Document:

exv10w7

 

Exhibit 10.7

THE SHAW GROUP INC.

2005 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

(As amended and restated through April 6, 2006)

1. Purpose of the Plan.

     This 2005 Non-Employee Director Stock Incentive 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 Phantom Stock Awards (as described in
Section 6 hereof) and nonqualified stock options (the “Options”) (collectively, “Awards”) to
acquire shares of the common stock, no par value per share, of the Company (the “Shares”).

     The Plan as set forth herein constitutes an amendment and restatement of The Shaw Group Inc.
1996 Non-Employee Director Stock Option Plan (the “1996 Plan”) previously adopted by the Company,
and, subject to approval by the Company’s shareholders as provided in Section 11 below, shall
supersede and replace in its entirety the 1996 Plan.

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 Awards under the Plan. The Committee shall
prescribe the form of Award agreement to be used to evidence grants of Awards 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 the Plan; Fair Market Value.

     (a) Maximum Shares. The number of Shares which are hereby reserved for purposes of the Plan
shall be, in the aggregate, 300,000 Shares, 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. Any Shares released upon forfeiture of an Award
shall again be available for grants of future Awards 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 Awards previously granted hereunder shall be
equitably adjusted by the Committee to prevent the dilution or enlargement of such previously
granted Awards, 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 Awards 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
Awards in the event the effective date of the Capitalization Change occurs prior to the grant of
the Award.

     (c) 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.

5. Options Granted Under the Plan.

     (a) Option Grants.

     (i) As of the date of the annual meeting of the shareholders of the Company in each year
that the Plan is in effect, beginning with the 2005 annual meeting, each Eligible Director who is
elected to the Board or re-elected to the Board at such meeting shall be granted an Option to
acquire a number of Shares equal to the product of: (i) .5 and (ii) the quotient of 75,000
divided by the Fair Market Value of a Share on the date of such annual meeting, with any
fractional Share being rounded up to the next whole Share. Each Option granted pursuant to this
Section 5(a)(i) shall be referred to in the Plan as an “Annual Option.”

     (ii) As of the date of the 2005 annual meeting of the shareholders of the Company, each
Eligible Director who is elected to the Board or re-elected to the Board at such meeting, shall
be granted an Option pursuant to the terms of Section 5(a)(i) or 5(a)(ii) under the 1996 Plan as if the 1996 Plan was still
in effect on the

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Effective Date. Each Option granted pursuant to this Section 5(a)(ii) shall be
referred to in the Plan as a “1996 Option.”

     (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 4(c) hereof, as of
the date such Option is granted.

     (b) Exercise Rights.

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

     (ii) Each 1996 Option shall be fully exercisable on the date of the 2006 annual meeting of
the shareholders of the Company if this amendment and restatement of the Plan is not approved by
an affirmative vote of a majority of the total voting power present in person or represented by
proxy at such meeting. If this amendment and restatement of the Plan is approved at such meeting,
then the 1996 Options shall be automatically forfeited unexercised on such date.

     (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 constructively 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

6. Phantom Stock Awards Granted Under the Plan.

     (a) Phantom Stock Awards. Phantom Stock Awards are rights to receive Shares. As of the date
of the annual meeting of the shareholders of the Company in each year that the Plan is in effect,
beginning with the 2005 annual meeting, each Eligible Director who is elected to the Board or
re-elected to the Board at such meeting shall be granted a Phantom Stock Award with rights to receive a number of Shares equal to the
product of: (i) .5

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and (ii) the quotient of 75,000 divided by the Fair Market Value of a Share on
the date of such annual meeting, with any fractional Share being rounded up to the next whole
Share.

     (b) Award Period. Each Phantom Stock Award made after April 6, 2006, shall vest in three (3)
equal annual installments of 33 1⁄3% each, beginning one year after the date of grant.

     (c) Payment. Upon vesting of a Phantom Stock Award, the holder of a Phantom Stock Award shall
be entitled to receive a number of Shares equal to the number of Phantom Stock shares then vesting.

     (d) Termination of Award. In the event that the Eligible Director ceases to be a member of
the Board prior to the one year anniversary of the date of grant of the Phantom Stock Award, the
Phantom Stock Award shall be automatically forfeited unpaid. In the event that the Eligible
Director ceases to be a member of the Board at any time after the one year anniversary of the date
of grant of the Phantom Stock Award, the vesting of the Phantom Stock Award (or applicable unvested
portion thereof) shall be automatically accelerated and thereupon entitle the holder of such
Phantom Stock Award to receive a number of Shares equal to the number of Phantom Stock shares then
vesting

7. Restrictions on Transfers.

     (a) Limitations on Transfer. Except as provided by the Committee, no Award granted under the
Plan may be assigned, encumbered or transferred, except (i) by will or the laws of descent and
distribution or (ii) 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. 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 Awards 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 Awards may
be granted, satisfied, 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 Awards, 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.

8. Termination.

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     The Plan shall terminate automatically on the tenth anniversary of the Effective Date (as
defined in Section 11), and the Board may suspend or terminate the Plan at any earlier time. Upon
termination of the Plan, no additional Awards shall be granted under the Plan; provided, however,
that the terms of the Plan shall continue in full force and effect until all Options granted under
the Plan have been exercised or expired and all Phantom Stock Awards have been satisfied or
expired.

9. Amendment.

     (a) The Plan. The Board of Directors may amend the Plan from time to time in its sole
discretion, provided that, unless the requisite approval of shareholders is obtained, no amendment
shall be made to the Plan if such amendment would (i) increase the number of Shares available for
issuance under the Plan or increase the limits applicable to Awards under the Plan, in each case,
except as provided in Section 4(b); (ii) lower the Exercise Price of an Option below 100% of the
fair market value of one share on the date of grant, except as provided in Section 4(b); (iii)
remove the repricing restriction set forth in Section 9(b); or (iv) require shareholder approval
pursuant to applicable federal, state or local law or under rules of the New York Stock Exchange,
if the Shares are then listed on such exchange. No amendment shall adversely affect the rights of
any Eligible Director under any Award theretofore made under the Plan, without the Eligible
Director’s consent.

     (b) Awards. Notwithstanding any provision of the Plan to the contrary, the Committee shall
not have the authority to accept the surrender or cancellation of any Options that relate to such
Options outstanding hereunder (to the extent not theretofore exercised) and grant new Options that
relate to such new Options hereunder in substitution therefore (to the extent not theretofore
exercised) at an Exercise Price that is less than the Exercise Price of the Options surrendered or
canceled. The foregoing shall not limit any adjustments made under Section 4(b) of the Plan.

10. 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 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 Award 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.

11. Effective Date; Shareholder Approval.

     The 1996 Plan was effective on the date provided therein. This amendment and restatement of
the 1996 Plan shall have an Effective Date of January 24, 2005, subject to receipt 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 2006

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annual meeting of the shareholders of the Company at which the Plan is considered. All Awards
granted prior to such shareholder approval shall be subject to receipt of such approval and may not
be exercised or become vested or payable prior to receipt of such approval. If such shareholder
approval is not received, all such Awards (except the 1996 Options) shall automatically terminate
on such date, this amendment and restatement shall be void ab initio, and the 1996 Plan shall
continue in effect as if this amendment and restatement had not occurred, and any options
previously granted under the 1996 Plan shall continue in effect under the terms of the grant;
provided, further, that thereafter options may continue to be granted pursuant to the terms of the
1996 Plan, as in effect prior to this amendment and as may be otherwise amended hereafter; provided
further, that the grant of the 1996 Options hereunder shall be deemed to have been granted under
Sections 5(a)(i) and 5(a)(ii) of the 1996 Plan at the 2005 annual meeting of the shareholders of
the Company and such 1996 Options shall be subject to the terms of the 1996 Plan.

6exv10w8

 

Exhibit 10.8

PHANTOM STOCK AGREEMENT

The Shaw Group Inc.

2005 Non-Employee Director Stock Incentive Plan

     This Phantom Stock Agreement (“Agreement”) dated as of                     , 200___ (“Grant Date”) is
entered into between The Shaw Group Inc. (the “Company”) and (the “Awardee”), pursuant to The Shaw
Group Inc. 2005 Non-Employee Director Stock Incentive Plan (the “Plan”).

THE PARTIES HERETO AGREE AS FOLLOWS:

     1. Award of Phantom Stock. In consideration of the services performed and to be performed by the
Awardee, the Company hereby awards (the “Award”) to the Awardee under the Plan a total of
                     phantom shares of the Company (the “Phantom Stock”), subject to the following terms
and restrictions.

     2. Incorporation of Plan Provisions. The Award evidenced hereby is made under and pursuant to
the Plan, a copy of which is available from the Company’s Secretary and incorporated herein by
reference, and the Award is subject to all of the provisions thereof. Capitalized terms used
herein without definition shall have the same meanings given such terms in the Plan. The Awardee
represents and warrants that he or she has read the Plan and is fully familiar with all the terms
and conditions of the Plan and agrees to be bound thereby.

     3. Vesting of Phantom Shares. Each Award made after April 6, 2006, shall vest in three (3)
equal annual installments of 33 1⁄3% each, beginning one year after the Grant Date. While a share of
Phantom Stock remains “outstanding” pursuant to this Agreement, an amount equivalent to the
distributions made on a share of the Company’s no par value common stock (“Share”) during such
period shall be held by the Company without interest until the share of Phantom Stock becomes
vested or is forfeited and then paid to you or forfeited, as the case may be.

     4. Payment/Certificates. Upon vesting of the Phantom Stock, subject to Paragraph 6(c) below,
the Company shall cause a certificate or certificates for Shares to be issued without legend
(except for any legend required pursuant to applicable securities laws or any other agreement to
which you are a party) in your name in cancellation of the Phantom Stock that has vested.

     5. Nontransferability of Phantom Stock. You may not sell, transfer, pledge, exchange,
hypothecate or dispose of the Phantom Stock in any manner otherwise than by will or by the laws of
descent or distribution or as otherwise provided in the Plan. A breach of these terms of this
Agreement shall cause a forfeiture of the Phantom Stock.

6. Miscellaneous.

     (a) No Representations or Warranties. Neither the Company nor the Committee or
any of their representatives or agents has made any representations or warranties to the
Awardee with respect to the income tax or other

 

 

consequences of the transactions contemplated by this Agreement, and the Awardee is in
no manner relying on the Company, the Committee or any of their representatives or agents
for an assessment of such tax or other consequences.

     (b) Membership. Nothing in this Agreement or in the Plan or in the making of
the Award shall confer on the Awardee any right to or guarantee of continued membership on
the Board or in any way limit the right of the Board or the shareholders of the Company to
terminate the membership of the Awardee on the Board at any time.

     (c) Withholding of Tax. To the extent that the grant or vesting of the Phantom
Stock results in the receipt of compensation by you with respect to which the Company or
its affiliates has a tax withholding obligation pursuant to applicable law, unless other
arrangements have been made by you that are acceptable to the Company or such affiliate
which, with the consent of the Committee, may include withholding a number of Shares that
would otherwise be delivered on vesting that have an aggregate Fair Market Value that does
not exceed the amount of taxes to be withheld, you shall deliver to the Company or the
affiliate such amount of money as the Company or the affiliate may require to meet its
withholding obligations under such applicable law. No delivery of Shares shall be made
under this Agreement until you have paid or made arrangements approved by the Company or
the affiliate to satisfy in full the applicable tax withholding requirements of the Company
or the affiliate.

     (d) Necessary Acts. The Awardee and the Company hereby agree to perform any
further acts and to execute and deliver any documents which may be reasonably necessary to
carry out the provisions of this Agreement.

     (e) Binding Effect; Applicable Law. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns, and the Awardee and any heir,
legatee, or legal representative of the Awardee. This Agreement shall be interpreted under
and governed by and construed in accordance with the laws of the State of Louisiana.

     (f) Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the Committee shall
have all powers with respect to this Agreement as it has with respect to the Plan. Any
interpretation of the Agreement by the Committee and any decision made by it with respect
to the Agreement is final and binding.

     (g) Amendment. This Agreement may be amended by written agreement of the
Awardee and the Company, without the consent of any other person.

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Executed in duplicate as of the day and year first above written.

	 	 	 	 	 
	 	THE SHAW GROUP INC.

 	 
	 	By:  	Gary P. Graphia
 	 
	 	Title:	Secretary and General Counsel 	 
	 

	 	 	 	 	 
	 	DIRECTOR:

 	 
	 	[Name of Awardee]	 

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