Document:

Exhibit 10.1

    
      

    

    Exhibit
      10.1 

     

    

    

       

      ANNUAL
        INCENTIVE PLAN

      

      2006
        Plan
        Year

      

      Guidelines

       

      

      KIRBY
        CORPORATION

       

      January
        2006

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

       

      
        	
                Introduction

              	
                2

              
	 	 
	
                The
                  Annual Incentive Plan

              	
                3

              
	 	 
	
                Performance
                  Measurement Period

              	
                3

              
	 	 
	
                Eligibility

              	
                3

              
	 	 
	
                Plan
                  Objectives

              	
                4

              
	 	 
	
                Performance
                  Measures

              	
                4

              
	 	 
	
                Corporate
                  and Business Group Weighting

              	
                5

              
	 	 
	
                Individual
                  Bonus Targets

              	
                6

              
	 	 
	
                Annual
                  Incentive Plan Concept

              	
                6

              
	 	 
	
                Performance
                  Measures and Weighting

              	
                7

              
	 	 
	
                Performance
                  Standards and Award Opportunities

              	
                7

              
	 	 
	
                Example
                  Award Calculation

              	
                8

              
	 	 
	
                Administration

              	
                9

              

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      Introduction

       

      Kirby
        Corporation established its Annual Incentive Plan to focus employees on
        identifying and achieving business strategies that will grow the business
        and
        lead to an increase in shareholder value. The Annual Incentive Plan is also
        intended to reward superior performance by employees, for their contributions
        toward achieving Kirby’s objectives. This program may be offered, in whole or in
        part, to wholly owned subsidiaries of the Company, at the Company’s
        discretion.

      

      Certain
        aspects of this Bonus Plan are complex. Although these guidelines establish
        rules for Plan operation, those rules may not work in all cases. Therefore,
        the
        Compensation Committee of the Kirby Board of Directors shall have the
        discretionary authority to interpret, and if determined appropriate, deviate
        from the Guide to insure that the awards are consistent with the Plan’s purposes
        and the Company’s interests. All decisions by the Compensation Committee shall
        be final and binding.

      

      This
        Plan, or any part thereof, may be amended, modified, or terminated at any
        time,
        without prior notice, by written authorization of the President and Chief
        Executive Officer of the Company.

      

      This
        Plan
        supercedes all prior annual incentive bonus plans or programs maintained
        by the
        Company.

      

      The
        initial Plan became effective January 1, 2003.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      The
        Annual Incentive Plan

      

      The
        Annual Incentive Plan is an award for total Company performance, and for
        the
        performance of our four Business Groups; Kirby Inland Marine, Kirby Engine
        Systems, Dixie Offshore Transportation and Osprey, Line. Awards are 75%
        formula-driven and 25% driven by individual performance, and are based on
        achieving Company, Business Group and individual performance
        objectives.

      

      Performance
        Measurement Period

      

      Performance
        is measured on a calendar year basis for the Annual Incentive Plan. The
        Performance Period begins on January 1 and ends on December 31.

      

      Eligibility

      

      
        	
                ·

              	
                Generally,
                  shore staff managerial employees in salary grades 15 and above,
                  and
                  Wheelhouse employees classified as Captain, Relief Captain or Pilot,
                  will
                  be eligible for consideration to be participants. Selection for
                  participation in the Plan will be based upon each position’s ability to
                  impact long-term financial results of the Company. Consequently,
                  all
                  employees in positions at salary grades 15 and above might not
                  be included
                  in the Plan, and employees in positions below salary grade 15 might
                  be
                  included.

              

      

      

      
        	
                ·

              	
                In
                  order to be eligible to receive an award participants must be employed
                  on
                  the last day of the Performance Period, and on the date bonuses
                  are
                  actually paid for the respective Performance Period, unless their
                  earlier
                  termination is due to death, normal retirement1 
                  or
                  disability1.

              

      

      

      
        	
                ·

              	
                It
                  should also be noted that participation in the Bonus Plan in one
                  year does
                  not guarantee participation in future years. Participants in the
                  Plan will
                  be notified annually of their selection for
                  participation.

              

      

       

       

      _____________________________

      1
        Normal
        retirement or disability as defined for shore based employees in the Company’s
        Profit Sharing Plan, and as defined for wheelhouse employees in the Vessel
        Pension Plan

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Plan
        Objectives

      

      The
        Annual Incentive Plan has five key objectives:

      

      
        	 	
                ·

              	
                Provide
                  an annual incentive plan that drives performance toward objectives
                  critical to creating shareholder
                  value.

              

      

      

      
        	 	
                ·

              	
                Offer
                  competitive cash compensation opportunities to key Kirby
                  employees.

              

      

      

      
        	 	
                ·

              	
                Award
                  outstanding achievement among employees who can directly affect
                  Kirby’s
                  results.

              

      

      

      
        	 	
                ·

              	
                Assist
                  Kirby in attracting and retaining high quality
                  employees.

              

      

      

      
        	 	
                ·

              	
                Reflect
                  both quantitative and qualitative performance factors in actual
                  bonus
                  payouts.

              

      

       

      Performance
        Measures

      

      The
        performance measures for the Annual Incentive Plan are:

      
        

        
          	 	
                  ·

                	
                  EBITDA

                

        

        
          	 	
                  ·

                	Return on Total Capital 

        

        
          	 	
                  ·

                	Earnings
                  per share 

        

      

      

      Annual
        performance targets will be established for each measure based on Kirby’s
        projected budget, and individual bonus payments will be based on a combination
        of Company performance and individual performance.

      

      Participants
        will receive 75% of their award based on Company performance in achieving
        the
        three performance measures, with the remaining 25% based on an assessment
        of
        individual performance for the year.

      

      Each
        of
        the performance measures will have equal weight in calculating the bonus
        payout
        pool.

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Corporate
        & Business Group Weighting

      

      The
        Annual Incentive Plan bonus is calculated at the end of the year based on
        the
        performance of Kirby and the performance of our four Business Groups, Kirby
        Inland Marine, Kirby Engine Systems, Dixie Offshore Transportation and Osprey
        Line, relative to objectives established at the beginning of the
        year.

      

      The
        award
        for Business Group employees will be primarily tied to Business Group
        performance, with a defined portion tied to Company performance.

      

      The
        award
        for Corporate employees will be tied entirely to total Kirby
        performance.

       

      
        
          	
                   Annual
                    Incentive Plan
                    Calculation

                	 
	 	 	 	 
	 	 	
                  Incentive

                  Bonus
                    Calculation %

                	 
	 	 	
                  Kirby
                    (Company)

                	 	
                  Business
                    Group

                	 
	 	 	 	 	 	 
	
                  All
                    Corporate Employees

                	 	 	
                  100

                	
                  %

                	 	
                  0

                	
                  %

                
	 	 	 	 	 	 	 	 
	
                  Business
                    Group Employees

                	 	 	 	 	 	 	 
	
                  (Inland,
                    Engine Systems, Offshore and Osprey)

                	 	 	
                  30

                	
                  %

                	 	
                  70

                	
                  %

                
	 	 	 	 	 	 	 	 
	
                  Inland
                    & Engine Systems Presidents

                	 	 	
                  50

                	
                  %

                	 	
                  50

                	
                  %

                

        

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      Individual
        Bonus Targets

      

      Each
        participant will be assigned a bonus level which is based on competitive
        market
        practices, as well as the employee’s ability to impact long-term Company
        performance. Market practices will be determined using data from either general
        industry, the marine transportation industry, or the diesel repair industry,
        depending upon the individual position being considered. It is the Company’s
        intent that salary plus target annual bonus be positioned to provide a
        competitive market opportunity for target performance.

      
 

      Annual
        Incentive Plan Concept

      

        

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      Performance
        Measures and Weighting

       

      
        
          	
                  Measure

                	 	
                  Weight

                	 
	 	 	 	 
	
                  n
                    EBITDA (Earnings Before Interst, Taxes, Depreciation
                    and Ammortization)

                	 	 	
                  33-1/3
                    

                	
                  %

                
	 	 	 	 	 
	
                  n
                    Return on Total Capital (Earnings before interest and taxes divided
                    by
                    average beginning and ending shareholders equity plus long-term
                    debt)

                	 	 	
                  33-1/3
                    

                	
                  %

                
	 	 	 	 	 
	
                  n
                    Earnings per Share

                	 	 	
                  33-1/3
                    

                	
                  %

                
	 	 	 	 	 
	 	 	 	
                  100
                    

                	
                  %

                

        

      

       

       

      Performance
        Standards & Award Opportunities

       

      
        
          	
                  Performance

                  Level

                	
                  Definition

                	
                  Relationship
                    to 

                  Budget

                	
                  %
                    of Target 

                  Earned

                
	 	 	 	 
	
                   

                  Threshold

                   

                	
                   

                  Minimal
                    acceptable performance for payout

                	
                   

                  80%
                    of Budget

                	
                   

                  50%

                
	 	 	 	 
	
                   

                  Target

                   

                	
                   

                  Expected
                    performance at a stretch level

                   

                	
                   

                  100%
                    of Budget

                   

                	
                   

                  100%

                   

                
	 	 	 	 
	
                   

                  Maximum

                   

                	
                   

                  Outstanding
                    performance

                   

                	
                   

                  120%
                    of Budget

                   

                	
                   

                  200%

                   

                

        

      

      

      Performance
        must be at least to Threshold to earn a bonus payment.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      Example
        Award Calculation 

       

      
        
          	 	
                  Performance
                    Standards

                	
                  Example
                    Calculation

                
	
                  Performance
                    Objectives

                	
                  Below
                    Threshold

                	
                  Threshold

                	
                  Target

                	
                  Maximum

                	
                  Assumed
                    Actual Results (% Budget Achieved)

                	
                  Percent
                    of Target Award Earned

                	
                  Objective
                    Weight

                	
                  Weighted
                    Percent of Target Award Earned

                
	
                  Percent
                    of Target Award Earned:

                	
                  0%

                	
                  50%

                	
                  100%

                	
                  200%

                
	 	 	 	 	 	 	 	 	 
	
                  EBITDA

                  (%
                    Budget Achieved)

                	
                  <
                    80%

                	
                  80%

                	
                  100%

                	
                  120%

                	
                  90%

                	
                  75%

                	
                  33-1/3%

                	
                  25%

                
	 	 	 	 	 	 	 	 	 
	
                  Return
                    on Total Capital (% Budget Achieved)

                	
                  <
                    80%

                	
                  80%

                	
                  100%

                	
                  120%

                	
                  110%

                	
                  150%

                	
                  33-1/3%

                	
                  50%

                
	 	 	 	 	 	 	 	 	 
	
                  Earnings
                    per Share (% Budget Achieved)

                	
                  <
                    80%

                	
                  80%

                	
                  100%

                	
                  120%

                	
                  100%

                	
                  100%

                	
                  33-1/3%

                	
                  33.3%

                
	 	 	 	 	 	 	 	 	 
	 	 	
                  Total
                    Percent of Target Awards Earned for Bonus Pool:

                	
                  108.3%

                

        

      

       

      
        	
              	
                n

              	
                As
                  shown in the exhibit, actual performance on each objective results
                  in a
                  corresponding percent of target award
                  earned.

              

      

      
         

        
          	
                	
                  n

                	
                  The
                    percents of target award earned for each objective are then multiplied
                    by
                    the weight for the objective, producing a weighted percent of
                    target award
                    earned for each objective.

                

        

        
           

          
            	
                  	
                    n

                  	
                    
                      The
                        weighted percents of target award earned for all objectives
                        are summed to
                        produce a total percent of target awards earned. This factor,
                        when
                        multiplied by the sum of target bonuses for plan participants,
                        equals the
                        bonus funding pool.

                    

                  

          

          
             

            
              	
                    	
                      n

                    	
                      75%
                        of the total pool is paid to participants pro-rata, based
                        on their
                        individual bonus level and their applicable base salary for
                        the
                        period.

                    

            

            
               

              
                	
                      	
                        n

                      	
                        The
                          remaining 25% is awarded to participants based on individual
                          performance.

                      

              

               

            

          

        

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      Administration

      

      Award
        Payout

      A
        participant’s Final Award is paid out in cash within 90 days following the end
        of the Company’s fiscal year, based on audited financials.

      

      Eligibility
        Limitation

      Unless
        otherwise provided for as a special circumstance (below), selected participants
        must be employed by the Company on the last day of the Performance Period,
        and
        on the date bonuses are actually paid for the respective Performance Period,
        in
        order to be eligible to receive a bonus award.

      

      Special
        Circumstances

      Listed
        below are guidelines addressing termination and other events. The Committee
        will
        have the sole authority to resolve disputes related to Plan administration.
        Decisions made by the Committee will be final and binding on all
        participants.

      

      New
        Employees.
        New
        employees hired after the beginning of a Performance Period who are selected
        for
        participation in the Plan, will receive prorated awards for the then current
        Performance Period, subject to the Termination of Employment restrictions.
        

      

      Termination
        of Employment.
        If
        employment terminates before the end of the full Performance Period, or before
        the date bonuses are actually paid for the respective Performance Period,
        as a
        result of death, normal retirement3,
        or
        disability3,
        the
        participant (or the participant’s heirs) will be entitled to receive a prorated
        award at the end of the Performance Period, based upon base wages earned
        while
        employed during the Performance Period. 

      

      If
        employment terminates prior to the last day of the applicable Performance
        Period, or prior to the date bonuses are actually paid for the respective
        Performance Period, for any reason other then death, normal
        retirement3,
        or
        disability3,
        the
        participant will be ineligible to receive an award.

      

      ________________________

      3
        Normal
        retirement or disability as defined for shore based employees in the Company’s
        Profit Sharing Plan, and as defined for wheelhouse employees in the Vessel
        Pension Plan.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      Transfer.
        A
        participant who is transferred between business units of the Company will
        be
        entitled to receive a weighted award based upon the time spent at each of
        the
        units. The weighted award is calculated by adding (1) the participant’s prorated
        award for time spent at the first business unit, to (2) the participant’s
        prorated award for time spent at the second business unit4.
        

      

      Promotions.
        A
        participant who is promoted or reassigned during any Performance Period,
        and
        whose bonus target is subsequently increased or decreased, will be eligible
        to
        receive a weighted award. The award is calculated by adding (1) the prorated
        award for service before the promotion or reassignment, to (2) the prorated
        award for service after the promotion or reassignment4.
        

      

      Compensation
        Committee

      The
        Compensation Committee has the responsibility for the overall governance
        and
        administration of the Plan. In fulfilling its duties, the Committee will
        be
        responsible for interpreting the Plan and will rely on these guidelines in
        making all determinations that are necessary or advisable for administration
        of
        the Plan.

      

      In
        administering the Plan the Committee will, on an annual basis:

      

      
        	 	
                ·

              	
                Approve
                  the designation of Business Groups within the
                  Company

              

      

       

      
        	 	
                
                  ·

                

              	
                Approve
                  the Performance Measures and the Threshold, Target and Maximum
                  budget
                  performance levels 

              

      

       

      
        	 	
                
                  ·

                

              	
                Approve
                  linkage for participants to Company and Business Group
                  performance

              

      

       

      
        	 	
                
                  ·

                

              	
                Approve
                  the Bonus Levels for all participants whose salaries are at or
                  above
                  $100,000

              

      

       

      President
        & CEO

      The
        CEO
        will have primary responsibility for recommending Plan guidelines to the
        Committee, and for carrying out the administrative duties associated with
        annual
        award calculations. In addition, the Compensation Committee may delegate
        additional administrative duties to the CEO or any Company officer.

       

      _______________________

      4
        Company
        and Business Group performance factors are calculated using performance for
        the
        entire Performance Period.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      CFO

      The
        CFO
        will be responsible for calculating performance under the Plan and recommending
        adjustments to the performance objectives. In this capacity, the CFO
        will:

      

      
        	 	
                
                  ·

                

              	
                Provide
                  annual reports to the Compensation Committee and the CEO on each
                  Business
                  Group’s performance at the end of the Company’s fiscal
                  year

              

      

       

      
        	 	
                
                  ·

                

              	
                Maintain
                  a financial information system that reports results on an estimated
                  quarterly and annual basis

              

      

       

      
        	 	
                
                  ·

                

              	
                Coordinate
                  with the Company’s auditors to properly recognize any accounting expense
                  associated with awards under the
                  Plan

              

      

       

      
        	 	
                
                  ·

                

              	
                Provide
                  the VP of Human Resources with the performance results of each
                  Business
                  Group as well as overall Company
                  performance

              

      

       

      
        	 	
                
                  ·
                    

                

              	
                Calculate
                  new Threshold, Target and Maximum performance objectives as required
                  by
                  the Plan

              

      

       

      VP
        of Human Resources

      The
        VP of
        Human Resources will have primary responsibility for the day-to-day
        administration of the Plan. In this capacity, the VP of Human Resources
        will:

      

      
        	 	
                
                  ·

                

              	
                Develop
                  and recommend Target Award Guidelines and eligible participants
                  for each
                  new Performance Period to the CEO for
                  approval

              

      

       

      
        	 	
                
                  ·

                

              	
                Coordinate
                  communications with participants, including materials to facilitate
                  understanding the Plan’s objectives and
                  goals

              

      

       

      
        	 	
                
                  ·

                

              	
                Provide
                  quarterly performance updates to Plan
                  participants

              

      

       

      
        	 	
                
                  ·

                

              	
                Calculate
                  participants’ awards, using the performance factors provided by the
                  CFO

              

      

       

      
        	 	
                
                  ·

                

              	
                Process
                  paperwork approving individual award
                  payments

              

      

       

      Business
        Group Presidents and Vice Presidents

      Business
        Group Presidents and Vice Presidents will:

      

      
        	 	
                
                  ·

                

              	
                Recommend
                  participants for each Performance
                  Period

              

      

       

      
        	 	
                
                  ·

                

              	
                Coordinate
                  with the CFO to determine any significant changes in business conditions
                  for purposes of reviewing the Threshold, Target and Maximum performance
                  objectives

              

      

       

      
        	 	
                
                  ·

                

              	
                Insure
                  that participants are informed of the actual award earned for each
                  Performance Period

              

      

       

      11Exhibit 4.1

    
      

    

    Exhibit
      4.1

    
 

    AMENDMENT
      NO. 2

    TO

    RIGHTS
      AGREEMENT

    

    This
      Amendment No. 2 to Rights Agreement (this “Amendment”),
      dated
      as of January 24, 2006, by and between Kirby Corporation (“Kirby”)
      and
      Computershare Trust Company, N.A. (formerly EquiServe Trust Company, N.A.)
      as
      Rights Agent (the “Rights
      Agent”),
      amends the Rights Agreement dated as of July 18, 2000 by and between Kirby
      and
      Fleet National Bank, as amended by Amendment to Rights Agreement, dated as
      of
      April 30, 2002, by which EquiServe Trust Company, N.A. succeeded Fleet National
      Bank as Rights Agent (the Rights Agreement, as amended, and all exhibits thereto
      hereinafter referred to, are collectively referred to as the “Rights
      Agreement”).
      Capitalized terms not defined herein shall have the meanings given to them
      in
      the Rights Agreement.

    

    WHEREAS,
      under Section 27 of the Rights Agreement, Kirby has the sole and absolute
      discretion to amend the Rights Agreement at any time that the Rights are
      redeemable, and the Rights are currently redeemable; and

    

    WHEREAS,
      Kirby wishes to amend the Rights Agreement to (a) remove the provisions
      requiring the approval of “Continuing Directors” for certain actions under the
      Rights Agreement and (b) make certain other changes deemed desirable by
      Kirby;

    

    NOW,
      THEREFORE, in consideration of the foregoing and the respective covenants and
      agreements set forth in the Rights Agreement and this Amendment, the parties
      hereto agree as follows:

    

    
      	
              1.

            	
              Amendments
                to Remove “Continuing Directors” Requirement.

            

    

    

    
      	 	
              (a)

            	
              Section
                1 of the Rights Agreement is hereby amended by deleting the definition
                of
                “Continuing Director.”

            

    

    

    
      	 	
              (b)

            	
              Section
                1 of the Rights Agreement is hereby amended by deleting the phrase
                “and
                provided,
                further,
                that if there is at least one Continuing Director then in office
                and the
                Board of Directors, with the concurrence of a majority of the Continuing
                Directors then in office, determines in good faith that a Person
                that
                would otherwise be an “Acquiring Person” has become such
                inadvertently”
                in the first paragraph of the definition of “Acquiring Person” and
                replacing such deleted phrase with the phrase: “and
                provided,
                further,
                that if the Board of Directors of the Company, with the concurrence
                of a
                majority of the members of the Board of Directors who are not, and
                are not
                representatives, nominees, Affiliates or Associates of, such Person
                or an
                Acquiring Person, determines in good faith that a Person that would
                otherwise be an “Acquiring Person” has become such
                inadvertently.”

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (c)

            	
              Section
                1 of the Rights Agreement is hereby amended by deleting the last
                sentence
                in the definition of “Distribution Date” and replacing such deleted
                sentence with the sentence: “The
                Board of Directors of the Company may, to the extent set forth in
                the
                preceding sentence, defer the date set forth in clause (i) or (ii)
                of the
                preceding sentence to a specified later date or to an unspecified
                later
                date to be determined by a subsequent action or event (but in no
                event to
                a date later than the close of business on the tenth day after the
                first
                occurrence of a Triggering Event).”

            

    

    

    
      	 	
              (d)

            	
              Section
                1 of the Rights Agreement is hereby amended by deleting the words
                “Continuing
                Directors”
                in the definition of “Permitted Offer” and replacing such deleted words
                with the phrase: “members
                of the Board of Directors of the Company.”

            

    

    

    
      	 	
              (e)

            	
              Section
                7(e) of the Rights Agreement is hereby amended by deleting the first
                instance of the words “a
                majority of the Continuing
                Directors”
                and replacing such deleted words with the phrase: “the
                Board of Directors of the Company.”
                Section 7(e) of the Rights Agreement is hereby further amended by
                deleting
                the phrase “(or
                a majority of the Continuing Directors determines).”

            

    

    

    
      	 	
              (f)

            	
              Section
                23(a) of the Rights Agreement is hereby amended by deleting the proviso
                in
                the first sentence thereof and replacing such proviso with: “provided,
                however,
                if the Board of Directors of the Company authorizes redemption of
                the
                Rights after the time a Person becomes an Acquiring Person, the Rights
                may
                be redeemed only if the Board of Directors determines in good faith
                that
                such redemption is in the best interests of the Company and its
                stockholders (other than the Acquiring Person).”

            

    

    

    
      	 	
              (g)

            	
              Section
                24(a) of the Rights Agreement is hereby amended by deleting the phrase
                “If
                there is at least one Continuing Director then in office, the Board
                of
                Directors of the Company, with the concurrence of a majority of the
                Continuing Directors then in office, may”
                and replacing such deleted phrase with the phrase: “The
                Board of Directors of the Company may”.

            

    

    

    
      	 	
              (h)

            	
              Section
                27 of the Rights Agreement is hereby amended by deleting the last
                sentence
                thereof and replacing such deleted sentence with the following two
                sentences: “Action
                by the Company to approve any amendment or supplement to this Agreement
                must be approved by a majority of the whole Board of Directors.
                Notwithstanding anything contained in this Agreement to the contrary,
                (1)
                at any time after the time a Person becomes an Acquiring Person,
                this
                Agreement may be supplemented or amended only if the Board of Directors
                determines that such supplement or amendment is, in their judgment,
                in the
                best interests of the Company and its stockholders, and (2) no supplement
                or amendment shall be made that decreases the Redemption
                Price.”

            

    

    

    
      	 	
              (i)

            	
              Section
                29 of the Rights Agreement is hereby amended by deleting each instance
                of
                the following phrases:

            

    

    

    “and,
      where specifically provided for herein, the concurrence of a majority of the
      Continuing Directors”

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “(with,
      where specifically provided for herein, the concurrence of a majority of the
      Continuing Directors)”

    

    “(or
      the Continuing Directors)”

    

    
      	 	
              (j)

            	
              Section
                31 of the Rights Agreement is hereby amended by deleting the phrase
                “(with
                the concurrence of a majority of the Continuing
                Directors)”.

            

    

    

    
      	 	
              (k)

            	
              Exhibit
                B to the Rights Agreement, the form of Rights Certificate, is hereby
                amended by deleting the last sentence of the sixth paragraph of the
                form
                of Rights Certificate, which is the sentence that reads “Under
                certain circumstances set forth in the Rights Agreement, the decision
                to
                redeem the Rights shall require the concurrence of a majority of
                the
                Continuing Directors (as defined in the Rights
                Agreement).”

            

    

    

    
      	
              2.

            	
              Further
                Amendment to Definition of “Acquiring Person.”
                Section 1 of the Rights Agreement is hereby amended by deleting the
                second
                paragraph of the definition of “Acquiring
                Person.”

            

    

    

    
      	
              3.

            	
              Amendment
                to Definition of “Associate.”
                Section 1 of the Rights Agreement is hereby amended by inserting
                the
                following proviso at the end of clause (1) in the definition of
                “Associate”:

            

    

    

    “,
      provided, however, that a corporation, firm, partnership, association,
      unincorporated organization or other entity shall not be an “Associate” of a
      Person if and for so long as (A) such Person has reported Beneficial Ownership
      of the common stock or other equity interests of such corporation, firm,
      partnership, association, unincorporated organization or other entity on
      Schedule 13G under the Exchange Act, (B) such Person satisfies the criteria
      set
      forth in both Rule 13d-1(b)(1)(i) and Rule 13d-1(b)(1)(ii) under the Exchange
      Act, (C) such Person has not reported and is not required to report such
      Beneficial Ownership on Schedule 13D under the Exchange Act and (D) such Person
      has not reported and is not required to report Beneficial Ownership of Common
      Stock on Schedule 13D under the Exchange Act”

    

    
      	
              4.

            	
              Amendments
                Relating to Rights Agent.

            

    

    

    
      	 	
              (a)

            	
              Section
                26 of the Rights Agreement is hereby amended to change the identification
                of the Rights Agent from “Fleet
                National Bank c/o EquiServe
                Limited Partnership”
                to “Computershare
                Trust Company, N.A.”
                and to change the address of the Rights Agent to 250 Royall Street,
                Canton, MA 02021.

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	 	
              (b)

            	
              The
                Rights Agreement is hereby amended by adding a new Section 35 that
                reads
                as follows:

            

    

    

    “Section
      35. Force
      Majeure.
      Notwithstanding anything to the contrary contained herein, the Rights Agent
      shall not be liable for any delays or failures in performance resulting from
      acts beyond its reasonable control, including without limitation acts of God,
      terrorist acts, interruptions or malfunction of computer facilities or loss
      of
      data due to power failures or mechanical difficulties with information storage
      or retrieval systems, labor difficulties, war or civil
      unrest.”

    

    
      	
              5.

            	
              Amendment
                to Restate Exhibit C to the Rights Agreement.
                The Rights Agreement is hereby amended by deleting Exhibit C to Rights
                Agreement in its entirety and replacing it with the Summary of Rights
                attached to this Amendment as Exhibit
                A.
                The Summary of Rights previously distributed to holders of Common
                Stock
                need not be replaced or exchanged, and may continue as the Summary
                of
                Rights contemplated by Section 3(b) of the Rights
                Agreement.

            

    

    

    
      	
              6.

            	
              Effect
                on Agreement.
                Upon execution of this Amendment, each reference in the Rights Agreement
                to “the Agreement,” “hereunder,” “hereof,” “herein” or words of similar
                import, and each similar reference in any document related thereto,
                or
                executed in connection therewith, shall mean and be a reference to
                the
                Rights Agreement as amended by this Amendment, and the Rights Agreement
                and this Amendment shall be read together and construed as one single
                instrument. This Amendment is intended to amend the Rights Agreement.
                Except as specifically set forth herein, all other terms and conditions
                of
                the Rights Agreement shall remain in full force and effect without
                modification.

            

    

    

    
      	
              7.

            	
              Counterparts.
                This Amendment may be executed in multiple counterparts, and by the
                different parties hereto in separate counterparts, each of which
                when
                executed shall be deemed to be an original but all of which taken
                together
                shall constitute one and the same
                agreement.

            

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Executed
      as of the date first written above.

     

    
      	 	
              KIRBY
                CORPORATION:

            
	 	 	 
	 	 	 
	 	
              By
                

            	
              /s/
                Joseph H. Pyne

            
	 	 	
              Joseph
                H. Pyne

            
	 	 	
              President
                and Chief Executive Officer

            
	 	 	 
	 	 	 
	 	
              COMPUTERSHARE
                TRUST COMPANY, N.A.

            
	 	
              (formerly
                EquiServe Trust Company, N.A.):

            
	 	 
	 	 
	 	
              By
                

            	
              /s/
                Dennis V. Moccia

            
	 	 	
              Dennis
                V. Moccia

            
	 	 	
              Managing
                Director

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    to

    Amendment
      No. 2 to Rights Agreement

    

    Exhibit
      C

    to
      Rights
      Agreement

    

    Under
      certain circumstances set forth in the Rights Agreement, Rights beneficially
      owned by or transferred to any Person who is, was or becomes an Acquiring Person
      or an Affiliate or Associate thereof (as such terms are defined in the Rights
      Agreement), and certain transferees thereof, will become null and void and
      will
      no longer be transferable.

    

    SUMMARY
      OF RIGHTS

    

    On
      July
      18, 2000, the Board of Directors of Kirby Corporation (the “Company”) declared a
      dividend of one right (“Right”) for each outstanding share of the Company’s
      Common Stock, par value $.10 per share (“Common Stock”), to stockholders of
      record at the close of business on August 15, 2000. Each Right entitles the
      registered holder to purchase from the Company a unit consisting of one
      one-hundredth of a share (a “Fractional Share”) of Series A Junior Participating
      Preferred Stock, par value $1.00 per share (the “Preferred Stock”), at a
      purchase price of $92 per Fractional Share, subject to adjustment (the “Purchase
      Price”). The description and terms of the Rights are set forth in a Rights
      Agreement dated as of July 18, 2000 as it may from time to time be supplemented
      or amended (the “Rights Agreement”) between the Company and Computershare Trust
      Company, N.A., as successor Rights Agent.

    

    Initially,
      the Rights will be evidenced by the certificates representing outstanding shares
      of Common Stock, and no separate certificates for the Rights (“Rights
      Certificates”) will be distributed. The Rights will separate from the Common
      Stock and a “Distribution Date” will occur, with certain exceptions, upon the
      earlier of (i) ten days following a public announcement that a person or
      group of affiliated or associated persons (an “Acquiring Person”) has acquired,
      or obtained the right to acquire, beneficial ownership of 15% or more of the
      outstanding shares of Common Stock (the date of the announcement being the
      “Stock Acquisition Date”), or (ii) ten business days following the
      commencement of a tender offer or exchange offer that would result in a person’s
      becoming an Acquiring Person. In certain circumstances, the Distribution Date
      may be deferred by the Board of Directors. Certain inadvertent acquisitions
      will
      not result in a person’s becoming an Acquiring Person if the person promptly
      divests itself of sufficient Common Stock. Until the Distribution Date,
      (a) the Rights will be evidenced by the Common Stock certificates (together
      with a copy of this Summary of Rights or bearing the notation referred to below)
      and will be transferred with and only with such Common Stock certificates,
      (b) new Common Stock certificates issued after July 18, 2000 will contain a
      notation incorporating the Rights Agreement by reference and (c) the
      surrender for transfer of any certificate for Common Stock (with or without
      a
      copy of this Summary of Rights) will also constitute the transfer of the Rights
      associated with the Common Stock represented by such
      certificate.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    The
      Rights are not exercisable until the Distribution Date and will expire at the
      close of business on July 18, 2010, unless earlier redeemed or exchanged by
      the
      Company as described below.

    

    As
      soon
      as practicable after the Distribution Date, Rights Certificates will be mailed
      to holders of record of Common Stock as of the close of business on the
      Distribution Date and, from and after the Distribution Date, the separate Rights
      Certificates alone will represent the Rights. All shares of Common Stock issued
      prior to the Distribution Date will be issued with Rights. Shares of Common
      Stock issued after the Distribution Date in connection with certain employee
      benefit plans or upon conversion of certain securities will be issued with
      Rights. Except as otherwise determined by the Board of Directors, no other
      shares of Common Stock issued after the Distribution Date will be issued with
      Rights.

    

    In
      the
      event (a “Flip-In Event”) that a person becomes an Acquiring Person except
      pursuant to a tender or exchange offer for all outstanding shares of Common
      Stock at a price and on terms that a majority of the independent members of
      the
      Board of Directors of the Company determines to be fair to and otherwise in
      the
      best interests of the Company and its stockholders (a “Permitted Offer”)), each
      holder of a Right will thereafter have the right to receive, upon exercise
      of
      such Right, a number of shares of Common Stock (or, in certain circumstances,
      cash, property or other securities of the Company) having a Current Market
      Price
      (as defined in the Rights Agreement) equal to two times the exercise price
      of
      the Right. Notwithstanding the foregoing, following the occurrence of any
      Triggering Event, all Rights that are, or (under certain circumstances specified
      in the Rights Agreement) were, beneficially owned by or transferred to an
      Acquiring Person (or by certain related parties) will be null and void in the
      circumstances set forth in the Rights Agreement. However, Rights are not
      exercisable following the occurrence of any Flip-In Event until such time as
      the
      Rights are no longer redeemable by the Company as set forth below.

    

    For
      example, at an exercise price of $92 per Right, each Right not owned by an
      Acquiring Person (or by certain related parties) following an event set forth
      in
      the preceding paragraph would entitle its holder to purchase $184 worth of
      Common Stock (or other consideration, as noted above), based upon its then
      Current Market Price, for $92. Assuming that the Common Stock had a Current
      Market Price of $50 per share at such time, the holder of each valid Right
      would
      be entitled to purchase approximately 3.7 shares of Common Stock for $92, or
      $25
      per share.

    

    In
      the
      event (a “Flip-Over Event”) that, at any time from and after the time an
      Acquiring Person becomes such, (i) the Company is acquired in a merger or
      other business combination transaction (other than certain mergers that follow
      a
      Permitted Offer), or (ii) 50% or more of the Company’s assets or earning
      power is sold or transferred, each holder of a Right (except Rights that are
      voided as set forth above) shall thereafter have the right to receive, upon
      exercise, a number of shares of common stock of the acquiring company having
      a
      Current Market Price equal to two times the exercise price of the Right. Flip-In
      Events and Flip-Over Events are collectively referred to as “Triggering
      Events.”

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    The
      number of outstanding Rights associated with a share of Common Stock, or the
      number of Fractional Shares of Preferred Stock issuable upon exercise of a
      Right
      and the Purchase Price, are subject to adjustment in the event of a stock
      dividend on, or a subdivision, combination or reclassification of, the Common
      Stock occurring prior to the Distribution Date. The Purchase Price payable,
      and
      the number of Fractional Shares of Preferred Stock or other securities or
      property issuable, upon exercise of the Rights are subject to adjustment from
      time to time to prevent dilution in the event of certain transactions affecting
      the Preferred Stock.

    

    With
      certain exceptions, no adjustment in the Purchase Price will be required until
      cumulative adjustments amount to at least 1% of the Purchase Price. No
      fractional shares of Preferred Stock that are not integral multiples of a
      Fractional Share are required to be issued upon exercise of Rights and, in
      lieu
      thereof, an adjustment in cash may be made based on the market price of the
      Preferred Stock on the last trading date prior to the date of exercise. Pursuant
      to the Rights Agreement, the Company reserves the right to require prior to
      the
      occurrence of a Triggering Event that, upon any exercise of Rights, a number
      of
      Rights be exercised so that only whole shares of Preferred Stock will be
      issued.

    

    At
      any
      time until ten days following the first date of public announcement of the
      occurrence of a Flip-In Event, the Company may redeem the Rights in whole,
      but
      not in part, at a price of $0.01 per Right, payable, at the option of the
      Company, in cash, shares of Common Stock or such other consideration as the
      Board of Directors may determine. Immediately upon the effectiveness of the
      action of the Board of Directors ordering redemption of the Rights, the Rights
      will terminate and the only right of the holders of Rights will be to receive
      the $0.01 redemption price.

    

    At
      any
      time after the occurrence of a Flip-In Event and prior to a person’s becoming
      the beneficial owner of 50% or more of the shares of Common Stock then
      outstanding or the occurrence of a Flip-Over Event, the Company may exchange
      the
      Rights (other than Rights owned by an Acquiring Person or an affiliate or an
      associate of an Acquiring Person, which will have become void), in whole or
      in
      part, at an exchange ratio of one share of Common Stock, and/or other equity
      securities deemed to have the same value as one share of Common Stock, per
      Right, subject to adjustment.

    

    Until
      a
      Right is exercised, the holder thereof, as such, will have no rights as a
      stockholder of the Company, including, without limitation, the right to vote
      or
      to receive dividends. While the distribution of the Rights should not be taxable
      to stockholders or to the Company, stockholders may, depending upon the
      circumstances, recognize taxable income in the event that the Rights become
      exercisable for Common Stock (or other consideration) of the Company or for
      the
      common stock of the acquiring company as set forth above or are exchanged as
      provided in the preceding paragraph.

    

    Other
      than the redemption price, any of the provisions of the Rights Agreement may
      be
      amended by the Board of Directors of the Company as long as the Rights are
      redeemable. Thereafter, the provisions of the Rights Agreement other than the
      redemption price may be amended by the Board of Directors in order to cure
      any
      ambiguity, defect or inconsistency, to make changes that do not materially
      adversely affect the interests of holders of Rights (excluding the interests
      of
      any Acquiring Person), or to shorten or lengthen any time period under the
      Rights Agreement; provided,
      however,
      that no
      amendment to lengthen the time period governing redemption shall be made at
      such
      time as the Rights are not redeemable.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    A
      copy of
      the Rights Agreement has been filed with the Securities and Exchange Commission
      as an exhibit to a Current Report on Form 8-K. A copy of the Rights Agreement
      is
      available free of charge from the Company and the Rights Agent. This summary
      description of the Rights does not purport to be complete and is qualified
      in
      its entirety by reference to the Rights Agreement, which is incorporated herein
      by reference.

     

     

    4

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