Document:

Exhibit 4.10

 

WARRANT AGREEMENT

between

Foster
Wheeler Ltd.

and

Mellon
Investor Services LLC, as Warrant Agent

Dated as of September 24, 2004

 

 

 

WARRANT AGREEMENT

This Warrant Agreement, dated as of September 24, 2004 (this “Agreement”), is
between Foster Wheeler Ltd., a Bermuda company (the “Company”), and Mellon Investor Services LLC,
a New Jersey limited liability company (the “Warrant Agent”).

The Company, at or about the time that it is entering into this
Agreement, proposes to issue (a) to the holders of its outstanding 9.00%
Preferred Securities, Series I (liquidation amount $25 per trust security)
issued by FW Preferred Capital Trust I (“Trust Preferred Securities”) that tender in the exchange
offer described in the Company’s registration statement on Form S-4 (File No.
107054) last declared effective by the Securities and Exchange Commission on
August 16, 2004 (the “Form S-4”), warrants (the “Class A Warrants”) to purchase that number of
the Company’s common shares par value $0.01 per share (the “Common Shares”)
described in Schedule A hereto or in certain circumstances, the Company’s
Series B Convertible Preferred Shares (liquidation preference $0.01 per
preferred share) (the “Preferred Shares”) and (b) to the existing registered
holders of common shares of the Company, on the date preceding the closing date
of the exchange offer described in the Form S-4, warrants to purchase that
number of Common Shares described in Schedule B hereto, or, in certain
circumstances described herein, Preferred Shares (the “Class B Warrants”, and together with the
Class A Warrants, the “Warrants”).  Each
Class A Warrant will become exercisable to purchase Common Shares, and each
Class B Warrant will become exercisable to purchase Common Shares in the
circumstances, upon the terms and conditions and subject to adjustment in
certain circumstances, all as set forth in this Agreement; provided that, in certain
circumstances, the Warrants shall be exercisable for Preferred Shares, as
defined herein.

The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the “Warrant Certificates”) and the exercise of
the Warrants.

The Company and the Warrant Agent wish to enter into this Agreement to
set forth the terms and conditions of the Warrants and the rights of the
registered holders thereof (“Warrantholders”) and to set forth the respective rights
and obligations of the Company and the Warrant Agent.  Each Warrantholder is an intended beneficiary of this Agreement
with respect to the rights of Warrantholders herein.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:

1.                                       Appointment of Warrant Agent.  The Company appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions in this
Agreement and the Warrant Agent accepts such appointment.

2.                                       Date,
Denomination and Execution of Warrant Certificates.

(a)                                  The warrant
certificates (and the Form of Election to Purchase and the Form of Assignment
to be printed on the reverse thereof) shall be in registered form only

 

 

and shall be substantially
of the tenor and purport recited in Exhibits A and B hereto (the “Class A Warrant Certificate”
and the “Class B Warrant
Certificate”, respectively, and together the “Warrant Certificates”)
as applicable, and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law, or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange on which the
Common Shares or the Warrants may be listed or any automated quotation system,
or to conform to usage.  Each Class A
Warrant shall entitle the registered holder thereof, subject to the conditions
and other provisions of this Agreement and of the Class A Warrant Certificate,
to purchase that number of fully paid and non-assessable Common Shares
described in Schedule A hereto on or after September 24, 2005 and on or before
the close of business on September 24, 2009, subject to extension, in certain
circumstances, as provided in Section 9(d) hereof (the “Class A Expiration Date”) for each Class A
Warrant evidenced by such Class A Warrant Certificate for $0.4689 per Common
Share to be received (the “Exercise Price”). 
Each Class B Warrant shall entitle the registered holder thereof,
subject to the conditions and other provisions of this Agreement and of the Class
B Warrant Certificate, to purchase that number of fully paid and non-assessable
Common Shares described in Schedule B hereto on or after September 24, 2005 and
on or before the close of business on September 24, 2007, subject to extension,
in certain circumstances, as provided in Section 9(d) hereof (the “Class B Expiration Date”,
together with the Class A Expiration Date, an “Expiration Date”) for each Class B Warrant
evidenced by such Warrant Certificate for the Exercise Price.  Notwithstanding the foregoing, only until
the Increase of Capital and the Par Value Reduction (each as defined in the
Certificate of Designation relating to the Preferred Shares (the “COD”)) have
been approved, upon the exercise of a Warrant, the holder thereof shall be
entitled (notwithstanding the fact that the Increase of Capital and Par Value
Reduction have not become effective) to receive a number of Preferred Shares,
or fraction thereof, then convertible into the number of Common Shares (as
defined in Section 6(n)) that would otherwise have been issuable upon exercise
of such Warrant.  The Exercise Price is
subject to adjustment as provided in Section 6 hereof, provided that  the
Exercise Price shall in no case be less than the par value of the underlying
Common Shares.  The Company will not
take any action to increase such par value above the Exercise Price once the
Par Value Reduction has occurred.  Each
Warrant Certificate shall be dated the date on which the Warrant Agent receives
written issuance instructions from the Company (under the hand of an Authorized
Officer) or a transferring holder of a Warrant Certificate or, if such
instructions specify another date, such other date.

(b)                                 For purposes of
this Agreement, the term “close of business” on any given date shall mean 5:00
p.m., Eastern time, on such date; provided, however, that if such date is not a
business day, it shall mean 5:00 p.m., Eastern time, on the next succeeding
business day.  For purposes of this
Agreement, the term “business

2

 

day” shall mean any day
other than a Saturday, Sunday, a federal holiday, any day that shall be in the
City of New York a legal holiday or a day on which banking institutions in New
York, New York or in the State in which the Warrant Agent maintains the
principal office in which it conducts business related to the Warrants are
authorized or obligated by law to be closed.

(c)                                  Each Warrant
Certificate shall be executed on behalf of the Company by the chairman of the
Board of Directors of the Company (the “Board”), the president or chief executive officer, any
vice president, the chief financial officer, the treasurer or any assistant
treasurer, or the secretary or any assistant secretary, (each an “Authorized
Officer”) either manually or by facsimile signature printed thereon.  Each Warrant Certificate shall be
countersigned by the Warrant Agent upon receipt by the Warrant Agent of written
instructions from the Company to such effect (which the Company covenants to
give) and shall not be valid for any purpose unless so countersigned.  In case any Authorized Officer of the
Company who shall have signed any Warrant Certificate shall cease to be an
Authorized Officer of the Company before countersignature by the Warrant Agent
and issue and delivery thereof by the Company, such Warrant Certificate,
nevertheless, may be countersigned by the Warrant Agent, issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificate had not ceased to be such Authorized Officer of the Company.

3.                                       Subsequent Issue of Warrant
Certificates.  Subsequent
to their original issuance, no Warrant Certificates shall be reissued except
(if applicable, upon written notice thereof from the Company (under the hand of
an Authorized Officer) to the Warrant Agent) (i) Warrant Certificates issued
upon transfer thereof in accordance with Section 4 hereof, (ii) Warrant
Certificates issued upon any combination, split-up or exchange of Warrant
Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates issued in
replacement of mutilated, destroyed, lost or stolen Warrant Certificates
pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon the partial
exercise of Warrant Certificates pursuant to Section 7 hereof, and (v) Warrant
Certificates issued to reflect any adjustment or change in the Exercise Price
or the number or kind of shares purchasable thereunder pursuant to Section 22
hereof.  The Warrant Agent is hereby
irrevocably authorized to countersign and deliver, in accordance with the
provisions of said Sections 4, 5, 7 and 22, the new Warrant Certificates
required for purposes thereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with (i) Warrant Certificates
duly executed on behalf of the Company (under the hand of an Authorized
Officer) for such purposes and (ii) all other information pertaining
thereto which the Warrant Agent shall reasonably request.

4.                                       Transfers and Exchanges of Warrant
Certificates.

(a)                                  The Warrant Agent
will keep or cause to be kept books for registration of ownership and transfer
of the Warrant Certificates issued hereunder. 
Such registers shall show the names and addresses of the respective
Warrantholders and the kind and number of Warrants evidenced by each such
Warrant Certificate.

3

 

(b)                                 The Warrant
Agent shall, from time to time, register the transfer of any outstanding
Warrants upon the books to be maintained by the Warrant Agent for that purpose,
upon surrender of the Warrant Certificate evidencing such Warrants, with the
Form of Assignment duly filled in and executed with such signature guaranteed
by an eligible institution and such supporting documentation as the Warrant
Agent or the Company may reasonably require, to the Warrant Agent at its stock
transfer office in New York, New York at any time on or before the Expiration
Date of such Warrant, and upon payment to the Warrant Agent for the account of
the Company of an amount equal to any applicable transfer tax.  Payment of the amount of such tax may be
made in cash, or by certified or official bank check, payable in lawful money
of the United States of America to the order of the Company.

(c)                                  Upon receipt of
a Warrant Certificate, with the Form of Assignment duly filled in and executed
by a Warrantholder, accompanied by payment of an amount equal to any applicable
transfer tax, the Warrant Agent shall promptly cancel the surrendered Warrant
Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants transferred to such transferee;
provided, however, that in case a Warrantholder shall elect to transfer fewer
than all of the Warrants evidenced by such Warrant Certificate, the Warrant Agent
in addition shall promptly countersign and deliver to such Warrantholder a new
Warrant Certificate or Certificates for the number of full Warrants not so
transferred.

(d)                                 Any Warrant
Certificate or Certificates may be exchanged at the option of a Warrantholder
for another Warrant Certificate or Certificates of different denominations, of
like tenor and representing in the aggregate the same kind and number of
Warrants, upon surrender of such Warrant Certificate or Certificates, with the
Form of Assignment duly filled in and executed, to the Warrant Agent, at any
time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date relating to such
Warrant.  The Warrant Agent shall
promptly cancel the surrendered Warrant Certificate and deliver the new Warrant
Certificate pursuant to the provisions of this Section.

5.                                       Mutilated, Destroyed, Lost or
Stolen Warrant Certificates.  Upon receipt by the Company and the Warrant Agent of evidence
from a Warrantholder reasonably satisfactory to them of the loss, theft,
destruction or mutilation of any Warrant Certificate, and in the case of loss,
theft or destruction, of indemnity or security from a Warrantholder reasonably
satisfactory to them, and reimbursement to them by such Warrantholder of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender by the relevant Warrantholder and cancellation of the Warrant
Certificate, the Warrant Agent shall countersign and deliver a new Warrant
Certificate of like tenor for the same kind and number of Warrants.  In the case of an institutional
Warrantholder, the written assurance of such Warrantholder of such loss, theft
or destruction shall be considered a satisfactory indemnity for the purposes of
this Section 5.

4

 

6.                                       Adjustments of Number and Kind of
Shares Purchasable and Exercise Price.  Upon written notice thereof from the Company (under the hand of
an Authorized Officer) to the Warrant Agent (which the Company covenants to
give promptly following any of the events described in this Section), the
number and kind of securities or other property purchasable upon exercise of a
Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of any of the following events:

(a)                                  In case the
Company shall (1) declare and pay a dividend in, or make a distribution of,
shares of its capital on its outstanding Common Shares, (2) subdivide its
outstanding Common Shares into a greater number of such shares or (3)
consolidate its outstanding Common Shares into a smaller number of such shares,
the total number of Common Shares purchasable upon the exercise of each Warrant
outstanding immediately prior thereto shall be adjusted so that the
Warrantholder, on exercise of a Warrant, shall be entitled to receive at the
same aggregate Exercise Price the number of shares of the applicable classes
which such Warrantholder would have owned or have been entitled to receive immediately
following the happening of any of the events described above had such Warrant
been exercised in full immediately prior to the record date with respect to
such event (on the effective date of such event, if there is no such record
date); provided
that
no adjustment shall be made in connection with the Bonus Issue or the Par Value
Reduction (each as defined in the COD). 
Any adjustment made pursuant to this Subsection shall, in the case of a
share dividend or distribution, declared and paid in shares of the Company
become effective as of the record date therefore and, in the case of a
subdivision or consolidation, be made as of the effective date thereof.  If, as a result of an adjustment made
pursuant to this Subsection, the Warrantholder of any Warrant Certificate
thereafter surrendered for exercise shall become entitled to receive shares of
two or more classes of share capital of the Company, the Board (whose
determination shall be conclusive and shall be evidenced by a Board resolution
filed with the Warrant Agent) shall determine the allocation of the adjusted
Exercise Price between or among shares of such classes.

(b)                                 In the event of
a capital reorganization or a reclassification of the Common Shares (except as
provided in Subsection (a) above or Subsection (d) below), any Warrantholder,
upon exercise of Warrants, shall be entitled to receive, in substitution for
the Common Shares to which he would have become entitled upon exercise
immediately prior to such reorganization or reclassification, the shares (of
any class or classes) or other securities or property of the Company (or cash)
that he would have been entitled to receive at the same aggregate Exercise
Price upon such reorganization or reclassification if such Warrants had been
exercised immediately prior to the record date with respect to such event (on
the effective date of such event, if there is no such record date); and in any
such case, appropriate provision (as reasonably determined by the Board, whose
determination shall be evidenced by a certified Board resolution filed with the
Warrant Agent) shall be made for the application of this Section 6 with respect
to the rights and interests thereafter of the Warrantholders (including but not
limited to the allocation of the Exercise Price between or among shares of
classes of

5

 

authorized capital), to the
end that this Section 6 (including the adjustments of the number of Common
Shares or other securities purchasable and the Exercise Price thereof) shall
thereafter be reflected, as nearly as reasonably practicable, in all subsequent
exercises of the Warrants for any shares or securities or other property (or
cash) thereafter deliverable upon the exercise of the Warrants.

(c)                                  Whenever the
number of Common Shares or other securities purchasable upon exercise of a
Warrant is adjusted as provided in this Section 6, the Company will file
promptly following such adjustment with the Warrant Agent a certificate signed
by an Authorized Officer of the Company setting forth the number and kind of
securities or other property purchasable upon exercise of a Warrant, as so
adjusted, stating that such adjustments in the number or kind of shares or
other securities or property conform to the requirements of this Section 6, and
setting forth a brief statement of the facts accounting for such
adjustments.  Promptly after receipt of
such certificate, the Company, or the Warrant Agent at the Company’s
instruction (which the Company covenants to give under the hand of an
Authorized Officer), will deliver, by first-class, postage prepaid mail, a
brief summary thereof (to be supplied by the Company) to the Warrantholders;
provided, however, that failure to file or to give any notice required under
this Subsection, or any defect therein, shall not affect the legality or
validity of any such adjustments under this Section 6; and provided, further,
that, where appropriate, such notice may be given in advance and included as
part of the notice required to be given pursuant to Section 12 hereof.

(d)                                 In case of any
consolidation of the Company with, or merger of the Company into, another
company or corporation (other than a consolidation, amalgamation or merger
which does not result in any reclassification or change of the outstanding
Common Shares), or in case of any sale or conveyance to another company or
corporation of the property of the Company as an entirety or substantially as
an entirety, the company or corporation formed by such consolidation,
amalgamation or merger or the company or corporation which shall have acquired
such assets, as the case may be, shall execute and deliver to the Warrant Agent
a supplemental warrant agreement providing that each Warrantholder then
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, solely the kind and amount
of share capital, shares and other securities and property (or cash) receivable
upon such consolidation, amalgamation, merger, sale or transfer by a holder of
the number of Common Shares of the Company for which such Warrant might have
been exercised immediately prior to such consolidation, amalgamation, merger,
sale or transfer, provided that (i) if the holders of Common Shares were
entitled to exercise a right of election as to the kind or amount of
securities, cash or other assets receivable upon such consolidation,
amalgamation or merger, then the kind and amount of securities, cash or other
assets for which each Warrant shall become exercisable shall be deemed to be
the kind and amount so receivable per share by a plurality of the holders of
Common Shares in such consolidation, amalgamation or merger, and (ii) if a
tender or exchange offer shall have been made to and accepted by the holders of
Common

6

 

Shares under circumstances
in which, upon completion of such tender or exchange offer, the maker thereof,
together with members of any group (within the meaning of Rule 13d-5(b)(1)
under the Securities Exchange Act of 1934 (the “Exchange Act”) of which such
maker is a part, and together with any affiliate or associate of such maker
(within the meaning of Rule 12b-2 under the Exchange Act) and any members of
any such group of which any such affiliate or associate is a part, own
beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more
than 50% of the outstanding Common Shares, each Warrant shall become
exercisable for the highest amount of cash, securities or other property to
which such Warrantholder would actually have been entitled as a shareholder if
such Warrantholder had exercised the Warrant prior to the expiration of such
tender or exchange offer, accepted such offer and all of the Common Shares held
by such Warrantholder had been purchased pursuant to such tender or exchange
offer, subject to adjustments (from and after the consummation of such tender
or exchange offer).  Such supplemental
warrant agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this
Section.  The above provision of this
Subsection shall similarly apply to successive consolidations, amalgamation,
mergers, sales or transfers.  The
Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of share capital, shares or
securities or property (or cash) purchasable by Warrantholders upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.

(e)                                  If the Company
distributes to all holders of its Common Shares any of its assets (excluding
ordinary cash dividends) or debt securities
or any rights or warrants to purchase debt securities, assets or other securities of the Company, the Exercise Price of
the Warrants shall be adjusted in accordance with the following formula:

	
   

  	
  E’ = E

  	
  x

  	
  M — F

  	
   

  
	
   

  	
   

  	
   

  	
  M

  	
   

  

 

where:

E’ =                           the adjusted exercise price.

E =                               the current exercise price.

M =                          the current market price per Common Share on the record date
mentioned below.

F =                               the fair market value on the record date of the assets,
securities, rights, options or warrants applicable to one Common Share. Fair
market

7

 

value shall be reasonably
determined by the Board, provided that the Company shall obtain an appraisal or other valuation
opinion in support of the Board’s determination from an investment bank or accounting firm of recognized national standing if the
aggregate fair market value exceeds $10
million.

The adjustment contemplated by this paragraph shall be made
successively whenever any such distributions are made and shall become
effective immediately after the record date for the determination of shareholders entitled to receive the
distribution.  This paragraph does not
apply to rights, options or warrants referred to in paragraph (f).

(f)                                    If the Company
issues any Common Shares or securities convertible into or exchangeable for
Common Shares or any rights, options or warrants to acquire Common Shares or
securities convertible into or exchangeable for Common Shares (other than
securities issued in transactions described in subsections (a), (b) or (e) of
this Section 6) for a consideration per Common Share issued or initially
deliverable upon conversion or exchange of such securities less than the
current market price per share on the date of issuance of such securities, the
Exercise Price of the Warrants shall be adjusted in accordance with this
formula:

	
   

  	
   

  	
   

  	
  P

  	
   

  
	
   

  	
  E’ = E x

  	
   

  	
  O + M

  	
   

  
	
   

  	
   

  	
   

  	
  O + D

  	
   

  
						

 

where:

E’ =                           the adjusted Exercise Price.

E =                               the then current Exercise Price.

O =                             the number of Common Shares outstanding immediately prior to
the issuance of such securities.

P =                               the aggregate consideration received for the issuance of such
securities.

M =                          the current market price per Common Share on the date of issuance of such securities.

D =                             the number of Common Shares so issued
or the maximum number of Common Shares
deliverable upon exercise or conversion or in exchange for such securities at the initial conversion or
exchange rate.

The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediate after such issuance.  If all of the Common Shares deliverable upon
conversion or exchange of such securities have not been issued when such
securities are no longer outstanding, or there is a change in the terms of such
securities, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the

8

 

issuance of such securities been made on the basis of the actual number
of Common Shares issued upon conversion or exchange of such securities (in case the securities are no longer outstanding) or on the basis of such new
terms.  This paragraph does not apply
to: (1) the exercise of Warrants, or the exercise, conversion or exchange of other securities
convertible into or exchangeable for Common Shares, or (2) Common Shares
issued to the Company’s employees, officers, directors and consultants under bona fide employee benefit plans or stock
options plans adopted by the Board and approved by the holders of Common Shares
when required by law, if such Common Shares would otherwise be covered by this
paragraph.

(g)                                 For purposes of this Section 6, the current market price per share of
Common Shares on any date is the average of the Quoted Prices of the
Common Shares for 30 consecutive trading days commencing 45 trading days before
the date in question.  The “Quoted Price” of the Common Shares is the last reported sales
price of the Common Shares as reported by Nasdaq, National Market System, or if
the Common Shares are listed on a securities exchange, the last reported sales
price of the Common Shares on such exchange which shall be for
consolidated trading if applicable to such exchange, or if neither so reported
or listed, the last reported bid
price of the Common Shares; provided that with respect to the sale of Common
Shares in an underwritten public offering, the current market price per share
shall be equal to the offering price. 
In the absence of one or more such quotations, the current market price shall be the fair market value, as reasonably determined by the Board.

(h)                                 For purposes of any computation respecting consideration received pursuant
to paragraph (f) of this Section 6, the following shall apply:  (1) in the case of the issuance of Common
Shares for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for reasonable commissions,
discounts or other expenses incurred by the Company for any underwriting of the
issue or otherwise in connection therewith; (2)
in the case of the issuance of Common Shares for a consideration in whole
or in part other than  cash,  the
consideration other than cash shall
be deemed to be the fair market value thereof; and (3) in the case of the
issuance of securities convertible into or exchangeable for shares, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion
or exchange thereof (the consideration in each case to be determined in the
same manner as provided in clauses (1) and (2) of this paragraph).

(i)                                     Whenever the Exercise Price is adjusted, the Company shall promptly
provide to the Warrantholders notice of adjustment stating the facts requiring
the adjustment and the manner of computing it.

(j)                                     Upon each event that provides for an adjustment of the Exercise Price
pursuant to paragraph (e) or (f) of this Section 6, each Warrant outstanding
prior to the

9

 

making
of the adjustment shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of Common Shares obtained from the
following formula:

	
   

  	
  N’

  	
  =

  	
  N

  	
  x

  	
  E

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  E’

  	
   

  

 

                                                where

 

                                                N’ =                   the
adjusted number of Common Shares issuable upon exercise of

                                                a
Warrant by payment of the adjusted Exercise Price.

 

                                                N =                    the
number of Common Shares previously issuable upon exercise

                                                of
a Warrant by payment of the Exercise Price prior to adjustment.

 

                                                E’ =                         the
adjusted Exercise Price.

 

                                                E =                          the
Exercise Price prior to adjustment.

 

(k)                                  In case any
event shall occur affecting the Company, or any entity in which the Company has a direct or indirect investment, as to which
the provisions of this Section 6 are not strictly applicable, but the failure to make any adjustment would not
fairly protect the purchase rights
represented by the Warrants in accordance with the essential intent and principles of this Section, then in each such
case the Company shall make the adjustment on a basis reasonably determined by the Board to
be consistent with the essential intent and principles established in this
Section 6, necessary to preserve, without dilution, the purchase rights
represented by the Warrants. In no case may such adjustment increase the
Exercise Price or reduce the number of
shares issuable on exercise of a Warrant.

(l)                                     Irrespective of
any adjustments in the number or kind of shares issuable upon exercise of
Warrants, Warrant Certificates theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in the
similar Warrant Certificates initially issuable pursuant to this Warrant
Agreement.

(m)                               The Company may
retain a firm of independent public accountants of recognized standing, which
may be the firm regularly retained by the Company, selected by the Board or any
executive committee of the Board, to make any computation required under this
Section, and a certificate signed by such firm shall, if reasonable, be
conclusive evidence of the correctness of any computation made under this
Section.

(n)                                 For the purpose
of this Section, the term “Common Shares” shall mean (i) the Common Shares or
(ii) any other class of share capital or shares resulting from successive
changes or reclassifications of such Common Shares consisting solely of changes
in par value.  In the event that at any
time as a result of an adjustment made pursuant to this Section, the holder of
any Warrant thereafter surrendered

10

 

for exercise shall become
entitled to receive any share capital or shares of the Company other than
Common Shares, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in this Section, and all other
provisions of this Agreement, with respect to the Common Shares, shall apply on
like terms to any such other shares.

(o)                                 The company
covenants not to take any action that would cause the Exercise Price of the
Warrants to be adjusted to an amount less than the par value in effect from
time to time of any shares issuable on exercise.

7.                                       Exercise of Warrants.  A Warrantholder may exercise the Warrants
registered in its name, in whole at any time or in part from time to time on or
after September 24, 2005 and on or before the close of business on the
applicable Expiration Date relating to such Warrant, subject to the provisions
of Section 8, at which time the Warrants as represented by the Warrant
Certificates shall be and become wholly void and of no value.  Warrants may be exercised by Warrantholders
or redeemed by the Company as follows:

(a)                                  Exercise of
Warrants shall be accomplished upon surrender of the Warrant Certificate
evidencing such Warrants, with the Form of Election to Purchase on the reverse
side thereof duly filled in and executed by the Warrantholder, to the Warrant
Agent at its stock transfer office in New York, New York, together with payment
to the Warrant Agent on behalf of the Company by the Warrantholder of the
Exercise Price (as of the date of such surrender) of the Warrants then being
exercised and an amount equal to any applicable transfer tax and, if requested
by the Company, any other taxes or governmental charges which the Company may
be required by law to collect in respect of such exercise.  Payment of the Exercise Price and other
amounts may be made by wire transfer of good funds, or by certified or bank
cashier’s check, payable in lawful money of the United States of America to the
order of the Company.  No adjustment shall
be made for any cash dividends, whether paid or declared, on any securities
issuable upon exercise of a Warrant.

(b)                                 Upon receipt of
a Warrant Certificate, with the Form of Election to Purchase duly and properly
filled in and executed by the Warrantholder, accompanied by payment of the
Exercise Price of the Warrants being exercised by the Warrantholder (and of an
amount equal to any applicable taxes or government charges as aforesaid), the
Warrant Agent shall promptly request from the Warrant transfer agent with
respect to the securities to be issued and delivered to or upon the order of
the Warrantholder, in such name or names as such Warrantholder may designate, a
certificate or certificates for the number of full shares of the securities to
be purchased, together with cash, if any, made available by the Company
pursuant to Section 8 hereof in respect of any fraction of a share of such
securities otherwise issuable upon such exercise, and the Company shall cause
the Transfer Agent to prepare and deliver such certificate or certificates
within two business days; provided that if a Warrant is being
exercised for Preferred Shares

11

 

then such period shall be 30
days.  If the Warrant is then
exercisable to purchase property other than securities, the Company shall take
appropriate steps to cause such property to be delivered to or upon the order
of the Warrantholder.  In addition, if
it is required by law and upon written instruction by the Company, the Warrant
Agent will deliver to each Warrantholder a prospectus which complies with the
provisions of Section 9 of the Securities Act of 1933 and/or the Bermuda
Companies Act 1981 and the Company agrees to supply the Warrant Agent with
sufficient number of prospectuses to effectuate that purpose.

(c)                                  In case a
Warrantholder shall exercise fewer than all of the Warrants registered in such
Warrantholder’s name, the Warrant Agent shall promptly countersign and deliver
to the registered Warrantholder or to his duly authorized assigns, a new
Warrant Certificate or Certificates evidencing the number of Warrants that were
not so exercised.

(d)                                 Each person in
whose name any certificate for securities is issued upon the exercise of
Warrants shall first be registered as the holder of such securities in the
branch register of members of the Company on, and thereupon shall, for all
purposes, be deemed to have become the holder of the securities represented
thereby as of, and such registration shall be made and such certificate shall
be dated the date upon which the Warrant Certificate was duly surrendered by
the Warrantholder for exercise in proper form and payment of the Exercise Price
(and of any applicable taxes or other governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date on which said
branch register of the Company is closed, such person shall be deemed to have
become the record holder of such shares as of, and the registration in the said
branch register and the certificate for such securities shall be dated, the
next succeeding business day on which the said branch register is open (whether
before, on or after the Expiration Date relating to such Warrant) and the
Warrant Agent shall be under no duty to deliver the certificates for such
securities until such date.  The Company
covenants and agrees that it shall not cause its branch register of members to
be closed for a period of more than 20 consecutive business days except upon consolidation,
amalgation, merger, sale of all or substantially all of its assets, dissolution
or liquidation or as otherwise provided by law.

8.                                       Fractional Interests.  The Company may but shall not be required to
issue any Warrant Certificate evidencing a Warrant that is exercisable for a
fraction of a Common Share or to issue fractions of Common Shares on the
exercise of the Warrants (if a Warrant is exercisable at the time of exercise
for Preferred Shares, the Company shall be obligated to issue fractional
shares).  If any fraction (calculated to
the nearest one-hundredth) of a Common Share would, except for the provisions
of this Section, be issuable on the exercise of any Warrant, the Company shall,
at its option (subject to applicable law), either purchase such fraction for an
amount in cash equal to the current value of such fraction computed on the
basis of the closing market price (as quoted on the OTC Bulletin Board or other
principal quotation system or exchange on which the Common Shares are quoted or
traded) on the trading day immediately preceding the day upon

12

 

which such Warrant Certificate was surrendered for exercise in
accordance with Section 7 hereof or issue the required fractional  share. If more than one Warrant held by a
single Warrantholder evidences a fraction of a share upon its exercise, then
for the purposes of this Section 8, the shares issuable upon the exercise of
all such Warrants held by such Warrantholder at a given time shall be
aggregated for the purposes of this Section 8. 
By accepting a Warrant Certificate, the Warrantholder in whose name it
is registered expressly waives any right to receive a Warrant Certificate
evidencing any Warrant that is exercisable for a fraction of a Common Share or
to receive any fractional Common Share upon exercise of a Warrant, except as
expressly provided in this Section 8.

9.                                       Reservation and Registration of
Equity Securities.

(a)                                  The Company
covenants that it will at all times reserve and keep available, free from any
preemptive rights, out of its authorized and unissued equity securities, solely
for the purpose of issuance upon exercise of the Warrants, such number of
Preferred Shares or Common Shares, as the case may be, of the Company as shall
then be issuable upon the exercise of all outstanding Warrants (“Equity Securities”).  The Company covenants that all Equity
Securities which shall be so issuable shall, upon such issue, be duly
authorized, validly issued, fully paid and non-assessable.

(b)                                 The Company
covenants that if any Equity Securities, required to be reserved for the
purpose of issue upon exercise of the Warrants hereunder, require registration
with or approval of any governmental authority under any federal, state or
other law before such shares may be issued upon exercise of Warrants, the
Company will use its best efforts to cause such securities to be duly
registered, or approved, as the case may be, and, to the extent practicable,
take all such action in anticipation of and prior to the exercise of the
Warrants, including, without limitation, filing or maintaining an appropriate
registration statement (the “Shelf Registration Statement”) or prospectus, necessary
to permit a public offering of the securities underlying the Warrants at any
and all times during which the Warrants are exercisable.

(c)                                  Upon
(i) the issuance by the Securities and Exchange Commission of a stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of proceedings with respect to the Shelf Registration Statement
under Section 10(d) or 8(e) of the Securities Act of 1933, as amended (the
“Securities Act”),
(ii) the occurrence of any event or the existence of any fact (a “Material Event”) as a
result of which the Shelf Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any prospectus contained therein shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (iii) the occurrence or
existence of any pending corporate development with respect to the Company
that, in the discretion of the Company, makes it appropriate to suspend the
availability of the Shelf

13

 

Registration Statement and
the related prospectus, then (A) in the case of clause (ii) above,
subject to the next sentence, the Company shall, as promptly as practicable,
use its best efforts to prepare and file a post effective amendment to such
Shelf Registration Statement or a supplement to the related prospectus or any document
incorporated therein by reference or file any other required document that
would be incorporated by reference into such Shelf Registration Statement and
prospectus so that such Shelf Registration Statement does not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and such prospectus does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, as thereafter delivered to the
Warrantholders whose Warrants are being exercised thereunder, and, in the case
of a post effective amendment to the Shelf Registration Statement, subject to
the next sentence, use its best efforts to cause it to be declared effective as
promptly as is reasonably practicable, and (B) the Company shall give
notice to the Warrantholders that the availability of the Shelf Registration
Statement is suspended (a “Deferral Notice”) and, upon receipt of any Deferral
Notice, each Warrantholder agrees not to exercise any Warrants pursuant to the
Shelf Registration Statement until such holder’s receipt of copies of the
supplemented or amended prospectus provided for in clause (A) above, or
until it is advised in writing by the Company that the prospectus may be used,
and has received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such prospectus.  The Company shall use its best efforts to
ensure that the use of the prospectus may be resumed (x) in the case of
clause (i) above, as promptly as is practicable, (y) in the case of
clause (ii) above, as soon as, in the good faith judgment of the Company,
public disclosure of such Material Event would not be materially prejudicial to
or contrary to the interests of the Company or, if necessary to avoid
unreasonable burden or expense, as soon as reasonably practicable thereafter
and (z) in the case of clause (iii) above, as soon as, in the
discretion of the Company, such suspension is no longer appropriate.  The period during which the availability of
the Shelf Registration Statement and any prospectus is suspended or for any
other reason the Warrants are not exercisable (the “Deferral Period”) shall not exceed
30 days, and there shall not occur more than one such Deferral Period in
any consecutive 90-day period.

(d)                                 The parties
hereto agree that the Expiration Dates shall be extended as provided herein if
(i) the Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to September 24, 2005 (the “Effective Date Deadline”), or (ii) a Deferral
Period occurs.  The Expiration Dates
shall be extended in the case of clause (i), for a period having a duration
equal to the period beginning on the Effective Date Deadline and ending on the
date the Shelf Registration Statement is declared effective under the
Securities Act and, in the case of clause (ii), for a period having a duration
equal to each Deferral Period (each, an “Extension Period”). 
The Expiration Dates shall be extended from time to time for every
Extension Period.  In addition, if a
Deferral Period occurs at any

14

 

time during the 30 business
days preceding what would otherwise have been the Expiration Dates, then the
Expiration Dates shall be extended so that no Deferral Period exists during the
30 consecutive business days preceding the Expiration Dates, as so
extended.  The Company shall promptly
give notice to each Warrantholder of Warrants of each extension of the
Expiration Dates.

10.                                 Reduction of Conversion Price
Below Par Value.  Following
the Par Value Reduction, before taking any action that would cause an
adjustment pursuant to Section 6 hereof reducing the portion of the Exercise
Price required to purchase one share of its share capital below the then par
value (if any) of a share of such share capital, the Company will take any
corporate action which, in the opinion of its counsel, may be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable shares of such share capital.

11.                                 Payment of Taxes.  The Company covenants and agrees that it
will pay when due and payable any and all federal, state or local documentary
stamp and other original issue taxes which may be payable in respect of the
original issuance of the Warrant Certificates, or any Common Shares or other
securities upon the exercise of Warrants. 
The Company shall not, however, be required (a) to pay any tax which may
be payable in respect of any transfer involved in the transfer and delivery of
Warrant Certificates or the issuance or delivery of certificates for Common
Shares or other securities in a name other than that of the registered holder
of the Warrant Certificate surrendered for purchase or (b) to issue or deliver
any certificate for Common Shares or other securities upon the exercise of any Warrant
Certificate until any such tax shall have been paid, all such tax being payable
by the holder of such Warrant Certificate at the time of surrender.

12.                                 Notice of Certain Corporate Action.  In case the Company after the date hereof
shall propose (a) to offer or distribute to the holders of Common Shares,
generally, rights to subscribe to or purchase any additional shares of any
class of its share capital, any evidences of its indebtedness or assets, or any
other rights or options, (b) to effect any reclassification of Common Shares
(other than a reclassification involving merely the subdivision or combination
of outstanding Common Shares) or any capital reorganization, tender or exchange
offer, or any consolidation, amalgamation or merger to which the Company is a
party and for which approval of any members of the Company is required, or any
sale, transfer or other disposition of its property and assets substantially as
an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, or (c) take any action that, under Section 9(c) of
the COD, requires delivery of a notice to the holders of the Preferred Shares
of such event, then, in each such case, the Company shall file with the Warrant
Agent (which the Company covenants to so instruct), and the Company or the
Warrant Agent on its behalf, if so instructed in writing by the Company, shall
mail (by first-class, postage prepaid mail) to all registered Warrantholders
notice of such proposed action, which notice shall specify the date on which
the books of the Company shall close or a record be taken for such offer of
rights or options, or the date on which such reclassification, reorganization,
consolidation, amalgamation, merger, sale, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up shall take place or
commence, as the case may be, and which shall also specify any record date for
determination of holders of

15

 

Common Shares entitled to vote thereon or participate therein and shall
set forth such facts with respect thereto as shall be reasonably necessary to
indicate any adjustments in the Exercise Price and the number or kind of shares
or other securities purchasable upon exercise of Warrants which will be
required as a result of such action (which notice, in the case of any action
under Section 9(c) of the COD, shall include a copy of the notice being
concurrently delivered under said Section 9(c) to the holders of the Preferred
Shares).  Such notice shall be filed and
mailed in the case of any action covered by clause (a) above, at least 15 days
prior to the record date for determining holders of the Common Shares for
purposes of such action or, if a record is not to be taken, the date as of
which the holders of Common Shares of record are to be entitled to such
offering; and, in the case of any action covered by clause (b) above, at least
20 days, or such longer period as may be required by law, prior to the earlier
of the date on which such reclassification, reorganization, consolidation,
amalgamation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and
the date on which it is expected that holders of Common Shares of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
amalgamation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up. 
Failure to give any such notice or any defect therein shall not affect
the legality or validity of any transaction listed in this Section 12.

13.                                 Disposition of Proceeds on
Exercise of Warrant Certificate, etc. The Warrant Agent shall
account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all moneys received by the Warrant Agent for
the purchase of securities or other property through the exercise of such
Warrants.

14.                                 Warrantholder Not Deemed a Member.  No Warrantholder, as such, shall be entitled
to vote, receive dividends or be deemed the holder of Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Warrants represented thereby for any purpose whatever, nor
shall anything contained herein or in any Warrant Certificate be construed to
confer upon any Warrantholder, as such, any of the rights of a member of the
Company or any right to vote for the election of directors or upon any matter
submitted to members at any meeting thereto, or to give or withhold consent to
any corporate action (whether upon any recapitalization, issuance of shares,
reclassification of shares, change of par value, consolidation, merger,
amalgamation, conveyance or otherwise), or to receive notice of meetings or
other actions affecting members (except as provided in Section 12 hereof), or
to receive dividend or subscription rights, or otherwise, until such Warrant
Certificate shall have been exercised by such Warrantholder in accordance with
the provisions hereof and the underlying securities shall have been registered
in the name of such holder and the receipt of the Exercise Price and any other
amounts payable upon such exercise by the Warrant Agent.

15.                                 Right of Action.  All rights of action in respect to this
Agreement are vested in the respective Warrantholders; and any Warrantholder,
without the written consent of the Warrant Agent or of any other Warrantholder,
may, in his own behalf for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the

16

 

Company suitable to enforce, or otherwise in respect of, his right to
exercise the Warrants evidenced by his Warrant Certificate, for the purchase of
the Common Shares in the manner provided in the Warrant Certificate and in this
Agreement.

16.                                 Agreement with Holders of Warrant
Certificates.  Every
Warrantholder by accepting the same consents and agrees with the Company, the
Warrant Agent and with every other Warrantholder that:

(a)                                  the Warrant
Certificates are transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in this Agreement; and

(b)                                 the Company and
the Warrant Agent may deem and treat the person in whose name the Warrant
Certificate is registered as the absolute owner of the Warrant (notwithstanding
any notation of ownership or other writing thereon made by anyone other than
the Company or the Warrant Agent) for all purposes whatever and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.

17.                                 Cancellation of Warrant
Certificates.  In the
event that the Company shall purchase or otherwise acquire any Warrant
Certificate or Certificates after the issuance thereof, such Warrant
Certificate or Certificates shall thereupon be delivered to the Warrant Agent
and be canceled by it and retired.  The
Warrant Agent shall also cancel any Warrant Certificate delivered to it for
exercise, in whole or in part, or delivered to it for transfer, split-up,
combination or exchange.  Warrant
Certificates so canceled shall be maintained in accordance with the regulations
of the Securities and Exchange Commission.

18.                                 Concerning the Warrant Agent.  The Company agrees to pay to the Warrant
Agent compensation for all services rendered by it hereunder as set forth in
Annex A to this Agreement, including its reasonable expenses, including counsel
fees, and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder.  The Company also agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, judgment, fine,
cost, damage, penalty, demand, claim, liability or expense (including the
reasonable fees and expenses of a single counsel to the Warrant Agent),
incurred without gross negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a final,
nonappealable order, judgment, decree or ruling of a court of competent
jurisdiction) on the part of the Warrant Agent, arising out of or in connection
with the acceptance and administration of this Agreement.

19.                                 Merger or Consolidation or Change
of Name of Warrant Agent.  Any
corporation, company or other entity into which the Warrant Agent may be merged
or amalgamated or with which it may be consolidated, or any corporation
resulting from any merger, amalgamation, or consolidation to which the Warrant
Agent shall be a party, or any corporation, company or other entity succeeding
to the corporate trust business of the Warrant Agent, shall be the successor to
the Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation, company or other entity would be eligible for

17

 

appointment as a successor warrant agent under the provisions of
Section 21 hereof.  In case at the time
such successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Warrant Certificates shall have the full force provided in
the Warrant Certificates and in this Agreement.  In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the countersignature
under its prior name and deliver Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, the Warrant Agent may countersign such Warrant Certificates
either in its prior name or in its changed name; and in all such cases such
Warrant Certificates shall have the full force provided in the Warrant
Certificates and in this Agreement.

20.                                 Duties of Warrant Agent.  The Warrant Agent undertakes the duties and
obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrant
Certificates, by their acceptance thereof, shall be bound:

(a)                                  The Warrant
Agent may consult with counsel satisfactory to it (who may be counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Warrant Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such opinion.

(b)                                 Whenever in the
performance of its duties under this Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established prior to taking, suffering or omitting to take any action
hereunder, by a certificate signed by an Authorized Officer of the Company and
delivered to the Warrant Agent; and such certificate shall be full
authorization and protection to the Warrant Agent for any action taken,
suffered or omitted to be taken in good faith by it under the provisions of
this Agreement in reliance upon such certificate.

(c)                                  The Warrant
Agent shall be liable hereunder only for its own gross negligence, bad faith or
willful misconduct (which gross negligence, bad faith or willful misconduct
must be determined by a final, nonappealable order, judgment, decree or ruling
of a court of competent jurisdiction). 
Anything to the contrary notwithstanding, in no event shall the Warrant
Agent be liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including, but not limited to, lost profits),
even if the Warrant Agent

18

 

has been advised of the
likelihood of such loss or damage.  The
liability of the Warrant Agent hereunder is limited to the amount of annual
fees paid to the Warrant Agent by the Company pursuant to this Agreement.

(d)                                 The Warrant
Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Warrant Certificates (except its
countersignature on the Warrant Certificates and such statements or recitals as
describe the Warrant Agent or action taken or to be taken by it) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.

(e)                                  The Warrant
Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Warrant Agent) or in respect of the validity or execution of any Warrant
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Warrant Certificate; nor shall it be responsible for the
making of any change in the number of Common Shares for which a Warrant is
exercisable required under the provisions of Section 6 or responsible for the
manner, method or amount of any such change or the ascertaining of the
existence of facts that would require any such adjustment or change (except
with respect to the exercise of Warrant Certificates after actual notice of any
adjustment of the Exercise Price); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any Common Shares to be issued pursuant to this Agreement or any Warrant
Certificate or as to whether any Common Shares will, when issued, be validly
issued, fully paid and non-assessable.

(f)                                    The Warrant
Agent shall be under no obligation to institute any action, suit or legal
proceeding or take any other action likely to involve expense unless the
Company or one or more registered holders of Warrant Certificates shall furnish
the Warrant Agent with reasonable security and indemnity for any costs and
expenses which may be incurred.  All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of the Warrantholders, as their respective rights or
interests may appear.

(g)                                 The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not Warrant Agent under this Agreement.  Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.

19

 

(h)                                 The Warrant
Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from an Authorized Officer of the
Company, and to apply to such officers for advice or instructions in connection
with the Warrant Agent’s duties, and it shall not be liable for any action
taken or suffered or omitted by it in good faith in accordance with
instructions of any such officer.

(i)                                     The Warrant
Agent will not be responsible for any failure of the Company to comply with any
of the covenants contained in this Agreement or in the Warrant Certificates to
be complied with by the Company.

(j)                                     The Warrant
Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys,
agents or employees and the Warrant Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys,
agents or employees or for any loss to the Company resulting from such neglect
or misconduct; provided, however, that reasonable care shall have been
exercised in the selection and continued employment of such attorneys, agents
and employees.

(k)                                  Subject to
Sections 18, 20(c) and 20(m) of this Agreement, the Warrant Agent, in carrying
out its duties and exercising its powers pursuant to this Agreement, shall at
all times act in accordance with such standards of conduct as are customary in
the industry for agencies of this kind.

(l)                                     The Warrant
Agent will not incur any liability or responsibility to the Company or to any
Warrantholder for any action taken, or any failure to take action, in reliance
on any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument reasonably believed by the Warrant Agent to be genuine
and to have been signed, sent or presented by the proper party or parties.

(m)                               The Warrant
Agent will act hereunder solely as agent of the Company in a ministerial
capacity, and its duties will be determined solely by the provisions
hereof.  The Warrant Agent will not be
liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own gross negligence, bad faith or willful misconduct
(which gross negligence, bad faith or willful misconduct must be determined by
a final, nonappealable order, judgment, decree or ruling of a court of
competent jurisdiction).

21.                                 Change of Warrant Agent.  The Warrant Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ prior notice in
writing mailed, by registered or certified mail, to the Company.  The Company may remove the Warrant Agent or
any successor warrant agent upon 30 days’ prior notice in writing, mailed to the
Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail.  If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent and shall, within 15
days following such appointment, give notice thereof in writing to each
registered holder

20

 

of the Warrant Certificates. 
After such removal or resignation or incapacity by the resigning or
incapacitated Warrant Agent, the Company agrees to perform the duties of the
Warrant Agent hereunder until a successor Warrant Agent is appointed.  After appointment and execution of a copy of
this Agreement in effect at that time, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent,
within a reasonable time, any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose.  Failure to give any
notice provided for in this Section, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor warrant agent, as the case may be.

22.                                 Issuance of New Warrant
Certificates. 
Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new
Warrant Certificates in such form as may be approved by the Board to reflect
any adjustment or change in the Exercise Price or the number or kind of shares purchasable
under the several Warrant Certificates made in accordance with the provisions
of this Agreement.

23.                                 Notices.  Notice or demand pursuant to this Agreement
to be given or made on the Company by the Warrant Agent or by the registered
holder of any Warrant Certificate shall be sufficiently given or made if sent
by first-class or registered mail, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:

Foster
Wheeler Ltd.

c/o Foster Wheeler Inc.

Perryville Corporate Park

Clinton, NJ  08809-4000

Telecopier No.: 908-730-5315

Attention: Steven I. Weinstein

Subject to the provisions of
Section 21, any notice pursuant to this Agreement to be given or made by the
company or by the holder of any Warrant Certificate to or on the Warrant Agent
shall be sufficiently given or made if sent by first-class or registered mail,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) as follows:

Mellon  Investor Services LLC

44 Wall Street

6th Floor

New York, New York 10005

Facsimile No.: (917) 320-6318

Attention: Relationship Manager

21

 

Mellon
Investor Services LLC

85 Challenger Road

Ridgefield Park, New Jersey  07660-2108

Facsimile No.:  (201) 296-4004

Attention:  General Counsel

Any notice or demand
authorized to be given or made to the registered holder of any Warrant
Certificate under this Agreement shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, to the last address of such
holder as it shall appear on the registers maintained by the Warrant Agent.

24.                                 Modification of Agreement.  Any term, covenant, agreement or condition
in this Agreement may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Company and the Warrant Agent with the consent of a holders of a majority of
the Warrants then outstanding (excluding the Company and its affiliates); provided,
that, without the consent of each Warrantholder affected, no such
amendment or waiver shall (i) reduce the number of Common Shares , Preferred
Shares or other property or securities that can be issued pursuant to a
Warrant, (ii) increase the Exercise Price, (iii) bring forward the Expiration
Date, (iv) change any provision of Section 6 hereof in a manner adverse to any
Warrantholder or (v) modify any provision of this Section 24.  Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for the specific
purpose for which it was given.  No
notice to or demand on the Company, the Warrant Agent or any Warrantholder in any
case shall entitle the Company, the Warrant Agent or the Warrantholder to any
other or further notice or demand in similar or other circumstances.  Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 24 shall be binding
upon Warrantholders, Warrant Agent and the Company.

25.                                 Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

26.                                 New York Contract.  This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with
the laws of said State.  To the fullest
extent permitted by applicable law, the parties hereby irrevocably and
unconditionally submit to the jurisdiction of any New York State or United
States Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Warrant Agreement or any Warrant.  Each party irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an
inconvenient forum. To the extent that a party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process with respect
to itself or its property, such party irrevocably waives, to the fullest extent
permitted by applicable law, such immunity in respect of its obligations
hereunder

22

 

or under any Warrant Certificate. 
Each party agrees that final judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding upon such
party and, to the extent permitted by applicable law, may be enforced in any
court to the jurisdiction of which such party is subject by a suit upon such
judgment or in any manner provided by applicable law; provided that service of
process is effected upon such party in the manner specified in the following
subsection or as otherwise permitted by applicable law.

27.                                 Termination.  This Agreement shall terminate as of the
close of business on the Expiration Date, or such earlier date upon which all
Warrants shall have been exercised or redeemed, except that the Warrant Agent
shall account to the Company as to all Warrants outstanding and all cash held
by it as of the close of business on the Expiration Date.  The provisions of Sections 18 and 20 of this
Agreement shall survive the termination of this Agreement.

28.                                 Benefits of this Agreement.  Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other than
the Company, the Warrant Agent, and their respective successors and assigns
hereunder and the Warrantholders any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent, their respective successors and
assigns hereunder and the Warrantholders.

29.                                 Descriptive Headings.  The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

30.                                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but such counterparts
shall together constitute one and the same instrument.

(Remainder
of page intentionally left blank; signature page follows)

23

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

	
   

  	
  FOSTER
  WHEELER LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thierry Desmaris

  	
   

  
	
   

  	
   

  	
  Name: Thierry Desmaris

  	
   

  
	
   

  	
   

  	
  Title: Vice President and
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
  as
  Warrant Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Kavanagh

  	
   

  
	
   

  	
   

  	
  Name: Robert Kavanagh

  	
   

  
	
   

  	
   

  	
  Title: Vice President

  	
   

  

 

24

 

Schedule A

Each Class A Warrant will be exercisable, on
the terms and conditions set forth in the Warrant Agreement, for that number of
Common Shares equal to:

 

 

	
  (20% x TPL)  x

  	
  [

  	
  Existing

  Shares

  	
  +

  	
  Shares

  under

  Restricted

  Stock Plan

  	
  +

  	
  Senior

  Notes

  Shares

  	
  +

  	
  Convertible

  Notes

  Shares

  	
  +

  	
  Robbins

  Shares

  	
  +

  	
  Trust

  Securities

  Shares

  	
  ]

  	
   

  
	
   

  	
  1 — (10% + (20% x TPL))

  	
   

  
	
   

  	
                                                  7,000,000 x TPL

  	
   

  

 

where:

 

“Convertible Notes Shares” means (x) the final
participation level of the 6.50% Convertible Notes due 2007 in the Exchange
Offer, including convertible notes tendered in any subsequent offering period,
expressed as a percentage, multiplied by (y) ($210 million  ̧ $1,000) x
2,132.7 Common Shares.

 

“Exchange Offer” means the debt for equity exchange offer
of Foster Wheeler Ltd. described in its registration statement on Form S-4,
File No. 333-107054 dated August 16, 2004.

 

“Existing Shares” means the Common Shares outstanding
immediately prior to the closing of the exchange offer.

 

“Robbins Shares” means the sum of the following:  (A) (x) the final participation level of the
Series 1999 C Bonds maturing in 2009 in the Exchange Offer, including bonds
tendered in any subsequent offering period, expressed as a percentage,
multiplied by (y) ($12.130 million  ̧ $1,000) x 2,555 Common
Shares; plus (B) (x) the final participation level of the Series 1999 C
Bonds maturing in 2024 in the Exchange Offer, including bonds tendered in any
subsequent offering period, expressed as a percentage; multiplied by (y)
($77.155 million  ̧ $1,000) x
2,132.7 Common Shares; plus (C) (x) the final participation level of the
Series 1999 D Bonds in the Exchange Offer, including bonds tendered in any
subsequent offering period, expressed as a percentage, multiplied by (y) ($24.8
million  ̧ $1,000) x
2,555 Common Shares.

 

“Senior Notes Shares” means (x) the final participation
level of the 6.75% Senior Notes due 2005 in the Exchange Offer, including
senior notes tendered in any subsequent offering period, expressed as a
percentage, multiplied by (y) ($200 million  ̧ 1,000) x 614.2 Common
Shares.

 

“TPL” means the final participation level of the trust
preferred securities in the Exchange Offer, including trust securities tendered
in any subsequent offering period, expressed as a percentage.

 

“Trust Securities Shares” means (x) the TPL
multiplied by (y) ($175 million  ̧ $25) x 16.75 Common Shares.

25

Schedule B

Each Class B Warrant will be exercisable, on
the terms and conditions set forth in the Warrant Agreement, for that number of
Common Shares equal to:

 

 

 

	
  5% x

  	
  [

  	
  Existing

  Shares

  	
  +

  	
  Shares

  under

  Restricted

  Stock Plan

  	
  +

  	
  Senior

  Notes

  Shares

  	
  +

  	
  Convertible

  Notes

  Shares

  	
  +

  	
  Robbins

  Shares

  	
  +

  	
  Trust

  Securities

  Shares

  	
  ]

  	
   

  
	
   

  	
  1 — (10% + (20% x TPL))

  	
   

  
	
   

  	
                                                  Existing Shares

  	
   

  

 

where:

 

“Convertible Notes Shares” means (x) the final participation
level of the 6.50% Convertible Notes due 2007 in the Exchange Offer, including
convertible notes tendered in any subsequent offering period, expressed as a
percentage, multiplied by (y) ($210 million  ̧ $1,000) x 2,132.7
Common Shares.

 

“Exchange Offer” means the debt for equity exchange offer
of Foster Wheeler Ltd. described in its registration statement on Form S-4,
File No. 333-107054 dated August 16, 2004.

 

“Existing Shares” means the Common Shares outstanding
immediately prior to the closing of the exchange offer.

 

“Robbins Shares” means the sum of the following:  (A) (x) the final participation level of the
Series 1999 C Bonds maturing in 2009 in the Exchange Offer, including bonds
tendered in any subsequent offering period, expressed as a percentage,
multiplied by (y) ($12.130 million  ̧ $1,000) x 2,555 Common
Shares; plus (B) (x) the final participation level of the Series 1999 C
Bonds maturing in 2024 in the Exchange Offer, including bonds tendered in any
subsequent offering period, expressed as a percentage; multiplied by (y)
($77.155 million  ̧ $1,000) x
2,132.7 Common Shares; plus (C) (x) the final participation level of the
Series 1999 D Bonds in the Exchange Offer, including bonds tendered in any
subsequent offering period, expressed as a percentage, multiplied by (y) ($24.8
million  ̧ $1,000) x
2,555 Common Shares.

 

“Senior Notes Shares” means (x) the final participation
level of the 6.75% Senior Notes due 2005 in the Exchange Offer, including
senior notes tendered in any subsequent offering period, expressed as a
percentage, multiplied by (y) ($200 million  ̧ 1,000) x 614.2 Common
Shares.

 

“TPL” means the final participation level of the trust
preferred securities in the Exchange Offer, including trust securities tendered
in any subsequent offering period, expressed as a percentage.

 

“Trust
Securities Shares” means (x) the TPL multiplied by
(y) ($175 million  ̧ $25) x 16.75 Common Shares.

26

Exhibit A

Form of Class A Warrant

[DTC LEGEND

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.][to be included in global Warrant
Certificates held through DTC]

VOID AFTER 5 P.M. EASTERN TIME ON________,
2009

(EXCEPT AS PROVIDED IN THE WARRANT AGREEMENT)

WARRANTS TO PURCHASE COMMON SHARES

Warrants

Foster Wheeler Ltd.

CUSIP:

THIS CERTIFIES THAT ____________________ or registered assigns, is the
registered holder of the number of Warrants (“Warrants”) set forth above.  Each Warrant is issued by Foster Wheeler
Ltd. a Bermuda company, (the “Company”) as provided in the Warrant Agreement,
hereinafter more fully described (the “Warrant Agreement”), and will entitle the holder thereof
to purchase from the Company, subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement, at any time on or after September 24,
2005 and before the close of business on September 24, 2009, subject to
extension, in certain circumstances, as described in the Warrant Agreement (the
“Expiration Date”),
that number of fully paid and non-assessable Common Shares of the Company (“Common Shares”)
described in Schedule A to the Warrant Agreement, or, in certain circumstances
described in the Warrant Agreement, Preferred Shares, subject to adjustments as
provided in the Warrant Agreement, upon presentation and surrender of this
Warrant Certificate, with the instructions for the registration and delivery of
Common Shares filled in, at the stock transfer office in New York, New York, of
Mellon Investor Services LLC, Warrant Agent of the Company (“Warrant Agent”) or of
its successor warrant agent or, if there be no successor warrant agent, at the
corporate offices of the Company, and upon payment of the Exercise Price (as
defined in the Warrant Agreement) and any applicable taxes paid either in cash,
or by certified or official bank check, payable in lawful

 

money of the United States of America to the order
of the Company.  Each Warrant will
entitle the holder to purchase Common Shares for $0.4689 per Common Share or,
in certain circumstances, Preferred Shares as provided in the Warrant Agreement
(subject to adjustments as provided in the Warrant Agreement).  The number and kind of securities or other
property for which the Warrants are exercisable are subject to adjustment to
prevent dilution.  All Warrants not
theretofore exercised will expire on the Expiration Date.

This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of September 24, 2004, between
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof.  The Warrant
Agreement is incorporated herein by reference and made a part hereof and
reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the
Warrant Agent, the Company and the holders of the Warrant Certificates.  Copies of the Warrant Agreement are
available for inspection at the stock transfer office of the Warrant Agent or
may be obtained upon written request addressed to the Company at Foster Wheeler
Ltd. c/o Foster Wheeler Inc.
Perryville Corporate Park Clinton, NJ 
08809-4000 Telecopier No.: 908-730-5315 Attention: Steven I.
Weinstein.

The Company may but shall not be required upon the exercise of the
Warrants evidenced by this Warrant Certificate to issue fractions of, Common
Shares, but may make adjustment therefore in cash on the basis of the current
market value of any fractional interest as provided in the Warrant Agreement.

In certain cases, the sale of securities by the Company upon exercise
of Warrants would violate the securities laws of the United States, certain
states thereof or other jurisdictions. 
The Company has agreed to use its best efforts to cause a registration
statement to continue to be effective during the term of the Warrants with
respect to such sales under the Securities Act of 1933, and to take such action
under the laws of various states as may be required to cause the sale of
securities upon exercise to be lawful.

This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or
Certificates so surrendered.  If the
Warrants evidenced by this Warrant Certificate shall be exercised in part, the
holder hereof shall be entitled to receive upon surrender hereof another
Warrant Certificate or Certificates evidencing the number of Warrants not so
exercised.

No holder of this Warrant Certificate, as such, shall be entitled to
vote, receive dividends or be deemed the holder of Common Shares or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any matter submitted to shareholders at any
meeting thereof, or give or withhold consent to any merger,

 

A-2

 

recapitalization, issuance of shares,
reclassification of shares, change of par value or change of shares to no par
value, consolidation, conveyance or otherwise) or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Warrant
Agreement) or to receive dividends or subscription rights or otherwise until
the Warrants evidenced by this Warrant Certificate shall have been exercised
and the Common Shares purchasable upon the exercise thereof shall have become
deliverable as provided in the Warrant Agreement.

If this Warrant Certificate shall be surrendered for exercise within
any period during which the register of members for the Company’s Common Shares
or other class of shares purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate are closed for any purpose, the Company
shall not be required to make delivery of certificates for shares purchasable
upon such transfer until the date of the reopening of said register of members.

Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of
a Warrant Certificate that:

(a)           this Warrant
Certificate is transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in the Warrant Agreement, and

(b)           the Company and the
Warrant Agent may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute owner hereof (notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Company or the Warrant Agent) for all purposes whatever and neither the Company
nor the Warrant Agent shall be affected by any notice to the contrary.  The Company shall not be required to issue
or deliver any certificate for Common Shares or other securities upon the
exercise of Warrants evidenced by this Warrant Certificate until any tax which
may be payable in respect thereof by the holder of this Warrant Certificate pursuant
to the Warrant Agreement shall have been paid, such tax being payable the
holder of this Warrant Certificate at the time of surrender.

This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

(Remainder
of page intentionally left blank; signature page follows)

 

A-3

WITNESS the facsimile signatures of the
proper officer of the Company.

Dated:

	
   

  	
  FOSTER
  WHEELER LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Countersigned:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
  as
  Warrant Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

A-4

[TO
BE PRINTED ON BACK OF CERTIFICATE]

FORM OF ELECTION TO PURCHASE

The undersigned holder hereby exercises the right to purchase common
shares (the “Warrant Shares”) of FOSTER WHEELER LTD., a Bermuda company (the
“Company”), evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not
otherwise defined have the respective meanings set forth in the Warrant.

1.             Payment of Warrant
Exercise Price.  The holder has paid in
connection with this exercise the sum of
$              
to the Company in accordance with the terms of the Warrant.

2.             Delivery of Warrant
Shares.  The Company shall deliver to
the holder
                       
Warrant Shares in accordance with the terms of the Warrant.

	
  :

  	
  Dated

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Name
  of Registered Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

A-5

 

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer
to                      ,
Federal Identification No.            
, a warrant to
             the
common shares of FOSTER WHEELER LTD., a Bermuda company, represented by warrant
certificate
no.                     
, standing in the name of the undersigned on the books of said company.  The undersigned does hereby irrevocably
constitute and appoint
                 ,
attorney to transfer the warrants of said company, with full power of
substitution in the premises.

	
  :

  	
  Dated

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Name
  of Registered Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

A-6

Exhibit B

[DTC LEGEND

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.][to be included in global Warrant Certificates held
through DTC]

Form of Class B Warrant

VOID AFTER 5 P.M. EASTERN TIME ON________,
2007

(EXCEPT AS PROVIDED IN THE WARRANT AGREEMENT)

WARRANTS TO PURCHASE COMMON SHARES

Warrants

Foster Wheeler Ltd.

CUSIP:

THIS CERTIFIES THAT ____________________ or registered assigns, is the
registered holder of the number of Warrants (“Warrants”) set forth above.  Each Warrant is issued by Foster Wheeler
Ltd. a Bermuda company, (the “Company”) as provided in the Warrant Agreement,
hereinafter more fully described (the “Warrant Agreement”), and will entitle the holder thereof
to purchase from the Company, subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement, at any time on or after September 24,
2005 and before the close of business on September 24, 2007, subject to
extension, in certain circumstances, as described in the Warrant Agreement (the
“Expiration Date”)
that number of fully paid and non-assessable Common Shares of the Company (“Common Shares”)
described in the Schedule B to the Warrant Agreement, or, in certain
circumstances described in the Warrant Agreement, Preferred Shares, subject to
adjustments as provided in the Warrant Agreement, upon presentation and
surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Shares filled in, at the stock transfer
office in New York, New York, of Mellon Investor Services LLC, Warrant Agent of
the Company (“Warrant Agent”)
or of its successor warrant agent or, if there be no successor warrant agent,
at the corporate offices of the Company, and upon payment of the Exercise Price
(as defined in the Warrant Agreement) and any applicable taxes paid either in
cash, or by certified or official bank check, payable in lawful money of the
United States of America to the order of the Company.  Each Warrant will entitle the holder to purchase Common Shares
for $0.4689 per Common Share or, in certain

 

circumstances, Preferred Shares as provided in the
Warrant Agreement (subject to adjustments as provided in the Warrant
Agreement).  The number and kind of
securities or other property for which the Warrants are exercisable are subject
to adjustment to prevent dilution.  All
Warrants not theretofore exercised will expire on the Expiration Date.

This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of September 24, 2004, between
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof.  The Warrant
Agreement is incorporated herein by reference and made a part hereof and
reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the
Warrant Agent, the Company and the holders of the Warrant Certificates.  Copies of the Warrant Agreement are available
for inspection at the stock transfer office of the Warrant Agent or may be
obtained upon written request addressed to the Company at Foster Wheeler Ltd. c/o Foster Wheeler Inc. Perryville Corporate Park Clinton,
NJ  08809-4000 Telecopier No.:
908-730-5315 Attention: Steven I. Weinstein.

The Company may but shall not be required upon the exercise of the
Warrants evidenced by this Warrant Certificate to issue fractions of Common
Shares, but may make adjustment therefore in cash on the basis of the current
market value of any fractional interest as provided in the Warrant Agreement.

In certain cases, the sale of securities by the Company upon exercise
of Warrants would violate the securities laws of the United States, certain
states thereof or other jurisdictions. 
The Company has agreed to use its best efforts to cause a registration
statement to continue to be effective during the term of the Warrants with
respect to such sales under the Securities Act of 1933, and to take such action
under the laws of various states as may be required to cause the sale of
securities upon exercise to be lawful.

This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered.  If the Warrants
evidenced by this Warrant Certificate shall be exercised in part, the holder
hereof shall be entitled to receive upon surrender hereof another Warrant
Certificate or Certificates evidencing the number of Warrants not so exercised.

No holder of this Warrant Certificate, as such, shall be entitled to
vote, receive dividends or be deemed the holder of Common Shares or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any matter submitted to shareholders at any
meeting thereof, or give or withhold consent to any merger, recapitalization, issuance
of shares, reclassification of shares, change of par value or change of shares
to no par value, consolidation, conveyance or otherwise) or to receive notice
of meetings

B-2

 

or other actions affecting shareholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Shares purchasable upon the exercise thereof shall
have become deliverable as provided in the Warrant Agreement.

If this Warrant Certificate shall be surrendered for exercise within
any period during which the register of members for the Company’s Common Shares
or other class of shares purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate are closed for any purpose, the Company
shall not be required to make delivery of certificates for shares purchasable
upon such transfer until the date of the reopening of said register of members.

Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of
a Warrant Certificate that:

(a)           this Warrant
Certificate is transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in the Warrant Agreement, and

(b)           the Company and the
Warrant Agent may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute owner hereof (notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Company or the Warrant Agent) for all purposes whatever and neither the Company
nor the Warrant Agent shall be affected by any notice to the contrary.  The Company shall not be required to issue
or deliver any certificate for Common Shares or other securities upon the
exercise of Warrants evidenced by this Warrant Certificate until any tax which
may be payable in respect thereof by the holder of this Warrant Certificate
pursuant to the Warrant Agreement shall have been paid, such tax being payable
the holder of this Warrant Certificate at the time of surrender.

This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

(Remainder
of page intentionally left blank; signature page follows)

 

B-3

WITNESS the facsimile signatures of the
proper officer of the Company.

Dated:

	
   

  	
  FOSTER
  WHEELER LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Countersigned:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
  as
  Warrant Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

B-4

[TO
BE PRINTED ON BACK OF CERTIFICATE]

FORM OF ELECTION TO PURCHASE

The undersigned holder hereby exercises the right to purchase common
shares (the “Warrant Shares”) of FOSTER WHEELER LTD., a Bermuda company (the
“Company”), evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not
otherwise defined have the respective meanings set forth in the Warrant.

1.             Payment of Warrant
Exercise Price.  The holder has paid in
connection with this exercise the sum of
$              
to the Company in accordance with the terms of the Warrant.

2.             Delivery of Warrant
Shares.  The Company shall deliver to
the holder
                       
Warrant Shares in accordance with the terms of the Warrant.

	
  :

  	
  Dated

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Name
  of Registered Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

B-5

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer
to                      ,
Federal Identification No.              
, a warrant to
                 the
common shares of FOSTER WHEELER LTD., a Bermuda company, represented by warrant
certificate
no.                     
, standing in the name of the undersigned on the books of said company.  The undersigned does hereby irrevocably
constitute and appoint
                 ,
attorney to transfer the warrants of said company, with full power of
substitution in the premises.

 

	
  :

  	
  Dated

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Name
  of Registered Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

B-6

Annex AExhibit
10.23

 

 

 

 

 

 

RV ACQUISITION INC.

2004 Stock Option Plan

 

 

 

 

 

 

 

 

 

RV ACQUISITION INC.

2004 STOCK OPTION PLAN

ARTICLE I

Purpose of Plan

This plan shall be known
as the RV Acquisition Inc. 2004 Stock Option Plan (the “Plan”).  The purpose of the Plan shall be to promote
the long-term growth and profitability of RV Acquisition Inc. (the “Company”)
and its Subsidiaries by providing certain directors, officers, consultants and
employees of the Company and its Subsidiaries with incentives to further the development
and financial success of the Company and its Subsidiaries.  By allowing certain individuals to acquire
an ownership interest in the Company, the Plan is intended to motivate certain
individuals to contribute to the success of the Company and its
Subsidiaries.  The Plan will also enable
the Company and its Subsidiaries to attract and retain individuals of
exceptional talent to contribute to the sustained progress, growth and
profitability of the Company and its Subsidiaries.  The Plan is a compensatory benefit plan within the meaning of
Rule 701 under the Securities Act of 1933, as amended (the “Securities Act”),
and, unless and until the Common Stock (as defined below) is publicly traded,
the issuance of stock purchase options (“Options”) for shares of Common
Stock pursuant to the Plan and the issuance of shares of Common Stock pursuant
to such Options are intended to qualify for the exemption from registration
under the Securities Act provided by Rule 701. 
This Plan replaces and supercedes all previous plans, other than the
2004 Lazy Days Employee Stock Appreciation Plan.

ARTICLE II

Definitions

For purposes of the Plan
the following terms have the indicated meanings:

“Board” means the
Board of Directors of the Company.

“Code” means the
Internal Revenue Code of 1986, as amended, and any successor statute.

“Committee” means
the Compensation Committee or such other committee of the Board as the Board
may designate to administer the Plan or, if for any reason the Board has not
designated such a committee, the Board. 
The Committee, if other than the Board, shall be composed of two or more
directors as appointed from time to time by the Board.

“Common Stock”
means the Common Stock, par value $0.01
per share, of the Company, and any other common stock of any class of
the Company hereafter authorized, and any other shares into which any such
stock may be changed by reason of a recapitalization, reorganization, merger,
consolidation or any other change in the corporate structure or capital stock
of the Company.

“Company Sale”
means the consummation of a transaction, whether in a single transaction or in
a series of related transactions, with any Independent Third Party or group of
Independent Third Parties pursuant to which such Person or Persons (i) acquire
(whether by merger, consolidation, recapitalization, reorganization,
redemption, transfer or issuance of capital

 

 

stock or
otherwise) capital stock of the Company (or any surviving or resulting
corporation) possessing the voting power to elect a majority of the Board (or
the board of directors of such surviving or resulting corporation) or (ii)
acquire assets constituting all or substantially all of the assets of the
Company and its Subsidiaries (as determined on a consolidated basis).

“Independent Third
Party” means any Person who, immediately prior to the contemplated
transaction, does not own in excess of 5% of the Common Stock on a
fully-diluted basis (a “5% Owner”), who is not controlling, controlled
by or under common control with any such 5% Owner and who is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner or such other Persons.

“Option Agreement”
has the meaning set forth in Section 5.10.

“Option Shares”
means (i) all shares of Common Stock issued or issuable upon the proper
exercise of an Option and (ii) all equity securities issued or issuable with
respect to the Common Stock referred to in clause (i) above by way of stock
dividend or stock split or in connection with any conversion, merger,
consolidation or recapitalization or other reorganization affecting the Common
Stock.  Unless otherwise provided herein
or in a Participant’s Option Agreement, Option Shares will continue to be
Option Shares in the hands of any holder other than the Participant (except for
the Company and BRS), and each such transferee thereof will succeed to the
rights and obligations of a holder of Option Shares hereunder.

“Participant”
means any director, consultant or employee of the Company or any of its Subsidiaries
who has been selected to participate in the Plan by the Committee or the Board.

“Permitted Option
Transferee” means the Executive’s transferees by will or the laws of
descent and distribution.

“Person” means an
individual, a partnership, a corporation, an association, a joint stock
company, a limited liability company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.

“Preferred Stock”
means the Company’s Series A Preferred Stock, par value $0.01 per share, and
any other stock of any class of the Company hereafter authorized, other than
the Common Stock, and any other shares into which any such stock may be changed
by reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.

“Public Offering”
means an underwritten public offering and sale of Common Stock pursuant to an
effective registration statement under the Securities Act; provided that a Public Offering shall not
include an offering made in connection with a business acquisition or
combination pursuant to a registration statement on Form S-4 or any form
for similar registration purposes, or an employee benefit plan pursuant to a
registration statement on Form S-8 or any form for similar registration
purposes.

“Securities Act”
has the meaning ascribed thereto in Article 1 hereof.

 

-2-

 

“Stockholders
Agreement” means the Stockholders Agreement, dated as of May 14, 2004,
by and among the Company, Bruckmann, Rosser & Sherrill Co. II, L.P.
and other stockholders of the Company, as in effect from time to time.

“Subsidiary”
means, with respect to any Person, any corporation, partnership, association or
other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, limited liability company, association or
other business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability
company, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership, limited
liability company, association or other business entity.

ARTICLE III

Administration

The Plan shall be
administered by the Committee.  Subject
to the limitations of the Plan, the Committee shall have the sole and complete
authority to:  (i) select Participants,
(ii) grant Options to Participants in such forms and amounts as it shall
determine, (iii) impose such limitations, restrictions and conditions upon such
Options as it shall deem appropriate, (iv) interpret the Plan and adopt, amend
and rescind administrative guidelines and other rules and regulations relating
to the Plan, (v) correct any defect or omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan, and (vi) make all other
determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan. 
The Committee’s determinations on matters within its authority shall be
conclusive and binding upon the Participants, the Company and all other
persons.  All expenses associated with
the administration of the Plan shall be borne by the Company.  The Committee may, as approved by the Board
and to the extent permissible by law, delegate any of its authority hereunder
to such persons or entities as it deems appropriate.

ARTICLE IV

Limitation on Aggregate Shares

The number of shares of
Common Stock with respect to which Options may be granted under the Plan shall
not exceed, in the aggregate, 606,061 shares of Common Stock, subject to
adjustment in accordance with Section
6.1.  The shares of Common Stock
available under the Plan may consist of authorized and unissued shares,
treasury shares or a combination thereof, as the Committee shall
determine.  If any shares of Common
Stock subject to repurchase or forfeiture rights are repurchased by the Company
pursuant to such rights, or if any Option is canceled, terminates or expires
unexercised, any shares of Common Stock that would otherwise have been issuable
pursuant thereto will be available for issuance under new Options.

 

-3-

 

ARTICLE V

Options

5.1           Grant of Options.  The Committee may grant Options to Participants
from time to time in accordance with this Article V.  Options granted under the Plan shall be nonqualified stock
options.  The exercise price per share
(the “Exercise Price”) of Common Stock under each Option shall be
determined by the Committee at the time of grant.  Subject to Section 5.6, Options shall be exercisable at such time
or times as the Committee shall determine.

5.2           Conditions and Limitations on
Exercise.  At the discretion of the
Committee, exercised at the time of grant, Options may vest, in one or more
installments, upon (i) the fulfillment of certain conditions, (ii) the passage
of a specified period of time, and/or (iii) the achievement by the Company or
any Subsidiary of certain performance goals. 
Any Options which shall have vested are referred to as “Vested
Options”, and any Options which have not vested are referred to as the “Unvested
Options”.  In addition, Options may
vest on an accelerated or decelerated basis or be subject to certain other
criteria as the Committee shall determine as specified in any Option
Agreement.  In the event of a proposed
Company Sale, the Committee may provide, in its discretion, by written notice
to each applicable Participant, that any or all Options shall become
immediately vested and that any or all Options shall terminate if not exercised
as of the date of such Company Sale or any other designated date or that any
such Options shall thereafter represent only the right to receive such
consideration as the Committee shall deem equitable in the circumstances.

5.3           Exercise Procedure.  Options shall be exercised in whole or in
part, to the extent they are vested, by written notice to the Company (to the
attention of the Company’s Secretary) accompanied by a statement of the
Participant that the Participant has read and has been afforded an opportunity
to ask questions of management of the Company regarding all financial and other
information provided to the Participant regarding the Company together with
payment in full of an amount (the “Option Price”) equal to the product
of (i) the applicable Exercise Price for the applicable Options multiplied by
(ii) the number of Option Shares to be acquired.  Unless otherwise specified in the Option Agreement, payment of the
Option Price may be made in cash (including certified check, bank draft or
money order or the equivalent thereof acceptable to the Company).  Unless otherwise specified in the Option
Agreement or as determined by the Committee, no Option may be exercised for a
fraction of a share of Common Stock.

5.4           Term of Options.  The Committee shall determine the term of
each Option, which term shall in no event exceed ten (10) years from the date
of grant.  In addition, each Option
shall be subject to early termination in accordance with Section 5.5 below.

5.5           Expiration of Options.

(a)           In no event shall any part of any
Option be exercisable after the date of expiration thereof (the “Expiration
Date”), as determined by the Committee in accordance with Section 5.4
above.

(b)           Any Unvested Options of a Participant
on the date of the termination of such Participant’s employment shall expire
and be forfeited as of such date.

 

-4-

 

5.6           Restrictions on Option Shares.  The Option Shares shall be subject to the
restrictions on transfer as set forth in the Stockholders Agreement and may be
subject to repurchase as set forth in an Option Agreement or in any employment
agreement between the Company and the Participant.

5.7           Options Not Transferable.  Options may not be transferred other than by
will or the laws of descent and distribution and, during the lifetime of the
Participant to whom they were granted, may be exercised only by such
Participant (or, if such Participant is incapacitated, by such  Participant’s legal guardian or legal
representative); provided, that
in the event of the death of a Participant, Options which are not vested on the
date of death shall terminate and the exercise of Options granted hereunder to
such Participant, which are vested as of the date of death, may be made only by
the executor or administrator of such Participant’s estate or the Person or
Persons to whom such Participant’s rights under the Options will pass by will
or the laws of descent and distribution.

5.8           Holdback Agreement.  No holder of Option Shares will effect any
sale or distribution of Common Stock during the twenty  days prior to or the 180-day period
beginning on the effective date of any underwritten Public Offering (except as
part of such underwritten registration), unless the underwriters managing such
underwritten Public Offering otherwise agree.

5.9           Listing, Registration and Legal
Compliance.  If at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares of Common Stock subject to Options upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
Options or the purchase or issuance of shares thereunder, no Options may be
granted or exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.  The holders of such Options will supply the Company with such
certificates, representations and information as the Company shall request and
shall otherwise cooperate with the Company in obtaining such listing, registration,
qualification, consent or approval.  In
the case of officers and other persons subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the Committee may at any time
impose any limitations upon the exercise of Options that, in the Committee’s
discretion, are necessary or desirable in order to comply with such Section
16(b) and the rules and regulations thereunder.  If the Company, as part of an offering of securities or
otherwise, finds it desirable because of federal or state regulatory
requirements to reduce the period during which any Options may be exercised,
the Committee may, in its discretion and without the Participant’s consent, so
reduce such period on not less than 15 days’ written notice to the holders
thereof.

5.10         Written Agreements.  The granting of Options hereunder shall be
evidenced by a written agreement executed by the Participant receiving such
Options and the Company (an “Option Agreement”) which shall include
relevant provisions described in this Article V and shall contain such other
provisions as approved by the Committee. 
In the event of any conflict or inconsistency between the terms set
forth in this Plan and the terms of any Option Agreement, the terms of such
Option Agreement shall control and govern the interpretation of this Plan as it

 

-5-

 

relates to such
Participant and such Participant’s Options. 
In addition, each Participant shall execute a joinder to the
Stockholders Agreement in form and substance satisfactory to the Committee and
otherwise in accordance with the terms of the Stockholders Agreement, which
shall restrict the transfer of any Option Shares in the manner provided
therein.

5.11         Rights with Respect to Shares of
Common Stock.

(a)                   Unless otherwise determined
by the Committee in its discretion or as otherwise set forth in an Option
Agreement evidencing an Option, a Participant that receives such Option (and
any person succeeding to such a Participant’s rights pursuant to the Plan) shall
have no rights as a stockholder with respect to any Option Shares issuable
pursuant to any such Option until the date of the issuance of a stock
certificate to the Participant for such Option Shares upon the exercise of such
Option.

(b)                   Except as provided in Section 6.1, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities, other property or other forms
of consideration, or any combination thereof) for which the record date is
prior to the date a stock certificate is issued and described in
Section 5.11(a) above.

5.12         Securities and Tax
Law Compliance.

(a)                   Unless otherwise determined
by the Committee in its discretion, Options shall not be granted unless counsel
for the Company shall be satisfied that such issuance will qualify as
performance-based compensation for purposes of Section 162(m) of the Code
and that such issuance will be in compliance with the Code and regulations
issued thereunder.

(b)                   No shares of Common Stock,
other company securities or property, other securities or property, or other
forms of payment shall be issued hereunder with respect to any Option unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state, local and foreign legal, securities
exchange and other applicable requirements.

ARTICLE VI

General Provisions

6.1           Adjustments.  In the event of a reorganization,
recapitalization, stock dividend,  stock
split, combination or other change in the shares of Common Stock, the Board or
the Committee may, in order to prevent the dilution or enlargement of rights
under the Plan, adjust the terms of any Option or the number of shares of
Common Stock available for Options under the Plan and such adjustment shall be
final, conclusive and binding for all purposes of the Plan.

6.2           Organic Change.  Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of
the Company’s assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an “Organic Change.”  Except as otherwise provided herein, after
the consummation of any Organic Change, each Option shall thereafter be

 

-6-

 

exercisable for, rather than the applicable Option
Shares immediately theretofore acquirable and receivable upon exercise of such
Option, such shares of stock, securities or assets (including cash) as may be
issued or payable with respect to or in exchange for the number and class of
Option Shares immediately theretofore acquirable and receivable upon exercise
of such Option had such Organic Change not taken place.  Notwithstanding the foregoing, in the event
of any proposed Organic Change which would represent a Company Sale, the Board
may, in its discretion, terminate any or all of the Options by written notice
to the then holders of the Options, subject to the payment, upon the
consummation of such Company Sale, by the Company to the then holders of
Options of the difference, if any, between the consideration which the holders
of such Options would receive in such Organic Change for the applicable Option
Shares if such holders exercised such Options immediately prior to such Organic
Change and the exercise price of such Options.

6.3           Rights of Participants.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any of its Subsidiaries to
terminate any Participant’s employment at any time (with or without cause), or
confer upon any Participant any right to continue in the employ of the Company
or any Subsidiary for any period of time or to continue to receive such
Participant’s current (or other) rate of compensation.  No employee shall have a right to be
selected as a Participant or, having been so selected, to be selected again as
a Participant.

6.4           Withholding Tax Requirements.  The Company shall be entitled, if necessary
or desirable, to withhold from any amounts due and payable by the Company to
any Participant (or secure payment from such Participant in lieu of
withholding) the amount of any withholding or other tax due from the Company
with respect to any amounts payable to such Participant under the Plan, and the
Company may defer such payments unless indemnified to its satisfaction.

6.5           Notification of Inquiries and
Agreements.  Each Participant and
each Permitted Option Transferee shall notify the Company in writing within 10
days after the date such Participant or Permitted Option Transferee (i) first
obtains knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value
of any Options granted hereunder; (ii) includes or agrees (including, without
limitation, in any settlement, closing or other similar agreement) to include
in gross income with respect to any Option granted under this Plan (A) any
amount in excess of the amount reported on Form 1099 or Form W-2 to such
Participant by the Company, or (B) if no such Form was received, any amount;
and/or (iii) exercises, sells, disposes of, or otherwise transfers an Option
acquired pursuant to this Plan.  Upon
request, a Participant or Permitted Option Transferee shall provide to the
Company any information or document relating to any event described in the
preceding sentence which the Company (in its sole discretion) requires in order
to calculate and substantiate any change in the Company’s tax liability as a
result of such event.

6.6           Amendment, Suspension and
Termination of Plan.  The Board may
suspend or terminate the Plan or any portion thereof at any time and may amend
it from time to time in such respects as the Board may deem advisable; provided, that no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed, and no such amendment, suspension or termination shall impair the
rights of Participants under outstanding Options

 

-7-

 

without the consent of the Participants affected
thereby.  No Options shall be granted
hereunder after the tenth anniversary of the adoption of the Plan.

6.7           Amendment of Outstanding Options.  The Committee may amend or modify any Option
in any manner to the extent that the Committee would have had the authority
under the Plan initially to grant such Option; provided
that, except as expressly contemplated in an Option Agreement evidencing such
Option, no such amendment or modification shall impair the rights of any
Participant under any outstanding Option without the consent of such
Participant.

6.8           Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Board and the Committee shall be indemnified by the Company
against (i) all costs and expenses reasonably incurred by them in connection
with any action, suit or proceeding to which they or any of them may be party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted under the Plan, and (ii) all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; provided,
that (a) any such Committee or Board member shall be entitled to the
indemnification rights set forth in this Section 6.8 only if such member acted
in good faith and in a manner that such member reasonably believed to be in,
and not opposed to, the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe that such
conduct was unlawful, and (b) upon the institution of any such action, suit or
proceeding a Committee or Board member shall give the Company written notice
thereof and an opportunity to handle and defend the same before such Committee
member undertakes to handle and defend it on his own behalf.

6.9           Restricted Securities.  All Common Stock issued pursuant to the
terms of this Plan shall constitute “restricted securities,” as that term is
defined in Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act, and may not be transferred except in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.

*    *   
*    *    *

 

-8-

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