Document:

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                                                                     EXHIBIT 4.2

                                  $180,000,000

                            OMNIBUS CREDIT AGREEMENT

                          DATED AS OF FEBRUARY 10, 2003

                                      AMONG

                             J. RAY MCDERMOTT, S.A.

                         J. RAY MCDERMOTT HOLDINGS, INC.

                             J. RAY MCDERMOTT, INC.

                             BWX TECHNOLOGIES, INC.

                                  AS BORROWERS

                          MCDERMOTT INTERNATIONAL, INC.

                               AS PARENT GUARANTOR

                                       AND

           THE INITIAL LENDERS AND INITIAL ISSUING BANKS NAMED HEREIN

                  AS INITIAL LENDERS AND INITIAL ISSUING BANKS

                                       AND

                               CITICORP USA, INC.

                  AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT

                                       AND

                            SALOMON SMITH BARNEY INC.

                        AS LEAD ARRANGER AND BOOK RUNNER

                                       AND

                             THE BANK OF NOVA SCOTIA

                             AS DOCUMENTATION AGENT

                                       AND

                         CREDIT LYONNAIS NEW YORK BRANCH

                              AS SYNDICATION AGENT
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                                TABLE OF CONTENTS

SECTION                                                                     PAGE

                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

<S>                                                                         <C>
SECTION 1.01. Certain Defined Terms........................................    2
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions...   25
SECTION 1.03. Accounting Terms.............................................   25

     ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

SECTION 2.01. The Advances and the Letters of Credit.......................   26
SECTION 2.02. Making the Advances..........................................   27
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
              Credit.......................................................   28
SECTION 2.04. Repayment of Advances........................................   30
SECTION 2.05. Termination or Reduction of the Commitments..................   31
SECTION 2.06. Prepayments; Cash Collateralization..........................   32
SECTION 2.07. Interest.....................................................   33
SECTION 2.08. Fees.........................................................   33
SECTION 2.09. Conversion of Advances.......................................   34
SECTION 2.10. Increased Costs, Etc.........................................   35
SECTION 2.11. Payments and Computations....................................   36
SECTION 2.12. Taxes........................................................   38
SECTION 2.13. Sharing of Payments, Etc.....................................   41
SECTION 2.14. Use of Proceeds..............................................   41
SECTION 2.15. Defaulting Lenders...........................................   42
SECTION 2.16. Evidence of Debt.............................................   44
SECTION 2.17. Existing Letters of Credit.  ................................   45

      ARTICLE III CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

SECTION 3.01. Conditions Precedent to Initial Extension of Credit..........   45
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and
              Renewal......................................................   48
SECTION 3.03. Determinations Under Section 3.01............................   48

                    ARTICLE IV REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower...............   49

                     ARTICLE V COVENANTS OF THE LOAN PARTIES

SECTION 5.01. Affirmative Covenants........................................   56
SECTION 5.02. Negative Covenants...........................................   62
SECTION 5.03. Reporting Requirements.......................................   73
SECTION 5.04. Financial Covenants..........................................   78
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                                       ii

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                          ARTICLE VI EVENTS OF DEFAULT

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SECTION 6.01. Events of Default............................................   79
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.....   83

                             ARTICLE VII THE AGENTS

SECTION 7.01. Authorization and Action.....................................   83
SECTION 7.02. Agents' Reliance, Etc........................................   83
SECTION 7.03. CUSA and Affiliates..........................................   84
SECTION 7.04. Lender Party Credit Decision.................................   84
SECTION 7.05. Indemnification..............................................   84
SECTION 7.06. Successor Agents.............................................   86

                          ARTICLE VIII PARENT GUARANTY

SECTION 8.01. Guaranty.....................................................   86
SECTION 8.02. Guaranty Absolute............................................   87
SECTION 8.03. Waiver.......................................................   88
SECTION 8.04. Payments Free and Clear of Taxes, Etc........................   89
SECTION 8.05. Continuing Guaranty; Assignments.............................   90
SECTION 8.06. Subrogation..................................................   90
SECTION 8.07. Subordination................................................   91

                            ARTICLE IX MISCELLANEOUS

SECTION 9.01. Amendments, Etc..............................................   92
SECTION 9.02. Notices, Etc.................................................   93
SECTION 9.03. No Waiver; Remedies..........................................   93
SECTION 9.04. Costs and Expenses...........................................   93
SECTION 9.05. Right of Set-off.............................................   95
SECTION 9.06. Binding Effect...............................................   95
SECTION 9.07. Assignments and Participations...............................   95
SECTION 9.08. Execution in Counterparts....................................   99
SECTION 9.09. No Liability of the Issuing Banks............................   99
SECTION 9.10. Confidentiality..............................................  100
SECTION 9.11. Release of Collateral........................................  101
SECTION 9.12. Nature of Obligations........................................  101
SECTION 9.13. Jurisdiction, Etc............................................  102
SECTION 9.14. Governing Law................................................  102
SECTION 9.15. Waiver of Jury Trial.........................................  102
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                                      iii

SCHEDULES

Schedule I       - Commitments and Applicable Lending Offices
Schedule II      - Excluded Assets
Schedule III     - Middle Eastern Subsidiaries
Schedule IV      - Bilateral Obligations
Schedule V       - Remaining L/Cs
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(f) - Litigation Disclosure
Schedule 4.01(g) - Financial Disclosure
Schedule 4.01(n) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(o) - Environmental Disclosure
Schedule 4.01(p) - Open Years
Schedule 4.01(q) - Surviving Debt
Schedule 4.01(r) - Liens
Schedule 4.01(s) - Owned Real Property
Schedule 4.01(t) - Leased Real Property
Schedule 4.01(u) - Investments
Schedule 4.01(v) - Intellectual Property
Schedule 4.01(w) - Material Contracts
Schedule 4.01(x) - Vessels

EXHIBITS

Exhibit A   - Form of Note
Exhibit B   - Form of Notice of Borrowing
Exhibit C   - Form of Assignment and Acceptance
Exhibit D   - Form of Security Agreement
Exhibit E   - Form of Subsidiary Guaranty
Exhibit F   - Form of Solvency Certificate
Exhibit G-1 - Form of Opinion of Outside Counsel to MII
Exhibit G-2 - Form of Opinion of General Counsel of MII
Exhibit H   - Form of Opinion of Panamanian Counsel to MII
Exhibit I   - Four-Week Forecast
Exhibit J   - Backlog Report
<PAGE>
                                CREDIT AGREEMENT

     CREDIT AGREEMENT dated as of February 10, 2003 among McDERMOTT
INTERNATIONAL, INC., a Panamanian corporation ("MII"), as parent guarantor (the
"PARENT GUARANTOR"), J. RAY McDERMOTT, S.A., a Panamanian corporation ("JRMSA"),
J. RAY McDERMOTT HOLDINGS, INC. ("JRMHI"), a Delaware corporation, J. RAY
McDERMOTT, INC., a Delaware corporation ("JRMI"), and BWX TECHNOLOGIES, INC., a
Delaware corporation ("BWXT", and together with JRMSA, JRMHI and JRMI, the
"BORROWERS" and each, a "BORROWER"), the banks, financial institutions and other
institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "INITIAL LENDERS"), the banks listed on the signature pages hereof
as the Initial Issuing Banks (the "INITIAL ISSUING BANKS" and, together with the
Initial Lenders, the "INITIAL LENDER PARTIES"), CITICORP USA, INC. ("CUSA"), as
collateral agent (together with any successor collateral agent appointed
pursuant to Article VII, the "COLLATERAL AGENT"), CUSA, as administrative agent
(together with any successor administrative agent appointed pursuant to Article
VII, the "ADMINISTRATIVE AGENT" and, together with the Collateral Agent, the
"AGENTS") for the Lender Parties (as hereinafter defined), SALOMON SMITH BARNEY
INC. ("SSB"), as lead arranger and book runner, THE BANK OF NOVA SCOTIA, as
documentation agent, and CREDIT LYONNAIS NEW YORK BRANCH, as syndication agent.

PRELIMINARY STATEMENTS:

     (1) Each of JRMSA, JRMHI and JRMI is a borrower under that certain Amended
and Restated Credit Agreement dated as of April 24, 2000 (as amended, restated,
supplemented or otherwise modified, the "J. RAY CREDIT AGREEMENT") with the
Lenders party thereto, Citibank, N.A. ("CITIBANK"), as administrative agent,
SSB, as arranger and book manager, Credit Lyonnais New York Branch, as
syndication agent and The Bank of Nova Scotia, as documentation agent.

     (2) Each of MII and BWXT is a borrower under that certain Amended and
Restated Credit Agreement dated as of April 24, 2000 (as amended, restated,
supplemented or otherwise modified, the "MCDERMOTT CREDIT AGREEMENT"; and
together with the J. Ray Credit Agreement, the "EXISTING CREDIT FACILITIES")
with the Lenders party thereto, Citibank, as administrative agent, SSB, as
arranger and book manager, Credit Lyonnais New York Branch, as syndication
agent, The Bank of Nova Scotia, as documentation agent and Wells Fargo Bank
(Texas), National Association, as co-underwriter.

     (3) The Borrowers have requested that the Lender Parties lend to the
Borrowers and issue Letters of Credit for the account of the Borrowers to (a)
refinance in full outstanding indebtedness under the Existing Credit Facilities
(it being understood that to the extent that letters of credit issued for the
account of MII (or any of its subsidiaries) under the McDermott Credit Agreement
are not re-issued for the account of one or more Borrowers under this Agreement,
such letters of credit shall be fully cash-collateralized) and (b) provide for
the working capital needs and general corporate purposes of the Borrowers and
their Subsidiaries, affiliates and joint ventures. The Lender Parties have
indicated their willingness to agree to lend
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                                        2

such amounts and to issue such Letters of Credit on the terms and conditions set
forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "ADDITIONAL AMOUNT" has the meaning specified in Section 2.12(a).

          "ADMINISTRATIVE AGENT" has the meaning specified in the recital of
     parties to this Agreement.

          "ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
     Administrative Agent maintained by the Administrative Agent with Citibank
     at its office in New York, New York, at such address as the Administrative
     Agent shall specify in writing to the Lender Parties.

          "ADVANCE" means a Working Capital Advance or a Letter of Credit
     Advance.

          "AFFILIATE" means, as to any Person, any other Person that, directly
     or indirectly, controls, is controlled by or is under common control with
     such Person or is a director or officer of such Person; provided, that,
     when used in reference to any of the Loan Parties or any of the
     Subsidiaries of any of the Loan Parties, the term "Affiliate" shall exclude
     B&W and each of its Subsidiaries. For purposes of this definition, the term
     "control" (including the terms "controlling", "controlled by" and "under
     common control with") of a Person means the possession, direct or indirect,
     of the power to vote 30% or more of the Voting Interests of such Person or
     to direct or cause the direction of the management and policies of such
     Person, whether through the ownership of Voting Interests, by contract or
     otherwise.

          "AGENTS" has the meaning specified in the recital of parties to this
     Agreement.

          "AGREEMENT VALUE" means, for each Hedge Agreement, on any date of
     determination, an amount equal to: (a) in the case of a Hedge Agreement
     documented pursuant to the Master Agreement (Multicurrency-Cross Border)
     published by the International Swap and Derivatives Association, Inc. (the
     "MASTER AGREEMENT"), the amount, if any, that would be payable by any
     Borrower or any of its Subsidiaries to its counterparty to such Hedge
     Agreement, as if (i) such Hedge Agreement was being terminated early on
     such date of determination and (ii) such Borrower or Subsidiary was the
     sole "Affected Party"; or (b) in the case of a Hedge Agreement traded on an
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                                        3

     exchange, the mark-to-market value of such Hedge Agreement, which will be
     the unrealized loss on such Hedge Agreement to any Borrower or Subsidiary
     of a Borrower party to such Hedge Agreement based on the settlement price
     of such Hedge Agreement on such date of determination, or (c) in all other
     cases, the mark-to-market value of such Hedge Agreement, which will be the
     unrealized loss on such Hedge Agreement to any Borrower or Subsidiary of a
     Borrower party to such Hedge Agreement as the amount, if any, by which (i)
     the present value of the future cash flows to be paid by such Borrower or
     Subsidiary exceeds (ii) the present value of the future cash flows to be
     received by such Borrower or Subsidiary pursuant to such Hedge Agreement;
     capitalized terms used and not otherwise defined in this definition shall
     have the respective meanings set forth in the above described Master
     Agreement.

          "APPLICABLE BORROWER(S)" means the Borrower or Borrowers, as
     applicable, under any Applicable Working Capital Sublimit.

          "APPLICABLE L/C SUBLIMIT" means (a) in the case of the JRM Borrowers,
     collectively, $100,000,000, as such amount may be reduced from time to time
     pursuant to Section 5.02(a)(x), and (b) in the case of BWXT, $60,000,000.

          "APPLICABLE LENDING OFFICE" means, with respect to each Lender Party,
     such Lender Party's Domestic Lending Office in the case of a Base Rate
     Advance and such Lender Party's Eurodollar Lending Office in the case of a
     Eurodollar Rate Advance.

          "APPLICABLE MARGIN" means, (i) in the case of Base Rate Advances, (A)
     4.0% per annum, in the case of the JRM Borrowers and (B) 3.0% per annum, in
     the case of BWXT and (ii) in the case of Eurodollar Rate Advances, (A) 5.0%
     per annum, in the case of the JRM Borrowers and (B) 4.0% per annum, in the
     case of BWXT.

          "APPLICABLE SUBLIMIT" means (a) as to the JRM Borrowers, the sum of
     the Applicable Working Capital Sublimit and the Applicable L/C Sublimit of
     the JRM Borrowers and (b) in the case of BWXT, the sum of the Applicable
     Working Capital Sublimit and the Applicable L/C Sublimit of BWXT.

          "APPLICABLE WORKING CAPITAL SUBLIMIT" means (a) in the case of the JRM
     Borrowers, collectively, $10,000,000 and (b) in the case of BWXT,
     $50,000,000.

          "ASBESTOS PI TRUST" has the meaning set forth in the Settlement
     Agreement.

          "ASBESTOS SETTLEMENT NOTE" means the note to be issued by MII (or by
     MI and guaranteed solely by MII) in favor of the Asbestos PI Trust on the
     terms described in the Settlement Agreement.

          "ASSET TRANSFER CASE" means the adversary action captioned Asbestos
     Claimants' Committee and Eric D. Green, Esq., Legal Representative for
     Future Asbestos Claimants on behalf of the Bankruptcy Estate of the Babcock
     & Wilcox Company v. Babcock & Wilcox Investment Company, et al., Adversary
     Proceeding No. 01-1155, filed in the United States Bankruptcy Court for the
     Eastern District of Louisiana, and the related
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                                        4

     appeal currently pending before the United States District Court for the
     Eastern District of Louisiana.

          "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
     into by a Lender Party and an Eligible Assignee, and accepted by the
     Administrative Agent, in accordance with Section 9.07 and in substantially
     the form of Exhibit C hereto.

          "AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the
     maximum amount available to be drawn under such Letter of Credit at such
     time (assuming compliance at such time with all conditions to drawing).

          "AVAILABLE L/C SUBLIMIT" means (a) in the case of the JRM Borrowers,
     collectively, the Applicable L/C Sublimit of the JRM Borrowers minus the
     sum of the aggregate Available Amount of all Letters of Credit issued for
     the account of the JRM Borrowers and outstanding at such time plus the
     aggregate principal amount of all outstanding Letter of Credit Advances
     made for the account of the JRM Borrowers and (b) in the case of BWXT, the
     Applicable L/C Sublimit of BWXT minus the sum of the aggregate Available
     Amount of all outstanding Letters of Credit issued for the account of BWXT
     and outstanding at such time plus the aggregate principal amount of all
     outstanding Letter of Credit Advances made for the account of BWXT.

          "BASE RATE" means a fluctuating interest rate per annum in effect from
     time to time, which rate per annum shall at all times be equal to the
     higher of:

               (a) the rate of interest announced publicly by Citibank in New
          York, New York, from time to time, as Citibank's base rate; and

               (b) 1/2 of 1% per annum above the Federal Funds Rate.

          "BASE RATE ADVANCE" means an Advance that bears interest as provided
     in Section 2.07(a)(i).

          "BILATERAL OBLIGATIONS" means (a) the Obligations of the Loan Parties
     and their respective Subsidiaries under foreign exchange spot contracts
     entered into with Lender Parties or their Affiliates and (b) the
     Obligations of the Loan Parties and their respective Subsidiaries under the
     letters of credit and other arrangements referred to on Schedule IV hereto.

          "BORROWER" has the meaning specified in the recital of parties to this
     Agreement.

          "BORROWER'S ACCOUNT" means, as to each Borrower, the account of such
     Borrower maintained by such Borrower with Citibank at its office at 399
     Park Avenue, New York, New York 10043, having such account number as such
     Borrower shall have notified the Administrative Agent in writing, or such
     other account as the Borrower shall specify in writing to the
     Administrative Agent.

          "BORROWING" means a borrowing consisting of simultaneous Working
     Capital Advances of the same Type made by the Lenders.
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                                        5

          "BUSINESS DAY" means a day of the year on which banks are not required
     or authorized by law to close in New York City and, if the applicable
     Business Day relates to any Eurodollar Rate Advances, on which dealings are
     carried on in the London interbank market.

          "B&W" means The Babcock & Wilcox Company, a Delaware corporation.

          "BWICO" means Babcock & Wilcox Investment Company, a Delaware
     corporation.

          "BWXT" has the meaning specified in the recital of parties to this
     Agreement.

          "CAPITAL EXPENDITURES" means, for any Person for any period, the sum
     of, without duplication, all expenditures made, directly or indirectly, by
     such Person or any of its Subsidiaries during such period for equipment,
     fixed assets, real property or improvements, or for replacements or
     substitutions therefor or additions thereto, that have been or should be,
     in accordance with GAAP, reflected as additions to property, plant or
     equipment on a Consolidated balance sheet of such Person or have a useful
     life of more than one year; PROVIDED, HOWEVER, that the amount of Capital
     Expenditures for such period attributable to Capitalized Leases shall be
     limited to the amount actually paid on such Capitalized Leases during such
     period. For purposes of this definition, the purchase price of property or
     equipment that is purchased simultaneously with the trade-in of existing
     property or equipment or with insurance proceeds shall be included in
     Capital Expenditures only to the extent of the gross amount of such
     purchase price less the credit granted by the seller of such equipment for
     the equipment being traded in at such time or the amount of such proceeds,
     as the case may be.

          CAPITALIZED LEASES" means all leases that have been or should be, in
     accordance with GAAP, recorded as capitalized leases.

          "CASH EQUIVALENTS" means (a) direct obligations of, or obligations the
     principal of and interest on which are unconditionally guaranteed by, the
     United States of America (or any agency thereof) and repurchase agreements
     in respect of any such obligations in each case maturing within 360 days
     from the date of acquisition thereof; (b) investments in commercial paper
     maturing within 270 days from the date of acquisition thereof and having,
     at such date of acquisition, a rating of at least "Prime-1" (or the then
     equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then
     equivalent grade) by Standard & Poor's, a division of The McGraw-Hill
     Companies, Inc.; (c) investments in (i) certificates of deposit, bankers'
     acceptances and time deposits maturing within 180 days from the date of
     acquisition thereof issued or guaranteed by or placed with, and money
     market deposit accounts issued or offered by, any domestic office of (A)
     any commercial bank organized under the laws of the United States of
     America or any State thereof and comparable in credit quality to the
     investments permitted under the preceding clause (b), or (B) any Lender,
     provided that beginning 45 days after the Effective Date (and except in the
     cash of the Mizuho Cash Collateral Account), such certificates of deposit,
     bankers' acceptances, time deposits and money market accounts shall only be
     with commercial banks which have a combined capital and surplus and
     undivided profits
<PAGE>
                                        6

     of not less than $250,000,000 or (ii) Eurocurrency time deposits maturing
     within 180 days from the date of acquisition thereof with any branch or
     office of (A) any commercial bank organized under the laws of a country
     that is a member of the Organization for Economic Cooperation and
     Development, and comparable in credit quality to the investments permitted
     under the preceding clause (b), or (B) any Lender; (d) in the case of any
     Loan Party, any Subsidiary or branch of any Loan Party located in a
     jurisdiction outside the United States of America, or to the extent
     reasonably required in the judgment of the Borrowers in connection with any
     business conducted in any such jurisdiction, investments comparable in
     credit quality and tenor to those referred to above and customarily used by
     corporations for cash management purposes in such jurisdiction; (e) other
     investment instruments approved in writing by the Required Lenders and
     offered by financial institutions which have a combined capital and surplus
     and undivided profits of not less than $250,000,000; and (f) investments in
     money market or similar funds the assets of which consist only of the types
     referred to any of the preceding clauses (a) through (e) or otherwise rated
     AAA by any of Standard & Poor's, a division of The McGraw-Hill Companies,
     Inc., Moody's Investors Service, Inc. or Fitch Ratings.

          "CASH TAXES" means net income taxes paid to any taxation authority by
     MII and its Subsidiaries less those amounts reimbursed to MI by B&W or any
     of its Subsidiaries for taxes of B&W or any its Subsidiaries paid under the
     Tax Allocation Agreement dated as of January 1, 2000 or the tax separation
     agreement contemplated by the Settlement Agreement.

          "CERCLA" means the Comprehensive Environmental Response, Compensation
     and Liability Act of 1980, as amended from time to time.

          "CERCLIS" means the Comprehensive Environmental Response, Compensation
     and Liability Information System maintained by the U.S. Environmental
     Protection Agency.

          "CHANGE OF CONTROL" means the occurrence of any of the following: (a)
     any Person or two or more Persons acting in concert shall have acquired
     beneficial ownership (within the meaning of Rule 13d-3 of the Securities
     and Exchange Commission under the Securities Exchange Act of 1934),
     directly or indirectly, of Voting Interests of MII (or other securities
     convertible into such Voting Interests) representing 30% or more of the
     combined voting power of all Voting Interests of MII; or (b) the board of
     directors of the Borrower shall cease to consist of a majority of
     Continuing Directors of the Borrower ("CONTINUING DIRECTORS" shall mean the
     directors of MII on the Effective Date and each other director, if, in each
     case, such other director's nomination for election or appointment to the
     board of directors of MII is recommended or approved by at least a majority
     of the then Continuing Directors); or (c) any Person or two or more Persons
     acting in concert shall have acquired by contract (to which MII is a
     party), or shall have entered into a contract or arrangement (in each case,
     to which MII is a party) that, upon consummation, will result in its or
     their acquisition of control over Voting Interests of MII (or other
     securities convertible into such Voting Interests) representing 30% or more
     of the combined voting power of all Voting Interests of MII; or (d) MII
     shall cease to own, directly or indirectly, 100% of the Equity Interests in
     each other Borrower.
<PAGE>
                                        7

          "CITIBANK" has the meaning specified in the Preliminary Statements.

          "COLLATERAL" means all "Collateral" referred to in the Collateral
     Documents and all other property that is or, as specifically contemplated
     by this Agreement or any Collateral Document, is intended to be subject to
     any Lien in favor of the Collateral Agent for the benefit of the Secured
     Parties.

          "COLLATERAL ACCOUNT" has the meaning specified in the Security
     Agreement.

          "COLLATERAL AGENT" has the meaning specified in the recital of parties
     to this Agreement.

          "COLLATERAL DOCUMENTS" means the Security Agreement, the Mortgages,
     the Ship Mortgages and any other agreement entered into pursuant to this
     Agreement that creates or purports to create a Lien in favor of the
     Collateral Agent for the benefit of the Secured Parties.

          "COLLATERAL GRANTOR" means any Subsidiary of MII (other than MI and
     its Subsidiaries) that is or becomes party to any Collateral Document.

          "COMMITMENT" means a Working Capital Commitment or a Letter of Credit
     Commitment.

          "CONFIDENTIAL INFORMATION" means information furnished by or on behalf
     of any Loan Party to any Agent or any Lender Party in a writing designated
     as confidential, but does not include any such information that is or
     becomes generally available to the public (other than as a result of a
     disclosure by any Agent or Lender Party or any officer, director, employee,
     consultant, Affiliate, agent or other representative of any Agent or Lender
     Party) or that is or becomes available to such Agent or such Lender Party
     on a nonconfidential basis from a Person (other than the Loan Parties or
     any of their respective Subsidiaries, officers, directors, employees,
     consultants, Affiliates, agents or other representatives) who is not
     prohibited from disclosing such information to such Agent or Party by a
     contractual, legal or fiduciary obligation to any of the Loan Parties or
     any of their respective Subsidiaries, officers, directors, employees,
     consultants, Affiliates, agents or other representatives.

          "CONSOLIDATED" refers to the consolidation of accounts of MII and its
     Subsidiaries in accordance with GAAP.

          "CONTINGENT OBLIGATION" means, with respect to any Person, any
     Obligation or arrangement of such Person to guarantee or having the effect
     of guaranteeing any Debt, Capitalized Leases, dividends or other payment
     Obligations (other than performance guaranties that are required by the
     terms of a contract) ("PRIMARY OBLIGATIONS") of any other Person (the
     "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
     including, without limitation, (a) the direct or indirect guarantee,
     endorsement (other than for collection or deposit in the ordinary course of
     business), co-making, discounting with recourse or sale with recourse by
     such Person of the Obligation of a primary obligor, (b) the Obligation to
     make take-or-pay or similar payments, if required, regardless of
<PAGE>
                                        8

     nonperformance by any other party or parties to an agreement or (c) any
     Obligation of such Person, whether or not contingent, (i) to purchase any
     such primary obligation or any property constituting direct or indirect
     security therefor, (ii) to advance or supply funds (A) for the purchase or
     payment of any such primary obligation or (B) to maintain working capital
     or equity capital of the primary obligor or otherwise to maintain the net
     worth or solvency of the primary obligor, (iii) to purchase property,
     assets, securities or services primarily for the purpose of assuring the
     owner of any such primary obligation of the ability of the primary obligor
     to make payment of such primary obligation or (iv) otherwise to assure or
     hold harmless the holder of such primary obligation against loss in respect
     thereof. The amount of any Contingent Obligation shall be deemed to be an
     amount equal to the stated or determinable amount of the primary obligation
     in respect of which such Contingent Obligation is made (or, if less, the
     maximum amount of such primary obligation for which such Person may be
     liable pursuant to the terms of the instrument evidencing such Contingent
     Obligation) or, if not stated or determinable, the maximum reasonably
     anticipated liability in respect thereof (assuming such Person is required
     to perform thereunder), as determined by such Person in good faith.

          "CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
     Advances of one Type into Advances of the other Type pursuant to Section
     2.09 or 2.10.

          "CUSA" has the meaning specified in the recital of parties to this
     Agreement.

          "DEBT" of any Person means (a) all indebtedness of such Person for
     borrowed money, (b) all Obligations of such Person for the deferred
     purchase price of property or services (excluding trade accounts payable
     not overdue by more than 90 days (unless the same are (1) being contested
     in good faith, (2) subject to a good faith request by such Person for
     supporting documentation from the applicable trade creditor, (3) subject to
     an agreement between such Person and the applicable trade creditor pursuant
     to which such trade creditor has agreed to postpone receipt of payment or
     (4) being considered in any determination of Debt prior to February 28,
     2003), accrued expenses, deferred compensation and expenses under any Plan,
     Welfare Plan or other employee benefit plan incurred in the ordinary course
     of business of such Person), (c) all Obligations of such Person evidenced
     by notes, bonds, debentures or similar instruments, (d) all Obligations of
     such Person created or arising under any conditional sale or other title
     retention agreement with respect to property acquired by such Person (even
     though the rights and remedies of the seller or lender under such agreement
     in the event of default are limited to repossession or sale of such
     property), but excluding Obligations of such Person under operating leases,
     (e) all Obligations of such Person as lessee under Capitalized Leases, (f)
     all Obligations of such Person under acceptance, letter of credit or
     similar facilities, (g) all Obligations of such Person to purchase, redeem,
     retire, defease or otherwise make any return of investment capital in
     respect of any Equity Interests in such Person or any other Person or any
     warrants, rights or options to acquire such capital stock, valued, in the
     case of Redeemable Preferred Interests, at the greater of its voluntary or
     involuntary liquidation preference plus accrued and unpaid dividends, (h)
     all Obligations of such Person in respect of Hedge Agreements, valued at
     the Agreement Value thereof, (i) all Contingent Obligations of such Person
     and (j) all indebtedness and other payment Obligations referred to in
     clauses (a) through (i) above of another Person secured by (or
<PAGE>
                                        9

     for which the holder of such Debt has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including, without
     limitation, accounts and contract rights) owned by such Person, even though
     such Person has not assumed or become liable for the payment of such
     indebtedness or other payment Obligations.

          "DEBT FOR BORROWED MONEY" of any Person means all items that, in
     accordance with GAAP, would be classified as indebtedness on a Consolidated
     balance sheet of such Person and its Subsidiaries.

          "DEFAULT" means any Event of Default or any event that would
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

          "DEFAULTED ADVANCE" means, with respect to any Lender Party at any
     time, the portion of any Advance required to be made by such Lender Party
     to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time
     that has not been made by such Lender Party or by the Administrative Agent
     for the account of such Lender Party pursuant to Section 2.02(d) as of such
     time. In the event that a portion of a Defaulted Advance shall be deemed
     made pursuant to Section 2.15(a), the remaining portion of such Defaulted
     Advance shall be considered a Defaulted Advance originally required to be
     made pursuant to Section 2.01 on the same date as the Defaulted Advance so
     deemed made in part.

          "DEFAULTED AMOUNT" means, with respect to any Lender Party at any
     time, any amount required to be paid by such Lender Party to any Agent or
     any other Lender Party hereunder or under any other Loan Document at or
     prior to such time that has not been so paid as of such time, including,
     without limitation, any amount required to be paid by such Lender Party to
     (a) any Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a
     Letter of Credit Advance made by such Issuing Bank, (b) the Administrative
     Agent pursuant to Section 2.02(d) to reimburse the Administrative Agent for
     the amount of any Advance made by the Administrative Agent for the account
     of such Lender Party, (c) any other Lender Party pursuant to Section 2.13
     to purchase any participation in Advances owing to such other Lender Party
     and (d) any Agent or any Issuing Bank pursuant to Section 7.05 to reimburse
     such Agent or such Issuing Bank for such Lender Party's ratable share of
     any amount required to be paid by the Lender Parties to such Agent or such
     Issuing Bank as provided therein. In the event that a portion of a
     Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the
     remaining portion of such Defaulted Amount shall be considered a Defaulted
     Amount originally required to be paid hereunder or under any other Loan
     Document on the same date as the Defaulted Amount so deemed paid in part.

          "DEFAULTING LENDER" means, at any time, any Lender Party that, at such
     time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take
     any action or be the subject of any action or proceeding of a type
     described in Section 6.01(f).

          "DOMESTIC LENDING OFFICE" means, with respect to any Lender Party, the
     office of such Lender Party specified as its "Domestic Lending Office"
     opposite its name on Schedule I hereto or in the Assignment and Acceptance
     pursuant to which it became a
<PAGE>
                                       10

     Lender Party, as the case may be, or such other office of such Lender Party
     as such Lender Party may from time to time specify in writing to the
     Borrower and the Administrative Agent.

          "EBITDA" means, for any Person for any period, GAAP net income (or
     loss), determined on a Consolidated basis, plus to the extent included in
     determining net income and without duplication, the sum of (a) non-cash
     pension plan losses (less non-cash pension plan gains) and expenses (except
     to the extent such expenses are funded in cash or other property of such
     Person), (b) any aggregate net gain or any aggregate net loss from the
     sale, exchange or other disposition of capital assets of such Person, (c)
     extraordinary items, (d) income attributable to minority interests in such
     Person, net of cash distributed to the holders of such minority interests,
     (e) interest expense, (f) taxes, (g) depreciation, (h) amortization, (i)
     other non-cash charges (including impairment loss on long-lived assets),
     (j) fees and expenses related to the negotiation and documentation of the
     Transaction (including, without limitation, fees in connection with the Fee
     Letter), (k) settlement charges arising out of the Settlement Agreement and
     (l) restructuring charges with respect to operational changes in the
     Western Hemisphere marine business of JRMSA and its Subsidiaries.

          "EFFECTIVE DATE" means the date of the Initial Extension of Credit.

          "ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender;
     and (c) any other Person (other than a natural person) approved by the
     Administrative Agent, each Issuing Bank and, so long as no Event of Default
     has occurred and is continuing (other than in the case of any Person that
     is a competitor of any Borrower), MII (in each case, such approvals not to
     be unreasonably withheld); provided that notwithstanding the foregoing,
     "Eligible Assignee" shall not include MII or any of MII's Affiliates or
     Subsidiaries.

          "ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
     claim, notice of non-compliance or violation, notice of liability or
     potential liability, investigation, proceeding, consent order or consent
     agreement relating in any way to any Environmental Law, any Environmental
     Permit or Hazardous Material or arising from alleged injury or threat to
     health, safety or the environment, including, without limitation, (a) by
     any governmental or regulatory authority for enforcement, cleanup, removal,
     response, remedial or other actions or damages and (b) by any governmental
     or regulatory authority or third party for damages, contribution,
     indemnification, cost recovery, compensation or injunctive relief.

          "ENVIRONMENTAL LAW" means any Federal, state, local or foreign
     statute, law, ordinance, rule, regulation, code, order, writ, judgment,
     injunction, decree or published judicial or agency interpretation, policy
     or guidance relating to pollution or protection of the environment, health,
     safety or natural resources, including, without limitation, those relating
     to the use, handling, transportation, treatment, storage, disposal, release
     or discharge of Hazardous Materials.
<PAGE>
                                       11

          "ENVIRONMENTAL PERMIT" means, with respect to any Person, any permit,
     approval, identification number, license or other authorization required to
     be held by such Person under any Environmental Law applicable to such
     Person.

          "EQUIPMENT" means all Equipment referred to in Section 1(a) of the
     Security Agreement.

          "EQUITY INTERESTS" means, with respect to any Person, shares of
     capital stock of (or other ownership or net profit interests in) such
     Person, warrants, options or other rights for the purchase or other
     acquisition from such Person of shares of capital stock of (or other
     ownership or net profit interests in) such Person, securities convertible
     into or exchangeable for shares of capital stock of (or other ownership or
     net profit interests in) such Person or warrants, rights or options for the
     purchase or other acquisition from such Person of such shares (or such
     other interests), and other ownership or net profit interests in such
     Person (including, without limitation, partnership, member or trust
     interests therein), whether voting or nonvoting, and whether or not such
     shares, warrants, options, rights or other interests are authorized or
     otherwise existing on any date of determination.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     emended from time to time, and the regulations promulgated thereunder.

          "ERISA AFFILIATE" means any Person (other than B&W and its
     Subsidiaries) that for purposes of Title IV of ERISA is a member of the
     controlled group of any Loan Party, or under common control with any
     Borrower, within the meaning of Section 414(b) or (c) or, solely for
     purposes of Section 412 of the Internal Revenue Code, Section 414(m) or (o)
     of the Internal Revenue Code.

          "ERISA EVENT" means (a)(i) the occurrence of a reportable event,
     within the meaning of Section 4043 of ERISA, with respect to any Plan
     unless the 30-day notice requirement with respect to such event has been
     waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA
     apply with respect to a contributing sponsor, as defined in Section
     4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9),
     (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
     to occur with respect to such Plan within the following 30 days; (b) the
     application for a minimum funding waiver with respect to a Plan; (c) the
     provision by the administrator of any Plan of a notice of intent to
     terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
     such notice with respect to a plan amendment referred to in Section 4041(e)
     of ERISA); (d) the cessation of operations at a facility of any Loan Party
     or any ERISA Affiliate in the circumstances described in Section 4062(e) of
     ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a
     Multiple Employer Plan during a plan year for which it was a substantial
     employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
     imposition of a lien under Section 302(f) of ERISA shall have been met with
     respect to any Plan; (g) the adoption of an amendment to a Plan requiring
     the provision of security to such Plan pursuant to Section 307 of ERISA; or
     (h) the institution by the PBGC of proceedings to terminate a Plan pursuant
     to Section 4042 of ERISA.
<PAGE>
                                       12

          "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
     of the Board of Governors of the Federal Reserve System, as in effect from
     time to time.

          "EURODOLLAR LENDING OFFICE" means, with respect to any Lender Party,
     the office of such Lender Party specified as its "Eurodollar Lending
     Office" opposite its name on Schedule I hereto or in the Assignment and
     Acceptance pursuant to which it became a Lender Party (or, if no such
     office is specified, its Domestic Lending Office), or such other office of
     such Lender Party as such Lender Party may from time to time specify in
     writing to the Borrower and the Administrative Agent.

          "EURODOLLAR RATE" means, for any Interest Period for all Eurodollar
     Rate Advances comprising part of the same Borrowing, an interest rate per
     annum equal to the rate per annum obtained by dividing (a) the rate per
     annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
     on Telerate Page 3750 (or any successor page) as the London interbank
     offered rate for deposits in U.S. dollars at 11:00 A.M. (London time) two
     Business Days before the first day of such Interest Period for a period
     equal to such Interest Period (provided that, if for any reason such rate
     is not available, the term "Eurodollar Rate" shall mean, for any Interest
     Period for all Eurodollar Rate Advances comprising part of the same
     Borrowing, the rate per annum (rounded upwards, if necessary, to the
     nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
     interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
     (London time) two Business Days prior to the first day of such Interest
     Period for a term comparable to such Interest Period; provided, however, if
     more than one rate is specified on Reuters Screen LIBO Page, the applicable
     rate shall be the arithmetic mean of all such rates) by (b) a percentage
     equal to 100% minus the Eurodollar Rate Reserve Percentage for such
     Interest Period.

          "EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
     provided in Section 2.07(a)(ii).

          "EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period for all
     Eurodollar Rate Advances comprising part of the same Borrowing means the
     reserve percentage applicable two Business Days before the first day of
     such Interest Period under regulations issued from time to time by the
     Board of Governors of the Federal Reserve System (or any successor) for
     determining the maximum reserve requirement (including, without limitation,
     any emergency, supplemental or other marginal reserve requirement) for a
     member bank of the Federal Reserve System in New York City with respect to
     liabilities or assets consisting of or including Eurocurrency Liabilities
     (or with respect to any other category of liabilities that includes
     deposits by reference to which the interest rate on Eurodollar Rate
     Advances is determined) having a term equal to such Interest Period.

          "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

          "EXCLUDED ASSETS" means the assets of the Loan Parties set forth on
     Schedule II hereto.
<PAGE>
                                       13

          "EXISTING CREDIT FACILITIES" has the meaning specified in the
     Preliminary Statements.

          "EXTRAORDINARY RECEIPT" means any cash received by or paid to or for
     the account of any Person not in the ordinary course of business,
     including, without limitation, tax refunds, pension plan reversions that
     are not received in the ordinary course of business, proceeds of insurance
     (including, without limitation, any key man life insurance but excluding
     proceeds of business interruption insurance to the extent such proceeds
     constitute compensation for lost earnings), condemnation awards (and
     payments in lieu thereof) and indemnity payments; provided, however, that
     an Extraordinary Receipt shall not include cash receipts received from
     proceeds of insurance, condemnation awards (or payments in lieu thereof) or
     indemnity payments to the extent that such proceeds, awards or payments (A)
     in respect of loss or damage to equipment, fixed assets or real property
     are applied (or in respect of which expenditures were previously incurred)
     to replace or repair the equipment, fixed assets or real property in
     respect of which such proceeds were received in accordance with the terms
     of the Loan Documents, so long as such application is made no later than 6
     months after receipt of payment with respect to the occurrence of such
     damage or loss or (B) are received by any Person in respect of any third
     party claim against such Person and applied to pay (or to reimburse such
     Person for its prior payment of) such claim and the costs and expenses of
     such Person with respect thereto.

          "FACILITY" means the Working Capital Facility or the Letter of Credit
     Facility.

          "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
     rate per annum equal for each day during such period to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers, as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York, or, if
     such rate is not so published for any day that is a Business Day, the
     average of the quotations for such day for such transactions received by
     the Administrative Agent from three Federal funds brokers of recognized
     standing selected by it.

          "FEE LETTER" means the fee letter dated February 10, 2003 between MII
     and the Administrative Agent, as amended.

          "FISCAL YEAR" means a fiscal year of MII and its Consolidated
     Subsidiaries ending on December 31 in any calendar year.

          "FIXED CHARGE COVERAGE RATIO" means, for any Person for any period,
     the ratio of (a) Consolidated EBITDA minus the sum of Capital Expenditures
     to (b) the sum of (i) Consolidated cash interest required to be paid on all
     Debt for Borrowed Money plus (ii) Cash Taxes, in each case, of or by such
     Person and its Subsidiaries during such period.

          "FRONTRUNNER VARIANCE" has the meaning specified in Section 5.03(g).
<PAGE>
                                       14

          "FRONTRUNNER VARIANCE REPORT" has the meaning specified in Section
     5.03(g).

          "GAAP" has the meaning specified in Section 1.03.

          "GUARANTIES" means the Parent Guaranty and the Subsidiary Guaranty.

          "GUARANTORS" means the Parent Guarantor and the Subsidiary Guarantors.

          "HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
     by-products or breakdown products, radioactive materials,
     asbestos-containing materials, polychlorinated biphenyls and radon gas and
     (b) any other chemicals, materials or substances designated, classified or
     regulated as hazardous or toxic or as a pollutant or contaminant under any
     Environmental Law.

          "HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
     interest rate future or option contracts, currency swap agreements,
     currency future or option contracts and other hedging agreements.

          "HEDGE BANK" means any Lender Party or an Affiliate of a Lender Party
     in its capacity as a party to a Secured Hedge Agreement.

          "INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).

          "INITIAL EXTENSION OF CREDIT" means the earlier to occur of the
     initial Borrowing and the initial issuance of a Letter of Credit hereunder.

          "INITIAL ISSUING BANKS", "INITIAL LENDER PARTIES" and "INITIAL
     LENDERS" each has the meaning specified in the recital of parties to this
     Agreement.

          "INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
     of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
     ERISA.

          "INSURANCE SUBSIDIARIES" means Creole Insurance Company, Ltd., a
     Bermuda corporation, Honore Insurance Company, Ltd., a Bermuda corporation,
     Lagniappe Insurance Company, Ltd., a Bermuda corporation, Pirogue Insurance
     Company, Ltd., a Bermuda corporation, and Brick Insurance Company, Ltd., a
     Bermuda corporation.

          "INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
     part of the same Borrowing, the period commencing on the date of such
     Eurodollar Rate Advance or the date of the Conversion of any Base Rate
     Advance into such Eurodollar Rate Advance, and ending on the last day of
     the period selected by any Borrower pursuant to the provisions below and,
     thereafter, each subsequent period commencing on the last day of the
     immediately preceding Interest Period and ending on the last day of the
     period selected by such Borrower pursuant to the provisions below. The
     duration of each such Interest Period shall be one, two, three or six
     months, as any Borrower may, upon notice received by the Administrative
     Agent not later than 11:00 A.M. (New York City time) on the third Business
     Day prior to the first day of such Interest Period, select; provided,
     however, that:
<PAGE>
                                       15

               (a) no Borrower may select any Interest Period with respect to
          any Eurodollar Rate Advance under a Facility that ends after any
          principal repayment installment date for such Facility unless, after
          giving effect to such selection, the aggregate principal amount of
          Base Rate Advances and of Eurodollar Rate Advances having Interest
          Periods that end on or prior to such principal repayment installment
          date for such Facility shall be at least equal to the aggregate
          principal amount of Advances under such Facility due and payable on or
          prior to such date;

               (b) Interest Periods commencing on the same date for Eurodollar
          Rate Advances comprising part of the same Borrowing shall be of the
          same duration;

               (c) whenever the last day of any Interest Period would otherwise
          occur on a day other than a Business Day, the last day of such
          Interest Period shall be extended to occur on the next succeeding
          Business Day, provided, however, that, if such extension would cause
          the last day of such Interest Period to occur in the next following
          calendar month, the last day of such Interest Period shall occur on
          the next preceding Business Day; and

               (d) whenever the first day of any Interest Period occurs on a day
          of an initial calendar month for which there is no numerically
          corresponding day in the calendar month that succeeds such initial
          calendar month by the number of months equal to the number of months
          in such Interest Period, such Interest Period shall end on the last
          Business Day of such succeeding calendar month.

          "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
     amended from time to time, and the regulations promulgated and rulings
     issued thereunder.

          "INVENTORY" means all Inventory referred to in Section 1(b) of the
     Security Agreement.

          "INVESTMENT" in any Person means any loan or advance to such Person,
     any purchase or other acquisition of any Equity Interests or Debt or the
     assets comprising a division or business unit or a substantial part or all
     of the business of such Person, any capital contribution to such Person or
     any other direct or indirect investment in such Person, including, without
     limitation, any acquisition by way of a merger or consolidation and any
     arrangement pursuant to which the investor incurs Debt of the types
     referred to in clause (i) or (j) of the definition of "DEBT" in respect of
     such Person.

          "ISSUING BANKS" means each Initial Issuing Bank and any other Lender
     approved as an Issuing Bank by the Administrative Agent and any Eligible
     Assignee to which a Letter of Credit Commitment hereunder has been assigned
     pursuant to Section 9.07 so long as each such Lender or each such Eligible
     Assignee expressly agrees to perform in accordance with their terms all of
     the obligations that by the terms of this Agreement are required to be
     performed by it as an Issuing Bank and notifies the Administrative Agent of
     its Applicable Lending Office and the amount of its Letter of Credit
     Commitment (which information shall be recorded by the Administrative Agent
     in the Register), for so
<PAGE>
                                       16

     long as such Initial Issuing Bank, Lender or Eligible Assignee, as the case
     may be, shall have a Letter of Credit Commitment.

          "JRM BORROWERS" means JRMSA, JRMHI and JRMI.

          "JRMHI" has the meaning specified in the recital of parties to this
     Agreement.

          "JRMI" has the meaning specified in the recital of parties to this
     Agreement.

          "JRMSA" has the meaning specified in the recital of parties to this
     Agreement.

          "L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the
     Security Agreement.

          "L/C RELATED DOCUMENTS" has the meaning specified in Section
     2.04(b)(ii).

          "LENDER PARTY" means any Lender or any Issuing Bank.

          "LENDERS" means the Initial Lenders and each Person that shall become
     a Lender hereunder pursuant to Section 9.07 for so long as such Initial
     Lender or Person, as the case may be, shall be a party to this Agreement.

          "LETTER OF CREDIT ADVANCE" means an advance made by any Issuing Bank
     or any Lender pursuant to Section 2.03(c).

          "LETTER OF CREDIT AGREEMENT" has the meaning specified in Section
     2.03(a).

          "LETTER OF CREDIT COMMITMENT" means, with respect to any Issuing Bank
     at any time, the amount set forth opposite such Issuing Bank's name on
     Schedule I hereto under the caption "Letter of Credit Commitment" or, if
     such Issuing Bank has entered into one or more Assignment and Acceptances,
     set forth for such Issuing Bank in the Register maintained by the
     Administrative Agent pursuant to Section 9.07(d) as such Issuing Bank's
     "Letter of Credit Commitment", as such amount may be reduced at or prior to
     such time pursuant to Section 2.05.

          "LETTER OF CREDIT FACILITY" means, at any time, an amount equal to the
     aggregate amount of the Issuing Banks' Letter of Credit Commitments at such
     time, as such amount may be reduced at or prior to such time pursuant to
     Section 2.05.

          "LETTERS OF CREDIT" has the meaning specified in Section 2.01(b).

          "LIEN" means any lien, security interest or other charge or
     encumbrance of any kind, or any other type of preferential arrangement,
     including, without limitation, the lien or retained security title of a
     conditional vendor and any easement, right of way or other encumbrance on
     title to real property; provided, however that for the avoidance of doubt,
     the interest of a Person as owner or lessor under charters or leases of
     property shall not constitute "Liens" on or in respect of such property.
<PAGE>
                                       17

          "LOAN DOCUMENTS" means (a) for purposes of this Agreement and the
     Notes and any amendment, supplement or modification hereof or thereof, (i)
     this Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) the
     Fee Letter, (v) each Letter of Credit Agreement and (b) for purposes the
     Collateral Documents and for all other purposes other than for purposes of
     this Agreement and the Notes, (i) this Agreement, (ii) the Notes, (iii) the
     Collateral Documents, (iv) the Fee Letter, (v) each Letter of Credit
     Agreement, and (vi) each Secured Hedge Agreement.

          "LOAN PARTIES" means MII, the Borrowers and the Guarantors.

          "MARGIN STOCK" has the meaning specified in Regulation U.

          "MATERIAL ADVERSE CHANGE" means any material adverse change in the
     business, condition (financial or otherwise), operations, performance,
     properties or prospects of MII and its Subsidiaries, taken as a whole,
     excluding, solely with respect to prospects, in any case, any fact or
     circumstance (including the occurrence or nonoccurrence of any event)
     relating to the economy or financial markets generally.

          "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
     business, condition (financial or otherwise), operations, performance,
     properties or prospects of MII and its Subsidiaries, taken as a whole, (b)
     the rights and remedies of any Agent or any Lender Party under any Loan
     Document or (c) the ability of any Loan Party to perform its Obligations
     under any Loan Document to which it is or is to be a party, excluding,
     solely with respect to prospects, in any case under clause (a), any fact or
     circumstance (including the occurrence or nonoccurrence of any event)
     relating to the economy or financial markets generally.

          "MATERIAL CONTRACT" means, with respect to any Borrower, each contract
     to which such Person is a party involving aggregate consideration remaining
     to be paid to or by such Person of $10,000,000 or more and which remains
     executory in whole or in part, but excluding any agreements relating to
     Surviving Debt or to compensation or employee benefits.

          "MAXIMUM AMOUNT" means (a) at any time prior to the Mizuho Termination
     Date, $180,000,000, and (b) thereafter, $166,500,000.

          "MIDDLE EASTERN RECEIVABLES" means receivables owing to Middle Eastern
     Subsidiaries and all proceeds and supporting obligations of such
     receivables that are subject to a Lien permitted under Section 5.02(a)(x).

          "MIDDLE EASTERN SUBSIDIARIES" means the Subsidiaries of MII listed on
     Schedule III hereto.

          "MIDDLE EASTERN L/CS" means letters of credit issued for the account
     of Middle Eastern Subsidiaries

          "MI" means McDermott Incorporated, a Delaware corporation.
<PAGE>
                                       18

          "MIICO" means McDermott International Investments Co., Inc., a
     Panamanian corporation.

          "MII" has the meaning specified in the recital of parties to this
     Agreement.

          "MII LOANS" means revolving intercompany loans made to (a) JRMSA, in
     an aggregate principal amount of up to $90 million and (b) BWXT, in an
     aggregate principal amount of up to $25 million, in each case to be used
     for working capital purposes, which loans shall (x) solely in the case of
     such intercompany loans to JRMSA, accrue interest solely on a paid-in-kind
     basis during the term of the Facilities, (y) be subordinated to the
     Obligations under the Facilities in a manner reasonably acceptable to the
     Required Lenders and (z) shall otherwise be consistent with the existing
     cash management system of MII and its Subsidiaries.

          "MIZUHO" means Mizuho Corporate Bank, Ltd.

          "MIZUHO CASH COLLATERAL ACCOUNT" means a segregated cash collateral
     account maintained with Mizuho, the amounts in which (a) shall be invested
     in Cash Equivalents of the type described in clause (a) of the definition
     therefor, or in such other Cash Equivalents as MII shall agree, and (b)
     shall be used, solely for the period from the Effective Date through the
     Mizuho Termination Date, to (i) cash collateralize the Mizuho Obligations
     and (ii) repay Mizuho Obligations outstanding on the Mizuho Termination
     Date (which shall not include any Obligations in respect of undrawn Letters
     of Credit).

          "MIZUHO OBLIGATIONS" means the Obligations of the Borrowers owing to
     Mizuho under this Agreement.

          "MIZUHO TERMINATION DATE" means the date that is 91 days following the
     Effective Date; provided that Mizuho shall have released to MII any amounts
     required to be released under Section 2.06(c)(i)(B).

          "MORTGAGES" has the meaning specified in Section 5.01(p).

          "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
     4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate is making
     or accruing an obligation to make contributions, or has within any of the
     preceding five plan years made or accrued an obligation to make
     contributions.

          "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
     Borrower or any ERISA Affiliate and at least one Person other than the
     Borrowers and the ERISA Affiliates or (b) was so maintained and in respect
     of which any Borrower or any ERISA Affiliate could have liability under
     Section 4064 or 4069 of ERISA in the event such plan has been or were to be
     terminated.
<PAGE>
                                       19

          "NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
     or other disposition of any asset or the incurrence or issuance of any Debt
     or the sale or issuance of any Equity Interests (including, without
     limitation, any capital contribution) by any Person, or any Extraordinary
     Receipt received by or paid to or for the account of any Person, the
     aggregate amount of cash received from time to time (whether as initial
     consideration or through payment or disposition of deferred consideration)
     by or on behalf of such Person in connection with such transaction after
     deducting therefrom only (without duplication) (a) reasonable and customary
     brokerage commissions, underwriting fees and discounts, legal fees,
     finder's fees and other similar fees and commissions, and (b) the amount of
     taxes payable in connection with or as a result of such transaction and (c)
     the amount of any Debt secured by a Lien on such asset that, by the terms
     of the agreement or instrument governing such Debt, is required to be
     repaid upon such disposition, in each case to the extent, but only to the
     extent, that the amounts so deducted are, at the time of receipt of such
     cash, actually paid to a Person that is not an Affiliate of such Person or
     any Borrower or any Affiliate of any Borrower and are properly attributable
     to such transaction or to the asset that is the subject thereof; provided,
     however, that in the case of taxes that are deductible under clause (b)
     above but for the fact that, at the time of receipt of such cash, such
     taxes have not been actually paid or are not then payable, such Borrower or
     such Subsidiary may deduct an amount (the "RESERVED AMOUNT") equal to the
     amount reserved in accordance with GAAP for such Borrower's or such
     Subsidiary's reasonable estimate of such taxes, other than taxes for which
     such Borrower or such Subsidiary is indemnified, provided further, however,
     that, at the time such taxes are paid, an amount equal to the amount, if
     any, by which the Reserved Amount for such taxes exceeds the amount of such
     taxes actually paid shall constitute "Net Cash Proceeds" of the type for
     which such taxes were reserved for all purposes hereunder.

          "NOTE" means a promissory note of any Borrower payable to the order of
     any Lender, in substantially the form of Exhibit A hereto, evidencing the
     aggregate indebtedness of the Borrowers to such Lender resulting from the
     Working Capital Advances and Letter of Credit Advances made by such Lender,
     as amended.

          "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

          "NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a).

          "NOTICE OF NON-RENEWAL" has the meaning specified in Section 2.01(b).

          "NPL" means the National Priorities List under CERCLA.

          "OBLIGATION" means, with respect to any Person, any payment,
     performance or other obligation of such Person of any kind, excluding any
     obligations in respect of compensation or employee benefits but including,
     without limitation, any liability of such Person on any claim, whether or
     not the right of any creditor to payment in respect of such claim is
     reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
     disputed, undisputed, legal, equitable, secured or unsecured, and whether
     or not such claim is discharged, stayed or otherwise affected by any
     proceeding referred to in
<PAGE>
                                       20

     Section 6.01(f). Without limiting the generality of the foregoing, the
     Obligations of any Borrower under the Loan Documents include (a) the
     obligation to pay principal, interest, Letter of Credit commissions,
     charges, expenses, fees, attorneys' fees and disbursements, indemnities and
     other amounts payable by such Borrower under any Loan Document and (b) the
     obligation of such Borrower to reimburse any amount in respect of any of
     the foregoing that any Lender Party, in its sole discretion, may elect to
     pay or advance on behalf of such Borrower.

          "OECD" means the Organization for Economic Cooperation and
     Development.

          "OPEN YEAR" has the meaning specified in Section 4.01(p)(iii).

          "OTHER TAXES" has the meaning specified in Section 2.12(b).

          "PARENT GUARANTOR" has the meaning specified in the recital of parties
     to this Agreement.

          "PARENT GUARANTY" means the guaranty of MII set forth in Article VIII
     of this Agreement.

          "PBGC" means the Pension Benefit Guaranty Corporation (or any
     successor).

          "PERMITTED ENCUMBRANCES" has the meaning specified in the Collateral
     Documents.

          "PERMITTED L/C LIEN ASSETS" means (a) Middle Eastern Receivables and
     (b) cash in the amount of Net Cash Proceeds described in clauses (A) and
     (D) of Section 2.06(b), solely to the extent that such Net Cash Proceeds
     are not required to be used to cash collateralize the Facilities as
     provided in Section 2.06(b).

          "PERMITTED LIENS" means such of the following as to which no
     enforcement, collection, execution, levy or foreclosure proceeding shall
     have been commenced or, if commenced, have been stayed: (a) Liens for
     taxes, assessments and governmental charges or levies to the extent not
     required to be paid under Section 5.01(b); (b) Liens imposed by law, such
     as landlord's, materialmen's, mechanics', carriers', workmen's and
     repairmen's Liens, maritime Liens and other similar Liens arising in the
     ordinary course of business securing obligations that, individually or
     together with all other Permitted Liens outstanding on any date of
     determination do not materially adversely affect the use of the property to
     which they relate; (c) pledges or deposits to secure obligations under
     workers' compensation unemployment insurance or social security laws or
     similar legislation or to secure public or statutory obligations; (d)
     easements, rights of way and other encumbrances on title to real property
     that do not render title to the property encumbered thereby unmarketable or
     materially adversely affect the use of such property for its present
     purposes; (e) Permitted Encumbrances; (f) Liens to secure the performance
     of bids, trade contracts (other than for Debt), leases (other than
     Capitalized Leases), statutory obligations, surety and appeal bonds,
     performance bonds and other obligations of a like nature incurred in the
     ordinary course of business; (g) Liens with respect to cash collateral
     deposited as security for letters of credit issued under the
<PAGE>
                                       21

     Existing Credit Facilities and not replaced with Letters of Credit issued
     under this Agreement and (h) Liens with respect to joint ventures or other
     similar arrangements to secure the Obligations of one joint venture party
     to another, provided that such Liens do not secure Debt.

          "PERMITTED UNBLOCKED ACCOUNT" means (a) solely in respect of MII
     and/or MIICO, securities accounts and bank accounts holding an aggregate
     amount not to exceed $25,000,000 of unrestricted cash and (b) as to any
     Loan Party and its Subsidiaries, bank accounts (i) maintained for payroll,
     employee benefits and disbursements, (ii) maintained outside the United
     States in respect of overseas operations or (iii) of Insurance
     Subsidiaries, in each case for clauses (i) through (iii) above, maintained
     in the ordinary course of business consistent with past practices.

          "PERSON" means an individual, partnership, corporation (including a
     business trust), limited liability company, joint stock company, trust,
     unincorporated association, joint venture or other entity, or a government
     or any political subdivision or agency thereof.

          "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

          "PLEDGED DEBT" has the meaning specified in the Security Agreement.

          "PLEDGED EQUITY" has the meaning specified in the Security Agreement.

          "PREFERRED INTERESTS" means, with respect to any Person, Equity
     Interests issued by such Person that are entitled to a preference or
     priority over any other Equity Interests issued by such Person upon any
     distribution of such Person's property and assets, whether by dividend or
     upon liquidation.

          "PRO RATA SHARE" of any amount means, with respect to any Lender at
     any time, the product of such amount times a fraction the numerator of
     which is the amount of such Lender's Working Capital Commitment at such
     time (or, if the Commitments shall have been terminated pursuant to Section
     2.05 or 6.01, such Lender's Working Capital Commitment as in effect
     immediately prior to such termination) and the denominator of which is the
     Working Capital Facility at such time (or, if the Commitments shall have
     been terminated pursuant to Section 2.05 or 6.01, the Working Capital
     Facility as in effect immediately prior to such termination).

          "RECEIVABLES" means all Receivables referred to in Section 1(c) of the
     Security Agreement.

          "REDEEMABLE" means, with respect to any Equity Interest, any Debt or
     any other right or Obligation, any such Equity Interest, Debt, right or
     Obligation that (a) the issuer has undertaken to redeem at a fixed or
     determinable date or dates, whether by operation of a sinking fund or
     otherwise, or upon the occurrence of a condition not solely within the
     control of the issuer or (b) is redeemable at the option of the holder.

          "REGISTER" has the meaning specified in Section 9.07(d).
<PAGE>
                                       22

          "REGULATION U" means Regulation U of the Board of Governors of the
     Federal Reserve System, as in effect from time to time.

          "REMAINING L/CS" means the letters of credit listed on Schedule V
     hereto.

          "REQUIRED LENDERS" means, at any time, Lenders owed or holding at
     least 66 2/3% in interest of the sum of (a) the aggregate principal amount
     of the Advances outstanding at such time, (b) the aggregate Available
     Amount of all Letters of Credit outstanding at such time and (c) the
     aggregate Unused Working Capital Commitments at such time; provided,
     however, that if any Lender shall be a Defaulting Lender at such time,
     there shall be excluded from the determination of Required Lenders at such
     time (A) the aggregate principal amount of the Advances owing to such
     Lender (in its capacity as a Lender) and outstanding at such time, (B) such
     Lender's Pro Rata Share of the aggregate Available Amount of all Letters of
     Credit outstanding at such time and (C) the Unused Working Capital
     Commitment of such Lender at such time. For purposes of this definition,
     the aggregate principal amount of Letter of Credit Advances owing to
     Issuing Banks and the Available Amount of each Letter of Credit shall be
     considered to be owed to the Lenders ratably in accordance with their
     respective Working Capital Commitments.

          "RESPONSIBLE OFFICER" means any of the chief executive officer, chief
     financial officer, treasurer or general counsel of any of MII, JRMSA or
     BWXT.

          "SECURED HEDGE AGREEMENT" means any Hedge Agreement required or
     permitted under Article V that is entered into by and between any Borrower
     and any Hedge Bank.

          "SECURED OBLIGATIONS" has the meaning specified in the Collateral
     Documents.

          "SECURED PARTIES" means the Agents, the Lender Parties, the Hedge
     Banks and, solely with respect to Bilateral Obligations, Affiliates of the
     Lender Parties.

          "SECURITY AGREEMENT" has the meaning specified in Section 3.01(a)(ii).

          "SERIES A NOTES" means the Series "A" Medium Term Notes issued by MI
     under the Indenture dated as of March 1, 1992 to which MI is a party.

          "SETTLEMENT AGREEMENT" means the Settlement Agreement to be entered
     into by and among MII, MI, BWICO, B&W, Diamond Power International, Inc.,
     Americon, Inc., Babcock & Wilcox Construction Co., Inc., the Asbestos
     Claimants Committee (as defined therein) and the Legal Representative for
     Future Asbestos-Related Claimants in the Chapter 11 Proceedings (as defined
     therein), a copy of the December 18, 2002 draft of which has been delivered
     to the Administrative Agent.

          "SHIP MORTGAGES" has the meaning specified in Section 5.01(q).

          "SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
     Borrower or any ERISA Affiliate and no Person other than the Borrowers and
     the ERISA Affiliates or
<PAGE>
                                       23

     (b) was so maintained and in respect of which any Borrower or any ERISA
     Affiliate could have liability under Section 4069 of ERISA in the event
     such plan has been or were to be terminated.

          "SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
     particular date, that on such date (a) the fair value of the property of
     such Person is greater than the total amount of liabilities, including,
     without limitation, contingent liabilities, of such Person, (b) the present
     fair salable value of the assets of such Person is not less than the amount
     that will be required to pay the probable liability of such Person on its
     debts as they become absolute and matured, (c) such Person does not intend
     to, and does not believe that it will, incur debts or liabilities beyond
     such Person's ability to pay such debts and liabilities as they mature and
     (d) such Person is not engaged in business or a transaction, and is not
     about to engage in business or a transaction, for which such Person's
     property would constitute an unreasonably small capital. The amount of
     contingent liabilities at any time shall be computed as the amount that, in
     the light of all the facts and circumstances existing at such time,
     represents the amount that can reasonably be expected to become an actual
     or matured liability.

          "SUBLIMIT AVAILABILITY" means, with respect to the Applicable
     Borrower(s) under any Applicable Working Capital Sublimit at any time, (a)
     such Applicable Working Capital Sublimit at such time minus (b) the sum of
     the aggregate principal amount of all Working Capital Advances and Letter
     of Credit Advances made for the account of such Applicable Borrower(s) and
     outstanding at such time.

          "SUBORDINATED DEBT" means Debt of any Borrower that is subordinated to
     the Obligations of such Borrower under the Loan Documents on, and that
     otherwise contains, terms and conditions satisfactory to the Required
     Lenders.

          "SUBSIDIARY" of any Person means any corporation, partnership, joint
     venture, limited liability company, trust or estate of which (or in which)
     more than 50% of (a) the issued and outstanding capital stock having
     ordinary voting power to elect a majority of the Board of Directors of such
     corporation (irrespective of whether at the time capital stock of any other
     class or classes of such corporation shall or might have voting power upon
     the occurrence of any contingency), (b) the interest in the capital or
     profits of such partnership, joint venture or limited liability company or
     (c) the beneficial interest in such trust or estate is at the time directly
     or indirectly owned or controlled by such Person, by such Person and one or
     more of its other Subsidiaries or by one or more of such Person's other
     Subsidiaries; provided, that, B&W and each of its subsidiaries shall not be
     deemed to be Subsidiaries of MII or any of MII's other subsidiaries.

          "SUBSIDIARY GUARANTOR" means each Subsidiary of JRMSA (other than the
     Borrowers) that is a Collateral Grantor and each other Subsidiary of JRMSA
     that shall be required to execute and delivery a guaranty pursuant to
     Section 5.02(p).

          "SUBSIDIARY GUARANTY" has the meaning specified in Section
     3.01(a)(iii).
<PAGE>
                                       24

          "SURVIVING DEBT" means Debt of each Loan Party and each Subsidiary of
     a Loan Party outstanding immediately before and after giving effect to the
     Transaction.

          "TAXES" has the meaning specified in Section 2.12(a).

          "TERMINATION DATE" means the earlier of (a) April 30, 2004, and (b)
     the date of termination in whole of the Working Capital Commitments and the
     Letter of Credit Commitments pursuant to Section 2.05 or 6.01.

          "TOTAL L/C EXPOSURE" means the sum of (a) the aggregate Available
     Amount of all Letters of Credit issued for the account of the Borrowers and
     outstanding at such time plus (b) the aggregate principal amount of all
     Letter of Credit Advances made for the account of the Borrowers.

          "TRANSACTION" means the transactions contemplated by the Loan
     Documents.

          "TYPE" refers to the distinction between Advances bearing interest at
     the Base Rate and Advances bearing interest at the Eurodollar Rate.

          "UNUSED WORKING CAPITAL COMMITMENT" means, with respect to any Lender
     at any time, (a) such Lender's Working Capital Commitment at such time
     minus (b) the sum of (i) the aggregate principal amount of all Working
     Capital Advances and Letter of Credit Advances made by such Lender (in its
     capacity as a Lender) and outstanding at such time plus (ii) such Lender's
     Pro Rata Share of (A) the aggregate Available Amount of all Letters of
     Credit outstanding at such time and (B) the aggregate principal amount of
     all Letter of Credit Advances made by the Issuing Banks pursuant to Section
     2.03(c) and outstanding at such time.

          "VOTING INTERESTS" means shares of capital stock issued by a
     corporation, or equivalent Equity Interests in any other Person, the
     holders of which are ordinarily, in the absence of contingencies, entitled
     to vote for the election of directors (or persons performing similar
     functions) of such Person, even if the right so to vote has been suspended
     by the happening of such a contingency.

          "WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of
     ERISA, that is maintained for employees of any Borrower or in respect of
     which any Borrower could have liability.

          "WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
     E of Title IV of ERISA.

          "WORKING CAPITAL ADVANCE" has the meaning specified in Section
     2.01(a).

          "WORKING CAPITAL COMMITMENT" means, with respect to any Lender at any
     time, the amount set forth opposite such Lender's name on Schedule I hereto
     under the caption "Working Capital Commitment" or, if such Lender has
     entered into one or more Assignment and Acceptances, set forth for such
     Lender in the Register maintained by the Administrative Agent pursuant to
     Section 9.07(d) as such Lender's "Working Capital
<PAGE>
                                       25

     Commitment", as such amount may be reduced at or prior to such time
     pursuant to Section 2.05.

          "WORKING CAPITAL FACILITY" means, at any time, the aggregate amount of
     the Lenders' Working Capital Commitments at such time.

          "YARD AGREEMENT" means the Yard Utilization Contract dated as of
     January 23, 2001, between BP America, Inc., and JRMI, as amended by
     Amendment No. 1 to Yard Utilization Contract BPA-00-0198 and by Amendment
     No. 2 to Yard Utilization Contract BPA-00-01918.

     SECTION 1.02. Computation of Time Periods; Other Definitional Provisions.
In this Agreement and the other Loan Documents in the computation of periods of
time from a specified date to a later specified date, the word "FROM" means
"from and including" and the words "TO" and "UNTIL" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "AS
AMENDED" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.

     SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(g), but giving effect to
Statement of Financial Accounting Standards No. 143 ("GAAP").
<PAGE>
                                       26

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

     SECTION 2.01. The Advances and the Letters of Credit. (a) The Working
Capital Advances. Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make advances (each a "WORKING CAPITAL ADVANCE") to
each Borrower from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such Advance not to
exceed the lesser of (a) such Lender's Unused Working Capital Commitment at such
time and (b) such Lender's Pro Rata Share of the Sublimit Availability under the
Applicable Working Capital Sublimit of such Borrower; provided, that, the sum of
the aggregate amount of all outstanding Working Capital Advances plus Total L/C
Exposure shall not exceed the Maximum Amount at any time. Each Borrowing shall
be in an aggregate amount of $1,000,000 or an integral multiple thereof, in the
case of a Borrowing consisting of Eurodollar Rate Advances, or $200,000 or an
integral multiple of $100,000 in excess thereof, in the case of Base Rate
Advances (in each case, other than a Borrowing the proceeds of which shall be
used solely to repay or prepay in full outstanding Letter of Credit Advances)
and shall consist of Working Capital Advances made simultaneously by the Lenders
ratably according to their Working Capital Commitments. Within the limits of
each Lender's Unused Working Capital Commitment in effect from time to time, and
subject to the limits set forth above, each Borrower may borrow under this
Section 2.01(a), prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(a).

     (b) The Letters of Credit. Each Issuing Bank severally agrees, on the terms
and conditions hereinafter set forth, to issue letters of credit (the "LETTERS
OF CREDIT") for the account of each Borrower and for the account of their
respective Subsidiaries, Affiliates and joint ventures from time to time on any
Business Day during the period from the date hereof until 10 days before the
Termination Date in an aggregate Available Amount (i) for all Letters of Credit
issued by such Issuing Bank not to exceed at any time the lesser of (x) the
Letter of Credit Facility at such time and (y) such Issuing Bank's Letter of
Credit Commitment at such time and (ii) for each such Letter of Credit not to
exceed the Available L/C Sublimit; provided, that, the sum of Total L/C Exposure
plus the aggregate amount of all outstanding Working Capital Advances shall not
exceed the Maximum Amount at any time. No Letter of Credit shall have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than 10 days before the Termination Date, but may by its
terms be renewable annually, or otherwise, automatically unless such Issuing
Bank has notified the applicable Borrower (with a copy to the Administrative
Agent) and the beneficiary of such Letter of Credit on or prior to the final
date for notice of non-renewal set forth in such Letter of Credit but in any
event at least 30 days prior to the date of automatic renewal of its election
not to renew such Letter of Credit (a "NOTICE OF NON-RENEWAL"); provided that
the terms of each Letter of Credit that is automatically renewable shall (x)
require the Issuing Bank that issued such Letter of Credit to give the
beneficiary named in such Letter of Credit Notice of Non-Renewal and (y) permit,
according to the terms thereunder, such beneficiary, upon receipt of such
notice, to draw under such Letter of Credit prior to the date such Letter of
Credit otherwise would
<PAGE>
                                       27

have been automatically renewed. If a Notice of Non-Renewal is given by the
relevant Issuing Bank pursuant to the immediately preceding sentence, such
Letter of Credit shall expire on the date on which it otherwise would have been
automatically renewed; provided, further, that any Letter of Credit may expire
after the tenth day prior to the Termination Date if, at the time of issuance or
renewal, as the case may be, of such Letter of Credit, such Letter of Credit is
cash collateralized in an amount equal to 105% of the amount of such Letter of
Credit plus any additional amounts owing under such Letter of Credit; provided,
further, that each of Bank One NA and The Bank of Nova Scotia, in its capacity
as an Issuing Bank, shall have no obligation hereunder to issue any new Letter
of Credit or to extend or renew any existing Letter of Credit under this
Agreement, and all Letters of Credit (or related arrangements) issued by either
Bank One NA or The Bank of Nova Scotia or any of its respective Affiliates for
the account of the Borrowers hereunder shall be replaced with Letters of Credit
issued hereunder no later than ninety (90) days following the Effective Date.
Within the limits of the Letter of Credit Facility, and subject to the limits
referred to above, each Borrower may request the issuance of Letters of Credit
under this Section 2.01(b), repay any Letter of Credit Advances resulting from
drawings thereunder pursuant to Section 2.03(c) and request the issuance of
additional Letters of Credit under this Section 2.01(b).

     SECTION 2.02. Making the Advances. (a) Except as otherwise provided in
Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the date
of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar
Rate Advances, or the first Business Day prior to the date of the proposed
Borrowing in the case of a Borrowing consisting of Base Rate Advances, by any
Borrower to the Administrative Agent, which shall give to each Lender prompt
notice thereof by telex or telecopier. Each such notice of a Borrowing (a
"NOTICE OF BORROWING") shall be by telephone, confirmed immediately in writing,
or telex or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing and
(iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Advance. Each Lender shall, before 11:00 A.M. (New
York City time) on the date of such Borrowing, make available for the account of
its Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Commitments of such Lender and the
other Lenders. After the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the applicable Borrower
by crediting such Borrower's Account; provided, however, that the Administrative
Agent shall first make a portion of such funds equal to the aggregate principal
amount of any Letter of Credit Advances made by any Issuing Bank, as the case
may be, and by any other Lender and outstanding on the date of such Borrowing,
plus interest accrued and unpaid thereon to and as of such date, available to
such Issuing Bank and such other Lenders for repayment of such Letter of Credit
Advances.

     (b) Anything in subsection (a) above to the contrary notwithstanding, no
Borrower may select Eurodollar Rate Advances for the initial Borrowing hereunder
or for any Borrowing if the aggregate amount of such Borrowing is less than
$5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances
shall then be suspended pursuant to Section 2.09 or 2.10.
<PAGE>
                                       28

     (c) Each Notice of Borrowing shall be irrevocable and binding on the
applicable Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, each
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.

     (d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the applicable Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Administrative Agent,
such Lender and the applicable Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount and to pay
interest thereon, for each day from the date such amount is made available to
the applicable Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of such Borrower, the interest rate
applicable at such time under Section 2.07 to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all
purposes.

     (e) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the applicable Borrower to the Administrative Agent and the
applicable Issuing Bank. Each such notice of issuance of a Letter of Credit (a
"NOTICE OF ISSUANCE") shall be by telephone, confirmed immediately in writing,
or telex or telecopier, specifying therein the requested (A) date of such
issuance (which shall be a Business Day), (B) Available Amount of such Letter of
Credit, (C) expiration date of such Letter of Credit, (D) name and address of
the beneficiary of such Letter of Credit and (E) form of such Letter of Credit,
with such variations as such Issuing Bank reasonably may specify to the Borrower
for use in connection with such requested Letter of Credit (a "LETTER OF CREDIT
AGREEMENT"). If the requested form of such Letter of Credit is acceptable to
such Issuing Bank in its sole discretion, such Issuing Bank will, upon
fulfillment of the applicable conditions set forth in Article III, make such
Letter of Credit available to the applicable Borrower at its office
<PAGE>
                                       29

referred to in Section 9.02 or as otherwise agreed with the such Borrower in
connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.

     (b) Letter of Credit Reports. Each Issuing Bank shall furnish (A) to the
Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued by such
Issuing Bank during the previous week and drawings during such week under all
Letters of Credit issued by such Issuing Bank, (B) to each Lender on the first
Business Day of each month a written report summarizing issuance and expiration
dates of Letters of Credit issued by such Issuing Bank during the preceding
month and drawings during such month under all Letters of Credit issued by such
Issuing Bank and (C) to the Administrative Agent and each Lender on the first
Business Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit issued by such Issuing Bank.

     (c) Drawing and Reimbursement. The payment by any Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. Upon written demand
by any Issuing Bank with an outstanding Letter of Credit Advance, with a copy of
such demand to the Administrative Agent, each Lender shall purchase from such
Issuing Bank, and such Issuing Bank shall sell and assign to each such Lender,
such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of
the date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of such Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to such Issuing Bank. Each
Borrower hereby agrees to each such sale and assignment. Each Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i)
the Business Day on which demand therefor is made by the Issuing Bank which made
such Advance, provided that notice of such demand is given not later than 11:00
A.M. (New York City time) on such Business Day, or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by an Issuing Bank to any Lender of a portion of a
Letter of Credit Advance, such Issuing Bank represents and warrants to such
other Lender that such Issuing Bank is the legal and beneficial owner of such
interest being assigned by it, free and clear of any liens, but makes no other
representation or warranty and assumes no responsibility with respect to such
Letter of Credit Advance, the Loan Documents or any Borrower. If and to the
extent that any Lender shall not have so made the amount of such Letter of
Credit Advance available to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by such Issuing Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate for its account or the account of such Issuing Bank, as applicable.
If such Lender shall pay to the Administrative Agent such amount for the account
of such Issuing Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Lender on
such Business Day for purposes of this Agreement, and the outstanding principal
amount of the Letter of Credit Advance made by such Issuing Bank shall be
reduced by such amount on such Business Day.
<PAGE>
                                       30

     (d) Failure to Make Letter of Credit Advances. The failure of any Lender to
make the Letter of Credit Advance to be made by it on the date specified in
Section 2.03(c) shall not relieve any other Lender of its obligation hereunder
to make its Letter of Credit Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.

     SECTION 2.04. Repayment of Advances. (a) Working Capital Advances. The
Borrowers shall repay to the Administrative Agent for the ratable account of the
Lenders on the Termination Date the aggregate principal amount of the Working
Capital Advances then outstanding.

     (b) Letter of Credit Advances. (i) The Borrowers shall repay to the
Administrative Agent for the account of each Issuing Bank and each other Lender
that has made a Letter of Credit Advance no later than the third Business Day
following the date on which such Advance is made the outstanding principal
amount of each Letter of Credit Advance made by each of them.

     (ii) The Obligations of each Borrower under this Agreement, any Letter of
Credit Agreement and any other agreement or instrument relating to any Letter of
Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances (it being understood that any such
payment by any Borrower is without prejudice to, and does not constitute a
waiver of, any rights the Borrower might have or might acquire as a result of
the payment by any Issuing Bank of any draft or the reimbursement by the
Borrower thereof):

          (A) any lack of validity or enforceability of any Loan Document, any
     Letter of Credit Agreement, any Letter of Credit or any other agreement or
     instrument relating thereto (all of the foregoing being, collectively, the
     "L/C RELATED DOCUMENTS");

          (B) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Obligations of any Borrower in respect of
     any L/C Related Document or any other amendment or waiver of or any consent
     to departure from all or any of the L/C Related Documents;

          (C) the existence of any claim, set-off, defense or other right that
     any Borrower may have at any time against any beneficiary or any transferee
     of a Letter of Credit (or any Persons for which any such beneficiary or any
     such transferee may be acting), any Issuing Bank or any other Person,
     whether in connection with the transactions contemplated by the L/C Related
     Documents or any unrelated transaction;

          (D) any statement or any other document presented under a Letter of
     Credit proving to be forged, fraudulent, invalid or insufficient in any
     respect or any statement therein being untrue or inaccurate in any respect;

          (E) payment by any Issuing Bank under a Letter of Credit against
     presentation of a draft or certificate that does not strictly comply with
     the terms of such Letter of Credit;
<PAGE>
                                       31

          (F) any exchange, release or non-perfection of any Collateral or other
     collateral, or any release or amendment or waiver of or consent to
     departure from any guarantee, for all or any of the Obligations of any
     Borrower in respect of the L/C Related Documents; or

          (G) any other circumstance or happening whatsoever, whether or not
     similar to any of the foregoing, including, without limitation, any other
     circumstance that might otherwise constitute a defense available to, or a
     discharge of, any Borrower or a guarantor.

     SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrowers may, upon at least three Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Letter of Credit Facility and the Unused Working Capital Commitments;
provided, however, that each partial reduction of a Facility (i) shall be in an
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, (ii) shall be made ratably among the Lenders in accordance with their
Commitments with respect to such Facility and (iii) shall reduce one or more
Applicable Sublimits, as applicable, as notified to the Administrative by the
Borrowers in connection with such reduction and in an amount equal to the amount
of such reduction, provided that if the Borrowers shall fail to so notify the
Administrative Agent, each Applicable Sublimit, as applicable, shall be ratably
reduced in an aggregate amount equal to the amount of such reduction.

     (b) BWXT Optional Termination. Subject to compliance by MII with Section
5.02(b)(v), both prior to and after giving effect to such termination, BWXT
shall be permitted to terminate its Obligations (other than Contingent
Obligations) and the Commitments of each Lender Party in respect of BWXT, and
(except as required under clause (ii) below) be entitled to the release of any
amounts held to cash collateralize its Obligations under the Loan Documents
pursuant to Section 2.06(b), at any time upon (i) the repayment in full of all
its Obligations (other than Contingent Obligations) under the Loan Documents and
in cash and (ii) the cash collateralization of 105% of the face amount of, or
replacement of, all then outstanding Letters of Credit issued for the account of
BWXT or any of its Subsidiaries.

     (c) Termination of Mizuho Commitment. On the Mizuho Termination Date, the
Working Capital Facility shall be automatically reduced by an amount equal to
Mizuho's Working Capital Commitment as set forth on Schedule I hereto, and
Mizuho shall cease to have any Commitment hereunder.
<PAGE>
                                       32

     SECTION 2.06. Prepayments; Cash Collateralization. (a) Optional. Each
Borrower may, upon at least one Business Day's notice in the case of Base Rate
Advances and three Business Days' notice in the case of Eurodollar Rate
Advances, in each case to the Administrative Agent stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is given such
Borrower shall, prepay the outstanding aggregate principal amount of the
Advances comprising part of the same Borrowing in whole or ratably in part,
together with accrued interest to the date of such prepayment on the aggregate
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and (y) if any prepayment of a Eurodollar Rate
Advance is made on a date other than the last day of an Interest Period for such
Advance, the Borrower shall also pay any amounts owing pursuant to Section
9.04(c).

     (b) Mandatory Cash Collateralization. Each Loan Party (or, in the case of
BWXT, either MII or BWXT) shall, not later than the third Business Day after the
date of receipt of the Net Cash Proceeds by such Loan Party or any of its
Subsidiaries from (A) the sale, lease, transfer or other disposition of any
assets of such Loan Party or any of its Subsidiaries (other than assets
described in clause (C) of this sentence or any sale, lease, transfer or other
disposition of assets pursuant to clause (i), (v), (vi), (vii), (viii) or (x) of
Section 5.02(e)), (B) the incurrence or issuance by any Loan Party or any of its
Subsidiaries of any Debt (other than Debt incurred or issued pursuant to Section
5.02(b)), (C) the sale or issuance by any Loan Party or any of its wholly-owned
Subsidiaries of any Equity Interests (including, without limitation, receipt of
any capital contribution, but excluding any sale or issuance of any Equity
Interest in any Person (1) which is an Investment specifically permitted under
Section 5.02(f)(iii), (2) as required under the terms of the Settlement
Agreement) or (3) pursuant to any incentive compensation or other benefit plan
or arrangement) and (D) any Extraordinary Receipt received by or paid to or for
the account of any Loan Party or any of its Subsidiaries and not otherwise
included in clause (A), (B) or (C) above, deposit an amount in a segregated cash
collateral account maintained with the Administrative Agent to collateralize the
Facilities equal to (x) the amount of such Net Cash Proceeds, in the case of Net
Cash Proceeds arising from clause (B) above, and (y) 50% of the amount of such
Net Cash Proceeds in the case of any Net Cash Proceeds arising from any of
clauses (A), (C) or (D) above; provided that net cash proceeds of BWXT that are
required to be used to cash collateralize the Facilities shall be applied solely
to cash collateralize the obligations of BWXT under the Facilities; provided,
further that no cash collateralization shall be required under clauses (A) or
(D) above (1) in respect of the first $30,000,000 of such Net Cash Proceeds or
(2) in connection with any transaction or series of related transactions from
which the aggregate Net Cash Proceeds do not exceed $500,000.

     (c) Prepayment of Mizuho Obligations. (i) On the Mizuho Termination Date,
all outstanding Mizuho Obligations (other than Obligations in respect of undrawn
Letters of Credit) shall be repaid solely from amounts on deposit in the Mizuho
Cash Collateral Account, whereupon (A) Mizuho shall cease to be a Lender under
this Agreement and (B) any amount remaining in such account, after giving effect
to such repayment, shall be released to MII.

     (ii) If, after giving effect to the repayment of outstanding Mizuho
Obligations on the Mizuho Termination Date, the sum of the aggregate amount of
all outstanding Working Capital Advances plus Total L/C Exposure exceeds the
Maximum Amount, the Borrowers shall
<PAGE>
                                       33

be required to prepay outstanding Working Capital Advances in an amount equal to
such excess amount.

     SECTION 2.07. Interest. (a) Scheduled Interest. Each Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:

          (i) Base Rate Advances. During such periods as such Advance is a Base
     Rate Advance, a rate per annum equal at all times to the sum of (A) the
     Base Rate in effect from time to time plus (B) the Applicable Margin in
     effect from time to time, payable in arrears monthly on the last day of
     each month during such periods and on the date such Base Rate Advance shall
     be Converted or paid in full.

          (ii) Eurodollar Rate Advances. During such periods as such Advance is
     a Eurodollar Rate Advance, a rate per annum equal at all times during each
     Interest Period for such Advance to the sum of (A) the Eurodollar Rate for
     such Interest Period for such Advance plus (B) the Applicable Margin in
     effect from time to time, payable in arrears on the last day of such
     Interest Period and, if such Interest Period has a duration of more than
     one month, on each day that occurs during such Interest Period every one
     month from the first day of such Interest Period and on the date such
     Eurodollar Rate Advance shall be Converted or paid in full.

     (b) Default Interest. Upon the occurrence and during the continuance of an
Event of Default under Section 6.01(a) or (f), or upon receipt by the Loan
Parties of notice from the Administrative Agent as to any other Event of
Default, each Borrower shall pay interest on (i) the unpaid principal amount of
each Advance owing to each Lender, payable in arrears on the dates referred to
in clause (a)(i) or (a)(ii) above at a rate per annum equal at all times to 2%
per annum above the rate per annum required to be paid on such Advance pursuant
to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by
law, the amount of any interest, fee or other amount payable under the Loan
Documents that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid, in the case
of interest, on the Type of Advance on which such interest has accrued pursuant
to clause (a)(i) or (a)(ii) above and, in all other cases, on Base Rate Advances
pursuant to clause (a)(i) above.

     (c) Notice of Interest Period and Interest Rate. Promptly after receipt of
a Notice of Borrowing pursuant to Section 2.02(a), a notice of Conversion
pursuant to Section 2.09 or a notice of selection of an Interest Period pursuant
to the terms of the definition of "Interest Period", the Administrative Agent
shall give notice to the applicable Borrower and each Lender of the applicable
Interest Period and the applicable interest rate determined by the
Administrative Agent for purposes of clause (a)(i) or (a)(ii) above.

     SECTION 2.08. Fees. (a) Commitment Fee. Each Borrower shall pay to the
Administrative Agent for the account of the Lenders a commitment fee, from the
date hereof in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the
<PAGE>
                                       34

Termination Date, payable in arrears on the date of the initial Borrowing
hereunder, thereafter quarterly within 5 Business Days after receipt of an
invoice with supporting documentation from the Administrative Agent, commencing
with the invoice received for the quarter ending March 31, 2003, and on the
Termination Date, at the rate of 0.75 of 1% per annum on the average daily
Unused Working Capital Commitment of such Lender during such quarter; provided,
however, that no commitment fee shall accrue on any of the Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.

     (b) Letter of Credit Fees, Etc. (i) Each Borrower shall pay to the
Administrative Agent for the account of each Lender a commission, payable
quarterly in arrears within 5 Business Days after receipt of an invoice with
supporting documentation from the Administrative Agent, commencing with the
invoice received for the quarter ending March 31, 2003, and on the earliest to
occur of the full drawing, expiration, termination or cancellation of any Letter
of Credit and on the Termination Date, on such Lender's Pro Rata Share of the
average daily aggregate Available Amount during such quarter of all Letters of
Credit outstanding from time to time at the rate of (A) 4.50% per annum, in the
case of the JRM Borrowers, and (B) 3.50% per annum, in the case of BWXT.

     (ii) Each Borrower shall pay to each Issuing Bank, for its own account,
within 5 Business Days after receipt of an invoice with supporting documentation
from such Issuing Bank: (A) a commission, payable in arrears quarterly on the
last day of each March, June, September and December, commencing March 31, 2003,
and on the Termination Date, on the average daily Available Amount of its
Letters of Credit during such, from the date hereof until the Termination Date,
at the rate of 0.50% per annum and (B) such other commissions, fronting fees,
transfer fees and other charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and such Issuing Bank
shall agree.

     (c) Agents' Fees. The Borrowers shall pay to each Agent for its own account
such fees as may from time to time be agreed between the Borrowers and such
Agent.

     SECTION 2.09. Conversion of Advances. (a) Optional. Each Borrower may on
any Business Day, upon notice given to the Administrative Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(b), and
each Conversion of Advances comprising part of the same Borrowing shall be made
ratably among the Lenders in accordance with their Commitments. Each such notice
of Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

     (b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or
<PAGE>
                                       35

prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.

     (ii) If any Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify such Borrower and the Lenders,
whereupon each such Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.

     (iii) Upon the occurrence and during the continuance of any Event of
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

     SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in any applicable law or regulation or in the
interpretation thereof by any governmental authority charged with the
interpretation or administration thereof or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender Party of agreeing to make or of making, funding or
maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or
maintaining or participating in Letters of Credit or of agreeing to make or of
making or maintaining Letter of Credit Advances (excluding, for purposes of this
Section 2.10, any such increased costs resulting from (x) Taxes or Other Taxes
(as to which Section 2.12 shall govern) and (y) changes in the basis of taxation
of overall net income or overall gross income by the United States or by the
foreign jurisdiction or state under the laws of which such Lender Party is
organized or has its Applicable Lending Office or any political subdivision
thereof), then the Borrowers shall from time to time, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent) pay to the
Administrative Agent for the account of such Lender Party additional amounts
necessary to compensate such Lender Party for such increased cost; provided,
however, that a Lender Party claiming additional amounts under this Section
2.10(a) agrees to use reasonable efforts (consistent with its internal policy
and applicable legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost that may thereafter
accrue and would not, in the reasonable judgment of such Lender Party, be
otherwise materially disadvantageous to such Lender Party. A certificate setting
forth in reasonable detail the amount of such increased cost, submitted to the
Borrowers by such Lender Party (within 90 days after obtaining knowledge of such
increased costs), shall be conclusive and binding for all purposes, absent
manifest error.

     (b) If, following the introduction of or any change in any applicable law
or regulation or in the interpretation thereof by any governmental authority
charged with the interpretation or administration thereof, the compliance with
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender Party or any
corporation controlling such Lender Party and that the amount of such capital is
increased by or based upon the existence of such Lender Party's commitment to
lend or to issue or participate in Letters of Credit hereunder and other
commitments of such type or the issuance or
<PAGE>
                                       36

maintenance of or participation in the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party or such corporation (with a
copy of such demand to the Administrative Agent), the Borrowers shall pay to the
Administrative Agent for the account of such Lender Party, from time to time as
specified by such Lender Party, additional amounts necessary to compensate such
Lender Party in the light of such circumstances, to the extent that such Lender
Party reasonably determines such increase in capital to be allocable to the
existence of such Lender Party's commitment to lend or to issue or participate
in Letters of Credit hereunder or to the issuance or maintenance of or
participation in any Letters of Credit. A certificate setting forth in
reasonable detail such amounts submitted to the Borrowers (within 90 days after
obtaining knowledge of such increased costs) by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error. No Lender Party
shall demand compensation under this Section 2.10(b) if it shall not at the time
be the general practice of such Lender Party to demand compensation in similar
circumstances under comparable provisions of other credit agreements, if any.

     (c) If, with respect to any Eurodollar Rate Advances, the Required Lenders
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrowers and the
Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrowers that such Lenders have
determined that the circumstances causing such suspension no longer exist.

     (d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in any law or regulation or in the interpretation
thereof by any governmental authority charged with the interpretation or
administration thereof shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder, then, on notice thereof and demand therefor by such Lender
to the Borrowers through the Administrative Agent, (i) each Eurodollar Rate
Advance will automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrowers that such Lender has determined that the circumstances
causing such suspension no longer exist; provided, however, that, before making
any such demand, such Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the making of such a designation would
allow such Lender or its Eurodollar Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to fund or maintain
Eurodollar Rate Advances and would not, in the judgment of such Lender, be
otherwise materially disadvantageous to such Lender.

     SECTION 2.11. Payments and Computations. (a) The Borrowers shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off
<PAGE>
                                       37

(except as otherwise provided in Section 2.15), not later than 11:00 A.M. (New
York City time) on the day when due in U.S. dollars to the Administrative Agent
at the Administrative Agent's Account in same day funds, with payments being
received by the Administrative Agent after such time being deemed to have been
received on the next succeeding Business Day. The Administrative Agent will
promptly thereafter cause like funds to be distributed (i) if such payment by
the Borrowers is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder and under the Notes to more than one Lender
Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lender Parties and (ii) if such payment by the
Borrowers is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

     (b) Each Borrower hereby authorizes each Lender Party and each of its
Affiliates, if and to the extent payment owed to such Lender Party is not made
when due hereunder or, in the case of a Lender, under the Note held by such
Lender, to charge from time to time, to the fullest extent permitted by law,
against any or all of such Borrower's accounts with such Lender Party or such
Affiliate any amount so due.

     (c) All computations of interest based on the Base Rate shall be made by
the Administrative Agent on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the Eurodollar Rate or the
Federal Funds Rate and of fees and Letter of Credit commissions shall be made by
the Administrative Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or commissions are
payable. Each determination by the Administrative Agent of an interest rate, fee
or commission hereunder shall be conclusive and binding for all purposes, absent
manifest error.

     (d) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

     (e) Unless the Administrative Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to any Lender Party
hereunder that the Borrowers will not make such payment in full, the
Administrative Agent may assume that the Borrowers have made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each
<PAGE>
                                       38

such Lender Party on such due date an amount equal to the amount then due such
Lender Party. If and to the extent the Borrowers shall not have so made such
payment in full to the Administrative Agent, each such Lender Party shall repay
to the Administrative Agent forthwith on demand such amount distributed to such
Lender Party together with interest thereon, for each day from the date such
amount is distributed to such Lender Party until the date such Lender Party
repays such amount to the Administrative Agent, at the Federal Funds Rate.

     (f) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute such funds to each Lender Party ratably in
accordance with such Lender Party's proportionate share of the principal amount
of all outstanding Advances and the Available Amount of all Letters of Credit
then outstanding, in repayment or prepayment of such of the outstanding Advances
or other Obligations owed to such Lender Party, and for application to such
principal installments, as the Administrative Agent shall direct.

     SECTION 2.12. Taxes. (a) Any and all payments by the Borrowers hereunder or
under the Notes shall be made, in accordance with Section 2.11, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party and each Agent, taxes that
are imposed on its net income by the United States and taxes that are imposed on
its net income (and franchise taxes imposed on or measured by net income) by the
jurisdiction under the laws of which such Lender Party or such Agent, as the
case may be, is organized or in which its principal executive office is located
or any political subdivision thereof, and, in the case of each Lender Party,
taxes that are imposed on its net income (and franchise taxes imposed on or
measured by net income) by the jurisdiction of such Lender Party's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes being hereinafter referred to
as "TAXES"). If the Borrowers shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender Party
or any Agent, (i) the sum payable by the Borrowers shall be increased by the
amount (an "ADDITIONAL AMOUNT") necessary so that after the Borrowers and the
Administrative Agent have made all required deductions (including deductions
applicable to additional sums payable under this Section 2.12) such Lender Party
or such Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrowers shall make
all such deductions and (iii) the Borrowers shall pay the full amount deducted
to the relevant taxation authority in accordance with applicable law.

     (b) In addition, the Borrowers shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of performance under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "OTHER TAXES").

     (c) The Borrowers shall indemnify each Lender Party and each Agent for and
hold them harmless against the full amount of Taxes and Other Taxes, and for the
full amount of
<PAGE>
                                       39

taxes of any kind imposed by any jurisdiction on amounts payable under this
Section 2.12, imposed on or paid by such Lender Party or such Agent (as the case
may be) and any liability (including penalties, additions to tax, interest and
reasonable expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
such Agent (as the case may be) makes reasonable written demand (which demand
shall be made within a reasonable time), specifying in reasonable detail (with
supporting documentation reasonably requested by the Borrowers) the reasons
therefor.

     (d) If an Agent or Lender Party shall become aware that it is entitled to
claim a refund from a taxation authority in respect of Taxes or Other Taxes as
to which it has been indemnified by the Borrowers, or with respect to which the
Borrowers have paid Additional Amounts, pursuant to this Section 2.12, it shall
promptly notify the Borrowers of the availability of such refund claim and
shall, within 30 days after receipt of a request by the Borrowers, make a claim
to such taxation authority for such refund at the Borrowers' expense. If an
Agent or a Lender Party receives a refund (including pursuant to a claim for
refund made pursuant to the preceding sentence) in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrowers, or with respect to
which the Borrowers have paid Additional Amounts, pursuant to this Section 2.12,
it shall within 30 days from the date of such receipt pay over such refund to
the Borrowers (but only to the extent of indemnity payments made, or Additional
Amounts paid, by the Borrowers under this Section 2.12 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Agent or Lender Party and without interest (other than interest paid by the
relevant taxation authority with respect to such refund); provided, however,
that the Borrowers, upon the request of such Agent or Lender Party, agree to
repay the amount paid over to the Borrowers (plus penalties, interest or other
charges, if any, imposed by the relevant taxation authority in respect of such
repayment) to such Agent or Lender Party in the event such Agent or Lender Party
is required to repay such refund to such taxation authority.

     (e) Within 30 days after the date of any payment of Taxes by the Borrowers,
the Borrowers shall use commercially reasonable efforts to furnish to the
Administrative Agent, at its address referred to in Section 9.02, the original
or a certified copy of a receipt evidencing such payment. In the case of any
payment hereunder or under the Notes by or on behalf of any Borrower through an
account or branch outside of the United States or Panama or by or on behalf of
such Borrower by a payor that is not a United States or Panamanian person, if
such Borrower determines that no Taxes are payable in respect thereof and if
requested by the Administrative Agent, such Borrower shall furnish, or shall
cause such payor to furnish, to the Administrative Agent, at such address, an
opinion of counsel (which may be, if acceptable to the Administrative Agent,
from in-house counsel) stating that such payment is exempt from Taxes. For
purpose of subsections (e) and (f) of this Section 2.12, the terms "UNITED
STATES" and "UNITED STATES PERSON" shall have the meanings specified in Section
7701 of the Internal Revenue Code.

     (f) Each Lender Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender Party, on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender Party in the
case of each other Lender Party and on or before the date, if any, it changes
its Applicable Lending Office, and from time to time thereafter as requested in
<PAGE>
                                       40

writing by the Borrowers (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide each of the Administrative Agent and
the Borrowers with two original Internal Revenue Service Forms W-8BEN or W-8ECI
(in the case of a Lender Party that provides a Form W-8BEN other than by reason
of the applicability of a tax treaty, the Lender Party shall also provide a
certificate representing that such Lender Party is not a "bank" for purposes of
Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrowers and is not a controlled foreign corporation related to the Borrowers
(within the meaning of Section 864(d)(4) of the Internal Revenue Code)), as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, properly completed and duly executed by such Lender Party, certifying
that such Lender Party is exempt from or entitled to a reduced rate of United
States withholding tax on payments pursuant to this Agreement or the Notes and,
in the case of a Lender Party providing a Form W-8BEN, certifying that such
Lender Party is a foreign corporation, partnership, estate or trust. In
addition, each such Lender Party shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Lender
Party. If the forms provided by a Lender Party at the time such Lender Party
first becomes a party to this Agreement indicate or require a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes for purposes of this Section 2.12 unless
and until such Lender Party provides the appropriate forms certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such forms; provided,
however, that if, at the effective date of the Assignment and Acceptance
pursuant to which a Lender Party becomes a party to this Agreement (or the date,
if any, a Lender Party changes its Applicable Lending Office), the Lender Party
assignor (or such Lender Party) was entitled to payments under subsection (a) of
this Section 2.12 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes, subject to the provisions of this
subsection (f)) United States withholding tax, if any, applicable with respect
to the Lender Party assignee (or such Lender Party) on such date.

     (g) For any period with respect to which a Lender Party has failed to
provide any Borrower with the appropriate form described in subsection (f) above
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (f) above), such Lender Party shall not be
entitled to indemnification under subsection (a) or (c) of this Section 2.12,
Section 8.04 hereof or Section 5(c) of the Subsidiary Guaranty with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender Party become subject to Taxes because of its failure to
deliver a form required hereunder, any Borrower shall take such steps as such
Lender Party shall reasonably request to assist such Lender Party to recover
such Taxes.

     (h) Any Lender Party claiming any indemnity payment or Additional Amounts
payable pursuant to this Section 2.12, Section 8.04 hereof or Section 5(c) of
the Subsidiary Guaranty shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested in writing by the Borrowers or to change the jurisdiction of its
Applicable Lending Office following the reasonable request in writing of the
Borrower if the making of such a filing or change would avoid the need for or
reduce the amount
<PAGE>
                                       41

of any such indemnity payment or Additional Amounts that may thereafter accrue
and would not, in the sole determination of such Lender Party, require the
disclosure of information that the Lender Party reasonably considers
confidential, or be otherwise disadvantageous to such Lender Party.

     SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise, other than as a result of an assignment
pursuant to Section 9.07) (a) on account of Obligations due and payable to such
Lender Party hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender Party at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party's
ratable share (according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to all Lender
Parties) of such recovery together with an amount equal to such Lender Party's
ratable share (according to the proportion of (i) the amount of such other
Lender Party's required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered. The
Borrower agrees that any Lender Party so purchasing an interest or participating
interest from another Lender Party pursuant to this Section 2.13 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such interest or participating interest,
as the case may be, as fully as if such Lender Party were the direct creditor of
such Borrower in the amount of such interest or participating interest, as the
case may be; provided, further, that, notwithstanding anything to the contrary
contained in this Section 2.13, this Section 2.13 shall not apply to (x) the
cash collateralization of the Mizuho Obligations pursuant to Section 3.01(d) and
Section 5.01(s) and (y) the repayment of outstanding Mizuho Obligations and the
termination of Mizuho's Commitment on the Mizuho Termination Date.

     SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely (i) to refinance in full the
Existing Credit Facilities and (ii) provide
<PAGE>
                                       42

for working capital and general corporate purposes of the Borrowers and their
respective Subsidiaries, Affiliates and joint ventures.

     SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to any Borrower and (iii) such Borrower shall be
required to make any payment hereunder or under any other Loan Document to or
for the account of such Defaulting Lender, then such Borrower may, so long as no
Default shall occur or be continuing at such time and to the fullest extent
permitted by applicable law, set off and otherwise apply the Obligation of such
Borrower to make such payment to or for the account of such Defaulting Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that, on any date, any Borrower shall so set off and otherwise
apply its obligation to make any such payment against the obligation of such
Defaulting Lender to make any such Defaulted Advance on or prior to such date,
the amount so set off and otherwise applied by such Borrower shall constitute
for all purposes of this Agreement and the other Loan Documents an Advance by
such Defaulting Lender made on the date of such setoff under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.01. Such Advance shall be considered, for all
purposes of this Agreement, to comprise part of the Borrowing in connection with
which such Defaulted Advance was originally required to have been made pursuant
to Section 2.01, even if the other Advances comprising such Borrowing shall be
Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant
to this subsection (a). The Borrower shall notify the Administrative Agent at
any time any Borrower exercises its right of set-off pursuant to this subsection
(a) and shall set forth in such notice (A) the name of the Defaulting Lender and
the Defaulted Advance required to be made by such Defaulting Lender and (B) the
amount set off and otherwise applied in respect of such Defaulted Advance
pursuant to this subsection (a). Any portion of such payment otherwise required
to be made by any Borrower to or for the account of such Defaulting Lender which
is paid by such Borrower, after giving effect to the amount set off and
otherwise applied by the Borrower pursuant to this subsection (a), shall be
applied by the Administrative Agent as specified in subsection (b) or (c) of
this Section 2.15.

     (b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
any Agent or any of the other Lender Parties and (iii) any Borrower shall make
any payment hereunder or under any other Loan Document to the Administrative
Agent for the account of such Defaulting Lender, then the Administrative Agent
may, on its behalf or on behalf of such other Agents or such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by such Borrower to or for the account of such
Defaulting Lender to the payment of each such Defaulted Amount to the extent
required to pay such Defaulted Amount. In the event that the Administrative
Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Administrative Agent shall constitute
for all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Agents or such other
Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent, such other
Agents and such other Lender Parties and, if the amount of
<PAGE>
                                       43

such payment made by such Borrower shall at such time be insufficient to pay all
Defaulted Amounts owing at such time to the Administrative Agent, such other
Agents and such other Lender Parties, in the following order of priority:

          (i) first, to the Agents for any Defaulted Amounts then owing to them,
     in their capacities as such, ratably in accordance with such respective
     Defaulted Amounts then owing to the Agents;

          (ii) second, to the Issuing Banks for any Defaulted Amounts then owing
     to them, in their capacities as such, ratably in accordance with such
     respective Defaulted Amounts then owing to the Issuing Banks; and

          (iii) third, to any other Lender Parties for any Defaulted Amounts
     then owing to such other Lender Parties, ratably in accordance with such
     respective Defaulted Amounts then owing to such other Lender Parties.

Any portion of such amount paid by any Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.

     (c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) any Borrower, any Agent or any other Lender
Party shall be required to pay or distribute any amount hereunder or under any
other Loan Document to or for the account of such Defaulting Lender, then such
Borrower or such Agent or such other Lender Party shall pay such amount to the
Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Citibank, in the name and under the control of the Administrative Agent,
but subject to the provisions of this subsection (c). The terms applicable to
such account, including the rate of interest payable with respect to the credit
balance of such account from time to time, shall be Citibank's standard terms
applicable to escrow accounts maintained with it. Any interest credited to such
account from time to time shall be held by the Administrative Agent in escrow
under, and applied by the Administrative Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so held in escrow
shall at any time be insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:
<PAGE>
                                       44

          (i) first, to the Agents for any amounts then due and payable by such
     Defaulting Lender to them hereunder, in their capacities as such, ratably
     in accordance with such respective amounts then due and payable to the
     Agents;

          (ii) second, to the Issuing Banks for any amounts then due and payable
     to them hereunder, in their capacities as such, by such Defaulting Lender,
     ratably in accordance with such respective amounts then due and payable to
     the Issuing Banks;

          (iii) third, to any other Lender Parties for any amount then due and
     payable by such Defaulting Lender to such other Lender Parties hereunder,
     ratably in accordance with such respective amounts then due and payable to
     such other Lender Parties; and

          (iv) fourth, to the applicable Borrower for any Advance then required
     to be made by such Defaulting Lender pursuant to a Commitment of such
     Defaulting Lender.

In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.

     (d) The rights and remedies against a Defaulting Lender under this Section
2.15 are in addition to other rights and remedies that any Borrower may have
against such Defaulting Lender with respect to any Defaulted Advance and that
any Agent or any Lender Party may have against such Defaulting Lender with
respect to any Defaulted Amount.

     SECTION 2.16. Evidence of Debt. (a) Each Lender Party shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Advance owing
to such Lender Party from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder. Each
Borrower agrees that upon notice by any Lender Party to such Borrower (with a
copy of such notice to the Administrative Agent) to the effect that a promissory
note or other evidence of indebtedness is required or appropriate in order for
such Lender Party to evidence (whether for purposes of pledge, enforcement or
otherwise) the Advances owing to, or to be made by, such Lender Party, such
Borrower shall promptly execute and deliver to such Lender Party, with a copy to
the Administrative Agent, a Note in substantially the form of Exhibit A hereto
payable to the order of such Lender Party in a principal amount equal to the
Working Capital Commitment of such Lender Party. All references to Notes in the
Loan Documents shall mean Notes, if any, to the extent issued hereunder.

     (b) The Register maintained by the Administrative Agent pursuant to Section
9.07(d) shall include a control account, and a subsidiary account for each
Lender Party, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances comprising
such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii)
the terms of each Assignment and Acceptance delivered to and accepted by it,
(iii) the amount of any principal or interest due and
<PAGE>
                                       45

payable or to become due and payable from each Borrower to each Lender Party
hereunder, and (iv) the amount of any sum received by the Administrative Agent
from any Borrower hereunder and each Lender Party's share thereof.

     (c) Entries made in good faith by the Administrative Agent in the Register
pursuant to subsection (b) above, and by each Lender Party in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from any Borrower to, in the case of the Register, each Lender Party and, in the
case of such account or accounts, such Lender Party, under this Agreement,
absent manifest error; provided, however, that the failure of the Administrative
Agent or such Lender Party to make an entry, or any finding that an entry is
incorrect, in the Register or such account or accounts shall not limit or
otherwise affect the obligations of the Borrowers under this Agreement.

     SECTION 2.17. Existing Letters of Credit. Effective as of the Effective
Date, (i) all "Letters of Credit" issued and outstanding under (A) the J. Ray
Credit Agreement for the account of any JRM Borrower shall be deemed to be
Letters of Credit and (B) the McDermott Credit Agreement (except as set forth on
Schedule V hereto) shall be deemed to be Letters of Credit issued for the
account of BWXT, in each case, under this Agreement and (ii) the applications
and agreements for such Letters of Credit shall be deemed to be Letter of Credit
Agreements hereunder.

                                  ARTICLE III

                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

     SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance or of each Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:

          (a) The Administrative Agent shall have received on or before the day
     of the Initial Extension of Credit the following, each dated such day
     (unless otherwise specified), in form and substance satisfactory to the
     Lender Parties (unless otherwise specified) and (except for the Notes) in
     sufficient copies for each Lender Party:

               (i) The Notes, if any, payable to the order of the Lenders.

               (ii) A security agreement in substantially the form of Exhibit D
          hereto (together with each other security agreement and security
          agreement supplement delivered pursuant to Section 5.01(j), in each
          case as amended, the "SECURITY AGREEMENT"), duly executed by each
          Grantor (as defined therein), together with:

               (A) certificates representing the Pledged Equity accompanied,
          where applicable, by undated stock powers executed in blank and
          instruments evidencing the Pledged Debt indorsed in blank,
<PAGE>
                                       46

               (B) proper financing statements, in form sufficient for filing
          under the Uniform Commercial Code of all jurisdictions that the
          Administrative Agent may deem necessary or desirable in order to
          perfect and protect the priority of the liens and security interests
          created under the Security Agreement, covering the Collateral
          described in the Security Agreement,

               (C) completed requests for information, dated on or before the
          date of the Initial Extension of Credit, listing all effective
          financing statements filed in the jurisdictions referred to in clause
          (B) above that name any Borrower as debtor, together with copies of
          such other financing statements,

               (D) evidence of the insurance required by the terms of the
          Security Agreement, and

               (E) receipt of duly executed payoff letters and UCC-3 termination
          statements.

               (iii) A guaranty in substantially the form of Exhibit E hereto
          (together with each other guaranty and guaranty supplement delivered
          pursuant to Section 5.01(j), in each case as amended, the "SUBSIDIARY
          GUARANTY"), duly executed by each Subsidiary Guarantor.

               (iv) Certified copies of the resolutions of the Board of
          Directors of each initial Loan Party approving the Transaction and
          each Loan Document to which it is or is to be a party, and of all
          documents evidencing other necessary corporate action and governmental
          and other third party approvals and consents, if any, with respect to
          the Transaction and each Loan Document to which it is or is to be a
          party.

               (v) Except as provided in Section 5.01(t), a copy of a
          certificate of the Secretary of State or similar governmental
          authority of the jurisdiction of incorporation or organization of each
          initial Loan Party, dated reasonably near the date of the Initial
          Extension of Credit, certifying (A) as to a true and correct copy of
          the charter of such Loan Party, as amended through the date of such
          certificate, on file in such Secretary's or similar office and, in the
          case of each initial Loan Party that is organized under the laws of a
          jurisdiction located within the United States, (B) that (1) such Loan
          Party has paid all franchise taxes to the date of such certificate and
          (2) such Loan Party is duly incorporated or organized and in good
          standing or presently subsisting under the laws of the jurisdiction of
          its incorporation or organization.

               (vi) A certificate of each initial Loan Party, signed on behalf
          of such Loan Party by its President or a Vice President and its
          Secretary or any Assistant Secretary, dated the date of the Initial
          Extension of Credit (the statements made in which certificate shall be
          true on and as of the date of the Initial Extension of Credit),
          certifying as to (A) the absence of any amendments to the charter of
          such Loan Party since the date of the certificate referred to in
          Section 3.01(a)(v), (B) a
<PAGE>
                                       47

          true and correct copy of the bylaws or other governing documents of
          such Loan Party as in effect on the date on which the resolutions
          referred to in Section 3.01(a)(iv) were adopted and on the date of the
          Initial Extension of Credit, (C) the due incorporation and good
          standing or valid existence of such Loan Party as a corporation
          organized under the laws of the jurisdiction of its incorporation or
          organization, and the absence of any proceeding for the dissolution or
          liquidation of such Loan Party, (D) the truth of the representations
          and warranties contained in the Loan Documents as though made on and
          as of the date of the Initial Extension of Credit, other than any such
          representations or warranties that, by their terms, refer to a
          specific date other than the date of the Initial Extension of Credit,
          in which case as of such specific date, and (E) the absence of any
          event occurring and continuing, or resulting from the Initial
          Extension of Credit, that constitutes a Default.

               (vii) A certificate of the Secretary or an Assistant Secretary of
          each initial Loan Party certifying the names and true signatures of
          the officers of such Loan Party authorized to sign each Loan Document
          to which it is or is to be a party and the other documents to be
          delivered hereunder and thereunder.

               (viii) A certificate from the Chief Financial Officer of MII, in
          substantially the form of Exhibit F hereto, respectively, attesting to
          the Solvency of MII and its Subsidiaries, taken as a whole, before and
          after giving effect to the Transaction.

               (ix) Evidence of insurance naming the Collateral Agent as
          additional insured and loss payee with respect to the Collateral with
          such responsible and reputable insurance companies or associations,
          and in such amounts and covering such risks as are agreed to by the
          parties hereto, including, without limitation, business interruption
          insurance.

               (x) A Notice of Borrowing or Notice of Issuance, as applicable,
          relating to the Initial Extension of Credit.

               (xi) A favorable opinion of (A) Baker Botts, L.L.P., counsel for
          MII, in substantially the form of Exhibit G-1 hereto and (B) John T.
          Nesser, General Counsel of MII, in substantially the form of Exhibit
          G-2 hereto.

               (xii) A favorable opinion of Durling & Durling, Panamanian
          counsel to the Loan Parties, in substantially the form of Exhibit H
          hereto.

          (b) MII shall have made the MII Loans available to each of BWXT and
     JRMSA, and each of BWXT and JRMSA shall have borrowed, or shall borrow
     contemporaneously with the Initial Extension of Credit, the full amount of
     MII Loans made available to it.

          (c) On or prior to the Effective Date, all outstanding letters of
     credit issued for the account of MII or its Subsidiaries under the
     McDermott Credit Agreement will be required to either be transferred to the
     account of one or more Borrowers under the
<PAGE>
                                       58

     Facilities or to be fully cash collateralized on terms reasonably
     satisfactory to the Lender Parties.

          (d) MII shall have deposited $6,000,000 into the Mizuho Cash
     Collateral Account.

          (e) The Borrowers shall have paid all accrued fees of the Agents and
     the Lender Parties and all accrued expenses of the Agents (including the
     accrued fees and expenses of counsel to the Administrative Agent and local
     counsel to the Lender Parties).

     SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and
Renewal. The obligation of each Lender to make an Advance (other than a Letter
of Credit Advance made by an Issuing Bank or a Lender pursuant to Section
2.03(c)) on the occasion of each Borrowing (including the initial Borrowing),
and the obligation of each Issuing Bank to issue a Letter of Credit (including
the initial issuance) or renew a Letter of Credit, shall be subject to the
conditions precedent that on the date of such Borrowing or issuance or renewal
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing or Notice of Issuance or Notice of Renewal and
the acceptance by any Borrower of the proceeds of such Borrowing or of such
Letter of Credit or the renewal of such Letter of Credit shall constitute a
representation and warranty by such Borrower that both on the date of such
notice and on the date of such Borrowing or issuance or renewal such statements
are true):

          (i) the representations and warranties contained in this Agreement are
     correct and the representations and warranties in each of the other Loan
     Documents are correct in all material respects, in each case on and as of
     such date, before and after giving effect to such Borrowing or issuance or
     renewal and to the application of the proceeds therefrom, as though made on
     and as of such date, other than any such representations or warranties
     that, by their terms, refer to a specific date other than the date of such
     Borrowing or issuance or renewal, in which case as of such specific date;

          (ii) no Default has occurred and is continuing, or would result from
     such Borrowing or issuance or renewal or from the application of the
     proceeds therefrom; and

          (iii) (A) in the case of the JRM Borrowers, the full amount of the MII
     Loan made to JRMSA is outstanding and (B) in the case of BWXT, the full
     amount of the MII Loan made to BWXT is outstanding; provided, however, that
     this clause (iii) shall only apply to an Advance (other than a Letter of
     Credit Advance made by an Issuing Bank or a Lender pursuant to Section
     2.03(c));

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender Party through the Administrative Agent may
reasonably request.

     SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
<PAGE>
                                       49

Party prior to the Initial Extension of Credit specifying its objection thereto
and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     SECTION 4.01. Representations and Warranties of the Borrower. Each Loan
Party represents and warrants as follows:

          (a) Each Loan Party and each of its Subsidiaries (i) is a duly
     organized, validly existing and in good standing under the laws of the
     jurisdiction of its incorporation or organization, (ii) is duly qualified
     to do business and in good standing in each other jurisdiction in which it
     owns or leases property or in which the conduct of its business requires it
     to so qualify or be licensed and (iii) has all requisite corporate power
     and authority (including, without limitation, all governmental licenses,
     permits and other approvals) to own or lease and operate its properties and
     to carry on its business as now conducted and as proposed to be conducted,
     except for any failures to be so organized, existing, qualified to do
     business or in good standing or to have such power and authority as would
     not, individually or in the aggregate, have a Material Adverse Effect.

          (b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
     list of all Subsidiaries of each Loan Party as of the Effective Date
     showing as of the Effective Date (as to each such Subsidiary) the
     jurisdiction of its incorporation, the number of shares of each class of
     its Equity Interests authorized, and the number outstanding, on the date
     hereof and the percentage of each such class of its Equity Interests owned
     (directly or indirectly) by such Loan Party and the number of shares
     covered by all outstanding options, warrants, rights of conversion or
     purchase and similar rights at the date hereof. Except as specified on
     Schedule 4.01(b), all of the outstanding Equity Interests in each Loan
     Party's Subsidiaries organized under the laws of any state of the United
     States have been validly issued, are fully paid and non-assessable and are
     owned by such Loan Party or one or more of its Subsidiaries free and clear
     of all Liens, except those created under the Collateral Documents and
     Permitted Liens.

          (c) The execution, delivery and performance by each Loan Party of each
     Loan Document to which it is or is to be a party, and the consummation of
     the Transaction, are within such Loan Party's corporate powers, have been
     duly authorized by all necessary corporate action, and do not (i)
     contravene such Loan Party's charter or bylaws or other constitutive
     documents, (ii) violate, in any material respect, any law, rule, regulation
     (including, without limitation, Regulation X of the Board of Governors of
     the Federal Reserve System), order, writ, judgment, injunction, decree,
     determination or award, (iii) result in the breach of, or constitute a
     default or require any payment to be made under, any contract, loan
     agreement, indenture, mortgage, deed of trust, lease or other instrument
     binding on or affecting any Loan Party, any of its Subsidiaries or any of
     their properties, except for such breaches, defaults or required payments
     as, would not
<PAGE>
                                       50

     reasonably be expected to, individually or in the aggregate, have a
     Material Adverse Effect, or (iv) except for the Liens created under the
     Loan Documents, result in or require the creation or imposition of any Lien
     upon or with respect to any of the properties of any Loan Party or any of
     its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation
     of any such law, rule, regulation, order, writ, judgment, injunction,
     decree, determination or award or in breach of any such contract, loan
     agreement, indenture, mortgage, deed of trust, lease or other instrument,
     the violation or breach of which would be reasonably expected to have a
     Material Adverse Effect.

          (d) Except as contemplated by the Loan Documents and except for
     filings required to be made by MII with the Securities and Exchange
     Commission under the Securities Exchange Act of 1934, as amended, no
     authorization or approval or other action by, and no notice to or filing
     with, any governmental authority or regulatory body or any other third
     party is required for (i) the due execution, delivery, recordation, filing
     or performance by any Loan Party of any Loan Document to which it is or is
     to be a party, or for the consummation of the Transaction, (ii) the grant
     by any Loan Party or by any of its Subsidiaries of the Liens granted by it
     pursuant to the Collateral Documents or (iii) the perfection or maintenance
     of the Liens created under the Collateral Documents (including the required
     priority).

          (e) This Agreement has been, and each other Loan Document when
     delivered hereunder will have been, duly executed and delivered by each
     Loan Party party thereto. This Agreement is, and each other Loan Document
     when delivered hereunder will be, the legal, valid and binding obligation
     of each Loan Party or Subsidiary of such Loan Party party thereto,
     enforceable against such Loan Party of such Subsidiary in accordance with
     its terms, except as that enforceability may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or similar laws
     affecting the enforcement of creditors' rights generally and by general
     equitable principles.

          (f) There is no action, suit, investigation, litigation or proceeding
     affecting any Loan Party or any of its Subsidiaries, including any
     Environmental Action, pending or threatened before any court, governmental
     agency or arbitrator that (i) purports to affect the legality, validity or
     enforceability of any Loan Document or the consummation of the Transaction
     or (ii) as to which there is a reasonable possibility of an adverse
     determination and which, if adversely determined, would reasonably be
     expected to, individually or in the aggregate, result in a Material Adverse
     Effect, except as disclosed on Schedule 4.01(f) hereto or in MII's annual
     report on Form 10-K for the year ended December 31, 2001 or MII's quarterly
     report on Form 10-Q for the quarter ended September 30, 2002.

          (g) The Consolidated balance sheets of MII and its Subsidiaries as at
     December 31, 2001, and the related Consolidated statements of income and
     cash flows of MII and its Subsidiaries for the fiscal year then ended,
     accompanied by an unqualified opinion of Pricewaterhouse Coopers LLP,
     independent public accountants, and the Consolidated balance sheets of MII
     and its Subsidiaries as at September 30, 2002, and the related Consolidated
     statements of income and cash flows of MII and its Subsidiaries for the
     nine months then ended, duly certified by the Chief Financial Officer of
     MII, copies of which
<PAGE>
                                       51

     have been furnished to each Lender Party, fairly present the Consolidated
     financial condition of MII and its Subsidiaries as at such dates and the
     Consolidated results of operations of MII and its Subsidiaries for the
     periods ended on such dates, all in accordance with generally accepted
     accounting principles applied on a consistent basis, and since December 31,
     2001, there has been no Material Adverse Change (except as identified in
     MII's report on Form 10-Q for the quarter ended September 30, 2002, in
     Schedule 4.01(g) hereto, in any of the other Schedules delivered pursuant
     to this Section 4.01 or in any other writing delivered to each of the
     Lender Parties).

          (h) No information, exhibit or report furnished by or on behalf of any
     Borrower in writing to any Agent or any Lender Party in connection with the
     negotiation and syndication of the Loan Documents or pursuant to the terms
     of the Loan Documents (taken together with all other information furnished
     by or on behalf of the Loan Parties) contained as of the date such
     information is dated or certified (or, if not dated or certified, as of the
     date such information is provided) any untrue statement of a material fact
     or omitted to state a material fact necessary to make the statements made
     therein, in light of the circumstances under which they were or are made,
     not misleading; provided, however, that, with respect to any such
     information, exhibit or report consisting of statements, estimates and
     projections regarding the future performance of MII or any of its
     Subsidiaries ("PROJECTIONS"), no representation or warranty is made other
     than that such Projections have been prepared in good faith utilizing due
     and careful consideration and the best information available to MII at the
     time of preparation thereof.

          (i) No Loan Party is engaged in the business of extending credit for
     the purpose of purchasing or carrying Margin Stock, and no proceeds of any
     Advance or drawings under any Letter of Credit will be used to purchase or
     carry any Margin Stock or to extend credit to others for the purpose of
     purchasing or carrying any Margin Stock.

          (j) Neither any Loan Party nor any of its Subsidiaries is an
     "investment company" or a company "controlled" by an "investment company",
     as such terms are defined in the Investment Company Act of 1940, as
     amended. Neither any Loan Party nor any of its Subsidiaries is a "holding
     company", or a "subsidiary company" of a "holding company", or an
     "affiliate" of a "holding company" or of a "subsidiary company" of a
     "holding company", as such terms are defined in the Public Utility Holding
     Company Act of 1935, as amended. Neither the making of any Advances, nor
     the issuance of any Letters of Credit, nor the application of the proceeds
     or repayment thereof by the Loan Parties, nor the consummation of the other
     transactions contemplated by the Loan Documents, will constitute a
     violation by any Loan Party of any applicable provision of any such Act or
     any rule, regulation or order of the Securities and Exchange Commission
     thereunder.

          (k) Neither any Loan Party nor any Subsidiary of any Loan Party is a
     party to any indenture, loan or credit agreement or any lease or other
     agreement or instrument or subject to any charter or corporate restriction
     that would be reasonably expected to have a Material Adverse Effect.
<PAGE>
                                       52

          (l) After making all of the filings and taking all other actions
     required to be made by any of the Loan Parties and the other Collateral
     Grantors which are necessary to perfect the security interest in the
     Collateral created under the Collateral Documents , the Collateral
     Documents will create in favor of the Collateral Agent for the benefit of
     the Secured Parties a valid and, together with such filings and other
     applicable actions, perfected first priority security interest in the
     Collateral, subject only to the Liens permitted by the Loan Documents,
     securing the payment of the Secured Obligations. The Loan Parties and the
     other Collateral Grantors are the legal and beneficial owners of the
     Collateral free and clear of any Lien, except for the liens and security
     interests created or permitted under the Loan Documents.

          (m) MII and its Subsidiaries are, taken as a whole, Solvent.

          (n) (i) Except as specified in Schedule 4.01(n) hereto, since December
     31, 2001, no ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan that has resulted in or is reasonably expected to
     result in a material liability of any Loan Party or any ERISA Affiliate.

          (ii) Schedule B (Actuarial Information) to the most recent annual
     report (Form 5500 Series) for each Plan, copies of which have been filed
     with the Internal Revenue Service and furnished to the Administrative
     Agent, was complete and accurate and fairly presented the funding status of
     such Plan as of the date thereof, and, except as specified in Schedule
     4.01(n) hereto, since the date of such Schedule B there has been no
     material adverse change in such funding status.

          (iii) Since December 31, 2001, neither any Loan Party nor any ERISA
     Affiliate has incurred or is reasonably expected to incur any Withdrawal
     Liability to any Multiemployer Plan in an amount in excess of $20,000,000.

          (iv) Since December 31, 2001, neither any Loan Party nor any ERISA
     Affiliate has been notified by the sponsor of a Multiemployer Plan that
     such Multiemployer Plan is in reorganization or has been terminated, within
     the meaning of Title IV of ERISA, and none of the Loan Parties reasonably
     expects such Multiemployer Plan to be in reorganization or to be
     terminated, within the meaning of Title IV of ERISA, except for any such
     reorganizations or terminations as would not, individually or in the
     aggregate, result in a liability of any Loan Party or any ERISA Affiliate
     in excess of $20,000,000.

          (v) With respect to each scheme or arrangement mandated by a
     government other than the United States (a "FOREIGN GOVERNMENT SCHEME OR
     ARRANGEMENT") and with respect to each employee benefit plan maintained or
     contributed to by any Loan Party or any Subsidiary of any Loan Party that
     is not subject to United States law (a "FOREIGN PLAN"):

               (i) Any employer and employee contributions required by law or by
          the terms of any Foreign Government Scheme or Arrangement or any
          Foreign Plan have been made, or, if applicable, accrued, in accordance
          with normal accounting practices, except for such failure to make
          contributions as would not
<PAGE>
                                       53

          individually or in the aggregate, result in a material liability of
          any Loan Party or any Subsidiary of any Loan Party.

               (ii) The fair market value of the assets of each funded Foreign
          Plan, the liability of each insurer for any Foreign Plan funded
          through insurance or the book reserve established for any Foreign
          Plan, together with any accrued contributions, is sufficient to
          procure or provide for the accrued benefit obligations, as of the
          Effective Date, with respect to all current and former participants in
          such Foreign Plan according to the actuarial assumptions and
          valuations most recently used to account for such obligations in
          accordance with applicable generally accepted accounting principles,
          except for deficiencies that would not individually or in the
          aggregate, result in a material liability.

               (iii) Each Foreign Plan required to be registered has been
          registered and has been maintained in good standing with applicable
          regulatory authorities, except for failures to register that would not
          individually or in the aggregate, result in a material liability of
          any Loan Party or any Subsidiary of any Loan Party.

          (o) In each case, except as set forth in Schedule 4.01(o) hereto:

          (i) (A) The operations and properties of each Loan Party and each of
     its Subsidiaries comply with all applicable Environmental Laws and
     Environmental Permits, except where the failure to so comply would not,
     individually or in the aggregate, have a Material Adverse Effect; (B) all
     past non-compliance with such Environmental Laws and Environmental Permits
     has been resolved without material ongoing obligations or costs, except
     where the failure to resolve any such non-compliance would not,
     individually or in the aggregate, be reasonably expected to have a Material
     Adverse Effect; and (C) no circumstances exist that would be reasonably
     expected to (1) form the basis of an Environmental Action against any Loan
     Party or any of its Subsidiaries or any of their properties that would be
     reasonably expected to have a Material Adverse Effect or (2) cause any such
     property to be subject to any restrictions on ownership, occupancy, use or
     transferability under any Environmental Law that would be reasonably
     expected to have a Material Adverse Effect.

          (ii) None of the properties currently or formerly owned or operated by
     any Loan Party or any of its Subsidiaries is listed or, to the knowledge of
     any of the Loan Parties as of the Effective Date, currently proposed for
     listing on the NPL or on the CERCLIS or any analogous foreign, state or
     local list or is adjacent to any such property; except as would not,
     individually or in the aggregate, reasonably be expected to have a Material
     Adverse Effect, there are no and never have been any underground or
     aboveground storage tanks or any surface impoundments, septic tanks, pits,
     sumps or lagoons in which Hazardous Materials are being or have been
     treated, stored or disposed on any property currently owned or operated by
     any Loan Party or any of its Subsidiaries or, to the best of its knowledge,
     on any property formerly owned or operated by any Loan Party or any of its
     Subsidiaries; except as would not, individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect, there is no
     asbestos or asbestos-containing
<PAGE>
                                       54

     material on any property currently owned or operated by any Loan Party or
     any of its Subsidiaries; and, except as would not, individually or in the
     aggregate, reasonably be expected to have a Material Adverse Effect,
     Hazardous Materials have not been released, discharged or disposed of on
     any property currently or formerly owned or operated by any Loan Party or
     any of its Subsidiaries.

          (iii) Except as would not, individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect, neither any Loan
     Party nor any of its Subsidiaries is undertaking, and has not completed,
     either individually or together with other potentially responsible parties,
     any investigation or assessment or remedial or response action relating to
     any actual or threatened release, discharge or disposal of Hazardous
     Materials at any site, location or operation currently or formerly owned or
     operated by any Loan Party or any of its Subsidiaries, either voluntarily
     or pursuant to the order of any governmental or regulatory authority or the
     requirements of any Environmental Law; and all Hazardous Materials
     generated, used, treated, handled or stored at, or transported to or from,
     any property currently or formerly owned or operated by any Loan Party or
     any of its Subsidiaries have been disposed of in a manner not reasonably
     expected to result in a Material Adverse Effect.

          (p) (i) Neither any Loan Party nor any of its Subsidiaries is party to
     any Affiliated group tax sharing agreement other than (A) the Tax
     Allocation Agreement dated January 1, 2000 and (B) the tax separation
     agreement contemplated by the Settlement Agreement.

          (ii) Each Loan Party and each of its Subsidiaries and Affiliates has
     filed, has caused to be filed or has been included in all Federal and state
     and material local and foreign tax returns required to be filed (after
     giving effect to any applicable extension in the time for filing) with
     respect to such Loan Party and each of its Subsidiaries. All Taxes with
     respect to such Loan Party and each of its Subsidiaries shown to be due on
     such tax returns, together with applicable interest and penalties, have
     been paid.

          (iii) Set forth on Schedule 4.01(p) hereto is a complete and accurate
     list, as of the Effective Date, of each taxable year of each Loan Party and
     each of its Subsidiaries for which U.S. Federal income tax returns have
     been filed and for which the expiration of the applicable statute of
     limitations for assessment or collection has not occurred by reason of
     extension or otherwise (an "OPEN YEAR").

          (iv) The Internal Revenue Service has issued notices for the MI
     consolidated group for the fiscal years ended March 31, 1993, 1994, 1995,
     1996, 1997 and 1998 and for the JRMHI consolidated group for the fiscal
     years ended March 31, 1995, 1996 and 1998 asserting deficiencies in the
     amount of taxes reported. Each Loan Party and its Subsidiaries and
     Affiliates believe that any additional income taxes ultimately assessed
     against the MI and JRMHI consolidated groups in respect of those fiscal
     years will not exceed $23,100,000.

          (v) The aggregate unpaid amount, as of the Effective Date, of
     adjustments to the state, local and foreign tax liability of each Loan
     Party and its Subsidiaries and Affiliates
<PAGE>
                                       55

     proposed in writing by all state, local and foreign taxing authorities
     (other than amounts arising from adjustments to Federal income tax returns)
     does not exceed $7,000,000. No issues have been raised in writing by such
     taxing authorities that, in the aggregate, could be reasonably likely to
     have a Material Adverse Effect.

          (vi) No "ownership change" as defined in Section 382(g) of the
     Internal Revenue Code, and no event that would result in the application of
     the "separate return limitation year" limitations under the Federal income
     tax consolidated return regulations, has occurred with respect to any Loan
     Party since December 31, 2001.

          (q) Set forth on Schedule 4.01(q) hereto is a complete and accurate
     list, as of the date therein specified, of each item of Surviving Debt
     that, in each case, consists of Debt in excess of $1,000,000 in principal
     amount and is described in clauses (a), (c), (f) and (h) of the definition
     of "Debt" contained of Section 1.01 (but, in each case, excluding Debt of
     any Loan Party or any Subsidiary of any Loan Party owed to any other Loan
     Party or any Subsidiary of any other Loan Party), showing as of the
     Effective Date the obligor and the principal amount outstanding thereunder,
     the maturity date thereof and the amortization schedule therefor.

          (r) Set forth on Schedule 4.01(r) hereto is a complete and accurate
     list, as of the dates therein specified, of all Liens (other than Permitted
     Liens) relating to Debt listed on Schedule 4.01(q) on the property or
     assets that consist of Collateral of any Loan Party, showing as of the
     Effective Date the lienholder thereof, the principal amount of the
     obligations secured thereby and the property or assets of such Loan Party
     or such Subsidiary subject thereto.

          (s) Set forth on Schedule 4.01(s) hereto is a complete and accurate
     list, as of the Effective Date, of each item of real property located in
     the United States owned by any Loan Party or any of its Subsidiaries having
     an individual market value in excess of $5,000,000, showing as of the
     Effective Date the street address, county or other relevant jurisdiction,
     state, record owner and book value thereof.

          (t) Set forth on Schedule 4.01(t) hereto is a complete and accurate
     list, as of the Effective Date, of each lease of real property located in
     the United States under which any Loan Party or any of its Subsidiaries is
     the lessee and where the leasehold interest has an individual market value
     in excess of $5,000,000, showing as of the Effective Date the street
     address, county or other relevant jurisdiction, state, lessor, lessee, and
     current annual rental cost thereof.

          (u) Set forth on Schedule 4.01(u) hereto is a complete and accurate
     list of all material Investments (in each case, having a value, as of the
     Effective Date, of not less than $1,000,000) held by any Loan Party as of
     (i) December 31, 2002, in the case of Investments in unconsolidated
     Subsidiaries, showing as of such date the amount, obligor or issuer and
     maturity, if any, thereof, and (ii) the date hereof, in the case of all
     other Investments (excluding any Investments in any Subsidiaries of the
     Loan Parties), showing as of the Effective Date the amount, obligor or
     issuer and maturity, if any, thereof.
<PAGE>
                                       56

          (v) Set forth on Schedule 4.01(v) hereto is a complete and accurate
     list of all patents, trademarks, trade names, service marks and copyrights
     that are material to MII and its Subsidiaries taken as a whole, and all
     applications therefor and licenses thereof, in each case, that constitute
     Collateral as of the Effective Date, showing as of the Effective Date the
     jurisdiction in which registered, the registration number, the date of
     registration and the expiration date.

          (w) Set forth on Schedule 4.01(w) hereto is a complete and accurate
     list of all Material Contracts of each Loan Party and its Subsidiaries as
     of the Effective Date, showing as of the Effective Date the parties,
     subject matter and (where determinable) term thereof (except, in each case,
     where such information is classified or otherwise restricted by contract or
     by law, regulation or governmental guidelines). Each such Material Contract
     has been duly authorized, executed and delivered by all Loan Parties or
     Subsidiaries party thereto, and, to the knowledge of such Loan Parties or
     Subsidiaries, is in full force and effect as of the Effective Date.

          (x) Set forth on Schedule 4.01(x) hereto is a complete and accurate
     list of all vessels owned by each Loan Party having a book value in excess
     of $1,000,000 as of the Effective Date.

                                   ARTICLE V

                         COVENANTS OF THE LOAN PARTIES

     SECTION 5.01. Affirmative Covenants. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, each Loan Party will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
     Subsidiaries to comply, with all applicable laws, rules, regulations and
     orders (such compliance to include, without limitation, compliance with
     ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the
     Organized Crime Control Act of 1970 (or any similar foreign statute)),
     except where the failure to so comply would not reasonably be expected to,
     individually or in the aggregate, have a Material Adverse Effect.

          (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes, assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all material lawful claims against it
     that, if unpaid, might by law become a Lien upon its property; provided,
     however, that neither such Loan Party nor any of its Subsidiaries shall be
     required to pay or discharge any such tax, assessment, charge or claim that
     is being contested in good faith and by proper proceedings and as to which
     appropriate reserves are being maintained, unless and until any Lien
     resulting therefrom attaches to its property and becomes presently
     enforceable against its other creditors.
<PAGE>
                                       57

          (c) Compliance with Environmental Laws. Comply, and cause each of its
     Subsidiaries and, as far as reasonable practicable, all lessees and other
     Persons operating or occupying its properties to comply, with all
     applicable Environmental Laws and Environmental Permits, except where the
     failure to do so would not be reasonably expected to have a Material
     Adverse Effect; obtain and renew and cause each of its Subsidiaries to
     obtain and renew all Environmental Permits necessary for its operations and
     properties; and conduct, and cause each of its Subsidiaries to conduct, any
     investigation, study, sampling and testing, and undertake any cleanup,
     removal, remedial or other action necessary to remove and clean up all
     Hazardous Materials from any of its properties, in accordance with the
     requirements of all Environmental Laws, except where the failure to do so
     would not be reasonably expected to have a Material Adverse Effect;
     provided, however, that neither such Loan Party nor any of its Subsidiaries
     shall be required to undertake any such cleanup, removal, remedial or other
     action to the extent that its obligation to do so is being contested in
     good faith and by proper proceedings and appropriate reserves are being
     maintained with respect to such circumstances (if and to the extent
     required by GAAP).

          (d) Maintenance of Insurance. Maintain, and cause each of its
     Subsidiaries to maintain, insurance with responsible and reputable
     insurance companies or associations or, through self-insurance, in such
     amounts and covering such risks as is usually carried by companies engaged
     in similar businesses and owning similar properties in the same general
     areas in which such Loan Party or such Subsidiary operates.

          (e) Preservation of Corporate Existence, Etc. Preserve and maintain,
     and cause each of its Subsidiaries to preserve and maintain (unless, in the
     case of any Subsidiary other than MI or any such Subsidiary that is also a
     Loan Party, (i) the Board of Directors of such Loan Party determines that
     such preservation and maintenance is no longer necessary in the conduct of
     the business of such Loan Party and its Subsidiaries, taken as a whole, and
     (ii) the failure to so preserve and maintain would not impair the
     Collateral in any material respect), its existence, legal structure, legal
     name, rights (charter and statutory), permits, licenses, approvals,
     privileges and franchises; provided, however, that such Loan Party and its
     Subsidiaries may consummate any merger or consolidation permitted under
     Section 5.02(d) and provided further that neither such Loan Party nor any
     of its Subsidiaries shall be required to preserve any right, permit,
     license, approval, privilege or franchise if the Board of Directors of such
     Loan Party or such Subsidiary shall determine that the preservation thereof
     is no longer necessary in the conduct of the business of such Loan Party or
     such Subsidiary, as the case may be, and that the loss thereof is not
     disadvantageous in any material respect to such Loan Party, such
     Subsidiary.

          (f) Visitation Rights. At any reasonable time and from time to time,
     following reasonable notice and subject to any applicable restrictions or
     limitations on access to any facility or information that is classified or
     restricted by contract or by law, regulation or governmental guidelines,
     permit any of the Agents or any of the Lender Parties, or any agents or
     representatives thereof, to visit the properties of, such Loan Party and
     any of its Subsidiaries, and to discuss the affairs, finances and accounts
     of such Loan Party and any of its Subsidiaries with any of their officers
     and with their independent certified public
<PAGE>
                                       58

     accountants; provided, however, that advance notice of any discussion with
     such independent public accountants shall be given to the Loan Parties, and
     the Loan Parties shall have the opportunity to be present at any such
     discussion.

          (g) Keeping of Books. Keep, and cause each of its Subsidiaries to
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial transactions and the assets and business of
     the Loan Party and each such Subsidiary in accordance with generally
     accepted accounting principles in effect from time to time.

          (h) Maintenance of Properties, Etc. Maintain and preserve and cause
     each of its Subsidiaries to maintain and preserve, at all times, all
     property material to the conduct of the business of MII and its
     Subsidiaries, taken as a whole, and keep such property in good repair,
     working order and condition (ordinary wear and tear excepted) and from time
     to time make, or cause to be made, all needful and proper repairs,
     renewals, additions, improvements and replacements thereto necessary in
     order that the business carried on in connection therewith may be properly
     conducted.

          (i) Transactions with Affiliates. Conduct, and cause each of its
     Subsidiaries to conduct, all transactions otherwise permitted under the
     Loan Documents with any of its Affiliates (other than transactions among
     any of MI, any one or more of the Loan Parties and any one or more
     Subsidiaries of any Loan Party) with any of their Affiliates on terms that
     are fair and reasonable and no less favorable to such Loan Party or such
     Subsidiary than it would obtain in a comparable arm's-length transaction
     with a Person not an Affiliate.

          (j) Covenant to Give Security. Upon the request of the Collateral
     Agent following the acquisition of any property having a value of not less
     than $1,000,000 by any Collateral Grantor, and such property (i) is not
     already subject to an agreement (otherwise acceptable under the terms of
     this Agreement) that prevents the encumbering of such property or that
     would treat such encumbering as a default thereunder and (ii) in the
     reasonable judgment of the Collateral Agent, shall not already be subject
     to a perfected first priority security interest, subject only to the Liens
     permitted by the Loan Documents, in favor of the Collateral Agent for the
     benefit of the Secured Parties, then such Collateral Grantor shall, in each
     case at the expense of the JRM Borrowers:

               (A) within 15 days after such request, furnish to the Collateral
          Agent a description of such property in detail reasonably satisfactory
          to the Collateral Agent,

               (B) within 25 days after such request and the receipt from the
          Collateral Agent of drafts of proposed documentation that conforms to
          the Collateral Documents then in effect, duly execute and deliver to
          the Collateral Agent mortgages, pledges, assignments, security
          agreement supplements and other security agreements, as specified by
          and in form and substance reasonably satisfactory to the Collateral
          Agent, securing payment of all the Obligations of the
<PAGE>
                                       59

          Loan Parties under the Loan Documents and constituting Liens on all
          such property,

               (C) within 35 days after such request, take whatever action
          (including, without limitation, the recording of mortgages, the filing
          of Uniform Commercial Code financing statements, the giving of notices
          and the endorsement of notices on title documents) may be reasonably
          necessary or advisable in the opinion of the Collateral Agent to vest
          in the Collateral Agent (or in any representative of the Collateral
          Agent designated by it) valid and subsisting Liens on the properties
          purported to be subject to the mortgages, pledges, assignments,
          security agreement supplements and security agreements delivered
          pursuant to this Section 5.01(j),

               (D) within 60 days after such request, deliver to the Collateral
          Agent, upon the reasonable request of the Collateral Agent, a signed
          copy of a favorable opinion (subject to customary qualifications,
          assumptions, exceptions and limitations), addressed to the Collateral
          Agent and the other Secured Parties, of counsel for the Loan Parties
          reasonably acceptable to the Collateral Agent as to the matters
          contained in clauses (B) and (C) above, as to such mortgages, pledges,
          assignments, security agreement supplements and security agreements
          being legal, valid and binding obligations of the applicable
          Collateral Grantor, enforceable in accordance with their terms, and as
          to the matters contained in clause (C) above,

               (E) as promptly as practicable after such request, deliver, upon
          the reasonable request of the Collateral Agent, to the Collateral
          Agent with respect to each parcel of real property owned by the entity
          that is the subject of such request all applicable deliveries that
          would have been required under Section 5.01(p) in respect of such
          property as though it had been subject thereto,

               (F) promptly following its receipt of notice from the Collateral
          Agent of the existence of an Event of Default, (A) cause to be
          deposited any and all cash dividends paid or payable to it or any of
          its Subsidiaries from any of its Subsidiaries from time to time into
          the Collateral Account so long as such Event of Default shall exist,
          and (B) with respect to all other dividends paid or payable to it or
          any of its Subsidiaries from time to time so long as such Event of
          Default shall exist, promptly execute and deliver, or cause such
          Subsidiary to promptly execute and deliver, as the case may be, any
          and all further instruments and take or cause such Subsidiary to take,
          as the case may be, all such other action as the Collateral Agent may
          reasonably deem necessary or desirable in order to obtain and maintain
          from and after the time such dividend is paid or payable a perfected,
          first priority lien on and security interest in such dividends, and

               (G) at any time and from time to time, promptly execute and
          deliver any and all further instruments and documents and take all
          such other action as the Collateral Agent may reasonably deem
          necessary or desirable in perfecting and
<PAGE>
                                       60

          preserving the Liens of the mortgages, pledges, assignments, security
          agreements and security agreement supplements described in the
          foregoing clauses.

          (k) Further Assurances. (i) Promptly upon request by any Agent, or any
     Lender Party through the Administrative Agent, correct, and cause each of
     its Subsidiaries promptly to correct, any material defect or error that may
     be discovered in any Loan Document or in the execution, acknowledgment,
     filing or recordation thereof.

          (ii) Promptly upon request by any Agent, or any Lender Party through
     the Administrative Agent, do, execute, acknowledge, deliver, record,
     re-record, file, re-file, register and re-register any and all such further
     acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust,
     trust deeds, assignments, financing statements and continuations thereof,
     termination statements, notices of assignment, transfers, certificates,
     assurances and other instruments as any Agent, or any Lender Party through
     the Administrative Agent, may reasonably require from time to time in order
     to (A) carry out more effectively the purposes of the Loan Documents, (B)
     to the fullest extent permitted by applicable law, subject such Loan
     Party's (other than BWXT) or any of its Subsidiaries' (other than MI or any
     of its Subsidiaries, including BWXT) properties, assets, rights or
     interests to the Liens now or hereafter intended to be covered by any of
     the Collateral Documents, (C) perfect and maintain the validity,
     effectiveness and priority of any of the Collateral Documents and any of
     the Liens intended to be created thereunder and (D) assure, convey, grant,
     assign, transfer, preserve, protect and confirm more effectively unto the
     Secured Parties the rights granted or now or hereafter intended to be
     granted to the Secured Parties under any Loan Document or under any other
     instrument executed in connection with any Loan Document to which such Loan
     Party or any of its Subsidiaries is or is to be a party, and cause each of
     its Subsidiaries to do so.

          (l) Preparation of Environmental Reports. At the reasonable request of
     the Required Lenders from time to time, which request shall specify the
     reason therefor, provide to the Lender Parties within 90 days after such
     request, at the expense of such Loan Party, a Phase I environmental site
     assessment report for any of its or its Subsidiaries' properties described
     in such request that constitute or are intended to constitute Collateral,
     prepared by an environmental consulting firm acceptable to the Required
     Lenders, indicating the presence or absence of Hazardous Materials and the
     estimated cost of any compliance, removal or remedial action in connection
     with any Hazardous Materials on such properties.

          (m) Compliance with Terms of Leaseholds. Make all payments and
     otherwise perform all obligations in respect of all leases of real property
     to which such Loan Party or any of its Subsidiaries is a party, keep such
     leases in full force and effect and not allow such leases to lapse or be
     terminated or any rights to renew such leases to be forfeited or cancelled,
     notify the Administrative Agent of any default by any party with respect to
     such leases and cooperate with the Administrative Agent in all respects to
     cure any such default, and cause each of its Subsidiaries to do so, except,
     in any case, where the failure to do so, either individually or in the
     aggregate, would not be reasonably likely to have a Material Adverse
     Effect.
<PAGE>
                                       61

          (n) Cash Concentration Accounts; Existing Cash Management System. (i)
     Maintain, and cause each of its Subsidiaries to maintain main cash
     concentration accounts (other than Permitted Unblocked Accounts) solely
     with Lender Parties and (ii) maintain the existing cash management system
     of the Loan Parties and MI as in effect on the Effective Date, in all
     material respects, subject to such modifications as are necessary to
     implement the security arrangements or other provisions (such as those
     relating to Permitted Unblocked Accounts) contemplated by the Loan
     Documents.

          (o) Performance of Material Contracts. Use commercially reasonable
     efforts to perform and observe all the terms and provisions of each
     Material Contract to be performed or observed by it, use commercially
     reasonable efforts to maintain each such Material Contract in full force
     and effect, enforce each such Material Contract in accordance with its
     terms, and cause each of its Subsidiaries to do so, except, in any case,
     where the failure to do so, either individually or in the aggregate, would
     not be reasonably likely to have a Material Adverse Effect.

          (p) Mortgages. Deliver, no later than 60 days following the Effective
     Date, deeds of trust, trust deeds and mortgages in form and substance
     reasonably satisfactory to the Required Lenders, to be promptly negotiated
     in good faith by all parties, and covering the properties that are owned by
     any Collateral Grantor and are listed on Schedule 4.01(s) hereto (together
     with the Assignments of Leases and Rents referred to therein and each other
     mortgage delivered pursuant to Section 5.01(j), in each case as amended,
     the "MORTGAGES"), duly executed by the appropriate Collateral Grantor,
     together with:

               (i) evidence that counterparts of the Mortgages have been duly
          recorded in all filing or recording offices that the Administrative
          Agent may deem necessary or desirable in order to create a valid first
          and subsisting Lien, subject only to the Liens permitted by the Loan
          Documents, on the property described therein in favor of the
          Collateral Agent for the benefit of the Secured Parties and that all
          filing and recording taxes and fees have been paid,

               (ii) title searches in respect of such properties, in form and
          substance satisfactory to the Required Lenders,

               (iii) the Assignments of Leases and Rents referred to in the
          Mortgages, duly executed by the appropriate Borrower, and

               (iv) evidence of the insurance required by the terms of the
          Mortgages.

          (q) Ship Mortgages. As soon as practicable, but in any event no later
     than (i) 60 days, in the case of Panamanian-flagged vessels and (ii) 30
     days, in the case of U.S.-flagged vessels, in each case, fleet or ship
     mortgages in form and substance reasonably satisfactory to the Required
     Lenders, to be promptly negotiated in good faith by all parties, hereto and
     covering the vessels identified as vessels to be mortgaged on Schedule
     4.01(x) (the "SHIP MORTGAGES").

          (r) Accounts. Obtain and deliver to the Administrative Agent, within
     five Business Days after the Effective Date, with respect to investment or
     deposit accounts
<PAGE>
                                       62

     (other than Permitted Unblocked Accounts) maintained with Citibank, and
     within 30 days following request by the Collateral Agent (or such later
     date as the Required Lenders may reasonably determine), with respect to
     other investment and deposit accounts (other than Permitted Unblocked
     Accounts), account control agreements with respect to all such investment
     and other deposit accounts of MII and JRMSA and its Subsidiaries that are
     Collateral Grantors, each in form and substance reasonably satisfactory to
     the Collateral Agent.

          (s) Mizuho Cash Collateralization. Upon the first to occur of (i) the
     next Business Day immediately preceding March 31, 2003 and (ii) 3 Business
     Days following the receipt of the first $7,500,000 of Net Cash Proceeds
     described in clauses (A) or (D) of Section 2.06(b), deposit $7,500,000 to
     be held in the Mizuho Cash Collateral Account.

          (t) Panamanian Certificates. In the event that a certificate referred
     to in Section 3.01(a)(v) is not delivered in respect of any Loan Party
     organized under the laws of Panama on or prior to the Effective Date, such
     certificate shall be delivered to the Administrative Agent as soon as
     practicable thereafter.

     SECTION 5.02. Negative Covenants. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, no Loan Party will, at any time, without the prior written
consent of the Required Lenders:

          (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
     any of its Subsidiaries to create, incur, assume or suffer to exist, any
     Lien on or with respect to any of its properties of any character
     (including, without limitation, accounts) whether now owned or hereafter
     acquired, or sign or file or suffer to exist, or permit any of its
     Subsidiaries to sign or file or suffer to exist, under the Uniform
     Commercial Code of any jurisdiction, a financing statement that names such
     Loan Party or any of its Subsidiaries as debtor (other than any financing
     statement that is filed solely for precautionary purposes in connection
     with operating leases and any financing statement that is filed without the
     authorization of such Loan Party or any of its Subsidiaries), or sign or
     suffer to exist, or permit any of its Subsidiaries to sign or suffer to
     exist, any security agreement authorizing any secured party thereunder to
     file such financing statement, or assign, or permit any of its Subsidiaries
     to assign, any accounts or other right to receive income, except:

               (i) Liens created or permitted under the Loan Documents;

               (ii) Permitted Liens;

               (iii) Liens on or with respect to any of the properties of MII
          and its Subsidiaries existing on the date hereof;

               (iv) purchase money Liens upon or in real property or equipment
          acquired or held by the Borrower or any of its Subsidiaries in the
          ordinary course of business to secure the purchase price of such
          property or equipment or to secure Debt incurred solely for the
          purpose of financing the acquisition,
<PAGE>
                                       63

          construction or improvement of any such property or equipment to be
          subject to such Liens; provided, however, that no such Lien shall
          extend to or cover any property other than the property or equipment
          being acquired, constructed or improved and proceeds (including,
          without limitation, proceeds from associated contracts and insurances)
          of, and improvements, accessories and upgrades to, the property or
          equipment being acquired, constructed or improved, and no such
          extension, renewal or replacement shall extend to or cover any
          property not theretofore subject to the Lien being extended, renewed
          or replaced; and provided further that the aggregate principal amount
          of the Debt secured by Liens permitted by this clause (iv) shall not
          exceed $10,000,000 at any time outstanding;

               (v) Liens arising in connection with Capitalized Leases permitted
          under Section 5.02(b)(ii)(C); provided that no such Lien shall extend
          to or cover any Collateral or assets other than the assets subject to
          such Capitalized Leases; and proceeds (including, without limitation,
          proceeds from associated contracts and insurances) of, and
          improvements, accessories and upgrades to, the property leased
          pursuant thereto;

               (vi) (1) Liens securing Remaining L/Cs, and (2) other Liens
          securing Debt outstanding in an aggregate principal amount not to
          exceed $5,000,000, provided that no such Lien shall extend to or cover
          any Collateral;

               (vii) Liens in favor of BP America, Inc. or any of its
          Subsidiaries, provided that (A) such Liens shall only cover the
          leasehold interests owned by JRMSA or any of its Subsidiaries relating
          to the leased premises located near Morgan City, Louisiana, all rights
          of the lessee under the related lease agreements, the buildings and
          other permanent constructions on the leased premises covered by such
          lease agreements and the equipment of JRMSA or any of its Subsidiaries
          held on those premises (provided, however, that such Liens shall
          exclude the "Facilities" (as such term is used in this clause (vii)(A)
          only, as defined in the Yard Agreement and any inventory or general
          intangibles related to the "Work", as such term is defined in the Yard
          Agreement), as Liens on those excluded assets constitute Permitted
          Liens that may otherwise be granted in favor of BP America, Inc.), (B)
          the Facilities are promptly secured by a Mortgage (in form reasonably
          acceptable to the Administrative Agent, to be negotiated in good
          faith) on such property on a subordinated basis (in no event later
          than [60] days after the Effective Date) and (C) BP America, Inc. and
          the Administrative Agent shall have agreed on intercreditor
          arrangements in respect of such property;

               (viii) any Lien existing on any asset prior to the acquisition
          thereof by any Loan Party or any of their respective Subsidiaries,
          provided that such Lien is not created in contemplation of or in
          connection with such acquisition and no such Lien shall be extended to
          cover property other than the asset being acquired and proceeds
          (including, without limitation, proceeds from associated contracts and
          insurances) of, and improvements, accessories and upgrades to, the
          asset being acquired;
<PAGE>
                                       64

               (ix) rights of setoff of banks;

               (x) Liens on Permitted L/C Lien Assets to secure Middle Eastern
          L/Cs and Hedge Agreements permitted under Section 5.02(b)(ii)(H),
          provided that the Applicable L/C Sublimit of the JRM Borrowers shall
          be reduced on a dollar-for-dollar basis to the extent that the sum of
          the aggregate face amount of Middle Eastern L/Cs that are so secured
          plus the aggregate Agreement Value of Hedge Agreements that are so
          secured exceeds $25,000,000;

               (xi) Liens to secure any extension, renewal, refunding or
          replacement (or successive extensions, renewals, refinancings,
          refundings or replacements), in whole or in part, of any Debt or other
          Obligation secured by any Lien referred to in the foregoing clauses
          (ii), (iii), (iv), (v), (vii), (viii) and (x), provided that (A) the
          principal amount of the Debt or other obligation secured thereby is no
          greater than the outstanding principal amount of such Debt or other
          Obligation immediately before such extension, renewal, refinancing,
          refunding or replacement (B) such Lien shall only extend to such
          assets as are already subject to a Lien in respect of such Debt or
          other Obligation;

               (xii) Liens permitted by Section 5.02(l) (solely to the extent
          that any agreement permitted thereunder would constitute a Lien); and

               (xiii) the financing statements and security agreements existing
          on the date hereof or relating to any of the Liens described in any of
          the foregoing clauses (i) through (xi); and

               (xiv) Liens which are imposed under Section 4068 of ERISA or
          Section 412(n)(1) of the Code and which would not constitute an Event
          of Default under Section 6.01(l).

          (b) Debt. Create, incur, assume or suffer to exist, or permit any of
     its Subsidiaries to create, incur, assume or suffer to exist, any Debt,
     except:

               (i) in the case of the Loan Parties and MI,

               (A) (other than BWXT), Debt in respect of Hedge Agreements with
          Hedge Banks designed to hedge against fluctuations in foreign exchange
          rates incurred in the ordinary course of business and consistent with
          prudent business practice with the aggregate Agreement Value thereof
          not to exceed $25,000,000 at any time outstanding, unless, with
          respect to any such excess amount, the Loan Parties (other than BWXT)
          shall have deposited with the Collateral Agent as cash collateral for
          the Obligations of the Loan Parties under the Loan Documents an amount
          equal to such excess amount within three Business Days following the
          date on which the aggregate Agreement Value exceeds the amount
          permitted pursuant to this sub-clause (A),

               (B) Debt owed to a Collateral Grantor or MII, which Debt (x)
          shall constitute Pledged Debt and (y) shall be evidenced by promissory
          notes in form
<PAGE>
                                       65

          reasonably satisfactory to the Collateral Agent and such promissory
          notes shall be pledged as security for the Obligations of the holder
          thereof under the Loan Documents to which such holder is a party and
          delivered to the Collateral Agent pursuant to the terms of the
          Security Agreement,

               (C) Debt consisting of the MII Loans or Debt described in clause
          (ii) below,

               (D) Debt consisting of Obligations of BWXT to lenders to CH2M
          Hill Mound, Inc. in an aggregate amount for all such Debt not to
          exceed $3,000,000 at any time outstanding, and

               (E) Subordinated Debt owing to Persons other than MII and its
          Subsidiaries in an amount not to exceed in the aggregate $25,000,000
          at any time outstanding.

               (ii) in the case of the Loan Parties and their Subsidiaries,

               (A) Debt under the Loan Documents,

               (B) Debt secured by Liens permitted by Section 5.02(a)(iv) not to
          exceed in the aggregate $10,000,000 at any time outstanding,

               (C) Capitalized Leases entered into after the date hereof not to
          exceed in the aggregate $10,000,000 at any time outstanding,

               (D) the Surviving Debt, and any Debt extending the maturity of,
          or refunding or refinancing (including reasonable fees, costs and
          expenses incurred in connection with such refunding or refinancing),
          in whole or in part, any Surviving Debt, provided that the terms of
          any such extending, refunding or refinancing Debt, and of any
          agreement entered into and of any instrument issued in connection
          therewith, are otherwise permitted by the Loan Documents, provided
          further that the principal amount of such Surviving Debt shall not be
          increased above the principal amount thereof outstanding immediately
          prior to such extension, refunding or refinancing, and the direct and
          contingent obligors therefor shall not be changed, as a result of or
          in connection with such extension, refunding or refinancing, provided
          still further that the terms relating to principal amount, rate of
          interest, amortization, maturity, collateral (if any) and
          subordination (if any), and other material terms taken as a whole, of
          any such extending, refunding or refinancing Debt, and of any
          agreement entered into and of any instrument issued in connection
          therewith, are no less favorable in any material respect to the
          Borrowers or the Lender Parties than the terms of any agreement or
          instrument governing the Surviving Debt being extended, refunded or
          refinanced,

               (E) (1) Debt consisting of intercompany Debt between or among any
          of the Loan Parties or any of their respective Subsidiaries so long as
          the Obligations of the debtors thereunder are subordinated to their
          Obligations, if any, under the
<PAGE>
                                       66

          Loan Documents and are incurred in the ordinary course of business
          consistent with past practices, and (2) Debt consisting of
          intercompany Debt owing by the Loan Parties or any of their respective
          Subsidiaries to any Insurance Subsidiary, provided that such Debt is
          incurred in the ordinary course of business consistent with past
          practices,

               (F) Debt consisting of Obligations to lenders to Construcciones
          Maritimas Mexicanas, S.A. de C.V., a Mexican corporation, and related
          unsecured guaranties by JRMSA or its Subsidiaries in the ordinary
          course of business consistent with past practices,

               (G) Obligations under the Settlement Agreement, provided that
          such Obligations (other than interest payment Obligations) shall
          mature no earlier than on the third anniversary of the confirmation of
          a plan of reorganization in the Chapter 11 case of B&W,

               (H) Debt in respect of letters of credit and Hedge Agreements
          issued by parties that are not Lender Parties; provided that, except
          as permitted under Section 5.02(a)(vi) or (x), such Debt shall be
          unsecured, and

               (I) Debt under Bilateral Obligations.

               (iii) Debt under the Asbestos Settlement Note.

               (iv) unsecured Debt of JRMSA, JRMHI and JRMI, in an aggregate
          amount for all such Debt not to exceed $5,000,000.

               (v) Notwithstanding any other provision contained in this Section
          5.02(b), MII will not permit MI and its Subsidiaries, collectively, to
          create, incur, assume or suffer to exist consolidated Debt in excess
          of $100 million in the aggregate (excluding (A) existing Debt of MI
          and its Subsidiaries as shown on the December 31, 2002 balance sheet
          of MII and its Consolidated Subsidiaries, (B) any Debt extending the
          maturity of, or refunding or refinancing (including reasonable fees,
          costs and expenses incurred in connection with such refunding or
          refinancing), in whole or in part, any Debt described in clause (A) of
          this clause (v), (C) the MII Loan made to BWXT, (D) the Asbestos
          Settlement Note and (E) undrawn letters of credit, but including
          Advances made to BWXT under the Facilities).

          (c) Change in Nature of Business. Make, or permit any of its
     Subsidiaries to make, any material change in the nature of the business of
     MII and its Subsidiaries, taken as a whole, as carried on at the date
     hereof.

          (d) Mergers, Etc. Merge into or consolidate with any Person or permit
     any Person to merge into it, or permit any of its Subsidiaries to do so,
     except (i) in a transaction permitted by Section 5.02(e) and (ii) that any
     Loan Party or Subsidiary of such Loan Party may merge into or consolidate
     with any other Subsidiary of such Loan Party, provided that (except in the
     case of any transaction permitted under Section
<PAGE>
                                       67

     5.02(e)), in the case of any such merger or consolidation, the Person
     surviving such merger or formed by such consolidation shall be a
     wholly-owned Subsidiary of such Loan Party, provided further that, in the
     case of any such merger, to which any Loan Party is a party, the Person
     surviving such merger shall be a Loan Party, and if such Loan Party is a
     Collateral Grantor, the Person surviving such merger shall be a Collateral
     Grantor, provided further that, in the case of any such consolidation, to
     which any Loan Party is a party, the Person formed by such consolidation
     shall execute an agreement reasonably satisfactory to the Administrative
     Agent pursuant to which such Person shall (x) assume the Obligations of
     such Loan Party under the Loan Documents to which such Loan Party is a
     party and (y) become a Loan Party, and if such Loan Party is a Collateral
     Grantor, such agreement shall provide that the Person formed by such
     consolidation shall be or become a Collateral Grantor; provided, however,
     that in each case, immediately after giving effect thereto, no event shall
     occur and be continuing that constitutes a Default.

          (e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose
     of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
     dispose of, any assets, or grant any option or other right to purchase,
     lease or otherwise acquire any assets other than Inventory to be sold in
     the ordinary course of its business, except:

               (i) sales of Inventory in the ordinary course of its business;

               (ii) in a transaction authorized by Section 5.02(d);

               (iii) the sale of any asset (including Equity Interests) by such
          Loan Party or any Subsidiary of such Loan Party (other than a bulk
          sale of Inventory and a sale of Receivables other than delinquent
          accounts for collection purposes only) so long as (A) the purchase
          price paid (including any holdback or escrow amount for post-closing
          purchase price adjustments or indemnity claims) to such Loan Party or
          such Subsidiary for such asset shall be no less than the fair market
          value of such asset at the time of such sale, (B) the purchase price
          for such asset shall be paid to such Loan Party or such Subsidiary
          solely in cash and (C) the aggregate purchase price paid to such Loan
          Party and all of its Subsidiaries for such asset and all other assets
          sold by such Loan Party and its Subsidiaries pursuant to this clause
          (iii) shall not exceed $5,000,000;

               (iv) the sale of any Excluded Asset so long as (A) the purchase
          price paid (including any holdback or escrow amount for post-closing
          purchase price adjustments or indemnity claims) to such Loan Party for
          such Excluded Asset shall be no less than the fair market value of
          such asset at the time of such sale and (B) the purchase price for
          such asset shall be paid to such Loan Party solely in cash,

               (v) sales of obsolete or worn out property or property no longer
          used or useful in the business of MII and its Subsidiaries, whether
          now owned or hereafter acquired, in the ordinary course of business;
<PAGE>
                                       68

               (vi) any contribution or transfer of Equity Interests in B&W and
          its Subsidiaries, Equity Interests in MII, the Asbestos Settlement
          Note, rights to insurance and insurance proceeds or other assets
          pursuant to the terms of the Settlement Agreement;

               (vii) any contribution or transfer of intellectual property to
          B&W and its Subsidiaries and any forgiveness of intercompany
          receivables or Debt owing from B&W or any of its Subsidiaries in
          connection with the consummation of the transactions contemplated by
          the Settlement Agreement;

               (viii) charters of vessels in the ordinary course of business;

               (ix) Liens permitted under Section 5.02(a)(x) (to the extent that
          any such Lien would constitute a sale, transfer or other disposition
          of property under the laws of any applicable jurisdiction);

               (x) The sale, lease, transfer or other disposition of any asset
          by any Loan Party or one of its Subsidiaries to a Loan Party or any
          Subsidiary of a Loan Party; provided that to the extent any such asset
          constitutes Collateral, such sale, lease, transfer or other
          disposition shall not impair the security interest or the enforcement
          rights of the Secured Parties in respect of such asset; and

               (xi) so long as no Default shall occur and be continuing, the
          grant of any option or other right to purchase any asset in a
          transaction that would be permitted under the provisions of clauses
          (iii), (iv) and (v) above;

     provided that in the case of sales of assets pursuant to clauses (iii) and
     (iv) above, such Borrower shall, not more than three Business Days after
     the date of receipt by any Borrower or any of its Subsidiaries of the Net
     Cash Proceeds from such sale, collateralize the Facilities pursuant to, and
     in the amount set forth in, Section 2.06(b), as specified therein.

          (f) Investments in Other Persons. Make or hold, or permit any of its
     Subsidiaries to make or hold, any Investment in any Person, except:

               (i) Investments existing on the date hereof;

               (ii) the MII Loans;

               (iii) equity Investments in wholly owned Subsidiaries;

               (iv) loans and advances to employees after the Effective Date in
          the ordinary course of the business of such Loan Party and its
          Subsidiaries as presently conducted in an aggregate principal amount
          not to exceed $4,000,000 at any time outstanding;

               (v) Investments in Cash Equivalents (A) by MII and its
          non-wholly-owned Subsidiaries, (B) that constitute Collateral, (C)
          consisting of restricted cash
<PAGE>
                                       69

          relating to the captive insurance Subsidiaries of MII, (D) that are
          pledged by such Loan Party or any of such Loan Party's wholly-owned
          Subsidiaries as cash collateral for Middle Eastern L/Cs or Hedge
          Agreements as permitted by Section 5.02(b)(ii)(H) or (E) that are
          invested in by any of such Loan Party's Subsidiaries outside of the
          United States in the ordinary course of business consistent with past
          practices;

               (vi) Investments of MII and its Subsidiaries existing on the date
          hereof and Investments in joint ventures or pursuant to teaming
          arrangements made after the date hereof pursuant to binding
          obligations existing as of the date hereof;

               (vii) Investments by such Loan Party or any Subsidiary of such
          Loan Party in Hedge Agreements permitted under Section 5.02(b)(i)(A);

               (viii) Investments consisting of intercompany Debt permitted
          under Section 5.02(b)(i)(B) or (c) or 5.02(b)(ii)(E);

               (ix) Investments in joint ventures of the Loan Parties and
          Subsidiaries, which joint ventures are formed after the Effective Date
          and which Investments are consistent with past practices in an
          aggregate amount for all such Investments not to exceed $10,000,000;

               (x) Investments in the form of loans to and unsecured guaranties
          made on behalf of Construcciones Maritimas Mexicanas, S.A. de C.V., a
          Mexican corporation, in the ordinary course of business and consistent
          with past practices; and

               (xi) other Investments made after the Effective Date in an
          aggregate amount not to exceed $2,500,000 existing at any one time for
          all such Investments (which may include Investments of any type,
          including but not limited to Investments of the types referred to in
          clauses (iv) and (viii) above).

          (g) Restricted Payments. Solely with respect to MII and BWXT, declare
     or pay any dividends, purchase, redeem, retire, defease or otherwise
     acquire for value any of its Equity Interests now or hereafter outstanding,
     return any capital to its stockholders, as such, make any distribution of
     assets, Equity Interests, obligations or securities to its stockholders, as
     such, or permit any of its Subsidiaries to purchase, redeem, retire,
     defease or otherwise acquire for value any Equity Interests in MII, other
     than in connection with any Plan or Welfare Plan. Notwithstanding the
     foregoing, so long as no Default shall have occurred and be continuing at
     the time of any action described in clause (i) or (ii) below or would
     result therefrom:

               (i) MII and BWXT may, except to the extent the Net Cash Proceeds
          thereof are required to be applied to the prepayment of the Advances
          pursuant to Section 2.06(b), purchase, redeem, retire, defease or
          otherwise acquire shares of its capital stock with the proceeds
          received contemporaneously from the issue of new shares of its capital
          stock with equal or inferior voting powers, designations, preferences
          and rights, and
<PAGE>
                                       70

               (ii) BWXT may declare and pay dividends so long as the proceeds
          therefrom are ultimately received by MI to be applied solely for Debt
          service and operating requirements of MI consistent with MI's past
          operating requirements, and

               (iii) MII and its Subsidiaries may make required payments under
          the Settlement Agreement.

          (h) Lease Obligations. Create, incur, assume or suffer to exist, or
     permit any of its Subsidiaries to create, incur, assume or suffer to exist,
     any obligations as lessee (i) for the rental or hire of real or personal
     property in connection with any sale and leaseback transaction, or (ii) for
     the rental or hire of other real or personal property of any kind under
     leases or agreements to lease (excluding Capitalized Leases), in each case
     under clause (i) or (ii) above, except in the ordinary course of business.

          (i) Amendments of Constitutive Documents. Amend, or permit any of its
     Subsidiaries to amend, its certificate of incorporation or bylaws or other
     constitutive documents in any manner that would be reasonably expected to
     have an adverse effect on the Lender Parties.

          (j) Accounting Changes. Make or permit, or permit any of its
     Subsidiaries to make or permit, any (i) material change in accounting
     policies or reporting practices, except (A) as required by generally
     accepted accounting principles or (B) upon 15 days notice to the Lender
     Parties, and in the absence of any objection from the Required Lenders, as
     permitted by generally accepted accounting principles or (ii) change in
     Fiscal Year.

          (k) Prepayments, Etc., of Debt. Prepay, redeem, purchase, defease or
     otherwise satisfy prior to the scheduled maturity thereof in any manner, or
     make any payment in violation of any subordination terms of, any Debt,
     except (i) the prepayment of the Advances in accordance with the terms of
     this Agreement, (ii) any extension, renewal, refunding or replacement of
     any Debt permitted under Section 5.02(b), (iii) any forgiveness of
     intercompany receivables or Debt owing from B&W and its Subsidiaries
     pursuant to the Settlement Agreement, (iv) the prepayment, redemption,
     purchase, defeasance or other satisfaction of any or all of the Series A
     Notes and (v) regularly scheduled or required repayments or redemptions of
     Debt permitted under Section 5.02(b) or amend, modify or change any term or
     condition of any Surviving Debt or Subordinated Debt in any manner that
     would, in the aggregate for all such changes, result in the terms of such
     Debt becoming materially less favorable to the Borrower, or permit any of
     its Subsidiaries to do any of the foregoing other than to prepay any Debt
     payable to any Loan Party or any Subsidiary of any Loan Party.

          (l) Negative Pledge. Enter into or suffer to exist, or permit any of
     its Subsidiaries to enter into or suffer to exist, any agreement
     prohibiting or conditioning the creation or assumption of any Lien upon any
     of its property or assets except (i) in favor of the Secured Parties or
     (ii) in connection with (A) any Surviving Debt (including any permitted
     refinancing thereof), or (B) any purchase money Debt permitted by
<PAGE>
                                       71

     Section 5.02(b)(ii)(B) solely to the extent that the agreement or
     instrument governing such Debt prohibits a Lien on the property acquired
     with the proceeds of such Debt, or (C) any Capitalized Lease permitted by
     Section 5.02(b)(ii)(C) solely to the extent that such Capitalized Lease
     prohibits a Lien on the property subject thereto, or (D) existing joint
     venture agreements or (E) existing indentures, or (F) work performed by
     BWXT for the U.S. Navy, the U.S. Department of Defense, the U.S. Department
     of Energy or any other department or instrumentality of the U.S. Government
     or (G) any contract with BP regarding usage of the fabrication yard
     facilities and related assets referred to in the Yard Agreement.
     Notwithstanding the foregoing, this Section 5.02(l) does not and shall not
     apply to the following (in each case, to the extent not otherwise
     restricted under this Section 5.02):

               (A) any agreement or arrangement applicable to any Person or the
          property or assets of such Person acquired by any Loan Party or any of
          their respective Subsidiaries, existing at the time of such
          acquisition and not entered into in connection with or in
          contemplation of such acquisition; provided that the encumbrance or
          restriction therein is not applicable to any Person or the properties
          or assets of any Person, other than the Person, or the property or
          assets of such Person, so acquired and any amendments, modifications,
          restatements, renewals, extensions, supplements, refundings,
          replacements or refinancings thereof, provided that the encumbrances
          and restrictions in any such amendments, modifications, restatements,
          renewals, extensions, supplements, refundings, replacement or
          refinancings are no more restrictive, taken as a whole, than those in
          effect on the date of the acquisition;

               (B) limitations and restrictions on asset transfers:

                    (1) That restrict in a customary manner the subletting,
               assignment or transfer of any property or asset that is a lease,
               license, conveyance, joint venture, partnership interest or
               contract or similar property or asset,

                    (2) Existing by virtue of any transfer of, agreement to
               transfer, option or right with respect to, or Lien on, any
               property or assets of any Loan Party or any Subsidiary of a Loan
               Party not otherwise prohibited by the Loan Documents, or,

                    (3) Arising or agreed to in the ordinary course of business,
               not relating to any Debt, and that do not, individually or in the
               aggregate, detract from the value of property or assets of the
               Loan Parties or the Subsidiaries of the Loan Parties in any
               manner material to MII and its Subsidiaries, taken as a whole;

               (C) any agreement for the sale or other disposition of all or
          substantially all of the capital stock of, or property and assets of,
          a Subsidiary of a Loan Party;

               (D) contracts and agreements related to any extension, renewal or
          replacement of Debt that is permitted under Section 5.02(b) of this
          Agreement,
<PAGE>
                                       72

          provided that the restrictions contained in the contracts and
          agreements governing such extended, renewed or replaced Debt are no
          more restrictive, taken as a whole, than those contained in the
          contracts and agreements governing the Debt being extended, renewed or
          replaced; and

               (E) restrictions imposed by customers under construction
          contracts entered into in the ordinary course of business.

          (m) Partnerships, Etc. Become a general partner in any general or
     limited partnership or joint venture, or permit any of its Subsidiaries to
     do so, other than in the case of any Subsidiary the sole assets of which
     consist of its interest in such partnership or joint venture.

          (n) Speculative Transactions. Engage, or permit any of its
     Subsidiaries to engage, in any transaction involving commodity options or
     futures contracts or any similar speculative transactions.

          (o) Capital Expenditures. Make, or permit any of its Subsidiaries to
     make, any Capital Expenditures that would cause the aggregate of all such
     Capital Expenditures made by MII and its Subsidiaries during the term of
     the Facilities to exceed $80,000,000.

          (p) Formation of Subsidiaries. Organize or invest, or permit any
     Subsidiary to organize or invest, in any new Subsidiary, except for the
     organization or investment (subject to the restrictions of Section 5.01(i))
     in any new Subsidiary in the ordinary course of such Loan Party's business
     consistent with past practices; provided, however, that upon the formation
     of any Subsidiary of JRMSA in any jurisdiction located within the United
     States, such Subsidiary shall forthwith execute a Guaranty Supplement (as
     defined in the Subsidiary Guaranty) and a Security Agreement Supplement (as
     defined in the Security Agreement), and shall take all other such actions
     as may be required to comply with the provisions of the Subsidiary Guaranty
     and the Security Agreement.

          (q) Payment Restrictions Affecting Subsidiaries. Directly or
     indirectly, enter into or suffer to exist, or permit any of its
     Subsidiaries to enter into or suffer to exist, any agreement or arrangement
     expressly limiting the ability of any of its wholly-owned Subsidiaries to
     declare or pay dividends or other distributions in respect of its Equity
     Interests or repay or prepay any Debt owed to, make loans or advances to,
     or otherwise transfer assets to or invest in, such Loan Party or any
     wholly-owned Subsidiary of such Loan Party (whether through a covenant
     restricting dividends, loans, asset transfers or investments, a financial
     covenant or otherwise), except (i) the Loan Documents and (ii) any
     agreement or instrument evidencing Surviving Debt (including any permitted
     replacement or refinancing thereof). Notwithstanding the foregoing, this
     Section 5.02(q) does not and shall not apply to the following (in each
     case, to the extent not otherwise restricted under this Section 5.02):

               (A) any agreement or arrangement applicable to any Person or the
          property or assets of such Person acquired by any Loan Party or any of
          their respective Subsidiaries, existing at the time of such
          acquisition and not entered into in
<PAGE>
                                       73

          connection with or in contemplation of such acquisition; provided that
          the encumbrance or restriction therein is not applicable to any Person
          or the properties or assets of any Person, other than the Person, or
          the property or assets of such Person, so acquired and any amendments,
          modifications, restatements, renewals, extensions, supplements,
          refundings, replacements or refinancings thereof, provided that the
          encumbrances and restrictions in any such amendments, modifications,
          restatements, renewals, extensions, supplements, refundings,
          replacement or refinancings are no more restrictive, taken as a whole,
          than those in effect on the date of the acquisition;

               (B) limitations and restrictions on asset transfers (excluding
          limitations and restrictions on cash payments of dividends,
          redemptions or distributions with respect to capital stock and on cash
          repayments of intercompany loans or advances):

                    (1) That restrict in a customary manner the subletting,
               assignment or transfer of any property or asset that is a lease,
               license, conveyance, joint venture, partnership interest or
               contract or similar property or asset,

                    (2) Existing by virtue of any transfer of, agreement to
               transfer, option or right with respect to, or Lien on, any
               property or assets of any Loan Party or any Subsidiary of a Loan
               Party not otherwise prohibited by the Loan Documents, or

                    (3) Arising or agreed to in the ordinary course of business,
               not relating to any Debt, and that do not, individually or in the
               aggregate, detract from the value of property or assets of the
               Loan Parties or the Subsidiaries of the Loan Parties in any
               manner material to MII and its Subsidiaries, taken as a whole;

               (C) Any agreement for the sale or other disposition of all or
          substantially all of the capital stock of, or property and assets of,
          a Subsidiary of a Loan Party;

               (D) Contracts and agreements related to any extension, renewal or
          replacement of Debt that is permitted under Section 5.02(b) of this
          Agreement, provided that the restrictions contained in the contracts
          and agreements governing such extended, renewed or replaced Debt are
          not more restrictive, taken as a whole, than those contained in the
          contracts and agreements governing the Debt being extended, renewed or
          replaced; and

               (E) Restrictions imposed by customers under construction
          contracts entered into in the ordinary course of business.

     SECTION 5.03. Reporting Requirements. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Loan Parties will furnish to the Agents and the Lender
Parties:
<PAGE>
                                       74

          (a) Default or MAE Notice. (A) As soon as possible and in any event
     within (A) Three Business Days after a Responsible Officer of MII bewares
     aware of the occurrence of a Default and (B) seven Business Days after a
     Responsible Officer of MII becomes aware of any other event or development
     that, in the reasonable judgment of such officer, would reasonably be
     expected to have a Material Adverse Effect (other than matters of a general
     economic nature or generally affecting the industry or industries in which
     the Loan Parties operate), in each case continuing on the date of such
     statement, a statement of a Responsible Officer of MII setting forth
     details of such Default or event, development or occurrence and the action
     that MII has taken and proposes to take with respect thereto.

          (b) Annual Financials. (i) As soon as available and in any event
     within 120 days after the end of each Fiscal Year, a copy of the annual
     audit report for such year for MII and its Subsidiaries, including therein
     Consolidated balance sheets of MII and its Subsidiaries as of the end of
     such Fiscal Year and Consolidated statements of income and cash flows of
     MII and its Subsidiaries for such Fiscal Year, in each case accompanied by
     an opinion of Pricewaterhouse Coopers LLP or other independent public
     accountants of recognized standing reasonably acceptable to the Required
     Lenders that the consolidated financial statements of MII are prepared in
     accordance with generally accepted accounting principles, together with (i)
     a certificate of such accounting firm to the Lender Parties stating that in
     the course of the regular audit of the business of MII and its
     Subsidiaries, which audit was conducted by such accounting firm in
     accordance with generally accepted auditing standards, such accounting firm
     has obtained no knowledge that an Event of Default has occurred and is
     continuing, or if, in the opinion of such accounting firm, an Event of
     Default has occurred and is continuing, a statement as to the nature
     thereof, (ii) a schedule in form reasonably satisfactory to the Required
     Lenders of the computations used by such accountants in determining, as of
     the end of such Fiscal Year, compliance with the covenants contained in
     Section 5.04, provided that in the event of any change in generally
     accepted accounting principles used in the preparation of such financial
     statements, MII shall also provide, if necessary for the determination of
     compliance with Section 5.04, a statement of reconciliation conforming such
     financial statements to GAAP and (iii) a certificate of the Chief Financial
     Officer of MII stating that no Event of Default has occurred and is
     continuing or, if an Event of Default has occurred and is continuing, a
     statement as to the nature thereof and the action that MII has taken and
     proposes to take with respect thereto.

          (ii) As soon as available and in any event within 120 days after the
     end of each Fiscal Year, a copy the annual unaudited (A) consolidated
     balance sheets of JRMSA and its Subsidiaries and consolidated balance
     sheets of BWXT and its Subsidiaries, in each case as of the end of such
     Fiscal Year, and (B) consolidated statements of income and cash flows of
     JRMSA and Subsidiaries and consolidated statements of income and cash flows
     of BWXT and its Subsidiaries, in each case for such Fiscal Year, in each
     case duly certified by the Chief Financial Officer of MII as having been
     prepared in accordance with generally accepted accounting principles
     (subject to normal year-end audit adjustments and the absence of complete
     footnotes), together with a schedule in form reasonably satisfactory to the
     Required Lenders of the computations used by such officer in determining,
     as of the end of such Fiscal Year, compliance with the covenants
<PAGE>
                                       75

     contained in Section 5.04 applicable to each of JRMSA and its Subsidiaries
     and BWXT and its Subsidiaries, provided that in the event of any change in
     generally accepted accounting principles used in the preparation of such
     financial statements, MII shall also provide, if necessary for the
     determination of compliance with Section 5.04, a statement of
     reconciliation conforming such financial statements to GAAP.

          (c) Quarterly Financials. As soon as available and in any event within
     60 days after the end of each of the first three quarters of each Fiscal
     Year, (i) Consolidated balance sheets of MII and its Subsidiaries,
     consolidated balance sheets of JRMSA and its Subsidiaries and consolidated
     balance sheets of BWXT and its Subsidiaries, in each case as of the end of
     such quarter, (ii) Consolidated statements of income and cash flows of MII
     and its Subsidiaries, consolidated statements of income and cash flows of
     JRMSA and Subsidiaries and consolidated statements of income and cash flows
     of BWXT and its Subsidiaries, in each case for the period commencing at the
     end of the previous fiscal quarter and ending with the end of such fiscal
     quarter and (iii) Consolidated statements of income and cash flows of MII
     and its Subsidiaries, consolidated statements of income and cash flows of
     JRMSA and its Subsidiaries and consolidated statements of income and cash
     flows of BWXT and its Subsidiaries, in each case commencing at the end of
     the previous Fiscal Year and ending with the end of such quarter, setting
     forth in each case covered by the preceding clauses (i), (ii) and (iii), in
     comparative form, the corresponding figures for the corresponding date or
     period of the preceding Fiscal Year, all in reasonable detail and duly
     certified by the Chief Financial Officer of MII as having been prepared in
     accordance with generally accepted accounting principles (subject to normal
     year-end audit adjustments and the absence of complete footnotes), together
     with (i) a certificate of said officer stating that no Event of Default has
     occurred and is continuing or, if an Event of Default has occurred and is
     continuing, a statement as to the nature thereof and the action that MII
     has taken and proposes to take with respect thereto and (ii) a schedule in
     form reasonably satisfactory to the Required Lenders of the computations
     used by MII in determining whether or not the Loan Parties are in
     compliance with the covenants contained in Section 5.04, provided that in
     the event of any change in generally accepted accounting principles used in
     the preparation of such financial statements, MII shall also provide, if
     necessary for the determination of compliance with Section 5.04, a
     statement of reconciliation conforming such financial statements to GAAP.

          (d) Annual Forecasts. As soon as available and in any event no later
     than 10 days following approval by the board of directors of MII following
     the end of each Fiscal Year, forecasts prepared by management of MII, in
     form reasonably satisfactory to the Required Lenders, of balance sheets,
     income statements and cash flow statements on a quarterly basis for the
     Fiscal Year following such Fiscal Year and on an annual basis for each
     Fiscal Year thereafter until the Termination Date.

          (e) Rolling 4-Week Forecasts. A four-week rolling forecast of inflows
     and outflows of cash with an explanation of the significant variances from
     the most recent four-week rolling forecast delivered to the Agents and the
     Lender Parties (in substantially the form set forth on Exhibit J hereto, or
     in form otherwise reasonably satisfactory to the Administrative Agent), on
     a monthly basis in no event later than 30 days following the end of each
     month, for BWXT and, to the extent reasonably practicable, on a weekly
<PAGE>
                                       76

     basis, no later than the fifth Business Day after the end of such week, for
     the JRM Borrowers and their Subsidiaries on a consolidated basis.

          (f) Backlog Report. For each Borrower, on a quarterly basis, no later
     than 30 days following the end of each quarter, a backlog report similar to
     the report set forth on Exhibit K hereto, listing the total backlog amount
     for BWXT and for each project of the JRM Borrowers reflected therein: (i)
     the customer and project names, (ii) projected revenue and (iii) projected
     gross profit and actual gross profit to date, and in the case of the JRM
     Borrowers and their Subsidiaries on a Consolidated Basis, on a monthly
     basis no later than 30 days following the end of each month, a report, in
     form reasonably satisfactory to the Administrative Agent, listing
     significant contract/project bookings and projected gross profit for each
     such booking.

          (g) (i) on a monthly basis, in no event later than 30 days following
     the end of each month, a status report on the Frontrunner Project outlining
     project milestones consistent with the ongoing management of the project
     contract, and such other available information as the Administrative Agent
     may reasonably request, and (ii) on a quarterly basis, to be delivered no
     later than 30 days following the end of each such quarter, a variance
     report (the "FRONTRUNNER VARIANCE REPORT"), in form reasonably satisfactory
     to the Administrative Agent, showing, on a cumulative basis, any variance
     (the "FRONTRUNNER VARIANCE") in (1) the sum of the actual cost-to-complete
     to date of the Frontrunner Project plus the current estimate of the
     remaining cost-to-complete from (2) the total contract cost at completion
     as shown in the "December 2002 Contract Cost and Revenue Report" (a
     preliminary copy of which, subject to audit adjustments, has been delivered
     to the Required Lenders), in each case as adjusted for change orders
     executed by the customer.

          (h) Monthly Cash Balance Report. On a monthly basis, in no event later
     than 30 days following the end of each month, a report listing (i) all cash
     balances of MII and its Subsidiaries showing, separately, restricted and
     unrestricted cash balances, (ii) the current balances of all outstanding
     intercompany debt of MII and its Subsidiaries and (iii) a schedule setting
     forth (A) an accounting of the use of Net Cash Proceeds referred to in
     Section 2.06(b) that are not required to cash collateralize the Facilities
     and (B) cash or Cash Equivalents used to cash collateralize Middle Eastern
     L/Cs; in each case, in form reasonably satisfactory to the Administrative
     Agent.

          (i) Litigation. Promptly after a Responsible Officer has knowledge of
     the commencement thereof, notice of all actions, suits, investigations,
     litigation and proceedings before any court or governmental department,
     commission, board, bureau, agency or instrumentality, domestic or foreign,
     affecting any Loan Party or any of its Subsidiaries of the type described
     in Section 4.01(f).

          (j) Securities Reports. Promptly after the sending or filing thereof,
     copies of all proxy statements, financial statements and reports that MII
     sends to its stockholders, and copies of all regular, periodic and special
     reports, and all registration statements, that MII files with the
     Securities and Exchange Commission or any governmental authority that may
     be substituted therefor, or with any national securities exchange.
<PAGE>
                                       77

          (k) Creditor Reports. Promptly after the furnishing thereof, copies of
     any statement or report furnished to any holder of Debt securities of any
     Loan Party or of any of its Subsidiaries pursuant to the terms of any
     indenture, loan or credit or similar agreement and not otherwise required
     to be furnished to the Lender Parties pursuant to any other clause of this
     Section 5.03.

          (l) Agreement Notices. Promptly after receipt thereof, copies of all
     notices, requests and other documents received by any Loan Party or any of
     its Subsidiaries under or pursuant to any Material Contract or indenture,
     loan or credit or similar agreement regarding or related to any material
     breach or default by any party thereto or any other event that would, in
     the reasonable judgment of a Responsible Officer of MII, be reasonably
     expected to have a Material Adverse Effect.

          (m) Revenue Agent Reports. Within 10 days after receipt, copies of any
     and all final assessments from the appeals division of the Internal Revenue
     Service, that determine or otherwise set forth positive adjustments to the
     Federal income tax liability of the affiliated group (within the meaning of
     Section 1504(a)(1) of the Internal Revenue Code) of which any Borrower is a
     member aggregating $5,000,000 or more.

          (n) ERISA. (i) as soon as possible, and in any event within 30 days
     after the filing thereof with the Internal Revenue Service, copies of each
     Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
     with respect to each Plan, (ii) as soon as possible and in any event within
     10 days after any Responsible Officer of the Loan Parties or any ERISA
     Affiliate either knows or has reason to know that any ERISA Event has
     occurred that alone or together with any other ERISA Event has resulted or
     would reasonably be expected to result in liability of the Loan Parties or
     any ERISA Affiliate in an aggregate amount exceeding $20,000,000, a
     statement of a Responsible Officer of MII setting forth details as to such
     ERISA Event and the action proposed to be taken with respect thereto,
     together with a copy of the notice, if any, of such ERISA Event given to
     the PBGC, (i) on the date any records, documents or other information must
     be furnished to the PBGC with respect to any Plan pursuant to Section 4010
     of ERISA, a copy of such records, documents and information, (ii) promptly
     and in any event within five Business Days after receipt thereof, a copy of
     any notice the Loan Parties or any ERISA Affiliate receives from the PBGC
     relating to the intention of the PBGC to terminate any Plan or Plans or to
     appoint a trustee to administer any Plan or Plans, (iii) upon the filing
     with the PBGC pursuant to Section 412(n) of the Code or Section 302(f) of
     ERISA of a notice of failure to make a required installment or other
     payment with respect to a Plan, a statement of a Responsible Officer
     setting forth details as to such failure and the action proposed to be
     taken with respect thereto, together with a copy of such notice given to
     the PBGC and (iv) promptly and in any event within 30 days after receipt
     thereof by the Loan Parties or any ERISA Affiliate from the sponsor of a
     Multiemployer Plan, a copy of each notice received by the Loan Parties or
     any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability,
     (B) a determination that a Multiemployer Plan is, or is expected to be,
     terminated or in reorganization, in each case within the meaning of Title
     IV of ERISA or (C) the amount of liability incurred, or that may be
     incurred by such Loan Party or any Affiliate of any Loan Party in
     connection with any event described in clause (A) or (B).
<PAGE>
                                       78

          (o) Environmental Conditions. Promptly after a Responsible Officer of
     any Loan Party has knowledge of the assertion or occurrence thereof, notice
     of any Environmental Action against or of any noncompliance by any Borrower
     or any of its Subsidiaries with any Environmental Law or Environmental
     Permit that would reasonably be expected to cause any property described in
     the Mortgages to be subject to any material restrictions on ownership,
     occupancy, use or transferability under any Environmental Law.

          (p) Other Information. Such other information respecting the business,
     condition (financial or otherwise), operations, performance, properties or
     prospects of any Borrower or any of its Subsidiaries as any Agent, or any
     Lender Party through the Administrative Agent, may from time to time
     reasonably request.

     SECTION 5.04. Financial Covenants. So long as any Advance or any other
Obligation of any Borrower under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrowers will:

          (a) Minimum EBITDA. Maintain EBITDA for MII and its Subsidiaries of
     not less than the amount set forth below as of the respective measurement
     dates set forth below for the respective measurement periods set forth
     below:

<TABLE>
<CAPTION>
===================================================================================

MEASUREMENT DATES                   MEASUREMENT PERIODS                   EBITDA
===================================================================================
<S>                   <C>                                              <C>
-----------------------------------------------------------------------------------
March 31, 2003        For fiscal quarter ending March 31, 2003         $ 30,000,000
-----------------------------------------------------------------------------------
June 30, 2003         Two fiscal quarters ending June 30, 2003         $ 60,000,000
-----------------------------------------------------------------------------------
September 30, 2003    Three fiscal quarters ending June 30, 2003       $ 90,000,000
-----------------------------------------------------------------------------------
December 31, 2003     Four fiscal quarters ending December 31, 2003    $ 10,000,000
-----------------------------------------------------------------------------------
March 31, 2004        Four fiscal quarters ending March 31, 2004       $100,000,000
===================================================================================
</TABLE>

          (b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
     Ratio for MII and its Subsidiaries of not less than the amount set forth
     below as of the respective measurement dates set forth below for the
     respective measurement periods set forth below:
<PAGE>
                                       79

<TABLE>
<CAPTION>
=============================================================================================
                                                                                FIXED CHARGE
MEASUREMENT DATES                   MEASUREMENT PERIODS                        COVERAGE RATIO
=============================================================================================
<S>                   <C>                                                       <C>
March 31, 2003        For fiscal quarter ending March 31, 2003                  1.20 to 1.00
---------------------------------------------------------------------------------------------
June 30, 2003         Two fiscal quarters ending June 30, 2003                  1.25 to 1.00
---------------------------------------------------------------------------------------------
September 30, 2003    Three fiscal quarters ending September 30, 2003           1.25 to 1.00
---------------------------------------------------------------------------------------------
December 31, 2003     Four fiscal quarters ending December 31, 2003             1.25 to 1.00
---------------------------------------------------------------------------------------------
March 31, 2004        Four fiscal quarters ending March 31, 2004                1.25 to 1.00
=============================================================================================
</TABLE>

          (c) Tangible Net Worth. Maintain at all times an excess of
     consolidated total tangible assets over consolidated total liabilities
     (such amounts to exclude the effects of non-cash charges (net of non-cash
     gains), (2) restructuring charges and liabilities in respect of the
     Settlement Agreement, (3) non-cash pension plan expenses and non-cash
     minimum pension liability recognition, (4) contingency reserves for SPAR
     contracts to the extent, if any, that such contingency reserves exceed
     $16,900,000 as of December 31,2002, and (5) restructuring charges with
     respect to operational changes in the Western Hemisphere marine business of
     JRMSA and its Subsidiaries), of not less than the respective amounts set
     forth below for MII and its Consolidated Subsidiaries, JRMSA and its
     consolidated Subsidiaries and BWXT and its consolidated Subsidiaries:

<TABLE>
<CAPTION>
================================================================================
                             MII                  JRMSA                 BWXT
================================================================================
<S>                     <C>                   <C>                   <C>
Amount                  $160,000,000          $ 50,000,000          $130,000,000
================================================================================
</TABLE>

          (d) Frontrunner Variance. Maintain at all times a Frontrunner Variance
     of not greater than 20% in terms of actual and expected costs to complete
     exceeding the total contract cost at completion as shown in the December
     2002 Contract Cost and Revenue Report referred to in Section 5.03(g)(ii),
     as adjusted for change orders executed by the customer.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:
<PAGE>
                                       80

          (a) (i) the Borrowers shall fail to pay any principal of any Advance
     when the same shall become due and payable or (ii) the Borrowers shall fail
     to pay any interest on any Advance, or any Borrower shall fail to make any
     other payment under any Loan Document, in each case under this clause (ii)
     within three Business Days after the same becomes due and payable; or

          (b) any representation or warranty made by any Borrower (or any of its
     officers) in or pursuant to any Loan Document shall prove to have been
     incorrect in any material respect when made; or

          (c) the Borrower shall fail to perform or observe any term, covenant
     or agreement contained in Section 2.14, 5.01(e), (f), (j), (n) or (s),
     5.02, 5.03 or 5.04; or

          (d) any Borrower shall fail to perform or observe any other term,
     covenant or agreement contained in any Loan Document on its part to be
     performed or observed if such failure shall remain unremedied for 20 days
     after the earlier of the date on which (i) a Responsible Officer has
     knowledge of such failure or (ii) written notice thereof shall have been
     given to such Borrower by any Agent or any Lender Party; or

          (e) any Borrower or any of its Subsidiaries shall fail to pay any
     principal of, premium or interest on or any other amount payable in respect
     of any Debt (other than Subordinated Debt so long as such Debt cannot be
     accelerated or give rise to the exercise of other remedies by the holders
     thereof) of such Borrower or such Subsidiary (as the case may be) that is
     outstanding in a principal amount (or, in the case of any Hedge Agreement,
     an Agreement Value) of at least $5,000,000 either individually or in the
     aggregate (but excluding Debt outstanding hereunder), when the same becomes
     due and payable (whether by scheduled maturity, required prepayment,
     acceleration, demand or otherwise); or any other event shall occur or
     condition shall exist under any agreement or instrument relating to any
     such Debt, if the effect of such event or condition is to accelerate, or to
     permit the acceleration of, the maturity of such Debt or otherwise to
     cause, or to permit the holder thereof to cause, such Debt to mature; or
     any such Debt shall be declared to be due and payable or required to be
     prepaid or redeemed (other than by a regularly scheduled required
     prepayment or redemption), purchased or defeased, or an offer to prepay,
     redeem, purchase or defease such Debt shall be required to be made, in each
     case prior to the stated maturity thereof; or

          (f) any Borrower or any of its Subsidiaries shall generally not pay
     its debts as such debts become due, or shall admit in writing its inability
     to pay its debts generally, or shall make a general assignment for the
     benefit of creditors; or any proceeding shall be instituted by or against
     any Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt
     or insolvent, or seeking liquidation, winding up, reorganization,
     arrangement, adjustment, protection, relief, or composition of it or its
     debts under any law relating to bankruptcy, insolvency or reorganization or
     relief of debtors, or seeking the entry of an order for relief or the
     appointment of a receiver, trustee or other similar official for it or for
     any substantial part of its property and, in the case of any such
     proceeding instituted against it (but not instituted by it) that is being
     diligently contested by it in good faith, either such proceeding shall
     remain undismissed or unstayed for a period of 30 days or
<PAGE>
                                       81

     any of the actions sought in such proceeding (including, without
     limitation, the entry of an order for relief against, or the appointment of
     a receiver, trustee, custodian or other similar official for, it or any
     substantial part of its property) shall occur; or any Borrower or any of
     its Subsidiaries shall take any corporate action to authorize any of the
     actions set forth above in this subsection (f); or

          (g) any judgments or orders, either individually or in the aggregate,
     for the payment of money in excess of $5,000,000 (over and above applicable
     insurance coverage, so long as such coverage is not being contested by the
     applicable insurer) shall be rendered against any Borrower or any of its
     Subsidiaries and either (i) enforcement proceedings shall have been
     commenced by any creditor upon such judgment or order or (ii) there shall
     be any period of 10 consecutive days during which a stay of enforcement of
     such judgment or order, by reason of a pending appeal or otherwise, shall
     not be in effect; or

          (h) any non-monetary judgment or order shall be rendered against any
     Borrower or any of its Subsidiaries that would be reasonably expected to
     have a Material Adverse Effect, and there shall be any period of 10
     consecutive days during which a stay of enforcement of such judgment or
     order, by reason of a pending appeal or otherwise, shall not be in effect;
     or

          (i) any provision of any Loan Document after delivery thereof pursuant
     to Section 3.01 or 5.01(j) shall for any reason cease to be valid and
     binding on or enforceable against any Loan Party that is a party to such
     Loan Document, and such defect shall not be cured within 10 Business Days
     following such Loan Party's receipt of notice thereof, or any such Borrower
     shall so state in writing; or

          (j) any Collateral Document or financing statement after delivery
     thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other
     than pursuant to the terms thereof) cease to create a valid and perfected
     first priority (other than prior Liens permitted under the Loan Documents)
     lien on and security interest in the Collateral purported to be covered
     thereby; or

          (k) a Change of Control shall occur; or

          (l) any ERISA Event (other than an ERISA Event that has occurred or is
     reasonably expected to occur that is described in Schedule 4.01(n) hereto)
     shall have occurred with respect to a Plan and the sum (determined as of
     the date of occurrence of such ERISA Event) of the Insufficiency of such
     Plan and the Insufficiency of any and all other Plans with respect to which
     an ERISA Event shall have occurred and then exist (or the liability of the
     Borrowers and the ERISA Affiliates related to such ERISA Event) exceeds
     $20,000,000 and any Loan Party or ERISA Affiliate has incurred or is
     reasonably expected to incur liability in such amount in connection with
     such Plan or Plans; or

          (m) any Loan Party or any ERISA Affiliate shall have been notified by
     the sponsor of a Multiemployer Plan that it has incurred Withdrawal
     Liability to such
<PAGE>
                                       82

     Multiemployer Plan in an amount that, when aggregated with all other
     amounts required to be paid to Multiemployer Plans by the Loan Parties and
     the ERISA Affiliates as Withdrawal Liability (determined as of the date of
     such notification), exceeds $30,000,000 or requires payments exceeding
     $5,000,000 per annum and (ii) such Loan Party or such ERISA Affiliate does
     not have reasonable grounds for contesting such Withdrawal Liability or is
     not in fact contesting such Withdrawal Liability; or

          (n) any Loan Party or any ERISA Affiliate shall have been notified by
     the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
     reorganization or is being terminated, within the meaning of Title IV of
     ERISA, and as a result of such reorganization or termination the aggregate
     annual contributions of the Loan Parties and the ERISA Affiliates to all
     Multiemployer Plans that are then in reorganization or being terminated
     have been or will be increased over the amounts contributed to such
     Multiemployer Plans for the plan years of such Multiemployer Plans
     immediately preceding the plan year in which such reorganization or
     termination occurs by an amount exceeding $5,000,000; or

          (o) an "Event of Default" (as defined in any Mortgage or any Ship
     Mortgage) shall have occurred and be continuing; or

          (p) there shall occur any material adverse change in the terms of the
     Asbestos Settlement Note; or

          (q) Except as contemplated in the Settlement Agreement, there shall
     occur any final, nonappealable ruling in the Asset Transfer Case that
     requires capital stock of any Subsidiary of MII to be transferred to B&W.

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrowers,
declare the Commitments of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by an Issuing Bank
or a Lender pursuant to Section 2.03(c)) and of each Issuing Bank to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, (A) by notice to the Borrowers, declare the Notes, all
interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower and (B) by notice to each
Issuing Bank, direct such Issuing Bank to deliver a Default Termination Notice
to the beneficiary of each Letter of Credit issued by it, and each Issuing Bank
shall deliver such Default Termination Notices; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to any
Borrower under the Federal Bankruptcy Code, (x) the Commitments of each Lender
Party and the obligation of each Lender Party to make Advances (other than
Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section
2.03(c)) and of each Issuing Bank to issue Letters of Credit shall automatically
be terminated and (y) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrowers.
<PAGE>
                                       83

     SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, or shall at the request of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon each Borrower to, and forthwith upon such demand the Borrower
will pay to the Collateral Agent on behalf of the Lender Parties in same day
funds at the Collateral Agent's office designated in such demand, for deposit in
the applicable L/C Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding; provided that BWXT
shall only be required to cash collateralize Letters of Credit issued for its
own account. If at any time the Administrative Agent or the Collateral Agent
determines that any funds held in either or both of the L/C Cash Collateral
Accounts are subject to any right or claim of any Person other than the Agents
and the Lender Parties or that the total amount of such funds is less than the
aggregate Available Amount of all Letters of Credit, each Borrower will
forthwith upon demand by the Administrative Agent or the Collateral Agent pay to
the Collateral Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
applicable L/C Cash Collateral Account that the Administrative Agent or the
Collateral Agent, as the case may be, determines to be free and clear of any
such right and claim; provided that BWXT shall only be required to cash
collateralize Letters of Credit issued for its own account. Upon the drawing of
any Letter of Credit for which funds are on deposit in either or both of the L/C
Cash Collateral Accounts, such funds shall be applied to reimburse the relevant
Issuing Bank or Lenders, as applicable, to the extent permitted by applicable
law.

                                  ARTICLE VII

                                   THE AGENTS

     SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender, an Issuing Bank (if applicable) and on behalf of itself
and its Affiliates as potential Hedge Banks) hereby appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Loan Documents as are delegated to
such Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of the Notes), no Agent shall be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided, however,
that no Agent shall be required to take any action that exposes such Agent to
personal liability or that is contrary to this Agreement or applicable law. Each
Agent agrees to give to each Lender Party prompt notice of each notice given to
it by any Borrowers pursuant to the terms of this Agreement.

     SECTION 7.02. Agents' Reliance, Etc. Neither any Agent nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the
<PAGE>
                                       84

foregoing, each Agent: (a) may treat the payee of any Note as the holder thereof
until, in the case of the Administrative Agent, the Administrative Agent
receives and accepts an Assignment and Acceptance entered into by the Lender
that is the payee of such Note, as assignor, and an Eligible Assignee, as
assignee, or, in the case of any other Agent, such Agent has received notice
from the Administrative Agent that it has received and accepted such Assignment
and Acceptance, in each case as provided in Section 9.07; (b) may consult with
legal counsel (including counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of any Loan Document on the part of any
Borrower or to inspect the property (including the books and records) of any
Borrower; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

     SECTION 7.03. CUSA and Affiliates. With respect to its Commitments, the
Advances made by it and the Notes issued to it, CUSA shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not an Agent; and the term "Lender Party" or "Lender
Parties" shall, unless otherwise expressly indicated, include CUSA in its
individual capacity. CUSA and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person that may do business with or own
securities of any Loan Party or any such Subsidiary, all as if CUSA were not an
Agent and without any duty to account therefor to the Lender Parties.

     SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender Party and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender Party
also acknowledges that it will, independently and without reliance upon any
Agent or any other Lender Party and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.

     SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to
indemnify each Agent (to the extent not promptly reimbursed by the Borrowers)
from and against such Lender Party's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted
<PAGE>
                                       85

against such Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by such Agent under the Loan Documents
(collectively, the "INDEMNIFIED COSTS"); provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender Party agrees to reimburse each Agent
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Loan Parties
under Section 9.04, to the extent that such Agent is not promptly reimbursed for
such costs and expenses by the Loan Parties. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such investigation, litigation or proceeding is brought by
any Lender Party or any other Person.

     (b) Each Lender Party severally agrees to indemnify each Issuing Bank (to
the extent not promptly reimbursed by the Loan Parties) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by such Issuing Bank under the Loan Documents; provided, however, that no Lender
Party shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Issuing Bank's gross negligence or willful misconduct as
found in a final, non-appealable judgment by a court of competent jurisdiction.
Without limitation of the foregoing, each Lender Party agrees to reimburse such
Issuing Bank promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Loan Parties under Section 9.04, to the extent that such Issuing Bank is
not promptly reimbursed for such costs and expenses by the Loan Parties.

     (c) For purposes of this Section 7.05, the Lender Parties' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (i) the aggregate principal amount of the Advances outstanding at such
time and owing to the respective Lender Parties, (ii) their respective Pro Rata
Shares of the aggregate Available Amount of all Letters of Credit outstanding at
such time, and (iii) their respective Unused Working Capital Commitments at such
time. The failure of any Lender Party to reimburse any Agent or any Issuing
Bank, as the case may be, promptly upon demand for its ratable share of any
amount required to be paid by the Lender Parties to such Agent or such Issuing
Bank, as the case may be, as provided herein shall not relieve any other Lender
Party of its obligation hereunder to reimburse such Agent or such Issuing Bank,
as the case may be, for its ratable share of such amount, but no Lender Party
shall be responsible for the failure of any other Lender Party to reimburse such
Agent or such Issuing Bank, as the case may be, for such other Lender Party's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
<PAGE>
                                       86

     SECTION 7.06. Successor Agents. Any Agent may resign at any time by giving
written notice thereof to the Lender Parties and the Borrowers and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lender Parties, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and, in the case of a
successor Collateral Agent, upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages and the Ship Mortgages, and such other instruments or notices,
as may be necessary or desirable, or as the Required Lenders may request, in
order to continue the perfection of the Liens granted or purported to be granted
by the Collateral Documents, such successor Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. If within 45 days after written notice is
given of the retiring Agent's resignation or removal under this Section 7.06 no
successor Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (a) the retiring Agent's resignation or
removal shall become effective, (b) the retiring Agent shall thereupon be
discharged from its duties and obligations under the Loan Documents and (c) the
Required Lenders shall thereafter perform all duties of the retiring Agent under
the Loan Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided above. After any retiring Agent's resignation or
removal hereunder as Agent shall have become effective, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

                                  ARTICLE VIII

                                 PARENT GUARANTY

     SECTION 8.01. Guaranty. (a) The Parent Guarantor hereby unconditionally and
irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or
otherwise pursuant to the terms of this Agreement, of all Bilateral Obligations
and all Obligations of each Loan Party now or hereafter existing under the Loan
Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, fees, expenses or otherwise (such Obligations being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including,
without limitation, reasonable counsel fees and expenses) incurred by the Agents
or the Lender Parties in enforcing any rights under this Guaranty or any other
Loan Documents. Without limiting the generality of the foregoing, the Parent
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by each Loan Party to the
Administrative Agent or any Lender Party under or in respect
<PAGE>
                                       87

of the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Loan Party.

     (b) The Parent Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Agent or any Lender
Party under this Guaranty or any other guaranty, the Parent Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
guarantor so as to maximize the aggregate amount paid to any Agent or any Lender
Parties (up to the amount of the payment so required to be made) under or in
respect of the Loan Documents.

     SECTION 8.02. Guaranty Absolute. The Parent Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent, the Agents or the Lenders with respect thereto. The
Obligations of the Parent Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any Loan Party under the Loan
Documents, and a separate action or actions may be brought and prosecuted
against the Parent Guarantor to enforce this Guaranty, irrespective of whether
any action is brought against any Borrower or whether any Borrower is joined in
any such action or actions. To the maximum extent permitted by applicable law,
the liability of the Parent Guarantor under this Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and the Parent Guarantor hereby
irrevocably waives any defenses it may now or hereinafter have in any way
relating to, any or all of the following:

     (a) any lack of validity or enforceability of any Loan Document;

     (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations or any other Obligations of
any other Loan Party under the Loan Documents, or any other amendment or waiver
of or any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to the Borrowers, the Parent Guarantor or any of
their Subsidiaries or otherwise;

     (c) any taking, exchange, release or non-perfection of any collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;

     (d) any manner of application of collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any collateral for all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents or any other assets
of the Borrowers, the Parent Guarantor or any of their Subsidiaries;

     (e) any change, restructuring or termination of the corporate or other
legal structure or existence of the Borrowers, the Parent Guarantor or any of
their Subsidiaries;

     (f) any failure of any Agent or any Lender Party to disclose to any Loan
Party any information relating to the business, condition (financial or
otherwise), operations,
<PAGE>
                                       88

performance, properties or prospects of any Loan Party now or hereafter known to
any Agent or any Lender Party (the Parent Guarantor waiving any duty on the part
of any Agent or any Lender Party to disclose such information); or

     (g) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any Agent
or any Lender Party that might otherwise constitute a defense available to, or a
discharge of, any Borrower, the Parent Guarantor or any other guarantor or
surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any Lender Party
upon the insolvency, bankruptcy or reorganization of any Borrower, the Parent
Guarantor or any of their Subsidiaries or otherwise, all as though such payment
had not been made.

     SECTION 8.03. Waiver. (a) The Parent Guarantor hereby unconditionally and
irrevocably waives promptness, diligence, notice of acceptance, presentment,
demand for performance, notice of nonperformance, default, acceleration, protest
or dishonor and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Agent or any Lender
Party protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any Loan Party or any
other Person or any Collateral.

     (b) The Parent Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

     (c) The Parent Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Agent or any Lender Party that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of the Parent Guarantor or
other rights of the Parent Guarantor to proceed against any of the Loan Parties,
any other guarantor or any other Person or any Collateral and (ii) any defense
based on any right of set-off or counterclaim against or in respect of the
Obligations of the Parent Guarantor hereunder.

     (d) The Parent Guarantor acknowledges that the Agents may, except as
otherwise required by the Uniform Commercial Code as in effect from time to time
in the State of New York or other applicable law, without notice to or demand
upon the Parent Guarantor and without affecting the liability of the Parent
Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale,
and the Parent Guarantor hereby waives any defense to the recovery by the Agents
and the other Lender Parties against the Parent Guarantor of any deficiency
after such nonjudicial sale and any defense or benefits that may be afforded by
applicable law.

     (e) The Parent Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Agent or any Lender Party to disclose to the Parent
Guarantor any matter,
<PAGE>
                                       89

fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by any Agent or any Lender Party.

     (f) The Parent Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 8.02 and this Section
8.03 are knowingly made in contemplation of such benefits.

     SECTION 8.04. Payments Free and Clear of Taxes, Etc. (a) Any and all
payments made by the Parent Guarantor under or in respect of this Guaranty or
any other Loan Document shall be made, in accordance with Section 2.12, free and
clear of and without deduction for any and all present or future Taxes and
subject to the limitations set forth herein. If the Parent Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender Party or the Administrative Agent, (i) the sum payable
by the Parent Guarantor shall be increased as may be necessary so that after the
Parent Guarantor and the Administrative Agent have made all required deductions
(including deductions applicable to additional sums payable under this Section
8.04) such Lender Party or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Parent Guarantor shall make such deductions and
(iii) the Parent Guarantor shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

     (b) In addition, the Parent Guarantor agrees to pay any present or future
Other Taxes that arise from any payment made under or in respect of this
Guaranty or any other Loan Document or from the execution, delivery or
registration of, performance under, or otherwise with respect to, this Guaranty
and the other Loan Documents.

     (c) The Parent Guarantor will indemnify each Lender Party and the Agents
for the full amount of Taxes or Other Taxes and for the full amount of taxes of
any kind imposed by any jurisdiction on amounts payable under this Section 8.04,
imposed on or paid by such Lender Party or Agent and any liability (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by such Lender Party or any Agent (as
the case may be) arising therefrom or with respect thereto. This indemnification
shall be made within 30 days from the date such Lender Party or such Agent (as
the case may be) makes reasonable written demand therefore, specifying in
reasonable detail the reasons therefor.

     (d) Within 30 days after the date of any payment of Taxes by or on behalf
of the Parent Guarantor, the Parent Guarantor use commercially reasonable
efforts to furnish to the Administrative Agent, at its address referred to in
Section 9.02, the original or certified copy of a receipt evidencing such
payment. If an Agent or Lender Party shall become aware that it is entitled to
claim a refund from a taxation authority in respect of Taxes or Other Taxes as
to which it has been indemnified by the Parent Guarantor, or with respect to
which the Parent Guarantor has paid Additional Amounts, pursuant to this Section
8.04, it shall promptly notify the Parent Guarantor of the availability of such
refund claim and shall, within 30 days after receipt of a written request by the
Parent Guarantor, make a claim to such taxation authority for
<PAGE>
                                       90

such refund at the Parent Guarantor's expense. If an Agent or a Lender Party
receives a refund (including pursuant to a claim for refund made pursuant to the
preceding sentence) in respect of any Taxes or Other Taxes as to which it has
been indemnified by the Parent Guarantor, or with respect to which the Parent
Guarantor has paid Additional Amounts, pursuant to this Section 8.04, it shall
reasonably promptly following its receipt pay over such refund to the Parent
Guarantor (but only to the extent of indemnity payments made, or Additional
Amounts paid, by the Parent Guarantor under this Section 8.04 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Agent or Lender Party and without interest (other than interest
paid by the relevant taxation authority with respect to such refund); provided,
however, that the Parent Guarantor, upon the request of such Agent or Lender
Party, agrees to repay the amount paid over to the Parent Guarantor (plus
penalties, interest or other charges, if any, imposed by the relevant taxation
authority in respect of such repayment) to such Agent or Lender Party in the
event such Agent or Lender Party is required to repay such refund to such
taxation authority.

     (e) Without prejudice to the survival of any other agreement of the Parent
Guarantor hereunder, the agreements and obligations of the Parent Guarantor
contained in Section 8.01(a) (with respect to enforcement expenses), the last
sentence of Section 8.02 and this Section 8.04 shall survive the payment in full
of the Guaranteed Obligations and all other amounts payable under this Guaranty.

     SECTION 8.05. Continuing Guaranty; Assignments. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the cash payment in full of the Guaranteed Obligations and all
other amounts payable under this Guaranty, (ii) the Termination Date and (iii)
the latest date of expiration or termination or cash collateralization (as
provided herein) of all Letters of Credit, (b) be binding upon the Parent
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Lender Parties, the Agents and their successors and permitted
assigns. Without limiting the generality of the foregoing clause (c), any Lender
Party may assign or otherwise transfer all or any portion of its rights and
obligations hereunder (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, in each
case to the extent permitted by Section 9.07. The Parent Guarantor shall not
have the right to assignment rights hereunder or any interest herein without the
prior written consent of the Administrative Agent.

     SECTION 8.06. Subrogation. The Parent Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now or hereafter
acquire against any Borrower, any Loan Party or any other guarantor that arise
from the existence, payment, performance or enforcement of the Parent
Guarantor's Obligations under this Agreement or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Administrative Agent or any Lender Party against any
Borrower, any Loan Party or any other guarantor or any Collateral, whether or
not such claim,
<PAGE>
                                       91

remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from any Borrower,
any Loan Party or any other guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been paid in full
in cash, all Letters of Credit shall have expired or been terminated or cash
collateralized as provided herein and the Commitments shall have expired or
terminated. If any amount shall be paid to the Parent Guarantor in violation of
the preceding sentence at any time prior to the latest of (a) the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Guaranty, (b) the Termination Date and (c) the latest date of expiration or
termination or cash collateralization (as provided herein) of all Letters of
Credit, such amount shall be received and held in trust for the benefit of the
Agents and the Lender Parties, shall be segregated from other property and funds
of the Parent Guarantor and shall forthwith be paid to the Administrative Agent
in the same form as so received (with any necessary endorsement or assignment)
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) the Parent Guarantor shall make payment to the Administrative Agent or any
Lender Party of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
be paid in full in cash, (iii) the Termination Date shall have occurred and (iv)
all Letters of Credit shall have been expired or been terminated or cash
collateralized as provided herein, the Administrative Agent and the Lender
Parties will, at the Parent Guarantor's request and expense, execute and deliver
to the Parent Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
the Parent Guarantor of an interest in the Guaranteed Obligations resulting from
such payment by the Parent Guarantor.

     SECTION 8.07. Subordination. The Parent Guarantor hereby subordinates any
and all debts, liabilities and other Obligations owed to the Parent Guarantor by
each Loan Party (the "Subordinated Obligations") to the Guaranteed Obligations
to the extent and in the manner hereinafter set forth in this Section 8.07:

     (a) Prohibited Payments, Etc. Except during the continuance of an Event of
Default, the Parent Guarantor may receive regularly scheduled payments from any
other Loan Party on account of Debt owed to it by such Loan Party and permitted
under Section 5.02(b). After the occurrence and during the continuance of any
Event of Default, however, unless the Administrative Agent otherwise agrees, the
Parent Guarantor shall not demand, accept or take any action to collect any
payment on account of Debt owed to it by any other Loan Party.

     (b) Prior Payment of Guaranteed Obligations. The Parent Guarantor agrees
that the Secured Parties shall be entitled to receive payment in full in cash of
all Guaranteed Obligations before the Parent Guarantor receives payment of any
Debt owed to it by any Loan Party.

     (c) Turn-Over. After the occurrence and during the continuance of any Event
of Default, the Parent Guarantor shall, if the Administrative Agent so requests,
use commercially reasonable efforts to collect, enforce and receive payments on
account of Debt owed to it by any Loan Party as trustee for the Lender Parties
and deliver such payments to the Administrative Agent on account of the
Guaranteed Obligations, together with any necessary endorsements or
<PAGE>
                                       92

other instruments of transfer, but without reducing or affecting in any manner
the liability of the Parent Guarantor under the other provisions of this
Guaranty.

     (d) Administrative Agent Authorization. After the occurrence and during the
continuance of any Event of Default, the Administrative Agent is authorized and
empowered, in its discretion, (i) in the name of the Parent Guarantor, to
collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all post petition interest), and (ii) to require
the Parent Guarantor (A) use commercially reasonable efforts to collect and
enforce, and to submit claims in respect of, Debt owed to it by any Loan Party
and (B) to pay any amounts received on such obligations to the Administrative
Agent for application to the Guaranteed Obligations.

                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all of the Lenders (other than any Lender
Party that is, at such time, a Defaulting Lender), do any of the following at
any time: (i) waive any of the conditions specified in Section 3.01 or, in the
case of the Initial Extension of Credit, Section 3.02, (ii) change the number of
Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid
principal amount of the Advances or (z) the aggregate Available Amount of
outstanding Letters of Credit that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (iii) amend Section 2.13 or
this Section 9.01, (iv) increase the Commitments of the Lenders, (v) reduce the
principal of, or interest on, the Notes or any fees payable hereunder, (vi)
postpone any date scheduled for any payment of principal of, or interest on, the
Notes pursuant to Section 2.04 or 2.07 or any date fixed for payment of fees or
other amounts payable hereunder, (vii) release any material portion of the
Collateral (except as permitted under Section 5.02(e)) or permit the creation,
incurrence, assumption or existence of any Lien on any material portion of the
Collateral (except as permitted under Section 5.02(a)) in any transaction or
series of related transactions to secure any Obligations other than Obligations
owing to the Secured Parties under the Loan Documents or (viii) limit the
liability of any Loan Parties under any of the Loan Documents; provided further,
that, so long as Mizuho is a Lender under this Agreement, no amendment, waiver
or consent shall, unless in writing and signed by Mizuho, in addition to the
Lenders required above to take such action, amend any of the definitions of
"Mizuho Cash Collateral Account", "Mizuho Obligations" and "Mizuho Termination
Date", in each case as set forth in Section 1.01, or amend, waive or consent to
any departure from any of Sections 2.05(c), 2.06(c), 5.01(s) and 6.01(c) (solely
to the extent it relates to Section 5.01(s)); provided further that no
amendment, waiver or consent shall, unless in writing and signed by each Issuing
Bank, as the case may be, in addition to the Lenders required above to take such
action, affect the rights or obligations of the Issuing Banks, as the case may
be, under this Agreement; and provided
<PAGE>
                                       93

further that no amendment, waiver or consent shall, unless in writing and signed
by an Agent in addition to the Lenders required above to take such action,
affect the rights or duties of such Agent under this Agreement or the other Loan
Documents.

     SECTION 9.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
any Loan Party, at the address specified for such Loan Party on the signature
pages hereto; if to any Initial Lender Party, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; if to either the Collateral Agent or
the Administrative Agent, at its address at 2 Penns Way, Suite 200, New Castle,
Delaware 19720 (telecopier number: (302) 894-6120), Attention: McDermott Account
Officer, with a copy to Citicorp North America, Inc., 1200 Smith Street, Suite
2000, Houston, Texas 77002 (telecopier number: (713) 654-2849), Attention:
McDermott Account Officer; or, as to any party, at such other address as shall
be designated by such party in a written notice to the other parties. Solely
with respect to weekly and monthly deliveries pursuant to Section 5.03(e), (f),
(g) and (h), the Borrowers shall be permitted to deliver such deliveries by
e-mail at such e-mail address as each of the Administrative Agent and each
Lender Party shall have provided, or shall provide, to the Borrowers from time
to time. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telegraph, telecopy, telex or e-mail or on the date five Business
Days after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 9.02 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 9.02. Delivery by telecopier or
e-mail (to the extent permitted hereunder) of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of an original executed counterpart thereof.

     SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender
Party or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

     SECTION 9.04. Costs and Expenses. (a) The Borrowers agree to pay on demand
(i) all costs and out-of-pocket expenses of each Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all out-of-pocket due
diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for each Agent with respect thereto, with respect to advising such Agent as to
its rights and responsibilities, or the perfection, protection or preservation
of rights or interests, under the Loan Documents, with respect to negotiations
with any Loan Party or with other creditors of any Loan Party or any of its
Subsidiaries arising out of any Default or any events or circumstances that may
give rise to a Default and with respect to presenting claims in or otherwise
participating in
<PAGE>
                                       94

or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of each Agent and each Lender Party in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent and each Lender Party with
respect thereto).

     (b) The Loan Parties agree to indemnify, defend and save and hold harmless
each Agent, each Lender Party and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(i) the Facilities, the actual or proposed use of the proceeds of the Advances
or the Letters of Credit, the Loan Documents or any of the transactions
contemplated thereby or (ii) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 9.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Transaction is consummated.
Each Loan Party also agrees not to assert any claim against any Agent, any
Lender Party or any of their Affiliates, or any of their respective officers,
directors, employees, agents and advisors, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the Facilities, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit, the Loan Documents or any of the transactions
contemplated by the Loan Documents.

     (c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by any Borrower to or for the account of a Lender Party other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.06, 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, or by an Eligible Assignee to a Lender Party other than on the
last day of the Interest Period for such Advance upon an assignment of rights
and obligations under this Agreement pursuant to Section 9.07 as a result of a
demand by a Borrower pursuant to Section 9.07(a), or if any Borrower fails to
make any payment or prepayment of an Advance for which a notice of prepayment
has been given or that is otherwise required to be made, whether pursuant to
Section 2.04, 2.06 or 6.01 or otherwise, such Borrower shall, upon demand by
such Lender Party (with a copy of such demand to the Administrative Agent), pay
to the Administrative Agent for the account of such Lender Party any amounts
required to compensate such Lender Party for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment or Conversion
or such failure to pay or prepay, as the case may be, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
<PAGE>
                                       95

incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender Party to fund or maintain such Advance.

     (d) If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of such Loan Party by the Administrative Agent or any Lender Party, in its sole
discretion.

     (e) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of such Loan Party contained in Sections 2.10 and 2.12 and this Section 9.04
shall survive the payment in full of principal, interest and all other amounts
payable hereunder and under any of the other Loan Documents.

     SECTION 9.05. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender Party
or such Affiliate to or for the credit or the account of any Loan Party against
any and all of the Obligations of such Loan Party now or hereafter existing
under the Loan Documents, irrespective of whether such Agent or such Lender
Party shall have made any demand under this Agreement or such Note or Notes and
although such Obligations may be unmatured. Each Agent and each Lender Party
agrees promptly to notify the applicable Loan Party after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Agent
and each Lender Party and their respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Agent, such Lender Party and their respective
Affiliates may have.

     SECTION 9.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by MII, each Borrower each Agent and the Administrative
Agent shall have been notified by each Initial Lender Party that such Initial
Lender Party has executed it and thereafter shall be binding upon and inure to
the benefit of the Loan Parties, each Agent and each Lender Party and their
respective successors and assigns, except that no Loan Party shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender Parties.

     SECTION 9.07. Assignments and Participations. (a) Each Lender may and, so
long as no Default shall have occurred and be continuing, if demanded by any
Borrower (following a demand by such Lender pursuant to Section 2.10 or 2.12)
upon at least five Business Days' notice to such Lender and the Administrative
Agent, will assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment or Commitments, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) each such assignment
shall be of a
<PAGE>
                                       96

uniform, and not a varying, percentage of all rights and obligations under and
in respect of Facilities, (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an Affiliate of any
Lender or an assignment of all of a Lender's rights and obligations under this
Agreement, the aggregate amount of the Commitments being assigned to such
Eligible Assignee pursuant to such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $5,000,000 (or such lesser amount as shall be approved by the
Administrative Agent and, so long as no Default shall have occurred and be
continuing at the time of effectiveness of such assignment, each Borrower),
(iii) each such assignment shall be to an Eligible Assignee, (iv) each such
assignment made as a result of a demand by the Borrower pursuant to this Section
9.07(a) shall be arranged by the applicable Borrower after consultation with the
Administrative Agent and shall be either an assignment of all of the rights and
obligations of the assigning Lender under this Agreement or an assignment of a
portion of such rights and obligations made concurrently with another such
assignment or other such assignments that together cover all of the rights and
obligations of the assigning Lender under this Agreement, (v) no Lender shall be
obligated to make any such assignment as a result of a demand by the applicable
Borrower pursuant to this Section 9.07(a) unless and until such Lender shall
have received one or more payments from either such Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, (vi) no such
assignments shall be permitted without the consent of the Administrative Agent
until the Administrative Agent shall have notified the Lender Parties that
syndication of the Commitments hereunder has been completed and (vii) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500.

     (b) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (ii) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Sections 2.10, 2.12 and 8.04 to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Lender's or
Issuing Bank's rights and obligations under this Agreement, such Lender or
Issuing Bank shall cease to be a party hereto).

     (c) By executing and delivering an Assignment and Acceptance, each Lender
Party assignor thereunder and each assignee thereunder confirm to and agree with
each other and the other parties thereto and hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender Party makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability,
<PAGE>
                                       97

genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, any Loan Document or any other instrument or document furnished pursuant
thereto; (ii) such assigning Lender Party makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon any Agent, such assigning Lender Party or any other Lender
Party and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Lender or Issuing Bank, as the case may be.

     (d) The Administrative Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lender Parties and the Commitment under each Facility of, and principal amount
of the Advances owing under each Facility to, each Lender Party from time to
time (the "REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrowers, the Agents
and the Lender Parties shall treat each Person whose name is recorded in the
Register as a Lender Party hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Agent or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.

     (e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to each
Borrower and each other Agent. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, each Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note to the order of such Eligible Assignee
in an amount equal to the Commitment assumed by it under each Facility pursuant
to such Assignment and Acceptance and, if any assigning Lender has retained a
Commitment hereunder under such Facility, a new Note to the order of such
assigning Lender in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto, as the case may be.
<PAGE>
                                       98

     (f) Each Issuing Bank may assign to an Eligible Assignee all of its rights
and obligations under the undrawn portion of its Letter of Credit Commitment at
any time; provided, however, that (i) except in the case of an assignment to a
Person that immediately prior to such assignment was an Issuing Bank or an
assignment of all of an Issuing Bank's rights and obligations under this
Agreement, the amount of the Letter of Credit Commitment of the assigning
Issuing Bank being assigned pursuant to each such assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than $5,000,000 and shall be in an integral multiple of $1
in excess thereof, (b) each such assignment shall be to an Eligible Assignee and
(c) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500.

     (g) Each Lender Party may sell participations to one or more Persons (other
than any Borrower or any of its Affiliates, and subject to the consent of the
Borrowers in the case of any participant that is a competitor of any Borrower)
in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Note or Notes (if any) held by it); provided,
however, that (i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender Party shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender Party shall remain
the holder of any such Note for all purposes of this Agreement, (iv) the
Borrowers, the Agents and the other Lender Parties shall continue to deal solely
and directly with such Lender Party in connection with such Lender Party's
rights and obligations under this Agreement and (v) no participant under any
such participation shall have any right to approve any amendment or waiver of
any provision of any Loan Document, or any consent to any departure by any
Borrower therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral.

     (h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender
Party by or on behalf of such Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree in writing to preserve the confidentiality of any Confidential
Information received by it from such Lender Party.

     (i) In the event that S&P, Moody's or Thompson's BankWatch (or Insurance
Watch Ratings Service, in the case of Issuing Banks that are insurance companies
(or Best's Insurance Reports, in the case of insurance companies not rated by
Insurance Watch Ratings Service)) shall downgrade the long-term certificate
deposit ratings of any Issuing Bank, and the resulting ratings shall be below
BBB-, Baa3 and C (or the corporate credit ratings of such Issuing Bank shall be
below BB, in the case of an Issuing Bank that is an insurance company (or B, in
the case of an insurance company not rated by Insurance Watch Ratings Service)),
then the
<PAGE>
                                       99

Borrowers shall have the right, but not the obligation, at their own expense,
upon notice to such Issuing Bank and the Administrative Agent, to replace such
Issuing Bank with an assignee (in accordance with and subject to the
restrictions contained in paragraph (b) above), and such Issuing Bank hereby
agrees to transfer and assign without recourse (in accordance with and subject
to the restrictions contained in paragraph (a) above) all its interests, rights
and obligations in respect of its Commitment to such assignee; provided,
however, that (i) no such assignment shall conflict with any law, rule and
regulation or order of any governmental authority and (ii) such assignee shall
pay to such Issuing Bank in immediately available funds on the date of such
assignment the principal of and interest accrued to the date of payment on the
Advances and Letter of Credit Advances made by such Lender hereunder and the
Borrowers, the Administrative Agent or such assignee, as applicable, shall pay
to such Issuing Bank all other amounts accrued for such Issuing Bank's account
or owed to it hereunder.

     (j) Notwithstanding any other provision set forth in this Agreement, any
Lender Party may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.

     SECTION 9.08. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.

     SECTION 9.09. No Liability of the Issuing Banks. Each Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the applicable Borrower
shall have a claim against Issuing Bank, and Issuing Bank shall be liable to the
applicable Borrower, to the extent of any direct, but not consequential, damages
suffered by such Borrower that the Borrower proves were caused by (i) Issuing
Bank's willful misconduct or gross negligence as determined in a final,
non-appealable judgment by a court of competent jurisdiction in determining
whether documents presented under any Letter of Credit comply with the terms of
the Letter of Credit or (ii) such Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
<PAGE>
                                       100

     SECTION 9.10. Confidentiality. (a) The Loan Parties, the Lender Parties and
the Administrative Agent hereby agree that each of the Loan Parties, the Lender
Parities and the Administrative Agent (and each of their respective, and their
respective Affiliates', employees, officers, directors, agents and advisors) is,
and has been from the commencement of discussions with respect to the Facilities
established by this Agreement, permitted to disclose to any and all Persons,
without limitation of any kind, the structure and tax aspects (as such terms are
used in Internal Revenue Code Sections 6011, 6111 and 6112 and the regulations
promulgated thereunder) of the Facilities, and all materials of any kind
(including opinions or other tax analyses) that are or have been provided to the
Loan Parties, such Lender Party or the Administrative Agent related to such
structure and tax aspects. In this regard, each of the Loan Parties, the Lender
Parties and the Administrative Agent acknowledges and agrees that its disclosure
of the structure or tax aspects of the Facilities is not limited in any way by
an express or implied understanding or agreement, oral or written (whether or
not such understanding or agreement is legally binding). Furthermore, each of
the Loan Parties, the Lender Parties and the Administrative Agent acknowledges
and agrees that it does not know or have reason to know that its use or
disclosure of information relating to the structure or tax aspects of the
Facilities is limited in any other manner (such as where the Facilities are
claimed to be proprietary or exclusive) for the benefit of any other Person. To
the extent that disclosure of the structure or tax aspects of the Facilities by
the Loan Parties, the Administrative Agent or the Lender Parties is limited by
any existing agreement between the Loan Parties and the Administrative Agent or
the Lender Parties, such limitation is agreed to be void ab initio and such
agreement is hereby amended to permit disclosure of the structure and tax
aspects of the Facilities as provided in this subsection (a). Notwithstanding
anything in this subsection (a) to the contrary, each of the Loan Parties, the
Lender Parties and the Administrative Agent may (i) retain its privilege to
maintain the confidentiality of a communication relating to the Facilities,
including a confidential communication with its legal counsel and (ii) subject
disclosure of the structure or tax aspects of the Facilities to restrictions
reasonably necessary to comply with Federal or state securities laws.

     (b) Subject to subsection (a) of this Section 9.10, neither any Agent nor
any Lender Party may disclose to any Person any confidential, proprietary or
non-public information of the Loan Parties furnished to the Agents or the Lender
Parties by any Loan Party (such information being referred to collectively
herein as the "LOAN PARTY INFORMATION"), except that each of the Agents and each
of the Lender Parties may disclose Loan Party Information (i) to its and its
Affiliates' employees, officers, directors, agents and advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Loan Party Information and instructed to keep
such Loan Party Information confidential on substantially the same terms as
provided herein), (ii) to the extent requested by any bank regulatory authority,
(iii) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (iv) to any other party to this Agreement,
(v) in connection with the exercise of any remedies hereunder or under any other
Loan Document or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder,
(vi) subject to the execution and delivery of a binding agreement containing
provisions substantially the same as those of this Section 9.10, to any assignee
of, or any prospective assignee of, any of its rights or obligations under this
Agreement, (vii) to the extent such Loan Party Information (A) is or becomes
generally available to the public on a non-confidential basis other than as a
result of a breach of this Section 9.10 by any Agent or any Lender Party, or (B)
is or becomes available to the Administrative Agent or such
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                                       101

Lender Party on a nonconfidential basis from a source other than the Loan
Parties and (viii) with the consent of the Loan Parties.

     SECTION 9.11. Release of Collateral. Upon the sale, lease, transfer or
other disposition of any item of Collateral of any Collateral Grantor in
accordance with the terms of the Loan Documents, the Collateral Agent will, at
such Collateral Grantor's expense, execute and deliver to such Borrower such
documents as such Collateral Grantor may reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents in accordance with the terms of the Loan
Documents.

     SECTION 9.12. Nature of Obligations. (a) The Borrowers agree that all
Obligations of each Borrower (other than BWXT) under or in respect of this
Agreement or any other Loan Document shall be joint and several obligations of
all the Borrowers; it being understood that BWXT shall not be liable for any
such Obligations of any other Loan Party.

     (b) Each Borrower (other than BWXT) waives presentment to, demand of
payment from and protest to the other Borrowers of any of the Obligations, and
also waives notice of acceptance of its Obligations and notice of protest for
nonpayment. The Obligations of a Borrower (other than BWXT) hereunder shall not
be affected by (i) the failure of any Lender or the Administrative Agent to
assert any claim or demand or to enforce any right or remedy against the other
Borrowers under the provisions of this Agreement or any of the other Loan
Documents or otherwise; (ii) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement, any of the other Loan
Documents or any other agreement; or (iii) the failure of any Lender to exercise
any right or remedy against any other Borrower.

     (c) Each Borrower (other than BWXT) further agrees that its agreement
hereunder constitutes a promise of payment when due and not of collection, and
waives any right to require that any resort be had by any Lender to any balance
of any deposit account or credit on the books of any Lender in favor of any
other Borrower or any other Person.

     (d) The Obligations of each Borrower hereunder (other than BWXT) shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, compromise, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations of
the other Borrowers or otherwise. Without limiting the generality of the
foregoing, the Obligations of each Borrower hereunder (other than BWXT) shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement or under any other Loan Document or any other
agreement, by any waiver or modification in respect of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations of the other Borrowers, or by any other act or omission which may or
might in any manner or to any extent vary the risk of such Borrower or otherwise
operate as a discharge of such Borrower as a matter of law or equity.

     (e) Each Borrower (other than BWXT) further agrees that its Obligations
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of or interest on any
Obligation of the other Borrowers
<PAGE>
                                       102

is rescinded or must otherwise be restored by the Administrative Agent or any
Lender upon the occurrence of a Bankruptcy Event in respect of such Borrower,
any of the other Borrowers or otherwise.

     (f) In furtherance of the foregoing and not in limitation of any other
right which the Administrative Agent or any Lender may have at law or in equity
against any Borrower by virtue hereof, upon the failure of a Borrower to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each other Borrower
(other than BWXT) hereby promises to and will, upon receipt of written demand by
the Administrative Agent, forthwith pay, or cause to be paid, in cash the amount
of such unpaid Obligations, and thereupon each Lender shall, in a reasonable
manner, assign the amount of the Obligations of the other Borrowers owed to it
and paid by such Borrower pursuant to this guarantee to such Borrower, such
assignment to be pro tanto to the extent to which the Obligations in question
were discharged by such Borrower, or make such disposition thereof as such
Borrower shall direct (all without recourse to any Lender and without any
representation or warranty by any Lender).

     (g) Upon payment by a Borrower of any amount as provided above, all rights
of such Borrower against another Borrower, as the case may be, arising as a
result thereof by way of right of subrogation or otherwise shall in all respects
be subordinated and junior in right of payment to the prior indefeasible payment
in full of all the Obligations to the Lenders

     SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final and non-appealable judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or any of the
other Loan Documents in the courts of any jurisdiction.

     (b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party in any New York State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

     SECTION 9.14. Governing Law. (a) This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
<PAGE>
     SECTION 9.15. Waiver of Jury Trial. Each of the Borrower, the Agents and
the Lender Parties irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Advances, the
Letters of Credit or the actions of any Agent or any Lender Party in the
negotiation, administration, performance or enforcement thereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                  THE BORROWERS

                                    J. RAY McDERMOTT, S.A. as Borrower

                                    By  \s\ James R. Easter
                                        ---------------------------------------
                                        Title:   James R. Easter
                                                 Vice President Finance &
                                                 Treasurer

                                        Address: J. Ray McDermott, S.A.
                                                 757 N. Eldridge Parkway
                                                 Houston, TX  77079
                                                 Attention: Chief Financial
                                                 Officer
                                                 Telecopier No: 281-870-5015

                                    J. RAY McDERMOTT HOLDINGS, INC. as Borrower

                                    By  \s\ James R. Easter
                                        ---------------------------------------
                                        Title:   James R. Easter
                                                 Vice President Finance &
                                                 Treasurer

                                        Address: c/o J. Ray McDermott, S.A.
                                                 757 N. Eldridge Parkway
                                                 Houston, TX  77079
                                                 Attention: Chief Financial
                                                 Officer
                                                 Telecopier No: 281-870-5015
<PAGE>
                                    J. RAY McDERMOTT, INC. as Borrower

                                    By  \s\ James R. Easter
                                        ---------------------------------------
                                        Title:   James R. Easter
                                                 Vice President Finance &
                                                 Treasurer

                                        Address: c/o J. Ray McDermott, S.A.
                                                 757 N. Eldridge Parkway
                                                 Houston, TX  77079
                                                 Attention: Chief Financial
                                                 Officer
                                                 Telecopier No: 281-870-5015

                                    BWX TECHNOLOGIES, INC. as Borrower

                                    By  \s\ James R. Easter
                                        ---------------------------------------
                                        Title:   James R. Easter
                                                 Vice President Finance &
                                                 Treasurer

                                        Address: c/o J. Ray McDermott, S.A.
                                                 757 N. Eldridge Parkway
                                                 Houston, TX  77079
                                                 Attention: Chief Financial
                                                 Officer
                                                 Telecopier No: 281-870-5015
<PAGE>
                                    McDERMOTT INTERNATIONAL, INC.,
                                        as Parent Guarantor

                                    By  \s\ James R. Easter
                                        ---------------------------------------
                                        Title:   James R. Easter
                                                 Vice President Finance &
                                                 Treasurer

                                        Address: c/o J. Ray McDermott, S.A.
                                                 757 N. Eldridge Parkway
                                                 Houston, TX  77079
                                                 Attention: Chief Financial
                                                 Officer
                                                 Telecopier No: 281-870-5015
<PAGE>
                                    CITICORP USA, INC.,
                                        as Administrative Agent and Collateral
                                        Agent and in its individual capacity

                                    By  \s\ Todd J. Mogil
                                        ---------------------------------------
                                        Title:   Todd J. Mogil
                                                 Vice President
<PAGE>
                                    THE BANK OF NOVA SCOTIA,
                                        as Documentation Agent and in its
                                        individual capacity

                                    By  \s\ V. Gibson
                                        ---------------------------------------
                                        Title:   V. Gibson
                                                 Assistant Agent
<PAGE>
                                    CREDIT LYONNAIS NEW YORK BRANCH,
                                        as Syndication Agent and in its
                                        individual capacity

                                    By  /s/ Philippe Soustar
                                        ---------------------------------------
                                               Philippe Soustar
                                        Title: Executive Vice President
<PAGE>
                                 LENDER PARTIES

                                    CITIBANK, N.A., as Initial Issuing Bank

                                    By  \s\ Todd J. Mogil
                                        ---------------------------------------
                                        Title:   Todd J. Mogil
                                                 Attorney-In-Fact
<PAGE>
                                    BANK ONE NA

                                    By  \s\ Carl F. Shafer
                                        ---------------------------------------
                                        Title:   Carl F. Shafer
                                                 First Vice President
<PAGE>
                                    HIBERNIA NATIONAL BANK

                                    By  /s/ Frank Crifasi
                                        ---------------------------------------
                                        Title:   Sr. Vice President
<PAGE>
                                    MELLON BANK, N.A.

                                    By  /s/ Gary A. Saul
                                        ---------------------------------------
                                        Title:   First Vice President
<PAGE>
                                    MIZUHO CORPORATE BANK, LTD.

                                    By  /s/ Hirofumi Sugano
                                        ---------------------------------------
                                               Hirofumi Sugano
                                        Title: Senior Vice President<PAGE>
                                                                     EXHIBIT 4.3

                               SECURITY AGREEMENT

                             Dated February 10, 2003

                                      From

                         The Grantors referred to herein

                                   as Grantors

                                       to

                               Citicorp USA, Inc.

                               as Collateral Agent
<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

SECTION                                                                     PAGE

<S>           <C>                                                           <C>
Section 1.    Grant of Security............................................    2

Section 2.    Security for Obligations.....................................    7

Section 3.    Grantors Remain Liable.......................................    8

Section 4.    Delivery and Control of Security Collateral..................    8

Section 5.    Maintaining the Account Collateral...........................    8

Section 6.    Investing of Amounts in the Collateral Account...............    9

Section 7.    Maintaining Electronic Chattel Paper and Transferable
              Records......................................................   10

Section 8.    Representations and Warranties...............................   10

Section 9.    Further Assurances...........................................   12

Section 10.   As to Equipment and Inventory................................   12

Section 11.   Insurance....................................................   13

Section 12.   Post-Closing Changes; Bailees; Collections on Receivables
              and Related Contracts........................................   14

Section 13.   Voting Rights; Dividends; Etc................................   15

Section 14.   Transfers and Other Liens; Additional Shares.................   16

Section 15.   Collateral Agent Appointed Attorney-in-Fact..................   16

Section 16.   Collateral Agent May Perform.................................   17

Section 17.   The Collateral Agent's Duties................................   17

Section 18.   Remedies.....................................................   18

Section 19.   Indemnity and Expenses.......................................   19

Section 20.   Amendments; Waivers; Additional Grantors; Etc................   20

Section 21.   Notices, Etc.................................................   20

Section 22.   Continuing Security Interest; Assignments Under the Credit
              Agreement....................................................   21

Section 23.   Release; Termination.........................................   21

Section 24.   Security Interest Absolute...................................   22
</TABLE>
<PAGE>
                                        2

<TABLE>

<S>           <C>                                                             <C>
Section 25.   Execution in Counterparts....................................   23

Section 26.   The Mortgages................................................   23

Section 27.   Governing Law................................................   23
</TABLE>

Schedules I   -  Location, Chief Executive Office, Type Of Organization, Trade
                 Names, Jurisdiction Of Organization And Organizational
                 Identification Number
Schedule II   -  Pledged Equity and Pledged Debt
Schedule III  -  Locations of Equipment and Inventory
Schedule IV   -  Changes in Name, Location, Etc.
Schedule V    -  Account Collateral
Schedule VI   -  Commercial Tort Claims

Exhibit A     -  Form of Security Agreement Supplement
Exhibit B     -  Form of Account Control Agreement (Deposit Account/Securities
                 Account)
<PAGE>
                               SECURITY AGREEMENT

     SECURITY AGREEMENT dated February 10, 2003 made by McDermott International,
Inc., a Panamanian corporation ("MII"), J. Ray McDermott, S.A., a Panamanian
corporation ("JRMSA"), J. Ray McDermott Holdings, Inc., a Delaware corporation
("JRMHI"), J. Ray McDermott, Inc., a Delaware corporation ("JRMI", and together
with JRMSA and JRMHI, the "BORROWERS" and each, a "BORROWER"), the other Persons
listed on the signature pages hereof and the Additional Grantors (as defined in
Section 20(b)) (MII, the Borrowers, the Persons so listed and the Additional
Grantors being, collectively, the "GRANTORS"), to Citicorp USA, Inc., as
collateral agent (in such capacity, together with any successor collateral agent
appointed pursuant to Article VII of the Credit Agreement (as hereinafter
defined), the "COLLATERAL AGENT") for the Secured Parties (as defined in the
Credit Agreement).

     PRELIMINARY STATEMENTS.

     (1) MII, the Borrowers and BWX Technologies, Inc., a Delaware corporation,
have entered into a Credit Agreement dated as of February 10, 2003 (said
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT") with the
Lender Parties and the Agents (each as defined therein). Terms defined in the
Credit Agreement and not otherwise defined in this Agreement are used in this
Agreement as defined in the Credit Agreement.

     (2) Pursuant to the Credit Agreement, the Grantors are entering into this
Agreement in order to grant to the Collateral Agent for the ratable benefit of
the Secured Parties a security interest in the Collateral (as hereinafter
defined).

     (3) Each Grantor is the owner of the shares of stock or other Equity
Interests (the "INITIAL PLEDGED EQUITY") set forth opposite such Grantor's name
on and as otherwise described in Part I of Schedule II hereto and issued by the
Persons named therein and of the indebtedness (the "INITIAL PLEDGED DEBT") set
forth opposite such Grantor's name on and as otherwise described in Part II of
Schedule II hereto and issued by the obligors named therein.

     (4) MII has opened a collateral deposit account (the "COLLATERAL ACCOUNT"),
with Citibank, N. A. at its office at 399 Park Ave., New York, NY 10043.

     (5) The Grantors have opened deposit accounts and securities accounts (the
"BANK ACCOUNTS") with banks, in the names of such Grantors and subject to the
terms of this Agreement, as described in Schedule V hereto.

     (6) It is a condition precedent to the making of Advances and the issuance
of Letters of Credit by the Lender Parties under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time that
the Grantors shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.

     (7) Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Loan Documents.
<PAGE>
                                        2

     (8) Unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the
Federal Book Entry Regulations (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. "UCC" means the Uniform Commercial Code as in effect, from time to
time, in the State of New York; PROVIDED that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.

     NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and issue Letters of Credit under the Credit
Agreement, to induce the Hedge Banks to enter into Secured Hedge Agreements and
to induce the Secured Parties to enter into foreign exchange spot contracts from
time to time and to maintain other Bilateral Obligations, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties
as follows:

     Section 1. Grant of Security. (x) Each Grantor (other than MII) hereby
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in such Grantor's right, title and interest in and to the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located, and whether
now or hereafter existing or arising (collectively, the "J. RAY COLLATERAL"):

          (a) all equipment (major items of movable equipment being
     "CONTRACTOR'S EQUIPMENT") in all of its forms, including, without
     limitation, all machinery, tools, motor vehicles, vessels ("VESSELS"),
     aircraft, furniture and fixtures, and all parts thereof and all accessions
     thereto and all software related thereto, including, without limitation,
     software that is embedded in and is part of the equipment (any and all such
     property being the "EQUIPMENT");

          (b) all inventory in all of its forms, including, without limitation,
     (i) all raw materials, work in process, finished goods and materials used
     or consumed in the manufacture, production, preparation or shipping
     thereof, (ii) goods in which such Grantor has an interest in mass or a
     joint or other interest or right of any kind (including, without
     limitation, goods in which such Grantor has an interest or right as
     consignee) and (iii) goods that are returned to or repossessed or stopped
     in transit by such Grantor), and all accessions thereto and products
     thereof and documents therefor, and all software related thereto,
     including, without limitation, software that is embedded in and is part of
     the inventory (any and all such property being the "INVENTORY");
<PAGE>
                                        3

          (c) all accounts (including, without limitation, health-care-insurance
     receivables), chattel paper (including, without limitation, tangible
     chattel paper and electronic chattel paper), instruments (including,
     without limitation, promissory notes), deposit accounts, letter-of-credit
     rights, general intangibles (including, without limitation, payment
     intangibles) and other obligations of any kind, whether or not arising out
     of or in connection with the sale or lease of goods or the rendering of
     services and whether or not earned by performance, and all rights now or
     hereafter existing in and to all supporting obligations and in and to all
     security agreements, mortgages, Liens, leases, letters of credit and other
     contracts securing or otherwise relating to the foregoing property (any and
     all of such accounts, chattel paper, instruments, deposit accounts,
     letter-of-credit rights, general intangibles and other obligations, to the
     extent not referred to in clause (d), (e) or (f) below, being the
     "RECEIVABLES", and any and all such supporting obligations, security
     agreements, mortgages, Liens, leases, letters of credit and other contracts
     being the "RELATED CONTRACTS");

          (d) the following (the "J. RAY SECURITY COLLATERAL"), with respect to
     such Grantor:

               (i) the Initial Pledged Equity and the certificates, if any,
          representing the Initial Pledged Equity, and all dividends,
          distributions, return of capital, cash, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of the Initial Pledged Equity
          and all subscription warrants, rights or options issued thereon or
          with respect thereto;

               (ii) the Initial Pledged Debt and the instruments, if any,
          evidencing the Initial Pledged Debt, and all interest, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Debt;

               (iii) all additional shares of stock and other Equity Interests
          from time to time acquired by such Grantor, in any manner, and the
          certificates, if any, representing such additional shares or other
          Equity Interests, and all dividends, distributions, return of capital,
          cash, instruments and other property from time to time received,
          receivable or otherwise distributed in respect of or in exchange for
          any or all of such shares or other Equity Interests and all
          subscription warrants, rights or options issued thereon or with
          respect thereto, PROVIDED, HOWEVER, that none of the Grantors shall be
          required to pledge any Equity Interest in any Person organized or
          formed in a jurisdiction outside of the United States of America that
          is owned or otherwise held thereby which, when aggregated with all of
          the other Equity Interests in such Person pledged by such Grantor and
          the other Grantors, would result in more than 66% of the Equity
          Interests in such Person entitled to vote (within the meaning of
          Treasury Regulation Section 1.956-2(c)(2) promulgated under the
          Internal Revenue Code) (the "VOTING EQUITY INTERESTS") (on a fully
          diluted basis) being pledged to the Collateral Agent, on behalf of the
          Secured Parties, under this Agreement and the other Collateral
          Documents (although all of the Equity Interests in such Person not
          entitled to vote (within the
<PAGE>
                                        4

          meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated under
          the Internal Revenue Code) (the "NON-VOTING EQUITY INTERESTS") shall
          be pledged by each of the Grantors that owns or otherwise holds any
          such Non-Voting Equity Interest therein); PROVIDED that, if, as a
          result of any change in the tax laws of the United States of America
          after the date of this Agreement, the pledge by such Grantor of any
          additional Equity Interests in any such Person to the Collateral
          Agent, on behalf of the Secured Parties, under this Agreement or any
          of the other Collateral Documents would not result in an increase in
          the aggregate net consolidated tax liabilities of MII and its
          Subsidiaries, then, promptly after the change in such laws, all such
          additional Equity Interests shall be so pledged under this Agreement
          or such other Collateral Document, as applicable;

               (iv) all additional indebtedness from time to time owed to such
          Grantor and the instruments, if any, evidencing such indebtedness, and
          all interest, cash, instruments and other property from time to time
          received, receivable or otherwise distributed in respect of or in
          exchange for any or all of such indebtedness;

               (v) all other investment property (including, without limitation,
          all (A) securities, whether certificated or uncertificated, (B)
          security entitlements, (C) securities accounts, (D) commodity
          contracts and (E) commodity accounts) in which such Grantor has now,
          or acquires from time to time hereafter, any right, title or interest
          in any manner, and the certificates or instruments, if any,
          representing or evidencing such investment property, and all
          dividends, distributions, return of capital, interest, distributions,
          value, cash, instruments and other property from time to time
          received, receivable or otherwise distributed in respect of or in
          exchange for any or all of such investment property and all
          subscription warrants, rights or options issued thereon or with
          respect thereto;

          (e) the following (collectively, the "J. RAY ACCOUNT COLLATERAL"):

               (i) the Bank Accounts and all funds and financial assets from
          time to time credited thereto (including, without limitation, all Cash
          Equivalents), all interest, dividends, distributions, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of such funds and financial assets, and all certificates and
          instruments, if any, from time to time representing or evidencing the
          Bank Accounts;

               (ii) all promissory notes, certificates of deposit, deposit
          accounts, checks and other instruments from time to time delivered to
          or otherwise possessed by the Collateral Agent for or on behalf of
          such Grantor, including, without limitation, those delivered or
          possessed in substitution for or in addition to any or all of the then
          existing J. Ray Account Collateral; and
<PAGE>
                                        5

               (iii) all interest, dividends, distributions, cash, instruments
          and other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the then
          existing J. Ray Account Collateral;

          (f) all commercial tort claims described in Schedule VI hereto
     (collectively, the "COMMERCIAL TORT CLAIMS COLLATERAL");

          (g) all books and records (including, without limitation, customer
     lists, credit files, printouts and other computer output materials and
     records) of such Grantor pertaining to any of the J. Ray Collateral; and

          (h) all proceeds of, collateral for, income, royalties and other
     payments now or hereafter due and payable with respect to, and supporting
     obligations relating to, any and all of the J. Ray Collateral (including,
     without limitation, proceeds, collateral and supporting obligations that
     constitute property of the types described in clauses (a) through (g) of
     this Section 1(x) and this clause (h)) and, to the extent not otherwise
     included, all (A) payments received under insurance (whether or not the
     Collateral Agent is the loss payee thereof), or under any indemnity,
     warranty or guaranty, payable by reason of loss or damage to or otherwise
     with respect to any of the foregoing J. Ray Collateral, (B) tort claims,
     including, without limitation, all commercial tort claims and (C) cash.

PROVIDED, HOWEVER, that J. Ray Collateral shall not include any Permitted
Unblocked Account (a) used for payroll, employee benefits or disbursements or
(b) maintained outside of the United States, in each case maintained in the
ordinary course of business consistent with past practices; PROVIDED FURTHER
that, notwithstanding the foregoing, if the granting of a security interest in
or pledge of any specific item of the J. Ray Collateral is restricted or
prohibited (a "RESTRICTION") by, or would cause a breach or default under or
termination, avoidance or forfeiture, or right of termination, avoidance or
forfeiture (a "REMEDY"), of, any contract, license, law or regulation, then the
security interest or pledge created hereby is ineffective with respect to such
specific item of J. Ray Collateral, except that the granting of such security
interest in or pledge of such specific item of the J. Ray Collateral nonetheless
remains effective to the extent (i) the granting of such security interest or
pledge is allowed by such contract, license, law or regulation or (ii) such
Restriction or Remedy is rendered ineffective under the UCC.

     (y) MII hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties, a security interest in MII's right, title and interest in
and to the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by MII, wherever located, and whether
now or hereafter existing or arising (collectively, the "MII COLLATERAL", and
together with the J. Ray Collateral, the "COLLATERAL"):

          (a) the following (the "MII SECURITY COLLATERAL", and together with
     the J. Ray Security Collateral, the "SECURITY COLLATERAL"):

               (i) the Initial Pledged Equity and the certificates, if any,
          representing the Initial Pledged Equity, and all dividends,
          distributions, return of capital, cash, instruments and other property
          from time to time received, receivable or
<PAGE>
                                        6

          otherwise distributed in respect of or in exchange for any or all of
          the Initial Pledged Equity and all subscription warrants, rights or
          options issued thereon or with respect thereto;

               (ii) the Initial Pledged Debt and the instruments, if any,
          evidencing the Initial Pledged Debt, and all interest, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Debt;

               (iii) all additional shares of stock and other Equity Interests
          of or in any issuer of the Initial Pledged Equity or any successor
          entity from time to time acquired by MII in any manner (such shares
          and other Equity Interests, together with the Initial Pledged Equity
          and the shares and other Equity Interests described in Section
          1(x)(d)(iii), being the "PLEDGED EQUITY"), and the certificates, if
          any, representing such additional shares or other Equity Interests,
          and all dividends, distributions, return of capital, cash, instruments
          and other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such shares
          or other Equity Interests and all subscription warrants, rights or
          options issued thereon or with respect thereto; PROVIDED, HOWEVER,
          that MII shall not be required to pledge any Equity Interest in any
          Person organized or formed in a jurisdiction outside of the United
          States of America that is owned or otherwise held thereby which, when
          aggregated with all of the other Equity Interests in such Person
          pledged by such Grantor and the other Grantors, would result in more
          than 66% of the Voting Equity Interests in such Person (on a fully
          diluted basis) being pledged to the Collateral Agent, on behalf of the
          Secured Parties, under this Agreement and the other Collateral
          Documents (although all of the Non-Voting Equity Interests in such
          Person shall be pledged by MII); PROVIDED that, if, as a result of any
          change in the tax laws of the United States of America after the date
          of this Agreement, the pledge by MII of any additional Equity
          Interests in any such Person to the Collateral Agent, on behalf of the
          Secured Parties, under this Agreement or any of the other Collateral
          Documents would not result in an increase in the aggregate net
          consolidated tax liabilities of MII and its Subsidiaries, then,
          promptly after the change in such laws, all such additional Equity
          Interests shall be so pledged under this Agreement or such other
          Collateral Document, as applicable;

               (iv) all additional indebtedness from time to time owed to MII by
          any obligor of the Initial Pledged Debt or any successor entity (such
          indebtedness, together with the Initial Pledged Debt and the
          indebtedness described in Section 1(x)(d)(iv), being the "PLEDGED
          DEBT") and the instruments, if any, evidencing such indebtedness, and
          all interest, cash, instruments and other property from time to time
          received, receivable or otherwise distributed in respect of or in
          exchange for any or all of such indebtedness; and

          (b) the following (collectively, the "MII ACCOUNT COLLATERAL", and
     together with the J. Ray Account Collateral, the "ACCOUNT COLLATERAL"):
<PAGE>
                                        7

               (i) the Collateral Account, the Bank Accounts and all funds and
          financial assets from time to time credited thereto (including,
          without limitation, all Cash Equivalents), all interest, dividends,
          distributions, cash, instruments and other property from time to time
          received, receivable or otherwise distributed in respect of or in
          exchange for any or all of such funds and financial assets, and all
          certificates and instruments, if any, from time to time representing
          or evidencing the Collateral Account or the Bank Accounts;

               (ii) all promissory notes, certificates of deposit, deposit
          accounts, checks and other instruments from time to time delivered to
          or otherwise possessed by or under the control of the Collateral Agent
          for or on behalf of MII, including, without limitation, those
          delivered or possessed in substitution for or in addition to any or
          all of the then existing MII Account Collateral;

               (iii) all interest, dividends, distributions, cash, instruments
          and other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the then
          existing MII Account Collateral; and

          (c) all proceeds of, collateral for, income, royalties and other
     payments now or hereafter due and payable with respect to, and supporting
     obligations relating to, any and all of the MII Collateral (including,
     without limitation, proceeds, collateral and supporting obligations that
     constitute property of the types described in clauses (a) and (b) of this
     Section 1(y) and this clause (c));

PROVIDED, HOWEVER, that MII Collateral shall not include any Permitted Unblocked
Account of MII; PROVIDED FURTHER that, notwithstanding the foregoing, if the
granting of a security interest in or pledge of any specific item of the MII
Collateral is subject to a Restriction under, or would give rise to a Remedy
under, any contract, license, law or regulation, then the security interest or
pledge created hereby is ineffective with respect to such specific item of MII
Collateral, except that the granting of such security interest in or pledge of
such specific item of the MII Collateral nonetheless remains effective to the
extent (i) the granting of such security interest or pledge is allowed by such
contract, license, law or regulation or (ii) such Restriction or Remedy is
rendered ineffective under the UCC.

     Section 2. Security for Obligations. This Agreement hereby secures, in the
case of each Grantor, the payment of all Bilateral Obligations and all
Obligations of such Grantor now or hereafter existing under the Loan Documents
(including, without limitation, any extensions, modifications, substitutions,
amendments or renewals of any or all of the foregoing Obligations), whether
direct or indirect, absolute or contingent, and whether for principal, interest,
fees, expenses or otherwise (all such Obligations, being the "SECURED
OBLIGATIONS"), and such Grantor agrees to pay any and all expenses (including,
without limitation, reasonable counsel fees and expenses) incurred by the Agents
or the Lender Parties in enforcing any rights under this Agreement or any other
Loan Documents. Without limiting the generality of the foregoing, this Agreement
secures, as to each Grantor, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Grantor to any Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.
<PAGE>
                                        8

     Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

     Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral
(other than the certificates or instruments representing or evidencing Security
Collateral identified in Schedule II as being located outside of the United
States) shall be delivered to and held by or on behalf of the Collateral Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to the Collateral Agent.

     (b) With respect to any Security Collateral in which any Grantor has any
right, title or interest and that constitutes an uncertificated security, such
Grantor will use commercially reasonable efforts to cause the issuer thereof to
agree in an authenticated record with such Grantor and the Collateral Agent
that, upon notice from the Collateral Agent that an Event of Default has
occurred and is continuing, such issuer will comply with instructions with
respect to such security originated by the Collateral Agent without further
consent of such Grantor, such authenticated record to be in form and substance
reasonably satisfactory to the Collateral Agent. With respect to any Security
Collateral in which any Grantor has any right, title or interest and that is not
an uncertificated security, upon the request of the Collateral Agent upon the
occurrence and during the continuance of an Event of Default, such Grantor will
notify each such issuer of Pledged Equity that such Pledged Equity is subject to
the security interest granted hereunder.

     (c) Upon the request of the Collateral Agent upon the occurrence and during
the continuance of an Event of Default, such Grantor will notify each such
issuer of Pledged Debt that such Pledged Debt is subject to the security
interest granted hereunder.

     Section 5. Maintaining the Account Collateral. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit that has not been cash collateralized (as provided
in the Credit Agreement) shall be outstanding, any Secured Hedge Agreement shall
be in effect or any Lender Party shall have any Commitment or any Bilateral
Obligation contract with Secured Party shall be in effect:

          (a) Each Grantor will maintain all Account Collateral (other than
     Account Collateral maintained in the Permitted Unblocked Accounts in the
     ordinary course of business consistent with past practices) only with the
     Collateral Agent or with banks (the "PLEDGED ACCOUNT BANKS") that have
     agreed within the time period specified in Section 5.01(r) of the Credit
     Agreement, in a record authenticated by the Grantor, the Collateral
<PAGE>
                                        9

     Agent and the applicable Pledged Account Bank, to upon notice from the
     Collateral Agent that an Event of Default has occurred and is continuing,
     comply with instructions originated by the Collateral Agent directing the
     disposition of funds in the Account Collateral without the further consent
     of the Grantor, which authenticated record shall be substantially in the
     form of Exhibit B hereto, or shall otherwise be in form and substance
     reasonably satisfactory to the Collateral Agent (each such agreement, an
     "ACCOUNT CONTROL AGREEMENT").

          (b) Except for the Permitted Unblocked Accounts, each Grantor agrees
     that it will not add any bank in the United States that maintains a deposit
     account for such Grantor or open any new deposit account in the United
     States with any then existing Pledged Account Bank unless (i) the
     Collateral Agent shall have received at least 10 days' prior written notice
     of such additional bank or such new deposit account and (ii) the Collateral
     Agent shall have received, in the case of a bank or Pledged Account Bank
     that is not the Collateral Agent, an Account Control Agreement
     authenticated by such new bank and such Grantor, or a supplement to an
     existing Account Control Agreement with such then existing Pledged Account
     Bank, covering such new deposit account (and, upon the receipt by the
     Collateral Agent of such Account Control Agreement or supplement, Schedule
     V hereto shall be automatically amended to include such other deposit
     account). Each Grantor agrees that it will not terminate any bank as a
     Pledged Account Bank or terminate any Account Collateral, except that the
     Grantor may terminate a Bank Account, and terminate a bank as a Pledged
     Account Bank with respect to such Bank Account, if it gives the Collateral
     Agent at least 10 days' prior written notice of such termination (and, upon
     such termination, Schedule V hereto shall be automatically amended to
     delete such Pledged Account Bank and Bank Account).

          (c) Upon any termination by a Grantor of any Bank Account by such
     Grantor, or any Pledged Account Bank with respect thereto, such Grantor
     will immediately transfer all funds and property held in such terminated
     Bank Account to another Bank Account listed in Schedule V or a new Bank
     Account that is permitted by clause (b) of this Section 5, so that the
     Collateral Agent shall have a continuously perfected security interest in
     such Account Collateral, funds and property.

          (d) If an Event of Default has occurred and is continuing, the
     Collateral Agent may, at any time and without notice to, or consent from,
     the Grantor, transfer, or direct the transfer of, funds from the Account
     Collateral to satisfy the Grantor's obligations under the Loan Documents.
     As soon as reasonably practicable after any such transfer, the Collateral
     Agent agrees to give written notice thereof to the applicable Grantor.

     Section 6. Investing of Amounts in the Collateral Account. MII may, subject
to the provisions of Sections 5 and 18, from time to time (a) invest, or direct
the applicable Pledged Account Bank to invest, amounts received with respect to
the Collateral Account in such Cash Equivalents credited to (A) the Collateral
Account as the Borrower may select or (B) in the case of Cash Equivalents
consisting of Security Collateral, a securities account in which the Collateral
Agent is the securities intermediary or a securities account subject to a
securities account control agreement, and (b) invest interest paid on the Cash
Equivalents referred to in
<PAGE>
                                       10

clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents credited in the
same manner.

     Section 7. Maintaining Electronic Chattel Paper and Transferable Records .
(a)So long as any Advance or any other Obligation of any Borrower under any Loan
Document shall remain unpaid, any Letter of Credit that has not been cash
collateralized (as provided in the Credit Agreement) shall be outstanding, any
Secured Hedge Agreement or any Bilateral Obligation owing to a Secured Party
shall be in effect or any Lender Party shall have any Commitment, each Grantor
will maintain all (i) electronic chattel paper so that the Collateral Agent has
control of the electronic chattel paper in the manner specified in Section 9-105
of the UCC and (ii) all transferable records so that the Collateral Agent has
control of the transferable records in the manner specified in Section 16 of the
Uniform Electronic Transactions Act, as in effect in the jurisdiction governing
such transferable record ("UETA"); and

          (b) Each Grantor will promptly, but in any event within 10 Business
     Days after a Responsible Officer of MII becoming aware thereof, give notice
     to the Collateral Agent of any material commercial tort claim that may
     arise in the future and will promptly execute or otherwise authenticate a
     supplement to this Agreement, and otherwise take all necessary action, to
     subject such commercial tort claim to the first priority security interest
     created under this Agreement.

     Section 8. Representations and Warranties. Each Grantor represents and
warrants as of the date of this Agreement, as follows:

          (a) Such Grantor's exact legal name, as defined in Section 9-503(a) of
     the UCC, is correctly set forth in Schedule I hereto. Schedule I hereto
     lists all trade names of such Grantor (other than such Grantor's exact
     legal name) that Grantor believes to be of material value or benefit to its
     business. Such Grantor is located (within the meaning of Section 9-307 of
     the UCC) and has its chief executive office, in the state or jurisdiction
     set forth in Schedule I hereto. The information set forth in Schedule I
     hereto with respect to such Grantor is true and accurate in all material
     respects. Such Grantor has not, at any time in the three years immediately
     preceding the date of this Agreement, changed its name, location (within
     the meaning of the Section 9-307 of the UCC), chief executive office, type
     of organization or jurisdiction of organization or organizational
     identification number from those set forth in Schedule I hereto except as
     disclosed in Schedule IV hereto.

          (b) Substantially all of the Equipment (other than motor vehicles,
     aircraft and Vessels) and Inventory of such Grantor that is material to
     such Grantor's business and located within the United States is located at
     the places specified therefor in Schedule III hereto. All Security
     Collateral (other than the certificates or instruments representing or
     evidencing Security Collateral identified in Schedule II as being located
     outside of the United States) consisting of certificated securities and
     instruments have been delivered to the Collateral Agent.
<PAGE>
                                       11

          (c) Such Grantor is the legal and beneficial owner of the Collateral
     of such Grantor free and clear of any Lien, except for the security
     interest created under this Agreement and Liens permitted under the Credit
     Agreement.

          (d) The Initial Pledged Equity pledged by such Grantor hereunder has
     been duly authorized and validly issued and, in the case of Pledged Equity
     issued by an entity organized under the laws of a jurisdiction located
     within the United States, is fully paid and non-assessable. With respect to
     the Pledged Equity that is an uncertificated security, such Grantor has
     caused or will use commercially reasonable efforts to cause the issuer
     thereof to agree in an authenticated record with such Grantor and the
     Collateral Agent that, upon the occurrence and during the continuance of an
     Event of Default, such issuer will comply with instructions with respect to
     such security originated by the Collateral Agent without further consent of
     such Grantor. If such Grantor is an issuer of Pledged Equity, such Grantor
     confirms that it has received notice of such security interest. The Initial
     Pledged Debt (other than the instruments representing or evidencing Initial
     Pledged Debt identified in Schedule II as being located outside of the
     United States pledged by such Grantor hereunder has been duly authorized,
     authenticated or issued and delivered, is the legal, valid and binding
     obligation of the issuers thereof, is evidenced by one or more promissory
     notes (which notes have been delivered to the Collateral Agent) and is not
     in default.

          (e) The Initial Pledged Equity pledged by such Grantor constitutes the
     percentage of the issued and outstanding Equity Interests of the issuers
     thereof indicated on Schedule II hereto.

          (f) In the case of the Grantors other than MII, substantially all of
     the investment property owned by such Grantor is listed on Schedule II
     hereto or is held in the accounts listed in Schedule V hereto. In case of
     MII, substantially all of the investment property owned by such Grantor is
     listed in Schedule II hereto or is held in the accounts listed in Schedule
     V hereto, except Equity Interests of any Subsidiary other than McDermott
     Incorporated and J. Ray McDermott, S.A.

          (g) Such Grantor has no deposit accounts, other than the Permitted
     Unblocked Accounts and the Account Collateral listed on Schedule V hereto,
     as such Schedule V may be amended from time to time pursuant to Section
     5(b).

          (h) Except as contemplated by this Agreement and the other Loan
     Documents, and except for filings required to be made by MII with the
     Securities and Exchange Commission under the Securities Exchange Act of
     1934, as amended, no authorization or approval or other action by, and no
     notice to or filing with, any governmental authority or regulatory body or
     any other third party is required for the grant by such Grantor of the
     security interest granted hereunder or for the execution, delivery or
     performance of this Agreement by such Grantor.

          (i) The Inventory that has been produced or distributed by such
     Grantor has been produced in material compliance with all requirements of
     applicable law, including, without limitation, the Fair Labor Standards
     Act.
<PAGE>
                                       12

          (j) To the best of such Grantor's knowledge, such Grantor has no
     commercial tort claims (as defined in Section 9-102(13) of the UCC) other
     than those listed in Schedule VI hereto.

     Section 9. Further Assurances. (a) Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary, or that the Collateral Agent may
reasonably request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor: (i) upon the reasonable request of the Collateral
Agent, mark conspicuously each chattel paper included in Receivables with a
legend, in form and substance reasonably satisfactory to the Collateral Agent,
indicating that such chattel paper is subject to the security interest granted
hereby; (ii) if any such Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Collateral Agent
hereunder such note or instrument or chattel paper duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Collateral Agent; (iii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
(iv) deliver and pledge to the Collateral Agent for benefit of the Secured
Parties certificates representing Pledged Equity that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank; (v)
take all commercially reasonable action necessary to ensure that the Collateral
Agent has control of Collateral (other than with respect to the Permitted
Unblocked Accounts) consisting of deposit accounts, electronic chattel paper,
investment property and transferable records as provided in Sections 9-104,
9-105, 9-106 and 9-107 of the UCC and in Section 16 of UETA; and (vi) deliver to
the Collateral Agent evidence that all other action that the Collateral Agent
may deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Agreement has been taken.

     (b) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, in each case
without the signature of such Grantor, and regardless of whether any particular
asset described in such financing statements falls within the scope of the UCC.
A photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.

     (c) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

     Section 10. As to Equipment and Inventory. (a) Each Grantor will cause the
Equipment that is material to such Grantor to be maintained and preserved in
good repair,
<PAGE>
                                       13

working order and condition (ordinary wear and tear excepted) and will
forthwith, or in the case of any loss or damage to any of such Equipment as soon
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable in order that the business carried on in connection
therewith may be conducted, except to the extent maintenance thereof is not
required by Section 5.01(h) of the Credit Agreement.

     (b) Each Grantor will pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by Section 5.01(b) of the Credit Agreement. In
producing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.

     Section 11. Insurance. (a) Each Grantor will, at its own expense, maintain
insurance (including self-insurance) with respect to the Vessels and
Contractor's Equipment of such Grantor, in such amounts and against such risks,
in such form and with such insurers, as such Grantor shall deem appropriate
subject to Section 5.01(d) of the Credit Agreement. Each such policy shall (i)
name such Grantor and the Collateral Agent as insured or additional insured
parties thereunder (without any representation or warranty by or obligation upon
the Collateral Agent) as their interests may appear, (ii) contain in respect to
insurance covering physical loss and/or damage to the Vessels and/or the
Contractor's Equipment the agreement by the insurer that any loss thereunder
shall be payable to the Collateral Agent, (iii) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto and (iv) provide that at least 10 days' prior written
notice of cancellation or of lapse shall be given to the Collateral Agent by the
insurer. Each Grantor will, if so reasonably requested by the Collateral Agent,
deliver to the Collateral Agent copies of policies of such insurance and, as
often as the Collateral Agent may reasonably request, a certificate of a
reputable insurance broker with respect to such insurance.

     (b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Vessels and/or Contractor's Equipment when subsection (c) of this
Section 11 is not applicable, the applicable Grantor will make or cause to be
made the necessary repairs to or replacements of such Vessels and/or
Contractor's Equipment to the extent required by the Credit Agreement, and any
proceeds of insurance properly received by or released to such Grantor shall be
used by such Grantor, except as otherwise required hereunder or by the Credit
Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.

     (c) So long as no Event of Default shall have occurred and be continuing,
all insurance payments received by the Collateral Agent in connection with any
loss, damage or destruction of any Vessels and/or Contractor's Equipment will be
released by the Collateral Agent to the applicable Grantor for the repair,
replacement or restoration thereof. To the extent that (i) the amount of any
such insurance payments exceeds the cost of any such repair, replacement or
restoration, or (ii) such insurance payments are not otherwise required by the
applicable Grantor to complete any such repair, replacement or restoration
required hereunder,
<PAGE>
                                       14

such amount shall be applied to cash collateralize the obligations of the
Borrowers to the extent required by Section 2.06(b) of the Credit Agreement.
Upon the occurrence and during the continuance of any Event of Default, all
insurance payments in respect of such Vessels and/or Contractor's Equipment in
excess of $100,000 shall be paid to the Collateral Agent and shall, in the
Collateral Agent's sole discretion, (i) be released to the applicable Grantor to
be applied as set forth in the first sentence of this subsection (c) or (ii) be
held as additional Collateral hereunder or applied as specified in Section
18(b).

     Section 12. Post-Closing Changes; Bailees; Collections on Receivables and
Related Contracts. (a) No Grantor will change its name, type of organization,
jurisdiction of organization, organizational identification number or location
(within the meaning of Section 9-307 of the UCC) from those set forth in Section
8(a) of this Agreement without first giving at least 30 days' prior written
notice to the Collateral Agent and taking all action reasonably required by the
Collateral Agent for the purpose of perfecting or protecting the security
interest granted by this Agreement. Except as otherwise permitted by the Credit
Agreement, no Grantor will become bound by a security agreement authenticated by
another Person (determined as provided in Section 9-203(d) of the UCC) without
giving the Collateral Agent 30 days' prior written notice thereof and taking all
action required by the Collateral Agent to ensure that the perfection and first
priority nature of the Collateral Agent's security interest in the Collateral
will be maintained. Each Grantor will hold and preserve its records relating to
the Collateral, including, without limitation, the Related Contracts, consistent
with past practices and will permit representatives of the Collateral Agent upon
reasonable notice at any time during normal business hours to inspect and make
abstracts from such records and other documents. If any Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Agent of such organizational identification number.

     (b) If any Collateral of any Grantor is at any time in the possession or
control of a warehouseman, bailee or agent, or if the Collateral Agent so
requests such Grantor will (i) notify such warehouseman, bailee or agent of the
security interest created hereunder, (ii) instruct such warehouseman, bailee or
agent to hold all such Collateral solely for the Collateral Agent's account
subject only to the Collateral Agent's instructions (which shall permit such
Collateral to be removed by such Grantor in the ordinary course of business
until the Collateral Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing), (iii) use commercially
reasonable efforts, to cause such warehouseman, bailee or agent to authenticate
a record acknowledging that it holds possession of such Collateral for the
Collateral Agent's benefit and shall act solely on the instructions of the
Collateral Agent without the further consent of the Grantor or any other Person,
and (iv) make such authenticated record available to the Collateral Agent.

     (c) Except as otherwise provided in this subsection (c), each Grantor will
continue to use commercially reasonable efforts to collect, at its own expense,
all amounts due or to become due such Grantor under the Receivables and Related
Contracts. The Collateral Agent shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default and upon written
notice to such Grantor of its intention to do so, to notify the obligors under
any Receivables and Related Contracts of the assignment of such Receivables and
Related Contracts to the Collateral Agent and to direct such obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such
<PAGE>
                                       15

notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including, without limitation, those set
forth set forth in Section 9-607 of the UCC. After receipt by any Grantor of the
notice from the Collateral Agent referred to in the preceding sentence and
during the continuance of the Event of Default to which such notice relates, all
amounts and proceeds (including, without limitation, instruments) received by
such Grantor in respect of the Receivables and Related Contracts of such Grantor
shall be received in trust for the benefit of the Collateral Agent hereunder,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Collateral Account and either (A) released
to such Grantor on the terms set forth in Section [6] so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing, applied as provided in Section 18(b). No
Grantor will consent to the subordination of its right to payment under any of
the Receivables and Related Contracts to any other indebtedness or obligations
of the obligor thereof.

     Section 13. Voting Rights; Dividends; Etc. (a) So long as no Default under
Section 6.01(f) of the Credit Agreement or Event of Default shall have occurred
and be continuing:

          (i) Each Grantor shall be entitled to exercise any and all voting and
     other consensual rights pertaining to the Security Collateral of such
     Grantor or any part thereof for any purpose.

          (ii) Each Grantor shall be entitled to receive and retain any and all
     dividends, interest and other distributions paid in respect of the Security
     Collateral of such Grantor if and to the extent that the payment thereof is
     not otherwise prohibited by the terms of the Loan Documents; PROVIDED,
     HOWEVER, that any and all dividends, interest and other distributions paid
     or payable in the form of instruments or certificated in respect of, or in
     exchange for, any Security Collateral, shall be, and shall be forthwith
     delivered to the Collateral Agent to hold as, Security Collateral and
     shall, if received by such Grantor, be received in trust for the benefit of
     the Collateral Agent, be segregated from the other property or funds of
     such Grantor and be forthwith delivered to the Collateral Agent as Security
     Collateral in the same form as so received (with any necessary
     indorsement).

          (iii) The Collateral Agent will execute and deliver (or cause to be
     executed and delivered) to each Grantor all such instruments as such
     Grantor may reasonably request for the purpose of enabling such Grantor to
     receive the dividends or interest payments that it is authorized to receive
     and retain pursuant to paragraph (ii) above.

     (b) Upon the occurrence and during the continuance of a Default under
Section 6.01(f) of the Credit Agreement or an Event of Default:

          (i) All rights of each Grantor (x) to exercise or refrain from
     exercising the voting and other consensual rights that it would otherwise
     be entitled to exercise pursuant to Section 13(a)(i) shall, upon notice to
     such Grantor by the Collateral Agent, cease and
<PAGE>
                                       16

     (y) to receive the dividends, interest and other distributions that it
     would otherwise be authorized to receive and retain pursuant to Section
     13(a)(ii) shall automatically cease, and all such rights shall thereupon
     become vested in the Collateral Agent, which shall thereupon, so long as
     such Default or Event of Default shall continue, have the sole right to
     exercise or refrain from exercising such voting and other consensual rights
     and to receive and hold as Security Collateral such dividends, interest and
     other distributions.

          (ii) All dividends, interest and other distributions that are received
     by any Grantor contrary to the provisions of paragraph (i) of this Section
     13(b) shall be received in trust for the benefit of the Collateral Agent,
     shall be segregated from other funds of such Grantor and shall be forthwith
     paid over to the Collateral Agent as Security Collateral in the same form
     as so received (with any necessary indorsement).

     Section 14. Transfers and Other Liens; Additional Shares. (a) Each Grantor
agrees that it will not (i) sell, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral, other than sales, assignments and
other dispositions of Collateral, and options relating to Collateral, permitted
under the terms of the Credit Agreement, or (ii) create or suffer to exist any
Lien upon or with respect to any of the Collateral of such Grantor except for
the pledge, assignment and security interest created under this Agreement and
Liens permitted under the Credit Agreement.

     (b) Each Grantor agrees that it will (i) cause each issuer of the Pledged
Equity pledged by such Grantor that is a wholly-owned Subsidiary of MII not to
issue any Equity Interests or other securities in addition to or in substitution
for the Pledged Equity issued by such issuer, except to such Grantor, and (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional Equity Interests or other securities of each
issuer of the Pledged Equity received by such Grantor.

     Section 15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary to accomplish the purposes of this Agreement,
including, without limitation:

          (a) to obtain and adjust insurance required to be paid to the
     Collateral Agent pursuant to Section 11,

          (b) to ask for, demand, collect, sue for, recover, compromise, receive
     and give acquittance and receipts for moneys due and to become due under or
     in respect of any of the Collateral,

          (c) to receive, indorse and collect any drafts or other instruments,
     documents and chattel paper, in connection with clause (a) or (b) above,
     and

          (d) to file any claims or take any action or institute any proceedings
     that the Collateral Agent may deem necessary or desirable for the
     collection of any of the
<PAGE>
                                       17

     Collateral or otherwise to enforce the rights of the Collateral Agent with
     respect to any of the Collateral.

     Section 16. Collateral Agent May Perform. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, as the Collateral
Agent reasonably deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 19.

     Section 17. The Collateral Agent's Duties. (a) The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Parties' interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not any Secured Party has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.

     (b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each, a "SUBAGENT") for the Collateral
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Secured
Parties, as security for the Secured Obligations of such Grantor, (ii) such
Subagent shall automatically be vested, in addition to the Collateral Agent,
with all rights, powers, privileges, interests and remedies of the Collateral
Agent hereunder with respect to such Collateral, and (iii) the term "Collateral
Agent," when used herein in relation to any rights, powers, privileges,
interests and remedies of the Collateral Agent with respect to such Collateral,
shall include such Subagent; PROVIDED, HOWEVER, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Collateral Agent,
with a copy delivered to the Grantors.

     (c) Anything contained herein to the contrary notwithstanding, the
Collateral Agent will not take any action pursuant to this Agreement which would
constitute or result in the change of ownership of MI if such change of
ownership would require under then-existing law, the prior approval of the U.S.
Navy or the U. S. Department of Energy, without first obtaining such approval.
The Collateral Agent hereby acknowledges the terms of the Material Contracts and
other contracts to which BWX Technologies, Inc. or its Subsidiaries is a party
and that such agreements are not superceded by any provision contained herein.
<PAGE>
                                       18

     Section 18. Remedies. If any Event of Default shall have occurred and be
continuing:

          (a) The Collateral Agent may exercise in respect of the Collateral, in
     addition to other rights and remedies provided for herein or otherwise
     available to it, all the rights and remedies of a secured party upon
     default under the UCC (whether or not the UCC applies to the affected
     Collateral) and also may: (i) require each Grantor to, and each Grantor
     hereby agrees that it will at its expense and upon request of the
     Collateral Agent forthwith, assemble all or part of the Collateral as
     directed by the Collateral Agent and make it available to the Collateral
     Agent at one or more places and times to be designated by the Collateral
     Agent that are reasonably convenient to both parties; (ii) without notice
     except as specified below or as required by applicable law, sell the
     Collateral or any part thereof in one or more parcels at public or private
     sale, at any of the Collateral Agent's offices or elsewhere, for cash, on
     credit or for future delivery, and upon such other terms as the Collateral
     Agent may deem commercially reasonable; (iii) occupy any premises owned or
     (to the extent permitted by the applicable lease) leased by any of the
     Grantors where the Collateral or any part thereof is assembled or located
     for a reasonable period in order to effectuate its rights and remedies
     hereunder or under law, without obligation to such Grantor in respect of
     such occupation; and (iv) exercise any and all rights and remedies of any
     of the Grantors under or in connection with the Collateral, or otherwise in
     respect of the Collateral, including, without limitation, (A) any and all
     rights of such Grantor to demand or otherwise require payment of any amount
     under, or performance of any provision of, the Receivables, the Related
     Contracts and the other Collateral, (B) withdraw, or cause or direct the
     withdrawal of, all funds with respect to the Account Collateral and (C)
     exercise all other rights and remedies with respect to the Receivables, the
     Related Contracts and the other Collateral, including, without limitation,
     those set forth in Section 9-607 of the UCC. Each Grantor agrees that, to
     the extent notice of sale shall be required by law, at least ten Business
     Days' notice to such Grantor of the time and place of any public sale or
     the time after which any private sale is to be made shall constitute
     reasonable notification. The Collateral Agent shall not be obligated to
     make any sale of Collateral regardless of notice of sale having been given.
     The Collateral Agent may adjourn any public or private sale from time to
     time by announcement at the time and place fixed therefor, and such sale
     may, without further notice, be made at the time and place to which it was
     so adjourned.

          (b) Any cash held by or on behalf of the Collateral Agent and all cash
     proceeds received by or on behalf of the Collateral Agent in respect of any
     sale of, collection from, or other realization upon all or any part of the
     Collateral may, in the discretion of the Collateral Agent, be held by the
     Collateral Agent as collateral for, and/or then or at any time thereafter
     applied (after payment of any amounts payable to the Collateral Agent
     pursuant to Section 19) in whole or in part by the Collateral Agent for the
     ratable benefit of the Secured Parties against, all or any part of the
     Secured Obligations, in the following manner:

               (i) first, paid to the Agents for any amounts then owing to the
          Agents pursuant to Section 9.04 of the Credit Agreement or otherwise
          under the Loan
<PAGE>
                                       19

          Documents, ratably in accordance with such respective amounts then
          owing to the Agents; and

               (ii) second, ratably (A) paid to the Lender Parties and the Hedge
          Banks, respectively, for any amounts then owing to them, in their
          capacities as such, under the Loan Documents ratably in accordance
          with such respective amounts then owing to such Lender Parties and the
          Hedge Banks, PROVIDED that, for purposes of this Section 18, the
          amount owing to any such Hedge Bank pursuant to any Secured Hedge
          Agreement to which it is a party (other than any amount therefore
          accrued and unpaid) shall be deemed to be equal to the Agreement Value
          therefor and (B) deposited as Collateral in the Collateral Account up
          to an amount equal to 105% of the aggregate Available Amount of all
          outstanding Letters of Credit, PROVIDED that in the event that any
          such Letter of Credit is drawn, the Collateral Agent shall pay to the
          Issuing Bank that issued such Letter of Credit the amount held in the
          Collateral Account in respect of such Letter of Credit, PROVIDED
          FURTHER that, to the extent that any such Letter of Credit shall
          expire or terminate undrawn and as a result thereof the amount of the
          Collateral in the Collateral Account shall exceed 105% of the
          aggregate Available Amount of all then outstanding Letters of Credit,
          such excess amount of such Collateral shall be applied in accordance
          with the remaining order of priority set out in this Section 18(b).

     Any surplus of such cash or cash proceeds held by or on the behalf of the
     Collateral Agent and remaining after payment in full of all the Secured
     Obligations shall be paid over to the applicable Grantor or to whomsoever
     may be lawfully entitled to receive such surplus.

          (c) Upon notice from the Collateral Agent, all payments received by
     any Grantor in respect of the Collateral shall be received in trust for the
     benefit of the Collateral Agent, shall be segregated from other funds of
     such Grantor and shall be forthwith paid over to the Collateral Agent in
     the same form as so received (with any necessary indorsement).

          (d) Subject to Section 9.05 of the Credit Agreement, the Collateral
     Agent may, without notice to any Grantor except as required by law and at
     any time or from time to time, charge, setoff and otherwise apply all or
     any part of the Secured Obligations against any funds held with respect to
     the Account Collateral or in any other deposit account.

     Section 19. Indemnity and Expenses. (a) Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and out-of-pocket
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
to the extent such claim, damage, loss,
<PAGE>
                                       20

liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.

     (b) Each Grantor will upon demand pay to the Collateral Agent the amount of
any and all reasonable out-of-pocket expenses, including, without limitation,
the reasonable fees and expenses of its counsel and of any experts and agents,
that the Collateral Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.

     Section 20. Amendments; Waivers; Additional Grantors; Etc. (a) No amendment
or waiver of any provision of this Agreement, and no consent to any departure by
any Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of the Collateral Agent or any other
Secured Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.

     (b) Upon the execution and delivery, or authentication, by any Person of a
security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to
as an "ADDITIONAL GRANTOR" and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to "Grantor" shall
thereafter also mean and be a reference to such Additional Grantor, and, where
the context so permits, each reference in this Agreement and the other Loan
Documents to "Collateral" shall thereafter also mean and be a reference to the
Collateral of such Additional Grantor, and (ii) the supplemental Schedules I-VI
attached to each Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules I-VI, respectively, hereto, and the
Collateral Agent may attach such supplemental schedules to such Schedules; and
each reference to such Schedules shall mean and be a reference to such Schedules
as supplemented pursuant to each Security Agreement Supplement.

     Section 21. Notices, Etc. All notices and other communications provided for
hereunder shall be either (i) in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or otherwise
delivered or (ii) by electronic mail (if electronic mail addresses are
designated as provided below) confirmed immediately in writing, in the case of
MII and the Borrowers or the Collateral Agent, addressed to it at its address
specified in the Credit Agreement and, in the case of each Grantor other than
the Borrowers and MII, addressed to it at its address set forth opposite such
Grantor's name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by telegraph, telecopy, telex or electronic
mail (if confirmed in writing) or on the
<PAGE>
                                       21

date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 21 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 21. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or of any Security Agreement Supplement or Schedule
hereto shall be effective as delivery of an original executed counterpart
thereof.

     Section 22. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Secured Obligations, (ii) the Termination
Date and (iii) the separate cash collateralization of all outstanding Letters of
Credit and all Secured Hedge Agreements, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Secured Parties and their
respective successors and permitted assigns. Without limiting the generality of
the foregoing clause (c), any Lender Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case, and to the extent, as provided in Section 9.07 of the Credit
Agreement.

     Section 23. Release; Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; PROVIDED, HOWEVER, that (i) at
the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) such Grantor shall have delivered to the
Collateral Agent, at least five Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable detail,
including, without limitation, the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may reasonably request and (iii) the portion of proceeds of any
such sale, lease, transfer or other disposition required to be applied, or any
payment to be made in connection therewith, in accordance with Section 2.06 of
the Credit Agreement shall, to the extent so required, be paid or made to, or in
accordance with the instructions of, the Collateral Agent when and as required
under Section 2.06 of the Credit Agreement.

     (b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Termination Date and (iii) the separate cash
collateralization of all outstanding Letters of Credit and all Secured Hedge
Agreements, the pledge and security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantor. Upon any
such termination, the Collateral Agent will, at the applicable Grantor's
<PAGE>
                                       22

expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.

     Section 24. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted against each
Grantor to enforce this Agreement, irrespective of whether any action is brought
against such Grantor or any other Loan Party or whether such Grantor or any
other Loan Party is joined in any such action or actions. All rights of the
Collateral Agent and the other Secured Parties and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
     other agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other amendment or waiver of or any consent to any
     departure from any Loan Document, including, without limitation, any
     increase in the Secured Obligations resulting from the extension of
     additional credit to any Loan Party or any of its Subsidiaries or
     otherwise;

          (c) any taking, exchange, release or non-perfection of any Collateral
     or any other collateral, or any taking, release or amendment or waiver of
     or consent to departure from any guaranty, for all or any of the Secured
     Obligations;

          (d) any manner of application of any Collateral or any other
     collateral, or proceeds thereof, to all or any of the Secured Obligations,
     or any manner of sale or other disposition of any Collateral or any other
     collateral for all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other assets of any Loan Party or any of its Subsidiaries;

          (e) any change, restructuring or termination of the corporate
     structure or existence of any Loan Party or any of its Subsidiaries;

          (f) any failure of any Secured Party to disclose to any Loan Party any
     information relating to the business, condition (financial or otherwise),
     operations, performance, assets, nature of assets, liabilities or prospects
     of any other Loan Party now or hereafter known to such Secured Party (each
     Grantor waiving any duty on the part of the Secured Parties to disclose
     such information);

          (g) the failure of any other Person to execute this Agreement or any
     other Collateral Document, guaranty or agreement or the release or
     reduction of liability of any Grantor or other grantor or surety with
     respect to the Secured Obligations; or
<PAGE>
                                       23

          (h) any other circumstance (including, without limitation, any statute
     of limitations) or any existence of or reliance on any representation by
     any Secured Party that might otherwise constitute a defense available to,
     or a discharge of, such Grantor or any other Grantor or a third party
     grantor of a security interest.

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.

     Section 25. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

     Section 26. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage or Ship Mortgage and the terms of such Mortgage or Ship Mortgage are
inconsistent with the terms of this Agreement, then with respect to such
Collateral, the terms of (i) such Mortgage shall be controlling in the case of
fixtures and real estate leases, letting and licenses of, and contracts and
agreements relating to the lease of, real property, and (ii) such Ship Mortgage
shall be controlling, and the terms of this Agreement shall be controlling in
the case of all other Collateral.

     Section 27. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
<PAGE>
     IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                        J. RAY McDERMOTT, S.A.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                   Vice President Finance &
                                                   Treasurer

                                        J. RAY McDERMOTT HOLDINGS, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Vice President Finance &
                                                  Treasurer

                                        J. RAY McDERMOTT, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Vice President Finance &
                                                  Treasurer

                                        McDERMOTT INTERNATIONAL, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Vice President Finance &
                                                  Treasurer

                                        J. RAY McDERMOTT UNDERWATER
                                        SERVICES, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer
<PAGE>
                                        MENTOR SUBSEA TECHNOLOGY
                                        SERVICES, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        McDERMOTT TRADE CORPORATION

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        J. RAY McDERMOTT TECHNOLOGY, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        OPI VESSELS, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        J. RAY McDERMOTT ENGINEERING
                                        HOLDINGS, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer
<PAGE>
                                        SABINE RIVER REALTY, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        SPARTEC, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        J. RAY McDERMOTT WEST AFRICA
                                        HOLDINGS, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        J. RAY McDERMOTT ENGINEERING, LLC

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer

                                        J. RAY McDERMOTT WEST AFRICA, INC.

                                        By \s\ James R. Easter
                                           ------------------------------
                                           Title: James R. Easter
                                                  Treasurer
<PAGE>
                                        Acknowledged and Accepted:

                                        CITICORP USA, INC.

                                        By \s\ Todd J. Mogil
                                           ------------------------------
                                           Title: Todd J. Mogil
                                                  Vice President
<PAGE>
                                                               SCHEDULE I TO THE
                                                              SECURITY AGREEMENT

          LOCATION, CHIEF EXECUTIVE OFFICE, PLACE WHERE AGREEMENTS ARE
       MAINTAINED, TYPE OF ORGANIZATION, JURISDICTION OF ORGANIZATION AND
                      ORGANIZATIONAL IDENTIFICATION NUMBER

<TABLE>
<CAPTION>
                     CHIEF       PLACE WHERE
                     EXECUTIVE   AGREEMENTS ARE   TYPE OF        JURISDICTION      ORGANIZATIONAL
GRANTOR   LOCATION   OFFICE      MAINTAINED       ORGANIZATION   OF ORGANIZATION   I.D. NO.
-------   --------   ---------   --------------   ------------   ---------------   --------------
<S>       <C>        <C>         <C>              <C>            <C>               <C>
</TABLE>
<PAGE>
                                                              SCHEDULE II TO THE
                                                              SECURITY AGREEMENT

                         PLEDGED EQUITY AND PLEDGED DEBT

                                     PART I

<TABLE>
<CAPTION>
======================================================================================
                                                                           PERCENTAGE
                                                                               OF
                   CLASS OF EQUITY               CERTIFICATE     NUMBER    OUTSTANDING
GRANTOR   ISSUER       INTEREST      PAR VALUE      NO(S)      OF SHARES     SHARES
======================================================================================
<S>       <C>      <C>               <C>         <C>           <C>         <C>
--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

======================================================================================
</TABLE>

                                     PART II

<TABLE>
<CAPTION>
======================================================================================
                                                                           OUTSTANDING
           DEBT        DESCRIPTION OF     DEBT CERTIFICATE       FINAL      PRINCIPAL
GRANTOR   ISSUER            DEBT                NO(S).          MATURITY      AMOUNT
======================================================================================
<S>       <C>          <C>                <C>                   <C>        <C>
--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

======================================================================================
</TABLE>
<PAGE>
                                                             SCHEDULE III TO THE
                                                              SECURITY AGREEMENT

                       LOCATION OF EQUIPMENT AND INVENTORY

[NAME OF GRANTOR]

     LOCATIONS OF EQUIPMENT:

     LOCATIONS OF INVENTORY:

[NAME OF GRANTOR]

     LOCATIONS OF EQUIPMENT:

     LOCATIONS OF INVENTORY:

[ETC.]
<PAGE>
                                                              SCHEDULE IV TO THE
                                                              SECURITY AGREEMENT

                         CHANGES IN NAME, LOCATION, ETC.

CHANGES IN THE GRANTOR'S NAME (INCLUDING NEW GRANTOR WITH A NEW NAME AND NAMES
ASSOCIATED WITH ALL PREDECESSORS IN INTEREST OF THE GRANTOR)

CHANGES IN THE GRANTOR'S LOCATION

CHANGES IN THE GRANTOR'S CHIEF EXECUTIVE OFFICE

CHANGES IN THE LOCATION OF EQUIPMENT AND INVENTORY

CHANGES IN THE PLACE WHERE AGREEMENTS ARE MAINTAINED

CHANGES IN THE TYPE OF ORGANIZATION

CHANGES IN THE JURISDICTION OF ORGANIZATION

CHANGES IN THE ORGANIZATIONAL IDENTIFICATION NUMBER
<PAGE>
                                                               SCHEDULE V TO THE
                                                              SECURITY AGREEMENT

                               ACCOUNT COLLATERAL

<TABLE>
<CAPTION>
===================================================================================
          NAME AND ADDRESS OF PLEDGED   MAILING ADDRESS OF PLEDGED
GRANTOR          ACCOUNT BANK                     ACCOUNT            ACCOUNT NUMBER
===================================================================================
<S>       <C>                           <C>                          <C>
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

===================================================================================
</TABLE>
<PAGE>
                                                              SCHEDULE VI TO THE
                                                              SECURITY AGREEMENT

                             COMMERCIAL TORT CLAIMS

                                                                EXHIBIT A TO THE
                                                              SECURITY AGREEMENT

                      FORM OF SECURITY AGREEMENT SUPPLEMENT

                                         [Date of Security Agreement Supplement]

Citicorp US, Inc.
     as the Collateral Agent for the
     Secured Parties referred to in the
     Credit Agreement referred to below
     [1200 Smith Street, Suite 200
     Houston, TX  77002]
     Attn: ___________________

Ladies and Gentlemen:

     Reference is made to (i) the Credit Agreement dated as of January ___, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"; terms defined therein, unless otherwise defined
herein, being used herein as therein defined), among the Borrowers, the Lender
Parties and certain other lender parties party thereto, Citicorp USA, Inc., as
Collateral Agent and Administrative Agent for the Lender Parties and such other
lender parties thereto, Salomon Smith Barney Inc., as lead arranger and book
runner, [NAME OF INSTITUTION], as documentation agent and [NAME OF INSTITUTION],
as syndication agent, and (ii) the Security Agreement dated January ___, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "SECURITY AGREEMENT") made by the Grantors from time to time party
thereto in favor of the Collateral Agent for the Secured Parties.

     SECTION 1. Grant of Security. The undersigned hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.

     SECTION 2. Security for Obligations. The grant of a security interest in,
the Collateral by the undersigned under this Security Agreement Supplement and
the Security Agreement secures the payment of all Obligations of the undersigned
now or hereafter existing under or in respect of the Loan Documents, whether
direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
Without limiting the generality of the foregoing, this Security Agreement
Supplement and the Security Agreement
<PAGE>
secures the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party under
the Loan Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.

     SECTION 3. Supplements to Security Agreement Schedules. The undersigned has
attached hereto supplemental Schedules [I through IX] to Schedules [I through
IX], respectively, to the Security Agreement, and the undersigned hereby
certifies, as of the date first above written, that such supplemental schedules
have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct.

     SECTION 4. Representations and Warranties. The undersigned hereby makes
each representation and warranty set forth in Section 9 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.

     SECTION 5. Obligations Under the Security Agreement. The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors. The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.

     SECTION 6. Governing Law. This Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

                                                    Very truly yours,

                                                    [NAME OF ADDITIONAL GRANTOR]

                                                    By
                                                       -------------------------
                                                       Title:

                                                          Address for notices:

                                                          ----------------------

                                                          ----------------------

                                                          ----------------------
<PAGE>
                                                                EXHIBIT B TO THE
                                                              SECURITY AGREEMENT

                        FORM OF ACCOUNT CONTROL AGREEMENT
                      (DEPOSIT ACCOUNT/SECURITIES ACCOUNT)

     ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________, ____,
among____________, a ___________ (the "GRANTOR"), Citicorp USA, Inc., a
[Delaware] corporation, as Collateral Agent (the "SECURED PARTY"), and
_________, a _________ ("____________"), as securities intermediary and
depository bank (the "ACCOUNT HOLDER").

PRELIMINARY STATEMENTS:

     (1) The Grantor has granted the Secured Party a security interest (the
"SECURITY INTEREST") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):

     [Insert account numbers and other identifying information.]

     (2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:

     SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agrees with, the Secured Party that:

          (a) The Account Holder maintains each Account for the Grantor, and all
     property (including, without limitation, all funds and financial assets)
     held by the Account Holder for the account of the Grantor are, and will
     continue to be, credited to an Account in accordance with instructions
     given by the Grantor (unless otherwise provided herein).

          (b) To the extent that funds are credited to any Account, such Account
     is a deposit account; and to the extent that financial assets are credited
     to any Account, such Account is a securities account. The Account Holder is
     (i) the bank with which each Account that is a deposit account is
     maintained and (ii) the securities intermediary with respect to financial
     assets held in any Account that is a securities account. The Grantor is (x)
     the Account Holder's customer with respect to the Accounts and (y) the
     entitlement holder with respect to financial assets credited from time to
     time to any Account.

          (c) Notwithstanding any other agreement to the contrary, the Account
     Holder's jurisdiction with respect to each Account for purposes of the N.Y.
     Uniform
<PAGE>
     Commercial Code is, and will continue to be for so long as the Security
     Interest shall be in effect, the State of New York.

          (d) Attached as Exhibit A hereto are statements of the respective
     Accounts as of the date hereof showing the property credited to each
     Account.

          (e) The Grantor and Account Holder do not know of any claim to or
     interest in any Account or any property (including, without limitation,
     funds and financial assets) credited to any Account, except for claims and
     interests of the parties referred to in this Agreement.

     SECTION 2. Control by Secured Party. The Account Holder will comply with
(i) all instructions directing disposition of the funds in any and all of the
Accounts, (ii) all notifications and entitlement orders that the Account Holder
receives directing it to transfer or redeem any financial asset in any and all
of the Accounts, and (iii) all other directions concerning any and all of the
Accounts, including, without limitation, directions to distribute to the Secured
Party proceeds of any such transfer or redemption or interest or dividends on
property in any and all of the Accounts (any such instruction, notification or
direction referred to in clause (i), (ii) or (iii) above being an "ACCOUNT
DIRECTION"), in each case of clauses (i), (ii) and (iii) above originated by the
Secured Party without further consent by the Grantor or any other Person.

     SECTION 3. Grantor's Rights in Accounts.

     (a) Except as otherwise provided in this Section 3, the Account Holder will
comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Secured Party.

     (b) Until the Account Holder receives a notice from the Secured Party that
the Secured Party will exercise exclusive control over any Account (a "NOTICE OF
EXCLUSIVE CONTROL" with respect to such Account), the Account Holder may
distribute to the Grantor all interest and regular cash dividends on property
(including, without limitation, funds and financial assets) in such Account.

     (c) If the Account Holder receives from the Secured Party a Notice of
Exclusive Control with respect to any Account, the Account Holder will comply
only with Account Directions originated by the Secured Party and will cease:

          (i) complying with Account Directions or other directions concerning
     such Account originated by the Grantor and

          (ii) distributing to the Grantor interest and dividends on property
     (including, without limitation, funds and financial assets) in such
     Account.

     SECTION 4. Priority of Secured Party's Security Interest. (a) The Account
Holder (i) subordinates to the Security Interest and in favor of the Secured
Party any security interest, lien, or right of recoupment or setoff that the
Account Holder may have, now or in the future, against any Account or property
(including, without limitation, any funds and financial assets) credited to any
Account, and (ii) agrees that it will not exercise any right in respect of any
<PAGE>
such security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated, except that the Account Holder (A) will
retain its prior security interest and lien on property credited to any Account,
(B) may exercise any right in respect of such security interest or lien, and (C)
may exercise any right of recoupment or setoff against any Account, in the case
of clauses (A), (B) and (C) above, to secure or to satisfy, and only to secure
or to satisfy, payment (x) for such property, (y) for its customary fees and
expenses for the routine maintenance and operation of such Account, and (z) if
such Account is a deposit account, for the face amount of any items that have
been credited to such Account but are subsequently returned unpaid because of
uncollected or insufficient funds.

     (b) The Account Holder will not enter into any other agreement with any
Person relating to Account Directions or other directions with respect to any
Account.

     SECTION 5. Statements, Confirmations, and Notices of Adverse Claims. When
the Account Holder knows of any claim or interest in any Account or any property
(including, without limitation, funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Secured Party and the
Grantor of such claim or interest.

     SECTION 6. The Account Holder's Responsibility. (a) Except for permitting a
withdrawal, delivery, or payment in violation of Section 3, the Account Holder
will not be liable to the Secured Party for complying with Account Directions or
other directions concerning any Account from the Grantor that are received by
the Account Holder before the Account Holder receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.

     (b) The Account Holder will not be liable to the Grantor or the Secured
Party for complying with a Notice of Exclusive Control or with an Account
Direction or other direction concerning any Account originated by the Secured
Party, even if the Grantor notifies the Account Holder that the Secured Party is
not legally entitled to issue the Notice of Exclusive Control or Account
Direction or such other direction unless the Account Holder takes the action
after it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and had
a reasonable opportunity to act on the injunction, restraining order or other
legal process.

     (c) This Agreement does not create any obligation of the Account Holder
except for those expressly set forth in this Agreement and, in the case of any
Account that is a securities account, in Part 5 of Article 8 of the N.Y. Uniform
Commercial Code and, in the case of any Account that is a deposit account, in
Article 4 of the N.Y. Uniform Commercial Code. In particular, the Account Holder
need not investigate whether the Secured Party is entitled under the Secured
Party's agreements with the Grantor to give an Account Direction or other
direction concerning any Account or a Notice of Exclusive Control. The Account
Holder may rely on notices and communications it believes given by the
appropriate party.

     SECTION 7. Indemnity. The Grantor will indemnify the Account Holder, its
officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including, without limitation,
reasonable attorney's fees and disbursements), except to the extent the claims,
liabilities or expenses are caused by the Account Holder's gross
<PAGE>
negligence or willful misconduct as found by a court of competent jurisdiction
in a final, non-appealable judgment.

     SECTION 8. Termination; Survival. (a) The Secured Party may terminate this
Agreement by notice to the Account Holder and the Grantor. If the Secured Party
notifies the Account Holder that the Security Interest has terminated, this
Agreement will immediately terminate.

     (b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Secured Party and the Grantor, provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including, without limitation, all funds and financial
assets) credited to each Account to another Account Holder that shall have
executed, together with the Grantor, a control agreement in favor of the Secured
Party in respect of such property in substantially the form of this Agreement or
otherwise in form and substance reasonably satisfactory to the Secured Party.

     (c) Sections 6 and 7 will survive termination of this Agreement.

     SECTION 9. Governing Law. This Agreement and each Account will be governed
by the law of the State of New York. The Account Holder and the Grantor may not
change the law governing any Account without the Secured Party's express prior
written agreement.

     SECTION 10. Entire Agreement. This Agreement is the entire agreement, and
supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.

     SECTION 11. Amendments. No amendment of, or waiver of a right under, this
Agreement will be binding unless it is in writing and signed by the party to be
charged.

     SECTION 12. Financial Assets. The Account Holder agrees with the Secured
Party and the Grantor that, to the fullest extent permitted by applicable law,
all property (other than funds) credited from time to time to any Account will
be treated as financial assets under Article 8 of the N.Y. Uniform Commercial
Code.

     SECTION 13. Notices. A notice or other communication to a party under this
Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.

     SECTION 14. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Grantor, the Secured Party and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Grantor, the Secured Party and the Account Holder and their respective
successors and assigns.

     SECTION 15. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall
<PAGE>
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
an original executed counterpart of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                                    [NAME OF GRANTOR]

                                                    By
                                                       -------------------------
                                                       Name:
                                                       Title:

                                                    Address:

                                                    ----------------------------

                                                    ----------------------------

                                                    CITICORP USA, INC., as
                                                    Collateral Agent

                                                    By
                                                       -------------------------
                                                       Name:
                                                       Title:

                                                    Address:

                                                    ----------------------------

                                                    ----------------------------

                                                    [NAME OF ACCOUNT HOLDER]

                                                    By
                                                       -------------------------
                                                       Name:
                                                       Title:

                                                    Address:

                                                    ----------------------------

                                                    ----------------------------
<PAGE>
                                    EXHIBIT A

[Statements of the various Accounts showing the property credited to each
Account

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