Document:

LTIP

Exhibit 10.1

 

 

 

 

2005
ROWAN COMPANIES, INC. 

 

 

LONG-TERM
INCENTIVE PLAN 

 

 

 

 

 

2005
ROWAN COMPANIES, INC. 

LONG-TERM
INCENTIVE PLAN 

 

Table of
Contents 

 

	
       

      ARTICLE
      I INTRODUCTION

       
	 	
       

      1

       

	 	
       

      1.1

       
	 	
      Purpose

       
	 	
       

      1

       

	 	
       

      1.2

       
	 	
       

      Definitions

       
	 	
       

      1

       

	 	
       

      1.3

       
	 	
       

      Shares
      Subject to this Plan-Limitations-Adjustments

       
	 	
       

      4

       

	 	
       

      1.4

       
	 	
       

      Administration
      of this Plan

       
	 	
       

      5

       

	 	
       

      1.5

       
	 	
       

      Granting
      of Awards to Participants

       
	 	
       

      6

       

	 	
       

      1.6

       
	 	
       

      Leave
      of Absence

       
	 	
       

      6

       

	 	
       

      1.7

       
	 	
       

      Term
      of Plan

       
	 	
       

      6

       

	 	
       

      1.8

       
	 	
       

      Amendment
      and Discontinuance of this Plan

       
	 	
       

      6

       

	
       

      ARTICLE
      II NON-QUALIFIED OPTIONS

       
	 	
       

      6

       

	 	
       

      2.1

       
	 	
       

      Eligibility

       
	 	
       

      6

       

	 	
       

      2.2

       
	 	
       

      Exercise
      Price

       
	 	
       

      6

       

	 	
       

      2.3

       
	 	
       

      Terms
      and Conditions of Non-Qualified Options

       
	 	
       

      7

       

	 	
       

      2.4

       
	 	
       

      Option
      Repricing

       
	 	
       

      8

       

	 	
       

      2.5

       
	 	
       

      Vesting

       
	 	
       

      8

       

	
       

      ARTICLE
      III INCENTIVE OPTIONS

       
	 	
       

      8

       

	 	
       

      3.1

       
	 	
       

      Eligibility

       
	 	
       

      8

       

	 	
       

      3.2

       
	 	
       

      Exercise
      Price

       
	 	
       

      8

       

	 	
       

      3.3

       
	 	
       

      Dollar
      Limitation

       
	 	
       

      8

       

	 	
       

      3.4

       
	 	
       

      10%
      Stockholder

       
	 	
       

      9

       

	 	
       

      3.5

       
	 	
       

      Incentive
      Options Not Transferable

       
	 	
       

      9

       

	 	
       

      3.6

       
	 	
       

      Compliance
      with Code Section 422

       
	 	
       

      9

       

	 	
       

      3.7

       
	 	
       

      Limitations
      on Exercise

       
	 	
       

      9

       

	
       

      ARTICLE
      IV PURCHASED STOCK

       
	 	
       

      9

       

	 	
       

      4.1

       
	 	
       

      Eligibility

       
	 	
       

      9

       

	 	
       

      4.2

       
	 	
       

      Purchase
      Price

       
	 	
       

      9

       

	 	
       

      4.3

       
	 	
       

      Payment
      of Purchase Price

       
	 	
       

      9

       

 

i

 

 

	
       

      ARTICLE
      V BONUS STOCK

       
	 	
       

      9

       

	
       

      ARTICLE
      VI STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK UNIT

       
	 	
       

      10

       

	 	
       

      6.1

       
	 	
       

      Stock
      Appreciation Rights

       
	 	
       

      10

       

	 	
       

      6.2

       
	 	
       

      Restricted
      Stock Units

       
	 	
       

      10

       

	
       

      ARTICLE
      VII RESTRICTED STOCK

       
	 	
       

      10

       

	 	
       

      7.1

       
	 	
       

      Eligibility

       
	 	
       

      10

       

	 	
       

      7.2

       
	 	
       

      Restrictions,
      Restricted Period and Vesting

       
	 	
       

      11

       

	 	
       

      7.3

       
	 	
       

      Forfeiture
      of Restricted Stock

       
	 	
       

      11

       

	 	
       

      7.4

       
	 	
       

      Delivery
      of Shares of Common Stock

       
	 	
       

      11

       

	
       

      ARTICLE
      VIII PERFORMANCE AWARDS

       
	 	
       

      11

       

	 	
       

      8.1

       
	 	
       

      Performance
      Awards

       
	 	
       

      11

       

	 	
       

      8.2

       
	 	
       

      Performance
      Goals

       
	 	
       

      11

       

	
       

      ARTICLE
      IX OTHER STOCK OR PERFORMANCE-BASED AWARDS

       
	 	
       

      13

       

	
       

      ARTICLE
      X CERTAIN PROVISIONS APPLICABLE TO ALL AWARDS

       
	 	
       

      13

       

	 	
       

      10.1

       
	 	
       

      Vesting
      and Other General Provisions

       
	 	
       

      13

       

	 	
       

      10.2

       
	 	
       

      Stand-Alone,
      Additional, Tandem and Substitute Awards

       
	 	
       

      14

       

	 	
       

      10.3

       
	 	
       

      Term
      of Awards

       
	 	
       

      14

       

	 	
       

      10.4

       
	 	
       

      Form
      and Timing of Payment under Awards; Deferrals

       
	 	
       

      14

       

	 	
       

      10.5

       
	 	
       

      Vested
      and Unvested Awards

       
	 	
       

      14

       

	 	
       

      10.6

       
	 	
       

      Exemptions
      from Section 16(b) Liability

       
	 	
       

      15

       

	 	
       

      10.7

       
	 	
       

      Securities
      Requirements

       
	 	
       

      15

       

	 	
       

      10.8

       
	 	
       

      Transferability

       
	 	
       

      15

       

	 	
       

      10.9

       
	 	
       

      Rights
      as a Stockholder

       
	 	
       

      16

       

	 	
       

      10.10

       
	 	
       

      Listing
      and Registration of Shares of Common Stock

       
	 	
       

      16

       

	 	
       

      10.11

       
	 	
       

      Termination
      of Employment, Death and Disability

       
	 	
       

      16

       

	 	
       

      10.12

       
	 	
       

      Change
      in Control

       
	 	
       

      16

       

	
       

      ARTICLE
      XI WITHHOLDING FOR TAXES

       
	 	
       

      17

       

 

ii

 

 

	
       

      ARTICLE
      XII MISCELLANEOUS

       
	 	
       

      18

       

	 	
       

      12.1

       
	 	
       

      No
      Rights to Awards or Uniformity Among Awards

       
	 	
       

      18

       

	 	
       

      12.2

       
	 	
       

      Conflicts
      with Plan

       
	 	
       

      18

       

	 	
       

      12.3

       
	 	
       

      No
      Right to Employment

       
	 	
       

      18

       

	 	
       

      12.4

       
	 	
       

      Governing
      Law

       
	 	
       

      18

       

	 	
       

      12.5

       
	 	
       

      Gender,
      Tense and Headings

       
	 	
       

      18

       

	 	
       

      12.6

       
	 	
       

      Severability

       
	 	
       

      18

       

	 	
       

      12.7

       
	 	
       

      Other
      Laws

       
	 	
       

      18

       

	 	
       

      12.8

       
	 	
       

      Stockholder
      Agreements

       
	 	
       

      18

       

	 	
       

      12.9

       
	 	
       

      Funding

       
	 	
       

      18

       

	 	
       

      12.10

       
	 	
       

      No
      Guarantee of Tax Consequences

       
	 	
       

      18

       

 

iii

 

 

 

 

2005
ROWAN COMPANIES, INC. 

 

 

LONG-TERM
INCENTIVE PLAN 

 

 

ARTICLE
I 

 

 

INTRODUCTION 

 

 

1.1
Purpose. This
2005 Rowan Companies, Inc. Long-Term Incentive Plan (as the same may be amended
from time to time, this “Plan”) is
intended to promote the interests of Rowan Companies, Inc., a Delaware
corporation (the “Company”), and
its stockholders by encouraging Employees, Consultants and Non-Employee
Directors of the Company or its Affiliates (as defined below) to acquire or
increase their equity interests in the Company, thereby giving them an added
incentive to work toward the continued growth and success of the Company. The
Board of Directors of the Company (the “Board”) also
contemplates that through this Plan, the Company and its Affiliates will be
better able to compete for the services of the individuals needed for the
continued growth and success of the Company. The Plan provides for payment of
various forms of incentive compensation, and accordingly, is not intended to be
a plan that is subject to the Employee Retirement Income Security Act of 1974,
as amended, and shall be administered accordingly. This Plan replaces the
Restated 1988 Nonqualified Stock Option Plan as Amended and the 1998 Nonemployee
Directors Stock Option Plan (collectively the “Prior Plans”) with respect to
Awards after the Effective Date hereof. 

 

 

1.2
Definitions. As used
in this Plan, the following terms shall have the meanings set forth below:

 

 

“Affiliate” means
(i) any entity in which the Company, directly or indirectly, owns 50% or more of
the combined voting power, as determined by the Committee, (ii) any “parent
corporation” of the Company (as defined in section 424(e) of the Code), (iii)
any “subsidiary corporation” of any such parent corporation (as defined in
section 424(f) of the Code) of the Company and (iv) any trades or businesses,
whether or not incorporated which are members of a controlled group or are under
common control (as defined in Sections 414(b) or (c) of the Code) with the
Company. 

 

 

“Awards” means,
collectively, Options, Purchased Stock, Bonus Stock, Stock Appreciation Rights,
Restricted Stock Unit, Restricted Stock, Performance Awards, or Other Stock or
Performance-Based Awards. 

 

 

“Board” has the
meaning set forth in Section
1.1 of this
Plan. 

 

 

“Bonus
Stock” means
Common Stock described in Article
V of this
Plan. 

 

 

“Change
of Control” shall be
deemed to have occurred upon any of the following events: 

 

 

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

 

 

(b) the
consummation of any merger, organization, business combination or consolidation
of the Company or one of its subsidiaries with or into any other entity, other
than a merger, reorganization, business combination or consolidation which would
result in the holders of the voting securities of the Company outstanding
immediately prior thereto holding securities which represent immediately after
such merger, reorganization, business combination or consolidation more than 50%
of the combined voting power of the voting securities of the Company or the
surviving company or the parent of such surviving company; 

 

 

1

 

 

(c) the
consummation of a sale or disposition by the Company of all or substantially all
of the Company’s assets, other than a sale or disposition if the holders of the
voting securities of the Company outstanding immediately prior thereto hold
securities immediately thereafter which represent more than 50% of the combined
voting power of the voting securities of the acquiror, or parent of the
acquiror, of such assets; 

 

 

(d) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or 

 

 

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

 

 

“Code” means
the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations thereunder. 

 

 

“Committee” means
the compensation committee of the Board, which shall consist of not less than
two (2) independent members of the Board, each of whom shall qualify as a
“non-employee director” (as that term is defined in Rule 16b-3 of the General
Rules and Regulations under the Exchange Act) appointed by and serving at the
pleasure of the Board to administer this Plan or, if none, the independent
members of the Board; provided,
however, that
with respect to any Award granted to a Covered Employee which is intended to be
“performance-based compensation” as described in Section 162(m)(4)(C) of the
Code, the Committee shall consist solely of two (2) or more “outside directors”
as described in Section 162(m)(4)(C)(i) of the Code. 

 

 

“Common
Stock” means
the common stock, $.125 par value per share, of the Company. 

 

 

“Company” has the
meaning set forth in Section
1.1 of this
Plan. 

 

 

“Consultant” means
any individual, other than a Director or an Employee, who renders consulting or
advisory services to the Company or an Affiliate, provided that such services
are not in connection with the offer or sale of securities in a capital-raising
transaction. 

 

 

“Covered
Employee” shall
mean any of the Chief Executive Officer of the Company and the four highest paid
officers of the Company other than the Chief Executive Officer, as described in
Section 162(m)(3) of the Code. 

 

 

“Director” means an
individual who is a member of the Board. 

 

 

“Disability” means
the “Disability” of an Employee shall have occurred if he has a mental or
physical condition which totally and presumably permanently prevents him from
engaging in any substantial gainful employment with the Company or the Company
subsidiary or affiliate with which he was employed prior to inception of his
disability which (i) did not arise while engaged in or as a result of being
engaged in an illegal act or enterprise, (ii) did not result from chronic
alcoholism, addiction to narcotics or the use of illegal or unauthorized drugs
in any manner, (iii) did not result from service in the Armed Forces of the
United States which entitled the Employee to a Veteran’s Disability Pension, and
(iv) did not arise while employed by an employer other than the Company or a
Company subsidiary or affiliate of the Company. The existence of such Disability
must be certified by two duly licensed and practicing physicians selected,
respectively, by the Committee and by the Employee (or his representative). If
they fail to agree, a third physician shall be selected by the Committee, and
the determination of any two of such three physicians shall be final and
controlling on all interested parties. The determination of any such physicians
shall be evidenced by appropriate written certifications delivered to the
Committee. Notwithstanding the foregoing, the Committee may, in its discretion,
waive the requirement of certification of Disability by licensed physicians,
and, in lieu of 

 

 

2

 

 

such
certification, rely on such other appropriate medical evidence of Disability as
is deemed satisfactory by the Committee. Determination of whether such
Disability exists shall be made as promptly as possible after the date such
Disability is claimed to have commenced. Determination of the date of
termination of employment by reason of Disability shall be based on such
evidence as the Committee may require and a determination by the Committee of
such date of termination shall be final and controlling on all interested
parties. 

 

 

“Effective
Date” means,
with respect to this Plan, the date that this Plan is (a) adopted by the Board
and (b) approved by stockholders of the Company, provided that such stockholder
approval occurs not more than one (1) year prior to or after the date of such
adoption by the Board. 

 

 

“Employee” means
any employee of the Company or an Affiliate. 

 

 

“Employment” includes
any period in which a Participant is an Employee. 

 

 

“Exchange
Act” means
the Securities Exchange Act of 1934, as amended. 

 

 

“Fair
Market Value” or
“FMV Per
Share” means,
with respect to shares of Common Stock, the fair market value of such shares
determined in good faith by the Committee, which may be conclusively deemed by
the Committee to be the average of the highest and lowest sales price (or, if
applicable, the highest and lowest reported bid price) of a share of Common
Stock on the immediately preceding trading date as reported in The Wall
Street Journal (or other
reporting service approved by the Committee). If such shares are not publicly
traded at the time a determination of its fair market value is required to be
made hereunder, the determination of fair market value shall be made in good
faith by the Committee using any fair and reasonable means selected in the
Committee’s discretion. 

 

 

“Full
Value Awards” shall
mean any Award other than Options or Stock Appreciation Rights. 

 

 

“Incentive
Option” means
any Option that satisfies the requirements of Code Section 422 and is granted
pursuant to Article
III of this
Plan. 

 

 

“Incumbent
Board” has the
meaning set forth in paragraph (e) of the definition of “Change of Control”
under this Section
1.2.

 

 

“Non-Employee
Director” means a
Director who is neither an Employee nor a Consultant. 

 

 

“Non-Employee
Director Option” means an
Option not intended to satisfy the requirements of Code Section 422.

 

 

“Non-Qualified
Option” means an
Option not intended to satisfy the requirements of Code Section 422 that is
granted pursuant to Article
II of this
Plan. 

 

 

“Option” means an
option to acquire Common Stock granted pursuant to the provisions of this Plan
and includes either an Incentive Option or a Non-Qualified Option, or both, as
applicable. 

 

 

“Option
Expiration Date” means,
with respect to an Option, the date determined by the Committee, which shall not
be more than ten (10) years after the date of grant of such Option.

 

 

“Optionee”
means a
Participant who has received or will receive an Option. 

 

 

“Other
Stock or Performance-Based Award” means an
award granted pursuant to Article
IX of this
Plan that is not otherwise specifically provided for, the value of which is
based in whole or in part upon the value of a share of Common Stock.

 

 

“Participant” means
any Non-Employee Director, Employee or Consultant granted an Award under this
Plan. 

 

 

“Performance
Award” means an
Award granted pursuant to Article
III of this
Plan, that, if earned, shall be payable in shares of Common Stock, cash or any
combination thereof as determined by the Committee. 

 

 

“Plan” has the
meaning set forth in Section
1.1 of this
Plan. 

 

 

3

 

 

“Prior
Plans” means the
Rowan Companies, Inc. Restated 1988 Nonqualified Stock Option Plan as Amended
and the Rowan Companies Inc. 1998 Nonemployee Directors Stock Option Plan

 

 

“Purchased
Stock” means a
right to purchase Common Stock granted pursuant to Article
IV of this
Plan. 

 

 

“Restricted
Period” means,
with respect to an Award, the period established by the Committee during which
such Award either remains subject to forfeiture or is not exercisable by the
Participant. 

 

 

“Restricted
Stock” means
one or more shares of Common Stock, prior to the lapse of restrictions thereon,
granted under Article
VII of this
Plan. 

 

 

“Restricted
Stock Unit” means an
Award, granted pursuant to Article
VI of this
Plan, of the right to receive (a) shares of Common Stock issued at the end of a
Restricted Period, (b) the Fair Market Value of shares of Common Stock paid in
cash at the end of a Restricted Period or (c) a combination of shares of Common
Stock and cash, as determined by the Committee, paid at the end of a Restricted
Period. 

 

 

“Retirement”
means
“Retirement” by an Employee, which shall have occurred if: 

 

 

(a) in
the case of an Employee who is an employee of Rowan Companies, Inc. or an
employee of an Employing Company, as defined in the Rowan Pension Plan (the
“Rowan Plan”), the Employee: (1) has satisfied the requirements for normal
retirement pursuant to the rules of the Rowan Plan which, in terms of age, is a
minimum of 60 and (2) has requested and received authorization from the
administrative committee appointed by the Company’s Board of Directors to
administer the Rowan Plan to commence receiving pension benefits; or

 

 

(b) in
the case of an Employee who is an employee of LeTourneau, Inc. or an employee of
an Employing Company, as defined in the LeTourneau Pension Plan (the “LeTourneau
Plan”), the Employee: (1) has satisfied the requirements for either normal or
late retirement pursuant to the rules of the LeTourneau Plan, (2) has requested
and received authorization from the administrative committee appointed by the
Board of Directors of LeTourneau, Inc. to administer the LeTourneau Plan to
commence receiving pension benefits, and (3) would have satisfied the
requirements for normal retirement pursuant to the rules of the Rowan Plan if he
or she was an employee of Rowan Companies, Inc. or an employee of an Employing
Company under the Rowan Plan. 

 

 

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

 

 

“Securities
Act” means
the Securities Act of 1933, as amended. 

 

 

“Spread” has the
meaning set forth in Section
6.1(a) of this
Plan. 

 

 

“Stock
Appreciation Rights” means an
Award granted pursuant to Article
VI of this
Plan. 

 

 

1.3
Shares Subject to this Plan-Limitations-Adjustments. 

 

 

(a)
Plan and
Award Limitations. The
maximum number of shares of Common Stock that may be issued under this Plan
shall be 3,400,000 shares. The maximum number of shares that may be issued as
Full Value Awards under the Plan shall be 1,700,000 shares. With respect to any
Award of Options, Stock Appreciation Rights or any other Award to any Employee
that is intended to be a Performance Award under Article VIII, the maximum
number of shares of Common Stock issued or reserved for issuance plus the
maximum number of shares underlying or equal in Fair Market Value to the cash
received under any such Award that may be granted to any one Participant in any
one calendar year shall not exceed 500,000. The maximum number of shares of
Common Stock issued or reserved for issuance, plus the maximum number of shares
underlying or equal in Fair Market Value as of the date of grant of any Award to
Non-Employee Directors with respect to any one-year term of such Non-employee
Director shall not exceed 5,000. The maximum number of shares of Common Stock
issued under the Plan during its term to all Non-Employee Directors shall not
exceed 

 

 

4

 

 

250,000.
The maximum number of shares of Common Stock that may be issued under this Plan
pursuant to Incentive Options shall be 1,000,000 shares. 

 

 

(b)
Adjustment
of Limitations. In the
event that the number of shares to be delivered upon the exercise or payment of
any award granted under the Plan or the Prior Plans is reduced for any reason
other than the withholding of shares for the payment of taxes or exercise price,
or in the event any award (or portion thereof) granted under the Plan or the
Prior Plans can no longer under any circumstances be exercised or paid, the
number of shares no longer subject to such award shall thereupon be released
from such award and shall thereafter be available under this Plan for the grant
of additional Awards including Full Value Awards. Notwithstanding the foregoing,
in the event that at any time after the Effective Date the outstanding shares of
Common Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like, the aggregate number and class of securities available, and
each of the limitations on Awards set forth above shall be ratably adjusted by
the Committee. Upon the occurrence of any of the events described in the
immediately preceding sentence, in order to ensure that after such event the
shares of Common Stock subject to this Plan and each Participant’s proportionate
interest remain substantially as before the occurrence of such event, the
Committee shall, in such manner as it may deem equitable, adjust (a) the number
of shares of Common Stock with respect to which Awards may be granted, (b) the
number of shares of Common Stock subject to outstanding Awards and (c) the grant
or exercise price with respect to an Award. Such adjustment in an outstanding
Option shall be made (i) without change in the total price applicable to the
Option or any unexercised portion of the Option (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices) and
(ii) with any necessary corresponding adjustment in exercise price per share.
The Committee’s determinations shall be final, binding and conclusive with
respect to the Company and all other interested persons. 

 

 

(c)
Share
Counting and Forfeitures. In the
event the number of shares to be delivered upon the exercise or payment of any
Award granted under this Plan is reduced for any reason other than the
withholding of shares for the payment of taxes or exercise price, or in the
event any Award (or portion thereof) granted under this Plan can no longer under
any circumstances be exercised or paid, the number of shares no longer subject
to such Award shall thereupon be released from such Award and shall thereafter
be available under this Plan for the grant of additional Awards. Shares that
cease to be subject to an Award because of the exercise of the Award, or the
vesting of a Restricted Stock Award or similar Award, shall no longer be subject
to or available for any further grant under this Plan. Shares issued pursuant to
this Plan (x) may be treasury shares, authorized but unissued shares or, if
applicable, shares acquired in the open market and (y) shall be fully paid and
nonassessable. No fractional shares shall be issued under this Plan. Payment for
any fractional shares that would otherwise be issuable hereunder in the absence
of the immediately preceding sentence shall be made in cash. 

 

 

1.4
Administration of this Plan. 

 

 

(a)
Committee,
Meetings, Rule Making and Interpretations. The Plan
shall be administered by the Committee. Subject to the provisions of this Plan,
the Committee shall (i) interpret this Plan and all Awards under this Plan, (ii)
make, amend and rescind such rules as it deems necessary for the proper
administration of this Plan, (iii) make all other determinations necessary or
advisable for the administration of this Plan and (iv) correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any Award
under this Plan in the manner and to the extent that the Committee deems
desirable to effectuate this Plan. Any action taken or determination made by the
Committee pursuant to this or any other provision of this Plan shall be final,
binding and conclusive on all affected persons, including, without limitation,
the Company, any Affiliate, any grantee, holder or beneficiary of an Award, any
stockholder and any Employee, Consultant or Non-Employee Director. No member of
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to this Plan or any Award granted hereunder, and the
members of the Board and the Committee shall be entitled to indemnification and
reimbursement by the Company and 

 

 

5

 

 

its
Affiliates in respect of any claim, loss, damage or expense (including legal
fees) arising therefrom to the fullest extent permitted by law. 

 

 

1.5
Granting of Awards to Participants. The
Committee shall have the authority to grant, prior to the expiration date of
this Plan, Awards to such Employees, Consultants and Non-Employee Directors as
may be selected by it, subject to the terms and conditions set forth in this
Plan. In selecting the persons to receive Awards, including the type and size of
the Award, the Committee may consider the contribution the recipient has made
and/or may make to the growth of the Company or its Affiliates and any other
factors that it may deem relevant. No member of the Committee shall vote or act
upon any matter relating solely to himself. Grants of Awards to members of the
Committee must be ratified by the Board. In no event shall any Employee,
Consultant or Non-Employee Director, nor his legal representatives, heirs,
legatees or distributees have any right to participate in this Plan, except to
such extent, if any, as permitted under this Plan and as the Committee may
determine. 

 

 

1.6 Leave
of Absence. If an
employee is on military, sick leave or other bona fide leave of absence, such
person shall be considered an “Employee” for purposes of an outstanding Award
during the period of such leave, provided that it does not exceed ninety (90)
days (or such longer period as may be determined by the Committee in its sole
discretion), or, if longer, so long as the person’s right to reemployment is
guaranteed either by statute or by contract. If the period of leave exceeds
ninety (90) days (or such longer period as may be determined by the Committee in
its sole discretion), the employment relationship shall be deemed to have
terminated on the ninety-first (91st) day (or the first (1st) day immediately
following any period of leave in excess of ninety (90) days as approved by the
Committee) of such leave, unless the person’s right to reemployment is
guaranteed by statute or contract. 

 

 

1.7 Term
of Plan. If not
sooner terminated under the provisions of Section
1.8, this
Plan shall terminate upon, and no further Awards shall be made, after the tenth
(10th) anniversary of the Effective Date. 

 

 

1.8
Amendment and Discontinuance of this Plan. The
Board may amend, suspend or terminate this Plan at any time without prior notice
to or consent of any person; provided,
however, that
subject to Section
10.12, no
amendment, suspension or termination of this Plan may, without the consent of
the holder of an Award, terminate such Award or adversely affect such person’s
rights with respect to such Award in any material respect; and provided further that no
amendment shall be effective prior to its approval by the stockholders of the
Company, to the extent such approval is required by applicable legal
requirements or the requirements of any securities market or exchange on which
the Company’s stock is then listed. Notwithstanding the foregoing, the Board may
amend this Plan in such manner as it deems necessary in order to permit Awards
to meet the requirements of the Code or other applicable laws, or to prevent
adverse tax consequences to the Participants. 

 

 

ARTICLE
II 

 

 

NON-QUALIFIED
OPTIONS 

 

 

2.1
Eligibility. The
Committee may grant Non-Qualified Options to purchase shares of Common Stock to
any Employee, Consultant or Non-Employee Director. Each Non-Qualified Option
granted under this Plan shall be evidenced by a written agreement between the
Company and the individual to whom such Non-Qualified Option is granted in such
form as the Committee shall provide. 

 

 

2.2
Exercise Price. The
exercise price to be paid for each share of Common Stock deliverable upon
exercise of each Non-Qualified Option granted under this Article
II shall
not be less than one hundred percent (100%) of the FMV Per Share on the date of
grant of such Non-Qualified Option. The exercise price for each Non-Qualified
Option granted under this Article
II shall be
subject to adjustment as provided in Section
2.3(f) of this
Plan. 

 

 

6

 

 

2.3 Terms
and Conditions of Non-Qualified Options.
Non-Qualified Options shall be in such form as the Committee may from time to
time approve, shall be subject to the following terms and conditions and may
contain such additional terms and conditions (including, but not limited to
conditions of vesting or exercise of the Options), not inconsistent with the
Plan, as the Committee shall deem desirable: 

 

 

(a)
Option
Period and Conditions and Limitations on Exercise. No
Non-Qualified Option shall be exercisable later than the Option Expiration Date.
To the extent not prohibited by other provisions of this Plan, each
Non-Qualified Option shall be exercisable at such time or times as the
Committee, in its discretion, may determine at the time such Non-Qualified
Option is granted. 

 

 

(b)
Manner of
Exercise. In order
to exercise a Non-Qualified Option, the person or persons entitled to exercise
such Non-Qualified Option shall deliver to the Company payment in full for (i)
the shares being purchased and (ii) unless other arrangements have been made
with the Committee, any required withholding taxes. The payment of the exercise
price for each Non-Qualified Option shall either be (x) in cash or by check
payable and acceptable to the Company, (y) with the consent of the Committee,
which consent may be granted or withheld in the Committee’s sole discretion, by
tendering to the Company shares of Common Stock having an aggregate Fair Market
Value as of the date of exercise that is not greater than the full exercise
price for the shares with respect to which the Non-Qualified Option is being
exercised and by paying any remaining amount of the exercise price as provided
in (x) above or (z) with the consent of the Committee, which may be granted or
withheld in the Committee’s sole discretion, and upon compliance with such
instructions as the Committee may specify, at the person’s written request, the
Company may deliver certificates for the shares of Common Stock for which the
Non-Qualified Option is being exercised to a broker for sale on behalf of the
person, provided that the person has irrevocably instructed such broker to remit
directly to the Company on the person’s behalf from the proceeds of such sale
the full amount of the exercise price, plus all required withholding taxes. In
the event that the person elects to make payment as allowed under clause (y)
above, the Committee may, upon confirming that the Optionee owns the number of
shares being tendered, authorize the issuance of a new certificate for the
number of shares being acquired pursuant to the exercise of the Non-Qualified
Option, less the number of shares being tendered upon the exercise and return to
the person (or not require surrender of) the certificate for the shares being
tendered upon the exercise. If the Committee so requires, such person or persons
shall also deliver a written representation that all shares being purchased are
being acquired for investment and not with a view to, or for resale in
connection with, any distribution of such shares. 

 

 

(c)
Alternative
Payment for Stock. Subject
to the consent of the Committee, which may be granted or withheld in the
Committee’s sole discretion and at the election of the Participant, payment of
the exercise price or withholding may be made, in whole or in part, with shares
of Common Stock with respect to which the Option is being exercised. If payment
is to be made in such manner, then the Participant shall deliver to the Company
a notice of exercise as to the number of shares of Common Stock to be issued to
the Participant as well as the number of shares of Common Stock to be retained
by the Company in payment. In such case, the notice of exercise shall include
(A) a statement (i) directing the Company to retain the number of shares from
the exercise of the Options the Fair Market Value (as of the date of delivery of
such notice) of which is equal to the portion of the exercise price and/or
withholding with respect to which the Participant intends to make payment, and
(ii) confirming the aggregate number of shares to be delivered to the
Participant; and (B) such additional payment in cash or shares as shall be
necessary, when added to the consideration paid with shares subject to the
Option, to pay the exercise price and withholding in full for all such shares.
If the Company is required to withhold on account of any federal, state or local
tax imposed as a result of an exercise of an Option with previously issued stock
or by retention of optioned shares under this Section, the Common Stock
surrendered or retained shall include an additional number of shares whose Fair
Market Value equals the amount thus required to be withheld at the applicable
minimum statutory rate. 

 

 

(d)
Proceeds. The
proceeds received from the sale of shares of Common Stock pursuant to exercise
of Non-Qualified Options exercised under this Plan will be used for general
corporate purposes. 

 

 

7

 

 

(e)
Non-Qualified
Options not Transferable. Except
as provided below, no Non-Qualified Option granted hereunder shall be
transferable other than by (i) will or by the laws of descent and distribution
or (ii) pursuant to a domestic relations order, and during the lifetime of the
Participant to whom any such Non-Qualified Option is granted, it shall be
exercisable only by the Participant (or his guardian). The Committee may, in its
discretion, provide in an Option Agreement or otherwise that any Non-Qualified
Option may be transferred in whole or in part. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any Non-Qualified Option granted hereunder, or
any right thereunder, contrary to the provisions hereof, shall be void and
ineffective, shall give no right to the purported transferee and shall, at the
sole discretion of the Committee, result in forfeiture of the Non-Qualified
Option with respect to the shares involved in such attempt. Any Non-Qualified
Option that is transferred in accordance with the provisions of this
Section
2.3(e)may only
be exercised by the person or persons who acquire a proprietary interest in the
Non-Qualified Options pursuant to the transfer. 

 

 

(f)
Adjustment
of Non-Qualified Options. In the
event that at any time after the Effective Date the outstanding shares of Common
Stock are changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like, the Committee shall make appropriate and equitable
adjustments to all Non-Qualified Options then outstanding as provided in
Section
1.3.

 

 

(g)
Listing
and Registration of Shares. Each
Non-Qualified Option shall be subject to the requirement that if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares subject to such Non-Qualified Option under any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such Non-Qualified Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained and the same shall have been free of any conditions
not acceptable to the Committee. 

 

 

2.4
Option Repricing. With
stockholder approval only, the Committee, in its absolute discretion, may grant
to holders of outstanding Non-Qualified Options, in exchange for the surrender
and cancellation of such Non-Qualified Options, new Non-Qualified Options having
exercise prices lower (or higher with any required consent) than the exercise
price provided in the Non-Qualified Options so surrendered and canceled and
containing such other terms and conditions as the Committee may deem
appropriate. 

 

 

2.5
Vesting. See
Section
10.11 of this
Plan for provisions on vesting in connection with termination of Employment or
service. Also, see Section
10.12 of this
Plan relating to vesting in connection with a Change of Control. 

 

 

ARTICLE
III 

 

 

INCENTIVE
OPTIONS 

 

 

The terms
specified in this Article
III shall be
applicable to all Incentive Options. Except as modified by the provisions of
this Article
III, all of
the provisions of Article
II shall be
applicable to Incentive Options. Options which are specifically designated as
Non-Qualified Options shall not be
subject to the terms of this Article
III.

 

 

3.1
Eligibility.
Incentive Options may only be granted to Employees of a “corporation” within the
meaning of Code section 7701(a)(3). 

 

 

3.2
Exercise Price. Subject
to Section
3.4, the
exercise price per share shall not be less than one hundred percent (100%) of
the FMV Per Share on the date of grant of the Incentive Option. 

 

 

3.3
Dollar Limitation. The
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of shares of Common Stock for which one or more Options granted to any
Employee under this Plan (or any other option plan of the Company or any
Affiliate which is a parent or subsidiary as defined in Code 

 

 

8

 

 

Sections
424(e) or (f), as applicable) may for the first time become exercisable as
Incentive Options during any one (1) calendar year shall not exceed the sum of
$100,000. To the extent the Employee holds two (2) or more such Options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such Options as Incentive Options shall be
applied on the basis of the order in which such Options are granted.

 

 

3.4 10%
Stockholder. If any
Employee to whom an Incentive Option is granted owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any “parent corporation” of the Company (as defined in Section
424(e) of the Code) or any “subsidiary corporation” of the Company (as defined
in Section 424(f) of the Code), then the exercise price per share under such
Incentive Option shall not be less than one hundred ten percent (110%) of the
FMV Per Share on the date of grant, and the Option term shall not exceed five
(5) years measured from the date of grant. For purposes of the immediately
preceding sentence, the attribution rules under Section 424(d) of the Code shall
apply for purposes of determining an Employee’s ownership. 

 

 

3.5
Incentive Options Not Transferable. No
Incentive Option granted hereunder (a) shall be transferable other than by will
or by the laws of descent and distribution and (b) except as permitted in
regulations or other guidance issued under Section 422 of the Code, shall be
exercisable during the Optionee’s lifetime by any person other than the Optionee
(or his guardian). 

 

 

3.6
Compliance with Code Section 422. All
Options that are intended to be Incentive Options described in Code Section 422
shall be designated as such in the Option grant and in all respects shall be
issued in compliance with Code Section 422. 

 

 

3.7
Limitations on Exercise. No
Incentive Option shall be exercisable more than three (3) months after the
Optionee ceases to be an Employee for any reason other than death or Disability,
or more than one (1) year after the Optionee ceases to be an Employee due to
death or Disability. 

 

 

ARTICLE
IV 

 

 

PURCHASED
STOCK 

 

 

4.1
Eligibility. The
Committee shall have the authority to sell shares of Common Stock to such
Employees, Consultants and Non-Employee Directors as may be selected by it, on
such terms and conditions as it may establish, subject to the further provisions
of this Article
IV. Each
issuance of Common Stock under this Article
IV shall be
evidenced by an agreement, which shall be subject to applicable provisions of
this Plan and to such other provisions not inconsistent with this Plan as the
Committee may approve for the particular sale transaction. 

 

 

4.2
Purchase Price. The
price per share of Common Stock to be purchased by a Participant under this
Article
IV shall be
determined in the sole discretion of the Committee, and may be less than, but
shall not be greater than the FMV Per Share at the time of purchase.

 

 

4.3
Payment of Purchase Price. Payment
of the purchase price of Purchased Stock under this Article
IV shall be
made in full in cash. 

 

 

ARTICLE
V 

 

 

BONUS
STOCK 

 

 

The
Committee may, from time to time and subject to the provisions of this Plan,
grant shares of Bonus Stock to Employees, Consultants and Non-Employee
Directors. Such grants of Bonus Stock shall be in consideration of performance
of services by the Participant without additional consideration, except as may
be required by the Committee or pursuant to Section
10.1. Bonus
Stock shall be shares of Common Stock that are not subject to a Restricted
Period under Article
VII.

 

 

9

 

 

 

 

ARTICLE
VI 

 

 

STOCK
APPRECIATION RIGHTS AND RESTRICTED STOCK UNIT 

 

 

6.1 Stock
Appreciation Rights. The
Committee is authorized to grant Stock Appreciation Rights to Employees,
Consultants and Non-Employee Directors on the following terms and conditions:

 

 

(a)
Right to
Payment. A Stock
Appreciation Right shall confer on the Participant to whom it is granted, upon
exercise thereof, a right to receive shares of Common Stock, the value of which
is equal to the excess of (i) the FMV Per Share on the date of exercise over
(ii) the FMV per share on the date of grant (such excess, the “Spread”) with
respect to a specified number of shares of Common Stock. Notwithstanding the
foregoing, the Committee may provide, in its sole discretion, that the Spread
covered by a Stock Appreciation Right may not exceed a specified amount.

 

 

(b)
Terms. The
Committee shall determine at the date of grant the time or times at which and
the circumstances under which a Stock Appreciation Right may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the method of exercise, whether or not a Stock
Appreciation Right shall be in tandem or in combination with any other Award and
any other terms and conditions of any Stock Appreciation Right. 

 

 

6.2
Restricted Stock Units. The
Committee is authorized to grant Restricted Stock Units to Employees,
Consultants and Non-Employee Directors, which are rights to receive a specified
number of shares of Common Stock or the Fair Market Value of such Common Stock
in cash at the end of a specified deferral period, subject to the following
terms and conditions: 

 

 

(a)
Award and
Restrictions.
Satisfaction of a Restricted Stock Unit shall occur upon expiration of the
deferral period specified for such Restricted Stock Units by the Committee or,
if permitted by the Committee, as elected by the Participant; provided that such
election by the Participant shall be made in the calendar year before services
are performed and is irrevocable. In addition, Restricted Stock Units shall be
subject to such restrictions (which may include a risk of forfeiture), if any,
as the Committee may impose in its sole discretion, which restrictions may lapse
at the expiration of the deferral period or at earlier specified times
(including times based on achievement of performance goals and/or future service
requirements), separately or in combination, as the Committee may determine in
its sole discretion to be appropriate or advisable for any Award. 

 

 

(b)
Forfeiture. Except
as otherwise determined by the Committee or as may be set forth in any Award,
employment or other agreement pertaining to a Restricted Stock Units, upon
termination of Employment or services during the applicable deferral period or
portion thereof to which forfeiture conditions apply, all Restricted Stock Units
that are at that time subject to forfeiture shall be forfeited; provided,
however, that
the Committee may provide, by rule or regulation or in any Award agreement, or
may determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock Units shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in
other cases which it determines appropriate or advisable waive in whole or in
part the forfeiture of Restricted Stock Units. 

 

 

(c)
Performance
Goals. To the
extent the Committee determines that any Award granted pursuant to this
Article
VI shall
constitute performance-based compensation for purposes of Section 162(m) of the
Code, the grant or settlement of the Award shall, in the Committee’s discretion,
be subject to the achievement of performance goals determined and applied in a
manner consistent with Section
8.2.

 

 

ARTICLE
VII 

 

 

RESTRICTED
STOCK 

 

 

7.1
Eligibility. All
Employees, Consultants and Non-Employee Directors shall be eligible for grants
of Restricted Stock. 

 

 

10

 

 

 

	 	 
	
       

      7.2

       
	
       

      Restrictions,
      Restricted Period and Vesting.

       

 

(a) The
Restricted Stock shall be subject to such forfeiture restrictions (including,
without limitation, limitations that qualify as a “substantial risk of
forfeiture” within the meaning given to that term under Section 83 of the Code)
and restrictions on transfer by the Participant and repurchase by the Company as
the Committee, in its sole discretion, shall determine. Prior to the lapse of
such restrictions, the Participant shall not be permitted to transfer such
shares. The Company shall have the right to repurchase or recover such shares
for the amount of cash paid therefor, if any, if (i) the Participant’s
Employment from or services to the Company or an Affiliate is terminated by the
Company or the Participant prior to the lapse of such restrictions or (ii) the
Restricted Stock is forfeited by the Participant pursuant to the terms of the
Award. 

 

 

(b)
Vesting. See
Section
10.11 of this
Plan for provisions on vesting in connection with termination of Employment or
service. Also, see Section
10.12 of this
Plan relating to vesting in connection with a Change of Control. 

 

 

(c)
Immediate
Transfer Without Immediate Delivery of Restricted Stock. Each
certificate representing Restricted Stock awarded under this Plan shall be
registered in the name of the Participant and, during the Restricted Period,
shall be left on deposit with the Company, or in trust or escrow pursuant to an
agreement satisfactory to the Committee, along with a stock power endorsed in
blank until such time as the restrictions on transfer have lapsed. The grantee
of Restricted Stock shall have all the rights of a stockholder with respect to
such shares including the right to vote and the right to receive dividends or
other distributions paid or made with respect to such shares; provided,
however, that the
Committee may in the Award restrict the Participant’s right to dividends until
the restrictions on the Restricted Stock lapse. Any certificate or certificates
representing shares of Restricted Stock shall bear a legend substantially
similar to the following: 

 

	 	 	 
	 	
       

      The
      shares represented by this certificate have been issued pursuant to the
      terms of the 2005 Rowan Companies, Inc. Long-Term Incentive Plan and may
      not be sold, pledged, transferred, assigned or otherwise encumbered in any
      manner except as is set forth in the terms of such award dated , 200
      .

       
	 

 

7.3
Forfeiture of Restricted Stock. If, for
any reason, the restrictions imposed by the Committee upon Restricted Stock are
not satisfied at the end of the Restricted Period, any Restricted Stock
remaining subject to such restrictions shall thereupon be forfeited by the
Participant and reacquired by the Company. 

 

 

7.4
Delivery of Shares of Common Stock. Pursuant
to Section
10.5 of this
Plan and subject to the withholding requirements of Article
XI of this
Plan, at the expiration of the Restricted Period, a stock certificate evidencing
the Restricted Stock (to the nearest full share) with respect to which the
Restricted Period has expired shall be delivered without charge to the
Participant, or his personal representative, free of all restrictions under this
Plan. 

 

 

ARTICLE
VIII 

 

 

PERFORMANCE
AWARDS 

 

 

8.1
Performance Awards. The
Committee may grant Performance Awards to Employees, Consultants or Non-employee
Directors based on performance criteria measured over a period of not less than
six (6) months and not more than ten (10) years. The Committee may use such
business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its discretion to
increase the amounts payable under any Award subject to performance conditions,
except as limited under Section
8.2 in the
case of a Performance Award which is intended to meet the requirements of
section 162(m) of the Code. 

 

 

8.2
Performance Goals. The
grant and/or settlement of a Performance Award shall be contingent upon terms
set forth in this Section
8.2.

 

 

11

 

 

(a)
General. The
performance goals for Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee. In the case of any Award granted
to an Employee, which is intended to meet the requirements of the
performance-based exception of section 162(m) of the Code performance goals
shall be designed to be objective and shall otherwise meet the requirements of
Section 162(m) of the Code and regulations thereunder (including Treasury
Regulations sec. 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
are such that the achievement of performance goals is “substantially uncertain”
at the time of grant. The Committee may determine that such Performance Awards
shall be granted and/or settled upon achievement of any one performance goal or
that two or more of the performance goals must be achieved as a condition to the
grant and/or settlement of such Performance Awards. Performance goals may differ
among Performance Awards granted to any one Participant or for Performance
Awards granted to different Participants. 

 

 

(b)
Business
Criteria. With
respect to any Performance Award granted to an Employee which is intended to
meet the requirements of the performance-based exception of section 162(m) of
the Code, one or more of the following business criteria for the Company, on a
consolidated basis, and/or for specified subsidiaries, divisions, businesses,
geographical units or individual employees or service providers of the Company
(except with respect to the total stockholder return and earnings per share
criteria), shall be used by the Committee in establishing performance goals for
Performance Awards granted to a Participant: (i) earnings per share; (ii) price
per share, (iii) revenues; (iv) cash flow; (v) return on net assets; (vi) return
on assets; (vii) return on investment; (viii) return on equity; (ix) economic
value added; (x) gross margin; (xi) net income; (xii) pretax earnings; (xiii)
pretax earnings before interest, depreciation and amortization; (xiv) pretax
operating earnings after interest expense and before incentives, service fees,
and extraordinary or special items; (xv) operating income; (xvi) total
stockholder return; (xvii) debt reduction; (xviii) safety record; (xix)
environmental compliance; and (xx) budget compliance. Any of the above goals may
be determined on an absolute or relative basis or as compared to the performance
of a published or special index deemed applicable by the Committee including,
but not limited to, the Standard & Poor’s 500 Stock Index or components
thereof or a group of comparable companies. 

 

 

(c)
Performance
Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of Performance Awards shall be
measured over a performance period of not less than six (6) months and not more
than ten (10) years, as specified by the Committee. Performance goals in the
case of any Award granted to a Participant shall be established not later than
ninety (90) days after the beginning of any performance period applicable to
such Performance Award, or at such other date as may be required or permitted
for “performance-based compensation” under Section 162(m) of the Code.

 

 

(d)
Settlement
of Performance Awards; Other Terms. After
the end of each performance period, the Committee shall determine the amount, if
any, of Performance Awards payable to each Participant based upon achievement of
business criteria over a performance period. The Committee may not exercise
discretion to increase any such amount payable in respect of a Performance Award
that is intended to comply with Section 162(m) of the Code. The Committee shall
specify the circumstances in which such Performance Awards shall be paid or
forfeited in the event of termination of Employment of the Participant prior to
the end of a performance period or settlement of Performance Awards.

 

 

(e)
Written
Determinations. All
determinations by the Committee as to the establishment of performance goals,
the amount of any Performance Award and the achievement of performance goals
relating to Performance Awards shall be made in a written agreement or other
document covering the Performance Award. The Committee may not delegate any
responsibility relating to such Performance Awards. 

 

 

(f)
Status of
Performance Awards under Section 162(m) of the Code. It is
the intent of the Company that Performance Awards granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Section 162(m) of the Code and regulations thereunder (including Treasury
Regulations sec. 1.162-27 and successor regulations thereto) shall constitute
“performance-based 

 

 

12

 

 

compensation”
within the meaning of Section 162(m) of the Code and regulations thereunder.
Accordingly, the terms of this Section
8.2 shall be
interpreted in a manner consistent with Section 162(m) of the Code and
regulations thereunder. Notwithstanding the foregoing, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
“Covered Employee” as used herein shall mean any person designated by the
Committee, at the time of grant of a Performance Award, as likely to be a
Covered Employee with respect to that fiscal year. If any provision of this Plan
as in effect on the date of adoption or any agreements relating to Performance
Awards that are intended to comply with Section 162(m) of the Code does not
comply or is inconsistent with the requirements of Section 162(m) of the Code or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements. 

 

 

ARTICLE
IX 

 

 

OTHER
STOCK OR PERFORMANCE-BASED AWARDS 

 

 

The
Committee is hereby authorized to grant to Employees, Non-Employee Directors and
Consultants, Other Stock or Performance-Based Awards, which shall consist of a
right which (a) is not an Award described in any other Article of this Plan and
(b) is denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, shares of Common Stock (including, without
limitation, units or securities convertible into shares of Common Stock) or cash
as deemed by the Committee to be consistent with the purposes of this Plan.
Subject to the terms of this Plan, the Committee shall determine the terms and
conditions of any such Other Stock or Performance-Based Awards, which shall be
contained in a written agreement or other document covering such Awards.

 

 

ARTICLE
X 

 

 

CERTAIN
PROVISIONS APPLICABLE TO ALL AWARDS 

 

 

10.1
Vesting and Other General Provisions. Awards
shall be evidenced by a written agreement or other document and may be granted
on the terms and conditions set forth herein. In addition, the Committee may
impose on any Award or the exercise thereof, such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of Employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award which are not inconsistent with
the Plan. Notwithstanding the foregoing, except in the case of terminations of
employment due to death, Disability, Retirement, Change of Control or such other
special circumstances as the Committee in its sole discretion shall determine,
any Full Value Award under the Plan to an Employee shall not become 100% vested
until such Employee has been employed for at least three years from the date of
grant. The preceding sentence shall be construed to permit any such Award to
vest ratably over such three-year period and to be up to 25% vested immediately
upon date of grant. The foregoing vesting requirement shall not apply to (i)
Awards to Non-employee Directors or Consultants, (ii) Awards made to Employees
not exceeding 5% of the total shares available for Awards as of the Effective
Date, or (iii) Awards made contingent upon shareholder approval of the Plan
which were authorized by the Company’s Compensation Committee prior to the
Effective Date. The terms, conditions and/or restrictions contained in an Award
may differ from the terms, conditions and restrictions contained in any other
Award. The Committee may amend an Award; provided,
however, that,
subject to Section
10.12, no
amendment of an Award may, without the consent of the holder of the Award,
adversely affect such person’s rights with respect to such Award in any material
respect. Notwithstanding the foregoing, the Committee may amend any Award
without the consent of the holder if the Committee deems it necessary to avoid
adverse tax consequences to the holder under Code Section 409A. The Committee
shall retain full power and discretion to accelerate or waive, at any time, any
term or condition of an Award that is not mandatory under this Plan;
provided,
however, that,
subject to Section
10.12, the
Committee shall not have discretion to accelerate or waive any term or condition
of an Award (i) if such discretion would cause the Award to have adverse tax
consequences 

 

 

13

 

 

 

to the
Participant under 409A, or (ii) if the Award is intended to qualify as
“performance-based compensation” for purposes of Section 162(m) of the Code and
such discretion would cause the Award not to so qualify. Except in cases in
which the Committee is authorized to require other forms of consideration under
this Plan, or to the extent other forms of consideration must be paid to satisfy
the requirements of the Delaware Corporation Law, no consideration other than
services may be required for the grant of any Award. 

 

 

10.2
Stand-Alone, Additional, Tandem and Substitute Awards. Subject
to Section
2.4 of this
Plan, Awards granted under this Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any Affiliate or any business entity to be acquired by the Company or
an Affiliate, or any other right of a Participant to receive payment from the
Company or any Affiliate. Such additional, tandem and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award, the Committee shall require the surrender of such
other Award for cancellation in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any Affiliate. Any
such action contemplated under this Section
10.2 shall be
effective only to the extent that such action will not cause (a) the holder of
the Award to lose the protection of Section 16(b) of the Exchange Act and rules
and regulations promulgated thereunder or (b) any Award that is designed to
qualify payments thereunder as performance-based compensation as defined in
Section 162(m) of the Code to fail to qualify as such performance-based
compensation. 

 

 

10.3 Term
of Awards. The term
or Restricted Period of each Award that is an Option, Stock Appreciation Right,
Restricted Stock Unit or Restricted Stock shall be for such period as may be
determined by the Committee; provided,
however, that in
no event shall the term of any such Award exceed a period of ten (10) years (or
such shorter terms as may be required in respect of an Incentive Stock Option
under Section 422 of the Code). 

 

 

10.4 Form
and Timing of Payment under Awards; Deferrals. Subject
to the terms of this Plan and any applicable Award agreement, payments to be
made by the Company or an Affiliate upon the exercise of an Option or other
Award or settlement of an Award may be made in a single payment or transfer, in
installments or on a deferred basis. The settlement of any Award may, subject to
any limitations set forth in the Award agreement, be accelerated and cash paid
in lieu of shares in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events; provided, however,
that such discretion may not be exercised by the Committee if the exercise of
such discretion would result in adverse tax consequences to the Participant
under section 409A of the Code. In the discretion of the Committee, Awards
granted pursuant to Article
VIII of this
Plan may be payable in cash or shares to the extent permitted by the terms of
the applicable Award agreement and the Plan. Installment or deferred payments
may be required by the Committee (subject to Section
1.8 of this
Plan, including the consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award agreement); provided,
however, that no deferral shall be required or permitted by the Committee if
such deferral would result in adverse tax consequences to the Participant under
section 409A of the Code. Payments may include, without limitation, provisions
for the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of amounts in respect of installment or
deferred payments denominated in shares. Any deferral shall only be allowed as
is provided in a separate deferred compensation plan adopted by the Company. The
Plan shall not constitute an “employee benefit plan” for purposes of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.

 

 

10.5
Vested and Unvested Awards. After
the satisfaction of all of the terms and conditions set by the Committee with
respect to an Award granted to a Participant pursuant to this Plan, the
following shall be delivered to such Participant: (a) with respect to an Award
of Restricted Stock, a certificate, without the legend set forth in Section
7.2(c), for the
number of shares that are no longer subject to such restrictions, terms and
conditions; (b) with respect to an Award of Restricted Stock Unit, to the extent
not paid in cash, a certificate for the number of shares equal to the number of
shares of Common Stock earned; and (c) with 

 

 

14

 

 

respect
to an Award of Stock Appreciation Rights or Performance Awards, cash and/or a
certificate for the number of shares equal in value to the number of Stock
Appreciation Rights or amount of Performance Awards vested. The number of shares
of Common Stock which shall be issuable upon exercise of a Stock Appreciation
Right or earning of a Performance Award shall be determined by dividing (1) by
(2) where (1) is the number of shares of Common Stock as to which the Stock
Appreciation Right is exercised multiplied by the Spread or the amount of
Performance Award that is earned and payable, as applicable, and (2) is the FMV
Per Share of Common Stock on the date of exercise of the Stock Appreciation
Right or the date the Performance Award is earned and payable, as applicable.
Upon termination, resignation or removal of a Participant under circumstances
that do not cause such Participant to become fully vested, any remaining
unvested Options, shares of Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights or Performance Awards, as the case may be, shall either be
forfeited back to the Company or, if appropriate under the terms of the Award,
shall continue to be subject to the restrictions, terms and conditions set by
the Committee with respect to such Award. 

 

 

10.6
Exemptions from Section 16(b) Liability. It is
the intent of the Company that the grant of any Awards to or other transaction
by a Participant who is subject to Section 16 of the Exchange Act shall be
exempt from Section 16(b) of the Exchange Act pursuant to an applicable
exemption (except for transactions acknowledged by the Participant in writing to
be non-exempt). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 as then applicable
to any such transaction, such provision shall be construed or deemed amended to
the extent necessary to conform to the applicable requirements of Rule 16b-3 so
that such Participant shall avoid liability under Section 16(b) of the Exchange
Act. 

 

 

10.7
Securities Requirements. No
shares of Common Stock will be issued or transferred pursuant to an Award unless
and until all then-applicable requirements imposed by federal and state
securities and other laws, rules and regulations and by any regulatory agencies
having jurisdiction and by any stock market or exchange upon which the Common
Stock may be listed, have been fully met. As a condition precedent to the
issuance of shares pursuant to the grant or exercise of an Award, the Company
may require the grantee to take any reasonable action to meet such requirements.
The Company shall not be obligated to take any affirmative action in order to
cause the issuance or transfer of shares pursuant to an Award to comply with any
law or regulation described in the second preceding sentence. 

 

 

10.8
Transferability. 

 

 

(a)
Non-Transferable
Awards and Options. Except
as may be otherwise provided by the Committee in an Award agreement or
otherwise, no Award and no right under this Plan, contingent or otherwise, other
than Purchased Stock, Bonus Stock or Restricted Stock as to which restrictions
have lapsed, will be (i) assignable, saleable or otherwise transferable by a
Participant except by will or by the laws of descent and distribution or
pursuant to a domestic relations order or (ii) subject to any encumbrance,
pledge or charge of any nature. No transfer by will or by the laws of descent
and distribution shall be effective to bind the Company unless the Committee
shall have been furnished with a copy of the deceased Participant’s will or such
other evidence as the Committee may deem necessary to establish the validity of
the transfer. Any attempted transfer in violation of this Section
10.8(a) shall be
void and ineffective for all purposes. 

 

 

(b)
Ability
to Exercise Rights. Except
as otherwise specifically provided under this Plan, only the Participant or his
guardian (if the Participant becomes Disabled), or in the event of his death,
his legal representative or beneficiary, may exercise Options, receive cash
payments and deliveries of shares or otherwise exercise rights under this Plan.
The executor or administrator of the Participant’s estate, or the person or
persons to whom the Participant’s rights under any Award will pass by will or
the laws of descent and distribution, shall be deemed to be the Participant’s
beneficiary or beneficiaries of the rights of the Participant hereunder and
shall be entitled to exercise such rights as are provided hereunder.

 

 

15

 

 

10.9
Rights as a Stockholder. 

 

 

(a)
No
Stockholder Rights. Except
as otherwise provided in Section
10.9(b), a
Participant who has received a grant of an Award or a transferee of such
Participant shall have no rights as a stockholder with respect to any shares of
Common Stock until such person becomes the holder of record. Except as otherwise
provided in Section
10.9(b), no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued.

 

 

(b)
Holder of
Restricted Stock. Unless
otherwise approved by the Committee prior to the grant of a Restricted Stock
Award, a Participant who has received a grant of Restricted Stock or a permitted
transferee of such Participant shall not have any rights of a stockholder until
such time as a stock certificate has been issued with respect to all, or a
portion of, such Restricted Stock Award. 

 

 

10.10
Listing and Registration of Shares of Common Stock. The
Company, in its discretion, may postpone the issuance and/or delivery of shares
of Common Stock upon any exercise of an Award until completion of such stock
exchange listing, registration or other qualification of such shares under any
state and/or federal law, rule or regulation as the Company may consider
appropriate, and may require any Participant to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of the shares in compliance with applicable laws, rules and
regulations. 

 

 

10.11
Termination of Employment, Death and Disability. 

 

 

(a)
Termination
of Employment. Except
as otherwise provided in (b) below, and unless otherwise provided in the Award,
if Employment of an Employee or service of a Non-Employee Director or Consultant
is terminated for any reason whatsoever, any nonvested Award granted pursuant to
this Plan outstanding at the time of such termination and all rights thereunder
shall wholly and completely terminate and no further vesting shall occur, and
the Employee, Consultant or Non-Employee Director shall be entitled to exercise
his or her rights with respect to the portion of the Award vested as of the date
of termination for a period that shall end on the earlier of (i) the expiration
date set forth in the Award with respect to the vested portion of such Award or
(ii) the date that occurs six (6) months after such termination date (three (3)
months after the date of termination in the case of an Incentive Option).

 

 

(b)
Continuation.
Notwithstanding any other provision of this Plan, the Committee, in its
discretion, may provide for the acceleration of vesting upon death, Disability
or Retirement or for the continuation of any Award for such period and upon such
terms and conditions as are determined by the Committee in the event that a
Participant ceases to be an Employee, Consultant or Non-Employee Director.

 

 

10.12
Change in Control. 

 

 

(a)
Change in
Control. Unless
otherwise provided in the Award, in the event of a Change in Control described
in the definition of Change in Control under Section
1.2 of this
Plan: 

 

	 	 
	 	
       

      (i)
      the Committee may accelerate vesting and the time at which all Options and
      Stock Appreciation Rights then outstanding may be exercised so that those
      types of Awards may be exercised in full for a limited period of time on
      or before a specified date fixed by the Committee, after which specified
      date all unexercised Options and Stock Appreciation Rights and all rights
      of Participants thereunder shall terminate, or the Committee may
      accelerate vesting and the time at which Options and Stock Appreciation
      Rights may be exercised so that those types of Awards may be exercised in
      full for their then remaining term;

       

	 	 
	 	
       

      (ii)
      the Committee may waive all restrictions and conditions of all Restricted
      Stock and Restricted Stock Unit then outstanding with the result that
      those types of Awards shall be deemed satisfied, and the Restriction
      Period or other limitations on payment in full with respect thereto shall
      be deemed to have

       

 

16

 

 

	 	 
	 	
       

      expired,
      as of the date of the Change in Control or such other date as may be
      determined by the Committee; and

       

	 	 
	 	
       

      (iii)
      the Committee may determine to amend Performance Awards and Other Stock or
      Performance-Based Awards, or substitute new Performance Awards and Other
      Stock or Performance-Based Awards in consideration of cancellation of
      outstanding Performance Awards and any Other Stock or Performance-Based
      Awards, in order to ensure that such Awards shall become fully vested,
      deemed earned in full and promptly paid to the Participants as of the date
      of the Change in Control or such other date as may be determined by the
      Committee, without regard to payment schedules and notwithstanding that
      the applicable performance cycle, retention cycle or other restrictions
      and conditions shall not have been completed or satisfied.

       

 

Notwithstanding
the above provisions of this Section
10.12(a), the
Committee shall not be required to take any action described in the preceding
provisions of this Section
10.12(a), and any
decision made by the Committee, in its sole discretion, not to take some or all
of the actions described in the preceding provisions of this Section
10.12(a) shall be
final, binding and conclusive with respect to the Company, all Participants and
all other interested persons. 

 

 

(b)
Right of
Cash-Out. If
approved by the Board prior to or within thirty (30) days after such time as a
Change in Control shall be deemed to have occurred, the Board shall have the
right for a forty-five (45) day period immediately following the date that the
Change in Control is deemed to have occurred to require all, but not less than
all, Participants to transfer and deliver to the Company all Awards previously
granted to the Participants in exchange for an amount equal to the “cash value”
(defined below) of the Awards. Such right shall be exercised by written notice
to all Participants. For purposes of this Section
10.12(b), the
“cash value” of an Award shall equal the sum of (i) all cash to which the
Participant would be entitled upon settlement or exercise of any Award which is
not an Option and (ii) in the case of any Award that is an Option, the excess of
the “market value” (defined below) per share over the Option price, if any,
multiplied by the number of shares subject to such Award. For purposes of the
preceding sentence, “market value” per share shall mean the higher of (x) the
average of the Fair Market Value per share of Common Stock on each of the five
(5) trading days immediately following the date a Change in Control is deemed to
have occurred or (y) the highest price, if any, offered in connection with the
Change in Control. The amount payable to each Participant by the Company
pursuant to this Section
10.12(b) shall be
paid in cash or by certified check and shall be reduced by any taxes required to
be withheld. 

 

 

ARTICLE
XI 

 

 

WITHHOLDING
FOR TAXES 

 

 

Any
issuance of Common Stock pursuant to the exercise of an Option or in payment of
any other Award under this Plan shall not be made until appropriate arrangements
satisfactory to the Company have been made for the payment of any tax amounts
(federal, state, local or other) that may be required to be withheld or paid by
the Company with respect thereto. Such arrangements may, at the discretion of
the Committee, include allowing the person to tender to the Company shares of
Common Stock owned by the person, or to request the Company to withhold shares
of Common Stock being acquired pursuant to the Award, whether through the
exercise of an Option or as a distribution pursuant to the Award, which have an
aggregate FMV Per Share as of the date of such withholding that is not greater
than the sum of all tax amounts to be withheld with respect thereto at the
minimum statutory rate, together with payment of any remaining portion of such
tax amounts in cash or by check payable and acceptable to the Company.

 

 

Notwithstanding
the foregoing, if on the date of an event giving rise to a tax withholding
obligation on the part of the Company the person is an officer or individual
subject to Rule 16b-3, such person may direct that such tax withholding be
effectuated by the Company withholding the necessary number of shares of Common
Stock (at the minimum statutory tax rate) from such Award payment or exercise.

 

 

17

 

 

ARTICLE
XII 

 

 

MISCELLANEOUS 

 

 

12.1 No
Rights to Awards or Uniformity Among Awards. No
Participant or other person shall have any claim to be granted any Award; there
is no obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards; and the terms and conditions of Awards need not be the
same with respect to each recipient. 

 

 

12.2
Conflicts with Plan. In the
event of any inconsistency or conflict between the terms of this Plan and an
Award, the terms of this Plan shall govern. 

 

 

12.3 No
Right to Employment. The
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company or any Affiliate. Further, the Company or
any Affiliate may at any time dismiss a Participant from employment, free from
any liability or any claim under this Plan, unless otherwise expressly provided
in this Plan or in any Award. 

 

 

12.4
Governing Law. The
validity, construction and effect of this Plan and any rules and regulations
relating to this Plan shall be determined in accordance with applicable federal
law and the laws of the State of Texas with venue in Harris County, without
regard to any principles of conflicts of law. 

 

 

12.5
Gender, Tense and Headings. Whenever
the context requires such, words of the masculine gender used herein shall
include the feminine and neuter, and words used in the singular shall include
the plural. Section headings as used herein are inserted solely for convenience
and reference and constitute no part of this Plan. 

 

 

12.6
Severability. If any
provision of this Plan or any Award is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or as to any Participant or Award,
or would disqualify this Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended as necessary
to conform to the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of this Plan or the Award, such provision shall be stricken as to such
jurisdiction, Participant or Award, and the remainder of this Plan and any such
Award shall remain in full force and effect. 

 

 

12.7
Other Laws. The
Committee may refuse to issue or transfer any shares or other consideration
under an Award if, acting in its sole discretion, it determines that the
issuance or transfer of such shares or such other consideration might violate
any applicable law. 

 

 

12.8
Stockholder Agreements. The
Committee may condition the grant, exercise or payment of any Award upon such
person entering into a stockholders’ or repurchase agreement in such form as
approved from time to time by the Board. 

 

 

12.9
Funding. Except
as provided under Article
VII of this
Plan, no provision of this Plan shall require or permit the Company, for the
purpose of satisfying any obligations under this Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Participants shall
have no rights under this Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other Employees, Consultants or Non-Employee Directors under general
law. 

 

 

12.10 No
Guarantee of Tax Consequences. Neither
the Board, nor the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder. 

 

 

18Amendment No. 1

EXHIBIT 10a

AMENDMENT
NO. 1

TO

CREDIT
AGREEMENT

THIS
AMENDMENT NO. 1, dated
as of March 28, 2005 (“Amendment
No. 1”), to
the 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”)
(collectively the “Parties”).

WHEREAS, to aid
in the construction of the self-elevating mobile offshore drilling unit to be
named “TARZAN II” (the “Vessel”), on
May 28, 2003, the Parties executed the Credit Agreement, providing for the
delivery of no more than $89,658,000 principal amount of notes designated
"United States Government Guaranteed Ship Financing Obligations, TARZAN II
Series";

WHEREAS, the
projected Delivery Date of the Vessel, which was April 1, 2005, has, for a
variety of reasons, been postponed to September 2005;

WHEREAS, in
connection with the postponement of the projected Delivery Date of the Vessel,
the Parties wish to amend the Credit Agreement in order to extend the Final
Disbursement Date and Commitment Termination Date thereunder from April 1, 2005
to December 31, 2005;

NOW
THEREFORE, in
consideration of the mutual rights and obligations set forth herein and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1. Section
2.02. Section
2.02 of the Credit Agreement is hereby amended to read as follows:

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) December 31, 2005, (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. Concerning
Exhibit 1. (a) The
following definition in Exhibit 1 to the Credit Agreement is hereby amended to
read as follows:

“Commitment
Termination Date” means December 31, 2005, as such date may be extended from
time to time pursuant to Section 2.06(a).

(b)
Exhibit 1 to the Credit Agreement is further amended by adding the following
definition to read as follows:

 

“Amendment
No. 1 to the Credit Agreement” means the Amendment No. 1 to the Credit Agreement
dated March 28, 2005, among the Shipowner, the Lenders and Agents.

3. All other
capitalized terms used herein have the meanings set forth in Exhibit 1 to the
Credit Agreement.

4. Except as
so amended, the provisions of the Credit Agreement are hereby confirmed, and
shall remain in full force and effect.

5. This
Amendment No. 1 to the Credit Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

2

IN
WITNESS WHEREOF, this
Amendment No. 1 to the Credit Agreement has been duly executed by the Parties as
of the day and year first above written.

	
      ROWAN
      COMPANIES, INC., as 

      the
      Shipowner
	 	
      GOVCO
      INCORPORATED, as the Primary Lender, by Citicorp North America, Inc., its
      attorney-in-fact.

	 	 	 
	
      By:
      ______________________________
	 	
      By:
      _______________________________

	
      (Signature)
	 	
      (Signature)

	 	 	 
	
      Name:
      E.
      E. Thiele .
	 	
      Name:
      P.
      A. Botticelli .

	
      (Print)
	 	
      (Print)

	 	 	 
	
      Title:
      Senior
      Vice President . 
	 	
      Title:
      Vice
      President .

	
      (Print)
	 	
      (Print)

	 	 	 

	
      CITIBANK,
      N.A., as Facility Agent
	 	
      CITIBANK,
      N.A., as the Alternate Lender

	 	 	 
	
      By:
      ______________________________
	 	
      By:
      _______________________________

	
      (Signature)
	 	
      (Signature)

	 	 	 
	
      Name:
      P.
      A. Botticelli . 
	 	
      Name:
      P.
      A. Botticelli .

	
      (Print)
	 	
      (Print)

	 	 	 
	
      Title:
      Vice
      President . 
	 	
      Title:
      Vice
      President .

	
      (Print)
	 	
      (Print)

	 	 	
      CITICORP
      NORTH AMERICA, INC., as the Administrative Agent

	 	 	 
	 	 	
      By:
      _______________________________

	 	 	
      (Signature)

	 	 	 
	 	 	
      Name:
      P.
      A. Botticelli .

	 	 	
      (Print)

	 	 	 
	 	 	
      Title:
      Vice
      President .

	 	 	
      (Print)

3

CONSENT:

Pursuant
to the Section 11.08 of the Credit Agreement, the Secretary hereby consents to
this Amendment No. 1 to the Credit Agreement and confirms the continued
Guarantee of the Obligation of the United States of America pursuant to Title XI
of the Merchant Marine Act, 1936, as amended.

ATTEST:                   UNITED STATES OF
AMERICA,

 
SECRETARY OF TRANSPORTATION

BY:
___________________________         MARITIME
ADMINISTRATION

 
By: __________________________________

        Secretary

 

 

 

 

 

 

 

4

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