Document:

ex10-4.htm

    STOCK
OPTION

    GRANT
AGREEMENT

    

    2009
McDermott International, Inc. Long-Term Incentive Plan

    

    

    On
________, _____ (the “Date of Grant”) the Compensation Committee of the Board of
Directors (the “Committee”) of McDermott International, Inc. (the “Company”)
selected you to receive a grant of Non-Qualified Stock Options (the “Options”)
under the Company’s 2009 McDermott International, Inc. Long-Term Incentive Plan
(the “Plan”).  The provisions of the Plan are incorporated herein by
reference.

    

    Any
reference or definition contained in this Agreement shall, except as otherwise
specified, be construed in accordance with the terms and conditions of the Plan
and all determinations and interpretations made by the Committee with regard to
any question arising hereunder or under the Plan shall be binding and conclusive
on you and your legal representatives and beneficiaries.  Whenever the
words “you or your” are used in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the
beneficiary, estate, or personal representative, to whom any rights under this
Agreement may be transferred by will or by the laws of descent and distribution,
it shall be deemed to include such person.

    

    Subject
to the provisions of the Plan, the terms and conditions of this grant are as
follows:

    

    
      	
              1.  

            	
              Number and Price of
      Options – The Company grants to you the option to purchase from the
      Company at the price of $___ up to, but not exceeding in the aggregate,
      the number of shares of the Company’s Common Stock (the “Common Stock”),
      as shown on the attached Notice of Grant and as explained hereinafter and
      in the Program.

            

    

    

    
      	
              2.  

            	
              Option Term –
      Options have been granted for a period of seven (7) years from the Date of
      Grant (the “Option Term”).

            

    

    

    
      	
              3.  

            	
              Vesting of
      Options – Subject to the “Forfeiture of Options” paragraph below,
      options do not provide you with any rights or interest therein until they
      vest and become exercisable in one-third (1/3) increments on the first,
      second and third anniversaries of the Date of Grant.  Options
      which are or become exercisable at the time of termination of employment
      continue to be exercisable until terminated in accordance with Paragraph 6
      below.

            

    

    

    All
unvested Options shall become vested and exercisable upon your termination of
employment due to death or disability, or upon the occurrence of a “Change in
Control” as defined in the Plan.

    

    If your
employment is terminated prior to the third anniversary of the Date of Grant due
to “Retirement,” 25% of the then unvested Options will become vested and
exercisable provided your termination date is on or after the first anniversary
of the Date of Grant, and 50% of the then unvested Options will become vested
and exercisable provided your termination date is on or after the second
anniversary of the Date of Grant.  For this purpose, “Retirement”
means a voluntary termination of employment after attaining age 60 and
completing 10 years of service with the Company or its subsidiaries, or an
involuntary termination due to reduction in force.

    

    The
Committee, in its sole discretion, may provide for additional
vesting.

     

    
      	
              4.  

            	
              Forfeiture of Options
      - Options which are not and do not vest and become exercisable at
      your termination of employment with the Company or its subsidiaries for
      any reason shall, coincident therewith, terminate and be of no force and
      effect.

            

    

    

    In the
event that (i) you are convicted of (1) a felony or (2) misdemeanor involving
fraud, dishonesty or moral turpitude, or (ii) you engage in conduct that
adversely effects or may reasonably be expected to adversely affect the business
reputation or economic interests of the Company, as determined in the sole
discretion of the Committee, then all outstanding Options awarded to you under
this grant terminate and have no force and effect immediately upon notice of
such conviction or determination.  In addition, your right to exercise
Options may be suspended during any inquiry regarding any such acts pending a
final determination by the Committee.

    

    
      	
              5.  

            	
              How to Exercise
      – Charles Schwab & Co., Inc. (“Schwab”) currently administers the
      Company’s stock plans and you must exercise your Options with
      Schwab.  You have two ways to exercise your Options through
      Schwab:

            

    

    

    
      	
              1.  

            	
              Online
      – http://equityawardcenter.schwab.com;
      or

            

    

    

    
      	
              2.  

            	
              Telephone
      – 1-800-654-2593.

            

    

    

    Certain
restrictions apply if you are a Section 16 insider.  The Committee may
change Plan administrators or exercise procedures from time to
time.  You will be notified of such changes, as
applicable.

    

    
      	
              6.  

            	
              Termination of
      Options – The Options, which become exercisable as provided in
      paragraphs 3 and 4 above, shall terminate and be of no force or effect as
      follows:

            

    

    

    
      	
              (a)  

            	
              If
      your employment terminates during the Option Term by reason of Retirement
      or disability, the Options terminate and have no force or effect upon the
      expiration of the Option Term;

            

    

    

    
      	
              (b)  

            	
              If
      your employment terminates during the Option Term by reason of death, the
      Options terminate and have no force or effect three (3) years after the
      date of death, or upon the expiration of the Option Term, whichever occurs
      first;

            

    

    

    
      	
              (c)  

            	
              If
      your employment terminates during the Option Term for any other reason,
      the Options terminate and have no force or effect upon the expiration of
      twelve (12) months after your termination of employment or the expiration
      of the Option Term, whichever occurs
first;

            

    

    

    
      	
              (d)  

            	
              If
      you continue in the employ of the Company through the Option Term, the
      Options terminate and have no force or effect upon the expiration of the
      Option Term.

            

    

    

    
      	
              7.  

            	
              Who Can
      Exercise – During your lifetime the Options shall be exercisable
      only by you.  No assignment or transfer of the Options, whether
      voluntary or involuntary, by operation of law or otherwise, except by will
      or the laws of descent and distribution or pursuant to a Qualified
      Domestic Relations Order, shall vest in the assignee or transferee any
      interest whatsoever.

            

    

     

    
      	
              8.  

            	
              Securities and
      Exchange Commission Requirements.  If you are a Section
      16 insider, this type of transaction must be reported on a Form 4 before
      the end of the second (2) business day following the Date of
      Grant.  Please be aware that if you are going to reject the
      grant, you should do so immediately after the Date of Grant to avoid
      potential Section 16 liability.  Please advise Kathy Peres and
      Renee Hack immediately by e-mail, fax or telephone call if you intend to
      reject this grant.  Absent such notice of rejection, the Company
      will prepare and file the required Form 4 on your behalf within the
      required two business day deadline. If Section 16 applies to you, you are
      also subject to Rule 144.  This Rule is applicable only when the
      shares are sold, so you need not take any action under Rule 144 at this
      time.

            

    

    

    Those of
you covered by these requirements have already been advised of your
status.  Others of you may become Section 16 insiders at some future
date, in which case reporting will be required at that time.

    

    You will
recognize income upon the exercise of non-qualified stock options in accordance
with the tax laws of the jurisdiction that is applicable to you.  You
will be required to pay forthwith to the Company the amount which the Company
must withhold on your behalf upon exercise of the Options.  State
income tax and FICA withholding may also be required and will be withheld in the
same manner.

    

    Neither
the action of the Company in establishing the Program, nor any action taken by
it, by the Committee or the Board of Directors under this Program nor any
provisions of this Agreement shall be construed as giving to you the right to be
retained in the employ of the Company.ex10-5.htm

    McDermott International,
Inc.

    New Supplemental Executive
Retirement Plan

    As
Amended and Restated Effective December 31, 2008

    

    ARTICLE
I

    

    Purpose

    

    1.1           Purpose
of Plan.  The purpose of this McDermott International, Inc.,
New Supplemental Executive Retirement Plan (the “Plan”) is to advance the
interests of McDermott International, Inc., its subsidiaries and affiliates by
providing certain retirement benefits that will attract and retain highly
qualified key employees accountable for the successful conduct of its
business.

    

    1.2           ERISA
Status.  The Plan is governed by the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).  It has been designed to
qualify for certain exemptions under Title I of ERISA that apply to plans that
are unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees.  The Plan is intended to comply with Section 409A of the
Internal Revenue Code of 1986, as amended, and regulations and rulings issued
thereunder.

    

    1.3   Effective
Date.   The original effective date of this Plan is January 1,
2005.  The effective date of this restatement is the close of business
December 31, 2008.

    

    

    ARTICLE
II

    

    Definitions and
Construction

    

    Definitions.  Where
the following words and phrases appear in the Plan, they shall have the
respective meanings set forth below, unless their context clearly indicates to
the contrary.

    

       
2.1         Account. Collectively, means the
Participant’s Company Account and the Participant’s Deferral
Account.

    

    2.2   Account
Value.  At any given time, the sum of all amounts credited to
the Participant’s Account, adjusted for any income, gain or loss and any
payments attributable to such account. 

       

          2.2.1           Beneficiary.  The person
designated by each Participant, on a form provided by the Company for this
purpose, to receive the Participant’s distribution under Article VI in the event
of the
Participant’s death prior to receiving complete payment of his
Account.  In order to be effective under this Plan, any form
designating a Beneficiary must be delivered to the Committee before the
Participant’s death.  In the absence of such an effective designation
of a Beneficiary, “Beneficiary” means the Participant’s spouse, or if there is
no spouse on the date of the Participant’s death, the Participant’s estate, or
heirs at law if there is no administration of the Participant’s
estate.

    

    

    2.4           Board.  The Board of
Directors of McDermott International, Inc. or the board of directors of a
company that is a successor to the Company.

    

    2.5           Bonus. Any bonus paid to a
Participant under any plan, policy or program of the Company providing for the
payment of annual bonuses to employees or any extraordinary payment paid to a
Participant if such payment is designated by the Committee to be a Bonus for
purposes of this Plan.  Bonus shall not include any compensation under
the 2002 B&W Performance Incentive Plan.

    

    2.6           Cause. Cause
means:

    

    
      	
               
      

            	
              (a)

            	
              the
      overt and willful disobedience of orders or directives issued to a
      Participant that are within his scope of duties, or any other willful and
      continued failure of a Participant to perform substantially his duties
      with the Company (occasioned by reason other than physical or mental
      illness or disability) after a written demand for substantial performance
      is delivered to the Participant by the Committee or the Chief Executive
      Officer of the Company which specifically identifies the manner in which
      the Committee or the Chief Executive Officer believes that the Participant
      has not substantially performed his duties, after which the Participant
      shall have thirty days to defend or remedy such failure to substantially
      perform his duties;

            

    

    

    
      	
               
      

            	
              (b)

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

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      conviction of the Participant with no further possibility of appeal or, or
      plea of nolo contendere by the Participant to, any felony or crime of
      falsehood.

            

    

    

    The
cessation of employment of a Participant under subparagraph (a) and (b) above
shall not be deemed to be for “Cause” unless and until there shall have been
delivered to him 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 Committee at
a meeting of such Committee called and held for such purpose (after reasonable
notice is provided to the Participant and the Participant is given an
opportunity to be heard before the Committee), finding that, in the good faith
opinion of the Committee, the Participant is guilty of the conduct described in
subparagraph (a) or (b) above, and specifying the particulars thereof in
detail.

    

    2.7           Change in
Control. A
change in control shall occur when:

    
      

      
        	
                 
      

              	
                (a)

              	
                any
      person (other than a trustee or other fidicuary holding securities under
      an Employee benefit plan of the Company or a corporation owned, directly
      or indirectly, by the stockholders of the Company in substantially the
      same proportions as their ownership of stock of the Company) is or becomes
      the beneficial owner, directly or indirectly, of securities of the Company
      representing thirty percent (30%) or more of the combined voting power of
      the Company’s then outstanding voting
  securities;

              

      

       

    

    
      	
               
      

            	
              (b)

            	
              during
      any period of two (2) consecutive years (not including any period prior to
      the execution of this Plan), individuals who at the beginning of such
      period constitute the Board of the Company, and any new director of the
      Company (other than a director designated by a person who has entered into
      an agreement with the Company to effect a transaction described in Clauses
      (a) or (c) of this Paragraph (7) whose election by the Company’s Board or
      nomination for election by the stockholders of the Company, was approved
      by a vote of at least two-thirds (2/3) of the Directors of the Company’s
      Board, then still in office who either were Directors thereof at the
      beginning of the period or who election or nomination for election was
      previously so approved, cease for any reason to constitute a majority
      thereof:

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      shareholders of the Company approve a) a merger or consolidation of the
      Company, with any other corporation, other than a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto, continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) at least fifty percent (50%) of the combined voting power of the
      voting securities of the Company or such surviving entity outstanding
      immediately after such merger or consolidation, or b) the shareholders of
      the Company approve a plan of complete liquidation of the Company, or c)
      an agreement for the sale or disposition by the Company of all or
      substantially all of the Company’s assets;
or

            

    

    

    
      	
               
      

            	
              (d)

            	
              Such
      other circumstances as may be deemed by the Board in its sole discretion
      to constitute a change in control of the
  Company.

            

    

    

    

    However, in no event shall a “Change In
Control” be deemed to have occurred with respect to a Participant if the
Participant is part of the purchasing group which consummates the
Change-In-Control transaction.  A Participant shall be deemed “part of
a purchasing group” for purposes of the preceding sentence if the Participant is
an equity participant in the purchasing company or group (except
for:  (i) passive ownership of less than three percent (3%) of the
stock of the purchasing company; or (ii) ownership of equity participation in
the purchasing company or group which is otherwise not significant, as
determined prior to the Change in Control by a majority of the non-employee
continuing directors).

    

    2.8           Code.  The Internal
Revenue Code of 1986, as amended.

    

    2.9           Committee.  The Compensation
Committee of the Board, or such other administrative committee that is appointed
by the Board to administer the Plan.

    

    2.10         Company.  McDermott
International, Inc. and except where the context clearly indicates otherwise,
shall include the Company’s subsidiaries and affiliates, as well as any
successor to any such entities.

    

    2.11         Company
Account.  The notional
account maintained by the Committee reflecting each Participant’s Company
Contributions, together with any income, gain or loss and any payments
attributable to such account.

    

    2.12         Company
Contribution.  The total contributions credited to a
Participant’s Company Account for any one Plan Year pursuant to the provisions
of Section 4.1 or 4.2.

    

    2.13         Compensation. The salary, wages and
other cash remuneration received by a Participant during any Plan Year or in
respect of employment with the Company, including any contributions made to a
plan described in Sections 125, 132(f) or 401(k) of the Code pursuant to a
salary reduction agreement entered into between a Participant and the Company
and Bonuses, and amounts, if any, deferred by the Participant under this Plan,
but excluding cash payments under the Company’s 2001 Directors and Officers Long
Term Incentive Plan and any successor plan thereto and other additional
remuneration in any form.

    

    2.14         Deemed
Investments.  With respect to
any Account, the hypothetical investment options with respect to which such
Account is deemed to be invested for purposes of determining the value of such
Account under this Plan, as selected from time to time by the Committee in its
discretion.

    

    2.15         Deferral
Account.  The notional account maintained by the Committee
reflecting each Participant’s Deferral Contributions, together with any income,
gain or loss and any payments attributable to such amount.

    

    2.16         Deferral
Contribution.  Compensation that is deferred by a Participant
pursuant to Section 4.3 and credited to a Participant’s Deferral Account
pursuant to the provisions of Section 4.3.

    

    2.17         Disabled.  A
Participant will be considered Disabled if the Committee determines in its sole
discretion that the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that is expected to last for a continuous period of not less than twelve (12)
months.

    

    2.18         Eligible
Employee.  The Company’s CEO
and any officers of the Company and its subsidiaries and
affiliates.

    

    2.19         ERISA.  The Employee
Retirement Income Security Act of 1974, as amended.

    

    2.20         Exchange
Act.  The Securities
Exchange Act of 1934, as amended.

    

    2.21         Participant.  An Eligible
Employee who has been selected by the Committee as a Participant in the Plan
until such Eligible Employee ceases to be a Participant in accordance with
Article III of the Plan.

    

    2.22         Plan
Year.  The
twelve-consecutive month period commencing January 1 of each year.

    

    2.23         Retirement. Separation from Service
with the Company on or after the first of the calendar month following the
Participant’s attainment of the age of 65.

    

    2.24         Separation
from Service. A Separation from
Service occurs on the date a Participant dies, retires or otherwise has a
termination of employment with the Company.  A termination of
employment occurs on the date after which the Participant and the Company
reasonably anticipate that no further services will be performed by the
Participant or that the level of bona fide services reasonably anticipated to be
performed after such date will permanently decrease to 49% or less of the
average level of bona fide services provided in the immediately preceding
thirty-six months.

    

    2.25         Specified
Person. Specified Person shall
have the meaning set forth in Code Section 409A(a)(2)(B)(i) and regulations and
ruling promulgated thereunder.

    

    2.26         Unforeseeable
Emergency. A
severe financial hardship to the Participant resulting from an illness or
accident of the Participant, the Participant’s spouse, the Participant’s
Beneficiary, or the Participant’s dependent (as defined in Section 409A of the
Code); loss of the Participant’s property due to casualty; or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  Whether a Participant is faced
with an Unforeseeable Emergency is to be determined by the Committee in its sole
discretion, based on the relevant facts and circumstances of each
case.  In any case, a distribution on account of Unforeseeable
Emergency may not exceed the amount necessary to relieve the emergency, plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent that the emergency may be
relieved through reimbursement or compensation from insurance or otherwise, by
liquidation of the Participant’s assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship, or by cessation of
deferrals under the Plan.

    

    2.27         Vested
Account.  The sum of the Participant’s vested Company Account
and the Participant’s Deferral Account.

    

    2.28         Vested
Percentage.  The percentage as
to which a Participant is vested in his or her Company Account as determined
under Sections 5.4 and 5.5.

    

    2.29         Years of
Participation.  The sum of whole Plan Years of participation in
the Plan as an active employee in continuous employment, excluding fractional
years.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                                                                     ARTICLE
III

     

    Participation

     

    

    The
Committee, in its sole discretion, shall select and notify in writing those
Eligible Employees of the Company who shall participate in the
Plan.  An Eligible Employee who has been selected by the Committee as
a Participant shall begin participation in the Plan effective on the date
specified by the Committee in its notification and shall continue to participate
in the Plan until the earlier of (a) the date the Committee notifies the
Participant that he is no longer eligible to participate in the Plan or (b) the
date of his Separation from Service.  A Participant who ceases to
participate in the Plan pursuant to (a) of the preceding sentence shall be
treated as if he had terminated employment with the Company but (i) his benefit,
if any, shall not be payable until after his Separation from Service, and (ii)
his Vested Account shall be adjusted as provided in Article V.  An
Eligible Employee who is rehired by the Company following his Separation from
Service shall become a Participant only if such Eligible Employee is again
selected to participate in the Plan by the Committee.

    

     

    ARTICLE
IV

     

    
      Contributions

       

    

     

    

    4.1   Annual
Company Contribution.  As of the first day of each Plan Year,
the Company shall declare a contribution percentage for each Participant’s
Company Account.  The contribution percentage declared for a
Participant may, but need not be, the same as the contribution percentage
declared for other Participants.  Company Contributions shall be
credited as a bookkeeping entry as of the first day of the Plan Year or at other
such times as determined by the Committee to each Participant’s Company Account,
in an amount equal to the contribution percentage declared for the Participant
multiplied by the Participant’s Compensation received during the prior Plan
Year.

    

    4.2   Discretionary
Company Contribution.  The Committee may in its sole discretion
at any time make an extraordinary contribution to the Company Account of any
Participant.

    

    4.3   Participant
Deferrals.  For
any Plan Year, the Committee may, in its sole discretion, allow a Participant to
elect to defer the payment by the Company of any whole percentage (or dollar
amount) of his annual base salary that would otherwise be paid during such Plan
Year and/or of any whole percentage (or dollar amount) of any Bonus earned
during such Plan Year, and instead have such amounts credited as a bookkeeping
entry to his Deferral Account.  The Compensation otherwise payable to
the Participant shall be reduced by the amount the Participant elected to have
contributed to the Participant’s Deferral Account, which shall be a Deferral
Contribution.

    

    4.4   Participant
Elections.  Prior to the first day of each Plan
Year, a Participant shall file a written election with the Committee specifying
(i) the type(s) and amount(s) of Compensation that he wishes to defer pursuant
to Section 4.3, if Deferral Contributions are permitted by the Committee for the
relevant Plan Year, (ii) the payment date or payment commencement date
pertaining to the portion of his Vested Account that is attributable to
contributions made in the relevant Plan Year, and (iii) the form of payment of
the portion of his Vested Account that is attributable to contributions made in
the relevant Plan Year.  Such election with respect to any Plan Year
must be filed with the Committee no later than the last day of the immediately
preceding Plan Year; provided however, that an election made by a new
Participant who is first eligible to participate in the Plan may be made no
later than the 30th day following the date on which he is
initially eligible to participate in the Plan but only with respect to
Compensation earned after the effective date of such election.  If
Deferral Contributions are permitted, a Participant may elect to defer up to 50%
of his annual Salary and/or up to 100% of any Bonus earned in any Plan
Year.

    

    Except as
set forth in Section 6.3, a Participant shall not be permitted to change his
election with respect to the timing or form of payment and any election made
hereunder shall not apply with respect to prior Plan Years.  Failure
to make a timely Deferral Contribution election will result in no Deferral
Contributions for the relevant Plan Year.  If a Participant fails to
make a timely election specifying time and form of payment, payment of the
portion of the Participant’s Vested Account that is attributable to
contributions made in the relevant Plan Year shall be paid in accordance with
Section 6.4

    

    4.5   Suspension
of Deferral Contributions.  Except as provided below, an
election to make Deferral Contributions in a Plan Year shall be irrevocable on
the last day of the immediately preceding Plan Year. To the extent expressly
permitted under Code Section 409A and regulations and rulings issued thereunder,
a Participant’s deferral election shall be suspended during any unpaid leave of
absence granted in accordance with Company policies; provided, however that such
deferral election shall become fully operative as of the first day of the
payroll period commencing coincident with or next following the Participant’s
return to active employment following termination of the approved unpaid leave
in the Plan Year to which the Participant’s deferral pertains.  In the
event of an Unforeseeable Emergency, a Participant shall suspend deferrals in
order  to relieve the emergency, provided that the deferrals must be
suspended for the entire remainder of the Plan Year.  In the event of
a Disability, the Participant may suspend deferrals by the later of the end of
the taxable year of the Company in which the Disability arises, or the 15th of the
third month following the date that the Disability arises.

    

    

    

                                                                                                                   
ARTICLE
V

       

    

    Accounts

     

    

    5.1   Company
Accounts.  The Committee shall establish and maintain an
individual bookkeeping account for each Participant, which shall be the
Participant’s Company Account.  A separate “Company Sub Account” may
be maintained for each Participant for each Plan Year in respect of which
Company Contributions are credited under the Plan for the benefit of the
Participant.  The Committee shall credit the amount of each Company
Contribution made on behalf of a Participant to such Participant’s Company
Account pursuant to Section 4.1 and 4.2.  The Committee shall further
debit and/or credit the Participant’s Company Account with any income, gain or
loss based upon the performance of the Deemed Investments selected by the
participant and any payments attributable to such account on a daily basis, or
at such other times as it shall determine appropriate.  The sole
purpose of the Participant’s Company Account is to record and reflect the
Company’s Plan obligations related to Company Contributions to each Participant
under the Plan.  The Company shall not be required to segregate any of
its assets with respect to Plan obligations nor shall any provision of the Plan
be construed as constituting such segregation.

    

    5.2   Deferral
Accounts.  The Committee shall establish and maintain an
individual bookkeeping account for each Participant, which shall be the
Participant’s Deferral Account.  A separate “Deferral Sub Account” may
be maintained for each Participant for each Plan Year in respect of which
Deferral Contributions are credited under the Plan for the benefit of the
Participant. The Committee shall credit the amount of each Deferral Contribution
made on behalf of a Participant to such Participant’s Deferral Account as soon
as administratively feasible following the applicable deferral.  The
Committee shall further debit and/or credit the Participant’s Deferral Account
with any income, gain or loss based upon the performance of the Deemed
Investments selected by the Participant and any payments attributable to such
Account on a daily basis, or at such other times as it shall determine
appropriate.  The sole purpose of the Participant’s Deferral Account
is to record and reflect the Company’s Plan obligations related to Deferral
Contributions of each Participant under the Plan.  The Company shall
not be required to segregate any of its assets with respect to Plan obligations,
nor shall any provision of the Plan be construed as constituting such
segregation.

    

    5.3   Hypothetical
Accruals to the Account.  In accordance
with procedures established by the Committee and subject to this Section 5.3,
the Participant may designate the Deemed Investments with respect to which his
or her Account shall be deemed to be invested. If a Participant fails to make a
proper designation, then his Account shall be deemed to be invested in the
Deemed Investments designated by the Committee in its sole
discretion.   A Participant may change such designation with
respect to future Company and Deferral Contributions, as well as amounts,
already credited to his Account in accordance with procedures established by the
Committee.  A copy of any available prospectus or other disclosure
materials for each of the Deemed Investments shall be made available to each
Participant upon request.  The Committee shall determine from time to
time each of the Deemed Investments made available under the Plan and may change
any such determinations at any time.  Nothing herein shall obligate
the Company to invest any part of its assets in any of the investment vehicles
serving as the Deemed Investments.

    

    5.4   Vesting
of Company Account.  A Participant’s vested percentage with
respect to the Participant’s Company Account, adjusted by any income, gain or
loss and any payments attributable thereto, shall be the lesser of i) twenty
percent times the Participant’s Years of Participation, and ii)
100%.  Except as provided in Section 5.5, upon Separation from Service
or cessation of Plan participation, whichever is earlier, a Participant shall
forfeit all amounts credited to his Account other than his Vested Account value
determined as of the close of business coincident with or next following the
date on which the Participant separated from service or ceased to participate in
the Plan, as applicable, provided, however, that amounts not so forfeited shall
continue to be debited and credited in accordance with Section 5.3 from and
after Separation from Service.

    

    5.5   Accelerated
Vesting.  The vesting provisions above notwithstanding, each
Participant shall have a Vested Percentage of 100% for his entire Account upon
the soonest of the following to occur during the Participant’s employment with
the Company:  (i) the date of Separation from Service as a result of a
Participant’s death, disability or termination by the Company for reasons other
than cause, (ii) the Participant’s Disability, (iii) the Participant’s
Retirement, or (iv) the date a Change in Control occurs.  Each
Participant who was employed by the Company on December 31, 2008 shall have a
vested percentage of 100% of amounts allocated to his Account as of December 31,
2008 and future gains and losses thereon.  Amounts allocated on or
after January 1, 2009 and gains and losses thereon shall vest in accordance with
Section 5.4 and the first sentence of this Section 5.5.

    

    5.6   Vesting
of Deferral Account. A Participant’s Vested Percentage with regard to his
Deferral Account shall at all times be 100%.

    

    5.7   Nature
and Source of Payments.  The obligation to make distributions
under this Plan with respect to each Participant and any Beneficiary in
accordance with the terms of this Plan shall constitute a liability of the
Company which employed the Participant when the obligation was accrued, and no
other Company shall have such obligation and any failure by a particular Company
to live up to its obligation under this Plan shall have no effect on any other
Company.  All distributions payable hereunder shall be made from the
general assets of the Company, and nothing herein shall be deemed to create a
trust of any kind between the Company and any Participant or other
person.  No special or separate fund shall be established nor shall
any other segregation of assets be made to assure that distributions will be
made under this Plan.  No Participant or Beneficiary shall have any
interest in any particular asset of the Company by virtue of the existence of
this Plan.  Each Participant and Beneficiary shall be an unsecured
general creditor of the Company.

    

    5.8   Statements
to Participants.  Periodically as
determined by the Committee, but not less frequently than annually, the
Committee shall transmit to each Participant a written statement regarding the
Participant's Account for the period beginning on the date following the
effective date of the preceding statement and ending on the effective date of
the current statement.

    

    

    ARTICLE
VI

    

    Payment of
Benefits

    

    

    6.1   Occasions
for Distributions.  The Company shall distribute a
Participant's Vested Account following the events and in the manner set forth in
this Article VI.  A Participant’s Vested Account shall be debited in
the amount of any distribution made from the Account as of the date of the
distribution.  The occasions for distributions shall be (i) the
Participant’s Separation From Service, including upon Retirement or death, (ii)
Disability, (iii) the occurrence of an Unforeseeable Emergency, or (iv) the
completion of fixed period of deferral.

    

    6.2   Distribution
Elections.  A Participant shall elect the time and form of
payment of his Vested Account in the manner set forth in Section
4.4.  A Participant who fails to timely file a distribution election
for a Plan Year shall be deemed to have elected to receive the portion of his
Vested Account attributable to the relevant Plan Year in a single lump sum
payment within 30 days after his Separation from Service, or on the first day of
the seventh month following his Separation from Service if he is a Specified
Person as of the date of the Separation from Service.  If a
Participant’s Vested Account is less than $50,000, it will be distributed in a
single lump sum distribution irrespective of any election to the contrary.

    

    6.3   Change of
Former Timing of Payments.  A Participant may make a subsequent
election no later than twelve months prior to the date that he would be eligible
to receive a distribution under the Plan, to change the timing and form of
payment of the distribution; provided, however, that the payment, or first
payment in the case of a series of payments, under the subsequent election shall
be deferred to a date that is at least five (5) years after the date the
Participant would have been eligible to receive, or begin receiving, the
distribution under the prior election.  To be effective, any such
election must be in writing timely and received by the Committee, and cannot be
effective for at least twelve months after the date on which the election is
made.  The requirement in this Section 6.3 that the first payment with
respect to which any election thereunder applies must be deferred for at least
five (5) years shall not apply to a payment on account of the Participant’s
death, Disability or in the event of an Unforeseeable
Emergency.  Notwithstanding the provisions of this Section 6.3, for
subsequent distribution elections made in 2008 only, the five year delay shall
not be applicable, so long as the distribution is not payable in 2008 under the
prior election, and the subsequent election does not schedule the distribution
until after December 31, 2008.

    

    6.4   Distribution
on Account of Separation from Service or Disability. Subject to
Section 6.8, upon a Participant’s Disability or Separation from Service,
the Company shall distribute, or begin distributing, to the Participant (or the
Participant’s Beneficiary) within a reasonable period of time (not to exceed 30
days after such separation), the Participant’s Vested Account.  Such
distribution(s) shall be in the form specified on the distribution election
form(s) filed with the Committee that covers the relevant Vested
Account.  If no effective election form exists, the distribution shall
be distributed in the form of a lump sum payment equal to the relevant portion
of the Participant’s Vested Account.

     

    

    6.5   Continuation
of Hypothetical Accruals to the Vested Account After Commencement of
Distributions.   If any Vested Account of a Participant is
to be distributed in a form other than a lump sum, then such Vested Account
shall continue to be adjusted for hypothetical income, gain or loss and any
payment or distributions attributable to the Vested Account as described in
Section 5.1, and 5.2, until the entire Vested Account has been
distributed.

     

    

    6.6   Unforeseeable
Emergency Distribution.   In the event that the Committee,
upon the written request of a Participant, determines in its sole discretion
that such Participant has incurred an Unforeseeable Emergency, as defined in
Section 2.26, such Participant may be entitled to receive a distribution of part
or all of the Participant’s Vested Account, in an amount not to exceed the
lesser of (a) the amount determined by the Committee under Section 2.26, or (b)
the value of such Participant’s Vested Account at the time of the
emergency.  Such amount shall be paid in a single lump sum payment as
soon as administratively practicable after the Committee has made its
determination with respect to the availability and amount of such distribution;
provided, however, that the payment shall not be made after the later of the end
of the taxable year of the Company in which the Unforeseeable Emergency arises
or the 15th day of
the third month following the date of the occurrence of the Unforeseeable
Emergency.  If a Participant’s Account is deemed to be invested in
more than one Deemed Investment, such distribution shall be made pro rata from
each of such Deemed Investments.  For purposes of the foregoing, such
distribution shall be made from the Participant’s Account beginning with the
oldest Account in the following order:  First, such amount shall be
debited from the Participant’s Deferral Account, and second, from the
Participant’s Company Account (subject to forfeitures with respect to the
non-vested portion of the Company Account utilized for such
distribution).

    

    6.7     Distribution
on Account of Completion of a Fixed Deferral Period.   At
the time of a Participant’s election to participate in the Plan, the Participant
may elect to receive the Distribution of a Participant’s Vested Account
(established only in respect of the relevant Plan Year), or any applicable
Vested Plan Year Company Sub-Account or Plan Year Deferral Sub-Account on the
completion of a fixed deferral period elected by the Participant on forms
provided by the Committee.

    

    6.8          Limitation
on Distributions to Certain Key Employees. Notwithstanding any
other provision of the Plan to the contrary, to the extent that a Participant is
a Specified Person and the Participant’s distribution is on account of any
reason other than death or Disability distributions may not be made before the
date which is six months after the date of the Separation from
Service.  Payments to which the Participant would otherwise be
entitled during the six-month period described above shall be delayed and paid
in a lump sum on the first day of the seventh month after the date of his
Separation from Service.

    
 

    ARTICLE
VII

    

    Committee

    

    7.1          Authority.  The Committee has
full and absolute discretion in the exercise of each and every aspect of the
rights, power, authority and duties retained or granted it under the Plan,
including without limitation, the authority to determine all facts, to interpret
this Plan, to apply the terms of this Plan to the facts determined, to make
decisions based upon those facts and to make any and all other decisions
required of it by this Plan, such as the right to benefits, the correct amount
and form of benefits, the determination of any appeal, the review and correction
of the actions of any prior administrative committee, and the other rights,
powers, authority and duties specified in this Article and elsewhere in this
Plan.  The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or any agreement or document related to
this Plan in the manner and to the extent the Committee deems necessary or
appropriate to carry this Plan into effect.  Notwithstanding any
provision of law, or any explicit ruling or implicit provision of this document,
any action taken, or finding, interpretation, ruling or decision made by the
Committee in the exercise of any of its rights, powers, authority or duties
under this Plan shall be final and conclusive as to all parties, including
without limitation all Participants, former Participants and beneficiaries,
regardless of whether the Committee or one or more if its members may have an
actual or potential conflict of interest with respect to the subject matter of
the action, finding, interpretation, ruling or decision.  No final
action, finding, interpretation, ruling or decision of the Committee shall be
subject to de novo review in any judicial proceeding.  No final
action, finding, interpretation, ruling or decision of the Committee may be set
aside unless it is held to have been arbitrary and capricious by a final
judgment of a court having jurisdiction with respect to the issue.  To
the extent Plan distributions are payable in a form other than a single lump sum
(e.g., installments), the Committee shall determine the methodology for
computing such payments.

    

    7.2           Delegation
of Authority.  The Committee may
delegate any of its powers or responsibilities to one or more members of the
Committee or any other person or entity.

    

    7.3           Procedures.  The Committee may
establish procedures to conduct its operations and to carry out its rights and
duties under the Plan.  Committee decisions may be made by majority
action.  The Committee may act by written consent.

    

    7.4   Compensation
and Expenses.  The members of
the Committee shall serve without compensation for their services, but all
expenses of the Committee and all other expense incurred in administering the
Plan shall be paid by the Company

    

    7.5   Indemnification.  The Company shall
indemnify the members of the Committee and/or any of their delegates against the
reasonable expenses, including attorney’s fees, actually and appropriately
incurred by them in connection with the defense of any action, suit or
proceeding, of in connection with any appeal thereto, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) and against all amounts paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in a suit of final adjudication that such
Committee member is liable for fraud, deliberate dishonesty of willful
misconduct in the performance of his duties; provided that within 60 days after
the institution of any such action, suit or proceeding a Committee member has
offered in writing to allow the Company, at its own expense, to handle and
defend any such action, suit or proceeding.

    

    

    

    ARTICLE
VIII

    

    Amendment and
Termination

    

    The
Company retains the power to amend the Plan or to terminate the Plan at any time
by action of the Board.  No such amendment or termination shall
adversely affect any Participant or Beneficiary with respect to his right to
receive a benefit in accordance with Article VI, determined as of the later of
the date that the Plan amendment or termination is adopted or the date such Plan
amendment or termination is effective, unless the affected Participant or
Beneficiary consents to such amendment or termination.

    

    

    ARTICLE
IX

    

    Miscellaneous

    

    9.1           Plan Does
Not Affect the Rights of Employee.  Nothing contained
in this Plan shall be deemed to give any Participant the right to be retained in
the employment of the Company, to interfere with the rights of the Company to
discharge any Participant at any time or to interfere with a Participant’s right
to terminate his employment at any time.

    

    9.2           Nonalienation
and Nonassignment.  Except for debts
owed the Company by a Participant or Beneficiary, no amounts payable or to
become payable under the Plan to a Participant or Beneficiary shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, whether voluntary, involuntary, by operation of law or
otherwise, and any attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same by a Participant or Beneficiary prior to
distribution as herein provided shall be null and void.

    

    9.3           Tax
Withholding.  The Company shall
have the right to deduct from any payments to a Participant or Beneficiary under
the Plan any taxes required by law to be withheld with respect to such
payments.  In addition, the Company shall have the right to deduct
from any Participant’s base salary or other compensation any applicable
employment taxes or other required withholdings with respect to a
Participant.

    

    9.4           FICA
Withholding/Employee Deferrals/Company Contributions. For each payroll period,
the Company shall withhold from that portion of the Participant’s Compensation
that is not being deferred under this Plan, the Participant’s share of FICA and
other applicable taxes that are required to be withheld with respect to
(i) Employee Deferrals, and (ii) Company Contributions as they vest
and become subject to such FICA withholding.  To the extent that there
are insufficient funds to satisfy all applicable tax withholding requirements in
a timely manner, the Company reserves the right to reduce the Participant’s
Employee Deferrals, as required to  provide available funds for
applicable tax withholding requirements.  To the extent there are
still insufficient funds to satisfy all such applicable tax withholding
requirements, the Participant agrees to timely remit cash funds to the Company
sufficient to cover such withholding requirements.

    

    

    9.5           Setoffs. As a condition to the
receipt of any benefits hereunder, the Committee, in its sole discretion, may
require a Participant or Beneficiary to first execute a written authorization,
in the form established by the Committee, authorizing the Company to offset from
the benefits otherwise due hereunder any and all amounts, debts or other
obligations, incurred in the ordinary course of the service relationship, owed
to the Company by the Participant.  Where such written authorization
has been so executed by a Participant, benefits hereunder shall be reduced
accordingly.  The Committee shall have full discretion to determine
the application of such offset and the manner in which such offset will reduce
benefits under the Plan; provided, however, that the amount offset in any one
taxable year does not exceed $5,000 and the offset is taken at the same time and
in the same amount as the debt otherwise would have been due from the
Participant.

    

    9.6   Number
and Gender.  Wherever
appropriate herein, words used in the singular shall be considered to include
the plural and words used in the plural shall be considered to include the
singular.  The masculine gender, where appearing in the Plan, shall be
deemed to include the feminine gender.

    

    9.7   Headings.  The headings of
Articles and Sections herein are included solely for convenience, and if there
is any conflict between such headings and the text of the Plan, the text shall
control.

    

    9.8   Applicable
Law.  Except to the
extent preempted by federal law, the terms and provisions of the Plan shall be
construed in accordance with the laws of the State of Texas.

    

    9.9   Successors.  All obligations
under the Plan shall be binding upon the Company and any successors and assigns,
in accordance with its terms, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or other
transaction, involving all or substantially all of the business and/or assets of
the Company.

    

    9.10  Claims
Procedure.  The Committee
shall have sole discretionary authority with regard to the adjudication of any
claims made under the Plan.  All claims for benefits under the Plan
shall be submitted in writing, shall be signed by the claimant and shall be
considered filed on the date the claim is received by the
Committee.  In the event a claim is denied, in whole or in part, the
claims procedures set forth below shall be applicable.

    

    Upon the
filing of a claim as above provided and in the event the claim is denied, in
whole or in part, the Committee shall within ninety (90 days, forty five (45)
days for disability related claims,) provide the claimant with a written
statement which shall be delivered or mailed to the claimant to his last known
address, which statement shall contain the following:

    

    (a)           the
specific reason or reasons for the denial of benefits;

    

    
      	
              (b)

            	
              a
      specific reference to the pertinent provisions of the Plan upon which the
      denial is based;

            

    

    

    
      	
              (c)

            	
              a
      description of any additional material or information necessary for the
      claimant to perfect his claim for benefits and an explanation of why such
      material and information is necessary;
and

            

    

    

    (d)           an
explanation of the review procedure provided below.

    

    If
special circumstances require additional time for processing the claim, the
Committee shall advise the claimant prior to the end of the initial ninety (90)
day or forty-five (45) day period, setting forth the reasons for the delay and
the approximate date the Committee expects to render its
decision.  Any such extension shall not exceed ninety (90) days, or
thirty (30) days for disability related claims.

    

    Within
ninety (90) days after receipt of the written notice of denial of a claim as
provided above, a claimant or his authorized representative may request a review
of the denial upon written application to the Committee, may review pertinent
documents and may submit issues and comments in writing to the
Committee.  Within sixty (60) days (or forty-five days in the case of
a disability related claim) after receipt of a written request for review, or
within one hundred and twenty (120) days (or ninety days for disability related
claims) in the event of special circumstances which require an extension of time
for processing such application for review, the Committee shall notify the
claimant of its decision by delivery or by Certified or Registered Mail to his
last known address.  The decision of the Committee shall be in writing
and shall include the specific reasons for the decision and specific references
to the pertinent provisions of the Plan on which such decision is
based.  The Committee shall advise the claimant prior to the end of
the initial sixty (60) day or forty-five day period, as applicable, if
additional time is needed to process such application for review.  The
decision of the Committee shall be final and conclusive.

    

    9.11     Claims/Disputes.  Any dispute or
claim arising out of this Plan or the breach thereof, which is not settled under
the Plan’s administrative claims procedure and which is pursued beyond such
claims procedure, shall be brought in Federal District Court, in Harris County,
Texas.

    

    9.12     Conduct
Injurious to the Company.  Notwithstanding
anything in the Plan to the contrary, any and all benefits otherwise payable to
any Participant hereunder, except to the extent of any prior distributions under
the Plan, shall be forever forfeited if it is determined by the Committee, in
its sole discretion, that such Participant has engaged in conduct injurious to
the Company, including but not limited to the following:

    

    (a)           dishonesty
while in the employ of the Company;

    

    
      	
              (b)

            	
              imparting,
      disclosing or appropriating proprietary information for himself or to or
      for any other person, firm, corporation, association or entity for any
      reason or purpose whatsoever, except if required by law or at the
      Company’s direction;

            

    

    

    
      	
              (c)

            	
              performing
      any act or engaging in any course of conduct which has or may reasonably
      have the effect of demeaning the name or business reputation of the
      Company; or

            

    

    

    
      	
              (d)

            	
              providing
      goods or services to or becoming an employee, owner, officer, agent,
      consultant, advisor or director of any firm or person in any geographic
      area which competes with the Company in any phase of any of the business
      lines or services offered by the Company as of the Participant’s
      Retirement Date.

            

    

    

    9.13                      Compliance
with Code Section 409A. The Plan is intended to
meet the requirements of Section 409A of the Code in order to avoid any
adverse tax consequences resulting from any failure to comply with
Section 409A of the Code and, as a result, the Plan shall be operated
in a manner consistent with such compliance.  Except to the extent
expressly set forth in the Plan, the Participant (and/or the Participant’s
Beneficiary, as applicable) shall have no right to dictate the taxable year in
which any payment hereunder that is subject to Section 409A of the Code should
be paid.

    

    9.14                      No
Guarantee of Tax Consequences. None of the Board of
Directors, officers or employees of the Company, the Company or any Affiliate
makes any commitment or guarantee that any federal, state or local tax treatment
will apply or be available to any individual or person participating hereunder
or eligible to participate hereunder.

    

    9.15                      Entire
Agreement.  This Plan
document constitutes the entire Plan governing the Company and the Participant
with respect to the subject matters hereof and supercedes all prior written and
oral and all contemporaneous written and oral agreements and understandings,
with respect to the subject matters herein.  This Plan may not be
changed orally, but only by an amendment in writing signed by the Company,
subject to the provisions in this Plan regarding amendments
thereto.

     

    IN WITNESS WHEREOF, McDermott
International, Inc. has caused this Plan to be executed by its duly authorized
officer, effective as provided herein.

     

    

    

              McDermott International,
Inc.

    

    

    By:                        _____________________________

    Title:                     _____________________________

    Date:                     _____________________________

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