Exhibit 10.3
 
 

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (“Agreement”) is entered into as of April 8,
2011 (“Effective Date”), by and between The Shaw Group Inc., a Louisiana
corporation (collectively with the affiliates and subsidiaries hereinafter
referred to as “Company”), and David L. Chapman, Sr. (“Employee”).  The Company
and Employee shall hereinafter be referred to collectively as the “Parties”.
WHEREAS, the Company and Employee are parties to an Employment Agreement dated
March 12, 2008 (the “Original Agreement”) and an Amended & Restated Employment
Agreement dated December 31, 2008 (the “Amended Agreement”);
WHEREAS, the Company and the Employee desire to supersede both the Original
Agreement and the Amended Agreements and enter into a new agreement concerning
Employee’s employment with the Company;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
1.            Employment.  The Company hereby employs Employee, and Employee
hereby accepts employment with the Company, on the terms and conditions set
forth in this Agreement.
2.            Term.
(a)            Initial Term of Employment.  Subject to the provisions for
earlier termination provided in this Agreement, the initial term of this
agreement (the “Initial Term”) shall be two (2) years and six (6) months
commencing on the Effective Date hereof.  Approximately half-way way through the
Initial Term, the Company and Employee shall discuss renewal of the
Agreement.  At the expiration of the Initial Term, providing Employee has not
entered into the “Part-Time Term” discussed in paragraph 2(b) below, all
obligations under this Agreement shall cease except that the obligations of the
Employee contained in paragraph 6 and Exhibit A hereto shall survive the
expiration of the Term and continue throughout Employee’s employment with the
Company, as well as after such employment has ended, consistent with their
applicable provisions.
 
 
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Exhibit 10.3
 
(b)            Part-Time Term.  At any time prior to expiration of the Initial
Term, upon three months’ prior written notice (a “Part-Time Employment Period
Notice”), the Employee may terminate the Initial Term to invoke a Part-Time
Term, and Employee shall thereafter provide Part-Time Employment Services (as
defined below) to the Company for the period (the “Part-Time Employment Period”)
commencing on the date specified in the Part-Time Employment Period Notice (the
“Part-Time Employment Period Commencement Date”) and ending on the third
anniversary of the Part-Time Employment Period Commencement Date (unless the
Company and Employee mutually agree to a shorter Part-Time Employment
Period).  For the avoidance of doubt, termination of the Initial Term under this
Section 2(b) shall not constitute a termination of this Agreement for the
purposes of Section 7(a).  The Initial Term and the Part-Time Employment Period
shall hereinafter be referred to collectively as the “Term.”
3.            Employee’s Duties.
(a)            During the Initial Term of this Agreement, Employee shall serve
as President of the Company’s Fabrication and Manufacturing Group, or such
similar position as the Parties may mutually agree, with such duties and
responsibilities as may from time to time be assigned to him by the board of
directors of the Company (the “Board”) or the Company’s Chief Executive Officer,
as the case may be, provided that such duties are consistent with the customary
duties of such position.  Employee agrees to devote his full attention and time
during normal business hours to the business and affairs of the Company and to
use reasonable best efforts to perform faithfully and efficiently his duties and
responsibilities.
 
 
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Exhibit 10.3
 
(b)            During the Part-Time Employment Period, Employee shall perform
such services (“Part-Time Employment Services”) as reasonably requested by the
Company for a minimum of 20 hours per week.  The Part-Time Employment Services
shall include, at a minimum, review by Employee of backlogs at all Fabrication &
Manufacturing Group facilities, participation in monthly financial reviews (via
telephone conference) and review of all project bids (at the buy stage) equal to
or greater than $5,000,000 in revenue.
(c)            Employee shall not, either directly or indirectly, enter into any
business or employment with or for any person, firm, association or corporation
other than the Company during the Term of this Agreement; provided, however,
that Employee shall not be prohibited from making financial investments in any
other company or business or from serving on the board of directors of any other
company. Employee shall at all times observe and comply with all lawful
directions and instructions of the Board.
4.            Compensation.
(a)            Base Compensation.
(i)            For services rendered by Employee under the Initial Term, the
Company shall pay Employee’s base salary in effect as of the Effective Date
(“Base Compensation”) in accordance with the Company's customary pay periods and
subject to customary withholdings. The amount of Base Compensation may be
reviewed on an annual basis as of the close of each fiscal year of the Company,
or at other times as may be appropriate, and may be increased as the Company may
deem warranted. In the event the Company deems it appropriate to increase
Employee’s annual base salary, said increased amount shall thereafter be the
“Base Compensation”. Employee’s Base Compensation, as increased from time to
time, may not be decreased unless agreed to by Employee. Nothing contained
herein shall prevent the Company from paying additional compensation to Employee
in the form of bonuses or otherwise during the Term of this Agreement.
 
 
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Exhibit 10.3
 
(ii)            During the Part-Time Employment Period, the Company shall pay to
Employee a part-time salary (the “Part-Time Employment Salary”) of $450,000.00,
per annum, payable in accordance with the Company’s customary pay periods and
subject to tax and other customary withholdings.  In the event that the Company
requests, and Employee performs, Part-Time Employment Services in excess of 20
hours in any week during the Part-Time Employment Period, the Company shall pay
Employee $400 per hour for each hour in excess of 20 hours for the applicable
week, payable in accordance with the Company’s customary pay periods and subject
to tax and other customary withholdings.  Employee’s Part-Time Employment Salary
may not be decreased unless agreed to by Employee.
 
 
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Exhibit 10.3
 
(b)            Annual Bonus and Incentive Awards.  During the Term, Employee
will be eligible to participate in the Company’s discretionary incentive
programs as established by the Board (as the same may be amended from time to
time), including annual bonus incentives and long-term incentive awards.  The
target range for Employee’s annual bonus is 133% of Employee’s Base Compensation
and Employee may be awarded 0-200% of that target.    The Compensation Committee
of the Board or its designee retains the sole authority and discretion to set
the amount, if any, of long-term incentive awards. All long term incentive
awards are subject to shareholders’ approval of shares to be allocated to the
Company’s long term incentive plan(s) and are granted under the strict purview
of the Compensation Committee of the Board or its designee.  The actual number
of long term incentives will be determined utilizing the valuation methodology
used for other similarly situated executive officers of the Company; provided,
however, that the target value of the annual long term incentive grants to
Employee on the date of grant will be in the range of 100% to 200% of Employee’s
Base Compensation.  Notwithstanding any provision to the contrary in the plan(s)
governing such Long Term Incentives, in the event that Initial Term is
terminated by Employee by delivery of a Part-Time Employment Period Notice
pursuant to Section 2(b), all Long Term Incentives granted to Employee by the
Company prior to such Part-Time Employment Period Notice shall continue to vest
in accordance with their terms during the Part-Time Employment
Period.  Notwithstanding any provision to the contrary in plan(s) governing Long
Term Incentives granted to Employee, all such Long Term Incentives which by the
terms of the grant agreement provided to Employee provide that such grants
automatically vest upon retirement age shall so vest notwithstanding Employee’s
continued employment with the Company.
 
 
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Exhibit 10.3
 
5.            Additional Benefits.  In addition to the Base Compensation
provided for in Section 4 herein, Employee shall be entitled to the following:
(a)           Expenses. The Company shall, in accordance with any rules and
policies that it may establish from time to time for executive officers,
reimburse Employee for business expenses reasonably incurred in the performance
of his duties.
(b)           Vacation.  Employee shall be entitled to four (4) weeks of
vacation per year during both the Initial and Part Time Terms. Employee shall be
entitled to carry forward any unused vacation time.
(c)           General Benefits.  Employee shall be entitled to participate in
the various employee benefit plans or programs provided to the employees of the
company in general, including but not limited to, health, dental, disability,
401(k) and life insurance plans, subject to the eligibility requirements with
respect to each of such benefit plans or programs, and such other benefits or
perquisites as may be approved by the Board during the Term of this Agreement.
Nothing in this paragraph shall be deemed to prohibit the Company from making
any changes in any of the plans, programs or benefits described in this Section
5, provided the change similarly affects all executive officers of the Company
similarly situated.
(d)           Flexible Perquisites.  Employee shall be entitled to participate
in the Company’s flexible perquisites plan, which provides an amount equal to 4%
of Employee’s Base Compensation in each calendar year in lieu of customary
perquisite benefits.  Payments under the flexible perquisites plan will be made
on a calendar quarter basis and will be calculated based on Employee’s Base
Compensation from the previous calendar quarter.  Nothing in this Section 5(e)
shall be deemed to prohibit the Company from making any changes in the flexible
perquisites plan, provided the change similarly affects all executive officers
of the Company that are similarly situated.
 
 
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Exhibit 10.3
 
(e)           Country Club Membership.  The Company will reimburse Employee for
one country club membership initiation fee.  Employee shall be responsible for
monthly dues, expenses, assessments, etc., in connection with such membership.
(f)           Aircraft Expense Reimbursement.  During the Term, the Company will
reimburse Employee for operating expenses (e.g., fuel and hangar fees and pro
rata portion of insurance and maintenance) incurred by Employee for the use of
Employee’s personal aircraft for Company-approved business.  Pro rated operating
expenses will be based upon the actual usage for Company-approved business
purposes compared to total usage as determined by quarterly review of aircraft
log books by the Company.  Hot section and turbine overhaul maintenance will be
billed at $100 per hour.  In the event that the Company’s pro rata share of
actual hot section and turbine overhaul maintenance expenses is less than $100
per hour, Employee shall pay the Company the difference.  In the event that the
Company’s pro rata share of actual hot section and turbine overhaul maintenance
expenses is greater than $100 per hour, the Company shall reimburse Employee for
such excess amount.  Employee shall log every hour of flight time as business or
personal as applicable.
 
 
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Exhibit 10.3
 
6.           Confidentiality; Nonsolicitation and Noncompete.
(a)           Employee hereby acknowledges that the Company possesses certain
Confidential Information (defined below) that is peculiar to the businesses in
which the Company is or may be engaged.  Employee hereby affirms that such
Confidential Information is the exclusive property of the Company and that the
Company has proprietary interests in such Confidential Information.  For the
purposes of this Agreement, the term “Confidential Information” shall mean any
and all information of any nature and in any form that at the time or times
concerned is not generally known to Persons (other than the Company) that are
engaged in businesses similar to that conducted or contemplated by the Company
(other than by the act or acts of an employee not authorized by the Company to
disclose such information), which may include, without limitation, the Company’s
existing and contemplated products and services; the Company’s purchasing,
accounting, marketing and merchandising methods or practices; the Company’s
development data, theories of application and/or methodologies; the Company’s
customer/client contact and/or supplier information files; the Company’s
existing and contemplated policies and/or business strategies; any and all
samples and/or materials submitted to Employee by the Company; and any and all
directly and indirectly related records, documents, specifications, data and
other information with respect thereto.  Employee further acknowledges by
signing this Agreement that the Company has expended much time, cost and
difficulty in developing and maintaining the Company’s customers.
(b)           Employee shall (i) use the Confidential Information solely for the
purpose of performing Employee’s duties on behalf of the Company and for no
other purpose whatsoever, (ii) not, directly or indirectly, at any time during
or after Employee’s employment by the Company, disclose Confidential Information
to any other Person (except to the Company’s officers in connection with
Employee’s duties on behalf of the Company) or use or otherwise exploit
Confidential Information to the detriment of the Company, and (iii) not lecture
on or publish articles with respect to Confidential Information without prior
written approval of the Chief Operating Officer of the Company.  In the event of
a breach or threatened breach of the provisions of this Section 6(b), the
Company shall be entitled, in addition to any other remedies available to the
Company, to an injunction restraining Employee from disclosing such Confidential
Information.
 
 
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Exhibit 10.3
 
(c)           Upon termination of employment of Employee for whatever reason,
Employee shall surrender to the Company any and all documents, manuals,
correspondence, reports, records and similar items then or thereafter coming
into the possession of Employee that contain any Confidential Information;
provided, however, that (i) the Company will provide Employee reasonable access
to such Confidential Information to the extent required by Employee in
connection with the defense of any cause of action, dispute, proceeding or
investigation made or initiated against Employee by any Person other than the
Company related to the employment of Employee by the Company or the performance
by Employee of its duties in the course of such employment and (ii) Employee may
retain a copy of any agreement between Employee and the Company.
(d)           Employee agrees that, as part of the consideration for this
Agreement and as an integral part hereof, Employee has executed, delivered and
the Parties agree to be bound by the Nonsolicitation and Noncompete Agreement
attached hereto as Exhibit A, as well as any subsequent addenda thereto.
7.           Termination.
(a)           Employee’s employment under this Agreement may be terminated prior
to the expiration of the Term for any of the following reasons:
(i)           Resignation for Corporate Change:  For the purposes of this
Agreement, the term “Corporate Change” means a “change in ownership,” a “change
in effective control,” or a “change in the ownership of substantial assets” of
the Company.
 
 
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Exhibit 10.3
 
(A)           A “change in ownership” of the Company occurs on the date that any
one person, or more than one person acting as a group, acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company.  However, if any one person, or more than one
person acting as a group, is considered to own more than 50% percent of the
total fair market value or total voting power of the stock of the Company, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in ownership of the Company (or to cause a change in the
effective control of the Company (within the meaning of Section 7(a)(i)(B)).
(B)           Notwithstanding that the Company has not undergone a change in
ownership under Section 7(a)(i)(A), a “change in effective control” of the
Company occurs on the date that a majority of members of the Board is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election.  For purposes of this Section 7(a)(i)(B), the term
“Company” refers solely to the relevant corporation identified in the opening
paragraph of this Agreement, for which no other corporation is a majority
shareholder.
(C)           A “change in the ownership of substantial assets” of the Company
occurs on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than 75%
percent of the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. For this purpose, “gross
fair market value” means the value of the assets of the Company, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with such assets.
 
 
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Exhibit 10.3
 
Employee shall be entitled to terminate Employee’s employment for a Corporate
Change if Employee is not retained in Employee’s current (or a comparable)
position, but only if Employee gives notice of Employee’s intent to terminate
employment within 90 days following the effective date of such Corporate Change
(provided that, notwithstanding the foregoing, the Notice of Termination may not
be given later than February 13th of the year following the year in which the
Corporate Change occurs).
(ii)           Resignation for Good Reason:  For the purposes of this Agreement,
the term “Good Reason” shall mean the occurrence of any of the following
circumstances without Employee’s express written consent:
(A)           any material diminution of Employee’s duties or responsibilities
(other than in connection with the termination of Employee for Misconduct or
Disability in accordance with the terms of this Agreement);
(B)           any material diminution of Employee’s Base Compensation;
(C)           the relocation of Employee’s office more than 25 miles from its
location at the commencement of this Agreement;
(D)           any other material breach by the Company of its obligations under
this Agreement; provided, however, Employee shall provide written notice (a
“Good Reason Notice”) to the Company of the initial existence of the condition
causing the change in terms or status no more than 90 days after the change in
terms or status occurs, and the Company shall have 30 days from receipt of the
Good Reason Notice to resolve the issue causing the change in terms or
status.  If the Company resolves such issue, then Employee’s employment shall
not be subject to the Good Reason provisions of this Agreement as to such issue.
(iii)           Resignation other than for Good Reason:  Any resignation other
than for the reasons set forth in 7(a)(i) and (ii).
(iv)           Termination due to Death:  Employee’s employment will terminate
upon death.
 
 
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Exhibit 10.3
 
(v)           Termination due to Disability:  For purposes of this Agreement, a
“Disability” shall exist if: Employee is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; orEmployee is, by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company.  If Employee shall have been absent from the full time performance of
Employee’s duties with the Company for 120 consecutive calendar days as a result
of Employee’s incapacity due to a Disability, Employee’s employment may be
terminated by the Company.
(vi)           Termination due to Misconduct.  As used herein, “Misconduct”
means:
(A)           Any willful breach or habitual neglect of duty by Employee; or
Employee’s material and continued failure to substantially perform Employee’s
duties with the Company in a professional manner and in a manner that is
reasonably expected as appropriate for the position (other than any such failure
resulting from Employee’s incapacity due to a Disability or any such actual or
anticipated failure after the issuance of a Notice of Termination by Employee
for Good Reason), which breach, neglect or failure is not cured by Employee
within 30 days from receipt by Employee of written notice from the Company that
specifies the alleged breach, neglect or failure;
(B)           the misappropriation or attempted misappropriation by Employee of
a material business opportunity of the Company, including attempting to secure
any personal profit in connection with entering into any transaction on behalf
of the Company;
(C)           the misappropriation or attempted misappropriation by Employee of
any of the Company’s funds or property;
 
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Exhibit 10.3
(D)           an intentional violation by Employee of the Company’s Code of
Corporate Conduct or Fraud Policy; or
(E)           the commission by Employee of a felony offense or a misdemeanor
offense involving violent or dishonest behavior; or Employee engaging in conduct
involving fraud or dishonesty in connection with his duties with the Company.
(vii)         Termination other than for Good Reason:  Any termination of
Employee’s employment other than for the reasons in 7(a)(iv), (v), or (vi).
(b)           Notice of Termination.  Any purported termination of Employee’s
employment by the Company under Sections 7(a)(v) and (vi), or by Employee under
Section 7(a)(i), (ii) and (iii) shall be communicated by a written Notice of
Termination to the other Party in accordance with Section 10.  For purposes of
this Agreement, a “Notice of Termination” shall mean a notice that (i) in the
case of termination by the Company, shall set forth in reasonable detail the
reason for such termination of Employee’s employment and the Date of
Termination, or (ii) in the case of resignation by Employee, shall specify in
reasonable detail the basis for such resignation and the Date of Termination.  A
Notice of Termination given by Employee pursuant to Section 7(a)(ii) shall be
effective even if given after the receipt by Employee of notice that the Board
has set a meeting to consider terminating Employee for Misconduct.  A Notice of
Termination given by Employee pursuant to Section 7(a)(ii) shall be considered
effective only after 30 days have elapsed since Employee delivered the
applicable Good Reason Notice and the Company has failed to resolve the issue
causing the change in terms or status during such 30 day period.  Employee shall
not be expected to provide further services after the Date of Termination.  Any
purported termination for which a Notice of Termination is required that does
not materially comply with this Section 7(b) shall not be effective.
 
 
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Exhibit 10.3
 
(c)           Date of Termination, Etc.  The “Date of Termination” shall mean
the date specified in the Notice of Termination, provided that the Date of
Termination shall be at least 15 calendar days, but not more than 45 calendar
days, following the date Notice of Termination is given.  Notwithstanding
anything herein to the contrary, if Notice of Termination is given pursuant to
Section 7(a)(i), then the Date of Termination may not be later than February
28th of the year following the year in which the Change of Control occurs.  In
the event Employee is terminated for Misconduct, the Company may refuse to allow
Employee access to the Company’s offices (other than to allow Employee to
collect personal belongings under Company supervision) prior to the Date of
Termination.  Employee shall not be expected to provide further services after
the Date of Termination.
(d)           Payments Due Upon Termination.  At the time of termination,
Employee shall be paid all wages earned through the Date of Termination plus all
accrued but unused vacation and expenses incurred but not yet paid.  If Employee
resigns without Good Reason or is terminated by the Company for Misconduct,
Employee is not entitled to any additional payments other than wages earned,
accrued but unused vacation and expenses incurred but not yet paid.  If
Employee’s employment terminates due to Death 7(iv), Employee’s surviving
dependents shall receive a payment equal to the amount it would cost them to
obtain, for an 18-month period, health, dental and vision insurance benefits
substantially similar to those the covered dependants were receiving immediately
prior to Employee’s death.  If Employee’s employment is terminated for reasons
other than Death, resignation without Good Reason, or termination for
Misconduct, Employee shall be entitled to additional severance payments as set
forth herein but only if Employee executes a Severance Agreement and Release
(“Release”) in which Employee waives the right to sue the Company for claims
relating to his or her employment in exchange for the payments and benefits
listed below.  If Employee executes the Release, Employee will be entitled to
severance payments based upon the reason for termination (and payable not later
than 15 days after the Effective Date of the Release) as follows:
 
 
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Exhibit 10.3
 
(i)           If Employee resigns due to Corporate Change (7(a)(i)) or for Good
Reason (7(a)(ii)), or if Employee is terminated for other than Good Reason
(7(a)(vii)), employee will be entitled to the following: (A) a payment equal to
two times Employee’s Base Compensation if Date of Termination occurs during the
Initial Term, OR three times Employee’s Part-Time Employment Salary if the Date
of Termination is during the Part-Time Employment Period; (B) an amount equal to
Employee’s highest annual bonus actually paid by the Company during the two year
period immediately preceding the Date of Termination; (C) a payment equal to the
amount it would cost Employee to obtain, for an 18-month period health, dental
and vision insurance benefits substantially similar to those the Employee held
with the Company; and (D) immediate and total vesting in all Long Term
Incentives granted to Employee prior to the Date of Termination.
(ii)           If Employee is terminated due to Disability, Employee shall
receive salary continuation for twelve months in the amount of the difference
between Employee’s Base Compensation and any benefit received under any
disability insurance plan covering Employee.
(e)           Mitigation.  Employee shall not be required to mitigate the amount
of any payment provided for in this Section 7 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Agreement be
reduced by any compensation earned by Employee as a result of employment by
another employer, except that any severance amounts payable to Employee pursuant
to the Company’s severance plan or policy for employees in general shall reduce
the amount otherwise payable pursuant to Section 7(d).
 
 
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Exhibit 10.3
 
(f)           Excess Parachute Payments.  Notwithstanding any other provision of
this Agreement, if any portion of the payments and benefits provided under
Section 7 of this Agreement, either alone or together with other payments and
benefits which the Employee receives or is then entitled to receive from the
Company, or any successor (in the aggregate, "Total Payments"), would constitute
an “Excess Parachute Payment” (as defined in Section 280G of the Internal
Revenue Code) subject to the excise tax imposed by section 4999 of the Code, or
any interest or penalties with respect to such excise tax (such excise tax,
together with any interest or penalties thereon, is herein referred to as the
"Excise Tax"), then, except as otherwise provided in the next sentence, such
Total Payments shall be reduced to the extent the Independent Tax Advisor shall
determine is necessary (but not below zero) so that no portion thereof shall be
subject to the Excise Tax. If Independent Tax Advisor determines that the
Employee would receive in the aggregate greater payments and benefits on an
after tax basis if the Total Payments were not reduced pursuant to this Section
7(f), then no such reduction shall be made. For purposes of determining the
after tax benefit to the Employee, the Employee’s estimated actual blended
marginal rate of federal, state and local income taxation in the calendar year
in which the Termination Date occurs shall be utilized. Such marginal rate shall
be determined by taking into account (A) the estimated actual net effect on the
marginal rate attributable to the deduction of state and local income taxes, (B)
the phase out, if any, of itemized deductions, (C) the estimated actual net tax
rate attributable to employment taxes, and (D) any other tax provision that in
the judgment of the Independent Tax Advisor will actually affect the Employee's
estimated actual blended marginal tax rate. The determination of which payments
or benefits shall be reduced to avoid the Excise Tax shall be made by the
Independent Tax Advisor, provided that the Independent Tax Advisor shall reduce
or eliminate, as the case may be, payments or benefits in the order that it
determines will produce the required deduction in Total Payments with the least
reduction in the after-tax economic value to the Employee of such payments. If
the after-tax economic value of any payments is equivalent, such payments shall
be reduced in the inverse order of when the payments would have been made to the
Employee until the reduction specified herein is achieved. The Independent Tax
Advisor shall provide its determination, together with detailed supporting
calculations and documentation to the Company and the Employee within ten (10)
days of the Termination Date. The determination of the Independent Tax Advisor
under this Section 7(f) shall be final and binding on all parties hereto. For
purposes of this Section 7(f), “Independent Tax Advisor” shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial and benefits
consulting firm with expertise in the area of executive compensation tax law,
who shall be selected by the Company and shall be acceptable to the Employee
(the Employee’s acceptance not to be reasonably withheld), and whose fees and
disbursements shall be paid by the Company.
 
 
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Exhibit 10.3
 
8.           Non-exclusivity of Rights.  Nothing in this Agreement shall prevent
or limit Employee’s continuing or future participation in any benefit, bonus,
incentive, or other plan or program provided by the Company and for which
Employee may qualify, nor shall anything herein limit or otherwise adversely
affect such rights as Employee may have under any Long Term Incentives granted
by the Company.
 
 
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Exhibit 10.3
 
9.           Assignability.  The obligations of Employee hereunder are personal
and may not be assigned or delegated by Employee or transferred in any manner
whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer.  The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary of the
Company, so long as the obligations of the Company under this Agreement remain
the obligations of the Company.
10.           Notice.  For the purpose of this Agreement, all notices and other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by Federal Express or similar
courrier addressed (a) to the Company, at its principal office address, directed
to the attention of the Board with a copy to the Corporate Secretary of the
Company, and (b) to Employee, at Employee’s residence address on the records of
the Company or to such other address as either Party may have furnished to the
other in writing in accordance herewith except that notice of change of address
shall be effective only upon receipt.
11.           Severability.  In the event that one or more of the provisions set
forth in this Agreement shall for any reason be held to be invalid, illegal,
overly broad or unenforceable, the same shall not affect the validity or
enforceability of any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal, overly broad or unenforceable
provisions had never been contained therein; provided, however, that no
provision shall be severed if it is clearly apparent under the circumstances
that the Parties would not have entered into the Agreement without such
provision.
 
 
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Exhibit 10.3
 
12.           Successors; Binding Agreement.
(a)           The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.  Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall constitute Good Reason under Section
7(a)(ii); provided that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.  As used herein, the term “Company” shall include any successor to
its business and/or assets as aforesaid that executes and delivers the Agreement
provided for in this Section 12 or that otherwise becomes bound by all terms and
provisions of this Agreement by operation of law.
(b)           This Agreement and all rights of Employee hereunder shall inure to
the benefit of and be enforceable by Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13.           Miscellaneous.
        (a)   No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Employee and such officer of the Company as may be specifically
authorized by the Board.
 
 
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Exhibit 10.3
 
        (b)   No waiver by either Party at any time of any breach by the other
Party of, or in compliance with, any condition or provision of this Agreement to
be performed by such other Party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
        (c)   Together with the Nonsolicitation and Noncompete Agreement, this
Agreement is an integration of the Parties’ agreement; no agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either Party, except those which are set
forth expressly in this Agreement and the Nonsolicitation and Noncompete
Agreement.
             (d)   THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF LOUISIANA.
             (e)   Reimbursements provided for under this Agreement shall be
provided in accordance with policies of the Company established from time to
time.
14.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15.           Arbitration.
        (a)   Employee and the Company agree that any dispute regarding the
covenants herein and/or the validity of this Agreement and its addenda, if any,
shall be resolved through arbitration.  Employee and the Company hereby
expressly acknowledge that Employee’s position in the Company and the Company’s
business have a substantial impact on interstate commerce and that Employee’s
development and involvement with the Company and the Company’s business have a
national and international territorial scope commercially.  Any
arbitration-related matter or arbitration proceeding of a dispute regarding the
covenants herein and/or the validity of this Agreement and its addenda, shall be
governed, heard, and decided under the provisions and the authority of the
Federal Arbitration Act, 9 U.S.C.A. §1, et seq., and shall be submitted for
arbitration to the office of the American Arbitration Association (“AAA”) in New
Orleans, Louisiana, on demand of either Party.
 
 
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Exhibit 10.3
 
        (b)   Such arbitration proceedings shall be conducted in New Orleans,
Louisiana, and shall be conducted in accordance with the then-current Employment
Arbitration Rules and Mediation Procedures of the AAA, with the exception that
the Employee expressly waives the right to request interim measures or
injunctive relief from a judicial authority.  Employee acknowledges that the
Company alone retains the right to seek injunctive relief from a judicial
authority based on the nature of this Agreement.  Each Party shall have the
right to be represented by counsel or other designated representatives.  The
Parties shall negotiate in good faith to appoint a mutually acceptable
arbitrator; provided, however, that, in the event that the Parties are unable to
agree upon an arbitrator within 30 days after the commencement of the
arbitration proceedings, the AAA shall appoint the arbitrator.  The arbitrator
shall have the right to award or include in his or her award any relief that he
or she deems proper under the circumstances, including, without limitation, all
types of relief that could be awarded by a court of law, such as money damages
(with interest on unpaid amounts from date due), specific performance and
injunctive relief.  The arbitrator shall issue a written opinion explaining the
reasons for his or her decision and award.  The award and decision of the
arbitrator shall be conclusive and binding upon both Parties, and judgment upon
the award may be entered in any court of competent jurisdiction.  The Parties
acknowledge and agree that any arbitration award may be enforced against either
or both of them in a court of competent jurisdiction, and each waives any right
to contest the validity or enforceability of such award.  The Parties further
agree to be bound by the provisions of any statute of limitations that would be
otherwise applicable to the controversy, dispute, or claim that is the subject
of any arbitration proceeding initiated hereunder.  Without limiting the
foregoing, the Parties shall be entitled in any such arbitration proceeding to
the entry of an order by a court of competent jurisdiction pursuant to a
decision of the arbitrator for specific performance of any of the requirements
of this Agreement.  The provisions of this Section 15 shall survive and continue
in full force and effect subsequent to and notwithstanding expiration or
termination of this Agreement for any reason.  Employee agrees to pay
arbitration fees in an amount not to exceed the amount required to file a
lawsuit in a court of law.  The Company agrees to pay the remaining amount of
arbitration fees.  The arbitrator shall have the right to award reasonable
attorney’s fees and costs to the prevailing Party.  Employee and the Company
acknowledge and agree that any and all rights they may have to resolve their
claims by a jury trial are hereby expressly waived.  The provisions of this
Section 15 do not preclude Employee from filing a complaint with any federal,
state, or other governmental administrative agency, if applicable.
 
 
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Exhibit 10.3
 
16.           Code Section 409A.  To the extent a payment hereunder is, or shall
become, subject to the application of Code Section 409A, the following shall
apply:
(a)   The Company may delay payment hereunder only upon such events and
conditions as the IRS may permit in generally applicable published regulatory or
other guidance under Code Section 409A, including, without limitation, payments
that the Company reasonably anticipates will be subject to the application of
Code Section 162(m), or will violate Federal securities laws or other applicable
law; provided that any such delayed payment will be made at the earliest date at
which the Company reasonably anticipates that the making of the payment would
not cause such a violation.
 
 
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Exhibit 10.3
 
(b)   The time or schedule of payment hereunder may be accelerated only upon
such events and conditions as the IRS may permit in generally applicable
published regulatory or other guidance under Code Section 409A, including,
without limitation, payment to a person other than Employee to the extent
necessary to fulfill the terms of a domestic relations order (as defined in Code
Section 414(p)(1)(B)) or payment of the amount required to be included in income
for Employee as a result of failure of this Agreement at any time to meet the
requirements of Code Section 409A with respect to Employee.
(c)   If, as of the date of Employee’s termination of employment, (i) any stock
of the Company is publicly traded on an established securities market or
otherwise; and (ii) a payment is payable under this Agreement due to a
termination of employment which is considered to be a “separation from service”
for purposes of the rules under Treasury Regulation Section 1.409A-3(i)(2); and
(iii) Employee is determined to be a “specified employee” (as determined under
Treasury Regulation Section 1.409A-1(i)), then the payment shall be delayed
until a date that is six (6) months after the date of Employee’s termination of
employment to the extent necessary to comply with the requirements of Code
Section 409A and related Treasury Regulations; provided, however, that the
payments to which Employee would have been entitled during such 6-month period,
but for this subparagraph, shall be accumulated and paid to Employee without
interest in a lump sum within ten (10) days following the date that is six (6)
months following Employee’s termination date with the Company, and any remaining
payments shall continue to be paid to Employee on their original schedule.  If
Employee dies during such six (6) month period and prior to the payment of the
portion that is required to be delayed on account of Code Section 409A, such
amount shall be paid to the personal representative of Employee’s estate within
sixty (60) days after Employee’s death.
 
 
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Exhibit 10.3
 
(d)   Any reimbursements or in-kind benefits provided under this Agreement shall
be made or provided at the times specified in this Agreement; provided, however,
that (i) any reimbursement is for expenses incurred during the period of time
specified in this Agreement, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another
benefit.
 
 
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Exhibit 10.3
 
(e)   This Agreement is intended to comply with the requirements of Code Section
409A and the Treasury Regulations and other guidance issued thereunder, as in
effect from time to time.  To the extent a provision of this Agreement is
contrary to or fails to address the requirements of Code Section 409A and
related Treasury Regulations, this Agreement shall be construed and administered
as necessary to comply with such requirements to the extent allowed under
applicable Treasury Regulations until this Agreement is appropriately amended to
comply with such requirements.
IN WITNESS WHEREOF, the parties have executed this Agreement on April 8, 2011,
effective for all purposes as provided above.
 
 

  THE SHAW GROUP INC.                                
 
By:
John Donofrio     Executive Vice President, General Counsel and Corporate
Secretary                

 

EMPLOYEE:         Name:        David L. Chapman, Sr.  

 

 
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Exhibit 10.3
 
EXHIBIT A

NONSOLICITATION AND NONCOMPETE AGREEMENT
 
This Nonsolicitation and Noncompete Agreement (“Agreement”) is made and entered
into as of April 8, 2011 (the “Effective Date”), between The Shaw Group Inc.
(together with its affiliated companies (as contained in its most recent SEC
filings), the “Company”) and David L. Chapman, Sr. (“Executive”).  The Company
and Executive shall hereinafter be referred to collectively as the “Parties”.
 
RECITALS
 
1.           The Company and Employee are parties to that certain Executive
Employment Agreement dated effective of even date herewith (the “Employment
Agreement”), pursuant to which the Company and Employee have agreed to
employment of Executive with the Company, during which employment Executive
shall perform those duties set forth in the Employment Agreement;
 
2.           As part of Executive’s duties and responsibilities, Executive will
have access to confidential information of the Company and, by virtue of his
employment with the Company, will have direct contact with and will establish
personal relationships with various customers of the Company; and
 
3.           The Company and Executive recognize the Company’s need to protect
the Company’s confidential and proprietary interest in the Company’s  business,
business relationships, and the work product produced by Executive on behalf of
the Company in the course of Executive’s employment; and
 
4.           As consideration, in part, for the Employment Agreement, Executive
and the Company enter into this Agreement.
 
NOW, THEREFORE, Executive and the Company agree as follows:
 
AGREEMENT
 
Section 1.              Company Property.  All personal property and equipment
furnished to or prepared by Executive in the course of or incident to
Executive’s employment belong to the Company and shall be promptly returned to
the Company upon termination of Executive’s employment or at such other time as
the Company may request.  Personal property includes, without limitation, all
books, manuals, records, reports, notes, contracts, lists, and other documents,
electronic files, and all other proprietary information relating to the business
of the Company and/or its affiliates.  Following termination of employment,
Executive will not retain any written or other tangible material containing any
proprietary information of the Company.
 
Section 2.              Non-Solicitation.  At all times during Executive’s
employment and for two (2) years after the termination of Executive’s
employment, Executive will not, directly or indirectly, either on Executive’s
own account or jointly with or as a manager, agent, officer, employee,
consultant, independent contractor, partner, joint venturer, owner, financier,
shareholder, or otherwise on behalf of any other person, firm, or corporation,
offer employment to, solicit, or attempt to solicit away from the Company or its
affiliates any of their officers or employees or offer employment to any person
who, during the six (6) months immediately preceding the date of such
solicitation or offer, is or was an officer or employee of the Company or any of
its affiliates.
 
 
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Exhibit 10.3
 
Section 3.              Covenant Not to Compete.  As a condition of employment
and in consideration of the terms of the Employment Agreement pursuant to which
this is being executed, Executive acknowledges and agrees to the following:
 
(a)           Executive acknowledges that he is intimately involved in the
management of the Company, its expansion, and its acquisition or creation of
affiliated companies.  Executive acknowledges and agrees that the business of
the Company is providing engineering, construction, procurement, maintenance,
environmental and infrastructure services,1 and pipe fabrication services, as
more fully set forth on the Company’s Form 10-K dated October 30, 2008 (the
“Form 10-K”).
 
(b)           Based on Executive’s high level in management of the Company and
based on the knowledge, information, and experience that the Executive has
gained and will gain through his management position in the Company and
Executive’s ability to build a competing company engaging in some or all of the
services provided by the Company, Executive acknowledges that the scope of this
Agreement should be broad, both geographically and in the scope of conduct
prohibited.
 
(c)           Executive acknowledges that the Company now conducts business and
provides services throughout the United States to federal agencies,
federally-owned facilities or federally-controlled political subdivisions, state
and local governments and political subdivisions, and domestic and non-domestic
commercial customers.  Executive acknowledges that as of the date of this
Agreement, the Company delivers services through a network of over 180
locations, including approximately 22 international locations and approximately
22 fabrication and manufacturing facilities.  Executive acknowledges and agrees
that at the time of signing this agreement, the Company conducts business in the
geographic territory (the “Restricted Area”) set forth in Exhibit 1.  Executive
agrees that the Company may periodically revise the Restricted Area to reflect
any changes in the geographic territory in which the Company is conducting
business.  Executive agrees that, as consideration for the Employment Agreement,
Executive agrees to sign addenda to this agreement which update the Restricted
Area to reflect geographic territories in which the Company conducts its
business.  Executive agrees that the Company may periodically revise the
description of the business of the Company to reflect changes in the Company’s
business.  Executive also agrees that, as consideration for the Employment
Agreement, Executive agrees to sign addenda to this Agreement which update the
description of the business of the Company to coincide with the description of
the business of the Company as set forth in the Company’s current Form 10-K.
 

   

 
1   Environmental and infrastructure services include the delivery of
environmental restoration, regulatory compliance, facilities management,
emergency response, and design and construction services, environmental
consulting, engineering and construction services to private-sector and state
and local government customers. These environmental services include complete
life cycle management, construction management, Operation and Maintenance (O&M)
services, and environmental services including emergency response and high
hazard and toxic waste cleanups and on-site remedial activities site selection,
permitting, design, build, operation, decontamination, demolition, remediation
and redevelopment, identification of contaminants in soil, air and water and the
subsequent design and execution of remedial solutions, project and facilities
management and other related services for non-environmental construction,
watershed restoration, emergency response services and outsourcing of
privatization markets. These Infrastructure services include program management,
operations and maintenance solutions to support and enhance domestic and global
land, water and air transportation systems, and commercial port and marine
facilities.  
 
 
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Exhibit 10.3
 
(d)           Executive agrees that at all times during Executive’s employment
with the Company and for a the duration of the Post-Termination Non-Compete Term
(defined in Section 3(e) below), Executive shall not, directly or indirectly,
whether personally or through agents, associates, or co-workers, whether
individually or in connection with any corporation, partnership, or other
business entity, and whether as an employee, owner, partner, financier, joint
venturer, shareholder, officer, manager, agent, independent contractor,
consultant, or otherwise, establish, carry on, or engage in a business similar
to that of the Company or any of its affiliates, in the Restricted Area, as
defined in Exhibit 1, attached.  This prohibition includes, without limitation,
that Executive will not perform the following in the Restricted Area:
 
(i)           Solicit or provide, directly or indirectly, engineering,
construction, procurement, maintenance, Environmental, and pipe fabrication
services, or any of these, to any persons or entities who are or were customers
of the Company or any of its affiliates at any time prior to Executive’s
separation from employment;
 
(ii)           Establish, own, become employed with, consult on business matters
with, or participate in any way in a business engaged in engineering,
construction, procurement maintenance, Environmental, and pipe fabrication
services, or any of these, except to the extent that the Company or any of its
affiliates do not provide the same type of services as such business provides;
and
 
(iii)           Provide consulting services for, invest in, become employed by,
or otherwise become associated from a business perspective with competitors of
the Company or any of its affiliates, including but not limited to Jacobs
Engineering Group Inc.; Fluor Corporation; URS Corporation; Halliburton; Turner
Industries Group, L.L.C.; Bechtel Group, Inc.; KBR, Inc.; Chicago Bridge & Iron
Company N.V.; CH2M Hill; Black & Veatch Corporation; Foster Wheeler Ltd.; and
Washington Group International, Inc., or any of their respective subsidiaries,
parent companies, affiliates, or successors.
 
 
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Exhibit 10.3
 
This prohibition does not prohibit Executive from engaging in a business solely
within an area or areas not contained in the Restricted Area, so long as that
business does not provide in the Restricted Area the same or similar services or
conduct the same or similar business as the Company or its affiliates.
 
(e)           For purposes of Section 3(d), the Post-Termination Non-Compete
Term is as follows:
 
(i)           In the event of resignation for other than Good Reason (7(a)(iii))
or termination by the Company for Misconduct(7(a)(vi)), the non-compete term
shall be two-years from the date of the Executive’s separation from employment
with the Company.
 
(ii)           In the event of resignation due to Corporate Change (7(a)(i)) or
for Good Reason (7(a)(ii)), or if Employee is terminated for other than Good
Reason (7(a)(vii)), or due to Disability (7(a)(v)), the non-compete term shall
be equal to the period of severance pay provided pursuant to the Employment
Agreement, the period of any other applicable severance program of the Company,
provided the payments pursuant to such program are made at a rate not less than
the Executive’s base Compensation as of the Effective Date; or the pendency of
any post-termination consulting agreement between the Executive and the Company,
but in no event longer than two (2) years after Executive’s separation from
employment with the Company.
 
(f)           Executive acknowledges that the business of the Company is
extremely competitive in nature, that the remedy at law for any breach of this
covenant will be inadequate, and that in the event of a breach the Company shall
be entitled to injunctive relief and specific performance, as well as any and
all other remedies at law or in equity to which the Company is
entitled.  Executive acknowledges that the provisions contained in this Section
are reasonable and valid in all respects and are a reasonable and necessary
protection of the legitimate interests of the Company and that any violation of
these provisions would cause substantial injury to the Company.
 
Section 4.              Miscellaneous Provisions.
 
(a)           Employment Rights.   This Agreement shall not be deemed to confer
upon Executive any right to continue in the employ of the Company for any period
or any right to continue employment at Executive’s present or any other rate of
compensation.
 
(b)           Amendment.  This Agreement may only be amended or modified in a
writing executed by both the Company and Executive.  No oral waivers or
extensions shall be binding on the parties.
 
(c)           Waiver.  No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument signed by the Party
charged with such waiver or estoppel.  No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any other
act other than that specifically waived.
 
 
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Exhibit 10.3
 
(d)           Injunctive Relief and Arbitration.  Executive and the Company each
acknowledge that the provisions of Sections 2 and 3 are reasonable and
necessary, that the damages that would be suffered as a result of a breach or
threatened breach by Executive of Sections 2 and 3 may not be calculable, and
that the award of a money judgment to the Company for such a breach or
threatened breach thereof by Executive would be an inadequate remedy. Executive
expressly consents and agrees that the Company may, in addition to any other
available remedies that the Company may be entitled in law or in equity, enforce
the provisions of Sections 2 and/or 3 by injunctive or other equitable relief,
including a temporary and/or permanent injunction (without proving a breach
thereof), to prevent unfair competition, the use and/or unauthorized disclosure
of trade secrets or confidential information, and/or the unauthorized
solicitation of the Company’s officers, employees, and customers.  The Company
shall not be obligated to post bond or other security in seeking such relief.
 
(e)           Arbitration.  Executive and the Company agree that any dispute
regarding the covenants herein and/or the validity of this Agreement and its
addenda, if any, shall be resolved through arbitration as provided in Paragraph
15 of the Employment Agreement, above.

(f)           Governing Law.  This Agreement, and the rights and obligations of
the parties hereto, shall be governed by and construed in accordance with the
laws of the State of Louisiana.

(g)           Assignment.   This Agreement may not be assigned by Executive, but
may be assigned by the Company to any successor to its business and will inure
to the benefit and be binding upon any such successor.  This Agreement shall be
binding upon the Parties, together with their respective executors,
administrators, personal representatives, and heirs, and, in the case of the
Company, permitted successors and assigns.
 
(h)           Severability.  Each provision of this Agreement is intended to be
severable.  If any term or provision of this Agreement is illegal or invalid for
any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
 
(i)           Reformation.                        It is the intention of the
Parties that if any court or arbitrator(s) shall determine that any provision of
this Agreement, including the scope, duration, or geographical limit of any
provision, is unenforceable, the provision in question and this Agreement shall
not be invalidated but shall be deemed reformed or amended only to the extent
necessary to render the provision and Agreement valid and enforceable.
 
(j)           Headings.  The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
 
(k)           Consent.  Executive acknowledges that Executive has reviewed the
provisions of this Agreement carefully and has been given an opportunity to ask
questions of the Company.  Executive acknowledges that Executive has had ample
opportunity to consult with an attorney of his choice (at his expense) prior to
signing this Agreement and that Executive knowingly consents to the terms
herein.
 
 
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Exhibit 10.3
 
(l)           Integration.  Together with the Employment Agreement, this
Agreement is an integration of the Parties’ agreement; no agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either Party, except those which are set
forth expressly in this Agreement.
 
IN WITNESS WHEREOF, the Parties have executed this Agreement as of this 8th day
of April, 2011.
 
 

 COMPANY:             EXECUTIVE:                   The Shaw Group Inc.          
    David L. Chapman, Sr.       John Donofrio     Executive Vice President,
General Counsel and CorporateSecretary    

 
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