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                                                                     EXHIBIT 4.6

                               THE SHAW GROUP INC.
                  STONE & WEBSTER ACQUISITION STOCK OPTION PLAN



1.       PURPOSE OF PLAN.

         The Shaw Group Inc. Stone & Webster Acquisition Stock Option Plan has
been established by the Company to award Options to employees of the Company who
are not Officers and who either (i) became employed by the Company as a result
of the acquisition by the Company of substantially all of the assets of Stone &
Webster, Incorporated (a Delaware corporation) and its subsidiaries; or (ii)
were instrumental in the ultimate completion of the Stone & Webster acquisition.

2.       DEFINITIONS.

         Unless otherwise required by the context, the following terms when used
in the Plan shall have the meanings set forth in this Section 2:

                  (1) "Agreement": A stock option agreement evidencing an Option
         in such form as adopted from time to time by the Committee pursuant to
         the Plan.

                  (2) "Board of Directors": The Board of Directors of the
         Company.

                  (3) "Change of Control": For the purposes of the Plan, the
         term Change in Control shall mean the happening of any of the
         following:

                           (1) When any "person" as defined in Section 3(a)(9)
                  of the Exchange Act, and as used in Section 13(d) and 14(d)
                  thereof, including a "group" as defined in Section 13(d) of
                  the Exchange Act (but excluding any shareholder of record of
                  the Company as of January 1, 2000, owning 10% or more of the
                  combined voting power of the Company's securities which are
                  entitled to vote in the election of directors of the Company)
                  directly or indirectly becomes the "beneficial owner" (as
                  defined in Rule 13d-3 under the Exchange Act), of securities
                  of the Company representing 20% or more of the combined voting
                  power of the Company's then outstanding securities which are
                  entitled to vote with respect to the election of directors;

                           (2) When, during any period of 24 consecutive months,
                  the individuals who, at the beginning of such period,
                  constitute the Board of Directors of the Company (the
                  "Incumbent Directors") cease for any reason other than death
                  or disability to constitute at least a majority thereof;
                  provided, however, that a director who was not a director at
                  the beginning of such 24-month period shall be deemed to have
                  satisfied such 24-month requirement (and be an Incumbent
                  Director) if such director was elected by, or on the
                  recommendation of or with approval of, at least


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                  two-thirds of the directors who then qualified as Incumbent
                  Directors either actually (because they were directors at the
                  beginning of such 24-month period) or by operation of this
                  provision;

                           (3) The acquisition of the Company or all or
                  substantially all of the Company's assets by an entity other
                  than the Company (or a Subsidiary) through purchase of assets,
                  or by merger, or otherwise, except in the case of a
                  transaction pursuant to which, immediately after the
                  transaction, the Company's shareholders immediately prior to
                  the transaction own immediately after the transaction at least
                  a majority of the combined voting power of the surviving
                  entity's then outstanding securities which are entitled to
                  vote with respect to the election of directors of such entity;
                  or

                           (4) The Company files a report or proxy statement
                  with the Commission pursuant to the Exchange Act disclosing in
                  response to Form 8-K, Form 10-K or Schedule 14A (or any
                  successor schedule, form or report or item therein) that a
                  change in control of the Company has or may have occurred or
                  will or may occur in the future pursuant to any then-existing
                  contract or transaction.

                  (4) "Code": The Internal Revenue Code of 1986, as amended from
         time to time.

                  (5) "Commission": The Securities and Exchange Commission.

                  (6) "Committee": The Compensation Committee of the Board of
         Directors or such other committee appointed by the Board of Directors
         which meets the requirements set forth in Section 9.1 hereof.

                  (7) "Company": The Shaw Group Inc., a Louisiana corporation.

                  (8) "Effective Date": The date on which the Plan shall become
         effective as set forth in Section 11 hereof.

                  (9) "Exchange Act": The Securities Exchange Act of 1934, as
         amended, together with all regulations and rules issued thereunder.

                  (10) "Exercise Price": The price per Share at which the Shares
         subject to an Option may be purchased upon exercise of such Option.

                  (11) "Fair Market Value": As applied to a specific date, the
         fair market value of a Share on such date as determined in good faith
         by the Committee in the following manner:

                           (1) If the Shares are then listed on any national or
                  regional stock exchange, the Fair Market Value shall be the
                  last quoted sales price of a Share on the


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                  date in question, or if there are no reported sales on such
                  date, on the last preceding date on which sales were reported;

                           (2) If the Shares are not so listed, then the Fair
                  Market Value shall be the mean between the bid and ask prices
                  quoted by a market maker or other recognized specialist in the
                  Shares at the close of the date in question; or

                           (3) In the absence of either of the foregoing, the
                  Fair Market Value shall be determined by the Committee in its
                  absolute discretion after giving consideration to the book
                  value, the revenues, the earnings history and the prospects of
                  the Company in light of market conditions generally.

The Fair Market Value determined in such manner shall be final, binding and
conclusive on all parties.

         (12) "Officer": An officer of the Company or its Subsidiaries meeting
the definition of "officer" in Rule 16a-1(f) (or any successor provision)
promulgated by the Commission under the Exchange Act.

         (13) "Option": A non-qualified stock option (i.e., a stock option not
intended to qualify as an "incentive stock option" as defined in Section 422 of
the Code) granted under the Plan.

         (14) "Participant": An employee of the Company or any of its
Subsidiaries who has been granted an Option under the Plan.

         (15) "Plan": This, The Shaw Group Inc. Stone & Webster Acquisition
Stock Option Plan, as the same may be amended from time to time.

         (16) "Shares": Shares of the Company's authorized but unissued or
reacquired no par value per share common stock, or such other class or kind of
shares or other securities as may be applicable pursuant to the provisions of
Section 4.3 hereof.

         (17) "Stone & Webster": Stone & Webster, Incorporated, a Delaware
corporation.

         (18) "Subsidiary": Any "subsidiary corporation" of the Company, as such
term is defined in Section 424(f) of the Code.

3.       PARTICIPATION.

         Participants shall be selected by the Committee from the employees of
the Company or its Subsidiaries (either full or part-time). An Option may be
granted to an employee in connection with hiring, retention or otherwise, prior
to the date the employee first performs services for the Company or the
Subsidiaries, provided that such Option shall not become vested prior to the
date the employee first performs such services. In no event, however, shall an
Option be awarded under the Plan to an Officer.



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4.       SHARES SUBJECT TO PLAN.

         4.1 Shares Subject to the Plan. The maximum number of Shares that may
be delivered to Participants and their beneficiaries pursuant to the Plan shall
be equal to 535,000 shares of Common Stock, subject to adjustment as provided in
Section 4.3 of the Plan.

         4.2 Accounting for Number of Shares. Any Shares covered by an Option
(or portion of an Option) granted under the Plan, which is forfeited or
canceled, expires or is settled in cash, shall be deemed not to have been
delivered for purposes of determining the maximum number of Shares available for
delivery under the Plan. Likewise, if any Option is exercised by tendering
Shares to the Company as full or partial payment in connection with the exercise
of an Option under this Plan, only the number of Shares issued net of the Shares
tendered shall be deemed delivered for purposes of determining the maximum
number of Shares available for delivery under the Plan. Further, Shares issued
under the Plan through the settlement, assumption or substitution of outstanding
Options or obligations to grant future Options as a result of acquiring another
entity shall not reduce the maximum number of Shares available for delivery
under the Plan.

         4.3 Adjustments. In the event of a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares, or other
similar transactions or Option), the Committee may adjust Options to preserve
the benefits or potential benefits of the Options. Action by the Committee may
include: (i) adjustment of the number and kind of Shares (or other securities or
property) which may be delivered under the Plan; (ii) adjustment of the number
and kind of Shares (or the securities or property) subject to outstanding
Options; (iii) adjustment of the Exercise Price of outstanding Options; and (iv)
any other adjustments that the Committee determines to be equitable, in its sole
discretion.

5.       AWARDS OF OPTIONS.

         5.1 General Terms And Conditions. The Committee shall have full and
complete authority and discretion, except as expressly limited by the Plan, to
grant Options and to provide any and all terms and conditions (which need not be
identical among the Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions:

                           (1) The Exercise Price of the Option which may not be
                  less than 100% of the Fair Market Value per Share as of the
                  date of grant of the Option;

                           (2) The number of Shares subject to, and the
                  expiration date of, the Option;

                           (3) The manner, time and rate (cumulative or
                  otherwise) of exercise of the Option; and


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                           (4) The restrictions or conditions (such as
                  performance goals), if any, to be placed upon the Option, the
                  exercisability of the Option or upon the Shares which may be
                  issued upon exercise of the Option. The Committee may, as a
                  condition of granting an Option, require that a Participant
                  agree not to thereafter exercise one or more Options
                  previously granted to such Participant.

         5.2 Exercise of Options.

         (1) General Exercise Rights. Except as provided in Section 5.5, an
Option granted under the Plan shall be exercisable during the lifetime of the
Participant to whom such Option was granted only by such Participant, and except
as provided in Section 5.4(c) and Section 5.5 hereof, no Option may be exercised
unless at the time such Participant exercises such Option, such Participant is
an employee of and has continuously since the grant thereof been an employee of,
the Company or an any of its Subsidiaries. Transfer of employment between
Subsidiaries or between a Subsidiary and the Company shall not be considered an
interruption or termination of employment for any purpose under this Plan.
Neither shall a leave of absence at the request, or with the approval, of the
Company or Subsidiary be deemed an interruption or termination of employment, so
long as the period of such leave does not exceed 90 days, or, if longer, so long
as the Participant's right to re-employment with the Company or Subsidiary is
guaranteed by contract.

         (2) Notice Of Exercise. An Option may not be exercised with respect to
less than 100 Shares, unless the exercise relates to all Shares covered by the
Option at the date of exercise. An Option may be exercised by delivery of a
written notice to the Company, which shall state the election to exercise the
Option and the number of whole Shares in respect of which it is being exercised,
and shall be signed by the person or persons so exercising the Option. In the
case of an exercise of an Option, such notice shall either: (i) be accompanied
by payment of the full Exercise Price and all applicable withholding taxes, in
which event the Company shall deliver any certificate(s) representing Shares to
which the Participant is entitled as a result of the exercise as soon as
practicable after the notice has been received; or (ii) fix a date (not less
than 5 nor more than 15 business days from the date such notice has been
received by the Company) for the payment of the full Exercise Price and all
applicable withholding taxes, against delivery by the Company of any
certificate(s) representing Shares to which the Participant is entitled to
receive as a result of the exercise. Payment of such Exercise Price and
withholding taxes shall be made as provided in Sections 5.4(d) and 8,
respectively. In the event the Option shall be exercised pursuant to Section
5.4(c)(i) or Section 5.5 hereof, by any person or persons other than the
Participant, such notice shall be accompanied by appropriate proof of the right
of such person or persons to exercise the Option.

         (3) Exercise After Termination Of Employment. Except as otherwise
determined by the Committee at the date of grant of the Option and as is
provided in the applicable Agreement evidencing the Option, upon termination of
a Participant's employment with the Company or any of its Subsidiaries, such
Participant (or in the case of death, the person(s) to whom the Option is
transferred by will or the laws of descent and distribution) may exercise such
Option during the following periods of time (but in no event after the
expiration date of such Option) to the extent that


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such Participant was entitled to exercise such Option (or portion thereof) at
the date of such termination (i.e., the Option (or portion thereof) must be
"vested" at the time of termination to be exercisable thereafter):

                  (1) In the case of termination as a result of death,
         disability or retirement of the Participant, the Option shall remain
         exercisable for a one-year period following such termination; for this
         purpose, "disability" shall exist when the Participant is unable to
         engage in any substantial, gainful activity by reason of any medically
         determinable physical or mental impairment which can be expected to
         result in death or which has lasted or can be expected to last for a
         continuous period of not less than 12 months, as determined by the
         Committee in its sole discretion, and "retirement" shall mean voluntary
         retirement at or after the Participant's normal retirement date as
         determined by the Committee in its sole discretion;

                  (2) In the case of termination for cause, the Option shall
         immediately terminate and shall no longer be exercisable; "Cause" is
         hereby defined as: (i) been convicted of, or has pleaded guilty or nolo
         contendere to a charge that he committed a felony under the laws of the
         United States or any state or a crime involving moral turpitude,
         including but not limited to fraud, theft, embezzlement or any crime
         that results in or is intended to result in personal enrichment at the
         expense of the Company or its Subsidiaries; (ii) perpetrated a fraud
         against, or theft of property of the Company or any of its
         Subsidiaries; (iii) committed acts amounting to gross negligence,
         intentional neglect or willful misconduct in carrying out his duties
         and responsibilities as an employee of the Company or one or more of
         its Subsidiaries; (iv) willfully or persistently failed to attend to
         his duties as an employee of the Company or one or more of its
         Subsidiaries; or (v) as a result of his gross negligence or willful
         misconduct, committed any act that causes, or has knowingly failed to
         take reasonable and appropriate action to prevent, any material injury
         to the financial condition or business reputation of the Company or any
         of its Subsidiaries. and

                  (3) In the case of termination for any reason other than those
         set forth in subparagraphs (i) and (ii) above, the Option shall remain
         exercisable for three months after the date of termination.

To the extent the Option is not exercised within the foregoing periods of time,
the Option shall automatically terminate at the end of the applicable period of
time.

         (4) Payment of Option Exercise Price. Upon the exercise of an Option,
payment of the Exercise Price shall be made either (i) in cash (by a certified
check, bank draft or money order payable in United States dollars), (ii) with
the consent of the Committee and subject to Section 5.4(e) hereof, by delivering
the Participant's duly-executed promissory note and related documents, (iii)
with the consent of the Committee, by delivering Shares already owned by the
Participant valued at Fair Market Value as of the date of exercise, (iv) with
the consent of the Committee, by irrevocably authorizing a third party to sell
shares of Common Stock (or a sufficient portion of such shares) acquired upon
exercise of the Option and remit to the Company a sufficient portion of the
sales


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proceeds to pay the entire Exercise Price and any tax withholding resulting from
such exercise, or (v) by a combination of the foregoing forms of payment.

         (5) Payment With Loan. The Committee may, in its sole discretion,
assist any Participant in the exercise of one or more Options granted to such
Participant under the Plan by authorizing the extension of a loan to such
Participant from the Company. Except as otherwise provided in this Section
5.4(e), the terms of any loan (including the interest rate and terms of
repayment) shall be established by the Committee in its sole discretion. Any
such loan by the Company shall be with full recourse against the Participant to
whom the loan is granted, shall be secured in whole or in part by the Shares so
purchased, and shall bear interest at a rate not less than the minimum interest
rate required at the time of purchase of the Shares in order to avoid having
imputed interest or original issue discount under Sections 483 or 1272 of the
Code. In addition, any such loan by the Company shall become immediately due and
payable in full, at the option of the Company, upon termination of the
Participant's employment with the Company or its Subsidiaries for any reason or
upon the sale of any Shares acquired with such loan to the extent of the cash
and fair market value of any property received by the Participant in such sale.
The Committee may make arrangements for the application of payroll deductions
from compensation payable to the Participant to amounts owing to the Company
under any such loan. Until any loan by the Company under this Section 5.4(e) is
fully paid in cash, the Shares shall be pledged to the Company as security for
such loan and the Company shall retain physical possession of the stock
certificates evidencing the Shares so purchased together with a duly executed
stock power for such Shares. No loan shall be made hereunder unless counsel for
the Company shall be satisfied that the loan and the issuance of Shares funded
thereby will be in compliance with all applicable federal, state and local laws,
and such counsel shall be consulted prior to the funding of any such loan.

         5.3 Settlement of Awards of Options. Settlement of awards of Options is
subject to Section 6.

         5.4 Rights As A Shareholder. A Participant shall have no rights as a
shareholder with respect to any Shares issuable on exercise of an Option until
the date of the issuance of a stock certificate to the Participant for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 4.3 hereof.

         5.5 Limited Transferability. No Option, nor any interest therein, may
be assigned, encumbered or transferred except, in the event of the death of a
Participant, by will or the laws of descent and distribution. Notwithstanding
the foregoing, the Committee shall have the discretionary authority to grant
Options that are transferable by the Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family
members, or a partnership in which such family members were the only partners.
The holder of an Option transferred pursuant to this Section 5.5 shall be bound
by the terms and conditions that govern the Option during the period that it was
held by the Participant; provided, however, that such transferee may not
transfer the Option except by will or the laws of descent and distribution.


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6.       SETTLEMENT OF OPTION.

         The obligation to make payments and distributions with respect to
Options may be satisfied through cash payments, the delivery of shares of Common
Stock, the granting of replacement Options, or any combination thereof as the
Committee shall determine, in its sole discretion. Satisfaction of any such
obligations under an Option, which is sometimes referred to as "settlement" of
the Option, may be subject to such conditions, restrictions, and contingencies
as the Committee shall determine. The Committee may permit or require the
deferral of any Option payment, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of interest
or dividend equivalents. Each Subsidiary shall be liable for payment of cash due
under the Plan with respect to any Participant to the extent that such benefits
are attributable to the services rendered for that Subsidiary by the
Participant. Any disputes relating to liability of a Subsidiary for cash
payments shall be resolved by the Committee.

7.       GOVERNMENT REGULATIONS.

         This Plan, the granting of Options under this Plan and the issuance or
transfer of Shares (and/or the payment of money) pursuant thereto are subject to
all applicable federal and state laws, rules and regulations and to such
approvals by any regulatory or governmental agency (including without limitation
"no action" positions of the Commission) which may, in the opinion of counsel
for the Company, be necessary or advisable in connection therewith. Without
limiting the generality of the foregoing, no Options may be granted under this
Plan, and no Shares shall be issued by the Company, pursuant to or in connection
with any such Option, unless and until, in each such case, all legal
requirements applicable to the issuance or payment have, in the opinion of
counsel to the Company, been complied with. In connection with any stock
issuance or transfer, the person acquiring the Shares shall, if requested by the
Company, give assurances satisfactory to counsel to the Company in respect of
such matters as the Company may deem desirable to assure compliance with all
applicable legal requirements. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such Shares to listing or
for quotation on any stock exchange or automated quotation system on which
Shares may then be listed or quoted, and (ii) the completion and effectiveness
of such registration or other qualification of such Shares under any state or
federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.

8.       TAX WITHHOLDING.

         The Company shall have the right to withhold from amounts due
Participants, or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld at
any time by reason of participation in the Plan, and the obligations of the
Company under the Plan shall be conditional on payment of such taxes. The
Participant may, prior to the due date of any taxes, pay such amounts to the
Company in cash, or with the consent of the Committee, in Shares (which shall be
valued at their Fair Market Value on the date of payment). There is no
obligation under this Plan that any Participant be advised of the existence of
the tax or


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the amount required to be withheld. Without limiting the generality of the
foregoing, in any case where it determines that a tax is or will be required to
be withheld in connection with the issuance or transfer of Shares under this
Plan, the Company may pursuant to such rules as the Committee may establish,
reduce the number of such Shares so issued or transferred by such number of
Shares as the Company may deem appropriate in its sole discretion to accomplish
such withholding or make such other arrangements as it deems satisfactory.
Notwithstanding any other provision of this Plan, the Committee may impose such
conditions on the payment of any withholding obligation as may be required to
satisfy applicable regulatory requirements.

9.       ADMINISTRATION OF PLAN.

         9.1 The Committee. The Plan shall be administered by the Committee,
which shall be comprised of two or more members of the Board of Directors, each
of whom shall be a "Non-Employee Director" as defined in Rule 16b-3(b)(3) (or
any successor provision) promulgated by the Commission and each of whom shall
qualify as an "outside director" as defined in Section 162(m) of the Code.

         9.2 Committee Action. A majority of the members of the Committee at the
time in office shall constitute a quorum for the transaction of business, and
any determination or action may be taken at a meeting by a majority vote or may
be taken without a meeting by a written resolution signed by all members of the
Committee. All decisions and determinations of the Committee shall be final,
conclusive and binding upon all Participants and upon all other persons claiming
any rights under the Plan with respect to any Option. Members of the Board of
Directors and members of the Committee acting under the Plan shall be fully
protected in relying in good faith upon the advice of counsel and shall incur no
liability except for willful misconduct in the performance of their duties.

         9.3 Committee Authority. In amplification of the Committee's powers and
duties, but not by way of limitation, the Committee shall have full authority
and power to:

                  (1) Construe and interpret the provisions of the Plan and
             establish, amend and rescind rules and regulations relating to the
             Plan and to make all other determinations that may be necessary or
             advisable for the administration of the Plan not inconsistent with
             the Plan;

                  (2) Decide all questions of eligibility for Plan participation
             and for the grant of Options;

                  (3) Determine the number of Shares covered by the Options, if
             any, to be granted to any Participant, to establish the terms,
             conditions, restrictions and other provisions of such Options, and
             (subject to the restrictions imposed by Section 12 to cancel or
             suspend Options;

                  (4) Adopt forms of agreements and other documents consistent
             with the Plan;


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                  (5) Engage agents to perform legal, accounting and other such
             professional services as it may deem proper for administering the
             Plan; and

                  (6) Take such other actions as may be reasonably required or
             appropriate to administer the Plan or to carry out the Committee
             activities contemplated by other sections of this Plan.

         9.4 Indemnification. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the Board of Directors and the members of the Committee shall be indemnified by
the Company against the reasonable expenses, including court costs and
reasonable attorneys' fees, actually incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal therein, 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 or any Option granted
hereunder, and against all amounts paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except where such indemnification is expressly prohibited by applicable law.

10.      CHANGE OF CONTROL.

         Subject to the provisions of Section 4.3 (relating to the adjustment of
Shares), or except as otherwise provided in the Agreement evidencing the Option,
upon the occurrence of a Change of Control, all outstanding Options shall become
fully exercisable.

11.      EFFECTIVE DATE.

         The Effective Date of the Plan shall be July 28, 2000.

12.      AMENDMENT AND TERMINATION.

         12.1 The Plan

                     (1) Amendment. The Board of Directors may amend the Plan
              from time to time in its sole discretion unless the amendment
              would, pursuant to any applicable federal, state or local law,
              require shareholder approval, in which event such approval shall
              be obtained. However, no amendment shall adversely affect the
              rights of any Participant under any Option theretofore granted
              under the Plan, without the Participant's consent.

                     (2) Termination. The Plan shall terminate automatically on
              the tenth anniversary of the Effective Date, and the Board of
              Directors may suspend or terminate the Plan at any earlier time.
              Upon termination of the Plan, no additional Options shall be
              granted under the Plan; provided, however, that the terms of the
              Plan


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              shall continue in full force and effect with respect to
              outstanding Options and Shares issued under the Plan.

         12.2 Options. Subject to the terms and conditions and the limitations
of the Plan, the Committee may in the exercise of its sole discretion modify,
extend or renew the terms of outstanding Options granted under the Plan, or
accept the surrender of outstanding Options (to the extent not theretofore
exercised). Notwithstanding the foregoing, however, no modification of an Option
shall, without the consent of the Participant, impair any rights or obligations
under any Options theretofore granted under the Plan.

13.      MISCELLANEOUS.

         13.1 No Individual Rights. No person shall have any claim or right to
be granted an Option under the Plan, or having been selected as a Participant
for one Option, to be so selected again. Neither the establishment of the Plan
nor any amendments thereto, nor the granting of any Option under the Plan, shall
be construed as in any way modifying or affecting, or evidencing any intention
or understanding with respect to, the terms of the employment of any Participant
with the Company or any of its Subsidiaries.

         13.2 Multiple Options. Subject to the terms and restrictions set forth
in the Plan, a Participant may hold more than one Option.

         13.3 Written Notice. As used herein, any notices required hereunder
shall be in writing and shall be given on the forms, if any, provided or
specified by the Committee. Written notice shall be effective upon actual
receipt by the person to whom such notice is to be given; provided, however,
that in the case of notices to Participants and their transferees, heirs,
legatees and legal representatives, notice shall be effective upon delivery if
delivered personally or three business days after mailing, registered first
class postage prepaid to the last known address of the person to whom notice is
given. Written notice shall be given to the Committee and the Company at the
following address or such other address as may be specified from time to time:

              The Shaw Group Inc.
              8545 United Plaza Boulevard
              Baton Rouge, Louisiana 70809
              Attention:  Secretary

         13.4 Unfunded Plan. The Plan shall be unfunded and shall not create
(and shall not be construed to create) a trust or a separate fund or funds. The
Plan shall not establish any fiduciary relationship between the Company and any
Participant. To the extent any person holds any obligation of the Company by an
Option granted under the Plan, such obligation shall merely constitute a general
unsecured liability of the Company and accordingly, shall not confer upon such
person any right, title or interest in any assets of the Company.


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         13.5 Applicable Law; Severability. The Plan shall be governed by and
construed in all respects in accordance with the laws of the State of Louisiana.
If any provision of the Plan shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions of the Plan shall
continue to be fully effective.

         13.6 No Replacement of Existing Options. With respect to Participants
who were formerly employees of Stone & Webster or one or more of its
subsidiaries, the awards of Options to such Participants pursuant to this Plan
are not intended to replace stock options that such Participants may hold or may
have held pursuant to the employee benefit plans of Stone & Webster or any of
its subsidiaries. Rather, the awards of Options to such Participants under this
Plan are intended to (i) provide an incentive to such Participants to remain in
the employ of the Company; (ii) motivate such Participants to achieve long-range
goals on behalf of the Company; and (iii) align such Participants' interests
with those of the Company's other shareholders.


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