-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QSDh1ddO9k8efpTUz1BJopDyAgJhZI3W8DDXBEk0bzBCg3QAUinKMWbI81n+DfNF G4C2A635KoB5FjnQnrnnSA== 0001157523-05-000135.txt : 20050107 0001157523-05-000135.hdr.sgml : 20050107 20050107094731 ACCESSION NUMBER: 0001157523-05-000135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050107 DATE AS OF CHANGE: 20050107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCDERMOTT INTERNATIONAL INC CENTRAL INDEX KEY: 0000708819 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 720593134 STATE OF INCORPORATION: R1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08430 FILM NUMBER: 05517052 BUSINESS ADDRESS: STREET 1: 1450 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045875400 MAIL ADDRESS: STREET 1: 1450 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70161 8-K 1 a4795381.txt MCDERMOTT INTERNATIONAL 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 31, 2004 McDERMOTT INTERNATIONAL, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) REPUBLIC OF PANAMA 001-08430 72-0593134 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1450 Poydras Street, New Orleans, Louisiana 70112-6050 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including Area Code: (504) 587-5400 -------------- _________________________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) _________________________________________ Item 1.01 Entry into a Material Definitive Agreement. On December 31, 2004, McDermott International, Inc. ("McDermott") terminated the McDermott International, Inc. Supplemental Executive Retirement Plan, Amended and Restated Effective December 1, 1999, (the "1999 SERP") and adopted the McDermott International, Inc. Supplemental Executive Retirement Plan, Effective January 1, 2005 (the "2005 SERP"). Termination of the Plan does not affect the rights of retired or disabled Participants (or their spouses) who are receiving benefits under the 1999 SERP as of December 31, 2004. Current retired and disabled participants of the 1999 SERP may, under terms established by McDermott, elect to receive a discounted lump sum distribution in lieu of any other entitlements they may have under the 1999 SERP. The 1999 SERP provided company officers selected by the Compensation Committee of the Board of Directors of McDermott (the "Compensation Committee") an opportunity to receive defined benefits based generally upon the date of participation, retirement date and years of service. Any benefits provided under the 1999 SERP were to be paid for the life of the participant and then one-half to the participant's spouse for life, subject to certain conditions. The 2005 SERP provides officers of McDermott and its subsidiaries and affiliates (the "Company") selected by the Compensation Committee an opportunity to participant in a defined contribution plan with benefits based upon the participant's notional account balance at the time of retirement or termination. The Compensation Committee will credit a participant's notional account with such amounts determined annually in the sole discretion of the Compensation Committee. McDermott, in its sole discretion, may terminate or amend the 2005 SERP, at any time, in any respect whatsoever; provided, however, that no such action may reduce amounts credited to vested notional accounts of participants, and such accounts will continue to be owed to the participants or beneficiaries and will continue to be a liability of McDermott. No special or separate fund shall be established nor shall any other segregation of assets be made to assure that distributions will be made under the 2005 SERP. Therefore, any distributions payable under the 2005 SERP shall be made from the general assets of the Company and any participant or beneficiary shall be an unsecured general creditor of the Company. Item 1.02 Termination of a Material Definitive Agreement. The disclosure required by this item is included in Item 1.01 and is incorporated herein by reference. Item 9.01 Financial Statements and Exhibits. (c) Exhibits The following are filed as exhibits to this report: 10.1 McDermott International, Inc. Supplemental Executive Retirement Plan (Amended and Restated Effective December 1, 1999). 10.2 McDermott International, Inc. Supplemental Executive Retirement Plan (Effective January 1, 2005) 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. McDERMOTT INTERNATIONAL, INC. By: /s/ Keith G. Robinson ----------------------------------- Keith G. Robinson Corporate Controller January 6, 2005 3 EX-10.1 2 a4795381ex101.txt EXHIBIT 10.1 Exhibit 10.1 McDERMOTT INTERNATIONAL, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Amended and Restated Effective December 1, 1999 TABLE OF CONTENTS SECTION 1 PARTICIPATION AND OTHER EMPLOYERS...................................1 1.1 DEFINITIONS...........................................................1 1.2 PARTICIPATION........................................................10 1.3 OTHER EMPLOYERS......................................................11 SECTION 2 AMOUNT AND PAYMENT OF RETIREMENT INCOME............................12 2.1 RETIREMENT - AMOUNT OF RETIREMENT INCOME.............................12 2.2 EARLY RETIREMENT - AMOUNT OF RETIREMENT INCOME.......................14 2.3 PAYMENT OF RETIREMENT INCOME.........................................15 2.4 BENEFITS OTHER THAN ON RETIREMENT....................................15 2.5 INCREASE IN BENEFITS.................................................20 2.6 LUMP SUM ELECTION....................................................21 SECTION 3 SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS...................23 3.1 BENEFITS APPLICABLE TO PARTICIPANT WHO HAS BEEN OR IS EMPLOYED BY TWO OR MORE EMPLOYERS...................................23 3.2 PARTICIPANTS TO FURNISH REQUIRED INFORMATION.........................23 3.3 BENEFITS NOT ASSIGNABLE..............................................25 3.4 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN........................26 3.5 ABANDONMENT OF BENEFITS..............................................26 3.6 WRITTEN COMMUNICATIONS REQUIRED......................................27 3.7 CONDUCT INJURIOUS TO THE COMPANY.....................................27 SECTION 4 ADMINISTRATION.....................................................28 4.1 ADMINISTRATION BY COMMITTEE..........................................28 4.2 RULES AND REGULATIONS OF COMMITTEE...................................29 4.3 POWERS OF COMMITTEE..................................................29 4.4 LIABILITY OF COMMITTEE...............................................30 4.5 INDEMNIFICATION......................................................30 4.6 APPLICABLE LAW.......................................................31 SECTION 5 GENERAL PROVISIONS.................................................31 5.1 AMENDMENT AND DISCONTINUANCE.........................................31 5.2 SOURCE OF BENEFITS...................................................32 5.3 BINDING ON COMPANY, EMPLOYEES AND THEIR SUCCESSORS...................32 -i- SECTION 1 PARTICIPATION AND OTHER EMPLOYERS 1.1 DEFINITIONS The following words and phrases shall have the meaning stated below unless a different meaning is plainly required by the context: (1) "Actuarial equivalent" or "equivalent actuarial value" means equality in value of the aggregate amounts expected to be received under similar or different forms of payment, based upon actuarial assumptions as provided in this Plan or as adopted from time to time by the Committee. (2) "Affiliate" or "Affiliated Company" means a company which is not a Subsidiary but in which 20% or more of the voting stock is owned, directly or indirectly, by the Company. (3) "Compensation" means the base salary earned by a Participant in respect of services with one or more Employers (regardless of when such salary is actually paid), and awards determined by the committee designated under the Company's Variable Supplemental Compensation Plan are allocable to such Participant (regardless of when such awards are actually paid), but shall exclude all the other bonuses, any severance pay, retirement or other income under this or any other pension, profit sharing, thrift saving or similar plans, stock awards of stock options, other allowances and other additional remuneration in any form. 1 (4) "Committee" means a Committee consisting of the Chief Financial Officer, the Chief Administrative Officer and the Corporate Secretary of the Company or such other committee appointed by the Board of Directors of the Company, which Committee shall administer the Plan pursuant to the provisions of Section 4 hereof. Said Committee shall serve under the direction and at the pleasure of the Board of Directors of the Company and shall be designated the "SERP Committee." (5) "Company" means McDermott International, Inc., a Panama Corporation, and its successor or successors. (6) "Disability" means a mental or physical condition which, in the opinion Committee, is likely to be continuous and permanent such that the Participant is wholly prevented from engaging in any occupation for wage or profit. A Participant will not be considered disabled for purposes of the Plan, if in the opinion of the Committee, the disability is a, result of: (a) excessive and habitual use by the participant of drugs or narcotic, except on the prescription of a duly licensed physician or surgeon; (b) injury or disease sustained by the participant while willfully and illegally participating in fights, riots, civil insurrections or while committing a felony; (c) injury or disease sustained by the participant while serving in any armed forces, 2 (d) injury or disease sustained by the participant which was diagnosed or discovered subsequent to the date his employment was terminated; or (e) injury or disease sustained by the participant (other than a loaned employee) for anyone other than the Employer and arising out of such employment. The Committee before approving the disability of a Participant hereunder shall require satisfactory proof, which may be evidence satisfactory to the Committee that the Participant is entitled to disability insurance benefits under the Social Security Act or may be in the form of a certificate from a duly licensed physician selected by the Committee, that the Participant has become disabled as provided herein. A Participant will not be considered disabled for purposes of the Plan until the date the Employee considers the Participant to have been dropped from its employment rolls. (7) "Employee" means any officer (other than a person acting only as a director) of an Employer. (8) "Employer" means, collectively or distributively as the context Company and any Subsidiary or Affiliated Company which has in accordance with Section 1.3 hereof. (9) "Final Adverse Monthly Compensation" means the Participant's average monthly rate of three (3) Fiscal Years in the last ten (10) Fiscal Years of the Participant's employment by an Employer prior to retirement such 3 average. Such three (3) Fiscal Years need not be consecutive. The Participant's average monthly rate of Compensation will be determined by dividing the total Compensation attributable to such three (3) Fiscal Years, as determined in accordance with rules established by the Committee, by the number of full or partial months of the Participant's employment during such three (3) Fiscal Years. Compensation attributable to a particular Fiscal Year shall not include base salary earned (or Variable Supplemental Compensation awards determined to be paid) for periods prior to or following such Fiscal Year, regardless of whether payment occurs during such Fiscal Year. (10) "Monthly Retirement Plan Offset" means: (a) If payment(s) under any other retirement or pension plan(s) or similar fund(s) or program(s) (including The Retirement and Restoration of Retirement Income Plans of McDermott Incorporated and The Babcock & Wilcox Company, and similar plans) maintained by the Employers, any Subsidiary or Affiliated Company or any other previous employer is made monthly for life only, or monthly under a joint and survivor form of payment or in monthly installment's over a period equal to or greater than ten (10) years, to the Participant. or to his spouse or other Joint pensioner or beneficiary, the "Monthly Retirement Plan Offset" shall be equal to such payments when and as they are made; or 4 (b) If payment(s) under said other retirement or pension plan(s), or other similar fund(s) or program(s), is made in a lump sum or in any method of payment other than monthly payment for life only, monthly joint and survivor payments or monthly installments over a period equal to or greater than ten (10) years, to the Participant or to his spouse or other joint pensioner or beneficiary, the "Monthly Retirement Plan Offset" shall be an actuarial equivalent amount, as determined by the Committee based upon the interest and mortality assumptions used under the plan(s) maintained by the Employers or any Subsidiary or as may be determined from time to time by the Committee under Section 1.1(1), hereof with respect to such plan(s) or fund(s) or program(s) maintained by any other previous employer. However, if any such Participant shall have contributed to the source of payment(s) or fund(s) out of which said retirement or pension payment(s) shall be paid or is payable, then the "Monthly Retirement Plan Offset" shall not include any portion of said amount attributable to the Participant's own contributions. The term "Monthly Retirement Plan Offset", with respect to the Profit Sharing and Stock Bonus Retirement Plan of McDermott Incorporated and Hudson Engineering Corporation's Profit Sharing Trust Plan (which plans were terminated on August 31, 1988) shall mean the Monthly Profit Sharing and Stock Bonus Retirement Offset determined under Section 1.1(A)(29) of the Retirement Plan for Employees of McDermott Incorporated and Subsidiary 5 and Affiliated Companies. If any Participant shall become entitled to or shall be paid any pension or retirement income payment(s) or payment(s) of similar kind, under any plan in respect of which the Employer, any Subsidiary or Affiliate of any previous employer have directly or indirectly contributed by reason of any law of the United States or of any state thereof or of any foreign country, then the total amount paid or payable to him in respect of any such allowance or payments shall be considered a retirement or pension plan maintained by the Employer, any Subsidiary or Affiliate or any other previous employer for purposes of this Plan. United States Social Security payment(s), Workmen's Compensation and similar benefits, shall, however, not be included in "Monthly Retirement Plan Offset". (11) "Number of Years of Credited Service" means: (a) For those Participants covered by Section 2.1(A), the total period of an Employee's Service computed in completed years until he attains age 60, or if earlier, his retirement under Section 2.2. hereof, provided that Service prior to an Employees attaining age 35 shall not be counted for purposes of the Plan. If an Employee has a period of Service upon his attaining age 60 of less than a completed year, there shall be added to his Number of Years of Credited Service a fraction, the numerator of which shall be the number of his months of Service for said period, computed in completed months and the denominator of which shall be 12. 6 (b) For those Participants covered by Section 2.l(B), the total period of an Employee's Service computed in completed years until he attains age 65, or if earlier. his retirement under Section 2.2. hereof, provided that Service prior to an Employees attaining age 35 shall not be counted for purposes of the Plan. If an Employee has a period of Service upon his attaining age 65 of less than a completed year, there shall be added to his Number of Years of Credited Service a fraction, the numerator of which shall be the number of his months of Service for said period, computed in completed months and the denominator of which shall be 12. (c) For those Participants covered by Section 2.1(C), the total period of an Employee's Service computed in completed years until he attains age 65, or if earlier, his retirement under Section 2.2. hereof, provided that Service prior to an Employees attaining age 45 shall not be counted for purposes of the Plan. If an Employee has a period of Service upon his attaining age 65 of less than a completed year, there shall be added to his Number of Years of Credited Service a fraction, the numerator of which shall be the number of his months of Service for said period, computed in completed months and the denominator of which shall be 12. 7 (12) "Participant" means any Employee of an Employer who under Section 1.2 has been selected to participate in the Plan. (13) "Plan" means the McDermott International, Inc. Supplemental Executive Retirement Plan as set forth in this document and as it may hereafter be amended from time to time. (14) "Retirement Date" means: (a) For those Participants covered by Section 2.1(A), the first day of the month coincident with or next following the date a Participant attains age 60. (b) For those Participants covered by Section 2.1(B), the first day of the month coincident with or next following the date a Participant attains age 65. (c) For those Participants covered by Section 2.1(C), the first day of the month coincident with or next following the date a Participant attains age 65. (15) "Subsidiary" means a company in which more than 50% of the voting stock is owned, directly or indirectly, by the Company. (16) "Service" means that period of employment with an Employer, or with any. Subsidiary or Affiliate, including any predecessor, from the Employee's date of hire to the date of termination of his service. Transfer of employment among the Employers and other Subsidiaries or Affiliates shall not be deemed an interruption of employment for purposes of the Plan, 8 and no period of Service rendered for a given Employer shall count as Service for more than one Employer. Employment with any person, firm or corporation to which the Employee was transferred and loaned for such employment by an Employer will be included in the Employee's Service in the same manner as if such employment had been with an Employer. Any Employee who is absent from active employment due to accident or illness and during such absence remains on the payroll shall be deemed to be in employment during such absence. Any voluntary termination and any other absence from active employment not deemed a leave of absence shall terminate an Employee's Service as of the date the Employer considers the Employee to have been dropped from its employment rolls. A period of authorized leave of absence granted by the Employer or absence for the purpose of military service pursuant to the requirement of law or by enlistment for not longer than the minimum period required by law, shall be counted as service if the Employee resumes his employment with an Employer at the end of such leave of absence or within the period prescribed by law for the exercise of his reemployment rights. (17) The masculine pronoun whenever used includes the feminine pronoun, and nouns stated in the singular shall include the plural whenever appropriate. 9 (18) "Effective Change in Control" means an event or series of events by which (A) any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be the "beneficial owner" of all shares that any such person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants, options or otherwise, without regard to the sixty day period referred to in such Rule), directly or indirectly, of securities representing 50% or more of the combined voting power of the Company's then outstanding voting securities, excluding for these purposes the Company's Series A Participating Preferred Stock; or (B) during any period of two consecutive years (not including any period prior to the effective date of this provision of the Plan), individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Company's directors then still in office who either were the Company's directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof. (19) "Fiscal Year" means the fiscal year of the Company. 1.2 PARTICIPATION Each Employee shall become a Participant as of the date the Committee selects the Employee for participation in the Plan. Subject to obtaining the consent of the Committee, any participating Employer may elect by 10 proper action of its board of directors, to designate a person or committee, other than the Committee, which committee shall have the exclusive authority to select Employees of such Employer for participation in the Plan, but whose authority shall consist solely of selecting Employees of such Employer for participation in the Plan. Any Employee who continues in the employment of the Employers beyond his Retirement Date shall no longer qualify as a Participant under this Plan and, except as otherwise provided in Section 2.4(D), he and his spouse shall not be entitled to any benefits whatsoever under this Plan. Also, if a Participant remains in the employment of the Employers but has a change in his employment status so that he no longer qualifies as an Employee as defined herein, such person shall no longer qualify as a Participant under this Plan and, except as otherwise provided in Section 2.4(D), he and his spouse shall not be entitled to any benefits whatsoever under this Plan unless he has a subsequent change in his employment status so that he qualifies as an Employee hereunder and the applicable committee selects him for participation in the Plan. 1.3 OTHER EMPLOYERS Any Subsidiary or Affiliate may adopt this Plan by proper action of its board of directors, provided, however, that the administrative powers and control of the Company, as provided in the Plan shall not be deemed diminished under the Plan by reason of the participation of any other Employers in the Plan. Except as otherwise provided in Section 1.2 with respect to the selection Employees for participation in the Plan, the administrative powers and control granted in Section 4 of the Plan to the 11 Company with respect to the administration of the Plan by the Committee and other matters shall apply only with respect to the Company and not to any other Employer. Each Employer shall have the obligation to pay the retirement benefits under this Plan for its own Employees and no other Employer shall have such obligation, and any failure by a particular Employer to live up to its obligation under the Plan shall have non effect on any other Employer. SECTION 2 AMOUNT AND PAYMENT OF RETIREMENT INCOME 2.1 RETIREMENT - AMOUNT OF RETIREMENT INCOME (A) Except as to those Participants described in Section 2.1(B), each Participant who joined the Plan prior to April 1, 1989, other than a Participant to whom the provisions of Section 2.2 or 2.4 apply, who retires on his Retirement Date shall be entitled to receive a monthly retirement benefit equal to: (1) 2% of his Final Average Monthly Compensation multiplied by his Number of Years of Credited Service after attaining age 35; plus (2) 2% of his Final Average Monthly Compensation multiplied by his Number of Years of Credited Service after attaining age 55; less (3) the amount, if any, of the Participant's Monthly Retirement Plan Offset; provided, however, that in any event, the monthly retirement income payable to a Participant (prior to giving effect to the Participant's Monthly Retirement Plan Offset) shall not exceed 60% of his Final Average Monthly Compensation. 12 (B) Each Participant who joined the Plan prior to April 1, 1989 and was actively employed by any Employer on March 31, 1989, that is offered in writing, in the sole discretion of the Committee or the Board of Directors, the opportunity to delay his Retirement Date under the Plan until the age of 65 (or age 67 in the case of R.E. Howson) and who then accepts and consents to such offer in writing, shall be entitled to receive a monthly retirement benefit equal to: (1) 2% of his Final Average Monthly Compensation multiplied by his Number of Years of Credited Service after attaining age 35; plus (2) 2% of his Final Average Monthly Compensation multiplied by his Number of Years of Credited Service after attaining age 55; less (3) The amount, if any, of the Participant's Monthly Retirement Plan Offset; provided, however, that in any event, the monthly retirement income payable to a Participant (prior to giving effect to the Participant's Monthly Retirement Plan Offset) shall not exceed 65% of his Final Average Monthly Compensation. Notwithstanding the foregoing, the monthly retirement income payable to R.E. Howson hereunder (prior to giving effect to his Monthly Retirement Plan Offset) shall not exceed 73% of his Final Average Monthly Compensation. 13 (C) Each Participant who joins the Plan on or after April 1, 1989, other than a Participant to whom the provisions of Section 2.2 or 2.4 apply, who retires on his Retirement Date shall be entitled to receive a monthly retirement benefit equal to: (1) 3% of his Final Average Monthly Compensation multiplied by his Number of Years of Credited Service after attaining age 45; less (2) the amount, if any, of the participant's Monthly Retirement Plan Offset; provided, however, that in any event, the monthly retirement income payable to a Participant (prior to giving effect to the Participant's Monthly Retirement Plan Offset) shall not exceed 60% of his Final Average Monthly Compensation. 2.2 EARLY RETIREMENT - AMOUNT OF RETIREMENT INCOME A Participant who retires prior to his Retirement Date with the consent of the Employer (which consent may be withheld in the Employer's sole discretion) shall be entitled to receive a monthly retirement income as determined in accordance with the applicable provision of Section 2.1 hereof based upon the Participant's Number of Years of Credited Service as determined on his early retirement date and Final Average Monthly Compensation as determined on his early retirement date, or as to a Participant covered by Section 2.1(B) on the date he attains age 60, whichever is greater. 14 2.3 PAYMENT OF RETIREMENT INCOME The monthly retirement income under Section 2.1 and 2.2 hereof will be payable on the first day of each month. The first payment will be made on the Participant's Retirement Date, or upon his retirement under Section 2.2 hereof, whichever is earlier, and the last payment will be the payment due next preceding the retired Participant's death, provided, however, that following a retired Participant's death, one half of the retired Participant's monthly retirement income shall be paid to his spouse if she shall have been married to the Participant on the date of his retirement under Section 2.1 or Section 2.2, whichever is applicable, and shall have survived him, for her lifetime. 2.4 BENEFITS OTHER THAN ON RETIREMENT (A) Benefit Payable in the Event of Death on or Prior to Retirement Date: If the service of a Participant is terminated by reason of his death on or prior to his Retirement Date, his surviving spouse shall be entitled to receive for her remaining lifetime a monthly income equal to the monthly retirement income to which the Participant would have been entitled under Section 2.1 if he had retired on his Retirement Date and if his Compensation for the one year period prior to his death had continued without change to his Retirement Date; provided, however, that on the deceased Participant's Retirement Date, the amount of monthly income payable to his surviving spouse shall be reduced to one-half of said monthly income. (B) Benefits Payable in the Event of Disability: In the event an Employee becomes disabled while a Participant in the Plan, he shall be entitled to receive a monthly retirement income equal to the amount of monthly 15 retirement income to which he would have been entitled on his Retirement Date, computed as for retirement in accordance with Section 2.1 hereof, as if his employment had not been terminated but had continued uninterrupted from the date of disability to his Retirement Date and as if his Compensation for the one year period prior to his disability had continued without change to his Retirement Date. The monthly retirement income under this Section 2.4(B) will be payable commencing on the first day of each month coincident with or next following said Participant's disability as determined under Section 1.1(5) hereof. The last payment will be as follows: (1) if the Participant recovers from his disability prior to his Retirement Date, the last payment shall be the payment due next preceding the date of such recovery; or (2) if the Participant attains his Retirement Date while still disabled, the last payment will be the payment next preceding the Participant's death, provided, however, that following a Participant's death, one half of the Participant's monthly retirement income shall be paid to his spouse if she shall have been married to the Participant on his Retirement Date and shall have survived him, for her lifetime. 16 (C) Benefit Payable in the Event of Death of Disabled: Participant prior to Retirement Date: If a disabled Participant dies prior to his Retirement Date, his surviving spouse shall be entitled to receive for her remaining lifetime a monthly income equal to the monthly retirement income to which the Participant would have been entitled under Section 2.1 if he had retired on his Retirement Date and if his Compensation for the one year period prior to his disability had continued without change to his Retirement Date; provided, however, that on the deceased Participant's Retirement Date, the amount of monthly income payable to his surviving spouse shall be reduced to one-half of said monthly income. (D) (1) Benefits on Termination of Service: In the event that a Participant who has attained age 60 on or before December 31, 1993 terminates employment on or after December 31, 1993 for reasons other than his death disability or retirement under Section 2.2 hereof. he shall be entitled to receive a monthly retirement income as determined in accordance with the applicable provision of Section 2.1 hereof, based upon the Participant's Number of Years of Credited Service and Final Average Monthly Compensation as determined on December 31, 1993. The monthly retirement payment under this paragraph will be payable commencing on the Participant's Retirement Date as determined under Section 1.1(14) hereof, and the last payment will be the payment due next preceding the terminated Participant's death, provided, however that following a terminated Participant's death, one-half of the retired Participant's monthly retirement income shall be paid to his 17 spouse if she shall have been married to the Participant on the date his monthly retirement payments commenced, and shall have survived him, for her lifetime. If a Participant should die after termination of employment and before monthly retirement income payments commence, no benefits whatsoever shall be payable under this Plan. (2) Except as to those Participants described in paragraph (1) above, in the event that a Participant terminates employment for any reason other than his death, disability or retirement under Section 2.2 hereof, he, and his spouse, shall not be entitled to any benefits whatsoever under this Plan. (3) Notwithstanding any other provision of this Plan to the contrary, in the event a Participant's employment is terminated for any reason whatsoever after the date of an Effective Change in Control but prior to his Retirement Date, such Participant (or his surviving spouse, if any) shall be vested in and entitled to receive the greater of (i) the benefits to which such Participant or surviving spouse may be entitled to under any other provisions of this Plan, or (ii) the Deferred Vested Benefit provided below. The Deferred Vested Benefit with respect to such a Participant shall be a non forfeitable benefit determined in accordance with Section 2.1 hereof based on such Participant's Number of Years of Credited Service and Final Average Monthly Compensation determined of the date of the Effective Change in Control; 18 provided, however, that the amount of such Deferred Vested Benefit payable to a Participant who is employed by any Employer other than J. Ray McDermott S.A. and its Subsidiary and Affiliated Companies (prior to giving effect to the Participant's Monthly Retirement Plan Offset) shall not be less than 21% of the Participant's Final Average Monthly Compensation determined as of the date of his termination of employment. The benefits payable to a Participant under this subparagraph (3) shall be paid in the form of a lump sum distribution equal to the present value of the monthly income amounts that would otherwise be received under the Plan, commencing as of the Participant's date of termination of employment. The amount of such lump sum distribution to be paid to any Participant shall be calculated using the following assumptions: (a) The mortality table based on the prevailing commissioners' standard table (described in Section 807(d)(5)(A) of the Code) used to determine reserves for group annuity contracts issued on the date as of which present value is determined (without regard to any other subparagraph of Section 807(d)(5) of the Code) that is prescribed by the Commissioner of Internal Revenue in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin; and 19 (b) The annual rate of interest on 30-year Treasury securities as specified by the Commissioner of Internal Revenue in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin for the month of August immediately preceding the first day of the Plan Year in which the Participant's Retirement Date occurs. The applicable interest rate shall be determined annually. Payment hereunder shall be made within thirty (30) days of the date of the Participant's termination of employment. If a Participant should die after terminating employment with a vested right hereunder and prior to the payment of a lump sum distribution, such distribution shall be payable to his surviving spouse, if any, at the time it would have been paid to the Participant, if such spouse shall have been married to the Participant on the date he terminated employment with the Employer. 2.5 INCREASE IN BENEFITS In the event a Participant, or his surviving spouse, is receiving benefits under Sections 2.1, 2.2 or 2.4 (A) through (C) hereof and the Retirement Plan for Employees of McDermott Incorporated and Subsidiary and Affiliated Companies provides for an increase in pension payments after retirement as a result of cost of living or similar adjustments, then the benefits payable under Sections 2.1, 2.2 or 2.4 (A) through (C) hereof shall be similarly increased based upon the same cost of living or similar adjustments as set forth in such retirement plan. 20 2.6 LUMP SUM ELECTION Notwithstanding anything to the contrary which may be contained in the Plan, a Participant retiring under Section 2.1 or 2.2 after attaining the age of 60 or terminating employment with a vested interest under Section 2.4(D)(1) shall have the right, with the consent of the Committee, to elect a lump sum distribution equal to the present value of the monthly income amounts that would otherwise be received under the Plan. If a Participant retires at age 65, such Participant must have requested, in writing the consent of the Committee to make such election at least twelve (12) months but not more than eighteen (18) months prior to such Participant's 65th birthday. If a Participant should die after reaching age 60 and before retiring, the spouse shall also have the right, with the written consent of the Committee, to elect a lump sum distribution. The amount of the lump sum distribution to be paid to any Participant shall be calculated using the following criteria: (A) The form of benefit (e.g., joint and 50% survivor) shall be the same as that elected by the Participant under the ERISA qualified plan applicable to the Participant; (B) The mortality table based on the prevailing commissioners' standard table (described in Section 807(d)(5)(A) of the Code) used to determine reserves for group annuity contracts issued on the date as 21 of which present value is determined (without regard to any other subparagraph of Section 807(d)(5) of the Code) that is prescribed by the Commissioner of Internal Revenue in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin; and (C) The annual rate of interest on 30-year Treasury securities as specified by the Commissioner of Internal Revenue in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin for the month of August immediately preceding the first day of the Plan Year in which the Participant's Retirement Date occurs. The applicable interest rate shall be determined annually Payment hereunder shall be made within thirty days of the date of the Participant's retirement; provided, however that if the payment of a lump sum distribution hereunder would cause the Applicable Employee Remuneration (as defined in Section 162(m)(4) of the Internal Revenue Code of 1986, as amended) to exceed the limitation of Section 162(m)(1) of the Code, then in its sole discretion the Committee may defer such payment. Deferred payment hereunder shall be made within thirty days of the first day of the fiscal year of the Employer next following the Participant's retirement date. A deferred lump sum distribution shall earn interest from the Participant's date of retirement until paid, compounded daily, at the minimum commercial lending rate charged from time to time by Morgan Guaranty Trust Company of New York for loans in New York City. If a Participant should die after retiring and prior to the payment of a 22 deferred lump sum distribution, such distribution shall be payable to his spouse at the time it would have been paid to the Participant, if she shall have been married to him on his Retirement Date and shall have survived him. Any payment made under this Section 2.6 shall be in complete satisfaction of any amounts which may be due to any Participant or his surviving spouse or any other person claiming under either of them pursuant to any other provisions of the Plan." SECTION 3 SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS 3.1 BENEFITS APPLICABLE TO PARTICIPANT WHO HAS BEEN OR IS EMPLOYED BY TWO OR MORE EMPLOYERS In the event that a Participant or his surviving spouse is entitled to benefits under the Plan and such Participant has been or is employed by any two or more Employers, his retirement benefit shall be computed by applying the benefit formulas as if all the Employers were a single Employer, provided there is a proper allocation (taking into account the Credited Service and Compensation applicable to each Employer) of the costs of the resulting benefits among the Employers by which such Participant has been or is employed. 3.2 PARTICIPANTS TO FURNISH REQUIRED INFORMATION Each Participant will furnish to the Committee such information as the Committee considers necessary or desirable for purposes of administering the Plan, and the provisions of the Plan respecting any payments thereunder are conditional upon the Participant's furnishing promptly such true, full and complete information as the Committee may request. 23 Each Participant will submit proof of his age to the Committee at such time as required by the Committee. The Committee will, if such proof of age is not submitted as required, use as conclusive evidence thereof, such information as is deemed by it to be reliable, regardless of the source of such information. Any adjustment required by reason of lack of proof or the misstatement of the age of persons entitled to benefits hereunder, by the Participant or otherwise, will be in such manner as the Committee deems equitable. Any notice or information which, according to the terms of the Plan or the rules of the Committee, must be filed with the Committee, shall be deemed so filed at the time that it is actually received by the Committee. The Employers, the Committee, and any person or persons involved in the administration of the Plan shall be entitled to rely upon any certification, statement, or representation made or evidence furnished by a Participant with respect to his age or other facts required to be determined under any of the provisions of the Plan, and shall not be liable on account of the payment of any monies or the doing of any act or failure to act in reliance thereon. Any such certification, statement, representation, or evidence, upon being duly made or furnished, shall be conclusively binding upon the person furnishing same; but it shall not be binding upon the Employers, the Committee, or any other person or persons involved in the administration of the Plan, and nothing herein contained shall be construed to prevent any of such parties from contesting any such certification, statement, representation, or evidence or to relieve the Participant from the duty of submitting satisfactory proof of any such fact. 24 3.3 BENEFITS NOT ASSIGNABLE Except for any indebtedness of a Participant to an Employer, no benefits or rights shall exist under the Plan which are subject in any manner to voluntary or involuntary anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any attempt so to anticipate, alienate, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such benefit or right be in any manner liable for or subject to the debts, contracts, liabilities, engagements, torts or other obligations of the person entitled to such benefit or right, except as specifically provided in the Plan; nor shall any benefit or right under the Plan constitute an asset of a Participant or of any person entitled to benefits under the Plan in case of the bankruptcy, receivership or divorce of said person; and any such benefit or right shall be payable only directly to the Participant or to his surviving spouse. If a Participant or any other person entitled to benefits under this Plan becomes bankrupt or makes an assignment for the benefit of creditors or in any way suffers a lien or judgment against his personal assets, or in any way attempts to anticipate, alienate, sell, assign, pledge, encumber or charge a benefit or right, except as specifically provided in the Plan, then such benefit or right in the discretion of the Committee may cease and terminate. 25 3.4 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN The establishment and maintenance of the Plan will not be construed as conferring any legal rights upon any Participant to the continuation of his employment with an Employer, nor will the Plan interfere with the right of an Employer to discipline, lay off or discharge any Participant. The adoption and maintenance of the Plan shall not be deemed to constitute a contract between the Employer and any Employee or to be a consideration for, inducement to, or condition of employment of any person. 3.5 ABANDONMENT OF BENEFITS Each Participant and other person entitled to benefits hereunder shall file with the Committee from time to time, in writing, his post office address and each change of post office address, and any check representing payment hereunder and any communication addressed to a Participant, a retired Participant, or a surviving spouse at his or her last address filed with the Committee (or, if no such address has been filed, then at his last address as indicated on the records of the Employer) shall be binding on such person for all purposes of the Plan, and the Committee shall not be obliged to search for or ascertain the location of any such person. If the Committee, for any reason, is in doubt as to whether retirement income payments are being received by the person entitled thereto, it may, by registered mail addressed to the person concerned at his address last known to the Committee, notify such person that all unmailed and future retirement income payments shall be henceforth withheld until he provides the Committee with evidence of his continued life and his proper mailing 26 address. Further, his right to any retirement income whatsoever including, without limitation, payments withheld as provided in the preceding sentence and payment checks returned or not cashed shall, at the option of the Committee, be cancelled forever if, at the expiration of three years from the date of such mailing, he shall not have provided the Committee with evidence of his continued life and his proper mailing address. 3.6 WRITTEN COMMUNICATIONS REQUIRED Any notice, request, instruction, or other communication to be given or made hereunder shall be in writing and either personally delivered to the addressee or deposited in the United States mail fully postpaid and properly addressed to such addressee at the last address for notice shown on the Committee's records (or if no address has been filed with the Committee, then at the last address for such addresses as indicated on the records of the Employer). 3.7 CONDUCT INJURIOUS TO THE COMPANY Notwithstanding anything in the Plan to the contrary, any and all benefits otherwise payable to any Participant hereunder, except to the extent of any prior distributions under the Plan, shall be forever forfeited if it is determined by the Committee, in its sole discretion, that such Participant has engaged in conduct injurious to the Company or any Subsidiary or Affiliated Company, including but not limited to the following: (a) dishonesty while in the employ Of the Company or any Subsidiary or Affiliated Company; 27 (b) imparting, disclosing or appropriating proprietary information for himself or to or for any other person, firm, corporation, association or entity for any reason or purpose whatsoever, except if required by law or at the Company's direction; (c) performing any act or engaging in any course of conduct which has or may reasonably have the effect of demeaning the name or business reputation of the Company or any Subsidiary or Affiliated Company; and (d) providing goods or services to or becoming an employee, owner, officer, agent, consultant, advisor or director of any firm or person in any geographic area which competes with the Company or any Subsidiary or Affiliated Company in any phase of any of the business lines or services offered by the Company or any Subsidiary or Affiliated Company as of the Participant's Retirement Date. Any determination by the Committee that a Participant has engaged in conduct injurious to the Company shall be conclusive and binding on all parties. SECTION 4 ADMINISTRATION 4.1 ADMINISTRATION BY COMMITTEE The Plan will be administered by the Committee which shall appoint one of its members as a Chairman and may appoint a secretary, who may, but need not, be a member of the Committee and the Committee may employ such agents, clerical and other services, legal counsel, accountants and actuaries as may be required for the purpose of administering the Plan. A majority of 28 the members of the Committee shall constitute a quorum for the transaction of business and shall have full power to act hereunder. The Committee may act either at a meeting at which a quorum is present or by a writing subscribed by at least a majority of the members then serving. Any written memorandum signed by the secretary or any member of the Committee who has been authorized to act on behalf of the Committee shall have the same force and effect as a formal resolution adopted in an open meeting. Minutes of all meetings of the Committee and a record of any action taken by the Committee shall be kept in written form by the secretary appointed by the Committee. 4.2 RULES AND REGULATIONS OF COMMITTEE The Committee shall have the authority to make such rules and regulations and to take such action as may be necessary to carry out the provisions of the Plan and will, subject to the provisions of the Plan, decide any questions arising in the administration, interpretation and application of the Plan, which decisions shall be conclusive and binding on all parties. The Committee may delegate any part of its authority and duties as it deems expedient. 4.3 POWERS OF COMMITTEE In order to effectuate the purposes of the Plan, the Committee shall have the power to construe the Plan and to make equitable adjustments for any mistakes or errors made in the administration of the Plan, and all such actions or determinations made by the Committee in good faith shall not be subject to review by anyone. 29 4.4 LIABILITY OF COMMITTEE No member of the Committee shall be liable for any loss unless resulting from his own fraud, bad faith or intentional wrongdoing and no member shall be personally liable upon or with respect to any agreement, act, transaction or omission executed, committed or suffered to be committed by the Committee or by himself as a member of the Committee or by any other member, agent, representative or employee of the Committee. The Committee and any individual member of the Committee and any agent thereof shall be fully protected in relying upon the advice of consultant(s) or advisor(s) employed by the Company or the Committee, including but without any limitation, any attorney insofar as legal matters are concerned, any accountant insofar as accounting matters are concerned and any actuary insofar as actuarial matters are concerned. 4.5 INDEMNIFICATION The Company agrees to hold harmless and indemnify the members of the Committee and all directors, officers, and employees of the Company and of any Subsidiary or Affiliate which has adopted this Plan against any and all claims and causes of action whomsoever, and any losses therefrom, including without limitation costs of defense and attorneys' fees, based upon or arising out of any act or omission relating to or in connection with this Plan, its interpretation or administration, other than losses resulting from the fraud, bad faith or intentional wrongdoing of the party asserting the right to indemnification. 30 4.6 APPLICABLE LAW The Plan shall be construed, administered and enforced in accordance with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the laws of the State of Louisiana where ERISA pre-emption does not apply. SECTION 5 GENERAL PROVISIONS 5.1 AMENDMENT AND DISCONTINUANCE The Plan may be amended from time to time in any respect whatever, by resolution of the Board of Directors of the Company specifying such amendment and amendments may be made retroactively which, in the judgment of the Committee, is necessary or advisable provided that such retroactive amendment does not deprive a retired or disabled Participant, or his spouse, without his or her consent, of a right to receive benefits hereunder. The participation in the Plan of Employers other than the Company shall not limit the power of the Company under the foregoing provision, and amendments by the Company shall be binding upon all other Employers to the extent accepted by such Employers. Acceptance by each such Employer shall be presumed. However the discontinuance of the Plan shall not affect the rights of retired or disabled Participants (or their spouses) who are receiving benefits under this Plan on the date of such discontinuance. 31 5.2 SOURCE OF BENEFITS All benefits payable to Participants of the Company under this Plan shall be paid from the general assets of the Company and all benefits payable to Participants of any Subsidiary or Affiliate which has adopted this Plan shall be paid from the general assets of such Subsidiary or Affiliate. Benefits shall not be paid from any special or separate fund and no special or separate fund shall be established, or other segregation of assets made to make payment of benefits to eligible Participants or their surviving spouses hereunder. No Participant or surviving spouse or any other person shall have, under any circumstances, any interest whatever in any particular property or assets of the Company or any Subsidiary or Affiliate by virtue of this Plan. 5.3 BINDING ON COMPANY, EMPLOYEES AND THEIR SUCCESSORS This Plan shall be binding upon and inure to the benefit of the Company and to the Subsidiaries and Affiliated Companies which have adopted this Plan, their successors and assigns and the Participant and his heirs, executors, administrators, tutors, and legal representatives. IN WITNESS WHEREOF, McDermott International, Inc. has caused this instrument to be executed by its duly authorized officers on this 7th day of February, 2000. ATTEST MCDERMOTT INTERNATIONAL, INC. /s/ John Tsai By: /s/ R.E. Tetrault - ------------------------------------- --------------------------------- Assistant Secretary R.E. Tetrault Chairman of the Board and Chief Executive Officer 32 EX-10.2 3 a4795381ex102.txt EXHIBIT 10.2 Exhibit 10.2 McDermott International, Inc. ----------------------------- New Supplemental Executive Retirement Plan ------------------------------------------ Effective January 1, 2005 ARTICLE I Purpose ------- 1.1 Purpose of Plan. The purpose of this McDermott International, Inc., New Supplemental Executive Retirement Plan (the "Plan") is to advance the interests of McDermott International, Inc., its subsidiaries and affiliates by providing certain retirement benefits that will attract and retain highly qualified key employees accountable for the successful conduct of its business. This Plan replaces the prior Supplemental Executive Retirement Plan, terminated effective December 31, 2004. 1.2 ERISA Status. The Plan is governed by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). It has been designed to qualify for certain exemptions under Title I of ERISA that apply to plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. 1.3 Effective Date. The effective date of this Plan is January 1, 2005. 1.4 Grantor Trust. The Company may establish, in its sole discretion, a grantor trust to be utilized in conjunction with this Plan. ARTICLE II Definitions and Construction ---------------------------- Definitions. Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary. (1) Account. Collectively, means the Participant's Company Account and the Participant's Deferral Account. (2) Account Value. At any given time, the sum of all amounts credited to the Participant's Account, adjusted for any income, gain or loss and any payments attributable to such account. (3) Beneficiary. The person designated by each Participant, on a form provided by the Company for this purpose, to receive the Participant's distribution under Article VI in the event of the Participant's death prior to receiving complete payment of his Account. In order to be effective under this Plan, 1 any form designating a Beneficiary must be delivered to the Committee before the Participant's death. In the absence of such an effective designation of a Beneficiary, "Beneficiary" means the Participant's spouse, or if there is no spouse on the date of the Participant's death, the Participant's executor or administrator or heirs at law if there is no administration of the Participant's estate. (4) Board. The Board of Directors of McDermott International, Inc. or the board of directors of a company that is a successor to the Company. (5) Bonus. Any bonus paid to a Participant under any plan, policy or program of the Company providing for the payment of annual bonuses to employees or any extraordinary payment paid to a Participant if such payment is designated by the Committee to be a Bonus for purposes of this Plan. Bonus shall not include any compensation under the 2002 B&W Performance Incentive Plan. (6) Cause. Cause means: (a) the overt and willful disobedience of orders or directives issued to a Participant that are within his scope of duties, or any other willful and continued failure of a Participant to perform substantially his duties with the Company (occasioned by reason other than physical or mental illness or disability) after a written demand for substantial performance is delivered to the Participant by the Committee or the Chief Executive Officer of the Company which specifically identifies the manner in which the Committee or the Chief Executive Officer believes that the Participant has not substantially performed his duties, after which the Participant shall have thirty days to defend or remedy such failure to substantially perform his duties; (b) the willful engaging by the Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or (c) the conviction of the Participant with no further possibility of appeal or, or plea of nolo contendere by the Participant to, any felony or crime of falsehood. The cessation of employment of a Participant under subparagraph (a) and (b) above shall not be deemed to be for "Cause" unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Committee at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to the Participant and the Participant is given an opportunity to be heard before the Committee), finding that, in the good faith opinion of the Committee, the Participant is guilty of the conduct described in subparagraph (a) or (b) above, and specifying the particulars thereof in detail. 2 (7) Change in Control. A change in control shall occur when: (a) any person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company) is or becomes the "beneficial owner" (as such term is used in ss. 13 of the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding voting securities; (b) the shareholders of the Company approve (i) a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior there to continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) the shareholders of the Company approve a plan of complete liquidation of the Company, or (iii) an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (c) the individuals who, at the beginning of any period of two (2) consecutive years, constitute the Board of Directors of the Company cease, for any reason, to constitute at lease a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least a majority of the directors then still in office who were directors at the beginning of such period; or (d) such other circumstances as may be deemed by the Board of Directors of McDermott International, Inc., in its sole discretion, to constitute a change in control of the Company with respect to any Participant. However, in no event shall a Change In Control be deemed to have occurred with respect to a Participant if the Participant is part of the purchasing group which consummates the Change In Control transaction. A Participant shall be deemed "part of a purchasing group for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for passive ownership of less than three percent (3%) of the stock of the purchasing company or ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing members of the Board of Directors of the Company.) 3 In no event shall a Change In Control be deemed to have occurred with respect to any Participant as a result of the resolution of the Chapter 11 proceedings related to The Babcock & Wilcox Company and certain of its subsidiaries which were filed in the U. S. Bankruptcy Court for the Eastern District of Louisiana on February 22, 2000. For purposes of determining whether a Change In Control has occurred, the term "Company" shall mean McDermott International, Inc. with respect to all Participants, and shall also mean the Company by which the Participant is employed with respect to each Participant. (8) Code. The Internal Revenue Code of 1986, as amended. (9) Committee. The Compensation Committee of the Board, or such other administrative committee that is appointed by the Board to administer the Plan. (10) Company. McDermott International, Inc. and except where the context clearly indicates otherwise, shall include the Company's subsidiaries and affiliates, as well as any successor to any such entities. (11) Company Account. The account maintained by the Committee reflecting each Participant's Company Contributions, together with any income, gain or loss and any payments attributable to such account. (12) Company Contribution. The total contributions credited to a Participant's Company Account for any one Plan Year pursuant to the provisions of Section 4.1 or 4.2. (13) Compensation. The salary, wages and other cash remuneration received by a Participant during any Plan Year or in respect of employment with the Company, including any contributions made to a plan described in Sections 125, 132(f) or 401(k) of the Code pursuant to a salary reduction agreement entered into between a Participant and the Company and Bonuses, but excluding other additional remuneration in any form. (14) Deemed Investments. With respect to any Account, the hypothetical investment options with respect to which such Account is deemed to be invested for purposes of determining the value of such Account under this Plan, as selected from time to time by the Committee in its discretion. (15) Deferral Account. The account maintained by the Committee reflecting each Participant's Deferral Contributions, together with any income, gain or loss and any payments attributable to such amount. (16) Deferral Contribution. Compensation that is credited to a Participant's Deferral Account pursuant to the provisions of Section 4.3. 4 (17) Eligible Employee. The Company's CEO and any officers of the Company and its subsidiaries and affiliates. (18) ERISA. The Employee Retirement Income Security Act of 1974, as amended. (19) Exchange Act. The Securities Exchange Act of 1934, as amended. (20) Hardship. An unforeseeable financial emergency which is a severe financial hardship to the Participant resulting from a sudden and unexpected loss or accident of the Participant or of a dependent of the Participant, a loss of the Participant due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. To qualify as an unforeseeable financial emergency, it must be demonstrated that such hardship cannot be relieved (i) by reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. (21) Participant. An Eligible Employee who has been selected by the Committee as a Participant in the Plan until such Eligible Employee ceases to be a Participant in accordance with Article III of the Plan. (22) Plan Year. The twelve-consecutive month period commencing January 1 of each year. (23) Retirement. Termination of service with the Company on or after the first of the calendar month following the Participant's attainment of the age of 65. (24) Termination. The termination of a participant's employment with the Company for any reason whatsoever. (25) Vested Account. The sum of the Participant's vested Company Account and the Participant's Deferral Account. (26) Vested Percentage. The percentage as to which a Participant is vested in his or her Company Account as determined under Sections 5.4 and 5.5. (27) Years of Participation. The sum of whole Plan Years of participation in the Plan as an active employee in continuous employment, excluding fractional years. 5 ARTICLE III Participation ------------- The Committee, in its sole discretion, shall select and notify in writing those Eligible Employees of the Company who shall participate in the Plan. An Eligible Employee who has been selected by the Committee as a Participant shall begin participation in the Plan effective on the date specified by the Committee in its notification and shall continue to participate in the Plan until the earlier of (a) the date the Committee notifies the Participant that he is no longer eligible to participate in the Plan or (b) the date of his Termination. A Participant who ceases to participate in the Plan pursuant to (a) of the preceding sentence shall be treated as if he had terminated employment with the Company but (i) his benefit, if any, shall not be payable until after his Termination, and (ii) his Vested Account shall be adjusted as provided in Article V. An Eligible Employee who is rehired by the Company following his Termination shall become a Participant only if such Eligible Employee is again selected to participate in the Plan by the Committee. ARTICLE IV Contributions ------------- 4.1 Annual Company Contribution. As of the first day of each Plan Year, the Company shall declare a contribution percentage for each Participant's Company Account. The contribution percentage declared for a Participant may, but need not be, the same as the contribution percentage declared for other Participants. Company Contributions shall be credited as of the first day of the Plan Year or at other such times as determined by the Committee to each Participant's Company Account, in an amount equal to the contribution percentage declared for the Participant multiplied by the Participant's Compensation received during the prior Plan Year. 4.2 Discretionary Company Contribution. The Committee may in its sole discretion at any time make an extraordinary contribution to the Company Account of any Participant. 4.3 Participant Deferrals. For any Plan Year, the Committee may, in its sole discretion, allow a Participant to elect to defer the payment by the Company of any whole percentage (or dollar amount) of his annual base salary that would otherwise be paid during such Plan Year and of any whole percentage (or dollar amount) of any Bonus earned during such Plan Year, and instead have such amounts credited to his Deferral Account. The salary and Bonus otherwise payable to the Participant shall be reduced by the amount the Participant elected to have contributed to the Participant's Deferral Account, which shall be a Deferral Contribution. 6 4.4 Manner of Deferral. The Committee shall prescribe, in its sole discretion, the procedures, limitations and timing requirements, for Participant Deferral Contribution elections. Elections to make Deferral Contributions shall be in writing, on a form supplied by the Committee, and shall be irrevocable (except as otherwise provided in the Plan) for the applicable period to which they relate. ARTICLE V Accounts -------- 5.1 Company Accounts. The Committee shall establish and maintain an individual bookkeeping account for each Participant, which shall be the Participant's Company Account. The Committee shall credit the amount of each Company Contribution made on behalf of a Participant to such Participant's Company Account pursuant to Section 4.1 and 4.2. The Committee shall further debit and/or credit the Participant's Company Account with any income, gain or loss and any payments attributable to such account on a daily basis, or at such other times as it shall determine appropriate. The sole purpose of the Participant's Company Account is to record and reflect the Company's Plan obligations related to Company Contributions to each Participant under the Plan. The Company shall not be required to segregate any of its assets with respect to Plan obligations nor shall any provision of the Plan be construed as constituting such segregation. 5.2 Deferral Accounts. The Committee shall establish and maintain an individual bookkeeping account for each Participant, which shall be the Participant's Deferral Account. The Committee shall credit the amount of each Deferral Contribution made on behalf of a Participant to such Participant's Deferral Account as soon as administratively feasible following the applicable deferral. The Committee shall further debit and/or credit the Participant's Deferral Account with any income, gain or loss and any payments attributable to such Account on a daily basis, or at such other times as it shall determine appropriate. The sole purpose of the Participant's Deferral Account is to record and reflect the Company's Plan obligations related to Deferral Contributions of each Participant under the Plan. The Company shall not be required to segregate any of its assets with respect to Plan obligations, nor shall any provision of the Plan be construed as constituting such segregation. 5.3 Hypothetical Accruals to the Account. In accordance with procedures established by the Committee and subject to this Section 5.3, the Participant may designate the Deemed Investments with respect to which his or her Account shall be deemed to be invested, provided such designation(s) are made in accordance with the procedures established by the Committee. If a Participant fails to make a proper designation, then his Account shall be deemed to be invested in the Deemed Investments designated by the Committee in its sole discretion. A copy of any available prospectus or other disclosure materials for each of the Deemed Investments shall be made available to each Participant upon request. The Committee shall determine from time to time each of the Deemed Investments made available under the Plan and may change any such determinations at any time. Nothing herein shall obligate the Company to invest any part of its assets in any of the investment vehicles serving as the Deemed Investments. 7 5.4 Vesting of Company Account. A Participant's vested percentage with respect to the Participant's Company Account, adjusted by any income, gain or loss and any payments attributable thereto, shall be the lesser of i) twenty percent times the Participant's Years of Participation, and ii) 100%. Upon termination of employment other than described in Section 5.5, a Participant shall forfeit all amounts credited to his Account other than his Vested Account value determined as of the close of business coincident with or next following the date on which the Participant terminated employment; provided, however, that amounts not so forfeited shall continue to be debited and credited in accordance with Section 5.3 from and after termination of employment. 5.5 Accelerated Vesting. The vesting provisions above notwithstanding, the Participant shall have a Vested Percentage of 100% for his entire Account upon the soonest of the following to occur during the Participant's employment with the Company: (i) the date of termination of the Participant's employment as a result of the Participant's death or disability or termination by the Company for reasons other than Cause, (ii) the participant's Retirement, or (iii) the date of termination of the Participant's employment within 24 months following a Change of Control. 5.6 Vesting of Deferral Account. A Participant's Vested Percentage with regard to the Participant's Deferral Account shall at all times be 100%. 5.7 Nature and Source of Payments. The obligation to make distributions under this Plan with respect to each Participant and any Beneficiary in accordance with the terms of this Plan shall constitute a liability of the Company which employed the Participant when the obligation was accrued, including any hypothetical income, gain or loss and any payment or distribution attributable to such accrual and no other Company shall have such obligation and any failure by a particular Company to live up to its obligation under this Plan shall have no effect on any other Company. All distributions payable hereunder shall be made from the general assets of the Company, and nothing herein shall be deemed to create a trust of any kind between the Company and any Participant or other person. No special or separate fund shall be established nor shall any other segregation of assets be made to assure that distributions will be made under this Plan. No Participant or Beneficiary shall have any interest in any particular asset of the Company by virtue of the existence of this Plan. Each Participant and Beneficiary shall be an unsecured general creditor of the Company. 5.8 Statements to Participants. Periodically as determined by the Committee, but not less frequently than annually, the Committee shall transmit to each Participant a written statement regarding the Participant's Account for the period beginning on the date following the effective date of the preceding statement and ending on the effective date of the current statement. 8 ARTICLE VI Payment of Benefits ------------------- 6.1 Occasions for Distributions. The Company shall distribute a Participant's Vested Account following the events and in the manner set forth in this Article VI. A Participant's Vested Account shall be debited in the amount of any distribution made from the Account as of the date of the distribution. 6.2 Distribution Elections. A Participant may file a distribution election directing how his Vested Account shall be distributed following his Termination. The distribution election must be made on a form supplied by the Committee for that purpose and the Committee in its sole discretion may determine the available distribution options. To be effective, the distribution election must be filed upon initial enrollment in the Plan or otherwise at least 12 months prior to the Participant's Termination. In the event of Termination due to the death of the Participant, no such restriction applies. In the event the Participant files more than one distribution election, the last valid distribution election shall control. In the event that no valid distribution election has been filed, payment will be made in a lump sum, within 90 days of Termination. If the Participant's Vested Account Balance is less than $50,000, the Committee will distribute the Vested Account Balance in a lump sum irrespective of the Participant's Distribution Election. 6.3 Distribution of Vested Account upon Termination of Employment. If a Participant terminates employment with the Company for any reason other than disability or death, the Company shall distribute or begin distributing to the Participant within 90 days of Termination the full amount of the Participant's Vested Account. Such distributions shall be in the form specified on the most recently filed distribution election form. 6.4 Distribution on Account of Disability. If a Participant becomes disabled, such determination to be made by the Committee in its sole discretion, then Contributions under this Plan will cease. Contributions will not resume unless and until the Participant returns to work and formally reenrolls in the Plan by completing and filing a form supplied by the Committee. If the Participant's employment with the Company is interrupted for more than one year by disability, then within 90 days following the date when the interruption of employment reaches one year, the Company shall distribute or begin distributing to the Participant the full amount of the Participant's Vested Account calculated as of the date the interruption of employment reaches one year. Such distributions shall be in accordance with the last valid distribution election form filed by the Participant in accordance with Section 6.2. 6.5 Distributions on Account of Death. Within 90 days after the Participant's death, the Company shall distribute or begin distributing to the Beneficiary the Participant's Vested Account as of the date of death. Such distributions shall be in accordance with the last valid distribution election form filed by the Participant in accordance with Section 6.2. 9 6.6 Continuation of Accounts after Commencement of Distributions. If a Participant's Vested Account is to be distributed in a form other than an immediate lump sum, then the Vested Account shall continue to be adjusted with any hypothetical income, gain or loss and any payments or distributions attributable to such account as described in Sections 5.1 and 5.2, until the entire Vested Account has been distributed. 6.7 Hardship Distribution. Anything to the contrary notwithstanding, in the event of a Hardship and upon the written request of a Participant, the Committee, in its sole discretion, may authorize and direct the Company to accelerate distributions under this Plan to such Participant. Distributions may be accelerated under this Section 6.7 only to the extent that the accelerated distribution is necessary to enable the Participant to resolve the financial need. If a Hardship distribution is made to a Participant under this Section 6.7, then the Participant will be suspended from the Plan for the remainder of the Plan Year in which the Hardship distribution is made, and the following Plan Year. Any distributions made under this Section 6.7 shall be first from the Participant's Deferral Account and then from the Participant's Company Account to the extent that it is vested. 6.8 Distribution on Account of Completion of a Fixed Deferral Period. If, with respect to any Deferral Contribution for a Plan Year, the Participant elected at the time of such deferral, on forms provided by the Committee, to receive a specified portion of such deferred amount upon the expiration of a pre-determined deferral period, the Participant shall receive a lump sum distribution of that portion of such Deferral Contribution, subject to any income, gain or loss and any payments of distributions associated with such Deferral Contribution, as previously elected. Such election must be made at the time the Deferral Contribution is elected, and the deferral period must be specified for a minimum of three years. ARTICLE VII Committee --------- 7.1 Authority. The Committee has full and absolute discretion in the exercise of each and every aspect of the rights, power, authority and duties retained or granted it under the Plan, including without limitation, the authority to determine all facts, to interpret this Plan, to apply the terms of this Plan to the facts determined, to make decisions based upon those facts and to make any and all other decisions required of it by this Plan, such as the right to benefits, the correct amount and form of benefits, the determination of any appeal, the review and correction of the actions of any prior administrative committee, and the other rights, powers, authority and duties specified in this Article and elsewhere in this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or any agreement or document related to this Plan in the manner and to the extent the Committee deems necessary or appropriate to carry this Plan into effect. Notwithstanding any provision of law, or any explicit ruling or implicit provision of this document, any action taken, or finding, interpretation, ruling or decision made by the Committee in the exercise of any of its rights, powers, authority or duties under this Plan shall be final and conclusive as to all parties, including without limitation all Participants, former Participants and beneficiaries, regardless of whether the Committee or one or more if its members may have an actual or potential conflict of interest with respect to the subject matter of the action, finding, interpretation, ruling or decision. No final 10 action, finding, interpretation, ruling or decision of the Committee shall be subject to de novo review in any judicial proceeding. No final action, finding, interpretation, ruling or decision of the Committee may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue. To the extent Plan distributions are payable in a form other than a single lump sum (e.g., installments), the Committee shall determine the methodology for computing such payments. 7.2 Delegation of Authority. The Committee may delegate any of its powers or responsibilities to one or more members of the Committee or any other person or entity. 7.3 Procedures. The Committee may establish procedures to conduct its operations and to carry out its rights and duties under the Plan. Committee decisions may be made by majority action. The Committee may act by written consent. 7.4 Compensation and Expenses. The members of the Committee shall serve without compensation for their services, but all expenses of the Committee and all other expense incurred in administering the Plan shall be paid by the Company 7.5 Indemnification. The Company shall indemnify the members of the Committee and/or any of their delegates against the reasonable expenses, including attorney's fees, actually and appropriately incurred by them in connection with the defense of any action, suit or proceeding, of in connection with any appeal thereto, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) and against all amounts paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in a suit of final adjudication that such Committee member is liable for fraud, deliberate dishonesty of willful misconduct in the performance of his duties; provided that within 60 days after the institution of any such action, suit or proceeding a Committee member has offered in writing to allow the Company, at its own expense, to handle and defend any such action, suit or proceeding. 11 ARTICLE VIII Amendment and Termination ------------------------- The Company retains the power to amend the Plan or to terminate the Plan at any time by action of the Board. No such amendment or termination shall adversely affect any Participant or Beneficiary with respect to his right to receive a benefit in accordance with Article VI, determined as of the later of the date that the Plan amendment or termination is adopted or the date such Plan amendment or termination is effective, unless the affected Participant or Beneficiary consents to such amendment or termination. ARTICLE IX Miscellaneous ------------- 9.1 Plan Does Not Affect the Rights of Employee. Nothing contained in this Plan shall be deemed to give any Participant the right to be retained in the employment of the Company , to interfere with the rights of the Company to discharge any Participant at any time or to interfere with a Participant's right to terminate his employment at any time. 9.2 Nonalienation and Nonassignment. Except for debts owed the Company by a Participant or Beneficiary, no amounts payable or to become payable under the Plan to a Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, by operation of law or otherwise, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same by a Participant or Beneficiary prior to distribution as herein provided shall be null and void. 9.3 Tax Withholding. The Company shall have the right to deduct from any payments to a Participant or Beneficiary under the Plan any taxes required by law to be withheld with respect to such payments. In addition, the Company shall have the right to deduct from any Participant's base salary or other compensation any applicable employment taxes or other required withholdings with respect to a Participant. 9.4 Setoffs. As a condition to the receipt of any benefits hereunder, the Committee, in its sole discretion, may require a Participant or Beneficiary to first execute a written authorization, in the form established by the Committee, authorizing the Company to offset from the benefits otherwise due hereunder any and all amounts, debts or other obligations, of any kind or nature, owed to the Company by the Participant. Where such written authorization has been so executed by a Participant, benefits hereunder shall be reduced accordingly. The Committee shall have full discretion to determine the application of such offset and the manner in which such offset will reduce benefits under the Plan. 12 9.5 Number and Gender. Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender. 9.6 Headings. The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control. 9.7 Applicable Law. Except to the extent preempted by federal law, the terms and provisions of the Plan shall be construed in accordance with the laws of the State of Texas. 9.8 Successors. All obligations under the Plan shall be binding upon the Company and any successors and assigns, in accordance with its terms, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other transaction, involving all or substantially all of the business and/or assets of the Company. 9.9 Claims Procedure. The Committee shall have sole discretionary authority with regard to the adjudication of any claims made under the Plan. All claims for benefits under the Plan shall be submitted in writing, shall be signed by the claimant and shall be considered filed on the date the claim is received by the Committee. In the event a claim is denied, in whole or in part, the claims procedures set forth below shall be applicable. Upon the filing of a claim as above provided and in the event the claim is denied, in whole or in part, the Committee shall within ninety (90 days, (forty five (45) days for disability related claims,) provide the claimant with a written statement which shall be delivered or mailed to the claimant to his last known address, which statement shall contain the following: (a) the specific reason or reasons for the denial of benefits; (b) a specific reference to the pertinent provisions of the Plan upon which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect his claim for benefits and an explanation of why such material and information is necessary; and (d) an explanation of the review procedure provided below. If special circumstances require additional time for processing the claim, the Committee shall advise the claimant prior to the end of the initial ninety (90) day or forty-five (45) day period, setting forth the reasons for the delay and the approximate date the Committee expects to render its decision. Any such extension shall not exceed ninety (90) days, or thirty (30) days for disability related claims. 13 Within ninety (90) days after receipt of the written notice of denial of a claim as provided above, a claimant or his authorized representative may request a review of the denial upon written application to the Committee, may review pertinent documents and may submit issues and comments in writing to the Committee. Within sixty (60) days (or forty-five days in the case of a disability related claim) after receipt of a written request for review, or within one hundred and twenty (120) days (or ninety days for disability related claims) in the event of special circumstances which require an extension of time for processing such application for review, the Committee shall notify the claimant of its decision by delivery or by Certified or Registered Mail to his last known address. The decision of the Committee shall be in writing and shall include the specific reasons for the decision and specific references to the pertinent provisions of the Plan on which such decision is based. The Committee shall advise the claimant prior to the end of the initial sixty (60) day or forty-five day period, as applicable, if additional time is needed to process such application for review. The decision of the Committee shall be final and conclusive. 9.10 Claims/Disputes. Any dispute or claim arising out of this Plan or the breach thereof, which is not settled under the Plan's administrative claims procedure and which is pursued beyond such claims procedure, shall be brought in Federal District Court, in Harris County, Texas. 9.11 Conduct Injurious to the Company. Notwithstanding anything in the Plan to the contrary, any and all benefits otherwise payable to any Participant hereunder, except to the extent of any prior distributions under the Plan, shall be forever forfeited if it is determined by the Committee, in its sole discretion, that such Participant has engaged in conduct injurious to the Company, including but not limited to the following: (a) dishonesty while in the employ of the Company; (b) imparting, disclosing or appropriating proprietary information for himself or to or for any other person, firm, corporation, association or entity for any reason or purpose whatsoever, except if required by law or at the Company's direction; (c) performing any act or engaging in any course of conduct which has or may reasonably have the effect of demeaning the name or business reputation of the Company; or (d) providing goods or services to or becoming an employee, owner, officer, agent, consultant, advisor or director of any firm or person in any geographic area which competes with the Company in any phase of any of the business lines or services offered by the Company as of the Participant's Retirement Date. 14 9.12 Entire Agreement. This Plan document constitutes the entire Plan governing the Company and the Participant with respect to the subject matters hereof and supercedes all prior written and oral and all contemporaneous written and oral agreements and understandings, with respect to the subject matters herein. This Plan may not be changed orally, but only by an amendment in writing signed by the Company, subject to the provisions in this Plan regarding amendments thereto. IN WITNESS WHEREOF, McDermott International, Inc. has caused this Plan to be executed by its duly authorized officer, effective as provided herein. 15 -----END PRIVACY-ENHANCED MESSAGE-----