Document:

exv10w5

 

Exhibit 10.5

AMENDMENT NO. 3 TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

     This AMENDMENT NO. 3 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
“Agreement”), dated as of January 30, 2004, is entered into by and among THE
SHAW GROUP INC., a Louisiana corporation (the “Borrower”), the Subsidiaries of
the Borrower listed on the signature pages hereto as Guarantors (together with
each other Person who subsequently becomes a Guarantor, collectively, the
“Guarantors”), the banks and other financial institutions listed on the
signature pages hereto under the caption “Lenders” (together with each other
Person who becomes a Lender, collectively, the “Lenders”), and CREDIT LYONNAIS
NEW YORK BRANCH, individually as a Lender and as administrative agent for the
other Lenders (in such capacity together with any other Person who becomes the
agent, the “Agent”).

INTRODUCTION

     WHEREAS, the Borrower, the Guarantors, the Agent and the Lenders are
parties to that certain Third Amended and Restated Credit Agreement dated as of
March 17, 2003, as amended by Amendment No. 1 to Third Amended and Restated
Credit Agreement dated as of May 16, 2003 and Amendment No. 2 dated as of
October 24, 2003 (“Credit Agreement”); and

     WHEREAS, the Borrower has requested that the Agent and the Lenders amend
certain provisions of the Credit Agreement as set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

ARTICLE I

AGREEMENT

     Section 1.1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the Credit
Agreement.

     Section 1.2. Amendments to Article I. Article I of the Credit Agreement
is hereby amended as follows:

     (a) The definition of “EBITDA” is hereby amended in its entirety as
follows:

        “EBITDA” means, for any Person for any period,
the Consolidated Net Income of such Person for that
period plus, to the extent deducted from revenues in
determining Consolidated Net Income, without
duplication (i) Consolidated Interest Expense, (ii)
expense for taxes paid or accrued, (iii) depreciation,
(iv) amortization and (v) other non-cash expenses for
such period, including, without limitation, any
amortization of financing fees incurred in connection
with this Agreement and any non-cash

 

 

interest expense relating to the LYONs, minus, to
the extent included in Consolidated Net Income, other
non-cash income, all calculated for such Person on a
consolidated basis. For the avoidance of doubt, any
asset write-offs associated with the sale (should such
sale occur) of Shaw Alloy Piping Products, Inc. and
Shaw FVF, Inc. will be considered as a non-cash
expense for purposes of the EBITDA calculations made
after the Third Amendment Effective Date.

    (b) The definition of “Shaw EBITDA” is hereby amended in its entirety as
follows:

        “Shaw EBITDA” means, for any period, EBITDA for
the Borrower and its Subsidiaries. In calculating
Shaw EBITDA, (i) for any Acquisition permitted
hereunder by Borrower or a Subsidiary of any Person or
assets during a Calculation Period for which EBITDA is
calculated (A) the EBITDA of such Person or assets for
the trailing twelve (12) months immediately preceding
the Acquisition shall be included in the first such
calculation with respect to such Person or assets and
(B) in any subsequent calculation, to the extent such
Person or asset’s EBITDA is not consolidated with
Borrower’s under Agreement Accounting Principles for a
full Calculation Period, the actual EBITDA of such
Person or assets for the most recent period prior to
the time it was acquired by Borrower or a Subsidiary
shall be added to the EBITDA of Borrower to reach a
total of a full Calculation Period’s EBITDA for such
Person or assets being a part of the calculation of
Borrower’s EBITDA; (ii) Shaw EBITDA shall be reduced
by EBITDA attributable to any assets sold during the
applicable Calculation Period; and (iii) Shaw EBITDA
shall be increased by charges related to the PG&E
National Energy Group projects, the FP&L Marcus Hook
project and software for such period in an amount not
to exceed $75,000,000 in the aggregate.

     (c) The definition of “Collateral” is hereby amended in its entirety as
follows:

        “Collateral” means Accounts, Equipment,
Inventory, Fixtures, General Intangibles, and the
Mortgaged Property including, without limitation,
intellectual property and contracts, stock and all
other items described as collateral in any of the
Collateral Documents, including without limitation,
all deposit accounts, plus all proceeds thereof;
provided, however that Collateral shall not include
the Escrow Account No.        created pursuant to
that Escrow Agreement between the Borrower and Liberty
Mutual Insurance Company dated October 30, 2001, and
held at Barclays Bank PLC, London England.

     (d) The definition of “Performance Letter of Credit” is hereby amended in
its entirety as follows:

2

 

        “Performance Letter of Credit” means a Letter of
Credit qualifying as a “performance-based standby
letter of credit” under 12 CFR Part 3, Appendix A,
Section 3(b)(2)(i) or any successor U.S. Comptroller
of the Currency regulation.

     (d) The following new definitions are hereby added to the Credit Agreement
in appropriate alphabetical order:

        “Equipment” has the meaning stated in the New
York Uniform Commercial Code in effect from time to
time.

        “Fixtures” has the meaning stated in the New York
Uniform Commercial Code in effect from time to time.

        “Mortgage” means each of the mortgages, deeds of
trust, leasehold mortgages, leasehold deeds of trust,
collateral assignments of leases or other real estate
security documents delivered by the Borrower or any
Subsidiary to the Agent with respect to the Mortgaged
Property, all in form and substance reasonably
satisfactory to the Agent.

        “Mortgaged Property” shall mean all real
properties owned or leased by the Borrower or any of
its Subsidiaries with a market value as defined in the
S&P draft report dated July 31, 2003 in excess of
$250,000.

        “Third Amendment Effective Date” means the
“Amendment Effective Date”, as such term is defined in
Section 2.1 of Amendment No. 3 to Third Amended and
Restated Credit Agreement dated as of January 30,
2004, to this Agreement.

     Section 1.3. Amendment to Section 2.2(d). Section 2.2(d) of the Credit
Agreement is hereby amended by deleting the “or” after subsection (ii) thereof,
replacing the period at the end of subsection (iii) thereof with “; or” and
adding the following new subsection (iv):

        (iv) Upon the sale of any asset, including stock
in any of Borrower’s Subsidiaries allowed under
Section 6.13(e), for $5,000,000 or more in cash
proceeds, the entire amount of the net cash proceeds
resulting therefrom. Any non-cash proceeds received
from such sale shall be pledged as additional
Collateral.

     Section 1.4. Amendment to Section 6.10. Section 6.10 is hereby amended in
its entirety as follows:

        6.10 Dividends. The Borrower will not, nor will
it permit any Subsidiary to, declare or pay any
dividends or make any distributions on its Capital
Stock (other than stock splits or dividends payable in
its own Capital Stock) or redeem, repurchase or
otherwise acquire or retire any of its Capital Stock
at any time outstanding, except that (a) any
Subsidiary may declare and pay dividends or make
distributions to the Borrower or to any Wholly-

3

 

Owned Subsidiary, and (b) the Borrower may redeem
or repurchase the LYONs at any time after the
Effective Date (i) with cash so long as there is
Sufficient Liquidity after giving effect to any such
redemption or repurchase, (ii) so long as such
redemption or repurchase is made solely with its own
Capital Stock, or (iii) with the Debt Incurrence
Proceeds received in connection with the private
placement of its Senior Notes due 2010.
Notwithstanding the foregoing, the provisions of this
Section 6.10 shall not prohibit purchases of common
stock by Borrower or its Subsidiaries or a trust
pursuant to an employee benefit plan or the cashless
exercise of stock options or warrants to purchase
common stock of Borrower by Borrower or a trust that
in each case has been approved by the Board of
Directors of Borrower.

     Section 1.5. Amendment to Section 6.11. The last sentence of Section 6.11
is hereby amended by replacing “$100,000,000” with “$25,000,000”.

     Section 1.6. Amendment to Section 6.13(e). Section 6.13(e) is amended in
its entirety as follows:

     (e) The sale of other assets in any fiscal year in an aggregate amount not
to exceed 20% of Borrower’s tangible net worth as of the end of the immediately
preceding fiscal year of the Borrower and calculated pursuant to Agreement
Accounting Principles; provided, however, that if (i) any Loans are
outstanding, the Borrower shall apply the net cash proceeds resulting therefrom
to the prepayment of Loans in accordance with Section 2.2(d)(iv) or (ii) no
Loans are outstanding, the Borrower shall apply the net cash proceeds resulting
therefrom in accordance with Section 4.06 of the Indenture dated as of March
17, 2003 among the Borrower, the Subsidiaries party thereto, and The Bank of
New York, as trustee.

     Section 1.7. Amendment to Section 6.14(l). Section 6.14(l) is amended by
deleting the second proviso at the end thereof.

     Section 1.8. Amendment to Section 6.15. The last sentence of Section 6.15
(i.e. the sentence following clause (f) of such section) is hereby deleted in
its entirety.

     Section 1.9. Amendment to Section 6.20. Section 6.20 is amended by
replacing “$50,000,000” with “$150,000,000”.

     Section 1.10. Amendments to Section 6.22.

     (a) Section 6.22.1 is hereby amended in its entirety as follows:

        6.22.1 Leverage Ratio. As of the end of each
fiscal quarter of the Borrower, beginning with the
fiscal quarter ending May 31, 2003, the Borrower will
not permit the ratio of (a) (i) Consolidated Total Net
Indebtedness minus (ii) the aggregate amount of Equity
Issuance Proceeds held as restricted cash for the
purposes of redeeming the LYONs to (b) Shaw EBITDA,
for the Calculation

4

 

Period (the “Leverage Ratio”), to be
greater than (i) from the Effective Date until May 31,
2004, 3.50 to 1.0 and (ii) thereafter, 3.00 to 1.00.

     (b) Section 6.22.5 is hereby amended in its entirety as follows:

        6.22.5 Minimum EBITDA. As of the end of each
fiscal quarter of the Borrower, beginning with the
first fiscal quarter ending after the Third Amendment
Effective Date, the Borrower will not permit EBITDA
for the Borrower and its Subsidiaries to be less than
the amount set forth below opposite such period:

	 	 	 	 	 
	 	 	Minimum
	 Period
	 	EBITDA

	Fiscal quarter ending February 29, 2004
	 	$	15,000,000	 
	Two fiscal quarters ending May 31, 2004
	 	$	42,500,000	 
	Three fiscal quarters ending August 31, 2004
	 	$	75,000,000	 
	Calculation Period ending November 30, 2004 and each
Calculation Period thereafter
	 	$	110,000,000	 

     (c) A new Section 6.22.6 is hereby added as follows:

        6.22.6 Working Capital. As of the end of each
fiscal quarter of the Borrower, beginning with the
fiscal quarter ending February 29, 2004, the Borrower
will not permit the ratio of (a) the sum of (i) cash
and cash equivalents other than escrowed cash plus
(ii) accounts receivable plus (iii) Costs in Excess of
Billings plus (iv) inventories to (b) the sum of (i)
outstanding amounts under short-term revolving lines
of credit plus (ii) current maturities of long-term
debt plus (iii) accounts payable plus (iv) billings in
excess of costs plus (v) accrued liabilities (each
term used herein but not defined in this Agreement has
the meaning used in the Borrower’s condensed
consolidated balance sheets) to be less than 1.00 to
1.00.

     Section 1.11. Amendments to Section 6.24. Section 6.24 is amended by
deleting the proviso at the end thereof.

     Section 1.12. Section 6.31. A new Section 6.31 is hereby added as
follows:

        Section 6.31. Post-Closing Requirements. Within
60 days following the Third Amendment Effective Date
(or within thirty (60) days following delivery of any
Mortgage with respect to

5

 

additional Mortgaged Property) deliver or cause to be
delivered to the Agent:

        (a) Mortgages executed by the Borrower or such
Subsidiary that owns Mortgaged Property granting a
Lien to the Agent in the Mortgaged Property described
therein to secure the Obligations, together with any
other documents, agreements or instruments necessary
to create an Acceptable Security Interest in such
Mortgaged Property;

        (b) favorable opinions from local counsel located
in the jurisdiction of each Mortgaged Property;

        (c) ALTA lender’s title insurance policies issued
by title insurers reasonably satisfactory to the Agent
(the “Mortgage Policies”) in form and substance and in
amounts reasonably satisfactory to the Agent assuring
the Agent that the Mortgages are valid and enforceable
first priority mortgage liens on the respective
Mortgaged Property, free and clear of all defects and
encumbrances except Permitted Liens, and

        (d) current surveys, certified by a licensed
surveyor, for all real property that is the subject of
the Mortgage Policies for which a Mortgage Policy is
issued.

     Section 1.13. Amendments to Section 8.2(c). Section 8.2(c) is hereby
amended as follows:

     (a) Section 8.2(c) is hereby amended by replacing “with” with “without”
therein.

     (b) Section 8.2(c)(v) is hereby amended in its entirety as follows:

        (v) release any Guarantor of any Credit Extension
or, except as provided in the Collateral Documents,
release any substantial part of the Collateral during
any calendar year; provided, however, that any
Guarantor or Collateral may be released if such
Guarantor or such Collateral is sold or transferred as
permitted under this Agreement or any other Loan
Document. For purposes of this subsection,
“substantial” means any Collateral, the aggregate book
value of which is worth an amount equal to or greater
than ten percent (10%) of the tangible net worth of
Borrower calculated pursuant to Agreement Accounting
Principles and as of the immediately preceding fiscal
quarter end;

6

 

ARTICLE II

EFFECTIVENESS

     Section 2.1. Effectiveness. This Agreement shall not be effective until
the date on which the following conditions precedent have been satisfied (the
“Amendment Effective Date”):

     (a) Closing Documents. The Borrower shall have furnished the following to
the Agent each in form and substance satisfactory to the Agent and with
sufficient copies for the Lenders, where appropriate, executed by the relevant
Person:

        (i) this Agreement that, when taken together, bear the signatures of
the Borrower, the Guarantors and the Required Lenders; and

        (ii) an amendment to the Amended and Restated Pledge and Security
Agreement executed by the Borrower, the Guarantors and the Agent.

     (b) Collateral Documents. The Agent shall have received all appropriate
evidence required by the Agent in its sole discretion necessary to determine
that arrangements have been made for the Agent for the benefit of Lenders to
have a valid and perfected first priority security interest in Equipment,
including, without limitation, the delivery to the Agent of such financing
statements under the Uniform Commercial Code for filing in such jurisdictions
as the Agent may require; and

     (c) Amendment Fees. The Borrower shall have paid to the Administrative
Agent for the benefit of each Lender that executes and delivers a copy of this
Agreement to the Administrative Agent (or its counsel) by 5:00 p.m., New York
City time, on January 30, 2004 (the “Return Date”), an amendment fee (the
“Amendment Fees”) in an amount equal to 0.125% of such Lender’s Revolving
Credit Commitment (whether used or unused) as of the Return Date.

     Section 2.2. Other Agreements.

     (a) The Amendment Fees shall be payable in immediately available Dollars
on the Amendment Effective Date. Once paid, the Amendment Fees shall not be
refundable.

     (b) Each of the Borrower, the Guarantors and the Lenders acknowledge that
as of the Amendment Effective Date there are no Revolving Credit Loans or Swing
Line Loans outstanding and therefore, the Equity Issuance Proceeds will not be
used to prepay outstanding Loans as required by the terms of Section 2.2(d).

ARTICLE III

MISCELLANEOUS; RATIFICATION

     Section 3.1. Representations True; No Default.

     (a) The Borrower and the Guarantors represent and warrant that this
Agreement has been duly authorized, executed and delivered on their behalf and
the Credit Agreement as amended hereby, together with each other Loan Documents
to which the Borrower and each of

7

 

the Guarantors is a party, constitute valid
and legally binding agreements of the Borrower and the Guarantors, enforceable
in accordance with their terms, except as enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization or moratorium or other similar law relating to creditors’ rights
and by general equitable principles which may limit the right to obtain
equitable remedies (regardless of whether such enforceability is considered in
a proceeding, in equity or at law);

     (b) The Borrower represents and warrants that the representations and
warranties of the Borrower contained in Article V of the Credit Agreement are
true and correct in all material respects on and as of the date hereof as
though made on and as of the date hereof, except to the extent such
representations and warranties relate solely to an earlier date;

     (c) The Guarantors represent and warrant that the representations and
warranties of the Guarantors contained in the Guaranty are true and correct in
all material respects on and as of the date hereof as though made on and as of
the date hereof, except to the extent such representations and warranties
relate solely to an earlier date; and

     (d) The Borrower and the Guarantors represent and warrant that after
giving effect to this Agreement, there has not occurred and is not continuing a
Default or an event that with the passage of time would constitute a Default.

     Section 3.2. Ratification and Extension of Liens. The Credit Agreement,
the Notes and all other Loan Documents executed in connection therewith to
which the Borrower or any Guarantor is a party shall remain in full force and
effect, and all rights and powers created thereby or thereunder and under the
other Loan Documents to which the Borrower or any Guarantor is a party are in
all respects ratified and confirmed. All liens created by any Loan Document
are hereby regranted by the Borrower and the Guarantors to the Lenders as
security for the Obligations. The Borrower and the Guarantors agree that the
obligations of the Borrower and the Guarantors under the Credit Agreement, the
Notes and the other Loan Documents to which the Borrower or any Guarantor is a
party are hereby reaffirmed, renewed and extended.

     Section 3.3. Additional Information. The Borrower and the Guarantors
shall furnish to the Agent all such other documents, consents and information
relating to the Borrower and the Guarantors as the Agent may reasonably require
to accomplish the purposes hereof.

     Section 3.4. Miscellaneous Provisions.

     (a) From and after the execution and delivery of this Agreement, the
Credit Agreement shall be deemed to be amended and modified as herein provided,
but, except as so amended and modified, the Credit Agreement and all other Loan
Documents shall continue in full force and effect.

     (b) The Credit Agreement and this Agreement shall be read and construed as
one and the same instrument.

     (c) Any reference in any Loan Document to the Credit Agreement shall be a
reference to the Credit Agreement, as amended by this Agreement.

8

 

     (d) This Agreement may be signed in any number of counterparts and by
different parties in separate counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

     (e) The headings herein shall be accorded no significance in interpreting
this Agreement.

     (f) Each Guarantor hereby acknowledges that its execution and delivery of
this Agreement does not indicate or establish an approval or consent
requirement by the Guarantors under the Guaranty in connection with the
execution and delivery of amendments to the Credit Agreement, the Notes or any
of the other Loan Documents (other than the Guaranty).

     Section 3.5 Binding Effect. Once executed by the Borrower, the Guarantors
and the Required Lenders, this Agreement shall be binding upon and inure to the
benefit of the Borrower, the Guarantors, Lenders, Agents and the successors and
assigns of the Agents and Lenders. The Borrower and the Guarantors shall not
have the right to assign its rights hereunder or any interest herein.

     Section 3.6. Choice of Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS. WITHOUT LIMITATION OF THE FOREGOING, NOTHING IN
THIS AGREEMENT, OR IN THE NOTES OR IN ANY OTHER LOAN DOCUMENT SHALL BE DEEMED
TO CONSTITUTE A WAIVER OF ANY RIGHTS WHICH ANY LENDER MAY HAVE UNDER APPLICABLE
FEDERAL LEGISLATION RELATING TO THE AMOUNT OF INTEREST WHICH SUCH LENDER MAY
CONTRACT FOR, TAKE, RECEIVE OR CHARGE IN RESPECT OF THE LOAN AND THE LOAN
DOCUMENTS, INCLUDING ANY RIGHT TO TAKE, RECEIVE, RESERVE AND CHARGE INTEREST AT
THE RATE ALLOWED BY THE LAW OF THE STATE WHERE ANY LENDER IS LOCATED.

[Signature pages follow.]

9

 

     IN WITNESS WHEREOF, the Borrower, the Guarantors, the Lenders and the
Agent have executed this Agreement as of the date first above written.

	 	 	 	 	 
	 	THE SHAW GROUP INC.

 	 
	 	By:  	/s/     Robert L. Belk
 	 
	 	 	Robert L. Belk 	 
	 	 	Executive Vice President and

Chief Financial Officer 	 
	 

 

 

GUARANTORS:

	 	 	 	 	 
	 	 	WHIPPANY VENTURE I, L.L.C
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary Graphia
	

	 	 	

	

	 	Name:
	

	

	 	Title:
	

	 
	 	 	 	 
	 	 	SHAW CONSTRUCTORS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary Graphia
	

	 	 	

	

	 	Name:
	

	

	 	Title:
	

	 
	 	 	 	 
	 	 	STONE & WEBSTER MICHIGAN, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary Graphia
	

	 	 	

	

	 	 	 	Gary P. Graphia
	

	 	 	 	Secretary
	 
	 	 	 	 
	 	 	SO-GLEN GAS CO., LLC
	

	 	 	 	by its sole member,
	

	 	 	 	EMCON/OWT, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Executive Vice President, Assistant
	

	 	 	 	Treasurer and Assistant Chief Financial Officer
	 
	 	 	 	 
	 	 	EMCON/OWT, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Executive Vice President, Assistant
	

	 	 	 	Treasurer and Assistant Chief Financial Officer

 

 

	 	 	 	 	 
	 	 	GUARANTORS (continued):
	 
	 	 	 	 
	 	 	AMERICAN PLASTIC PIPE AND SUPPLY, L.L.C.
	 	 	LFG SPECIALTIES, L.L.C.
	 	 	SHAW ENVIRONMENTAL & INFRASTRUCTURE, INC.
	 	 	SHAW FACILITIES, INC.
	 	 	SHAW INFRASTRUCTURE, INC.
	 	 	SHAW PROPERTY HOLDINGS, INC.
	 	 	STONE & WEBSTER – IT RUSSIA MANAGEMENT CONSULTANTS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Executive Vice President and Treasurer
	 
	 	 	 	 
	 	 	STONE & WEBSTER – JSC MANAGEMENT CONSULTANTS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Senior Vice President and Treasurer
	 
	 	 	 	 
	 	 	SHAW BENECO, INC.
	 	 	SHAW E & I INVESTMENT HOLDINGS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Executive Vice President
	 
	 	 	 	 
	 	 	POWER TECHNOLOGIES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Vice President and Assistant Treasurer

 

 

	 	 	 	 	 
	 	 	GUARANTORS (continued):
	 
	 	 	 	 
	 	 	B.F. SHAW, INC.
	 	 	C.B.P. ENGINEERING CORP.
	 	 	FIELD SERVICES, INC.
	 	 	PROSPECT INDUSTRIES (HOLDINGS) INC.
	 	 	SHAW A/DE, INC.
	 	 	SHAW ALLOY PIPING PRODUCTS, INC.
	 	 	SHAW CAPITAL, INC.
	 	 	SHAW CONNEX, INC.
	 	 	SHAW ENVIRONMENTAL, INC.
	 	 	SHAW FABRICATORS, INC.
	 	 	SHAW FCI, INC.
	 	 	SHAW FVF, INC.
	 	 	SHAW GLOBAL ENERGY SERVICES, INC.
	 	 	SHAW GRP OF CALIFORNIA
	 	 	SHAW HEAT, INC.
	 	 	SHAW INDUSTRIAL SUPPLY CO., INC.
	 	 	SHAW INTELLECTUAL PROPERTY HOLDINGS, INC.
	 	 	SHAW INTERNATIONAL, INC.
	 	 	SHAW JV HOLDINGS, L.L.C.
	 	 	SHAW MAINTENANCE, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Vice President and Treasurer
	 
	 	 	 	 
	 	 	S C WOODS, L.L.C.
	

	 	 	 	by its sole member,
	

	 	 	 	Stone & Webster, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Vice President and Treasurer

 

 

	 	 	 	 	 
	 	 	GUARANTORS (continued):
	 
	 	 	 	 
	 	 	SHAW MANAGED SERVICES, INC.
	 	 	SHAW MANAGEMENT SERVICES ONE, INC.
	 	 	SHAW NAPTECH, INC.
	 	 	SHAW PIPE SHIELDS, INC.
	 	 	SHAW PIPE SUPPORTS, INC.
	 	 	SHAW POWER SERVICES GROUP, L.L.C.
	 	 	SHAW POWER SERVICES, INC.
	 	 	SHAW PROCESS AND INDUSTRIAL GROUP, INC.
	 	 	SHAW PROCESS FABRICATORS, INC.
	 	 	SHAW SERVICES, L.L.C.
	 	 	SHAW SSS FABRICATORS, INC.
	 	 	SHAW SUNLAND FABRICATORS, INC.
	 	 	SHAW WORD INDUSTRIES FABRICATORS, INC.
	 	 	STONE & WEBSTER ASIA, INC.
	 	 	STONE & WEBSTER HOLDING ONE, INC.
	 	 	STONE & WEBSTER HOLDING TWO, INC.
	 	 	STONE & WEBSTER INTERNATIONAL HOLDINGS, INC.
	 	 	STONE & WEBSTER INTERNATIONAL, INC.
	 	 	STONE & WEBSTER MANAGEMENT CONSULTANTS, INC.
	 	 	STONE & WEBSTER MASSACHUSETTS, INC.
	 	 	STONE & WEBSTER PROCESS TECHNOLOGY, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Vice President and Treasurer
	 
	 	 	 	 
	 	 	STONE & WEBSTER SERVICES, L.L.C.
	 	 	STONE & WEBSTER, INC.
	 	 	SWINC ACQUISITION FIVE, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	Vice President and Treasurer

 

 

	 	 	 	 	 
	 	 	GUARANTORS (continued):
	 
	 	 	 	 
	 	 	STONE & WEBSTER CONSTRUCTION SERVICES, L.L.C.
	 	 	STONE & WEBSTER CONSTRUCTION, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert L. Belk
	

	 	 	

	

	 	 	 	Robert L. Belk
	

	 	 	 	President
	 
	 	 	 	 
	 	 	ARLINGTON AVENUE E VENTURE, LLC
	

	 	 	 	by its sole member,
	

	 	 	 	LandBank Properties, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	/s/ T. A. Barfield, Jr.
	

	 	 	

	

	 	 	 	T.A. Barfield, Jr.
	

	 	 	 	Chief Executive Officer and Chairman
	 
	 	 	 	 
	 	 	CAMDEN ROAD VENTURE, LLC
	

	 	 	 	by its sole member,
	

	 	 	 	LandBank Properties, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	/s/ T. A. Barfield, Jr.
	

	 	 	

	

	 	 	 	T.A. Barfield, Jr.
	

	 	 	 	Chief Executive Officer and Chairman
	 
	 	 	 	 
	 	 	GREAT SOUTHWEST PARKWAY
	

	 	 	 	VENTURE, LLC
	

	 	 	 	by its sole member,
	

	 	 	 	LandBank Properties, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	/s/ T. A. Barfield, Jr.
	

	 	 	

	

	 	 	 	T.A. Barfield, Jr.
	

	 	 	 	Chief Executive Officer and Chairman

 

 

	 	 	 	 	 
	 	 	GUARANTORS (continued):
	 
	 	 	 	 
	 	 	LANDBANK PROPERTIES, L.L.C.
	 	 	SHAW ENVIRONMENTAL LIABILITY SOLUTIONS, L.L.C.
	 	 	THE LANDBANK GROUP, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ T. A. Barfield, Jr.
	

	 	 	

	

	 	 	 	T.A. Barfield, Jr.
	

	 	 	 	Chief Executive Officer and Chairman
	 
	 	 	 	 
	 	 	BENICIA NORTH GATEWAY II, L.L.C.
	 	 	CHIMENTO WETLANDS, L.L.C.
	 	 	HL NEWHALL II, L.L.C.
	 	 	JERNEE MILL ROAD, L.L.C.
	 	 	KATO ROAD II, L.L.C.
	 	 	KIP I, L.L.C.
	 	 	LANDBANK BAKER, L.L.C.
	 	 	MILLSTONE RIVER WETLAND SERVICES, L.L.C.
	 	 	NORWOOD VENTURE I, L.L.C.
	 	 	OTAY MESA VENTURES II, L.L.C.
	 	 	PLATTSBURG VENTURE, L.L.C.
	 	 	RARITAN VENTURE I, L.L.C.
	 	 	SHAW CALIFORNIA, L.L.C.
	 	 	SHAW CMS, INC.
	 	 	SHAW REMEDIATION SERVICES, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	/s/ T. A. Barfield, Jr.
	

	 	 	

	

	 	 	 	T.A. Barfield, Jr.
	

	 	 	 	President

 

 

	 	 	 	 	 
	 	 	CREDIT LYONNAIS NEW YORK BRANCH,
	 	 	as Agent and as a Lender
	 
	 	 	 	 
	

	 	By:
	 	            /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	BNP PARIBAS,
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	CREDIT SUISSE FIRST BOSTON,
	

	 	 	 	CAYMAN ISLANDS BRANCH,
	

	 	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	HARRIS TRUST AND SAVINGS BANK,
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION

as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	UNION PLANTERS BANK, N.A.
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	UBS AG, CAYMAN ISLANDS BRANCH
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	 

	 	Title:
	 	

	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	SOUTHWEST BANK OF TEXAS, N.A.
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL CORPORATION,
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

 

 

	 	 	 	 	 
	 	 	REGIONS BANK,
	 	 	as a Lender
	 
	 	 	 	 
	

	 	By:
	 	        /s/ Conformed Signature
	

	 	 	 	

	

	 	Name:
	 	

	

	 	Title:exv10w6

 

Exhibit 10.6

THE SHAW GROUP INC.

2001 EMPLOYEE INCENTIVE COMPENSATION PLAN

(as amended and restated through March 8, 2004)

1. Purpose of Plan.

     The Shaw Group Inc. 2001 Employee Incentive Compensation Plan has been
established by the Company to (i) attract and retain persons eligible to
participate in the Plan; (ii) motivate participants, by means of appropriate
incentives, to achieve long-range goals; (iii) provide incentive compensation
opportunities that are competitive with those of other similar companies; and
(iv) further identify participants’ interests with those of the Company’s other
shareholders through compensation that is based on the Common Stock thereby
promoting the long-term financial interest of the Company and its Subsidiaries,
including the growth in value of the Company’s equity and enhancement of
long-term shareholder return.

2. Definitions.

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

          (a) “Agreement”: An agreement evidencing an Award in such form as
adopted from time to time by the Committee pursuant to the Plan.

          (b) “Award”: Any award or benefit granted under the Plan, including
without limitation, the grant of Options, SARs, Restricted Stock,
Performance Shares or Incentive Bonuses, or any combination thereof,
under the Plan.

          (c) “Board of Directors”: The Board of Directors of the Company.

          (d) “Cause”: For purposes of the Plan, whether the termination of a
Participant’s employment shall have been for Cause shall be determined by
the Committee in its sole discretion, if said Participant has: (i) been
convicted of, or has pleaded guilty or nolo contendere to a charge that
he committed a felony under the laws of the United States or any state or
a crime involving moral turpitude, including but not limited to fraud,
theft, embezzlement or any crime that results in or is intended to result
in personal enrichment at the expense of the Company or its Subsidiaries;
(ii) perpetrated a fraud against, or theft of property of the Company or
any of its Subsidiaries; (iii) committed acts amounting to gross
negligence, intentional neglect or willful misconduct in carrying out his
duties and responsibilities as an employee of the Company or one or more
of its Subsidiaries; (iv) willfully or persistently failed to attend to
his duties as an employee of the Company or one or more of its
Subsidiaries; or (v) as a result of his gross negligence or willful
misconduct, committed any act that causes, or has knowingly failed to
take reasonable and appropriate action to prevent, any material injury to
the financial condition or business reputation of the Company or any of
its Subsidiaries.

          (e) “Change of Control”: For the purposes of the Plan, the term
Change in Control shall mean the happening of any of the following:

 

 

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

          (ii) When, during any period of 24 consecutive months, the
individuals who, at the beginning of such period, constitute the
Board of Directors of the Company (the “Incumbent Directors”) cease
for any reason other than death or disability to constitute at
least a majority thereof; provided, however, that a director who
was not a director at the beginning of such 24-month period shall
be deemed to have satisfied such 24-month requirement (and be an
Incumbent Director) if such director was elected by, or on the
recommendation of or with approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually
(because they were directors at the beginning of such 24-month
period) or by operation of this provision;

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

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

          (f) “Code”: The Internal Revenue Code of 1986, as
amended from time to time.

          (g) “Commission”: The Securities and Exchange
Commission.

          (h) “Committee”: The Compensation Committee of the Board of
Directors or such other committee appointed by the Board of Directors
which meets the requirements set forth in Section 14.1 hereof.

          (i) “Company”: The Shaw Group Inc., a Louisiana
corporation.

          (j) “Consultant”: Any professional advisor to the Company or its
Subsidiaries as well as any employee, officer or director of a
corporation that serves as an advisor, consultant or independent
contractor to the Company or its Subsidiaries. The term “Consultant”
shall not, however, include any director, officer or employee of the
Company or its Subsidiaries.

 

 

          (k) “Effective Date”: The date on which the Plan shall become
effective as set forth in Section 16 hereof.

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

          (m) “Exercise Price”: (i) In the case of an Option, the price per
Share at which the Shares subject to such Option may be purchased upon
exercise of such Option and (ii) in the case of an SAR, the price per
Share which upon grant, the Committee determines shall be used in
calculating the aggregate value which a Participant shall be entitled to
receive upon exercise of such SAR.

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

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

          (o) “Incentive Bonus”: An Award granted pursuant to Section 8 of the
Plan.

          (p) “ISO”: An Option intended to qualify as an “incentive stock
option,” as defined in Section 422 of the Code or any statutory provision
that may replace such Section and designated as an incentive stock option
by the Committee.

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

          (r) “NQSO”: An Option not intended to be an ISO and designated as a
nonqualified stock option by the Committee.

          (s) “Option”: Any ISO or NQSO granted under the Plan.

          (t) “Participant”: An officer or other employee of or Consultant to
the Company or any of its Subsidiaries who has been granted an Award
under the Plan.

 

 

          (u) “Performance Measures”: The Performance Measures described in
Section 9.1 of the Plan.

          (v) “Performance Period”: For the purposes of the grant of
Performance Shares, the time period during which the applicable
performance goal(s) must be met.

          (w) “Performance Shares”: An Award granted pursuant to Section 7 of
the Plan.

          (x) “Plan”: This The Shaw Group Inc. 2001 Employee Incentive
Compensation Plan, as the same may be amended from time to time.

          (y) “Related”: (i) In the case of an SAR, an SAR that is granted in
connection with, and to the extent exercisable, in whole or in part, in
lieu of, an Option or another SAR; and (ii) in the case of an Option, an
Option with respect to which and to the extent an SAR is exercisable, in
whole or in part, in lieu thereof, has been granted.

          (z) “Restricted Stock”: Shares which have been awarded to a
Participant under Section 6 hereof.

          (aa) “Restriction Period”: The time period during which Restricted
Stock awarded under the Plan must be held before it becomes fully vested,
unless additional conditions have been placed upon the vesting thereof.

          (bb) “SAR”: A stock appreciation right awarded to a Participant
under Section 5.3 hereto.

          (cc) “Shares”: Shares of the Company’s authorized but unissued or
reacquired no par value per share common stock, or such other class or
kind of shares or other securities as may be applicable pursuant to the
provisions of Section 4.4 hereof.

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

3. Participation.

Participants shall be selected by the Committee from the officers (whether or
not they are directors), employees of the Company or its Subsidiaries (either
full or part-time) and Consultants. An Award may be granted to an employee, in
connection with hiring, retention or otherwise, prior to the date the employee
first performs services for the Company or the Subsidiaries, provided that such
Awards shall not become vested prior to the date the employee first performs
such services.

4. Shares Subject to Plan.

 

 

     4.1 Shares Subject to the Plan. The maximum number of Shares that may be
delivered to Participants and their beneficiaries pursuant to the Plan shall be
equal to 5.5 million shares of Common Stock. The limitations established by
the preceding sentence shall be subject to adjustment as provided in Section
4.4 of the Plan.

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

     4.3 Maximum Total Option and SAR Awards. Notwithstanding the provisions
of Section 4.1, over the term of the Plan, the total number of Shares that may
be issued upon exercise of all Options and SARs granted under the Plan shall
not exceed 5.5 million shares of Common Stock (as adjusted to reflect a
two-for-one Common Stock split distributed on December 15, 2000). The
limitations in this Section 4.3 shall be subject to adjustment as provided in
Section 4.4 below.

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

5. Awards of Options and SARs.

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

          (a) The Exercise Price of the Option or SAR, which may not be less
than 100% of the Fair Market Value per Share at the date of grant of the
Option or SAR;

          (b) The number of Shares subject to, and the
expiration date of, the Option or SAR;

          (c) The manner, time and rate (cumulative or otherwise) of exercise
of the Option or SAR; provided, however, that except as otherwise
specified in the Plan, no Option or SAR

 

 

awarded to a Participant who is an Officer shall expressly provide
for exercise prior to the expiration of six months from the date of
grant; and

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

     5.2 Maximum Award Of Options and SARs. The number of Shares that may be
allotted by the Committee pursuant to Options and SARs awarded to any
individual Participant shall not exceed, in any fiscal year, 2.0 million Shares
(as adjusted to reflect a two-for-one Common Stock Split distributed on
December 15, 2000) (subject to further adjustment pursuant to Section 4.4 of
the Plan). If an Option is in tandem with an SAR, such that the exercise of
the Option or SAR with respect to a Share cancels the tandem SAR or Option
right, respectively, with respect to such Share, the tandem Option and SAR
rights with respect to such Share shall be counted as covering but one Share
for purposes of applying the limitations of this Section 5.2.

     5.3 SAR Awards.

          (a) Grant of SARs. An SAR shall, upon its exercise, entitle the
Participant to whom such SAR was granted to receive a number of Shares or
cash or combination thereof, as the Committee in its discretion shall
determine, the aggregate value of which (i.e., the sum of the amount of
cash and/or Fair Market Value of such Shares on date of exercise) shall
equal the amount by which the Fair Market Value per Share on the date of
such exercise shall exceed the Exercise Price of such SAR multiplied by
the number of Shares with respect of which such SAR shall have been
exercised. An SAR may be related to an Option or may be granted
independently of an Option, as the Committee shall from time to time in
each case determine. A Related SAR may be granted at the time of grant
of an Option or, in the case of an NQSO, at any time thereafter during
the term of the NQSO.

          (b) Related SARs. The Exercise Price of a Related SAR shall be the
same as the Exercise Price of the Related Option. A Related SAR shall be
exercisable only at such time or times and only to the extent that the
Related Option is exercisable and then only when the Fair Market Value
per Share on the date of exercise exceeds the Exercise Price. A Related
SAR shall expire no later than the Related Option. Upon exercise of a
Related SAR, in whole or in part, the Related Option shall be cancelled
automatically to the extent of the number of Shares covered by such
exercise, and such Shares shall no longer be available for delivery
pursuant to future Awards. Conversely, if the Related Option is
exercised, in whole or in part, the Related SAR shall be cancelled
automatically to the extent of the number of Shares covered by the Option
exercise.

     5.4 Exercise of Options and SARs.

          (a) General Exercise Rights. Except as provided in Section 5.9, an
Option or SAR ranted under the Plan shall be exercisable during the
lifetime of the Participant to whom such Option or SAR was granted only
by such Participant, and except as provided in Section 5.4(c) and Section
5.9 hereof, no Option or SAR may be exercised unless at the time such
Participant exercises such Option or SAR, such Participant is an employee
of and has continuously since the

 

 

grant thereof been an employee of, the Company or an any of its
Subsidiaries. Transfer of employment between Subsidiaries or between
Subsidiary and the Company shall not be considered an interruption or
termination of employment for any purpose under this Plan. Neither shall
a leave of absence at the request, or with the approval, of the Company
or Subsidiary be deemed an interruption or termination of employment, so
long as the period of such leave does not exceed 90 days, or, if longer,
so long as the Participant’s right to re-employment with the Company or
Subsidiary is guaranteed by contract. An Option or SAR also shall
contain such conditions upon exercise (including, without limitation,
conditions limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 (or any successor rule) promulgated by the
Commission.

          (b) Notice Of Exercise. An Option or SAR may not be exercised with
respect to less than 100 Shares, unless the exercise relates to all
Shares covered by the Option or SAR at the date of exercise. An Option
or SAR may be exercised by delivery of a written notice to the Company,
which shall state the election to exercise the Option or SAR and the
number of whole Shares in respect of which it is being exercised, and
shall be signed by the person or persons so exercising the Option or SAR.
In the case of an exercise of an Option or SAR, such notice shall
either: (i) if applicable, be accompanied by payment of the full
Exercise Price and all applicable withholding taxes, in which event the
Company shall deliver any certificate(s) representing Shares to which the
Participant is entitled as a result of the exercise as soon as
practicable after the notice has been received; or (ii) fix a date (not
less than 5 nor more than 15 business days from the date such notice has
been received by the Company) for the payment of the full Exercise Price
and all applicable withholding taxes, against delivery by the Company of
any certificate(s) representing Shares to which the Participant is
entitled to receive as a result of the exercise. Payment of such
Exercise Price and withholding taxes shall be made as provided in
Sections 5.4(d) and 13, respectively. In the event the Option or SAR
shall be exercised pursuant to Section 5.4(c)(i) or Section 5.9 hereof,
by any person or persons other than the Participant, such notice shall be
accompanied by appropriate proof of the right of such person or persons
to exercise the Option or SAR.

          (c) Exercise After Termination Of Employment. Except as otherwise
determined by the Committee at the date of grant of the Option or SAR and
as is provided in the applicable Agreement evidencing the Award, upon
termination of a Participant’s employment with the Company or any of its
Subsidiaries, such Participant (or in the case of death, the person(s) to
whom the Option is transferred by will or the laws of descent and
distribution) may exercise such Option or SAR during the following
periods of time (but in no event after the expiration date of such Option
or SAR) to the extent that such Participant was entitled to exercise such
Option or SAR (or portion thereof) at the date of such termination (i.e.,
the Option or SAR (or portion thereof) must be “vested” at the time of
termination to be exercisable thereafter):

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

 

 

mean voluntary retirement at or after the Participant’s normal
retirement date as determined by the Committee in its sole
discretion;

          (ii) In the case of termination for Cause, the Option shall
immediately terminate and shall no longer be exercisable; and

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

To the extent the Option or SAR is not exercised within the foregoing
periods of time, the Option or SAR shall automatically terminate at the
end of the applicable period of time. Notwithstanding the foregoing
provisions, failure to exercise an ISO within the periods of time
prescribed under Sections 421 and 422 of the Code shall cause an ISO to
cease to be treated as an “incentive stock option” for purposes of
Section 421 of the Code.

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

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

 

 

     5.5 Settlement of Awards of Options and SARs. Settlement of Awards of
Options and SARs is subject to Section 10.

     5.6 Options or SARs Awarded To Consultants. Any provision of this Section
5 to the contrary notwithstanding, (i) an Option or SAR may be exercised at any
time by a Participant who is a Consultant during the applicable period in the
manner provided in Section 5.4(b) above; provided, that in the event of the
death of a Participant who is a Consultant, the Option or SAR may be exercised
by the executors or administrators of the estate of such Consultant or by the
person or persons who shall have acquired the Option or SAR directly by bequest
or inheritance; and (ii) the Exercise Price for an Option or SAR awarded to a
Consultant must be paid in cash (by a certified check, bank draft of money
order).

     5.7 Rights As A Shareholder. A Participant shall have no rights as a
shareholder with respect to any Shares issuable on exercise of an Option or SAR
until the date of the issuance of a stock certificate to the Participant for
such Shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 4.4 hereof.

     5.8 Special Provisions for ISOs.

     Any provision of the Plan to the contrary notwithstanding, the following
special provisions shall apply to all ISOs granted under the Plan:

          (a) The Option must be expressly designated as an ISO by the
Committee and in the Agreement evidencing the Option;

          (b) No ISO shall be granted more than ten years from the Effective
Date of the Plan and no ISO shall be exercisable more than ten years from
the date such ISO is granted;

          (c) The Exercise Price of any ISO shall not be less than the Fair
Market Value per Share on the date such ISO is granted;

          (d) Any ISO shall not be transferable by the Participant to whom
such ISO is granted other than by will or the laws of descent and
distribution and shall be exercisable during such Participant’s lifetime
only by such Participant;

          (e) No ISO shall be granted to any individual who, at the time such
ISO is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary
unless the Exercise Price of such ISO is at least 110% of the Fair Market
Value per Share at the date of grant and such ISO is not exercisable
after the expiration of five years from the date such ISO is granted;

          (f) The aggregate Fair Market Value (determined as of the time any
ISO is granted) of any Company stock with respect to which any ISOs
granted to a Participant are exercisable for the first time by such
Participant during any calendar year (under this Plan and all other stock
option plans of the Company and any of its Subsidiary and any predecessor
of any such corporations) shall not exceed $100,000 as required under
Section 422(d)(i) of the Code. (To the extent the $100,000 limit is
exceeded, the $100,000 in Options, measured as described above, granted
earliest in time will be treated as ISOs); and

 

 

          (g) any other terms and conditions as may be required in order that
the ISO qualifies as an “incentive stock option” under Section 422 of the
Code or successor provision.

Notwithstanding the provisions of Section 5.4(c)(i), the favorable tax
treatment available pursuant to Section 422 of the Code upon the exercise of an
ISO will not be available to a Participant who exercises any ISO more than (i)
12 months after the date of termination of employment due to the Participant’s
disability or (ii) three months after the date of termination of employment due
to retirement of the Participant.

     5.9 Limited Transferability. No Option or SAR, nor any interest therein,
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee shall have the discretionary
authority to grant NQSOs and SARs (that are not Related to an ISO) that are
transferable by the Participant to the Participant’s children, grandchildren,
spouse, one or more trusts for the benefit of such family members, or a
partnership in which such family members were the only partners. The holder of
an NQSO or SAR transferred pursuant to this Section 5.9 shall be bound by the
terms and conditions that govern the NQSO or SAR during the period that it was
held by the Participant; provided, however, that such transferee may not
transfer the NQSO or SAR except by will or the laws of descent and
distribution.

6. Restricted Stock.

     6.1 General Terms/Conditions. The Committee may, in its discretion, grant
one or more Awards of Restricted Stock to any Participant. Each Award of
Restricted Stock shall be evidenced by an Agreement which shall specify the
number of Shares to be issued to the Participant, the date of such issuance,
the price, if any, to be paid for such Shares by the Participant, the
Restriction Period and any other conditions imposed on such Shares as the
Committee, in its discretion, shall determine. Notwithstanding the foregoing,
the Committee shall impose upon each Award of Restricted Stock made to a
Participant who is an Officer a Restriction Period expiring no earlier than six
months after the date of grant of the Restricted Stock.

     6.2 Maximum Award Of Restricted Stock. The maximum number of Shares that
may be allotted by the Committee pursuant to Restricted Stock awarded to any
individual Participant shall not exceed, in any fiscal year, 50,000 Shares (as
adjusted to reflect a two-for-one Common Sock split distributed on December 15,
2000) (subject to further adjustment as provided in Section 4.4 of the Plan).

     6.3 Restrictions And Forfeitures.

          (a) Shares included in Restricted Stock Awards may not be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such Shares have fully vested.

          (b) Participants holding shares of Restricted Stock granted
hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Restriction Period. During the
Restriction Period, Participants holding shares of Restricted Stock
granted hereunder may be credited with regular cash dividends paid with
respect to the underlying Shares while they are so held. The Committee
may apply any restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding sentence,
if the grant or vesting of Restricted Stock is designed to comply with
one or more of the Performance Measures set forth in Section 9.1, the
Committee may apply any restrictions it deems appropriate to the

 

 

payment of dividends declared with respect to such Restricted Stock,
such that the dividends and/or the Restricted Stock maintain eligibility
under Section 162(m) of the Code.

          (c) In the event that the Participant shall have paid any cash for
the Restricted Stock, the Agreement shall specify whether and to what
extent such cash shall be returned upon a forfeiture (with or without an
earnings factor).

          (d) The Restricted Stock shall be evidenced by a stock certificate
registered only in the name of the Participant, which stock certificate
shall be held by the Company until the Restricted Stock has fully vested.

          (e) The occurrence of any of the following events shall cause the
immediate vesting of the Restricted Stock:

          (i) the death of the Participant;

          (ii) the retirement of the Participant on or after the
Participant’s normal retirement date;

          (iii) the disability of the Participant.

For the purposes of this Subsection, the term “disability” shall be
defined as such term is defined in Section 5.4(c)(i).
Notwithstanding the foregoing, to the extent a condition(s) other
than a Restriction Period has been imposed by the Committee upon
the Restricted Stock, the occurrence of the foregoing shall not
cause immediate vesting unless and until such condition(s) has been
met.

          (f) A Restricted Stock Award shall be entirely forfeited by the
Participant in the event that prior to vesting, the Participant breaches
any terms or conditions of the Plan, the Participant resigns from or is
terminated by the Company, or any condition(s) imposed upon vesting are
not met.

     6.4 Legend On Certificates. Each certificate evidencing a Restricted
Stock Award under the Plan shall be registered in the name of the Participant
and deposited by the Participant, together with a stock power endorsed in
blank, with the Company and shall bear the following (or a similar) legend:

          “The transferability of this certificate and the shares of
Common Stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in The Shaw Group Inc.
2001 Employee Incentive Compensation Plan and a Restricted Stock
Agreement entered into between the registered owner and The Shaw
Group Inc. Copies of such Plan and Agreement are on file in the
offices of the Secretary of The Shaw Group Inc., 4171 Essen Lane,
Baton Rouge, Louisiana 70809.”

     6.5 Section 83(b) Elections. Within 30 days after the issuance of shares
of Restricted Stock to a Participant under the Plan, the Participant shall
decide whether or not to file an election pursuant to Section 83(b) of the Code
and Treasury Regulation Section 1.83-2 (and state law counterparts) with
respect to such Restricted Stock. If the Participant does file such an
election, the Participant shall promptly furnish the Company with a copy of
such election.

7. Performance Shares.

 

 

     7.1 Grant of Performance Shares. Subject to the terms of the Plan,
Performance Shares may be granted to Participants in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee, provided that no more than 50,000 Shares (as adjusted to reflect a
two-for-one Common Sock split distributed on December 15, 2000) (subject to
further adjustment as provided in Section 4.4 of the Plan) may be subject to
any Performance Share Awards granted to any individual Participant in any
fiscal year.

     7.2 Value of Performance Shares. Each Performance Share shall have an
initial value equal to the Fair Market Value of a Share on the date of grant.
The Committee shall set performance goals in its discretion which, depending on
the extent to which they are met, will determine the number and/or value of
Performance Shares that will be paid out to the Participant.

     7.3 Earning of Performance Shares. Subject to the terms of the Plan,
after the applicable Performance Period has ended, the holder of Performance
Shares shall be entitled to receive payout on the number and value of
Performance Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.

     7.4 Form and Timing of Payment of Performance Shares. Payment of earned
Performance Shares shall be made in a single lump sum following the close of
the applicable Performance Period. Subject to the terms of this Plan, the
Committee, in its sole discretion, may pay earned Performance Shares in the
form of cash or in Shares (or in a combination thereof) which have an aggregate
Fair Market Value equal to the value of the earned Performance Shares at the
close of the applicable Performance Period. Such Shares may be granted subject
to any restrictions deemed appropriate by the Committee. The determination of
the Committee with respect to the form of payout of such Awards shall be set
forth in the Agreement pertaining to the grant of the Award of Performance
Shares.

     At the discretion of the Committee, Participants may be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Shares which have been earned, but not
yet distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 6 hereof). In
addition, Participants may, at the discretion of the Committee, be entitled to
exercise their voting rights with respect to such Shares.

     7.5 Termination of Employment Due to Death, Disability, or Retirement.
Unless determined otherwise by the Committee and set forth in the Agreement
evidencing an Award of Performance Shares, in the event the employment of a
Participant is terminated by reason of death, disability, or retirement during
a Performance Period, the Participant or his legal representative shall receive
a payout of the Performance Shares which is prorated, as specified by the
Committee, in its sole discretion. For purposes of this Section 7.5, the term
“disability” shall be defined as such term is defined in Section 5.4(c)(i).

     Payment of earned Performance Shares shall be made at a time specified by
the Committee in its sole discretion and set forth in the Agreement evidencing
such Award. Notwithstanding the foregoing, with respect to Performance Shares
that have been awarded with the intention of qualifying as “performance-based
compensation” under Section 162(m) of the Code to a Participant who retires
during a Performance Period, payment shall be made pursuant to such Performance
Share Award at the same time as payments are made to Participants who did not
terminate employment during the applicable Performance Period.

 

 

     7.6 Termination of Employment for Other Reasons. In the event that a
Participant’s employment terminates for any reason other than those reasons set
forth in Section 7.5 above, all Performance Shares shall be forfeited by the
Participant to the Company unless determined otherwise by the Committee, as set
forth in the Agreement evidencing such Award.

     7.7 Non-Transferability. Except as otherwise provided in an Agreement
evidencing such Award of Performance Shares, Performance Shares may not be
sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such Performance Shares have fully
vested. Further, except as otherwise provided in an Agreement evidencing such
Award of Performance Shares, a Participant’s rights under the Plan shall be
exercisable during the Participant’s lifetime only by the Participant or the
Participant’s legal representative.

8. Incentive Bonuses.

     8.1 Awards of Incentive Bonuses. The Committee shall have the
discretionary authority to designate Participants to whom Incentive Bonuses are
to be paid. Incentive Bonuses shall be determined exclusively by the Committee
pursuant to procedures established by the Committee; provided, however, that
for any fiscal year, no individual Participant may receive Incentive Bonuses
aggregating more than $5 million.

     8.2 Terms and Conditions. The Committee, at the time an Incentive Bonus
is made, shall specify the terms and conditions that govern the granting
thereof. Such terms and conditions may include, by way of example and not
limitation, requirements that the Participant complete a specified period of
employment with the Company or a Subsidiary, or that the Company or Subsidiary
or the Participant attain stated objectives or goals as a prerequisite to
payment under an Incentive Bonus. The Committee, at the time the Incentive
Bonus is granted shall also specify what amount shall be payable under the
Incentive Bonus and whether amounts shall be payable in the event of the
Participant’s death, disability or retirement.

     8.3 Settlement of Incentive Bonuses. Settlement of Incentive Bonuses is
subject to Section 10.

9. Performance-Based Compensation.

     9.1 Performance Measures. The Committee may designate whether an Award
being granted to any Participant is intended to be “performance-based
compensation” as that term is used in Section 162(m) of the Code. Any such
Awards designated by the Committee to be “performance-based compensation” shall
be conditioned on the achievement of one or more Performance Measures, to the
extent required by Code Section 162(m). The Performance Measures that may be
used by the Committee for such Awards shall be based on any one or more of the
following, as selected by the Committee:

          (a) Earnings per share;

          (b) Net income (before or after taxes);

          (c) Return measures (including, but not limited to, return on
assets, capital, equity or sales);

          (d) Earnings before or after taxes;

 

 

          (e) Share price (including, but not limited to, growth
measure and total shareholder return);

          (f) Gross revenues;

          (g) Working capital measures; or

          (h) Backlog.

For Awards under this Section 9 intended to be “performance-based
compensation”, (i) the grant of the Awards and the establishment of the
Performance Measures shall be made during the period required by Section 162(m)
of the Code and (ii) the Committee shall certify in writing that the
Performance Measure has been met. The Committee shall have the discretion to
define the Performance Measures on a corporation or subsidiary or business
division basis or in comparison with peer group performance.

     9.2 Board Authority. In the event that applicable tax and/or securities
laws change to permit the Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes,
the Board of Directors of the Company shall have the sole discretion to make
changes in the Performance Measures without shareholder approval.

10. Settlement of Awards.

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

11. Consultants.

     An Award made to a Consultant hereunder must be supported by bona fide
services actually rendered by the Company to the Consultant. However, in no
event shall an Award be made to a Consultant (i) for services rendered by the
Consultant in connection with the offer or sale of securities in a capital
raising transaction or (ii) who directly or indirectly promotes or maintains a
market for the Company’s securities.

12. Government Regulations.

     This Plan, the granting of Awards under this Plan and the issuance or
transfer of Shares (and/or the payment of money) pursuant thereto are subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any regulatory or governmental agency (including without
limitation “no action” positions of the Commission) which may, in the opinion
of counsel for the Company, be necessary or advisable in connection therewith.
Without limiting the generality of the foregoing, no Awards may be granted
under this Plan, and no Shares shall be issued by the Company, pursuant to or
in connection with any such Award, unless and until, in each such case, all
legal requirements applicable to

 

 

the issuance or payment have, in the opinion of counsel to the Company,
been complied with. In connection with any stock issuance or transfer, the
person acquiring the Shares shall, if requested by the Company, give assurances
satisfactory to counsel to the Company in respect of such matters as the
Company may deem desirable to assure compliance with all applicable legal
requirements. The Company shall not be required to deliver any Shares under
the Plan prior to (i) the admission of such Shares to listing or for quotation
on any stock exchange or automated quotation system on which Shares may then be
listed or quoted, and (ii) the completion and effectiveness of such
registration or other qualification of such Shares under any state or federal
law, rule or regulation, as the Committee shall determine to be necessary or
advisable.

13. Tax Withholding.

     The Company shall have the right to withhold from amounts due
Participants, or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld at
any time by reason of participation in the Plan, and the obligations of the
Company under the Plan shall be conditional on payment of such taxes. The
Participant may, prior to the due date of any taxes, pay such amounts to the
Company in cash, or with the consent of the Committee, in Shares (which shall
be valued at their Fair Market Value on the date of payment). There is no
obligation under this Plan that any Participant be advised of the existence of
the tax or the amount required to be withheld. Without limiting the generality
of the foregoing, in any case where it determines that a tax is or will be
required to be withheld in connection with the issuance or transfer or vesting
of Shares under this Plan, the Company may pursuant to such rules as the
Committee may establish, reduce the number of such Shares so issued or
transferred by such number of Shares as the Company may deem appropriate in its
sole discretion to accomplish such withholding or make such other arrangements
as it deems satisfactory. Notwithstanding any other provision of this Plan, the
Committee may impose such conditions on the payment of any withholding
obligation as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 (or successor provision) promulgated
by the Commission.

14. Administration Of Plan.

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

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

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

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

 

 

          (b) Decide all questions of eligibility for Plan participation and
for the grant of Awards;

          (c) Determine the types of Awards and the number of Shares covered
by the Awards, if any, to be granted to any Participant, to establish the
terms, conditions, Performance Measures, restrictions and other
provisions of such Awards, and (subject to the restrictions imposed by
Section 17) to cancel or suspend Awards;

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

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

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

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

15. Change Of Control.

     Subject to the provisions of Section 4.4 (relating to the adjustment of
Shares), or except as otherwise provided in the Agreement evidencing the Award,
upon the occurrence of a Change of Control:

          (a) all outstanding Options (regardless of whether in tandem with
SARs) shall become fully exercisable,

          (b) all outstanding SARs (regardless of whether in tandem with
Options) shall become fully exercisable,

          (c) all Restricted Stock and Performance Shares shall become fully
vested, and

          (d) All Incentive Bonuses that have been approved and accrued shall
become fully payable.

16. Effective Date And Shareholder Approval.

     The Effective Date of the Plan shall be November 27, 2000 (the date the
Plan was approved by the Board of Directors) subject to receipt within one year
of such date the approval of the Plan by the holders of a majority of the total
voting power of the voting securities of the Company present in person or
represented by proxy at a meeting of shareholders at which the approval of such
Plan is considered.

 

 

17. Amendment and Termination.

     17.1 The Plan

          (A) Amendment. 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 4.4; (ii)
lower the Exercise Price of an Option or SAR grant value below 100% of
the Fair Market Value of one Share on the date of the Award, except as
provided in Section 4.4; (iii) remove the repricing restriction set forth
in Section 17.2; 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 Participant under any
Award theretofore made under the Plan, without the Participant’s consent.

          (B) Termination. The Plan shall terminate automatically on the
tenth anniversary of the Effective Date, and the Board of Directors may
suspend or terminate the Plan at any earlier time. Upon termination of
the Plan, no additional Awards shall be granted under the Plan; provided,
however, that the terms of the Plan shall continue in full force and
effect with respect to outstanding Awards and Shares issued under the
Plan.

     17.2 Awards. Subject to the terms and conditions and the limitations of
the Plan, the Committee may in the exercise of its sole discretion modify,
extend or renew the terms of outstanding Awards granted under the Plan, or
accept the surrender of outstanding Awards (to the extent not theretofore
exercised); provided, however, that the Committee shall not have the authority
to accept the surrender or cancellation of any Options and any SARs that relate
to such Options outstanding hereunder (to the extent not theretofore exercised)
and grant new Options and any SARs that relate to such new Options hereunder in
substitution therefor (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 4.4
of the Plan. Notwithstanding the provisions of this Section 17.2, no
modification of an Award shall, without the consent of the Participant, impair
any rights or obligations under any Awards theretofore granted under the Plan.

18. Miscellaneous.

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

     18.2 Multiple Awards. Subject to the terms and restrictions set forth in
the Plan, a Participant may hold more than one Award.

     18.3 Written Notice. As used herein, any notices required hereunder shall
be in writing and shall be given on the forms, if any, provided or specified by
the Committee. Written notice shall be effective upon actual receipt by the
person to whom such notice is to be given; provided, however, that in the case
of notices to Participants and their transferees, heirs, legatees and legal
representatives, notice

 

 

shall be effective upon delivery if delivered personally or three business
days after mailing, registered first class postage prepaid to the last known
address of the person to whom notice is given. Written notice shall be given
to the Committee and the Company at the following address or such other address
as may be specified from time to time:

	 
	The Shaw Group Inc.

	4171 Essen Lane

	Baton Rouge, Louisiana 70809

	Attention: Secretary

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

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

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