Exhibit 10.2
 

 
FOSTER WHEELER LTD. OMNIBUS INCENTIVE PLAN

 
Notice of Stock Option Grant
 
[Participant Information]
 
Pursuant to the attached Option Agreement, you have been granted a nonqualified
stock option to purchase shares of common stock, $.01 par value per share (a
“Share”), of Foster Wheeler Ltd., a Bermuda company (the “Company”) as follows:
 
Board Approval Date:
 
June 14, 2006
 
Date of Grant:
 
June 16, 2006
 
Exercise Price Per Share:
 
$________ per Common Share
 
Total Number of Shares Subject to this Option:
 
________________ shares of common stock
 
Total Exercise Price:
 
$__________________
 
Type of Option:
 
Nonstatutory Stock Option
 
Expiration Date:
 
September 30, 2010
 
Vesting Commencement Date:
 
June 16, 2006
 
Vesting/Exercise Schedule:
 
So long as you provide continuous service to the Company or any Affiliate, and
except as otherwise set forth in Section 5 of the Option Agreement, the Shares
underlying this Option shall vest and become exercisable on September 30, 2006.
 
Termination Period:
 
Following your termination of service with the Company and all its Affiliates,
the Option may be exercised, but only as to Shares that were vested on the date
of such termination, through the Expiration Date set forth above. The Option may
terminate as of an earlier date in connection with certain events as set forth
in the Plan and in Section 5 of the Option Agreement.
 
 
You are responsible for keeping track of the periods during which the Option may
be exercised, including those periods that apply following your termination of
service with the Company and all its Affiliates for any reason. The Company will
not provide further notice of such exercise periods.
 
Transferability:
 
Unless otherwise provided in the Option Agreement or the Plan, this Option may
not be transferred.
 

 
 

--------------------------------------------------------------------------------

 
By your signature and the signature of the Company’s representative below, you
and the Company agree that this Option is granted under and governed by the
terms and conditions of the Foster Wheeler Ltd. Omnibus Incentive Plan and the
Stock Option Agreement, both of which are attached and made a part of this
document.
 
In addition, you agree and acknowledge that your rights to any Shares underlying
the Option vest only as you provide services to the Company or its Affiliates
over time, that the grant of the Option is not as consideration for services you
rendered to the Company or its Affiliates prior to your Vesting Commencement
Date, and that nothing in this Notice or the attached documents confers upon you
any right to continue your service relationship with the Company or its
Affiliates for any period of time, nor does it interfere in any way with your
right or the Company’s (or its Affiliates’) right to terminate that relationship
at any time, for any reason, with or without cause.

   
FOSTER WHEELER LTD.
           
Participant
 
By:
             
Its:
 

--------------------------------------------------------------------------------

 
FOSTER WHEELER LTD. OMNIBUS INCENTIVE PLAN

 
Director’s Stock Option Agreement
 
1. Grant of Option. Foster Wheeler Ltd., a Bermuda company (the “Company”),
hereby grants to ___________________ (“Optionee”), an option (the “Option”) to
purchase the total number of shares of common stock (the “Shares”) subject to
the Option, set forth in the Notice of Stock Option Grant (the “Notice”), at the
exercise price per Share set forth in the Notice (the “Exercise Price”), subject
to the terms, definitions and provisions of the Foster Wheeler Ltd. Omnibus
Incentive Plan (the “Plan”) adopted by the Company, which is incorporated in
this Agreement by reference. Unless otherwise defined in this Agreement, the
terms used in this Agreement shall have the meanings defined in the Plan;
provided, however, that the term “Shares” as defined above shall be interpreted
to refer to the specific number of shares set forth in the Notice but shall
otherwise have the meaning set forth in Section 2(ww) of the Plan. This Stock
Option Agreement shall be deemed executed by the Company and Optionee upon
execution by such parties of the Notice.
 
2. Designation of Option. This Option is intended to be a Nonstatutory Stock
Option.
 
3. Exercise of Option. This Option shall be exercisable during its term in
accordance with the Vesting/Exercise Schedule set out in the Notice and with the
provisions of Section 6 of the Plan as follows:
 
(a) Right to Exercise.
 
(i) This Option may not be exercised for a fraction of a share of common stock.
 
(ii) In the event of Optionee’s death, Disability (as defined in Section 2(q) of
the Plan) or other termination of employment or service, the exercisability of
the Option is governed by Section 5 below, subject to the limitations contained
in this Section 3.
 
(iii) In no event may this Option be exercised after the Expiration Date of the
Option as set forth in the Notice.
 
(b) Method of Exercise.
 
(i) This Option shall be exercisable by delivering to the Company a written
Notice of Exercise (containing the information described in Exhibit A hereto, in
the form attached as Exhibit A, or in any other form acceptable to the
Committee) which shall state Optionee’s election to exercise the Option, the
number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder’s investment intent with
respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by Optionee and
shall be delivered to the Company by such means as are determined by the
Committee in its discretion to constitute adequate delivery. The written notice
shall be accompanied by payment of the Exercise Price. This Option shall be
deemed to be exercised upon receipt by the Company of such written notice
accompanied by payment of the Exercise Price.
 
(ii) As a condition to the exercise of this Option and as further set forth in
Article 20 of the Plan, Optionee agrees to make adequate provision for federal,
state or other tax withholding obligations, if any, which arise upon the vesting
or exercise of the Option, or disposition of Shares, whether by withholding,
direct payment to the Company, or otherwise. If Optionee fails to satisfy such
obligations in this regard, the Company may require that the Shares otherwise
scheduled to become vested on any given date be forfeited.
 

--------------------------------------------------------------------------------

 
(iii) The Company is not obligated, and will have no liability for failure, to
issue or deliver or repurchase any Shares upon exercise of the Option unless
such issuance or delivery or repurchase would comply with the Applicable Laws
(as defined in Section 2(c) of the Plan), with such compliance determined by the
Company in consultation with its legal counsel. This Option may not be exercised
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board, or other Applicable Laws. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by the Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to Optionee on the date on which the Option is exercised with respect to such
Shares. The Company may postpone issuing and delivering any Shares for so long
as the Company reasonably determines to be necessary to satisfy the following:
 
(A) its completing or amending any securities registration or qualification of
the Shares or its or the Optionee’s satisfying any exemption from registration
under any federal or state law, rule or regulation;
 
(B) its receiving proof it considers satisfactory that a person seeking to
exercise the Option after the Optionee’s death is entitled to do so;
 
(C) the Optionee complying with any requests for representations under the Plan;
 
(D) the Optionee complying with any federal, state, or local tax withholding
obligations; and
 
(E) its compliance with the restrictions of Code Section 409A to the extent
applicable, including any final regulations issued pursuant thereto, including
the Committee’s right to amend any provision of this Option Agreement to the
extent necessary to comply with Code Section 409A.
 
4. Method of Payment. Payment of the Exercise Price (in US dollars) shall be by
any of the following, or a combination of the following, at the election of
Optionee:
 
(a) cash or check; or
 
(b) be tendering (either by actual delivery or attestation) to the Company for
repurchase previously acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the Exercise Price together with an assignment of
the proceeds of the Share repurchase to pay the Exercise Price (provided,
however, that such Shares tendered must have been held by the Optionee for at
least six (6) months prior to their tender if acquired under this Plan or any
other compensation plan maintained by the Company or such Shares must have been
purchased on the open market and be subject to the Companies Act of 1981 of
Bermuda) prior to their tender;
 
(c) through a same-day sale/cashless brokered exercise program, delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker acceptable to the Company to execute such instructions, in such form and
manner as the Company may from time to time require; or
 
(d) a combination of paragraphs (a), (b) and (c) immediately above.
 
5. Termination of Relationship; Vesting Acceleration on Certain Events.
Following the date of the Optionee’s termination of employment or service for
any reason (the “Termination Date”), Optionee may exercise the Option only as
set forth in the Notice and this Section 5. To the extent that Optionee is not
vested in the Shares as of his or her Termination Date, the Option shall
terminate as to unvested Shares as of the Termination Date. If Optionee does not
exercise this Option as to vested Shares prior to the Expiration Date of the
Option as set forth in the Notice, the Option shall terminate in its entirety.
In no event, may the Option be exercised as to any Shares after the Expiration
Date of the Option as set forth in the Notice.
 

--------------------------------------------------------------------------------

 
(a) Termination as a Result of Death or Disability. In the event of the
Optionee’s termination of service as a result of his or her death or Disability
(as defined in Section 2(q) of the Plan), any unvested Shares under the Option
shall immediately become fully vested and exercisable and all remaining Shares
subject to the Option shall remain exercisable until the Expiration Date. In the
event of the Optionee’s death, the Optionee’s beneficiary or estate may exercise
the vested Shares under the Option.
 
(b) Termination for Cause. In the event the Optionee’s service is terminated for
Cause (as defined in Section 2(i) of the Plan), all unvested Shares under the
Option and all unexercised, vested Shares under the Option shall expire
immediately, be forfeited and considered null and void, and the provisions of
Section 9 of this Agreement shall control.
 
(c) Termination -- General. In the event of the Optionee’s termination of
service other than as a result of Optionee’s death, Disability (as defined in
Section 2(q) of the Plan) or Cause (as defined in Section 2(i) of the Plan), the
vesting of the Option shall accelerate such that Optionee shall be vested in and
able to exercise the Option as of the Termination Date as to that number of
Shares subject to the Option that equals the product of:
 
(i) the total number of Shares subject to the Option, times
 
(ii) a ratio, the numerator of which is the total number of months of service
from May 1, 2006 to the end of the month immediately preceding the month in
which the Termination Date occurs, and the denominator of which is five (5).
 
(d) Change in Control Acceleration. In the event of a Change in Control (as
defined in Section 2(j) of the Plan) which closes on a date prior to an
Optionee’s termination of service, any unvested Shares under the Option shall
immediately become fully vested and exercisable and all remaining Shares subject
to the Option shall remain exercisable through their Expiration Date, effective
as of immediately prior to consummation of the Change in Control.
Notwithstanding the foregoing, to the extent that a service, change in control
or other agreement or arrangement with the Company or an Affiliate provides
benefits of greater value upon a Change in Control that those provided in this
paragraph (e), the rights set forth in such other agreement shall supersede the
provisions of this paragraph (e). Comparatively, to the extent that a service,
change in control or other agreement or arrangement with the Company or an
Affiliate provides benefits of lesser value upon a Change in Control that those
provided in this paragraph (e), the rights set forth in this paragraph (e) shall
supersede the provisions of such other agreement.
 
(e) Other Termination Events. Notwithstanding anything to the contrary contained
in this Option Agreement, the Option will terminate and expire immediately upon
the occurrence of the circumstances set forth in Section 11.2 of the Plan, and
the provisions of Section 9 of this Agreement shall control.
 
6. Relation of Prior Agreement(s) to Option. As an express condition to
acceptance of this Option, you agree that the only vesting and exercisability
provisions to govern the Option are as set forth in the Notice of Option Grant
and Sections 3 and 5 of this Agreement. Subject to Section 5(e) immediately
above (which governs a Change in Control situation), you agree that you will not
be entitled to any additional vesting or right to exercise under any service,
change in control or other agreement or arrangement, written or unwritten, to
which you are a party with the Company.
 
7. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him or her. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
 

--------------------------------------------------------------------------------

 
8. Changes in Company’s Capital Structure. Subject to any required action by the
Company’s Board and stockholders, as may be determined to be appropriate and
equitable by the Committee, to prevent dilution or enlargement of rights, the
Committee may:
 
(a) adjust proportionately the number of Shares covered by the Option and the
Exercise Price for any increase or decrease in the number of issued and
outstanding shares of common stock resulting from a subdivision or combination
of such shares or the payment of a stock dividend or any other increase or
decrease in the number of such outstanding shares of common stock of the Company
effected without the receipt of consideration by the Company; and
 
(b) if the Company is a participating corporation in any merger or consolidation
and provided the Option is not terminated upon consummation of such merger or
consolidation, modify such Option to pertain to and apply to the securities or
other property to which a holder of the number of shares subject to the
unexercised portion of this Option would have been entitled upon such
consummation.
 
Notwithstanding anything to the contrary, such adjustments by the Committee
shall be final, binding and conclusive.
 
9. Forfeiture Events. Upon the occurrence of any of the events set forth in
Section 11.2 of the Plan (a “Forfeiture Event”), Optionee, without any further
action by the Company or Optionee, shall forfeit, as of the first day of any
such Forfeiture Event:
 
(a) all right, title and interest to this Option;
 
(b) any Shares subject to the Option then owned by the Optionee; and
 
(c) any net proceeds received by the Optionee pursuant to any sales or transfer
of any Shares previously subject to the Options within the six (6) month period
prior to such date of such Forfeiture Event.
 
Additionally, the Company shall have the right to issue a stop transfer order
and other appropriate instructions to its transfer agent with respect to this
Option and the Shares, and the Company further shall be entitled to
reimbursement from the Optionee of any fees and expenses (including attorneys’
fees) incurred by or on behalf of the Company in enforcing the Company’s rights
under this Section 9. By accepting this Option Grant, the Optionee hereby
consents to a deduction from any amounts the Company owes to Optionee from time
to time (including amounts owed to the Optionee as compensation as well as any
other amounts owed to Optionee by the Company), to the extent of any amounts
that the Optionee owes to the Company under this Section 9. Whether or not the
Company elects to make any set-off in whole or in part, if the Company does not
recover by means of set-off the full amount the Optionee owes to the Company,
calculated as set forth above, the Optionee agrees to pay immediately the unpaid
balance to the Company.
 
10. Tax Consequences. Below is a brief summary as of the date of this Option of
certain United States federal tax consequences of exercise of this nonstatutory
stock option and disposition of the Shares under the laws in effect as of the
Date of Grant. THIS SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES. There may be a regular federal (and state)
income tax liability upon you exercise the Option. You will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price. If Shares issued upon exercise of this Option are held
for at least one year, any gain realized on disposition of those Shares will be
treated as long-term capital gain for federal income tax purposes. You are
obligated as a condition of exercise of this Option to satisfy any applicable
withholding obligations that apply thereto.
 

--------------------------------------------------------------------------------

 
11. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and provisions thereof (and
has had an opportunity to consult counsel regarding the Option terms), and
hereby accepts this Option and agrees to be bound by its contractual terms as
set forth herein and in the Plan. Optionee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Committee
regarding any questions relating to the Option. In the event of a conflict
between the terms and provisions of the Plan and the terms and provisions of the
Notice and this Agreement, the Plan terms and provisions shall prevail. This
Option Agreement and the Plan constitute the entire agreement between Optionee
and the Company on the subject matter hereof and supersedes all proposals,
written or oral, and all other communications between the parties relating to
such subject matter.
 
12. Governing Law. The laws of the state of New Jersey, without giving effect to
principles of conflicts of law, will apply to the Plan, to the Option and the
Option Agreement (including the Notice). The Company agrees, and Optionee agrees
as a condition to acceptance of the Option, to submit to the jurisdiction of the
courts located in the jurisdiction in which the Optionee provides, or most
recently provided, his or her primary services to the Company.
 
13. Provisions Applicable to Non-US Persons. This Section 13 shall apply to you
if you are resident in and/or subject to the laws of a country other than the
United States at the time of grant of this Option and during the period in which
you hold this Option or the Shares issued pursuant thereto:
 
(a) Data Protection. Optionee acknowledges and agrees (by executing this Option
Agreement) to the collection, use, processing and transfer of certain personal
data as described in this paragraph (a). The Optionee understands that he or she
is not obliged to consent to such collection, use, processing and transfer of
personal data. However, the Optionee understands that his or her failure to
provide such consent may affect his or her ability to participate in the Plan.
The Optionee understands that the Company may hold certain personal information
about the Optionee, including his or her name, salary, nationality, job title,
position evaluation rating along with details of all past awards and current
awards outstanding under the Plan, for the purpose of managing and administering
the Plan (the “Data”). The Company, or its Affiliates, will transfer Data
amongst themselves as necessary for the purpose of implementation,
administration and management of the Plan. The Company and/or any of it
Affiliates may further transfer Data to any third parties assisting the Company
in the implementation, administration and management of the Plan. These various
recipients of Data may be located elsewhere throughout the world. The Optionee
authorizes these various recipients of Data to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Plan, including any required
transfer of such Data as may be required for the subsequent holding of Shares
subject to the Option on the Optionee’s behalf by a broker or other third party
with whom the Optionee may elect to deposit any Shares subject to the Option
acquired pursuant to the Plan. The Optionee understands that he or she may, at
any time, review Data with respect to the Optionee and require any necessary
amendments to such Data. The Optionee also understands that he or she may
withdraw the consents to use Data herein by notifying the Company in writing;
however, the Optionee understands that by withdrawing his or her consents to use
Data, that the Optionee may affect his or her ability to participate in the
Plan.
 
(b) Service Matters. The award of this Option does not form part of your
entitlement to remuneration or benefits in terms of your services to the
Company. Your terms and conditions of service are not affected or changed in any
way by this Option or by the terms of the Plan or this Agreement. No provision
of this Agreement or of the Option granted hereunder shall give the Optionee any
right to continue in the service of the Company or any Affiliate, create any
inference as to the length of service of the Optionee, affect the right of the
Company or any Affiliate to terminate the service of the Optionee, with or
without Cause (as defined in Section 2(i) of the Plan), or give the Optionee any
right to participate in any employee welfare or benefit plan or other program
(other than the Plan) of the Company or any Affiliate. Optionee acknowledges and
agrees (by executing this Agreement) that the granting of Options under this
Agreement are made on a fully discretionary basis by the Company and that this
Agreement does not lead to a vested right to further Option awards in the
future. Further, the Options set forth in this Agreement constitute a
non-recurrent benefit and the terms of this Agreement are only applicable to the
Options distributed pursuant to this Agreement.
 

--------------------------------------------------------------------------------

 
(c) Tax Matters.
 
(i) Applicable if you are not a US person (including as to UK persons): You
hereby agree to indemnify and keep indemnified the Company and any Affiliate
from and against any liability for, or obligation to pay, income tax and
employer’s and/or employee’s national insurance or social security contributions
arising on the grant of the Option, vesting of the Shares or the exercise of the
Option.
 
(ii) Applicable if you are a UK person: Where any obligation to pay, income tax
or employee’s national insurance contributions or social security contributions
(any such obligation or contribution, a “Tax Liability”) arises, the Company or
any Affiliate may recover from you an amount of money sufficient to meet the Tax
Liability by any of the following arrangements:
 
(A) deduction from salary or other payments due to you; or
 
(B) withholding the issue to you of that number of Shares (otherwise to be
acquired by you on exercise of the Option) whose aggregate Fair Market Value on
the date of exercise is, so far as possible, equal to but neither less than nor
more than the amount of Tax Liability.
 
If the Participant is unable to satisfy his or her Tax Liability pursuant to
either clause (A) or clause (B) above, the Company may additionally cause the
forfeiture of any Shares otherwise scheduled to become vested under the
Restricted Stock Unit Award on a given date to avoid imposition of any Tax
Liability to the Participant.
 
14. Severability. In the event that any provision of this Option Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of this Option Agreement, and this Option
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.
 
15. Waiver; Cumulative Rights. The failure or delay of either party to require
performance by the other party of any provision hereof shall not affect its
right to require performance of such provision unless and until such performance
has been waived in writing. Each and every right hereunder is cumulative and may
be exercised in part or in whole from time to time.
 
16. Representations. As a condition to your receipt of this Option, you
represent and warrant the following:
 
(a) You are aware of the Company’s business affairs and financial condition and
have acquired sufficient information about the Company to reach an informed and
knowledgeable decision to accept this Option;
 
(b) You are acquiring the Option and the Shares subject thereto for investment
only for your own account, and not with a view, or for resale in connection
with, any “distribution” thereof under Applicable Law (as defined in Section
2(c) of the Plan);
 
(c) You understand that neither Option nor the Shares have been registered in
all State jurisdictions within the United States, and that the exemption(s) from
registration relied upon may depend upon your investment intent as set forth
above;
 
(d) You further understand that prior to any resale by you of the Shares
acquired upon exercise of this Option without registration of such resale in
relevant State jurisdictions, the Company may require you to furnish the Company
with an opinion of counsel acceptable to the Company that you may sell or
transfer such Shares pursuant to an available exemption under Applicable Law;
 

--------------------------------------------------------------------------------

 
(e) You understand that the Company is under no obligation to assist you in this
process by registering the Shares in any jurisdiction or by ensuring that an
exemption from registration is available; and
 
(f) You further agree that as a condition to exercise of this Option, the
Company may require you to furnish contemporaneously dated representations
similar to those set forth in this Section 16.
 

--------------------------------------------------------------------------------

 
EXHIBIT A
 
FOSTER WHEELER LTD. OMNIBUS INCENTIVE PLAN
Director’s Notice of Exercise
 

To:
Foster Wheeler Ltd.

Attn:
Stock Option Administrator

Subject:
Notice of Intention to Exercise Stock Option

 
This is official notice that the undersigned (“Optionee”) intends to exercise
Optionee’s option to purchase _________ Common Shares of Foster Wheeler Ltd.,
under and pursuant to the Company’s Omnibus Incentive Plan and the Option
Agreement dated ____________:
 
Date of Purchase:
 
 
Number of Shares:
 
 
Exercise Price:
 
 
Method of Payment of Purchase Price:
 
 
Social Security Number:
 
 

 
The Shares should be issued as follows:
 
Name:
 
 
Address:
 
 
Signed:
 
 
Date:
 
 

--------------------------------------------------------------------------------