a611937910-2.htm


    Exhibit 10.2

     

     

    
      RESTRUCTURING
TRANSACTION

      RETENTION
AGREEMENT

      


      THIS
AGREEMENT is made by and between McDermott International, Inc., a corporation
duly organized under the laws of the Republic of Panama (the “Company”) and
Michael S. Taff (“Employee”) as of the 10th day
of December, 2009 (this “Agreement”).

       

      In
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto agree as follows:

       

      If the
Company, 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 The Babcock
& Wilcox Company or  J. Ray McDermott, S.A. (each 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, with an Effective Date (this term and other terms
that are capitalized (but not otherwise defined herein) are used as defined in
Section XIII of this Agreement) within the 24-month period beginning on the date
of this Agreement (a “Restructuring Transaction”), Employee shall be entitled to
compensation and benefits under the circumstances set out below.  In
addition, if Employee’s employment is terminated under certain circumstances set
out below before a Restructuring Transaction, Employee will be entitled to the
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.

       

      
        	
                I.

              	
                Obligations
      of the Company or a Successor Upon Termination of Employee In Connection
      With or After a Restructuring
Transaction.

              


      

       

      In the
event that either

       

      
        	
                 
      

              	
                (X)

              	
                while
      employed by the Company, Employee’s employment by the Company is
      terminated following the date of this Agreement and before the earlier of
      (A) the termination of this Agreement in accordance with Section XII and
      (B) the one-year anniversary of the Effective Date of a Restructuring
      Transaction, either (i) by the Company for any reason other than Cause or
      Employee’s Disability or (ii) by Employee for Good Reason
    or

              


      

       

      
        	
                 
      

              	
                (Y)

              	
                while
      employed by a Successor, Employee’s employment by such Successor is
      terminated following the Effective Date of a Restructuring
      Transaction  and before the one-year anniversary of such
      Effective Date, either (i) by the Successor for any reason other than
      Cause or Employee’s Disability or (ii) by Employee for Good Reason (in the
      case of either of the immediately preceding clause (i) or this clause
      (ii), the Successor being substituted for the Company in the definitions
      of Cause and Good Reason herein),

              


      

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      then, in
either case, the Company or such Successor, as applicable, shall (in all cases,
subject to the proviso in clause (f) below with respect to awards described in
that clause, no later than March 15 following the year in which Employee so
terminates); provided that by such date, Employee has signed an agreement that
is no longer subject to rescission prepared by the Company or Successor, as
applicable, which is solely a release of the Company, Successor (if applicable),
and each of their respective affiliates, directors, officers and other customary
persons from any claim or liability arising out of or related to Employee’s
employment with or termination from the Company or a Successor, except for
amounts to which Employee is legally entitled pursuant to employee benefit plans
or this Agreement, and rights to insurance coverage or
indemnification:

       

      
        	
                 
      

              	
                (a)

              	
                pay
      to Employee within 30 days after the date of termination of Employee’s
      employment (or such earlier time as may be required by applicable law) the
      Accrued Benefits;

              


      

       

      
        	
                 
      

              	
                (b)

              	
                in
      the event that a bonus is paid after the date of Employee’s termination of
      employment under the Company’s or such Successor’s Executive Incentive
      Compensation Plan (such plan or any successor or replacement plan,
      including any annual bonus plan of such Successor, in any case in which
      Employee was a participant immediately prior to such termination being
      hereinafter referred to as the “EICP”), as applicable, for the year prior
      to the year in which the termination takes place (the “Measurement
      Period”), pay to Employee in a lump sum, at the same time such bonus is
      paid to other participants in the EICP, a cash bonus equal to the product
      of the multiplier used for Employee’s position during the Measurement
      Period and Employee’s annual base salary for the Measurement
      Period;

              


      

       

      
        	
                 
      

              	
                (c)

              	
                pay
      to Employee in a lump sum, in cash, within 30 days after the date of
      termination of Employee’s employment, a payment equal to the product of
      Employee’s target bonus under the EICP as in effect immediately prior to
      the date of termination and a fraction, the numerator of which is the
      number of days that have elapsed in the year in which the termination
      takes place through the date of termination of Employee’s employment and
      the denominator of which is 365;

              


      

       

      
        	
                 
      

              	
                (d)

              	
                pay
      to Employee in a lump sum, in cash, as soon as administratively
      practicable after the date of termination of Employee’s employment, 200%
      of the sum of (1) Employee’s annual base salary as in effect immediately
      prior to the date of termination of Employee’s employment and (2)
      Employee’s target bonus under the EICP as in effect immediately prior to
      the date of termination;

              


      

       

      
        	
                 
      

              	
                (e)

              	
                (1)
      pay to Employee in a lump sum, in cash, within 30 days after the date of
      termination of Employee’s employment, a payment equal to two times the
      full annual cost of coverage for medical, dental and vision benefits
      provided to Employee and Employee’s covered dependents by the Company and,
      if applicable, a Successor for the year in which Employee’s termination
      takes place and (2) permit Employee and Employee’s covered dependents to
      be covered under the Company’s, or if applicable, a Successor’s medical,
      dental and vision benefits for 48 months provided Employee pays the full
      then applicable COBRA premium;

              


      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (f)

              	
                as
      of the date of Employee’s termination of employment, cause Employee to
      have a fully vested and nonforfeitable interest in each of the awards
      identified on the attached Schedule A (as the same may be modified
      pursuant to the terms of the applicable plans and award agreements in
      connection with the Restructuring Transaction), and to the extent
      applicable immediately pay such awards to Employee; provided that none of
      the awards subject to Section 409A of the Internal Revenue Code of 1986,
      as amended (“Code”), will be paid on a date earlier than as provided in
      the applicable award agreements without regard to this
      Agreement;

              


      

       

      
        	
                 
      

              	
                (g)

              	
                as
      of the date of Employee’s termination of employment, cause Employee to
      have a fully vested and nonforfeitable interest in Employee’s account
      balance in the McDermott International, Inc. New Supplemental Executive
      Retirement Plan (“SERP”); provided that, notwithstanding anything to the
      contrary, Employee’s SERP benefits shall be distributed in accordance with
      the terms of the SERP; and

              


      

       

      
        	
                 
      

              	
                (h)

              	
                pay
      to Employee within 30 days after the date of termination of Employee’s
      employment an amount equal to the portion of Employee’s account under the
      Thrift Plan for Employees of McDermott Incorporated and Participating
      Subsidiary and Affiliated Companies  that was not vested as of
      the date of termination of Employee’s
  employment.

              


      

       

      Notwithstanding
the foregoing provisions of Section I, payments and benefits shall be subject to
reduction as set out in Schedule B.

       

      
        	
                II.

              	
                Obligations
      of the Company if Employee remains employed through the Effective Date of
      a Restructuring Transaction.

              


      

       

      In the
event that Employee’s employment by the Company is not terminated as of the
Effective Date of the Restructuring Transaction under circumstances entitling
Employee to benefits under Section I above, and if Employee has remained
employed with the Company through the Effective Date of the Restructuring
Transaction, then the Company or, if applicable, the Successor shall (a) pay
Employee on such Effective Date a cash amount equal to one-third of 50% of the
amount described in Section I(d) above and (b) cause Employee to be granted the
number of whole shares of restricted stock under the Company’s or Successor’s,
as applicable, stock plan, as near equal in value to, but not greater than,
two-thirds of 50% of the amount described in Section I(d) above, on terms and
conditions set forth in the grant agreement approved in accordance with such
stock plan; provided, however, the restricted stock shall vest on the first
anniversary of the Effective Date of the Restructuring Transaction if, and only
if, Employee remains employed with the Company or the Successor through such
first anniversary.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                III.

              	
                Participation
      In Other Company Programs.

              


      

       

      Nothing in
this Agreement shall prevent or limit Employee’s continuing or future
participation in any plan, program, policy or practice provided by the Company
for which Employee may qualify, nor shall anything herein limit or otherwise
affect such rights as Employee may have under any other contract or agreement
with the Company, except as provided in Section X of this
Agreement.  Amounts which are vested benefits or which Employee is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the date of
termination of Employee’s employment shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.  Notwithstanding the foregoing, it is
expressly understood and acknowledged by Employee that any payment by the
Company or a Successor under Section I of this Agreement shall be in lieu of any
obligation on the part of the Company or such Successor for payment of severance
benefits under the Severance Plan for Employees of McDermott Incorporated and
Participating Subsidiary and Affiliated Companies or any successor thereto or
any other plan, policy or agreement of the Company or such Successor in the
event of termination of Employee’s employment as provided in Section I of this
Agreement with the Company or such Successor during the one-year period
following the Effective Date of a Restructuring Transaction.

       

      IV.           Confidential
and Proprietary Information.

      


      Employee
acknowledges and agrees that any and all non-public information regarding the
Company, any of its Subsidiaries and its or their customers (including but not
limited to any and all information relating to its or their business practices,
products, services, finances, management, strategy, profits and overhead) is
confidential and the unauthorized disclosure of such confidential information
will result in irreparable harm to the Company.  Employee shall not,
during Employee’s employment by the Company or any of its Subsidiaries and for a
period of five years after termination of such employment (or such shorter
period as may be required by law), disclose or permit the disclosure of any such
confidential information to any person other than an employee or director of the
Company or its Subsidiaries or any successor thereto or an individual engaged by
the Company or its Subsidiaries or any successor thereto to render professional
services to the Company or its Subsidiaries under circumstances that require
such person to maintain the confidentiality of such information, except as such
disclosure may be required by law.  The provisions of this Section IV
shall survive any termination of this Agreement.  For purposes of this
Section IV, the term “confidential information” shall not include information
that was or becomes generally available to the public other than as a result of
disclosure by Employee.  Employee acknowledges that the execution of
this Agreement and the payments described in Section I of this Agreement
constitute consideration for the limitations on activities set forth in this
Section IV, the adequacy of which is hereby expressly acknowledged by
Employee.  Employee understands and agrees that the Company shall
suffer irreparable harm if Employee breaches Section IV of this Agreement, and
that monetary damages shall be inadequate to address any such
breach.  Accordingly, Employee agrees that the Company shall have the
right, to the extent permitted by applicable law, and in addition to any other
rights or remedies it may have, to obtain from any court of competent
jurisdiction, injunctive relief to restrain any breach or threatened breach
hereof or otherwise to specifically enforce the provisions
hereof.  For purposes of this Section IV, the term “Company” shall
include a Successor.

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                V.

              	
                Notices.

              


      

       

      All
notices and other communications provided for by this Agreement shall be in
writing and shall be deemed to have been duly given when (a) delivered by hand,
(b) sent by facsimile to the facsimile number given below, provided that a copy
is also sent by a nationally recognized overnight delivery service, (c) the day
after being sent by a nationally recognized overnight delivery service, or (d)
three days after being mailed by United States Certified Mail, return receipt
requested, postage prepaid, addressed as follows:

       

      If to
Employee:                       ___________________

      ___________________

      ___________________

      


      Facsimile:                ___________________

      


      If to the Company or a
Successor:

      


      McDermott International,
Inc.

      Vice President, Human
Resources

      777 N. Eldridge Parkway

      Houston,
TX  77079

      


      Facsimile:                      281-870-5095

      


      or to such
other address as Employee, the Company or a Successor may hereafter specify in a
notice furnished in writing in accordance with this Section V.

       

      
        	
                VI.

              	
                Governing
      Law.

              


      

       

      The
provisions of this Agreement shall be interpreted and construed in accordance
with, and enforcement may be made under, the law of the State of Texas without
giving effect to any principles of conflict of laws thereof which would result
in the application of the laws of any other jurisdiction.

       

      
        	
                VII.

              	
                Successors
      and Assigns.

              


      

       

      
        	
                 
      

              	
                (a)

              	
                This
      Agreement is personal to Employee and, without the prior written consent
      of the Company, shall not be assignable by Employee otherwise than by will
      or the laws of descent and
distribution.

              


      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

              	
                This
      Agreement shall be binding upon and shall inure to the benefit of
      Employee, and of the Company and any Successor and their respective
      successors and assigns.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                The
      Company will require that any successor to all or substantially all of its
      business and/or assets (other than a Successor, as to which the last
      sentence of this Section VII(c) shall apply) (whether such successor
      acquires such business and/or assets directly or indirectly, and whether
      by purchase, merger, consolidation or otherwise) expressly assume and
      agree to perform this Agreement in the same manner and to the same extent
      that the Company would be required to perform it if no such succession had
      taken place.  As used in this Agreement, “Company” shall mean
      the Company as herein defined and any such successor to its business
      and/or assets. In the event that Employee becomes employed by a Successor
      in connection with a Restructuring Transaction, the Company shall require
      such Successor to expressly assume and adopt this Agreement and to honor
      the terms and conditions of this Agreement applicable to such Successor,
      unless Employee terminates Employee’s employment within thirty-one days
      after the Effective Date of the Restructuring Transaction for a Good
      Reason event which occurs upon the consummation of such Restructuring
      Transaction (in which case the Company shall remain obligated under this
      Agreement).

              


      

       

      
        	
                VIII.

              	
                Employment
      by Subsidiaries.

              


      

       

      If
Employee is not employed by McDermott International, Inc., but is only employed
by a Subsidiary of McDermott International, Inc., then, except for purposes of
determining whether a Restructuring Transaction has occurred, (a) the “Company”
as defined herein shall be deemed to include such Subsidiary, and (b)
termination of employment shall be determined with reference to Employee’s
employment by such Subsidiary, but, in each case, only if such Subsidiary is not
a Successor.  Further, the Company agrees that it will perform its
obligations hereunder without regard to whether Employee is employed by the
Company or by a Subsidiary of the Company.

       

      
        	
                IX.

              	
                Severability.

              


      

       

      If any
provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by applicable law.

       

      
        	
                X.

              	
                Entire
      Agreement; Amendment.

              


      

       

      This
Agreement sets forth the entire Agreement of the parties hereto and supersedes
all prior agreements, understandings and covenants between the parties with
respect to the subject matter hereof; provided
that:  if Employee is entitled to payments and benefits under both
Section I of this Agreement and the Change in Control Agreement between the
Company and Employee, dated as of October 1, 2008 (the “Change in Control
Agreement”), Employee will receive payments and benefits only under Section I of
this Agreement (and not under the Change in Control Agreement), except that
Section I(f) of the Change in Control Agreement will continue to apply, with the
payments (if any) under such Section I(f) limited to those which would have been
payable had Employee received the payments and benefits under the Change in
Control Agreement (and not under this Agreement) (it being the intention of the
parties hereto that, in no event, shall substantially the same benefits become
payable under both the Change in Control Agreement and Section I of this
Agreement).  This Agreement may be amended or terminated (other than
pursuant to Section XII of this Agreement) only by mutual agreement of the
parties in writing.

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                XI.

              	
                Miscellaneous.

              


      

       

      
        	
                 
      

              	
                (a)

              	
                The
      captions and headings of this Agreement are not part of the provisions
      hereof and shall have no force or
effect.

              


      

       

      
        	
                 
      

              	
                (b)

              	
                The
      Company (or a Successor) shall be entitled to withhold from any amounts
      payable under this Agreement such Federal, state, local, foreign or excise
      taxes as shall be required or permitted to be withheld pursuant to any
      applicable law or regulation.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                Employee’s
      or the Company’s (or a Successor’s) failure to insist upon strict
      compliance with any provision of this Agreement or the failure to assert
      any right Employee or the Company (or a Successor) may have hereunder,
      including, without limitation, the right of Employee to terminate
      employment for Good Reason pursuant to paragraph (f) of Section XIII of
      this Agreement, shall not be deemed to be a waiver of such provision or
      right or any other provision or right of this
  Agreement.

              


      

       

      
        	
                 
      

              	
                (d)

              	
                Employee
      and the Company acknowledge that, except as may otherwise be provided
      under any other written agreement between Employee and the Company, the
      employment of Employee by the Company is “at
  will.”

              


      

       

      
        	
                 
      

              	
                (e)

              	
                For
      purposes of this Agreement, the date of termination of Employee’s
      employment shall be: (i) if Employee’s employment is terminated by the
      Company (or a Successor) for Cause, the date on which the Company (or a
      Successor) delivers to Employee the resolution referred to in the last
      sentence of Section XIII, paragraph (c), or, with respect to a termination
      as described in this Agreement under Section XIII, paragraph (c)(iii), the
      date on which the Company (or a Successor) notifies Employee of such
      termination, (ii) if Employee’s employment is terminated by the Company
      (or a Successor) for a reason other than Cause (including on account of
      Disability), the date on which the Company (or a Successor) notifies
      Employee of such termination, or such later date as is reflected in such
      notification, (iii) if Employee’s employment is terminated by Employee for
      Good Reason, the date on which Employee notifies the Company (or a
      Successor) of such termination (after having given the Company (or such
      Successor) notice and a 30-day cure period), or (iv) if Employee’s
      employment is terminated by reason of death, the date of death of
      Employee.

              


      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (f)

              	
                This
      Agreement may be executed in two counterparts, each of which shall be
      deemed an original and together shall constitute one and the same
      agreement, with one counterpart being delivered to each party
      hereto.

              


      

       

      
        	
                 
      

              	
                (g)

              	
                In
      the event Employee’s employment is terminated (i) by the Company (or a
      Successor) for Cause or as a result of Employee’s Disability, (ii) by
      Employee without Good Reason, or (iii) on account of Employee’s death,
      Employee shall not be entitled to the payments described in Section 1 of
      this Agreement.

              


      

       

      
        	
                XII.

              	
                Term.

              


      

       

      This
Agreement shall terminate on the earliest to occur of (i) the date one year
after the Effective Date of a Restructuring Transaction, or (ii) the date on
which Employee’s employment with the Company (or a Successor) is terminated;
provided, however, that if Employee’s employment with the Company (or a
Successor) is terminated under any of the circumstances described in Section I
of this Agreement, Employee’s rights hereunder shall continue following the
termination of Employee’s employment until all benefits to which Employee is
entitled hereunder has been paid and the Company’s (or a Successor’s) rights
hereunder shall continue until all obligations owed to it hereunder have been
satisfied.  Notwithstanding the foregoing:  (a) if no
Restructuring Transaction shall have been completed with an Effective Date on or
before the second anniversary of the date of this Agreement, then this Agreement
shall automatically terminate on such second anniversary; and (b) the
provisions of this Section XII and Sections II, XIII and XIV shall survive any
termination of this Agreement.

       

      
        	
                XIII.

              	
                Definitions.

              


      

       

      For
purposes of this Agreement, the following terms shall have the meanings given
them in this Section XIII.

       

      
        	
                 
      

              	
                (a)

              	
                “Accrued
      Benefits” shall mean:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                Any
      portion of Employee’s Annual Base Salary earned through the date of
      termination of Employee’s employment and not yet
  paid;

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                Reimbursement
      for any and all amounts advanced in connection with Employee’s employment
      for reasonable and necessary expenses incurred by Employee through the
      date of termination of Employee’s employment in accordance with the
      Company’s (or a Successor’s) policies and procedures on reimbursement of
      expenses;

              


      

       

      
        	
                 
      

              	
                (iii)

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

              


      

       

      
        	
                 
      

              	
                (iv)

              	
                All
      other payments and benefits to which Employee may be entitled under the
      terms of any applicable compensation arrangement or benefit plan or
      program of the Company (or a Successor) that do not specify the time of
      distribution; provided that Accrued Benefits shall not include any
      entitlement to severance under any severance policy of the Company (or
      such Successor) generally applicable to the salaried employees of the
      Company (or such Successor).

              


      

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

              	
                “Annual
      Base Salary” shall mean Employee’s annual rate of pay excluding all other
      elements of compensation such as, without limitation, bonuses,
      perquisites, expatriate or hardship premiums, restricted stock awards,
      stock options and retirement and welfare
  benefits.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                “Cause”
      shall mean:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                the
      willful and continued failure of Employee to perform substantially
      Employee’s duties with the Company (occasioned by reason other than
      physical or mental illness or disability of Employee) after a written
      demand for substantial performance is delivered to Employee 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
      Employee has not substantially performed Employee’s duties, after which
      Employee shall have thirty days to defend or remedy such failure to
      substantially perform Employee’s
duties;

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      willful engaging by Employee in illegal conduct or gross misconduct which
      is materially and demonstrably injurious to the Company;
  or

              


      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      conviction of Employee with no further possibility of appeal or, or plea
      of guilty or nolo contendere by Employee to, any
  felony.

              


      

       

      The
cessation of employment of Employee under subparagraph (i) and (ii) above shall
not be deemed to be for “Cause” unless and until there shall have been delivered
to Employee 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 Employee and Employee is given an opportunity, together with Employee’s
counsel, to be heard before such Committee), finding that, in the good faith
opinion of such Committee, Employee is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.

       

      
        	
                 
      

              	
                (d)

              	
                “Disability”
      shall mean circumstances that would qualify Employee for long-term
      disability benefits under the Company’s Long-Term Disability Plan as in
      effect immediately prior to the Restructuring Transaction, whether or not
      such Plan remains in effect subsequent to the Restructuring
      Transaction.

              


      

       

      


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (e)

              	
                “Effective
      Date” with respect to a Restructuring Transaction for purposes of this
      Agreement shall be 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.

              


      

       

      
        	
                 
      

              	
                (f)

              	
                “Good
      Reason” shall mean:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                any
      action by the Company which results in a material diminution in Employee’s
      position, authority, duties or responsibilities immediately prior to the
      date of this Agreement; but, for the avoidance of doubt, if Employee 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 date of this Agreement (notwithstanding that the business
      operations of the  Company or such Successor may be smaller or
      less complex).

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                Requiring
      Employee, without Employee’s consent, to be based at any office or
      location other than the office or location at which Employee was employed
      immediately following the date of this Agreement; provided, however, that
      any such relocation requests shall not be grounds for resignation with
      Good Reason if such relocation is within a fifty mile radius of the
      location at which Employee was employed immediately following the date of
      this Agreement  or such relocation does not result in an
      increase in Employee’s actual commuting distance from his principal
      residence to Employee’s new office or
location;

              


      

       

      
        	
                 
      

              	
                (iii)

              	
                a
      material reduction in Employee’s Annual Base Salary in effect immediately
      prior to the date of this Agreement or a material reduction in the target
      multiplier used to calculate the annual bonus awarded to Employee below
      the target multiplier used to calculate the bonus paid to Employee under
      the EICP immediately prior to the date of this Agreement, provided,
      however that in either case a material reduction in the Annual Base Salary
      or the target bonus multiplier shall not be considered “Good Reason” with
      respect to any year for which such reduction is part of a reduction
      uniformly applicable to all similarly situated
  employees;

              


      

       

      
        	
                 
      

              	
                (iv)

              	
                a
      material adverse change in Employee’s eligibility to participate in
      long-term incentive compensation plans as in effect immediately prior to
      the date of this Agreement, unless Employee is eligible to participate in
      a comparable plan; or

              


      

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (v)

              	
                any
      material breach of this Agreement by the Company, excluding for this
      purpose an isolated, insubstantial or inadvertent action not taken in bad
      faith and which is remedied by the Company promptly after receipt of
      notice thereof given by Employee.

              


      

       

      In the
event (A) any of the events described above occurs (an “Event”) or (B) the
Company, in connection with but prior to the Effective Date of a Restructuring
Transaction, notifies Employee in writing that the terms and conditions of
Employee’s employment will be changed in connection with the consummation of a
Restructuring Transaction in a manner that would constitute Good Reason (a
“Company Notice”), Employee shall give the Company or Successor written notice
(the “Employee Notice”) within 60 days following Employee’s knowledge of an
Event or receipt of the Company Notice, as applicable, that such change in
employment terms or conditions would constitute Good Reason and Employee intends
to terminate employment 1as a result. The Company or Successor shall
have thirty days following receipt of the Employee Notice in which to cure the
Event or retract the Company Notice, or amend the Company Notice such that the
proposed changes in employment terms or conditions do not constitute Good
Reason.  If the Company does not take such action within that time,
the Event, or the event described in the Company Notice when it would have
occurred, as applicable, shall constitute Good Reason.  If Employee
does not provide the Employee Notice within 60 days as required above in this
clause (f), then the Event, or the change in employment terms and conditions
described in the Company Notice, as applicable, shall not constitute Good
Reason, and thereafter, for purposes of determining whether Employee has Good
Reason, Employee's terms and conditions of employment after the occurrence of
the Event or the implementation of the changes described in the Company Notice,
as applicable, shall be substituted for those terms and conditions of Employee's
employment in effect immediately prior to the date of this Agreement in each of
clauses (i), (ii), (iii) and (iv) above.  Notwithstanding the
foregoing or any other provision of this Agreement, the Company and Employee
agree that Employee will serve as chief financial officer of The Babcock &
Wilcock Company for one year after a Restructuring Transaction in which the
Company disposes of The Babcock & Wilcox Company through a spinoff and will
not have Good Reason by reason of such change in duties and contemplated
associated relocation of office or work location, but Employee may elect to
terminate employment on the first anniversary of such one-year period (provided
Employee provides at least 30 days prior written notice) and such termination of
employment shall be treated as for Good Reason entitling Employee to payments
and benefits under Section I.

       

      
        	
                 
      

              	
                (g)

              	
                “Subsidiaries”
      shall mean 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 McDermott International, Inc. or, upon and
      following a Restructuring Transaction, by the
  Successor.

              


      

       

        

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (h)

              	
                “Successor”
      shall mean an entity that has acquired a separate reporting segment of the
      Company (by reference to the Company’s audited consolidated financial
      statements as of and for the year ended December 31, 2008) from the
      Company in a Restructuring Transaction or a Subsidiary that is sold or
      spun off to the stockholders of the Company in a Restructuring
      Transaction.

              


      

       

      
        	
                XIV.

              	
                Arbitration.

              


      

       

      Any
controversy or claim arising out of or relating to this Agreement (or the breach
thereof) shall be settled by final and binding arbitration in Houston, Texas by
one arbitrator selected in accordance with the Commercial Arbitration Rules (the
“Rules”) of the American Arbitration Association (the “Association”) then in
effect.  Subject to the following provisions, the arbitration shall be
conducted in accordance with the Rules then in effect.  Any award
entered by the arbitrator shall be final and binding, and judgment may be
entered thereon by any party hereto in any court of law having competent
jurisdiction.  This arbitration provision shall be specifically
enforceable.  The Company (or a Successor, if applicable) and Employee
shall each pay half of the administrative fees of the Association and the
compensation of the arbitrator and shall each be responsible for its own
attorney’s fees and expenses relating to the conduct of the
arbitration.

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

       

      MCDERMOTT INTERNATIONAL,
INC.

      


      


      


      By:____________________________________

      Printed
Name:___________________________

      Title:__________________________________

      Date:__________________________________

      


      


      EMPLOYEE:____________________________

      Date:___________________________________

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      SCHEDULE  A

      


      
        	
                (a)

              	
                2008
      Performance Shares Agreement dated March 3, 2008, between Employee and the
      Company, the amount of shares calculated as if the Restructuring
      Transaction were a “change in control” as defined in such grant
      agreement.

              


      

       

      
        	
                (b)

              	
                2008
      Restricted Stock Grant Agreement dated March 3, 2008, between Employee and
      the Company.

              


      

       

      
        	
                (c)

              	
                2009
      Performance Share Grant Agreement dated March 5, 2009, between the
      Company and Employee, applicable only as to the Initial Grant of
      shares.

              


      

       

      
        	
                (d)

              	
                2009
      Deferred Stock Unit Grant Agreement dated March 5, 2009, between the
      Company and Employee.

              


      

       

      
        	
                (e)

              	
                2009
      Stock Option Grant Agreement dated March 5, 2009, between the Company
      and Employee.

              


      

       

      
        	
                (f)

              	
                Any
      additional long-term incentive awards granted to Employee after the date
      of this Agreement; provided, however, only those awards are included in
      this clause (f) if Employee has been employed with the Company or a
      Successor for at least one year following the grant date of that
      award.

              


      

       

      In the
event the Committee (as defined in the Company’s applicable equity compensation
plans) adjusts any of the foregoing or other unvested equity-based awards in
connection with a Restructuring Transaction that is a spin-off of The Babcock
& Wilcox Company or  J. Ray McDermott, S.A., the Committee shall
make such adjustments thereto pursuant to the terms of the applicable plans;
provided that any resulting equity-based awards shall be equally divided, in the
reasonable discretion of the Committee, between awards with respect to the
equity securities of each of the Company and Successor.

      


      Effective
as of the date of this Agreement, any of the foregoing awards that are subject
to Section 409A of the Code are hereby modified to provide that no “Change in
Control” (as defined in the applicable award) shall occur unless it is a change
in control within the meaning of Section 409A of the Code.

      


      


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      


      SCHEDULE
B

      


      Excise Tax Modified Cutback
Provisions

      


      Anything
in this Agreement to the contrary notwithstanding, in the event the Firm (as
defined below) shall determine that Employee shall become entitled to payments
and/or benefits provided by this Agreement which would be subject to the excise
tax imposed by Section 4999 of the Code (the “Payments”), the Firm
shall determine whether to reduce any of the Payments to the Reduced Amount (as
defined below).  The Payments shall be reduced to the Reduced Amount
only if the Firm determines that Employee would have a greater Net After-Tax
Receipt (as defined below) of aggregate Payments if the Employee’s Payments were
reduced to the Reduced Amount.  If such a determination is not made by
the Firm, Employee shall receive all Payments to which Employee is entitled
under this Agreement.

       

      If the
Firm determines that aggregate Payments should be reduced to the Reduced Amount,
the Company shall promptly give Employee notice to that effect and a copy of the
detailed calculation thereof.  All determinations made by the Firm
under this Schedule B shall be binding upon the Company and Employee absent
manifest error and shall be made as soon as reasonably practicable and in no
event later than 15 business days of the receipt of notice from the Company that
there has been a Payment, or such earlier time as is requested by the
Company.  For purposes of reducing the Payments to the Reduced Amount,
only amounts payable under this Agreement (and no other Payments) shall be
reduced.  The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing, in order, cash payments otherwise due
under clauses (c), (d), (e) and (h) of Section I of this Agreement, and then by
reducing equity-based compensation otherwise due under clause (f) of Section I
of this Agreement in chronological order with the most recent equity-based
compensation awards reduced first.

       

      As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Firm hereunder, it is possible that
amounts will have been paid or distributed by the Company to or for the benefit
of Employee pursuant to this Agreement which should not have been so paid or
distributed (“Overpayment”) or that
additional amounts which will have not been paid or distributed by the Company
to or for the benefit of Employee pursuant to this Agreement could have been so
paid or distributed (“Underpayment”), in
each case, consistent with the calculation of the Reduced Amount
hereunder.  In the event that the Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against either the Company or
Employee which the Firm believes has a high probability of success determines
that an Overpayment has been made, Employee shall pay any such Overpayment to
the Company together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code; provided, however,
that no amount shall be payable by Employee to the Company if and to the extent
such payment would not either reduce the amount on which Employee is subject to
tax under Section 1 and Section 4999 of the Code or generate a refund of
such taxes.  In the event that the Firm, based upon controlling
precedent or substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be paid promptly (and in no event later
than 60 days following the date on which the Underpayment is determined) by the
Company to or for the benefit of Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the
Code.

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      For
purposes hereof, the following terms have the meanings set forth
below:

       

      “Firm” shall mean an
internationally recognized accounting or employee benefits consulting firm
selected by the Company with the input of Employee (but without Employee’s
consent) and which shall not, during the one year preceding the date of its
selection, have acted in any way on behalf of the Company or its affiliated
companies.

       

      “Net After-Tax
Receipt” shall mean the present value (as determined in accordance with
Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all
taxes imposed on Employee with respect thereto under Sections 1 and 4999 of the
Code and under applicable state and local laws, determined by applying the
highest marginal rate under Section 1 of the Code and under state and local laws
which applied to the Employee’s taxable income for the immediately preceding
taxable year, or such other rate(s) as Employee certifies, in Employee’s sole
discretion, as likely to apply to him in the relevant tax year(s).

       

      “Reduced Amount” shall
mean the greatest amount of Payments that can be paid that would not result in
the imposition of the excise tax under Section 4999 of the Code if the Firm
determines to reduce Payments pursuant to paragraph (a) of this Attachment
A.

       

      
 

      16