Exhibit 10.4

RESTRUCTURING TRANSACTION RETENTION AGREEMENT

This Restructuring Transaction Retention Agreement (“Agreement”) is by and
between The Babcock & Wilcox Company and             (“Executive”), dated as of
November 5, 2014 (the “Agreement Date”).

If the Company (as defined in Exhibit A to this Agreement), with the prior
approval of the Board of Directors of the Company, engages in a transaction that
results in the sale or other disposition of all or substantially all of the
operations of either of its Subsidiaries, BWX Technologies, Inc. (“BWXT”) or
Babcock & Wilcox Power Generation Group, Inc. (“PGG”, and each of BWXT and PGG,
an “Operating Sub” and, together, the “Operating Subs”), whether by sale of the
capital stock or assets of one or both of the Operating Subs, spinoff of one or
both of the Operating Subs or otherwise (a “Restructuring Transaction”) with a
Spin Effective Date (as defined in Exhibit A to this Agreement) that occurs
prior to January 1, 2016, Executive shall be entitled to the Retention Incentive
Grant (as defined below) under the circumstances set out below. In addition, if
Executive’s employment is terminated under certain circumstances set out below
prior to, on or following the Spin Effective Date, Executive will be entitled to
the severance compensation and benefits set out below. The sale or disposition
of less than 100% of the assets or stock of an Operating Sub shall not be
considered a sale or other disposition of substantially all of the operations of
such Operating Sub unless it is a sale or other disposition of at least 80% of
the stock or assets of such Operating Sub. Terms that are capitalized (but not
otherwise defined herein) are used as defined in Exhibit A to this Agreement.

The Company and Executive agree as follows:

 

1. RETENTION INCENTIVE GRANT: On such date as the Company sets the record date
for the Restructuring Transaction, if Executive’s employment with the Company
has not been terminated prior to such date, then the Company shall cause
Executive to be granted either whole shares of restricted common stock of the
Company (“Company Shares”) or restricted stock units covering Company Shares
under the Company’s 2010 Long-Term Incentive Plan, as amended and restated
February 25, 2014 (the “Retention Incentive Grant”), as follows:

 

  (a) Number of Shares. The dollar amount of the Retention Incentive Grant will
be equal to the product of (x) 1a and (y) the sum of Executive’s (1) Salary plus
(2) the product of (A) the Salary and (B) the Target Bonus Percentage (such
amount, the “Grant Date Value”b). The number of Company Shares to be granted as
the Retention Incentive Grant shall equal, rounded down to the nearest whole
number of shares that is divisible by three (3): (i) the Grant Date Value,
divided by (ii) the closing price of one Company Share, as applicable, on the
third trading day following the third quarter release of earnings of the
Company.

 

 

a  This number is 2 in the agreement for James Canafax.

b  The Grant Date Value in the agreement for each of Jenny Apker, P. Sandy Baker
and David Black is expressed as $600,000; $1,235,000 and $600,000, respectively,
rather than as a formula.

 

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  (b) Vesting. Except as provided in Section 1(c) below, if, and only if,
Executive remains continuously employed with the Company through the relevant
vesting date, the Retention Incentive Grant will vest as follows: one-third
(1/3rd) shall vest on the thirtieth (30th) day following the Spin Effective Date
and two-thirds (2/3rd) shall vest on the first anniversary of the Spin Effective
Date.

 

  (c) Death or Disability. The Retention Incentive Grant shall vest in full upon
Executive’s death or date of Separation from Service due to Disability that
occurs prior to any vesting date described in Section 1(b); provided that
Executive remains continuously employed with the Company through the date of
death or date of Separation from Service due to Disability.

 

2. SEVERANCE BENEFITS: If Executive experiences a Covered Termination, he will
be entitled to the payments and benefits set forth below; provided that the
benefits described in Sections 2(b), (c), (d), (e) and (f) shall only be payable
if Executive executes a waiver and release prepared by the Company, which
releases the Company and its affiliates, directors, officers and other customary
persons from any claim or liability arising out of or related to Executive’s
employment with or termination of employment from the Company or any of its
affiliates (except for amounts to which Executive is legally entitled pursuant
to employee benefit plans, Executive’s right to enforce this Agreement and
rights to insurance coverage or indemnification), and 12-month post-employment
nondisparagement and noncompetition covenants (the “Release”), which Release is
not revoked within the time period provided therein, and the executed Release is
delivered to the Company no later than forty-five (45) days after the Covered
Termination.

 

  (a) Accrued Benefits. The Accrued Benefits, payable within sixty (60) days
after the Covered Termination, or such earlier time as may be required by
applicable law.

 

  (b) SERP and Restoration Plan. As of the Covered Termination, a fully vested
and non-forfeitable interest in Executive’s account balance in the SERP and the
Restoration Plan, payable in accordance with the terms of SERP or the
Restoration Plan, as applicable.

 

  (c)

Unvested Equity Awards. As of the Covered Termination, unless otherwise settled
in accordance with the provisions of Section 4 of this Agreement and/or the
plans and agreements referred to therein, a fully vested and non-forfeitable
interest in any outstanding unvested equity awards granted on Company Shares on
or prior to December 31, 2014 (the “Equity Awards”) (excluding for the avoidance
of doubt the Retention Incentive Grant), to be vested and, in the case of
restricted stock and restricted stock units, settled within the 60th day after
the Covered

 

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  Termination; provided that no such Equity Award that is subject to Code
Section 409A will be paid on a date earlier than is provided in the applicable
Equity Award agreement to the extent necessary to avoid the imposition of tax
penalties pursuant to Code Section 409A; and provided further that, subject to
any adjustment(s) which may be made to the Equity Awards as of the Spin
Effective Date as a result of the Restructuring Transaction (including without
limitation pursuant to the applicable plan or award agreement pursuant to which
the Equity Awards were granted, and/or the Company’s employee matters agreement
executed in connection with the Restructuring Transaction), (i) any
performance-based Equity Awards shall be settled assuming a target rate of
performance applicable to such award, but (ii) any performance-based Equity
Awards which at the time of grant had been designated as “performance-based
compensation” within the meaning of Code Section 162(m) will be settled only
with respect to the number of Company Shares earned based on achievement of
actual performance through the applicable performance period, which settlement
will occur at the same time as if the Covered Termination had not occurred. For
the avoidance of doubt, any Equity Awards that are vested (including as a result
of the foregoing provision) options to purchase Company Shares that Executive
holds as of the date of his Covered Termination will remain exercisable through
the expiration of the original term of such option.

 

  (d) Severance Payment Based on Salary. An amount equal to 2 times the sum of
Executive’s (x) Salary plus (y) the product of (1) Salary and (2) Target Bonus
Percentage, paid in a lump sum in cash within sixty (60) days after the Covered
Termination.

 

  (e) Severance Payment Based on Bonus.

 

  (1) Covered Termination Performance Year. An amount equal to the product of
(A) Salary and (B) the Applicable Bonus Percentage, with the product of (A) and
(B) prorated based on the number of days Executive was employed during the bonus
year in which Executive’s Covered Termination occurs, paid in a lump sum in cash
within sixty (60) days after the Covered Termination; but if the Covered
Termination occurs in calendar year 2014 or 2016, such payment may be made not
later than March 15 of the calendar year following the year in which the Covered
Termination occurs.

 

  (2) Prior Performance Year. If a bonus for the prior calendar year has not
been paid under the Bonus Plan as of Executive’s Covered Termination, then
Executive will be entitled to the actual amount of the bonus determined under
the Bonus Plan for such prior calendar year (such amount to be determined
without the exercise of any downward discretion), paid in a lump sum in cash at
the same time such bonus is paid to other Bonus Plan participants.

 

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  (f) Health Care Benefits. An amount equal to three (3) times the full annual
cost of coverage for medical, dental and vision benefits covering Executive and
his covered dependents for the year in which Executive’s Covered Termination
occurs, paid in a lump sum in cash within sixty (60) days after the Covered
Termination.

In no event shall the benefits provided for in Sections 2(a), (d), (e) and
(f) above or any payment provided for in (c) above that is not subject to Code
Section 409A be paid later than March 15th of the calendar year immediately
following the calendar year in which Executive’s Covered Termination occurs. For
the avoidance of doubt, in the event of a Covered Termination, in no event shall
Executive be eligible for or entitled to any other severance payments or
benefits under any other severance plan, program or policy maintained by the
Company or any of its Affiliates.

 

3. LIMITATION ON PAYMENTS AND BENEFITS: Subject to Section 4(a) of this
Agreement, notwithstanding any provision of this Agreement to the contrary, if
any amount or benefit to be paid or provided under this Agreement would be an
“Excess Parachute Payment,” within the meaning of Section 280G of the Code, or
any successor provision thereto, but for the application of this sentence, then
the payments and benefits identified in the last sentence of this Section 3 to
be paid or provided under this Agreement will be reduced to the minimum extent
necessary (but in no event to less than zero) so that no portion of any such
payment or benefit, as so reduced, constitutes an Excess Parachute Payment;
provided, however, that no such reduction shall be made if it is not thereby
possible to eliminate all Excess Parachute Payments under this Agreement;
provided, however, that the foregoing reduction will be made only if and to the
extent that such reduction would result in an increase in the aggregate payment
and benefits to be provided, determined on an after-tax basis (taking into
account the excise tax imposed pursuant to Section 4999 of the Code, or any
successor provision thereto, any tax imposed by any comparable provision of
state law, and any applicable federal, state and local income and employment
taxes). Whether requested by Executive or the Company, the determination of
whether any reduction in such payments or benefits to be provided under this
Agreement or otherwise is required pursuant to the preceding sentence will be
made at the expense of the Company by the Company’s independent accountants. The
fact that Executive’s right to payments or benefits may be reduced by reason of
the limitations contained in this Section 3 will not of itself limit or
otherwise affect any other rights of Executive other than pursuant to this
Agreement. In the event that any payment or benefit intended to be provided
under this Agreement or otherwise is required to be reduced pursuant to this
Section 3, the Company will reduce Executive’s payment and/or benefits, to the
extent required, in the following order: (i) the lump sum payment provided under
Section 2(d); (ii) the lump sum payment provided under
Section 2(e)(1); (iii) the lump sum payment related to Health Care Benefits
provided under Section 2(f); and (iv) the accelerated vesting of equity-based
awards described in Section 2(c).

 

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4. CHANGE IN CONTROL:

 

  (a) Executive Subject to Change in Control Agreement. In the event of a Change
in Control, if Executive is party to a Change in Control Agreement with the
Company, then, Executive’s Change in Control Agreement shall govern in lieu of
this Agreement; in no event will Executive receive duplicate severance payments
pursuant to Section 2 of this Agreement and Executive’s Change in Control
Agreement, if any. In the event of a Change in Control, any Retention Incentive
Grant that is outstanding and unvested at the time of a Covered Termination
shall be immediately vested in full pursuant to
Section 2(c) of the Change in Control Agreement upon the Covered Termination (as
defined under the Change in Control Agreement).

 

  (b) Executive Not Subject to Change in Control Agreement. In the event of a
Change in Control, if Executive is not a party to a Change in Control Agreement
with the Company, Executive shall continue to be covered under the provisions of
this Agreement upon a Covered Termination, except any benefits Executive may be
entitled to with respect to any equity-based compensation (including any Equity
Awards) will be determined in accordance with the applicable plans and award
agreements. In the event of any conflict between the terms of any such plans or
award agreement and Section 2(c) of this Agreement, the terms of such plan or
award agreement shall control. Notwithstanding the foregoing, in the event of a
Change in Control, any Retention Incentive Grant that is outstanding and
unvested shall be immediately vested in full upon Executive’s Covered
Termination hereunder.

 

5. INTERNAL REVENUE CODE 409A:

 

  (a) Compliance. It is the intent of the parties that the provisions of this
Agreement either comply with Code Section 409A and the Treasury regulations and
guidance issued thereunder or that one or more elements of compensation or
benefits be exempt from Code Section 409A. Accordingly, the parties intend that
this Agreement be interpreted and operated in a manner consistent with such
requirements in order to avoid the application of penalty taxes under Code
Section 409A to the extent reasonably practicable. The Company shall neither
cause nor permit: (i) any payment, benefit or consideration to be substituted
for a benefit that is payable under this Agreement if such action would result
in the failure of any amount that is subject to Code Section 409A to comply with
the applicable requirements of Code Section 409A; or (ii) any adjustments to any
equity interest to be made in a manner that would result in the equity
interest’s becoming subject to Code Section 409A unless, after such adjustment,
the equity interest is in compliance with the requirements of Code Section 409A
to the extent applicable. A Covered Termination shall constitute an “involuntary
separation from service” for purposes of Code Section 409A.

 

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  (b) Waiting Period for Specified Employees. Notwithstanding any provision of
this Agreement to the contrary, if Executive is a “Specified Employee” (as that
term is defined in Code Section 409A) as of Executive’s Covered Termination,
then any amounts or benefits which are payable under this Agreement upon
Executive’s “Separation from Service” (within the meaning of Code Section 409A),
which are subject to the provisions of Code Section 409A and not otherwise
exempt under Code Section 409A, and would otherwise be payable during the first
six-month period following such Separation from Service, shall be paid on the
first business day that (i) is at least six months after the date after
Executive’s Covered Termination or (ii) follows Executive’s date of death, if
earlier (the “Waiting Period”). The benefits in Sections 2(a), (d), (e) and
(f) and certain of the benefits in Section 2(c) are intended to be exempt from
Code Section 409A under the “short-term deferral exemption” and thus the Waiting
Period is not intended to apply to such benefits.

 

6. CONFIDENTIALITY AND NON-DISCLOSURE: Executive acknowledges that pursuant to
this Agreement, the Company agrees to provide to him Confidential Information
and has previously provided him other such Confidential Information. In return
for this and other consideration, provided under this Agreement, Executive
agrees that he will not, while employed by the Company or any Affiliate and
thereafter, disclose or make available to any other person or entity, or use for
his own personal gain, any Confidential Information, except for such disclosures
as required in the performance of his duties hereunder as may otherwise be
required by law or legal process (in which case Executive shall notify the
Company of such legal or judicial proceeding as soon as practicable following
his receipt of notice of such a proceeding, and permit the Company to seek to
protect its interests and information).

 

7. RETURN OF PROPERTY: Executive agrees that at the time of leaving his or her
employ with the Company or an Affiliate, he will deliver to the Company (and
will not keep in his possession, recreate or deliver to anyone else) all
Confidential Information as well as all other devices, records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, customer or client lists or information, or any
other documents or property (including all reproductions of the aforementioned
items) belonging to the Company or any of its Affiliates, regardless of whether
such items were prepared by Executive.

 

8. NON-SOLICITATION:

 

  (a)

For consideration provided under this Agreement, including, but not limited to
the Company’s agreement to provide Executive with Confidential Information
regarding the Company and its respective

 

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  businesses, Executive agrees that while employed by the Company or an
Affiliate and for twelve (12) months following a Separation from Service during
the term of this Agreement he shall not, without the prior written consent of
the General Counsel of the Company, directly or indirectly, (i) hire or induce,
entice or solicit (or attempt to induce, entice or solicit) any employee of the
Company or any of its Affiliates or ventures to leave the employment of the
Company or any of its Affiliates or ventures or (ii) solicit or attempt to
solicit the business of any customer or acquisition prospect of the Company or
any of its Affiliates or ventures with whom Executive had any actual contact or
Confidential Information about while employed by the Company or an Affiliate.

 

  (b) The restrictions contained in Section 8(a) are limited to areas or
territories within the United States or in any foreign country where the Company
or an Affiliate engages (or has definite plans to engage) in operations or the
marketing of its products or services at the time of Executive’s Separation from
Service.

 

  (c) Executive acknowledges that these restrictive covenants under this
Agreement, for which Executive received valuable consideration from the Company
as provided in this Agreement, including, but not limited to the Company’s
agreement to provide Executive with Confidential Information regarding the
Company and its respective businesses, are ancillary to otherwise enforceable
provisions of this Agreement, that the consideration provided by the Company
gives rise to the interest of each of the Company in restraining Executive from
competing and that the restrictive covenants are designed to enforce Executive’s
consideration or return promises under this Agreement. Additionally, Executive
acknowledges that these restrictive covenants contain limitations as to time,
geographical area and scope of activity to be restrained that are reasonable and
do not impose a greater restraint than is necessary to protect the goodwill or
other legitimate business interests of the Company, including, but not limited
to, the Company’s need to protect its Confidential Information.

 

9. NOTICES: For purposes of this Agreement, notices and all other communications
must be in writing and will be deemed to have been given when personally
delivered or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

 

If to Company:   The Babcock & Wilcox Company   13024 Ballantyne Corporate
Place, Ste. 700   Charlotte, NC 28277   ATTENTION: General Counsel

 

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If to Executive:   Executive, at Executive’s most recent address on file with
the Company

or to such other address as either party may furnish to the other in writing in
accordance with this Section.

 

10. APPLICABLE LAW: The validity, interpretation, construction and performance
of this Agreement will be governed by and construed in accordance with the
substantive laws of the State of Delaware, but without giving effect to the
principles of conflict of laws of such State.

 

11. SEVERABILITY: If any provision of this Agreement is determined to be invalid
or unenforceable, then the invalidity or unenforceability of that provision will
not affect the validity or enforceability of any other provision of this
Agreement and all other provisions will remain in full force and effect.

 

12. WITHHOLDING OF TAXES: The Company may withhold from any payments under this
Agreement all federal, state, local or other taxes as may be required pursuant
to any law or governmental regulation or ruling. Executive acknowledges that
other than the Company’s obligation to withhold and remit applicable income
and/or employment taxes and pay its share of any applicable payroll taxes,
Executive is solely responsible for any and all taxes, interest and penalties
that may be imposed with respect to the payments and benefits provided under
this Agreement.

 

13. NO ASSIGNMENT; SUCCESSORS: Executive’s right to receive payments or benefits
under this Agreement will not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, whether voluntary, involuntary, by
operation of law or otherwise, other than a transfer by will or by the laws of
descent or distribution, and in the event of any attempted assignment or
transfer contrary to this Section 13 the Company will have no liability to pay
any amount so attempted to be assigned or transferred. This Agreement inures to
the benefit of and is enforceable by Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

This Agreement is binding upon and inures to the benefit of the Company and its
successors and assigns (including, without limitation, any company into or with
which the Company may merge or consolidate and any Successor); and to the extent
necessary, the Company may assign its obligations under this Agreement to
Executive’s employer upon the occurrence of the Restructuring Transaction.

 

14. NUMBER AND GENDER: Wherever appropriate herein, words used in the singular
will include the plural, the plural will include the singular, and the masculine
gender will include the feminine gender.

 

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15. CONFLICTS: This Agreement constitutes the entire understanding of the
parties with respect to its subject matter and supersedes any other agreement or
other understanding, whether oral or written, express or implied, between them
concerning, related to or otherwise in connection with, the subject matter
hereof; provided that if Executive is a party to a Change in Control Agreement,
the Change in Control Agreement shall apply in accordance with its terms as
described herein.

 

16. AMENDMENT AND WAIVER: No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and such officer as may be specifically
designated by the Board. No waiver by any party hereto at any time of any breach
by the other party hereto of, or of any lack of compliance with, any condition
or provision of this Agreement to be performed by any other party will be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

 

17. COUNTERPARTS: This Agreement may be executed in several counterparts, each
of which will be deemed to be an original but all of which together will
constitute one and the same instrument.

 

18. TERM: This Agreement shall become effective on the Agreement Date and shall
terminate on the earliest of: (a) December 31, 2015, but if the Spin Effective
Date occurs prior to January 1, 2016, then the first anniversaryc of the Spin
Effective Date; (b) the date a determination is made by the Board that a
Restructuring Transaction will not occur; and (c) the date on which Executive’s
employment with the Company and all Affiliates is terminated; provided that the
terms of this Agreement which must survive the termination of this Agreement in
order to be effectuated (including the provisions of Sections 1, 2, 6, 7 and 8)
will in all events survive.

[Signatures on next page]

 

 

c  Second anniversary in the agreement for James Canafax

 

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THE BABCOCK & WILCOX COMPANY By:  

 

Name:   E. James Ferland Title:   President and Chief Executive Officer
EXECUTIVE By:  

 

Name:   EMPLOYEE

 

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EXHIBIT A

DEFINITIONS

The following terms have the meanings set forth below.

“Accrued Benefits” shall mean:

 

  i. Any portion of Executive’s Salary earned through the date of the Covered
Termination and not yet paid;

 

  ii. Reimbursement for any and all amounts advanced in connection with
Executive’s employment for reasonable and necessary expenses incurred by
Executive through the date of the Covered Termination in accordance with the
Company’s policies and procedures on reimbursement of expenses;

 

  iii. Any earned vacation pay not theretofore used or paid in accordance with
the Company’s policy for payment of earned and unused vacation time;

 

  iv. If executive participates in the Company’s financial planning services
through AYCO on the date of the Covered Termination, such services through AYCO
will continue until the earlier of June 30 of the calendar year following the
calendar year in which a Covered Termination occurs or the date such program
terminates for all similarly situated employees; and

 

  v. All other payments and benefits to which Executive may be entitled under
the terms of any applicable compensation arrangement or benefit plan or program
of the Company that do not specify the time of distribution; provided that
Accrued Benefits shall not include any entitlement to severance under any
severance plan or policy of the Company.

“Affiliate” means an Affiliate of the Company within the meaning of Rule 12b-2
promulgated under Section 12 of the Exchange Act.

“Applicable Bonus Percentage” means: (i) if the Covered Termination occurs in
calendar year 2014 or 2016, the percentage applicable to Executive to determine
Executive’s actual bonus due under the applicable Bonus Plan in respect of such
year and (ii) if the Covered Termination occurs in calendar year 2015, the
Target Bonus Percentage for such year.

“Board” means the Board of Directors of the Company.

“Bonus Plan” means the Company’s Executive Incentive Compensation Plan or the
Company’s Management Incentive Compensation Plan, as applicable to Executive, or
any successor plan thereto.

“Cause” means

 

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  (i) the willful and continued failure of Executive to perform substantially
Executive’s duties with the Company or an Affiliate (occasioned by reason other
than physical or mental illness or disability of Executive) after a written
demand for substantial performance is delivered to Executive by the Compensation
Committee of the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Compensation Committee of the
Board or the Chief Executive Officer believes that Executive has not
substantially performed his duties, after which Executive shall have thirty days
to defend or remedy such failure to substantially perform his duties;

 

  (ii) the willful engaging by Executive in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company; or

 

  (iii) the conviction of Executive with no further possibility of appeal for,
or plea of guilty or nolo contendere by Executive to, any felony.

The cessation of employment of Executive under subparagraph (i) and (ii) above
shall not be deemed to be for “Cause” unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the
Compensation Committee of the Board of Directors of the Company at a meeting of
such Committee called and held for such purpose (after reasonable notice is
provided to Executive and he is given an opportunity, together with his counsel,
to be heard before such Committee), finding that, in the good faith opinion of
such Committee, Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof in detail.

A “Change in Control” will be deemed to have occurred upon the occurrence of any
of the following:

 

  (a) 30% Ownership Change: Any Person, other than an ERISA-regulated pension
plan established by the Company or an Affiliate, makes an acquisition of
Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of
30% or more of the then Outstanding Voting Stock, unless such acquisition is
made directly from the Company in a transaction approved by a majority of the
Incumbent Directors; or any group is formed that is the beneficial owner of 30%
or more of the Outstanding Voting Stock (other than a group formation for the
purpose of making an acquisition directly from the Company and approved (prior
to such group formation) by a majority of the Incumbent Directors); or

 

  (b) Board Majority Change: Individuals who are Incumbent Directors cease for
any reason to constitute a majority of the members of the Board; or

 

  (c)

Major Mergers and Acquisitions: Consummation of a Business Combination unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities that were the beneficial owners of the Outstanding
Voting Stock immediately before such Business Combination

 

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  beneficially own, directly or indirectly, more than 51% of the then
outstanding shares of voting stock of the parent corporation resulting from such
Business Combination in substantially the same relative proportions as their
ownership, immediately before such Business Combination, of the Outstanding
Voting Stock, (ii) if the Business Combination involves the issuance or payment
by the Company of consideration to another entity or its shareholders, the total
fair market value of such consideration plus the principal amount of the
consolidated long-term debt of the entity or business being acquired (in each
case, determined as of the date of consummation of such Business Combination by
a majority of the Incumbent Directors) does not exceed 50% of the sum of the
fair market value of the Outstanding Voting Stock plus the principal amount of
the Company’s consolidated long-term debt (in each case, determined immediately
before such consummation by a majority of the Incumbent Directors), (iii) no
Person (other than any corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of the then outstanding
shares of voting stock of the parent corporation resulting from such Business
Combination and (iv) a majority of the members of the board of directors of the
parent corporation resulting from such Business Combination were Incumbent
Directors of the Company immediately before consummation of such Business
Combination; or

 

  (d) Major Asset Dispositions: Consummation of a Major Asset Disposition
unless, immediately following such Major Asset Disposition, (i) individuals and
entities that were beneficial owners of the Outstanding Voting Stock immediately
before such Major Asset Disposition beneficially own, directly or indirectly,
more than 70% of the then outstanding shares of voting stock of the Company (if
it continues to exist) and of the entity that acquires the largest portion of
such assets (or the entity, if any, that owns a majority of the outstanding
voting stock of such acquiring entity) and (ii) a majority of the members of the
Board (if it continues to exist) and of the entity that acquires the largest
portion of such assets (or the entity, if any, that owns a majority of the
outstanding voting stock of such acquiring entity) were Incumbent Directors of
the Company immediately before consummation of such Major Asset Disposition.

For purposes of the definition of a “Change in Control”,

 

  (1) “Person” means an individual, entity or group;

 

  (2) “group” is used as it is defined for purposes of Section 13(d)(3) of the
Exchange Act;

 

  (3) “beneficial owner” is used as it is defined for purposes of Rule 13d-3
under the Exchange Act;

 

  (4) “Outstanding Voting Stock” means outstanding voting securities of the
Company entitled to vote generally in the election of directors; and any
specified percentage or portion of the Outstanding Voting Stock (or of other
voting stock) is determined based on the combined voting power of such
securities;

 

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  (5) “Incumbent Director” means a director of the Company (x) who was a
director of the Company on the effective date of this Agreement or (y) who
becomes a director after such date and whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of a majority of
the Incumbent Directors at the time of such election or nomination, except that
any such director will not be deemed an Incumbent Director if his or her initial
assumption of office occurs as a result of an actual or threatened election
contest or other actual or threatened solicitation of proxies by or on behalf of
a Person other than the Board;

 

  (6) “election contest” is used as it is defined for purposes of Rule 14a-11
under the Exchange Act;

 

  (7) “Business Combination” means

 

  (x) a merger or consolidation involving the Company or its stock or

 

  (y) an acquisition by the Company, directly or through one or more
Subsidiaries, of another entity or its stock or assets;

 

  (8) “parent corporation resulting from a Business Combination” means the
Company if its stock is not acquired or converted in the Business Combination
and otherwise means the entity which as a result of such Business Combination
owns the Company or all or substantially all the Company’s assets either
directly or through one or more Subsidiaries; and

 

  (9) “Major Asset Disposition” means the sale or other disposition in one
transaction or a series of related transactions of 70% or more of the assets of
the Company and its Subsidiaries on a consolidated basis; and any specified
percentage or portion of the assets of the Company will be based on fair market
value, as determined by a majority of the Incumbent Directors.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means The Babcock & Wilcox Company and any Successors, including,
following a Restructuring Transaction, BWXT or PGG, as applicable.

“Confidential Information” means any and all information, data and knowledge
that has been created, discovered, developed or otherwise become known to the
Company or any of its Affiliates or in which property rights have been assigned
or otherwise conveyed to the Company or any of its Affiliates, which
information, data or knowledge has commercial value in the business in which the
Company or any of its Affiliates or ventures is engaged, except such
information, data or knowledge as is or becomes known to the public without
violation of the

 

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terms of this Agreement. By way of illustration, but not limitation,
Confidential Information includes business trade secrets, secrets concerning the
Company’s or any of its Affiliate’s plans and strategies, nonpublic information
concerning material market opportunities, technical trade secrets, processes,
formulas, know-how, improvements, discoveries, developments, designs,
inventions, techniques, marketing plans, manuals, records of research, reports,
memoranda, computer software, strategies, forecasts, new products, unpublished
financial information, projections, licenses, prices, costs, and employee,
customer and supplier lists.

“Covered Termination” means, prior to the first anniversaryd of the Spin
Effective Date of a Restructuring Transaction occurring during the term of this
Agreement, there occurs a termination of Executive’s employment (such that
Executive ceases to be employed by the Company or an Affiliate) that is a
“Separation from Service” (as defined in Code Section 409A and the Treasury
regulations and guidance issued thereunder) (i) by the Company or an Affiliate
for a reason other than Cause or other than Executive’s Disability or (ii) by
Executive for Good Reason.

“Disability” means circumstances which would qualify Executive for long term
disability benefits under the Company’s Long Term Disability Plan, whether or
not Executive is covered under such plan.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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

“Good Reason” means any one or more of the following events which occurs prior
to the first anniversarye of the Spin Effective Date of a Restructuring
Transaction:

 

  (a) a material diminution in the duties or responsibilities of Executive from
those applicable immediately before the Agreement Date; [prior to the Spin
Effective Date, a material diminution in the duties or responsibilities of
Executive from those applicable immediately before the Agreement Date, but on
and after the Spin Effective Date, a material diminution in the duties or
responsibilities of Executive from those applicable immediately after the Spin
Effective Date;]f but, for the avoidance of doubt, if Executive has a position
with either the Company or a Successor and, in either case, the employer is
publicly traded, a material diminution in position, authority, duties or
responsibilities will not have occurred if Employee has a position, authority,
duties and responsibilities substantially the same as those attendant to
Employee’s position with the Company immediately prior to the Agreement Date
(notwithstanding that the business operations of the Company or such Successor
may be smaller or less complex);

 

 

d  Second anniversary in the agreement for James Canafax

e  Second anniversary in the agreement for James Canafax

f  Only the agreements for Jenny Apker, P. Sandy Baker and David Black contain
the language in brackets.

 

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  (b) a material reduction in Executive’s annual Salary as in effect immediately
before the Agreement Date or as the same may be increased from time to time
thereafter; [prior to the Spin Effective Date, a material reduction in
Executive’s annual rate of base salary as of the Agreement Date, but on and
after the Spin Effective Date, a material reduction in Executive’s annual rate
of base salary as of the Spin Effective Date, as the same may be increased from
time to time thereafter;]g

 

  (c) the failure by the Company to continue in effect any compensation plan in
which Executive participates immediately before the Agreement Date which is
material to Executive’s total compensation, unless a comparable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue Executive’s
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable than existed immediately before the Agreement Date,
unless the action by the Company applies to all similarly situated employees;

 

  (d) the failure by the Company to continue to provide Executive with material
benefits in the aggregate that are substantially similar to those enjoyed by
Executive under any of the Company’s (or its Affiliates’) pension, savings, life
insurance, medical, health and accident, or disability plans in which Executive
was participating immediately before the Agreement Date if such benefits are
material to Executive’s total compensation, the taking of any other action by
the Company which would directly or indirectly materially reduce any of such
benefits or deprive Executive of any fringe benefit enjoyed by Executive at the
time of the Agreement Date if such fringe benefit is material to Executive’s
total compensation, unless the action by the Company applies to all similarly
situated employees; or

 

  (e) a change in the location of Executive’s principal place of employment with
the Company by more than 50 miles from the location where Executive was
principally employed as of the Agreement Date without Executive’s consent.

If any of the events described above occurs prior to the first anniversaryh of a
Restructuring Transaction (an “Event”), Executive shall give the Company written
notice (the “Executive Notice”) within 60 days following Executive’s knowledge
of an Event that Executive intends to terminate employment as a result. The
Company shall have 30 days following receipt of the Executive Notice in which to
cure the Event. If the Company does not take such action within that time, the
Event shall constitute Good Reason. If Executive does not provide the Executive
Notice within 60 days as required above, then the Event shall not constitute
Good Reason, and thereafter, for purposes of determining whether Executive has
Good Reason, Executive’s terms and conditions of employment after the occurrence
of the Event shall be substituted for those terms and conditions of Executive’s
employment in effect immediately prior to the date of this Agreement.

 

 

g  Only the agreements for Jenny Apker, P. Sandy Baker and David Black contain
the language in brackets.

h  Second anniversary in the agreement for James Canafax

 

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“Restoration Plan” means The Babcock & Wilcox Company Defined Contribution
Restoration Plan, or any similar plan offered by a Successor, as in effect on
the Covered Termination.

“Salary” means Executive’s annual rate of base salary: (a) for purposes of
Section 1, as in effect on the record date of the Restructuring Transaction; and
(b) for purposes of Section 2, as in effect immediately before the Covered
Termination or, if higher, in effect immediately before the first Event
constituting Good Reason.

“SERP” means The Babcock & Wilcox Company Supplemental Executive Retirement
Plan, or any supplemental executive retirement plan offered by a Successor, as
in effect on the date of the Covered Termination.

“Spin Effective Date” means, with respect to a Restructuring Transaction, the
effective date of date of the consummation of the spinoff or split off (i.e.,
the date shares of the Subsidiary subject to the spinoff or split off are first
distributed to the Company’s stockholders) or sale (i.e., the closing date for
the sale) that results in the completion of the Restructuring Transaction.

“Subsidiary” means every corporation, limited liability company, partnership or
other entity of which 50% or more of the total combined voting power of all
classes of voting securities or other equity interests is owned, directly or
indirectly, by The Babcock and Wilcox Company or, upon and following a
Restructuring Transaction, by the Successor.

“Successor” means an entity that has acquired the Company or an Operating Sub in
a Change in Control, or an Operating Sub that is sold off or spun off to the
stockholders of the Company in a Restructuring Transaction.

“Target Bonus Percentage” means the percentage applicable to Executive to
determine Executive’s target incentive award opportunity under the Bonus Plan
applicable to Executive: (a) for purposes of Section 1, as in effect for the
bonus year in which the Restructuring Transaction occurs; and (b) for purposes
of Section 2, as in effect immediately before the Covered Termination or, if
higher, immediately before the first Event constituting Good Reason.

 

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