AMENDED &
RESTATED EMPLOYMENT AGREEMENT
This Amended & Restated
Employment Agreement (this “ Agreement ”) is
entered into effective as of December 22, 2008 (the “
Effective Date ”), by and between The Shaw Group Inc.,
a Louisiana corporation (collectively with its affiliates and
subsidiaries hereinafter referred to as “ Company
”), and Gary P. Graphia (“ Employee ”).
The Company and Employee may hereinafter be referred to,
individually, as a “ Party ” and, collectively,
as the “ Parties ”.
WHEREAS , the Company and
Employee are parties to that certain Employment Agreement dated as
of October 14, 2005 (the “ Original Agreement
”); and
WHEREAS , the Company and
Employee desire to amend certain provisions of the Original
Agreement and to restate the Original Agreement in its
entirety.
NOW, THEREFORE , in
consideration of the mutual covenants, representations, warranties,
and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:
1. Employment . The
Company continues to employ Employee, and Employee hereby agrees to
continued employment by the Company, on the terms and conditions
set forth in this Agreement.
2. Term of Employment .
Subject to the provisions for earlier termination provided in
Section 7 of this Agreement, the term of this Agreement (the
“ Term ”) shall be three years commencing on the
Effective Date and shall be automatically renewed on each day
following the Effective Date so that on any given day the unexpired
portion of the Term shall be three years. Notwithstanding the
foregoing provision, at any time after the Effective Date the
Company or Employee may give written notice to the other Party that
the Term shall not be further renewed from and after a subsequent
date specified in such notice (the “ fixed term date
”), in which event the Term shall become fixed, and this
Agreement shall terminate on the third anniversary of such fixed
term date.
3. Employee’s
Duties .
(a) During the Term, Employee
shall serve as Executive Vice President & Chief Operating
Officer of the Company, or such other similar position(s) as the
Parties may mutually agree, reporting directly to the Chief
Executive Officer of the Company and with such duties and
responsibilities as may from time to time be assigned to Employee
by the Board of Directors of the Company (the “ Board
”) or the Chief Executive Officer, as the case may be,
provided that such duties are comparable to the customary duties
and responsibilities of such position(s).
(b) Employee agrees to devote
Employee’s full attention and time during normal business
hours to the business and affairs of the Company and to use
reasonable best efforts to perform faithfully and efficiently
Employee’s duties and responsibilities. Employee shall not,
either directly or indirectly, enter into any business or
employment with or for any Person (as defined below) other than the
Company during the Term; provided , however , that
Employee shall not be prohibited from making financial investments
in any other company or business or from serving on the board of
directors of any other company, subject in each case to the
provisions set forth in the Nonsolicitation and Noncompete
Agreement (defined below) and the Company’s Code of Conduct
or similar guidelines of which Employee is notified in writing. For
the purposes of this Agreement, the term “ Person
” shall mean any individual, corporation, limited or general
partnership, limited liability company, joint venture, association,
trust or other entity or organization, whether or not a legal
entity. Employee shall at all times observe and comply with all
lawful directions and instructions of the Board of which Employee
is notified in writing.
4. Compensation .
(a) Base Compensation .
For services rendered by Employee under this Agreement, the Company
shall pay to Employee Employee’s current base salary as of
the Effective Date (“ Base Compensation ”), per
annum, payable in accordance with the Company’s customary pay
periods and subject to tax and other customary withholdings.
Employee’s Base Compensation may be reviewed by the Board on
an annual basis as of the close of each fiscal year of the Company
and may be increased as the Board may deem appropriate. In the
event the Board deems it appropriate to increase Employee’s
Base Compensation, that increased amount shall thereafter be the
Base Compensation for the purposes of this Agreement.
Employee’s Base Compensation, as increased from time to time,
may not thereafter be decreased unless agreed to by Employee in
writing. Nothing contained herein shall prevent the Board from
paying additional compensation to Employee in the form of bonuses
or otherwise during the Term.
(b) Annual Bonus .
During the Term, Employee shall participate in the Company’s
discretionary management incentive program as established by the
Board (as the same may be amended from time to time), with an
annual performance bonus range of 0-200% of Employee’s bonus
target (the “ Bonus Target ”), which Bonus
Target shall initially be an amount equal to 100% of
Employee’s Base Compensation. The Bonus Target may be
adjusted annually. Annual bonus payments will be subject to tax and
other customary withholdings.
(c) Retention Amount .
As additional consideration for this Agreement, the Company agrees
to pay to Employee a retention amount (the “ Retention
Amount ”) in the amount of $1,000,000, which shall be
paid, subject to tax and other customary withholdings, on the
following dates: (i) $333,334, not later than 15 days after
execution of this Agreement by Employee, (ii) $333,333, on the
first anniversary of the Effective Date and (iii) $333,333, on the
second anniversary of the Effective Date. In the event that
Employee voluntarily terminates employment with the Company (other
than for Good Reason (as defined below) or is terminated for
Misconduct (as defined below) prior to the completion of
12 months of continuous employment in any of the first three
contract years commencing on the Effective Date, Employee shall
repay to the Company the pro rata portion of the Retention Amount
that was paid to Employee on or before the Date of Termination (as
defined below) for the contract year in which the Date of
Termination occurs and shall forfeit all rights to the unpaid
portion (if any) of the Retention Amount. For example, if Employee
is terminated for Misconduct effective May 15, 2010, Employee
(i) would retain the first installment of the Retention Amount
since Employee would have completed the requisite
12 months’ continuous employment for the first contract
year, (ii) would be obliged to pay to the Company $166,666.50
(or 50% (six months divided by 12 months) of the second
installment of the Retention Amount) since Employee would not have
completed the requisite 12 months’ continuous employment
for the second contract year and (iii) would thereafter
forfeit any rights to $333,333 (the remaining unpaid third
installment of the Retention Amount).
(d) Long Term
Incentives .
(i) Employee will be eligible to participate in the
Company’s discretionary Long Term Incentive (as defined in
Section 7(a)(i) below) plan(s) as established by the Board (as
the same may be amended from time to time), subject to the terms
and conditions of the applicable plan(s). The overall target value
of the annual Long Term Incentive grants to Employee on the date of
grant will be not less than 150% of Employee’s Base
Compensation.
(ii) On the
Effective Date, Employee will be granted Long Term Incentives with
an aggregate value of $525,000, which will be divided equally
between option shares (or stock appreciation rights) and restricted
shares (or restricted share units) and will vest in annual
installments of 25% each, with full vesting after four years. In
accordance with the Company’s Long Term Incentive policies,
such Long Term Incentives will have a grant date of, and the
exercise price of the option shares (or stock appreciation rights)
shall be the closing price on, the first business day of January,
2009.
(iii) All
Long Term Incentive awards that are to be settled by the delivery
of shares are subject to shareholders approval of shares to be
allocated to the Company’s Long Term Incentive plan(s) and
are granted under the strict purview of the Compensation Committee
of the Board.
(iii) Long
Term Incentive awards will be determined utilizing the valuation
methodology used for other similarly situated executive officers of
the Company.
(iv) Notwithstanding any provision to the contrary in the
plan(s) governing such Long Term Incentives, in the event that this
Agreement is terminated by Employee pursuant to
Section 7(a)(ii), (iv) or (v) or by the Company
pursuant to Section 7(a)(iii)(A) (other than for Misconduct)
or (iii)(D) of this Agreement, Employee shall have not less than
one year from the Date of Termination in which to exercise all Long
Term Incentive awards granted to Employee by the Company on or
before the Date of Termination (including any Long Term Incentive
awards that become vested pursuant to Section 7 of this
Agreement); provided that in no event shall such one year
period extend the exercise period for any Long Term Incentive
awards beyond the date that is 10 years from the date of grant
of such Long Term Incentive.
5. Additional Benefits .
In addition to the compensation provided for in Section 4
herein, Employee shall be entitled to the following:
(a) Expenses . The
Company shall, in accordance with any rules and policies that it
may establish from time to time for executive officers, reimburse
Employee for business expenses reasonably incurred in the
performance of Employee’s duties. It is understood that
Employee is authorized to incur reasonable business expenses for
promoting the business of the Company, including reasonable
expenditures for professional memberships and licenses, travel,
lodging, meals and client or business associate entertainment.
Requests for reimbursement for all business expenses must be
accompanied by appropriate documentation.
(b) Vacation . Employee
shall be entitled to four weeks of vacation per year, without any
loss of compensation or benefits. Employee shall be entitled to
carry forward any unused vacation time. Upon termination of
employment of Employee for whatever reason, Employee shall be paid
for any unused vacation time based on Employee’s Base
Compensation as in effect immediately prior to the Date of
Termination.
(c) General Benefits .
Employee shall be entitled to participate in (i) the various
employee benefit plans or programs provided to the employees of the
Company in general, including, but not limited to, health
(including ExecuCare), dental, disability, accident and life
insurance plans and 401k plans and (ii) the Flexible
Perquisites Plan, which provides Employee an amount equal to 4% of
Employee’s Base Compensation in each calendar year in lieu of
customary perquisite benefits. Benefits are subject to the
eligibility requirements with respect to each of such benefit plans
or programs. Nothing in this Section 5(c) shall be deemed to
prohibit the Company from making any changes in any of the plans,
programs or benefits described in this Section 5(c), provided
the change similarly affects all executive officers of the Company
that are similarly situated.
6. Confidentiality;
Nonsolicitation and Noncompete .
(a) Employee hereby
acknowledges that the Company possesses certain Confidential
Information (defined below) that is peculiar to the businesses in
which the Company is or may be engaged. Employee hereby affirms
that such Confidential Information is the exclusive property of the
Company and that the Company has proprietary interests in such
Confidential information. For the purposes of this Agreement, the
term “ Confidential Information ” shall mean any
and all information of any nature and in any form that at the time
or times concerned is not generally known to Persons (other than
the Company) that are engaged in businesses similar to that
conducted or contemplated by the Company (other than by the act or
acts of an employee not authorized by the Company to disclose such
information) which may include, without limitation, the
Company’s existing and contemplated products and services;
the Company’s purchasing, accounting, marketing and
merchandising methods or practices; the Company’s development
data, theories of application and/or methodologies; the
Company’s customer/client contact and/or supplier information
files; the Company’s existing and contemplated policies
and/or business strategies; any and all samples and/or materials
submitted to Employee by the Company; and any and all directly and
indirectly related records, documents, specifications, data and
other information with respect thereto. For the purposes of this
Agreement, “Confidential Information” shall not include
(i) information, knowledge or data that, through no fault of
Employee, becomes publicly available or (ii) information,
knowledge or data acquired from, or published by, third parties
that have no direct or indirect confidentiality obligation to the
Company. Employee further acknowledges by signing this Agreement
that the Company has expended much time, cost and difficulty in
developing and maintaining the Company’s customers.
(b) Employee shall (i) use
the Confidential Information solely for the purpose of performing
Employee’s duties on behalf of the Company and for no other
purpose whatsoever, (ii) not, directly or indirectly, at any
time during or after Employee’s employment by the Company,
disclose Confidential Information to any other Person (except to
the Company’s officers in connection with Employee’s
duties on behalf of the Company) or use or otherwise exploit
Confidential Information to the detriment of the Company, and
(iii) not lecture on or publish articles with respect to
Confidential Information without the prior written consent of the
General Counsel of the Company. In the event of a breach or
threatened breach of the provisions of this Section 6(b), the
Company shall be entitled, in addition to any other remedies
available to the Company, to an injunction restraining Employee
from disclosing such Confidential Information.
(c) Upon termination of
employment of Employee, for whatever reason, Employee shall
surrender to the Company any and all documents, manuals,
correspondence, reports, records and similar items that have or
thereafter come into the possession of Employee that contain any
Confidential Information; provided , however , that
the Company will provide Employee reasonable access to such
Confidential Information to the extent required by Employee in
connection with the defense of any cause of action, dispute,
proceeding or investigation made or initiated against Employee by
any Person other than the Company related to the employment of
Employee by the Company or the performance by Employee of its
duties and responsibilities in the course of such employment.
(d) Employee agrees that, as
part of the consideration for this Agreement and as an integral
part hereof, Employee has executed, delivered and agreed to be
bound by the Nonsolicitation and Noncompete Agreement attached
hereto as Exhibit A, as well as any subsequent addenda thereto
executed by the Company and Employee.
7. Termination .
(a) This Agreement may be
terminated prior to the end of the Term only under the terms and
conditions set forth below:
(i)
Resignation (other than for Good Reason) . Employee may
resign Employee’s position at any time, including by reason
of retirement, by providing written notice of resignation to the
Company. In the event of such resignation, except in the case of
resignation for Good Reason (defined in Section 7(a)(iv)
below), this Agreement shall terminate on the Date of Termination
(defined in Section 7(c) below), and Employee shall not be entitled
to further compensation pursuant to this Agreement other than
(A) the payment of any Base Compensation and General Benefits
(e.g., unused vacation, unreimbursed business expenses, etc.)
accrued and unpaid as of the Date of Termination and (B) the
retention of any and all option shares, restricted shares or units
or other similar awards granted to Employee by the Company under
any long term incentive plan(s) duly adopted by the Board (“
Long Term Incentives ”) that have vested or become
exercisable on or before the Date of Termination in accordance with
the plans governing such Long Term Incentives (which Long Term
Incentives remain subject to, and must thereafter be exercised in
accordance with, the plan(s) governing such Long Term
Incentives).
(ii)
Death . If Employee’s employment is terminated due to
Employee’s death, the Company shall pay to Employee’s
surviving spouse or estate, subject to customary withholdings, not
later than 30 days after Employee’s death, (A)
