EXHIBIT 10.7 PARENT PLEDGE AGREEMENT dated October 13, 2006, between
The Shaw Group Inc.
as Pledgor and The Bank of New York as Trustee
This PARENT PLEDGE AGREEMENT , dated October 13, 2006 (this " Agreement" ), is entered into between The Shaw Group Inc., a Louisiana corporation (the " Pledgor" ), and The Bank of New York, as security agent for the Secured Creditors (as defined below) (herein in such capacity, the " Trustee" ). RECITALS A. Nuclear Energy Holdings, L.L.C. , a limited liability company organized under the laws of the State of Delaware (the " Issuer" ), and the Trustee, have entered into a Bond Trust Deed dated October 13, 2006 (the " Bond Trust Deed" ), pursuant to which the Issuer is issuing JPY 50,980,000,000 aggregate principal amount of 2.20% Fixed Rate Bonds due 2013 and JPY 78,000,000,000 aggregate principal amount of Floating Rate Bonds due 2013 (together, the " Bonds" ). B. The Pledgor is the sole member of the Issuer and has agreed to pledge its membership interest in the Issuer as additional security for the Secured Obligations. C. As a condition precedent to issuance of the Bonds under the Bond Trust Deed, the Pledgor is required to execute and deliver this Agreement.In consideration of the premises and for other valuable consideration, the receipt and sufficiency of which the parties hereto hereby acknowledge, the Pledgor and the Trustee, on behalf of itself and each Secured Creditor (and each of their respective successors or permitted assigns), hereby agree as follows: SECTION 1 DEFINITIONS; RULES OF INTERPRETATION Section 1.1 Definition of Terms Used Herein Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Deed of Charge (as defined below). Section 1.2 UCC Terms used herein that are defined in the UCC but not defined herein have the meanings given to them in the UCC. Section 1.3 General Definitions In this Agreement:" Agreement" has the meaning set forth in the preamble hereto." Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. a7a7 101 et. seq." Bond Trust Deed" has the meaning set forth in the recitals hereof." Cash Collateral Account" means any Deposit Account or Securities Account established by the Trustee in which cash and Cash Equivalents may from time to time be on deposit or held therein as provided herein." Collateral" means the property of the Pledgor described in Section 2.1 in which Security Interests are granted to the Trustee for the benefit of the Secured Creditors." Collateral Records" means books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and
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related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereon." Deed of Charge" means the deed of charge dated on or about the date hereof among the Trustee, the Issuer, the Account Bank, the Cash Manager and the Principal Paying Agent." Dividends" means, in relation to Pledged LLC Interest, all present and future: (a) dividends and distributions of any kind and any other sum received or receivable in respect of that Pledged LLC Interest, (b) rights, shares, money or other assets accruing or offered by way of redemption, substitution, exchange, bonus, option, preference or otherwise in respect of that Pledged LLC Interest, (c) allotments, offers and rights accruing or offered in respect of that Pledged LLC Interest and (d) other rights and assets attaching to, deriving from or exercisable by virtue of the ownership of, that Pledged LLC Interest." Enforcement Event" means the service of the Bond Enforcement Notice under Section 7 of the Deed of Charge." Federal Securities Laws" means the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted that is analogous in purpose or effect." General Intangibles" means " general intangibles" as defined in Article 9 of the UCC." Indemnified Party" means each Secured Creditor, each Affiliate thereof and each of their respective partners, controlling Persons, directors, officers, trustees, employees and agents." Indemnified Matters" has the meaning set forth in Section 9.6." Issuer Pledge Agreement" means the pledge agreement dated on or about the date hereof between the Issuer and the Trustee." Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any agreement or arrangement that has the practical effect of creating a security interest, in respect of such asset." LLC Agreement" means the limited liability company agreement governing the operation of Nuclear Energy Holdings, L.L.C." Pledged Collateral" means, collectively, the Pledged LLC Interest, all General Intangibles related to the Pledged LLC Interest, all certificates or other instruments representing the Pledged LLC Interest and all distributions, cash, warrants, rights, instruments and other property or Proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing." Pledged LLC Interest" means all of the Pledgor' s right, title and interest as a member of Nuclear Energy Holdings, L.L.C. a Delaware limited liability company and all of the Pledgor' s right, title and interest in, to and under the LLC Agreement." Pledgor" has the meaning set forth in the preamble hereto." Proceeds" means " Proceeds," as defined in Article 9 of the UCC, and includes all payments or distributions made with respect to the Pledged Collateral and whatever is receivable or received when
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the Collateral or Proceeds are sold, exchanged, collected, converted or otherwise disposed of, whether such disposition is voluntary or involuntary." Secured Creditors" has the meaning set forth in the Deed of Charge." Secured Obligations" means all amounts, obligations, covenants and duties owing by the Pledgor or the Issuer to the Secured Creditors, present or future, arising under the Transaction Documents, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired and whether or not evidenced by any note, guaranty or other instrument or for the payment of money." Security Interest" means, collectively, the continuing security interests in the Collateral granted to the Trustee for the benefit of the Secured Creditors pursuant to Section 2.1." Security Supplement" means any supplement to this Agreement in substantially the form of Exhibit A, executed by an authorized financial officer of the Pledgor." Stock" means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non voting, and all rights to subscribe for, purchase or otherwise acquire any of the foregoing." Toshiba" means Toshiba Corporation, a corporation organized under the laws of Japan." Trustee" has the meaning set forth in the preamble hereto." UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction. Section 1.4 Rules of Interpretation In this Agreement, unless otherwise specified, (a) the Schedules and Exhibits to this Agreement, in each case as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, are incorporated herein by reference and (b) all obligations of the Pledgor hereunder shall be satisfied by the Pledgor at the Pledgor' s sole cost and expense. Section 1.5 Certain Terms The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words " include" and " includes" shall be deemed to be followed by the phrase " without limitation." The word " will" shall be construed to have the same meaning and effect as the word " shall." Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person' s successors and assigns, (c) the words " herein," " hereof" and " hereunder," and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and
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Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein (including the UCC) shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words " asset" and " property" shall be construed to have the same meaning and effect and to refer to any and all tangible assets and properties, including cash, securities, accounts and contract rights. SECTION 2 GRANT OF SECURITY Section 2.1 Grant of Security As security for the prompt and complete payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code) of all Secured Obligations, the Pledgor hereby pledges, assigns, transfers and grants to the Trustee, for its benefit and for the benefit of the Secured Creditors, a continuing security interest in and Lien on all of its right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located: (a) all Pledged Collateral; (b) all books and Records pertaining to the Pledged Collateral, including all Collateral Records; and (c) to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, and substitutions and replacements for, any of the foregoing.For avoidance of doubt it is expressly understood and agreed that, to the extent the UCC is revised subsequent to the date hereof such that the definition of any of the foregoing terms included in the description of Collateral is changed, the parties hereto desire that any property that is included in such changed definitions that would not otherwise be included in the foregoing grants on the date hereof be included in such grants immediately upon the effective date of such revision, it being the intention of the Pledgor that the description of Collateral set forth above be construed to include the broadest possible range of assets. Notwithstanding the immediately preceding sentence, the foregoing grant is intended to apply immediately on the date hereof to all Collateral to the fullest extent permitted by applicable law regardless of whether any particular item of Collateral is currently subject to the UCC. Section 2.2 Grant of Security Notwithstanding anything to the contrary contained in this Section 2 or elsewhere in this Agreement, the Pledgor and the Trustee (on behalf of the Secured Creditors) acknowledge and agree that the Security Interest granted pursuant to this Agreement (including pursuant to this Section 2) to the Trustee for the benefit of the Secured Creditors and securing the Secured Obligations shall be a " first" priority Security Interest in the Collateral, junior to no other security interests. The parties hereto acknowledge, and the Trustee hereby agrees, that the Trustee shall hold that portion of the Collateral constituting Certificated Securities for and on behalf of the Secured Creditors as agent for such parties for the purpose of perfecting a Security Interest in such Collateral.
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SECTION 3 REPRESENTATIONS AND WARRANTIES The Pledgor represents and warrants to the Trustee and the Secured Creditors, on and as of the date hereof, that: Section 3.1 Title The Pledgor owns the Collateral purported to be owned by it free and clear of any and all Liens, rights or claims of all other Persons. The Pledgor has not filed or consented to the filing of (a) any financing statement or analogous document under the UCC or any other applicable laws covering any Collateral or (b) any assignment in which the Pledgor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except for any financing statement or analogous document, assignment, security agreement or similar instrument evidencing Liens being terminated on the date hereof. Section 3.2 Names, Locations (a) Schedule 3.2 sets forth with respect to the Pledgor under the heading " Names," (i) its exact name, as such name appears in the public record of its jurisdiction of organization which shows the Pledgor to have been formed, (ii) each other name that the Pledgor has had in the past five years, together with the date of the relevant change, (iii) a list of all other names (including trade names or similar appellations) used by the Pledgor or any of its divisions or other business units in connection with the conduct of its business or the ownership of its properties in the past five years, (iv) the federal taxpayer identification number of the Pledgor and (v) the jurisdiction of organization of the Pledgor and its organizational identification number or statement that the Pledgor has no such number. (b) Schedule 3.2 sets forth, with respect to the Pledgor, under the heading " Locations" the location of its chief executive office and each other chief executive office of the Pledgor within the past five years, together with dates of the relevant change. Except as set forth on Schedule 3.2, the Pledgor has not changed its jurisdiction of organization, chief executive office or other " location" (as defined in Section 9-307 of the UCC) in the past four months. (c) Except as set forth on Schedule 3.2 under the heading " Changes in Identity or Organizational Structure," the Pledgor has not changed its identity or organizational structure in any way in the past five years. Changes in identity or organizational structure would include mergers, consolidations and acquisitions, as well as any change in the form or jurisdiction of the Pledgor. If any such change has occurred, Schedule 3.2 sets forth the date of such change and all information applicable to each acquired party or constituent party to a merger or consolidation. Section 3.3 Filings, Consents (a) Attached hereto as Exhibit B are true, complete and correct copies of search reports from the offices where any filings or recordings against the Pledgor with respect to any property of the Pledgor of the type included in the Collateral have been made, including
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a true copy of each financing statement, assignment or other filing or recording identified in such search reports. (b) Exhibit C sets forth true, complete and correct copies of all UCC financing statements or other appropriate filings, recordings or registrations containing an accurate description of the Collateral that have been delivered to the Trustee for filing in each governmental, municipal or other office specified in Schedule 3.3. (c) No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge or grant by the Pledgor of the Security Interest purported to be created in favor of the Trustee hereunder or (ii) the exercise by the Trustee of any rights or remedies in respect of the Collateral, including voting rights (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (b) above and (B) as may be required in connection with the disposition of the Pledged Collateral by laws generally affecting the offering and sale of securities. (d) All filing or recording fees and taxes payable in connection with the filings and recordings described in clauses (b) and (c) above have been or promptly will be paid by the Pledgor. Section 3.4 Security Interests The Security Interest constitutes (a) a legal and valid security interest in all Collateral securing the payment and performance of the Secured Obligations and (b) subject to the completion of the filings described in Section 3.3 and to value being given, a perfected Security Interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document under the UCC as in effect in the State of Louisiana. The Security Interest is and shall be prior to any other Lien on any of the Collateral. Section 3.5 Pledged Collateral (a) Schedule 3.5 sets forth under the heading " Pledged LLC Interests" all Pledged LLC Interests granted by the Pledgor hereof. The Pledged LLC Interest pledged hereunder by the Pledgor constitutes, as of the date hereof, that percentage of the issued and outstanding equity of all classes of Nuclear Energy Holdings, L.L.C. as set forth on Schedule 3.5 under the heading " Pledged LLC Interests." (b) All of the Pledged LLC Interests have been duly and validly issued and are fully paid and nonassessable. (c) No Person other than the Trustee has " control" (as defined in Sections 8-106 and 9-106 of the UCC) over any Pledged Collateral of the Pledgor constituting Certificated Securities, and, other than the Pledged LLC Interests that constitute General Intangibles, there is no Pledged Collateral other than Pledged Collateral that is represented by Certificated Securities that are in the possession of the Trustee. (d) All Pledged Collateral represented by Certificated Securities has been delivered to the Trustee in the State of New York.
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(e) There are no restrictions on transfer in the LLC Agreement governing the Pledged LLC Interests or any other agreement relating to the foregoing which would limit or restrict (i) the grant of a security interest in the Pledged LLC Interests, (ii) the perfection of such security interest or (iii) the exercise of remedies in respect of such perfected security interest in the Pledged LLC Interests, in each case as contemplated by this Agreement. SECTION 4 COVENANTS Section 4.1 Change of Name; Location of Collateral; Place of Business Unless the Pledgor has given the Trustee at least 30 days prior written notice, the Pledgor will not change (i) its name, (ii) its jurisdiction of organization or other " location" (as defined in Section 9-307 of the UCC), (iii) the location of its chief executive office, its principal place of business or any office in which it maintains the Collateral Records (including the establishment of any such new office or facility), (iv) its identity or organizational structure or (v) its organizational identification number or its federal taxpayer identification number. The Pledgor agrees to cooperate with the Trustee in making all filings that are required in order for the Trustee to continue at all times following such change to have a legal, valid and perfected Security Interest in all the Collateral having the priority described in Section 2.2. Section 4.2 Protection of Security The Pledgor shall, at its own cost and expense, take any and all actions necessary or desirable to defend title to the Collateral and to defend the Security Interest of the Trustee in the Collateral and the priority thereof against any Lien against all Persons. The Pledgor shall not take or permit to be taken any action that could impair the Trustee' s rights in the Collateral. Section 4.3 Pledged Collateral (a) The Pledgor hereby covenants and agrees that, without the prior written consent of the Trustee, which shall not be unreasonably withheld, delayed or conditioned, it shall not vote or take any other action to amend or terminate any LLC Agreement, certificate of formation, by-laws or other organizational documents in any way that materially changes the rights of the Pledgor with respect to any Pledged Collateral or adversely affects the validity, perfection or priority of the Trustee' s Security Interest (including without limitation, any election that would cause the Pledged LLC Interest not to be a " Security" under Section 8-102(a)(15) of the UCC, it being acknowledged that as of the date hereof the LLC Agreement, in accordance with Section 8-103(c) of the UCC as in effect in the State of Delaware and Section 8-103(c) of the UCC as in effect in the State of New York, provides that each limited liability company interest in the Issuer shall constitute a " security" within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8 102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995).
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(b) The Pledgor hereby covenants and agrees that, in the event it establishes or acquires rights in any Pledged Collateral after the date hereof, it shall deliver to the Trustee a completed Security Supplement, together with all supplements to Schedules hereto, reflecting such new Pledged Collateral and all other Pledged Collateral. Notwithstanding the foregoing, it is understood and agreed that the Security Interest of the Trustee shall attach to all Pledged Collateral immediately upon the Pledgor' s acquisition of rights therein and shall not be affected by the failure of the Pledgor to deliver a supplement to Schedule 3.5 as required hereby. (c) The Pledgor hereby covenants and agrees that it shall enforce all of its rights with respect to any Pledged Collateral. (d) The Certificated Securities referred to in Section 3.5(d) shall be held by the Trustee in the State of New York. W