Document:

Exhibit 10.5

 

Foster Wheeler Inc.

Directors Deferred Compensation and Stock Award
Plan

 

Article I.  Purpose and Background of the Plan; Certain
Definitions

 

(A)          Purpose and
Background of the Plan

 

Foster Wheeler Corporation (hereinafter referred to as “FWC”) adopted
its Directors Deferred Compensation and Stock Award Plan, effective as of April 26,
1999 (the “Original Effective Date”), to enable its Non-employee Directors to
defer receipt of compensation for their services as Non-employee Directors to
later years and to provide part of the compensation for their services as
Non-employee Directors in shares of FWC Common Stock (“FWC Shares”), delivery
of which was also deferred.  The Board of
Directors of Foster Wheeler Inc. (the “Company”) has approved the assumption by
the Company of the FWC Directors Deferred Compensation and Stock Award Plan and
all outstanding obligations to Non-employee Directors under such plan, in
connection with the reorganization transactions contemplated by that certain
Agreement and Plan of Merger (the “Merger Agreement”), dated as of May 25,
2001, among FWC, Foster Wheeler Ltd. (“Parent”) and Foster Wheeler LLC, an
indirect wholly-owned subsidiary of Parent (“FW LLC”).  The Directors Deferred Compensation and Stock
Award Plan of the Company is hereby amended and restated in its entirety (the
“Plan”), effective as of the Effective Time (as defined in the Merger Agreement
and hereinafter referred to as the “Amended and Restated Effective Date”).

 

(B)           Certain
Defined Terms

 

For purposes of the Plan:

 

(i)            “Non-employee
Director” shall mean (a) each individual who participated in the FWC
Directors Deferred Compensation and Stock Award Plan prior to the Amended and
Restated Effective Date, and (b) each member of the Board of Directors of
Parent (the “Board”) who, on the date of any deferral or award under the Plan,
is not an employee of Parent or its direct or indirect subsidiaries, including,
without limitation, the Company, and has not been, within the period of five
consecutive years ending on such date, an employee of Parent or any such
subsidiary or FWC.

 

(ii)           “Share”
or “Shares” means a common share or common shares of Parent, as the case may
be.

 

(iii)          “Share Unit” means a promise by the Company
to deliver one Share to the Non-employee Director to whom such Share Unit is
awarded, in accordance with the terms and conditions of the Plan.  Any Share Units denominated in FWC Shares
credited to a Non-employee Director’s Deferred Compensation Account under the
Plan prior to the Amended and Restated Effective Date shall be automatically
converted into Share Units denominated in Shares, as described in the
immediately preceding sentence, on the basis of one Share for one FWC Share.

 

 

(iv)          “Deferred
Stock Award” means an award of Share Units under the Plan.

 

Article II.  Maintenance of Records

 

The Company shall
maintain a Deferred Compensation Account for each Non-employee Director, which
shall be credited in accordance with the terms of this Plan and the elections
of each Non-employee Director pursuant to this Plan.

 

Article III.  Deferred Stock Awards and Deferral of Fees

 

(A)          Deferred Stock Award
Amount

 

(i)            Each
Non-employee Director, as of the Original Effective Date, has received a
one-time Deferred Stock Award of 1,000 Share Units.

 

(ii)           Each
new Non-employee Director, upon commencement of his or her term on the Board,
shall receive on the date of the first Board meeting attended, a one-time
Deferred Stock Award of 1,000 Share Units, or such other amount as may from
time to time be established by resolution of the Board; provided,
however, that any Non-employee Director
who participated in the Plan immediately prior to the Amended and Restated
Effective Date shall not be entitled to a Deferred Stock Award under this
paragraph III(A)(ii) by reason of joining the Board during calendar year
2001 on or following the Effective Time.

 

(iii)          Each Non-employee Director who is an
incumbent director on the first business day (defined as the first day of the
year on which the New York Stock Exchange is open) of each calendar year,
beginning in 2000, shall receive on such date an annual Deferred Stock Award of
300 Share Units, or such other amount as may from time to time be established
by resolution of the Board.

 

(iv)          Awards
of Share Units pursuant to subparagraphs (i), (ii) and (iii) of this
paragraph III(A) shall be credited to the Deferred Compensation Account of
the applicable Non-employee Director and Shares in respect of such Share Units
shall be delivered in accordance with the provisions of Article VI
hereof.  The issuance and delivery of
Shares in respect of the Share Units shall be deferred until the Non-employee
Director ceases to be a member of the Board in accordance with paragraph III(D) hereof,
or, if the Non-employee Director elects deferral beyond such cessation, the
time of payment or delivery specified by the Non-employee Director in his or
her Deferral Election under paragraph III(B)(1) hereof.

 

(B)           Election to Defer
Fees in Share Units

 

(1)           Any
Non-employee Director may elect to defer, for a period of more than six months
following such election, receipt of all or any portion of the retainer and
meeting 

 

2

 

fees (“Fees”) to be earned by such Non-employee Director and otherwise
payable in cash by indicating his or her election to the Secretary of the
Company on an election form supplied by the Secretary (“Deferral
Election”).  A Non-employee Director’s
Deferral Election must specify (without limitation) (i) the portion of
such Fees to be deferred, (ii) the period for which Fee payments are to be
deferred pursuant to such Deferral Election (“Deferral Period”) and (iii) the
time(s) of payment or delivery. 
Each Deferral Election is irrevocable with respect to the compensation
payable for the Deferral Period to which it applies.

 

(2)           In
addition, each individual who participated in FWC’s Deferred Compensation Plan
for Directors (the “Deferred Compensation Plan”) as of the Original Effective
Date has been permitted to irrevocably elect to transfer the entire balance in
his or her deferred compensation account under the Deferred Compensation Plan
as of July 30, 1999 (the “Conversion Date”), to the Plan, by providing
written notice of such election to the Secretary.  The time and manner of such election (a
“Conversion Election”) shall be prescribed by the Secretary in accordance with
the Plan, except that clauses (ii) and (iii) of paragraph III(B)(1) above
shall also apply to Share Units credited to a Non-employee Director’s Deferred
Compensation Account by reason of his or her Conversion Election.

 

(C)           Credit for Deferred
Fees and Company Supplemental Contributions

 

(1)           Each
Non-employee Director’s Deferred Compensation Account will be credited with the
number of Share Units equal to the number of Shares, including fractions, that
could have been purchased by such Non-employee Director had the amount of the
Fees accrued during the relevant Deferral Period been used to purchase Shares
on the date such Fees would have been paid had they not been deferred, at a
price equal to the Share Fair Market Value, as defined below.  The Deferred Compensation Account of each
Non-employee Director who made a Conversion Election has also been credited
with a number of Shares equal to the number of FWC Shares, including fractions,
that could have been purchased by such Non-employee Director had the amount
elected by such Non-employee Director to be converted in accordance with
paragraph III(B)(2) been used to purchase FWC Shares at a price equal to
the Share Fair Market Value (as defined in the FWC Directors Deferred
Compensation and Stock Award Plan prior to the Amended and Restated Effective
Date) on the Conversion Date.  Each
Non-employee Director’s Deferred Compensation Account shall also be credited
with a Company supplemental contribution of Share Units (“Supplemental
Contributions”) equal to the number of Share Units determined in the first
sentence of this paragraph III(C)(1) multiplied by 15 percent.

 

(2)           “Share
Fair Market Value” shall be the mean of the high and low prices of a Share on
the New York Stock Exchange - Composite Tape (the “Exchange”) on the date in
question, provided that if no sales of Shares were
made on the Exchange on that date, the mean of the high and low prices reported
for the next preceding day on which sales of Shares were made on the Exchange
shall be used.

 

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(D)          Vesting of Deferred
Stock Awards and Supplemental Contributions

 

(1)           The Share
Units in connection with the Deferred Stock Awards pursuant to Article III(A)(i) and
(ii) and the Supplemental Contributions shall not vest until cessation of
service on the Board by reason of normal retirement in accordance with the
Company’s By-Laws (“normal retirement”) or death or earlier, if cessation of
service from the Board is in good standing as approved by the Nominating
Committee of the Board (the “Nominating Committee”), and all such Share Units
shall be forfeited in the event of cessation of service under any other
circumstances.

 

(2)           The Share
Units in connection with the Deferred Stock Awards set forth in Article III(A)(iii) shall
vest on the earlier to occur of (i) cessation of service on the Board by
reason of normal retirement or death or otherwise in good standing as approved
by the Nominating Committee, and (ii) the one-year anniversary of the
award of such Share Units, and all such Share Units shall be forfeited in the
event of cessation of service on the Board under any other circumstances.

 

(E)           Advance Notice of
Election

 

Any Deferral Election with respect to Fees to be earned during a
calendar year shall be delivered to the Secretary of the Company prior to the
beginning of such calendar year or, with respect to a new Non-employee
Director, within 30 days after the effective date of his or her election to the
Board with respect to Fees for Board service after such election.  Notwithstanding the foregoing each incumbent
Non-employee Director as of the effective date of the Plan, stated in Article XI
hereof, may deliver to the Secretary of the Company within 30 days after such
effective date a Deferral Election with respect to Fees for Board service after
such election.

 

Each Non-employee Director who does not provide notice to the Secretary
of the Company of a Deferral Election in accordance with the preceding sentence
will be deemed not to have elected to defer receipt of any Fees.

 

(F)           Duration of Election

 

A Deferral Election may be made annually for the succeeding calendar
year or, at the Non-employee Director’s direction, it may continue from year to
year, unless a written request to modify or terminate that election effective
beginning with the immediately subsequent calendar year is submitted to the
Secretary of the Company on or before the date 15 days prior to the beginning of
such subsequent calendar year.

 

Article IV.  Voting Rights

 

Share Units shall
not have voting rights.

 

4

 

Article V.  Dividends And Changes In Capital

 

(A)          Dividends

 

Whenever a cash dividend or any other in-kind distribution is paid with
respect to Shares, the Deferred Compensation Account of each Non-employee
Director shall be credited with an additional number of Share Units, equal to
the number of Shares, including fractional Shares, that could have been
purchased had such dividend or other distribution been paid on each Share Unit
in the Deferred Compensation Account (on the record date for such dividend or
distribution) and the amount of such dividend or value of such other
distribution been used to acquire additional Shares at the Share Fair Market
Value on the date such dividend or other distribution is paid.  The value of any such other distribution on
or related to Shares shall, at the option of the Board (or an authorized
Committee of the Board), be either determined by the Board or independently
established.  Additional Share Units
credited to a Deferred Compensation Account under this Article V(A) shall
be subject to the rules of the Plan applicable to the underlying Share
Units in respect of which such additional Share Units are credited under this Article V(A).

 

(B)           Changes in Capital

 

The number of Share Units for purposes of the Plan shall be
appropriately adjusted upon the occurrence of any stock split, stock dividend,
recapitalization, merger or similar event.

 

Article VI.  Delivery

 

(A)          Delivery Date

 

(1)           In the
case of Shares to be delivered pursuant to a Deferral Election or a Conversion
Election, Shares equal to the number of Share Units credited to a Non-employee
Director’s Deferred Compensation Account shall be delivered on the delivery
date or dates specified in the Deferral Election to such Non-employee Director;
provided, however,
that if the service of an individual who made a Conversion Election terminated
under any circumstances within one year after the Conversion Date the balance
of his or her Deferred Compensation Account attributable to his or her
Conversion Election shall be delivered at the time or times specified in his or
her notice filed with the Secretary pursuant to the Deferred Compensation Plan,
without regard to the Deferral Election filed hereunder.  In the case of Share Units in connection with
the Deferred Stock Awards and the Supplemental Contributions, the delivery of
Shares equal to the number of Share Units credited to a Non-employee Director’s
Deferred Compensation Account which are vested in accordance with paragraph (D) of
Article III hereof will be made to the Non-employee Director promptly
after cessation of service on the Board, or such later date or dates specified
by the Non-employee Director’s Deferral Election with respect to his or her
Deferred Stock Awards and Supplemental Contributions.

 

(2)           Notwithstanding
paragraph VI(A)(1) above, subject to approval by the Board, a Non-employee
Director may make an irrevocable election, by executing and delivering to the
Secretary written notice thereof, to defer receipt of Shares otherwise
deliverable upon cessation of his or her Board service until the date specified
in such election; 

 

5

 

provided, however,
that if such Non-employee Director’s Board service terminates under any
circumstances within one year of the date such election is filed with the
Secretary, such election shall be ineffective and delivery of his or Shares
shall be made as provided in paragraph VI(A)(1) above without regard to
such deferral election.

 

(3)           The date
or dates specified in a Non-employee Director’s Deferral Election or the date
or dates of delivery of his or her Shares otherwise applicable under paragraph
VI(A)(1) or (2) above shall be referred to herein as the “Delivery
Date.”  In any case, when Shares are
delivered a cash payment will be made in lieu of delivering a fractional share.

 

(4)           For the
avoidance of doubt, an individual who ceases service on the Board of Directors
of FWC and thereafter commences service on the Board shall not be deemed
thereby to have had a cessation of service entitling such individual to any
distribution or payment under the Plan.

 

(B)           Death

 

In the event of a Non-employee Director’s death, the Shares in respect
of Share Units credited to his or her Deferred Compensation Account shall be
delivered to the Non-employee Director’s estate or beneficiary, as appropriate.

 

(C)           Delivery in Cash

 

Notwithstanding the foregoing, a Non-employee Director may elect to
receive the equivalent of the Share Units he or she would be entitled to
receive on the Delivery Date in cash instead of Shares (the amount of such cash
payment shall equal the number of Share Units credited to such Non-employee
Director’s Deferred Compensation Account multiplied by the Share Fair Market
Value on the Delivery Date).  An election
to receive cash in lieu of Shares shall be delivered to the Secretary of the Company
at least sixty (60) days prior to the initial Delivery Date and shall be
subject to approval in advance by the Board (or an authorized Committee of the
Board).

 

Article VII.  Authorization and Source of Shares

 

Shares necessary
to meet the obligations of the Plan shall be obtained by the Company (a) through
acquisitions by the Company in the open market or (b) from Parent, and
Parent shall obtain such Shares through acquisitions by Parent in the open
market, from time to time.

 

Article VIII.  Alienability

 

Prior to delivery
of Shares by the Company pursuant to Article VI, no Non-employee Director
shall have any right to sell, pledge, transfer, assign or hypothecate any Share
Units or Shares, or any right to receive any Share Units or Shares, credited to
him or her under this Plan and such Share Units or Shares shall not be subject
to execution, attachment, garnishment or similar process.

 

6

 

Article IX.  Non-Employee Director’s Rights Unsecured

 

The right of a
Non-employee Director to receive any Shares hereunder shall rank as an
unsecured claim against the Company. 
Assets that may be set aside for the Company’s convenience with respect
to the Plan shall not in any way be held in trust for, or be subject to any
prior claim by, a Non-employee Director or beneficiary.

 

Article X.  Change of Control

 

(A)          For purposes of the Plan, a “Change of
Control” shall mean:

 

(a)           The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of Parent where such acquisition
causes such Person to own 20% or more of the combined voting power of the then
outstanding voting securities of Parent entitled to vote generally in the
election of directors (the “Outstanding Parent Voting Securities”); provided, however, that
for purposes of this paragraph X(A)(a), the following acquisitions shall not be
deemed to result in a Change of Control: 
(i) any acquisition directly from Parent or any corporation or
other legal entity controlled, directly or indirectly, by Parent, (ii) any
acquisition by Parent or any corporation or other legal entity controlled,
directly or indirectly, by Parent, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Parent or any
corporation or other legal entity controlled, directly or indirectly, by Parent
or (iv) any acquisition by any corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of paragraph X(A)(c) below;
and provided, further,
that if any Person’s beneficial ownership of the Outstanding Parent Voting
Securities reaches or exceeds 20% as a result of a transaction described in
clause (i) or (ii) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of Parent, such subsequent
acquisition shall be treated as an acquisition that causes such Person to own
20% or more of the Outstanding Parent Voting Securities; or

 

(b)           Individuals who, as of the Amended and Restated
Effective Date, constitute the Board (such individuals, the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the Amended and Restated
Effective Date whose election, or nomination for election by Parent’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or

 

7

 

(c)           The approval by the shareholders of Parent of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of Parent (“Business Combination”) or, if
consummation of such Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Parent Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of such transaction owns
Parent or all or substantially all of Parent’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Parent Voting Securities, (ii) no Person (excluding any (x) corporation
owned, directly or indirectly, by the beneficial owners of the Outstanding
Parent Voting Securities as described in clause (i) immediately preceding
or (y) employee benefit plan (or related trust) of Parent or such
corporation resulting from such Business Combination, or any of their
respective subsidiaries) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

 

(d)           approval by the shareholders of Parent of a complete
liquidation or dissolution of Parent.

 

For the avoidance of doubt, neither the approval nor the consummation
of the merger of FWC with and into FW LLC (whereby each outstanding FWC Share
(other than those FWC Shares held by FWC or any direct or indirect wholly-owned
subsidiary of FWC) was converted into one Share), or any restructuring
transactions contemplated by or related to such merger, shall be deemed to
constitute or result in, directly or indirectly, a Change of Control, for
purposes of the Plan.

 

(B)           Upon the occurrence of
a Change of Control, all deferrals pursuant to the Plan shall immediately
terminate and Deferred Compensation Account amounts shall become immediately
payable in full whether or not otherwise vested and notwithstanding any other
provision of the Plan to the contrary. 
Each Non-employee Director’s Deferred Compensation Account shall be
converted to cash in an amount equal to the greater of (1) the highest
Share Fair Market Value during the 60 days preceding the date on which the
Change of Control occurs and (2) the highest amount received by Parent’s
shareholders for a Share in connection with the transaction giving rise to the
Change of Control, multiplied by the number of Share Units in such Deferred 

 

8

 

Compensation
Account.  Deferred Compensation Account
cash amounts shall be delivered to each Non-employee Director within thirty
days of the Change of Control.

 

Article XI. 
Plan Obligation of Company; Affiliate Guarantees

 

Notwithstanding
any other provisions of the Plan to the contrary, the obligation to make any
delivery of Shares or payment in respect of Share Units under the Plan shall be
the sole obligation of the Company and not of Parent.  FW LLC and Foster Wheeler International
Holdings, Inc., each an indirect, wholly-owned subsidiary of Parent, have
executed an agreement to unconditionally guarantee the Company’s performance of
its obligations under the Plan.

 

Article XII.  Amendment and Termination

 

The Board (or an
authorized Committee of the Board) may at any time terminate, and may at any
time and from time to time and in any respect amend, the Plan for any reason; provided, however, that
no amendment or termination of the Plan shall materially impair the right of
any Non-employee Director to receive amounts which have been credited to his or
her Deferred Compensation Account pursuant to Articles III and V prior to such
amendment or termination without such Non-employee Director’s prior written
consent.

 

Article XIII.  Administration and Interpretation.

 

The Board (or an
authorized Committee of the Board) shall have the exclusive authority to
operate, manage and administer the Plan in accordance with its terms and
conditions.  The Board shall have all
authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. 
Without limiting the generality of the foregoing, the Board shall have
the exclusive right and discretionary authority to interpret the Plan or any
agreement or document related to the Plan, construe any ambiguous provision of
the Plan or any such agreement or document, and decide all questions concerning
eligibility to participate in the Plan. 
The Board may establish, amend, waive and/or rescind rules and
regulations and administrative guidelines for carrying out the Plan and may
correct any errors, supply any omissions or reconcile any inconsistencies in
the Plan or any agreement or document related to the Plan.  The Board shall have full discretionary
authority in all matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan. 
Decisions and actions by the Board with respect to the Plan shall be
final, conclusive and binding on all persons having or claiming to have any
right or interest in or under the Plan. 
The Board or the Secretary of the Company shall prescribe the form and
content of any elections or other communications or agreements under the Plan,
which shall, in any case, be in writing.

 

9Exhibit 10.6

 

Amendment to the

FOSTER WHEELER INC.

Directors Deferred Compensation and Stock Award Plan

 

The Foster Wheeler Inc. Directors Deferred
Compensation and Stock Award Plan (the “Plan”) is hereby amended as follows,
pursuant to resolutions adopted by the Board of Directors of Foster Wheeler
Ltd. and its Compensation Committee at their meetings held December 8,
2008, and resolutions adopted by the Board of Directors of Foster Wheeler Inc. dated
January 23, 2009:

 

1.                                       References in the Plan to “Parent” are
replaced with “Foster Wheeler AG.”

 

2.                                       The following new Article XIV is
added to the Plan:

 

Article XIV   Redomestication.

Foster Wheeler Ltd. moved
the place of organization of the parent company of its group of companies from
Bermuda to Switzerland by means of a scheme of arrangement (“Scheme of
Arrangement”) between Foster Wheeler Ltd. and Foster Wheeler AG, a wholly-owned
subsidiary of Foster Wheeler Ltd. registered in Switzerland, and certain
related agreements described in Foster Wheeler Ltd.’s Proxy Statement for the
Special Court-Ordered Meeting of Common Shareholders held on January 27,
2009.  Effective upon the completion of
the Scheme of Arrangement, shares of Foster Wheeler AG will be issued, held,
made available, or used to measure benefits as appropriate under the Plan in
lieu of common shares of Foster Wheeler Ltd. with respect to all outstanding
awards.

 

3.                                       This Amendment
shall take effect upon completion of the Scheme of Arrangement (as described in
the resolutions adopted on December 8, 2008 by the Board of Directors of
Foster Wheeler Ltd.) and shall apply to all awards outstanding on such date.

 

IN WITNESS WHEREOF, Foster Wheeler Inc. has
caused this Amendment to the Plan to be executed.

 

	
   

  	
  FOSTER WHEELER INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Ganz

  
	
   

  	
  Name: 

  	
  Peter J. Ganz

  
	
   

  	
  Title: 

  	
  Executive Vice President

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