FOSTER WHEELER INC.

                             STOCK OPTION AGREEMENT



         THIS AGREEMENT (the "Agreement"),  dated as of the 22nd day of October,
2001, between Foster Wheeler Inc. located at Perryville Corporate Park, Clinton,
New Jersey (the "Company") and Raymond J. Milchovich ("Optionee").


         WHEREAS,  the  Company  wishes to grant an option to the  Optionee as a
material  inducement  to enter into an employment  contract with Foster  Wheeler
Ltd.  (the  "Parent")  and to encourage  Optionee to remain in the employ of the
Company or a direct or indirect subsidiary or affiliate of Parent, and

         WHEREAS,  the Optionee is  simultaneously  entering  into an employment
contract with Parent (the "Contract").

         NOW, THEREFORE, it is agreed as follows:

         1. OPTION.  The Company  hereby grants to Optionee  this  non-qualified
stock option ("Option") to purchase  1,300,000 common shares of Parent at $4.985
per  share,  which is the mean of the high  and low sale  prices  of the  Common
Shares  of Parent on the New York  Stock  Exchange  on the date of grant of this
Option.

         2. EXERCISE OF OPTION. This Option shall become  exercisable,  or shall
("vest"),  with respect to  one-fifth  of the shares  subject to this Option one
year after the date of this Agreement, this Option shall become exercisable with
respect to two-fifths  of the shares  subject to this Option two years after the
date of this  Agreement,  this Option shall become  exercisable  with respect to
three-fifths  of the shares subject to this Option three years after the date of
this Agreement, this Option shall become exercisable with respect to four-fifths
of the shares subject to this Option four years after the date of this Agreement
and this Option shall become  exercisable  with respect to the  remainder of the
shares subject to the Option five years after the date of this  Agreement.  This
Option expires ten (10) years from the date hereof.

         This Option may be exercised,  to the extent  exercisable in accordance
with this Agreement,  in whole or part by written notice to the Company,  except
that this Option shall not be exercisable  if, in the opinion of counsel for the
Company,  exercise of this Option or delivery of shares  pursuant  thereto would
directly  (i) result in a  violation  of any law or  regulation  of an agency of
government or (ii) have an adverse effect on the listing status or qualification
of Parent  shares on any  securities  exchange;  provided that the Company shall
take or cause to be taken all action necessary to satisfy any requirement of law
or such regulation, or to avoid any such adverse effect.

         3.  PAYMENT  OF  PURCHASE  PRICE.  Payment  for shares as to which this
Option is  exercised  shall be made at the time  written  notice of  exercise is
given. The option price shall be paid upon exercise (i) in U.S. dollars, or (ii)
in shares of common  shares  of  Parent  owned of record by the


<PAGE>

Optionee.  Such  common  shares  shall be valued at the mean of the high and low
sale  prices  of  such  shares  on the New  York  Stock  Exchange  on the day of
exercise.

         4. TERMINATION OF EMPLOYMENT. If the Optionee is terminated because the
Optionee  is  physically  or  mentally  disabled  and is unable to  perform  the
Optionee's principal services pursuant to the Contract, or is terminated Without
Cause (as defined in the  Contract) by Parent,  the Company,  or a subsidiary or
affiliate of Parent, or the Optionee  terminates  employment for Good Reason (as
defined in the  Contract),  this  Option  shall vest with  respect to all of the
shares subject to this Option, and shall remain  exercisable  through the second
anniversary of such termination.

         If the  Optionee  dies  while  employed  by  Parent,  the  Company or a
subsidiary or affiliate of Parent, this Option shall vest with respect to all of
the shares subject to this Option,  and shall remain exercisable by a legatee or
legatees of the  Optionee  under the last will,  or by the  Optionee's  personal
representatives   or  distributees,   through  the  second  anniversary  of  the
Optionee's death.

         If the Optionee retires under a pension plan of Parent,  the Company or
a subsidiary or affiliate of Parent,  this Option shall vest with respect to all
of the shares  subject to this Option,  and shall remain  exercisable  until the
earlier  of one year  from the date of  grant,  and the  expiration  date of the
Option.

         In the event that the Optionee's employment is terminated for Cause (as
defined in the Contract) by the Parent, the Company or a subsidiary or affiliate
of Parent or the Optionee  terminates his employment  other than for Good Reason
(as defined in the  Contract),  this Option,  to the extent  unvested,  shall be
immediately   forfeited  and  the  remainder  of  this  Option,  to  the  extent
unexercised on the date which is ninety (90) days after such termination,  shall
be forfeited. This Option expires ten (10) years from the date hereof.

         5. RECAPITALIZATION. In the event of changes in Parent common shares by
reason   of   share    dividends,    split-ups   or   combination   of   shares,
reclassifications,  recapitalizations, mergers, consolidations,  reorganizations
or liquidations, appropriate adjustments shall be made by the Board of Directors
of the  Company  (the  "Board")  in (a) the  number and class of shares to which
Optionee will thenceforth be entitled upon exercise of this Option,  and (b) the
price which the  Optionee  shall be required to pay upon  exercise.  Whether any
adjustment or  modification  is required as a result of the occurrence of any of
the events heretofore specified, and the amount thereof, shall be determined, in
good  faith,  by the Board,  which  determination  shall be final,  binding  and
conclusive.

         6. CONTINUED  EMPLOYMENT.  So long as the Optionee shall continue to be
an employee of Parent,  the Company or a subsidiary or affiliate of Parent,  the
Option  shall not be affected by (i) any change of duties or  position,  or (ii)
any temporary leave of absence approved by each employing corporation and by the
Board.  Nothing in this  Agreement  shall  confer upon the Optionee any right to
continue in the employ of Parent,  the Company or a  subsidiary  or affiliate of
Parent or  interfere  in any way with the right of Parent,  the  Company or each
such subsidiary or affiliate to terminate the Optionee's employment at any time,
with or without cause.

<PAGE>


         7. TRANSFERABILITY.  This Option is not transferable by Optionee except
by will or by the laws of descent and  distribution  and is  exercisable  during
Optionee's lifetime only by him or a court appointed guardian.  No assignment or
transfer by  Optionee  of this  Option,  or of the rights  represented  thereby,
whether  voluntary or involuntary,  by operation of law or otherwise,  except by
will or by the laws of descent and  distribution,  shall vest in the assignee or
transferee any interest or right herein  whatsoever.  Upon any attempt to assign
or transfer this Option, the Option shall forthwith terminate.

         Notwithstanding the foregoing, Optionee may transfer this Option to any
one or more of the following:  Optionee's  descendant,  spouse,  descendant of a
spouse,  spouse of any of the foregoing,  a trust established  primarily for the
benefit of any of the  foregoing,  or of  Optionee,  or to an entity  which is a
corporation,  partnership,  or limited  liability  company (or any other similar
entity) the owners of which are primarily the aforementioned  persons or trusts.
If the  Option  is so  transferred  to the  aforementioned  persons,  trusts  or
entities  in  respect  of  Optionee,  the  transferee  shall be  subject  to the
provisions of Paragraph 4 concerning  the  exercisability  following  Optionee's
termination of employment.

         8.  RIGHTS AS A  SHAREHOLDER.  Optionee  shall  not be  deemed  for any
purpose to be a  shareholder  of Parent  except to the extent  that this  Option
shall have been exercised.

         9.  CORPORATE  ACTION BY PARENT.  Existence  of this  Option  shall not
impair  the  right  of  Parent  or  its   shareholders   to  make   adjustments,
recapitalizations,  reorganizations or other changes in its capital structure or
business,  to consummate any merger or consolidation of Parent,  to issue bonds,
debentures,  preferred or prior  preference  stocks  ahead of or  affecting  the
common shares or the rights thereof, to dissolve or liquidate Parent, to sell or
transfer all or any part of its assets or  business,  or to do or take any other
corporate  act or  proceeding it or they might have done or taken if this Option
was not in existence.

         10. CHANGE OF CONTROL.  If during the Term, as defined in the Contract,
Parent,  the Company or a  subsidiary  or  affiliate  of Parent  terminates  the
Optionee's employment Without Cause (as defined in the Contract) or the Optionee
terminates his employment with Good Reason (as defined in the Contract), in each
case  following  a Change of Control  (as  defined in the  Contract),  or if the
Optionee  terminates  his  employment  for any reason during the thirty (30) day
period  commencing on the date which is twelve months  following  such Change of
Control,  this Option  shall vest with  respect to all of the shares  subject to
this Option, and shall remain exercisable through the second anniversary of such
termination.

         Notwithstanding  any other provision of this Agreement to the contrary,
in the event of a Change of Control, as defined in the Contract, this Option, to
the extent not  exercisable  and vested as of the date such Change of Control is
determined to have occurred, shall become fully exercisable and vested.

         11.  DISPUTES.  Issues  arising out of this Option shall be resolved in
accordance with the Dispute Resolution Procedure set forth in the Contract.


<PAGE>

         12. TERMS AND  CONDITIONS.  This  Agreement is subject to all terms and
conditions of the Contract.

         13. GOVERNING LAW. This Agreement and the rights and obligations of the
parties  hereto shall be governed by the laws of the State of New Jersey without
regard to the principles of conflicts of law which might otherwise apply.

         14.  NOTICE.  Any notice  which  either party hereto may be required or
permitted  to  give to the  other  shall  be in  writing,  and may be  delivered
personally  or by mail to the Company at the office of the  Secretary  of Foster
Wheeler Inc., Perryville Corporate Park, Clinton, New Jersey 08809-4000,  and to
the Optionee at such address as he has designated.

         IN WITNESS  WHEREOF,  the  Company  has  caused  this  Agreement  to be
executed by its duly authorized Officers and Optionee has hereunto set his hand,
as of the day and year first above written.

                                        FOSTER WHEELER INC.



                                        BY:/s/ Gilles A. Renaud
                                          ---------------------------------
                                                 Gilles A. Renaud
                                                 Senior Vice President and CFO


                                        BY: /s/ James E. Schessler
                                          ---------------------------------
                                                 James E. Schessler
                                                 Senior Vice President - Human
                                                 Resources and Administration



                                             /s/ Raymond J. Milchovich
                                          ---------------------------------
                                                 Raymond J. Milchovich
ATTEST:


/s/Lisa Fries Gardner
---------------------------
       Secretary