.A. in the London interbank market for dollar
deposits for delivery on the first day of that period; provided, however, that
if, for any such Post Maturity Period, quotations would ordinarily be given on
more than one date, the Quotation Date for that period shall be the last of
those dates.

                  4.03     Prepayment. (a) The Shipowner may from time to time
prepay on any Interest Payment Date all or any part of the Outstanding Principal
evidenced by the Floating Rate Note, provided that: (i) any partial prepayment
shall be in a minimum principal amount of $10,000,000, unless otherwise required
by the Indenture; (ii) the Shipowner shall have given the Facility Agent and the
Indenture Trustee prior written notice of such prepayment (which shall be not
less than 40 nor more than 60 days); (iii) the Shipowner shall have paid in full
all amounts due under this Agreement as of the date of such prepayment,
including, without limitation, interest which

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has accrued to the date of prepayment on the amount prepaid and all other
amounts payable hereunder relating to such prepayment; (iv) any amount prepaid
hereunder (other than the Outstanding Principal amount thereof prepaid through
the issuance of Fixed Rate Notes, the Outstanding Principal amount of which is
subtracted from the Credit Facility pursuant to the last sentence of Section
2.01) shall not be considered part of the Available Amount; and (v) subject to
Section 4.03(c), if the Lender is the Primary Lender, the Shipowner shall pay to
the Facility Agent, for the benefit of the Primary Lender an amount equal to (x)
the amount of yield that the Primary Lender is required to pay to holders of its
Commercial Paper during the Liquidation Period (as defined below) on an amount
of Commercial Paper having an aggregate issue price equal to the amount of the
Shipowner's prepayment less (y) the amount of the estimated investment earnings,
as determined by the Facility Agent, on the prepayment amount during the
Liquidation Period. The "Liquidation Period" means the period from the date on
which a prepayment is made to the earliest date on which the Primary Lender's
total amount of Commercial Paper related to the funding of the Disbursements can
be reduced (without prepayment thereof) by an amount equal to the amount of the
Shipowner's prepayment. Prepayments shall be applied to the installments of
principal of the Credit Facility in the inverse order of their maturity, and, in
cases where more than one Note is outstanding, pro rata to each Note.

         (b)      Upon delivery to the Shipowner and the Secretary of the
instrument satisfying and discharging the Indenture contemplated by Section
12.01 of the Exhibit 1 to the Indenture, all of the Shipowner's indebtedness,
liabilities and obligations under this Agreement and the Fee Letter shall become
immediately due and payable without demand upon, or notice to, the Shipowner.

         (c)      Notwithstanding any other provision to the contrary herein,
the Shipowner or the Secretary (after the Secretary's assumption of the Floating
Rate Note pursuant to Section 6.09 of Exhibit 1 to the Indenture) may from time
to time prepay all or any part of the principal amount of the Floating Rate Note
without any prepayment penalty or premium in accordance with Article III of
Exhibit 1 to the Indenture.

         (d)      Notwithstanding any other provision to the contrary herein,
the Shipowner shall have the right to prepay any portion of the Floating Rate
Note and redeem the Floating Rate Note by issuing a Fixed Rate Note and using
the proceeds thereof to prepay the Floating Rate Note so long as it first
obtains the Secretary's consent to the interest rate applicable to the Fixed
Rate Note and, except for the final redemption, the principal amount of such
redemption equals or exceeds $25,000,000; and the Shipowner shall have paid any
amount payable under Section 4.04(a)(iv) or any other provision hereof in
connection therewith.

         4.04     Recapture. (a) Upon the written request of the Facility Agent,
the Shipowner shall pay to the applicable Lender, such amounts as shall be

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sufficient (in the reasonable judgment of such Lender) to compensate such Lender
for any loss, expense or liability (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or redeployment of
deposits from third parties or in connection with obtaining funds to make or
maintain any Disbursement) which such Lender reasonably determines is
attributable to:

         (i)      any failure to make scheduled payments on a Payment Date or
any payment due in connection with any Redemption; or

         (ii)     any failure by the Shipowner to borrow any advance for which a
Certificate Authorizing Disbursement has been issued; or

         (iii)    any revocation of a notice of prepayment given pursuant to
Section 4.03(a); or

         (iv)     subject to the provisions of Section 4.03(c), any prepayment
of the Floating Rate Note (including, without limitation, due to the issuance of
any fixed rate notes) other than on an Interest Payment Date after giving five
Business Days prior written notice to such Lender, the Facility Agent, and the
Indenture Trustee.

         (b)      Without prejudice to any other provision hereof (and at the
Shipowner's expense), such Lender shall use such reasonable efforts as it shall
determine in its sole discretion to minimize any loss, expense or liability to
the extent possible.

         (c)      With respect to the Shipowner's obligations under Section
4.04(a)(iv), if the Shipowner shall at any time notify the Facility Agent and
the applicable Lender of its intention to pursue any such prepayment, the
Facility Agent and the applicable Lender shall reasonably cooperate with the
Shipowner in assessing and quantifying any loss, expense or liability the Lender
may incur in connection with a prepayment under the circumstances described in
Section 4.04(a)(iv), so that the Shipowner may make an informed decision as to
the cost to it of any such prepayment. Any information provided to the Shipowner
by the Lender pursuant to this Section 4.04(c) is understood by the parties to
be an estimate of the costs of prepayment only and shall not be binding in the
determination of such costs pursuant to Section 4.04(a)(iv).

         4.05     Evidence of Debt. The Shipowner agrees that to evidence
further its obligation to repay all amounts disbursed under the Credit Facility,
with interest accrued thereon, it shall issue and deliver to the Facility Agent,
in accordance with the written instructions of the Facility Agent, the Floating
Rate Note. The Floating Rate Note shall (i) be in the form of Exhibit 2 to the
Indenture; (ii) bear the Secretary's Guarantee, and (iii) be valid and
enforceable as to its principal amount at any time only to the extent of the
aggregate amounts then disbursed and outstanding thereunder, and, as to
interest, only to the extent of the interest accrued

                                       9
<PAGE>

thereon at the rate guaranteed by the Secretary, with any interest in excess
thereof being evidenced by this Agreement.

         4.06     Limit of United States Guarantee. None of the incremental
amount of interest required to be paid under Section 4.02(b), none of the fees,
and expenses arising under Sections 4.03, 4.04 and 6, and none of the
Indemnified Amounts, commissions, Taxes, Other Taxes, Post Maturity Interest
Rate, interest in excess of 10.25% (or such higher rate as may be agreed from
time to time by the Secretary) (the "Cap Rate") under the Floating Rate Note,
the costs of obtaining any interest rate protection, or any other charges,
costs, expenses, or indebtedness owed by the Shipowner under this Agreement to
any Person is guaranteed by the United States. The Guarantee of the United
States extends only to the principal and interest owed under the Obligations and
only to the extent specified therein. The Cap Rate shall not apply to fixed-rate
obligations.

         SECTION 5. CONDITIONS PRECEDENT

         5.01     Conditions Precedent to Lenders' Obligations Under this
Agreement. The obligations of the Lenders under this Agreement shall be subject
to the delivery to the Facility Agent of the documents indicated below on or
before the Closing Date:

         (a)      This Agreement, the Floating Rate Note and the Fee Letter.
This Agreement and the Fee Letter, each fully executed by the parties thereto in
form and substance satisfactory to the Lenders, which shall be in full force and
effect and the Floating Rate Note shall have been fully executed by the
Shipowner, endorsed by, or on behalf of, the United States, and delivered to the
Facility Agent, and all amounts then payable under the Fee Letter shall have
been paid to the Person entitled thereto.

         (b)      Existence. Evidence in form and substance satisfactory to the
Lenders, that the Shipowner is duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power, authority and
legal right to own its property and to carry on its business as now conducted.

         (c)      Authority. Evidence in form and substance satisfactory to the
Lenders, of the authority of the Shipowner to execute, deliver, perform and
observe the terms and conditions of this Agreement, the Floating Rate Note, the
Fee Letter, and the Indenture and evidence of authority (including specimen
signatures) for each Person who, on behalf of the Shipowner, signed this
Agreement, the Floating Rate Note, the Fee Letter, and the Indenture, or will
otherwise act as representatives of the Shipowner in the operation of the Credit
Facility.

         (d)      Governmental and Other Authorizations. Copies, certified as
true copies by a duly authorized officer of the Shipowner, of each consent,
license, authorization or approval of, and exemption by, any Governmental

                                       10
<PAGE>

Authority and any governmental authorities within the United States or
elsewhere, which are necessary or advisable (i) for the execution, delivery,
performance and observance by the Shipowner of this Agreement, the Floating Rate
Note, the Fee Letter, and the Indenture; and (ii) for the validity, binding
effect and enforceability of this Agreement, the Floating Rate Note, the Fee
Letter, and the Indenture, or if none is necessary, a written certification from
the Shipowner that none is necessary.

         (e)      Legal Opinions. (1) Opinion of legal counsel for the Shipowner
concerning this Agreement, the Floating Rate Note, the Fee Letter, and the
Indenture; (2) Opinion of the Chief Counsel of the Maritime Administration dated
the Closing Date, signed by or on behalf of such Chief Counsel, addressed to the
Lenders and the Agents to the effect that the Guarantees and the Authorization
Agreement have been or will be duly authorized, executed and delivered by the
United States of America, and constitute legal, valid, and binding obligations
of the United States of America enforceable in accordance with their respective
terms; and (3) Opinion of Mayer, Brown, Rowe & Maw addressed to the Lenders, the
Agents, and the Indenture Trustee concerning this Agreement, the Fee Letter, the
Indenture and the Floating Rate Note.

         (f)      Guarantee Commitment. A copy of the fully executed Guarantee
Commitment, which shall be in full force and effect until completion of the
Closing.

         (g)      Authorization Agreement. The fully executed Authorization
Agreement, which shall be in full force and effect.

         (h)      Indenture. The fully executed Indenture, which shall be in
full force and effect.

         5.02     Conditions Precedent to Each Disbursement. The agreement of
the Primary Lender to fund any Disbursement under this Agreement and any
obligations of the Alternate Lender to fund any Disbursement under this
Agreement shall be subject only to the Facility Agent's receipt of a Certificate
Authorizing Disbursement, upon which each such Lender may conclusively rely.

         SECTION 6. FEES AND EXPENSES

         6.01     Fees. The Shipowner shall pay or cause to be paid to the
Person entitled thereto such fees and other amounts as are set forth in that
certain Fee Letter (as amended, restated or otherwise modified from time to
time, the "Fee Letter") dated as of May 28, 2003 between the Shipowner and the
Agents, in each case when and as due.

                                       11
<PAGE>

         6.02     Taxes.

         (a)      The Shipowner agrees to pay all amounts owing by it under this
Agreement or the Floating Rate Note free and clear of and without deduction for
any and all present and future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding in the case of
each Lender, taxes imposed on its income, and franchise taxes imposed on it in
lieu of income taxes, by either (i) the jurisdiction under the laws of which
such Lender is organized or any political subdivision thereof, or (ii) the
jurisdiction of such Lender's applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). In addition, the Shipowner agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Floating Rate
Note or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement or the Floating Rate Note (hereinafter referred to as
"Other Taxes").

         (b)      The Shipowner further agrees:

         (i)      that, if the Shipowner is prevented by operation of law from
paying any such Taxes or Other Taxes, or if any such Taxes or Other Taxes are
required to be deducted or withheld, then the fees or expenses required to be
paid under this Agreement shall, on an after-tax basis, be increased by the
amount necessary to yield to the Lenders fees or expenses in the amounts
provided for in this Agreement after the provision for the payment of all such
Taxes and Other Taxes;

         (ii)     that the Shipowner shall, at the request of any Lender or any
Agent, execute and deliver to such Lender or Agent, as the case may be, such
further instruments as may be necessary or desirable to effect the payment of
the increased amounts as provided for in subsection (i) above; provided,
however, that the Shipowner may not amend the Floating Rate Note without the
prior written consent of the Secretary;

         (iii)    that the Shipowner shall hold the Lenders harmless from and
against the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 6.02) and any and all liabilities (including, without limitation,
penalties, interest and expenses) arising from, or with respect to, any Taxes or
Other Taxes (whether or not properly or legally asserted) and whether paid, or
payable, by the Shipowner, the Lenders, or any other Person;

         (iv)     that, at the request of any Lender or any Agent, the Shipowner
shall provide such Lender or Agent within the later of thirty (30) calendar days
after such request or thirty (30) calendar days after the payment of such Taxes
or Other Taxes, a copy evidencing the payment of any Taxes or Other Taxes by the
Shipowner; and

                                       12
<PAGE>

         (v)      that each payment under this Section 6.02 shall be made within
thirty (30) days from the date the Facility Agent on behalf of the applicable
Lender makes written demand therefor. Each demand for payment by such Lender
under Section 6.02(b)(v) for amounts paid or incurred by the Lenders or itself
shall be accompanied by a certificate (with accompanying documentation
supporting the demand) showing in reasonable detail the basis for the
calculation of the amounts demanded, which certificate, in the absence of
manifest error, shall be conclusive and binding for all purposes.

         Notwithstanding anything to the contrary contained herein, the
agreements in this Section 6.02 shall survive the termination of this Agreement
and the payment of the Floating Rate Note and all other amounts due hereunder.

         6.03     Expenses. The Shipowner agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay, or reimburse the
Agents and the Lenders, respectively, promptly upon demand for the payment of
all reasonable and duly documented costs and expenses arising in connection with
the preparation, printing, execution, delivery, registration, implementation,
modification of or waiver or consent under this Agreement, the Floating Rate
Note or the Indenture, including, without limitation, the reasonable and duly
documented out-of-pocket expenses of the Agents and the Lenders (incurred in
respect of telecommunications, mail or courier service, travel and the like),
and the fees and expenses of counsel for the Agents and the Lenders. The
Shipowner shall also pay all of the costs and expenses (including, without
limitation, the fees and expenses of counsel) incurred by or charged to the
Agents or the Lenders in connection with the amendment or enforcement of this
Agreement, the Floating Rate Note or the Indenture or the protection or
preservation of any right or claim of the Agents or the Lenders arising out of
this Agreement, the Floating Rate Note or the Indenture.

                                       13
<PAGE>

         6.04     Additional or Increased Costs.

         (a)      If, due to either (i) the introduction of or any change in or
in the interpretation of any law, regulation or accounting principle, or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining the Disbursements or the Credit Facility, then the Shipowner shall
from time to time, upon demand by such Lender, pay to such Lender additional
amounts sufficient to compensate such Lender for such increased cost. In
furtherance and not in limitation of the foregoing, if the issuance of Financial
Accounting Standards Board Interpretation No. 46 ("FASB 46"), or any other
change in accounting standards or the issuance of any other pronouncement,
release or interpretation, or the implementation of FASB 46 or any other such
standard, pronouncement, release or interpretation, causes or requires the
consolidation of all or a portion of the assets and liabilities of the Primary
Lender with the assets and liabilities of the Alternate Lender or any other
funding source, such event shall constitute a circumstance on which the affected
Lender may base a claim for reimbursement under this Section 6.04.

         (b)      If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender,
the Shipowner shall immediately pay to the Facility Agent (for the benefit of
such Lender), from time to time as specified by the Facility Agent (on behalf of
such Lender), additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of its commitment to lend hereunder.

         (c)      Each Lender shall take such reasonable steps as it shall
determine to minimize amounts demanded under this Section 6.04; provided that no
Lender shall be obligated to take any actions under this Section 6.04 if such
Lender has determined, that such actions would cause it to incur any material
costs or expenses or would otherwise be disadvantageous to it in any material
respect. In the event that a Lender transfers the booking office of the Credit
Facility or the Floating Rate Note to minimize amounts demanded under this
Section 6.04, any costs and expenses incurred in such transfer shall be paid by
the Shipowner on demand by such Lender.

         (d)      Each demand for payment by the Facility Agent (on behalf of
any Lender) under this Section 6.04 shall be accompanied by a certificate
showing in reasonable detail the basis for the calculation of the amounts
demanded,

                                       14
<PAGE>

which certificate, in the absence of manifest error, shall be conclusive and
binding for all purposes.

         (e)      The Facility Agent on behalf of each Lender shall notify the
Shipowner of any event occurring after the date of this Agreement which entitles
such Lender to compensation pursuant to this Section 6.04, as promptly as
practicable, and in any event within ninety (90) days after it has knowledge of
such event and has determined that a request for compensation hereunder shall be
made. The Shipowner shall not be obligated to reimburse any Lender for any loss
or cost incurred more than ninety (90) days prior to delivery of notice to the
Shipowner by the Lender requesting compensation under this Section 6.04.

         SECTION 7. PAYMENTS

         7.01     Method of Payment.

         (a)      (i) All payments to be made by the Shipowner under this
Agreement and the Floating Rate Note shall be made without set-off or
counterclaim in Dollars in immediately available and freely transferable funds
no later than 11:00 A.M. (New York City time) on the date on which due. Except
as provided in Section 7.01(a)(ii), all payments to be made by the Shipowner or
the Agents hereunder shall be made to (A) the Primary Lender (for the account of
GOVCO Incorporated, its successors and assigns), (B) the Alternate Lender (for
the account of Citibank, N.A., its successors and assigns), (C) the Facility
Agent (for the account of Citibank, N.A., its successors and assigns), (D) the
Administrative Agent (for the account of Citicorp North America, Inc., its
successors and assigns), or (E) any other Lender (for the account of such
Lender, its successors and assigns), in each case to the Facility Agent (for the
account of Citibank, N.A., its successors and assigns) at Citibank, N.A., 388
Greenwich Street, 20th floor, New York, NY 10013, ABA # 021 0000 89, DDA.
Account No. 3041-9849, Attn: Loans Agency. - Rowan Companies, Inc. Upon receipt
thereof by the Facility Agent, the Facility Agent shall forthwith forward such
funds to the party entitled thereto pursuant to the written instructions
provided by such party to the Facility Agent in accordance with Section 11.02.

                  (ii)     The Shipowner shall pay the principal and the
guaranteed amount of the Applicable Interest Rate on the Floating Rate Note to
the Indenture Trustee and all other amounts due under this Agreement directly to
the Person entitled thereto, in each case, by wire transfer in same day and
immediately available and freely transferable funds. Wire transfer instructions
shall be provided to the Shipowner. Until further notice, wire instructions for
the Indenture Trustee are as follows: Allfirst Trust Company, National
Association, ABA #052000113, Credit Trust Receipts, A/C #090-02-764, Re: Rowan
Companies, Inc., Attention Donald Hargadon, extension 4224 (SCOOTER YEARGAIN).

         (b)      Except as otherwise provided herein, whenever any payment
would otherwise fall due on a day that is not a Business Day, the due date for

                                       15
<PAGE>

payment shall be the immediately succeeding Business Day, and interest and fees
shall be computed in accordance with Section 11.01.

         (c)      Whenever a sum is required to be paid to the Facility Agent
under this Agreement for the account of another Person, the Facility Agent shall
not be obligated to make such sum available to such other Person unless and
until the Facility Agent shall have established to its satisfaction that it has
actually received payment of such sum. Notwithstanding the foregoing, unless it
has received actual notice to the contrary, the Facility Agent may (but shall
not be obligated to) assume on the date of any Disbursement or any other payment
required to be made by any Lender hereunder that such Lender has made available
to the Facility Agent such Disbursement or other payment and the Facility Agent
may (but shall not be required to) make available to the Shipowner on such date
a corresponding amount in reliance upon such assumption. Additionally, the
Facility Agent may (but shall not be obligated to) assume on the date of any
payment required to be made by the Shipowner hereunder that the Shipowner has
made available to the Facility Agent such payment and the Facility Agent may
(but shall not be required to) make available to the Lenders on such date a
corresponding amount in reliance upon such assumption. If and to the extent that
either (i) the Lender shall not in fact have made such Disbursement or other
payment available to the Facility Agent and the Facility Agent has made
available a corresponding amount to the Shipowner in reliance on the
above-described assumptions or (ii) the Shipowner has not in fact made such
payment and the Facility Agent has made available a corresponding amount to the
Lender in reliance on the above-described assumptions, then, in either such
case, such Lender agrees to repay to the Facility Agent forthwith on demand such
corresponding amount together with an amount sufficient to indemnify the
Facility Agent against any cost or loss it may have suffered or incurred by
reason of its having paid out such sum prior to receipt thereof.

         7.02     Application of Payments. In the absence of an Indenture
Default, the Lenders shall each apply payments received by them under this
Agreement and the Floating Rate Note (whether at Stated Maturity, by reason of
acceleration, prepayment or otherwise), in the following order of priority: (i)
interest due pursuant to Section 4.02(a); (ii) installments of principal due;
(iii) interest due pursuant to Section 4.02(b) other than the amount described
in clause (i) above; (iv) all amounts due under the Fee Letter; and (v) all
other amounts due under this Agreement and not otherwise provided for in this
Section 7.02. Upon the occurrence of an Indenture Default, the Lenders shall
each hold any payments they receive after an Indenture Default from, or on
behalf of, the Shipowner under this Agreement, the Fee Letter and any related
agreement (excluding the Floating Rate Note) and shall promptly deliver such
payments to the Secretary if the Secretary has been required to honor a
Guarantee as a result of said Indenture Default. All such amounts received
during an Indenture Default and delivered to the Secretary in accordance with
the preceding sentence shall be applied first to pay, satisfy and discharge all
amounts owed by the Shipowner to the Secretary under the Secretary's Note

                                       16
<PAGE>

and the Mortgage and then to pay, satisfy and discharge any and all amounts owed
to the Lenders or the Agents.

         SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER

         8.01     Representations and Warranties of the Shipowner. The Shipowner
represents and warrants to the Agents and the Lenders that, as of the Closing
Date:

         (a)      Existence and Authority. The Shipowner is duly organized,
validly existing under the laws of the State of Delaware, is in good standing
under the laws of the State of Delaware, has been duly qualified to do business
in, and is in good standing as a foreign corporation in each jurisdiction in
which the conduct of its business or the ownership of its properties requires it
to be so qualified, and has full power, authority and legal right to own its
properties and conduct its business as it is presently now conducted.

         The Shipowner has full power, authority and legal right (i) to execute
and deliver this Agreement, the Floating Rate Note and the Indenture, (ii) to
perform and observe the terms and provisions of each of said documents to be
performed or observed by it, (iii) to consummate the transactions contemplated
thereby and (iv) to own its properties (including, without limitation, the
Vessel owned or to be owned by it) and conduct its business as presently
conducted.

         (b)      Government and Other Authorizations. All consents, licenses,
authorizations and approvals of, and exemptions by, any Governmental Authority
and any governmental authorities within the United States or elsewhere and any
other Persons that are necessary or advisable: (i) for the execution, delivery,
performance and observance by the Shipowner of this Agreement, the Floating Rate
Note, and the Indenture; and (ii) for the validity, binding effect and
enforceability of this Agreement, the Floating Rate Note, and the Indenture have
been obtained and are in full force and effect.

         (c)      Restrictions. The execution, delivery and performance or
observance by the Shipowner of the terms of, and consummation by the Shipowner
of the transactions contemplated by, this Agreement, the Floating Rate Note, and
the Indenture do not and will not conflict with or result in a breach or
violation of: (i) the charter, by-laws or other organizational documents of the
Shipowner; (ii) any federal or state law of the United States or any other
ordinance, decree, constitutional provision, regulation or other requirement of
any Governmental Authority (including, without limitation, any restriction on
interest that may be paid by the Shipowner); or (iii) any order, writ,
injunction, judgment or decree of any court or other tribunal. Further, the
execution, delivery and performance or observance by the Shipowner of the terms
of, and consummation by the Shipowner of the transactions contemplated by, this
Agreement, the Floating Rate Note, and the Indenture does not and will not
conflict with or result in a breach of any agreement or instrument to which the
Shipowner is a party, or by which it or any of its revenues, properties or
assets may be subject, or result in the creation or

                                       17
<PAGE>

imposition of any Lien upon any of the revenues, properties or assets of the
Shipowner pursuant to any such agreement or instrument. "Lien" shall mean any
lien, lease, mortgage, pledge, hypothecation, preferential arrangement relating
to payments, or other encumbrance or security interest.

         (d)      Binding Effect. This Agreement, the Floating Rate Note, and
the Indenture, which have been executed on or before the date hereof, have been
duly executed and delivered by the Shipowner. Each of the Agreement, the
Floating Rate Note, and the Indenture constitutes, and each of the Agreement,
the Floating Rate Note, and the Indenture as it may hereafter be amended will
constitute, a direct, general and unconditional obligation of the Shipowner
which is legal, valid and binding upon the Shipowner and enforceable against the
Shipowner in accordance with its respective terms, except to the extent
enforceability thereof is limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws of general application relating to or
affecting the enforcement of creditors rights generally. All obligations
evidenced by the Floating Rate Note will be entitled to the benefits of the
Guarantees and the Authorization Agreement.

         (e)      Choice of Law. Under applicable conflict of laws principles,
the choice of law provisions of this Agreement, the Floating Rate Note and the
Indenture are valid, binding and not subject to revocation by the Shipowner. In
any proceedings brought for enforcement of this Agreement, the Indenture or the
Floating Rate Note, the choice of the law of the State of New York as the
governing law of such documents will be recognized and such law will be applied.

         (f)      Legal Proceedings. No legal proceedings are pending or, to the
best of the Shipowner's knowledge, threatened before any court or governmental
agency which might: (i) materially and adversely affect the Shipowner's
financial condition, business or operations; (ii) restrain or enjoin or have the
effect of restraining or enjoining the performance or observance of the terms
and conditions of any of this Agreement, the Indenture or the Floating Rate
Note; or (iii) in any other manner question the validity, binding effect or
enforceability of any of the provisions of this Agreement, the Indenture or the
Floating Rate Note.

         (g)      Use of the Vessel. The Vessel will be used for lawful
purposes.

         (h)      Shipowner Financial Statements. The Shipowner Financial
Statements present fairly the financial condition of the Shipowner at the date
of such statements and the results of the operations of the Shipowner for such
fiscal year. The Shipowner Financial Statements have been prepared in accordance
with generally accepted accounting principles in the United States consistently
applied. Except as fully reflected in the Shipowner Financial Statements, there
are no liabilities or obligations with respect to the Shipowner of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) for the period to which the Shipowner Financial Statements relate that,
either individually or in the aggregate, would be material to the Shipowner.
Since the date of the most recent audited Shipowner

                                       18
<PAGE>

Financial Statements, there has been no material adverse change in the financial
condition, business prospects or operations of the Shipowner. "Shipowner
Financial Statements" shall mean the financial statements of the Shipowner
furnished to the Facility Agent prior to the date of this Agreement.

         (i)      No Taxes. There is no Tax imposed on or in connection with:
(i) the execution, delivery or performance of this Agreement, the Indenture or
the Floating Rate Note; (ii) the enforcement of this Agreement, the Indenture or
the Floating Rate Note; or (iii) on any payment to be made to any Lender under
this Agreement or the Floating Rate Note.

         (j)      Laws. None of this Agreement, the Indenture, the Floating Rate
Note, the transactions contemplated thereunder nor any Person party to this
Agreement, the Indenture or the Floating Rate Note is required to qualify under
the Trust Indenture Act or register or qualify under any securities law.

         (k)      Defaults. No Event of Default has occurred and is continuing
and no event or circumstance has occurred and is continuing which with the
passage of time, the giving of notice or both would constitute an Event of
Default.

         8.02     Agreements of the Shipowner. The Shipowner agrees that until
all amounts owing under this Agreement and the Floating Rate Note have been paid
in full, the Shipowner will, unless the Agents and the Lenders shall have
consented in writing:

                  (a)      Interest Rate Protection. At all times that (1) a
         Floating Rate Note exists and (2) either the Applicable Interest Rate
         is equal to or greater than the Cap Rate less 0.5% or the Trigger Event
         has occurred, the Shipowner (at its expense) within ten (10) Business
         Days thereafter, shall (A) enter into, and thereafter maintain in full
         force and effect, an amortizing interest rate cap agreement with a
         strike price providing for a cap based on the Applicable Interest Rate
         not in excess of the Cap Rate per annum and otherwise acceptable to the
         Lenders, with a counterparty rated "AA" or better by any of the rating
         agencies that rate the Commercial Paper issued by the Primary Lender or
         such other counterparty reasonably acceptable to the Lenders, covering
         the Floating Rate Note and based on the expected amortization schedule
         of such Note, and (B) execute such documents and instruments as may be
         necessary, or in the opinion of the Facility Agent desirable, to effect
         the assignment of its rights thereunder to the Facility Agent for the
         benefit of the Lenders or, if any payments are made under any
         Guarantee, the Secretary, in every case with such terms as are
         reasonably acceptable to the Facility Agent for the protection of the
         Lenders. If the Shipowner fails to satisfy the requirements of this
         Section 8.02(a) within the ten (10) Business Days set forth above, the
         Facility Agent may (in its sole discretion) and if the Facility Agent
         so elects, the Shipowner hereby authorizes and directs the Facility
         Agent to, satisfy the requirements of this Section 8.02(a), all at the
         expense of the Shipowner, due on demand.

                                       19
<PAGE>

                  (b)      Notice of Defaults. Promptly, but in no event later
         than ten (10) days after the occurrence of an Indenture Default or an
         Event of Default of which the Shipowner has knowledge, notify the
         Facility Agent and the Indenture Trustee of any report required by the
         Shipowner Documents (or any other document entered into by the
         Shipowner in connection therewith), and send a copy thereof to the
         Facility Agent, in each case by facsimile or hand delivery.

                  (c)      Financial Reports. Beginning with the fiscal year in
         which this Agreement is executed and continuing until all amounts owing
         under this Agreement and the Floating Rate Note have been paid in full,
         the Shipowner shall furnish to the Facility Agent (and the Facility
         Agent, upon receipt thereof, shall furnish to each Lender and the
         Administrative Agent) a copy of all financial reports furnished to the
         Secretary pursuant to the Title XI Reserve Fund and Financial
         Agreement.

                  (d)      Other Acts. From time to time, do and perform any and
         all acts and execute any and all documents as may be necessary or as
         reasonably requested by the Facility Agent or the Indenture Trustee in
         order to effect the purposes of this Agreement and to protect the
         interests of the Lenders in the Floating Rate Note and the interests of
         the Lenders in the Guarantees.

                  (e)      Use of Proceeds. Use proceeds from each Disbursement
         solely to finance: (i) the manufacture, construction, fabrication,
         financing and purchase of the Vessel; (ii) Construction Period
         Interest; and (iii) the Guarantee Fees. Use the proceeds from the
         issuance of any Fixed Rate Notes to repay amounts owed under the
         Floating Rate Note or to finance: (i) the manufacture, construction,
         fabrication, financing and purchase of the Vessel; (ii) Construction
         Period Interest; and (iii) the Guarantee Fees.

                  (f)      Successors. Require that any successor to all or
         substantially all of its business as a result of any merger or
         consolidation with any other entity, dissolution or termination of
         legal existence, sale, lease, transfer or other disposal of any
         substantial part of its properties or any of its properties essential
         to the conduct of its business or operations, as now or hereafter
         conducted, any change in control, any agreement to do any of, or any
         combination of, the foregoing, to assume all of the Shipowner's
         indebtedness, liabilities and obligations under this Agreement, the
         Indenture and the Floating Rate Note.

                                       20
<PAGE>

         SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT

         9.01     Cancellation. The Shipowner may cancel at any time all or any
part of the Available Amount of the Credit Facility, provided that (i) thirty
(30) days' prior irrevocable written notice is given to the Agents, the
Indenture Trustee, and the Secretary and (ii) the Shipowner shall have paid to
the Lenders any commitment fees accrued and unpaid under Section 6.01 and all
other amounts due and payable under this Agreement and the Floating Rate Note as
of the proposed date of cancellation. In the absence of an Indenture Default,
the Lenders may not for any reason cancel at any time any part of the Available
Amount of the Credit Facility.

         9.02     Events of Default. Upon the occurrence of any of the following
events or conditions (each, an "Event of Default"):

                  (a)      any failure by the Shipowner to pay when and as due
         any amount owing under this Agreement, but which is not guaranteed by
         the Secretary; or

                  (b)      any failure by the Shipowner to comply with its
         obligations under Section 8.02(b) or 8.02(e); or any failure by the
         Shipowner to perform or comply with any of its agreements set forth in
         this Agreement (exclusive of any events specified as an Event of
         Default in any other subsection of this Section 9.02 and exclusive of
         Section 8.02(a)), which failure, if capable of being cured, remains
         uncured for a period of thirty (30) days after written notice thereof
         has been given to the Shipowner by the Facility Agent; or

                  (c)      the Shipowner shall be unable to pay its debts when
         and as they fall due or shall admit in writing its inability to pay its
         debts as they fall due or shall become insolvent; or the Shipowner
         shall apply for or consent to the appointment of any liquidator,
         receiver, trustee or administrator for all or a substantial part of its
         business, properties, assets or revenues; or a liquidator, receiver,
         trustee or administrator shall be appointed for the Shipowner and such
         appointment shall continue undismissed, undischarged or unstayed for a
         period of thirty (30) days, or the Shipowner shall institute (by
         petition, application, answer, consent or otherwise) any bankruptcy,
         arrangement, readjustment of debt, dissolution, liquidation or similar
         executory or judicial proceeding; or a bankruptcy, arrangement,
         readjustment of debt, dissolution, liquidation or similar executory or
         judicial proceeding shall be instituted against the Shipowner and shall
         remain undismissed, undischarged or unstayed for a period of thirty
         (30) days; or

                  (d)      an Indenture Default has occurred;

         then, and in any such event, and at any time thereafter, if such event
         is continuing, and if there is no Indenture Default (or if there is an
         Indenture Default, only after the Secretary has received all payments
         due under the Secretary's Note and the Mortgage), any Agent or any
         Lender (by written notice to the Shipowner), shall have the right to
         institute any judicial or

                                       21
<PAGE>

         other proceedings under this Agreement to recover all amounts owing
         under this Agreement. The Lenders agree that so long as an Indenture
         Default exists, all amounts received during such period from, or on
         behalf of, the Shipowner shall be applied in the manner set forth in
         Section 7.02. Notwithstanding an Event of Default, the Lenders may not
         terminate the Available Amount of the Credit Facility without the
         Secretary's consent; provided, however, that the Shipowner's use of the
         Available Amount of the Credit Facility shall remain subject to the
         requirements of Sections 2.02, 3.01, and 5.02. Except as expressly
         provided above in this Section 9.02, presentment, demand, protest and
         all other notices of any kind are hereby expressly waived.
         Notwithstanding any other provision of this Agreement, if Section
         9.02(c) is applicable, the Lender may file appropriate claims in
         connection therewith, but shall apply any funds collected as a
         consequence of said filings in accordance with the provisions of
         Section 7.02 of this Agreement.

         SECTION 10. GOVERNING LAW AND JURISDICTION

         10.01    Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

         10.02    Submission to Jurisdiction. Each of the Shipowner and the
Lenders hereby irrevocably agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement, or any of the transactions
contemplated hereby, may be instituted by the other parties hereto in the Courts
of the State of New York or the Federal Courts sitting in the Borough of
Manhattan, City of New York, State of New York. Each of the Shipowner and the
Lenders hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may have now or hereafter to the laying of the venue or any
objection based on forum non conveniens, or based on the grounds of jurisdiction
with respect to any such legal suit, action or proceeding and irrevocably
submits generally and unconditionally to the jurisdiction of any such court in
any such suit, action or proceeding. Each of the Shipowner and the Lenders
agrees that a judgment, after exhaustion of all available appeals, in any such
action or proceeding shall be conclusive and binding upon it and may be enforced
in any other jurisdiction by suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. Each of the Shipowner and the
Lenders waives personal service of any summons, complaint, or other process,
which service may be made by such or any other means permitted by New York law.

         10.03    Waiver of Security Requirements. To the extent the Shipowner
may, in any action or proceeding arising out of or relating to this Agreement be
entitled under applicable law to require or claim that the Agents or the Lenders
post security for costs or take similar action, the Shipowner hereby irrevocably
waives and agrees not to claim the benefit of such entitlement.

                                       22
<PAGE>

         10.04    No Limitation. Nothing in this Section 10 shall affect the
right of the Agents or any Lender to serve process in any manner permitted by
law or to commence legal proceedings or otherwise proceed against the Shipowner
in any jurisdiction; provided, however, that except as provided in Section 9.02,
in the event of an Indenture Default, the Agents and the Lenders may not proceed
against the Shipowner without the Secretary's consent unless the Secretary has
received full payment under the Secretary's Note.

         SECTION 11. MISCELLANEOUS

         11.01    Computations. Each determination of an interest rate by the
Administrative Agent or the Facility Agent, or any other Person pursuant to any
provision of this Agreement, the Fee Letter or the Floating Rate Note, in the
absence of error, shall be conclusive and binding on the Shipowner. Each
determination of a fee or other amounts (excluding interest rates) by the
Facility Agent, any Lender, or any other Person pursuant to any provision of
this Agreement, the Fee Letter or the Floating Rate Note, in the absence of
manifest error, shall be conclusive and binding on the Shipowner. All
computations of interest and fees hereunder and under the Floating Rate Note
shall be made on the basis of a year of three hundred sixty (360) days and
actual days elapsed. The Secretary and Indenture Trustee may request supporting
documentation for the information provided by the Facility Agent or the
Administrative Agent to the Indenture Trustee.

         11.02    Notices. Except as otherwise specified, all notices given
hereunder shall be in writing, and shall be given by mail, facsimile, telex or
personal delivery and shall be deemed to be given for the purposes of this
Agreement on the day that such notice is received by the intended recipient
thereof. Unless otherwise specified in a notice delivered in accordance with
this Section 11.02, all notices shall be delivered to the parties hereto and to
the Indenture Trustee and the Secretary at their respective addresses indicated
below:

To the Facility Agent and the Lenders:

Address:               Citibank, N.A., as Facility Agent
                       2 Penn's Way
                       New Castle, Delaware  19720
Attention:             Onat Acet
Telephone:             (302) 894-6088
Facsimile:             (212) 994-0849

With a copy to:

Address:               Citibank, N.A., as the Alternate Lender
                       388 Greenwich Street
                       20th Floor
                       New York, NY  10013
Attention:             Barbara Kobelt

                                       23
<PAGE>

Facsimile:             (212) 816-0263
Telephone:             (212) 816-1063

With a copy to the Administrative Agent

To the Administrative Agent

Address:               Citicorp North America, Inc.
                       388 Greenwich Street
                       20th floor
                       New York, NY  10013
Attention:             Sean Portrait
Facsimile              (212) 816-0397
Telephone:             (212) 816-5717

To the Shipowner

Address:               ROWAN COMPANIES, INC.
                       Suite 5450
                       2800 Post Oak Boulevard
                       Houston, Texas 77056
Attention:             Chief Financial Officer
Telephone:             (713) 960-7686
Facsimile:             (713) 960-7660


To the Secretary

Address:               SECRETARY OF TRANSPORTATION
                       c/o Maritime Administrator
                       400 Seventh Street, S.W.
                       Washington, D.C.  20590
Attention:             Office of Ship Finance
Telephone:             (202) 366-5744
Facsimile:             (202) 366-7901

To the Indenture Trustee

Address:               ALLFIRST TRUST COMPANY, NATIONAL ASSOCIATION
                       Mail Code 101-591
                       25 South Charles Street
                       Baltimore, Maryland  21201
Attention:             Mr. Donald C. Hargadon
Telephone:             (410) 244-4224
Facsimile:             (410) 244-4236

                                       24
<PAGE>

         11.03    Disposition of Indebtedness. Once the Shipowner has completely
drawn down on the Credit Facility and the Available Amount is zero, each Lender
may sell, assign, transfer, negotiate, or otherwise dispose of all or any part
of its interest in all or any part of the Shipowner's indebtedness under this
Agreement and the Floating Rate Note to any party (collectively, a "Disposition
of Indebtedness"), and any such party shall enjoy all the rights and privileges
of such Lender under this Agreement and the Floating Rate Note to the extent of
the interest sold or assigned; provided, however, that each Disposition of
Indebtedness to any Person other than another Lender or a domestic Affiliate of
a Lender shall require the prior written consent of the Shipowner (which consent
shall not be unreasonably withheld or delayed); provided, further, however, that
each Lender may pledge or grant participation in all or any part of its interest
in all or any part of the Shipowner's indebtedness under this Agreement and the
Floating Rate Note to any party at any time so long as such Lender's commitment
to lend the Available Amount under this Agreement is not affected thereby. The
Shipowner shall, at the request of the Facility Agent, execute and deliver to
the Facility Agent or to any party that the Facility Agent may designate, any
such further instruments as may be necessary or desirable to give full force and
effect to a Disposition of Indebtedness by the applicable Lender.

         11.04    Disclaimer. Neither the Agents nor the Lenders shall be
responsible in any way for the performance of the Construction Contract or any
other Shipowner Document, and no claim against the Shipbuilder or any other
Person with respect to the performance of the Construction Contract will affect
the obligations of the Shipowner under this Agreement or the Floating Rate Note.

         11.05    No Waiver; Remedies Cumulative. No failure or delay on the
part of any Agent or any Lender in exercising any right, power or privilege
under this Agreement, the Floating Rate Note or the Indenture and no course of
dealing between or among the Shipowner and any Agent or any Lender shall operate
as a waiver of the rights of the Shipowner and such Lenders against each other
under this Agreement; nor shall any single or partial exercise of any right,
power or privilege hereunder or under the Floating Rate Note or the Indenture
preclude the Shipowner, the Agents, or the Lenders from exercising against each
other any other right, power or privilege hereunder. The rights and remedies
expressly provided herein are cumulative and not exclusive of any rights or
remedies that the Agents or the Lenders would otherwise have. No notice to or
demand on the Shipowner in any case shall entitle the Shipowner to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Agent or any Lender under this Agreement to any
other or further action in any circumstances without notice or demand.
Notwithstanding any other provision to the contrary herein, no provision in this
Agreement or any other related agreement preserves any rights in favor of the
parties against the Secretary in the event that either party fails or delays to
exercise any rights, powers, or privileges under this Agreement, the Floating
Rate Note or the Indenture or engages in any particular course of dealing.

                                       25
<PAGE>

         11.06    Currency. All payments of principal, interest, fees or other
amounts due hereunder and under the Floating Rate Note shall be made in Dollars,
regardless of any law, rule, regulation or statute, whether now or hereafter in
existence or in effect in any jurisdiction, which affects or purports to affect
such obligations.

         11.07    Severability. To the extent permitted by applicable law, the
illegality or unenforceability of any provision of this Agreement shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement.

         11.08    Amendment or Waiver. This Agreement may not be changed,
discharged or terminated without the written consent of the parties hereto, and
no provision hereof may be waived without the written consent of the party to be
bound thereby. There may be no change, discharge, termination or claim of waiver
of the terms of this Agreement without the prior written consent of the
Secretary, who is entitled to enforce his rights under this Agreement as an
intended third party beneficiary to this Agreement. The parties hereto
acknowledge, however, that nothing in this Agreement creates in either the
Shipowner or the Lenders any right whatsoever against the Secretary.

         11.09    Indemnification. Without limiting any other rights that any
Agent or any Lender may have hereunder or under applicable law, the Shipowner
hereby agrees to indemnify each of the Agents and the Lenders (each, an
"Indemnified Party") from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by such Indemnified Party
arising out of or as a result of this Agreement or the Floating Rate Note
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party. In the
event of an Indenture Default, all amounts received by such Indemnified Party
pursuant to such indemnification after an Indenture Default shall be held and
paid in the manner required by Section 7.02.

         11.10    Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that the Shipowner may not
assign any of its rights or obligations hereunder without the prior written
consent of the Lenders, and, to the extent set forth in paragraph 11.03 hereof,
the Secretary.

         11.11    Waiver of Jury Trial. Each of the Shipowner and the Lenders
waives its respective rights to a trial by jury of any claim or cause of action
based upon or arising out of or related to this Agreement, any assignment or the
transactions contemplated hereby, in any action, proceeding or other litigation
of any type brought by any party against the other parties, whether with respect
to contract claims, tort claims, or otherwise. Each of the

                                       26
<PAGE>

Shipowner and the Lenders agrees that any such claim or cause of action shall be
tried by a court trial without a jury. Without limiting the foregoing, the
parties further agree that their respective right to a trial by jury is waived
by operation of this section as to any action, counterclaim or other proceeding
which seeks, in whole or in part, to challenge the validity or enforceability of
this Agreement, any assignment or any provision hereof or thereof. This waiver
shall apply to any subsequent amendments, renewals, supplements or modifications
to this Agreement or any assignment.

         11.12    Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same Agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.

         11.13    Shipowner Documents. Notwithstanding the provisions of this
Agreement, in any conflict between this Agreement and the provisions of the
Shipowner Documents, the Shipowner Documents shall govern the agreement between
the parties hereto, but only with respect to the subject matter thereof.
Notwithstanding the previous sentence, any provision in the Indenture (or any
other agreement the Shipowner has entered into with any other Person) purporting
to release the Shipowner of any indebtedness, liability or obligation shall not
apply to any indebtedness, liability or obligation of the Shipowner hereunder
and no termination of the Indenture (or any other agreement the Shipowner has
entered into with any other Person) shall affect the continued effectiveness of
this Agreement, which shall continue in full force and effect until the Credit
Facility has been terminated and all indebtedness, liabilities and obligations
of the Shipowner have been fully discharged and satisfied, the Floating Rate
Note have been paid, satisfied and discharged in full, and there has elapsed a
year and a day from the last payment received from, or on behalf, of the
Shipowner. However, this Section 11.13 shall have no affect on the relationships
established and the agreements entered into by the parties to the Shipowner
Documents (and such other agreements the Shipowner has entered into with any
other Person), in each case to which the Lenders are not parties in their
capacities as the Lenders hereunder.

         11.14    Entire Agreement. This Agreement, the Fee Letter and the
Floating Rate Note contain the entire agreement among the parties hereto
regarding the Credit Facility.

         11.15    No Proceedings. Each of the Shipowner, the Alternate Lender
and the Agents hereby agrees that it will not institute against, or join any
other Person in instituting against, the Primary Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or any other
proceeding under any federal or state bankruptcy or similar law, so long as any
Commercial Paper issued by the Primary Lender shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Commercial Paper shall have been outstanding.

                                       27
<PAGE>

         11.16    Tax Disclosure. Notwithstanding any other provision herein,
each party hereby agrees that each party (and each employee, representative or
other agent of such party) may disclose to any and all persons, without
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the
transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such U.S. tax treatment
and U.S. tax structure, other than any information for which nondisclosure is
reasonably necessary in order to comply with applicable securities laws.

SECTION 12. ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS

         12.01    Appointment. Each Lender hereby appoints the Facility Agent to
act as its agent in connection herewith and in connection with the Floating Rate
Note and the Indenture and authorizes the Facility Agent to exercise such
rights, powers and discretions as are specifically delegated to the Facility
Agent by the terms hereof and thereof, together with all such rights, powers and
discretions as are reasonably incidental thereto. Without limiting the
foregoing, all notices to be delivered to, and approvals to be given by, a
Lender under the disbursement procedures described in Section 3.01 hereof shall
be delivered to and given by the Facility Agent on behalf of such Lender.

         12.02    Rights of Facility Agent. The Lenders and the Facility Agent
agree that the Facility Agent may:

         (i)      assume that (a) any representation made by the Shipowner in
connection herewith is true; (b) no event which is or may become an Event of
Default has occurred; (c) the Shipowner is not in breach of or default under its
obligations hereunder; (d) any right, power, authority or discretion vested
herein upon the Lenders or any other person or group of persons has not been
exercised; unless it has, in its capacity as Facility Agent, notice or actual
knowledge to the contrary;

         (ii)     engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so obtained;

         (iii)    rely as to any matters of fact that might reasonably be
expected to be within the knowledge of the Shipowner upon a certificate signed
by or on behalf of the Shipowner;

         (iv)     rely upon any communication or document believed by it to be
genuine;

         (v)      refrain from exercising any right, power or discretion vested
in it as facility agent hereunder unless and until instructed by a Lender as to
whether or not such right, power or discretion is to be exercised and, if it is
to be exercised, as to the manner in which it should be exercised; and

                                       28
<PAGE>

         (vi)     refrain from acting in accordance with any instructions of any
Lender to begin any legal action or proceeding arising out of or in connection
with this Agreement until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all costs, claims,
expenses (including legal fees) and liabilities which it will or may expend or
incur in complying with such instructions.

         12.03    Duties. The Facility Agent shall:

         (i)      promptly inform each Lender of the contents of any
                  notice or document received by it from the Shipowner
                  hereunder;

         (ii)     promptly notify each Lender of the occurrence of any
                  Event of Default or any default by the Shipowner in
                  the due performance of or compliance with its
                  obligations under this Agreement of which the
                  Facility Agent has notice from any other party
                  hereto;

         (iii)    save as otherwise provided herein, act as facility
                  agent hereunder in accordance with any instructions
                  given to it by any Lender, which instructions shall
                  be binding on all of the Lenders; and

         (iv)     if so instructed by any Lender, refrain from
                  exercising any right, power or discretion vested in
                  it as facility agent hereunder.

         12.04    Limitation on Obligations of Facility Agent. Notwithstanding
anything to the contrary expressed or implied herein, the Lenders and the
Facility Agent agree that the Facility Agent shall not:

         (i)      be bound to inquire as to:

                  (a)      whether or not any representation made by the
                           Shipowner in connection herewith is true;

                  (b)      the occurrence or otherwise of any event which is or
                           may become an Event of Default;

                  (c)      the performance by the Shipowner of its obligations
                           hereunder; or

                  (d)      any breach of or default by the Shipowner or under
                           its obligations hereunder;

                                       29
<PAGE>

         (ii)     be bound to account to any Lender for any sum or the profit
element of any sum received by it for its own account;

         (iii)    be bound to disclose to any other person any information
relating to the Shipowner or any of its agencies if such disclosure would or
might in its opinion constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person; or

         (iv)     be under any obligations other than those for which express
provision is made herein.

         12.05    Indemnification by Lenders. The Alternate Lender shall, from
time to time on demand by the Facility Agent, indemnify the Facility Agent,
against any and all costs, claims, expenses (including legal fees) and
liabilities (collectively, "Liabilities") together with any tax thereon which
the Facility Agent may incur, otherwise than by reason of its own gross
negligence or willful misconduct, in acting in its capacity as facility agent
hereunder (including, without limitation, any Liabilities in anyway relating to
or arising out of certifications made with respect to either (a) the due
authorization, execution or delivery of a Floating Rate Note, or (b) laws and/or
regulations of any Governmental Authority, in each case in connection with any
request by the Facility Agent to the Indenture Trustee or the Secretary for the
Secretary to endorse its guarantee on a Floating Rate Note or for the Indenture
Trustee to authenticate a Floating Rate Note).

         12.06    Limitation on Responsibility. The Facility Agent accepts no
responsibility to the Lenders for the accuracy and/or completeness of any
information supplied by the Shipowner in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of this Agreement,
and the Facility Agent shall be under no liability to the Lenders as a result of
taking or omitting to take any action in relation to this Agreement, save in the
case of its own negligence or willful misconduct.

         12.07    No Claims on Employees of Facility Agent. Each Lender agrees
that it will not assert or seek to assert against any director, officer or
employee of the Facility Agent any claim that it might have against it in
respect of the matters referred to in Clause 12.06.

         12.08    Banking Business. The Lenders agree that the Facility Agent
may accept deposits from, lend money to and generally engage in any kind of
banking or other business with the Shipowner.

                                       30
<PAGE>

         12.09      Resignation or Termination of Facility Agent.

         (i)      The Facility Agent may (after consultation with the Shipowner
and the Lenders) resign its appointment hereunder at any time without assigning
any reason therefor by giving not less than thirty (30) days' prior written
notice to that effect to each of the other parties hereto; provided, that no
such resignation shall be effective until a successor for the Facility Agent is
appointed in accordance with the succeeding provisions of this Section 12;

         (ii)     The Lenders and the Shipowner may jointly seek the termination
of the appointment of the Facility Agent hereunder at any time by giving not
less than thirty (30) days prior written notice to that effect to the Facility
Agent; provided that no such termination shall be effective until a successor
for the Facility Agent is appointed in accordance with the succeeding provisions
of this Section 12; provided further that any such notice of termination must be
signed by all of the Lenders and the Shipowner; and

         (iii)    For the avoidance of doubt, the parties hereto agree that the
provisions of this Section 12.09 shall at no time apply to or restrict the
ability of the Administrative Agent to resign its position of Administrative
Agent.

         12.10    Successor to Facility Agent. If the Facility Agent gives
notice of its resignation pursuant to Section 12.09(i) or receives notice of
termination pursuant to Section 12.09(ii), then any reputable and experienced
bank or other financial institution may be appointed as a successor to the
Facility Agent by the Lenders with the consent of the Secretary and Shipowner
(which consent of the Shipowner shall not be unreasonably withheld or delayed)
during the period of such notice but, if no such successor is so appointed, the
Facility Agent may appoint such a successor itself with the consent of the
Secretary and Shipowner (which consent of the Shipowner shall not be
unreasonably withheld or delayed).

         12.11    Discharge of Obligations. If a successor to the Facility Agent
is appointed under the provisions of Section 12.10, then (i) the retiring
Facility Agent shall be discharged from any further obligation hereunder but
shall remain entitled to the benefits of the provisions of this Section 12 and
(ii) its successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if such
successor had been a party hereto.

         12.12    Responsibilities of Lenders. It is understood and agreed by
each Lender that it is, and will continue to be, solely responsible for making
its own independent appraisal of and investigations into the financial
condition, creditworthiness, condition, affairs, status and nature of the
Shipowner, the Secretary and the United States of America and, accordingly, each
Lender warrants to the Facility Agent that it has not relied and will not
hereafter rely on the Facility Agent:

                                       31
<PAGE>
         (i)        to check or inquire on its behalf into the adequacy,
                    accuracy or completeness of any information provided by the
                    Shipowner in connection with this Agreement or the
                    transaction herein contemplated (whether or not such
                    information has been or is hereafter circulated to such
                    Lender by the Facility Agent); or

         (ii)       to assess or keep under review on its behalf the financial
                    condition, creditworthiness, condition, affairs, status or
                    nature of the Shipowner.

         12.13 Agency Division. In acting as Facility Agent for the Lenders, the
Facility Agent's agency division shall be treated as a separate entity from any
other of its divisions or departments and, notwithstanding the foregoing
provisions of this Section 12, in the event that the Facility Agent should act
for the Shipowner in any capacity in relation to any other matter, any
information given by the Shipowner to the Facility Agent in such other capacity
may be treated as confidential by the Facility Agent.

         12.14 Administrative Agent. Each party hereto (other than the
Administrative Agent) acknowledges that the Administrative Agent is a party
hereto only in its capacity as administrative agent of the Primary Lender and
the Primary Lender's commercial paper holders.

         12.15 Facility Agent Only Agent for the Lenders. The Facility Agent is
not authorized to, nor shall it, act as the agent for the Secretary, the
Indenture Trustee, the Shipowner or any of their successors in interest or
assigns in any of the capacities provided for herein.

                                       32
<PAGE>


         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first above written.

ROWAN COMPANIES, INC., as the Shipowner


By:/s/ E. E. Thiele                 GOVCO INCORPORATED, as the Primary
   -----------------------------    Lender, by Citicorp North America, Inc.,
         (Signature)                its attorney-in-fact.

Name:      E. E. Thiele             By: /s/ P. A. Botticelli
     ---------------------------       -------------------------------------
         (Print)                             (Signature)

Title:   Senior Vice President      Name: P.A. Botticelli
                                         -----------------------------------
CITIBANK, N.A.                               (Print)
as Facility Agent
                                    Title:   Vice President
                                          ----------------------------------
By: /s/ John Gilliland                       (Print)
   -----------------------------
         (Signature)
                                    CITIBANK, N.A., as the Alternate Lender
Name:  John B. Gilliland
     ---------------------------
         (Print)
                                    By /s/ John Gilliland
Title:  Vice President                 --------------------------------------
         (Print)                             (Signature)

                                    Name:  John B. Gilliland
                                         ------------------------------------
                                             (Print)

                                         Title:    Vice President
                                               ------------------------------
                                                  (Print)

                                         CITICORP NORTH AMERICA, INC.,
                                         as the Administrative Agent

                                         By: /s/ P. A. Botticelli
                                             --------------------------------
                                                  (Signature)

                                         Name: P. A. Botticelli
                                              -------------------------------
                                                  (Print)

                                         Title:    Vice President
                                              -------------------------------
                                                  (Print)
                                       33
<PAGE>

                                                                         Annex B
                                                             to Credit Agreement

                            Form of Extension Request

                          Dated as of [______________]


Citibank, N.A.
  as Facility Agent
2 Penn's Way
New Castle, Delaware  19720
Attn: Onat Acet

Citibank, N.A.
  as the Alternate Lender
388 Greenwich Street
20th Floor
New York, NY  10013
Attn: Barbara Kobelt

Citicorp North America, Inc.,
  as Administrative Agent for the Primary Lender
388 Greenwich Street
20th floor
New York, NY  10013
Attention: Sean Portrait

Re: Extension of Commitment Termination Date

Ladies and Gentlemen:

         Please refer to the Credit Agreement, dated as of May 28, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among Rowan Companies, Inc., as shipowner (the "Shipowner"), GOVCO
Incorporated, as primary lender (the "Primary Lender"), Citibank, N.A., as
alternate lender (the "Alternate Lender"), Citibank, N.A., as facility agent,
and Citicorp North America, Inc., as administrative agent for the Primary
Lender.

         Pursuant to Section 2.06(a) of the Credit Agreement, the Shipowner
hereby requests that the Alternate Lender extend the Commitment Termination Date
until _____________________ (the "Extension").

                                       34
<PAGE>


         Please indicate your agreement to the Extension by signing below.

                                                     Very truly yours,

                                                     ROWAN COMPANIES, INC.,
                                                     as the Shipowner


                                                 By: ___________________________

                                                 Name: _________________________

                                                 Title: ________________________


The undersigned  hereby agrees to extend the Commitment  Termination  Date until
[________________].

CITIBANK, N.A.
as the Alternate Lender

By:  ___________________________

Name: _________________________

Title: __________________________

APPENDIX II TO GUARANTEE COMMITMENT                                  DOCUMENT 4

                                 TRUST INDENTURE

                               SPECIAL PROVISIONS

         THIS TRUST INDENTURE, dated May 28, 2003 (the "Indenture" or the
"Agreement"), is between (i) ROWAN COMPANIES, INC., a Delaware corporation (the
"Shipowner"), and (ii) ALLFIRST TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association (the "Indenture Trustee").

                                    RECITALS:

         WHEREAS, to aid in financing the construction of the Vessel, the
Shipowner has entered into a credit agreement (the "Credit Agreement") with
GOVCO INCORPORATED a Delaware corporation (the "Primary Lender"), CITIBANK,
N.A., a national banking association (the "Alternate Lender"), CITIBANK, N.A., a
national banking association (the "Facility Agent") and CITICORP NORTH AMERICA,
INC., a Delaware corporation (the "Administrative Agent") providing for the
delivery of no more than $91,198,000 principal amount of notes designated
"United States Government Guaranteed Ship Financing Obligations, Scooter
Yeargain Series";

                                       35
<PAGE>

         WHEREAS, the Secretary, on behalf of the United States, has agreed to
Guarantee the payment of the unpaid interest to the date of such payment on, and
the unpaid balance of the principal of, such Obligations under the provisions of
Title XI of the Act, and has authorized the Indenture Trustee to cause the
Guarantees to be imprinted on the Obligations pursuant to the Authorization
Agreement.

         NOW THEREFORE, in consideration of the premises, of the mutual
covenants herein contained, of the purchase of the Obligations by the Holders
thereof, and of other good and valuable consideration, the receipt and adequacy
of which the parties hereby acknowledge, and for the equal and proportionate
benefit of all the present and future Holders of the Obligations, the parties
hereto agree as follows:

         1. INCORPORATION OF GENERAL PROVISIONS. This Indenture shall consist of
two parts: the Special Provisions and the General Provisions attached hereto as
Exhibit 1, and they shall be treated as one instrument. In the event of a
conflict, the terms of the Special Provisions shall prevail.

         2. THE OBLIGATIONS.

         (a) The Obligations issued hereunder shall be designated "United States
Government Guaranteed Ship Financing Obligations, Scooter Yeargain Series," and
shall be in the forms of Exhibits 2 and 3 to this Indenture; and, the aggregate
principal amount of Obligations which may be issued under this Indenture shall
not exceed $91,198,000.

         (b) The denominations of the Obligations shall be in integral multiples
of $1,000.

         (c) The Shipowner shall at all times cause to be maintained in the City
of Baltimore, State of Maryland, an office or agency for the purposes specified
in Section 5.03 of Exhibit 1 to this Indenture.

         (d) The Indenture Trustee shall at all times have its Corporate Trust
Office in the City of Baltimore, State of Maryland.

         3. INTEREST RATE CALCULATION. Upon the terms and subject to the
conditions contained in the Obligations, and based on information received from
the Facility Agent (but only in connection with the Floating Rate Note), the
Indenture Trustee shall calculate the Applicable Interest Rate on the
Obligations in the manner and at the times provided in the Obligations and shall
communicate the same to the Shipowner, the Secretary and any paying agent
identified to it in writing as soon as practicable after each determination. The
Indenture Trustee, based on information received from the Facility Agent (but
only in connection with the Floating Rate Note), shall, upon the request of the
Holder of the Obligations, determine the Applicable Interest Rate then in effect
with respect to the Obligations.

         4. CERTAIN REDEMPTIONS

         (a) SCHEDULED MANDATORY REDEMPTION. The Obligations are subject to
redemption at a Redemption Price equal to 100% of the principal amount thereof,
together with interest accrued thereon to the applicable Redemption Date,
through the operation of scheduled repayment providing for the semi-annual
redemption on May 10 and November 10 of each year, commencing November 10, 2004
of $3,040,000 of principal amount of Obligations, which amount represents
approximately one thirtieth (1/30) of the Original Principal Amount of
Obligations, plus interest

                                       36
<PAGE>

accrued thereon to the Redemption Date. There shall be a final redemption of the
remaining outstanding principal of the Floating Rate Note on the earliest of (i)
October 1, 2008, (ii) four (4) years after the Delivery Date, or (iii) at the
request of the Secretary, within fifteen (15) Business Days from the date upon
which the Trigger Event (as hereinafter defined) shall occur, and a final
redemption of the remaining outstanding principal of the Fixed Rate Notes on May
10, 2019.

         Notwithstanding the foregoing provisions of this subsection (a), if the
principal amount of Outstanding Obligations shall be reduced by reason of any
redemption pursuant to Sections 3.04 or 3.06 of Exhibit 1 to this Indenture, the
principal amount of Obligations to be redeemed pursuant to this subsection (a)
on each subsequent Redemption Date for such Obligations shall be reduced by an
amount equal to the principal amount of such Obligations retired by reason of
such redemption pursuant to Sections 3.04 or 3.06 of Exhibit 1 hereto divided by
the number of Redemption Dates (including the Stated Maturity of such
Obligations) scheduled thereafter to November 10, 2008 in the case of the
Floating Rate Note and May 10, 2019 in the case of Fixed Rate Note(s) (subject
to such increase as shall be necessary so that the total principal amount of
Obligations to be redeemed on any such Redemption Date shall be an integral
multiple of $1,000); provided that, the entire unpaid principal amount of the
Outstanding Obligations shall be paid not later than October 1, 2008 in the case
of the Floating Rate Note and May 10, 2019 in the case of each Fixed Rate Note.
The Shipowner shall, in accordance with Section 3.02(e) of Exhibit 1 hereto,
promptly after each redemption pursuant to said Sections 3.04 or 3.06, furnish
to the Secretary, the Indenture Trustee and each Holder a revised table of
scheduled repayments reflecting the reductions made pursuant to this subsection
(a) as a result of such redemption.

         (b) OPTIONAL REDEMPTION OF OBLIGATIONS WITHOUT PREMIUM. At its option,
the Shipowner may without premium,

                  (i)      prepay on any Interest Payment Date the Floating Rate
                           Note, in whole or in part, in a minimum principal
                           amount of $10,000,000, at a Redemption Price equal to
                           100% of the principal amount thereof together with
                           interest accrued thereon to the Redemption Date, or

                  (ii) redeem or prepay the Floating Rate Note, in whole or in
         part, on a Redemption Date designated by the Shipowner, from the
         proceeds from the issuance of the Fixed Rate Notes.

         (c) OPTIONAL REDEMPTIONS OF OBLIGATIONS AT MAKE-WHOLE PREMIUM. At its
option, the Shipowner may prepay on any Interest Payment Date the Fixed Rate
Notes, in whole or in part, in a minimum principal amount of $10,000,000, at a
Redemption Price equal to 100% of the principal amount thereof together with
interest accrued thereon to the Redemption Date plus the Make-Whole Premium, if
any. Prepayments shall be applied pro rata against each Fixed Rate Note and
applied against the scheduled principal payments in the inverse order of
scheduled maturity.

         (d) OPTIONAL REDEMPTIONS. If the Shipowner shall elect to make any such
optional redemptions pursuant to this Article, the Shipowner shall, at least 40
days but not more than 60 days prior to the date fixed for redemption, deliver
to the Indenture Trustee (1) a Request stating that the Shipowner intends to
exercise its rights as above set forth to make such optional redemptions and
specifying the Redemption Date and the principal amount which the Shipowner
intends to redeem on such date, and (2) at least 35 days prior to the date fixed
for redemption in the case of the Fixed Rate Notes, deliver to the Indenture
Trustee an amount equal to the Make

                                       37
<PAGE>

Whole Premium estimated by the Indenture Trustee, based on information received
from the Holder or a calculation agent, to be paid on the Redemption Date. The
Indenture Trustee, based on information received from the Holder or a
calculation agent, shall give an estimate of the Make Whole Premium to the
Shipowner within two (2) Business Days of the delivery of the Shipowner's
Request. In the event the amount of the Make Whole Premium deposited by the
Shipowner with the Indenture Trustee pursuant to this section (and interest, if
any, accrued thereon, less any losses incurred on the investment thereof) is
insufficient to pay the amount of the Make Whole Premium, the Shipowner shall
pay the amount of the shortfall to the Indenture Trustee in immediately
available funds upon one (1) day's notice. In the event the amount of the Make
Whole Premium deposited by the Shipowner pursuant to this section (and interest,
if any, accrued thereon, less any losses incurred on the investment thereof)
exceeds the Make Whole Premium, the excess amount shall be refunded to the
Shipowner by the Indenture Trustee in immediately available funds on the
Redemption Date.

         (e) FIXED RATE NOTE INTEREST RATE PROTECTION. (1) The Shipowner shall
redeem the Floating Rate Note in full by causing to be issued one or more fixed
rate obligations with a maturity equal to May 10, 2019 and using the proceeds
thereof to repay the Floating Rate Note in full, whenever the Treasury constant
maturities rate (10-year) as reported by the Federal Reserve Board in
statistical release H.15 (519) (the "Treasury Rate") equals or exceeds nine
percent (9.0%) per annum (the "Trigger Event").

         If a Trigger Event should occur, the Shipowner shall redeem the
Floating Rate Note in full by causing to be issued one or more fixed rate
obligations and using the proceeds thereof to repay the Floating Rate Note in
full, at the request of the Secretary, within fifteen (15) Business Days from
the date of the Trigger Event.

         (2) Nothing herein shall prevent the Shipowner from redeeming the
Floating Rate Note by the issuance of one or more fixed rate obligations at any
time prior to Maturity.

         (3) The failure of the Shipowner to redeem the Floating Rate Note in
full by causing to be issued one or more fixed rate obligations and using the
proceeds thereof to repay the Floating Rate Note in full, at the request of the
Secretary, within fifteen (15) Business Days, unless subsequently waived in
writing by the Secretary, shall constitute an Indenture Default without further
notice to the Shipowner or the Holders being required under the Indenture.

         5.  ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1

         The following additions, deletions and amendments are hereby made to
Exhibit 1 to this Indenture.

         (a) CONCERNING IMMEDIATELY AVAILABLE FUNDS. Notwithstanding any
provision in Exhibit 1 to this Indenture to the contrary, all payments are to be
made in immediately available funds.

         (b) CONCERNING MANDATORY SCHEDULED REDEMPTIONS. The terms "sinking fund
payment" and "sinking fund redemption" in Exhibit 1 to this Indenture refer to
the mandatory scheduled redemption.

                                       38
<PAGE>

         (c) INTEREST RATES. Interest at the Applicable Interest Rate shall be
due on each Disbursement at the end of each Interest Period. The Indenture
Trustee, based on information received from the Facility Agent (but only in
connection with the Floating Rate Note), shall determine the Applicable Interest
Rate for each Interest Period.

         (d) CONCERNING DISBURSEMENT NOTATIONS. Upon receipt from the Lender of
documents confirming Disbursements, the Indenture Trustee shall review Exhibit A
of the Floating Rate Note (the "Grid"), and calculate principal and applicable
interest thereon, from time to time. If the Indenture Trustee's calculations are
not consistent with those of the Lender, the calculations of the former shall
prevail. The Indenture Trustee shall promptly thereafter send a copy of the Grid
bearing its calculations to the Holder, who shall endorse the Indenture
Trustee's calculations on the original Exhibit A to the Floating Rate Note, and
send a copy thereof, so noted, to the Indenture Trustee, who, in turn, shall
promptly send a copy thereof to the Secretary.

         (e) CONCERNING SECTION 2.01. Section 2.01(c) and (e) are revised to
read as follows:

                           (c) The principal and interest and any premium due on
                           the Obligations shall be paid by (i) the Indenture
                           Trustee or (ii) a Paying Agent, out of funds it
                           receives from the Shipowner, by (x) certified or
                           official bank check mailed by first class postage
                           prepaid to the addresses of the Obligees appearing on
                           the Obligation Register or (y) at the request of an
                           Obligee, received by the Indenture Trustee at least
                           three (3) Business Days prior to the date of payment,
                           by wire transfer to a commercial bank in the United
                           States or by credit to an account maintained by the
                           Obligee with the Indenture Trustee without
                           presentment of the Obligation. Prior to any sale,
                           assignment or transfer of such Obligation, the Holder
                           is required to present the Obligation to the
                           Indenture Trustee so that a proper notation of all
                           principal payments under subparagraph (y) above are
                           made on the Obligation.

                           (e)If the Maturity of any Obligation or an Interest
                  Payment Date for any Obligation shall be a day other than a
                  Business Day, then such payment may be made on the next
                  succeeding Business Day, with the same force and effect as if
                  made on the Interest Payment Date for such payment; provided,
                  however, that interest shall accrue thereon for the period
                  after said Interest Payment Date (whether or not such next
                  succeeding Business Day occurs in a succeeding month).

         (f) CONCERNING SECTION 2.02. Prior to the earliest of (i) October 1,
2008, (ii) four (4) years from the Delivery Date, or (iii) at the request of the
Secretary, fifteen (15) Business Days from the date any Trigger Event shall
occur, the Shipowner and the Indenture Trustee may enter into a Supplemental
Indenture, and the Indenture Trustee may enter into a supplement to the
Authorization Agreement, pursuant to Section 2.02 of Exhibit 1 to this
Indenture, to provide for the issuance of fixed rate obligations in the form of
Exhibit 3 hereto for the purpose of repaying the Floating Rate Note and/or
financing an amount equal to the Available Amount (which amount shall be
deposited into the Escrow Fund established by the Security Agreement); provided
however, that the Shipowner and Indenture Trustee have obtained the prior
written consent of the Secretary and further provided, that (a) except for the
final issuance, each issuance of a Fixed Rate Note must be in a minimum
aggregate principal amount of $25,000,000 , and (b) the proceeds from the
issuance of Fixed Rate Notes shall be used to pay off, satisfy and cancel the
Floating Rate

                                       39
<PAGE>

Note; provided, however, that in the absence of a Trigger Event
during the Construction Period the Floating Rate Note need not be paid off in
its entirety and need only be reduced by the net proceeds from the issuance of
the Fixed Rate Notes.

         (g)      CONCERNING SECTION 2.07.

         (i)      The first sentence of Section 2.07(c) is revised to read as
                  follows:

                  (c) The Shipowner or the Indenture Trustee shall not be
                  required to register transfers or make exchanges of (1)
                  Obligations for a period of 15 days immediately prior to (A)
                  an Interest Payment Date or (B) any selection of Obligations
                  to be redeemed, (2) Obligations after demand for payment of
                  the Guarantees and prior to the payment thereof or rescission
                  of such demand pursuant to Section 6.02(a), or (3) any
                  Obligation which has been selected for redemption in whole or
                  in part, except as to the unredeemed portion of any Obligation
                  being redeemed in part.

         (ii) Section 2.07(e) is revised to read as follows:

         (e) As a condition precedent to any transfer or exchange of
         Obligations, the Shipowner and the Indenture Trustee may require the
         payment of a sum sufficient to reimburse it for any taxes or other
         governmental charges that may be imposed with respect thereto and a sum
         not exceeding $2.00 for each Obligation delivered upon any such
         transfer or exchange.

         (h) CONCERNING SECTION 2.09. With respect to clause (1) of the proviso
to Section 2.09 of Exhibit 1 to the Indenture, a written agreement of indemnity
which is satisfactory in form and substance to the Secretary, the Shipowner, and
the Indenture Trustee, executed and delivered by an institutional Holder having
a capital and surplus of at least $100,000,000 shall be considered sufficient
indemnity to the Secretary, the Shipowner, and the Indenture Trustee in
connection with the execution, authentication and delivery of any new
Obligations or the making of any payment as contemplated by said Section 2.09.

         (i) CONCERNING PAYMENT OF THE OBLIGATIONS. Notwithstanding anything to
the contrary in Exhibit 1 hereto, the Obligations to be issued hereunder shall
be payable as to principal, premium (if any), and interest, at an office or
agency maintained by the Shipowner for such purpose at the Corporate Trust
Office of the Indenture Trustee, or at the option of the Shipowner, as to
payments of principal, premium (if any), or interest by wire, in immediately
available funds, by such Corporate Trust Office to the Obligees as appear in the
Obligation Register, subject to the Indenture Trustee's receipt, by not later
than 11:00 am on the due date thereof, of funds sufficient for the payment of
principal, premium (if any) or interest by wire or other immediately available
funds. The Indenture Trustee shall have no obligation to determine whether such
wires or payments were received by the Obligees.

          (j) CONCERNING SECTION 3.02. Section 3.02(c) and (e) are revised to
read as follows:

         (c) Scheduled Redemptions. If the Obligations of any series and Stated
         Maturity or the Special Provisions hereof or the Supplemental Indenture
         establishing such series shall so provide, such Obligations shall be
         subject to (i) scheduled redemption through the

                                       40
<PAGE>

         operation of a mandatory redemption schedule, in such amounts, at such
         times and subject to such credits (if any) as may be specified therein,
         and (ii) redemption at the option of the Shipowner, in connection with
         the operation of any such mandatory redemption schedule, in such
         additional amounts and subject to such conditions as may be specified
         therein.

         (e) Adjustments of Redemption Payments. If the Obligations of any
         series and Stated Maturity or the Special Provisions hereof or of the
         Supplemental Indenture establishing such series provide for an
         adjustment in scheduled redemption payments as a result of any
         redemption or cancellation of Obligations, the Shipowner shall
         recompute the remaining scheduled redemption payments pursuant to such
         provisions and shall, at least 60 days prior to the next Interest
         Payment Date which occurs at least 60 days following any such
         redemption or cancellation of Obligations of such series requiring such
         recomputation, submit to the Secretary for his review such
         recomputation to ascertain compliance with the provisions of such
         Obligations or the Special Provisions hereof or such Supplemental
         Indenture, and table of revised mandatory redemption schedule payments
         on the Obligations of such series reflecting the adjustments made
         pursuant to such provisions as a result of such redemption or
         cancellation. Upon advice by the Secretary that he finds such
         recomputation to comply with such provisions, the Shipowner shall
         submit said table to the Indenture Trustee and the Indenture Trustee
         shall promptly send a copy thereof to each Holder of an Obligation of
         such series.

         (k) CONCERNING SECTION 3.04. Section 3.04 is revised to read as
         follows:

                  SECTION 3.04. Redemptions to Comply with Section 1104A(b)(2)
         of the Act. The Shipowner and the Secretary may Request a Redemption
         Date, at least forty (40) days but not more than sixty (60) days from
         the Indenture Trustee's receipt of the Request, for the redemption of
         certain Obligations because the principal amount of the Outstanding
         Obligations is in excess of the amount eligible for guarantee by the
         United States under Section 1104A(b)(2) of the Act. Upon receipt, the
         Indenture Trustee shall promptly give notice to the Holders of the
         Redemption Date as provided in Section 3.08 and on that date shall
         redeem, out of funds it receives from the Shipowner, the principal
         amount of Obligations specified in the instruction together with the
         interest accrued thereon.

         (l) CONCERNING SECTION 3.05. Section 3.05 is revised to read as
         follows:

                  SECTION 3.05. Redemption after Total Loss, Requisition of
         Title, Seizure or Forfeiture of a Vessel or Termination of Certain
         Contracts. The Shipowner and the Secretary may Request a Redemption
         Date, at least forty (40) days but not more than sixty (60) days from
         the Indenture Trustee's receipt of the Request, for the redemption of
         certain Obligations because of (1) an actual, constructive, agreed or
         compromised total loss of a Vessel, (2) requisition of title to, or
         seizure or forfeiture of a Vessel or (3) termination of a primary
         Construction Contract. Upon receipt, the Indenture Trustee shall
         promptly give notice to the Holders of the Redemption Date as provided
         in Section 3.08 and on that date shall redeem, out of funds it receives
         from the Shipowner, such principal amount of Obligations together with
         the interest accrued thereon.

         (m) CONCERNING SECTION 3.06. Section 3.06 is revised to read as
         follows:

                                       41
<PAGE>

                  SECTION 3.06. Redemption After Assumption by the Secretary. At
         any time after the Secretary has assumed the Obligations under Section
         6.09 of the Indenture, the Secretary may Request a Redemption Date, at
         least forty (40) days but not more than sixty (60) days from the
         Indenture Trustee's receipt of the Request, for the redemption of all
         or part of the Obligations. Upon receipt, the Indenture Trustee shall
         promptly give notice to the Holders of the Redemption Date as provided
         in Section 3.08 and on that date shall redeem, out of funds it receives
         from the Shipowner, such principal amount of Obligations together with
         the interest accrued thereon.

         (n) CONCERNING SECTION 3.07. Notwithstanding the provisions of Section
3.07 of Exhibit 1 to this Indenture, if less than all of the Obligations are to
be redeemed under any of the provisions contained or referred to in Article
Fourth hereof (excluding Section 4 (c) or Article III of said Exhibit 1), the
Indenture Trustee shall select such Obligations to be redeemed on the Redemption
Date by allocating the principal amount to be redeemed first between each
maturity of Obligations in proportion to the Outstanding Obligations and second
among the holders of each maturity of Obligations in proportion to the aggregate
principal amount of such maturity of Obligations registered in their respective
names; provided that, the Indenture Trustee may select for redemption portions
of the principal amount of the Obligations of a denomination larger than $1,000;
but the portions of the principal amount of the Obligations so selected shall be
equal to $1,000 or an integral multiple thereof.

         (o) CONCERNING SECTION 3.09. The second sentence of Section 3.09 is
revised to read as follows:

                  Failure to so deposit the amounts with the Indenture Trustee
         or the Paying Agent shall render any notice to redeem of no effect, and
         the Indenture Trustee shall so advise the Holders.

         (p)      CONCERNING SECTION 4.01. Section 4.01(b) of Exhibit 1 hereto
is hereby amended in its entirety to read as follows:

                  "(b)     Cash held by the Indenture Trustee or any Paying
Agent (other than the Shipowner) under this Indenture -

                           (i) need not be segregated;

                           (ii) shall not be invested except as permitted by
                           clause (iv) of this Section 4.01(b);

                           (iii) shall not bear interest except as the Shipowner
                           and the Indenture Trustee (or such Paying Agent) may
                           agree in writing; and

                           (iv) if the Shipowner shall have deposited or caused
                           to be deposited with the Indenture Trustee funds
                           sufficient for the payment of the Obligations at
                           their Maturity, including interest to the date of
                           Maturity, and the date of Maturity is more than one
                           (1) Business Day after the deposit of such funds (or
                           the next Business Day if the deposit of such funds is
                           made by 11:00 a.m. on the Business Day prior to the
                           date of Maturity), the Indenture Trustee upon the
                           Request of the Shipowner shall invest such

                                       42
<PAGE>

                           funds, as directed by the Shipowner in writing, in
                           direct obligations of the United States Government
                           maturing at or prior to the date of Maturity of such
                           Obligations and having a principal amount equal to
                           not less than the amount of the funds so invested.
                           Such investments shall be held in trust for the
                           purpose for which the funds so invested were held.
                           After the Obligations in respect of which the funds
                           were deposited have been paid in full (except as to
                           unclaimed amounts as referred to in Section 4.03) any
                           of such funds (including interest received in respect
                           of such investments and gain on matured investments
                           purchased at a discount) held by the Indenture
                           Trustee in excess of amounts to which Holders of such
                           Obligations are entitled shall upon the Request of
                           the Shipowner be paid by the Indenture Trustee to the
                           Shipowner but only in the absence of an Indenture
                           Default hereunder."

         (q) CONCERNING SECTION 4.02. (i) The appointment of a Paying Agent by
the Shipowner is subject to the prior written consent of the Secretary and
Indenture Trustee, which consent shall not be unreasonably withheld.

         (ii)     Section 4.02(a)(3) is revised to read as follows:

                           (3) promptly, and in no event later than five (5)
         days after any payment made by it hereunder, give written notice to a
         Responsible Officer in the Corporate Trust Office of all payments of
         Obligations made by it, including and identifying all endorsements of
         payment made on Obligations by it, signed and containing the specified
         information as provided in subparagraph (2) above, and deliver for
         cancellation to the Indenture Trustee all Obligations surrendered to
         the Paying Agent.


         (r) CONCERNING SECTION 4.03. Section 4.03 is revised to read as
         follows:

         SECTION 4.03. Unclaimed Amounts. Any moneys received by the Indenture
         Trustee or a Paying Agent, for the payment of Obligations or Guarantees
         and remaining unclaimed by the Holders thereof for six (6) years after
         the date of the Maturity of said Obligations or the date of payment by
         the Secretary of the Guarantees shall, upon delivery to the Indenture
         Trustee of a Request by the Shipowner, be paid to the Shipowner (unless
         the Secretary has previously paid the Guarantees, in which case it
         shall be paid only upon a request by the Secretary); provided that, not
         less than thirty (30) days prior to such payment, the Shipowner shall
         publish notice thereof to the Obligees at least once in the Authorized
         Newspapers and provide the Indenture Trustee with a copy thereof. In
         such event, such Holders shall thereafter be entitled to look only to
         the Shipowner (and the settlor or settlors of any trust for which the
         Shipowner is trustee, to the extent paid over to it or them) for the
         payment thereof, and the Indenture Trustee or such Paying Agent, as the
         case may be, shall thereupon be relieved from all responsibility to
         such Holders therefor. No such Request, publication or payment shall be
         construed to extend any statutory period of limitations which would
         have been applicable in the absence of such Request, publication or
         payment.

         (s) CONCERNING SECTION 5.02. Section 5.02 is revised to read as
         follows:

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<PAGE>

         SECTION 5.02. Payment and Procedure for Payment of Obligations. The
         Shipowner shall duly and punctually pay the principal of (and premium,
         if any) and interest on the Obligations according to the terms thereof
         and of this Indenture. The Shipowner shall deposit with the Indenture
         Trustee or (subject to Section 3.09) a Paying Agent no later than 11:00
         a.m. in Baltimore, Maryland on each date fixed for such payment or as
         otherwise provided by the Special Provisions hereof an amount in
         immediately available funds sufficient for such payment (after taking
         into account any amounts then held by the Indenture Trustee or such
         Paying Agent and available for such payment) with irrevocable
         directions to it to so apply the same;

         (t) CONCERNING SECTION 6.05. Section 6.05 is revised to read as
         follows:

         SECTION 6.05. Rights of Indenture Trustee after Indenture Default.
         During the continuance of any Indenture Default, the Indenture Trustee
         shall have the right to demand and to receive payment of the Guarantees
         and shall have, with the consent of the Secretary as to matters other
         than the enforcement of the Guarantees (unless all the Guarantees shall
         have terminated as provided herein):

                           (a) the right (in its name, as the trustee of an
         express trust, or as agent and attorney-in-fact for each Holder of the
         Obligations as a class) to take all action to enforce its rights and
         remedies (including the institution and prosecution of all judicial and
         other proceedings and the filings of proofs of claim and debt in
         connection therewith), and to enforce all existing rights of the
         Holders of the Obligations as a class; and

                           (b) all other rights and remedies granted to the
         Indenture Trustee by this Indenture, or the Authorization Agreement, or
         by law.

                  In addition, during the continuance of an Indenture Default
         and if all the Guarantees shall have terminated, except by payment of
         the Guarantees, as provided herein, the Indenture Trustee shall have
         the right, by written notice to the Shipowner, to declare the entire
         unpaid principal amount of the Outstanding Obligations and all unpaid
         interest to be immediately due and payable.

                  In the event the Shipowner shall be unable to pay its debts
         when and as they fall due or shall admit in writing its inability to
         pay its debts as they fall due or shall become insolvent; or the
         Shipowner shall apply for or consent to the appointment of any
         liquidator, receiver, trustee or administrator for all or a substantial
         part of its business, properties, assets or revenues; or a liquidator,
         receiver, trustee or administrator shall be appointed for the Shipowner
         and such appointment shall continue undismissed, undischarged or
         unstayed for a period of thirty (30) days, or the Shipowner shall
         institute (by petition, application, answer, consent or otherwise) any
         bankruptcy, arrangement, readjustment of debt, dissolution, liquidation
         or similar executory or judicial proceeding; or a bankruptcy,
         arrangement, readjustment of debt, dissolution, liquidation or similar
         executory or judicial proceeding shall be instituted against the
         Shipowner and shall remain undismissed, undischarged or unstayed for a
         period of thirty (30) days, the entire unpaid principal amount of the
         Outstanding Obligations and all unpaid interest shall be automatically
         due and payable.

         (u) CONCERNING SECTION 6.06. Section 6.06 is revised to read as
         follows:

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<PAGE>

         SECTION 6.06. (a) Obligees' Right to Direct Indenture Trustee after
         Indenture Default. During the continuance of any Indenture Default, the
         Holders of a majority in principal amount of the Outstanding
         Obligations shall have the right, by an Act of Obligees, to direct the
         Indenture Trustee:

                           (1) to exercise or to refrain from exercising any
                  right or to enforce any remedy granted to it by this
                  Indenture; and

                           (2) to direct the time, method and place of the
                  exercise of any such right or the enforcement of any such
                  remedy;

         provided that, subject to Section 7.03, the Indenture Trustee shall
         have the right not to take any such action if it shall determine in
         good faith that the action would involve it in personal liability,
         would subject it to expense and liability against which it had not been
         offered sufficient indemnity, or would be unjustly prejudicial to the
         Obligees not parties to such direction.

         Anything in this Section 6.06(a) to the contrary notwithstanding, the
         Indenture Trustee shall be obligated to demand payment of the
         Guarantees as provided in Section 6.02(a) unless the Holders of all
         Outstanding Obligations shall have elected to terminate the Guarantees
         as provided in Section 6.04(a)(2), in which case the Indenture Trustee
         shall be obligated to refrain from making such demand.

         (b) Limitations on Obligees' Right to Sue. No Obligee shall have the
         right to institute any judicial or other proceedings under this
         Indenture unless:

                           (1) the Indenture Trustee shall have been directed to
                        institute such proceeding by the Holders of at least 25%
                        in aggregate principal amount of the Obligations then
                        Outstanding;

                           (2) the Indenture Trustee shall have been offered
                        sufficient indemnity and security against the costs,
                        expenses and liabilities to be incurred by compliance
                        with such direction;

                           (3) the Indenture Trustee shall not have instituted
                        such proceeding within sixty (60) days after the receipt
                        of both such direction and such offer of security and
                        indemnity;

                           (4) no direction inconsistent with such request shall
                        have been given to the Indenture Trustee during such
                        60-day period by the Holders of a majority in principal
                        amount of the Outstanding Obligations; and

                           (5) the institution and prosecution of such
                        proceeding would not result in an impairment of the
                        rights of any other Obligee, it being understood and
                        intended that no one or more Obligees shall have any
                        right in any manner whatever by virtue of, or by
                        availing of, any provision of this Indenture to affect,
                        disturb or prejudice the rights of any other Obligees or
                        to obtain or to seek to obtain priority or preference
                        over any other Obligees or to enforce

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<PAGE>

                        any right under this Indenture, except in the manner
                        herein provided and for the equal and ratable benefit
                        of all the Obligees.

                  (c) Unconditional Right of Obligees to Sue for Principal (and
         Premium, if any) and Interest. Nothing in paragraph (b) shall (i)
         affect the obligation of the Shipowner to pay the principal of (and
         premium, if any) and interest on the Obligations in accordance with
         their terms or affect the right of any Obligee to institute any
         judicial or other proceeding to enforce the payment of his Obligations,
         or (ii) limit the right of any Obligee to demand payment of the
         Guarantees pursuant to Section 6.02(b) or to institute any judicial or
         other proceeding to enforce the payment of the Guarantee of any
         Obligation of which he is the Holder.

         (v) CONCERNING SECTION 6.07. Section 6.07 is revised to read as
         follows:

                  SECTION 6.07. Attorneys' Fees and Costs. In any proceeding for
         the enforcement of any right or remedy under this Indenture, or in any
         proceeding against the Indenture Trustee for any action taken or
         omitted by it as Indenture Trustee, the court may in its discretion
         assess reasonable costs, including reasonable attorneys' fees, against
         any party litigant, having due regard to the merits and good faith of
         the claims or defense made by such party litigant. The provisions of
         this Section shall not apply to any proceeding instituted by the
         Indenture Trustee or any proceeding instituted by any Obligee against
         the Secretary for the payment of the principal of (and premium, if any)
         and interest on the Obligations.

         (w) CONCERNING SECTION 6.09. The following paragraph is added at the
end of Section 6.09:

                  In the event that the Obligations are registered in the name
         of The Depository Trust Company ("DTC"), Cede & Co. ("Cede") or another
         nominee of DTC or Cede pursuant to a Letter of Representations ("LOR")
         which is executed among the Shipowner, the Indenture Trustee and DTC,
         and (i) if the Secretary assumes the Obligations pursuant to Section
         6.09(a) hereof, or (ii) if the Secretary instructs the Shipowner and
         the Indenture Trustee to terminate the LOR, the Shipowner and the
         Indenture Trustee, immediately upon receipt of notice of such
         assumption or upon receipt of notice of such termination, shall
         terminate or cause the termination of the LOR in accordance with
         Section 18 thereof and Rider A thereto. The Indenture Trustee shall
         within 30 days from receipt of either such notice from the Secretary
         also instruct DTC to notify its direct and indirect participants of the
         need to re-register the Obligations in the names of the beneficial
         owners. Upon surrender by DTC of the Obligations issued in its name,
         the name of Cede or another nominee, the Shipowner shall issue at its
         sole expense, and the Indenture Trustee shall authenticate Obligations
         in the names provided to the Indenture Trustee by DTC.

         (x) CONCERNING SECTION 7.03. Section 7.03(h) and (n) are revised to
read as follows:

         (h) In all cases where this Indenture does not make express provision
         as to the evidence on which the Indenture Trustee may act or refrain
         from acting, the Indenture Trustee shall be entitled to receive and
         shall be protected (subject to paragraph (c) of this

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<PAGE>

         Section) in acting or refraining from acting hereunder in reliance upon
         an Officer's Certificate as to the existence or non-existence of any
         fact.

         (n) No provision of this Indenture shall require the Indenture Trustee
         to expend or risk its own funds or otherwise incur any financial
         liability in the performance of any of its duties hereunder, or in the
         exercise of any of its rights or powers.

         (y) CONCERNING SECTION 7.04. Section 7.04 is revised to read as
         follows:

         SECTION 7.04. Compensation, Expenses and Indemnification of Indenture
         Trustee. The Shipowner shall (1) pay such compensation to the Indenture
         Trustee as they may agree upon in writing from time to time and
         reimburse it for its reasonable expenses and disbursements (including
         counsel fees and expenses), and (2) indemnify the Indenture Trustee
         for, and hold it harmless against, any loss, liability or expense which
         it may incur or suffer without negligence or bad faith in acting under
         this Indenture or the Authorization Agreement. The compensation of the
         Indenture Trustee shall not be limited to the compensation provided by
         law for a trustee acting under an express trust. The obligations of the
         Shipowner under this Section 7.04 shall survive the termination of the
         Indenture and resignation or removal of the Indenture Trustee.

         (z) CONCERNING SECTION 7.07. Section 7.07 is revised to read as
         follows:

                  SECTION 7.07. Effect of Appointment of Successor Indenture
         Trustee. Each successor Indenture Trustee shall forthwith, without
         further act or deed, succeed to all the rights and duties of its
         predecessor in trust under this Indenture and the Authorization
         Agreement. Upon the written request of the successor Indenture Trustee
         or the Shipowner and upon payment by the Shipowner of all amounts due
         to such predecessor Indenture Trustee under this Indenture, such
         predecessor Indenture Trustee shall promptly deliver to such successor
         Indenture Trustee all sums held hereunder, together with all records
         and other documents necessary or appropriate in connection with the
         performance of the duties of the successor Indenture Trustee under this
         Indenture and shall transfer, assign and confirm to the successor
         Indenture Trustee all its rights under this Indenture in such manner as
         deemed by such successor Indenture Trustee or the Shipowner to be
         necessary or appropriate in connection therewith and the predecessor
         Indenture Trustee shall have no liability for any actions taken by the
         successor Indenture Trustee.

         (aa) CONCERNING SECTION 9.01. Section 9.01(a) is revised to read as
         follows:

                           (a) Except as herein otherwise expressly provided, an
                  Act of Obligees shall become effective when it is delivered to
                  the Indenture Trustee and, where it is expressly required, to
                  the Shipowner and the Secretary. Proof of execution of any
                  instrument appointing an agent or attorney to execute an Act
                  of Obligees made in the manner of subsection (b) below shall
                  be sufficient and conclusive for any purpose of this
                  Indenture.

         (bb) CONCERNING SECTION 12.01. Section 12.01(a) is revised to read as
         follows:

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<PAGE>

                  SECTION 12.01. Satisfaction and Discharge of Indenture.
         Whenever all Outstanding Obligations authenticated and delivered
         hereunder shall have been Retired or Paid the Indenture Trustee shall
         forthwith deliver to the Shipowner and the Secretary a duly executed
         instrument, in form submitted to it by the Shipowner and reasonably
         satisfactory to the Secretary and the Indenture Trustee, satisfying and
         discharging this Indenture and, at the time such form of instrument is
         submitted to the Indenture Trustee the Shipowner shall deliver to the
         Indenture Trustee an Officer's Certificate and an Opinion of Counsel
         each stating that all conditions precedent herein provided relating to
         the satisfaction and discharge of this Indenture have been complied
         with. Notwithstanding the satisfaction and discharge of this Indenture,
         the Obligations of the Shipowner to the Indenture Trustee under Section
         7.04 shall survive.

         (cc) CONCERNING REGISTERED AND BENEFICIAL OWNERSHIP OF THE OBLIGATIONS;
         LEGENDS.

                           (i) The Fixed Rate Notes may be issued initially in
                           the form of one or more permanent global Notes in
                           definitive, fully registered form without interest
                           coupons (each, a "Global Obligation"). Except as
                           provided in paragraph (iii) below, owners of
                           beneficial interests in Global Obligations
                           ("Obligation Owners") shall not be entitled to
                           receive separate certificated Notes ("Definitive
                           Obligation") and shall not be considered the holders
                           thereof. Each such Global Obligation shall be
                           deposited with The Depository Trust Company (the
                           "DTC") or the Indenture Trustee, as custodian for
                           DTC, registered in the name of DTC or a nominee of
                           DTC, and duly executed by the Shipowner and
                           authenticated by the Indenture Trustee as provided in
                           the Indenture. Each Global Obligation shall bear such
                           legend as DTC may require.

                           (ii) Members of, or participants in, DTC shall have
         no rights under the Indenture with respect to any Global Obligation
         held on their behalf by DTC or by the Indenture Trustee, as the
         custodian of DTC, or under such Global Obligation, and DTC may be
         treated by the Shipowner, the Indenture Trustee and any agent of the
         Shipowner or the Indenture Trustee as the absolute owner of such Global
         Obligation for all purposes whatsoever. Notwithstanding the foregoing,
         nothing herein shall prevent the Shipowner, the Indenture Trustee or
         any agent of the Shipowner or the Indenture Trustee from giving effect
         to any written certification, proxy or other authorization furnished by
         DTC or impair, as between DTC and its members and participants, the
         operation of customary practices of DTC governing the exercise of the
         rights of an owner of a beneficial interest in any Global Obligation.

                           (iii)      (1)   The transfer and exchange of Global
         Obligations or beneficial interests therein shall be effected through
         DTC or the Indenture Trustee, as the custodian for DTC, in accordance
         with the Indenture and the procedures of DTC therefor.

                                      (2) A Global Obligation shall be
         exchangeable for Definitive Obligations registered in the names of
         persons owning beneficial interest in such Global Obligation only if
         any of the following events shall have occurred: (1) DTC notifies the
         Shipowner, with a copy to the Indenture Trustee, that it is unwilling
         or unable to

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<PAGE>

         continue as depositary for such Global Obligation or DTC ceases to be a
         clearing agency registered under the Securities Exchange Act of 1934,
         as amended, at a time when DTC is required to be so registered in order
         to act as depositary, and a successor depositary is not appointed by
         the Shipowner within 90 days thereafter, (2) the Shipowner or the
         Indenture Trustee elects to terminate DTC's services or the book entry
         system, (3) the Secretary assumes the Obligations, or (4) the Secretary
         instructs the Shipowner and Indenture Trustee to terminate the Letter
         of Representations.

                                            (3) Any Global Obligation that is
         exchangeable for Definitive Obligations registered in the name of the
         owners of beneficial interests therein pursuant to this paragraph (iii)
         shall be surrendered by DTC to the Indenture Trustee to be so
         exchanged, without charge, and the Shipowner shall execute and the
         Indenture Trustee shall authenticate and deliver, upon such exchange of
         such Global Obligation, an equal aggregate principal amount of
         Definitive Obligations of authorized denominations. Definitive
         Obligations issued in exchange for a beneficial interest in a Global
         Obligation pursuant hereto shall be registered in such names and in
         such authorized denominations as DTC, pursuant to instructions from its
         direct or indirect participants or otherwise, shall instruct the
         Indenture Trustee in writing. The Indenture Trustee shall deliver such
         Definitive Obligations to the Obligation Owners in whose names such
         Obligations are so registered in accordance with the instructions of
         DTC.

                                            (4) The registered holder of a
         Global Obligation may grant proxies and otherwise authorize any
         Obligation Owner, including DTC's members and participants and
         Obligation Owners that may hold interest through such members and
         participants, to take any action which a Holder is entitled to take
         under the Indenture or the Obligations.

                                            (5) In the event of the occurrence
         of any of the events specified in paragraph (iii)(2), the Shipowner
         shall promptly make available to the Indenture Trustee a reasonable
         supply of Definitive Obligations.

                                            (6) Notwithstanding any other
         provision of the Indenture, a Global Obligation may not be transferred
         except as a whole by DTC for such Global Obligation to a nominee of DTC
         or by a nominee of DTC to DTC or another nominee of DTC.

                           (iv) At such time as all beneficial interests in a
         Global Obligations have either been exchanged for Definitive
         Obligations, redeemed, repurchased or canceled, such Global Obligation
         shall be returned to the Indenture Trustee for cancellation or retained
         and canceled by the Indenture Trustee.

                           (v) The Indenture Trustee shall have no
         responsibility or obligation to any owner of a beneficial interest in a
         Global Obligation, a member of, or a participant in DTC or any other
         Obligation Owner with respect to the accuracy of the records of DTC or
         its nominee or of any participant or member thereof, with respect to
         any ownership interest in the Obligations or with respect to the
         delivery to any participant, member, beneficial owner or other
         Obligation Owner (other than DTC) of any notice (including any notice
         of redemption) or the payment of any amount or delivery of any
         Obligations (or other security or property) under or with respect to
         such Obligations. All notices and communications to be given to the
         Holders and all payments to be made to Holders in respect to the
         Obligations shall be given or made only to or upon the order of the
         registered Holders

                                       49
<PAGE>

         (which shall be DTC or its nominee in the case of a Global Obligation).
         The rights of owners of beneficial interests in any Global Obligation
         shall be exercised only through DTC subject to the applicable rules and
         procedures of DTC. The Indenture Trustee may rely and shall be fully
         protected in relying upon information furnished by DTC with respect to
         its members, participants and any beneficial owners.

6. MISCELLANEOUS.

         (a) CONCERNING NOTICES. Subject to the provisions of Section 13.01 of
Exhibit 1 to this Indenture, any notice, request, demand, direction, consent,
waiver, approval or other communication to be given to a party hereto or the
Secretary, shall be deemed to have been sufficiently given or made when
addressed to:

The Indenture Trustee as:                   ALLFIRST TRUST COMPANY,
                                                NATIONAL ASSOCIATION
                                                25 South Charles St.
                                                16th Floor
                                                (Mail Code 101-591)
                                                Baltimore, MD  21201

The Shipowner as:                           ROWAN COMPANIES, INC.
                                                Suite 5450
                                                2800 Post Oak Boulevard
                                                Houston, Texas 77056-6127
                                                Attn: Chief Financial Officer

                                       50
<PAGE>

The Secretary as:                                   SECRETARY OF TRANSPORTATION
                                                    c/o  Maritime Administrator

                                               U.S. Department of Transportation
                                               400 Seventh Street, SW
                                               Washington, D.C. 20590

         (b) CONCERNING APPLICABLE LAW. This Indenture and each Obligation shall
be governed by the federal laws of the United State of America, but to the
extent that they are inapplicable by the laws of the State of New York.


         (c) EXECUTION OF COUNTERPARTS. This Indenture may be executed in any
number of counterparts. All such counterparts shall be deemed to be originals,
and shall constitute but one and the same instrument.

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<PAGE>

         IN WITNESS WHEREOF, this Trust Indenture has been duly executed by the
parties hereto as of the day and year first above written.

(SEAL)                                                     ROWAN COMPANIES, INC.
                                                           Shipowner
ATTEST:

/s/ Mark H. Hay                                By /s/ E. E. Thiele
------------------------------                 ---------------------------------
                                               Secretary
Senior Vice President

                                           ALLFIRST TRUST COMPANY

                                                           NATIONAL ASSOCIATION

                                                             Indenture Trustee

 ATTEST:

/s/ Donald C. Hargadon                              By: /s/ Robert D. Brown
----------------------                              -----------------------
Vice President                                         Vice President

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