Document:

Employee Matters Agreement

 EMPLOYEE MATTERS AGREEMENT 

THIS EMPLOYEE MATTERS AGREEMENT dated as of July 2, 2010 among McDermott International, Inc., a Panamanian corporation
(“MII”), McDermott Investments, LLC, a Delaware limited liability company (“MI”), The Babcock & Wilcox Company, a Delaware corporation (“B&W”), and Babcock & Wilcox Investment Company, a Delaware
corporation (“BWICO”). MII, MI, B&W and BWICO are sometimes referred to herein, individually, as a “Party,” and, collectively, as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to such terms in Article I hereof. 
 RECITALS 

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

WHEREAS, the Board of Directors of MII has determined that it would be appropriate and in the best interests of MII and its stockholders
to effectuate the Distribution as described in the Master Separation Agreement between MII and B&W dated as of July 2, 2010 (the “Master Separation Agreement”); and 

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

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

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

DEFINITIONS 

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this
Section 1.1: 
 (a) “Additional MII RSAs” has the meaning set forth in Section 3.2(b). 

(b) “Additional MII RSUs” has the meaning set forth in Section 3.3(b). 

(c) “Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose, “control” of a Person means the 

 

 1 

 
possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or
otherwise. 
 (d) “Agreement” means this Employee Matters Agreement together with all Schedules hereto and all
amendments, modifications and changes hereto and thereto entered into in accordance with Section 11.10. 
 (e)
“Ancillary Agreements” has the meaning set forth in the Master Separation Agreement. 
 (f) “Benefit
Arrangement” means any contract, agreement, policy, practice, program, plan, trust or arrangement (other than any deferred compensation, profit sharing, bonus, stock-based compensation or other form of incentive compensation), providing for
benefits, perquisites or compensation of any nature to any Employee, or to any family member, dependent or beneficiary of any such Employee, including, travel and accident, tuition reimbursement, vacation, sick, personal or bereavement days, and
holidays. 
 (g) “B&W” has the meaning set forth in the preamble to this Agreement. 

(h) “B&W Common Stock” means the common stock of B&W, par value $0.01 per share. 

(i) “B&W Employee” means any individual who is employed by a member of the B&W Group on July 1, 2010 and, only for
purposes of Article III and any defined terms as used therein, as of the day after the Distribution Date. 
 (j) “B&W
Entity” means any member of the B&W Group (together with each current and former, direct or indirect, subsidiary of any such member (and of any such former subsidiary)), but also includes any entity which was sold or otherwise disposed of
or the business of which was discontinued at such time as such entity’s assets, liabilities or results of operations were accounted for within the Power Generation Systems, Government Operations or Industrial Operations segment of MII and its
Subsidiaries (or any predecessor to any such segment). The Parties acknowledge that this term is defined differently in the Master Separation Agreement. 

(k) “B&W Excess Plan” means any excess plan sponsored or maintained by any one or more members of the B&W Group on
July 1, 2010, including each of those set forth on Schedule 1.1(k). 
 (l) “B&W FSA” has the meaning set
forth in Section 7.4(b). 
 (m) “B&W Group” means, collectively, B&W and each B&W Subsidiary.

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

 2 

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

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

(q) “B&W New SERP Plan” means the supplemental executive retirement plan adopted by B&W and approved by MII, as sole
shareholder of B&W prior to the Distribution. 
 (r) “B&W Pension Beneficiaries” has the meaning set forth in
Section 5.1. 
 (s) “B&W Pension Plan” means any pension plan sponsored or maintained by any one or more
members of the B&W Group on July 1, 2010, including each of those set forth on Schedule 1.1(s). 
 (t) “B&W
Subsidiary” means any Subsidiary of B&W, other than Babcock & Wilcox Technical Services Group Pantex, LLC or Babcock & Wilcox Technical Services Group Y-12, LLC, as of the Distribution Date. 

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

(v) “B&W Thrift Plan” has the meaning set forth in Section 6.1 and on Schedule 1.1(v). 

(w) “B&W Transferee Plan” has the meaning set forth in Section 5.1. 

(x) “B&W Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the B&W Group on
July 1, 2010, including each of those set forth on Schedule 1.1(x). 
 (y) “B&W Welfare Plan Participants”
has the meaning set forth in Section 7.1. 
 (z) “BWICO” has the meaning set forth in the preamble to this
Agreement. 
 (aa) “COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part
6 of Subtitle B of Title I of ERISA and at Code Section 4980B. 
 (bb) “Code” means the Internal Revenue Code of
1986. 
 (cc) “Confidential Information” has the meaning set forth in the Master Separation Agreement. 

(dd) “Distribution” has the meaning set forth in the Master Separation Agreement. 

(ee) “Distribution Date” has the meaning set forth in the Master Separation Agreement. 

(ff) “Employee” means any McDermott Employee, Former McDermott Employee, B&W Employee or Former B&W Employee.

  

 3 

 (gg) “ERISA” means the U.S. Employee Retirement Income Security Act of 1974.

 (hh) “Final Transfer Amount” has the meaning set forth in Section 5.2(b). 

(ii) “FMLA” means the U.S. Family and Medical Leave Act. 

(jj) “Former B&W Employee” has the meaning set forth in Section 2.2(c). 

(kk) “Former B&W Officer” means the persons listed on Schedule 1.1(kk), each of whom has been an officer of B&W prior
to the date hereof but will not be a B&W Employee (for purposes of Article III and any defined terms as used therein). 

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

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

(nn) “Initial Transfer Date” has the meaning set forth in Section 5.1. 

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

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

(qq) “McDermott Benefit Arrangement” means any Benefit Arrangement sponsored or maintained by a member of the McDermott Group
on June 30, 2010. 
 (rr) “McDermott Employee” means any individual who is employed by a member of the McDermott
Group on July 1, 2010 and, only for purposes of Article III and any defined terms as used therein, as of the day after the Distribution Date. 

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

(tt) “McDermott Excess Plan” means any excess plan sponsored or maintained by any one or more members of the McDermott Group on
June 30, 2010, including each of those set forth on Schedule 1.1(tt). 
 (uu) “McDermott Group” means,
collectively, MII and each MII Subsidiary. 
 (vv) “McDermott Master Trust” means the trust that holds the commingled
assets of the McDermott Pension Plan and the B&W Pension Plans. 
 (ww) “McDermott Pension Plan” means the
Retirement Plan for Employees of McDermott Incorporated and Participating Subsidiary and Affiliate Companies. 
  

 4 

 (xx) “McDermott SRPP” means the McDermott Incorporated Supplemental Retirement
Payments Plan. 
 (yy) “McDermott Thrift Plan Beneficiaries” has the meaning set forth in Section 6.1.

 (zz) “McDermott Thrift Plan” means the Thrift Plan for Employees of McDermott Incorporated and Participating
Subsidiary and Affiliated Companies. 
 (aaa) “McDermott Welfare Plan” means any Welfare Plan sponsored or maintained
by any one or more members of the McDermott Group on June 30, 2010, including each of those set forth on Schedule 1.1(aaa). 

(bbb) “MI” has the meaning set forth in the preamble to this Agreement. 

(ccc) “MI Actuary” means an enrolled actuary appointed by MI. 

(ddd) “MII” has the meaning set forth in the preamble to this Agreement. 

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

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

(ggg) “MII Legacy Equity Plan” means any equity plan sponsored or maintained by MII immediately prior to the Distribution Date,
including each of those set forth on Schedule 1.1(ggg). 
 (hhh) “MII Options” means options to purchase shares of MII
Common Stock granted pursuant to any of the MII Legacy Equity Plans. 
 (iii) “MII RSAs” means restricted stock awards
issued under any of the MII Legacy Equity Plans. 
 (jjj) “MII RSUs” means restricted stock units or deferred stock
units issued under any of the MII Legacy Equity Plans that are not subject to performance conditions. 
 (kkk) “MII
SERP” means the McDermott International, Inc. New Supplemental Executive Retirement Plan. 
 (lll) “MII
Subsidiary” means any Subsidiary of MII as of the Distribution Date; provided, however, that (unless otherwise expressly stated) no B&W Entity shall be considered an “MII Subsidiary” for purposes of this Agreement. 

 

 5 

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

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

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

(ppp) “Party” or “Parties” has the meaning set forth in the preamble to this Agreement. 

(qqq) “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. 

(rrr) “Post-Distribution B&W Share Price” means the opening price on the NYSE of a share of B&W Common Stock on the
next trading day following the Distribution Date. 
 (sss) “Post-Distribution MII Option” has the meaning set forth in
Section 3.4(b). 
 (ttt) “Post-Distribution MII Share Price” means the opening price on the NYSE of a share of
MII Common Stock on the next trading day following the Distribution Date. 
 (uuu) “Pre-Distribution MII Share Price”
means the “regular way” closing price of a share of MII Common Stock on the Distribution Date, as reported on the NYSE’s Consolidated Transactions Reporting System. 

(vvv) “Privacy Contract” means any contract entered into in connection with applicable privacy protection laws or regulations.

 (www) “Registration Statement Effectiveness Date” means the first date on which the registration statement on Form
S-8 (or other appropriate form) contemplated by Section 11.7 shall be effective under the Securities Act of 1933. 
 (xxx)
“Replacement B&W Option” has the meaning set forth in Section 3.4(a). 
 (yyy) “Replacement B&W
RSAs” has the meaning set forth in Section 3.2(a). 
 (zzz) “Replacement B&W RSUs” has the meaning set
forth in Section 3.3(a). 
 (aaaa) “Replacement MII Performance RSUs” has the meaning set forth in
Section 3.5(b). 
 (bbbb) “Subsidiary” means, with respect to any specified Person, any corporation, partnership,
limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the
board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified
Person and one or more of its Subsidiaries. 
  

 6 

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

(dddd) “Value” has the meaning set forth in Section 5.2(e). 

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

(ffff) “WARN” means the U.S. Worker Adjustment and Retraining Notification Act, and any applicable state or local law
equivalent. 
 (gggg) “Welfare Plan” means a “welfare plan” as defined in ERISA Section 3(1) and also
means a cafeteria plan under Code Section 125 and any benefits offered thereunder, including pre-tax premium conversion benefits, a dependent care assistance program, contribution funding toward a health savings account and flex or cashable
credits. 
 Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

 (a) words used in the singular include the plural and words used in the plural include the singular; 

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding
meaning; 
 (c) reference to any gender includes the other gender and the neuter; 

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words
“without limitation”; 
 (e) the words “shall” and “will” are used interchangeably and have the
same meaning; 
 (f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

 (g) relative to the determination of any period of time, “from” means “from and including,”
“to” means “to but excluding” and “through” means “through and including”; 
 (h) all
references to a specific time of day in this Agreement shall be based upon Central Standard Time or Central Daylight Savings Time, as applicable, on the date in question; 

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

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

 7 

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

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

(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented
and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement; 
 (n)
reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining
compliance or applicability; 
 (o) references to any Person include such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by this Agreement; and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party; 

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

ARTICLE II 

ASSIGNMENT OF EMPLOYEES 

Section 2.1 Active Employees. 

(a) B&W Employees. Except as otherwise set forth in this Agreement, effective as of July 1, 2010, the
employment of the B&W Employees was continued by a member of the B&W 
  

 8 

 
Group. Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers. 

(b) McDermott Employees. Except as otherwise set forth in this Agreement, effective as of July 1, 2010, the employment of the
McDermott Employees was continued by a member of the McDermott Group. Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers.

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

(d) Severance. The Distribution and the assignment, transfer or continuation of the employment of employees as contemplated by
this Section 2.1 shall not be deemed a severance of employment of any employee for purposes of this Agreement and any plan, policy, practice or arrangement of any member of the McDermott Group or any member of the B&W Group. 

(e) Change of Control/Change in Control. Neither the completion of the Distribution nor any transaction in connection with the
Distribution shall be deemed a “change of control” or “change in control” for purposes of any plan, policy, practice or arrangement relating to directors, employees or consultants of any member of the McDermott Group or any
member of the B&W Group. 
 Section 2.2 Former Employees. 

(a) General Principles. Except as otherwise provided in this Agreement, each former employee of any member of the McDermott Group
or any member of the B&W Group as of the Distribution Date will be considered a former employee of the McDermott Group or the B&W Group based on his employer as of his first day of employment with any McDermott Entity or B&W Entity.

 (b) Former McDermott Employees. For purposes of this Agreement, former employees of the McDermott Group shall be
deemed to include all employees who, as of their first day of employment, were employed by a McDermott Entity and will not be either a B&W Employee or a McDermott Employee (collectively, the “Former McDermott Employees”). 

(c) Former B&W Employees. For purposes of this Agreement, former employees of the B&W Group shall be deemed to include all
employees who, as of their first day of employment, were employed by a B&W Entity and will not be either a B&W Employee or a McDermott Employee (collectively, the “Former B&W Employees”). 

 

 9 

 Section 2.3 Employment Law Obligations. 

(a) WARN Act. After the Distribution Date, (i) MII or MI shall be responsible for providing any necessary WARN notice (and
meeting any similar state law notice requirements) with respect to any termination of any McDermott Employee and (ii) B&W or BWICO shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice
requirements) with respect to any termination of any B&W Employee. 
 (b) Compliance With Employment Laws. On and
after the Distribution Date, (i) each member of the McDermott Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and
requirements relating to the employment of its McDermott Employees and the treatment of any applicable Former McDermott Employees in respect of their former employment, and (ii) each member of the B&W Group shall be responsible for adopting
and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of its B&W Employees and the treatment of any applicable Former
B&W Employees in respect of their former employment. 
 Section 2.4 Employee Records. 

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

  

 10 

 
used, copied and transmitted after the Distribution Date by members of the McDermott Group in accordance with all applicable laws, policies and Privacy Contracts relating to the collection,
storage, retention, use, transmittal, disclosure and destruction of such records. All information and records regarding employment, personnel and employee benefit matters of B&W Employees and Former B&W Employees shall be accessed, retained,
held, used, copied and transmitted after the Distribution Date by members of the B&W Group in accordance with all applicable laws, policies and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and
destruction of such records. 
 (d) Access to Records. To the extent not inconsistent with this Agreement and any
applicable privacy protection laws or regulations or Privacy Contracts, access to such records after the Distribution Date will be provided to members of the McDermott Group and members of the B&W Group in accordance with the Master Separation
Agreement. In addition, notwithstanding anything to the contrary, MII and MI shall be provided reasonable access to those records necessary for their administration of any plans or programs on behalf of McDermott Employees and Former McDermott
Employees after the Distribution Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. MII and MI shall also be permitted to retain copies of all restrictive covenant agreements with any B&W Employee or
Former B&W Employee in which any member of the McDermott Group has a valid business interest. In addition, B&W and BWICO shall be provided reasonable access to those records necessary for their administration of any plans or programs on
behalf of B&W Employees and Former B&W Employees after the Distribution Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. B&W and BWICO shall also be permitted to retain copies of all
restrictive covenant agreements with any McDermott Employee or Former McDermott Employee in which any member of the B&W Group has a valid business interest. 

(e) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all
such information, MII and B&W shall (and shall cause their respective Subsidiaries to) comply with all applicable laws, regulations, Privacy Contracts and internal policies, and shall indemnify and hold harmless each other from and against any
and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable laws, regulations, Privacy Contracts and internal policies
applicable to such information. 
 (f) No Access to Computer Systems or Files. Except as set forth in the Master
Separation Agreement or any Ancillary Agreement, no provision of this Agreement shall give (i) any member of the McDermott Group direct access to the computer systems or other files, records or databases of any member of the B&W Group or
(ii) any member of the B&W Group direct access to the computer systems or other files, records or databases of any member of the McDermott Group, unless specifically permitted by the owner of such systems, files, records or databases.

 (g) Relation to Master Separation Agreement. The provisions of this Section 2.4 shall be in addition to, and not
in derogation of, the provisions of the Master Separation Agreement governing Confidential Information, including Sections 6.3, 6.4 and 6.5 of the Master Separation Agreement. 

 

 11 

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

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

ARTICLE III 

EQUITY AND INCENTIVE COMPENSATION PLANS 

Section 3.1 General Principles. 

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

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

(c) Following the Distribution, a grantee who has outstanding awards under one or more of the MII Legacy Equity Plans and/or replacement
awards under the B&W New Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Distribution for purposes of (1) vesting and (2) determining the date of termination of employment as it
applies to any such award. 
 (d) Notwithstanding the other provisions of this Article III, in the case of Michael S. Taff,
fifty percent (50%) of the awards otherwise subject to Section 3.2(a) shall be treated as if subject to Section 3.2(b), fifty percent (50%) of the awards otherwise subject to Section 3.3(a) shall be treated as if subject to
Section 3.3(b), fifty percent (50%) of the awards otherwise subject to Section 3.4(a) shall be treated as if subject to Section 3.4(b) and fifty percent (50%) of the awards otherwise subject to Section 3.5(a) shall be
treated as if subject to Section 3.5(b). 
 (e) No award described in this Article III, whether outstanding or to be
issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be 
  

 12 

 
adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable law, including federal
securities laws. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable in accordance with the preceding sentence. 

Section 3.2 Restricted Stock. 

(a) Each grantee under any of the MII Legacy Equity Plans who will be a B&W Employee and who will hold, as of the Distribution Date,
one or more MII RSAs that are unvested as of the Distribution Date (and will not become vested as of the Distribution Date) shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, as a
replacement award in substitution for each such MII RSA (which shall be cancelled), a number of restricted shares of B&W Common Stock (a “Replacement B&W RSA”) under the B&W New Equity Plan having a value immediately following
the Distribution Date equal to the value of the MII RSA (calculated using the Pre-Distribution MII Share Price), as calculated pursuant to the following provisions. In each case, the number of shares of B&W Common Stock subject to the
Replacement B&W RSA shall be equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by the number of shares of MII Common Stock subject to the MII RSA that is being cancelled and replaced pursuant to
this Section 3.2(a), and (y) is the Post-Distribution B&W Share Price, with the resulting number of shares subject to the Replacement B&W RSAs being rounded up or down to the nearest whole share. B&W shall be responsible for
(i) the satisfaction of all tax reporting and withholding requirements in respect of the delivery of shares of B&W Common Stock to B&W Employees and the vesting of Replacement B&W RSAs and (ii) remitting the appropriate tax or
withholding amounts to the appropriate taxing authorities in respect of the delivery and vesting of all such restricted shares. Except as provided in the foregoing provisions of this Section 3.2(a), Replacement B&W RSAs shall be granted on
terms which are in all material respects identical (including with respect to vesting) to the terms of the MII RSAs which they replace. 

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

 13 

 
(including with respect to vesting) to the terms of the MII RSAs with respect to which they are granted. 

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

 Section 3.3 Restricted Stock Units. 

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

(b) Each MII Legacy Award Holder and each grantee under any of the MII Legacy Equity Plans who will be a McDermott Employee and (in
either case) who will hold one or more MII RSUs as of the Distribution Date shall receive, for each award of MII RSUs (in lieu of receiving any B&W restricted or deferred stock units in connection with such MII RSUs), a

  

 14 

 
number of additional restricted or deferred (as applicable) stock units with respect to MII Common Stock (the “Additional MII RSUs”), under one of the MII Legacy Equity Plans. In each
case, the number of shares of MII Common Stock subject to an award of Additional MII RSUs shall be equal to the product of (x) and (y), where (x) is the number of shares of MII Common Stock covered by the original award of MII RSUs and
(y) is equal to (a) the Pre-Distribution MII Share Price minus Post-Distribution MII Share Price, divided by (b) the Post-Distribution MII Share Price, with the resulting number of shares subject to the Additional MII RSUs being
rounded up or down to the nearest whole share. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the vesting of the
Additional MII RSUs or distribution of MII Common Stock to MII Legacy Award Holders and McDermott Employees and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and
vesting of all such restricted stock units. Except as provided in the foregoing provisions of this Section 3.3(b), Additional MII RSUs shall be granted on such terms which are in all material respects identical (including with respect to
vesting) to the terms of the MII RSUs with respect to which they are granted. 
 (c) Each Former B&W Officer who will hold
MII RSUs as of the Distribution Date shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, upon full settlement of such MII RSUs effective as of the Distribution Date, a number of shares of
MII Common Stock payable with respect to such MII RSUs, plus an additional number of shares of B&W Common Stock (subject to applicable tax withholding) equal to the number of shares of B&W Common Stock that would have been distributed in the
Distribution with respect to the number of shares of MII Common Stock subject to grantee’s vested MII RSUs. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for (i) the satisfaction of all tax
reporting and withholding requirements in respect of the distribution of MII Common Stock upon settlement of an MII RSU in accordance with this Section 3.3(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate
taxing authorities. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock as described in this Section 3.3(c) and (ii) remitting
the appropriate tax or withholding amounts to the appropriate taxing authorities. 
 Section 3.4 Stock Options.

 (a) Each grantee under any of the MII Legacy Equity Plans (i) who is a B&W Legacy Award Holder or will be a B&W
Employee, or who will not be a B&W Employee but will serve on the board of directors of B&W and not on the board of directors of MII immediately after the Distribution Date, and (ii) who holds as of the Distribution Date, one or more
MII Options, shall receive, as a replacement award in substitution for each such MII Option (which shall be cancelled), an option to purchase a number of shares of B&W Common Stock under the B&W New Equity Plan (a “Replacement B&W
Option”) having a value (calculated using the Post-Distribution B&W Share Price) equal to the value of the MII Common Stock subject to the MII Option (calculated using the Pre-Distribution MII Share Price), as calculated pursuant to the
following provisions. The number of shares of B&W Common Stock subject to a Replacement B&W Option shall be equal to the product of (i) the number of shares of MII Common Stock subject to an MII Option as of the Distribution Date and
(ii) a fraction, the numerator of which is 
  

 15 

 
the Pre-Distribution MII Share Price and the denominator of which is the Post-Distribution B&W Share Price. Each such Replacement B&W Option shall have the same comparative ratio of the
exercise price to the Post-Distribution B&W Share Price as the exercise price of each MII Option to the Pre-Distribution MII Share Price. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding
requirements in respect of the exercise of Replacement B&W Options issued in accordance with this Section 3.4(a) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. Replacement B&W
Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as provided in the foregoing provisions of this Section 3.4(a), Replacement B&W Options granted under this Section 3.4(a) shall be granted on
terms which are in all material respects identical (including with respect to vesting) to the terms of the MII Options with respect to which they replace. 

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

  

 16 

 
determined by multiplying the aggregate fair market value of the number of shares of MII Common Stock subject to the MII Option using the Pre-Distribution MII Share Price by a fraction, the
numerator of which is the Post-Distribution MII Share Price and the denominator of which is the Post-Distribution MII Share Price plus the Post-Distribution B&W Share Price, and dividing that product by the Post-Distribution MII Share Price,
with the resulting number of shares subject to the Post-Distribution MII Option being rounded up or down to the nearest whole share. In each case, the number of shares of B&W Common Stock subject to the Replacement B&W Option shall be
determined by multiplying the fair market value of the number of shares of MII Common Stock subject to the MII Option using the Pre-Distribution MII Share Price by a fraction, the numerator of which is the Post-Distribution B&W Share Price and
the denominator of which is the Post-Distribution MII Share Price plus the Post-Distribution B&W Share Price, and dividing that product by the Post-Distribution B&W Share Price, with the resulting number of shares subject to the Replacement
B&W Option being rounded up or down to the nearest whole share. Each of the Replacement B&W Options and the Post-Distribution MII Options shall have the same comparative ratio of the exercise price to the Post-Distribution B&W Share
Price and Post-Distribution MII Share Price, respectively, as the exercise price of the MII Option being replaced to the Pre-Distribution MII Share Price. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for
(i) the satisfaction of all tax reporting and withholding requirements in respect of the exercise of Post-Distribution MII Options issued in accordance with this Section 3.4(c) and (ii) remitting the appropriate tax or withholding
amounts to the appropriate taxing authorities. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the exercise of Replacement B&W Options issued in accordance with this
Section 3.4(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. Replacement B&W Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as
provided in the foregoing provisions of this Section 3.4(c), Replacement B&W Options and Post-Distribution MII Options shall be granted on such terms which are in all material respects identical (including with respect to vesting) to the
terms of the MII Options with respect to which they are granted. 
 Section 3.5 Performance-Based Awards.

 (a) Each grantee under any of the MII Legacy Equity Plans who is a B&W Legacy Award Holder or will be a B&W Employee
and (in either case) who holds, as of the Distribution Date, one or more performance-based awards as of the Distribution Date shall receive, on the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, as a
replacement award in substitution for each such performance-based award (which shall be cancelled), a number of restricted stock units with respect to and payable in shares of B&W Common Stock (“Replacement B&W Performance RSUs”)
under the B&W New Equity Plan. The Replacement B&W Performance RSUs will have a value (calculated using the Post-Distribution B&W Share Price) equal to the value of the shares of MII Common Stock (calculated using the Pre-Distribution
MII Share Price) that would vest under the performance-based award at target, as calculated pursuant to the following provisions. In each case, the number of Replacement B&W Performance RSUs shall be equal to (x) divided by (y), where
(x) is the Pre-Distribution MII Share Price multiplied by the number of shares of MII Common Stock subject to the performance-based awards at target performance that are being cancelled and replaced pursuant to this Section 3.5(a), and
(y) is the Post-Distribution B&W Share Price, 
  

 17 

 
with the resulting number of Replacement B&W Performance RSUs being rounded up or down to the nearest whole unit. B&W shall be responsible for (i) the satisfaction of all tax
reporting and withholding requirements in respect of the distribution of B&W Common Stock in accordance with this Section 3.5(a) and the vesting of Replacement B&W Performance RSUs and (ii) remitting the appropriate tax or
withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Continued employment conditions applicable to such awards will apply to the converted award. 

(b) Each grantee under any of the MII Legacy Equity Plans who is an MII Legacy Award Holder or will be a McDermott Employee and (in
either case) who will hold one or more performance-based equity awards as of the Distribution Date, shall receive, as a replacement award in substitution for each such performance-based award (which shall be cancelled), a number of restricted stock
units with respect to and payable in shares of MII Common Stock (“Replacement MII Performance RSUs”) under one of the MII Legacy Equity Plans. In each case, the Replacement MII Performance RSUs will have a value (calculated using the
Post-Distribution MII Share Price) equal to the value of the shares of MII Common Stock (calculated using the Pre-Distribution MII Share Price) that would vest under the performance-based award at target, as determined pursuant to the following
provisions. In each case, the number of Replacement MII Performance RSUs shall be equal to (x) divided by (y), where (x) is the Pre-Distribution MII Share Price multiplied by the number of shares of MII Common Stock subject to the
performance-based awards at target performance that are being cancelled and replaced pursuant to this Section 3.5(b), and (y) is the Post-Distribution MII Share Price, with the resulting number of Replacement MII Performance RSUs being
rounded up or down to the nearest whole unit. MII shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of MII Common Stock in accordance with this Section 3.5(c) and
the vesting of Replacement MII Performance RSUs and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such restricted stock units. Continued
employment conditions applicable to such awards will apply to the converted award. 
 (c) Each grantee under the MII Legacy
Equity Plans who is a Former B&W Officer and who will hold one or more performance-based equity awards as of the Distribution Date shall receive (subject to applicable tax withholding) a number of Replacement MII Performance RSUs equal to the
number of shares of MII Common Stock that would have been earned at target performance for each such performance-based equity award (except with respect to the performance-based award identified for the person listed on Schedule 3.5(c), which would
have been earned at maximum performance), with the resulting number of Replacement MII Performance RSUs being rounded up or down to the nearest whole unit and shall also receive (subject to applicable tax withholding), on the last to occur of the
Distribution Date and the Registration Statement Effectiveness Date, a number of Replacement B&W Performance RSUs equal to the number of shares of B&W Common Stock that would have been distributed in the Distribution with respect to the
Replacement MII Performance RSUs as if each of such Replacement MII Performance RSUs had been MII Common Stock. MII (or one or more of the MII Subsidiaries, as designated by MII) shall be responsible for the satisfaction of all tax reporting and
withholding requirements in respect of the distribution of MII Common Stock upon settlement of a performance-based equity award in accordance with this Section 3.5(c) and shall be responsible for remitting the appropriate tax or withholding
amounts to the appropriate 
  

 18 

 
taxing authorities. B&W shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the distribution of B&W Common Stock upon
settlement of the additional B&W restricted stock units in accordance with this Section 3.5(c) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. 

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

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

(a) By approving the adoption of this Agreement, the respective boards of directors of MII and B&W intend to exempt from the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b–3 thereunder, all acquisitions and dispositions of equity incentive awards by directors and executive officers of each of
MII and B&W, and the respective boards of directors of MII and B&W also intend to expressly approve, in respect of any equity-based award, the use of any method for the payment of an exercise price and the satisfaction of any applicable tax
withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of option shares from delivery in satisfaction of applicable tax withholding requirements) to the extent such
method is permitted under the applicable equity incentive plan and award agreement. 
 (b) Notwithstanding anything in this
Agreement to the contrary (including the treatment of supplemental and deferred compensation plans, outstanding long–term incentive awards and annual incentive awards as described herein), MII and B&W agree to negotiate in good faith
regarding the need for any treatment different from that otherwise provided herein to ensure that (i) a federal income tax deduction for the payment of such supplemental or deferred compensation or long–term incentive award, annual
incentive award or other compensation is not limited by reason of Code Section 162(m), and (ii) the treatment of such supplemental or deferred compensation or long–term incentive award, annual incentive award or other compensation
does not cause the imposition of a tax under Code Section 409A. 
 Section 3.7 Certain Bonus Payments.

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

 19 

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

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES 

Section 4.1 General Principles. 

(a) Each member of the McDermott Group and each member of the B&W Group shall take any and all reasonable action as shall be necessary
or appropriate so that active participation in the McDermott Pension Plan, McDermott Thrift Plan, McDermott Welfare Plans and McDermott Benefit Arrangements by all B&W Employees and Former B&W Employees shall terminate in connection with the
Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on June 30, 2010), and each member of the B&W Group shall cease to be a participating employer under the terms of
such McDermott Pension Plan, McDermott Thrift Plan, McDermott Welfare Plans and McDermott Benefit Arrangements as of such time. 

Each member of the B&W Group and each member of the McDermott Group shall take any and all reasonable action as shall be necessary or
appropriate so that active participation in the B&W Pension Plans, B&W Thrift Plan, B&W Welfare Plans and B&W Benefit Arrangements by all McDermott Employees and Former McDermott Employees shall terminate in connection with the
Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on June 30, 2010), and each member of the McDermott Group shall cease to be a participating employer under the terms
of such B&W Pension Plans, B&W Thrift Plan, B&W Welfare Plans and B&W Benefit Arrangements as of such time. 

Except as otherwise provided in this Agreement, one or more members of the B&W Group (as designated by B&W) shall continue to be
responsible for or assume, effective as of July 1, 2010, all employee benefits liabilities for B&W Employees and Former B&W Employees, and the assets relating to such employee benefits for B&W Employees and Former B&W Employees
shall be transferred to or continue to be held by one or more members of the B&W Group (as designated by B&W); and one or more members of the McDermott Group (as designated by MII) shall continue to be responsible for or assume all employee
benefits liabilities for McDermott Employees and Former McDermott Employees and the assets relating to such employee benefits for McDermott Employees and Former McDermott Employees shall be transferred to or continue to be held by one or more
members of the McDermott Group (as designated by MII). 
  

 20 

 (b) Except as otherwise provided in this Agreement, effective as of the day after the
Distribution Date, one or more members of the B&W Group (as determined by B&W) shall assume or continue the sponsorship of, and no member of the McDermott Group shall have any further liability for or under, the following agreements,
obligations and liabilities, and B&W shall indemnify each member of the McDermott Group, and the officers, directors, and employees of each member of the McDermott Group, and hold them harmless with respect to such agreements, obligations or
liabilities: 
 (i) any and all individual agreements entered into between any member of the McDermott Group and
any B&W Employee or Former B&W Employee; 
 (ii) any and all agreements entered into between any member
of the McDermott Group and any individual who is an independent contractor providing services primarily for the business activities of the B&W Group; 

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

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

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

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

(c) Except as otherwise provided in this Agreement, effective as of the day after the Distribution Date, no member of the B&W Group
shall have any further liability for, and MII shall indemnify each member of the B&W Group, and the officers, directors, and employees of each member of the B&W Group, and hold them harmless with respect to any and all liabilities

  

 21 

 
and obligations whatsoever with respect to, claims made by or with respect to any McDermott Employees or Former McDermott Employees in connection with any employee benefit plan, program or policy
not otherwise retained or assumed by any member of the B&W Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the McDermott Group or any officer, director, employee or agent
thereof on or prior to the Distribution Date. 
 Section 4.2 Sponsorship and/or Establishment of B&W Plans.
Except as otherwise provided in this Agreement, sponsorship of benefit plans that cover solely B&W Employees and Former B&W Employees shall be deemed to have become effective July 1, 2010 by the member of the B&W Group specified on
Schedule 4.2, and to the extent necessary to achieve such sponsorship, each member of the McDermott Group and each member of the B&W Group shall take appropriate action, including transfer of sponsorship of each such plan. McDermott Welfare
Plans in which both (i) McDermott Employees or Former McDermott Employees and (ii) B&W Employees or Former B&W Employees participate shall be divided into two separate plans, with one covering McDermott Employees and Former
McDermott Employees sponsored by a member of the McDermott Group, and the other covering B&W Employees and Former B&W Employees sponsored by a member of the B&W Group. 

Section 4.3 Service Credit. 

(a) Service for Eligibility and Vesting Purposes. Except as otherwise provided in any other provision of this Agreement, for
purposes of eligibility and vesting under the B&W Pension Plan, B&W Thrift Plan and B&W Welfare Plans, B&W shall, and shall cause each member of the B&W Group to, credit each B&W Employee and Former B&W Employee with
service for any period of employment with any member of the McDermott Group on or prior to the Distribution Date to the same extent such service would be credited if it had been performed for a member of the B&W Group. 

(b) Service for Benefit Purposes. Except as otherwise provided in any other provision of this Agreement, (i) for purposes of
benefit levels and accruals and benefit commencement entitlements under the B&W Pension Plan, B&W Thrift Plan and B&W Welfare Plans, B&W shall, and shall cause each member of the B&W Group to, credit each B&W Employee and
Former B&W Employee with service for any period of employment with any member of the McDermott Group on or prior to the Distribution Date to the same extent that such service is taken into account pursuant to the terms of the McDermott Pension
Plan, McDermott Thrift Plan and McDermott Welfare Plans, and (ii) for purposes of benefit commencement entitlements under the McDermott Pension Plan, McDermott Thrift Plan and McDermott Welfare Plans, MII shall, and shall cause each member of
the McDermott Group to, credit each McDermott Employee and Former McDermott Employee with service for any period of employment with any member of the B&W Group on or prior to the Distribution Date to the same extent such service would be
credited if it had been performed for a member of the McDermott Group. 
 (c) Evidence of Prior Service. Notwithstanding
anything to the contrary, but subject to applicable law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records available to the first Party to document such

  

 22 

 
service, plan participation and membership of such Employees and cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit
eligibility, participation, vesting and calculation of benefits with respect to any Employee. 
 Section 4.4 Plan
Administration. 
 (a) Transition Services. The Parties acknowledge that the McDermott Group or the B&W Group may
provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of an applicable transition services agreement. The Parties agree to enter into a business associate agreement (if
required by applicable health information privacy laws) in connection with such transition services agreement. 
 (b)
Administration. B&W shall use its best efforts to, and shall cause each member of the B&W Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored
benefit plans maintained by any member of the McDermott Group. MII shall use its best efforts to, and shall cause each member of the McDermott Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the
tax-favored status of the tax-favored benefit plans maintained by any member of the B&W Group. 
 (c) Participant
Elections and Beneficiary Designations. All participant elections and beneficiary designations made under any plan sponsored by a member of the McDermott Group prior to the effective date as of which assets or liabilities relating to that plan
are transferred or allocated to a member of the B&W Group shall continue in effect under any plan maintained by any member of the B&W Group to which liabilities are transferred or allocated pursuant to this Agreement until such time as any
applicable participant changes his elections or beneficiary designations in accordance with the procedures of the relevant plan, as the case may be, including deferral, investment, and payment form elections, dividend elections, coverage options and
levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders. 
 ARTICLE V

 PENSION, EXCESS AND SUPPLEMENTAL PLANS 

Section 5.1 General Principles. The B&W Pension Plans shall continue to be maintained and sponsored by one or more
members of the B&W Group after the Distribution Date. Additionally, on or prior to the Distribution Date, B&W amended one of the B&W Pension Plans (the “B&W Transferee Plan”) in order that the B&W Transferee Plan will
provide to each B&W Employee and Former B&W Employee who was a participant in the McDermott Pension Plan (and each alternate payee or beneficiary of such person) (the “B&W Pension Beneficiaries”) benefits identical to those
accrued with respect to such person under the McDermott Pension Plan as of the close of business on April 30, 2010 (the “Initial Transfer Date”) (the “Transferred Benefit”). On or prior to July 1, 2010, B&W has
established a trust intended to be qualified under Code Section 501(a) (the “B&W Master Trust”), and MI and B&W have caused the transfer from the McDermott Master Trust to the B&W Master Trust of the assets of the B&W
Pension Plans as described in Section 5.2. A B&W Pension Beneficiary 
  

 23 

 
shall not accrue benefits under the McDermott Pension Plan after the Initial Transfer Date, unless such B&W Pension Beneficiary shall become employed by any member of the McDermott Group that
participates in the McDermott Pension Plan after June 30, 2010. A McDermott Employee or Former McDermott Employee shall not accrue benefits under the B&W Transferee Plan, unless such McDermott Employee or Former McDermott Employee shall
become employed by any member of the B&W Group that participates in the B&W Transferee Plan. The McDermott Group and the B&W Group shall each be responsible for the funding of their respective pension plans after June 30, 2010.

 Section 5.2 Pension Transfers. 

(a) Initial Transfer. On or prior to the Distribution Date, with the assistance of the MI Actuary, MI shall establish and
communicate to B&W an amount equal to 90% of the estimated asset transfer amount attributable to the Transferred Benefit, calculated as of the Initial Transfer Date in accordance with Code Section 414(l) but based on January 1, 2009
census data and trust assets as of the last business day of the month immediately preceding the month in which the Initial Transfer Date occurs, as estimated in good faith by MI (the “Initial Transfer Amount”). Following the determination
of the Initial Transfer Amount by MI, MI shall cause to be transferred from the McDermott Pension Plan to the B&W Transferee Plan assets having an aggregate Value (as defined below) equal to the Initial Transfer Amount. As of June 1, 2010,
the B&W Transferee Plan shall commence making the required benefit payments. Effective as of the Initial Transfer Date, B&W shall assume all liabilities with respect to the payment of benefits previously accrued under the McDermott Pension
Plan by the B&W Pension Beneficiaries. 
 (b) Calculation of Final Transfer Amount and True-Up Adjustment. Promptly
following the Initial Transfer Date, the MI Actuary shall determine the Final Transfer Amount and the True-Up Adjustment, each of which is defined herein. The “Final Transfer Amount” means the amount required to be transferred from the
McDermott Pension Plan to the B&W Transferee Plan in respect of the assumption by the B&W Transferee Plan of the Transferred Benefit obligations, as determined in accordance with Code Section 414(l) and the regulations thereunder, as
appropriately adjusted to reflect the following amounts arising after the Initial Transfer Date and before the True-Up Adjustment: (i) any distributions and contributions made in respect of the B&W Pension Beneficiaries;
(ii) administrative expenses of the McDermott Pension Plan reasonably allocable to the B&W Pension Beneficiaries; (iii) the net gain or loss (realized and unrealized) of the McDermott Pension Plan allocable to the B&W Pension
Beneficiaries; (iv) changes in the census data from January 1, 2009 through the Initial Transfer Date; and (v) other appropriate items. Promptly upon determination of the Final Transfer Amount, MI shall cause the MI Actuary to provide
to B&W a written statement of the Final Transfer Amount, a summary of the calculation of such amount and a written statement that the sum of the Initial Transfer Amount and the True-Up Adjustment satisfies the requirements of Code
Section 414(l). MI and B&W shall use commercially reasonable efforts to cause the determination of the Final Transfer Amount and the True-Up Adjustment to be completed as promptly as practicable, subject to the time frames established
herein, but in no event later than December 31, 2010. 
 (c) Transfer of True-Up Adjustment. Transfer of the True-Up
Adjustment shall be made promptly after the date on which the Final Transfer Amount is determined by the MI 
  

 24 

 
Actuary. The “True-Up Adjustment” means: (A) if the Final Transfer Amount exceeds the Initial Transfer Amount, MI shall cause to be transferred from the McDermott Pension Plan to
the B&W Transferee Plan trust assets having a Value (as defined below) equal to such excess, and (B) if the Initial Transfer Amount exceeds the Final Transfer Amount, B&W shall cause to be transferred from the B&W Transferee Plan to
the McDermott Pension Plan assets having a Value equal to such excess. 
 (d) B&W Pension Plans Transfer. Effective
as of July 1, 2010, assets attributable to the B&W Pension Plans held in the McDermott Master Trust have been transferred to the B&W Master Trust. 

(e) Assets and Value. 

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

(a) Excess Plans. The liabilities attributable to McDermott Employees and Former McDermott Employees in a B&W Excess Plan, if
any, shall be assumed by a member of the McDermott Group which sponsors the McDermott Excess Plans and the liabilities attributable to B&W Employees and Former B&W Employees in a McDermott Excess Plan, if any, shall be assumed by a member of
the B&W Group which sponsors a B&W Excess Plan, each effective as of the Distribution Date. 
 (b) Supplemental
Plans. On or prior to the Distribution Date, B&W shall establish the B&W New SERP. The liabilities attributable to B&W Employees and Former B&W Employees in the McDermott SRPP shall be assumed by a member of the B&W Group
which sponsors the B&W New SERP, effective as of the Distribution Date. Each member of the B&W Group shall cease to be a participating employer in the McDermott SRPP and the MII SERP, and the B&W Employees and the Former B&W
Employees shall no longer participate in the 
  

 25 

 
McDermott SRPP or MII SERP, each effective as of the Distribution Date, unless any such B&W Employee or Former B&W Employee shall become employed by any member of the McDermott Group
after such date and such member participates in the McDermott SRPP or the MII SERP and such employee is eligible for participation therein. 

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

THRIFT PLANS 

Section 6.1 General Principles. Effective as of June 18, 2010, B&W established and adopted a qualified employee cash
or deferred arrangement under Code Section 401(k) (the “B&W Thrift Plan”) intended to be qualified under Code Section 401(a) and containing provisions that will provide, among other things, (i) benefits for each B&W
Employee and Former B&W Employee who was a participant (or former participant with a remaining account balance) in the McDermott Thrift Plan as of June 17, 2010 (and each beneficiary and alternate payee of such person) (the “B&W
Thrift Plan Beneficiaries”) identical (except as provided in this Article VI) to those in effect for the B&W Thrift Plan Beneficiaries under the McDermott Thrift Plan as of the date of transfer of assets and liabilities with respect to such
plan (as described below), and (ii) McDermott Employees or Former McDermott Employees (and each beneficiary or alternate payee of such person) (the “McDermott Thrift Plan Beneficiaries”) with participant account balances reflecting
shares of B&W Common Stock received in the Distribution. Each B&W Employee who was an active participant in the McDermott Thrift Plan on June 17, 2010 shall participate in the B&W Thrift Plan effective from and after June 18,
2010. B&W Employees and Former B&W Employees shall not make or receive additional contributions under the McDermott Thrift Plan after June 17, 2010, unless any such B&W Employee or Former B&W Employee shall become employed by
any member of the McDermott Group after such date and such member participates in the McDermott Thrift Plan. A McDermott Employee or Former McDermott Employee shall not participate in the B&W Thrift Plan unless any such McDermott Employee or
Former McDermott Employee shall become employed by any member of the B&W Group after June 17, 2010 and such member participates in the B&W Thrift Plan. The interest of each B&W Thrift Plan Beneficiary in the McDermott Thrift Plan
attributable to employer matching contributions as of the Distribution Date shall be 100% vested on the Distribution Date. The interest of each McDermott Thrift Plan Beneficiary in the B&W Thrift Plan attributable to employer matching
contributions as of the Distribution Date shall be 100% vested on the Distribution Date. 
  

 26 

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

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

(b) McDermott Common Stock Fund. MI shall amend the McDermott Thrift Plan, on or prior to the Distribution Date, to provide that,
following the Distribution: (i) the MII Common Stock fund will hold the assets of the accounts of the B&W Thrift Plan Beneficiaries invested in the MII Common Stock fund; (ii) the B&W Thrift Plan Beneficiaries will be prohibited
from increasing their holdings in the MII Common Stock fund; (iii) the B&W Thrift Plan Beneficiaries may elect to liquidate their holdings in the MII Common Stock fund and invest those monies in any other investment fund offered under the
McDermott Thrift Plan; and (iv) the B&W Thrift Plan Beneficiaries may elect to receive their holdings in the MII Thrift Plan in accordance with the distribution options available under such plan to terminated employees. MI shall cause
the McDermott Thrift Plan to provide that B&W Thrift Plan Beneficiaries shall participate in the McDermott Thrift Plan in respect of their accounts thereunder; provided, however, MI may in its discretion provide that the MII Common Stock fund
shall no longer be offered as an investment alternative under the McDermott Thrift Plan. 
 Section 6.3 Transfer of
Accounts. Effective June 18, 2010, MI caused to be transferred from the trust under the McDermott Thrift Plan to the trust under the B&W Thrift Plan the aggregate amount that was credited to the accounts of the B&W Thrift Plan
Beneficiaries as of such date, save and except for the portion of the MII Common Stock fund attributable to the accounts of the B&W Thrift Plan Beneficiaries. The transfer shall, to the extent reasonably possible, be an in-kind transfer,
subject to the reasonable consent of the trustee of the B&W Thrift Plan trust and shall include the transfer of the aggregate assets held in the accounts relating to each B&W Thrift Plan Beneficiary under the McDermott Thrift Plan and any
participant loan notes held under such plans. MI shall cause the McDermott Thrift Plan to allocate to the B&W Thrift Plan a proportionate share of any forfeiture account under the McDermott Thrift Plan. 

 

 27 

 ARTICLE VII 

WELFARE PLANS 

Section 7.1 Establishment of B&W Welfare Plans. Except as provided below, the members of the B&W Group who had
previously adopted a McDermott Welfare Plan and were participating employers therein on June 30, 2010 (“Participating B&W Employers”) have, at 11:59 p.m. on that date, withdrawn from such participation, and, effective as of
July 1, 2010, one or more of the Participating B&W Employers has assumed sponsorship, under newly established welfare plans, of the coverage and benefits which were offered under such plans to the B&W Employees and the Former B&W
Employees (and their eligible spouses and dependents as the case may be) of the Participating B&W Employers (collectively, the “B&W Welfare Plan Participants”). Such coverage and benefits shall then be provided to the B&W
Welfare Plan Participants on an uninterrupted basis under the newly established B&W Welfare Plans which shall contain substantially the same benefit provisions as in effect under the corresponding McDermott Welfare Plan on June 30, 2010.
Except as provided below, effective as of July 1, 2010, liabilities relating to the B&W Welfare Plan Participants shall be spun off from each McDermott Welfare Plan and allocated to the corresponding new B&W Welfare Plan. 

As a result of withdrawal from participation in the McDermott Welfare Plans by the Participating B&W Employers, the B&W Welfare
Plan Participants ceased to be eligible for coverage under the McDermott Welfare Plans at 11:59 p.m. on June 30, 2010. B&W Welfare Plan Participants shall not participate in any McDermott Welfare Plans after June 30, 2010, unless they
shall become employed after such date by any member of the McDermott Group that participates in such plans and meet the terms and conditions of participation thereunder. McDermott Employees and Former McDermott Employees shall not participate in any
B&W Welfare Plans, unless they shall become employed after June 30, 2010 by any member of the B&W Group that participates in such plans and meet the terms and conditions of participation thereunder. 

Section 7.2 Transitional Matters Under B&W Welfare Plans. 

(a) Treatment of Claims Incurred. 

(i) Self-Insured Benefits. B&W has assumed and is responsible for the funding of payment for any unpaid covered
claim and eligible expense: 
 (A) incurred by any B&W Welfare Plan Participant prior to July 1, 2010
under a McDermott Welfare Plan that is not described in section 7.2(a)(ii) below, to the extent such participant has coverage under such plan as, or through, an employee or former employee of a Participating B&W Employer on the date such claim
or expense is incurred; or 
 (B) incurred by any B&W Employee or Former B&W Employee prior to
July 1, 2010 under a McDermott Benefit Arrangement that is not described in section 7.2(a)(ii) below. 
  

 28 

 No member of the McDermott Group shall be responsible for any liability with respect to any
such claims or expenses. 
 (ii) Insured Benefits. With respect to benefits that, on or prior to
June 30, 2010, were provided for under the McDermott Welfare Plans through the purchase of insurance, MI shall cause the McDermott Welfare Plans to fully perform, pay and discharge all claims of B&W Welfare Plan Participants that were
incurred prior to June 30, 2010. 
 (iii) Claims Incurred. For purposes of this Section 7.2(a),
a claim or liability is deemed to be incurred (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or liability; (B) with respect to life insurance,
accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or liability; (C) with respect to long-term disability benefits, upon the date of an individual’s
disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or liability; and (D) with respect to a period of continuous hospitalization, upon the date of admission to the hospital,
unless otherwise provided under the terms of the applicable McDermott Welfare Plan or McDermott Benefit Arrangement. 
 (b)
Credit for Deductibles and Other Limits. With respect to each B&W Welfare Plan Participant, the B&W Welfare Plans will give credit in plan year 2010 for any amount paid, number of services obtained or visits provided under the
comparable type McDermott Welfare Plan by such B&W Welfare Plan Participant in plan year 2010 toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts are taken
into account under the comparable type McDermott Welfare Plan. For purposes of any life-time maximum benefit limit payable to a B&W Welfare Plan Participant under any B&W Welfare Plan, the B&W Welfare Plans will recognize any expenses
paid or reimbursed by a McDermott Welfare Plan with respect to such participant on or prior to June 30, 2010 to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under that
McDermott Welfare Plan. 
 (c) COBRA. Effective as of July 1, 2010, B&W has assumed and will satisfy all
requirements under COBRA with respect to all B&W Employees and Former B&W Employees and their qualified beneficiaries, including for individuals who are already receiving benefits as of such date under COBRA. 

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

Section 7.3 VEBA. MI is the grantor of a Code Section 501(c)(9) trust (the “VEBA”) that holds the plan assets
of a B&W Welfare Plan. On or prior to the Distribution Date, B&W or a member of the B&W Group shall assume the status as settlor and sponsor of the VEBA, and no member of the McDermott Group shall have any further responsibility or
liability therefor. 
  

 29 

 Section 7.4 Continuity of Benefits, Benefit Elections and Beneficiary
Designations. 
 (a) Benefit Elections and Designations. As of July 1, 2010 (or such other date provided for
under subsection 7.4(b)), B&W has caused the B&W Welfare Plans to recognize and give effect to all elections and designations (including all coverage and contribution elections and beneficiary designations) made by each B&W Welfare Plan
Participant under, or with respect to, the corresponding McDermott Welfare Plan for plan year 2010. Notwithstanding the foregoing, no elections with respect to long-term care insurance shall be given effect by B&W under any B&W Welfare Plan
or otherwise. 
 (b) Additional Details Regarding Flexible Spending Accounts. To the extent any B&W Welfare Plan
provides or constitutes a health care flexible spending account or dependent care flexible spending account (each a “B&W FSA”), such B&W Welfare Plan shall be effective as of January 1, 2010 rather than July 1, 2010. It
is the intention of the Parties that all activity under a B&W Welfare Plan Participant’s flexible spending account with McDermott for plan year 2010 be treated instead as activity under the corresponding B&W FSA. Accordingly,
(i) any period of participation by a B&W Welfare Plan Participant in a McDermott flexible spending account during plan year 2010 (the “Participation Period”) will be deemed a period when the B&W Welfare Plan Participant
participated in the corresponding B&W FSA; (ii) all expenses incurred during a Participation Period will be deemed incurred while the participant’s coverage was in effect under the corresponding B&W FSA; and (iii) all
elections and reimbursements made with respect to a Participation Period under a McDermott flexible spending account will be deemed to have been made with respect to the corresponding B&W FSA. 

(c) Employer Non-elective Contributions. As of July 1, 2010, B&W has caused any B&W Welfare Plan that constitutes a
cafeteria plan under Section 125 of the Code to recognize and give effect to all non-elective employer contributions payable and paid toward coverage of a B&W Welfare Plan Participant under the corresponding McDermott Welfare Plan that is a
cafeteria plan under Section 125 of the Code for the applicable cafeteria plan year. 
 Section 7.5 Insurance
Contracts. To the extent any McDermott Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, MI and B&W will cooperate and use their commercially reasonable efforts to replicate such
insurance contracts for B&W (except to the extent changes are required under applicable state insurance laws) and to maintain any pricing discounts or other preferential terms for both MI and B&W for a reasonable term. Neither Party shall be
liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this
Section 7.5. 
 Section 7.6 Third-Party Vendors. Except as provided below, to the extent any McDermott Welfare
Plan is administered by a third-party vendor, MI and B&W will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for B&W and to maintain any pricing discounts or other preferential
terms for both MI and B&W for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any 

 

 30 

 
additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 7.6. 

Section 7.7 Claims Experience. Notwithstanding the foregoing, MI and B&W shall use commercially reasonable efforts to
ensure that any claims experience under the McDermott Welfare Plans attributable to B&W Welfare Beneficiaries shall be available to the B&W Welfare Plans, as permitted by any applicable privacy protection laws or regulations or Privacy
Contracts. 
 ARTICLE VIII 

BENEFIT ARRANGEMENTS 

Except as otherwise provided under this Agreement, effective as of July 1, 2010, B&W Employees and Former B&W Employees are
no longer eligible to participate in any McDermott Benefit Arrangement. 
 ARTICLE IX 

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION 

Effective as of July 1, 2010, B&W shall have (and, to the extent it has not previously had such obligations, assume) the
obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all B&W Employees and Former B&W Employees. Effective as of July 1, 2010, MII shall have (and, to the extent it
has not previously had such obligations, assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all McDermott Employees and Former McDermott Employees. B&W and MII
shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution. 

ARTICLE X 

RETENTION, SEVERANCE AND OTHER MATTERS 

Section 10.1 Retention Agreements. 

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

 31 

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

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

Section 10.2 Severance. 

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

(b) Except as otherwise provided in this Agreement, effective after the Distribution Date, B&W shall assume and shall be responsible
for administering all payments and benefits under the applicable MII severance policies or any termination agreements with Former B&W Employees whose employment terminated prior to the Distribution Date for an eligible reason under such policies
or in accordance with such agreements. 
 Section 10.3 Accrued Time Off. B&W shall recognize and assume all
liability for all vacation, holiday, sick leave, flex days, personal days and paid-time off with respect to B&W Employees, and B&W shall credit each B&W Employee with such accrual. 

Section 10.4 Leaves of Absence. B&W will continue to apply the appropriate leave of absence policies applicable to
inactive B&W Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by B&W Employees prior to the Distribution Date shall be deemed to have been taken as employees of a member of the B&W
Group. 
 Section 10.5 Collective Bargaining Agreements. The McDermott Group shall have no further liability for all
collective bargaining agreements, collective agreements, multiemployer plans, pension and welfare plans and arrangements and trade union or works council agreements entered into with any member of the McDermott Group, any union, works council or
other body representing only B&W Employees and/or Former B&W Employees. 
 Section 10.6 Director Programs.
MII shall retain responsibility for the payment of any fees payable in respect of service on the MII board of directors that are payable but not yet paid as of the Distribution Date, and B&W shall not have any responsibility for any such
payments. 
  

 32 

 Section 10.7 Restrictive Covenants in Employment and Other Agreements.

 (a) To the fullest extent permitted by the agreements described in this Section 10.7(a) and applicable law, MII shall
assign, or cause any member of the McDermott Group to assign, to B&W or a member of the B&W Group, as designated by B&W, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a
member of the McDermott Group and a B&W Employee or Former B&W Employee, with such assignment effective as of July 1, 2010. To the extent that assignment of such agreements is not permitted, effective as of July 1, 2010, each
member of the B&W Group shall be considered to be a successor to each member of the McDermott Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and
non-competition provisions) between a member of the McDermott Group and a B&W Employee or Former B&W Employee whom B&W reasonably determines have substantial knowledge of the business activities of the B&W Group, such that each
member of the B&W Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the B&W Group; provided, however, that in no event
shall MII be permitted to enforce such restrictive covenant agreements against B&W Employees or Former B&W Employees for action taken in their capacity as employees of a member of the B&W Group. 

(b) To the fullest extent permitted by the agreements described in this Section 10.7(b) and applicable law, B&W shall assign, or
cause any member of the B&W Group to assign, to MII or a member of the McDermott Group, as designated by MII, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the
B&W Group and a McDermott Employee or Former McDermott Employee, with such assignment effective as of July 1, 2010. To the extent that assignment of such agreements is not permitted, effective as of July 1, 2010, each member of the
McDermott Group shall be considered to be a successor to each member of the B&W Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and non-competition
provisions) between a member of the B&W Group and a McDermott Employee or Former McDermott Employee whom MII reasonably determines have substantial knowledge of the business activities of the McDermott Group, such that MII and each member of the
McDermott Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the McDermott Group; provided, however, that in no event shall
B&W be permitted to enforce such restrictive covenant agreements against McDermott Employees or Former McDermott Employees for action taken in their capacity as employees of a member of the McDermott Group. 

ARTICLE XI 

GENERAL PROVISIONS 

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

 33 

 Section 11.2 Confidentiality. Each Party agrees that any information conveyed or
otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth in the Master Separation
Agreement. 
 Section 11.3 Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, on
and after the Distribution Date, B&W shall assume, and be solely liable for, the handling, administration, investigation and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful
dismissal, discrimination or human rights and unemployment compensation claims asserted at any time against MII or any member of the McDermott Group by any B&W Employee or Former B&W Employee (including any dependent or beneficiary of any
such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant or otherwise) to or with respect to the business activities of
any member of the B&W Group, whether or not such employment or services were performed before or after the Distribution. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both McDermott
Employees (or Former McDermott Employees) and B&W Employees (or Former B&W Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal
action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the
indemnification and related litigation cooperation provisions of the Master Separation Agreement shall apply with respect to each Party’s indemnification obligations under this Section 11.3. 

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

 Section 11.5 Costs of Compliance with Agreement. Except as otherwise provided in this Agreement or any other
Ancillary Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement. 
  

 34 

 Section 11.6 Fiduciary Matters. MII and B&W each acknowledge that actions
required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any
provisions hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are
deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any liabilities caused by the failure to satisfy any such responsibility. 

Section 11.7 Form S-8. Before the Distribution or as soon as reasonably practicable thereafter and subject to applicable law,
B&W shall prepare and file with the SEC a registration statement on Form S–8 (or another appropriate form) registering under the Securities Act of 1933 the offering of a number of shares of B&W Common Stock at a minimum equal to the
number of shares subject to the Replacement B&W Options, the Replacement B&W RSUs, the Replacement B&W Performance RSUs and the Replacement B&W RSAs. B&W shall use commercially reasonable efforts to cause any such registration
statement to be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any Replacement B&W Options, Replacement B&W RSUs, Replacement B&W Performance RSUs or Replacement
B&W RSAs may remain outstanding. 
 Section 11.8 Entire Agreement. This Agreement, together with the documents
referenced herein (including the Master Separation Agreement, the Ancillary Agreements and the plans and agreements referenced herein), constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof
and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Master Separation
Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof. 

Section 11.9 Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third
parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable
plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. Except as otherwise provided in Section 10.1(a), the provisions of this Agreement are solely for the benefit of the Parties, and no
current or former Employee, officer, director or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party,
except with the prior written consent of the other Parties. 
 Section 11.10 Amendment; Waivers. No change or
amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (i) extend the time for the performance of any of the obligations or other acts 

 

 35 

 
of another Party, (ii) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance by another Party with any of the agreements, covenants or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. No failure or delay
on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single
or partial exercise of any such right preclude other or further exercises thereof or of any other right. 
 Section 11.11
Remedies Cumulative. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. 

Section 11.12 Notices. Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to be duly given: (i) when personally delivered, (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return
receipt is executed or the letter is refused by the addressee or its agent, (iii) if sent by overnight courier which delivers only upon the executed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the
addressee or its agent, or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause
(i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

 Section 11.13 Counterparts. This Agreement, including the Schedules hereto and the other documents referred to
herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement. 

Section 11.14 Severability. If any term or other provision of this Agreement or the Schedules attached hereto is determined
by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 

Section 11.15 Governing Law. To the extent not preempted by applicable federal law, this Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the State of Texas, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction. 

 

 36 

 Section 11.16 Performance. Each of MII and B&W shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the McDermott Group and any member of the B&W Group, respectively. The Parties each agree to take such further
actions and to execute, acknowledge and deliver, or to cause to be executed, acknowledged and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered
pursuant to this Agreement. 
 Section 11.17 Construction. This Agreement shall be construed as if jointly drafted
by the Parties and no rule of construction or strict interpretation shall be applied against any Party. 
 Section 11.18
Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Master Separation Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.

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

 37 

			
	 MCDERMOTT INTERNATIONAL, INC.

		
	By:	 	 /s/ Liane K. Hinrichs

	Name:	 	Liane K. Hinrichs
	Title:	 	 Senior Vice President,

General Counsel and Corporate Secretary

 

			
	MCDERMOTT INVESTMENTS, LLC
		
	By:	 	 /s/ Liane K. Hinrichs

	Name:	 	Liane K. Hinrichs
	Title:	 	 Senior Vice President,

General Counsel and Corporate Secretary

 

			
	 THE BABCOCK & WILCOX COMPANY

		
	By:	 	 /s/ Michael S. Taff

	Name:	 	Michael S. Taff
	Title:	 	Senior Vice President and Chief Financial Officer

  

			
	 BABCOCK & WILCOX INVESTMENT COMPANY

		
	By:	 	 /s/ Michael S. Taff

	Name:	 	Michael S. Taff
	Title:	 	Senior Vice President and Chief Financial Officer

  

 38Tax Sharing Agreement

 TAX SHARING AGREEMENT 

This TAX SHARING AGREEMENT (this “Agreement”) is entered into as of [        ]
[    ], 2010, between J. Ray Holdings, Inc., a Delaware corporation (“J. Ray U.S.”) and Babcock &Wilcox Holdings, Inc., a Delaware corporation f/k/a McDermott Holdings, Inc. (“BHI”), and, solely for
the purpose set forth on its signature page to this Agreement, The Babcock & Wilcox Company, a Delaware corporation (“B&W”). BHI and J. Ray U.S. are sometimes referred to herein individually as a “Party,” and
collectively as the “Parties.” Unless otherwise indicated, all “Section” references in this Agreement are to the various sections of this Agreement. 

RECITALS 

WHEREAS, J. Ray U.S. is a wholly owned Subsidiary of BHI, and BHI is a wholly owned Subsidiary of McDermott International, Inc., a
Panamanian company (“MII”); 
 WHEREAS, it is anticipated that the Board of Directors of MII will determine that it
would be appropriate and in the best interests of MII and its stockholders for MII to separate the B&W Group from the J. Ray Group, as contemplated by the Master Separation Agreement (the “Separation”); 

WHEREAS, in furtherance thereof, the Board of Directors of MII has determined that, in connection with the Separation, it would be
appropriate and in the best interests of MII and its stockholders for (i) BHI to contribute certain assets and liabilities to J. Ray U.S. and to distribute all of the issued and outstanding capital stock of J. Ray U.S. to MII in what is
intended to qualify as a tax-free transaction described under Sections 368(a)(1)(D) and 355 of the Code (the “Internal Distribution”), (ii) MII to contribute all of the issued and outstanding capital stock of BHI to B&W as part of
a transaction intended to qualify as a tax-free reorganization under Section 368(a)(1)(F) of the Code (the “F Reorganization”), (iii) MII to distribute all of the issued and outstanding capital stock of B&W on a pro rata
basis to holders of MII Common Stock in what is intended to qualify as a tax-free transaction (except, in the case of the holders of MII Common Stock, with respect to cash received in lieu of fractional shares) described under Section 355 of
the Code (the “External Distribution”) and (iv) the members of the B&W Group and J. Ray Group to engage in the Related Separation Transactions; 

WHEREAS, MII and B&W expect to set forth in a Master Separation Agreement the principal arrangements between them regarding the
separation of the B&W Group from the J. Ray Group; and 
 WHEREAS, the Parties desire to provide for and agree upon the
allocation between the Parties of Taxes and Tax Benefits arising prior to, and as a result of, and subsequent to the Separation, and provide for and agree upon other matters relating to Taxes. 

NOW, THEREFORE, in consideration of the foregoing and agreements set forth below, the Parties agree as follows: 

 

 1 

 ARTICLE I 

DEFINITIONS AND EXAMPLES 

Section 1.1 Definitions. For purposes of this Agreement (including the recitals hereof), the following terms shall have the
following meanings: 
 “Affiliate” means, with respect to any Person, any other Person that directly or indirectly,
through one or more intermediaries, Controls, is Controlled by or is under common Control with, such first Person. 

“Agreement” has the meaning set forth in the preamble hereof. 

“B&W” has the meaning set forth in the preamble hereof. 

“B&W Group” means B&W and each Person that is a Subsidiary of B&W immediately after the External Distribution on
the External Distribution Date. 
 “BHI” has the meaning set forth in the preamble hereof. 

“Business Day” means a day other than a Saturday, a Sunday or a day on which banking institutions located in the State of Texas
are authorized or obligated by applicable law or executive order to close. 
 “Code” means the U.S. Internal Revenue
Code of 1986, as amended from time to time, or any successor law. 
 “Confidential Information” has the meaning set
forth in Section 6.3. 
 “Control” means, with respect to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership, membership, limited liability company or other ownership interests, by contract or otherwise.
“Controlled” has a meaning correlative to the foregoing. 
 “Controlling Party” means the Party that has
full responsibility, control and discretion in handling, settling or contesting a Tax Contest pursuant to Section 7.2. 

“Due Date” has the meaning set forth in Section 4.4. 

“Effective Time” means the time at which the Internal Distribution is effected on the Internal Distribution Date. 

“External Distribution” has the meaning set forth in the recitals hereof. 

“External Distribution Date” means the date on which the External Distribution occurs. 

“F Reorganization” has the meaning set forth in the recitals hereof. 

 

 2 

 “Governmental Authority” shall mean any U.S. federal, state, local or non-U.S.
court, government (or political subdivision thereof), department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority. 

“Group” means the J. Ray Group or the B&W Group, as the context requires. 

“Information Statement” means the information statement and any related documentation to be provided to holders of MII Common
Stock in connection with the External Distribution, including any amendments or supplements thereto. 
 “Internal
Distribution” has the meaning set forth in the recitals hereof. 
 “Internal Distribution Date” means the date on
which the Internal Distribution occurs. 
 “IRS” means the Internal Revenue Service. 

“IRS Submission” means the Ruling Request and any other correspondence or supplemental materials submitted to the IRS in
connection with obtaining the Ruling. 
 “J. Ray Group” means MII and each Person that is a Subsidiary of MII
immediately after the External Distribution on the External Distribution Date. 
 “J. Ray U.S.” has the meaning set
forth in the preamble hereof. 
 “Joint Return” means any Tax Return, for any Tax Year, that includes Tax Items of one
or more members of the J. Ray Group and one or more members of the B&W Group, determined without regard to Tax Items carried forward to such Tax Year. 

“Master Separation Agreement” means the Master Separation Agreement that will be entered into between MII and B&W in
connection with the Separation. 
 “MII” has the meaning set forth in the preamble hereof. 

“MII Common Stock” means the MII common stock, par value $1.00 per share, outstanding as of the Effective Time. 

 “Non-Controlling Party” means the Party that does not have full responsibility, control and discretion in handling,
settling or contesting a Tax Contest pursuant to Section 7.2. 
 “Non-Preparer” means the Party that is not
responsible for the preparation and filing of the Joint Return or Separate Return, as applicable, pursuant to Section 3.2. 

“Party” has the meaning set forth in the preamble to this Agreement. 

“Payment Date” means (i) with respect to any U.S. federal income tax return, any of (A) the due date for any required
installment of estimated taxes determined under Section 6655 of the Code, (B) the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code or (C) the date the return is
filed, as applicable, and 
  

 3 

 
(ii) with respect to any other Tax Return, any of the corresponding dates determined under the applicable Tax Law. 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. 

“Preparer” means the Party that is responsible for the preparation and filing of the Joint Return or Separate Return, as
applicable, pursuant to Section 3.2. 
 “Prime Rate” means the fluctuating commercial loan rate announced by
JPMorgan Chase Bank, National Association from time to time at its New York, NY office as its prime rate or base rate for U.S. Dollar loans in the United States of America in effect on the date of determination. 

“Related Separation Transactions” means the transactions described in the Omnibus Restructuring Agreement dated May 10,
2010. 
 “Requesting Party” has the meaning set forth in Section 5.2. 

“Ruling” means PLR-108078-10, which was issued to MII on May 21, 2010. 

“Ruling Request” means the request for rulings, dated February 16, 2010, filed by MII with the IRS in connection with the
Internal Distribution and the External Distribution, and any other correspondence or supplemental materials submitted to the IRS in connection with obtaining the Ruling. 

“Separate Return” means any Tax Return that is not a Joint Return. 

“Separation” has the meaning set forth in the recitals hereof. 

“Separation Taxes” has the meaning set forth in Section 2.2(b). 

“Subsidiary” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint
venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its
Subsidiaries. 
 “Supplemental IRS Submission” means any request for a Supplemental Ruling, each supplemental
submission and any other correspondence or supplemental materials submitted to the IRS in connection with obtaining any Supplemental Ruling. 

“Supplemental Ruling” means any private letter ruling obtained by MII or BHI from the IRS which supplements or otherwise
modifies the Ruling. 
  

 4 

 “Supplemental Tax Opinion” means, with respect to a specified action, an opinion
(other than the Tax Opinion) from Tax Counsel to the effect that (i) such action will not preclude (A) the Internal Distribution from qualifying as a tax-free transaction described under Sections 368(a)(1) and 355 of the Code, (B) the
F Reorganization from qualifying as a tax-free transaction under Section 368(a)(1)(D) of the Code or (C) the External Distribution from qualifying as a tax-free transaction described under Section 355 of the Code to MII and the
holders of MII Common Stock (except, in the case of the holders of MII Common Stock, with respect to cash received in lieu of fractional shares) and (ii) the tax, if any, imposed on the Related Separation Transactions will not be increased.

 “Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise,
withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum,
estimated or other similar tax (including any fee, assessment or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority and any interest, penalties, additions to tax or additional amounts in respect of the foregoing.

 “Tax Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the
Governmental Authority (if any) charged with the assessment, determination or collection of such Tax for such the Governmental Authority. 

“Tax Benefit” means a Tax Item that could decrease the Tax liability of a taxpayer, including a credit, loss or other
deduction, but not including deductions attributable to or arising from the J. Ray Group or the B&W Group, as applicable, to the extent that the aggregate of such deductions in a Tax Year does not exceed the income attributable to or arising
from such Group in such Tax Year. 
 “Tax Contest” means an audit, review, examination or any other administrative or
judicial proceeding with the purpose or effect of redetermining Taxes of any member of either Group (including any administrative or judicial review of any claim for refund). 

“Tax Counsel” means (i) with respect to the Tax Opinion, Baker Botts L.L.P. or (ii) with respect to a Supplemental
Tax Opinion, a nationally recognized law firm or accounting firm designated by the Party to whom such opinion is delivered. 

“Tax Item” means, with respect to any Tax, any item of income, gain, loss, deduction, credit or other attribute that may have
the effect of increasing or decreasing any Tax. 
 “Tax Law” means the law of any Governmental Authority and any
controlling judicial or administrative interpretations of such law, relating to any Tax. 
 “Tax Materials” means
(i) the Ruling issued by the IRS in connection with the Internal Distribution, the F Reorganization and the External Distribution, (ii) each IRS Submission, (iii) the representation letters delivered to Tax Counsel in connection with
the delivery of the Tax Opinion and (iv) any other materials delivered or deliverable by MII, BHI and others in connection with the rendering by Tax Counsel of the Tax Opinion or the issuance by the IRS of any Ruling. 

 

 5 

 “Tax Opinion” means the opinion to be delivered by Tax Counsel to MII in
connection with the Internal Distribution, the F Reorganization, the External Distribution and the Related Separation Transactions to the effect that (subject to the assumptions, qualifications and limitations set forth therein) for the U.S. federal
income tax purposes (i) the Internal Distribution will qualify as a tax-free transaction described under Sections 368(a)(1)(D) and 355 of the Code to BHI and MII, (ii) the F reorganization will qualify as a tax-free reorganization under
Section 368(a)(1)(F) of the Code to BHI, B&W and MII, (iii) the External Distribution will qualify as a tax-free transaction described under Section 355 of the Code to MII and the holders of MII Common Stock (except, in the case
of the holders of MII Common Stock, with respect to cash received in lieu of fractional shares) and (iv) the Related Separation Transactions will be tax-free to the parties involved. 

“Tax Records” means Tax Return, Tax Return work papers, documentation relating to any Tax Contests and any other books of
account or records required to be maintained under applicable Tax Laws (including but not limited to Section 6001 of the Code) or under any record retention agreement with any Tax Authority. 

“Tax Return” means any report of Taxes due (including estimated Taxes), any claims for refund of Taxes paid, any information
return with respect to Taxes, or any other similar report, statement, declaration or document required to be filed (by paper, electronically or otherwise) under any applicable Tax Law, including any attachments, exhibits or other materials submitted
with any of the foregoing, and including any amendments or supplements to any of the foregoing. 
 “Tax Year” means,
with respect to any Tax, the year, or shorter period, if applicable, for which the Tax is reported as provided under applicable Tax Law. 

“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax
Year. 
 Section 1.2 Examples. The operation of various provisions of this Agreement is illustrated by examples in
Appendix A hereto, and this Agreement shall be interpreted in accordance with such examples. 
 ARTICLE II 

ALLOCATION OF TAX LIABILITIES AND TAX BENEFITS 

Section 2.1 Liability for and Payment of Taxes. Except as provided in Section 3.1(b) (Provision of Information and
Assistance), Section 3.2(c) (Provision of Information) and Article VII (Tax Contests), and in accordance with Article IV: 

(a) BHI Liabilities and Payments. For any Tax Year (or portion thereof), BHI shall, subject to the rules for Tax Benefits in
Section 2.1(c): 
 (i) be liable for and pay the Taxes (determined without regard to Tax Benefits) allocated to it
pursuant to Section 2.2, reduced by any Tax Benefits 
  

 6 

 
allocated to J. Ray U.S. or BHI that are allowable under applicable Tax Law, to the applicable Tax Authority as required by Article IV; and 

(ii) pay J. Ray U.S. for: 

(A) any Tax Benefit arising in a Tax Year that begins after the Internal Distribution Date allocated to J. Ray U.S. pursuant to
Section 2.2 that BHI uses to reduce Taxes payable by it pursuant to Section 2.1(a)(i) in any Tax Year that begins on or before the Internal Distribution Date; 

(B) any Tax Benefit that (i) arises in a Tax Year that begins on or before the Internal Distribution Date, (ii) is allocated
to J. Ray U.S. pursuant to Section 2.2, (iii) arises or is used as a result of a Tax Contest or other dispute which is resolved after the Internal Distribution Date and (iv) BHI uses to reduce Taxes payable by it pursuant to
Section 2.1(a)(i) in any Tax Year that begins on or before the Internal Distribution Date; and 
 (C) any Tax Benefit that
(i) arises in a Tax Year that begins on or before the Internal Distribution Date, (ii) is allocated to J. Ray U.S. pursuant to Section 2.2, and (iii) BHI uses to reduce Taxes payable by it pursuant to Section 2.1(a)(i) in
any Tax Year that begins after the Internal Distribution Date. 
 (b) J. Ray U.S. Liabilities and Payments. For any Tax
Year (or portion thereof), J. Ray U.S. shall, subject to the rules for Tax Benefits in Section 2.1(c): 
 (i) be liable
for and pay the Taxes (determined without regard to Tax Benefits) allocated to it pursuant to Section 2.2, reduced by any Tax Benefits allocated to J. Ray U.S. or BHI that are allowable under applicable Tax Law, either to the applicable Tax
Authority or to BHI as required by Article IV; and 
 (ii) pay BHI for: 

(A) any Tax Benefit arising in a Tax Year that begins after the Internal Distribution Date allocated to BHI pursuant to Section 2.2
that J. Ray U.S. uses to reduce Taxes payable by it pursuant to Section 2.1(b)(i) in any Tax Year that begins on or before the Internal Distribution Date; and 

(B) any Tax Benefit that (i) arises in a Tax Year that begins on or before the Internal Distribution Date, (ii) is allocated
to BHI pursuant to Section 2.2, (iii) arises or is used as a result of a Tax Contest or other dispute which is resolved after the Internal Distribution Date and (iv) J. Ray U.S. uses to reduce Taxes payable by it pursuant to
Section 2.1(b)(i) in any Tax Year that begins on or before the Internal Distribution Date. 
 (c) Rules for Tax
Benefits. For purposes of this Article II: 
 (i) For any Tax Year that begins on or before the Internal Distribution Date,
(A) BHI shall, pursuant to Section 2.1(a)(i), reduce Taxes allocated to it by Tax Benefits allocated to J. Ray U.S. only to the extent such Tax Benefits are not taken into 

 

 7 

 
account by J. Ray U.S. pursuant to Section 2.1(b)(i) in the same Tax Year and (B) J. Ray U.S. shall, pursuant to Section 2.1(b)(i), reduce Taxes allocated to it by Tax Benefits
allocated to BHI only to the extent such Tax Benefits are not taken into account by BHI pursuant to Section 2.1(a)(i) in the same Tax Year. 

(ii) For purposes of applying Section 2.1(c)(i), for any Tax Year that begins on or before the Internal Distribution Date,
(A) BHI shall not take into account any Tax Benefit under Section 2.1(a)(i) unless the utilization of such Tax Benefit would be allowable under applicable Tax Law after taking into account only those Tax Items allocated to BHI during such
Tax Year (or portion thereof) and (B) J. Ray U.S. shall not take into account any Tax Benefit under Section 2.1(b)(i) unless the utilization of such Tax Benefit would be allowable under applicable Tax Law after taking into account only
those Tax Items allocated to J. Ray U.S. during such Tax Year (or portion thereof). 
 (iii) Tax Benefits will be treated as
used in the order specified under applicable Tax Law, and to the extent that such Tax Law does not specify the order of use then Tax Benefits will be deemed to be used pro rata. 

Section 2.2 Allocation Rules. For purposes of Section 2.1: 

(a) General Rule. Except as otherwise provided in this Section 2.2, (i) Taxes (determined without regard to Tax
Benefits) for any Tax Year (or portion thereof) shall be allocated (A) to BHI to the extent of the net taxable income or other applicable items attributable to members of the B&W Group that gave rise to such Taxes and (B) to J. Ray
U.S. to the extent of the net taxable income or other applicable items attributable to members of the J. Ray Group that gave rise to such Taxes and (ii) Tax Benefits for any Tax Year (or portion thereof) shall be allocated (A) to BHI to
the extent of the losses, credits or other applicable items attributable to members of the B&W Group that gave rise to such Tax Benefits and (B) to J. Ray U.S. to the extent of the losses, credits or other applicable items attributable to
members of the J. Ray Group that gave rise to such Tax Benefits. For purposes of applying this Section 2.2, any Taxes imposed on payments from a member of one Group to a member of the other Group shall be treated as attributable entirely to the
payee. 
 (b) Taxes Resulting from the Separation. For purposes of Section 2.1: 

(i) Separation Taxes Allocable to BHI. Except as provided in Section 2.2(b)(ii), Taxes and Tax Items resulting from the
Internal Distribution, the F Reorganization, the External Distribution or the Related Separation Transactions (collectively, the “Separation Taxes”) shall be allocated to BHI; provided that Separation Taxes shall not include Taxes
resulting from a payment between the Parties under this Agreement. 
 (ii) Separation Taxes Allocable to J. Ray U.S.
Separation Taxes shall be allocated to J. Ray U.S. to the extent that such Separation Taxes are directly attributable to J. Ray U.S.’s breach of any covenant or representation under Article VIII. 

 

 8 

 ARTICLE III 

PREPARATION AND FILING OF TAX RETURNS 

Section 3.1 Joint Returns. 

(a) Preparation of Joint Returns. BHI shall be responsible for preparing and filing (or causing to be prepared and filed) all
Joint Returns, except that J. Ray U.S. shall have the sole discretion over whether any Tax Return is filed on a consolidated, combined or unitary basis, if such Tax Return would include at least one member of each Group and the filing of such Tax
Return is elective under the relevant Tax Law. 
 (b) Provision of Information and Assistance. 

(i) Information with Respect to Joint Returns. At the written request of BHI, J. Ray U.S. shall provide BHI with
all information in its possession, or in the possession of its Group (as of the time in the immediately following sentence), that is reasonably necessary for BHI to properly and timely file all Joint Returns. J. Ray U.S. shall provide such
information no later than 30 Business Days prior to the extended due date of such Joint Return. If J. Ray U.S. or its Group is in possession of information and J. Ray U.S. fails to provide such information within the time period described in this
Section 3.1(b)(i) and in the form reasonably requested by BHI to permit the timely filing of any Joint Return, then, notwithstanding any other provision of this Agreement, J. Ray U.S. shall be liable for, and shall indemnify and hold harmless
each member of the B&W Group from and against, any penalties, interest or other payment obligation assessed against any member of either Group by reason of any resulting delay in filing such return. If J. Ray U.S. provides information within the
time period described in this Section 3.1(b)(i) in the form reasonably requested by BHI to permit the timely filing of a Joint Return, then, notwithstanding any other provision of this Agreement, BHI shall be liable for, and shall indemnify and
hold harmless each member of the J. Ray Group from and against, any penalties, interest or other payment obligation assessed against any member of either Group by reason of any delay in filing such return. 

(ii) Information with Respect to Estimated Payments and Extension Payments. At the written request of BHI, J.
Ray U.S. shall provide BHI with all information that J. Ray U.S. then has in its possession, or that is then in the possession of its Group, and that relates to members of the J. Ray Group that BHI reasonably requests in order to determine the
amount of Taxes due on any Payment Date with respect to a Joint Return. J. Ray U.S. shall provide such information no later than 15 Business Days before such Payment Date. In the event that J. Ray U.S. fails to provide information within the time
period described in this Section 3.1(b)(ii) in the form reasonably requested by BHI to permit the timely payment of such Taxes, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest or
other payments assessed against any member of either Group by reason of any resulting delay in paying such Taxes. 
 (iii)
Assistance. At the written request of BHI, J. Ray U.S. shall take (at its own cost and expense), and shall cause the members of the J. Ray Group to take (at their own cost and expense), any reasonable action (e.g., filing a ruling
request with the 
  

 9 

 
relevant Tax Authority or executing a limited power of attorney) that is reasonably necessary in order for BHI or any other member of the B&W Group to prepare, file, amend or take any other
action with respect to a Joint Return. In the event that J. Ray U.S. fails to take, or cause to be taken, any such requested action, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest or
other payments assessed against any member of either Group by reason of a failure to take any such requested action. 
 (c)
Allocation of Tax Items Between Joint Return and Separate Return. BHI must (i) allocate Tax Items between a Joint Return and any related Separate Return for which J. Ray U.S. is responsible pursuant to Section 3.2(a) that are filed
with respect to the same Tax Year in a manner that is consistent with the reporting of such Tax Items on such related Separate Return and (ii) make any applicable elections required under applicable Tax Law (including, without limitation, under
Treasury Regulations Section 1.1502-76(b)(2)) necessary to effect such allocation. 
 Section 3.2 Separate
Returns. 
 (a) Tax Returns to be Prepared by J. Ray U.S. J. Ray U.S. shall be responsible for preparing and filing
(or causing to be prepared and filed), and shall be considered the Preparer of, all Separate Returns that include Tax Items of members of the J. Ray Group. 

(b) Tax Returns to be Prepared by BHI. BHI shall be responsible for preparing and filing (or causing to be prepared and filed),
and shall be considered the Preparer of, all Separate Returns that include Tax Items of members of the B&W Group. 
 (c)
Provision of Information. At the written request of the Preparer, the Non-Preparer shall provide to the Preparer any information about members of the Non-Preparer’s Group that the Non-Preparer then has in its possession, or that is then
in the possession of its Group, and that the Preparer reasonably requests in order to properly and timely file all Separate Returns for which the Preparer is responsible pursuant to Section 3.2(a) or (b). Such information shall be provided
within the time period prescribed by Section 3.1(b) for the provision of information for Joint Returns. In the event that the Non-Preparer fails to provide information within the time period described in Section 3.1(b) and in the form
reasonably requested by the Preparer to permit the timely filing of a Separate Return, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest or other payments assessed against any member of
either Group by reason of any resulting delay in filing such return. 
 Section 3.3 Special Rules Relating to the
Preparation of Tax Returns. 
 (a) General Rule. Except as otherwise provided in this Agreement, the Party
responsible for filing (or causing to be filed) a Tax Return pursuant to Section 3.1 or Section 3.2 shall have the exclusive right, in its sole discretion, with respect to such Tax Return to determine (i) the manner in which such Tax
Return shall be prepared and filed, including the elections, methods of accounting, positions, conventions and principles of taxation to be used, and the manner in which any Tax Item shall be reported, (ii) whether any

  

 10 

 
extensions may be requested, (iii) whether an amended Tax Return shall be filed, (iv) whether any claims for refund shall be made, (v) whether any refunds shall be paid by way of
refund or credited against any liability for the related Tax and (vi) whether to retain outside firms to prepare or review such Tax Return. 

(b) Joint Returns. With respect to any Joint Return, BHI may not take (and shall cause the members of the B&W Group not to
take) any positions that it knows, or reasonably should know, would adversely affect any member of the J. Ray Group. 
 (c)
Withholding and Reporting. 
 (i) MII Stock Awards. With respect to stock of MII delivered to any Person, J. Ray
U.S. and BHI shall cooperate (and shall cause their Affiliates to cooperate) so as to permit MII to discharge any applicable Tax withholding and Tax reporting obligations, including the appointment of BHI or one or more of its Affiliates as the
withholding and reporting agent if MII or one or more of its Affiliates is not otherwise required or permitted to withhold and report under applicable Tax Law. 

(ii) B&W Stock Awards. With respect to stock of B&W delivered to any Person, J. Ray U.S. and BHI shall cooperate (and
shall cause their Affiliates to cooperate) so as to permit B&W to discharge any applicable Tax withholding and Tax reporting obligations, including the appointment of J. Ray U.S. or one or more of its Affiliates as the withholding and reporting
agent if B&W or one or more of its Affiliates is not otherwise required or permitted to withhold and report under applicable Tax Law. 

(d) Standard of Performance. BHI shall prepare Joint Returns with the same general degree of care as it uses in preparing
Separate Returns. 
 Section 3.4 Reliance on Exchanged Information. If a member of the B&W Group supplies
information to a member of the J. Ray Group, or a member of the J. Ray Group supplies information to a member of the B&W Group, and an officer of the requesting member intends to sign a statement or other document under penalties of perjury in
reliance upon the accuracy of such information, then a duly authorized officer of the member supplying such information shall certify, to such officer’s knowledge and belief, the accuracy and completeness of the information so supplied.

 ARTICLE IV 

TAX PAYMENTS 

Section 4.1 Payment of Taxes to Tax Authorities. J. Ray U.S. shall be responsible for remitting to the proper Tax Authority
all Tax shown on any Tax Return for which it is responsible for the preparation and filing pursuant to Section 3.2(a), and BHI shall be responsible for remitting to the proper Tax Authority all Tax shown (including Taxes for which J. Ray U.S.
is wholly or partially liable pursuant to Section 2.1 on any Tax Return for which it is responsible for the preparation and filing pursuant to Section 3.1(a) or Section 3.2(b). 

 

 11 

 Section 4.2 Indemnification Payments. 

(a) Tax Payments Made by the B&W Group. If any member of the B&W Group remits a payment to a Tax Authority for Taxes for
which J. Ray U.S. is wholly or partially liable under this Agreement, J. Ray U.S. shall remit the amount for which it is liable to BHI within 30 Business Days after receiving notification requesting such amount. 

(b) Payments for Tax Benefits. 

(i) If a member of the J. Ray Group uses a Tax Benefit for which BHI is entitled to reimbursement pursuant to Section 2.1(b)(ii), J.
Ray U.S. shall pay to BHI, within 30 Business Days following the use of such Tax Benefit, an amount equal to the deemed value of such Tax Benefit, as determined in Section 4.2(b)(iv). 

(ii) If a member of the B&W Group uses a Tax Benefit for which J. Ray U.S. is entitled to reimbursement pursuant to
Section 2.1(a)(ii), BHI shall pay to J. Ray U.S., within 30 Business Days following the use of such Tax Benefit, an amount equal to the deemed value of such Tax Benefit, as determined in Section 4.2(b)(iv). 

(iii) For purposes of this Agreement, a Tax Benefit (other than a Tax refund) will be considered used (A) in the case of a Tax
Benefit that generates a Tax refund, at the time such Tax refund is received and (B) in all other cases, at the time the Tax Return is filed with respect to such Tax Benefit or, if no Tax Return is filed, at the time the Tax would have been due
in the absence of such Tax Benefit. 
 (iv) The deemed value of any such Tax Benefit will be (A) in the case of a Tax
credit, the amount of such credit or (B) in the case of a Tax deduction, an amount equal to the product of (1) the amount of such deduction and (2) the highest statutory rate applicable under Section 11 of the Code or other
applicable rate under state, local or foreign law, as appropriate. 
 Section 4.3 Initial Determinations and Subsequent
Adjustments.The initial determination of the amount of any payment that one Party is required to make to another under this Agreement shall be made on the basis of the Tax Return as filed, or, if the Tax to which the payment relates is not
reported in a Tax Return, on the basis of the amount of Tax initially paid to the Tax Authority. The amounts paid under this Agreement will be redetermined, and additional payments relating to such redetermination will be made, as appropriate, if as
a result of an audit by a Tax Authority, an amended Tax Return, or for any other reason (i) additional Taxes to which such redetermination relates are subsequently paid, (ii) a refund of such Taxes is received, (iii) the Group using a
Tax Benefit changes or (iv) the amount or character of any Tax Item is adjusted or redetermined. Each payment required by the immediately preceding sentence (i) as a result of a payment of additional Taxes will be due 30 Business Days
after the date on which the additional Taxes were paid or, if later, 15 Business Days after the date of a request from the other Party for the payment, (ii) as a result of the receipt of a refund will be due 30 Business Days after the refund
was received, (iii) as a result of a change in use of a Tax Benefit will be due 30 Business Days after the date on which the final action resulting in such change is taken by a Tax Authority or either Party or any member of its Group or
(iv) as a result of an 
  

 12 

 
adjustment or redetermination of the amount or character of a Tax Item will be due 30 Business Days after the date on which the final action resulting in such adjustment or redetermination is
taken by a Tax Authority or either Party or any member of its Group. If a payment is made as a result of an audit by a Tax Authority which does not conclude the matter, further adjusting payments will be made, as appropriate, to reflect the outcome
of subsequent administrative or judicial proceedings. 
 Section 4.4 Interest on Late Payments. Payments pursuant to
this Agreement that are not made by the date prescribed in this Agreement or, if no such date is prescribed, within 30 Business Days after demand for payment is made (the “Due Date”) shall bear interest for the period from and including
the date immediately following the Due Date through and including the date of payment at a per annum rate fixed at the Prime Rate plus 2% per annum, subject to any maximum amount permitted by applicable Law, on the Due Date (or, if the Due Date
is not a business day, as of 11:00 a.m. New York, NY time on the first business day following the Due Date). Such rate shall be redetermined at the beginning of each calendar quarter following such Due Date. Such interest will be payable at the same
time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due. 

Section 4.5 Payments by or to Other Group Members. When appropriate under the circumstances to reflect the underlying
liability for a Tax or entitlement to a Tax refund or Tax Benefit, a payment which is required to be made by or to J. Ray U.S. or BHI may be made by or to another member of the J. Ray Group or the B&W Group, as appropriate, but nothing in this
Section 4.5 shall relieve J. Ray U.S. or BHI of its obligations under this Agreement. 
 Section 4.6 Procedural
Matters. Any written notice for indemnification delivered to the indemnifying Party in accordance with Section 9.5 shall state the amount due and owing together with a schedule calculating in reasonable detail such amount (and shall include
any relevant Tax Return, statement, bill or invoice related to such Taxes, costs, expenses or other amounts due and owing). All payments required to be made by one Party to the other Party pursuant to this Article IV shall be made by electronic,
same day wire transfer. Payments shall be deemed made when received. If the indemnifying Party fails to make a payment to the indemnified Party within the time period set forth in this Article IV, the indemnifying Party shall pay to the indemnified
Party, in addition to interest that accrues pursuant to Section 4.4, any costs or expenses, including any breakage costs, incurred by the indemnified Party to secure such payment or to satisfy the indemnifying Party’s portion of the
obligation giving rise to the indemnification payment. 
 Section 4.7 Tax Consequences of Payments.
For all Tax purposes and to the extent permitted by applicable Tax Law, the Parties shall treat any payment made pursuant to this Agreement as a capital contribution by BHI to J. Ray U.S. or a distribution by J. Ray U.S. to BHI, as the case may be,
immediately prior to the Internal Distribution. If any such payment (or portion thereof) causes, directly or indirectly, an increase in the Taxes owed by the recipient (or any of the members of its Group) under one or more applicable Tax Laws
through withholding or otherwise, the payor’s payment obligation (or portion thereof) under this Agreement shall be grossed up to take into account any additional Taxes that may be owed by the recipient (or any of 

 

 13 

 
the members of its Group) as a result of such payment. In the event that a Tax Authority asserts that J. Ray U.S.’s or BHI’s treatment of a payment pursuant to this Agreement should be
other than as required pursuant to this Section 4.7, J. Ray U.S. or BHI, as appropriate, shall use its commercially reasonable efforts to contest such assertion. 

ARTICLE V 

ASSISTANCE AND COOPERATION 

Section 5.1 Cooperation. In addition to the obligations enumerated in Section 3.1(b) and Section 3.2(c), J. Ray
U.S. and BHI will cooperate (and cause the members of their respective Groups to cooperate) with each other and with each other’s agents and representatives, including their respective accounting firms and legal counsel, in connection with Tax
matters, including provision of relevant documents and information in their possession and making available to each other, as reasonably requested and available, personnel (including officers, employees and agents of the Parties or their Affiliates)
responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or
judicial proceedings relating to Taxes. 
 Section 5.2 Supplemental Rulings and Supplemental Tax Opinions. Each of
the Parties agrees that at the reasonable request of the other Party (the “Requesting Party”), such Party shall (and shall cause each member of its Group to) cooperate and use reasonable efforts to seek to obtain, as expeditiously as
reasonably practicable, a Supplemental Ruling from the IRS. Each of the Parties further agrees that at the reasonable request of the Requesting Party, such other Party shall (and shall cause each member of its Group to) cooperate and use reasonable
efforts to assist the Requesting Party in obtaining, as expeditiously as reasonably practicable, a Supplemental Tax Opinion from Tax Counsel. Within 30 Business Days after receiving an invoice from the other Party therefor, the Requesting Party
shall reimburse such Party for all reasonable costs and expenses incurred by such Party and the members of its Group in connection with obtaining or requesting a Supplemental Ruling or in connection with assisting the Requesting Party in obtaining a
Supplemental Tax Opinion. Notwithstanding the foregoing, J. Ray U.S. shall not be required to file any Supplemental IRS Submission unless BHI represents to J. Ray U.S. that (i) it has reviewed the Supplemental IRS Submission and (ii) all
information and representations, if any, relating to any member of the B&W Group contained in the Supplemental IRS Submissions are true, correct and complete in all material respects. 

ARTICLE VI 
 TAX
RECORDS 
 Section 6.1 Retention of Tax Records. Each of J. Ray U.S. and BHI shall preserve, and shall cause the
members of its Group to preserve, all Tax Records that are in its possession or in the possession of any member of its Group, and that could affect the liability of any member of the other Group for Taxes, for as long as the contents thereof may
become material in the administration of any matter under applicable Tax Law, but in any event until the 
  

 14 

 
later of (i) the expiration of any applicable statutes of limitation, as extended and (ii) 7 years after the Internal Distribution Date. 

Section 6.2 Access to Tax Records. BHI shall make available, and cause the members of the B&W Group to make available, to
members of the J. Ray Group for inspection and copying (i) all Tax Records in their possession at the time of any request therefor that relate to Tax Years that begin on or before the Internal Distribution Date and (ii) the portion of any
Tax Record in their possession at the time of any request therefor that relates to Tax Years that begin after the Internal Distribution Date and which is reasonably necessary for the preparation of a Separate Return by a member of the J. Ray Group
or with respect to a Tax Contest relating to such return. J. Ray U.S. shall make available, and cause the members of the J. Ray Group to make available, to members of the B&W Group for inspection and copying that portion of any Tax Record in
their possession at the time of any request therefor that relates to Tax Years that begin on or before the Internal Distribution Date and which is reasonably necessary for the preparation of a Joint Return or Separate Return by a member of the
B&W Group or with respect to a Tax Contest relating to such return. 
 Section 6.3 Confidentiality. 

(a) J. Ray U.S. and BHI shall hold and shall cause the members of the J. Ray Group and the B&W Group, respectively, to hold, and
shall each cause their respective officers, employees, accountants, counsel, consultants, advisors and agents to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential
Information (as defined herein); provided, that the Parties may disclose, or may permit disclosure of, Confidential Information (i) as may be necessary in connection with the filing of Tax Returns or any administrative or judicial proceedings
relating to Taxes, to their respective accountants, auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such
information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, J. Ray U.S. or BHI, as the case may be, will be responsible or (ii) to the extent any member of the J.
Ray Group or the B&W Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of law. Notwithstanding the foregoing, in the event that any
demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, J. Ray U.S. or BHI, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a
reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential
Information is required to be disclosed shall or shall cause the other Party to furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed. As used in this Section 6.3,
“Confidential Information” shall mean all proprietary, technical or operational information, data or material of one Party which, prior to or following the Internal Distribution Date, has been disclosed by J. Ray U.S. or members of the J.
Ray Group, on the one hand, or BHI or members of the B&W Group, on the other hand, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other, including pursuant to the
access provisions of Section 3.1(b), Section 
  

 15 

 
3.2(c), Section 6.2 or Section 7.3 hereof or any other provision of this Agreement or by virtue of employees of one Group becoming employees of the other Group as a result of the
transactions contemplated by the Master Separation Agreement (except to the extent that such Information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of J. Ray U.S., any other member of the
J. Ray Group or, in the case of BHI, any other member of the B&W Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of J. Ray U.S., such member of the J. Ray Group or, in the case of BHI, such member of
the B&W Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such Information in breach of any confidentiality obligations). 

(b) Notwithstanding anything to the contrary set forth herein, (i) J. Ray U.S. and the other members of the J. Ray Group, on the
one hand, and BHI and the other members of the B&W Group, on the other hand, shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a
reasonable degree of care) as they take to preserve confidentiality for their own similar Information and (ii) confidentiality obligations provided for in any agreement between J. Ray U.S. or any other member of the J. Ray Group, or BHI or any
other member of the B&W Group, on the one hand, and any employee of J. Ray U.S. or any other member of the J. Ray Group, or BHI or any other member of the B&W Group, on the other hand, shall remain in full force and effect. Confidential
Information of J. Ray U.S. or any other member of the J. Ray Group, on the one hand, or BHI or any other member of the B&W Group, on the other hand, in the possession of and used by the other as of the Internal Distribution Date may continue to
be used by such Person in possession of the Confidential Information in and only in the operation of such Person’s business, and may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation
of this Section 6.3. Such continued right to use may not be transferred to any third party unless the third party purchases all or substantially all of the business and assets of J. Ray U.S. or BHI, or any asset of J. Ray U.S. or BHI in which
the relevant Confidential Information is used or employed, in one transaction or in a series of related transactions, and such prospective purchaser executes a written agreement with J. Ray U.S. or BHI, as the case may be (which agreement shall be
fully and directly enforceable by J. Ray U.S. or BHI, respectively), in which such Party agrees to be bound in perpetuity by the terms of this Section 6.3. 

ARTICLE VII 
 TAX
CONTESTS 
 Section 7.1 Notices. Each Party shall provide prompt notice to the other Party of any pending or
threatened Tax audit, assessment, proceeding or other Tax Contest of which it becomes aware relating to (i) Taxes for which it may be indemnified by the other Party hereunder, (ii) the qualification of the Internal Distribution as a
tax-free transaction described under Sections 368(a)(1)(D) and 355 of the Code, (iii) the qualification of the F Reorganization as a tax-free transaction described under Section 368(a)(1)(F) of the Code, (iv) the qualification of the
External Distribution as a tax-free transaction (except, in the case of the holders of MII Common Stock, with respect to cash received in lieu of fractional shares) described under Section 355 of the Code or (v) the tax treatment of the
Related Separation Transactions. Such notice shall contain factual information (to the extent known) describing any asserted Tax 

 

 16 

 
liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If (i) an indemnified
Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder, (ii) such Party fails to give the indemnifying Party prompt notice of such asserted Tax liability and (iii) the
indemnifying Party has the right, pursuant to Section 7.2, to control the Tax Contest relating to such Tax liability, then (A) if the indemnifying Party is precluded from contesting the asserted Tax liability as a result of the failure to
give prompt notice, the indemnifying Party shall have no obligation to indemnify the indemnified Party for any Taxes arising out of such asserted Tax liability and (B) if the indemnifying Party is not precluded from contesting the asserted Tax
liability, but such failure to give prompt notice results in a monetary detriment to the indemnifying Party, then any amount which the indemnifying Party is otherwise required to pay the indemnified Party pursuant to this Agreement shall be reduced
by the amount of such detriment. 
 Section 7.2 Control of Tax Contests. 

(a) General Rule. Except as otherwise provided in this Section 7.2, each Party shall be the Controlling Party with respect to
any Tax Contest involving a Tax reported on a Tax Return for which it is responsible for preparing and filing (or causing to be prepared and filed) pursuant to Article III of this Agreement. 

(b) Tax Contests Involving Certain Taxes Reported on a Joint Return. J. Ray U.S. shall be the Controlling Party with respect to
any Tax Contest involving a Tax reported on a Joint Return where such Tax relates exclusively to a member of the J. Ray Group. 

(c) Tax Contests Relating to Certain Tax Items. BHI shall be the Controlling Party with respect to any Tax Benefit it utilizes to
reduce Taxes pursuant to Section 2.1(a)(i), unless BHI is required to pay J. Ray U.S. for the use of such Tax Benefit pursuant to Section 2.1(a)(ii). 

(d) Non-Controlling Party Participation Rights. With respect to a Tax Contest of any Tax Return which involves a Tax liability
for which the Non-Controlling Party may be liable, or a Tax Benefit to which the Non-Controlling Party may be entitled, under this Agreement, (i) the Non-Controlling Party shall, at its own cost and expense, be entitled to participate in such
Tax Contest, (ii) the Controlling Party shall keep the Non-Controlling Party reasonably informed and consult in good faith with the Non-Controlling Party and its Tax advisors with respect to any issue relating to such Tax Contest,
(iii) the Controlling Party shall provide the Non-Controlling Party with copies of all correspondence, notices and other written materials received from any Tax Authority and shall otherwise keep the Non-Controlling Party and its Tax advisors
advised of significant developments in the Tax Contest and of significant communications involving representatives of the Tax Authority, (iv) the Non-Controlling Party may request that the Controlling Party take a position in respect of such
Tax Contest, and the Controlling Party shall do so provided that (A) there exists substantial authority for such position (within the meaning of the accuracy-related penalty provisions of Section 6662 of the Code) and (B) the adoption
of such position would not reasonably be expected to increase the Taxes or reduce the Tax Benefits allocated to the Controlling Party pursuant to Article II of this 

 

 17 

 
Agreement (unless the Non-Controlling Party agrees to indemnify and hold harmless the Controlling Party from such increase in Taxes or reduction in Tax Benefits), (v) the Controlling Party
shall provide the Non-Controlling Party with a copy of any written submission to be sent to a Taxing Authority prior to the submission thereof and shall give serious and good faith consideration to any comments or suggested revisions that the
Non-Controlling Party or its Tax advisors may have with respect thereto and (vi) there will be no settlement, resolution or closing or other agreement with respect thereto without the consent of the Non-Controlling Party, which consent shall
not be unreasonably withheld or delayed. 
 Section 7.3 Cooperation. At the written request of the Controlling
Party, the Non-Controlling Party shall provide to the Controlling Party any information about members of the Non-Controlling Party’s Group that the Non-Controlling Party then has in its possession, or that is then in the possession of its
Group, and that the Controlling Party reasonably requests in order to handle, settle or contest the Tax Contest. At the request of the Controlling Party, the Non-Controlling Party shall take any action (e.g., executing a limited power of attorney)
that is reasonably necessary in order for the Controlling Party to handle, settle or contest the Tax Contest. BHI shall assist J. Ray U.S., and J. Ray U.S. shall assist BHI, in taking any remedial actions that are necessary or desirable to minimize
the effects of any adjustment made by a Tax Authority. The Controlling Party shall reimburse the Non-Controlling Party for any reasonable out-of-pocket costs and expenses incurred in complying with this Section 7.3. The Controlling Party shall
have no obligation to indemnify the Non-Controlling Party for any additional Taxes resulting from the Tax Contest, if the Non-Controlling Party fails to cooperate in accordance with this Section 7.3. 

ARTICLE VIII 

RESTRICTION ON CERTAIN ACTIONS OF THE GROUPS 

Section 8.1 General Restrictions. Following the External Distribution Date, BHI shall not, and shall cause the members of the
B&W Group not to, and J. Ray U.S. shall not, and shall cause the members of the J. Ray Group not to, take any action that, or fail to take any action the failure of which, (i) would be inconsistent with the Internal Distribution qualifying,
or preclude the Internal Distribution from qualifying, as a tax-free transaction described under Sections 368(a)(1)(D) and 355 of the Code, (ii) would be inconsistent with the F Reorganization qualifying, or preclude the F Reorganization from
qualifying, as a tax-free transaction described under Section 368(a)(1)(F), (iii) would be inconsistent with the External Distribution qualifying, or preclude the External Distribution from qualifying, as a tax-free transaction (except
with respect to cash received in lieu of fractional shares) described under Section 355 of the Code or (iv) would be inconsistent with the treatment of the Related Separation Transactions, or that would increase any tax imposed on the
parties thereto. 
 Section 8.2 Restricted Actions Relating to Tax Materials. Without limiting the other provisions
of this Article VIII, following the Effective Time, BHI shall not, and shall cause the members of the B&W Group not to, and J. Ray U.S. shall not, and shall cause the members of the J. Ray Group not to, take any action that, or fail to take any
action the failure of which to take, would be reasonably likely to be inconsistent with, or cause any Person to be in breach of, any representation or covenant, or any material statement, made in the Tax Materials. 

 

 18 

 ARTICLE IX 

MISCELLANEOUS 

Section 9.1 Entire Agreement. This Agreement, together with the Master Separation Agreement, constitutes the entire agreement
and understanding between J. Ray U.S. and BHI with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. 

Section 9.2 Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors and permitted assigns; and, except for the rights to indemnification provided to the members of the J. Ray Group and the B&W Group under this Agreement, nothing in this Agreement, express
or implied, is intended to confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by either Party (including by operation of law or otherwise),
except with the prior written consent of the other Party. 
 Section 9.3 Amendment; Waivers. No change or amendment
may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties. Either Party may, at any time, (i) extend the time for the performance of any of the obligations or other acts of the other,
(ii) waive any inaccuracies in the representations and warranties of the other contained herein or in any document delivered pursuant hereto and (iii) waive compliance by the other with any of the agreements, covenants or conditions
contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. No failure or delay on the part of either Party in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise
thereof, or of any other right. 
 Section 9.4 Remedies Cumulative. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. 
 Section 9.5
Notices. Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or
(ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which
delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is
received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its
principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice. 
  

 19 

 Section 9.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement. 

Section 9.7 Severability. If any term or other provision of this Agreement is determined by a nonappealable decision by a
court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced,
the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the
fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 

Section 9.8 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the
substantive laws of the State of Texas, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction. 

Section 9.9 Performance Guarantees. J. Ray U.S. and BHI shall cause to be performed, and hereby guarantee the performance of,
all actions, agreements and obligations set forth herein to be performed by their respective Subsidiaries and Affiliates. 

Section 9.10 Construction. This Agreement shall be construed as if jointly drafted by J. Ray U.S. and BHI and no rule of
construction or strict interpretation shall be applied against either Party. In this Agreement, unless the context clearly indicates otherwise, words used in the singular include the plural and words used in the plural include the singular; and if a
word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine
and the neuter. Unless the context otherwise requires, the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and the word “or” shall have
the inclusive meaning represented by the phrase “and/or.” The words “shall” and “will” are used interchangeably in this Agreement and have the same meaning. Relative to the determination of any period of time hereunder,
“from” means “from and including,” “to” means “to but excluding” and “through” means “through and including.” All references herein to a specific time of day in this Agreement shall be
based upon Central Standard Time or Central Daylight Savings Time, as applicable, on the date in question. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. As used in
this Agreement, the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular
Section or other provision of this Agreement. The titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or
interpretation of this Agreement. 
  

 20 

 Section 9.11 Limitation of Liability. IN NO EVENT SHALL ANY MEMBER OF THE
J. RAY GROUP OR THE B&W GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES BE LIABLE FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES),
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 

Section 9.12 Termination. 

(a) This Agreement may be terminated at any time prior to the Internal Distribution Date by and in the sole discretion of J. Ray U.S.
without the approval of BHI. In the event of termination pursuant to this Section 9.12, neither Party shall have any liability of any kind to the other Party under this Agreement. 

(b) This Agreement shall otherwise terminate at such time as all obligations and liabilities of the Parties have been satisfied. The
obligations and liabilities of the Parties arising under this Agreement shall continue in full force and effect until all such obligations have been satisfied and such liabilities have been paid in full, whether by expiration of time, operation of
law or otherwise. 
 Section 9.13 Authority. Each of the Parties represents to the other that (a) it has the
corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions,
(c) it has duly and validly executed and delivered this Agreement on or prior to the Internal Distribution Date and (d) this Agreement creates legal, valid and binding obligations, enforceable against it in accordance with its respective
terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles. 

Section 9.14 Predecessors or Successors. Any reference to J. Ray U.S., BHI, MII, a Person or a Subsidiary in this Agreement
shall include any predecessors or successors (e.g., by merger or other reorganization, liquidation or conversion) of J. Ray U.S., BHI, MII, such Person or such Subsidiary, respectively. Notwithstanding the foregoing, BHI (not McDermott Investments,
LLC) shall be the successor to McDermott Incorporated. 
 Section 9.15 Expenses. Except as otherwise expressly
provided for herein, each Party and its Subsidiaries shall bear their own expenses incurred in connection with the preparation of Tax Returns and other matters related to Taxes under the provisions of this Agreement for which they are liable.

 Section 9.16 Effective Time. This Agreement shall become effective on the date recited above on which the Parties
entered into this Agreement. 
 Section 9.17 Change in Law. Any reference to a provision of the Code or any other
Tax Law shall include a reference to any applicable successor provision or law. 
  

 21 

 Section 9.18 Disputes. The procedures for discussion, negotiation and
arbitration set forth in Article V of the Master Separation Agreement, once executed, shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to, or arise under or in
connection with this Agreement. 
  

 22 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date set
forth above. 
  

			
	J. RAY HOLDINGS, INC.
		
	By:	 	 /s/ Dominic A. Savarino

	Name:	 	Dominic A. Savarino
	Title:	 	Vice President, Tax
	
	 BABCOCK & WILCOX HOLDINGS,

INC.

		
	By:	 	 /s/ Michael S. Taff

	Name:	 	Michael S. Taff
	Title:	 	 Senior Vice President and

Chief Financial Officer

  

 23 

 The Babcock & Wilcox Company hereby joins in the execution of this Agreement solely
for the purpose of guaranteeing the performance of all actions, agreements and obligations set forth herein to be performed by BHI. 
  

			
	 THE BABCOCK & WILCOX

COMPANY

		
	By:	 	 /s/ Michael S. Taff

	Name:	 	Michael S. Taff
	Title:	 	Vice President and Treasurer

  

 24 

 APPENDIX A 

The following examples illustrate the operation of various provisions of this Agreement. However, no example is intended to illustrate
every provision of this Agreement that may be relevant thereto. 
 Except as otherwise indicated, each example assumes
(i) a U.S. federal income tax rate of 35%, (ii) that the Internal Distribution Date was March 31, 2010, (iii) that J. Ray U.S. files a Separate Return with respect to all Taxes in 2011 and later years, (iv) that the Internal
Distribution qualifies as a tax-free transaction under Sections 368(a)(1)(D) and 355 of the Code, and (v) that the External Distribution qualifies as a tax-free transaction (except, in the case of holders of MII Common Stock, with respect to
cash received in lieu of fractional shares) under Section 355 of the Code. 
 Example 1. General Tax Allocation on Joint
Return. 
 On its U.S. federal consolidated income Tax Return for the Tax Year that begins on January 1, 2010, and ends
on December 31, 2010, the BHI consolidated group reports $200x of consolidated net taxable income, no credits, and a Tax liability of $70x (viz., (35%)($200x)). Of the $200x of consolidated net taxable income reported on such Tax Return,
$150x is attributable to members of the B&W Group. The remaining $50x of consolidated net taxable income is attributable to members of the J. Ray Group during the period in which J. Ray U.S. joins in the filing of such Tax Return (viz.,
the period beginning on January 1, 2010, and ending on the Internal Distribution Date). BHI’s basis in the stock of J. Ray U.S. immediately prior to the Internal Distribution was $7.5x. 

The $150x of taxable income attributable to the B&W Group and the $50x of taxable income attributable to the J. Ray Group in each
case includes deductions. However, in neither case are these deductions a Tax Benefit because the aggregate of such deductions in the Tax Year does not exceed the income attributable to or arising from the relevant Group in such Tax Year.

 Because BHI’s 2010 U.S. federal consolidated income Tax Return includes Tax Items of one or more members of the B&W
Group and one or more members of the J. Ray Group (determined without regard to Tax Items carried forward to such Tax Year), it will be a Joint Return. Pursuant to Section 2.1, each of BHI and J. Ray U.S. will be liable for its allocable
portion of the $70x of Tax shown on the Joint Return. Because $150x of the consolidated net taxable income that gave rise to the Tax was attributable to members of the B&W Group and $50x of the consolidated net taxable income that gave rise to
the Tax was attributable to members of the J. Ray Group, pursuant to Section 2.2(a), $52.5x of Tax will be allocable to BHI (viz., ($150x/$200x)($70x)) and $17.5x of Tax will be allocable to J. Ray U.S. (viz., ($50x/$200x)($70x)).

 Pursuant to Section 3.1(a), BHI is responsible for preparing and filing the Joint Return, except that J. Ray U.S. will
have the sole discretion over whether such Tax Return is filed on a consolidated, combined or unitary basis. BHI will have the right to make those determinations described in Section 3.3(a) with respect to the Joint Return, subject to the

  

 25 

 
limitations in Section 3.3(b). Pursuant to Section 4.1, BHI must pay the $70x of Tax to the Tax Authority. Pursuant to Section 4.2(a), J. Ray U.S. must remit the amount for which
it is liable (viz., $17.5x) to BHI within 30 Business Days after receiving notification requesting such amount. If payment is not made within 30 Business Days, J. Ray U.S. must pay interest thereafter on the amount past due at the rate and as
determined under Section 4.4. 
 Pursuant to Section 4.7, the Parties would ordinarily treat J. Ray U.S.’s
payment of $17.5x as a distribution to BHI immediately prior to the Internal Distribution. However, under applicable Tax Law (viz., Treasury Regulations Sections 1.1552-1(b)(2) and 1.1502-32(b)(3)(iv)(D)), the Parties are required to treat
such payment as a payment in satisfaction of indebtedness owed by J. Ray U.S. to BHI. Thus, such payment does not reduce BHI’s basis in the J. Ray U.S. stock. 

Example 2. Separate Return Filed by J. Ray U.S. 

The facts are the same as in Example 1, except that during the period beginning January 1, 2010, and ending December 31, 2010,
J. Ray U.S. and its subsidiaries have $200x of consolidated taxable income. On the Separate Return for the Tax Year that begins on April 1, 2010, and ends on December 31, 2010, the J. Ray U.S. consolidated group reports $150x of taxable
income, no credits, and a Tax liability of $52.5x (viz., (35%)($150x)). In determining the $150x of consolidated net taxable income reported on the Separate Return, J. Ray U.S. elected, under Treasury Regulations
Section 1.1502-76(b)(2)(ii)(D), to allocate the income of J. Ray U.S. and its consolidated subsidiaries ratably between (i) the period beginning on January 1, 2010, and ending on the Internal Distribution Date and (ii) the period
beginning on April 1, 2010, and ending on December 31, 2010. No items of income constitute “extraordinary items” within the meaning of Treasury Regulations Section 1.1502-76(b)(2)(ii)(C). 

Because no items of income constitute extraordinary items, the result is that (i) $150x of J. Ray U.S.’s net income is
allocated to the Separate Return and (ii) the remaining $50x of J. Ray U.S.’s net income is allocated to the period beginning on January 1, 2010, and ending on the Internal Distribution Date. Because the $150x of income allocated to
the Separate Return is allocated to J. Ray U.S. pursuant to Section 2.2(a), J. Ray U.S. must pay the $52.5x of Tax shown on such Tax Return to the Tax Authority pursuant to Section 2.1(b)(i). 

On the 2010 Joint Return prepared by BHI for the period beginning on January 1, 2010, and ending on the Internal Distribution Date,
BHI must, pursuant to Section 3.1(c), also make the election described in Treasury Regulations Section 1.1502-76(b)(2)(ii)(D) so that J. Ray U.S.’s net consolidated income on the Joint Return is allocated consistently with the
reporting of income on J. Ray U.S.’s Separate Return. 
 Example 3. Tax Benefit Allocation on Joint Return.

 On the Joint Return for the Tax Year that begins on January 1, 2010, and ends on December 31, 2010, the BHI
consolidated group reports no consolidated net taxable income, a consolidated net operating loss (“NOL”) of $300x after carrybacks, and no Tax liability. The $300x consolidated NOL is composed of (i) a $200x NOL attributable to
members of the B&W Group and (ii) a $100x NOL attributable to members of the J. Ray Group for the period in which 
  

 26 

 
J. Ray U.S. joins in the filing of such Tax Return (viz., the period beginning on January 1, 2010, and ending on the Internal Distribution Date). Of the $100x NOL attributable to
members of the J. Ray Group, $25x is attributable to J. Ray McDermott Holdings, LLC (“JRMH LLC”) while it was disregarded as an entity separate from its owner, BHI, for U.S. federal tax purposes. 

Because no Tax would be payable pursuant to Section 2.1 in the absence of any Tax Benefit, no allocation of Taxes under
Section 2.2 is required. Section 2.2 then allocates the Tax Benefit, consisting of the $300x consolidated NOL. Because $200x of the loss that gave rise to the consolidated NOL was attributable to members of the B&W Group and $100x of
the loss that gave rise to the consolidated NOL was attributable to members of the J. Ray Group, pursuant to Section 2.2(a), $200x of such NOL will be allocable to BHI and $100x of such NOL will be allocable to J. Ray U.S. 

Under applicable Tax Law, neither BHI nor J. Ray U.S. would be allowed to use any portion of the $300x consolidated NOL on the 2010 Joint
Return. Therefore, BHI will carry forward all $200x of the NOL allocated to it pursuant to Section 2.2(a), and J. Ray U.S. will carry forward $75x of the $100x of NOL allocated to it pursuant to Section 2.2(a). But the remaining $25x of
the $100x of NOL allocated to J. Ray U.S. pursuant to Section 2.2(a) will, under applicable Tax Law, be carried forward by BHI, as the sole owner of JRMH LLC at the time the $25x NOL was incurred. 

BHI will not be required to make payments under Section 2.1(a)(ii) for the use of the $200x of NOL allocated to it and carried
forward to subsequent Tax Years. Similarly, J. Ray U.S. will not be required to make payments under Section 2.1(b)(ii) for the use of the $75x of NOL allocated to it and carried forward to subsequent Tax Years. However, BHI will be required
under Section 2.1(a)(ii)(C) to pay J. Ray U.S. for its use in a subsequent Tax Year of the $25x of NOL allocated to J. Ray U.S. but carried forward by BHI under applicable Tax Law. As BHI uses its aggregate $225x of NOL carryforward, it will be
deemed, pursuant to Section 2.1(c)(iii), to use the $200x of NOL allocated to it and $25x of NOL allocated to J. Ray U.S. on a pro rata basis. For example, if BHI uses $90x of the NOL, it will be deemed to use $10x of the NOL allocated to J.
Ray U.S. (viz., ($90x)($25x/$225x)) and will be required to pay J. Ray U.S. $3.5x, the deemed value of the NOL pursuant to Section 4.2(b)(iv). 

Example 4. Tax and Tax Benefit Allocation on Joint Return. 

The facts are the same as in Example 1, except that the $200x of net consolidated taxable income reported on the 2010 Joint Return is
composed of (i) $300x of net taxable income attributable to members of the B&W Group and (ii) a $100x net operating loss (“NOL”) attributable to members of the J. Ray Group during the period in which J. Ray U.S. joins in the
filing of such Joint Return (viz., the period beginning on January 1, 2010, and ending on the Internal Distribution Date). During its short Tax Year beginning on April 1, 2010, and ending on December 31, 2010, the J. Ray Group
generated $100x of net taxable income attributable to “extraordinary items” within the meaning of Treasury Regulations Section 1.1502-76(b)(2)(ii)(C). The BHI consolidated group reported no consolidated net taxable income on either
its 2008 Joint Return or its 2009 Joint Return. 
  

 27 

 Section 2.2 first allocates the Tax which would be payable pursuant to Section 2.1
in the absence of any Tax Benefit. Thus, before taking into account the $100x NOL, $105x of Tax would be allocable to BHI (viz., (35%)($300x)). Section 2.2 then allocates the Tax Benefit, consisting of the $100x NOL. Because the $100x
NOL was attributable to members of the J. Ray Group, it is allocated to J. Ray U.S. pursuant to Section 2.2(a). 
 Under
applicable Tax Law, J. Ray U.S.’s short Tax Year ending on the Internal Distribution Date will be considered the same Tax Year as BHI’s Tax Year ending on December 31, 2010 (and which includes J. Ray U.S.’s short Tax Year), but
will be considered a different Tax Year from J. Ray U.S.’s short Tax Year that begins on April 1, 2010. After taking into account only those Tax Items allocated to it as required under Section 2.1(c)(ii), the $100x NOL would not be
allowable to J. Ray U.S. under applicable Tax Law because J. Ray U.S. has no net taxable income during its short Tax Year ending on the Internal Distribution Date. Accordingly, pursuant to Sections 2.1(c)(i) and 2.1(a)(i), BHI will be entitled to
use such NOL and will not be required to compensate J. Ray U.S. therefor, notwithstanding the fact that J. Ray U.S. would otherwise have been able to use such NOL in its short Tax Year that begins on April 1, 2010. 

Thus, the ultimate Tax liability of $70x (viz., (35%)($200x)) shown on the 2010 Joint Return will be allocated entirely to
BHI. 
 But see Example 10 below for a different result where BHI uses a Tax Benefit allocated to J. Ray U.S. to reduce
BHI’s net taxable income on an amended Joint Return. 
 Example 5. Tax and Tax Benefit Allocation on Joint Return.

 On the Joint Return for the Tax Year that begins on January 1, 2010, and ends on December 31, 2010, the BHI
consolidated group reports $200x of consolidated net taxable income, no losses, a $5x foreign tax credit generated in 2009 by a member of the J. Ray Group, and a Tax liability of $65x (viz., (35%)($200x)—$5x). Of the $200x of
consolidated net taxable income reported on such Tax Return, $150x is foreign source taxable income attributable to members of the B&W Group. The remaining $50x of consolidated net taxable income is U.S. source taxable income attributable to
members of the J. Ray Group during the period in which J. Ray U.S. joins in the filing of such Tax Return (viz., the period beginning on January 1, 2010, and ending on the Internal Distribution Date). BHI was unable to use the $5x
foreign tax credit on its 2009 Joint Return, and under applicable Tax Law, such tax credit is properly carried forward to the 2010 Joint Return. During its short Tax Year beginning on April 1, 2010, and ending on December 31, 2010, the J.
Ray Group generated $100x of foreign source taxable income. 
 Section 2.2 first allocates the Tax which would be payable
pursuant to Section 2.1 in the absence of any Tax Benefit. Thus, before taking into account the $5x foreign tax credit, $52.5x of Tax would be allocable to BHI and $17.5x of Tax would be allocable to J. Ray U.S., as in Example 1.
Section 2.2 then allocates the Tax Benefit, consisting of the $5x foreign tax credit. Because the $5x foreign tax credit was attributable to members of the J. Ray Group, it is allocated to J. Ray U.S. pursuant to Section 2.2(a).

 As in Example 3, under applicable Tax Law, J. Ray U.S.’s short Tax Year ending

  

 28 

 
on the Internal Distribution Date will be considered the same Tax Year as BHI’s Tax Year ending on December 31, 2010 (and which includes J. Ray U.S.’s short Tax Year), but will be
considered a different Tax Year from J. Ray U.S.’s short Tax Year that begins on April 1, 2010. After taking into account only those Tax Items allocated to it as required under Section 2.1(c)(ii), the $5x foreign tax credit would not
be allowable to J. Ray U.S. under applicable Tax Law because J. Ray U.S. has no foreign source income during its short Tax Year ending on the Internal Distribution Date. Accordingly, pursuant to Sections 2.1(c)(i) and 2.1(a)(i), BHI will be entitled
to use such foreign tax credit and will not be required to compensate J. Ray U.S. therefor, notwithstanding the fact that J. Ray U.S. would otherwise have been able to use such foreign tax credit in its short Tax Year that begins on April 1,
2010. 
 Thus, the ultimate Tax liability of $65x (viz., (35%)($200x) - $5x) shown on the 2010 Joint Return will be
allocated $47.5x to BHI (viz., $52.5x - $5x) and $17.5x to J. Ray U.S. 
 Example 6. Allocation of Taxes Imposed as a
Result of Intergroup Payments. 
 During the 2009 Tax Year, Foreign Sub, a foreign member of the J. Ray Group, loans $10,000x
to U.S. Sub, a domestic member of the B&W Group, and charges interest to U.S. Sub at a rate of 5% per annum, payable annually on January 1. On January 1, 2010, U.S. Sub pays $500x of interest to Foreign Sub, which amount U.S. Sub
deducts from its gross taxable income. U.S. Sub withholds 30% of the payment (or $150x) and remits the withheld amount to the Tax Authority. Because the $150x of Tax is imposed on the interest payment from U.S. Sub to Foreign Sub, pursuant to
Section 2.2(a), such Tax shall be treated as attributable entirely to Foreign Sub, the payee member of the J. Ray Group, even though the obligation to pay such Tax over to the Tax Authority was imposed on BHI. 

Assume that the Tax Authority successfully asserts that the interest paid on the loan from Foreign Sub to U.S. Sub was nondeductible
under applicable Tax Law, and U.S. Sub should have recognized additional taxable income of $500x and paid additional Tax of $175x (viz., (35%)($500x)). BHI pays $175x to the Tax Authority in settlement of the Tax Contest. Pursuant to
Section 2.2(a), such Tax is attributable entirely to U.S. Sub, a member of the B&W Group, because it is imposed on the net taxable income of U.S. Sub. 

Example 7. Breach of Covenants and Allocation of Separation Taxes. 

Immediately before the Internal Distribution, BHI held the J. Ray U.S. stock with a fair market value of $250x and a basis of $50x. In
2011, MII sells all of the stock of J. Ray U.S. to a third party. Assume that the sale causes BHI to recognize gain on the Internal Distribution by reason of 355(e) of the Code. 

As a result of the sale, BHI will be required to recognize its $200x of realized gain on the Internal Distribution
(viz., $250x - $50x), which results in a Separation Tax liability of $70x (viz., (35%)($200x)). 
 The $70x of
Separation Taxes would normally be allocated to BHI under applicable Tax Law and Section 2.2(b)(i). However, pursuant to Section 2.2(b)(ii), the $70x of Separation Taxes will be allocated to J. Ray U.S. because the sale is a breach of J.
Ray U.S.’s covenants under Section 8.1. 
  

 29 

 Pursuant to Section 4.2(a), J. Ray U.S. must remit the $70x of Separation Taxes to BHI
within 30 Business Days following the day such Taxes are paid by BHI. Pursuant to Section 4.7, the Parties must treat J. Ray U.S.’s payment of $70x as a distribution to BHI immediately prior to the Internal Distribution. Because the $70x
deemed distribution exceeds BHI’s basis in the J. Ray U.S. stock immediately prior to the Internal Distribution, such deemed distribution will create an excess loss account of $20x (viz., $50x basis - $70x) in BHI’s J. Ray U.S.
stock, which $20x will be included in income by BHI pursuant to Treasury Regulations Section 1.1502-19. Section 4.7 requires J. Ray U.S. to gross up its $20x payment to BHI by the amount of Taxes owed by BHI as a result of this $20x of
income and by the amount of the additional Taxes resulting from the gross-up payment itself. However, Section 2.2(b)(i) provides that Taxes resulting from the inclusion of the $20x in income are not Separation Taxes. Therefore, J. Ray U.S. is
not also required to indemnify BHI for such Taxes under Section 2.1. 
 Example 8. Allocation of Separation Taxes Not
Resulting from the Breach of Covenants. 
 J. Ray U.S. has a $10x excess loss account in the stock of one of its Subsidiaries
immediately prior to the Internal Distribution. As a result of the Internal Distribution, J. Ray U.S. includes the $10x in income immediately before the Internal Distribution pursuant to Treasury Regulations Section 1.1502-19. Because the Tax
on the $10x excess loss account in the stock of J. Ray U.S.’s Subsidiary resulted from the Internal Distribution, it is a Separation Tax that is allocated to BHI pursuant to Section 2.2(b)(i). 

Example 9. Redetermination of Amounts Paid. 

On the Joint Return for the Tax Year that begins on January 1, 2010, and ends on December 31, 2010, the BHI consolidated group
reports $200x of consolidated net taxable income, a $40x foreign tax credit, and a Tax liability of $30x (viz., (35%)($200x) - $40x). Of the $200x of consolidated net taxable income reported on such Joint Return, $50x is foreign source income
and $50x is U.S. source income attributable to members of the J. Ray Group, and $100x is foreign source income attributable members of the B&W Group. The $40x foreign tax credit is allocated to BHI pursuant to Section 2.2(a). 

Section 2.2 first allocates the Tax that would be payable pursuant to Section 2.1 in the absence of any Tax Benefit. Thus,
before taking into account the $40x foreign tax credit, $35x of Tax would be allocable to BHI and $35x of Tax would be allocable to J. Ray U.S. Section 2.2 then allocates the Tax Benefit, consisting of the $40x foreign tax credit. After taking
into account only those Tax Items allocated to BHI, the $40x foreign tax credit would be allowable to BHI under applicable Tax Law, but BHI would be limited to using an amount thereof equal to its $35x of Tax determined before utilizing the foreign
tax credit. As a result, BHI would be liable for $0x of Taxes pursuant to Section 2.1(a)(i) (viz., (35%)($100x) - $35x). Pursuant to Section 2.1(c)(i), J. Ray U.S. will be entitled to use the remaining $5x of such foreign tax credit
and will not be required to compensate BHI therefor. As a result, J. Ray U.S. would be liable for $30x of Taxes pursuant to Section 2.1(a)(i) (viz., (35%)($100x) - $5x). Thus, the Tax liability of $30x (viz., (35%)($200x) -
$40x) shown on the 2010 Joint Return is allocated $0x to BHI (viz., (35%)($100x) - $35x) and $30x to J. Ray U.S. (viz., (35%)($100x) - $5x). 

 

 30 

 In 2011, a foreign Tax Authority initiates a Tax Contest with respect to a Tax Return that
was prepared and filed by BHI for the 2010 Tax Year. In the Tax Contest, the foreign Tax Authority asserts that BHI should have paid additional foreign income tax in 2010. Because BHI was responsible for preparing and filing the Tax Return, BHI is
the Controlling Party with respect to the Tax Contest pursuant to Section 7.2(a). As a result, BHI has full responsibility, control and discretion in handling, settling or contesting the Tax Contest. 

On December 31, 2011, a date subsequent to the Internal Distribution Date, BHI pays $10x to the foreign Tax Authority in settlement
of the Tax Contest. Pursuant to Section 3.3(a), BHI amends the BHI consolidated group’s Joint Return for the 2010 Tax Year to claim a foreign tax credit for the $10x paid to the foreign Tax Authority and receives a Tax refund of $10x.

 As a result of amending the Joint Return, Section 4.3 requires that the amounts paid under this Agreement be
redetermined as follows: Section 2.2 first allocates the Tax that would be payable pursuant to Section 2.1 in the absence of any Tax Benefit. Thus, before taking into account the $50x foreign tax credit, $35x of Tax would be allocable to
BHI and $35x of Tax would be allocable to J. Ray U.S. Section 2.2 then allocates the Tax Benefits, consisting of the $50x foreign tax credit. After taking into account only those Tax Items allocated to BHI, the $50x foreign tax credit would be
allowable to BHI under applicable Tax Law in an amount equal to its $35x of Tax determined before utilizing the foreign tax credit. As a result, BHI would be liable for $0x of Taxes pursuant to Section 2.1(a)(i) (viz., (35%)($100x) -
$35x). Pursuant to Section 2.1(b)(i) and 2.1(c)(i), J. Ray U.S. will be entitled to use the remaining $15x of foreign tax credit. As a result, J. Ray U.S. would be liable for $20x of Taxes pursuant to Section 2.1(b)(i) (viz.,
(35%)($100x) - $15x). Thus, the Tax liability of $20x (viz., (35%)($200x) - $50x) shown on the amended Joint Return is allocated $0x to BHI (viz., (35%)($100x) - $35x) and $20x to J. Ray U.S. (viz., (35%)($100x) -
$15x). 
 Because J. Ray U.S. was entitled to use the additional $10x foreign tax credit, J. Ray U.S. is entitled to the $10x
Tax refund that BHI received as a result of filing an amended Joint Return. Pursuant to Section 4.3, BHI must pay $10x to J. Ray U.S. within 30 Business Days after receiving the Tax refund. However, because the additional $10x foreign tax
credit (i) arose in a Tax Year that begins on or before the Internal Distribution Date, (ii) was allocated to BHI pursuant to Section 2.2, (iii) arose as a result of a Tax Contest that was resolved after the Internal Distribution
Date, and (iv) was used by J. Ray U.S. to reduce Taxes payable by it pursuant to Section 2.1(b)(i) in a Tax Year that began on or before the Internal Distribution Date, J. Ray U.S. must, pursuant to Sections 2.1(b)(ii)(B) and 4.2(b)(i),
pay to BHI $10x, the deemed value of such tax credit pursuant to Section 4.2(b)(iv), within 30 Business Days following BHI’s receipt of the Tax refund. Because the timing and amount of the payment obligations between J. Ray U.S. and BHI
offset, no actual payments are required with respect to the Tax refund and the use of the Tax Benefit. 
 Example 10.
Redetermination of Amounts Paid. 
 On the Joint Return for the Tax Year that begins on January 1, 2010, and ends on
December 31, 2010, the BHI consolidated group reports no consolidated net taxable income, an NOL of $100x and no Tax liability. The $100x NOL is a Tax Benefit that is allocated to J. Ray 

 

 31 

 
U.S. pursuant to Section 2.2(a). Because no Tax is owed on the Joint Return, no payments are required to be made under this Agreement. 

In 2011, the Tax Authority initiates a Tax Contest with respect to the 2010 Joint Return. In the Tax Contest, the Tax Authority asserts
that a member of the B&W Group should have recognized additional taxable income of $100x in 2010. On December 31, 2011, a date subsequent to the Internal Distribution Date, BHI agrees to recognize $100x of additional taxable income in 2010
in settlement of the Tax Contest. Pursuant to Section 3.3(a), BHI amends the 2010 Joint Return to recognize such additional taxable income. 

As a result of amending the Joint Return, Section 4.3 requires that the amounts paid under this Agreement be redetermined as
follows: Section 2.2 first allocates the Tax that would be payable pursuant to Section 2.1 in the absence of any Tax Benefit. Thus, before taking into account the $100x NOL, $35x of Tax (viz., (35%)($100x)) would be allocable
to BHI. Section 2.2 then allocates the Tax Benefit, consisting of the $100x NOL. Under applicable Tax Law and pursuant to Section 2.1(a)(i), BHI is entitled to use the $100x NOL as a Tax Benefit to reduce its consolidated taxable income in
2010. As a result, no Tax is owed on the amended Joint Return. 
 Because the $100x NOL (i) arose in a Tax Year that begins
on or before the Internal Distribution Date, (ii) was allocated to J. Ray U.S. pursuant to Section 2.2, (iii) was used as a result of a Tax Contest that was resolved after the Internal Distribution Date, and (iv) was used by BHI
to reduce Taxes payable by it pursuant to Section 2.1(a)(i) in a Tax Year that began on or before the Internal Distribution Date, BHI must, pursuant to Sections 2.1(a)(ii)(B) and 4.2(b)(ii), pay to J. Ray U.S. $35x, the deemed value of the NOL
pursuant to Section 4.2(b)(iv), within 30 Business Days following the filing of the amended Tax Return. 
 Example 11.
Predecessors and Successors. 
 As part of an internal restructuring in 2006, J. Ray McDermott Holdings, Inc.
(“JRMHI”) converted from a corporation to a limited liability company and changed its name to J. Ray McDermott Holdings, LLC (“JRMH LLC”). After the 2006 internal restructuring, BHI owned all of the outstanding stock of McDermott
Incorporated (“MI”) and all of the membership interests in JRMH LLC. In 2010, prior to the External Distribution: 
  

	 	1.	MI converted from a corporation to a limited liability company and changed its name to McDermott Investments, LLC (“MI LLC”), and 

 

	 	2.	BHI contributed its entire interest in MI LLC and JRMH LLC to J. Ray U.S. and distributed all of the stock of J. Ray U.S. to MII in the Internal Distribution.

 Immediately after the External Distribution on the External Distribution Date, assume that MI LLC and JRMH LLC are Subsidiaries
of MII. 
 Pursuant to the general rule of Section 9.14, MI LLC would ordinarily be the successor of MI for purposes of
applying the provisions of this Agreement. However, Section 9.14 provides a specific exception whereby BHI, rather than MI LLC, is treated as the successor of MI for purposes of this Agreement. Accordingly, because BHI is a member of the
B&W 
  

 32 

 
Group and is the successor of MI, Tax Items attributable to MI for all periods prior to the conversion of MI into MI LLC will be allocated to BHI. 

Because MI LLC is a Subsidiary of MII immediately after the External Distribution on the External Distribution Date, it will be a member
of the J. Ray Group. As a result, Tax Items attributable to MI LLC for all periods after its formation (that is, the date MI converted into MI LLC) will be allocable to J. Ray U.S. 

Similarly, because JRMH LLC is a Subsidiary of MII immediately after the External Distribution on the External
Distribution Date, it will be a member of the J. Ray Group. As a result, Tax Items attributable to JRMH LLC for all periods after its formation (that is, the date JRMHI converted into JRMH LLC) will be allocable to J. Ray U.S. Moreover, pursuant to
the general successor rule of Section 9.14, JRMH LLC will be the successor of JRMHI. Accordingly, because JRMH LLC is a member of the J. Ray Group and is the successor of JRMHI, Tax Items attributable to JRMHI for all periods prior to the
conversion of JRMHI into JRMH LLC will be allocated to J. Ray U.S. 
  

 33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]