SEPARATION AGREEMENT

Retirement Benefits. Mr. Nash may elect to begin receiving unreduced benefits under the Retirement Plan for Employees of Babcock & Wilcox Governmental Operations as of the first day of any month following the Termination Date. Benefits under The Babcock

& Wilcox Company Thrift Plan shall be paid in accordance with the provisions of such plan. Benefits payable under the Restoration of Retirement Income Plan (the “Excess Plan”) shall begin as of October 1, 2011 under any available annuity form of payment selected by Mr. Nash, in accordance with Section 8 of the Excess Plan. The first monthly payment of Excess Plan benefits shall include the monthly payments that would have been made for the prior six months but for the Internal Revenue Code Section 409A requirements applicable to a “Specified Person”. Benefits payable under The Babcock & Wilcox Company Supplemental Executive Retirement Plan (“SERP”) shall be distributed in accordance with Mr. Nash’ election with respect to distributions on account of Separation from Service. Neither Mr. Nash nor the Company reasonably anticipate that Mr. Nash will provide services to the Company or any of its Affiliates in any capacity after the Termination Date at a level greater than 49% of the average level of services provided in the 36 months immediately preceding the Termination Date.

Release of Claims. In consideration of the foregoing, the adequacy of which is hereby expressly acknowledged, Mr. Nash hereby unconditionally and irrevocably releases and forever discharges, to the fullest extent applicable law permits, the “Releasees,” as defined below, from any and every action, cause of action, complaint, claim, demand, administrative charge, legal right, compensation, obligation, damages (including consequential, exemplary and punitive damages), liability, cost and/or expense (including attorney’s fees) that he has, may have or may be entitled to from or against the Releasees, whether legal, equitable or administrative, in any forum or jurisdiction, whether known or unknown, foreseen or unforeseen, matured or unmatured, accrued or not accrued, which arises directly or indirectly out of, or is based on or related in any way to Mr. Nash’ employment with or termination of employment from the Company, its predecessors, successors and assigns and past, present and future affiliates, subsidiaries, divisions and parent corporations, including, without limitation, any such matter arising from the negligence, gross negligence or willful misconduct of the Releasees, (together, the “Released Claims”); provided, however, that this Release does not apply to any claims solely and specifically (1) arising after the date this

Agreement is executed, (2) for indemnification (including, without limitation, under the Company’s organizational documents or insurance policies) arising in connection with an action instituted by a third party against the Company, its affiliates or Mr. Nash in his capacity as an employee or a former officer or director of the Company or its affiliates, or (3) arising from any breach or failure to perform this Agreement.

Return of Property. Mr. Nash will deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence,

specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property, in whatever medium stored (including all reproductions of the aforementioned items) belonging to the Company or any of its Affiliates, regardless of whether such items were prepared by Mr. Nash.

Mr. Nash acknowledges that the restrictive covenants under this Agreement, for which Mr. Nash received valuable consideration from the Company as provided in this Agreement, are ancillary to otherwise enforceable provisions of this Agreement, that the consideration provided by the Company gives rise to the interest of the Company and its Affiliates in restraining Mr. Nash from competing and that the restrictive covenants are designed to enforce Mr. Nash’s consideration or return promises under this Agreement. Additionally, Mr. Nash acknowledges that these restrictive covenants contain limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company and its Affiliates, including, but not limited to, the Company’s and its Affiliates’ need to protect their Confidential Information. Mr. Nash expressly acknowledges and agrees that in the event the that he has breached any of the restrictive covenants provided under this Agreement, any payments otherwise due and owing pursuant to Paragraph 1 above and all outstanding Options shall be cancelled. Mr. Nash further expressly agrees that the Company shall have the right, in its sole discretion, to suspend any such payment or benefit while an allegation that any of the restrictive covenants set forth above have been breached is under investigation and agrees that this Agreement shall act as a complete bar to his entitlement to any legal, equitable or administrative remedy based upon any forfeiture, cancellation or suspension pursuant to this subparagraph (d). Mr. Nash further agrees that if the Company determines that he has breached under any of the restrictive covenants set forth in this Agreement, he shall repay to the Company, within thirty (30) days of receipt of written demand for repayment, 100% of the value of any Award that became vested on the Termination Date

pursuant to Paragraph 2 above, including the proceeds of any such Option exercised on or after March 31, 2011. In the event that legal action is taken by the Company to enforce this repayment obligation, the Company shall be entitled to the amount of the repayment obligation, interest on the unpaid amount, costs and attorney’s fees.

Entire Agreement. Mr. Nash and the Company agree and acknowledge that this Agreement contains and comprises the entire agreement and understanding between the parties, that no other representation, promise, covenant or agreement of any kind whatsoever has been made to cause any party to execute this Agreement, and that all agreements and understandings between the parties are embodied and expressed in these agreements. The parties also agree that the terms of this Agreement shall not be amended or changed except in writing and signed by Mr. Nash and a duly authorized agent of the Company. The parties to this Agreement further agree that this Agreement shall be binding on and inure to the benefit of Mr. Nash, the Company, the Company’s successors, assigns and subsidiaries, the Releasees and the Affiliates, each as defined in this Agreement. Any other agreements or understandings between the parties, whether written or oral, are hereby null and void. The parties agree that venue

and jurisdiction for any litigation arising out of, related to, or regarding the validity of this Agreement shall lie with a court of competent jurisdiction in Charlotte, North Carolina.

Winfred D. Nash