**EXHIBIT 10.15**

 

**[ExecutionCopy]**

 

**WARRANTCASH SUBSTITUTION AGREEMENT**

 

This WARRANT CASH SUBSTITUTION AGREEMENT(this “Agreement”) is made andentered into as of January 10, 2006 by and among Wells Fargo Bank,N.A., f/k/a Wells Fargo Bank Minnesota, National Association, as Trustee andDisbursing Agent (the “Trustee and Disbursing Agent”) under the Trustand Disbursing Agreement dated as of January 25, 2002 (the “Trust andDisbursing Agreement”), entered into pursuant to the Second Amended JointPlan of Reorganization of Washington Group International, Inc., *et al.*, dated July 24, 2001, as modified by the FirstModification, the Second Modification and the Third Modification (as somodified, the “Plan”), confirmed in the bankruptcy cases (the “Reorganization”)of Washington Group International, Inc. (the “Company”) and certainof its affiliates, in the United States Bankruptcy Court for the District ofNevada (the “Bankruptcy Court”), Chapter 11 Case No. BK-N-01-31627,the Plan Committee established by the Plan (the “Plan Committee”), theCompany, a corporation organized under the laws of Delaware, and Wells FargoBank, N.A., f/k/a Wells Fargo Bank Minnesota, National Association, as WarrantAgent (the “Warrant Agent”) under the Warrant Agreement dated as of January 25,2002 (the “Warrant Agreement”) between the Company and the WarrantAgent.  Capitalized terms used herein butnot defined shall have the meaning given to them in the Trust and DisbursingAgreement or the Plan.

 

**RECITALS**

 

A.  WHEREAS,the Plan provides for distributions of cash, New Common Shares, Class 7Warrants and the proceeds, if any, of the Transferred Avoidance Actions(collectively, the ”Plan Consideration”) to holders of Allowed Class 7Claims;

 

B.  WHEREAS,the Trustee and Disbursing Agent holds the Class 7 Warrants not yetdistributed in an account for the benefit of the holders of Allowed Class 7Claims (the ”Allowed Class 7 Claimants”) in connection withthe Reorganization in accordance with the terms of the Trust and DisbursingAgreement;

 

C.  WHEREAS,the Plan provides that the Plan Committee will take such actions as are setforth in the Plan, the Confirmation Order or the Plan Committee Document or asmay be approved or ordered by the Bankruptcy Court;

 

D.  WHEREAS,the Class 7 Warrants by their terms expire at 5:00 p.m., New YorkCity time, on January 25, 2006; and

 

E.  WHEREAS,upon noticed joint motion of the Plan Committee and the Company and followinghearings and oral arguments held on December 8 and December 23, 2005,the Bankruptcy Court entered an Order on January 10, 2006 (the “EnablingOrder”) approving the payment of certain fees and expenses by the Companyand the provision of $27,500,000 in cash

 

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by the Company (the “Consideration”)in substitution, of the remaining Class 7 Warrants held by the Trustee andDisbursing Agent, consisting of 634,974 Tranche A Warrants, 725,684 Tranche BWarrants and 392,261 Tranche C Warrants (the “Remaining Warrants”) whichwould otherwise expire on January 25, 2006 (the “Warrant Transaction”).

 

**AGREEMENT**

 

NOW, THEREFORE, in consideration of themutual promises set forth herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Trustee andDisbursing Agent, the Warrant Agent, the Plan Committee and the Company agreeas follows:

 

**1.****                                      Recitals.**  The forgoing recitals are incorporated hereinby reference, and by this reference made a part hereof.

 

**2.****                                      Purchaseand Substitution of Warrants.**

 

(a)                                  Subject to theconditions set forth in the Enabling Order, the Trustee and Disbursing Agent,the Company and the Plan Committee hereby agree that the Trust and DisbursingAgreement is hereby amended such that the Plan Committee hereby authorizes anddirects the Trustee and Disbursing Agent on behalf of the Allowed Class 7Claimants to enter into all necessary agreements and to perform all necessaryactions as the Trustee and Disbursing Agent deems to be necessary andappropriate to: (i) assign, transfer and deliver to the Company theRemaining Warrants free from any restrictions, liens, encumbrances, claims(including any “adverse claim” as such term is defined in the UniformCommercial Code), options, calls, pledges, trusts and other commitments,agreements or arrangements; (ii) to receive $27,500,000 in cash from theCompany (the “Cash Proceeds”); (iii) to deposit the Cash Proceedsinto the WGI Class 7 Disbursement Account established under the Trust andDisbursing Agreement as a part of the Disputed Class 7 Claims Reserve andto invest such cash as provided in Section 3 of the Trust and DisbursingAgreement; (iv) to pay fees and expenses as contemplated by the EnablingOrder and Section 3 of this Agreement; (v) to make distributions ofthe net Cash Proceeds and any Cash Investment Yield earned thereon to Allowed Class 7Claimants in accordance with Section 5(a) and the other relevantprovisions of the Trust and Disbursing Agreement; and (vi) to perform allother required actions to effectuate the intent of this Agreement and theEnabling Order.

 

(b)                                 Subject to theconditions set forth in the Enabling Order, the Trust and Disbursing Agreementis hereby further amended to provide that each holder of an Allowed Class 7Claim will be entitled to receive, in lieu of receipt of future distributionsof Class 7 Warrants, a Pro Rata share of the net Cash Proceeds derivedfrom the Warrant Transaction and any Cash Investment Yield earned thereon afterpayment of any fees, costs and expenses in accordance with this Agreement.  Class 7 Claimants will not be entitled toany further distributions of Class 7 Warrants.  The Trust and Disbursing Agent willadminister the distribution of such funds in accordance with the Trust andDisbursing Agreement, as amended by this Agreement.

 

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(c)                                  In connection withthe cash substitution for the Remaining Warrants, the Plan Committee representsand warrants to the Company, all of which representations and warranties shallsurvive the Closing of the Warrant Transaction, that it has requested,received, reviewed and considered all information it deems relevant in makingan informed decision to sell and substitute the Remaining Warrants.  The Plan Committee, together with itsfinancial advisor, has such business and financial experience as is required togive it the capacity to utilize the information received, to evaluate themerits and risks involved in selling and substituting the Class 7Warrants.

 

(d)                                 Consistent with Section 11of the Trust and Disbursing Agreement and its characterization of the Disputed Class 7Claims Reserve as a grantor trust with the Company as grantor, the partiesshall treat the actions described in Sections 2(a)(i), (ii) and (iii) asdisregarded events for federal and applicable state income tax purposes.  The Company shall instruct the Trustee andDisbursing Agent that no taxes shall be payable and no amounts shall beremitted to the Company with respect to the substitution.

 

**3.****                                      Paymentof Fees and Expenses**

 

(a)                                  For purposes of Section 8of the Plan Committee Document, the Plan Committee and the Company agree thatthe Plan Committee, its Members and any Professionals (as defined in the PlanCommittee Document) retained by the Plan Committee shall be reimbursed by theCompany for fees and expenses incurred in connection with or arising from thePlan Committee’s efforts to capture the value of the Remaining Warrantsincurred prior to November 9, 2005 in accordance with the procedures forpayment of such fees and expenses as provided in the Plan Committee Document.

 

(b)                                 Fees and expenses ofthe Plan Committee, its Members and any Professionals retained by the PlanCommittee incurred in connection with or arising from the Plan Committee’sefforts to capture the value of the Remaining Warrants incurred on and after November 9,2005 shall be paid out of the Cash Proceeds deposited into the WGI Class 7Disbursement Account.  The amounts due tothe Plan Committee, its Members and any Professionals retained by the PlanCommittee shall be paid within thirty (30) days after the end of the month inwhich the relevant expense request for reimbursement was presented to the Trustand Disbursing Agent, *provided, however*,that such monthly requests for reimbursement shall be subject to review andapproval by the Company, which approval shall not be unreasonably withheld, tothe extent that doing so does not compromise the Plan Committee attorney-clientprivilege, *provided, further*, that in the event theCompany disputes any portions of such monthly requests for reimbursements, theCompany shall notify the counsel to the Plan Committee and the Trust andDisbursing Agent shall withhold payment of the disputed amounts until theBankruptcy Court, upon application by the Plan Committee, reviews and approvessuch disputed requests for reimbursement in whole or part.

 

(c)                                  If and to the extentthat fees and expenses of the Ad Hoc Committee of Washington GroupInternational Class 7 Claim Holders are allowed and approved by theBankruptcy Court, such fees and expenses shall be paid out of the Cash Proceedsdeposited into

 

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the WGI Class 7 DisbursementAccount in accordance with applicable final orders of the Bankruptcy Court.

 

(d)                                 Fees and expenses ofthe Trustee and Disbursing Agent in connection with or arising from the WarrantTransaction or any other action under the Trust and Disbursing Agreement shallcontinue to be paid by the Company in accordance with the Trust and DisbursingAgreement.

 

**4.****                                      Conditions.**  The obligation of the Company to pay the feesand expenses of the Plan Committee in accordance with Section 3(a) asprovided hereunder and to deliver cash for the Remaining Warrants is subjectonly to the following conditions, which may be waived in writing by theCompany, in its sole and unfettered discretion, at any time:

 

(a)                                  The entry of an orderor judgment of the Bankruptcy Court or other court of competent jurisdictionapproving the Warrant Transaction which has not been stayed, reversed oramended and as to which the time to appeal or seek review or rehearing hasexpired and no petition for review or rehearing or appeal was filed or, iffiled, no longer remains pending.

 

(b)                                 The representationsand warranties of the Plan Committee contained in Section 2(c) shallbe true and correct in all material respects on and as of the date of thisAgreement and the date of the Closing.

 

**5.****                                      Indemnification.** The Company acknowledges that itwill continue to indemnify and hold harmless the Trustee and Disbursing Agentin accordance with the terms and conditions of Section 14 of the Trust andDisbursing Agreement.  Furthermore, theCompany will indemnify and hold harmless the Trustee and Disbursing Agent inaccordance with the terms and conditions of Section 14 of the Trust andDisbursing Agreement from and against any and all costs, losses, liabilities,expenses (including reasonable counsel fees and disbursements) and claimsimposed upon or asserted against the Trustee and Disbursing Agent on account ofany action taken or omitted to be taken by them in connection with theperformance of its duties under this Agreement and the documents related hereto.

 

**6.****                                      TheTrust and Disbursing Agreement.**  TheTrustee and Disbursing Agent hereby confirms that effective December 23,2005, it withdrew its Notice of Termination, dated August 12, 2005, asmodified, and agrees to continue to be bound by the terms of the Trust andDisbursing Agreement as amended by this Agreement. The first sentence of Section 15of the Trust and Disbursing Agreement hereby is amended and restated to read asfollows: “This Agreement shall remain in full force and effect until the earlierof: (a) 60 days after Notice of Termination has been given by the Companyto Wells Fargo or by Wells Fargo to the Company, or (b) the later of (i) thedisbursement of all of the Plan Consideration, or (ii) the completion ofall tax reporting requirements for distributions made under the Plan.”  The Parties hereby ratify and confirm theterms and conditions of the Trust and Disbursing Agreement, as amended hereby,in each and every respect.

 

**7.****                                      Closing.**  If the condition specified in Section 4(a) shallhave been satisfied and provided that this Agreement has not been terminatedpursuant to Section 8, the delivery of cash

 

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Consideration for the RemainingWarrants will take place on January 23, 2006 or at such other time as theParties shall agree (the “Closing”). At the Closing, the Remaining Warrants shall be cancelled by the WarrantAgent in accordance with Section 16 of the Warrant Agreement againstpayment by the Company by wire transfer of $27,500,000 to an account asspecified by the Trustee and Disbursing Agent. The Warrant Agent shall provide written notice of the cancellation ofthe Remaining Warrants to the Company and the receipt of funds to the PlanCommittee.

 

**8.****                                      Terminationof Agreement.**  If the conditionspecified in Section 4(a) shall not have occurred by 5:00 p.m.Reno, Nevada time on January 20, 2006, this Agreement shall terminate onthe later to occur of 5:00 p.m. Reno, Nevada time on January 21, 2006or such later date as may be specified by the Company by written notice to theother parties to this Agreement. Sections 2(c) (relating to representations and warranties of thePlan Committee), 3(d) (relating to payment of fees and expenses of theTrust and Disbursing Agent), 5 (relating to indemnification of the Trust andDisbursing Agent), 6 (relating to the Trust and Disbursing Agreement), 9(relating to Notices) and 10 (relating to governing law) shall survivetermination of this Agreement.

 

**9.****                                      Notices.**  The executed copy of this Agreement and anywritten notices should be provided to:

 

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If to the Trustee and Disbursing Agent, to:

 

Wells Fargo Bank, N.A.

Customized Fiduciary Services

Sixth and Marquette; N9303-120

Minneapolis, Minnesota 55479

Attn: Nicholas D. Tally

 

with a copy to:

 

Wendy Walker

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178-0060

 

If to the Warrant Agent, to:

 

Wells Fargo Bank, N.A.

Customized Fiduciary Services

Sixth and Marquette; N9303-120

Minneapolis, Minnesota 55479

Attn: Nicholas D. Tally

 

with a copy to:

 

Wendy Walker

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178-0060

 

If to the Plan Committee, to:

 

Todd J. Dressel

Winston & Strawn LLP

101 California Street, Suite 3900

San Francisco, CA 94111

 

If to the Company, to:

 

Washington Group International, Inc.

720 Park Boulevard

Boise, Idaho 83712

Attn: Earl Ward, Treasurer, 

and Richard D. Parry, General Counsel

 

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with a copy to:

 

Robert Dean Avery

Jones Day

77 West Wacker Drive

Chicago, Illinois 60601

 

**10.****                               EntireAgreement.**  This Agreementconstitutes the entire agreement of the parties, and fully supersedes any andall prior and contemporaneous agreements or understandings between the partiesrelating to the subject matter hereof. This Agreement may be amended or modified only by an agreement inwriting and signed by all of the parties hereto.  Each party has had a full and completeopportunity to review this Agreement. Accordingly, the parties agree that the common law principles ofconstruing ambiguities against the drafter shall have no applicationhereto.  This Agreement shall beconstrued fairly and not in favor of or against one party as to the drafterhereof.

 

**11.****                               GoverningLaw.**  This Agreement shall begoverned by, and construed in accordance with, the laws of the State of NewYork, without regard to conflict of laws principles.

 

**12.****                               Counterparts.**  This Agreement may be executed in one or morecounterparts, each of which will be deemed to be an original but all of whichtogether will constitute one and the same agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have executedthis Agreement as of the day and year first written above.

 
|   | WELLS FARGO BANK, N.A., as Trustee and  Disbursing  Agent |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   |                                                      |   |
|   | By:                                                       |   /s/ Nicholas D. Tally |   |
|   |                                                      |      Nicholas D.  Tally, Vice President |   |
|   | Date:                                                     |      1/23/06 |   |
|   |                                                      |   |   |
|   | WELLS FARGO BANK, N.A., as Warrant Agent                  |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | By:                                                       |  /s/ Nicholas D. Tally |   |
|   |                                                      |     Nicholas D. Tally,  Vice President |   |
|   | Date:                                                     |     1/23/06 |   |
|   |                                                      |   |   |
|   | PLAN COMMITTEE                                            |   |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | By:                                                       |   /s/ Sharon Manewitz |   |
|   |                                                      | Sharon  Manewitz, as Chairperson |   |
|   |                                                      | of the Plan  Committee |   |
|   |                                                      | Managing  Director |   |
|   |                                                      | Teachers  Insurance and Annuity |   |
|   |                                                      | Association  of America |   |
|   | Date:                                                     | Jan. 18,  2006 |   |
|   |                                                      |   |   |
|   | WASHINGTON GROUP INTERNATIONAL, INC.                      |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | By:                                                       |   /s/ Earl Ward |   |
|   | Earl Ward, Vice President – Investor                 |   |
|   | Relations and Treasurer                                   |   |
|   | Date:                                                     |    January 18, 2006 |   |
|        |                                                           |  |  |  |

 

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