Document:

Form of Employee Matters Agreement

 Exhibit 10.2 

EMPLOYEE MATTERS AGREEMENT 

among 
 MCDERMOTT
INTERNATIONAL, INC., 
 MCDERMOTT INCORPORATED, 

THE BABCOCK & WILCOX COMPANY, 

and 

BABCOCK & WILCOX INVESTMENT COMPANY 

dated as of 

[            ] [    ], 2010 

 
  

 TABLE OF CONTENTS 

 

					
	 	  	 	  	PAGE
	 ARTICLE I
	  	 DEFINITIONS
	  	1
	 Section 1.1  
	  	 Definitions
	  	1
	 Section 1.2  
	  	 Interpretation
	  	5
			
	 ARTICLE II
	  	 ASSIGNMENT OF EMPLOYEES
	  	6
	 Section 2.1  
	  	 Active Employees
	  	6
	 Section 2.2  
	  	 Former Employees
	  	7
	 Section 2.3  
	  	 Employment Law Obligations
	  	7
	 Section 2.4  
	  	 Employee Records
	  	7
			
	 ARTICLE III
	  	 EQUITY AND INCENTIVE COMPENSATION PLANS
	  	9
	 Section 3.1  
	  	 General Principles
	  	9
	 Section 3.2  
	  	 Restricted Stock
	  	9
	 Section 3.3  
	  	 Restricted Stock Units
	  	11
	 Section 3.4  
	  	 Stock Options
	  	12
	 Section 3.5  
	  	 Performance-Based Awards
	  	13
	 Section 3.6  
	  	 Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A
	  	14
	 Section 3.7  
	  	 Certain Bonus Payments
	  	15
			
	 ARTICLE IV
	  	 GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
	  	15
	 Section 4.1  
	  	 General Principles
	  	15
	 Section 4.2  
	  	 Sponsorship and/or Establishment of B&W Plans
	  	16
	 Section 4.3  
	  	 Service Credit
	  	17
	 Section 4.4  
	  	 Plan Administration
	  	17
			
	 ARTICLE V
	  	 PENSION, EXCESS AND SUPPLEMENTAL PLANS
	  	18
	 Section 5.1  
	  	 General Principles
	  	18
	 Section 5.2  
	  	 Pension Transfers
	  	18
	 Section 5.3  
	  	 Excess and Supplemental Plans
	  	19
			
	 ARTICLE VI
	  	 THRIFT PLANS
	  	20
	 Section 6.1  
	  	 General Principles
	  	20
	 Section 6.2  
	  	 Treatment of MII Common Stock and B&W Common Stock
	  	20
	 Section 6.3  
	  	 Transfer of Accounts
	  	21
			
	 ARTICLE VII
	  	 WELFARE PLANS
	  	21
	 Section 7.1  
	  	 Establishment of B&W Welfare Plans
	  	21
	 Section 7.2  
	  	 Transitional Matters Under B&W Welfare Plans
	  	22
	 Section 7.3  
	  	 VEBA
	  	22
	 Section 7.4  
	  	 Continuity of Benefits, Benefit Elections and Beneficiary Designations
	  	22
	 Section 7.5  
	  	 Insurance Contracts
	  	23
	 Section 7.6  
	  	 Third-Party Vendors
	  	23
	 Section 7.7  
	  	 Claims Experience
	  	23
			
	 ARTICLE VIII
	  	 BENEFIT ARRANGEMENTS
	  	23
			
	 ARTICLE IX
	  	 WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION
	  	24
			
	 ARTICLE X
	  	 RETENTION, SEVERANCE AND OTHER MATTERS
	  	24
	 Section 10.1
	  	 Retention Agreements
	  	24
	 Section 10.2
	  	 Severance
	  	24
	 Section 10.3
	  	 Accrued Time Off
	  	25
	 Section 10.4
	  	 Leaves of Absence
	  	25

  

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	 	  	 	  	PAGE
	 Section 10.5  
	  	 Collective Bargaining Agreements
	  	25
	 Section 10.6  
	  	 Director Programs
	  	25
	 Section 10.7  
	  	 Restrictive Covenants in Employment and Other Agreements
	  	25
			
	 ARTICLE XI
	  	 GENERAL PROVISIONS
	  	26
	 Section 11.1  
	  	 Preservation of Rights to Amend
	  	26
	 Section 11.2  
	  	 Confidentiality
	  	26
	 Section 11.3  
	  	 Administrative Complaints/Litigation
	  	26
	 Section 11.4  
	  	 Reimbursement and Indemnification
	  	26
	 Section 11.5  
	  	 Costs of Compliance with Agreement
	  	26
	 Section 11.6  
	  	 Fiduciary Matters
	  	26
	 Section 11.7  
	  	 Form S-8
	  	27
	 Section 11.8  
	  	 Entire Agreement
	  	27
	 Section 11.9  
	  	 Binding Effect; No Third-Party Beneficiaries; Assignment
	  	27
	 Section 11.10
	  	 Amendment; Waivers
	  	27
	 Section 11.11
	  	 Remedies Cumulative
	  	27
	 Section 11.12
	  	 Notices
	  	27
	 Section 11.13
	  	 Counterparts
	  	28
	 Section 11.14
	  	 Severability
	  	28
	 Section 11.15
	  	 Governing Law
	  	28
	 Section 11.16
	  	 Performance
	  	28
	 Section 11.17
	  	 Construction
	  	28
	 Section 11.18
	  	 Effect if Distribution Does Not Occur
	  	28

  

 ii 

 EMPLOYEE MATTERS AGREEMENT 

THIS EMPLOYEE MATTERS AGREEMENT dated as of
[                    ], 2010 among McDermott International, Inc., a Panamanian corporation (“MII”), McDermott Incorporated, a
Delaware corporation (“MI”), The Babcock & Wilcox Company, a Delaware corporation (“B&W”), and Babcock & Wilcox Investment Company, a Delaware corporation (“BWICO”). MII, MI, B&W and BWICO are
sometimes referred to herein, individually, as a “Party,” and, collectively, as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in Article I
hereof. 
 RECITALS 

WHEREAS, each of MI, B&W and BWICO is a direct or indirect, wholly owned subsidiary of MII; 

WHEREAS, the Board of Directors of MII has determined that it would be appropriate and in the best interests of MII and
its stockholders to effectuate the Distribution as described in the Master Separation Agreement between MII and B&W dated as of
                    , 2010 (the “Master Separation Agreement”); and 

WHEREAS, the Master Separation Agreement provides, among other things, subject to the terms and conditions thereof, for
the Distribution and for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of B&W and its subsidiaries from MII; and 

WHEREAS, in order to ensure an orderly transition under the Master Separation Agreement, it will be necessary for the
Parties to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters. 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Parties,
intending to be legally bound, agree as follows: 
 ARTICLE I 

DEFINITIONS 

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth in
this Section 1.1: 
 (a) “Additional MII RSAs” has the meaning set forth in
Section 3.2(b). 
 (b) “Additional MII RSUs” has the meaning set forth in
Section 3.3(b). 
 (c) “Affiliate” means, with respect to any specified Person,
any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose, “control” of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise. 

(d) “Agreement” means this Employee Matters Agreement together with all Schedules hereto and all
amendments, modifications and changes hereto and thereto entered into in accordance with Section 11.10. 

(e) “Ancillary Agreements” has the meaning set forth in the Master Separation Agreement.

 (f) “Benefit Arrangement” means any contract, agreement, policy, practice, program,
plan, trust or arrangement (other than any deferred compensation, profit sharing, bonus, stock-based compensation or other form of incentive compensation), providing for benefits, perquisites or compensation of any nature to any Employee, or to any
family member, dependent or beneficiary of any such Employee, including, travel and accident, tuition reimbursement, vacation, sick, personal or bereavement days, and holidays. 

 

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 (g) “B&W” has the meaning set forth in the
preamble to this Agreement. 
 (h) “B&W Common Stock” means the common stock of
B&W, par value $0.01 per share. 
 (i) “B&W Employee” means any individual who
is employed by a member of the B&W Group on the day after the Distribution Date. 
 (j)
“B&W Entity” means any member of the B&W Group (together with each current and former, direct or indirect, subsidiary of any such member (and of any such former subsidiary)), but also includes any entity which was sold or otherwise
disposed of or the business of which was discontinued at such time as such entity’s assets, liabilities or results of operations were accounted for within the Power Generation Systems, Government Operations or Industrial Operations segment of
MII and its Subsidiaries (or any predecessor to any such segment). The Parties acknowledge that this term is defined differently in the Master Separation Agreement. 

(k) “B&W Excess Plan” means any excess plan sponsored or maintained by any one or more
members of the B&W Group on the day after the Distribution Date, including each of those set forth on Schedule 1.1(k). 

(l) “B&W FSA” has the meaning set forth in Section 7.4(b). 

(m) “B&W Group” means, collectively, B&W and each B&W Subsidiary. 

(n) “B&W Legacy Award Holders” means the holders of one or more MII RSAs, MII RSUs, MII
Options or performance-based equity awards under any of the MII Legacy Plans who are former employees of a member of the B&W Group (and will not be B&W Employees or McDermott Employees) and are listed on Schedule 1.1(n). 

(o) “B&W Master Trust” has the meaning set forth in Section 5.1. 

(p) “B&W New Equity Plan” means the plan adopted by B&W and approved by MII, as sole
stockholder of B&W prior to the Distribution, as set forth on Schedule 1.1(p), under which the B&W equity-based awards described in Article III shall be issued. 

(q) “B&W New SERP Plan” means the supplemental executive retirement plan adopted by B&W
and approved by MII, as sole shareholder of B&W prior to the Distribution. 
 (r)
“B&W Pension Beneficiaries” has the meaning set forth in Section 5.1. 
 (s)
“B&W Pension Plan” means any pension plan sponsored or maintained by any one or more members of the B&W Group on the day after the Distribution Date, including each of those set forth on Schedule 1.1(s). 

(t) “B&W Subsidiary” means any Subsidiary of B&W, other than Babcock & Wilcox
Technical Services Group Pantex, LLC or Babcock & Wilcox Technical Services Group Y-12, LLC, as of the Distribution Date. 

(u) “B&W Thrift Plan Beneficiaries” has the meaning set forth in Section 6.1.

 (v) “B&W Thrift Plan” has the meaning set forth in Section 6.1 and on
Schedule 1.1(v). 
 (w) “B&W Transferee Plan” has the meaning set forth in
Section 5.1. 
 (x) “B&W Welfare Plan” means any Welfare Plan sponsored or
maintained by any one or more members of the B&W Group on the day after the Distribution Date, including each of those set forth on Schedule 1.1(x). 

(y) “B&W Welfare Plan Participants” has the meaning set forth in Section 7.1.

 (z) “BWICO” has the meaning set forth in the preamble to this Agreement. 

(aa) “COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified
at Part 6 of Subtitle B of Title I of ERISA and at Code Section 4980B. 
  

 2 

 (bb) “Code” means the Internal Revenue Code of
1986. 
 (cc) “Confidential Information” has the meaning set forth in the Master
Separation Agreement. 
 (dd) “Distribution” has the meaning set forth in the Master
Separation Agreement. 
 (ee) “Distribution Date” has the meaning set forth in the
Master Separation Agreement. 
 (ff) “Employee” means any McDermott Employee, Former
McDermott Employee, B&W Employee or Former B&W Employee. 
 (gg) “ERISA” means
the U.S. Employee Retirement Income Security Act of 1974. 
 (hh) “Final Transfer
Amount” has the meaning set forth in Section 5.2(b). 
 (ii) “FMLA” means the
U.S. Family and Medical Leave Act. 
 (jj) “Former B&W Employee” has the meaning
set forth in Section 2.2(c). 
 (kk) “Former B&W Officer” means the persons
listed on Schedule 1.1(kk), each of whom has been an officer of B&W prior to the date hereof but will not be a B&W Employee. 

(ll) “Former McDermott Employee” has the meaning set forth in Section 2.2(b). 

(mm) “Initial Transfer Amount” has the meaning set forth in Section 5.2(a). 

(nn) “Initial Transfer Date” has the meaning set forth in Section 5.2(a). 

(oo) “IRS” means the U.S. Internal Revenue Service. 

(pp) “Master Separation Agreement” has the meaning set forth in the recitals to this Agreement.

 (qq) “McDermott Benefit Arrangement” means any Benefit Arrangement sponsored or
maintained by a member of the McDermott Group on the Distribution Date. 
 (rr) “McDermott
Employee” means any individual who is employed by a member of the McDermott Group on the day after the Distribution Date. 

(ss) “McDermott Entity” means any member of the McDermott Group, but also includes any entity
which was sold or otherwise disposed of or the business of which was discontinued at such time as such entity’s assets, liabilities or results of operations were accounted for within the Offshore Oil and Gas Construction segment of MII and its
Subsidiaries (or any predecessor to such segment, including Marine Construction Services). The Parties acknowledge that this term is defined differently in the Master Separation Agreement. 

(tt) “McDermott Excess Plan” means any excess plan sponsored or maintained by any one or more
members of the McDermott Group on the Distribution Date, including each of those set forth on Schedule 1.1(tt). 

(uu) “McDermott Group” means, collectively, MII and each MII Subsidiary. 

(vv) “McDermott Master Trust” means the trust that holds the commingled assets of the McDermott
Pension Plan and the B&W Pension Plans. 
 (ww) “McDermott Pension Plan” means the
Retirement Plan for Employees of McDermott Incorporated and Participating Subsidiary and Affiliate Companies. 

(xx) “McDermott SRPP” means the McDermott Incorporated Supplemental Retirement Payments Plan.

 (yy) “McDermott Thrift Plan Beneficiaries” has the meaning set forth in
Section 6.1. 
 (zz) “McDermott Thrift Plan” means the Thrift Plan for Employees
of McDermott Incorporated and Participating Subsidiary and Affiliated Companies. 
 (aaa)
“McDermott Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the McDermott Group on the Distribution Date, including each of those set forth on Schedule 1.1(aaa). 

 

 3 

 (bbb) “MI” has the meaning set forth in the
preamble to this Agreement. 
 (ccc) “MI Actuary” means an enrolled actuary appointed
by MI. 
 (ddd) “MII” has the meaning set forth in the preamble to this Agreement.

 (eee) “MII Common Stock” means the common stock of MII, par value $1.00 per share.

 (fff) “MII Legacy Award Holder” means any holder of one or more MII RSAs, MII RSUs,
MII Options or performance-based equity awards under any of the MII Legacy Plans who will not be a McDermott Employee or a B&W Employee and will not, as of the Distribution Date, be a member of the Board of Directors of either MII or B&W;
provided, however, that the term “MII Legacy Award Holder” shall not include any Former B&W Officer or any B&W Legacy Award Holder. 

(ggg) “MII Legacy Equity Plan” means any equity plan sponsored or maintained by MII immediately
prior to the Distribution Date, including each of those set forth on Schedule 1.1(ggg). 
 (hhh)
“MII Options” means options to purchase shares of MII Common Stock granted pursuant to any of the MII Legacy Equity Plans. 

(iii) “MII RSAs” means restricted stock awards issued under any of the MII Legacy Equity Plans.

 (jjj) “MII RSUs” means restricted stock units or deferred stock units issued under
any of the MII Legacy Equity Plans that are not subject to performance conditions. 
 (kkk)
“MII SERP” means the McDermott International, Inc. New Supplemental Executive Retirement Plan. 

(lll) “MII Subsidiary” means any Subsidiary of MII as of the Distribution Date; provided,
however, that (unless otherwise expressly stated) no B&W Entity shall be considered an “MII Subsidiary” for purposes of this Agreement. 

(mmm) “NYSE” means the New York Stock Exchange. 

(nnn) “Participating B&W Employers” has the meaning set forth in Section 7.1. 

(ooo) “Participation Period” has the meaning set forth in Section 7.4(b). 

(ppp) “Party” or “Parties” has the meaning set forth in the preamble to this
Agreement. 
 (qqq) “Person” means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. 

(rrr) “Post-Distribution B&W Share Price” means the opening price on the NYSE of a share of
B&W Common Stock on the next trading day following the Distribution Date. 
 (sss)
“Post-Distribution MII Option” has the meaning set forth in Section 3.4(b). 

(ttt) “Post-Distribution MII Share Price” means the opening price on the NYSE of a share of MII
Common Stock on the next trading day following the Distribution Date. 
 (uuu)
“Pre-Distribution MII Share Price” means the “regular way” closing price of a share of MII Common Stock on the Distribution Date, as reported on the NYSE’s Consolidated Transactions Reporting System. 

(vvv) “Privacy Contract” means any contract entered into in connection with applicable privacy
protection laws or regulations. 
 (www) “Registration Statement Effectiveness Date”
means the first date on which the registration statement on Form S-8 (or other appropriate form) contemplated by Section 11.7 shall be effective under the Securities Act of 1933. 

 

 4 

 (xxx) “Replacement B&W Option” has the meaning
set forth in Section 3.4(a). 
 (yyy) “Replacement B&W RSAs” has the meaning
set forth in Section 3.2(a). 
 (zzz) “Replacement B&W RSUs” has the meaning
set forth in Section 3.3(a). 
 (aaaa) “Replacement MII Performance RSUs” has the
meaning set forth in Section 3.5(b). 
 (bbbb) “Subsidiary” means, with respect to
any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof
ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by
any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries. 

(cccc) “U.S.” means the United States of America. 

(dddd) “Value” has the meaning set forth in Section 5.5. 

(eeee) “VEBA” has the meaning set forth in Section 7.3. 

(ffff) “WARN” means the U.S. Worker Adjustment and Retraining Notification Act, and any
applicable state or local law equivalent. 
 (gggg) “Welfare Plan” means a
“welfare plan” as defined in ERISA Section 3(1) and also means a cafeteria plan under Code Section 125 and any benefits offered thereunder, including pre-tax premium conversion benefits, a dependent care assistance program,
contribution funding toward a health savings account and flex or cashable credits. 

Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates
otherwise: 
 (a) words used in the singular include the plural and words used in the plural
include the singular; 
 (b) if a word or phrase is defined in this Agreement, its other
grammatical forms, as used in this Agreement, shall have a corresponding meaning; 
 (c)
reference to any gender includes the other gender and the neuter; 
 (d) the words
“include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; 

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

 (f) the word “or” shall have the inclusive meaning represented by the phrase
“and/or”; 
 (g) relative to the determination of any period of time, “from”
means “from and including,” “to” means “to but excluding” and “through” means “through and including”; 

(h) all references to a specific time of day in this Agreement shall be based upon Central Standard Time
or Central Daylight Savings Time, as applicable, on the date in question; 
 (i) whenever this
Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified; 

(j) accounting terms used herein shall have the meanings historically ascribed to them by MII and its
Subsidiaries, including B&W for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement; 

(k) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to,
this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition; 
  

 5 

 (l) the words “this Agreement,”
“herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement; 

(m) reference to any agreement, instrument or other document means such agreement, instrument or other
document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement; 

(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules
and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability; 

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement; and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party; 

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules
hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule; 

(q) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in
respect of lawful currency of the U.S.; 
 (r) the titles to Articles and headings of Sections
contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;
and 
 (s) any portion of this Agreement obligating a Party to take any action or refrain from
taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be. 

ARTICLE II 

ASSIGNMENT OF EMPLOYEES 

Section 2.1 Active Employees. 

(a) B&W Employees. Except as otherwise set forth in this Agreement, effective not later than
the day immediately following the Distribution Date, the employment of each individual (collectively, the “B&W Employees”) whose employment duties are to be primarily related to the business activities of the B&W Group after the
Distribution shall be continued by a member of the B&W Group or shall be assigned and transferred to a member of the B&W Group (in each case, as determined by B&W). Each of the Parties agrees to execute, and to seek to have the
applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers. 

(b) McDermott Employees. Except as otherwise set forth in this Agreement, effective not later than
the day immediately following the Distribution Date, the employment of each individual (collectively, the “McDermott Employees”) whose employment duties are to be primarily related to the business activities of the McDermott Group after
the Distribution shall be continued by a member of the McDermott Group or shall be assigned and transferred to a member of the McDermott Group (in each case as determined by MII). Each of the Parties agrees to execute, and to seek to have the
applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers. 

(c) At-Will Status. Notwithstanding the above or any other provision of this Agreement, nothing in
this Agreement shall create any obligation on the part of any member of the McDermott Group or any member of the B&W Group to continue the employment of any employee for any period following the date of this Agreement or the Distribution or to
change the employment status of any employee from “at will,” to the extent such employee is an “at will” employee under applicable law. 
  

 6 

 (d) Severance. The Distribution and the assignment,
transfer or continuation of the employment of employees as contemplated by this Section 2.1 shall not be deemed a severance of employment of any employee for purposes of this Agreement and any plan, policy, practice or arrangement of any member
of the McDermott Group or any member of the B&W Group. 
 (e) Change of Control/Change in
Control. Neither the completion of the Distribution nor any transaction in connection with the Distribution shall be deemed a “change of control” or “change in control” for purposes of any plan, policy, practice or
arrangement relating to directors, employees or consultants of any member of the McDermott Group or any member of the B&W Group. 

Section 2.2 Former Employees. 

(a) General Principles. Except as otherwise provided in this Agreement, each former employee of any
member of the McDermott Group or any member of the B&W Group as of the Distribution Date will be considered a former employee of the McDermott Group or the B&W Group based on his employer as of his first day of employment with any McDermott
Entity or B&W Entity. 
 (b) Former McDermott Employees. For purposes of this
Agreement, former employees of the McDermott Group shall be deemed to include all employees who, as of their first day of employment, were employed by a McDermott Entity and will not be either a B&W Employee or a McDermott Employee
(collectively, the “Former McDermott Employees”). 
 (c) Former B&W
Employees. For purposes of this Agreement, former employees of the B&W Group shall be deemed to include all employees who, as of their first day of employment, were employed by a B&W Entity and will not be either a B&W Employee or a
McDermott Employee (collectively, the “Former B&W Employees”). 
 Section 2.3 Employment
Law Obligations. 
 (a) WARN Act. After the Distribution Date, (i) MII or MI
shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any McDermott Employee and (ii) B&W or BWICO shall be responsible for providing any
necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any B&W Employee. 

(b) Compliance With Employment Laws. On and after the Distribution Date, (i) each member of
the McDermott Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of its McDermott
Employees and the treatment of any applicable Former McDermott Employees in respect of their former employment, and (ii) each member of the B&W Group shall be responsible for adopting and maintaining any policies or practices, and for all
other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of its B&W Employees and the treatment of any applicable Former B&W Employees in respect of their former employment.

 Section 2.4 Employee Records. 

(a) Records Relating to McDermott Employees and Former McDermott Employees. All records and data in
any form relating to McDermott Employees and Former McDermott Employees shall be the property of the McDermott Group, except that records and data pertaining to such an employee and relating to any period that such employee was (i) employed by
any member of the B&W Group or (ii) covered under any employee benefit plan sponsored by any member of the B&W Group (to the extent that such records or data relate to such coverage) prior to the Distribution Date shall be jointly owned
by those members of the B&W Group and the McDermott Group. 
 (b) Records Relating to
B&W Employees and Former B&W Employees. All records and data in any form relating to B&W Employees and Former B&W Employees shall be the property of the B&W Group, 

 

 7 

 
except that records and data pertaining to such an employee and relating to any period that such employee was (i) employed by any member of the McDermott Group or (ii) covered under any
employee benefit plan sponsored by any member of the McDermott Group (to the extent that such records or data relate to such coverage) prior to the Distribution Date shall be jointly owned by those members of the McDermott Group and the B&W
Group. 
 (c) Sharing of Records. The Parties shall use their respective commercially
reasonable efforts to provide the other Parties such employee-related records and information as necessary or appropriate to carry out their respective obligations under applicable law (including any relevant privacy protection laws or regulations
in any applicable jurisdictions or Privacy Contract), this Agreement, any other Ancillary Agreement or the Master Separation Agreement, and for the purposes of administering their respective employee benefit plans and policies. All information and
records regarding employment, personnel and employee benefit matters of McDermott Employees and Former McDermott Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by members of the McDermott Group
in accordance with all applicable laws, policies and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. All information and records regarding employment, personnel and
employee benefit matters of B&W Employees and Former B&W Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by members of the B&W Group in accordance with all applicable laws, policies
and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. 

(d) Access to Records. To the extent not inconsistent with this Agreement and any applicable
privacy protection laws or regulations or Privacy Contracts, access to such records after the Distribution Date will be provided to members of the McDermott Group and members of the B&W Group in accordance with the Master Separation Agreement.
In addition, notwithstanding anything to the contrary, MII and MI shall be provided reasonable access to those records necessary for their administration of any plans or programs on behalf of McDermott Employees and Former McDermott Employees after
the Distribution Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. MII and MI shall also be permitted to retain copies of all restrictive covenant agreements with any B&W Employee or Former B&W
Employee in which any member of the McDermott Group has a valid business interest. In addition, B&W and BWICO shall be provided reasonable access to those records necessary for their administration of any plans or programs on behalf of B&W
Employees and Former B&W Employees after the Distribution Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. B&W and BWICO shall also be permitted to retain copies of all restrictive covenant
agreements with any McDermott Employee or Former McDermott Employee in which any member of the B&W Group has a valid business interest. 

(e) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying
and permitting access to all such information, MII and B&W shall (and shall cause their respective Subsidiaries to) comply with all applicable laws, regulations, Privacy Contracts and internal policies, and shall indemnify and hold harmless each
other from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable laws, regulations, Privacy Contracts and
internal policies applicable to such information. 
 (f) No Access to Computer Systems or
Files. Except as set forth in the Master Separation Agreement or any Ancillary Agreement, no provision of this Agreement shall give (i) any member of the McDermott Group direct access to the computer systems or other files, records or
databases of any member of the B&W Group or (ii) any member of the B&W Group direct access to the computer systems or other files, records or databases of any member of the McDermott Group, unless specifically permitted by the owner of
such systems, files, records or databases. 
 (g) Relation to Master Separation Agreement.
The provisions of this Section 2.4 shall be in addition to, and not in derogation of, the provisions of the Master Separation Agreement governing Confidential Information, including Sections 6.3, 6.4 and 6.5 of the Master Separation Agreement.

  

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 (h) Confidentiality. Except as otherwise set forth in
this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Master Separation Agreement and any other applicable agreement and applicable law. 

(i) Cooperation. Each Party shall use commercially reasonable efforts to cooperate to share, retain
and maintain data and records that are necessary or appropriate to further the purposes of this Section 2.4 and for each Party to administer its respective benefit plans to the extent consistent with this Agreement and applicable law, and each
Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 2.4. Except as provided under any Ancillary Agreement, no Party shall charge another Party a fee for such cooperation. 

ARTICLE III 

EQUITY AND INCENTIVE COMPENSATION PLANS 

Section 3.1 General Principles. 

(a) For the avoidance of doubt, the provisions of this Article III shall not apply unless the Distribution
takes place. MII and B&W shall take any and all reasonable action as shall be necessary and appropriate to further the provisions of this Article III. 

(b) Where an award granted under one of the MII Legacy Equity Plans is replaced by an award under the
B&W New Equity Plan in accordance with the provisions of this Article III, such award generally shall be on terms which are in all material respects identical to the terms of the award which it replaces (including any requirements of continued
employment) but subject to any necessary changes to take into account that (i) the award relates to B&W Common Stock, (ii) the B&W New Equity Plan is administered by B&W, (iii) if applicable, the grantee under the award is
employed or affiliated with a new employer or plan sponsor, and (iv) the award is not subject to any performance conditions. Where an award granted under one of the MII Legacy Equity Plans is adjusted in accordance with the provisions of this
Article III, such award shall otherwise continue to retain the same terms and conditions of the original award, subject to any necessary changes to take into account the adjustments required by this Article III. 

(c) Following the Distribution, a grantee who has outstanding awards under one or more of the MII Legacy
Equity Plans and/or replacement awards under the B&W New Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Distribution for purposes of (1) vesting and (2) determining the date of
termination of employment as it applies to any such award. 
 (d) Notwithstanding the other
provisions of this Article III, in the case of Michael S. Taff, fifty percent (50%) of the unvested awards otherwise subject to Section 3.2(a) shall be treated as if subject to Section 3.2(b), fifty percent (50%) of the
unvested awards otherwise subject to Section 3.3(a) shall be treated as if subject to Section 3.3(b), fifty percent (50%) of the unvested awards otherwise subject to Section 3.4(a) shall be treated as if subject to
Section 3.4(b) and fifty percent (50%) of the awards otherwise subject to Section 3.5(a) shall be treated as if subject to Section 3.5(b). 

(e) No award described in this Article III, whether outstanding or to be issued, adjusted, substituted or
cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable law,
including federal securities laws. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable in accordance with the preceding sentence. 

Section 3.2 Restricted Stock. 

(a) Each grantee under any of the MII Legacy Equity Plans who will be a B&W Employee and who will
hold, as of the Distribution Date, one or more MII RSAs that are unvested as of the Distribution Date (and will not become vested as of the Distribution Date) shall receive, on the last to occur of the Distribution

  

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Date and the Registration Statement Effectiveness Date, as a replacement award in substitution for each such MII RSA (which shall be cancelled), a number of restricted shares of B&W Common
Stock (a “Replacement B&W RSA”) under the B&W New Equity Plan having a value immediately following the Distribution Date equal to the value of the MII RSA (calculated using the Pre-Distribution MII Share Price), as calculated
pursuant to the following provisions. In each case, the number of shares of B&W Common Stock subject to the Replacement B&W RSA shall be equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by
the number of shares of MII Common Stock subject to the MII RSA that is being cancelled and replaced pursuant to this Section 3.2(a), and (y) is the Post-Distribution B&W Share Price, with the resulting number of shares subject to the
Replacement B&W RSAs being rounded up or down to the nearest whole share. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the delivery of shares of B&W Common Stock
to B&W Employees and the vesting of Replacement B&W RSAs and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the delivery and vesting of all such restricted shares. Except as
provided in the foregoing provisions of this Section 3.2(a), Replacement B&W RSAs shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the MII RSAs which they replace.

 (b) Each grantee under any of the MII Legacy Equity Plans who will be a McDermott Employee and
who will hold, as of the Distribution Date, one or more MII RSAs that are unvested as of the Distribution Date (and will not become vested as of the Distribution Date), shall, for each such MII RSA (in lieu of receiving any restricted shares of
B&W Common Stock in connection with such MII RSA), receive a number of additional restricted shares of MII Common Stock (the “Additional MII RSA”), under one of the MII Legacy Equity Plans. In each case, the number of shares of MII
Common Stock subject to an Additional MII RSA shall be equal to the product of (x) and (y), where (x) is the number of shares of MII Common Stock covered by the MII RSA and (y) is equal to (a) the Pre-Distribution MII Share Price
minus the Post-Distribution MII Share Price, divided by (b) the Post-Distribution MII Share Price, with the resulting number of shares subject to the Additional MII RSA being rounded up or down to the nearest whole share. MII (or one or more of
the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the Additional MII RSAs and (ii) responsible for remitting the appropriate tax or
withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted shares. Except as provided in the foregoing provisions of this Section 3.2(b), Additional MII RSAs shall be granted on
terms which are in all material respects identical (including with respect to vesting) to the terms of the MII RSAs with respect to which they are granted.  

(c) Each grantee under the MII Legacy Equity Plans who will not be a McDermott Employee or B&W
Employee (including each B&W Legacy Award Holder, each MII Legacy Award Holder and each Former B&W Officer) and who holds one or more MII RSAs that become vested as of the Distribution Date (whether pursuant to the terms of the applicable
MII RSAs or the terms of any agreement between MII and such grantee) shall retain each such MII RSA and shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, a number of shares of B&W
Common Stock equal to the number of shares received by a stockholder of MII Common Stock in connection with the Distribution with respect to the number of shares of MII Common Stock subject to such MII RSA, with the resulting number of shares of
B&W Common Stock being rounded up or down to the nearest whole share. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in
respect of the MII RSAs to be issued in accordance with this Section 3.2(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. B&W shall be responsible for (i) the satisfaction of
all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock as described in this Section 3.2(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities.

  

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 Section 3.3 Restricted Stock Units. 

(a) Each B&W Legacy Award Holder and each grantee under any of the MII Legacy Equity Plans who will be
a B&W Employee and (in either case) who holds, as of the Distribution Date, one or more MII RSUs shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, as a replacement award in
substitution for each such MII RSU (which shall be cancelled), a number of restricted stock units with respect to and payable in shares of B&W Common Stock or (if, but only if, provided for under the terms of the applicable MII RSU) cash
(“Replacement B&W RSUs”) under the B&W New Equity Plan having a value immediately after the Distribution Date equal to the value of the shares of MII Common Stock subject to the MII RSU (calculated using the Pre-Distribution MII
Share Price), as calculated pursuant to the following provisions. In each case, the number of Replacement B&W RSUs shall be equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by the number of MII
RSUs that are being cancelled and replaced pursuant to this Section 3.3(a), and (y) is the Post-Distribution B&W Share Price, with the resulting number of Replacement B&W RSUs being rounded up or down to the nearest whole unit.
B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock to B&W Legacy Award Holders and B&W Employees and the vesting of Replacement
B&W RSUs and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Except as provided in the foregoing provisions of
this Section 3.3(a), Replacement B&W RSUs shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the MII RSUs which they replace. 

(b) Each MII Legacy Award Holder and each grantee under any of the MII Legacy Equity Plans who will be a
McDermott Employee and (in either case) who will hold one or more MII RSUs as of the Distribution Date shall receive, for each award of MII RSUs (in lieu of receiving any B&W restricted or deferred stock units in connection with such MII RSUs),
a number of additional restricted or deferred (as applicable) stock units with respect to MII Common Stock (the “Additional MII RSUs”), under one of the MII Legacy Equity Plans. In each case, the number of shares of MII Common Stock
subject to an award of Additional MII RSUs shall be equal to the product of (x) and (y), where (x) is the number of shares of MII Common Stock covered by the original award of MII RSUs and (y) is equal to (a) the Pre-Distribution
MII Share Price minus Post-Distribution MII Share Price, divided by (b) the Post-Distribution MII Share Price, with the resulting number of shares subject to the Additional MII RSUs being rounded up or down to the nearest whole share. MII (or
one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the vesting of the Additional MII RSUs or distribution of MII Common Stock
to MII Legacy Award Holders and McDermott Employees and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Except as
provided in the foregoing provisions of this Section 3.3(b), Additional MII RSUs shall be granted on such terms which are in all material respects identical (including with respect to vesting) to the terms of the MII RSUs with respect to which
they are granted. 
 (c) Each Former B&W Officer who will hold MII RSUs as of the
Distribution Date shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, upon full settlement of such MII RSUs effective as of the Distribution Date, a number of shares of MII Common Stock
payable with respect to such MII RSUs, plus an additional number of shares of B&W Common Stock (subject to applicable tax withholding) equal to the number of shares of B&W Common Stock that would have been distributed in the Distribution
with respect to the number of shares of MII Common Stock subject to grantee’s vested MII RSUs. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax reporting and
withholding requirements in respect of the distribution of MII Common Stock upon settlement of an MII RSU in accordance with this Section 3.3(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing
authorities. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock as described in this Section 3.3(c) and (ii) remitting the
appropriate tax or withholding amounts to the appropriate taxing authorities. 
  

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 Section 3.4 Stock Options. 

(a) Each grantee under any of the MII Legacy Equity Plans (i) who is a B&W Legacy Award Holder or
will be a B&W Employee, or who will not be a B&W Employee but will serve on the board of directors of B&W and not on the board of directors of MII immediately after the Distribution Date, and (ii) who holds as of the Distribution
Date, one or more MII Options, shall receive, as a replacement award in substitution for each such MII Option (which shall be cancelled), an option to purchase a number of shares of B&W Common Stock under the B&W New Equity Plan (a
“Replacement B&W Option”) having a value (calculated using the Post-Distribution B&W Share Price) equal to the value of the MII Common Stock subject to the MII Option (calculated using the Pre-Distribution MII Share Price), as
calculated pursuant to the following provisions. The number of shares of B&W Common Stock subject to a Replacement B&W Option shall be equal to the product of (i) the number of shares of MII Common Stock subject to an MII Option as of
the Distribution Date and (ii) a fraction, the numerator of which is the Pre-Distribution MII Share Price and the denominator of which is the Post-Distribution MII Share Price. Each such Replacement B&W Option shall have the same
comparative ratio of the exercise price to the Post-Distribution B&W Share Price as the exercise price of each MII Option to the Pre-Distribution MII Share Price. B&W shall be responsible for (i) the satisfaction of all tax reporting
and withholding requirements in respect of the exercise of Replacement B&W Options issued in accordance with this Section 3.4(a) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities.
Replacement B&W Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as provided in the foregoing provisions of this Section 3.4(a), Replacement B&W Options granted under this Section 3.4(a)
shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the MII Options with respect to which they replace. 

(b) Each grantee under any of the MII Legacy Equity Plans (i) who is an MII Legacy Award Holder or
will be a McDermott Employee, or who will not be a McDermott Employee but will serve on the board of directors of MII and not on the board of directors of B&W immediately after the Distribution Date, and (ii) who will hold one or more MII
Options as of the Distribution Date, shall receive, in substitution for each such MII Option (which shall be cancelled), an option to purchase shares of MII Common Stock under one of the MII Legacy Equity Plans (a “Post-Distribution MII
Option”) having a value (calculated using the Post-Distribution MII Share Price) equal to the value of the shares of MII Common Stock subject to the MII Option (calculated using the Pre-Distribution MII Share Price), as calculated pursuant to
the following provisions. The number of shares of MII Common Stock subject to a Post-Distribution MII Option shall be equal to the product of (i) the number of shares of MII Common Stock subject to an MII Option as of the Distribution Date and
(ii) a fraction, the numerator of which is the Pre-Distribution MII Share Price and the denominator of which is the Post-Distribution B&W Share Price. Each such Post-Distribution MII Option shall have the same comparative ratio of the
exercise price to the Post-Distribution MII Share Price as the exercise price of each MII Option to the Pre-Distribution MII Share Price. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the
satisfaction of all tax reporting and withholding requirements in respect of the exercise of Post-Distribution MII Options issued in accordance with this Section 3.4(b) and (ii) remitting the appropriate tax or withholding amounts to the
appropriate taxing authorities. Except as provided in the foregoing provisions of this Section 3.4(b), Post-Distribution MII Options shall be granted on terms which are in all material respects identical (including with respect to vesting) to
the terms of the MII Options with respect to which they are substituted. 
 (c) Each grantee
under any of the MII Legacy Equity Plans (i) who is a Former B&W Officer, or who will serve on the board of directors of both MII and B&W immediately after the Distribution Date, and (ii) who will hold one or more MII Options as of
the Distribution Date shall receive, in substitution for each such MII Option (which shall be cancelled), both a Replacement B&W Option with respect to shares of B&W Common Stock and a Post-Distribution MII Option with respect to shares of
MII Common Stock, with such shares of B&W Common Stock and MII Common Stock having an aggregate value (calculated using the Post-Distribution MII Share Price and the Post-Distribution B&W Share Price) equal to the value of the shares of MII
Common Stock subject to the MII Option (calculated using the Pre-Distribution MII 
  

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Share Price), as calculated pursuant to the following provisions. In each case, the number of shares of MII Common Stock subject to the Post-Distribution MII Option shall be determined by
multiplying the aggregate fair market value of the number of shares of MII Common Stock subject to the MII Option using the Pre-Distribution MII Share Price by a fraction, the numerator of which is the Post-Distribution MII Share Price and the
denominator of which is the Post-Distribution MII Share Price plus the Post-Distribution B&W Share Price. In each case, the number of shares of B&W Common Stock subject to the Replacement B&W Option shall be determined by multiplying the
fair market value of the number of shares of MII Common Stock subject to the MII Option using the Pre-Distribution MII Share Price by a fraction the numerator of which is the Post-Distribution B&W Share Price and the denominator of which is the
Post-Distribution MII Share Price plus the Post-Distribution B&W Share Price. Each of the Replacement B&W Options and the Post-Distribution MII Options shall have the same comparative ratio of the exercise price to the Post-Distribution
B&W Share Price and Post-Distribution MII Share Price, respectively, as the exercise price of the MII Option being replaced to the Pre-Distribution MII Share Price. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be
responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the exercise of Post-Distribution MII Options issued in accordance with this Section 3.4(c) and (ii) remitting the appropriate tax or
withholding amounts to the appropriate taxing authorities. Replacement B&W Options shall not be exercisable until the Registration Statement Effectiveness Date. B&W shall be responsible for (i) the satisfaction of all tax reporting and
withholding requirements in respect of the exercise of Replacement B&W Options issued in accordance with this Section 3.4(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. Except as
provided in the foregoing provisions of this Section 3.4(c), Replacement B&W Options and Post-Distribution MII Options shall be granted on such terms which are in all material respects identical (including with respect to vesting) to the
terms of the MII Options with respect to which they are granted. 
 Section 3.5 Performance-Based
Awards. 
 (a) Each grantee under any of the MII Legacy Equity Plans who is a B&W Legacy
Award Holder or will be a B&W Employee and (in either case) who holds, as of the Distribution Date, one or more performance-based awards as of the Distribution Date shall receive, on the last to occur of the Distribution Date and the
Registration Statement Effectiveness Date, as a replacement award in substitution for each such performance-based award (which shall be cancelled), a number of restricted stock units with respect to and payable in shares of B&W Common Stock
(“Replacement B&W Performance RSUs”) under the B&W New Equity Plan. The Replacement B&W Performance RSUs will have a value (calculated using the Post-Distribution B&W Share Price) equal to the value of the shares of MII
Common Stock (calculated using the Pre-Distribution MII Share Price) that would vest under the performance-based award at target, as calculated pursuant to the following provisions. In each case, the number of Replacement B&W Performance RSUs
shall be equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by the number of shares of MII Common Stock subject to the performance-based awards at target performance that are being cancelled and
replaced pursuant to this Section 3.5(a), and (y) is the Post-Distribution B&W Share Price, with the resulting number of Replacement B&W Performance RSUs being rounded up or down to the nearest whole unit. B&W shall be
responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock in accordance with this Section 3.5(a) and the vesting of Replacement B&W Performance RSUs
and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Continued employment conditions applicable to such awards will
apply to the converted award. 
 (b) Each grantee under any of the MII Legacy Equity Plans who is
an MII Legacy Award Holder or will be a McDermott Employee and (in either case) who will hold one or more performance-based equity awards as of the Distribution Date, shall receive, as a replacement award in substitution for each such
performance-based award (which shall be cancelled), a number of restricted stock units with respect to and payable in shares of MII Common Stock (“Replacement MII Performance RSUs”) under one of the MII

  

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Legacy Equity Plans. In each case, the Replacement MII Performance RSUs will have a value (calculated using the Post-Distribution MII Share Price) equal to the value of the shares of MII Common
Stock (calculated using the Pre-Distribution MII Share Price) that would vest under the performance-based award at target, as determined pursuant to the following provisions. In each case, the number of Replacement MII Performance RSUs shall be
equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by the number of shares of MII Common Stock subject to the performance-based awards at target performance that are being cancelled and replaced
pursuant to this Section 3.5(b), and (y) is the Post-Distribution MII Share Price, with the resulting number of Replacement MII Performance RSUs being rounded up or down to the nearest whole unit. MII shall be responsible for (i) the
satisfaction of all tax reporting and withholding requirements in respect of the distribution of MII Common Stock in accordance with this Section 3.5(c) and the vesting of Replacement MII Performance RSUs and (ii) remitting the appropriate
tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Continued employment conditions applicable to such awards will apply to the converted award. 

(c) Each grantee under the MII Legacy Equity Plans who is a Former B&W Officer and who will hold one
or more performance-based equity awards as of the Distribution Date shall receive (subject to applicable tax withholding) a number of Replacement MII Performance RSUs equal to the number of shares of MII Common Stock that would have been earned at
target performance for each such performance-based equity award, with the resulting number of Replacement MII Performance RSUs being rounded up or down to the nearest whole unit and shall also receive (subject to applicable tax withholding), on the
last to occur of the Distribution Date and the Registration Statement Effectiveness Date, a number of Replacement B&W Performance RSUs equal to the number of shares of B&W Common Stock that would have been distributed in the Distribution
with respect to the Replacement MII Performance RSUs as if each of such Replacement MII Performance RSUs had been MII Common Stock. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for the satisfaction of all
tax reporting and withholding requirements in respect of the distribution of MII Common Stock upon settlement of a performance-based equity award in accordance with this Section 3.5(c) and shall be responsible for remitting the appropriate tax
or withholding amounts to the appropriate taxing authorities. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock upon settlement of the
additional B&W restricted stock units in accordance with this Section 3.5(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. 

(d) Notwithstanding the foregoing provisions of this Section 3.5, the performance-based equity awards
held by the persons listed on Schedule 3.5(d) which are scheduled to vest in August 2010, and which are no longer subject to performance conditions, shall be treated as if they were MII RSUs under the applicable provisions of Section 3.3.

 Section 3.6 Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A. 

(a) By approving the adoption of this Agreement, the respective boards of directors of MII and B&W
intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity incentive awards by directors and
executive officers of each of MII and B&W, and the respective boards of directors of MII and B&W also intend to expressly approve, in respect of any equity-based award, the use of any method for the payment of an exercise price and the
satisfaction of any applicable tax withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of option shares from delivery in satisfaction of applicable tax withholding
requirements) to the extent such method is permitted under the applicable equity incentive plan and award agreement. 

(b) Notwithstanding anything in this Agreement to the contrary (including the treatment of supplemental
and deferred compensation plans, outstanding long-term incentive awards and annual incentive awards as described herein), MII and B&W agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided
herein to ensure that (i) a federal income tax deduction 
  

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for the payment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation is not limited by reason of Code Section 162(m), and
(ii) the treatment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation does not cause the imposition of a tax under Code Section 409A. 

Section 3.7 Certain Bonus Payments. 

(a) Except to the extent otherwise provided in Section 10.1, annual incentive bonuses in respect of
2010 shall be paid to McDermott Employees and B&W Employees by MII and B&W, respectively, at the time such bonuses are normally paid (but no later than March 15, 2011) in accordance with the bonus pools determined by the Compensation
Committee of the respective board of directors. The annual incentive bonuses in respect of 2010 for McDermott Employees and B&W Employees who are employed by MI on the day before the Distribution Date shall be bifurcated. Each such
individual’s bonus shall be the sum of: (i) the target bonus for the year, prorated for the period between January 1, 2010 and the day before the Distribution Date, and (ii) the bonus based on the applicable bonus plan
provisions, prorated for the period between the Distribution Date and December 31, 2010. 

(b) B&W shall assume responsibility for the grant of 2010 bonuses and liability for payment of bonuses
to the individuals listed on Schedule 3.7(b) earned under the MII Executive Incentive Compensation Plan, the MII Management Incentive Compensation Plan for B&W Employees and the MI Salaried Employees Incentive Plan. MII shall maintain liability
for payment of bonuses to individuals other than those listed on Schedule 3.7(b) earned under the MII Executive Incentive Compensation Plan, the MII Management Incentive Compensation Plan for MII Employees and the MI Salaried Employees
Incentive Plan. 
 ARTICLE IV 

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES 

Section 4.1 General Principles. 

(a) Each member of the McDermott Group and each member of the B&W Group shall take any and all
reasonable action as shall be necessary or appropriate so that active participation in the McDermott Pension Plan, McDermott Thrift Plan, McDermott Welfare Plans and McDermott Benefit Arrangements by all B&W Employees and Former B&W
Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on the Distribution Date), and each member of the B&W Group shall
cease to be a participating employer under the terms of such McDermott Pension Plan, McDermott Thrift Plan, McDermott Welfare Plans and McDermott Benefit Arrangements as of such time. 

Each member of the B&W Group and each member of the McDermott Group shall take any and all reasonable
action as shall be necessary or appropriate so that active participation in the B&W Pension Plans, B&W Thrift Plan, B&W Welfare Plans and B&W Benefit Arrangements by all McDermott Employees and Former McDermott Employees shall
terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on the Distribution Date), and each member of the McDermott Group shall cease to be a
participating employer under the terms of such B&W Pension Plans, B&W Thrift Plan, B&W Welfare Plans and B&W Benefit Arrangements as of such time. 

Except as otherwise provided in this Agreement, one or more members of the B&W Group (as designated
by B&W) shall continue to be responsible for or assume, effective as of the day after the Distribution Date, all employee benefits liabilities for B&W Employees and Former B&W Employees, and the assets relating to such employee benefits
for B&W Employees and Former B&W Employees shall be 
  

 15 

 
transferred to or continue to be held by one or more members of the B&W Group (as designated by B&W); and one or more members of the McDermott Group (as designated by MII) shall continue
to be responsible for or assume all employee benefits liabilities for McDermott Employees and Former McDermott Employees and the assets relating to such employee benefits for McDermott Employees and Former McDermott Employees shall be transferred to
or continue to be held by one or more members of the McDermott Group (as designated by MII). 

(b) Except as otherwise provided in this Agreement, effective as of the day after the Distribution Date,
one or more members of the B&W Group (as determined by B&W) shall assume or continue the sponsorship of, and no member of the McDermott Group shall have any further liability for or under, the following agreements, obligations and
liabilities, and B&W shall indemnify each member of the McDermott Group, and the officers, directors, and employees of each member of the McDermott Group, and hold them harmless with respect to such agreements, obligations or liabilities:

 (i) any and all individual agreements entered into between any member of the McDermott Group
and any B&W Employee or Former B&W Employee; 
 (ii) any and all agreements entered into
between any member of the McDermott Group and any individual who is an independent contractor providing services primarily for the business activities of the B&W Group; 

(iii) any and all collective bargaining agreements, collective agreements and trade union or works council
agreements entered into between any member of the McDermott Group and any union, works council or other body representing only B&W Employees or Former B&W Employees; 

(iv) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement),
commissions and bonuses payable to any B&W Employees or Former B&W Employees after the Distribution Date, without regard to when such wages, salaries, incentive compensation, commissions and bonuses are or may have been earned; 

(v) any and all moving expenses and obligations related to relocation, repatriation, transfers or similar
items incurred by or owed to any B&W Employees or Former B&W Employees, whether or not accrued as of the Distribution Date (other than such expenses and obligations incurred by MII on or prior to the Distribution Date as a result of which
there is an existing liability as of the Distribution Date and items set forth on Schedule 4.1(b)(v), all of which shall remain MII’s obligation); 

(vi) any and all immigration-related, visa, work application or similar rights, obligations and
liabilities related to any B&W Employees or Former B&W Employees; and 
 (vii) any and
all liabilities and obligations whatsoever with respect to claims made by or with respect to any B&W Employees or Former B&W Employees in connection with any employee benefit plan, program or policy not otherwise retained or assumed by any
member of the McDermott Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the B&W Group or any officer, director, employee or agent thereof on or prior to the Distribution Date.

 (c) Except as otherwise provided in this Agreement, effective as of the day after the
Distribution Date, no member of the B&W Group shall have any further liability for, and MII shall indemnify each member of the B&W Group, and the officers, directors, and employees of each member of the B&W Group, and hold them harmless
with respect to any and all liabilities and obligations whatsoever with respect to, claims made by or with respect to any McDermott Employees or Former McDermott Employees in connection with any employee benefit plan, program or policy not otherwise
retained or assumed by any member of the B&W Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the McDermott Group or any officer, director, employee or agent thereof on or prior
to the Distribution Date. 
 Section 4.2 Sponsorship and/or Establishment of B&W Plans. Except
as otherwise provided in this Agreement, sponsorship of benefit plans that cover solely B&W Employees and Former B&W Employees shall 

 

 16 

 
become effective no later than the day after the Distribution Date by the member of the B&W Group specified on Schedule 4.2, and to the extent necessary to achieve such sponsorship, each
member of the McDermott Group and each member of the B&W Group shall take appropriate action, including transfer of sponsorship of each such plan. McDermott Welfare Plans in which both (i) McDermott Employees or Former McDermott Employees
and (ii) B&W Employees or Former B&W Employees participate shall be divided into two separate plans, with one covering McDermott Employees and Former McDermott Employees sponsored by a member of the McDermott Group, and the other
covering B&W Employees and Former B&W Employees sponsored by a member of the B&W Group. 

Section 4.3 Service Credit. 

(a) Service for Eligibility and Vesting Purposes. Except as otherwise provided in any other
provision of this Agreement, for purposes of eligibility and vesting under the B&W Pension Plan, B&W Thrift Plan and B&W Welfare Plans, B&W shall, and shall cause each member of the B&W Group to, credit each B&W Employee and
Former B&W Employee with service for any period of employment with any member of the McDermott Group on or prior to the Distribution Date to the same extent such service would be credited if it had been performed for a member of the B&W
Group. 
 (b) Service for Benefit Purposes. Except as otherwise provided in any other
provision of this Agreement, (i) for purposes of benefit levels and accruals and benefit commencement entitlements under the B&W Pension Plan, B&W Thrift Plan and B&W Welfare Plans, B&W shall, and shall cause each member of the
B&W Group to, credit each B&W Employee and Former B&W Employee with service for any period of employment with any member of the McDermott Group on or prior to the Distribution Date to the same extent that such service is taken into
account pursuant to the terms of the McDermott Pension Plan, McDermott Thrift Plan and McDermott Welfare Plans, and (ii) for purposes of benefit commencement entitlements under the McDermott Pension Plan, McDermott Thrift Plan and McDermott
Welfare Plans, MII shall, and shall cause each member of the McDermott Group to, credit each McDermott Employee and Former McDermott Employee with service for any period of employment with any member of the B&W Group on or prior to the
Distribution Date to the same extent such service would be credited if it had been performed for a member of the McDermott Group. 

(c) Evidence of Prior Service. Notwithstanding anything to the contrary, but subject to applicable
law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records available to the first Party to document such service, plan participation and membership of such Employees and
cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee. 

Section 4.4 Plan Administration. 

(a) Transition Services. The Parties acknowledge that the McDermott Group or the B&W Group may
provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of an applicable transition services agreement. The Parties agree to enter into a business associate agreement (if
required by applicable health information privacy laws) in connection with such transition services agreement. 

(b) Administration. B&W shall use its best efforts to, and shall cause each member of the
B&W Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the McDermott Group. MII shall use its best efforts to,
and shall cause each member of the McDermott Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the B&W Group.

 (c) Participant Elections and Beneficiary Designations. All participant elections and
beneficiary designations made under any plan sponsored by a member of the McDermott Group prior to the effective date as of which assets or liabilities relating to that plan are transferred or allocated to a member of the

  

 17 

 
B&W Group shall continue in effect under any plan maintained by any member of the B&W Group to which liabilities are transferred or allocated pursuant to this Agreement until such time as
any applicable participant changes his elections or beneficiary designations in accordance with the procedures of the relevant plan, as the case may be, including deferral, investment, and payment form elections, dividend elections, coverage options
and levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders. 
 ARTICLE V

 PENSION, EXCESS AND SUPPLEMENTAL PLANS 

Section 5.1 General Principles. The B&W Pension Plans shall continue to be maintained and sponsored by
one or more members of the B&W Group after the Distribution Date. Additionally, on or prior to the Distribution Date, B&W shall amend one of the B&W Pension Plans (the “B&W Transferee Plan”) in order that the B&W
Transferee Plan will provide to each B&W Employee and Former B&W Employee who was a participant in the McDermott Pension Plan (and each alternate payee or beneficiary of such person) (the “B&W Pension Beneficiaries”) benefits
identical to those accrued with respect to such person under the McDermott Pension Plan as of the close of business on April 30, 2010 (the “Initial Transfer Date”) (the “Transferred Benefit”). On or prior to the Distribution
Date, B&W shall also establish a trust intended to be qualified under Code Section 501(a) (the “B&W Master Trust”), and MI and B&W shall cause the transfer from the McDermott Master Trust to the B&W Master Trust of the
assets of the B&W Pension Plans as described in Section 5.2. A B&W Pension Beneficiary shall not accrue benefits under the McDermott Pension Plan after the Initial Transfer Date, unless such B&W Pension Beneficiary shall become
employed by any member of the McDermott Group that participates in the McDermott Pension Plan after the Distribution Date. A McDermott Employee or Former McDermott Employee shall not accrue benefits under the B&W Transferee Plan, unless such
McDermott Employee or Former McDermott Employee shall become employed by any member of the B&W Group that participates in the B&W Transferee Plan. The McDermott Group and the B&W Group shall each be responsible for the funding of their
respective pension plans after the Distribution Date. 
 Section 5.2 Pension Transfers. 

(a) Initial Transfer. On or prior to the Distribution Date, with the assistance of the MI Actuary,
MI shall establish and communicate to B&W an amount equal to 90% of the estimated asset transfer amount attributable to the Transferred Benefit, calculated as of the Initial Transfer Date in accordance with Code Section 414(l) but based on
January 1, 2009 census data and trust assets as of the last business day of the month immediately preceding the month in which the Initial Transfer Date occurs, as estimated in good faith by MI (the “Initial Transfer Amount”).
Following the determination of the Initial Transfer Amount by MI, MI shall cause to be transferred from the McDermott Pension Plan to the B&W Transferee Plan assets having an aggregate Value (as defined below) equal to the Initial Transfer
Amount. As of June 1, 2010, the B&W Transferee Plan shall commence making the required benefit payments. Effective as of the Initial Transfer Date, B&W shall assume all liabilities with respect to the payment of benefits previously
accrued under the McDermott Pension Plan by the B&W Pension Beneficiaries. 
 (b)
Calculation of Final Transfer Amount and True-Up Adjustment. Promptly following the Initial Transfer Date, the MI Actuary shall determine the Final Transfer Amount and the True-Up Adjustment, each of which is defined herein. The “Final
Transfer Amount” means the amount required to be transferred from the McDermott Pension Plan to the B&W Transferee Plan in respect of the assumption by the B&W Transferee Plan of the Transferred Benefit obligations, as determined in
accordance with Code Section 414(l) and the regulations thereunder, as appropriately adjusted to reflect the following amounts arising after the Initial Transfer Date and before the True-Up Adjustment: (i) any distributions and
contributions made in respect of the B&W Pension Beneficiaries; (ii) administrative expenses of the McDermott Pension Plan reasonably allocable to the B&W Pension Beneficiaries; (iii) the net gain or loss (realized and unrealized)
of the McDermott Pension Plan allocable to the B&W Pension Beneficiaries; 
  

 18 

 
(iv) changes in the census data from January 1, 2009 through the Initial Transfer Date; and (v) other appropriate items. Promptly upon determination of the Final Transfer Amount,
MI shall cause the MI Actuary to provide to B&W a written statement of the Final Transfer Amount, a summary of the calculation of such amount and a written statement that the sum of the Initial Transfer Amount and the True-Up Adjustment
satisfies the requirements of Code Section 414(l). MI and B&W shall use commercially reasonable efforts to cause the determination of the Final Transfer Amount and the True-Up Adjustment to be completed as promptly as practicable, subject
to the time frames established herein, but in no event later than December 31, 2010. 
 (c)
Transfer of True-Up Adjustment. Transfer of the True-Up Adjustment shall be made promptly after the date on which the Final Transfer Amount is determined by the MI Actuary. The “True-Up Adjustment” means: (A) if the Final
Transfer Amount exceeds the Initial Transfer Amount, MI shall cause to be transferred from the McDermott Pension Plan to the B&W Transferee Plan trust assets having a Value (as defined below) equal to such excess, and (B) if the Initial
Transfer Amount exceeds the Final Transfer Amount, B&W shall cause to be transferred from the B&W Transferee Plan to the McDermott Pension Plan assets having a Value equal to such excess. 

(d) B&W Pension Plans Transfer. Effective as of June 30, 2010, assets attributable to the
B&W Pension Plans held in the McDermott Master Trust shall be transferred to the B&W Master Trust. 

(e) Assets and Value. 

(i) Assets To Be Transferred. Assets to be transferred under this Article V shall be in kind
and/or in cash in a manner that represents, as closely as commercially practical, a pro rata portion of each asset and position held by the applicable of the McDermott Pension Plan or the B&W Pension Plans in the McDermott Master Trust as of the
date of such transfer, except that reasonable adjustments shall be made where MI determines such transfers cannot reasonably be made due to investment manager account minimums or where other considerations prevent such pro rata transfers or render
such pro rata transfers impractical. 
 (ii) Value. For purposes of this Agreement, the
“Value” of all pension assets shall be the fair market value of such assets as determined in good faith by the named fiduciary of the McDermott Master Trust based on the most recent audited account statements provided to such named
fiduciary by the trustee of the McDermott Master Trust. 
 (f) Merger of the McDermott Pension
Plan. The McDermott Pension Plan subject to the Initial Transfer Amount and/or the True-Up Adjustment may be merged into and become a part of another McDermott tax-qualified defined benefit plan. In the event of such merger, the resulting plan
will be subject to any subsequent Initial Transfer Amount or True-Up Adjustment. 
 Section 5.3 Excess
and Supplemental Plans. 
 (a) Excess Plans. The liabilities attributable to McDermott
Employees and Former McDermott Employees in a B&W Excess Plan, if any, shall be assumed by a member of the McDermott Group which sponsors the McDermott Excess Plans and the liabilities attributable to B&W Employees and Former B&W
Employees in a McDermott Excess Plan, if any, shall be assumed by a member of the B&W Group which sponsors a B&W Excess Plan, each effective as of the Distribution Date. 

(b) Supplemental Plans. On or prior to the Distribution Date, B&W shall establish the B&W
New SERP. The liabilities attributable to B&W Employees and Former B&W Employees in the McDermott SRPP shall be assumed by a member of the B&W Group which sponsors the B&W New SERP, effective as of the Distribution Date. Each member
of the B&W Group shall cease to be a participating employer in the McDermott SRPP and the MII SERP, and the B&W Employees and the Former B&W Employees shall no longer participate in the McDermott SRPP or MII SERP, each effective as of
the Distribution Date, unless any such B&W Employee or Former B&W Employee shall become employed by any member of the McDermott Group after such date and such member participates in the McDermott SRPP or the MII SERP and such employee is
eligible for participation therein. 
  

 19 

 (c) Liability and Responsibility. B&W shall have
sole responsibility for the administration of each B&W Excess Plan and the B&W New SERP and the payment of benefits thereunder to or on behalf of B&W Employees and Former B&W Employees, and no member of the McDermott Group shall have
any liability or responsibility therefor. MII shall have sole responsibility for the administration of each McDermott Excess Plan and the McDermott SRPP and the payment of benefits thereunder to or on behalf of McDermott Employees and Former
McDermott Employees, and no member of the B&W Group shall have any liability or responsibility therefor. 
 ARTICLE VI

 THRIFT PLANS 

Section 6.1 General Principles. On or prior to the Distribution Date, B&W shall establish and adopt a
qualified employee cash or deferred arrangement under Code Section 401(k) (the “B&W Thrift Plan”) intended to be qualified under Code Section 401(a) and containing provisions that will provide, among other things,
(i) benefits for each B&W Employee and Former B&W Employee who was a participant (or former participant with a remaining account balance) in the McDermott Thrift Plan as of the Distribution Date (and each beneficiary and alternate payee
of such person) (the “B&W Thrift Plan Beneficiaries”) identical (except as provided in this Article VI) to those in effect for the B&W Thrift Plan Beneficiaries under the McDermott Thrift Plan as of the date of transfer of assets
and liabilities with respect to such plan (as described below), and (ii) McDermott Employees or Former McDermott Employees (and each beneficiary or alternate payee of such person) (the “McDermott Thrift Plan Beneficiaries”) with
participant account balances reflecting shares of B&W Common Stock received in the Distribution. Each B&W Employee who was an active participant in the McDermott Thrift Plan immediately prior to the Distribution Date shall participate in the
B&W Thrift Plan effective on the Distribution Date. B&W Employees and Former B&W Employees shall not make or receive additional contributions under the McDermott Thrift Plan after the Distribution Date, unless any such B&W Employee
or Former B&W Employee shall become employed by any member of the McDermott Group after such date and such member participates in the McDermott Thrift Plan. A McDermott Employee or Former McDermott Employee shall not participate in the B&W
Thrift Plan after the Distribution Date, unless any such McDermott Employee or Former McDermott Employee shall become employed by any member of the B&W Group after such date and such member participates in the B&W Thrift Plan. The interest
of each B&W Thrift Plan Beneficiary in the McDermott Thrift Plan attributable to employer matching contributions as of the Distribution Date shall be 100% vested on the Distribution Date. The interest of each McDermott Thrift Plan Beneficiary in
the B&W Thrift Plan attributable to employer matching contributions as of the Distribution Date shall be 100% vested on the Distribution Date. 

Section 6.2 Treatment of MII Common Stock and B&W Common Stock. 

(a) B&W Common Stock Fund. The B&W Thrift Plan will provide as of the Distribution Date:
(i) for the establishment of a B&W Common Stock fund; (ii) that such B&W Common Stock fund shall receive and hold all shares of B&W Common Stock to be distributed in the Distribution on behalf of B&W Thrift Plan
Beneficiaries and McDermott Thrift Plan Beneficiaries; (iii) that, following the Distribution Date, contributions made by or on behalf of B&W Thrift Plan Beneficiaries may be allocated to the B&W Common Stock fund; (iv) that the
McDermott Thrift Plan Beneficiaries will be prohibited from increasing their holdings in the B&W Common Stock fund; (v) that the McDermott Thrift Plan Beneficiaries may elect to liquidate their holdings in the B&W Common Stock fund and
invest those monies in any other investment fund offered under the B&W Thrift Plan; and (vi) that the McDermott Thrift Plan Beneficiaries may elect to receive their holdings in the B&W Thrift Plan in accordance with the distribution
options provided under such plan to terminated employees. Additionally, B&W shall cause the B&W Thrift Plan to provide that the McDermott Thrift Plan Beneficiaries shall participate in the B&W Thrift Plan in respect of their accounts
thereunder; provided, however, B&W may in its discretion provide that the B&W Common Stock fund shall no longer be offered as an investment alternative under the B&W Thrift Plan. 

 

 20 

 (b) McDermott Common Stock Fund. MI shall amend the
McDermott Thrift Plan, on or prior to the Distribution Date, to provide that, following the Distribution: (i) the MII Common Stock fund will hold the assets of the accounts of the B&W Thrift Plan Beneficiaries invested in the MII Common
Stock fund; (ii) the B&W Thrift Plan Beneficiaries will be prohibited from increasing their holdings in the MII Common Stock fund; (iii) the B&W Thrift Plan Beneficiaries may elect to liquidate their holdings in the MII Common
Stock fund and invest those monies in any other investment fund offered under the McDermott Thrift Plan; and (iv) the B&W Thrift Plan Beneficiaries may elect to receive their holdings in the MII Thrift Plan in accordance with the
distribution options available under such plan to terminated employees. MI shall cause the McDermott Thrift Plan to provide that B&W Thrift Plan Beneficiaries shall participate in the McDermott Thrift Plan in respect of their accounts
thereunder; provided, however, MI may in its discretion provide that the MII Common Stock fund shall no longer be offered as an investment alternative under the McDermott Thrift Plan. 

Section 6.3 Transfer of Accounts. Before or as soon as reasonably practicable after the Distribution Date,
but in no event later than six months following the Distribution Date, MI shall cause to be transferred from the trust under the McDermott Thrift Plan to the trust under the B&W Thrift Plan the aggregate amount that is credited to the accounts
of the B&W Thrift Plan Beneficiaries as of the date of transfer, but not less than or more than permitted by applicable law, as determined by MI, save and except for the portion of the MII Common Stock fund attributable to the accounts of
the B&W Thrift Plan Beneficiaries. The transfer shall, to the extent reasonably possible, be an in-kind transfer, subject to the reasonable consent of the trustee of the B&W Thrift Plan trust and shall include the transfer of the aggregate
assets held in the accounts relating to each B&W Thrift Plan Beneficiary under the McDermott Thrift Plan and any participant loan notes held under such plans. MI shall cause the McDermott Thrift Plan to allocate to the B&W Thrift Plan the
portion of any forfeiture account under the McDermott Thrift Plan that relates to forfeiture by Former B&W Employees consistent with MI’s recent past practice regarding allocation of forfeitures under the McDermott Thrift Plan. 

ARTICLE VII 

WELFARE PLANS 

Section 7.1 Establishment of B&W Welfare Plans. Except as provided below, the members of the B&W
Group who had previously adopted a McDermott Welfare Plan and were participating employers therein on the Distribution Date (“Participating B&W Employers”) shall, at 11:59 p.m. on that date, withdraw from such participation, and,
effective as of the Distribution Date, one or more of the Participating B&W Employers shall assume sponsorship, under newly established welfare plans, of the coverage and benefits which were offered under such plans to the B&W Employees and
the Former B&W Employees (and their eligible spouses and dependents as the case may be) of the Participating B&W Employers (collectively, the “B&W Welfare Plan Participants”). Such coverage and benefits shall then be provided
to the B&W Welfare Plan Participants on an uninterrupted basis under the newly established B&W Welfare Plans which shall contain substantially the same benefit provisions as in effect under the corresponding McDermott Welfare Plan on the
Distribution Date. Except as provided below, effective as of the day after the Distribution Date, liabilities relating to the B&W Welfare Plan Participants shall be spun off from each McDermott Welfare Plan and allocated to the corresponding new
B&W Welfare Plan. 
 As a result of withdrawal from participation in the McDermott Welfare Plans by the
Participating B&W Employers, the B&W Welfare Plan Participants shall lose eligibility for coverage under the McDermott Welfare Plans at the close of business on the Distribution Date. B&W Welfare Plan Participants shall not participate
in any McDermott Welfare Plans after the Distribution Date, unless they shall become employed after the Distribution Date by any member of the McDermott Group that participates in such plans and meet the terms and conditions of participation
thereunder. McDermott Employees and Former McDermott Employees shall not participate in any B&W Welfare Plans after the Distribution Date, unless they shall become employed after the Distribution Date by any member of the B&W Group that
participates in such plans and meet the terms and conditions of participation thereunder. 
  

 21 

 Section 7.2 Transitional Matters Under B&W Welfare Plans.

 (a) Treatment of Claims Incurred. 

(i) Self-Insured Benefits. B&W shall assume and shall be responsible for the funding of payment
for all unpaid covered claims and eligible expenses incurred by any B&W Employees and Former B&W Employees under the McDermott Welfare Plans and McDermott Benefit Arrangements on or prior to the Distribution Date that are not described in
section 7.2(a)(ii) below. No member of the McDermott Group shall be responsible for any liability with respect to any such claims or expenses. 

(ii) Insured Benefits. With respect to benefits that, on or prior to the Distribution Date, are
provided for under the McDermott Welfare Plans through the purchase of insurance, MI shall cause the McDermott Welfare Plans to fully perform, pay and discharge all claims of B&W Welfare Plan Participants that are incurred prior to the
Distribution Date. 
 (iii) Claims Incurred. For purposes of this Section 7.2(a), a
claim or liability is deemed to be incurred (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or liability; (B) with respect to life insurance,
accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or liability; (C) with respect to long-term disability benefits, upon the date of an individual’s
disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or liability; and (D) with respect to a period of continuous hospitalization, upon the date of admission to the hospital,
unless otherwise provided under the terms of the applicable McDermott Welfare Plan or McDermott Benefit Arrangement. 

(b) Credit for Deductibles and Other Limits. With respect to each B&W Welfare Plan Participant,
the B&W Welfare Plans will give credit in the year of the Distribution Date for any amount paid, number of services obtained or visits provided under the comparable type McDermott Welfare Plan by such B&W Welfare Plan Participant in the year
of the Distribution Date toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts are taken into account under the comparable type McDermott Welfare Plan. For
purposes of any life-time maximum benefit limit payable to a B&W Welfare Plan Participant under any B&W Welfare Plan, the B&W Welfare Plans will recognize any expenses paid or reimbursed by a McDermott Welfare Plan with respect to such
participant on or prior to the Distribution Date to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under that McDermott Welfare Plan. 

(c) COBRA. Effective as of the day after the Distribution Date, B&W shall assume and satisfy
all requirements under COBRA with respect to all B&W Employees and Former B&W Employees and their qualified beneficiaries, including for individuals who are already receiving benefits as of such date under COBRA. 

(d) Long-Term Care Insurance. Effective as of June 30, 2010, the McDermott Welfare Plan
sponsored by MI which provides long-term care insurance shall be terminated and no corresponding coverage shall be provided by any B&W Entity under any B&W Welfare Plan or otherwise. 

Section 7.3 VEBA. MI is the grantor of a Code Section 501(c)(9) trust (the “VEBA”) that holds
the plan assets of a B&W Welfare Plan. On or prior to the Distribution Date, B&W or a member of the B&W Group shall assume the status as settlor and sponsor of the VEBA, and no member of the McDermott Group shall have any further
responsibility or liability therefor. 
 Section 7.4 Continuity of Benefits, Benefit Elections and
Beneficiary Designations. 
 (a) Benefit Elections and Designations. As of the day
after the Distribution Date (or such other date provided for under subsection 7.4(b)), B&W shall cause the B&W Welfare Plans to recognize and give effect to all elections and designations (including all coverage and contribution elections
and beneficiary designations) made by each B&W Welfare Plan Participant under, or with respect to, the corresponding 

 

 22 

 
McDermott Welfare Plan for the year including the Distribution Date. Notwithstanding the foregoing, no elections with respect to long-term care insurance shall be given effect by B&W under
any B&W Welfare Plan or otherwise. 
 (b) Additional Details Regarding Flexible Spending
Accounts. To the extent any B&W Welfare Plan provides or constitutes a health care flexible spending account or dependent care flexible spending account (each a “B&W FSA”), such B&W Welfare Plan shall be effective as of
January 1, 2010 rather than the day after the Distribution Date. It is the intention of the Parties that all activity under a B&W Welfare Plan Participant’s flexible spending account with McDermott for the year including the
Distribution Date be treated instead as activity under the corresponding B&W FSA. Accordingly, (i) any period of participation by a B&W Welfare Plan Participant in a McDermott flexible spending account during the year including the
Distribution Date (the “Participation Period”) will be deemed a period when the B&W Welfare Plan Participant participated in the corresponding B&W FSA; (ii) all expenses incurred during a Participation Period will be deemed
incurred while the participant’s coverage was in effect under the corresponding B&W FSA; and (iii) all elections and reimbursements made with respect to a Participation Period under a McDermott flexible spending account will be deemed
to have been made with respect to the corresponding B&W FSA. 
 (c) Employer Non-elective
Contributions. As of the day after the Distribution Date, B&W shall cause any B&W Welfare Plan that constitutes a cafeteria plan under Section 125 of the Code to recognize and give effect to all non-elective employer contributions
payable and paid toward coverage of a B&W Welfare Plan Participant under the corresponding McDermott Welfare Plan that is a cafeteria plan under Section 125 of the Code for the applicable cafeteria plan year. 

Section 7.5 Insurance Contracts. To the extent any McDermott Welfare Plan is funded through the purchase of
an insurance contract or is subject to any stop loss contract, MI and B&W will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for B&W (except to the extent changes are required under applicable
state insurance laws) and to maintain any pricing discounts or other preferential terms for both MI and B&W for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the
other Party. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 7.5. 

Section 7.6 Third-Party Vendors. Except as provided below, to the extent any McDermott Welfare Plan is
administered by a third-party vendor, MI and B&W will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for B&W and to maintain any pricing discounts or other preferential terms
for both MI and B&W for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges or
administrative fees that such Party may incur pursuant to this Section 7.6. 
 Section 7.7 Claims
Experience. Notwithstanding the foregoing, MI and B&W shall use commercially reasonable efforts to ensure that any claims experience under the McDermott Welfare Plans attributable to B&W Welfare Beneficiaries shall be available to the
B&W Welfare Plans, as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. 
 ARTICLE
VIII 
 BENEFIT ARRANGEMENTS 

Except as otherwise provided under this Agreement, effective as of the day after the Distribution Date, B&W Employees
and Former B&W Employees shall not be eligible to participate in any McDermott Benefit Arrangement. 
  

 23 

 ARTICLE IX 

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION 

Effective as of the Distribution Date, B&W shall have (and, to the extent it has not previously had such obligations,
assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all B&W Employees and Former B&W Employees. Effective as of the Distribution Date, MII shall have (and,
to the extent it has not previously had such obligations, assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all McDermott Employees and Former McDermott
Employees. B&W and MII shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution. 

ARTICLE X 

RETENTION, SEVERANCE AND OTHER MATTERS 

Section 10.1 Retention Agreements. 

(a) B&W Obligations. Effective as of the Distribution Date, B&W hereby assumes MII’s
rights and obligations arising under the retention agreements described in Schedule 10.1(a) and agrees to honor the terms and conditions of those agreements applicable to B&W as a successor under the terms of such agreements, unless the B&W
Employee covered by such an agreement terminates employment with the B&W Group within 31 days after the Distribution Date for Good Reason (as defined in the relevant retention agreement) which occurs upon the Distribution Date, in which case MII
shall remain obligated under the applicable retention agreement. Except for B&W’s assumption of the retention agreements as described above, the terms of the retention agreements shall in all other respects be unaffected. The Parties agree
that the B&W Employees who are covered by retention agreements described above are express beneficiaries of this Section 10.1(a). 

(b) MII Obligations. MII shall continue to be responsible for and remain obligated under the
retention agreements described in Schedule 10.1(b) and agrees to honor the terms and conditions of those agreements. 

(c) Additional Obligations. B&W and MII shall each be solely responsible for any other
retention arrangements entered into by any member of the B&W Group or any member of the McDermott Group, respectively, and that are not otherwise allocated by this Agreement to a member of either the McDermott Group or the B&W Group.

 Section 10.2 Severance. 

(a) Except as otherwise provided in this Agreement, immediately following the Distribution, MII shall have
no liability or obligation under any MII severance plan or policy with respect to B&W Employees or Former B&W Employees (other than with respect to those individuals set forth on Schedule 10.2(a) who have accepted temporary positions with a
member of the B&W Group). B&W shall be responsible for paying any severance benefits payable under the McDermott Severance Plan to individuals who transfer from employment with a member of the McDermott Group to employment with a member of
the B&W Group in connection with the Distribution and who are involuntarily terminated within twelve months of the Distribution Date for reasons other than cause (other than with respect to those individuals set forth on Schedule 10.2(a)).

 (b) Except as otherwise provided in this Agreement, effective after the Distribution Date,
B&W shall assume and shall be responsible for administering all payments and benefits under the applicable MII severance policies or any termination agreements with Former B&W Employees whose employment terminated prior to the Distribution
Date for an eligible reason under such policies or in accordance with such agreements. 
  

 24 

 Section 10.3 Accrued Time Off. B&W shall recognize and
assume all liability for all vacation, holiday, sick leave, flex days, personal days and paid-time off with respect to B&W Employees, and B&W shall credit each B&W Employee with such accrual. 

Section 10.4 Leaves of Absence. B&W will continue to apply the appropriate leave of absence policies
applicable to inactive B&W Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by B&W Employees prior to the Distribution Date shall be deemed to have been taken as employees of a member of
the B&W Group. 
 Section 10.5 Collective Bargaining Agreements. The McDermott Group shall have
no further liability for all collective bargaining agreements, collective agreements, multiemployer plans, pension and welfare plans and arrangements and trade union or works council agreements entered into with any member of the McDermott Group,
any union, works council or other body representing only B&W Employees and/or Former B&W Employees. 

Section 10.6 Director Programs. MII shall retain responsibility for the payment of any fees payable in
respect of service on the MII board of directors that are payable but not yet paid as of the Distribution Date, and B&W shall not have any responsibility for any such payments. 

Section 10.7 Restrictive Covenants in Employment and Other Agreements. 

(a) To the fullest extent permitted by the agreements described in this Section 10.7(a) and
applicable law, MII shall assign, or cause any member of the McDermott Group to assign, to B&W or a member of the B&W Group, as designated by B&W, all agreements containing restrictive covenants (including confidentiality and
non-competition provisions) between a member of the McDermott Group and a B&W Employee or Former B&W Employee, with such assignment to be effective as of the Distribution Date. To the extent that assignment of such agreements is not
permitted, effective as of the Distribution Date, each member of the B&W Group shall be considered to be a successor to each member of the McDermott Group for purposes of, and a third-party beneficiary with respect to, all agreements containing
restrictive covenants (including confidentiality and non-competition provisions) between a member of the McDermott Group and a B&W Employee or Former B&W Employee whom B&W reasonably determines have substantial knowledge of the business
activities of the B&W Group, such that each member of the B&W Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the
B&W Group; provided, however, that in no event shall MII be permitted to enforce such restrictive covenant agreements against B&W Employees or Former B&W Employees for action taken in their capacity as employees of a member of the
B&W Group. 
 (b) To the fullest extent permitted by the agreements described in this
Section 10.7(b) and applicable law, B&W shall assign, or cause any member of the B&W Group to assign, to MII or a member of the McDermott Group, as designated by MII, all agreements containing restrictive covenants (including
confidentiality and non-competition provisions) between a member of the B&W Group and a McDermott Employee or Former McDermott Employee, with such assignment to be effective as of the Distribution Date. To the extent that assignment of such
agreements is not permitted, effective as of the Distribution Date, each member of the McDermott Group shall be considered to be a successor to each member of the B&W Group for purposes of, and a third-party beneficiary with respect to, all
agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the B&W Group and a McDermott Employee or Former McDermott Employee whom MII reasonably determines have substantial
knowledge of the business activities of the McDermott Group, such that MII and each member of the McDermott Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with
respect to the business operations of the McDermott Group; provided, however, that in no event shall B&W be permitted to enforce such restrictive covenant agreements against McDermott Employees or Former McDermott Employees for action taken in
their capacity as employees of a member of the McDermott Group. 
  

 25 

 ARTICLE XI 

GENERAL PROVISIONS 

Section 11.1 Preservation of Rights to Amend. The rights of each member of the McDermott Group and each
member of the B&W Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement. 

Section 11.2 Confidentiality. Each Party agrees that any information conveyed or otherwise received by or on
behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth in the Master Separation Agreement. 

Section 11.3 Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, on and
after the Distribution Date, B&W shall assume, and be solely liable for, the handling, administration, investigation and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful
dismissal, discrimination or human rights and unemployment compensation claims asserted at any time against MII or any member of the McDermott Group by any B&W Employee or Former B&W Employee (including any dependent or beneficiary of any
such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant or otherwise) to or with respect to the business activities of
any member of the B&W Group, whether or not such employment or services were performed before or after the Distribution. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both McDermott
Employees (or Former McDermott Employees) and B&W Employees (or Former B&W Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal
action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the
indemnification and related litigation cooperation provisions of the Master Separation Agreement shall apply with respect to each Party’s indemnification obligations under this Section 11.3. 

Section 11.4 Reimbursement and Indemnification. MII and B&W hereto agrees to reimburse the other Party,
within 60 days of receipt from the other Party of reasonable verification, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective MII and B&W Welfare Plans, Pension Plans, Thrift Plan and
Benefit Arrangements and, as contemplated by Section 10.2, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by B&W pursuant to this Agreement, and all liabilities retained, assumed
or indemnified against by MII pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Master Separation Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall
require any member of the B&W Group to pay or reimburse to any member of the McDermott Group any benefit-related cost item that a member of the B&W Group has previously paid or reimbursed to any member of the McDermott Group; and
(ii) no provision of this Agreement shall require any member of the McDermott Group to pay or reimburse to any member of the B&W Group any benefit-related cost item that a member of the McDermott Group has previously paid or reimbursed to
any member of the B&W Group. 
 Section 11.5 Costs of Compliance with Agreement. Except as
otherwise provided in this Agreement or any other Ancillary Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement. 

Section 11.6 Fiduciary Matters. MII and B&W each acknowledge that actions required to be taken pursuant
to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions

  

 26 

 
hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be
responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any liabilities caused by the failure to satisfy any such
responsibility. 
 Section 11.7 Form S-8. Before the Distribution or as soon as reasonably
practicable thereafter and subject to applicable law, B&W shall prepare and file with the SEC a registration statement on Form S-8 (or another appropriate form) registering under the Securities Act of 1933 the offering of a number of shares of
B&W Common Stock at a minimum equal to the number of shares subject to the Replacement B&W Options, the Replacement B&W RSUs, Replacement B&W Performance RSUs and the Replacement B&W RSAs. B&W shall use commercially
reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any Replacement B&W Options, Replacement B&W RSUs,
Replacement B&W Performance RSUs or Replacement B&W RSAs may remain outstanding. 
 Section 11.8
Entire Agreement. This Agreement, together with the documents referenced herein (including the Master Separation Agreement, the Ancillary Agreements and the plans and agreements referenced herein), constitutes the entire agreement and
understanding among the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of
this Agreement conflicts with the provisions of the Master Separation Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof. 

Section 11.9 Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the
benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer
upon any third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect
the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. Except as otherwise provided in Section 10.1(a), the provisions of this Agreement are solely for the benefit of the
Parties, and no current or former Employee, officer, director or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned
by any Party, except with the prior written consent of the other Parties. 
 Section 11.10 Amendment;
Waivers. No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (i) extend the time for the performance of any of the obligations or other
acts of another Party, (ii) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by another Party with any of the
agreements, covenants or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. No failure or delay on the part of any Party in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right
preclude other or further exercises thereof or of any other right. 
 Section 11.11 Remedies
Cumulative. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. 

Section 11.12 Notices. Unless otherwise expressly provided herein, all notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given: (i) when personally delivered, (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on

  

 27 

 
the date the return receipt is executed or the letter is refused by the addressee or its agent, (iii) if sent by overnight courier which delivers only upon the executed receipt of the
addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent, or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice
delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address
or facsimile number for a Party as it shall have specified by like notice. 
 Section 11.13
Counterparts. This Agreement, including the Schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall
constitute one and the same agreement. 
 Section 11.14 Severability. If any term or other provision
of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon
such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable. 
 Section 11.15 Governing Law. To the extent not preempted by applicable
federal law, this Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Texas, without regard to any conflicts of law provisions thereof that would result in the application of the laws
of any other jurisdiction. 
 Section 11.16 Performance. Each of MII and B&W shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the McDermott Group and any member of the B&W Group, respectively. The Parties each agree to take such
further actions and to execute, acknowledge and deliver, or to cause to be executed, acknowledged and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document
delivered pursuant to this Agreement. 
 Section 11.17 Construction. This Agreement shall be
construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party. 

Section 11.18 Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the
contrary, if the Master Separation Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect. 
  

 28 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names by a duly authorized officer as of the date first written above. 
  

			
	MCDERMOTT INTERNATIONAL, INC.
		
	By:	 	  

	 Name:

Title:

	
	 MCDERMOTT INCORPORATED

		
	By:	 	  

	 Name:

Title:

	
	THE BABCOCK & WILCOX COMPANY
		
	By:	 	  

	 Name:

Title:

	
	BABCOCK & WILCOX INVESTMENT COMPANY
		
	By:	 	  

	 Name:

Title

  

 29Form of Rights Agreement

  

Exhibit 4.1 

XERIUM TECHNOLOGIES, INC. 

and 
 AMERICAN
STOCK TRANSFER & TRUST COMPANY, LLC 
 as Rights Agent 

Rights Agreement 

Dated as of May 25, 2010 
  

 

 TABLE OF CONTENTS 

 

					
	 	 	 	  	Page
			
	Section 1	 	Certain Definitions	  	1
			
	Section 2	 	Appointment of Rights Agent	  	4
			
	Section 3	 	Issue of Right Certificates	  	5
			
	Section 4	 	Form of Right Certificates	  	7
			
	Section 5	 	Countersignature and Registration	  	7
			
	Section 6	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates	  	8
			
	Section 7	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	  	8
			
	Section 8	 	Cancellation and Destruction of Right Certificates	  	9
			
	Section 9	 	Availability of Preferred Shares	  	9
			
	Section 10	 	Preferred Shares Record Date	  	10
			
	Section 11	 	Adjustment of Purchase Price, Number of Shares or Number of Rights	  	10
			
	Section 12	 	Certificate of Adjusted Purchase Price or Number of Shares	  	16
			
	Section 13	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	  	16
			
	Section 14	 	Fractional Rights and Fractional Shares	  	17
			
	Section 15	 	Rights of Action	  	18
			
	Section 16	 	Agreement of Right Holders	  	18
			
	Section 17	 	Right Certificate Holder Not Deemed a Stockholder	  	19
			
	Section 18	 	Concerning the Rights Agent	  	19
			
	Section 19	 	Merger or Consolidation or Change of Name of Rights Agent	  	20
			
	Section 20	 	Duties of Rights Agent	  	20
			
	Section 21	 	Change of Rights Agent	  	22
			
	Section 22	 	Issuance of New Right Certificates	  	22
			
	Section 23	 	Redemption	  	23
			
	Section 24	 	Exchange	  	23
			
	Section 25	 	Notice of Certain Events	  	25
			
	Section 26	 	Notices	  	25
			
	Section 27	 	Supplements and Amendments	  	26
			
	Section 28	 	Successors	  	26
			
	Section 29	 	Benefits of this Rights Agreement	  	27

  

 -i- 

					
	Section 30	 	Severability	  	27
			
	Section 31	 	Governing Law	  	27
			
	Section 32	 	Counterparts	  	27
			
	Section 33	 	Descriptive Headings	  	27
			
	Exhibit A —	 	Terms, Designations, Powers and Preferences of Series A Junior Participating Preferred Stock	  	
			
	Exhibit B —	 	Form of Right Certificate	  	
			
	Exhibit C —	 	Summary of Rights to Purchase Preferred Shares	  	

  

 -ii- 

 RIGHTS AGREEMENT 

Rights Agreement, dated as of May 25, 2010, between Xerium Technologies, Inc., a Delaware corporation (the
“Company”), and American Stock Transfer & Trust Company, LLC (the “Rights Agent”). 

WHEREAS, on May 25, 2010, pursuant to that certain joint prepackaged plan of reorganization confirmed by the United States
Bankruptcy Court for the District of Delaware on May 12, 2010, the Company authorized and declared a dividend of one preferred share purchase right (a “Right”) for each Common Share of the Company outstanding as of the Close of
Business on May 25, 2010 (the “Record Date”), each Right representing the right to purchase one one-thousandth (subject to adjustment) of a Preferred Share, upon the terms and subject to the conditions herein set forth, and the
Company further authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each Common Share that shall become outstanding between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Expiration Date; provided, however, that Rights may be issued with respect to Common Shares that shall become outstanding after the Distribution Date and prior to the earlier of the Redemption Date and the
Expiration Date in accordance with the provisions of Section 22 hereof. 
 NOW THEREFORE, in consideration of the premises
and the mutual agreements herein set forth, the parties hereby agree as follows: 
 Section 1. Certain Definitions. For
purposes of this Rights Agreement, the following terms have the meanings indicated: 
 (a) “Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall not include (i) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity or trustee holding Common Shares for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the Company, (ii) any Person who or which becomes the Beneficial Owner of 15% or more of the Common Shares then outstanding as the result of a reduction in the outstanding Common
Shares resulting from acquisition of Common Shares by the Company approved by the Board of Directors, unless and until such Person becomes the Beneficial Owner of any additional Common Shares (other than pursuant to a stock split, stock dividend or
similar transaction) and immediately thereafter becomes the Beneficial Owner of 15% or more of the Common Shares, (iv) any Person who or which the Board of Directors of the Company determines, in good faith, became an Acquiring Person
inadvertently, if such Person divests as promptly as practicable a sufficient number of Common Shares so that such Person would no longer be an Acquiring Person, (v) any Person who or which the Board of Directors of the Company determines,
prior to the time such Person would otherwise be an Acquiring Person, should be exempted from the definition of Acquiring Person, provided that the Board of Directors may make such exemption subject to such conditions, if any, which the Board may

 
determine or (vi) AS Investors, LLC, Carl Marks Strategic Investments, L.P., Carl Marks Strategic Opportunities Fund, L.P., Cerberus Series Four Holdings, LLC and Saberasu Japan Investments
II B.V. (each, an “Exempt Person”) or any Affiliate or Associate of an Exempt Person; provided that any Exempt Person who shall become Beneficial Owner of 20% or more of the Common Shares then outstanding shall become an
Acquiring Person; provided, however, that in no event shall any Exempt Person become an Acquiring Person solely as a result of a reduction in the outstanding Common Shares resulting from acquisition of Common Shares by the Company
approved by the Board of Directors, unless and until such Exempt Person becomes the Beneficial Owner of any additional Common Shares (other than pursuant to a stock split, stock dividend or similar transaction) and immediately thereafter becomes the
Beneficial Owner of 20% or more of the Common Shares. 
 (b) “Affiliate” and “Associate” shall
have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act. 
 (c) A Person shall be deemed the
“Beneficial Owner” of and shall be deemed to “Beneficially Own” any securities: 

(i) which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly;

 (ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights (other than these Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or
exchange or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); 

(iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any securities of the Company; or 

 

 -2- 

 (iv) which are the subject of a derivative transaction entered into by such
Person, or derivative security acquired by such Person, which gives such Person the economic equivalent of ownership of an amount of such securities due to the fact that the value of the derivative is explicitly determined by reference to the price
or value of such securities, without regard to whether (A) such derivative conveys any voting rights in such securities to such Person, (B) the derivative is required to be, or capable of being, settled through delivery of such securities,
or (C) such Person may have entered into other transactions that hedge the economic effect of such derivative. In determining the number of Common Shares deemed Beneficially Owned by virtue of the operation of this subparagraph (iv) of
this paragraph (c), the subject Person shall be deemed to Beneficially Own (without duplication) the number of Common Shares that are synthetically owned pursuant to such derivative transactions or such derivative securities. 

Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase “then outstanding,” when used with reference to
a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be
deemed to Beneficially Own hereunder. 
 (d) “Business Day” shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in New York are authorized or obligated by law or executive order to close. 
 (e)
“Close of Business” on any given date shall mean 5:00 p.m., New York City time, on such date, provided, however, that, if such date is not a Business Day, it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day. 
 (f) “Common Shares” shall mean the shares of common stock, par value $.001 per
share, of the Company, except that “Common Shares” when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person
is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. 
 (g)
“Company” shall have the meaning set forth in the preamble hereof. 
 (h) “Current per share market
price” shall have the meaning set forth in Section 11(d) hereof. 
 (i) “Distribution Date” shall
have the meaning set forth in Section 3(a) hereof. 
 (j) “Equivalent preferred shares” shall have the
meaning set forth in Section 11(b) hereof. 
 (k) “Exchange Act” shall mean the Securities Exchange Act of
1934. 
 (l) “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof. 

 

 -3- 

 (m) “Expiration Date” shall mean the Close of Business on May 25,
2013. 
 (n) “Person” shall mean any individual, firm, corporation, partnership or other entity, and shall
include any successor (by merger or otherwise) of such entity. 
 (o) “Preferred Shares” shall mean shares of
Series A Junior Participating Preferred Stock, par value $.001 per share, of the Company having the terms, designations, powers and preferences set forth in Exhibit A. 

(p) “Purchase Price” shall initially be $60.00 for each one one-thousandth of a Preferred Share purchasable pursuant to
the exercise of a Right, and shall be subject to adjustment from time to time as provided in Section 11 or 13 hereof. 

(q) “Record Date” shall have the meaning set forth in the second paragraph hereof. 

(r) “Redemption Date” shall mean the time at which the Rights are redeemed as provided in Section 23 hereof.

 (s) “Redemption Price” shall have the meaning set forth in Section 23(a) hereof. 

(t) “Right” shall have the meaning set forth in the second paragraph hereof. 

(u) “Right Certificate” shall have the meaning set forth in Section 3(a) hereof. 

(v) “Rights Agent” shall have the meaning set forth in the preamble hereof. 

(w) “Security” shall have the meaning set forth in Section 11(d)(i) hereof. 

(x) “Stock Acquisition Date” shall mean the first date of public announcement (including, without limitation, by a
filing under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such or such earlier date as a majority of the Board shall become aware of the existence of an Acquiring Person. 

(y) “Subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned or otherwise controlled, directly or indirectly, by such Person. 
 (z)
“Trading Day” shall have the meaning set forth in Section 11(d)(i) hereof. 
 Section 2.
Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders
of the Common Shares) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. 

 

 -4- 

 Section 3. Issue of Right Certificates. (a) Until the earlier of the Close
of Business on (i) the tenth day after the Stock Acquisition Date or (ii) such date, if any, as may be determined by action of the Board of Directors of the Company after the date of the commencement by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity or trustee holding Common Shares for or pursuant to the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company or of any Subsidiary of the Company) of, or of the first public announcement of the intention of any Person (other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any entity or trustee holding Common Shares for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company) to commence, a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (including any such date which is after the date of this Rights Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights will attach to (subject to the provisions of Section 3(b) hereof) the Common Shares
(whether in book-entry, certificated or uncertificated form) issued and outstanding, and the Rights will be owned by the registered holder of the Common Shares and will not be evidenced by separate Right Certificates and (y) the right to
receive Right Certificates will be transferable only in connection with the transfer of Common Shares. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form of Exhibit B hereto (a “Right Certificate”), evidencing one Right for each Common Share so held, subject, in the case of Common Shares held in
uncertificated form on the Distribution Date, to the rights provided by law to a registered pledgee whose security interest has been duly registered with the Company. As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates. 
 (b) The Company will make available, as promptly as practicable following the Record Date, a Summary of Rights
to Purchase Preferred Shares, in substantially the form of Exhibit C hereto, to any holder of Rights who may so request from time to time prior to the Expiration Date. With respect to certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates and the registered holders of the Common Shares shall also be the registered holders of the associated Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Expiration Date), the surrender for transfer of any certificate for Common Shares in respect of which Rights have been issued shall also constitute the transfer of the Rights associated with such Common Shares. 

(c) Rights shall be issued in respect of all Common Shares which are issued in certificated form (whether originally issued or from the
Company’s treasury) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Expiration Date, and certificates representing such Common Shares shall have impressed on, printed on, written on or
otherwise affixed to them substantially the following legend: 
 This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between Xerium Technologies, Inc. (the “Company”) and the Rights Agent thereunder (the “Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such rights will be evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO ANY
PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT), INCLUDING SUCH RIGHTS HELD BY A SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID. 
  

 -5- 

 With respect to such certificates of Common Shares containing the foregoing legend, until the earliest of
the Distribution Date, the Redemption Date or the Expiration Date, the Rights associated with the Common Shares represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. 
 (d) Rights shall be
issued in respect of all Common Shares which are issued in book-entry or uncertificated form (whether originally issued or from the Company’s treasury) after the Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, and confirmations and account statements sent to holders of Common Shares in book-entry form and initial transaction statements relating to the registration, pledge or release from pledge of Common Shares in
uncertificated form shall have impressed on, printed on, written on or otherwise affixed to them substantially the following legend: 

The Common Stock, par value $0.001 per share, of Xerium Technologies, Inc. (the “Company”) to which this statement
relates also evidences and entitles the holder thereof to certain rights as set forth in a Rights Agreement between the Company and the Rights Agent thereunder (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such rights will be evidenced by separate certificates and will no longer be
evidenced by the shares to which this statement relates. The Company will mail to the holder of the shares to which this statement relates and any registered pledgee of uncertificated shares a copy of the Rights Agreement without charge after
receipt of a written request therefor. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS 
  

 -6- 

 
AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT), INCLUDING SUCH RIGHTS HELD BY A SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

 With respect to Common Shares in book-entry form for which there has been sent a confirmation or account statement and Common Shares in
uncertificated form for which there has been sent an initial transaction statement containing the foregoing legend, until the earliest of the Distribution Date, the Redemption Date or the Expiration Date, the Rights associated with such Common
Shares shall be evidenced by such Common Shares alone, and the registration of transfer or pledge, or the release from pledge, of any such Common Shares shall also constitute the registration of transfer or pledge, or the release from pledge, as the
case may be, of the Rights associated with such Common Shares. 
 (e) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding. 
 Section 4. Form of Right Certificates. Subject to the provisions of
Section 22 hereof, the Right Certificates (and the forms of election to purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Rights Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or automated quotation system on which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Right Certificates shall entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as shall be set forth therein at the price per one one-thousandth of a Preferred
Share set forth therein, but the number of one one-thousandths of a Preferred Share and the Purchase Price shall be subject to adjustment as provided herein. 

Section 5. Countersignature and Registration. (a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature, shall have affixed thereto the Company’s seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature, and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the Person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company by 
  

 -7- 

 
any Person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate although at the date of the execution of
this Rights Agreement any such Person was not such an officer. 
 (b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. 

Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. (a) Subject to the provisions of Section 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates entitling the registered holder to purchase a like number of one one-thousandths of a Preferred Share as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right
Certificates. 
 (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to
the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 
 Section 7. Exercise
of Rights; Purchase Price; Expiration Date of Rights. (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein), in whole or in part, at any time after the
Distribution Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the principal office of the Rights Agent, together with payment of the Purchase Price
for each one one-thousandth of a Preferred Share as to which the Rights are exercised, at or prior to the earliest of (i) the Expiration Date, (ii) the Redemption Date or (iii) the time at which such Rights are exchanged as provided
in Section 24 hereof. 
  

 -8- 

 (b) The Purchase Price shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below. 
 (c) Upon receipt of a Right Certificate representing exercisable Rights, with the
form of election to purchase duly executed, accompanied by payment of the Purchase Price for the shares to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof by certified check, cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares certificates
for the number of Preferred Shares to be purchased and the Company hereby irrevocably authorizes any such transfer agent to comply with all such requests, or (B) requisition from the depositary agent depositary receipts representing such number
of one one-thousandths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent of the Preferred Shares with such depositary agent) and the
Company hereby directs such depositary agent to comply with such request; (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof;
(iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. 

(d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of
Section 14 hereof. 
 Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Right Certificates, and, in such case, shall deliver a certificate of destruction thereof to the Company. 

Section 9. Availability of Preferred Shares. (a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with
Section 7. The Company covenants and agrees that it will take all such action as may be necessary to ensure that all securities delivered upon exercise of Rights shall, at the time of delivery of the certificates for such securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. 
  

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 (b) The Company further covenants and agrees that it will pay when due and payable any and
all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depositary receipts for Preferred Shares upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s reasonable satisfaction that no such tax is due. 

(c) The Company will use its best efforts to ensure that any securities issued pursuant hereto are issued in compliance with all
applicable laws. 
 Section 10. Preferred Shares Record Date. Each Person in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares represented thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the
Preferred Shares transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares transfer
books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 

Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of Preferred
Shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. 

(a) (i) In the event the Company shall at any time after the date of this Rights Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of

  

 -10- 

 
capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Shares transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right. 
 (ii) Subject to Section 24 of this
Rights Agreement, in the event any Person becomes an Acquiring Person, each holder of a Right shall thereafter have a right to receive, upon exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Rights Agreement and in lieu of Preferred Shares, such number of Common Shares as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable and dividing that product by (B) 50% of the then current per share market price of the
Company’s Common Shares (determined pursuant to Section 11(d) hereof) on the date of the occurrence of such event. In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to be afforded by the Rights. 

Notwithstanding anything in this Agreement to the contrary, from and after the time when any Person first becomes an
Acquiring Person, any Rights that are or were acquired or Beneficially Owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring Person) shall be void and any holder of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Rights Agreement. No Right Certificate shall be issued pursuant to Section 3 that represents Rights Beneficially Owned by an Acquiring Person whose Rights would be void pursuant to the preceding sentence or
any Associate or Affiliate thereof; no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant to the preceding sentence shall be cancelled. 

(iii) If there shall not be sufficient Common Shares issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exercise of the Rights. If the Company shall, after
good faith effort, be unable to take all such action as may be necessary to authorize such additional Common Shares, the Company shall substitute, for each Common Share that would otherwise be issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with substantially similar rights, privileges, preferences, voting power and economic rights) such that the 

 

 -11- 

 
current per share market price of one Preferred Share (or such other security) multiplied by such number or fraction is equal to the current per share market price of one Common Share as of the
date of issuance of such Preferred Shares or fraction thereof (or other security). 
 (b) In case the Company shall fix a record
date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares (“equivalent preferred shares”)) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the then current per share market price of the Preferred Shares on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.
Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 

(c) In case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the then current per share market price of the Preferred Shares on such record date, less the fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and holders of the Rights) of the portion of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the denominator of which 
  

 -12- 

 
shall be such current per share market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 

(d) (i) For the purpose of any computation hereunder, the “current per share market price” of any security
(a “Security” for the purpose of this Section 11(d)(i)) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per share market price of the Security is determined during a period following the announcement by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such shares, or (B) any subdivision, combination or reclassification of such Security and prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price shall be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the OTC Bulletin Board, the Pink Sheets or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the Security, the fair value of the Security on such date as determined in good faith by the Board of Directors of the Company shall be used. The term “Trading
Day” shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day. 
 (ii) For the purpose of any computation hereunder, the
“current per share market price” of the Preferred Shares shall be determined in accordance with the method set forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the “current per share market price”
of the Preferred Shares shall be conclusively deemed to be the current per share market price of the Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If neither the 
  

 -13- 

 
Common Shares nor the Preferred Shares are publicly held or so listed or traded, “current per share market price” shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. 
 (e) No
adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one-millionth of a Preferred Share or one
ten-thousandth of any other share or security as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the Expiration Date. 
 (f) If, as a result of an adjustment
made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares shall apply on like terms to any such other shares. 

(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one one-thousandths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. 

(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest one millionth of a Preferred Share) obtained by (A) multiplying (x) the number of one one-thousandths of a Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (B) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights in
substitution for any adjustment in the number of one one-thousandths of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the 

 

 -14- 

 
number of Rights shall become that number of Rights (calculated to the nearest one millionth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public announcement. 
 (j) Irrespective of any adjustment or change
in the Purchase Price or the number of one one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial Right Certificates issued hereunder. 
 (k) Before
taking any action that would cause an adjustment reducing the Purchase Price below one one-thousandth of the then par value, if any, of the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares at such adjusted Purchase Price. 

(l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment. 

(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that, it, in its sole discretion, shall determine to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the current market price, issuance 
  

 -15- 

 
wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section 11(b), hereafter made by the Company to holders of its Preferred Shares shall not be taxable to such stockholders. 

(n) In the event that at any time after the date of this Rights Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the number of one one-thousandths of a Preferred Share purchasable after such event upon proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a Preferred Share so purchasable immediately prior to such event by a fraction, the numerator of which is the number of Common Shares outstanding immediately before such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately after such event shall have issued with respect to it that number of Rights which each Common Share outstanding immediately prior to such
event had issued with respect to it. The adjustments provided for in this Section 11(n) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. 

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Common Shares or the Preferred Shares a copy of such certificate and (c) if a Distribution Date has occurred, mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof. 

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In the event, directly or indirectly, at
any time after a Person has become an Acquiring Person, (a) the Company shall consolidate with, or merge with and into, any other Person, (b) any Person shall consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the Common Shares shall be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or
any other property or (c) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one or more of its wholly-owned Subsidiaries, then, and in each such case, proper provision shall be made so that 

(i) each holder of a Right (other than Rights which have become void pursuant to Section 11(a)(ii)) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this
Rights Agreement and in lieu of Preferred Shares, such number of 
  

 -16- 

 
Common Shares of such other Person (including the Company as successor thereto or as the surviving corporation) as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable and dividing that product by (B) 50% of the then current per share market price of the Common Shares of such other Person (determined
pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer; 

(ii) the issuer of such Common Shares shall thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant to this Rights Agreement; 

(iii) the term “Company” shall thereafter be deemed to refer to such issuer; and 

(iv) such issuer shall take such steps (including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. 
 The Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so providing. The Company shall not enter into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. 

Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the OTC
Bulletin Board, the Pink Sheets or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the 

 

 -17- 

 
average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. 

(b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares (other than fractions which are integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it;
provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share. For the purposes of this Section 14(b), the current market value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. 

(c) The holder of a Right by the acceptance of the Right expressly waives such holder’s right to receive any fractional Rights or
any fractional shares upon exercise of a Right (except as expressly provided above). 
 Section 15. Rights of
Action. All rights of action in respect of this Rights Agreement, except the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Shares), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Rights Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Rights Agreement. 

Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that: 
 (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares; 
  

 -18- 

 (b) after the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer; and 

(c) the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. 

Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. 

Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Rights Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Rights Agreement, including the costs and expenses of defending against any claim of liability in the premises. 

(b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Rights Agreement in reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or
Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof. 
  

 -19- 

 Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Rights Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto; provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this Rights Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Rights Agreement. 

(b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Rights Agreement.

 Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Rights
Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: 

(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. 

(b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Rights Agreement in reliance upon such certificate. 

 

 -20- 

 (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own negligence, bad faith or willful misconduct. 
 (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by
the Company only. 
 (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Rights
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Rights Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice that such change or adjustment is required); nor shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares to be issued pursuant to this Rights Agreement or any Right Certificate or as to whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and
nonassessable. 
 (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Rights Agreement.

 (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. 

(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Rights Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. 

(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect 

 

 -21- 

 
or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. 
 Section 21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Rights Agreement upon 30-days’ notice in writing mailed to the Company and to each transfer agent of the Common Shares or Preferred Shares by registered or certified mail, and, if
such resignation occurs after the Distribution Date, to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30-days’ notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares or Preferred Shares by registered or certified mail, and, if such removal occurs after the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who or which shall, with such notice, submit such
holder’s Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of New York (or of any other state of the United States so long as such corporation is authorized to
do business as a banking institution in the State of New York), in good standing, having an office in the State of New York, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 

Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change in the Purchase Price and the number
or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Rights Agreement. In addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and 
  

 -22- 

 
prior to the earlier of the Redemption Date and the Expiration Date, the Company (a) shall with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement in existence prior to the Distribution Date, or upon the exercise, conversion or exchange of any securities, notes or debentures (pursuant to the terms thereof) issued by the Company and in existence prior to the
Distribution Date, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) the Company shall not be obligated to issue any such Right Certificates if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued or would create a significant risk of such options or employee plans or arrangements failing to qualify for otherwise available special tax
treatment, and (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 

Section 23. Redemption. (a) The Board of Directors of the Company may, at its option, at any time prior to such time as
any Person becomes an Acquiring Person, redeem all but not less than all the then outstanding Rights at a redemption price of $.001 per Right, appropriately adjusted to reflect any stock split, stock combination, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). The redemption of the Rights by the Board of Directors of the Company may be made effective at such time,
on such basis and with such conditions as the Board of Directors of the Company, in its sole discretion, may establish. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based on the current market price at the time of
redemption) or any other form of consideration deemed appropriate by the Board of Directors. 
 (b) Immediately upon the action
of the Board of Directors of the Company ordering the redemption of the Rights pursuant to paragraph (a) of this Section 23, and without any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors of the Company ordering the redemption of the Rights, the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection with the purchase of Common Shares
prior to the Distribution Date. 
 Section 24. Exchange. (a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all or part of the 
  

 -23- 

 
then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any adjustment in the number of Rights pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity or trustee holding Common Shares for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Company or of any Subsidiary of the Company),
together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Shares then outstanding. 

(b) Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to paragraph
(a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of Common Shares equal
to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held
by each holder of Rights. 
 (c) In the event that there shall not be sufficient Common Shares issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exchange of the
Rights. In the event the Company shall, after good faith effort, be unable to take all such action as may be necessary to authorize such additional Common Shares, the Company shall substitute, for each Common Share that would otherwise be issuable
upon exchange of a Right, a number of Preferred Shares or fraction thereof (or a security with substantially similar rights, privileges, preferences, voting power and economic rights) such that the current per share market price of one Preferred
Share (or other such security) multiplied by such number or fraction is equal to the current per share market price of one Common Share as of the date of issuance of such Preferred Shares or fraction thereof (or other such security). 

(d) The Company shall not be required to issue fractions of Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the 
  

 -24- 

 
purposes of this paragraph (d), the current market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. 

Section 25. Notice of Certain Events. (a) In case the Company, at any time after the Distribution Date, shall propose
(i) to pay any dividend payable in stock of any class to the holders of its Preferred Shares or to make any other distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than
by payment of dividends in Common Shares), then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, whichever shall be the earlier. 
 (b) In case the event set forth in
Section 11(a)(ii) hereof shall occur, then the Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof. 

Section 26. Notices. Notices or demands authorized by this Rights Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: 

Xerium Technologies, Inc. 

8537 Six Forks Road, Suite 300 

Raleigh, North Carolina 27615 

Attention: Chief Financial Officer 
  

 -25- 

 Subject to the provisions of Section 21 hereof, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows: 
 American Stock Transfer & Trust Company, LLC 

59 Maiden Lane 

New York, NY 10038 

Attention: Reorganization Department 

Notices or demands authorized by this Rights Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company or the registry books of the holders of the Rights maintained by
the Rights Agent after the Distribution Date as herein provided. Any notice or demand given prior to the Distribution Date by the Company or the Rights Agent to the holders of the Rights shall also be given to any registered pledgee of any
uncertificated Common Share by first-class mail, postage prepaid, addressed to such registered pledgee at the address of such registered pledgee as shown on the registry books of the Company. 

Section 27. Supplements and Amendments. Other than with respect to the definition of “Exempt Person” and the 20%
Beneficial Ownership threshold applicable to Exempt Persons, the Board of Directors of the Company may from time to time supplement or amend this Rights Agreement without the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with respect to the Rights which the Board of Directors of the Company may
deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent, provided, however, after any Person becomes an Acquiring Person, this Rights Agreement shall not be
amended in any manner which would adversely affect the interests of the holders of Rights (other than an Acquiring Person or Affiliate or Associate thereof). Without limiting the foregoing, the Company may, except (for the avoidance of doubt) with
respect to any Exempt Person and the 20% Beneficial Ownership threshold applicable to Exempt Persons, at any time prior to such time as any Person becomes an Acquiring Person amend this Agreement to lower the thresholds set forth in
Section 1(a) to not less than the greater of (i) the sum of 0.001% and the largest percentage of the outstanding Common Shares then known by the Company to be beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Shares for or pursuant to the terms of any such plan) and (ii) 10%. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment. 

Section 28. Successors. All the covenants and provisions of this Rights Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 
  

 -26- 

 Section 29. Benefits of this Rights Agreement. Nothing in this Rights Agreement
shall be construed to give to any Person, other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this
Rights Agreement; but this Rights Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares). 

Section 30. Severability. If any term, provision, covenant or restriction of this Rights Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Rights Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. 
 Section 31. Governing Law. This Rights Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely
within such State. 
 Section 32. Counterparts. This Rights Agreement may be executed in one or more counterparts
(including by means of facsimile or other electronic transmission), each of which shall be deemed an original but all of which together will constitute one and the same instrument. The exchange of copies of this Rights Agreement and of signature
pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether otherwise transmitted via electronic transmission), by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by a combination of such means, shall constitute effective execution and delivery of this Rights Agreement
as to the parties and may be used in lieu of an original Rights Agreement for all purposes. Signatures of the parties transmitted by facsimile or other electronic transmission shall be deemed to be original signatures for all purposes. 

Section 33. Descriptive Headings. Descriptive headings of the several Sections of this Rights Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 
  

 -27- 

 IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be duly executed
and attested, all as of the day and year first above written. 
  

			
	XERIUM TECHNOLOGIES, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
		
	By:	 	  

		 	Name:
		 	Title:

 Exhibit A 

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK 

OF 

XERIUM TECHNOLOGIES, INC. 

Section 1. Designation and Amount. There is hereby created a series of preferred stock of Xerium Technologies, Inc., a
corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the “Corporation”), par value $.001 per share, designated as the “Series A Junior Participating Preferred
Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 20,000; provided, however, that, if more than a total of 20,000 shares of Series A Preferred
Stock shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to the Rights Agreement, dated as of May 25, 2010, between the Corporation and American Stock Transfer & Trust Company, LLC, as Rights
Agent, the Board of Directors of the Corporation (the “Board of Directors”), pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, shall direct by resolution or resolutions that a certificate be
properly executed, acknowledged, filed and recorded, in accordance with the provisions of Section 103 thereof, providing for the total number of shares of Series A Preferred Stock authorized to be issued to be increased (to the extent that the
Certificate of Incorporation then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights. 

Section 2. Dividends and Distributions. 

(A) Subject to the rights of the holders of any shares of any series of preferred stock of the Corporation (the “Preferred
Stock”) (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $.001 per share
(the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock (the “Issue Date”), in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time after the Issue Date declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such 
  

 Exh. A-1 

 
case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event. 
 (B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided
in paragraph (A) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date. 
 (C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed for the payment thereof. 
 Section 3. Voting
Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: 
 (A) Subject to the
provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at
any time after the Issue Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event. 
  

 Exh. A-2 

 (B) Except as otherwise provided herein, in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation. 
 (C) Except as set forth herein, or as
otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action. 
 Section 4. Certain Restrictions. 

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: 

(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; 
 (ii) declare or pay
dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; 

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or 

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of
stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective
series or classes. 
 (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire
for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. 

 

 Exh. A-3 

 Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may
be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock or as otherwise required by law. 
 Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after the Issue Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 

Neither the merger or consolidation of the Corporation into or with another entity nor the merger or consolidation of any other entity
into or with the Corporation (nor the sale of all or substantially all of the assets of the Corporation) shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6. 

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into
which or for which each share of 
  

 Exh. A-4 

 
Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Issue Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 

Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable from any holder. 

Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the Corporation, junior to all other series of Preferred Stock and senior to the Common Stock. 

Section 10. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single class. 
 Section 11. Fractional Shares. The Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of
Series A Preferred Stock. 
  

 Exh. A-5 

 Exhibit B 

Form of Right Certificate 

Certificate No. R- 

                        
     Rights 
 NOT EXERCISABLE AFTER MAY 25, 2013 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
 Rights Certificate 

 XERIUM TECHNOLOGIES, INC. 

This certifies that
                        , or registered assigns, is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of May 25, 2010 (the “Rights Agreement”), between Xerium Technologies, Inc., a Delaware corporation (the
“Company”), and American Stock Transfer & Trust Company, LLC (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 p.m., New York time, on May 25, 2013 at the principal office of the Rights Agent, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share of Series A Junior Participating
Preferred Stock of the Company, par value $.001 per share (the “Preferred Shares”), at a purchase price of $60.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase Price as of May 25, 2010, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. 

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent. 

This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like 

 

 Exh. B-1 

 
aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. 

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Right Certificate (i) may be redeemed by the Company
at a redemption price of $.001 per Right or (ii) may be exchanged, in whole or in part, for Preferred Shares or shares of the Company’s Common Stock, par value $.001 per share. 

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in, lieu thereof, a cash payment will be made, as provided in the Rights Agreement. 

No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement. 
 This Right Certificate shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent. 
  

 Exh. B-2 

 WITNESS the facsimile signature of the proper officers of the Company and its corporate
seal. 
 Dated: as of . 
  

			
	XERIUM TECHNOLOGIES, INC.
		
	By:	 	  

		 	Name:
		 	Title:

  

			
	COUNTERSIGNED:
		
	By:	 	  

		 	Name:
		 	Title:

  

 Exh. B-3 

 [Form of Reverse Side of Right Certificate] 

FORM OF ASSIGNMENT 

(To be executed by the registered holder 

if such holder desires to transfer the Right Certificate.) 

FOR VALUE RECEIVED 

                         
                        hereby sells, assigns and transfers unto 

 
  

	
	(Please print name and address of transferee)

 this Right
Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

  

			
	Dated:	 	
 

			
		
	Signature	 	
 

			
		
	Signature Guaranteed:	 	  

Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act
of 1934, as amended. 
 Certificate 

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement). After due inquiry and to the best knowledge of the undersigned, the Rights evidenced by this Right Certificate were not acquired or beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof. 
  

			
	Dated:	 	  

			
		
	Signature	 	  

The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever. 
  

 Exh. B-4 

 FORM OF ELECTION TO PURCHASE 

(To be executed if holder desires to exercise Rights represented by the Right Certificate.) 

To: 
 The undersigned hereby
irrevocably elects to exercise Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares be issued in the name of: 

 

	
	  

	 Please insert social security or other identifying number:

	  

	(Please print name and address)

 If such number of Rights
shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to: 

 

	
	  

	Please insert social security or other identifying number:

  

 
 (Please print name and address) 

Dated: 
  

			
	Dated:	 	  

			
		
	Signature	 	  

			
		
	Signature Guaranteed:	 	  

Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act
of 1934, as amended. 
 Certificate 

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement). After due inquiry and to the best knowledge of the undersigned, the Rights evidenced by this Right Certificate were not acquired or beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof. 
  

			
	 Dated:
	 	  

			
		
	Signature	 	  

  

 Exh. B-5 

 The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. 

In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored. 
  

 Exh. B-6 

 Exhibit C 

SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES 

On May 25, 2010, pursuant to that certain joint prepackaged plan of reorganization confirmed by the United States Bankruptcy Court
for the District of Delaware on May 12, 2010, Xerium Technologies, Inc. (the “Company”) adopted a Rights Agreement (the “Rights Agreement”) with American Stock Transfer & Trust Company, LLC, as Rights
Agent (the “Rights Agent”) and, in connection therewith, declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.001 per share (the
“Common Shares”), of the Company. The dividend is payable on May 25, 2010 to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock of the Company, par value $0.001 per share (the “Preferred Shares”), at a price of $60.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in the Rights Agreement. 
 Distribution Date; Exercisability

 Initially, the Rights will be attached to all Common Shares (whether in book-entry, certificated or uncertificated form)
issued and outstanding and the Rights will be owned by the registered holder of the Common Shares, and no separate Rights certificates will be issued. Separate certificates evidencing the Rights (“Right Certificates”) will be mailed
to holders of record of all Common Shares as of the close of business on the earlier to occur of (i) a public announcement that an Acquiring Person (as discussed below) has acquired beneficial ownership of 15% or more of the outstanding
Common Shares or (ii) such date as may be determined by action of the Board of Directors of the Company following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 15% or more of the outstanding Common Shares (the earlier of such dates being the “Distribution Date”). 

The Rights Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), (i) the Rights
will be transferred with and only with the Common Shares, (ii) certificates or book-entry statements with respect to new Common Share certificates issued after the Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common Shares outstanding as of the Record Date will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. 
 The Rights are not exercisable until the Distribution Date. The Rights will expire on
May 25, 2013 (the “Expiration Date”), unless the Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. 

 

 Exh. C-1 

 Acquiring Person 

The Rights Agreement defines the term “Acquiring Person” generally to mean any person who, together with all affiliates
and associates of such person, is the beneficial owner of 15% or more of the Common Shares then outstanding. However, that definition does not generally include (i) the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity or trustee holding Common Shares for or pursuant to the terms of any such plan, (ii) any person who or which becomes the beneficial owner of 15% or more of the Common Shares then
outstanding as the result of a reduction in the outstanding Common Shares resulting from acquisition of Common Shares by the Company approved by the Board of Directors, (iv) any person who or which the Board of Directors of the Company
determines, in good faith, became an Acquiring Person inadvertently, if such person divests as promptly as practicable a sufficient number of Common Shares so that such person would no longer be an Acquiring Person, (v) any person who or which
the Board of Directors of the Company determines, prior to the time such person would otherwise be an Acquiring Person, should be exempted from the definition of Acquiring Person, provided that the Board of Directors may make such exemption subject
to such conditions, if any, which the Board may determine or (vi) AS Investors, LLC, Carl Marks Strategic Investments, L.P., Carl Marks Strategic Opportunities Fund, L.P., Cerberus Series Four Holdings, LLC and Saberasu Japan Investments II
B.V. (each, an “Exempt Person”) or any affiliate or associate of an Exempt Person. However, any Exempt Person who becomes the beneficial owner of 20% or more of the Common Shares then outstanding shall become an Acquiring Person.

 Flip-In 
 If
a person or group becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise, Common Shares (or, in certain circumstances, Preferred Shares or other similar securities of the Company) having a value
equal to two times the exercise price of the Right. Notwithstanding any of the foregoing, following the existence of an Acquiring Person, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void. 
 Flip-Over 

In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets
or earning power are sold after a person or group has become an Acquiring Person, proper provision will be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will be void), will thereafter have
the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise
price of the Right. 
 Exchange 

At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the 
  

 Exh. C-2 

 
Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which will have become void), in whole or in part, at an exchange ratio of one Common
Share, or one one-thousandth of a Preferred Share (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment). 

Redemption 
 At any time
prior to the existence of an Acquiring Person, the Board of Directors of the Company may redeem the Rights, in whole but not in part, at a price of $0.001 per Right (the “Redemption Price”). The redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of Directors, in its sole discretion, may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price. 
 Amendment 

The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, except
that from and after the existence of an Acquiring Person no such amendment may adversely affect the interests of the holders of the Rights (other than the Acquiring Person). 

Adjustment 
 The number
of outstanding Rights and the number of one one-thousandths of a Preferred Share issuable upon exercise of each Right are subject to adjustment under certain circumstances. 

Preferred Stock 
 Because
of the nature of the Preferred Shares’ dividend, liquidation and voting rights, the value of the one one-thousandth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one Common Share.

 Rights of Holders 

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. 
 Further Information 

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference. 
  

 Exh. C-3

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