Exhibit 10.2

 

 

 

 

 

 

 

 

 

FLUOR 409A

EXCUTIVE DEFERRED COMPENSATION PROGRAM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PREAMBLE

 

This Plan has been established to provide certain eligible Executives with
deferred compensation that complies with Code section 409A.  For periods prior
to January 1, 2008, the Plan shall be administered in reasonable, good faith
compliance with the requirements of Code section 409A.  Effective January 1,
2008, the Plan shall be interpreted in a manner consistent with Code section
409A, the final regulations issued thereunder, and any other applicable guidance
from the Internal Revenue Service.

 

ARTICLE I
THE PLAN

 

1.1.                              NAME.  This Plan shall be known as the “Fluor
Executive 409A Deferred Compensation Program”.

 

1.2                               PURPOSE.  This Plan is adopted for the purpose
of providing eligible Executives with a means to satisfy future financial needs
and also for the purpose of providing such Executives with retirement and other
benefits which, because of various contribution and benefit accrual limitations,
cannot be provided for them under the tax qualified retirement, profit sharing
and savings plans in which such Executive is a participant.  The Company intends
that the Plan constitute an unfunded “top hat” plan maintained for the purpose
of providing deferred compensation to a select group of management or highly
compensated employees under applicable provisions of ERISA.  The Company also
intends that the Plan comply with the applicable provisions of Code section
409A.

 

1.3                                 PLAN ADMINISTRATION.  The Plan shall be
administered by the Committee in accordance with the following:

 

(a)                               The Committee, on behalf of the Participants
and their Beneficiaries, shall enforce the Plan in accordance with its terms,
shall be charged with the general administration of the Plan, and shall have all
powers necessary to accomplish its purposes, including, but not by way of
limitation, the following:

 

(i)                                     To determine all questions relating to
the eligibility of employees to participate;

 

(ii)                                  To construe and interpret the terms and
provisions of this Plan;

 

(iii)                               To compute and certify to the amount and
kind of benefits payable to Participants or their Beneficiaries;

 

(iv)                              To maintain all records that may be necessary
for the administration of the Plan;

 

(v)                                    To provide for the disclosure of all
information and the filing or provision of all reports and statements to
Participants, Beneficiaries or governmental agencies as the Committee may
determine or as shall be required by law;

 

(vi)                                 To make and publish such rules for the
regulation of the Plan and procedures for the administration of the Plan as are
not inconsistent with the terms hereof; and

 

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(vii)                         To appoint a Plan administrator or any other
agent, and to delegate to such person such powers and duties in connection with
the administration of the Plan as the Committee may from time to time prescribe.

 

(b)                                 The Committee shall have sole and full
discretion to make factual determinations as may be necessary and to construe
and interpret the terms and provisions of this Plan, which interpretation or
construction shall be final and binding on all parties, including but not
limited to the Company and any Participant or Beneficiary.  The Committee shall
administer such terms and provisions in a uniform manner and in full accordance
with any and all laws applicable to the Plan.

 

(c)                                  To enable the Committee to perform its
functions, the Company shall supply full and timely information to the Committee
on all Plan matters relating to the Participants, their death or other cause of
termination, and such other pertinent facts as the Committee may require.

 

ARTICLE II
DEFINITIONS

 

2.1           DEFINITIONS.

 

Account(s) — shall mean (i) the Deferral Accounts (including, without
limitation, the Deferred Incentive Award Deferral Account and the Deferred
Salary Account), and the (ii) Excess Benefit Accrual Account, collectively,
maintained for each Participant, except that where reference to a specific
Account is intended, there will be a reference to the specific Account.

 

Adjustment — shall have the meaning set forth in Section 6.3 hereof.

 

Basic Compensation — shall mean “Basic Compensation” as defined in and provided
under the Savings Plan.

 

Beneficiary — The beneficiary designated on a form provided by the Company, or,
if no such designation has been made, the beneficiary designated by the
Participant under the Retirement Plan, or, in the absence of any designation,
the Participant’s estate.

 

Board — shall mean the Board of Directors of Fluor Corporation.

 

Change of Control — “Change of Control” of the Company shall be deemed to have
occurred if an event described in Treasury Regulation 1.409A-3(i)(5) occurs
(including, without limitation, (i) a change in ownership of the Company as a
result of a person, or more than one person acting as a group acquiring
ownership that in the aggregate constitutes more than 50 percent (50%) of the
total fair market value of the Company (this provision does not apply to a
person or group already possessing more than 50 percent (50%) of the total fair
market value of the Company); or (ii) a change in effective control of the
Company as a result of a person or more than one person acting as a group
acquiring (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or group) ownership of stock of the
Company possessing more than thirty percent (30%) of the total voting power of
the stock of the Company; or (iii) a change in effective control of the Company
as a result of the majority of members of the Company’s board of directors being
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the

 

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members of the Company’s board of directors before the date of the appointment
or election, or (iv) a change in ownership of a substantial portion of the
Company’s assets as a result of a person or more than one person acting as a
group acquiring (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to more than 40 percent
(40%) of the total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions).

 

Code — shall mean the Internal Revenue Code of 1986, as amended.

 

Committee — shall mean the Executive Compensation Committee of the Company.

 

Company — shall mean Fluor Corporation and (a) any company which is a member of
a controlled group of corporations, as defined in section 414(b) of the Code,
which controlled group includes Fluor Corporation; (b) any trade or business
under common control as defined in section 414(c) of the Code with Fluor
Corporation; (c) any organization (whether or not incorporated) which is a
member of an affiliated service group that includes Fluor Corporation or any
entity described in (a) and (b) above; and (d) any other entity required to be
aggregated with Fluor Corporation or any other entity described in (a), (b) and
(c) above pursuant to regulations under section 414(o) of the Code; provided,
however, that any reference to the Company with respect to matters relating to
the administration, design or termination of the Plan refers only to Fluor
Corporation.

 

Crediting Options — shall mean the crediting options established by the
Committee, as modified from time to time and shall have the meaning set forth in
Section 7.1 hereof.

 

Deferral Account — shall mean collectively, a Participant’s Deferred Incentive
Award Account and Deferred Salary Account.

 

Deferred Incentive Award Account — shall have the meaning set forth in
Section 6.1 hereof.

 

Deferred Salary Account — shall have the meaning set forth in Section 6.1
hereof.

 

Deferral Matching Contribution — shall mean the Company contributions credited
to each Participant’s Excess Benefit Accrual Account with respect to each Plan
Year in accordance with Section 5.3 hereof; and which consists of
(i) Discretionary Deferral Matching Contributions, (ii) Supplemental
Nonqualified Matching Contributions, and (iii) Regular Nonqualified Matching
Contributions.

 

Discretionary Deferral Matching Contributions — shall mean, with respect to an
Eligible Employee for a Plan Year, the amount, if anything, that is credited to
such Eligible Employee’s Excess Benefit Accrual Account in order to insure that
such Eligible Employee receives what the Committee determines to be the
appropriate total Deferral Matching Contributions, provided, further, that such
amount may not exceed an amount equal to the excess (if any) of (i) over (ii),
where:

 

(i)                                     equals such Eligible Employee’s Maximum
Nonqualified Matching Contribution for such Plan Year; and

 

(ii)                                  equals the sum of (a) such Eligible
Employee’s Supplemental Nonqualified Matching Contributions, plus (b) such
Eligible Employee’s

 

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Regular Nonqualified Matching Contributions; plus (c) such Eligible Employee’s
Maximum Qualified Matching Contribution.

 

Designated Filing Person- shall mean the person (which may be designated by
position or title rather than an individual) designated by the Committee to
receive, review and record Election Forms.

 

Effective Date — shall mean January 1, 2005 except that where reference to a
specific date is intended, there will be a reference to the specific date.

 

Election Form — shall mean the form or forms filed by an Eligible Employee on or
before whichever of the Salary Election Date or the Incentive Award Election
Date apply, and which complies with the requirements of Section 4.2, provided,
however, that such form shall contain such terms and be in such form as
determined by the Committee.

 

Eligible Employee — shall mean, unless otherwise expressly provided herein, an
employee of the Company who is (a) eligible to participate in the Retirement
Plan or has been specifically designated as eligible for participation in this
Plan by the Committee and (b) an Executive.

 

ERISA — shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

Excess Benefit Accrual Account — shall have the meaning set forth in Section 6.2
hereof.

 

Excess Benefit Accrual(s) — shall have the meaning set forth in Section 5.1 and
5.2 hereof.

 

Executive shall mean any employee who has been determined to be eligible to
participate in the Fluor Corporation and Subsidiaries Executive Incentive
Compensation Program, or any other person which the Committee determines to be
eligible for participation in the Plan.

 

Initial Deferral Election Date — shall mean the 30th day following the day on
which a person first becomes an Eligible Employee; provided, however, that the
Initial Deferral Election Date shall not apply to any individual who is a
participant in a plan that is aggregated with the Plan for purposes of Code
section 409A except to the extent permitted by Code section 409A.

 

Incentive Award — shall mean awards made pursuant to the terms of the Fluor
Corporation 2003 Executive Performance Incentive Plan, and any other incentive
program for Executives or other highly compensated employees whose participants
the Committee determines to be eligible for participation in this Plan.

 

Initial Election — shall have the meaning set forth in Section 3.1 hereof.

 

Incentive Award Election Date shall mean the last day of the Plan Year preceding
the Plan Year in which the initial performance period of such Incentive Award
commences.  However, if such Incentive Award qualifies as “performance-based
compensation” under section 409A of the Code and the applicable performance
period is at least one year, the Incentive Award Election Date shall be the date
that is six (6) months before the end of the performance period (or, if earlier,
when the amount of the Incentive Award has become ascertainable within the
meaning of section 409A of the Code).

 

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Maximum Qualified Matching Contribution. — shall mean, for each Eligible
Employee for a Plan Year, the amount which would have been contributed to the
Savings Plan as a Savings Plan Matching Contribution for such Eligible Employee
if such Eligible Employee had contributed at least the maximum percentage of
Basic Compensation that would have received a matching contribution from the
beginning of the applicable Plan Year (or, if later, when the Eligible Employee
became eligible to participate in the Savings Plan) until such Eligible
Employee’s Statutory Limitation Payroll Date.

 

Maximum Nonqualified Matching Amount — shall mean, for each Plan Year, the sum
of the amounts determined, for each payroll period during which a person was an
Eligible Employee, by multiplying the Salary paid to such Eligible Employee for
each such payroll period by the Savings Plan Matching Contribution Rate for such
payroll period.

 

Net Asset Value — shall mean a fund’s share value, calculated once a day, based
on the closing market price for each security in the fund’s portfolio.  It is
computed either by reference to a commercial exchange (NYSE, AMEX, Nasdaq, etc.)
or by deducting the fund’s liabilities from the portfolio’s total assets and
dividing this amount by the number of shares outstanding.

 

Participant — shall mean any Eligible Employee who has one or more Deferral
Accounts and/or an Accrual Account under this Plan.

 

Performance Plan Contributions — shall mean the contributions set forth in
Section 6.2 of the Fluor Corporation Salaried Employees’ Savings Investment
Plan.

 

Plan — shall mean the Fluor Executive 409A Deferred Compensation Program, the
terms of which are set forth herein.

 

Plan Year — shall mean the twelve-month period ending on December 31 of each
year.

 

Pre-Tax Contributions — shall mean “Pre-Tax Contributions” as defined in and
provided under the Savings Plan.

 

Regular Nonqualified Matching Contribution — shall have the meaning specified in
Section 5.3.

 

Retirement Plan — shall mean the Fluor Corporation Employees’ Defined Benefit
Retirement Plan.

 

Salary — shall mean the compensation regularly paid to an Eligible Employee by
the Company per payroll period in the form of base salary (including amounts
contributed by the Company on behalf of the Eligible Employee as Pre-Tax
Contributions under the Savings Plan and amounts contributed under the Fluor
Section 125 Plan), but excluding bonuses, commissions, incentives, site adders,
overtime and other irregular payments including severance pay, lump sum vacation
payments and merit increases paid in a lump sum, and before deductions
authorized by such Eligible Employee or required by law to be withheld from such
Eligible Employee.

 

Salary Election Date — shall mean the last day of the Plan Year preceding the
Plan Year in which the Salary to be deferred is paid.

 

Savings Plan — shall mean the Fluor Corporation Salaried Employees’ Savings
Investment Plan, as amended.

 

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Savings Plan Matching Contributions — shall mean the amounts contributed to a
Participant under Article VI of the Savings Plan as matching contributions with
respect to Pre-Tax Contributions under the Savings Plan.

 

Specified Employee — shall mean, effective January 1, 2008, a Participant
classified by the Company as an Officer for the year in which the Participant’s
Termination of Service occurs, as determined in a manner consistent with Code
section 409A.  For Plan Years ending prior to January 1, 2008, Specified
Employee shall mean a key employee (as defined in Code section 416(i) (without
regard to Code section 416(i)(5)) and Code section 409A, and regulations
thereunder) of the Company.  Notwithstanding the foregoing, the Company may make
such elections by appropriate corporate action as permitted under the applicable
regulations and other guidance issued under Code section 409A with respect to
determining Specified Employees, and any such election shall be incorporated
into and binding upon the Plan and all Participants as if fully set forth
herein.

 

Supplemental Nonqualified Matching Contributions — shall have the meaning set
forth in Section 5.3 hereof.

 

Statutory Limitation Payroll Date — shall mean the final payroll date during the
Plan Year on which an Eligible Employee can receive a Savings Plan Matching
Contribution resulting solely from the limitations imposed by either section
402(g) or 401(a)(17) of the Code; provided, further, that for purposes of this
Plan, the reference shall be construed as referring only to the portion of the
Eligible Employee’s Basic Compensation paid on such final payroll date which is
subject to such limitations.

 

Termination of Service — shall mean a separation from service from the Company
for any reason, within the meaning of Code section 409A. Termination of the
employee/ employer relationship between a Participant and the Company by reason
of retirement, death, resignation, involuntary termination, or permanent total
disability as these terms are defined for purposes of the Retirement Plan.  To
the extent permitted by Code section 409A, a Participant shall be deemed to have
incurred a Termination of Service when it is reasonably anticipated that a
permanent reduction in the level of services with respect to such Participant
equals forty-nine percent (49%) or less of the average level of services she or
he provided in the immediately preceding three (3) years.

 

Unforseeable Emergency — shall have the meaning set forth in Section 9.2 hereof.

 

Valuation Date — shall have the meaning set forth in Section 7.6 hereof.

 

ARTICLE III
PARTICIPATION

 

3.1                                 SALARY DEFERRALS.  A person who is an
Eligible Employee on a Salary Election Date (or on such Eligible Employee’s
Initial Election Date, if applicable) will be entitled to elect to defer amounts
of Salary hereunder.  Without limiting the generality of the preceding sentence,
if an Eligible Employee is removed as an Executive, such Eligible Employee will,
notwithstanding such removal, continue to defer Salary through the end of the
calendar year in which such removal occurred.  An election shall become
irrevocable on the Salary Election Date (or the Initial Election Date, if
applicable) with respect to the calendar year to which it applies, except to the
extent permitted by Code section 409A if the Participant experiences an
Unforeseeable Emergency.

 

 

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3.2                                 INCENTIVE AWARD DEFERRALS.  A person who is
an Eligible Employee on the Incentive Award Election Date will be entitled to
elect to defer amounts of Incentive Award hereunder.

 

3.3                                 EXCESS BENEFIT ACCRUALS.   As of the various
dates provided in Section 5.1, each Eligible Employee shall be entitled to
receive an Excess Benefit Accrual if and to the extent earned in accordance with
the provisions of Section 5.1 hereof.

 

3.4                                 STATUS AS PARTICIPANT.  Once an Eligible
Employee defers an amount hereunder, or is allocated an amount under
Section 5.1(a), such person will become a Participant, and shall remain a
Participant until all amounts credited to such person hereunder are distributed
to such person.

 

ARTICLE IV
DEFERRALS

 

4.1                                 AMOUNTS SUBJECT TO DEFERRAL.  Subject to the
provisions of this Plan and the effect of any previously authorized or required
deductions, reductions, income or employment tax withholdings applicable to such
compensation, an Eligible Employee may elect to defer all or any portion of her
or his Salary or any Incentive Award.

 

4.2                                 TIMING AND MECHANICS OF ELECTION.

 

(a)                                  Salary — In order to be effective with
respect to Salary paid during a Plan Year, an Election Form must be filed with
the Designated Filing Person by the Salary Election Date for such Plan Year, or,
where applicable, by the Initial Deferral Election Date, and only the last
Election Form filed on or before that date will be considered a properly filed
Election Form with respect to such Plan Year (or portion of Plan Year).  The
Election Form must specify (i) the percentage of Salary to be deferred for each
pay period, (ii) the pay period on which such deferrals will commence,
(iii) date on which payment of such deferrals will be made or commenced, and
(iv) the form in which payments of such deferrals will be made.  Only one
Election Form will be filed for each Plan Year and a new Election Form is
required to be filed for each Plan Year.  Deferred amounts withheld from an
Eligible Employee’s Salary shall be credited to such Eligible Employee’s
Deferred Salary Account as of the payroll date in which such amounts are
withheld.

 

(b)                                 Incentive Awards — In order to be effective
with respect to an Incentive Award, an Election Form must be filed with the
Designated Filing Person by the Incentive Award Election Date with respect to
such Incentive Award, and only the last Election Form filed on or before such
date will be considered a properly filed Election Form with respect to such
Incentive Award.  The Election Form must specify (i) either the percentage of
the Incentive Award, or a fixed dollar amount, to be deferred, (ii) date on
which payment of such deferral will be made or commenced, and (iii) the form in
which payments of such deferrals will be made.  A new Election Form is required
to be filed with respect to each Incentive Award.  Deferred amounts withheld
from an Eligible Employee’s Incentive Award shall be credited to such Eligible
Employee’s Deferred Incentive Award Account as of the payroll date in which such
amounts are withheld.

 

 

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ARTICLE V
OTHER ACCRUALS

 

5.1                                 EXCESS BENEFIT ACCRUALS.  Excess Benefit
Accruals will include the sum of:

 

(a)                                  As of each payroll date, the Company shall
credit the Excess Benefit Accrual Account of each Eligible Employee with a
pro-rata amount equal to the excess of the Company Contribution Credit which
would have been allocated to such Eligible Employee’s account under the
Retirement Plan for the calendar year but for the limitations imposed by
sections 401(a)(17) and 415 of the Code over the actual Company Contribution
Credit to the Eligible Employee’s account under the Retirement Plan for the
calendar year.  Such amount shall be determined by the Committee using actuarial
assumptions selected by the Committee in its discretion.

 

(b)                                 On or before a reasonable period of time
following the earlier of (i) an Eligible Employee’s Termination of Service, or
(ii) the last business day of the Plan Year, the Company shall credit the Excess
Benefit Accrual Account of each Eligible Employee with all of such Eligible
Employee’s Deferral Matching Contributions, if any, for such Plan Year.  Nothing
herein shall require, or prohibit, the Company from crediting some of the
Deferral Matching Contributions for a Plan Year at the end of any month or
payroll period during such Plan Year.

 

(c)                                  As of the last business day of each
calendar year, the Company shall credit the Excess Benefit Accrual Account of
each Eligible Employee with a pro-rata amount equal to the excess of the amount
of Company contributions which would have been allocated to such Eligible
Employee’s account as Performance Plan Contributions for the calendar year but
for the limitations imposed by sections 401(a)(17) and 415 of the Code over the
actual amount of Company contributions allocated to her or his accounts under
such plan for the calendar year.

 

5.2                                 COMPENSATING ACCRUALS.  Each Eligible
Employee who elects to defer all or a portion of her or his Salary pursuant to
Section 4.2(a) hereof will also be credited with additional accruals to her or
his Deferred Salary Account to compensate for reductions in Retirement Plan
accruals, Savings Plan contributions, and Performance Plan Contributions that
result from such Salary deferral.  Such accruals shall be calculated as follows:

 

(a)                                  As of the end of each month, there shall be
credited to the Deferred Salary Account of each Eligible Employee, an additional
amount that is equal to the Company Contributions Credit that would have been
credited to the Eligible Employee’s Company Contributions Account in the
Retirement Plan for such month but for Salary deferrals made under this Plan.

 

(b)                                 As of the last business day of each calendar
year, there shall be credited to the Deferred Salary Account of each Eligible
Employee, an additional amount that is equal to the amount by which Company
contributions to the Eligible Employee’s account as Performance Plan
Contributions were reduced by reason of Salary deferrals made under this Plan.

 

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5.3                                  DEFERRAL MATCHING CONTRIBUTIONS.  Effective
on January 1, 2008, for each Plan Year, the Company shall credit an Eligible
Employee with Deferral Matching Contributions determined as follows:

 

(a)                                  An Eligible Employee’s Supplemental
Nonqualified Matching Contributions shall equal five percent (5%) of the
Eligible Employee’s Salary deferred (in accordance with Section 3.1 hereof)
during each payroll period ending on or before such Eligible Employee’s
Statutory Limitation Payroll Date.

 

(b)                                 An Eligible Employee’s Regular Nonqualified
Matching Contribution shall be made with respect to each payroll period
occurring on or after such Eligible Employee’s Statutory Limitation Payroll
Date, and shall be equal to the lesser of (i) the amount of Salary which such
Eligible Employee defers (in accordance with Section 3.1 hereof) with respect to
such payroll period, or (ii) five percent (5%) of such Eligible Participant’s
Salary paid with respect to such payroll period.

 

(c)                                  The Company may, but shall not be required,
to credit an Eligible Employee with a Discretionary Deferral Matching
Contribution based upon any criteria determined by the Company.  Such
Discretionary Deferral Matching Contribution may be credited as of the end of
any payroll period or month, or at the end of calendar year, as selected by the
Company.

 

ARTICLE VI
MAINTENANCE OF ACCOUNTS

 

6.1                                          DEFERRAL ACCOUNTS.  The Company
shall maintain one or more of the following Deferral Accounts, as applicable,
for Eligible Employees: (1) a Deferred Incentive Award Account to which shall be
credited all amounts of Incentive Awards which have been deferred by such
Eligible Employee pursuant to the provisions of Section 4.2(b) hereof; and (2) a
Deferred Salary Account to which shall be credited all amounts of Salary
deferred on and after the Effective Date and all amounts credited such Eligible
Employee pursuant to Sections 4.2(a) and 5.2 hereof.

 

6.2                                         EXCESS BENEFIT ACCRUAL ACCOUNTS. 
The Company shall maintain an Excess Benefit Accrual Account for each Eligible
Employee to which shall be credited all amounts accruing for the benefit of such
Eligible Employee pursuant to Sections 5.1 and 5.3 hereof.

 

6.3                                         ADJUSTMENTS.  Each Account shall be
adjusted daily (prior to January 1, 2008, at least monthly) to reflect any gains
and/or losses thereon (deemed or actual) (the “Adjustment”) in accordance with
the provisions of Section 7.1 hereof.

 

ARTICLE VII
CREDITING OPTIONS

 

7.1                                         CREDITING OPTIONS.  THE COMPANY HAS
SELECTED CERTAIN CREDITING OPTIONS FOR DETERMINING GAINS AND/OR LOSSES TO
PARTICIPANT ACCOUNTS, ANY OF WHICH MAY BE CHANGED, MODIFIED OR DELETED, OR
ADDITIONAL INVESTMENT OPTIONS MAY BE ADDED, BY THE COMMITTEE IN ITS DISCRETION
(THE “CREDITING OPTIONS”).  AT THE TIME THAT AN ELIGIBLE EMPLOYEE FIRST BECOMES
A PARTICIPANT, THE PARTICIPANT SHALL ALLOCATE DEFERRALS AMONG THE CREDITING
OPTIONS SET FORTH IN THE INITIAL INVESTMENT ELECTION FORM.  THE CREDITING
OPTIONS WILL BE

 

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USED AS A MEASURE OF THE DEEMED INVESTMENT PERFORMANCE OF THE BALANCES OF EACH
OF HER OR HIS ACCOUNTS BY THE COMMITTEE.

 

Notwithstanding the preceding paragraph, all stock units (or equivalents) that
are deferred into a Participant Account shall not be subject to adjustment under
the provisions of this Section 7.1.  Any investment adjustment with respect to
stock units (or equivalents) shall instead be governed by the terms of the
Incentive Plan granting the stock units (or equivalents), and such stock units
(or equivalents) shall be deemed to have been granted under such Incentive Plan.

 

7.2                                 INITIAL DESIGNATIONS. In making the initial
Crediting Options designation, the Participant may specify that all or any
percentage (expressed in 1% multiples) of her or his Accounts be deemed to be
invested in one or more of the Crediting Options.

 

7.3                              SUBSEQUENT DESIGNATIONS.  Each Participant will
also be able to reallocate the Crediting Options to be used in the future for
each of her or his Accounts, for current Account balances and future
contributions, on any business day (prior to January 1, 2008, once every month)
on a form provided by the Company (all elections to be expressed in 1%
multiples).  Any reallocation among the Crediting Options will be effective on
the business day following the day on which the form is received by the Company
(prior to January 1, 2008, the first day of the month following the month in
which the form is received by the Company, unless the form is received after the
monthly deadline set by the Company for receipt of reallocation forms for the
month, in which case the reallocation will be effective as of the first day of
the next subsequent month).  Until a Participant delivers a new Crediting
Options form to the Company, her or his prior Crediting Options election shall
control.

 

7.4                                 MISSING OR INVALID DESIGNATIONS.  If a
Participant fails to designate any Crediting Option for the Accounts, she or he
shall be deemed to have designated the Money Market Option (or its equivalent)
until a Crediting Options designation is received by the Company.   Similarly,
if a Participant has designated a Crediting Option which is removed or no longer
available, the Participant will be deemed to have designated the Money Market
Option (or its equivalent) as its replacement until such time a new Crediting
Options designation is received by the Company.

 

7.5                                 EFFECT OF CHANGE IN DESIGNATION.  The
Company shall use the Participant’s Crediting Option designations as the basis
for calculating the Adjustment component of each Account.  If a Participant
changes her or his Crediting Option designations, then such change shall
supersede the previous designation effective the next business day after the
change is received by the Company (prior to January 1, 2008, the first business
day of the month following the month the change is received by the Company
(unless received after the deadline established by the Company)).

 

7.6                                 CALCULATION OF ADJUSTMENT.  The Adjustment
shall be determined for every Account each day that the investment associated
with the particular Crediting Option is actively traded.  The daily Adjustment
for each Crediting Option shall be determined as follows:

 

(a)                                  As of each trading day of the associated
investment of the Crediting Option in which a Participant has a beginning
balance for the day in any Account, the amount of each Account deemed invested
in a particular Crediting Option shall either be credited or debited with an
amount equal to that determined by multiplying the amount of such Account (as
measured by the beginning balance

 

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number of shares) deemed invested in a particular Crediting Option by the change
in the Net Asset Value reported for that day for the associated investment.

 

(b)                                 As to the any amounts distributed, the
Company shall cease crediting or debiting Adjustments to the Accounts on the
last day of the month (or such other date determined by the Committee on a
uniform and nondiscriminatory basis) prior to the applicable distribution event
set forth in Articles VIII and IX (the “Valuation Date”).

 

(c)                                  Distribution amounts determined under
Articles VIII and IX shall include the cumulative Adjustments made to the
Accounts of the Participant in accordance with this Article VII.

 

7.7                                 LIMITATIONS.  ALLOCATION SHALL BE MADE
SOLELY AMONG THE CREDITING OPTIONS SELECTED BY THE COMPANY.  A PARTICIPANT SHALL
HAVE ABSOLUTELY NO OWNERSHIP INTEREST IN ANY CREDITING OPTION OR ANY UNDERLYING
INVESTMENT.  THE COMPANY SHALL BE THE SOLE OWNER OF ANY FUNDS INVESTED IN ANY
SUCH INVESTMENT, AS WELL AS ALL AMOUNTS ACCOUNTED FOR IN THE ACCOUNTS, ALL OF
WHICH SHALL AT ALL TIMES BE SUBJECT TO THE CLAIMS OF THE COMPANY’S CREDITORS.  A
PARTICIPANT SHALL HAVE A CONTRACTUAL RIGHT TO PAYMENT OF AN AMOUNT EQUAL TO THE
BALANCE IN EACH OF HER OR HIS ACCOUNTS IN ACCORDANCE WITH THIS ARTICLE AND
ARTICLES VIII AND IX HEREOF.

 

ARTICLE VIII
ACCOUNT DISTRIBUTIONS

 

8.1                                 NO DEFERRAL PERIOD SPECIFIED.  With respect
to the Excess Benefit Accrual Account and those portions of any Deferral Account
(including, any Adjustments related thereto) as to which no specific deferral
period has been selected by the Participant prior to the time of deferral:

 

(a)                                  The lump sum payment or the first
installment payment will be paid in the month following Termination of Service.

 

(b)                                 In the case of installment payments, the
second installment will be paid in January following the calendar year in which
the first installment was paid and all remaining installments will be paid
annually in January.

 

(c)                                  Other provisions notwithstanding, a
Participant determined to be a Specified Employee who is entitled to a
distribution as a result of a Termination of Service shall receive the
applicable lump sum or initial payment six months after the Termination of
Service or, if earlier, upon death.

 

8.2                                 SPECIFIED DEFERRAL PERIOD.  With respect to
the Excess Benefit Accrual Account and those portions of any Deferral Account
(including any Adjustments related thereto) as to which a specified deferral
period has been selected by a Participant at the time of deferral:

 

(a)                                  The lump sum payment or the first
installment will be paid in the month following the earlier of the
(i) Participant’s Termination of Service or (ii) upon expiration of the specific
deferral period.

 

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(b)                                 In the case of installment payments, the
second installment will be paid in January following the year in which the first
installment was paid and all remaining installments will be paid annually in
January.

 

(c)                                  Notwithstanding any specified deferral
period election by a Participant, if the Participant has a Termination of
Service before all distributions are made pursuant thereto, such election shall
no longer apply and the deferral election applicable to distributions to be made
in connection with the Participant’s Termination of Service instead shall become
effective.

 

(d)                                 Other provisions notwithstanding, a
Participant determined to be a Specified Employee who is entitled to a
distribution as a result of a Termination of Service shall receive the initial
payment six months after the Termination of Service or, if earlier, upon death.

 

8.3                                 NO FORM OF DISTRIBUTION IS SPECIFIED.  With
respect to any Account (including, any Adjustments thereto) as to which no
specific form of distribution has been selected by the Participant at the time
of deferral, the distribution will be in the form of a single lump sum payment.

 

8.4                                 FORM OF DISTRIBUTION IS SPECIFIED.  All
payments will be made in a single lump sum unless the Participant designates at
the time of deferral that the deferred amount be paid in a specified number (not
to exceed ten) of annual installments.

 

8.5                                 ELECTION CHANGES.  A Participant may change
the time and method of payment by making a subsequent distribution election.  A
subsequent distribution election will become effective twelve (12) months after
the election has been received by the Company.  The subsequent distribution
election must defer payment to a date at least five (5) years later than
originally scheduled.

 

8.6                                 DEATH BENEFITS.  Unless otherwise elected in
the time and manner specified in Section 4.2, in the event of the death of a
Participant, the Participant’s benefits will be distributed to the Participant’s
Beneficiary in a single lump sum payment as soon as administratively feasible
following the Participant’s death, but no later than the January following
death.

 

8.7                                 RELEASE OF CLAIM.  Acceptance of payment of
the distributions required hereunder by a Participant or her or his Beneficiary
(as applicable) shall constitute a release by such Participant or Beneficiary
(as applicable) of all claims against the Company by the Participant or
Beneficiary (as applicable).

 

ARTICLE IX
OTHER DISTRIBUTION EVENTS

 

9.1                                 CHANGE OF CONTROL.

 

Notwithstanding any other Section hereof, if a Participant’s employment with the
Company has a Termination of Service for any reason other than death, within the
two-year period beginning on the date that a Change of Control occurs, then the
Company shall pay to the Participant by the end of the month following the month
of termination (six months (6) after the date of the Termination of Service if
the Participant is a Specified Employee) a lump sum distribution of all of her
or his Accounts (including any Adjustments).  If a Participant dies after
Termination of Service, but before payment of

 

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any amount payable under this Section, then such amount shall be paid to the
Participant’s Beneficiary within the first fifteen (15) days of the month
following the month of the Participant’s death.

 

 9.2          UNFORESEEABLE EMERGENCY.

 

(a)                                  A distribution of a portion of a
Participant’s Accounts because of an Unforeseeable Emergency will be permitted
only to the extent required by the Participant to satisfy the emergency. 
Whether an Unforeseeable Emergency has occurred will be determined solely by the
Committee in its reasonable discretion.  Distributions in the event of an
Unforeseeable Emergency may be made by and with the approval of the Committee
upon written request by a Participant.

 

(b)                                 An “Unforeseeable Emergency” is defined as a
severe financial hardship to the Participant caused by sudden and unexpected
illness or accident of the Participant, the Participant’s spouse, the
Participant’s Beneficiary, or of a dependent of the Participant (as defined in
Code section 152, without regard to Code section 152(b)(1), (b)(2), and
(d)(1)(B)), loss of the Participant’s property due to casualty, or other
extraordinary and unforeseeable circumstances caused by a result of events
beyond the Participant’s control.  The circumstances that will constitute an
Unforeseeable Emergency will depend upon the specific facts of each case, but,
in any event, any distribution under this Section shall not exceed the amount
required by the Participant to resolve the hardship after (i) reimbursement or
compensation through insurance or otherwise, (ii) obtaining liquidation of the
Participant’s assets, to the extent such liquidation would not itself cause a
severe financial hardship, or (iii) suspension of deferrals under the Plan.  In
all events, a distribution shall be made in connection with an Unforeseeable
Emergency only to the extent permitted by Code section 409A.

 

9.3                                 DISTRIBUTION IN THE EVENT OF DIVORCE.  In
the event of the divorce or legal separation of a Participant, and the awarding
of all or a portion of the Accounts to the spouse of the Participant by court
order, such spouse may elect, by filing with the Committee a form specified by
the Committee and by providing such other information as the Committee may in
its discretion reasonably request in order to confirm that the applicable facts
and circumstances are present, to receive a distribution of her or his
court-awarded portion of the Participant’s Accounts pursuant and subject to the
terms of Section 8.1.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

10.1                           PARTICIPANT RIGHTS IN THE UNFUNDED PLAN.  Any
liability of the Company to any Participant with respect to any benefit shall be
based solely upon the contractual obligations created by the Plan; no such
obligation shall be deemed to be secured by any pledge or any encumbrance on any
property of the Company.  The Company’s obligations under this agreement shall
be an unfunded and unsecured promise to pay.  No Participant or her or his
Beneficiaries shall have any rights under the Plan other than those of an
unsecured creditor of the Company.  Assets segregated or identified by the
Company for the purpose of paying benefits pursuant to the Plan remain general
corporate assets subject to the claims of the Company’s creditors.

 

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10.2                           NON-ASSIGNABILITY.  Subject to the provisions of
Section 10.3, neither the Participant nor her or his Beneficiary shall have any
power or rights to transfer, assign, anticipate, hypothecate or otherwise
encumber any part or all of the amounts payable hereunder, which are expressly
declared to be un-assignable and non-transferable.  Any such attempted
assignment or transfer shall be void and the Company shall thereupon have no
further liability to such Participant or such Beneficiary hereunder.  No amount
payable hereunder shall, prior to actual payment thereof, be subject to seizure
by any creditor of any Participant or Beneficiary for the payment of debt,
judgment or other obligation, by a proceeding at law or in equity, nor
transferable by operation of law in the event of the bankruptcy, insolvency or
death of the Participant, her or his designated Beneficiary or any other
beneficiary hereunder.

 

10.3                           TERMINATION OR AMENDMENT OF PLAN.  The Company
retains the right, at any time and in its sole discretion, to amend or terminate
the Plan, in whole or in part.   Any amendment of the Plan shall be approved by
the Board, shall be in writing, and shall be communicated to the Participants. 
Notwithstanding the above, the Committee shall have the discretionary authority
to change the requirements of eligibility or to modify the Crediting Options
hereunder without Board approval.  No amendment of the Plan shall materially
impair or curtail the Company’s contractual obligations arising from deferral
elections previously made or for benefits accrued prior to such amendment
without Participant consent.  In the event of Plan termination, payment of
Deferral and Accrual Accounts shall occur in accordance with existing
Participant distribution elections.

 

10.4                           CONTINUATION OF EMPLOYMENT.  This Plan shall not
be deemed to constitute a contract of employment between the Company and a
Participant.  Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue in the employ of the
Company or affect the right of the Company to terminate the employment of any
Participant at any time with or without cause.  Nothing in the Plan will
otherwise affect any Participant’s employment relationship with the Company.

 

10.5                           RESPONSIBILITY FOR LEGAL EFFECT.  Neither the
Committee nor the Company make any representations or warranties, express or
implied, or assumes any responsibility concerning the legal, tax or other
implications or effects of this Plan.

 

10.6                           WITHHOLDING.  The Company shall withhold from or
offset against any payment or accrual made under the Plan any taxes the Company
determines it is required to withhold by applicable federal, state, local or
foreign laws.

 

10.7                           OTHER COMPENSATION PLANS.  The adoption of the
Plan shall not affect any other incentive or other compensation plans in effect
for the Company or any subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any subsidiary.

 

10.8                           PLAN BINDING ON SUCCESSORS.  The Plan shall be
binding upon the successors and assigns of the Company.

 

10.9                           SINGULAR, PLURAL.  Wherever appropriate in this
Plan, nouns in the singular shall include the plural.

 

10.10                     CONTROLLING LAW.  The Plan shall be governed by and
construed in accordance with the internal law, without regard to conflict of law
principles, of the State of Delaware to the extent not pre-empted by the laws of
the United States of America.

 

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10.11                     NO DUPLICATION.  In no event shall the benefit
provided under the Plan duplicate any benefits accrued and/or payable under the
Fluor Corporation Deferred Compensation Program (frozen effective December 31,
2004).

 

 

 

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