Document:

Exhibit 10.1

    
      

    

     

    

      EXHIBIT
        10.1

      

      DELTA
        AIR LINES, INC.

      DIRECTOR
        AND OFFICER SEVERANCE PLAN

      

      INTRODUCTION

      

      Delta
        Air
        Lines, Inc. (together with its subsidiaries, the “Company”
or
        “Delta”)
        has
        adopted this Director and Officer Severance Plan (this “Severance
        Plan”
or
        “Plan”)
        to
        provide benefits to certain eligible U.S.-payroll regular full-time Corporate
        Director and Officer level employees of the Company and certain eligible
        employees of subsidiaries of Delta Air Lines, Inc. whose employment at Delta
        is
        separated as a result of organizational or other business changes at Delta.
        

      

      ELIGIBILITY
        CRITERIA

      

      
        	·	
                Separation
                  from Delta as the Result of Organizational Change

                Employees
                  who are classified as (i) a Corporate Director or Officer of Delta
                  according to Delta’s Human Resources records or (ii) any officers of Delta
                  AirElite Business Jets, Inc. or Delta Connection Academy, Inc.
                  are
                  eligible to be offered participation in this Plan (each such offeree,
                  a
                  “Participant”).
                  Notwithstanding anything to the contrary, at their request, Delta’s Chief
                  Executive Officer and Chief Operating Officer as of the Effective
                  Date (as
                  defined below) are not eligible to be Participants in this Plan.
                  “Effective
                  Date”
                  means the date of this Plan’s approval by the U.S. Bankruptcy
                  Court.

              

      

      

      A
        Participant whose employment has been terminated as a result of organizational
        or other business change at Delta and not for Cause shall be eligible for
        benefits hereunder as described below.

      

      Subject
        to the section of this Plan entitled “Amendment”, following the occurrence of a
        Change in Control (as defined below), the termination of a Participant’s
        employment by the Company or its successor other than for Cause (as defined
        below), or the termination of employment by the Participant by reason of
        (i) the
        Participant’s reduction in pay or benefits (unless such a reduction in pay or
        benefits applies generally to other employees at the same level), (ii) a
        significant diminution of the Participant’s position, responsibilities or
        duties, or (iii) the relocation by the Company or its successor of the
        Participant’s required work location more than 75 miles from its current
        location, shall be deemed to constitute a termination as a result of an
        organizational or other business change at Delta.

      

      
        	·	
                Notification
                  of Eligibility to
                  Participate

              

      

      No
        employee will be eligible to participate in this Plan and receive the benefits
        hereunder unless the Company provides the employee with written notification
        of
        his/her eligibility to participate. This notification requirement must be
        met in
        all cases regardless of whether an employee meets other requirements to
        participate in this Plan.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	·	
                Relinquishment
                  of Other Severance Rights

              

      

      No
        employee will be eligible to participate in this Plan and receive the benefits
        hereunder unless the employee relinquishes, and fully releases any claim
        to, any
        other severance arrangements to which the employee may be a party or for
        which
        the Participant is otherwise eligible as of the Effective Date, including,
        without limitation, any payments and benefits under an Executive Retention
        Protection Agreement, if applicable. This relinquishment and release will
        be
        required of the employee promptly after being notified of eligibility to
        participate in this Plan and must be executed in all cases regardless of
        whether
        an employee meets other requirements to participate in this Plan.

      

      
        	·	
                Successful
                  Completion of Notification
                  Period

              

      

      Participants
        may be required to work through their notification period (period of time
        between notification and effective date of separation). If Participants are
        required to work during the notification period, they must maintain a
        satisfactory level of performance. If they are terminated by Delta or if
        they
        voluntarily terminate their employment prior to the separation date set by
        Delta
        in connection with the offering of this Plan, they will not be eligible to
        receive the benefits under this Plan.

      

      
        	·	
                Completion
                  of Checkout Process

              

      

      If
        a
        Participant fails to successfully complete the separation checkout process,
        returning all Company property, including Company identification cards, keys,
        credit cards, etc., the Participant is not eligible to receive any benefits
        under the terms of this Plan. 

      

      
        	·	
                Full
                  Execution of Separation Agreement and General
                  Release

              

      

      In
        order
        to receive the benefits of this Plan, eligible Participants must first sign
        a
        Separation Agreement and General Release prepared by Delta (the “Agreement”)
        within
        45 days of the date that the Agreement is presented to the Participant.
        Participants who fail to sign the Agreement within 45 days or rescind the
        Agreement within seven days of completion thereof are not eligible to receive
        the benefits of this Plan. The Agreement is designed to ensure that both
        the
        Company and the Participant have their rights and obligations established
        with
        certainty and finality. The Company is offering benefits under this Severance
        Plan in exchange for the execution of the Agreement. The Agreement shall
        be in a
        form provided by and satisfactory to the Company (and reasonably satisfactory
        to
        the legal advisors to the official committee of the Company’s unsecured
        creditors) and shall include, without limitation, a release in favor of the
        Company and its employees, directors and affiliates and certain non-competition,
        non-solicitation and non-recruitment agreements for the benefit of the Company;
        provided,
        however,
        that
        following a Change in Control (as defined below), the Agreement shall be
        in
        substantially the same form as the form of Agreement used prior to the
        occurrence of a Change in Control.

      
        
          
          

        

        
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      OTHER
        ELIGIBILITY INFORMATION

      

      
        	·	
                Delta
                  shall have the complete and final discretion to make all eligibility
                  determinations.

              

      

       

      
        
          

        

      

      
        	
                SUMMARY
                  OF ELIGIBILITY CRITERIA

              
	 
	
                As
                  indicated above, a Participant must meet certain criteria to receive
                  the
                  benefits of the Severance Plan. These
                  include:

              

      

       

      
        	·	
                
                  The
                    Participant is notified by Delta
                    of eligibility to participate in this Severance Plan and fully
                    relinquishes and releases all rights to any payments or benefits
                    under any
                    other severance arrangement in place as of the Effective Date
                    (if
                    any).

                

              

      

       

      
        	·	
                The
                  Participant fully separates from Delta as a result of an organizational
                  or
                  other business change.

              

      

      
        
          
            
              
                
                  
                     

                  

                

              

            

          

        

      

      
        
          	·	
                  The
                    Participant completes the separation checkout
                    process.

                

        

         

        
          
            	·	
                    The
                      Participant executes the Separation Agreement and General Release
                      within
                      45 days of presentment of the offer and does not rescind it
                      within seven
                      days following signing.

                  

          

        

      

      
        	 
                

      

      Benefits
        under this Plan will not be paid or otherwise commence until
all
        of the criteria have been met.

      
        
          

        

      

       

      KEY
        TERMS

      

      “Base
        Salary”
means
        the Participant’s monthly base salary at the time of separation, excluding
        expense reimbursements and supplemental salary payments, and any items not
        considered by the Plan Administrator (as defined below) to be a component
        of
        regular monthly base earnings; provided,
        however,
        that
        following a Change in Control in the event of a termination of employment
        by the
        Participant because of a reduction in the Participant’s pay or benefits, “Base
        Salary” means the Participant’s monthly base salary prior to the reduction in
        pay which gave rise to the Participant’s termination of employment.

      

      “Cause”
means
        the Participant’s
        (a)
conviction,
        guilty plea, plea of nolo contendre or indictment for committing an act of
        fraud, embezzlement, theft, or any other act constituting a felony or similar
        crimes under applicable state law, provided,
        however,
        that an
        indictment may only constitute “Cause” if the indictment prevents the
        Participant from materially performing his or her duties assigned by the
        Company;
        (b)
        intentional wrongful act or gross negligence that has a material detrimental
        effect on the Company or its successor, its subsidiaries or their respective
        business units or groups; (c) material neglect or willful refusal or failure
        (other than by reason of illness, accident or other physical or mental
        incapacity or disability) to properly or substantially attend to duties as
        assigned by the Company, including without limitation, material insubordination
        or excessive absence 

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      or
        tardiness; or (d) a willful failure to follow the material written policies,
        standards and regulations of the Company; provided,
        however,
        that
        for purposes of clauses (c) and (d), no conduct will be deemed to constitute
        “Cause” unless (i) such conduct is committed in bad faith, without reasonable
        belief that the action or inaction is in the best interests of the Company
        and
        (ii) until the Participant has received prior written notice of the conduct,
        which persists after a 30-day cure period following the written
        notice.

      

      “Change
        in Control”
has
        the
        meaning set forth in Attachment A.

      

      “Severance
        Pay”
means
        6
        months’ Base Salary for Directors of Delta Air Lines, Inc. or the equivalent
        level executive at a Delta Air Lines, Inc. subsidiary; 9 months’ Base Salary for
        Vice Presidents and Senior Vice Presidents of Delta Air Lines, Inc. or the
        equivalent level executive at a Delta Air Lines, Inc. subsidiary; 12 months’
Base Salary for Executive Vice Presidents and Chief Officers of Delta Air
        Lines,
        Inc. or the equivalent level executive at a Delta Air Lines, Inc.
        subsidiary.

      

      “Severance
        Period”
means,
        with respect to any Participant, the period beginning on the Participant’s
        termination date from Delta and followed by: 6 months for Directors of Delta
        Air
        Lines, Inc. or the equivalent level executive at a Delta Air Lines, Inc.
        subsidiary; 9 months for Vice Presidents and Senior Vice Presidents of Delta
        Air
        Lines, Inc. or the equivalent level executive at a Delta Air Lines, Inc.
        subsidiary; 12 months for Executive Vice Presidents and Chief Officers of
        Delta
        Air Lines, Inc. or the equivalent level executive at a Delta Air Lines, Inc.
        subsidiary.

      

      DESCRIPTION
        OF SPECIFIC BENEFITS

      

      SEVERANCE
        PAY

      

      
        	·	
                This
                  Plan provides for the payment of Severance Pay based on job level
                  at the
                  time of termination of employment; provided,
                  however,
                  that following a Change in Control in the event of a termination
                  of
                  employment by the Participant because of a significant diminution
                  of the
                  Participant’s position, responsibilities or duties, Severance Pay shall be
                  based on the Participant’s job level prior to the diminution which gave
                  rise to the Participant’s termination of
                  employment.

              

      

      
        	·	
                Severance
                  Pay is paid as a one-time lump-sum payment promptly following the
                  Participant’s separation from employment and fulfillment of the other
                  eligibility criteria. 

              

      

      
        	·	
                All
                  applicable federal, state, and local taxes will be withheld from
                  all
                  Severance Payments that are made. Federal tax will be withheld
                  at a rate
                  consistent with applicable law. 

              

      

      
        	·	
                Severance
                  Pay will not
                  be
                  considered as earnings under the Delta Retirement Plan, the Delta
                  Family-Care Savings Plan, the Delta Family-Care Disability and
                  Survivorship Plan, or any other of Delta’s qualified or non-qualified
                  plans.

              

      

      
        	·	
                Severance
                  Pay will be provided by check and cannot be direct deposited to
                  any
                  financial institution.

              

      

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      

      

      MEDICAL/DENTAL
        AND LIFE INSURANCE BENEFITS

      

      Payment
        of COBRA Premiums

      

      Employees
        who have a separation from employment are offered the right to continue
        applicable medical, dental, vision and Health Flexible Spending Account Coverage
        coverage in accordance with the Consolidated Omnibus Budget Reconciliation
        Act
        of 1985 (COBRA). Under this Plan, Delta Air Lines Inc. or, if applicable,
        the
        subsidiary at which the Participant was employed as of his or her termination
        of
        employment (as applicable with respect to each Participant, the “Delta
        Employer”),
        will
        pay the premiums for medical, dental and/or vision COBRA coverage elected
        by a
        Participant or his eligible dependents for a period not to exceed the Severance
        Period, as further described below in this section. The Delta Employer will
        not
        pay any
        portion of the COBRA premium required for the Healthcare Flexible Spending
        Account COBRA coverage that is elected by a Participant or his or her eligible
        dependents. The COBRA statute, COBRA regulations and COBRA provisions of
        the
        Delta Family-Care Medical Plan (or corresponding subsidiary plan, if applicable)
        will, in all cases, govern whether a Participant or his dependents are eligible
        for COBRA coverage and accordingly whether such Participant or dependent
        will
        receive any payment of COBRA premiums by the Delta Employer in accordance
        with
        this Plan. If the Participant and/or dependent fail to meet these requirements,
        such Participant and/or dependent will not
        be
        eligible for COBRA continuation coverage at either the Delta Employer’s expense
        or their own.

      

      The
        Delta
        Employer’s payment of the COBRA premiums under this Plan will expire on the
        earlier of: (i) the end of the Severance Period; or (ii) the date the
        Participant’s or dependents’ eligibility for COBRA coverage ceases as provided
        under COBRA and the terms of the Delta Family-Care Medical Plan (or
        corresponding subsidiary plan, applicable). 

      

      Payment
        of Retiree Medical Premiums

      

      To
        the
        extent applicable, for those Participants who take special early, early or
        normal retirement at the time of their separation, and elect COBRA coverage,
        instead of retiree medical and/or dental coverage, the above section entitled
        “Payment of COBRA Premiums” will apply with respect to any Delta Employer-paid
        COBRA premium. If the Participant instead elects retiree medical and/or dental
        coverage, the Delta Employer will, as an alternative to paying COBRA premiums
        as
        described above, pay the retiree medical and/or dental premium for the
        Participant and their eligible, properly enrolled dependents during the
        Severance Period. In order to be eligible, the Participant must timely complete
        and return the separate retiree medical election form that is provided to
        employees at retirement. Failure to meet this requirement will result in
        no
        retiree medical coverage and therefore no payment of the retiree medical
        premium
        by the Delta Employer. If a Participant or his dependents become ineligible
        for
        Delta Retiree coverage for any reason or opt out of such coverage, all coverage
        will cease and the Delta Employer will have no responsibility to pay any
        further
        retiree medical and/or dental premiums under this Plan. 

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      

      BASIC
        LIFE INSURANCE

      

      To
        the
        extent applicable, Participants will also have their basic life insurance
        coverage under the Delta Family-Care Disability and Survivorship Plan (or
        corresponding subsidiary plan, if applicable) continued for the Severance
        Period
        at the Delta Employer’s expense. The amount of coverage continued will be equal
        to the amount of basic life insurance coverage in effect immediately prior
        to
        separation up to a maximum of $50,000. If a Participant instead shall have
        reached early retirement age at the time of his or her separation, he or
        she
        will not be eligible for this continuation of basic life coverage but instead
        will receive the standard retiree basic life coverage (currently $10,000
        at
        Delta Air Lines, Inc.). 

       

      TRAVEL
        PRIVILEGES

      

      During
        the Severance Period, a Participant will be eligible for continued travel
        privileges comparable to the Delta Employer’s travel policy as in effect for
        similarly situated active employees during such period.

       

      Family
        status changes (marriage, divorce, adoption or birth of child) that occur
        during
        the Severance Period must be reported to the Employee Service Center (or
        corresponding subsidiary administrator) within 30 days of the status change.
        Failure to do so will result in the ineligibility of the new family member
        for
        travel privileges described under this Plan. 

      

      Notwithstanding
        anything in this Plan, all travel privileges shall be governed by all applicable
        rules and procedures which are generally applicable at the time the travel
        privileges are used, except as expressly modified in this Plan. In accordance
        with HRPM 1014, travel privileges may be used for pleasure, vacation, or
        personal emergency, but may not be used for any type of business or professional
        activity. Any violation of the rules governing non-revenue and reduced rate
        travel may result in the suspension or termination of all travel
        privileges. Please
        note that the Delta Employer’s travel policy (as applied to active and/or
        terminated employees) is subject to change at any time at the Delta
        Employer’s discretion.

      

      CAREER
        TRANSITION SERVICES

      

      
        	·	
                Participants
                  are eligible to receive career transition services valued at up
                  to $5,000
                  at a career transition services firm chosen by the Delta
                  Employer.

              

      

      
        	·	
                These
                  career transition services may include seminars, job search work
                  teams,
                  productivity clinic, resumé preparation, assessments, resource library,
                  on-line database, job lead development, individual counseling,
                  administrative support, computer lab, and workspace
                  phone/fax.

              

      

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      

      
        	·	
                The
                  eligibility to receive these services will expire upon the employee
                  becoming employed or the expiration of the Severance Period, whichever
                  occurs first.

              

      

      

      FINANCIAL
        PLANNING SERVICES

      

      
        	·	
                Participants
                  are eligible for continuation of the financial planning services
                  for which
                  they are eligible at the time of their separation from the Delta
                  Employer.

              

      

      
        	·	
                The
                  eligibility to receive these services will expire at the conclusion
                  of the
                  calendar year in which the Participant separates from the Delta
                  Employer,
                  even if that occurs during the Severance
                  Period.

              

      

       

      SECTION
        409A OF THE INTERNAL REVENUE CODE

      

      To
        the
        extent required to be in compliance with Section 409A of the Internal Revenue
        Code and the regulations promulgated thereunder (together, “Section
        409A”),
        notwithstanding any other provision of this Plan, any payment or benefit
        to
        which a Participant is eligible under this Plan shall be adjusted or delayed
        in
        such manner as to comply with Section 409A and maintain the intent of this
        Plan
        to the maximum extent possible. For example, compliance with Section 409A
        could
        require a significant delay of payment or commencement of benefits beyond
        separation in certain circumstances.

      

      AMENDMENT

      

      The
        Company can amend or terminate this Plan at any time; provided,
        however,
        that (i)
        while
        the Company remains a debtor under the protection of the U.S. Bankruptcy
        Court,
        the Company will amend this Plan to enhance payments or benefits hereunder
        only
        upon further order of the U.S. Bankruptcy Court and (ii) with respect to
        any
        person who is or was a Participant during the period between the Effective
        Date
        and the Company’s emergence from chapter 11 (“Emergence”)
        (inclusive), no amendment to or termination of this Plan that is adverse
        to such
        Participant hereunder and that is made following the Company’s Emergence or a
        Change in Control shall be effective until one year following Emergence or,
        if
        later, six months following a Change in Control, provided,
        that
        the transaction resulting in such Change in Control is announced prior to
        the
        expiration of the one year period following Emergence and provided,
        further,
        that
        for purposes of this Section only, all references to “20%” in the definition of
        Change in Control shall be deemed to be references to “35%”. Unless otherwise
        extended, this Plan shall terminate upon the later of (i) one year following
        Emergence or (ii) six months following a Change in Control that is announced
        prior to the expiration of the one year period following Emergence.

      

      SUCCESSORS
        AND ASSIGNS

      

      This
        Plan
        shall be binding upon the Company’s successors and assigns.

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      

      

      GOVERNING
        LAW

      

      This
        Plan
        is governed by the Employee Retirement Income Security Act of 1974, as amended
        (“ERISA”),
        but
        it is intended to qualify as a plan maintained for the purpose of providing
        benefits to a select group of management or highly compensated employees.
        As
        such, it is exempt from certain provisions of ERISA pursuant to ERISA Sections
        201(2), 301(a)(3), 401(a)(1) and 4021(b) and applicable regulations (including
        Department of Labor Regulation 2520.104-23). However, some of the underlying
        benefits provided for under the terms of this Plan, such as travel privileges,
        financial planning and career transition services are not governed by ERISA,
        and
        their inclusion in this Plan does not deem them subject to ERISA. 

       

      PLAN
        ADMINISTRATION

      

      Attachment
        B contains further provisions regarding Plan administration, interpretation
        and
        claims appeal procedures and shall be considered a part of this Plan as if
        contained herein.

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      

      ATTACHMENT
        A

      CHANGE
        IN CONTROL DEFINITION

      

      “Change
        in Control”
means
        occurrence of any of the following: 

      

      (a)
        any
        person or group of persons (within the meaning of the Securities Exchange
        Act of
        1934, but in no event including the Creditors As a Group (as defined below),
        a
“Person”),
        shall
        have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
        by the Securities and Exchange Commission under the Securities Exchange Act
        of
        1934) of 20% or more of the issued and outstanding shares of common stock
        of the
        Company having the right to vote for the election of directors of the Company
        under ordinary circumstances other than any employee benefit plan of the
        Company
        or any of its subsidiaries or any Person organized, appointed or established
        by
        the Company or any of its Subsidiaries for, or pursuant to, the terms of
        any
        such employee benefit plan; or 

      

      (b)
        during any period of twelve consecutive calendar months, individuals who
        at the
        beginning of such period constituted the board of directors of the Company
        (together with any new directors whose election by the board of directors
        of the
        Company or whose nomination for election by the Company’s stockholders was (x)
        approved by a vote of at least two-thirds of the directors then still in
        office
        who either were directors at the beginning of such period or whose election
        or
        nomination for election was previously so approved or (y) effected pursuant
        to
        the plan of reorganization upon the Company’s Emergence) cease for any reason
        other than death or disability to constitute a majority of the directors
        then in
        office; or 

      

      (c)
        the
        sale or other disposition of all or substantially all of the assets of the
        Company, other than to any corporation with respect to which, immediately
        following such sale or other disposition, (x) (A) more than 50% of,
        respectively, the then-outstanding shares of common stock of such corporation
        and the combined voting power of the then outstanding voting securities of
        such
        corporation entitled to vote generally in the election of directors is then
        beneficially owned, directly or indirectly, by all or substantially all of
        the
        individuals and entities who were the beneficial owners, directly or indirectly,
        of the voting stock outstanding immediately prior to such sale or other
        disposition of assets, (B) no Person (but excluding for this purpose any
        Person
        beneficially owning, immediately prior to such sale or other disposition,
        directly or indirectly, 20% or more of the voting power of the outstanding
        voting stock) beneficially owns, directly or indirectly, 20% or more of,
        respectively, the then-outstanding shares of common stock of such corporation
        or
        the combined voting power of the then-outstanding voting securities of such
        corporation entitled to vote generally in the election of directors and (C)
        at
        least a majority of the members of the board of directors of such corporation
        were members of the board of directors of the Company at the time of the
        execution of the initial agreement or action of the board of directors of
        the
        Company providing for such sale or other disposition of assets of the Company
        or
        (y) the Creditors As a Group beneficially own more than 50% of, respectively,
        the then-outstanding shares of common stock of such 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      corporation
        and the combined voting power of the then-outstanding voting securities of
        such
        corporation entitled to vote generally in the election of directors unless
        any
        one or more Creditors acting together, other than the Creditors As a Group,
        beneficially owns, directly or indirectly, 20% or more of, respectively,
        the
        then- outstanding shares of common stock of such corporation or the combined
        voting power of the then outstanding voting securities of such corporation
        entitled to vote generally in the election of directors; or

      

      (d) a
        reorganization, merger or consolidation of the Company is consummated, in
        each
        case, unless, immediately following such reorganization, merger or
        consolidation, (x) (A) more than 50% of, respectively, the then-outstanding
        shares of common stock of the corporation resulting from such reorganization,
        merger or consolidation and the combined voting power of the then-outstanding
        voting securities of such corporation entitled to vote generally in the election
        of directors is then beneficially owned, directly or indirectly, by all or
        substantially all of the individuals and entities who were the beneficial
        owners
        of the Company’s voting stock outstanding immediately prior to such
        reorganization, merger or consolidation, (B) no Person (but excluding for
        this
        purpose any Person beneficially owning, immediately prior to such
        reorganization, merger or consolidation, directly or indirectly, 20% or more
        of
        the voting power of the outstanding Company’s voting stock) beneficially owns,
        directly or indirectly, 20% or more of, respectively, the then-outstanding
        shares of common stock of the corporation resulting from such reorganization,
        merger or consolidation or the combined voting power of the then-outstanding
        voting securities of such corporation entitled to vote generally in the election
        of directors and (C) at least a majority of the members of the board of
        directors of the corporation resulting from such reorganization, merger or
        consolidation were members of the board of directors of the Company at the
        time
        of the execution of the initial agreement providing for such reorganization,
        merger or consolidation or (y) the Creditors As a Group beneficially own
        more
        than 50% of, respectively, the then outstanding shares of common stock of
        such
        corporation and the combined voting power of the then-outstanding voting
        securities of such corporation entitled to vote generally in the election
        of
        directors unless any one or more Creditors acting together, other than the
        Creditors As a Group, beneficially owns, directly or indirectly, 20% or more
        of,
        respectively, the then- outstanding shares of common stock of such corporation
        or the combined voting power of the then outstanding voting securities of
        such
        corporation entitled to vote generally in the election of
        directors.

      

      “Creditor”
means
        any creditor of the Company in the Company’s chapter 11 case with respect to
        beneficial ownership, direct or indirect, of the Company’s capital stock, or the
        shares of any other corporation, however acquired.

      

      “Creditors
        As a Group”
means
        the creditors of the Company in the Company’s chapter 11 case to the extent of
        such creditors’ beneficial ownership, direct or indirect, of shares of the
        Company’s capital stock or assets of the Company acquired in exchange for
        relinquishment of such creditors’ pre-petition claims against the
        Company.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      ATTACHMENT
        B

      PLAN
        ADMINISTRATION, INTERPRETATION AND CLAIMS APPEAL PROCEDURE

      

      

      PLAN
        ADMINISTRATION AND INTERPRETATION 

      

      The
        Plan
        Administrator is the Vice President - Compensation and Benefits of Delta
        Air
        Lines (or, in the absence of such officer, any other Officer of Delta Air
        Lines
        designated by the Personnel & Compensation Committee of the Board of
        Directors of Delta Air Lines). The Plan Year is January 1 to December 31.
        Benefits from this Plan are paid from the general assets of Delta. 

      

      The
        Plan
        Administrator, or its delegate, has the full power and authority, in its
        sole
        discretion to construe, interpret and administer this Plan and its decisions
        shall be final and binding. The Plan Administrator shall have the broadest
        discretionary authority permitted under law in the exercise of all its functions
        including, but not limited to, deciding questions of eligibility, interpretation
        and the right to benefits hereunder.

      

      Notwithstanding
        any other provision of this Plan, this Plan shall not govern the terms and
        conditions of the medical coverage, dental coverage, life insurance coverage
        and
        travel privileges that a terminated participant continues to receive as a
        result
        of the payment of premiums or extension of eligibility for such benefits
        in
        accordance with the terms of this Plan. Instead, the terms and conditions
        of the
        underlying plans providing those benefits shall control the terms and condition
        of such benefits and privileges. 

      

      PLAN
        CLAIMS AND APPEALS

      

      Filing
        a Claim

      

      All
        claims for benefits under this Plan must be submitted in writing to the Vice
        President - Compensation and Benefits of Delta Air Lines. If
        a
        claim is denied, the claimant will receive written notification of the denial
        within 90 days after the claim is properly and completely filed. Special
        circumstances may require an additional period of no more than 90 days. In
        that
        event, the claimant will receive a written notice of the special circumstances
        requiring the extension and the date when the claimant may expect a decision
        on
        the claim. If the claimant is not furnished with written notification of
        the
        decision on the claim within 90 days (or within 180 days if an extension
        is
        necessary) after the claim is properly and completely filed, the claimant
        or
        his/her authorized representative may request a review of the claim under
        the
        appeal procedures described below.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Appeal
        Procedures for Denied Claims

      

      If
        a
        claimant is dissatisfied with a denial of a claim under the Plan, the claimant
        has the right to appeal the denial. All appeals must be addressed to the
        proper
        party in a timely manner. All
        appeal time deadlines will be strictly enforced.

      

      If
        claimant desires a review of a denial, he/she or his/her representative
        designated in writing must submit a written request that is received by the
        Plan
        Administrator within 90 days of the date of this Plan’s letter denying benefits.
        The date of the denial indicated on the denial letter counts as day one in
        determining this 90-day period and the Plan Administrator expressly reserves
        the
        right to refuse to consider tardy appeals. 

      

      The
        claimant will be notified in writing of the decision on review within 60
        days
        after the Plan Administrator receives the review request. If the claim denial
        is
        upheld, the claimant will be so advised and informed of the reason, the
        provisions of the Plan document upon which the denial was based, and, if
        applicable, an explanation of other relevant material or information necessary
        to perfect the claim. The Plan Administrator may take an additional 60 days
        to
        inform a claimant of a decision if special circumstances require an extension
        of
        processing time and the Plan Administrator has notified the claimant in writing
        that there will be a delay, the reasons for needing more time, and the date
        by
        which the final decision will be made.

      

      Review
        by
        the Plan Administrator is made only upon the written record. The claimant
        or a
        representative designated by the claimant in writing may review pertinent
        documents relating to the denial and may submit comments, a statement of
        issues,
        and/or additional documentary evidence if desired. Personal appearances are
        not
        permitted.

      

      A
        claimant must timely exhaust the administrative remedies allowed under this
        Plan
        as described above before filing any legal action on a claim. The previously
        described procedure is the exclusive administrative claims procedure provided
        under this Plan.Non-Debtor Affiliate Settlement Agreement

 Exhibit 10.1 
  
 NON-DEBTOR AFFILIATE SETTLEMENT AGREEMENT 
  
 THIS NON-DEBTOR AFFILIATE SETTLEMENT AGREEMENT (this “Agreement”) is made as of February 21, 2006 by and
among McDermott International, Inc., a Panamanian corporation (“MII”), McDermott Incorporated, a Delaware corporation and a direct, wholly owned subsidiary of MII (“MI”), Babcock & Wilcox Investment Company, a Delaware
corporation and a direct, wholly owned subsidiary of MI (“BWICO”), The Babcock & Wilcox Company, a Delaware corporation and a direct, wholly owned subsidiary of BWICO (“B&W”), Diamond Power International, Inc., a
Delaware corporation and a direct, wholly owned subsidiary of B&W (“DPII”), Americon, Inc., a Delaware corporation and a direct, wholly owned subsidiary of B&W (“Americon”), Babcock & Wilcox Construction Co.,
Inc., a Delaware corporation and a direct, wholly owned subsidiary of Americon (“BWCCI” and, collectively with B&W, DPII and Americon, the “Chapter 11 Debtors”), the Asbestos Claimants Committee in the Chapter 11
Proceedings defined below (the “ACC”), the Legal Representative for Future Asbestos-Related Claimants in the Chapter 11 Proceedings (the “FCR”), and the Asbestos PI Trust (as defined in the Plan of Reorganization referred to
herein). 
  
 PRELIMINARY STATEMENT 
  
 On February 22, 2000, the Chapter 11 Debtors commenced jointly
administered reorganization cases under Chapter 11 of the U.S. Bankruptcy Code (collectively, the “Chapter 11 Proceedings”) in the United States Bankruptcy Court for the Eastern District of Louisiana (the “Bankruptcy
Court”). 
  
 In an adversary proceeding commenced on
April 30, 2001 in connection with the Chapter 11 Proceedings (Adversary Proceeding Number 01-1155), the ACC and the FCR challenged the 1998 transfers by B&W to BWICO of, among other things, the capital stock of Hudson Products
Corporation, Babcock & Wilcox Tracy Power, Inc., BWX Technologies, Inc. and McDermott Technology, Inc. and the concurrent cancellation by B&W of a $313 million intercompany note receivable (collectively, the “1998
Transfers”) and have appealed the decision of the Bankruptcy Court in that adversary proceeding pursuant to an appeal filed with the United States District Court for the Eastern District of Louisiana (the “District Court”).

  
 B&W, on the one hand, and the ACC and the FCR, on the
other hand, have heretofore filed competing plans of reorganization in the Chapter 11 Proceedings. 
  
 MII, MI, BWICO, the Chapter 11 Debtors, the ACC and the FCR have agreed to a settlement of (1) the outstanding disputes among them concerning
the contents of the plan of reorganization to be consummated in connection with the Chapter 11 Proceedings, as reflected in a plan of reorganization the parties have negotiated and submitted to the Bankruptcy Court, and (2) various other
issues, as reflected in the Plan of Reorganization (as hereinafter defined) and this Agreement. 
  
 As part of the settlement, MII, MI, BWICO and the Chapter 11 Debtors have agreed to, among other things, cause a trust to be established for the benefit
of asbestos personal injury claimants, and the ACC and the FCR have agreed to, among other things, file a motion with the District Court to dismiss, with prejudice, their appeal of the Bankruptcy Court’s decision with respect to the 1998
Transfers, effective as of the Effective Date (as hereinafter defined). 

 The respective Boards of Directors of MII, MI, BWICO and the Chapter 11 Debtors have concluded it is
in the best interest of their respective corporations, and the ACC and the FCR have concluded it is in the best interest of their respective constituencies, to enter into this Agreement and to effect the settlement reflected in the Plan of
Reorganization and this Agreement. 
  
 ARTICLE I 
  
 DEFINITIONS AND DEFINITIONAL PROVISIONS 
  
 Section 1.1 Defined Terms. The following terms this Agreement
uses have the meanings this Section 1.1 assigns to them. 
  
 “ACC” has the meaning the Preliminary Statement specifies. 
  
 “Affiliate” means, as to any specified Entity, (i) any other Entity that, directly or indirectly through one or more
intermediaries or otherwise, controls, is controlled by or is under common control with the specified Entity and (ii) any Entity that is an “affiliate” (within the meaning of Section 101(2) of the U.S. Bankruptcy Code) of the
specified Entity. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an Entity (whether through ownership of Capital Stock of
that Entity, by contract or otherwise). 
  
 “Agreement” has the meaning the Preamble specifies. 
  
 “Amended and Restated Indemnification and Reimbursement Agreements” means, collectively, (i) the Amended and Restated Indemnification and Reimbursement Agreements, each dated as of February 21,
2000, between each of MII, MI and BWICO, on the one hand, and the Chapter 11 Debtors, on the other hand, and (ii) the related Amended and Restated Guaranty Agreements, each dated as of February 21, 2000, between each of MII, MI and BWICO,
on the one hand, and Babcock & Wilcox Canada Ltd., a Canadian corporation and a direct, wholly owned subsidiary of B&W, on the other hand. 
  
 “Americon” has the meaning the Preamble specifies. 
  
 “Asbestos Insurance Rights Assignment Agreement” has the meaning the Plan of Reorganization
specifies. 
  
 “Asbestos PI Channeling
Injunction” has the meaning the Plan of Reorganization specifies. 
  
 “Asbestos PI Trust” has the meaning the Plan of Reorganization specifies. 
  

 2 

 “Asbestos Protected Parties” has the meaning the Plan of Reorganization
specifies. 
  
 “Asbestos Resolution
Legislation” means the U.S. federal legislation currently designated as Senate Bill 852 (also referred to as the “Fairness in Asbestos Injury Resolution Act” or the “FAIR Act”) or any other U.S. federal legislation designed,
in whole or in part, to resolve asbestos-related personal injury claims through the implementation of a national trust. 
  
 “B&W” has the meaning the Preamble specifies. 
  
 “B&W Entities” means B&W and its Subsidiaries. 
  
 “B&W Note” shall mean a five-year promissory
note issued and payable by B&W in the original principal amount of $250 million, payable (subject to the satisfaction of the Payment Obligations Condition Precedent, which shall be applicable to all payments other than the payment of
$25 million of the principal amount thereof, as more specifically provided in Section 2.1(b) and in the form of the B&W Note attached as Exhibit A hereto) to the Asbestos PI Trust and guaranteed by MII and BWICO, with the
guarantee obligations secured by a security interest in all of the issued and outstanding shares of Capital Stock of B&W held by BWICO as of the Effective Date, in substantially the form of Exhibit A hereto. 
  
 “Bankruptcy Code” means Title 11 of the United
States Code, as applicable to the Chapter 11 proceedings. 
  
 “Bankruptcy Court” has the meaning the Preliminary Statement specifies. 
  
 “BWCCI” has the meaning the Preamble specifies. 
  
 “BWICO” has the meaning the Preamble specifies. 
  
 “Capital Stock” means, with respect to:
(i) any corporation, any share, or any depositary receipt or other certificate representing any share, of an equity ownership interest in that corporation; and (ii) any other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity interest in that Entity. 
  
 “Cash” means cash and cash equivalents. 
  
 “Chapter 11 Debtors” has the meaning the Preamble specifies. 
  
 “Claims” means any past, present or future
liability, obligation, claim, demand or cause of action whatsoever, whether such liability, obligation, claim, demand or cause of action is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, whether or not the facts of or legal bases therefor are known or unknown, and whether in the nature of or sounding in tort, or under contract, warranty or any other theory of law, equity or admiralty.

  

 3 

 “Collateral Agent” means the collateral agent named in the Pledge Agreement.

  
 “Contingent Payment Right” has the
meaning Section 2.1(a) specifies. 
  
 “Creole 1979 Year Policy” means the insurance policy issued by Creole Insurance Company, Ltd., a Subsidiary of MII, for the policy coverage period from April 1, 1979 to April 1, 1980 (policy no. 22,007). 
  
 “Damage” to any specified person or other Entity
means any cost, damage (including any consequential, exemplary, punitive or treble damage) or expense (including reasonable fees and actual disbursements by attorneys, consultants, experts or other Representatives and costs of litigation) to, any
fine of or penalty on or any liability (including loss of earnings or profits) of any other nature of that person or other Entity. 
  
 “D&O Insurers” means the respective past, present and future insurers that issued directors and officers liability policies
to any of the MII Indemnified Parties, but, in the case of each such insurer, only in its capacity as an issuer of any such directors and officers liability policies. 
  
 “Debtor-Related Contingent Liability Arrangements” means (a) the letters of credit, surety
bonds and performance, payment, advance payment or retention bonds described on Schedule 1.1(a) and (b) all of the guaranty arrangements with respect to obligations of any of the B&W Entities and as to which any of the MII Entities has
any direct or contingent obligation as of the Effective Date, including those letters of credit, surety bonds, performance bonds, payment bonds, nonpayment bonds, retention bonds and guaranty arrangements described on Schedule 1.1(a). 
  
 “District Court” has the meaning the Preliminary Statement
specifies. 
  
 “DPII” has the meaning
the Preamble specifies. 
  
 “Effective
Date” has the meaning the Plan of Reorganization specifies. 
  
 “Entity” means any individual, corporation, limited liability company, partnership, association, joint stock company, joint venture, trust, unincorporated organization, Governmental Authority or other
entity. 
  
 “Excluded Former
Subsidiaries” means Hudson Products Corporation, a Texas corporation, BWX Technologies, Inc., a Delaware corporation, and McDermott Technology, Inc., a Delaware corporation, but excludes any predecessor business operations of any of those
corporations. 
  
 “FCR” has the meaning the Preliminary
Statement specifies. 
  

 4 

 “Final Order” means an order as to which the time to appeal, petition for
certiorari or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue
or rehear shall have been waived in writing by the Entity possessing such right, or, in the event that an appeal, writ of certiorari or reargument or rehearing thereof has been sought, such order shall have been affirmed by the highest court to
which such order was appealed, or certiorari has been denied or from which reargument or rehearing was sought, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired. 
  
 “Governmental Authority” means any federal, state,
county, municipal or other government, domestic or foreign, or any agency, board, bureau, commission, court, department or other instrumentality of any such government. 
  
 “McDermott Cash” means an amount of Cash equal to $350 million, to be delivered to the Asbestos PI
Trust on the Effective Date as part of the McDermott Consideration under the Plan. 
  
 “MI” has the meaning the Preamble specifies. 
  
 “MII” has the meaning the Preamble specifies. 
  
 “MII Board” means the board of directors of MII.

  
 “MII Common Stock” means the common
stock, par value $1.00 per share, of MII. 
  
 “MII Entities” means MII, MI and BWICO. 
  
 “MII Indemnified Parties” means: (i) MII; (ii) all Entities that Schedule 1.1(b) identifies as Affiliates of MII; (iii) all natural persons who are past or present Affiliates of MII or any of
its Subsidiaries; (iv) all future Affiliates of MII or any of its Subsidiaries; (v) Hudson Products Corporation, a Delaware corporation, and all of its present Subsidiaries; (vi) all the respective Representatives of the persons or
other Entities described in clauses (i) through (v) of this definition; (vii) all the respective past, present and future Representatives of the B&W Entities; and (viii) all the respective successors (by operation of law or
otherwise) of the Entities described in clauses (i) through (vii) of this definition. 
  
 “MII Special Meeting of Stockholders” means a meeting of the holders of the outstanding MII Common Stock duly called and
convened, pursuant to resolutions of the Board of Directors of MII, for the purpose of voting on the approval of this Agreement and the settlement contemplated by this Agreement. “1998 Transfers” has the meaning the Preliminary Statement
specifies. 
  
 “Payment Obligations
Condition Precedent” has the meaning Section 2.1(b) specifies. 
  

 5 

 “Plan of Reorganization” means the Joint Plan of Reorganization as of
September 28, 2005, as amended through January 17, 2006, with such amendments, supplements or other modifications thereto as have been or shall hereafter be approved by the parties hereto through the date on which a confirmation order of
the District Court with respect to such plan of reorganization (as so amended, supplemented or modified) becomes a Final Order. 
  
 “Pledge Agreement” means a pledge and security agreement to which BWICO and the Asbestos PI Trust shall become parties on the
Effective Date, pursuant to which BWICO will pledge all of the issued and outstanding Capital Stock of the reorganized B&W as of the Effective Date to secure the guarantee obligations of BWICO and MII relating to the B&W Note, in
substantially the form of Exhibit B hereto. 
  
 “Released Claims” has the meaning Section 3.1 specifies. 
  
 “Representatives” means, with respect to any Entity, the directors, officers, employees, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents of that Entity, or any other representatives of that Entity or of any of those directors, officers, employees, accountants (including independent certified public
accountants), advisors, attorneys, consultants or other agents. 
  
 “Subject Asbestos Insurance Policies” has the meaning the Plan of Reorganization specifies. 
  
 “Subsidiary” of any specified Entity at any time means any Entity a majority of the Capital Stock of which the specified Entity
owns or controls at that time, directly or indirectly through another Subsidiary of the specified Entity. 
  
 “Support Services Agreement” means the existing Support Services Agreement dated as of January 1, 2000, the parties to
which include the Chapter 11 Debtors and MI. 
  
 “Tax Allocation Agreement” means the existing Tax Allocation Agreement dated as of January 1, 2000, the parties to which include B&W and MI. 
  
 “U.S.” means the United States of America. 
  
 Section 1.2 Other Defined Terms. Words and terms this Agreement uses
which other Sections of this Agreement define (whether specifically or by reference to the Plan of Reorganization or any law or regulation) are used in this Agreement as those other Sections define them. 
  
 Section 1.3 Other Definitional Provisions. 
  
 (a) This Agreement uses the words “herein,” “hereof” and
“hereunder” and words of similar import to refer to this Agreement as a whole and not to any provision of this Agreement, and the words “Article,” “Section,” “Preamble,” “Preliminary Statement,”
“Schedule” and “Exhibit” refer to Articles and Sections of, the preamble and Preliminary Statement in, and Schedules and Exhibits to, this Agreement unless otherwise specified. 
  

 6 

 (b) In this Agreement, whenever the context so requires, the singular number includes the plural and vice
versa, and a reference to one gender includes the other gender and the neuter. 
  
 (c) As used herein, the word “including” (and, with correlative meaning, the word “include”) means including, without limiting the generality of any description preceding that word, and the words
“shall” and “will” are used interchangeably and have the same meaning. 
  
 (d) As used herein, the term “business day” means any day other than a Saturday, Sunday or U.S. federal holiday. 
  
 (e) Unless the context otherwise requires, any reference in this Agreement to B&W or the Chapter 11 Debtors shall also mean reorganized B&W or the
reorganized Chapter 11 Debtors (in each case after giving effect to the consummation of the Plan of Reorganization), respectively. 
  
 (f) All references herein to “$” or “dollars” are to U.S. dollars. 
  
 (g) The language this Agreement uses will be deemed to be the language the parties hereto have chosen to express their
mutual intent, and no rule of strict construction will be applied against any party hereto. 
  
 Section 1.4 Captions. This Agreement includes captions to Articles, Sections and subsections of, and Schedules and Exhibits to, this Agreement for convenience of reference only, and these captions do not
constitute a part of this Agreement for any other purpose or in any way affect the meaning or construction of any provision of this Agreement. 
  
 ARTICLE II 
  
 CONTRIBUTIONS TO THE ASBESTOS PI TRUST AND RELATED MATTERS 
  
 Section 2.1 Contribution of McDermott Consideration. 
  

(a) In consideration of the provision of the Asbestos PI Channeling Injunction and the releases and indemnification protection to be provided pursuant
to the Plan of Reorganization and this Agreement, the applicable MII Indemnified Party or B&W Entity will, subject to the satisfaction (or waiver by the appropriate party or parties) of the conditions set forth in Article VI, take the following
actions: 
  
 (i) on the Effective Date, MII will
cause one or more of its Subsidiaries to transfer the McDermott Cash to the Asbestos PI Trust; 
  
 (ii) effective as of the Effective Date, B&W will issue and deliver the B&W Note to the Asbestos PI Trust; 
  

 7 

 (iii) effective as of the Effective Date, MII and BWICO will provide guaranties with
respect to the B&W Note (in each case in substantially the form set forth in the form of B&W Note attached as Exhibit A hereto); 
  
 (iv) effective as of the Effective Date, BWICO will execute and deliver appropriate documentation in favor of the Collateral Agent
reasonably necessary to grant to the Collateral Agent a security interest under Article 9 of the Uniform Commercial Code covering all of the outstanding and issued shares of Capital Stock of B&W outstanding as of the Effective Date for the
purpose of securing the guaranty obligations under the B&W Note; 
  
 (v) effective as of the Effective Date, MII will, and will cause all of its Subsidiaries that are listed in the Asbestos Insurance Rights Assignment Agreement as parties thereto, to execute and deliver to the Asbestos
PI Trust the Asbestos Insurance Rights Assignment Agreement; and 
  
 (vi) subject to the satisfaction of the Payment Obligations Condition Precedent (as provided in Section 2.1(b)) and the other provisions set forth in Section 2.1(b), on or before May 29, 2007, MI will,
or will cause one or more of its Subsidiaries to, pay the Asbestos PI Trust an amount equal to $355 million plus interest thereon at the rate of 7% per annum from (and including) December 1, 2006 to (but excluding) the date of payment (the
Asbestos PI Trust’s contingent right to receive such payment is referred to herein as the “Contingent Payment Right”). 
  
 (b) The Contingent Payment Right will vest and amounts under the B&W Note in excess of $25 million will be payable only upon satisfaction of the
condition precedent that Asbestos Resolution Legislation shall not have been enacted and become law on or before November 30, 2006 (the “Payment Obligations Condition Precedent”); provided, however, that 
  
 (i) if Asbestos Resolution Legislation is enacted and
becomes law on or before November 30, 2006 and is not subject to a legal proceeding as of January 31, 2007 which challenges the constitutionality of such Asbestos Resolution Legislation (any such proceeding being a “Challenge
Proceeding”), the Payment Obligations Condition Precedent shall be deemed not to have been satisfied (and no amounts shall be payable with respect to the Contingent Payment Right (which shall be deemed to be extinguished in its entirety) and no
amounts in excess of $25 million shall be payable under the B&W Note); and 
  
 (ii) if Asbestos Resolution Legislation is enacted and becomes law on or before November 30, 2006, but is subject to a Challenge
Proceeding as of January 31, 2007, the Payment Obligations Condition Precedent shall be deemed not to have been satisfied and any rights with respect to the Contingent Payment Right and payments under the B&W Note (other than a payment of
principal in the amount of $25,000,000 to be made on December 1, 2007) shall be suspended until either: 
  

	 	(A)	 there has been a final, non-appealable judicial decision with respect to such Challenge Proceeding to the effect that the 

  

 8 

	 	 
Asbestos Resolution Legislation is unconstitutional as generally applied to debtors in Chapter 11 proceedings whose plans of reorganization have not yet been
confirmed and become substantially consummated (i.e., debtors that are then similarly situated to B&W as of September 1, 2005 (in a Chapter 11 proceeding with a plan of reorganization that has not yet been confirmed)), so that
such debtors will not be subject to the Asbestos Resolution Legislation, in which event the Payment Obligations Condition Precedent shall be deemed to have been satisfied on the first day following the later of (1) the date of such judicial
decision and (2) the expiration of the last of any applicable periods of appeal from such judicial decision (and the Contingent Payment Right will then vest (and the payment with respect thereto will thereafter become payable in full on the
later of (x) the date which is 30 days after the date of such vesting and (y) May 31, 2007) and the B&W Note will then become fully payable pursuant to its terms (as more fully provided in the form of B&W Note attached hereto
as Exhibit A), in each case subject to the provisions of Section 7.2); or 

  

	 	(B)	there has been a final nonappealable judicial decision with respect to such Challenge Proceeding which resolves the Challenge Proceeding in a manner other than as contemplated by
the immediately preceding clause (A), in which event, the Payment Obligations Condition Precedent shall be irrevocably deemed not to have been satisfied (and no amounts shall be payable with respect to the Contingent Payment Right (which shall be
deemed to be extinguished in its entirety), no amounts in excess of $25 million shall be payable under the B&W Note, the guaranties provided in the B&W Note shall terminate, the Pledge Agreement shall terminate and the collateral provided
pursuant to the Pledge Agreement shall be released and returned to BWICO free and clear of any security interest as promptly as practicable). 

  
 Section 2.2 Cooperation With Respect to Insurance Litigation and Settlement Activity. To the extent permitted by applicable law and not
inconsistent with the provisions of the Plan of Reorganization, MII will, after the Effective Date, provide the Asbestos PI Trust with such reasonable cooperation as the Asbestos PI Trust may reasonably request in connection with the ongoing
insurance litigation and/or settlement activity with respect to the Subject Asbestos Insurance Policies; provided, however, that the Asbestos PI Trust shall reimburse MII for its reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ and consultants’ fees) incurred in connection with providing such cooperation, promptly (and, in any event, within 20 days) following MII’s request for reimbursement therefor. 
  

 9 

 ARTICLE III 
  
 GENERAL RELEASE AND INDEMNIFICATION 
  
 Section 3.1 General Release. Effective as of the Effective Date, each of the Reorganized Debtors (as that term is defined in the Plan of
Reorganization) and the respective estates of the Chapter 11 Debtors hereby release, to the fullest extent permitted by applicable law, each of the MII Indemnified Parties from any and all Claims and/or Damages arising out of, resulting from or
attributable to, directly or indirectly, (a) the business or operations of any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after the date
it was incorporated, as reflected in Schedule 3.1(a)), (b) the ownership of any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after
the date it was incorporated), (c) any contract, agreement, arrangement or understanding between one or more of the MII Indemnified Parties, on the one hand, and any one or more of the Chapter 11 Debtors or any of their respective past or
present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after the date it was incorporated), on the other hand, in effect prior to the Effective Date (other than this Agreement, the Tax Allocation Agreement and the
Support Services Agreement), (d) any affiliation or relationship with any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after the date it
was incorporated) prior to the Effective Date (other than as parties to this Agreement, the Tax Allocation Agreement and the Support Services Agreement) and/or (e) any legal or equitable claims or causes of action of any kind by any of the
B&W Entities relating to any period prior to the Effective Date, including, in the case of each of clauses (a) through (e), any Claims based on conduct that constituted or may have constituted ordinary or gross negligence or reckless,
willful or wanton misconduct of any of the Asbestos Protected Parties or any conduct for which any of the Asbestos Protected Parties may be deemed to have strict liability under any applicable law (collectively, the “Released Claims”),
including: 
  
 (i) any and all Claims arising out
of, resulting from or attributable to, directly or indirectly, exposure to products, equipment or materials completed, products, equipment or materials in the process of construction, or products, equipment or materials engineered, designed,
marketed, manufactured, fabricated, constructed, sold, supplied, produced, installed, maintained, serviced, specified, selected, repaired, removed, replaced, released, distributed or used at any time by (A) any of the Chapter 11 Debtors or any
of their respective past or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after the date it was incorporated), (B) any predecessor of any of the Chapter 11 Debtors or any of their respective past or
present Subsidiaries, or (C) any other Entity for whose products or operations any of the Entities referred to in the immediately preceding clauses (A) and (B) allegedly has liability or is otherwise liable, including any and all
Claims that may also constitute Asbestos PI Trust Claims, Asbestos PD Claims and Workers’ Compensation Claims (as those terms are defined in the Plan of Reorganization), and including any such Claim (1) for compensatory damages (such as
loss of consortium, wrongful death, survivorship, proximate, consequential, general and special damages) and punitive damages, (2) for reimbursement, indemnification, subrogation and contribution or (3) under any settlement 

  

 10 

 
entered into by or on behalf of any of the Entities referred to in the immediately preceding clauses (A), (B) and (C) prior to the commencement of
the Chapter 11 Proceedings; provided, however, that the Released Claims exclude Claims of the kind described above in this clause (i) against any of the MII Indemnified Parties in respect of any premises liability of any of the MII Indemnified
Parties that is not derived in any way from or based upon or resulting from any affiliation with any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from
and after the date it was incorporated); 
  
 (ii)
any and all Claims arising out of, resulting from or attributable to, directly or indirectly, the 1998 Transfers, including any and all Claims which were or could have been asserted against any of the MII Indemnified Parties in the 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 Bankruptcy Court; 
  
 (iii) any and all Claims (A) that (1) may be asserted by or through any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries or (2) may arise out of or result from, or may
be attributable to, any act or omission on the part of any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries and (B) that may arise out of or result from, or may be attributable to, insurance or the placement of
insurance coverage under which any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries is or was insured, including all Claims for contribution, indemnity, retrospective premiums, insurance coverages owed and
reinsurance coverages owed, and all other Claims arising from or relating to such insurance coverages, whether based on statute, regulation or common law, and whether sounding in contract or tort, including any extra-contractual claims relating to
the handling, adjustment or resolution of any coverage claims and including any and all Claims (including for contribution or indemnity) brought by any Entity in, pursuant to or in connection with any Insurer Misconduct Action (as defined in the
Plan of Reorganization); 
  
 (iv) any and all
Claims (in addition to those described in Sections 3.1(i) through (iv)) that may be asserted by or through any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries against any of the MII Indemnified Parties (including
Claims arising under Section 544, 545, 547, 548, 549, 550, 551 or 553 of the Bankruptcy Code or similar Claims arising under state or any other law) which are in the nature of fraudulent transfer, successor liability, veil piercing or alter
ego-type claims, as a consequence of transactions, events or circumstances involving or affecting any of the B&W Entities (or any of their respective predecessors) or any of their respective businesses or operations that occurred or existed
prior to the Effective Date; and 
  
 (v) any and
all Claims (in addition to those described in Sections 3.1(i) through (v)) arising out of, resulting from or attributable to, directly or indirectly, any and all other intercompany dealings between MII and/or its past and present Affiliates (other
than the B&W Entities), on the one hand, and any of the Chapter 11 Debtors and/or any of their respective past or present Subsidiaries, on the other hand, prior to the Effective Date; 
  

 11 

 provided, however, that the “Released Claims” shall not include: (A) any Claim referred to in clause
(ii) of the first sentence of Section 5.1 and (B) any Claim referred to in clause (ii) of the second sentence of Section 5.2. The releases provided pursuant to this Section 3.1 shall also extend to each of the D&O
Insurers, in each case to the extent, and only to the extent, that such insurer may have liability in respect of a Released Claim that is derivative of any liability of any of the MII Indemnified Parties with respect to such Released Claim (before
giving effect to the release to be provided pursuant to this Section 3.1), and only with respect to such insurer’s obligations under directors and officers liability policies. The Plan of Reorganization shall provide that the releases
provided for in this Section 3.1 and the indemnification provisions set forth in Section 3.2 shall be binding on the Reorganized Debtors and the Asbestos PI Trust with the same force and effect as if the Reorganized Debtors and the
Asbestos PI Trust were included in the list of parties granting the releases in this Section 3.1. Nothing in this Section 3.1 shall be deemed to limit or modify the releases provided or to be provided pursuant to Sections 5.1 and 5.2.

  
 Section 3.2 Indemnification. 
  
 (a) From and after the Effective Date, the Asbestos PI Trust shall protect,
defend, indemnify and hold harmless, to the fullest extent permitted by applicable law, each of the MII Indemnified Parties and the B&W Entities from and against: (A) any and all Released Claims (whether or not brought by or through any of
the Chapter 11 Debtors or any of their respective estates), to the extent they are channeled (or purported to be channeled) to the Asbestos PI Trust as contemplated by the Plan of Reorganization and the Asbestos PI Channeling Injunction, together
with any and all related Damages; (B) any and all Damages relating to Claims purported to be covered by the Asbestos PI Channeling Injunction, to the extent such Claims are brought in jurisdictions outside the United States of America or are
not otherwise, for any reason, subject to the Asbestos PI Channeling Injunction; (C) any and all Claims or Damages arising out of, resulting from or attributable to, directly or indirectly, (i) the assignment, transfer or other provision
to the Asbestos PI Trust of the rights to the coverages under the Subject Asbestos Insurance Policies and under the settlement and coverage-in-place agreements relating to the Subject Asbestos Insurance Policies as contemplated by
Section 2.1(a)(v) and/or (ii) any Asbestos PI Insurance Settlement Agreement; (D) any and all Claims that have been or hereafter may be made by any claimant, insurer or other Entity under or in connection with (1) the Subject
Asbestos Insurance Policies and/or (2) any settlement, coverage-in-place, insurance, reinsurance or other agreement relating to any of the Subject Asbestos Insurance Policies, together with any and all related Damages, including any and all
Claims (including for contribution or indemnity) brought by any Entity in, pursuant to or in connection with any Insurer Misconduct Action (as defined in the Plan of Reorganization); and (E) any and all Claims that have been or hereafter may be
made by any claimant, insurer or other Entity under or in connection with any insurance policy issued by any captive insurance Subsidiary of MII, including the Creole 1979 Year Policy, to the extent such Claims arise out of, result from or are
attributable to, directly or indirectly, Asbestos PI Trust Claims, together with any and all related Damages. If there shall be pending any Claim against the Asbestos PI Trust for indemnification under this Section 3.2(a), the Asbestos PI Trust
shall maintain sufficient assets (as determined in good faith by the trustees of the Asbestos PI Trust) to fund any payments in respect of that Claim for indemnification. 
  

 12 

 (b) From and after the Effective Date, the B&W Entities shall, jointly and severally, protect,
indemnify and hold harmless, to the fullest extent permitted by applicable law, each of the MII Indemnified Parties from and against: (i) any and all of the Released Claims (whether or not brought by or through any of the Chapter 11 Debtors or
any of their respective estates), together with any and all related Damages; (ii) any and all Claims that may arise out of or result from, or may be attributable to, the ownership or operation of B&W’s foundry facility in Barberton,
Ohio; (iii) any and all Asbestos PD Claims; and (iv) any and all other Claims that have been or hereafter may be made by any claimant, insurer or other Entity under or in connection with any insurance policy issued by any captive insurance
Subsidiary of MII, including the Creole 1979 Year Policy, to the extent such Claims arise out of, result from or are attributable to, directly or indirectly, the business or operations of any of the Chapter 11 Debtors or any of their respective past
or present Subsidiaries (other than the Excluded Former Subsidiaries, in each case, from and after the date it was incorporated), together with any and all related Damages. To the extent any provision of any existing agreement between or among any
of the B&W Entities, on the one hand, and any of the MII Indemnified Parties, on the other hand, is inconsistent with any of the release or indemnification provisions of this Agreement, such provision of such other agreement is hereby
superseded. 
  
 ARTICLE IV 
  
 RELEASE AND INDEMNIFICATION FROM DEBTOR-RELATED 
 CONTINGENT LIABILITIES 
  
 Section 4.1 Termination or Replacement of Debtor-Related Contingent Liability Arrangements. Subject to the satisfaction (or waiver by the
appropriate party or parties) of the conditions set forth in Article VI, the Chapter 11 Debtors shall, and shall cause the other B&W Entities to, use their best efforts to terminate or replace, as of the Effective Date or as promptly as
practicable thereafter, each of the Debtor-Related Contingent Liability Arrangements. 
  
 Section 4.2 Indemnification with Respect to Debtor-Related Contingent Liability Arrangements. The B&W Entities will, jointly and severally, indemnify and hold harmless MII and each of the other MII
Indemnified Parties from and against any and all Claims and any and all losses, costs, Damages or expenses whatsoever (including reasonable attorneys’ fees) that any of them may sustain, suffer or incur after the Effective Date and that result
from, arise out of or relate to any of the Debtor-Related Contingent Liability Arrangements. 
  
 ARTICLE V 
  
 MUTUAL RELEASE OF
INTERCOMPANY ACCOUNTS 
 AND OTHER CLAIMS 
  
 Section 5.1 Mutual Release of Pre-Petition Intercompany Accounts and Claims. Subject to the satisfaction (or waiver by the appropriate party or
parties) of the conditions set forth in Article VI, effective as of the Effective Date, and except as may otherwise be agreed 
  

 13 

 
to by the MII Entities and the B&W Entities: (a) the MII Entities hereby release the Chapter 11 Debtors and the other B&W Entities from any and
all pre-petition accounts receivable, notes receivable, debts, liabilities, Damages and obligations owed by any of the Chapter 11 Debtors or any of the other B&W Entities to MII or any of its Subsidiaries (other than the B&W Entities) and
any and all Claims, demands, actions or causes of action, suits, judgments and controversies of any kind whatsoever of MII or any of its Subsidiaries (other than the B&W Entities) against any of the Chapter 11 Debtors or any of the other B&W
Entities, in each case whether at law or in equity, known or unknown; and (b) in addition to the releases effected pursuant to Section 3.1, the Chapter 11 Debtors (for themselves and the other B&W Entities) hereby release the MII
Indemnified Parties from any and all pre-petition accounts receivable, notes receivable, debts, liabilities, Damages and obligations owed by any of the MII Indemnified Parties to any of the Chapter 11 Debtors or any of the other B&W Entities and
any and all Claims, demands, actions or causes of action, suits, judgments and controversies of any kind whatsoever of any of the Chapter 11 Debtors or any of the other B&W Entities against any of the MII Indemnified Parties, in each case
whether at law or in equity, known or unknown, including, in the case of each of clause (a) and clause (b) of this sentence, any liabilities, obligations, Claims, demands, actions or causes of action, suits, judgments or controversies
based on conduct that constituted or may have constituted ordinary or gross negligence or reckless, willful or wanton misconduct of any of the Entities being released hereby or any conduct for which any of the Entities being released hereby may be
deemed to have strict liability under any applicable law; provided, however, that the releases set forth in this Section 5.1 shall not have any effect on: 
  
 (i) any amounts owed to MI under the Support Services Agreement; 
  
 (ii) any amounts owed under the Tax Allocation Agreement by
any party to that agreement to any other party to that agreement; 
  
 (iii) any amounts owed by any of the Chapter 11 Debtors to any of MII, MI or BWICO under any of the Amended and Restated Indemnification and Reimbursement Agreements; 
  
 (iv) any Claims (whether for indemnification, contribution
or otherwise) by any of the MII Indemnified Parties against any of the B&W Entities in respect of warranty claims, breach of contract claims or similar claims, in any case, initiated by a customer and arising out of, resulting from or
attributable to actions by or omissions of any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries prior to the Effective Date (including any warranty or indemnification Claim relating to work performed for Northland
Power Iroquois Falls Partnership in connection with the design and construction of a cogeneration plant in Iroquois Falls, Ontario, Canada); 
  
 (v) any Claim (whether for contribution or otherwise) by any of the MII Indemnified Parties against any of the B&W Entities or the
Asbestos PI Trust in respect of any premises liability or other independent liability arising out of, resulting from or attributable to, directly or indirectly, exposure to products, equipment or materials completed, products, equipment or materials
in the process of construction or 

  

 14 

 
products, equipment or materials engineered, designed, marketed, manufactured, fabricated, constructed, sold, supplied, produced, installed, maintained,
serviced, specified, selected, repaired, removed, replaced, released, distributed or used at any time by B&W or any of its past or present Subsidiaries (other than the Excluded Former Subsidiaries), any predecessor of B&W or any of its past
or present Subsidiaries, or any other Entity for whose products or operations any of the B&W Entities allegedly has liability or is otherwise liable, including any such Claim (A) for compensatory damages (such as loss of consortium,
wrongful death, survivorship, proximate, consequential, general and special damages) and punitive damages or (B) for reimbursement, indemnification, subrogation and contribution at any time, which Claims shall be fully preserved and remain
viable after the Effective Date; or 
  
 (vi) any
accounts receivable, notes receivable, debts, liabilities, obligations, claims, demands, actions, causes of action, suits, judgments or controversies that are specifically established or preserved by, specifically disposed of by or otherwise the
specific subject of any other provision of this Agreement or any provision of the Plan of Reorganization. 
  
 Section 5.2 Cash Settlement of Post-Petition Intercompany Accounts. Promptly after the Effective Date, and except as otherwise may be agreed to by
the MII Entities and the B&W Entities, the MII Entities, on the one hand, and the B&W Entities, on the other hand, shall: (i) complete a cash settlement of the post-petition intercompany accounts and notes between them (in each case,
the cash settlement will be an amount in cash equal to the amount of the intercompany account, as reflected on the respective books and records of the MII Entities and the B&W Entities), other than (A) any amounts owed by any of the B&W
Entities to MI under the Support Services Agreement, and (B) any amounts owed by any of the MII Entities to any of the B&W Entities or owed by any of the B&W Entities to any of the MII Entities under the Tax Allocation Agreement; and
(ii) enter into a mutual release that will evidence the release of any other debts, liabilities, Damages, obligations, Claims, demands, actions or causes of action arising during the period from February 22, 2000 through the Effective
Date, including any based on conduct that constituted or may have constituted ordinary or gross negligence or reckless, willful or wanton misconduct of any of the Entities being so released or any conduct for which any of the Entities being so
released may be deemed to have strict liability under any applicable law. Notwithstanding the provisions of clause (ii) of the immediately preceding sentence, the mutual release to be entered into pursuant to this Section 5.2 shall not
have any effect on: 
  
 (i) any amounts owed to
MI under the Support Services Agreement; 
  
 (ii)
any amounts owed under the Tax Allocation Agreement by any party to that agreement to any other party to that agreement; 
  
 (iii) any amounts owed by any of the Chapter 11 Debtors to any of MII, MI or BWICO under any of the Amended and Restated Indemnification
and Reimbursement Agreements; 
  

 15 

 (iv) any Claims (whether for indemnification, contribution or otherwise) by any of the
MII Indemnified Parties against any of the B&W Entities in respect of warranty claims, breach of contract claims or similar claims, in any case, initiated by a customer and arising out of, resulting from or attributable to actions by or
omissions of any of the Chapter 11 Debtors or any of their respective past or present Subsidiaries prior to the Effective Date (including any warranty or indemnification Claim relating to work performed for Northland Power Iroquois Falls Partnership
in connection with the design and construction of a cogeneration plant in Iroquois Falls, Ontario, Canada); 
  
 (v) any Claim (whether for contribution or otherwise) by any of the MII Indemnified Parties against any of the B&W Entities or the
Asbestos PI Trust in respect of any premises liability or other independent liability arising out of, resulting from or attributable to, directly or indirectly, exposure to products, equipment or materials completed, products, equipment or materials
in the process of construction or products, equipment or materials engineered, designed, marketed, manufactured, fabricated, constructed, sold, supplied, produced, installed, maintained, serviced, specified, selected, repaired, removed, replaced,
released, distributed or used at any time by B&W or any of its past or present Subsidiaries (other than the Excluded Former Subsidiaries), any predecessor of B&W or any of its past or present Subsidiaries, or any other Entity for whose
products or operations any of the B&W Entities allegedly has liability or is otherwise liable, including any such Claim (A) for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential,
general and special damages) and punitive damages or (B) for reimbursement, indemnification, subrogation and contribution at any time, which Claims shall be fully preserved and remain viable after the Effective Date; or 
  
 (vi) any accounts receivable, notes receivable, debts,
liabilities, obligations, claims, demands, actions, causes of action, suits, judgments or controversies that are specifically established or preserved by, specifically disposed of by or otherwise the specific subject of any other provision of this
Agreement (including the indemnification provisions of Sections 3.2 and 4.2) or any provision of the Plan of Reorganization. 
  
 ARTICLE VI 
  
 CONDITIONS TO CONSUMMATION OF THE SETTLEMENT 
  
 Section 6.1 Conditions to the Obligations of Each Party. The obligation of each party hereto to take the actions contemplated to be taken by that
party under this Agreement is subject to the satisfaction on or before the Effective Date, or the written waiver by that party under Section 8.2, of each of the following conditions: 
  
 (i) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing or otherwise interfering with the consummation of the settlement contemplated by
this Agreement shall be in effect (provided, however, that this condition shall not be applicable with respect to the provisions set forth in Section 3.1, Section 3.2(b), Article IV and Article V); 
  

 16 

 (ii) Effectiveness of Asbestos PI Channeling Injunction. The Plan of
Reorganization shall contain all provisions necessary under Section 524(g) of the Bankruptcy Code to implement the Asbestos PI Channeling Injunction to the fullest extent possible under Section 524(g) of the Bankruptcy Code; and the
Asbestos PI Channeling Injunction shall be in full force and effect; and 
  
 (iii) No Legal Prohibitions. No Governmental Authority shall have enacted, promulgated, issued, adopted, decreed or otherwise implemented any law, statute, order, rule, regulation, judgment, decree, award or
other governmental requirement that prohibits or restricts in any material respect the consummation of the settlement contemplated by this Agreement (provided, however, that this condition shall not be applicable with respect to the provisions set
forth in Section 3.1, Section 3.2(b), Article IV and Article V). 
  
 Section 6.2 Conditions to the Obligations of the MII Indemnified Parties. The obligations of the MII Indemnified Parties with respect to the actions contemplated to be taken by them under this Agreement are
subject to the satisfaction on or before the Effective Date, or the written waiver by the MII Entities under Section 8.2, of all the conditions set forth in Section 6.1 and the conditions that (i) this Agreement shall have been duly
approved by the Board of Directors of each of B&W, BWICO and MII, and (ii) this Agreement shall have been duly and unconditionally approved by a majority of the voting power of the outstanding shares of MII Common Stock present in person or
represented by proxy at the MII Special Meeting of Stockholders (and the total number of shares for which votes shall have been cast at the MII Special Meeting of Stockholders on the proposal to so approve this Agreement and the settlement
contemplated by this Agreement shall have represented at least 50% of the voting power of all the outstanding shares of MII Common Stock entitled to vote on such proposal), provided that this stockholder approval condition may be satisfied through
the approval (in the manner contemplated by the foregoing provisions) of a draft of this Agreement, coupled with an acknowledgment that the Board of Directors of MII shall have the authority to approve any modifications to such draft as may be
mutually agreed among the parties hereto. 
  
 ARTICLE VII

  
 SET-OFF PROVISIONS 
  
 Section 7.1 General. If and to the extent the Asbestos PI Trust
becomes obligated to make any reimbursement or other payment to MII or any other MII Indemnified Party under this Agreement (including pursuant to Section 4.2), subject to the provisions of Section 4.2 (if applicable), MII may, at any time
and from time to time, elect, in lieu of MII or such other MII Indemnified Party receiving cash for all or any part of that indemnification obligation, to set-off any or all of such amount by reducing (i) the amount, if any, payable pursuant to
the Contingent Payment Right, (ii) the principal amount of the B&W Note then outstanding or (iii) both. In connection with any such set-off effected by reducing the principal amount at the B&W Note, the amount of such set-off shall
be deemed a prepayment in 
  

 17 

 
accordance with the terms of the B&W Note. Any set-off election made by MII or any other MII Indemnified Party under this Section 7.1 shall be
effected by written notice provided to the Asbestos PI Trust in accordance with Section 8.5, which notice shall specify the obligations to be set-off. 
  
 Section 7.2 Asbestos Resolution Legislation Set-off. If Asbestos Resolution Legislation is enacted and becomes law but the Payment
Obligations Condition Precedent nevertheless has been satisfied in accordance with the provisions of Section 2.1(b), and any of the MII Indemnified Parties or the B&W Entities becomes obligated to make any payment or contribution with
respect to any claims that would constitute Asbestos PI Trust Claims (as defined in the Plan) thereunder (any such obligation being a “Legislative Payment Obligation”): (i) any remaining payment obligation pursuant to the Contingent
Payment Right shall be reduced (but not below zero) by the amount of such Legislative Payment Obligation; and (ii) to the extent of any excess of such Legislative Payment Obligation over the remaining payment obligations pursuant to the
Contingent Payment Right, the principal amount of the B&W Note (together with the accrued and unpaid interest on the principal amount being reduced pursuant to this clause (ii)) shall be reduced (but not below zero) by the amount of such excess.
The provisions of this Section 7.2 shall be reflected in any documentation evidencing the Contingent Payment Right and the B&W Note and related guaranties and security documentation. In the event of any conflict between the application of
the provisions of Section 7.1 and the foregoing provisions of this Section 7.2, the foregoing provisions of this Section 7.2 shall control. 
  
 Section 7.3 Legends. The certificate representing the B&W Note will bear legends and other provisions indicating that the amounts owing
under the B&W Note are subject to set-off as provided in Section 7.1 and that the B&W Note is subject to restrictions on transfer as provided therein. 
  
 ARTICLE VIII 
  
 GENERAL PROVISIONS 
  
 Section 8.1 Binding Effect; Assignment; Third-Party Beneficiaries. This Agreement shall be binding on each of the parties hereto and their
respective successors and assigns. In addition, the Plan of Reorganization shall provide that this Agreement is binding on the Reorganized Debtors. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of
law) and will be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not intended, and shall not be construed, deemed or interpreted, to confer on any person or other
Entity not a party hereto any rights or remedies hereunder, except as otherwise provided expressly herein. 
  
 Section 8.2 Entire Agreement; Amendment; Waivers. This Agreement, the Plan of Reorganization and the documents to be delivered under this
Agreement or the Plan of Reorganization shall constitute the entire agreement and understanding among the parties to this Agreement with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
among the parties hereto relating to the subject matter of this Agreement. Except as Section 8.9 contemplates, this Agreement may not be amended or 
  

 18 

 
modified, and no provision hereof may be waived, except by an agreement in writing signed by the party against whom enforcement of any such amendment,
modification or waiver is sought. The waiver of any of the terms and conditions hereof shall not be construed or interpreted as, or deemed to be, a waiver of any other term or condition hereof. 
  
 Section 8.3 Termination of This Agreement. 
  
 (a) This Agreement may be terminated at any time prior to the Effective Date
solely: 
  
 (i) by the mutual written consent of
the parties hereto; 
  
 (ii) by MII, the ACC or
the FCR if the board and stockholder approvals contemplated by Section 6.2 shall not have been obtained on or before January 31, 2006; 
  
 (iii) by MII if, after the MII Special Meeting of Stockholders, a majority of the members of the MII Board concludes, in good faith, after
consultation with inside and outside counsel and as reflected in a written resolution duly adopted by the MII Board, that there has been a material adverse change (or a combination of more than one of such changes) in (A) the financial
condition, assets or operations of the B&W Entities, taken as a whole, or (B) national or international general business or economic conditions, which (in any case) obligates the MII Board to cause this Agreement to be terminated to avoid a
breach of the fiduciary duties of the MII Board under applicable law; or 
  
 (iv) by any party hereto if the Effective Date shall not have occurred on or before February 22, 2006, or such later date as may be agreed to by the Plan Proponents. 
  
 (b) If this Agreement is terminated under Section 8.3(a), there shall be
no liability or obligation under this Agreement on the part of any party hereto. 
  
 Section 8.4 No Admissions. This Agreement does not constitute, and shall not be construed, interpreted or otherwise read to constitute any admission by any of the Chapter 11 Debtors or the MII Entities
with respect to any alleged asbestos-related liabilities arising out of, resulting from or attributable to the business or operations of the B&W Entities or their respective predecessors. 
  
 Section 8.5 Notices. All notices required or permitted under this
Agreement must be in writing and will be deemed to be delivered and received (i) if personally delivered or if delivered by facsimile or courier service, when actually received by the party to whom notice is sent or (ii) if deposited with
the United States Postal Service (whether actually received or not), at the close of business on the third business day next following the day when placed in the mail, postage prepaid, certified or registered with return receipt requested, addressed
to the appropriate party or parties, at the address of such party or parties set forth below (or at such other address as such party may designate by written notice to all other parties in accordance with this Section 8.5): 
  

 19 

	 	(A)	if to any of the Chapter 11 Debtors, addressed to it at: 

  
 20 S. Van Buren Avenue 
 Barberton, Ohio
44203 
 Attention: David L. Keller 
 Facsimile: (330) 860-1057 
  
 with
copies (which will not constitute notice for purposes of this Agreement) to: 
  
 Kirkland & Ellis LLP 
 Citicorp Center 
 153 E. 53rd Street 
 New York, New York
10022-4675 
 Attention: Theodore L. Freedman, Esq. 
 Facsimile: (212) 446-4900 
  

	 	(B)	If to MI, MII or BWICO: 

  
 777 N. Eldridge Parkway 
 Houston, Texas
77079 
 Attention: John T. Nesser, Esq. 
 Facsimile: (281) 870-5015 
  
 with a copy (which shall not constitute notice for purposes of this Agreement) to: 
  
 Baker Botts L.L.P. 
 One Shell Plaza

 910 Louisiana 
 Houston,
Texas 77002-4995 
 Attention: Ted W. Paris, Esq. 
 Facsimile: (713) 229-7738 
  

	 	(C)	if to the ACC, addressed to it at: 

  
 c/o Caplin & Drysdale, Chartered 
 375 Park Avenue, 35th Floor 
 New York, New York 10152-3500 
 Attention: Elihu Inselbuch, Esq. 
 Facsimile: (212) 644-6755 
  

 20 

 with copies (which will not constitute notice for purposes of this Agreement) to:

  
 Caplin & Drysdale, Chartered 
 One Thomas Circle, N.W., Suite 1100 
 Washington, D.C. 20005 
 Attention: Peter Van N. Lockwood, Esq. 
 Facsimile: (202) 429-3329 
  

	 	(D)	if to the FCR, addressed to him at: 

  
 Eric D. Green, Esq. 
 Resolutions, LLC

 222 Berkeley Street, Suite 1060 
 Boston, Massachusetts 02116 
 Facsimile: (617) 556-9900 
  
 with copies (which will not constitute notice for purposes of this Agreement) to: 
  
 Young Conaway Stargatt & Taylor, LLP 
 The Brandywine Building 
 1000 West Street,
17th Floor 
 P.O. Box 391 
 Wilmington, Delaware 19801 
 Attention: James L. Patton, Jr., Esq. 
 Facsimile: (302) 571-1253 
  

	 	(E)	if to the Asbestos PI Trust, to the trustees of such trust at the address for such trustees as shall be specified in the Asbestos PI Trust Agreement (as defined in the Plan of
Reorganization). 

  
 Section 8.6
Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by and construed and enforced in accordance with the substantive laws of the State of Louisiana without regard to any conflicts of
law provisions thereof that would result in the application of the laws of any other jurisdiction. 
  
 Section 8.7 Exercise of Rights and Remedies. Except as this Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party hereto as a result of any breach or default hereunder by any other party hereto will impair any such right, power or remedy, nor will it be construed, deemed or interpreted as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring later; nor will any waiver of any single breach or default be construed, deemed or interpreted as a waiver of any other breach or default hereunder occurring before or after that
waiver. No right, remedy or election any term of this Agreement gives will be deemed exclusive, but each will be cumulative with all other rights, remedies and elections available at law or in equity. Anything in this agreement to the contrary
notwithstanding, the parties hereto acknowledge that in no event shall any breach by any of the B&W Entities party hereto of any of their covenants, agreements or other obligations hereunder to any of the MII Indemnified Parties, 
  

 21 

 
or any breach by any of the MII Indemnified Parties party hereto of any of their covenants, agreements or other obligations hereunder to any of the B&W
Entities, have any impact on the rights, remedies or obligations of the Asbestos PI Trust under this Agreement. 
  
 Section 8.8 Further Assurances. From and after the Effective Date, each party hereto shall use all reasonable efforts to take, or cause to be
taken, all appropriate action, do or cause to be done all things necessary under applicable laws and execute and deliver such documents and other papers as may be required to carry out the provisions of this Agreement and to consummate, perform and
make effective the settlement contemplated hereby. Without limiting the generality of the foregoing, on or after the Effective Date, (i) MII, MI and BWICO will, and will cause the other MII Entities to, execute and deliver such release
documents as any of the Chapter 11 Debtors may reasonably request, and (ii) the Chapter 11 Debtors will, and will cause the other B&W Entities to, execute and deliver such release documents as any of the MII Entities may reasonably request,
in each case in order to fully implement and effectuate the releases set forth in or contemplated by the provisions of Article V. 
  
 Section 8.9 Reformation and Severability. If any provision of this Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties hereto as expressed herein, and if such a modification is not possible, that provision will be severed from
this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby, it being intended by each party hereto that all the rights and privileges
of all parties hereto will be enforceable to the fullest extent permitted by applicable law. 
  
 Section 8.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which will be an original, but all of which together will constitute one and the same agreement. 
  

 22 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written:

  

			
	MCDERMOTT INTERNATIONAL, INC.
		
	By:	 	 /s/ John T. Nesser, III

	Name:	 	John T. Nesser, III
	Title:	 	Executive Vice President and General
	 	 	Counsel
	
	MCDERMOTT INCORPORATED
		
	By:	 	 /s/ John T. Nesser, III

	Name:	 	John T. Nesser, III
	Title:	 	Executive Vice President, General
	 	 	Counsel and Secretary
	
	BABCOCK & WILCOX INVESTMENT COMPANY
		
	By:	 	 /s/ John T. Nesser, III

	Name:	 	John T. Nesser, III
	Title:	 	Executive Vice President, General
	 	 	Counsel and Secretary
	
	THE BABCOCK & WILCOX COMPANY
		
	By:	 	 /s/ Harold L. Simmons, Jr.

	Name:	 	Harold L. Simmons, Jr.
	Title:	 	Vice President, Chief Restructuring
	 	 	Officer and Controller
	
	DIAMOND POWER INTERNATIONAL, INC.
		
	By:	 	 /s/ Harold L. Simmons, Jr.

	Name:	 	Harold L. Simmons, Jr.
	Title:	 	Chief Restructuring Executive

			
	AMERICON, INC.
		
	By:	 	 /s/ Harold L. Simmons, Jr.

	Name:	 	Harold L. Simmons, Jr.
	Title:	 	Chief Restructuring Executive & Controller
	
	BABCOCK & WILCOX CONSTRUCTION CO., INC.
		
	By:	 	 /s/ Harold L. Simmons, Jr.

	Name:	 	Harold L. Simmons, Jr.
	Title:	 	Chief Restructuring Executive & Controller
	
	THE ASBESTOS CLAIMANTS’ COMMITTEE
		
	By:	 	 /s/ Elihu Inselbuch

	Name:	 	Elihu Inselbuch
	Title:	 	Authorized Representative
	
	THE LEGAL REPRESENTATIVE FOR FUTURE ASBESTOS-RELATED CLAIMANTS
		
	By:	 	 /s/ Eric D. Green

	Name:	 	Eric D. Green
	Title:	 	FCR

			
	THE BABCOCK & WILCOX COMPANY ASBESTOS PI TRUST
		
	By:	 	 /s/    Victor Bussie

	 	 	Victor Bussie
	 	 	Trustee
		
	By:	 	 /s/    James J. McMonagle

	 	 	James J. McMonagle, Esq.
	 	 	Trustee
		
	By:	 	 /s/    Phillip A. Pahigian

	 	 	Phillip A. Pahigian, Esq.
	 	 	Trustee

 SCHEDULE 1.1(a) 
 DEBTOR-RELATED CONTINGENT LIABILITY ARRANGEMENTS
 February 22, 2006 
  

												
	 Instrument No.

	  	 Instrument Type

	  	 Instrument Issuer

	  	 Beneficiary

	  	Value

	  	 MII /MCD
Backing

	ASL-7420407-130BAW	  	Letter of Credit	  	Bank of America	  	Mitsubishi Heavy Industries	  	$	213,520.00	  	 
	ASL-7420396-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	3,250,000.00	  	 
	ASL-7420397-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	2,500,000.00	  	 
	ASL-7420398-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	2,000,000.00	  	 
	ASL-7420399-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	800,000.00	  	 
	ASL-7420400-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	1,300,000.00	  	 
	ASL-7420401-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	5,000,000.00	  	 
	ASL-7420402-130BAW	  	Letter of Credit	  	Bank of America	  	Cinergy Services, Inc.	  	$	4,000,000.00	  	 
	ASL-3014829-130BAW	  	Letter of Credit	  	Bank of America	  	GELCO/GE Capital Fleet Service	  	$	700,000.00	  	 
	ASL-3014901-130BAW	  	Letter of Credit	  	Bank of America	  	Black Hills Generation, Inc.	  	$	2,800,000.00	  	 
	ASL-3014902-130BAW	  	Letter of Credit	  	Bank of America	  	Kansas City Board of Public Utilities	  	$	504,995.00	  	 
	327336002	  	Letter of Credit	  	Calyon	  	Mitsui Babcock	  	$	55,930.60	  	 
	404136003	  	Letter of Credit	  	Calyon	  	Mitsubishi Heavy Industries	  	$	28,886.75	  	 
	403536008	  	Letter of Credit	  	Calyon	  	Korea Hydro & Nuclear Power	  	$	199,477.90	  	 
	321236018	  	Letter of Credit	  	Calyon	  	Turkish Electric Authority	  	$	4,984,313.00	  	 
	527136012	  	Letter of Credit	  	Calyon	  	Riley Power Inc	  	$	42,550.00	  	 
	530136004	  	Letter of Credit	  	Calyon	  	Black & Veatch Construction, Inc	  	$	247,824.21	  	 
	534036014	  	Letter of Credit	  	Calyon	  	China Electric Power	  	$	670,422.00	  	 
	60336006	  	Letter of Credit	  	Calyon	  	SCANA Services Inc	  	$	157,065.00	  	 
	226736024	  	Letter of Credit	  	Calyon	  	Tennesse Valley Authority	  	$	1,000,000.00	  	 
	010423IS699	  	Letter of Credit	  	Calyon	  	Federal Insurance	  	$	3,910,183.00	  	 
	010802IS804	  	Letter of Credit	  	Calyon	  	Bk of China/China Elect. Power	  	$	538,336.82	  	 
	604636019	  	Letter of Credit	  	Calyon	  	PSE&G Power Connecticut, LLC	  	$	189,640.00	  	 
	604736002	  	Letter of Credit	  	Calyon	  	Citicorp North America	  	$	36,328,946.73	  	 
	504736009	  	Letter of Credit	  	Calyon	  	Tri State Generation	  	$	1,245,470.23	  	 
	509836010	  	Letter of Credit	  	Calyon	  	Tri State Generation	  	$	1,377,497.12	  	 
	518936010	  	Letter of Credit	  	Calyon	  	IHI Inc.	  	$	69,265.90	  	 
	519236016	  	Letter of Credit	  	Calyon	  	Hitachi America, Ltd.	  	$	273,500.00	  	 
	520936019	  	Letter of Credit	  	Calyon	  	Plumbers and Steamfitters Local 136	  	$	200,000.00	  	 
	527136011	  	Letter of Credit	  	Calyon	  	Black Hills Generation, Inc.	  	$	1,200,000.00	  	 
	531136002	  	Letter of Credit	  	Calyon	  	Public Service of Colorado (Xcel Energy)	  	$	9,630,151.20	  	 
	531136003	  	Letter of Credit	  	Calyon	  	Public Service of Colorado (Xcel Energy)	  	$	12,521,698.80	  	 
	532236021	  	Letter of Credit	  	Calyon	  	Pacificorp	  	$	400,000.00	  	 
	534636002	  	Letter of Credit	  	Calyon	  	Harvard	  	$	218,226.00	  	 
	603736008	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	667,767.47	  	 
	603736010	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	667,767.47	  	 
	603736011	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	667,767.47	  	 
	603736013	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	685,036.80	  	 
	603736014	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	685,036.80	  	 
	603736015	  	Letter of Credit	  	Calyon	  	Valero Refining - Texas, L.P.	  	$	685,036.80	  	 
	400836011	  	Letter of Credit	  	Calyon	  	American Contractors Indemnity	  	$	551,870.00	  	 
	410636003	  	Letter of Credit	  	Calyon	  	Danske Bank	  	$	22,732,532.57	  	 
	412636007	  	Letter of Credit	  	Calyon	  	Danske Bank	  	$	6,306,399.00	  	 
	412636008	  	Letter of Credit	  	Calyon	  	Danske Bank	  	$	428,194.99	  	 
	603836001	  	Letter of Credit	  	Calyon	  	Hitachi America, Ltd.	  	$	3,312,325.60	  	 
	CPCS-221589	  	Letter of Credit	  	J P Morgan Chase	  	Detroit Edison Company	  	$	7,000,000.00	  	 
	CPCS-232116	  	Letter of Credit	  	J P Morgan Chase	  	Wisconsin Public Service Corporation	  	$	21,766,635.00	  	 
	CPCS-232118	  	Letter of Credit	  	J P Morgan Chase	  	Wisconsin Public Service Corporation	  	$	7,242,098.00	  	 
	SLT751119	  	Letter of Credit	  	J P Morgan Chase	  	New Brunswick Power	  	$	2,372,166.58	  	 
	SLT750585	  	Letter of Credit	  	J P Morgan Chase	  	China Electric Power	  	$	1,196,343.00	  	 
	SLT751135	  	Letter of Credit	  	J P Morgan Chase	  	Ontario Power Generation	  	$	878,580.21	  	 

												
	 Instrument No.

	  	 Instrument Type

	  	 Instrument Issuer

	  	 Beneficiary

	  	Value

	  	 MII /MCD
Backing

	SLT332835	  	Letter of Credit	  	J P Morgan Chase	  	Ontario Power Generation	  	$	878,580.21	  	 
	SLT751147	  	Letter of Credit	  	J P Morgan Chase	  	Progress Energy	  	$	6,000,000.00	  	 
	SLT751186	  	Letter of Credit	  	J P Morgan Chase	  	Commonwealth of Pennsylvania Bureau of Mining	  	$	56,500.00	  	 
	SLT751187	  	Letter of Credit	  	J P Morgan Chase	  	Commonwealth of Pennsylvania Bureau of Mining	  	$	1,100.00	  	 
	SLT751650	  	Letter of Credit	  	J P Morgan Chase	  	Ontario Power Generation	  	$	878,580.21	  	 
	SLT751651	  	Letter of Credit	  	J P Morgan Chase	  	Ontario Power Generation	  	$	878,580.21	  	 
	CPCS-200341	  	Letter of Credit	  	J P Morgan Chase	  	Israel Electric Corp	  	$	179,037.25	  	 
	CPCS-227446	  	Letter of Credit	  	J P Morgan Chase	  	Evergreen National Indemnity Co	  	$	1,271,361.00	  	 
	CPCS-228227	  	Letter of Credit	  	J P Morgan Chase	  	Wells Fargo Bank / Wyoming Department of Revenue	  	$	1,346,240.00	  	 
	CPCS-228234	  	Letter of Credit	  	J P Morgan Chase	  	Wells Fargo Bank / Wyoming Department of Revenue	  	$	566,684.00	  	 
	CPCS-232018	  	Letter of Credit	  	J P Morgan Chase	  	Progress Energy Carolinas	  	$	10,000,000.00	  	 
	CPCS-232693	  	Letter of Credit	  	J P Morgan Chase	  	Progress Energy Florida	  	$	6,000,000.00	  	 
	CPCS-647574	  	Letter of Credit	  	J P Morgan Chase	  	Carnet Services	  	$	105,429.63	  	 
	SLT410689	  	Letter of Credit	  	J P Morgan Chase	  	Mellon Bank / Pennsylvania DOT	  	$	10,000.00	  	 
	SLT410997	  	Letter of Credit	  	J P Morgan Chase	  	Canadian Chamber of Commerce	  	$	47,114.64	  	 
	SLT410998	  	Letter of Credit	  	J P Morgan Chase	  	Canadian Chamber of Commerce	  	$	187,781.80	  	 
	18101816-00-000	  	Letter of Credit	  	PNC	  	Pennslvania Economic Development Authority	  	$	4,853,635.68	  	 
	NZS562267	  	Letter of Credit	  	Wells Fargo	  	Wyoming Dept. of Revenue	  	$	1,346,240.00	  	 
	NZS562268	  	Letter of Credit	  	Wells Fargo	  	Wyoming Dept. of Revenue	  	$	566,684.00	  	 
						
	167771	  	Surety Bond	  	AIG	  	Tanjung Jati B - Sumitomo	  	$	115,544,000	  	YES
	81442186	  	Surety Bond	  	The Chubb Group	  	Duke Power	  	$	142,745,000	  	YES
	556500	  	Surety Bond	  	Evergreen Surety	  	Muscatine Power	  	$	260,000	  	 
	418	  	Surety Bond	  	AIG	  	I/S Sjaellandske Kraftvaerker - AVD straw	  	$	747,000	  	YES
	507	  	Surety Bond	  	AIG	  	Hobro Kommune	  	$	721,000	  	YES
	7001358	  	Surety Bond	  	AIG	  	Agra Birwelco Limited	  	$	673,000	  	YES
						
	80189191	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	80367826	  	Surety Bond	  	The Chubb Group	  	State of Ohio	  	$	3,925,000	  	YES
	80679257	  	Surety Bond	  	The Chubb Group	  	Iron Workers	  	$	10,000	  	YES
	80810146	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	2,000	  	YES
	80810175	  	Surety Bond	  	The Chubb Group	  	State of Alaska	  	$	10,000	  	YES
	80810176	  	Surety Bond	  	The Chubb Group	  	Construct. Ind. Com.	  	$	500	  	YES
	80831788	  	Surety Bond	  	The Chubb Group	  	State of Alaska	  	$	2,000	  	YES
	80897495	  	Surety Bond	  	The Chubb Group	  	State of Washington	  	$	12,000	  	YES
	81000120	  	Surety Bond	  	The Chubb Group	  	City of Mobile	  	$	5,000	  	YES
	81245756	  	Surety Bond	  	The Chubb Group	  	State of Arkansas	  	$	10,000	  	YES
	81245784	  	Surety Bond	  	The Chubb Group	  	State of Delaware	  	$	90,000	  	YES
	81442174	  	Surety Bond	  	The Chubb Group	  	ATA	  	$	26,000	  	 
	81442197	  	Surety Bond	  	The Chubb Group	  	US Customs	  	$	1,000,000	  	YES
	81101244	  	Surety Bond	  	The Chubb Group	  	State of Georgia	  	$	10,000	  	YES
	81101245	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	81101246	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	81101275	  	Surety Bond	  	The Chubb Group	  	State of Washington	  	$	12,000	  	YES
	81101197	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	3,000	  	YES
	81101198	  	Surety Bond	  	The Chubb Group	  	State of Ohio	  	$	250	  	YES
	81126563	  	Surety Bond	  	The Chubb Group	  	State of Alaska	  	$	10,000	  	YES
	81126573	  	Surety Bond	  	The Chubb Group	  	State of Minnesota	  	$	15,000	  	YES
	81126582	  	Surety Bond	  	The Chubb Group	  	State of New Mexico	  	$	5,000	  	YES
	81171801	  	Surety Bond	  	The Chubb Group	  	Intern. Union of Operating Eng.	  	$	25,000	  	YES

												
	 Instrument No.

	  	 Instrument Type

	  	 Instrument Issuer

	  	 Beneficiary

	  	Value

	  	 MII /MCD
Backing

	81171858	  	Surety Bond	  	The Chubb Group	  	Intern. Assoc. of Heat	  	$	20,000	  	YES
	81171867	  	Surety Bond	  	The Chubb Group	  	State of Arizona	  	$	15,000	  	YES
	81171869	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	20,000	  	YES
	81171873	  	Surety Bond	  	The Chubb Group	  	State of Arizona	  	$	10,000	  	YES
	81171894	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	81245745	  	Surety Bond	  	The Chubb Group	  	State of Iowa	  	$	50,000	  	YES
	81245746	  	Surety Bond	  	The Chubb Group	  	Pipefitter’s Local 597	  	$	10,000	  	YES
	81245749	  	Surety Bond	  	The Chubb Group	  	Union Local 226	  	$	4,000	  	YES
	81245755	  	Surety Bond	  	The Chubb Group	  	State of Arkansas	  	$	10,000	  	YES
	81245770	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	20,000	  	YES
	81245771	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	20,000	  	YES
	81404643	  	Surety Bond	  	The Chubb Group	  	Pipefitters Local 274	  	$	72,000	  	YES
	81404644	  	Surety Bond	  	The Chubb Group	  	Local 164	  	$	25,000	  	YES
	81404661	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	81442078	  	Surety Bond	  	The Chubb Group	  	State of Oregon	  	$	10,000	  	YES
	81442102	  	Surety Bond	  	The Chubb Group	  	City of Lorain	  	$	5,000	  	YES
	81442104	  	Surety Bond	  	The Chubb Group	  	City of Eastlake	  	$	10,000	  	YES
	81442129	  	Surety Bond	  	The Chubb Group	  	State of California	  	$	7,500	  	YES
	81442166	  	Surety Bond	  	The Chubb Group	  	City of Avon Lake, Ohio	  	$	5,000	  	YES
	81442175	  	Surety Bond	  	The Chubb Group	  	Clerk of Niagara County, NY	  	$	1,799,300	  	 
	81828660	  	Surety Bond	  	The Chubb Group	  	Local 825, Newark, NJ	  	$	25,000	  	YES
	81442192	  	Surety Bond	  	The Chubb Group	  	Painters Dist. #3. Kansas City	  	$	40,000	  	YES
	81828659	  	Surety Bond	  	The Chubb Group	  	Local Union 475, New Jersey	  	$	48,000	  	YES
	81497373	  	Surety Bond	  	The Chubb Group	  	Quebec Superior Court	  	$	67,900	  	YES
	58600630	  	Surety Bond	  	CAN	  	Ministry of Education of Ontario	  	$	69,643	  	 
	58598194	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	107,998	  	 
	58598198	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	460,417	  	 
	58598200	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	28,155	  	 
	58598201	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	2,633	  	 
	58600610	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	1,077	  	 
	58600626	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	14,185	  	 
	58600639	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	5,408	  	 
	58604286	  	Surety Bond	  	CAN	  	ATA Carnet Bond-Korea	  	$	121,561	  	YES
	81442132	  	Surety Bond	  	The Chubb Group	  	State of North Dakota	  	$	500	  	YES
	81442152	  	Surety Bond	  	The Chubb Group	  	State of Nevada	  	$	50,000	  	YES
	81828658	  	Surety Bond	  	The Chubb Group	  	Cambria Township, PA	  	$	14,375	  	YES
	81442103	  	Surety Bond	  	The Chubb Group	  	State of Oregon	  	$	10,000	  	YES
						
	 	  	PARENT GUARANTEE	  	McDermott International	  	Birka Vesta	  	$	900,000	  	 

 SCHEDULE 1.1(b) 
  
 MII Indemnified Parties 
  

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 B&W de Panama, Inc.
	  	100	  	Panama
	 B&W Federal Services, Inc.
	  	100	  	Delaware
	 B&W Hanford Company
	  	100	  	Delaware
	 B&W Protec, Inc.
	  	100	  	Delaware
	 B&W Services, Inc.
	  	100	  	Delaware
	 B&W SOFC G.P., Inc.
	  	100	  	Delaware
	 B&W SOFC L.P., Inc.
	  	100	  	Delaware
	 Babcock & Wilcox Asia Investment Co., Inc.
	  	100	  	Panama
	 Babcock & Wilcox Asia Limited
	  	100	  	Hong Kong
	 Babcock & Wilcox Beijing Company, Ltd.
	  	50	  	China
	 Babcock & Wilcox China Investment Co., Inc.
	  	100	  	Panama
	 Babcock & Wilcox Finance, Inc.
	  	100	  	Delaware
	 Babcock & Wilcox HRSG Company
	  	100	  	Delaware
	 Babcock & Wilcox Idaho, Inc.
	  	100	  	Delaware
	 Babcock & Wilcox International Investments Co., Inc.
	  	100	  	Panama
	 Babcock & Wilcox Investment Company
	  	100	  	Delaware
	 Babcock & Wilcox Investment Company
	  	100	  	Louisiana
	 Babcock & Wilcox of Ohio, Inc.
	  	100	  	Delaware
	 Babcock & Wilcox-ST Company
	  	100	  	Delaware
	 Barmada McDermott (L) Limited
	  	30	  	Malaysia
	 Barmada McDermott Sdn. Bhd.
	  	30	  	Malaysia
	 Bechtel B&W Idaho, LLC
	  	33	  	Delaware
	 Bechtel BWXT Idaho, LLC
	  	33	  	Delaware
	 Boudin Insurance Company, Ltd
	  	100	  	Bermuda
	 Brick Insurance Company, Ltd.
	  	100	  	Bermuda
	 BWX Technologies, Inc.
	  	100	  	Delaware
	 BWXT Federal Services, Inc.
	  	100	  	Delaware
	 BWXT Hanford Company
	  	100	  	Delaware
	 BWXT of Idaho, Inc.
	  	100	  	Delaware
	 BWXT of Ohio, Inc.
	  	100	  	Delaware
	 BWXT Pantex, L.L.C.
	  	59	  	Delaware
	 BWXT Protec, Inc.
	  	100	  	Delaware
	 BWXT Savannah River Company
	  	100	  	Delaware
	 BWXT Services, Inc.
	  	100	  	Delaware
	 BWXT Washington, Inc.
	  	100	  	Delaware
	 BWXT Y-12, L.L.C.
	  	51	  	Delaware
	 Caspian Offshore Fabricators LLC
	  	50	  	Azerbaijan Republic
	 Cayenne Insurance Company, Ltd.
	  	100	  	Bermuda
	 Ceramatec G.P., Inc.
	  	100	  	Utah
	 Ceramatec SOFC, Inc.
	  	100	  	Utah
	 Chartering Company (Singapore) Pte. Ltd.
	  	100	  	Singapore

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 Columbia Basin Ventures, LLC
	  	18	  	Delaware
	 Construcciones Maritimas Mexicanas, S.A. de C.V.
	  	49	  	Mexico
	 Contratista Costaneros, S.A.
	  	100	  	Panama
	 Creole Insurance Company, Ltd.
	  	100	  	Bermuda
	 CTR Solutions, LLC
	  	48	  	Delaware
	 Deep Oil Technology, Inc.
	  	50	  	California
	 Deepwater Marine Technology, L.L.C.
	  	50	  	Cayman Islands
	 Delta Catalytic (Holland) B.V.
	  	100	  	Netherlands
	 Delta Hudson Engineering Corporation
	  	100	  	Texas
	 Delta Hudson International, Inc.
	  	100	  	Panama
	 DHEC Corporation
	  	100	  	Texas
	 Diamond Power (Australia) Pty. Limited
	  	50	  	Australia
	 Diamond Power Hubei Machine Company, Ltd.
	  	50	  	China
	 Diamond Power Specialty Pty. Limited
	  	50	  	Australia
	 DynMcDermott Petroleum Operations Company
	  	30	  	Louisiana
	 Eastern Marine Services, Inc.
	  	100	  	Panama
	 Ebensburg Investors Limited Partnership*
	  	1	  	Pennsylvania
	 Ebensburg Power Company*
	  	50	  	Pennsylvania
	 First Emirates Trading Corporation
	  	100	  	United Arab Emirates
	 FloaTEC, LLC
	  	50	  	Delaware
	 Global Energy -McDermott Limited
	  	100	  	British Virgin Islands
	 Greenbank Terotech Pty. Limited
	  	50	  	Australia
	 Gumbo Insurance Company, Ltd.
	  	100	  	Bermuda
	 Halley & Mellowes Pty. Ltd.
	  	50	  	Australia
	 Honore Insurance Company, Ltd.
	  	100	  	Bermuda
	 Hudson Engineering (Canada), Ltd.
	  	100	  	Canada
	 Hudson Engineering and Project Management Corporation
	  	100	  	Texas
	 Hudson Engineering Company, Inc.
	  	100	  	Delaware
	 Hudson Engineering Corporation
	  	100	  	Texas
	 Hudson Engineering International, Inc.
	  	100	  	Panama
	 Hydro Marine Services, Inc.
	  	100	  	Panama
	 Initec, Astano y McDermott International Inc., S.A.
	  	50	  	Spain
	 International Vessels Ltd.
	  	100	  	Mauritius
	 J. Ray McDermott & Co., Inc.
	  	100	  	Delaware
	 J. Ray McDermott (Aust.) Holding Pty. Limited
	  	100	  	Australia
	 J. Ray McDermott (Nigeria) Ltd.
	  	100	  	Nigeria
	 J. Ray McDermott (U.S.) Diving, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Asia Pacific Pte. Ltd.
	  	100	  	Singapore
	 J. Ray McDermott Contractors, Inc.
	  	100	  	Panama
	 J. Ray McDermott de Mexico, S.A. de C. V.
	  	100	  	Mexico
	 J. Ray McDermott Diving International, Inc.
	  	100	  	Panama
	 J. Ray McDermott Eastern Hemisphere Limited
	  	100	  	Mauritius
	 J. Ray McDermott Engineering Holdings, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Engineering, LLC
	  	100	  	Texas
	 J. Ray McDermott Far East, Inc.
	  	100	  	Panama
	 J. Ray McDermott Gulf Contractors, Inc.
	  	100	  	Texas

	*	See last page of this Schedule for footnote. 

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 J. Ray McDermott Holdings, Inc.
	  	100	  	Delaware
	 J. Ray McDermott International Services Limited
	  	100	  	United Kingdom
	 J. Ray McDermott International Vessels, Ltd.
	  	100	  	Cayman Islands
	 J. Ray McDermott International, Inc.
	  	100	  	Panama
	 J. Ray McDermott Investments B.V.
	  	100	  	Netherlands
	 J. Ray McDermott Middle East (Indian Ocean), Ltd.
	  	100	  	Mauritius
	 J. Ray McDermott Middle East, Inc.
	  	100	  	Panama
	 J. Ray McDermott Newfoundland, Ltd.
	  	100	  	Newfoundland
	 J. Ray McDermott Solutions, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Spars, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Technology, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Underwater Services, Inc.
	  	100	  	Delaware
	 J. Ray McDermott Underwater Services, Inc.
	  	100	  	Panama
	 J. Ray McDermott Venture Holdings, Inc.
	  	100	  	Panama
	 J. Ray McDermott West Africa Holdings, Inc.
	  	100	  	Delaware
	 J. Ray McDermott West Africa, Inc.
	  	100	  	Delaware
	 J. Ray McDermott, Inc.
	  	100	  	Delaware
	 J. Ray McDermott, S.A.
	  	100	  	Panama
	 Lagniappe Insurance Company, Ltd.
	  	100	  	Bermuda
	 Macshelf Ltd
	  	50	  	United Kingdom
	 Malmac Sdn. Bhd.
	  	55	  	Malaysia
	 Marine Contractors, Inc.
	  	100	  	Panama
	 Marine Servicos de Construcao Ltda.
	  	100	  	Brazil
	 McDermott (Abu Dhabi) Operating Company, Inc.
	  	100	  	Panama
	 McDermott (Dubai) Operating Company, Inc.
	  	100	  	Panama
	 McDermott (Malaysia) Sendirian Berhad
	  	100	  	Malaysia
	 McDermott Abu Dhabi Offshore Construction Company
	  	49	  	United Arab Emirates
	 McDermott Amur, Inc.
	  	100	  	Panama
	 McDermott APG Services Limited
	  	50	  	United Kingdom
	 McDermott Arabia Company Limited
	  	49	  	Saudi Arabia
	 McDermott Azerbaijan Marine Construction, Inc.
	  	80	  	Panama
	 McDermott Azerbaijan Pipelines, Inc.
	  	100	  	Panama
	 McDermott Azerbaijan, Inc.
	  	100	  	Panama
	 McDermott Caspian Contractors, Inc.
	  	100	  	Panama
	 McDermott Cayman Ltd.
	  	100	  	Cayman Islands
	 McDermott Central & Eastern Europe, Inc.
	  	100	  	Panama
	 McDermott Employee Relief Fund
	  	100	  	Texas
	 McDermott Engineering Houston, LLC
	  	100	  	Texas
	 McDermott Engineering London, Inc.
	  	100	  	Panama
	 McDermott Engineering Pte. Ltd.
	  	100	  	Singapore
	 McDermott Far East, Inc.
	  	100	  	Panama
	 McDermott Gulf Operating Company, Inc.
	  	100	  	Panama
	 McDermott Holdings (U.K.) Limited
	  	100	  	United Kingdom
	 McDermott Incorporated
	  	100	  	Delaware
	 McDermott Industries (Aust.) Pty. Limited
	  	100	  	Australia
	 McDermott International Asset Management, Ltd.
	  	100	  	Bahamas
	 McDermott International B.V.
	  	100	  	Netherlands
	 McDermott International Beijing, Inc.
	  	100	  	Panama

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 McDermott International Engineering & Construction Co., Ltd.
	  	100	  	Cayman Islands
	 McDermott International Finance Co., Inc.
	  	100	  	Panama
	 McDermott International Investments Co., Inc.
	  	100	  	Panama
	 McDermott International Marine Investments N.V.
	  	100	  	Netherlands Antilles
	 McDermott International Marketing, Inc. (incorporated 12/30/94)
	  	100	  	Panama
	 McDermott International Marketing, Inc. (incorporated 11/14/95)
	  	100	  	Panama
	 McDermott International Project Management, Inc.
	  	100	  	Panama
	 McDermott International Trading (Holland 3) B.V.
	  	100	  	Netherlands
	 McDermott International Trading (Holland1) B.V.
	  	100	  	Netherlands
	 McDermott International Trading Co., Inc.
	  	100	  	Panama
	 McDermott Marine Construction Limited
	  	100	  	United Kingdom
	 McDermott Marine UK Limited
	  	100	  	United Kingdom
	 McDermott Offshore Services Company, Inc.
	  	100	  	Panama
	 McDermott Old JV Office, Inc.
	  	100	  	Panama
	 McDermott Overseas Investment Co. N.V.
	  	100	  	Netherlands Antilles
	 McDermott Overseas, Inc.
	  	100	  	Panama
	 McDermott Sakhalin, Inc.
	  	100	  	Panama
	 McDermott Servicos de Construcao, Ltda.
	  	100	  	Brazil
	 McDermott Shipbuilding, Inc.
	  	100	  	Delaware
	 McDermott South East Asia Pte. Ltd.
	  	100	  	Singapore
	 McDermott South East Asia Pte. Ltd.
	  	100	  	Singapore
	 McDermott Submarine Cable Systems Limited
	  	79	  	United Kingdom
	 McDermott Technology, Inc.
	  	100	  	Delaware
	 McDermott Trade Corporation
	  	100	  	Delaware
	 McDermott Venmac 4, Inc.
	  	100	  	Panama
	 McDermott West Indies Company
	  	100	  	United Arab Emirates
	 McDermott-ETPM East (Mauritius) Ltd.
	  	100	  	Mauritius
	 McDermott-ETPM East, Inc.
	  	100	  	Panama
	 McDermott-ETPM Far East, Inc.
	  	100	  	Panama
	 McDermott-ETPM, Inc.
	  	100	  	Panama
	 McNeth B.V.
	  	100	  	Netherlands
	 Menck B.V.
	  	100	  	Netherlands
	 Menck Holdings B.V.
	  	100	  	Netherlands
	 Mentor Engineering Consultants Limited
	  	100	  	United Kingdom
	 Mentor Engineering, Inc.
	  	100	  	Delaware
	 Mentor Subsea Technology Services, Inc.
	  	100	  	Delaware
	 MIMCO, Inc.
	  	100	  	Panama
	 Nooter/Eriksen -Babcock & Wilcox, L.L.C.
	  	50	  	Missouri
	 North Atlantic Vessel, Inc.
	  	100	  	Panama
	 Northern Marine Services, Inc.
	  	100	  	Panama
	 Oak Ridge Security Associates, L.L.C.
	  	49	  	Delaware
	 Oceanic Red Sea Company
	  	100	  	United Arab Emirates
	 Offshore Angola, Ltd.
	  	100	  	Cayman Islands
	 Offshore Hyundai International, Ltd.
	  	50	  	Cayman Islands
	 Offshore Pipelines Far East Limited
	  	100	  	Vanuatu
	 Offshore Pipelines International Gulf E.C.
	  	100	  	Bahrain
	 Offshore Pipelines International, Ltd.
	  	100	  	Cayman Islands
	 Offshore Pipelines Nigeria Limited
	  	60	  	Nigeria

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 Offshore Pipelines Sdn. Bhd.
	  	100	  	Malaysia
	 Offshore Pipelines, Inc.
	  	100	  	Delaware
	 Offshore Power Generation Ltd.
	  	100	  	Cayman Islands
	 Offshore Production & Salvage, Inc.
	  	100	  	Delaware
	 Offshore Production Vessels, Ltd.
	  	100	  	Cayman Islands
	 OPI International Vessels, Ltd.
	  	100	  	Cayman Islands
	 OPI International, Inc.
	  	100	  	Delaware
	 OPI Vessels, Inc.
	  	100	  	Delaware
	 OPMI, E.C.
	  	100	  	Bahrain
	 OPMI, Ltd.
	  	100	  	Cayman Islands
	 P. T. Armandi Pranaupaya
	  	100	  	Indonesia
	 P. T. Babcock & Wilcox Indonesia
	  	49	  	Indonesia
	 P. T. Bataves Fabricators
	  	80	  	Indonesia
	 P. T. Jay Ray
	  	100	  	Indonesia
	 P. T. McDermott Indonesia
	  	49	  	Indonesia
	 Pirogue Insurance Company, Ltd.
	  	100	  	Bermuda
	 POGC Sensor Technology Pty. Limited
	  	50	  	Australia
	 Power Systems Sunnyside Operations GP, Inc.*
	  	100	  	Delaware
	 Power Systems Sunnyside Operations LP, Inc.*
	  	100	  	Delaware
	 PT. J. Ray McDermott Indonesia
	  	100	  	Indonesia
	 Rocky Flats Technical Associates, Inc.
	  	33	  	Colorado
	 Sabine River Realty, Inc.
	  	100	  	Louisiana
	 Safe Sites of Colorado, L.L.C.
	  	35	  	Delaware
	 Saudi OPMI Company Limited
	  	40	  	Saudi Arabia
	 SOFCO Holdings LLC
	  	100	  	Delaware
	 SOFCo L. P.
	  	100	  	Delaware
	 SOFCo-EFS Holdings LLC
	  	100	  	Delaware
	 Spars International Inc.
	  	50	  	Texas
	 SparTEC, Inc.
	  	100	  	Delaware
	 Tallares Navales del Golfo, S.A. de C.V.
	  	95	  	Mexico
	 TL Marine Sdn. Bhd.
	  	49	  	Malaysia
	 Trispec Technical Services Ltd.
	  	50	  	Canada
	 Valveco Industries Pty. Ltd.
	  	50	  	Australia
	 Varsy International N.V.
	  	100	  	Netherlands Antilles
	 Wagley, Inc.
	  	100	  	Alaska
	 Washington Group BWXT Operating Services, LLC
	  	50	  	Delaware
	 WD 140 Platform LLC
	  	45	  	Louisiana
	 Williams-McWilliams Construction Co., Inc.
	  	100	  	Delaware
	 145012 British Columbia Ltd.
	  	100	  	Canada
	 2532-9673 Quebec Inc.
	  	100	  	Canada
	 349114 Alberta Ltd.
	  	100	  	Canada
	 418718 Alberta Ltd.
	  	100	  	Canada
	 A. M. Lockett & Co., Limited*
	  	100	  	Louisiana
	 Amcermet Corporation*
	  	100	  	North Carolina
	 Ash Acquisition Company*
	  	100	  	Delaware
	 B&W Clarion, Inc.*
	  	100	  	Delaware
	 B&W Ebensburg Pa., Inc.*
	  	100	  	Pennsylvania
	 B&W Energy Investments, Inc.
	  	100	  	Delaware

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 B&W Fort Worth Power, Inc.*
	  	100	  	Delaware
	 B&W Fuel, Inc.
	  	100	  	Delaware
	 B&W North Branch G.P., Inc.
	  	100	  	Delaware
	 B&W North Branch L.P., Inc.
	  	100	  	Delaware
	 B&W Nuclear, Inc.
	  	100	  	Delaware
	 B&W Saba, Inc.*
	  	100	  	Delaware
	 B&W Triso Corporation
	  	100	  	Delaware
	 B&W Tubular Products Limited*
	  	100	  	Canada
	 B.C. Bridge & Dredging Co. Ltd.
	  	100	  	Canada
	 Babcock & Wilcox (Cyprus) Limited
	  	100	  	Cyprus
	 Babcock & Wilcox Canada Leasing Ltd.*
	  	100	  	Canada
	 Babcock & Wilcox General Contracting Company*
	  	100	  	Delaware
	 Babcock & Wilcox Government Services Company*
	  	100	  	Delaware
	 Babcock & Wilcox Industries Ltd.*
	  	100	  	Canada
	 Babcock & Wilcox International Sales Corporation*
	  	100	  	Louisiana
	 Babcock & Wilcox International Sales Corporation*
	  	100	  	Delaware
	 Babcock & Wilcox Jonesboro Power, Inc.*
	  	100	  	Delaware
	 Babcock & Wilcox Refractories Limited*
	  	100	  	Canada
	 Babcock & Wilcox Services, Inc.*
	  	100	  	Delaware
	 Babcock & Wilcox Tracy Power, Inc.
	  	100	  	Delaware
	 Babcock & Wilcox Victorville Power, Inc.*
	  	100	  	Delaware
	 Babcock PFBC, Inc.*
	  	100	  	Delaware
	 Babcock Southwest Construction Corporation*
	  	100	  	Delaware
	 Badya Builders, Inc.
	  	100	  	Panama
	 Bailey Meter Company*
	  	100	  	Massachusetts
	 Bailey Meter Company Limited*
	  	100	  	Canada
	 Bailey Meter GmbH*
	  	100	  	Germany
	 C.C. Moore & Company Engineers*
	  	100	  	California
	 Chemtain Corporation
	  	100	  	Texas
	 Clarion Energy, Inc.*
	  	100	  	Delaware
	 Constructora Tropical, S.A.
	  	100	  	Mexico
	 Control Components France*
	  	100	  	France
	 Control Components Italy S.R.L.*
	  	100	  	Italy
	 Control Components, Inc.*
	  	100	  	Delaware
	 Control Components, Inc.*
	  	100	  	California
	 Delta Birwelco, Inc.
	  	100	  	Delaware
	 Delta Catalytic Environmental Services Ltd.
	  	100	  	Canada
	 Delta Catalytic International Corp.
	  	100	  	Canada
	 Delta Hudson Government Services, Inc.
	  	100	  	Delaware
	 Delta Projects (Eastern) Limited
	  	100	  	Canada
	 Delta Serv-Tech Ltd.
	  	100	  	Canada
	 Detroit Broach & Machine Corporation*
	  	100	  	Michigan
	 Diamond Blower Company Limited*
	  	100	  	United Kingdom
	 Diamond Canapower Ltd.*
	  	100	  	Canada
	 Diamond Power Korea Inc.
	  	100	  	Korea
	 Diamond Power Specialty (Japan) Ltd.*
	  	100	  	Japan
	 Diamond Power Specialty Corporation*
	  	100	  	Delaware
	 Diamond Power Specialty Corporation*
	  	100	  	Ohio

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 Diamond Power Specialty GmbH*
	  	100	  	Germany
	 ‘Dick’ Evans, Inc.
	  	100	  	Louisiana
	 Diescher Tube Mills, Inc.*
	  	100	  	Delaware
	 Ebensburg Energy, Inc.*
	  	100	  	Delaware
	 EPC Business Trust*
	  	100	  	Pennsylvania
	 Ferry-Diamond Engineering Company Limited*
	  	100	  	United Kingdom
	 Globe Steel Tubes Corporation*
	  	100	  	Wisconsin
	 Greer Land Co.*
	  	100	  	South Carolina
	 Harvey Lumber & Supply Company, Inc.
	  	100	  	Louisiana
	 Heavy Lift Chartering, Inc.
	  	100	  	Panama
	 Holmes Insulations Limited*
	  	100	  	Canada
	 Hudson Engineering (Australia) Ltd.
	  	100	  	Delaware
	 Hudson Pan American Corporation
	  	100	  	Delaware
	 Hudson Products Aktiebolag
	  	100	  	Sweden
	 Hychem Constructors, Inc.
	  	100	  	Texas
	 Industrial Tank & Tower Co., Inc.
	  	100	  	Louisiana
	 Ingenieria Petrolera Maritima, S.A. de C.V.
	  	100	  	Mexico
	 International Disarmament Corporation
	  	100	  	Delaware
	 Iranian Marine Contractors, Inc.
	  	100	  	Panama
	 J. Ray McDermott (U.K.), Inc.
	  	100	  	Panama
	 J. Ray McDermott (Venezuela), C.A.
	  	100	  	Venezuela
	 J. Ray McDermott Arctic Ltd.
	  	100	  	Alberta
	 J. Ray McDermott International Services (No. 1) Limited
	  	100	  	United Kingdom
	 J. Ray McDermott London, Ltd.
	  	100	  	United Kingdom
	 J. Ray McDermott Marine Construction AS
	  	100	  	Norway
	 J. Ray McDermott Offshore Chartering (U.S.), Inc.
	  	100	  	Delaware
	 J. Ray McDermott Venture Holdings (U.S.), Inc.
	  	100	  	Delaware
	 Jaramac Associated Services, Ltd.
	  	100	  	United Kingdom
	 Jaramac Petroleum (U.K.) Limited
	  	100	  	United Kingdom
	 Khafji Contractors, Inc.
	  	100	  	Panama
	 Khor Contractors, Inc.
	  	100	  	Panama
	 McAntille, N.V.
	  	100	  	Netherlands Antilles
	 McDermott de Mexico, S.A. de C.V.
	  	100	  	Mexico
	 McDermott Denmark ApS
	  	100	  	Denmark
	 McDermott Energy Services, Inc.
	  	100	  	Denmark
	 McDermott Engineers & Constructors (USA) Inc.
	  	100	  	Texas
	 McDermott Enterprises France, S.A.
	  	100	  	France
	 McDermott Europe Marine Services, Ltd.
	  	100	  	United Kingdom
	 McDermott Heat Transfer Company*
	  	100	  	Delaware
	 McDermott Hudson S.A.R.L.
	  	100	  	France
	 McDermott Industries, Inc.
	  	100	  	Delaware
	 McDermott Inland Services, Inc.
	  	100	  	Delaware
	 McDermott International (Deutschland) GmbH
	  	100	  	Germany
	 McDermott International Aviation Co., Inc.
	  	100	  	Delaware
	 McDermott International Aviation, Inc.
	  	100	  	Delaware
	 McDermott International Engineering Investment N.V.
	  	100	  	Netherlands Antilles
	 McDermott International General Services, Inc.
	  	100	  	Panama
	 McDermott International Marine Services, Inc.
	  	100	  	Panama

					
	 Name

	  	% Owned

	  	Jurisdiction of
Organization

	 McDermott International Trading Company AG
	  	100	  	Switzerland
	 McDermott Marketing Services, Inc.
	  	100	  	Delaware
	 McDermott Neutral Zone, Inc.
	  	100	  	Panama
	 McDermott Norway, Inc.
	  	100	  	Delaware
	 McDermott Petroleum (Iran), Inc.
	  	100	  	Delaware
	 McDermott Productos Industriales de Mexico, S.A. de C.V.*
	  	100	  	Mexico
	 McDermott Project Management, Inc.
	  	100	  	Delaware
	 McDermott Singapore Pte. Ltd.
	  	100	  	Singapore
	 McDermott Submarine Cable Ltd.
	  	100	  	United Kingdom
	 McDermott Transition Co., Inc.
	  	100	  	Delaware
	 McDermott UAR, Inc.
	  	100	  	Panama
	 McDermott-ETPM East B.V.
	  	100	  	Netherlands
	 McDermott-ETPM East N.V.
	  	100	  	Netherlands Antilles
	 MIT (Hong Kong) Trading Limited
	  	100	  	Hong Kong
	 National Drill & Manufacturing Co.*
	  	100	  	West Virginia
	 National Ecology (Alabama) Incorporated*
	  	100	  	Delaware
	 National Ecology (Utah) Incorporated*
	  	100	  	Delaware
	 North Branch Power Company L.P.
	  	100	  	Delaware
	 Nuclear Materials and Equipment Corporation*
	  	100	  	Delaware
	 Offshore Petroleum Divers, Inc.
	  	100	  	Delaware
	 Offshore Pipelines (Mauritius) Ltd.
	  	100	  	Mauritius
	 OPI Offshore Netherlands Holding B.V.
	  	100	  	Netherlands
	 OPI Sales & Service Corporation
	  	100	  	Barbados
	 OPI Towing & Supply, L.L.C.
	  	100	  	Louisiana
	 Paradigm Constructors Ltd.
	  	100	  	Alberta
	 Personal Administrativo de Vera Cruz, S.A. de C.V.
	  	100	  	Mexico
	 Personal Ejecutivo de Veracruz, S.A. de C.V.
	  	100	  	Mexico
	 Piedmont Tool Machine Company*
	  	100	  	South Carolina
	 Productos de Caolin, Inc.*
	  	100	  	Delaware
	 PSO Caribbean, Inc.*
	  	100	  	Delaware
	 Samburg Holdings, Inc.
	  	100	  	Texas
	 Sharman, Allen, Gay & Taylor, S.A.
	  	100	  	Panama
	 Sunland Construction Co., Inc.*
	  	100	  	Delaware
	 The Evelyn Kay Company
	  	100	  	Delaware
	 The Roger Thomas Company
	  	100	  	Delaware
	 The Rosalie E. Company
	  	100	  	Delaware
	 The Walter E. Company
	  	100	  	Delaware
	 W. F. and John Barnes Company*
	  	100	  	Illinois

	*	These Entities are listed as MII Indemnified Parties only for purposes of Section 3.2(a) of the Non-Debtor Affiliate Settlement Agreement. 

 Exhibit A 
  

As provided in Section 6 of this Promissory Note (this “Note”), this Note and the indebtedness evidenced hereby are subject to the setoff and payment
obligation reduction provisions set forth in Sections 7.1 and 7.2 of the within-referenced Settlement Agreement. The holder of this Note, by its acceptance hereof, agrees to be bound by the provisions of Sections 7.1 and 7.2 of such Settlement
Agreement. 
  
 Except as provided in Section 9 of this Note, neither
this Note nor any interest herein may be assigned without the prior written consent of the maker hereof, which consent may be withheld in the sole discretion of the maker hereof. 
  
 This Note has not been registered under the Securities Act of 1933 and may be sold or otherwise transferred only if the holder hereof
complies with that law and other applicable securities laws. 
  
 PROMISSORY NOTE 
  

			
	$250,000,000.00	  	February 22, 2006
	 	  	New Orleans, Louisiana

  
 FOR VALUE RECEIVED,
The Babcock & Wilcox Company, a Delaware corporation (herein referred to as the “Maker”), hereby promises and agrees to pay to the order of The Babcock & Wilcox Company Asbestos PI Trust (the “Holder”) the
principal amount of TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000), together with interest on the unpaid principal sum from (and including) December 1, 2006 until (but excluding) the Maturity Date (as hereinafter defined), at the rate of
seven percent (7.0%) per annum as hereinafter provided, in each case subject to the terms and conditions hereof, including the provisions of Section 1(b). Interest hereunder shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months. References in this Promissory Note (this “Note”) to the “Settlement Agreement” mean that certain Settlement Agreement made as of February 21, 2006 by and among the Maker, the Holder, McDermott
International, Inc., a Panamanian corporation of which the Maker is an indirect, wholly owned subsidiary (“MII”), McDermott Incorporated, a Delaware corporation and a direct, wholly owned subsidiary of MII (“MI”),
Babcock & Wilcox Investment Company, a Delaware corporation and a direct, wholly owned subsidiary of MI (“BWICO”), Diamond Power International, Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Maker,
Americon, Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Maker (“Americon”), Babcock & Wilcox Construction Co., Inc., a Delaware corporation and a direct, wholly owned subsidiary of Americon, the
Asbestos Claimants Committee referred to therein, the Legal Representative for Future Asbestos-Related Claimants referred to therein, and the Apollo/Parks Township Trust referred to therein. 
  

	 	1.	Payment Obligations. 

  

	 	(a)	 Principal and Interest. Subject to Section 1(b), the principal amount of this Note shall be payable in five equal annual installments of $50,000,000
each, commencing on December 1, 2007 and continuing on each anniversary thereof through and including December 1, 2011 (the “Maturity Date”), at which time the remaining unpaid principal amount of 

	 	 
this Note shall be paid in full. Each such payment date, including the Maturity Date, is referred to herein as a “Scheduled Principal Payment
Date.” Subject to Section 1(b), interest on the unpaid principal amount of this Note shall begin to accrue on December 1, 2006 and shall be payable on each June 1 and December 1 thereafter through the Maturity Date (each, an
“Interest Payment Date”), in each case to the extent interest has accrued from (and including) the date of the then most recent prior payment of interest to (but excluding) such Interest Payment Date. Payments of principal and interest
shall be made in lawful money of the United States of America, by (i) check or (ii) wire transfer of immediately available funds to such bank account of the Holder as the Holder may designate from time to time by at least thirty
(30) days’ prior written notice to the Maker. Any payment (excluding any prepayment) on or in respect of this Note shall be applied first to accrued but unpaid interest and then to the principal balance hereof. The unpaid principal may, at
the option of the Maker, be prepaid, in whole or in part, at any time without premium or penalty, through the payment of an amount equal to 100% of the principal amount being prepaid, together with all accrued and unpaid interest on this Note to
(but excluding) the date of the prepayment. At such time as this Note is paid or prepaid in full, it shall be surrendered to the Maker and cancelled and shall not be reissued. Anything in this Note to the contrary notwithstanding, any payment that
is due on a date other than a Business Day (as hereinafter defined) shall be made on the next succeeding Business Day (and such extension of time shall not be included in the computation of interest). As used in this Note, the term “Business
Day” means any day other than a Saturday, a Sunday, or a day on which commercial banks in New York City are required or authorized by law to be closed. 

  

	 	(b)	Payment Obligations Condition Precedent. Except for the $25,000,000 payment described in this Section 1(b), payment obligations under this Note shall only arise if the
U.S. federal legislation designated (as of the date of this Note) as Senate Bill 852 (also referred to as the “Fairness in Asbestos Injury Resolution Act” or the “FAIR Act”), or any other U.S. federal legislation designed, in
whole or in part, to resolve asbestos-related personal injury claims through the implementation of a national trust (any such legislation, including the FAIR Act, being referred to herein as “Asbestos Resolution Legislation”), has not been
enacted and become law on or before November 30, 2006 (the “Payment Obligations Condition Precedent”); provided, however, that: 

  

	 	(i)	 if Asbestos Resolution Legislation is enacted and becomes law on or before November 30, 2006 and is not subject to a legal proceeding as of January 31,
2007 which challenges the constitutionality of such Asbestos Resolution Legislation (any such proceeding being a “Challenge Proceeding”), the Payment Obligations Condition Precedent shall be deemed not to have been 

  

 2 

	 	 
satisfied, the only payment to be made under this Note shall be $25,000,000 (which payment shall be made by the Maker on the first Scheduled Principal
Payment Date), the covenants set forth in Section 2 shall terminate, the Guaranties (as hereinafter defined) shall terminate, and this Note shall be deemed paid in full and cancelled automatically pursuant to its terms, no interest shall be
deemed to have accrued hereunder, the Pledge Agreement shall terminate, and the Collateral (as defined in Section 1(c)) shall be released and returned to BWICO free and clear of any security interest (at no cost or expense to the Maker or
either Guarantor (as hereinafter defined)) as promptly as practicable; and 

  

	 	(ii)	if Asbestos Resolution Legislation is enacted and becomes law on or before November 30, 2006, but is subject to a Challenge Proceeding as of January 31, 2007, the Payment
Obligations Condition Precedent shall be deemed not to have been satisfied and any payments under this Note (other than a payment of principal in the amount of $25,000,000 to be made on December 1, 2007) shall be suspended (any period of
suspension as provided in this Section 1(b)(ii) being a “Suspension Period”) until either: 

  

	 	(A)	 there has been a final, non-appealable judicial decision with respect to such Challenge Proceeding to the effect that the Asbestos Resolution Legislation is
unconstitutional as generally applied to debtors in Chapter 11 proceedings whose plans of reorganization have not yet been confirmed and become substantially consummated (i.e., debtors that are then similarly situated to the Maker as of
September 1, 2005 (in a Chapter 11 proceeding with a plan of reorganization that has not yet been confirmed)), so that such debtors will not be subject to the Asbestos Resolution Legislation, in which event: (1) the Payment
Obligations Condition Precedent shall be deemed to have been satisfied on the first day following the later of (a) the date of such judicial decision and (b) the expiration of the last of any applicable periods of appeal from such judicial
decision; (2) within thirty (30) days of the receipt of written notice delivered by the Holder to the Maker and the United States Bankruptcy Court for the Eastern District of Louisiana (the “Bankruptcy Court”) of such judicial
decision or such expiration of the applicable periods of appeal (as applicable), interest on this Note held in the escrow account referred to below shall be paid to the Holder; and (3) principal payments and interest shall be payable on this
Note as described in Section 1(a) (with a one-time payment of any such principal payments that would have become due during the Suspension Period but for the application of 

  

 3 

	 	 
the foregoing provisions (after deducting the payment, if previously made, of the $25,000,000 amount referred to above), which payment shall be made within
thirty (30) days of receipt of the written notice by the Maker and the Bankruptcy Court referred to in the immediately preceding clause (2)); or 

  

	 	(B)	there has been a final nonappealable judicial decision with respect to such Challenge Proceeding which resolves the Challenge Proceeding in a manner other than as contemplated by
the immediately preceding clause (A), in which event: (1) the Payment Obligations Condition Precedent shall be irrevocably deemed not to have been satisfied; and (2) as of the later of the date that decision becomes final and nonappealable
or the date the $25,000,000 amount referred to above in this Section 1(b)(ii) has been paid by the Maker, (a) this Note shall be deemed to have been paid in full and shall be cancelled; (b) the funds in the escrow account referred to
below shall be turned over to the Maker; (c) the covenants set forth in Section 2 shall terminate; (d) the Guaranties shall terminate; (e) the Pledge Agreement shall terminate; and (f) the Collateral shall be released and
returned to BWICO free and clear of any security interest (at no cost or expense to the Maker or either Guarantor) as promptly as practicable. 

  
 During any Suspension Period, interest shall be paid on this Note as required by Section 1(a) into an escrow account established by the Maker for
such purpose with a national bank or trust company which regularly acts as an escrow agent in commercial transactions, which escrow account shall remain until such time as there has been a final, non-appealable judicial decision (to either effect
contemplated by this Section 1(b)) with respect to the Challenge Proceeding that gave rise to the Suspension Period, as evidenced by a written notice with respect thereto delivered by either (i) the Holder to the Maker and the Bankruptcy
Court or (ii) the Maker to the Holder and the Bankruptcy Court. 
  

	 	(c)	As further provided in Section 5, MII and BWICO (each a “Guarantor”) are guaranteeing the payment obligations of the Maker under this Note. Pursuant to the provisions
of the Pledge and Security Agreement dated as of the date of this Note to which BWICO and the Holder are parties (the “Pledge Agreement”), the guarantee obligations of the Guarantors are being secured by a security interest in all of the
capital stock of the Maker outstanding as of the date of this Note (the “Collateral”). Each of the Maker and the Guarantors sometimes is referred to herein as an “Obligor.” 

  

 4 

	2.	Certain Covenants. The Obligors hereby covenant and agree as follows, after the date of the Note and until such time as this Note has been paid in full or deemed to have been
paid in full pursuant to the provisions of Section 1(b): 

  

	 	(a)	Maintenance of existence. Except as permitted by Section 2(h), each Obligor shall maintain its corporate existence and remain in good standing in its jurisdiction of
incorporation. 

  

	 	(b)	Continuation of business. Each Obligor shall continue its principal lines of business carried on as of the date of this Note, except where the board of directors of such
Obligor determines in good faith that the discontinuation of a line of business would not reasonably be expected to have a material adverse effect on the business, financial condition, or results of operations of such Obligor and its subsidiaries,
taken as a whole. 

  

	 	(c)	Maintenance of insurance. Each Obligor shall maintain or cause to be maintained insurance with respect to its property and business against such liabilities and risks, in
such types and amounts and with such deductibles or self-insurance risk retentions, in each case as the board of directors of such Obligor determines in good faith to be customary in its respective industries. 

  

	 	(d)	Maintenance of books and records. Each Obligor shall maintain its accounting books and records in accordance with accounting principles generally accepted in the United
States (“GAAP”) in all material respects, to the extent applicable. 

  

	 	(e)	Compliance with laws. Each Obligor shall comply with all laws and governmental regulations applicable to it, except to the extent that the failure to so comply would not have
a material adverse effect on the business, financial condition, or results of operations of such Obligor and its subsidiaries, taken as a whole. 

  

	 	(f)	Delivery of financial statements. MII shall deliver to the Holder (i) annual audited consolidated financial statements of MII and its consolidated subsidiaries,
(ii) if otherwise available, annual audited financial statements of the Maker and BWICO (provided that this clause will not require preparation of such audited financial statements if they are not otherwise available) and (iii) unaudited
consolidating financial statements of BWICO and MII, in each case no later than ninety (90) days after the end of each such Obligor’s fiscal year-end or as soon as otherwise available. 

  

	 	(g)	Notification of default. Each Obligor shall notify the Holder, within ten (10) Business Days after receipt by such Obligor, of any notice of default received by it under
any agreement or instrument governing or creating any material Indebtedness (as hereinafter defined) of such Obligor or any of its consolidated subsidiaries. As used in this Note, “Indebtedness” means, with respect to any Obligor, without
duplication: 

  

	 	(i)	indebtedness of such Obligor for borrowed money; 

  

 5 

	 	(ii)	obligations of such Obligor evidenced by debentures, promissory notes, or other similar instruments; 

  

	 	(iii)	obligations of such Obligor in respect of letters of credit, bankers’ acceptances, or other similar instruments, excluding obligations in respect of trade letters of credit,
bankers’ acceptances, or other similar instruments issued in respect of trade payables or similar obligations to the extent not drawn upon or presented, or, if drawn upon or presented, the resulting obligation of such Obligor is paid with 30
Business Days; 

  

	 	(iv)	obligations of such Obligor to pay the deferred and unpaid purchase price of property or services which are recorded as liabilities in accordance with GAAP, excluding trade
payables, advances on contracts, deferred compensation and similar liabilities arising in the ordinary course of business of such Obligor (obligations of the kind referred to in this clause (iv) are hereinafter referred to as “Purchase
Money Indebtedness”); and 

  

	 	(v)	rent obligations of such Obligor as lessee under any lease arrangement classified as a capital lease on the balance sheet of such Obligor in accordance with GAAP.

  

	 	(h)	Restrictions on divestitures, mergers and consolidations. BWICO shall not sell the outstanding common stock of the Maker to any entity that is not an Obligor or a
consolidated subsidiary of an Obligor (excluding J. Ray McDermott, S.A. or any of its subsidiaries). None of the Obligors shall enter into any merger or consolidation transaction pursuant to which any of them is acquired by an entity that is not an
Obligor without the prior written consent of the Holder, which consent shall not be unreasonably withheld or delayed. Neither the Maker nor MII shall sell all of its assets or its assets substantially as an entirety (whether in a single transaction
or a series of related transactions), without the prior written consent of the Holder (which consent shall not be unreasonably withheld or delayed). Notwithstanding the foregoing, this covenant shall not restrict any transaction pursuant to which
the remaining principal balance of this Note (and all accrued and unpaid interest on this Note) is paid in full concurrently with the closing of such transaction. 

  

	 	(i)	 Subordination of additional Indebtedness. Any Indebtedness incurred by the Maker after the date of this Note will be expressly subordinated (pursuant to
customary subordination provisions as determined by the 

  

 6 

	 	 
Maker in good faith upon advice from a nationally recognized investment banking firm) to the indebtedness under this Note, except for any such incurrence by
the Maker under or in connection with any (i) facilities for working capital, letters of credit (including facilities relating to Indebtedness incurred to provide collateral for letters of credit and similar instruments, or so-called
“synthetic letter of credit facilities”) or bonding requirements entered into, issued, or obtained in the ordinary course of business or as part of the Exit Financing (as defined in the Plan of Reorganization referred to in the Settlement
Agreement), and any replacements, refinancings, renewals, or extensions of any of the foregoing, (ii) letters of credit, bankers’ acceptances, bonds (including industrial revenue bonds), capital leases, or similar instruments entered into,
issued, or obtained in the ordinary course of business, (iii) Purchase Money Indebtedness arrangements entered into in the ordinary course of business, (iv) replacements, refinancings, renewals, or extensions of any Indebtedness
outstanding as of the date of this Note (provided that, in the case of any Indebtedness incurred in accordance with this clause (iv), the principal amount of the Indebtedness incurred does not materially exceed the principal amount of the
Indebtedness being replaced, refinanced, renewed, or extended, plus any associated premiums, fees and expenses), or (v) guaranties, surety arrangements, interest rate protection arrangements and similar arrangements of or with respect to any
Indebtedness described in any of the immediately preceding clauses (i) through (iii) (the debt arrangements referred to in the immediately preceding clauses (i) through (v) are collectively referred to herein as the
“Specified Debt Arrangements”). 

  

	 	(j)	Prohibitions on incurrence of new liens. The Maker shall not grant any liens on its assets to secure any Indebtedness, other than Indebtedness pursuant to any of the
Specified Debt Arrangements. 

  

	 	(k)	Restrictions on certain guaranties. The Maker shall not provide a guaranty of the obligations of any entity that is not a consolidated subsidiary of the Maker (or a joint
venture or other similar business arrangement formed or invested in by the Maker or any of its subsidiaries) without the prior written consent of the Holder (which consent will not be unreasonably withheld or delayed). 

  

	 	(l)	 Restrictions on transactions with affiliates. The Maker shall not engage in any transactions with affiliated entities (other than its consolidated
subsidiaries) other than on an arm’s-length basis in the ordinary course of business, except as permitted by Section 2(m) or pursuant to existing agreements, including the Support Services Agreement dated as of January 1, 2000 to
which the Maker is a party, any amendments thereto that do not materially change the rights or obligations of the parties thereto in any manner that would be adverse to the Holder in any material respect, the Tax Allocation Agreement dated as of
January 1, 2000 to which the 

  

 7 

	 	 
Maker is a party, any amendments thereto that do not materially change the rights or obligations of the parties thereto in any manner that would be adverse
to the Holder in any material respect, the Amended and Restated Indemnification Agreements dated as of February 21, 2000 to which the Maker is a party, any amendments thereto that do not materially change the rights or obligations of the
parties thereto in any manner that would be adverse to the Holder in any material respect, and any replacement or similar inter-company agreements approved by the board of directors of the Maker in good faith, and except for the spin-off of the
Maker’s pension arrangements in a manner consistent with MII’s prior public disclosure thereof (as reflected in MII’s reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended,
prior to the date of this Note). 

  

	 	(m)	Restricted payments. The Maker shall not pay any dividends or make any similar distributions to BWICO; provided, however, that this covenant shall not restrict the Maker from
making any dividends, similar distributions, or payments in order to fund the $350,000,000 cash payment being made concurrently with the issuance of this Note (as contemplated by the Settlement Agreement), any dividends, similar distributions, or
payments in order to fund the amount that may become payable pursuant to the Contingent Payment Right (as defined in the Settlement Agreement), any payments under this Note, or any payments to reimburse the Guarantors for any amounts paid by either
of them pursuant to the Guaranties; provided, further, that: (i) after any payment due and owing in respect of the Contingent Payment Right has been paid in full, in the event the Maker accumulates cash in excess of $75,000,000 (other than
pursuant to borrowings under any of the Specified Debt Arrangements), this covenant shall not restrict the Maker from paying dividends from time to time to the extent of such excess, so long as the Maker is not in default under this Note at the time
any such dividend is declared or paid; and (ii) in the event of any Suspension Period as contemplated by Section 1(b)(ii), the Maker may from time to time pay dividends or make similar distributions to BWICO so long as an amount equal to
any such dividend is placed in the escrow account contemplated by Section 1(b)(ii) to satisfy any contingent payments with respect to the Contingent Payment Right or payment obligations under this Note, until such time as such Suspension Period
ends. 

  

	 	(n)	Prohibition on certain loans. The Maker shall not make loans to any entity that is not a consolidated subsidiary of the Maker or a joint venture or other similar business
arrangement formed or invested in by the Maker or any of its consolidated subsidiaries without the prior written consent of the Holder (which consent shall not be unreasonably withheld or delayed), other than loans to customers, vendors, and
subcontractors in the ordinary course of business. 

  

 8 

	 	(o)	Covenant in event of foreclosure of security interest. In the event the Holder forecloses on its security interest in the Collateral pursuant to the provisions of the Pledge
Agreement, the Obligors will cooperate in the transition of the Maker to a stand-alone operating entity. 

  

	3.	Events of Default and Remedies. 

  

	 	(a)	Events of Default. So long as this Note has not been paid in full, each of the following events will constitute an “Event of Default”: 

  

	 	(i)	any default in the payment of the principal or accrued interest payable under this Note, as and when the same shall become due and payable, and continuance of such default for a
period of ten (10) days after the Maker’s receipt of a Default Notice (as hereinafter defined) from the Holder with respect to such default; 

  

	 	(ii)	any breach of any of the covenants contained in Section 2, and continuance of such breach for a period of thirty (30) days after the Maker’s receipt of a Default
Notice from the Holder with respect to such breach; 

  

	 	(iii)	commencement of an involuntary case or other proceeding against any Obligor seeking (A) liquidation, reorganization, or other relief with respect to it or its debts under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in effect, (B) the appointment of a receiver, liquidator, custodian, or trustee of any Obligor or for all or substantially all the property and other assets of any
Obligor, or (C) the winding up or liquidation of the affairs of any Obligor, if, in the case of any of (A), (B), or (C) above, such case or proceeding shall remain unstayed and undismissed for a period of sixty (60) days;

  

	 	(iv)	(A) commencement of a voluntary case by any Obligor under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect, (B) consent by any
Obligor to the entry of an order for relief in an involuntary case against such Obligor under any such law, (C) consent by any Obligor to the appointment or taking possession by a receiver, liquidator, custodian, or trustee of such Obligor or
for all or substantially all its assets, or (D) a general assignment by any Obligor for the benefit of its creditors; or 

  

	 	(v)	the failure by MI to make, or to cause one or more of its subsidiaries to make, the required payment with respect to the Contingent Payment Right, on a timely basis in accordance
with the provisions of the Settlement Agreement following the satisfaction of the Payment Obligations Condition Precedent and the vesting of the Contingent Payment Right pursuant to the terms of the Settlement Agreement. 

  

 9 

	 	(b)	Remedies. If an Event of Default specified in Section 3(a)(i), (ii), or (v) shall occur, then the Holder may, by written notice to the Maker (a “Default
Notice”), so long as the Event of Default is continuing, declare all unpaid principal and accrued interest under this Note immediately due and payable without further presentment, demand, protest, or further notice, all of which are hereby
expressly waived by the Maker. If any Event of Default specified in Section 3(a)(iii) or (iv) shall occur, then, without any notice to the Maker or any other act by the Holder, the entire principal amount of this Note (together with all
accrued interest thereon) shall become immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Maker. 

  

	 	(c)	Expenses. If an Event of Default shall occur, the Maker shall pay, and save the Holder harmless against liability for the payment of, all reasonable expenses, including
reasonable attorneys’ fees, incurred by the Holder in enforcing its rights hereunder. 

  

	4.	Waivers; Amendments. Except as set forth in Sections 3(a)(i), 3(a)(ii), and 3(b), to the extent permitted by applicable law, each Obligor hereby expressly waives demand
for payment, presentment, notice of dishonor, notice of intent to demand, notice of acceleration, notice of intent to accelerate, protest, notice of protest and diligence in collecting and the bringing of suit against the Maker with respect to this
Note. The Obligors agree that the Holder may extend the time for repayment or accept partial payment an unlimited number of times without discharging or releasing any of the Obligors from their respective obligations under this Note (including the
Guaranties). No delay or omission on the part of the Holder in exercising any power or right in connection herewith shall operate as a waiver of such right or any other right under this Note (including the Guaranties), nor shall any single or
partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No amendment, modification, or
waiver of any provision of this Note (including the Guaranties), nor any consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the person against whom enforcement thereof is to be
sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 

  

	5.	 Guaranties. (a) Subject to the terms and conditions of this Note, the Guarantors hereby, jointly and severally, unconditionally guarantee to the Holder
the prompt and complete payment in cash when due, subject to any applicable grace periods and notice requirements set forth in this Note, of all the Maker’s payment obligations to the Holder under this Note (the “Obligations”). An
Event of 

  

 10 

	 	 
Default under this Note shall constitute an event of default under the guaranties of the Guarantors provided in this Section 5 (the
“Guaranties”), and shall entitle the Holder to accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as the Obligations. The Guaranties constitute guarantees of payment when due and not of
collection. 

  

	 	(b)	Anything herein to the contrary notwithstanding, the maximum liability of each Guarantor hereunder shall in no event exceed the amount which can be guaranteed by such Guarantor
under applicable federal and state laws relating to fraudulent transfers or conveyances or to the insolvency of debtors (after giving effect to any right of contribution from the other Guarantor). 

  

	 	(c)	The Guarantors shall not exercise any rights which they may acquire by way of subrogation to the rights of the Holder hereunder until all the Obligations shall have been paid in
full. Subject to the foregoing, upon payment of all the Obligations, the Guarantors shall be subrogated to the rights of the Holder against the Maker, and the Holder agrees to take such steps as the Guarantors may reasonably request to implement
such subrogation. 

  

	 	(d)	 To the maximum extent permitted by applicable law, the Guarantors understand and agree that the Guaranties shall be construed as continuing, complete, absolute, and
unconditional guarantees of payment without regard to, and each Guarantor hereby waives any defense of a surety or guarantor or any other obligor on any obligations arising in connection with or in respect of, and hereby agrees that its obligations
hereunder shall not be discharged or otherwise affected as a result of, any of the following: (i) any defense, setoff, or counterclaim (other than the defense of payment or performance and the setoff rights referred to in Section 6) which
may at any time be available to or be asserted by the Maker against the Holder; (ii) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution, or lack of power of the Maker or the
other Guarantor, or any sale, lease, or transfer of any or all of the assets of the Maker or the other Guarantor, or any change in the shareholders of the Maker or the other Guarantor; (iii) any change in the corporate existence, structure, or
ownership of any other Obligor; (iv) the absence of any attempt to collect the Obligations or any part of them from any other Obligor; or (v) any other circumstance or act which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Maker for the Obligations, or of such Guarantor under its Guaranty, in bankruptcy or in any other instance (other than the defense of payment or performance or any such discharge that may arise out of or be based
on Asbestos Resolution Legislation, as provided in Sections 7.1and 7.2 of the Settlement Agreement). When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against either Guarantor, the Holder may, but shall be
under no obligation to, join or 

  

 11 

	 	 
make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against the Maker or the other Guarantor, and any failure by
the Holder to make any such demand, to pursue such other rights or remedies, or to collect any payments from the Maker or the other Guarantor, or any release of the Maker or the other Guarantor, shall not relieve such Guarantor of any obligation or
liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied, or available as a matter of law, of the Maker against such Guarantor. 

  

	 	(e)	The Guaranties shall terminate upon the payment in full of the Obligations (as the same may be limited pursuant to the provisions of Section 1(b)) or at such later time as may
be applicable pursuant to the provisions of Section 1(b)(ii)(B)(2)(c). 

  

	6.	Right of Setoff. The Obligations shall be subject to the setoff and reduction in payment obligations provisions set forth in Sections 7.1 and 7.2 of the Settlement
Agreement. By its acceptance of this Note, the Holder agrees to be bound by the provisions of Section 7.1 and 7.2 of the Settlement Agreement. 

  

	7.	No Recourse Against Individuals. No director, officer, employee, or representative of any of the Obligors (in each case, in such person’s capacity as such), and no
stockholder of MII (in its capacity as such), shall have any personal liability in respect of any obligations of the Obligors under this Note or the Guaranties, or for any claim based on, with respect to, or by reason of such obligations or their
creation, by reason of his/her or its status as such. By accepting this Note, the Holder hereby waives and releases all such liability. Such waiver and release is part of the consideration for the issue of the Note and the Guaranties by the
Obligors. 

  

	8.	Certain Representations. The Maker hereby represents that: (a) it is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware
and has full corporate power and authority to execute and deliver this Note; (b) its execution and delivery of this Note has been duly authorized by all necessary corporate action on its part; and (c) this Note constitutes a legal, valid,
and binding obligation of the Maker, enforceable against the Maker in accordance with the terms hereof, except as such enforceability may be limited by: (i) bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, and other
laws of general applicability relating to or affecting creditors’ rights; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

  

	9.	 Assignment. Prior to satisfaction of the Payment Obligations Condition Precedent, the Holder may not transfer or assign this Note, its rights to payment
hereunder, or any other rights hereunder without the prior written consent of the Maker, which consent the Maker may withhold in its sole discretion; provided, however, that the Maker’s consent shall not be required in connection with any such
transfer or assignment to a national trust established pursuant to any 

  

 12 

	 	 
Asbestos Resolution Legislation, provided such transfer or assignment is made in accordance with the requirements of such legislation and in accordance with
the last sentence of this Section 9. If the Payment Obligations Condition Precedent is satisfied, at any time after the satisfaction thereof the Holder may transfer or assign this Note and its rights hereunder (subject to the provisions of
Section 6), provided that such transfer is effected in a transaction that is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and (ii) such transfer may only be in whole, and not in
part. In no event shall the Maker or the Guarantors be required to register this Note, the related Guaranties, or the Collateral under the Securities Act. The Holder, by its acceptance of this Note, hereby represents, and it is specifically
understood and agreed, that the Holder is not acquiring this Note or the related Guaranties with a view to any sale or distribution thereof within the meaning of the Securities Act. The Holder understands that this Note and the related Guaranties
have not been registered under the Securities Act and may be transferred only in compliance with the provisions of the Securities Act. In connection with any transfer or assignment of this Note in accordance with the foregoing provisions after the
satisfaction of the Payment Obligations Condition Precedent, the Maker shall issue to the Holder a replacement note (which shall provide replacement guaranties of the Guarantors) upon the written request of the Holder, accompanied by this Note
together with appropriate instruments of transfer, which replacement note shall reflect such modifications as shall be necessary or appropriate to reflect that the Payment Obligations Condition Precedent has been met and that successor holders are
thereafter permitted, and, upon the issuance of such replacement note, this Note shall be cancelled. Any transfer or assignment of this Note must be effected pursuant to written documentation pursuant to which the transferee or assignee agrees to be
bound by all the provisions of this Note and the Pledge Agreement. 

  

	10.	Entire Agreement. This Note, the Settlement Agreement and the Pledge Agreement constitute the entire agreement and understanding among the Holder and the Obligors with
respect to the subject matter of this Note and supersede all prior agreements and understandings, oral or written, among such parties with respect to the subject matter of this Note. 

  

	11.	Notices. All notices and communications provided for hereunder shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of
such notice by a recognized overnight-delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight-delivery service (with charges prepaid). Any
such notice shall be sent: 

  

	 	(i)	if to the Holder, at such address as the Holder shall have specified to the Maker in writing; or 

  

	 	(ii)	 if to any Obligor, addressed to it at 777 North Eldridge Parkway, Houston, Texas 77079, to the attention of Ms. Liane K. Hinrichs, or at such other
address as any of the Obligors may hereafter 

  

 13 

	 	 
specify to the Holder in writing; with a copy to McDermott International, Inc., 777 North Eldridge Parkway, Houston, Texas 77079, to the attention of
Mr. John T. Nesser, III, or such other address as MII shall have specified to the Holder in writing. 

  

	12.	Captions; Interpretation. The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Note. Except where the context otherwise requires, the defined terms used in this Note shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine, and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall” and both “will” and “shall” are used in the mandatory and imperative sense. The word “may” means is authorized or
permitted to, while “may not” means is not authorized or permitted to. Unless the context otherwise requires: (i) any definition of or reference to any agreement or other document herein shall be construed as referring to such
agreement or other document as from time to time amended, restated, supplemented, or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein or therein); (ii) any
reference herein to the subsidiaries of any entity shall be construed to include such entity’s direct and indirect subsidiaries; (iii) the words “herein,” “hereof,” and “hereunder,” and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; and (iv) all references herein to sections shall be construed to refer to sections of this Note. 

  

	13.	Severability. If any provision contained in this Note shall for any reason be held to be invalid, illegal, or unenforceable in any respect, that provision will, to the extent
possible, be modified in such manner as to be valid, legal, and enforceable but so as to most nearly retain the intent of the parties hereto as expressed herein, and if such a modification is not possible, that provision will be severed from this
Note, and in either case the validity, legality, and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. 

  

	14.	Governing Law. The construction, validity, and enforceability of this Note shall be governed by the substantive laws of the State of Louisiana, without giving
effect to any principles of conflicts of laws thereof that would result in the application of the laws of any other jurisdiction. 

  
 *        *        * 
  

 14 

			
	 MAKER:
  
 THE BABCOCK & WILCOX COMPANY

		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	 GUARANTORS:
  
 BABCOCK & WILCOX INVESTMENT COMPANY

		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	MCDERMOTT INTERNATIONAL, INC.
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 15 

 Exhibit B 

  
 PLEDGE AND SECURITY AGREEMENT 
  
 dated as of 
  
 February 22, 2006 
  
 by and among 
  
 BABCOCK & WILCOX INVESTMENT COMPANY 
  
 and 
  
 THE BABCOCK &WILCOX COMPANY 
 ASBESTOS PI TRUST 
  
 and

  
 U.S. BANK NATIONAL ASSOCIATION, 
  
 as Collateral Agent 
  

 This PLEDGE AND SECURITY AGREEMENT dated as of February 22, 2006 (this “Agreement”) is by
and between (a) Babcock & Wilcox Investment Company, a Delaware corporation (the “Company”), (b) The Babcock & Wilcox Company Asbestos PI Trust (together with the permitted successors and assigns thereof, the
“Secured Party”), and (c) U.S. Bank National Association, a national banking association organized under the laws of the United States (“U.S. Bank”). 
  
 For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company has agreed to
pledge and grant a security interest in the Collateral (as defined below) as security for the Guarantee Obligations (as defined below). 
  
 Accordingly, the parties hereto agree as follows: 
  
 Section 1. Definitions. 
  
 (a) As used in this Agreement, the terms defined in the preamble hereto shall have the meanings ascribed therein and the following terms have the meanings
ascribed below: 
  
 “Acceleration Event” exists
if all or any portion of the Guarantee Obligations have been accelerated pursuant to Section 5(a) of the Note and such acceleration shall not have been rescinded. 
  
 “B&W” means The Babcock & Wilcox Company, a Delaware corporation and a direct, wholly owned
subsidiary of the Company. 
  
 “Bankruptcy Court”
means the United States Bankruptcy Court for the Eastern District of Louisiana. 
  
 “Collateral” has the meaning assigned to such term in Section 3. 
  
 “Collateral Agent” means the collateral agent appointed pursuant to this Agreement, which shall initially be U.S. Bank. 
  
 “Confirmation Order” means the Order Confirming the Joint
Plan of Reorganization as of September 28, 2005, as Amended Through January 17, 2006, Proposed by the Debtors, the Asbestos Claimants’ Committee, the Future Asbestos-Related Claimants’ Representative, and McDermott Incorporated
and Issuing Injunctions entered on January 17, 2006 by the District Court. 
  
 “District Court” means the United States District Court for the Eastern District of Louisiana. 
  
 “Guarantee Obligations” means the guarantee obligations of the Guarantors set forth in Section 5 of the Note. 
  
 “Guarantors” means the Company and McDermott International,
Inc., a Panamanian corporation of which the Company is an indirect, wholly owned subsidiary. 
  
 “Note” means that certain Promissory Note executed and delivered by B&W, dated as of February 22, 2006, in the original principal amount of $250,000,000, as amended or modified from time to
time, together with any note executed and delivered in exchange or substitution therefor or transfer thereof. 
  

 1 

 “Plan” means the Joint Plan of Reorganization as of September 28, 2005, as Amended
Through January 17, 2006, and the exhibits and schedules to the foregoing, as confirmed by the District Court. 
  
 “Plan Documents” means the Plan, the exhibits to the Plan, the Plan Supplement, the disclosure statement to the Plan and all exhibits
attached to the disclosure statement. 
  
 “Plan
Supplement” means the Plan Supplement to the Plan, as amended through the date hereof. 
  
 “Pledged Stock” means the capital stock of B&W described on Annex 2, together with all certificates evidencing the same.

  
 “Proceeds” has the meaning assigned to such
term in the UCC. 
  
 “UCC” means the Uniform
Commercial Code as in effect from time to time in the State of Louisiana. 
  
 (b) In addition, for all purposes hereof, capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Note and, if not defined in the Note, in the UCC.

  
 (c) Except where the context otherwise requires, the foregoing
definitions shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words “include,”
“includes,” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall,” and both
“will” and “shall” are used in the mandatory and imperative sense. The word “may” means is authorized or permitted to, while “may not” means is not authorized or permitted to. Unless the context otherwise
requires: (i) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, or
otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein or therein); (ii) any reference herein to any person shall be construed to include such person’s permitted
successors and assigns; (iii) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;
and (iv) all references herein to sections and annexes shall be construed to refer to sections of, and annexes to, this Agreement. 
  
 Section 2. Appointment of Collateral Agent. 
  

2.01 Appointment. The Secured Party hereby appoints U.S. Bank as the Collateral Agent under this Agreement, to take such actions to be taken by
the Collateral Agent under this Agreement and to exercise such powers of the Collateral Agent contemplated by this Agreement, in each case subject to the terms and conditions hereof. The Company hereby consents to the appointment made pursuant to
the foregoing provisions of this Section 2.01. 
  

 2 

 2.02 Fees and Expenses of Collateral Agent. The Company agrees to pay the Collateral Agent upon
demand the amount of the Collateral Agent’s annual fee (as set forth on Annex 3 attached hereto) and any and all reasonable out-of-pocket expenses, including the reasonable fees and expenses of its counsel and agents, which the
Collateral Agent may invoice to the Company in connection with (a) the custody or preservation of, or the sale of, collection from or other realization upon, the Collateral, (b) the exercise or enforcement (whether through negotiations,
legal proceedings, or otherwise) of any of the rights of the Collateral Agent or the Secured Party hereunder, or (c) the failure by the Company to perform or observe any of the provisions hereof. The agreements in this Section 2.02 shall
survive the termination of this Agreement. No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 
  
 2.03 Tax Matters. Each of the Company and the Secured Party shall
provide the Collateral Agent with its taxpayer identification number documented by an appropriate Form W-8 or Form W-9 upon execution of this Agreement. 
  
 Section 3. Grant of Security Interest in the Collateral. As collateral security for the prompt payment of the Guarantee Obligations
when due in accordance with their terms, the Company hereby grants to the Collateral Agent, for the benefit of the Secured Party, a security interest in all of the Company’s right, title, and interest in and to the Pledged Stock, whether now
existing or hereafter coming into existence (such property described in this Section 3 being collectively referred to herein as the “Collateral”). In connection with the grant of such security interest, the Company agrees to take such
action as the Collateral Agent may reasonably request in order to permit the Collateral Agent to establish and maintain such security interest as a perfected, first priority security interest until such time as this Agreement terminates pursuant to
the provisions of Section 7.10. 
  
 Section 4.
Representations and Warranties. 
  
 4.01
Representations and Warranties of the Company. The Company represents and warrants to the Secured Party and the Collateral Agent as follows: 
  
 (a) Collateral. The Company is the sole beneficial owner of the Collateral, and no lien exists upon the Collateral other than the liens created
hereby. 
  
 (b) Creation, Perfection, and Priority. The
security interest created hereby constitutes a valid and perfected first priority security interest in the Collateral. 
  
 (c) Company Information; Locations. Annex 1 sets forth, as of date hereof, the exact name, the location, including county or parish, of the
chief executive office, the jurisdiction of organization, and the federal income tax identification number of the Company. 
  
 (d) Changes in Circumstances. The Company has not, within the period of 180 days prior to the date hereof, changed its name or the jurisdiction or
form of its organization. 
  
 (e) Pledged Stock. The
Pledged Stock identified in Annex 2 has been duly authorized and validly issued and is fully paid and nonassessable. The Pledged Stock is 

  

 3 

 
certificated, as indicated in Annex 2. The Pledged Stock identified on Annex 2 constitutes all of the issued and outstanding equity interests
in B&W as of the date hereof, and Annex 2 correctly identifies the class of the shares constituting the Pledged Stock. 
  
 (f) Organization. The Company is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware and has full
corporate power and authority to execute and deliver this Agreement. 
  
 (g) Approvals; Noncontravention. The execution and delivery of this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company and will not result in a contravention by the Company
of any provision of applicable law or of the Company’s organizational documents or any material contractual restriction binding on the Company or its assets. 
  
 (h) Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by the Company, and
this Agreement constitutes a legal, valid, and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by: (i) bankruptcy, insolvency, reorganization,
fraudulent transfer or conveyance, and other laws of general applicability relating to or affecting creditors’ rights; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity
or at law). 
  
 (i) Compliance with Plan. This Agreement
and the Note comply in all material respects with the terms of the Plan Documents and the Confirmation Order applicable to the provisions of this Agreement and the Note. 
  
 4.02 Representations and Warranties of the Secured Party. The Secured Party represents and warrants to the Company
and the Collateral Agent as follows: 
  
 (a) Organization.
The Secured Party is a trust duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite power and authority to execute and deliver this Agreement. 
  
 (b) Approvals; Noncontravention. The execution and delivery of this
Agreement by the Secured Party have been duly authorized by all necessary action on the part of the Secured Party and will not result in a contravention by the Secured Party of any provision of applicable law or of the Secured Party’s
organizational documents or any material contractual restriction binding on the Secured Party or its assets. 
  
 (c) Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by authorized officers or agents of the Secured
Party and is a legal, valid, and binding agreement of the Secured Party, enforceable against the Secured Party in accordance with its terms, except as such enforceability may be limited by: (i) bankruptcy, insolvency, reorganization, fraudulent
transfer or conveyance, and other laws of general applicability relating to or affecting the creditors’ rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). 
  
 (d) Compliance with Plan. This
Agreement and the Note comply in all material respects with the terms of the Plan Documents and the Confirmation Order applicable to the provisions of this Agreement and the Note. 
  

 4 

 Section 5. Further Assurances; Remedies. In furtherance of the pledge and grant of
security interest pursuant to Section 3 and for so long as the Guarantee Obligations continue to exist and remain unsatisfied and this Agreement remains in effect, the Company agrees with the Collateral Agent and the Secured Party as follows:

  
 5.01 Delivery and Perfection. The Company shall:

  
 (a) deliver to the Collateral Agent all certificated Pledged
Stock, accompanied by properly executed stock powers in blank; and 
  
 (b) after the occurrence and during the continuance of an Acceleration Event and at the reasonable request of the Collateral Agent (in accordance with the provisions of Section 5.06), execute and deliver all such documents as may be
necessary to cause any or all of the Pledged Stock to be transferred of record into the name of the Collateral Agent or to enable the Collateral Agent to exercise and enforce its rights hereunder in accordance with the UCC (or any successor statute)
(and the Collateral Agent agrees that, if any Pledged Stock is transferred into its name, the Collateral Agent will thereafter promptly give to the Company copies of any notices and communications received by the Collateral Agent with respect to the
Pledged Stock); provided, however, that no subsequent transfer of the Pledged Stock may be made by the Collateral Agent unless and until it has foreclosed on the Collateral in accordance with the provisions of Section 5.06; provided, further,
that nothing in this Agreement shall require the Company to take any action (or to assist any other person or entity to take any action) to register with any governmental authority any public offering of the Pledged Stock or any interest therein.

  
 5.02 Financing Statements. The Company hereby
authorizes the Collateral Agent to file one or more financing statements in respect of the Company as debtor in such filing offices in such jurisdictions with which such a filing is (a) required to perfect the security interest granted
hereunder by the Company or (b) desirable (in the reasonable judgment of the Collateral Agent) to give notice of the security interest granted hereunder by the Company. 
  
 5.03 Other Financing Statements and Control. Without the prior written consent of the Collateral Agent and the
Secured Party, the Company shall not (a) authorize the filing in any jurisdiction of any financing statement or like instrument with respect to the Collateral in which the Collateral Agent is not named as the sole secured party or
(b) cause or authorize any person other than the Company or the Collateral Agent to acquire “control” (as defined in Section 8-106 of the UCC or as otherwise construed for purposes of Article 8 or 9 of the UCC) over any
Collateral that is Investment Property. 
  
 5.04 Locations;
Names. Without at least 30 days’ prior notice to the Collateral Agent, the Company shall not change its name or the jurisdiction or form of its organization from the same shown on Annex 1. 
  
 5.05 Special Provisions Relating to Pledged Stock. 
  
 (a) So long as no Acceleration Event shall have occurred and be continuing,
the Company shall have the right to exercise all voting, consensual, and other powers of ownership pertaining to the Pledged Stock, and the Collateral Agent shall execute and deliver to the Company, or cause to be executed and delivered to the
Company, all such proxies, powers of attorney, dividend, and other orders, and all such instruments, without recourse, as the Company may reasonably request for the purpose of enabling the Company to exercise the rights and 

  

 5 

 
powers that it is entitled to exercise pursuant to this Section 5.05(a); provided that any such request by the Company shall be in the form of written
instructions addressed to the Collateral Agent (with a copy thereof provided to the Secured Party). 
  
 (b) Unless and until an Acceleration Event has occurred and is continuing, the Company shall be entitled to receive and retain any and all dividends and
distributions paid on the Pledged Stock (provided that such dividends and distributions have not been paid in violation of the provisions of Section 2(m) of the Note). 
  
 (c) If any Acceleration Event shall have occurred, then so long as such Acceleration Event shall continue, all dividends and
other distributions on the Pledged Stock shall be paid or distributed directly to the Collateral Agent, and, if the Collateral Agent shall so request in writing, the Company agrees to execute and deliver to the Collateral Agent appropriate
additional dividend, distribution, and other orders and documents to that end. 
  
 (d) If either the Company or the Secured Party delivers a notice or instruction to the Collateral Agent regarding the Pledged Stock, such party shall concurrently deliver a copy of such notice or instruction to the
other party. 
  
 5.06 Acceleration Event, Etc.
Notwithstanding any other provision contained in this Agreement or the Note, if an Acceleration Event shall have occurred and be continuing as a result of an Event of Default described in Section 3(a)(ii) of the Note, the Collateral Agent may
exercise its rights hereunder arising as a result of such Acceleration Event only following the receipt of written notice of such Acceleration Event executed by the Company and the Secured Party or written notice from the Secured Party that a final,
non-appealable judgment determining that such an Event of Default has occurred and is continuing (accompanied by an appropriately certified copy of such judgment). The period beginning with the receipt of any such notice and continuing for so long
as the Acceleration Event referred to in such notice is continuing is hereinafter referred to as an “Acceleration Event Period.” After receipt of such notice, the Collateral Agent shall take only such action with respect to an Acceleration
Event as shall be directed by written instructions from the Secured Party or by such judgment and shall not be required to take any such action absent such written instructions or such judgment. The Secured Party shall provide the Collateral Agent
with written notice in the event that any Acceleration Event is rescinded. Subject to the prior provisions of this Section 5.06, in the period during which an Acceleration Event shall have occurred and be continuing: 
  
 (a) the Collateral Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the UCC (subject to the provisions of clause (b) of this Section 5.06), including the right, to the fullest extent permitted by applicable law, to exercise all voting,
consensual, and other powers of ownership pertaining to the Collateral as if the Collateral Agent were the sole and absolute owner thereof (and the Company agrees to take all such action as the Collateral Agent may reasonably request to give effect
to such right); and 
  
 (b) the Collateral Agent
may, upon 30 days’ prior written notice to the Company of the time and place, with respect to the Collateral or any part thereof that shall then be or shall thereafter come into the possession, custody, or control of the Collateral Agent, sell,
assign, or otherwise dispose of all or any part of the Collateral at such place or places as specifically instructed by the Secured Party or by a judgment and for cash or for credit or for future delivery (without thereby assuming any credit risk),
at 

  

 6 

 
public sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the Collateral Agent or anyone else may be the purchaser, assignee, or recipient of any or all of the Collateral so disposed of at any such public sale and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise) of the Company, any such demand, notice, and right or equity being hereby expressly waived and released; the Collateral
Agent may, without notice, or publication, adjourn any public sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be
so adjourned. 
  
 The Company recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who
will agree to acquire the Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. The Company (i) acknowledges that any such private sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such restrictions and (ii) agrees that such circumstances shall not, without taking into account the other circumstances of such private sale, prevent such private sale from
being deemed to have been made in a commercially reasonable manner, and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any of the Collateral for the period of time necessary to
permit the issuer thereof to register it for public sale. 
  
 5.07
Application of Proceeds. Upon the occurrence and during the continuance of an Acceleration Event, the proceeds of any sale of, or other realization upon, all or any part of the Collateral and any cash held shall be applied by the Collateral
Agent in the following order of priorities: 
  
 (a) to payment of the expenses of such sale or other realization, including any taxes arising from such sale or other realization, and all expenses, liabilities, and advances incurred or made by the Collateral Agent in connection therewith;

  
 (b) to the payment of unpaid Guarantee
Obligations, until all Guarantee Obligations shall have been fully satisfied or terminated pursuant to the terms of the Note; and 
  
 (c) to payment to the Company or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds. 
  
 5.08 Deficiency. The
Company shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Guarantee Obligations and the fees and disbursements of any attorneys employed by the Collateral Agent to
collect such deficiency. 
  
 5.09 Attorney-in-Fact. Without
limiting any rights or powers granted by this Agreement to the Collateral Agent while no Acceleration Event has occurred and is continuing, upon the occurrence and during the continuance of any Acceleration Event, the Collateral Agent is hereby
appointed the attorney-in-fact of the Company for the purpose of carrying out the 

  

 7 

 
provisions of this Section 5 and taking any action and executing any instruments that the Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable (subject to the termination provision set forth) and coupled with an interest. Without limiting the generality of the foregoing, so long as the Collateral Agent
shall be entitled under this Section 5 to make collections in respect of the Collateral, the Collateral Agent shall have the right and power to receive, endorse, and collect all checks made payable to the order of the Company representing any
dividend, payment, or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. The appointment (and all the associated rights) provided by this Section 5.09 shall terminate immediately upon
receipt by the Collateral Agent of written notice executed by the Company and the Secured Party of the satisfaction or termination of the Guaranteed Obligations (which notice each of the Company and the Secured Party hereby undertakes to provide
immediately upon the satisfaction or termination of the Guaranteed Obligations) or receipt of a judgment to the effect that such satisfaction or termination has occurred. 
  
 5.10 No Marshalling. Upon the occurrence and continuance of an Acceleration Event, the Collateral Agent shall not be
required to marshal the order of its enforcement of its security interest in any part of the Collateral for the benefit of any person. 
  
 Section 6. General Provisions Concerning the Collateral Agent. 
  
 6.01 No Implied Duties or Responsibilities. 
  
 (a) In connection with its appointment and acting hereunder, the Collateral Agent shall not be a trustee or be subject to
any fiduciary or other implied duties or responsibilities, regardless of whether an Acceleration Event has occurred and is continuing, and none of the Collateral Agent, its agents, or any of their respective affiliates will be liable for any action
taken or omitted to be taken by any of them under or in connection with this Agreement, except that the foregoing provisions of this sentence will not excuse any such person from liability arising out of or resulting from its own gross negligence or
willful misconduct or a material breach of this Agreement. Without limiting the generality of the foregoing, the Collateral Agent: (a) shall treat the payee of the Note as the holder thereof until the Collateral Agent receives written notice of
the assignment or transfer thereof signed by such payee and B&W and in form satisfactory to the Collateral Agent; (b) may consult with legal counsel of its selection, independent public accountants, and other experts selected by it and will
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 representation or warranty to the Secured Party or the Company; (d) will not
have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants, or conditions of the Note or this Agreement or to inspect the books and records or any other property of B&W, the Company or any of
their respective affiliates; and (e) will not be responsible to the Secured Party for the existence, genuineness, or value of the Collateral or for the validity, perfection, priority, or enforceability of any security interest in the
Collateral. The Collateral Agent will not be deemed to have knowledge or notice of any Acceleration Event unless and until it has received written notice from the Secured Party referring to this Agreement, describing the Acceleration Event and
stating that such notice is a “notice of acceleration event.” 
  
 (b) The Collateral Agent shall have no duty to make any evaluation or to advise anyone of the suitability or propriety of action or proposed action of the Company or the Secured Party in any particular transaction involving the Collateral.
The Collateral Agent shall 

  

 8 

 
have no duty or authority to review, question, approve or make inquiries as to any instructions of the Company or, during any Acceleration Event Period, the
Secured Party. The Collateral Agent shall not be liable for any loss or diminution of the Collateral by reason of its actions taken in reliance upon an instruction from the Company or, during any Acceleration Event Period, the Secured Party. The
Collateral Agent shall have no duty or responsibility to monitor or otherwise investigate the actions or omissions of the Company or the Secured Party. The Collateral Agent shall only be responsible for the performance of such duties as are
expressly set forth herein or in instructions of the Company or, during any Acceleration Event Period, the Secured Party which are not contrary to the provisions of this Agreement. In no event shall the Collateral Agent be liable for special,
punitive, exemplary, incidental, indirect or consequential damages. 
  
 6.02 Refusal to Act. The Collateral Agent may refuse to take action on any notice, consent, direction, or instruction from the Company or the Secured Party that, in the Collateral Agent’s opinion, (a) is contrary to law or
the provisions of the Note or this Agreement or (b) may expose the Collateral Agent to liability (unless the Collateral Agent shall have been indemnified, to its satisfaction, for such liability by the party requesting the Collateral Agent to
take such action). 
  
 6.03 Indemnification. The Company
hereby agrees to indemnify the Collateral Agent and, in their respective capacities as such, its officers, directors, controlling persons, employees, agents and representatives (each an “Indemnified Party”) from and against any and all
claims, damages, losses, liabilities, obligations, penalties, actions, causes of action, judgments, suits, costs, expenses, or disbursements (including, without limitation, reasonable attorneys’ and consultants’ fees and expenses) of any
kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any Indemnified Party (or which may be claimed against any Indemnified Party by any person) by reason of, in connection with or in any way relating to or
arising out of, any action taken or omitted by the Collateral Agent in compliance with the provisions of this Agreement or in reliance on written instructions from the Company or, during any Acceleration Event Period, the Secured Party; provided,
however, that the Company shall not be liable to any Indemnified Party for any portion of such claims, liabilities, obligations, losses, damages, penalties, judgments, costs, expenses, or disbursements resulting from Indemnified Party’s gross
negligence or willful misconduct as determined by a final, non-appealable judgment of a court of competent jurisdiction. The Company further shall, upon demand by any Indemnified Party, pay to such Indemnified Party all documented costs and expenses
incurred by such Indemnified Party in enforcing any rights under this Agreement, including reasonable fees and expenses of counsel. If the Company shall fail to make any payment or reimbursement to any Indemnified Party for any amount as to which
the Company is obligated to indemnify such Indemnified Party under this Section 6.03, following exhaustion of all remedies against the Company and promptly after demand therefor, the Secured Party agrees to pay to such Indemnified Party the
amount that has not been paid by the Company. The agreements in this Section 6.03 shall survive the termination of this Agreement. 
  
 6.04 Resignation or Removal of the Collateral Agent. The Collateral Agent may resign at any time by giving at least 60 days’ prior written
notice thereof to the Secured Party and the Company and may be removed at any time by the Secured Party and the Company acting together, with any such resignation or removal to become effective upon the appointment of a successor Collateral Agent or
as otherwise provided by this Section 6.04. Upon any such resignation or removal, (a) the Secured Party will have the right to appoint a successor Collateral Agent, and (b) unless an Acceleration Event shall have occurred and be
continuing, the Company 

  

 9 

 
shall have the right to approve such appointed successor Collateral Agent, such approval not to be unreasonably withheld or delayed. If no successor
Collateral Agent will have been so appointed by the Secured Party and will have accepted its appointment within 45 days after the resignation or removal of the retiring Collateral Agent, the retiring Collateral Agent, the Company or the Secured
Party may, at the expense of the Company, petition a court of competent jurisdiction for the appointment of a successor Collateral Agent. Upon the acceptance of its appointment as Collateral Agent, the successor Collateral Agent will thereupon
succeed to and be vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent will be discharged from its duties and obligations under this Agreement. After any retiring Collateral
Agent’s resignation or removal, the provisions of this Agreement will inure to its benefit as to any actions taken or omitted to be taken by it while it was Collateral Agent. 
  
 6.05 Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely upon the authenticity of any
certificate, notice or other document (including any cable, telegram, telecopy, electronic mail message or telex) and believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper person, and upon advice and
statements of legal counsel, independent accountants and other experts selected by the Collateral Agent. As to any matters related to this Agreement or the transactions contemplated hereby, the Collateral Agent shall not be required to take any
action or exercise any discretion, but the Collateral Agent shall be required to act or to refrain from acting upon written instructions of the Secured Party delivered during any Acceleration Event Period and shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with the written instructions of the Secured Party delivered during any Acceleration Event Period, and such written instructions of the Secured Party and any action taken or failure to
act pursuant thereto shall be binding on the Secured Party. 
  
 6.06 Right of Interpleader. Should any controversy arise involving the parties hereto or any of them or any other person, firm or entity with respect to this Agreement or the Collateral, or should a substitute Collateral Agent fail
to be designated as provided in Section 6.04 hereof, or if the Collateral Agent should be in doubt as to what action to take, the Collateral Agent shall have the right, but not the obligation, either to (a) withhold delivery of the
Collateral until the controversy is resolved, the conflicting demands are withdrawn or its doubt is resolved or (b) institute a petition for interpleader in Bankruptcy Court or the District Court to determine the rights of the parties hereto.

  
 6.07 No Tax Responsibility. Notwithstanding any other
terms or conditions contained herein, the Collateral Agent shall not be responsible for, and the Company and Secured Party do hereby waive all duties or functions of the Collateral Agent (imposed by law or otherwise) relating to, the withholding and
government deposit of any and all taxes, or amounts with respect thereto, that may be incurred or payable in connection with the Collateral and the transactions contemplated hereunder, income or gain realized on the Collateral held therein or
transactions undertaken with respect thereto. Except as required by law in such manner that cannot be delegated to or assumed by the Company, the Collateral Agent shall have no responsibility to undertake any federal, state or local tax reporting in
connection with the Collateral or transactions contemplated by this Agreement. 
  

 10 

 Section 7. Miscellaneous. 
  
 7.01 Entire Agreement. This Agreement, the Note, and the Settlement
Agreement constitute the entire agreement and understanding among the Company, the Secured Party, and the Collateral Agent with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, among such
parties with respect to the subject matter hereof. 
  
 7.02
Notices. All notices, responses, consents, waivers, requests, statements, and other communications provided for herein shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such notice by
a recognized overnight-delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight-delivery service (with charges prepaid). Any such notice
shall be sent: 
  
 (a) if to the Secured Party, at such address
as the Secured Party shall have specified to the Company in writing, with copies (which shall not constitute notice) to: 
  
 B. Thomas Florence 
 Executive Director

 The Babcock & Wilcox Company Asbestos PI Trust 
 c/o ARPC 
 1220 19th Street, N.W., Suite 700 
 Washington, D.C. 20036 
 Facsimile: (202) 797-3619 
  
 Campbell & Levine, LLC 
 1700 Grant
Building 
 Pittsburgh, PA 15219-2399 
 Attention: Douglas A. Campbell, Esq. 
 Facsimile: (412) 261-5066 
  
 Eric D. Green, Esq. 
 Resolutions, LLC 
 222 Berkeley Street, Suite 1060 
 Boston, Massachusetts 02116 
 Facsimile: (617) 556-9900 
  
 Young Conaway Stargatt & Taylor, LLP 
 The Brandywine Building 
 1000 West Street,
17th Floor 
 P.O. Box 391 
 Wilmington, Delaware 19801 
 Attention: James L. Patton, Jr., Esq. 
 Facsimile: (302) 571-1253 
  

 11 

	 	(b)	if to the Company: 

  
 Babcock & Wilcox Investment Company 
 777 N. Eldridge Parkway 
 Houston, Texas 77079 
 Attention: Liane K. Hinrichs 
 Facsimile: (281) 870-5015 
  
 with a copy to: 
  
 McDermott International, Inc. 
 777 North Eldridge Parkway 
 Houston, Texas
77079 
 Attention: John T. Nesser, III 
 Facsimile: (281) 870-5015 
  
 or; 
  

	 	(c)	if to the Collateral Agent: 

  
 U.S. Bank National Association 
 5847 San
Felipe Street 
 Suite 1050 
 Houston, Texas 77057 
 Attention: Corporate Trust Services 
 Facsimile: 713-278-4329 
  
 7.03 No Waiver. No failure on the part of any party hereto to exercise, and no course of dealing with respect to, and no delay in exercising, any
right, power, or remedy of such party hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by any party hereto of any right, power, or remedy of such party hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, or remedy. 
  
 7.04
Amendments, Etc. Neither this Agreement nor any provision hereof may be changed, waived, discharged, or (except as provided in Section 7.10) terminated except in writing signed by the Company, the Secured Party, and the Collateral Agent.
The Collateral Agent shall be provided executed or true and correct copies of each amendment, notice, waiver, consent, or certificate made or delivered with respect to this Agreement sufficiently far in advance of the Collateral Agent being required
to take action under this Agreement or in respect of any such notice, waiver, consent, or other certificate delivered in connection therewith so as to allow the Collateral Agent sufficient time to take any such action. 
  
 7.05 Successors and Assigns; No Third-Party Beneficiaries. This
Agreement is for the benefit of the parties hereto and their successors and permitted assigns pursuant to the applicable provisions of the Note and this Agreement. In the event of an assignment of the Note by the Secured Party, the Secured
Party’s rights and obligations hereunder shall be transferred with the Note. Subject to the foregoing provisions of this Section 7.05, this Agreement shall be binding on each of the parties hereto and their respective successors and
assigns. Except as provided in Section 6.03, nothing in this Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than the parties hereto and their respective permitted 

  

 12 

 
successors and assigns any right, remedy, or claim under or by reason of this Agreement or any provision hereof, and the provision contained in this
Agreement are and shall be for the sole and exclusive benefit of the parties hereto and their respective permitted successors and assigns. 
  
 7.06 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. 
  
 7.07 Governing Law. The construction, validity, and enforceability of this Agreement shall be governed by the substantive laws of the State of
Louisiana, without giving effect to any principles of conflicts of laws thereof that would result in the application of the laws of any other jurisdiction. 
  
 7.08 Captions. The captions and Section headings appearing herein are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement. 
  
 7.09
Severability. If any provision contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, that provision will, to the extent possible, be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties hereto as expressed herein, and if such a modification is not possible, that provision will be severed from this Agreement, and in either case the validity, legality, and
enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby. 
  
 7.10 Termination. This Agreement shall terminate concurrently with the termination of the Guarantee Obligations pursuant to Section 5(e) of
the Note. Upon such termination: (a) the Collateral Agent shall promptly return to the Company all the certificated Pledged Stock and the stock powers previously delivered to the Secured Party pursuant to Section 5.01(a); and
(b) the Secured Party and the Collateral Agent shall execute and deliver to the Company such other documentation as the Company may reasonably request to evidence the termination of this Agreement. The provisions of Section 7.01 through
Section 7.09 and this Section 7.10 shall survive any termination of this Agreement. 
  
 [signature pages follow] 
  

 13 

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

			
	BABCOCK & WILCOX INVESTMENT COMPANY
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	THE BABCOCK &WILCOX COMPANY ASBESTOS PI TRUST
		
	By:	 	  

	 	 	Victor Bussie
	 	 	Trustee
		
	By:	 	  

	 	 	James J. McMonagle, Esq.
	 	 	Trustee
		
	By:	 	  

	 	 	Phillip A. Pahigian, Esq.
	 	 	Trustee
	
	U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 14 

 Annex 1 
  

Company Information; Locations 
  

									
	 Name

	  	 Location of
 Chief Executive Office

	  	Jurisdiction
of Organization

	  	Organizational
Number

	  	IRS Taxpayer
I.D. No.

	 Babcock & Wilcox Investment Company
	  	777 N. Eldridge Parkway
Houston, Texas 77079	  	Delaware	  	0002235817	  	72-1172705

 Annex 2 
  

Description of Pledged Stock 
  

													
	 Owner

	  	 Issuer

	  	Class of Stock

	  	No. of
Shares

	  	Certificate
Nos.

	  	Percent
Owned

	 	Percent
Pledged

	 Babcock & Wilcox Investment Company (a Delaware corporation)
	  	The Babcock & Wilcox Company (a Delaware corporation)	  	Common Stock	  	100,100	  	1 & 2	  	100%	 	100%

 Annex 3 
  

U.S. Bank National Association 
 Collateral Agent Fees 
 Babcock & Wilcox Investment Company 
  

			
	Schedule of Fees	  	 
	 Acceptance Fee:
	  	Waived
	 Administration Fee
	  	4,000
	 Counsel Fee
	  	at cost

  
 The above-mentioned Fees are basic
charges and do not include out-of-pocket expenses, which will be billed in addition to the regular charges as required. Out-of-pocket expenses shall include, but are not limited to: telephone tolls, stationery, travel and postage expenses.

  
 Charges for performing extraordinary or other services not contemplated at the
time of the execution of the transaction or not specifically covered elsewhere in this schedule will be determined by appraisal in amounts commensurate with the service to be provided. 
  
 To help the government fight the funding of terrorism and money laundering activities, Federal Law requires all financial institutions to
obtain, verify and record information that identifies each client who opens an account. 
  
 For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. We may also ask to see financial statements, licenses,
identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. 
  
 Our proposal is subject in all aspects to our review and acceptance of the final documents, which set forth our duties and responsibilities. 
  
 Please sign and date this letter and return a copy to Ronda Parman at fax 713.278.4329 as
acknowledgement of the fees and terms contained herein. 
  
 Signed
name                                       
                          Printed
name                                       
                                         

  
 Date                                     
   
Title                                       
         
Company

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