Document:

1995 STOCK OPTION PLAN OF FOSTER WHEELER INC.
               (As amended and restated as of September 24, 2002)

1.         Purpose

           The 1995 Stock Option Plan (as amended and restated as of September
24, 2002) (the "Plan") is intended to increase incentive and encourage ownership
of common shares of FOSTER WHEELER LTD. ("Parent"), the indirect owner of all of
the outstanding capital stock of FOSTER WHEELER INC. (the "Company"), on the
part of certain key executive employees of the Company or of other corporations
which are or become subsidiaries of the Company or of Parent ("Subsidiaries").
It is also the purpose of the Plan to increase the proprietary interest of such
employees in the success of Parent and the Company and Subsidiaries, and to
encourage them to remain in the employ of the Company or of the Subsidiaries or
Parent. Options intended to qualify as "incentive stock options" ("ISO")
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended, (the
"Code") and "non-qualified" options under Section 83 of the Code can be issued
under the Plan.

2.         Shares

           The shares subject to the options shall be newly issued, or
reacquired, common shares of Parent (the "Common Shares"). The total amount of
the Common Shares on which options may be granted is 5,300,000 shares.

           In the event that any outstanding option under the Plan expires or is
terminated, Common Shares allocable to the unexercised portion of such option
may again become subject to an option under the Plan.

3.         Administration

           The Plan shall be administered by the Board of Directors of the
Company (the "Company Board").

           Granting options and all matters relating to the Plan and options
granted pursuant thereto are hereby delegated to the Company Board except such
as are expressly herein reserved to the stockholders of Parent, the Board of
Directors of Parent or to the Compensation Committee of the Board of Directors
of Parent (the "Compensation Committee"). The interpretation and construction by
the Company Board, the Compensation Committee or the Board of Directors of
Parent, as the case may be, of provisions of the Plan or of options granted
pursuant thereto shall be final and conclusive. No member of the Company Board,
the Board of Directors of Parent or the Compensation Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted pursuant thereto.

           Notwithstanding any other provisions of the Plan to the contrary, (a)
grants of options under the Plan that are (1) intended to be "qualified
performance-based compensation," within the meaning of the Treasury Regulations
promulgated under Section 162(m) of the Code, to the extent required by Code
Section 162(m), or (2) intended to be covered by any exemptive rule under
Section 16 of the Exchange Act (as hereinafter defined), including Rule 16b-3,
or any successor rule, as the same may be amended from time to time, to the
extent required by such exemptive rule, shall be made by the Compensation
Committee, and the Compensation Committee shall approve the terms and conditions
of such options, and (b) grants of all other options under the Plan shall be
subject to the approval of the Compensation Committee. For the avoidance of
doubt, the obligation to deliver Common Shares upon the exercise of any option
granted in accordance with the Plan shall be the sole obligation of the Company
and not of Parent.

<PAGE>

           If no Compensation Committee is appointed by the Board of Directors
of Parent, or if the Compensation Committee shall cease or be unable to act, all
functions of the Compensation Committee shall be exercised by the Board of
Directors of Parent.

4.         Eligibility

           The persons eligible to receive options in accordance with Article 3
hereof shall be key executive employees (including officers and such directors
as are employees) of the Company or Subsidiaries, as the Company Board shall
determine from time to time. An optionee may hold more than one option. The
maximum number of shares with respect to which options may be granted to any
executive during a calendar year is 500,000.

           No ISO may be granted under the Plan to any individual otherwise
eligible to participate in the Plan who, on the date of granting of such option,
is not (a) an employee of the Company or a Subsidiary that is a "subsidiary
corporation" of the Company, as that term is defined in Section 424(f) of the
Code, or, (b) with respect to options granted under the Plan prior to the
Effective Time (as defined pursuant to Article 11 hereof), an employee of Foster
Wheeler Corporation or a "subsidiary corporation" of Foster Wheeler Corporation,
as that term is defined in Section 424(f) of the Code. To the extent that any
option granted under the Plan does not qualify as an ISO (whether because of its
provisions, the time or manner of its exercise, events occurring after the grant
of the option or otherwise), such option, or the portion thereof which does not
so qualify, shall constitute a separate non-qualified option.

5.         General Terms and Conditions of Options

           Share options granted pursuant to the Plan shall be evidenced by
agreements (which need not be identical) in such form as the Company Board from
time to time shall determine, which agreements shall contain the following terms
and conditions:

           (a)       Exercise of Options

                     Each option shall be exercisable in whole or in such
           installments, at such times and under such conditions as may be
           determined by the Company Board or the Compensation Committee in its
           discretion in accordance with the Plan and stated in the agreement
           evidencing the option; provided, however, that unless otherwise
           provided in the agreement evidencing an option, the option may be
           exercised following termination of the optionee's employment in
           accordance with the provisions set forth in Section 6(b) or 7(a) of
           the Plan, as the case may be; provided further, however, that an
           option may not be exercised within one year from the date of grant of
           such option, or if in the opinion of counsel for the Company exercise
           of an option or delivery of shares pursuant thereto might result in a
           violation of any law or regulation of an agency or government or have
           an adverse effect on the listing status or qualification of the
           Company shares on any securities exchange.

           (b)       Option Price

                     The option shall state the option price which shall be 100%
           of the fair market value of the Common Shares on the date of the
           granting of the option. The mean of the high and low sale prices of
           the Common Shares on the New York Stock Exchange on the day an option
           is granted may be taken by the Company Board as the fair market
           value.

           (c)       Medium and Time of Payment

                     The option price shall be paid upon exercise (i) in U.S.
           dollars, or (ii) in Common Shares owned of record by the employee.
           Such Common Shares shall be valued at the mean of the high and low
           sale prices of such stock on the New York Stock Exchange on the day
           of exercise.

                                      -2-
<PAGE>

           (d)       Term of Options

                     No option shall be exercisable after ten years from the
           date granted.

           (e)       Continuation of Employment

                     So long as the optionee shall continue to be an employee of
           the Company or a Subsidiary, the option shall not be affected by (i)
           any change of duties or position, or (ii) any temporary leave of
           absence approved by each employing corporation and by the Company
           Board. Nothing in this Plan or in any option agreement hereunder
           shall confer upon any employee any right to continue in the employ of
           the Company or such Subsidiary or interfere in any way with the right
           of the Company or such Subsidiary to terminate his employment at any
           time, with or without cause.

                     For the purposes of this section of the Plan, a member of
           the Company Board or of the Board of Directors of Parent, so long as
           he remains on such Board, shall not be deemed to have terminated his
           employment by reason of his retirement as an employee of the Company.
           Upon termination as a member of either or both such Boards, or death,
           the Board member, a legatee or legatees, or his personal
           representative or distributees shall have the same time period to
           exercise an option as provided for a retired or deceased employee.

           (f)       Assignability

                     No option shall be assignable or transferable by the
           optionee except by will or by the laws of descent and distribution.
           During the lifetime of an optionee, the option shall be exercisable
           only by him or a court appointed guardian.

           (g)       Rights as a Shareholder

                     An optionee shall have no rights as a shareholder with
           respect to any shares covered by his option until the date of the
           issuance of a certificate to him for such shares.

           (h)       Change of Control

                     Notwithstanding any other provision of the Plan, during the
           60-day period from and after a Change of Control (the "Exercise
           Period"), unless the Company Board shall determine otherwise at the
           time of grant, an optionee shall have the right, whether or not the
           option is fully exercisable and in lieu of the payment of the
           exercise price for the Common Shares being purchased under the option
           and by giving notice to the Company, to elect (within the Exercise
           Period) to surrender all or part of the option to the Company and to
           receive cash, within 30 days of such notice, in an amount equal to
           the amount by which the Change of Control Price per Common Share on
           the date of such election shall exceed the exercise price per Common
           Share under the option (the "Spread") multiplied by the number of
           Common Shares subject to the option as to which the right granted
           under this Section 5(h) shall have been exercised; provided, however,
           that if the Change of Control is within six months of the date of
           grant of a particular option held by an optionee who is an officer or
           director of the Company or Parent and is subject to Section 16(b) of
           the Exchange Act, no such election shall be made by such optionee
           with respect to such option prior to six months from the date of
           grant. However, if the end of such 60-day period from and after a
           Change of Control is within six months of the date of grant of an
           option held by an optionee who is an officer or director of the
           Company or Parent and is subject to Section 16(b) of the Exchange
           Act, such option shall be canceled in exchange for a cash payment to
           the optionee, effected on the day which is six months and one day
           after the date of grant of such option, equal to the Spread
           multiplied by the number of Common Shares subject to the option.

                                      -3-
<PAGE>

                     Notwithstanding any other provision of the Plan to the
           contrary, in the event of a Change of Control, any options
           outstanding as of the date such Change of Control is determined to
           have occurred and not then exercisable and vested shall become fully
           exercisable and vested to the full extent of the original grant.

                     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 subsection (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 subsection (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 Effective Time, constitute
           the Board of Directors of Parent (the "Incumbent Board") cease for
           any reason to constitute at least a majority of the Board of
           Directors of Parent; provided, however, that any individual becoming
           a director subsequent to the Effective Time 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 of Directors of Parent; or

                     (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

                                      -4-
<PAGE>

           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 of Directors of Parent, 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 Foster Wheeler Corporation with and into Foster
           Wheeler LLC (whereby each outstanding share of common stock of Foster
           Wheeler Corporation (other than those shares of such common stock
           held by Foster Wheeler Corporation or any direct or indirect
           wholly-owned subsidiary of Foster Wheeler Corporation) was converted
           into one Common 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.

                     For purposes of the Plan, "Change of Control Price" means
           the higher of (i) the highest reported sales price, regular way, of a
           Common Share in any transaction reported on the New York Stock
           Exchange Composite Tape or other national exchange on which such
           shares are listed during the 60-day period prior to and including the
           date of a Change of Control, or (ii) if the Change of Control is the
           result of a tender or exchange offer or a Business Combination, the
           highest price per Common Share paid in such tender or exchange offer
           or Business Combination; provided, however, that (x) in the case of
           an option which (A) is held by an optionee who is an officer or
           director of the Company or Parent and is subject to Section 16(b) of
           the Exchange Act and (B) was granted within 240 days of the Change of
           Control, the Change of Control Price for such option shall be the
           fair market value of the Common Shares on the date such option is
           exercised or deemed exercised and (y) in the case of an ISO option,
           the Change of Control Price shall be in all cases the fair market
           value of the Common Shares on the date such option is exercised. To
           the extent that the consideration paid in any such transaction
           described above consists in whole or in part of securities or other
           non-cash consideration, the value of such securities or other
           non-cash consideration shall be determined in the sole discretion of
           the Company Board.

6.         Additional Terms and Conditions of ISO Options

           In addition to the terms and conditions set forth in Article 5, the
following provisions shall be included in all ISO options:

           (a)       Term

                     All ISO options granted pursuant to the Plan must be
           granted prior to January 31, 2005.

           (b)       Termination of Employment

                     Except as otherwise provided in the agreement evidencing an
           ISO option:

                     (i) In the event that the employment of an optionee shall
           be terminated (otherwise than by reason of the optionee's death), the
           option may be exercised at any time after one year from the

                                      -5-
<PAGE>

           date of grant, but within three months after such termination, and
           not later than the expiration date of the option.

                     (ii) If an optionee shall die while employed by the Company
           or a Subsidiary, or within three months after the termination of his
           employment, the option may be exercised by a legatee or legatees of
           the optionee under his last will, or by his personal representatives
           or distributees, at any time one year after the date of grant, but
           before the expiration date of the option.

           (c)       Limitations of Option Grants

                     The aggregate annual fair market value of Common Shares
           with respect to which ISO's may become exercisable for the first time
           in a calendar year per employee, determined at the time of grant,
           shall not exceed $100,000.

7.         Additional Terms and Conditions of Non-Qualified Options

           In addition to the terms and conditions set forth in Article 5, the
           following provisions shall be included in all non-qualified stock
           options.

           (a)       Termination of Employment

                     Except as otherwise provided in the agreement evidencing an
           option:

                     (i) If an optionee retires under a pension plan of the
           Company or a Subsidiary, becomes disabled and is unable to continue
           to work, or is terminated for the convenience of the Company or a
           Subsidiary, the option may be exercised at any time after one year
           from the date of grant, but prior to the expiration date of the
           option.

                     (ii) If an optionee dies while employed by the Company or a
           Subsidiary, or dies while retired, disabled or terminated as set
           forth in the preceding paragraph, the option may be exercised by a
           legatee or legatees of the optionee under his last will, or by his
           personal representatives or distributees, at any time one year after
           the date of grant, but prior to the expiration date of the option.

                     (iii) In the event that the employment of an optionee shall
           be terminated, other than for the reasons set forth above, the option
           may be exercised at any time one year after the date of grant, but
           within three months after such termination, but not later than the
           expiration date of the option.

8.         Term of Plan

           Subject to Articles 10 and 6 (a), the Plan shall remain in effect
until all options granted under the Plan have been exercised or expire.

9.         Recapitalization

           In the event of changes in the Common Shares by reason of share
dividends, split-ups or combination of shares, reclassifications,
recapitalizations, mergers, consolidations, reorganizations or liquidations,
appropriate adjustments shall be made by the Company Board in (a) the number and
class of shares available under the Plan in the aggregate, (b) the option price
provided for by the Plan, (c) the number and class of shares to which optionees
will thenceforth be entitled upon exercise of their options, and (d) the price
which optionees shall be required to pay upon such exercise.

                                      -6-
<PAGE>

           Whether any adjustment or modification is required as a result of the
occurrence of any of the events heretofore specified, and the amount thereof,
shall be determined by the Company Board, which determination shall be final,
binding and conclusive; provided, however, that any adjustments or modifications
to the Plan or options thereunder pursuant to this Section 9 shall be subject to
the approval of the Compensation Committee.

10.        Amendment of the Plan

           The Company Board may from time to time suspend, discontinue or
abandon the Plan or revise or amend it in any respect whatsoever; provided,
however, that (a) without approval of the shareholders of Parent, the number of
shares subject to the Plan shall not be increased and the price at which options
may be granted shall not be decreased, other than appropriate adjustments
necessary to reflect share dividends, split-ups, or combinations of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, and (b) an outstanding option shall not be amended in any
respect without the consent of the optionee to whom granted; provided further,
however, that any such suspension, discontinuance or abandonment, or revision or
amendment, of the Plan shall be subject to the approval of the Board of
Directors of Parent.

11.        Adoption of Plan

           The Plan has been amended and restated in its entirety effective as
of September 24, 2002, as adopted by the Company Board and approved by the Board
of Directors of Parent on September 24, 2002. The Plan was amended and restated
in its entirety effective as of May 22, 2002, as adopted by the Company Board
and approved by the Board of Directors of Parent on January 29, 2002, and
approved by the shareholders of Parent at the annual meeting of shareholders
held on May 22, 2002. The Plan originally became effective when adopted by the
Board of Directors of Foster Wheeler Corporation, which was done on January 31,
1995, and approved by the stockholders of Foster Wheeler Corporation at a duly
held stockholders' meeting by favorable vote of holders of shares representing a
majority of the votes entitled to be cast on matters submitted to stockholders.
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 Foster Wheeler Corporation, Parent and Foster Wheeler LLC, an indirect
wholly-owned subsidiary of Parent, pursuant to the Merger Agreement, the Company
Board approved the assumption by the Company of the Plan and all outstanding
options thereunder, together with certain amendments to the Plan, effective as
of the Effective Time (as defined in the Merger Agreement). Adoption of the Plan
by the Company and approval of the Plan by the shareholders of Parent shall not
affect any other stock option plans or agreements of Parent or the Company or
their subsidiaries or options outstanding under any such other plans or
agreements. For all dates prior to the Effective Time, references in the Plan to
"Common Shares" shall be deemed references to the common stock of Foster Wheeler
Corporation. Foster Wheeler 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, effective as of the Effective Time.

                                      -7-
<PAGE>[FOSTER WHEELER LTD. LOGO]

                                     REVISED
                                 August 23, 2002

VIA MESSENGER
PERSONAL AND CONFIDENTIAL

Mr. James E. Schessler
25 Spring Garden Drive
Madison, New Jersey 07940

Dear Jim:

This revised letter confirms our discussions regarding your separation from
employment with Foster Wheeler Ltd., including its subsidiaries, divisions and
affiliates (collectively the "Company"). The details of our discussions are set
out below.

1.         SEPARATION FROM EMPLOYMENT

It is understood that your separation from employment with the Company is
effective today, August 23, 2002. In addition, in accordance with the Bye-Laws
of the Company, your position as a Director is vacated as of today.

Except as otherwise provided herein (i) all salary and any employee benefits due
to you as of your separation date according to the established policies, plans
and procedures of the Company shall be paid or made available to you in
accordance with the terms of those established policies, plans and procedures,
and (ii) any employee benefit continuation or conversion rights existing under
such established plans of the Company shall be made available to you in
accordance with the terms of such established plans. If you have any questions
regarding your benefits, please contact Rick Lee in Human Resources.

2.         SEPARATION BENEFITS

While the Company has no obligation to do so, on the condition that (i) ON OR
BEFORE OCTOBER 11, 2002 you sign, date and return to me a copy of this letter
agreement and the Waiver and Release Agreement attached hereto as Attachment I,
and (ii) you do not revoke the signed Waiver and Release Agreement, you will
receive from the Company the following separation benefits:

(a)                  As separation pay, the Company shall pay to you fifty-two
                     (52) weeks of your current base salary payable in
                     installments in accordance with the Company's regular
                     payroll payment schedule. Payment of separation pay shall
                     commence after the seven (7) day revocation period
                     described below has passed.

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 2

(b)                  For the one (1) year period commencing with your separation
                     date, your coverage under the Company sponsored health and
                     welfare benefit plans (excluding vacation and sick leave
                     accrual) will be continued as if you were an active
                     employee of the Company, including the relative Company and
                     active employee portions of the cost of coverage.

(c)                  Under the Company's Supplemental Employee Retirement Plan
                     ("SERP"), you will be eligible to receive your SERP benefit
                     in accordance with the terms of the SERP, including the
                     applicable administrative rules adopted by the Finance
                     Committee. Your SERP benefit shall be determined to include
                     your age on August 23, 2003 and one (1) additional year of
                     service. The Company will recommend to the Finance
                     Committee of the Company's Board of Directors that the
                     Finance Committee approve the immediate payment of your
                     SERP benefit in the form of a single lump sum payment. In
                     addition, under the Company's defined benefit pension plan
                     you will receive one (1) additional year of service.

(d)                  As soon as practicable, the Company shall cause all
                     transfer and other restrictions to be removed from all
                     shares of capital stock of the Company then registered in
                     your name and any stock options which you hold to purchase
                     shares of the capital stock of the Company will be fully
                     vested.

(e)                  For the one (1) year period commencing with your separation
                     date, you shall be permitted to retain use of the
                     automobile currently leased by the Company for you.

(f)                  The Company shall pay you in a single lump sum payment for
                     your accrued but unpaid vacation ($86,600.10) and sick time
                     ($52,442.28).

(g)                  The Company shall pay up to Twelve Thousand Dollars
                     ($12,000.00) for executive level career transition
                     assistance services for you by a career transition
                     assistance firm selected by you and approved in writing by
                     the Company. You must commence the executive level career
                     transition assistance program within sixty (60) days after
                     your separation date.

(h)                  For calendar year 2002, you shall be eligible to receive a
                     bonus under the Company's Foster Wheeler Annual Incentive
                     Plan For 2002 And Subsequent Years ("Annual Incentive
                     Plan"), the successor plan to the Company's former
                     Executive Compensation Plan. Such bonus shall be that
                     percentage amount of your annual base salary equal to the
                     average percentage of base salaries paid as bonuses for
                     calendar year 2002 under the Company's Annual Incentive
                     Plan or any other bonus plan or program of the Company to
                     the following senior executive officers of the Company:
                     Senior Vice President and General Counsel, Treasurer,
                     Secretary and the

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 3

                     Deputy General Counsel. Such bonus shall be paid to you at
                     the same time as payments are made to the participants in
                     the Company's Annual Incentive Plan or other bonus plan or
                     program of the Company.

You acknowledge that the foregoing separation benefits are extra benefits which
you would not be entitled to under the Company's established policies, plans and
procedures and the separation benefits are in exchange for your signing the
letter agreement and signing (and not later revoking) the Waiver and Release
Agreement. You further acknowledge and agree that the Company's offer of the
separation benefits to you and your signing of this letter agreement and the
Waiver and Release Agreement does not in any way indicate that you have any
viable claims against the Company or that the Company has or admits any
liability to you whatsoever.

You are encouraged to consult with an attorney of your choice at your own
expense prior to signing a copy of this letter agreement and the Waiver and
Release Agreement, and you acknowledge that you have been given at least
twenty-one (21) days within which to consider this letter agreement and the
Waiver and Release Agreement. You acknowledge that the modifications reflected
in this revised letter will not restart the running of the twenty-one (21) day
period referenced hereinabove which began on August 23, 2002.

You are further advised that you may revoke the signed Waiver and Release
Agreement within seven (7) days after its signing. Any such revocation must be
made in writing and be received by me within the seven (7) day period. All
legally required taxes and any monies owed the Company shall be deducted from
the separation benefits provided under this letter agreement. The Company
acknowledges that your separation benefits shall continue if you obtain
employment with another employer, provided that you are not in breach of this
letter agreement and/or the Waiver and Release Agreement.

3.         COMPANY PROPERTY/EXPENSES

You agree to immediately return to the Company all files, records, documents,
reports, computers, and other business equipment, keys, credit cards and calling
cards, unused airline tickets, ID cards, cellular telephones and beepers,
employee handbook, and other physical or personal property of the Company in
your possession or control and you further agree that you will not keep,
transfer or use any copies or excerpts of the foregoing items. You must also
ensure that all business expenses for which you are entitled to reimbursement
under the Company's expense reimbursement policy are documented and submitted
for approval within thirty (30) days after your separation date.

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 4

4.         CONFIDENTIALITY/COOPERATION/OBLIGATIONS

You agree from and after today to keep strictly confidential the existence and
terms of this letter agreement and you further agree that you will not disclose
them to any person or entity, other than to your immediate family, your
attorney, and your financial advisor, or except as may be required by law or to
enforce this letter agreement. The Company agrees from and after today to keep
strictly confidential the existence and terms of this letter agreement and
further agrees that it will not disclose them to any person or entity, other
than to employees on a need-to-know basis, its attorneys and financial advisors,
or except as may be required by law or to enforce this letter agreement.

Except as otherwise provided in this letter agreement or required under the
terms of the Company sponsored employee benefit plans, following your separation
date the Company will have no further obligations to you and you will have no
further obligations to the Company. You acknowledge that after your separation
date you shall not represent yourself to be an employee or Director of the
Company nor take any action which may bind the Company with regard to any
customer, client, supplier, vendor or any other party with whom you have had
contact while performing your duties as an employee or Director of the Company.

You further agree that from and after today you shall not take any actions or
make any statements to the public, future employers, current, former or future
Company employees, or any other third party whatsoever that disparage or reflect
negatively on the Company and its affiliates, and its and their officers,
directors, or employees. Senior management of the Company agrees that senior
management shall not take any actions or make any statements to the public or
any third party whatsoever that disparage or reflect negatively on you.

You further agree from and after your separation date to make yourself available
to the Company to provide reasonable cooperation and assistance to the Company
with respect to areas and matters in which you were involved during your
employment, including any threatened or actual litigation concerning the
Company, and to provide to the Company, if requested, information and counsel
relating to ongoing matters of interest to the Company. The Company will, of
course, take into consideration your personal and business commitments, will
give you as much advance notice as reasonably possible, and ask that you be
available at such time or times as are reasonably convenient to you and the
Company. The Company agrees to (i) reimburse you for the actual out-of-pocket
expenses you incur as a result of your complying with this provision, subject to
your submission to the Company of documentation substantiating such expenses as
the Company may require, and (ii) after August 23, 2003, pay you for your time
at the rate of Two Hundred Dollars ($200.00) per hour.

Proprietary information, confidential business information and trade secrets
(hereinafter collectively "Confidential Information") which became known to you
as an employee of

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 5

the Company remains the property of the Company. Such Confidential Information
includes, but is not limited to, materials, records, books, products, business
plans, business proposals, software, lists of actual or potential customers or
suppliers, financial information, computer disks, computer printouts, documents,
information stored electronically, personnel information and data of the Company
and its customers, but excludes information which is generally known to the
public or becomes known except through your actions. You agree from and after
today that you will not at any time, directly or indirectly, disclose
Confidential Information to any third party or otherwise use such Confidential
Information for your own benefit or the benefit of others. Also, you acknowledge
that the terms and conditions of any Confidential Information And Patent
Agreement you have signed remains in effect in accordance with its terms,
including all of your obligations thereunder. You covenant and agree that during
the twelve (12) month period from your separation date, you will not perform
services which are the same as or substantially similar to the services you
provided for the Company, for, or on behalf of a Competitor. For purposes of
this letter agreement, "Competitor" means a person or entity that is primarily
engaged in a material line of business conducted by the Company as of your
separation date. For purposes of this letter agreement, "a material line of
business conducted by the Company" means an activity of the Company generating
gross revenues to the Company of more than twenty-five million dollars
($25,000,000) in the fiscal year of the Company prior to your separation date.

You covenant and agree that during the twelve (12) month period from your
separation date, you shall not at any time, directly or indirectly, (i) call
upon any person or entity who is or that is, on your separation date, engaged in
activity on behalf of the Company for the purpose or with the intent of enticing
such person or entity to cease such activity on behalf of the Company or (ii)
solicit, induce or attempt to induce any past or current customer of the Company
to cease doing business in whole or in part with or through the Company, or to
do business with a Competitor.

You covenant and agree that during the twenty-four (24) month period from your
separation date, you shall not at any time, directly or indirectly, induce or
solicit any employee of the Company to terminate his or her employment with the
Company or to obtain employment elsewhere.

You covenant and agree that during the twenty-four (24) month period from your
separation date, you shall furnish a copy of this Paragraph 4 in its entirety to
any prospective employer prior to accepting employment with such prospective
employer.

If any court determines that any portion of this Paragraph 4 is invalid or
unenforceable, the remainder of this Paragraph 4 shall not thereby be affected
and shall be given full effect without regard to the invalid provision. If any
court construes any of the restrictions in this Paragraph 4 to be unreasonable
because of the duration or scope of

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 6

such provision, such court shall have the power to reduce the duration or scope
of such provision and to enforce such provision as so reduced.

You acknowledge and agree that your obligations set forth in this Paragraph 4
are reasonably necessary to protect the Company and its legitimate interests.
You further acknowledge the adequacy of consideration for these obligations
based on any one of the Company promises contained in Paragraph 2 above. You
further acknowledge and agree that damages may not be an adequate remedy for
your material breach of any provision of this Paragraph 4, and further agree
that the Company shall be entitled to obtain appropriate injunctive and/or other
equitable relief for any such material breach, without the posting of any bond
or other security.

5.         GENERAL MATTERS

You acknowledge and agree that in signing this letter agreement (including
Attachment I) you do not rely and have not relied on any representation or
statement by the Company or by its employees, agents, representatives, or
attorneys with regard to the subject matter, basis or effect of the letter
agreement (including Attachment I).

This letter agreement as revised is deemed made and entered into in the State of
New Jersey, and in all respects shall be interpreted, enforced and governed
under the laws of the State of New Jersey, without given effect to its choice of
laws provisions, to the extent not preempted by federal law. Any dispute under
this letter agreement (including Attachment I) shall be adjudicated by a court
of competent jurisdiction in the State of New Jersey.

The language of all parts of this letter agreement shall in all cases be
construed as a whole, according to its fair meaning, and not strictly for or
against either party. The provisions of this letter agreement shall survive any
termination of this letter agreement when necessary to effect the intent and
terms of this letter agreement expressed herein.

If any of the provisions of this letter agreement (including Attachment I) shall
be held to be invalid by a court of competent jurisdiction, such holding shall
not in any way whatsoever affect the validity of the remainder of this letter
agreement (including Attachment I).

This letter agreement supersedes any and all prior oral or written
understandings regarding your voluntary or involuntary separation from
employment with the Company and contains the entire agreement between you and
the Company with respect to the matter of your separation from employment. No
modification of any provision of this letter agreement shall be effective unless
made in writing and signed by you and the President and Chief Executive Officer
of the Company. This letter agreement shall not be assignable by you.

<PAGE>

Mr. James E.Schessler
REVISED August 23, 2002
Page 7

This letter agreement shall be binding upon and inure to the benefit of you and
the Company and our respective successors, assigns, heirs, estates and legal
representatives, including any entity with which the Company may merge or
consolidate or to which all or substantially all of its assets may be
transferred, or to any affiliate of the Company or such entity following the
transactions referred to hereinabove.

Should you or your representative require further clarification of any aspect of
the above arrangements, or wish to discuss their implementation, please contact
Eugene Jacobs, Esq. at Seyfarth Shaw, 55 East Monroe Street, Suite 4200,
Chicago, IL 60603 (312-269-8818).

Please indicate your agreement and acceptance of these provisions by signing and
dating the enclosed copy of this letter agreement and the Waiver and Release
Agreement and returning them to me on or before October 11, 2002. Following your
acceptance, the arrangements will be implemented and administered as described
herein.

So that there is no misunderstanding, please understand that if for any reason I
do not receive the signed copy of this letter agreement and the Waiver and
Release Agreement from you on or before October 11, 2002, the proposed
arrangements described in this letter agreement will be deemed to be withdrawn.

Best wishes for success in your future endeavors.

                                Sincerely yours,

                                 FOSTER WHEELER LTD.

                                 By        /S/ RAYMOND J. MILCHOVICH
                                           -------------------------------------
                                           Raymond J. Milchovich
                                           President and Chief Executive Officer

AGREED AND ACCEPTED:

/S/JAMES E. SCHESSLER
------------------------
 James E. Schessler

10/11/02
---------
  Date

<PAGE>

                                                                    ATTACHMENT I

                               FOSTER WHEELER LTD.

                          WAIVER AND RELEASE AGREEMENT

(1) In consideration for the separation benefits to be provided to me under the
terms of Raymond J. Milchovich's REVISED letter to me dated August 23, 2002
(hereinafter the "letter agreement"), I, on behalf of myself and my heirs,
executors, administrators, attorneys and assigns, hereby waive, release and
forever discharge FOSTER WHEELER LTD. (hereinafter referred to as the "Company")
and the Company's subsidiaries, divisions and affiliates, whether direct or
indirect, its and their joint ventures and joint venturers (including its and
their respective directors, officers, employees, shareholders, partners and
agents, past, present, and future), and each of its and their respective
successors and assigns (hereinafter collectively referred to as "Releasees"),
from any and all known or unknown actions, causes of action, claims or
liabilities of any kind which have or could be asserted against the Releasees
arising out of or related to my employment with and/or separation from
employment with the Company and/or any of the Releasees and/or any other
occurrence up to and including the date of this Waiver and Release Agreement,
including but not limited to:

(a)                  claims, actions, causes of action or liabilities arising
                     under Title VII of the Civil Rights Act, as amended, the
                     Age Discrimination in Employment Act, as amended (the
                     "ADEA"), the Employee Retirement Income Security Act, as
                     amended, the Rehabilitation Act, as amended, the Americans
                     with Disabilities Act, as amended, the Family and Medical
                     Leave Act, as amended, and/or any other federal, state,
                     municipal, or local employment discrimination statutes or
                     ordinances (including, but not limited to, claims based on
                     age, sex, attainment of benefit plan rights, race,
                     religion, national origin, marital status, sexual
                     orientation, ancestry, harassment, parental status,
                     handicap, disability, retaliation, and veteran status);
                     and/or

(b)                  claims, actions, causes of action or liabilities arising
                     under any other federal, state, municipal, or local
                     statute, law, ordinance or regulation; and/or

(c)                  any other claim whatsoever including, but not limited to,
                     claims for severance pay, claims based upon breach of
                     contract, wrongful termination, defamation, intentional
                     infliction of emotional distress, tort, personal injury,
                     invasion of privacy, violation of public policy, negligence
                     and/or any other common law, statutory or other claim
                     whatsoever arising out of or relating to my employment with
                     and/or separation from employment with the Company and/or
                     any of the other Releasees,

but excluding the filing of an administrative charge of discrimination, any
claims which I may make under state workers' compensation or unemployment laws,
and/or claims which by law I cannot waive.

<PAGE>

           (2) I also agree never to sue any of the Releasees or become party to
a lawsuit on the basis of any claim of any type whatsoever arising out of or
related to my employment with and/or separation from employment with the Company
and/or any of the other Releasees, other than a lawsuit to challenge this Waiver
and Release Agreement under ADEA or to enforce the letter agreement.

           (3) I further acknowledge and agree that if I breach the provisions
of paragraph (2) above, then (a) the Company shall be entitled to apply for an
injunction to restrain any violation of paragraph (2) above, (b) the Company
shall not be obligated to make payment of the letter agreement separation
benefits to me, (c) I shall be obligated to pay to the Company its costs and
expenses in enforcing this Waiver and Release Agreement and defending against
such lawsuit (including court costs, expenses and reasonable legal fees), and
(d) as an alternative to (c), at the Company's option, I shall be obligated upon
demand to repay to the Company all but $5,000.00 of the letter agreement
separation benefits paid to me, and the foregoing covenants in this paragraph
(2) shall not affect the validity of this Waiver and Release Agreement and shall
not be deemed to be a penalty nor a forfeiture.

           (4) To the extent permitted by law, I further waive my right to any
monetary recovery should any federal, state, or local administrative agency
pursue any claims on my behalf arising out of or related to my employment with
and/or separation from employment with the Company and/or any of the other
Releasees.

           (5) To the extent permitted by law, I further waive, release, and
discharge Releasees from any reinstatement rights which I have or could have and
I acknowledge that I have not suffered any on-the-job injury for which I have
not already filed a claim.

           (6) I further agree that if I breach the
Confidentiality/Cooperation/Obligations provisions of the letter agreement, then
(a) the Company shall be entitled to apply for an injunction to restrain any
such breach, (b) the Company shall not be obligated to make payment of the
letter agreement separation benefits to me, (c) I shall be obligated to pay to
the Company its costs and expenses in enforcing the Confidentiality/
Cooperation/Obligations provisions of the letter agreement (including court
costs, expenses and reasonable legal fees).

           (7) I acknowledge that I have been given at least twenty-one (21)
days to consider this Waiver and Release Agreement thoroughly and I was
encouraged to consult with my personal attorney or representative, if desired,
before signing below.

           (8) I understand that I may revoke this Waiver and Release Agreement
within seven (7) days after its signing and that any revocation must be made in
writing and submitted within such seven day period to the Company's President
and Chief Executive Officer. I further understand that if I revoke this Waiver
and Release Agreement, I shall not receive the letter agreement separation
benefits.

                                      -2-

<PAGE>

           (9) I also understand that the letter agreement separation benefits
which I will receive in exchange for signing and not later revoking this Waiver
and Release Agreement are in addition to anything of value to which I am already
entitled.

           (10) I FURTHER UNDERSTAND THAT THIS WAIVER AND RELEASE AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS TO DATE.

           (11) I acknowledge and agree that if any provision of this Waiver and
Release Agreement is found, held, or deemed by a court of competent jurisdiction
to be void, unlawful or unenforceable under any applicable statute or
controlling law, the remainder of the Waiver and Release Agreement shall
continue in full force and effect.

           (12) This Waiver and Release Agreement is deemed made and entered
into in the State of New Jersey without giving effect to its choice of laws
provisions, and in all respects shall be interpreted, enforced and governed
under applicable federal law and in the event reference shall be made to State
law, the internal laws of the State of New Jersey. Any dispute under this Waiver
and Release Agreement shall be adjudicated by a court of competent jurisdiction
in the State of New Jersey.

           (13) I further acknowledge and agree that I have carefully read and
fully understand all of the provisions of this Waiver and Release Agreement and
that I voluntarily enter into this Waiver and Release Agreement by signing
below.

                                             /S/JAMES E. SCHESSLER
                                             -----------------------------------
                                             James E. Schessler

                                             10/11/02
                                             -----------------------------------
                                             (Date)

                                      -3-

<PAGE>

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