exv10w7



 





Exhibit 10.7




THE SHAW GROUP INC.

1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

(amended and restated through January 30, 2004)




     1. Purpose of the Plan.



     This 1996 Non-Employee Director Stock Option Plan (the “Plan”) is intended
to assist The Shaw Group Inc. (the “Company”) in attracting and retaining
highly qualified and experienced persons, who are not officers or employees of
the Company or any of its subsidiaries or affiliates, for service as directors
of the Company by providing such directors with a proprietary interest in the
Company’s success through the grant to such directors of nonstatutory stock
options (the “Options”) to acquire shares of the common stock, no par value per
share, of the Company (the “Shares”).



     2. Participation.



     Each member of the Company’s Board of Directors (the “Board”) who is not,
and who has not been during the one-year period immediately preceding the
Effective Date (as defined below), or the date the director is first elected to
the Board, whichever is later, an officer or employee of the Company or of any
of its subsidiaries or affiliates (each, an “Eligible Director”) shall be
eligible to participate in the Plan.



     3. Administration of Plan.



     The Plan shall be administered, construed and interpreted by a committee
(the “Committee”) which shall be comprised of one or more members of the Board
appointed by the Board, who are not eligible under Section 2 hereof to receive
grants of Options under the Plan. The Committee shall prescribe the form of
stock option agreement to be used to evidence grants of Options under the Plan,
consistent with the terms of the Plan and all applicable laws and regulations,
including, without limitation, Rule 16b-3 (or successor provision) promulgated
by the Securities and Exchange Commission.



     4. Shares Subject to Plan.



     (a) Maximum Shares. The number of Shares which are hereby reserved for
purposes of the Plan shall be, in the aggregate, 300,000 Shares (as adjusted to
reflect a two-for-one common stock split distributed on December 15, 2000),
subject to further adjustment as provided in Section 4(b) hereof. Shares
issued under the Plan may be either authorized but unissued Shares or Shares
which have been or may be reacquired by the Company, including treasury shares.
Shares released upon forfeiture of an Option shall again be available for
grants of future Options under the Plan.



 









 





     (b) Adjustments in Event of Changes in Capitalization. In the event that
the Shares are changed into or exchanged for a different kind or number of
shares of stock or securities of the Company as the result of any stock
dividend, stock split, combination of shares, exchange of shares, merger,
consolidation, reorganization, recapitalization or other change in capital
structure of the Company (each, a “Capitalization Change”), then the number of
Shares subject to this Plan and the number of Shares subject to Options
previously granted hereunder shall be equitably adjusted by the Committee to
prevent the dilution or enlargement of such previously granted Options, and any
new stock or securities into which the Shares are changed or for which they are
exchanged shall be substituted for the Shares subject to this Plan and to
Options granted hereunder; provided, however, that fractional shares may be
deleted from any such adjustment or substitution. There shall be no such
equitable adjustment for the number of Shares subject to Options as set forth
in Section 5(a) in the event the effective date of the Capitalization Change
occurs prior to the grant of the Option.



     5. Options Granted Under the Plan.



     (a) Option Grants.




     (i) On the Effective Date, each Eligible Director shall be
and hereby is granted an Option to acquire 5,000 Shares. In
addition, after the Effective Date, any Eligible Director who was
not a member of the Board on the Effective Date shall be granted an
Option to acquire 5,000 Shares upon his or her initial election to
the Board by the shareholders of the Company. Each Option granted
pursuant to this Section 5(a)(i) shall be referred to in the Plan
as an “Initial Option.”




     (ii) Each Eligible Director shall also be granted an Option
(an “Annual Option”) to acquire 1,500 Shares on an annual basis
upon his or her re-election to the Board by the shareholders of the
Company.




     (iii) The price at which Shares may be acquired pursuant to
each Option (the “Exercise Price”) shall be the Fair Market Value
of the Shares, as defined in Section 5(d) hereof, as of the date
such Option is granted.




     (iv) Notwithstanding any other provision of the Plan to the
contrary, in the event an Eligible Director was first elected to
the Board by the shareholders of the Company prior to the October
8, 2001, amendment to Section 5(a)(i) of the Plan, such Eligible
Director shall be entitled to receive the full benefit of such
amendment as though the amendment were effective on the Effective
Date. Such Eligible Director shall be granted additional Options
as required to make the amendment effective as of the Effective
Date, and such additional Options shall have an Exercise Price
equal to the Fair Market Value of the Shares on the date of his
first election to the Board by the shareholders of the Company.



     (b) Exercise Rights.




     (i) Each Initial Option shall be exercisable in four 25%
annual increments beginning one year following the date of grant;




     (ii) Each Annual Option shall be fully exercisable one year
after the date of grant;



Signature page to

Amendment No. 3 to Third Amended and Restated Credit Agreement




 









 






     (iii) Once vested, each Option (or vested portion thereof)
shall be fully exercisable, and shall remain exercisable for a
period of ten years from the date such Option is granted, at which
time any unexercised portion of the Option shall terminate. In the
event that the optionee ceases to be a member of the Board prior to
the vesting of the Option (or applicable portion thereof), the
Option (or the unvested portion thereof) shall be forfeited.



     (c) Exercise of Options. Subject to Section 5(b), an Option may be
exercised with respect to all or part of the Shares covered by the Option, but
in no event with respect to less than 100 Shares, unless the exercise relates
to all Shares covered by the Option at the date of exercise. Options may be
exercised by delivery of a signed written notice to the Company, which notice
shall state the election to exercise the Option and the number of whole Shares
in respect to which it is being exercised, together with payment in full of the
Exercise Price, which payment shall be made either (i) in cash (by a certified
check, bank draft or money order); (ii) with the consent of the Committee, by
delivering Shares already owned by the optionee valued at Fair Market Value;
(iii) with the consent of the Committee, by irrevocably authorizing a third
party to sell Shares (or a sufficient portion thereof) acquired upon exercise
of the Option and remit to the Company a sufficient portion of the sales
proceeds to pay the entire Exercise Price; or (iv) by a combination of the
foregoing forms of payment. Notice of exercise and payment of the Exercise
Price shall be delivered to the Company at the following address:



	 
	The Shaw Group Inc.

	4171 Essen Lane

	Baton Rouge, La 70809

	Attn: Secretary








     (d) Fair Market Value. The term “Fair Market Value” means the fair
market value of a Share as determined in good faith by the Committee in the
following manner:




     (i) If the Shares are then listed on any national or regional
stock exchange or traded in the over-the-counter market and prices
are quoted on the Nasdaq National Market, the Fair Market Value
shall be the last quoted sales price of a Share on the date in
question, or if there are no reported sales on such date, on the
last preceding date on which sales were reported;




     (ii) If the Shares are not so listed or quoted, 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




     (iii) 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.




     6. Restrictions on Transfers.



Signature page to

Amendment No. 3 to Third Amended and Restated Credit Agreement




 









 





     (a) Limitations on Transfer. (i) Except as provided in Section 6(a)(ii)
below, no Option granted under the Plan may be assigned, encumbered or
transferred, except by will or the laws of descent and distribution in the
event of the death of the optionee, or pursuant to a qualified domestic
relation order as defined by the Internal Revenue Code of 1986, as amended or
Title I of the Employee Retirement Income Security Act, or the rules
thereunder; (iii) The Committee shall have the discretionary authority to grant
Options that would be transferable to members of an Eligible Director’s
immediate family, including trusts for the benefit of such family members and
partnerships in which such family members are the only partners. For purposes
of Section 5(c), a transferred Option may be exercised by the transferee to the
extent that the Eligible Director would have been entitled had the Option not
been transferred.



     (b) Government Regulations. This Plan and Options granted under the Plan
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 Securities and Exchange 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 or exercised under the Plan unless and until all
applicable legal requirements have, in the opinion of counsel to the Company,
been complied with. In connection with any Shares issued pursuant to the
exercise of Options, the person acquiring such Shares shall, if requested by
the Company, give assurances satisfactory to counsel to the Company in respect
to 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
on any stock exchange or Nasdaq Stock Market, as applicable, on which Shares
may then be listed; and (ii) the completion 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.



     7. Termination.



     The Plan shall terminate automatically on the tenth anniversary of the
Effective Date, and the Board 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 shall continue in
full force and effect with respect to outstanding and unexercised Options
issued under the Plan.



     8. Amendment.



     The Board may amend the Plan from time to time in its sole discretion. No
amendment, however, shall impair the rights of any Eligible Director or other
person or persons to whom an Option has been granted, without such person’s
consent.



     9. Indemnification.



     In addition to such other rights of indemnification as they may have, the
members of the Committee and the officers and employees of the Company who may
take actions relating to the Plan shall be indemnified by the Company to the
fullest extent permitted by law against the reasonable expenses, including
attorney’s fees, actually and necessarily incurred in connection with the
defense of



Signature page to

Amendment No. 3 to Third Amended and Restated Credit Agreement




 









 




any action, suit or proceeding, or in connection with any appeal thereof,
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
thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member, officer
or employee is liable for gross negligence or willful misconduct in the
performance of his duties, provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member, officer
or employee shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.




     10. Effective Date.



     The Effective Date of the Plan shall be July 14, 1996, subject to receipt,
within one year of such date, of the approval of the Plan by the affirmative
vote of a majority of the total voting power present in person or represented
by proxy at the meeting of the shareholders at which the Plan is considered.
All Options granted prior to such shareholder approval shall be subject to
receipt of such approval and may not be exercised prior to receipt of such
approval. If such shareholder approval is not received, all such Options shall
automatically terminate.



Signature page to

Amendment No. 3 to Third Amended and Restated Credit Agreement