FOSTER
      WHEELER LTD. OMNIBUS INCENTIVE PLAN

     

    Notice
      of Employee Nonqualified Stock Option Grant

     

    Participant
      Information

     

    Pursuant
      to the attached Employee Nonqualified Stock Option Agreement, you, Raymond
      J.
      Milchovich, 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: 

            	
              August
                11, 2006

               

            
	
              Date
                of Grant:

            	
              August
                11, 2006

               

            
	
              Exercise
                Price Per Share:

            	
              $43.47
                per Common Share

               

            
	
              Total
                Number of Shares Subject to this Option:

            	
               

              280,040 shares
                of common stock

               

            
	
              Total
                Exercise Price:

            	
              $4,987,500

               

            
	
              Type
                of Option:

            	
              Nonqualified
                Stock Option

               

            
	
              Expiration
                Date:

            	
              August
                11, 2016

               

            
	
              Vesting
                Commencement Date: 

            	
              August
                11, 2006

               

            
	
              Vesting/Exercise
                Schedule:

            	
              So
                long as you are continuously employed by 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 in
                accordance with the following schedule:

              ·  One-third
                of the Shares subject to the Option shall vest and become exercisable
                on
                August 11, 2007; 

               

              ·  Another
                one-third of the Shares subject to the Option shall vest and become
                exercisable on August 11, 2008; and

               

              ·  The
                remaining one-third of the Shares subject to the Option shall vest
                and
                become exercisable on August 11, 2009.

               

            
	
              Termination
                Period:

            	
              Following
                your termination of employment 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 employment 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 Employee Nonqualified
      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 employment 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.

     

    
      	
               

               

               

               

              __________________________________

              Raymond
                J. Milchovich

            	
               

              FOSTER
                WHEELER LTD.

               

               

              _______________________________

              By:
                Joseph J. Melone

              Its: 
                Deputy Chairman

               

            


    

    


     

    
 

    
      
        
        

      

      
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    FOSTER
      WHEELER LTD. OMNIBUS INCENTIVE PLAN

     

    Employee
      Nonqualified Stock Option Agreement

     

    1.  Grant
      of Option.
      Foster
      Wheeler Ltd., a Bermuda company (the “Company”),
      hereby grants to Raymond J. Milchovich (“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 Employee Nonqualified 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 Nonqualified Stock Option (as defined in Section
      2(bb) of the Plan).

     

    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 5 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 4.2 and Section 4.3
      of his Employment Agreement with the Company, dated August 11, 2006), Retirement
      (as defined in Section 2(vv) of the Plan), or other termination of employment,
      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.

     

    
      
        
        

      

      
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    (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:

     

    
      
        
        

      

      
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    (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
      (as
      defined in Section 2(u) of the Plan) 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 further provided that any repurchase of Shares shall 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 for any reason (the
“Termination Date”), Optionee may exercise the Option only as set forth in the
      Notice and this Section 5. 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 employment for death or Disability (as
      defined in Section 4.2 and Section 4.3 of his Employment Agreement with the
      Company, dated August 11, 2006), 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 earlier of:

    


    (i)  the
      Expiration Date; or 

     

    (ii)  the
      two
      (2) year anniversary of the day the Optionee terminates employment or service
      due to death or Disability.

     

    In
      the
      event of the Optionee’s death, the Optionee’s beneficiary or estate may exercise
      the vested Shares under the Option. 

    


    (b)  Termination
      as a Result of Involuntary Termination or Voluntary Termination for Good
      Reason.
      In
      the
      event of the Optionee’s termination of employment as a result of his Involuntary
      Termination (as defined in Section 2(aa) of the Plan) or his voluntary
      termination for Good Reason (as defined in Section 4.5 of his Employment
      Agreement with the Company, dated August 11, 2006), 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
      earlier of:

    


    (i)  the
      Expiration Date; or 

     

    
      
        
        

      

      
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    (ii)  the
      two
      (2) year anniversary of the day the Optionee terminates employment or service
      due to Involuntary Termination or voluntary termination for Good
      Reason.

     

    (c)  Termination
      as a Result of Retirement.
      In
      the
      event of the Optionee’s termination of employment as a result of his Retirement
      (as defined in Section 2(vv) 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 employment from the
      date
      the Option was granted to the end of the month in which the Termination Date
      occurs, and the denominator of which is the total number of months in the
      vesting schedule as set forth in the Notice of Grant. 

     

    All
      vested Shares subject to the Option (including those Shares under the Option
      which become immediately vested and exercisable pursuant to this paragraph
      (c))
      shall remain exercisable until the earlier of:

    


    (A)  the
      Expiration Date; or 

    


    (B)  the
      thirty-sixth (36) month anniversary of the day the Optionee terminates
      employment due to Retirement.

    


    The
      unvested portion of the Option shall be immediately forfeited. 

    


    (d)  Termination
      for Cause.
      In
      the
      event the Optionee’s employment is terminated for Cause (as defined in Section
      4.4 of his Employment Agreement with the Company, dated August 11,
      2006):

     

    (i)  any
      unvested Shares under the Option shall expire immediately, be forfeited and
      considered null and void; and 

     

    (ii)  any
      vested Shares under the Option shall remain exercisable until the earlier
      of:

     

    (A) the
      Expiration Date; or 

     

    (B) the
      date
      which is ninety (90) days following such date of termination for
      Cause.

     

    (e)  Termination
      -- General.
      In
      the
      event of the Optionee’s termination of employment other than as a result of his
      death, Disability (as defined in Section 4.2 and Section 4.3 of his Employment
      Agreement with the Company, dated August 11, 2006), Involuntary Termination
      (as
      defined in Section 2(aa) of the Plan), voluntary termination for Good Reason
      (as
      defined in Section 4.5 of his Employment Agreement with the Company, dated
      August 11, 2006), Retirement (as defined in Section 2(vv) of the Plan) or Cause
      (as defined in Section 4.4 of his Employment Agreement with the Company, dated
      August 11, 2006), Optionee may, to the extent he is otherwise vested in the
      Option at the Termination Date, exercise such Options and such Options shall
      remain exercisable until the earlier of:

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (i)  the
      Expiration Date; or 

     

    (ii)  the
      date
      which is ninety (90) days following such Termination Date.

     

    The
      unvested portion of the Option shall be immediately forfeited. 

    


    (f)  Change
      in Control Acceleration.
      In
      the
      event of a Change in Control (as defined in Section 4.6.2 of his Employment
      Agreement with the Company, dated August 11, 2006) which closes on a date prior
      to the Optionee’s termination of employment, 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. 

     

    6.  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. The terms of this Option shall be binding upon the
      executors, administrators, heirs, successors and assigns of
      Optionee.

     

    7.  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.  

     

    8.  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 your 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 you are an
      Employee (as defined in Section 2(s) of the Plan), the Company will be required
      to withhold from your compensation or collect from you and pay to the applicable
      taxing authorities an amount of income and employment taxes equal to a
      percentage of this compensation income at the time of exercise. 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.

     

    
      
        
        

      

      
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    9.  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 (as defined in Section 2(s) of the Plan)
      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;
      provided, however, in accordance with Section 3.3.2 of your Employment Agreement
      with the Company, dated August 11, 2006, in the event of any inconsistency
      between this Agreement, the Plan and the terms of your Employment Agreement
      with
      the Company, dated August 11, 2006, your Employment Agreement with the Company,
      dated August 11, 2006, shall govern and control. 

     

    10.  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 is employed, or was most recently
      employed, by the Company.

     

    11.  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.

     

    12.  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.

     

    13.  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); 

     

    
      
        
        

      

      
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    (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 13.

     

    



    
      
        
        

      

      
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    EXHIBIT
      A

     

    FOSTER
      WHEELER LTD. OMNIBUS INCENTIVE PLAN

     

    Employee’s
      Notice of Exercise

     

    
      	
              To:

              Attn:

              Subject:

            	 	
              Foster
                Wheeler Ltd.

              Stock Option
                Administrator

              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:

               

            	 


    

    


    
      
        
        

      

      
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