Document:

Exhibit 10.1

 

 

FLUOR CORPORATION

 

409A DEFERRED DIRECTORS’ FEES PROGRAM

 

(Effective as of January 1, 2005)

 

THIS
INSTRUMENT, executed and made effective as of January 1, 2005 by Fluor
Corporation, a Delaware corporation, evidences the establishment of the Fluor
Corporation 409A Deferred Directors’ Fees Program adopted for the benefit of
its non-employee directors.  For periods
prior to January 1, 2008, the Plan shall be administered in reasonable,
good faith compliance with the requirements of Code section 409A.  Effective January 1, 2008, the Plan
shall be interpreted in a manner consistent with Code section 409A, the final
regulations issued thereunder, and any other applicable guidance from the
Internal Revenue Service.

 

WITNESSETH:

 

WHEREAS, the Company has
previously established the Fluor Corporation Deferred Directors’ Fees Program;
and

 

WHEREAS,
the Company desires to establish a plan that complies with the requirements of Section 409A:

 

NOW,
THEREFORE, the Company hereby declares the current terms and conditions of the
Fluor Corporation 409A Deferred Directors’ Fees Program to be, as of January 1,
2005, as follows:

 

ARTICLE 1

PURPOSE

 

The
primary purpose of the Plan is to provide certain of the Company’s non-employee
directors with an opportunity to defer receipt of fees for services rendered to
the Company on a pre-tax basis that complies with Section 409A of the
Code.

 

ARTICLE 2

DEFINITIONS

 

Whenever
used herein, the following terms shall have the meanings set forth below, and,
when the defined meaning is intended, the term is capitalized:

 

(a)          “Board” or “Board of
Directors” means the Board of Directors of the Company.

 

(b)         “Change in Control” shall be
deemed to have occurred if an event described in Treasury Regulation
1.409A-3(a)(5) occurs, including, without limitation:

 

(i)                                     a change in ownership of the
Company as a result of a person, or more than one person acting as a group
acquiring ownership that in the aggregate constitutes more than 50 percent
(50%) of the total fair market value of the Company (this provision does not
apply to a person or group already possessing more than 50 percent (50%) of the
total fair market value of the Company); or

 

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(ii)                                  a change in
effective control of the Company as a result of a person or more than one
person acting as a group acquiring (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or group)
ownership of stock of the Company possessing more than thirty percent (30%) of
the total voting power of the stock of the Company; or

 

(iii)                               a change in
effective control of the Company as a result of the majority of members of the
Company’s board of directors being replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Company’s board of directors before the date of the appointment
or election, or

 

(iv)                              a change in
ownership of a substantial portion of the Company’s assets as a result of a
person or more than one person acting as a group acquiring (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) assets from the Company that have a total gross fair
market value equal to more than 40 percent (40%) of the total gross fair market
value of all of the assets of the Company immediately before such acquisition
or acquisitions.

 

(c)          “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

 

(d)         “Committee” means the
Executive Compensation Committee of the Company as appointed by the Board to
administer the Plan.

 

(e)          “Company” means Fluor
Corporation, a Delaware corporation.

 

(f)            “Deferral Account” means the
accounting entry made with respect to each Participant for the purpose of
maintaining a record of each Participant’s entitlement under the Plan.

 

(g)         “Director Contributions”
means those contributions credited to a Participant’s Deferral Account in
accordance with the Participant’s deferral election pursuant to Section 5.1.

 

(h)         “Director’s Fees” means cash
amounts payable to a director for the Plan Year for the director’s service on
the Board for the Plan Year including, without limitation, annual retainer
fees, meeting fees and annual California tax allowances, if any.

 

(i)             “Disability” means a
physical or mental medical condition such that the Participant is unable to
engage in any substantial gainful employment and the condition is reasonably
expected to result in death or to last continuously for at least 12
months.  The Committee shall make the
determination of Disability in its sole discretion based on available medical
information.

 

(j)             “Eligible Director” means a
director who is eligible to participate in the Plan pursuant to Section 4.1.

 

(k)          “Fair Market Value” means
the closing sales price of the Company’s common stock for such day, as reported
on the New York Stock Exchange.

 

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(l)             “Matching Contributions”
means those contributions made by the Company to the Participant’s Deferral
Account in accordance with Section 5.2 of the Plan.  In addition, Matching Contributions under the
Plan shall also include any such contributions made under the Fluor Corporation
Deferred Directors’ Fees Program.

 

(m)       “Participant” means an
Eligible Director who is participating in the Plan pursuant to Section 4.2.

 

(n)         “Plan” means the Fluor
Corporation 409A Deferred Compensation Directors’ Fees Program, as set forth
herein, and as it may be amended from time to time.

 

(o)         “Plan Year” means January 1
to December 31 of each calendar year.

 

(p)         “Stock Equivalent Fund”
means the fund established pursuant to Section 7.3.

 

(q)         “Stock Equivalents” means a
measure of value equal to one share of the Company’s common stock.

 

ARTICLE 3

ADMINISTRATION

 

3.1                               Authority
of the Committee.  The
Committee shall administer the Plan.  The
members of the Committee shall be appointed by and shall serve at the
discretion of the Board.

 

Subject
to the provisions herein, the Committee shall have full power and discretion
to:

 

(a)          determine a director’s
eligibility to participate in the Plan;

 

(b)         determine the terms and
conditions of each director’s participation in the Plan;

 

(c)          construe and interpret the
Plan and any agreement or instrument entered into under the Plan;

 

(d)         compute and certify to the
amount and kind of benefits payable to Participants or their beneficiaries;

 

(e)          maintain all records that
may be necessary for the administration of the Plan;

 

(f)            provide for the disclosure
of all information and the filing or provision of all reports and statements to
Participants, beneficiaries, or governmental agencies as the Committee may
determine or as shall be required by law;

 

(g)         establish, amend, or waive rules and
regulations for the Plan’s administration;

 

(h)         appoint a Plan administrator
or any other agent, and to delegate to such person such powers and duties in
connection with the administration of the Plan as the Committee may from time
to time prescribe; and

 

(i)             make other determinations
which may be necessary or advisable for the administration of the Plan

 

3.2                               Decisions
Binding.  All determinations and
decisions of the Committee as to any disputed question arising under the Plan,
including questions of construction and 

 

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interpretation,
shall be final, conclusive, and binding on all parties and shall be given the
maximum possible deference allowed by law.

 

3.3                               Claim
Procedures.  The
Committee shall establish and maintain procedures for the filing of claims for
benefits under this Plan and for the review of the denial of any such
claims.  The Committee is designated as
the fiduciary of this Plan to which appeals of claim denials shall be submitted
for review.

 

ARTICLE 4

ELIGIBILITY AND PARTICIPATION

 

4.1                               Eligibility.  The Committee shall determine, in its sole
and absolute discretion, which such directors shall be eligible to participate
in the Plan, and may modify such determinations at any time, provided that at
all times the Plan shall continue to qualify as an unfunded deferred
compensation plan.  To be eligible to
participate in the Plan, a director must be a non-employee director serving on
the Board and entitled to Director’s Fees.

 

4.2                               Participation
and Deferral Election.  Each
Eligible Director shall become a Participant in the Plan upon his election to
defer Director’s Fees hereunder. 
Eligible Directors and Participants shall make their elections to defer
all or a portion of their Director’s Fees for the Plan Year by completing a
“Deferral Election Form,” during the applicable enrollment period (as
determined by the Committee) in the Plan Year prior to the Plan Year the
Director Fees are earned and otherwise payable. 
Except as provided in Section 6.3, an election under this Section 4.2
shall be irrevocable after December 31 of the Plan Year prior to the Plan
Year the Director Fees are earned and otherwise payable.  A separate Deferral Election Form is
required for each Plan Year.

 

Each year’s Deferral Election Form will
specify the form of distribution (i.e. lump sum or installment payments) and
time of distribution (upon separation of Board service or a specified year).

 

If a Participant wishes to modify the
distribution date or form of distribution for a particular Plan Year, the
Participant must submit a distribution election change form for such
change.  The form must be submitted at
least twelve (12) months prior to the first scheduled payment, will not take
effect until 12 months after the date on which the election is made, and must
provide that the payment be deferred at least five years from the date such
payment would otherwise have been made.

 

In the event a Participant ceases to be
eligible to participate in the Plan, such Participant shall become an inactive
Participant, retaining all the rights described under the Plan, except the
right to make any further deferrals, until such time that the Participant again
becomes an active Participant.

 

4.3                               Initial
Year Eligibility.  In the
event that an director first becomes eligible to participate in the Plan after
the beginning of a Plan Year, the Company shall notify the director of his
eligibility to participate, and the Company shall provide the Eligible Director
with a Deferral Election Form; provided, however, that such Participant must
make his deferral election within 30 days of the determination that the
director is an Eligible Director and may elect only to defer Director’s Fees
for such Plan Year which are to be earned after the filing of the Deferral
Election Form.  Except as provided in Section 6.3,
an election 

 

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under
this Section 4.2 shall be irrevocable with respect to the Plan Year for
which the election is made.

 

4.4                               Notice.  The Company shall notify a director within a
reasonable time of such director’s gaining or losing eligibility for active
participation in the Plan.

 

ARTICLE 5

DIRECTOR AND MATCHING CONTRIBUTIONS TO DEFERRAL ACCOUNTS

 

5.1                               Director
Contributions.  Subject to Section 4.2
and 4.3, a Participant may elect to defer and have credited to his Deferral
Account for any Plan Year up to one hundred percent (100%) of his Director’s
Fees.  Director Contributions shall be
credited to the Participant’s Deferral Account pursuant to Section 7.1.

 

5.2                               Matching
Contributions.  The Company
shall credit matching contributions to the Participant’s Deferral Account in an
amount equal to 25% of Director Contributions deferred under the Plan and
initially deemed invested by the Participant in the Stock Equivalent Fund.  Director Contributions not initially deemed
invested in the Stock Equivalent Fund will not receive Matching
Contributions.  Matching Contributions
shall be credited to the Participant’s Deferral Account pursuant to Section 7.1.

 

ARTICLE 6

DISTRIBUTIONS

 

6.1                               Specified
Distribution Year.  A Participant
may elect to receive all or a portion of that year’s Director Fees and Matching
Contributions (and any deemed earnings) as of a specified distribution year in
cash in either: (i) a single lump sum payment, or (ii) annual
installment payments over a period of two (2) to ten (10) years.

 

With
respect to the portion of the Participant’s vested Deferral Account as to which
a specified distribution year has been selected by a Participant at the time of
deferral:

 

(a)                                  Distributions under this Section 6.1
shall commence in January of the year specified in the Participant’s
election.

 

(b)                                 In the case of installment
payments, the second installment will be paid in January following the
year in which the first installment was paid and all remaining installments
will be paid annually in each succeeding January.

 

(c)                                  If a Participant elects to
receive installment payments, the amount of each installment payment shall be
equal to the balance remaining in the portion of the Participant’s vested
Deferral Account that is subject to such installment election (as determined
immediately prior to each such payment), multiplied by a fraction, the
numerator of which is one (1), and the denominator of which is the total number
of remaining installment payments.  The
installment amount shall be adjusted annually to reflect gains and losses, if
any, allocated to such Participant’s vested Deferral Account pursuant to
ARTICLE 7.

 

(d)                                 Notwithstanding any specified
distribution year election by a Participant, if a Participant’s Board service
with the Company terminates for any reason prior to receiving full payment of
the Participant’s vested Deferral Account or while the Participant is receiving
scheduled installment payments pursuant to this Section 

 

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6.1,
the unpaid portion of the Participant’s Deferred Account shall be paid in
accordance with Section 6.2 below.

 

6.2                               Distributions
upon Separation from Board Service, Disability, or Death.  A Participant may elect to receive all or a
portion of each year’s Director Fees and Matching Contributions (and any deemed
earnings) as of separation of Board service in cash in either: (i) a
single lump sum payment, or (ii) annual installment payments over a period
of two (2) to ten (10) years.

 

With
respect to the Participant’s vested Deferral Account:

 

(a)                                  Distributions under this Section 6.2
shall commence in the month following separation of Board service (including if
due to Disability or Death).

 

(b)                                 In the case of installment
payments, the second installment will be paid in January following the
year in which the first installment was paid and all remaining installments
will be paid annually in January.

 

(c)                                  If a Participant elects to
receive installment payments, the amount of each installment payment shall be
equal to the balance remaining in the portion of the Participant’s vested
Deferral Account that is subject to such installment election (as determined
immediately prior to each such payment), multiplied by a fraction, the
numerator of which is one (1), and the denominator of which is the total number
of remaining installment payments.  The
installment amount shall be adjusted annually to reflect gains and losses, if
any, allocated to such Participant’s vested Deferral Account pursuant to
ARTICLE 7.

 

(d)                                 Notwithstanding any election
made pursuant to Section 6.1, if the Participant has a separation of Board
service before all distributions are made pursuant thereto, such election shall
no longer apply and the deferral election applicable to distributions to be
made in connection with the Participant’s separation of Board service
(including if due to Disability or Death) pursuant to this Section 6.2
instead shall become effective.

 

(e)                                  Unless otherwise elected
pursuant to this Section 6.2, a Participant’s vested Deferral Account will
be paid as a single lump sum thirty days following the occurrence of a
Participant’s separation of Board service, Disability, or death.

 

6.3                               Unforeseeable
Emergency.  A cash
distribution of a portion of a Participant’s vested Deferral Accounts a because
of an Unforeseeable Emergency will be permitted only to the extent required by
the Participant to satisfy the emergency. 
Whether an Unforeseeable Emergency has occurred will be determined
solely by the Committee.  Distributions
in the event of an Unforeseeable Emergency may be made by and with the approval
of the Committee upon written request by a Participant.  In all events, a distribution shall be made
in connection with an Unforeseeable Emergency only to the extent permitted by
section 409A of the Code.

 

An “Unforeseeable Emergency” is defined as a
severe financial hardship to the Participant caused by sudden and unexpected illness
or accident of the Participant, the Participant’s spouse, the Participant’s
beneficiary, or of a dependent of the Participant (as defined in Code section
152, without regard to Code section 152(b)(1), (b)(2), and (d)(1)(B)), loss of
the Participant’s property due to casualty, or other extraordinary and 

 

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unforeseeable circumstances caused by a
result of events beyond the Participant’s control.  The circumstances that will constitute an Unforeseeable
Emergency will depend upon the specific facts of each case, but, in any event,
any distribution under this Section shall not exceed the amount required
by the Participant to resolve the hardship after (i) reimbursement or
compensation through insurance or otherwise, (ii) obtaining liquidation of
the Participant’s assets, to the extent such liquidation would not itself cause
a severe financial hardship, or (iii) suspension of deferrals under the
Plan.  Examples of what are not
considered to be severe financial hardships include the need to send a
Participant’s child to college or the desire to purchase a home.

 

The Participant’s Deferral Account will be
credited with earnings in accordance with the Plan up to the date of
distribution.

 

The Committee’s decisions with respect to the
Unforeseeable Emergency shall be final, conclusive, and not subject to appeal
to the extent it is not arbitrary and capricious.

 

In the event a
Participant receives a distribution under this Section 6.3, then the
Participant will be ineligible to participate in the Plan for the remainder of
the Plan Year in which the distribution was received.

 

6.4                               Transition
Distribution Election.  To
the extent permitted by the Committee in a manner consistent with IRS Notice
2006-79, a Participant may elect to modify the distribution election applicable
to his or her Deferral Account no later than December 31, 2007, provided
that no such election shall cause any amounts payable in 2007 to be paid in a
later year or any amounts payable in a later year to be paid in 2007.

 

6.5                               Incompetence
of Distributee.  In the
event that it shall be found that a person entitled to receive payment under
the Plan (including a designated beneficiary) is a minor or is physically or
mentally incapable of personally receiving and giving a valid receipt for any
payment due (unless prior claim therefor shall have been made by a duly
qualified committee or other legal representative), such payment may be made to
any person whom the Committee in its sole discretion determines is entitled to
receive it, and any such payment shall fully discharge the Company, the
Committee and the Plan from any further liability to the person otherwise
entitled to payment hereunder, to the extent of such payment.

 

6.6                               Distribution
in the Event of Divorce.  In
the event of the divorce or legal separation of a Participant, and the awarding
of all or a portion of the Deferral Accounts to the spouse of the Participant
by court order, such spouse may elect, by filing with the Committee a form
specified by the Committee and by providing such other information as the
Committee may in its discretion reasonably request in order to confirm that the
applicable facts and circumstances are present, to receive a distribution of
his or her court-awarded portion of the Participant’s Deferral Accounts in cash
pursuant and subject to the terms of Section 6.1 as to available forms of
distribution and timing.

 

ARTICLE 7

DEFERRAL ACCOUNTS

 

7.1                               Participants’
Accounts.  The Company
shall establish and maintain an individual bookkeeping Deferral Account for
Director Contributions and Matching Contributions made on Participant’s
behalf.  For Director Contributions and
Matching Contributions deferred and deemed invested into the Stock Equivalent
Fund, such Participant’s 

 

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Deferral
Account shall be credited with Director Contributions and Matching
Contributions, if any, on the date such fees would have been paid to the
Participant had Participant not deferred the Director’s Fees to the Plan, and
as provided in Section 7.2. For Director Contributions deferred and deemed
invested into any other investment option, such Participant’s Deferral Account
shall be credited with Director Contributions on the first day of the month
following the date the Director’s Fees would have been paid to the Participant
had the Participant not deferred the Director’s Fees to the Plan, and as
provided in Section 7.2.  A
Participant’s Deferral Account shall also be credited with any deemed earnings
credit to such amounts as provided in Section 7.2.

 

7.2                               Earnings
on Deferred Amounts.  A
Participant’s Deferral Account shall be credited with earnings (or losses)
based on the deemed investments of the Participant’s Deferral Account, as
directed by each Participant on the Deferral Enrollment Form or such other
manner as the Committee may prescribe. 
The deemed investment shall be in one or more investment options
selected by the Committee, such options to include the Stock Equivalent Fund
described in Section 7.3.  Except
with respect to deemed investments in the Stock Equivalent Fund, deemed
earnings (and losses) on a Participant’s Deferral Account shall be based upon
the daily unit valuation of the funds (as determined by the Committee) selected
by the Participant, and shall be credited to a Participant’s Deferral Account
on a monthly basis.  Deemed earnings (or
losses) shall be paid out to a Participant in accordance with the applicable
Deferral Election Form.  Any portion of a
Participant’s Deferral Account which is subject to distribution in installments
shall continue to be credited with deemed earnings (or losses) until fully paid
out to the Participant.

 

The Committee reserves the right to change
the investment options available for deemed investments under the Plan at any
time, or to eliminate any option at any time. 
A Participant may specify a separate investment allocation with respect
to each Plan Year’s Deferral Election Form. 
Participants may modify their deemed investment instructions once a
month (daily beginning January 1, 2008) with respect to any portion (whole
percentages only) of their Deferral Account; provided they notify the Committee
or its designee within the time and in the manner specified by the
Committee.  Modifications to investment
in the Stock Equivalent fund may subject the Participant’s account to
forfeiture of Matching Contributions in accordance with Section 7.4.

 

The Committee or its designee may provide
additional limitations on the ability of Participants to change their deemed
investment instructions regarding deemed investments in the Stock Equivalent
Fund to prevent violations of Section 16(b) of the Securities
Exchange Act of 1934, as amended, as determined by the Committee or its
designee in its sole discretion.

 

The Committee reserves the right to credit
earnings (or losses) on a basis different from that elected by the
Participants.

 

7.3                               Stock
Equivalent Fund.  One of the
deemed investment options shall be the Stock Equivalent Fund which is a deemed
investment in the Company’s common stock. 
Directors Contributions directly allocated to the Stock Equivalent Fund
are eligible for Matching Contributions in accordance with Section 5.2
subject to the limitations of Section 7.4.

 

The number of Stock Equivalents, or fractions
thereof, that will be credited to a Participant’s Deferral Account is
determined by dividing the dollar amount of Director 

 

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Contributions and Matching Contributions to
be credited to the Stock Equivalent Fund, by the Fair Market Value of the
Company common stock on the date of crediting in accordance with Section 7.1.
To the extent dividends or other distributions on the Company’s common stock
are paid or made, dividend equivalents and fractions thereof shall be
calculated and credited with respect to the Share Equivalent balances (by
dividing the value of the dividend equivalents by the Fair Market Value) as an
increase in Share Equivalents as of the dividend payment dates.  Upon the occurrence of any stock split, stock
dividend, combination or reclassification with respect to any outstanding class
of stock of the Company, the number of Stock Equivalents deemed invested in the
Stock Equivalent Fund shall, to the extent deemed necessary by the Board of
Directors, be adjusted accordingly.

 

7.4                               Vesting
and Forfeiture.  The Director
Contributions held in each Participant’s Deferral Account shall be fully vested
at all times.  A Participant’s Matching
Contributions (and any related deemed earnings) shall become vested on January 1st,
of the calendar year that is five years after the date the Matching
Contribution are credited to Participant’s Deferral Account.  Notwithstanding the immediately preceding
sentence, if prior to the occurrence of such vesting (a) the Participant
dies, (b) the Participant’s Board service is terminated due to Disability
or (c) a Change in Control occurs, such Participant’s Matching
Contributions shall become fully vested as of the date of death, the date of
Disability or the date of the Change in Control, as applicable.  If a Participant receives distributions from,
or transfers amounts deemed invested in the Stock Equivalent Fund before the
Matching Contributions are fully vested, such unvested accrued balance in such
Participant’s Deferral Account shall be forfeited by such Participant to the
extent attributable to the Director Contributions distributed or transferred.

 

7.5                               Designation
of Beneficiary.  Each
Participant may designate a beneficiary or beneficiaries who, upon the
Participant’s death, or physical or mental incapacity will receive the
distributions that otherwise would have been paid to the Participant under the
Plan.  All beneficiary designations shall
be signed by the Participant, and shall be in the form prescribed by the
Committee.  Each beneficiary designation
shall be effective as of the date delivered to the Committee or its designee by
the Participant.

 

Participants may change their beneficiary
designations on such form as prescribed by the Committee.  The payment of distributions payable under
the Plan shall be in accordance with the last unrevoked written beneficiary
designation that has been signed by the Participant and delivered to the
Committee or its designee prior to the Participant’s death.  Notwithstanding the foregoing, a Participant
who is married may not designate a beneficiary other than the Participant’s
spouse, unless the spouse consents in writing to such alternate beneficiary
designation.

 

In the event that all the beneficiaries named
by a Participant pursuant to this Section 7.5 predecease the Participant,
the distributions payable to the Participant or the Participant’s beneficiaries
shall be paid to the Participant’s estate.

 

In the event a Participant
does not designate a beneficiary, or for any reason such designation is
ineffective, in whole or in part, the amounts that otherwise would have been
paid to the Participant or the Participant’s beneficiaries under the Plan shall
be paid to the Participant’s estate.

 

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ARTICLE 8

TRUST

 

Nothing
contained in this Plan shall create a trust of any kind or a fiduciary
relationship between the Company and any Participant.  Nevertheless, the Company may establish one
or more trusts, with such trustee(s) as the Committee may approve, for the
purpose of providing for the payment of deferred amounts and earnings
thereon.  Such trust or trusts may be
irrevocable, but the assets thereof shall be subject to the claims of the Company’s
general creditors upon the bankruptcy or insolvency of the Company.

 

ARTICLE 9

CHANGE IN CONTROL

 

9.1                               Trust
and Trustees.  Upon the
occurrence of a Change in Control, the trust or trusts that may be established
by the Company pursuant to ARTICLE 8 shall become irrevocable and the Company
shall not thereafter be permitted to remove, terminate, or change the trustee(s) for
a period of three years.

 

9.2                               Advanced
Funding.  No later than 30 days after a
Change in Control occurs, to the extent permitted by Code section 409A, the
Company shall make a contribution to the trust or trust(s) established
pursuant to ARTICLE 8 to the extent required to fully fund all benefits that
are or may become payable under the Plan, assuming for purposes of this
calculation that all Participants retire with 100% vesting, and to fund in
advance all administrative, legal, and other costs of maintaining the Plan, in
an additional amount of no less than $150,000. 
From time to time in the Company’s discretion,  Company
shall make such additional contributions to the trust or trusts to fully fund
the additional benefits that may become payable to Participants or
beneficiaries under the Plan  and the
additional administrative, legal, and other Plan expenses.

 

9.3                               Amendment
and Termination.  After the
occurrence of a Change in Control, the Company may not amend the Plan without
the prior approval of a majority of the Participants.  After a Change in Control, the Company may
not terminate the Plan until either (i) all benefits have been paid in
full, or (ii) the majority of the Participants approve the same.  For purposes of this Section 9.3,
Participants’ votes shall be weighted based on their relative Deferral Account
balances.

 

ARTICLE 10

RIGHTS OF PARTICIPANTS

 

10.1                        Contractual
Obligation.  The Plan
shall create an unfunded, unsecured contractual obligation on the part of the
Company to make payments from the Participants’ Deferral Accounts when
due.  Payment of Deferral Account
balances shall be made out of the general assets of the Company or from the
trust or trusts referred to in ARTICLE 8 above.

 

10.2                        Unsecured
Interest.  No
Participant or party claiming an interest in deferred amounts of a Participant
shall have any interest whatsoever in any specific asset of the Company.  To the extent that any party acquires a right
to receive payments under the Plan, such right shall be equivalent to that of
an unsecured general creditor of the Company. 
Each Participant, by participating hereunder, agrees to waive any
priority creditor status for wage payments with respect to any amounts due
hereunder.  The Company shall have no
duty to set aside or invest any amounts credited to Participants’ Deferral
Accounts 

 

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under
this Plan.  Deferral Accounts established
hereunder are solely for bookkeeping purposes and the Company shall not be
required to segregate any funds based on such Deferral Accounts.

 

ARTICLE 11

WITHHOLDING OF TAXES

 

The
Company shall have the right to require Participants to remit to the Company an
amount sufficient to satisfy Federal, state, and local withholding tax
requirements, or to deduct from all payments made pursuant to the Plan (or from
a Participant’s other Director’s Fees) amounts sufficient to satisfy withholding
tax requirements.  The Company makes no
representations, warranties, or assurances and assumes no responsibility as to
the tax consequences of this Plan or participation herein.

 

ARTICLE 12

AMENDMENT AND TERMINATION

 

Subject
to ARTICLE 9, the Company reserves the right to amend, modify, or terminate the
Plan (in whole or in part) at any time by action of the Board, with or without prior notice.  Except as described below in this ARTICLE 12,
no such amendment or termination shall in any material manner adversely affect
any Participant’s rights to any amounts already deferred or credited hereunder
or deemed earnings thereon, up to the date of amendment or termination, without
the consent of the Participant.  Any amounts
accumulated in Deferral Accounts prior to the Plan’s termination will continue
to be subject to the provisions of the Plan until distributed under the terms
of the Plan.

 

ARTICLE 13

MISCELLANEOUS

 

13.1                        Notice.  Any notice or filing required or permitted to
be given to the Company under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Fluor
Corporation Deferred Directors’ Fees Program c/o the Committee, and if mailed,
shall be addressed to the principal executive offices of the Company.  Notice mailed to a Participant shall be at
such address as is given in the records of the Company.  Notices to the Company shall be deemed given
as of the date of delivery.  Notice to a
Participant or beneficiary shall be deemed given as of the date of hand
delivery, or if delivery is made by mail, three (3) days following the
postmark date.

 

13.2                        Nontransferability.  Except as provided in Section 7.5 and
this Section 13.2, Participants’ rights to deferred amounts and deemed
earnings credited thereon under the Plan may not be sold, transferred,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution, or pursuant to a domestic relations order,
nor shall the Company make any payment under the Plan to any assignee or
creditor of a Participant.

 

13.3                        Responsibility
for Legal Effect.  Neither the
Committee nor the Company makes any representations or warranties, express or
implied, or assumes any responsibility concerning the legal, tax or other
implications or effects of this Plan.

 

13.4                        Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the 

 

Page 11 of 12

 

Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.

 

13.5                         Gender
and Number.  Except
where otherwise indicated by the context, any masculine term used herein also
shall include the feminine; the plural shall include the singular, and the
singular shall include the plural.

 

13.6                        Costs
of the Plan.  All costs
of implementing and administering the Plan shall be borne by the Company.

 

13.7                        Successors.  All obligations of the Company under the Plan
shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.

 

13.8                        Applicable
Law.  Except to the extent preempted
by applicable Federal law, the Plan shall be governed by and construed in
accordance with the laws of the state of Delaware.

 

13.9                        No
Duplication.  In no event
shall the benefit provided under the Plan duplicate any benefits accrued and/or
payable under the Fluor Corporation Deferred Directors’ Fees Program (frozen
effective December 31, 2004).

 

Page 12 of 12Exhibit 10.2

 

 

 

 

 

 

 

 

 

FLUOR 409A

EXCUTIVE DEFERRED COMPENSATION PROGRAM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 1 of 16

 

PREAMBLE

 

This Plan has been established to provide certain
eligible Executives with deferred compensation that complies with Code section
409A.  For periods prior to January 1,
2008, the Plan shall be administered in reasonable, good faith compliance with
the requirements of Code section 409A. 
Effective January 1, 2008, the Plan shall be interpreted in a
manner consistent with Code section 409A, the final regulations issued
thereunder, and any other applicable guidance from the Internal Revenue
Service.

 

ARTICLE I

THE PLAN

 

1.1.                              NAME.  This Plan shall be known as the “Fluor
Executive 409A Deferred Compensation Program”.

 

1.2                               PURPOSE.  This Plan is adopted for the purpose of
providing eligible Executives with a means to satisfy future financial needs
and also for the purpose of providing such Executives with retirement and other
benefits which, because of various contribution and benefit accrual
limitations, cannot be provided for them under the tax qualified retirement,
profit sharing and savings plans in which such Executive is a participant.  The Company intends that the Plan constitute
an unfunded “top hat” plan maintained for the purpose of providing deferred
compensation to a select group of management or highly compensated employees
under applicable provisions of ERISA. 
The Company also intends that the Plan comply with the applicable
provisions of Code section 409A.

 

1.3                                 PLAN ADMINISTRATION.  The Plan shall be administered by the
Committee in accordance with the following:

 

(a)                               The Committee,
on behalf of the Participants and their Beneficiaries, shall enforce the Plan
in accordance with its terms, shall be charged with the general administration
of the Plan, and shall have all powers necessary to accomplish its purposes,
including, but not by way of limitation, the following:

 

(i)                                     To determine
all questions relating to the eligibility of employees to participate;

 

(ii)                                  To construe and
interpret the terms and provisions of this Plan;

 

(iii)                               To compute and
certify to the amount and kind of benefits payable to Participants or their
Beneficiaries;

 

(iv)                              To maintain all
records that may be necessary for the administration of the Plan;

 

(v)                                    To provide for
the disclosure of all information and the filing or provision of all reports
and statements to Participants, Beneficiaries or governmental agencies as the
Committee may determine or as shall be required by law;

 

(vi)                                 To make and
publish such rules for the regulation of the Plan and procedures for the
administration of the Plan as are not inconsistent with the terms hereof; and

 

Page 2 of 16

 

(vii)                         To appoint a Plan
administrator or any other agent, and to delegate to such person such powers
and duties in connection with the administration of the Plan as the Committee
may from time to time prescribe.

 

(b)                                 The Committee
shall have sole and full discretion to make factual determinations as may be
necessary and to construe and interpret the terms and provisions of this Plan,
which interpretation or construction shall be final and binding on all parties,
including but not limited to the Company and any Participant or Beneficiary.  The Committee shall administer such terms and
provisions in a uniform manner and in full accordance with any and all laws
applicable to the Plan.

 

(c)                                  To enable the
Committee to perform its functions, the Company shall supply full and timely information
to the Committee on all Plan matters relating to the Participants, their death
or other cause of termination, and such other pertinent facts as the Committee
may require.

 

ARTICLE II

DEFINITIONS

 

2.1           DEFINITIONS.

 

Account(s) — shall mean (i) the
Deferral Accounts (including, without limitation, the Deferred Incentive Award
Deferral Account and the Deferred Salary Account), and the (ii) Excess
Benefit Accrual Account, collectively, maintained for each Participant, except
that where reference to a specific Account is intended, there will be a
reference to the specific Account.

 

Adjustment — shall have the meaning
set forth in Section 6.3 hereof.

 

Basic Compensation — shall mean “Basic
Compensation” as defined in and provided under the Savings Plan.

 

Beneficiary — The beneficiary
designated on a form provided by the Company, or, if no such designation has
been made, the beneficiary designated by the Participant under the Retirement
Plan, or, in the absence of any designation, the Participant’s estate.

 

Board — shall mean the Board of
Directors of Fluor Corporation.

 

Change of Control — “Change of Control” of
the Company shall be deemed to have occurred if an event described in Treasury
Regulation 1.409A-3(i)(5) occurs (including, without limitation, (i) a
change in ownership of the Company as a result of a person, or more than one
person acting as a group acquiring ownership that in the aggregate constitutes
more than 50 percent (50%) of the total fair market value of the Company (this
provision does not apply to a person or group already possessing more than 50
percent (50%) of the total fair market value of the Company); or (ii) a
change in effective control of the Company as a result of a person or more than
one person acting as a group acquiring (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
group) ownership of stock of the Company possessing more than thirty percent
(30%) of the total voting power of the stock of the Company; or (iii) a
change in effective control of the Company as a result of the majority of
members of the Company’s board of directors being replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the 

 

Page 3 of 16

 

members of the Company’s board of directors before
the date of the appointment or election, or (iv) a change in ownership of
a substantial portion of the Company’s assets as a result of a person or more
than one person acting as a group acquiring (or has acquired during the
12-month period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total gross fair market
value equal to more than 40 percent (40%) of the total gross fair market value
of all of the assets of the Company immediately before such acquisition or
acquisitions).

 

Code — shall mean the Internal
Revenue Code of 1986, as amended.

 

Committee — shall mean the Executive
Compensation Committee of the Company.

 

Company — shall mean Fluor
Corporation and (a) any company which is a member of a controlled group of
corporations, as defined in section 414(b) of the Code, which controlled
group includes Fluor Corporation; (b) any trade or business under common
control as defined in section 414(c) of the Code with Fluor Corporation; (c) any
organization (whether or not incorporated) which is a member of an affiliated
service group that includes Fluor Corporation or any entity described in (a) and
(b) above; and (d) any other entity required to be aggregated with
Fluor Corporation or any other entity described in (a), (b) and (c) above
pursuant to regulations under section 414(o) of the Code; provided,
however, that any reference to the Company with respect to matters relating to
the administration, design or termination of the Plan refers only to Fluor
Corporation.

 

Crediting Options — shall mean the crediting
options established by the Committee, as modified from time to time and shall
have the meaning set forth in Section 7.1 hereof.

 

Deferral Account — shall mean collectively,
a Participant’s Deferred Incentive Award Account and Deferred Salary Account.

 

Deferred Incentive Award Account — shall have
the meaning set forth in Section 6.1 hereof.

 

Deferred Salary Account — shall have
the meaning set forth in Section 6.1 hereof.

 

Deferral Matching Contribution — shall mean
the Company contributions credited to each Participant’s Excess Benefit Accrual
Account with respect to each Plan Year in accordance with Section 5.3
hereof; and which consists of (i) Discretionary Deferral Matching
Contributions, (ii) Supplemental Nonqualified Matching Contributions, and (iii) Regular
Nonqualified Matching Contributions.

 

Discretionary Deferral Matching Contributions — shall mean,
with respect to an Eligible Employee for a Plan Year, the amount, if anything,
that is credited to such Eligible Employee’s Excess Benefit Accrual Account in
order to insure that such Eligible Employee receives what the Committee
determines to be the appropriate total Deferral Matching Contributions,
provided, further, that such amount may not exceed an amount equal to the
excess (if any) of (i) over (ii), where:

 

(i)                                     equals such
Eligible Employee’s Maximum Nonqualified Matching Contribution for such Plan
Year; and

 

(ii)                                  equals the sum
of (a) such Eligible Employee’s Supplemental Nonqualified Matching
Contributions, plus (b) such Eligible Employee’s 

 

Page 4 of 16

 

Regular Nonqualified
Matching Contributions; plus (c) such Eligible Employee’s Maximum
Qualified Matching Contribution.

 

Designated Filing Person- shall mean
the person (which may be designated by position or title rather than an
individual) designated by the Committee to receive, review and record Election
Forms.

 

Effective Date — shall mean January 1,
2005 except that where reference to a specific date is intended, there will be
a reference to the specific date.

 

Election Form — shall mean the form or
forms filed by an Eligible Employee on or before whichever of the Salary
Election Date or the Incentive Award Election Date apply, and which complies
with the requirements of Section 4.2, provided, however, that such form
shall contain such terms and be in such form as determined by the Committee.

 

Eligible Employee — shall mean, unless
otherwise expressly provided herein, an employee of the Company who is (a) eligible
to participate in the Retirement Plan or has been specifically designated as
eligible for participation in this Plan by the Committee and (b) an
Executive.

 

ERISA — shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

Excess Benefit Accrual Account — shall have
the meaning set forth in Section 6.2 hereof.

 

Excess Benefit Accrual(s) — shall have
the meaning set forth in Section 5.1 and 5.2 hereof.

 

Executive shall mean any employee who
has been determined to be eligible to participate in the Fluor Corporation and
Subsidiaries Executive Incentive Compensation Program, or any other person
which the Committee determines to be eligible for participation in the Plan.

 

Initial Deferral Election Date — shall mean
the 30th day following the day on which a person first becomes an
Eligible Employee; provided, however, that the Initial Deferral Election Date
shall not apply to any individual who is a participant in a plan that is
aggregated with the Plan for purposes of Code section 409A except to the extent
permitted by Code section 409A.

 

Incentive Award — shall mean awards made
pursuant to the terms of the Fluor Corporation 2003 Executive Performance
Incentive Plan, and any other incentive program for Executives or other highly
compensated employees whose participants the Committee determines to be
eligible for participation in this Plan.

 

Initial Election — shall have the meaning
set forth in Section 3.1 hereof.

 

Incentive Award Election Date shall mean the
last day of the Plan Year preceding the Plan Year in which the initial
performance period of such Incentive Award commences.  However, if such Incentive Award qualifies as
“performance-based compensation” under section 409A of the Code and the
applicable performance period is at least one year, the Incentive Award
Election Date shall be the date that is six (6) months before the end of
the performance period (or, if earlier, when the amount of the Incentive Award
has become ascertainable within the meaning of section 409A of the Code).

 

Page 5 of 16

 

Maximum Qualified Matching Contribution. — shall mean,
for each Eligible Employee for a Plan Year, the amount which would have been
contributed to the Savings Plan as a Savings Plan Matching Contribution for
such Eligible Employee if such Eligible Employee had contributed at least the
maximum percentage of Basic Compensation that would have received a matching
contribution from the beginning of the applicable Plan Year (or, if later, when
the Eligible Employee became eligible to participate in the Savings Plan) until
such Eligible Employee’s Statutory Limitation Payroll Date.

 

Maximum Nonqualified Matching Amount — shall mean,
for each Plan Year, the sum of the amounts determined, for each payroll period
during which a person was an Eligible Employee, by multiplying the Salary paid
to such Eligible Employee for each such payroll period by the Savings Plan
Matching Contribution Rate for such payroll period.

 

Net Asset Value — shall mean a fund’s share value,
calculated once a day, based on the closing market price for each security in
the fund’s portfolio.  It is computed
either by reference to a commercial exchange (NYSE, AMEX, Nasdaq, etc.) or by
deducting the fund’s liabilities from the portfolio’s total assets and dividing
this amount by the number of shares outstanding.

 

Participant — shall mean any Eligible
Employee who has one or more Deferral Accounts and/or an Accrual Account under
this Plan.

 

Performance Plan Contributions — shall mean
the contributions set forth in Section 6.2 of the Fluor Corporation
Salaried Employees’ Savings Investment Plan.

 

Plan — shall mean the Fluor
Executive 409A Deferred Compensation Program, the terms of which are set forth
herein.

 

Plan Year — shall mean the
twelve-month period ending on December 31 of each year.

 

Pre-Tax Contributions — shall mean “Pre-Tax
Contributions” as defined in and provided under the Savings Plan.

 

Regular Nonqualified Matching Contribution — shall have
the meaning specified in Section 5.3.

 

Retirement Plan — shall mean the Fluor
Corporation Employees’ Defined Benefit Retirement Plan.

 

Salary — shall mean the compensation
regularly paid to an Eligible Employee by the Company per payroll period in the
form of base salary (including amounts contributed by the Company on behalf of
the Eligible Employee as Pre-Tax Contributions under the Savings Plan and
amounts contributed under the Fluor Section 125 Plan), but excluding
bonuses, commissions, incentives, site adders, overtime and other irregular
payments including severance pay, lump sum vacation payments and merit
increases paid in a lump sum, and before deductions authorized by such Eligible
Employee or required by law to be withheld from such Eligible Employee.

 

Salary Election Date — shall mean the last day
of the Plan Year preceding the Plan Year in which the Salary to be deferred is
paid.

 

Savings Plan — shall mean the Fluor
Corporation Salaried Employees’ Savings Investment Plan, as amended.

 

Page 6 of 16

 

Savings Plan Matching Contributions — shall mean
the amounts contributed to a Participant under Article VI of the Savings
Plan as matching contributions with respect to Pre-Tax Contributions under the
Savings Plan.

 

Specified Employee — shall mean, effective January 1,
2008, a Participant classified by the Company as an Officer for the year in
which the Participant’s Termination of Service occurs, as determined in a
manner consistent with Code section 409A. 
For Plan Years ending prior to January 1, 2008, Specified Employee
shall mean a key employee (as defined in Code section 416(i) (without
regard to Code section 416(i)(5)) and Code section 409A, and regulations
thereunder) of the Company. 
Notwithstanding the foregoing, the Company may make such elections by
appropriate corporate action as permitted under the applicable regulations and
other guidance issued under Code section 409A with respect to determining
Specified Employees, and any such election shall be incorporated into and
binding upon the Plan and all Participants as if fully set forth herein.

 

Supplemental Nonqualified Matching Contributions — shall have
the meaning set forth in Section 5.3 hereof.

 

Statutory Limitation Payroll Date — shall mean
the final payroll date during the Plan Year on which an Eligible Employee can
receive a Savings Plan Matching Contribution resulting solely from the
limitations imposed by either section 402(g) or 401(a)(17) of the Code;
provided, further, that for purposes of this Plan, the reference shall be
construed as referring only to the portion of the Eligible Employee’s Basic
Compensation paid on such final payroll date which is subject to such
limitations.

 

Termination
of Service — shall mean a separation from service from the
Company for any reason, within the meaning of Code section 409A. Termination of
the employee/ employer relationship between a Participant and the Company by
reason of retirement, death, resignation, involuntary termination, or permanent
total disability as these terms are defined for purposes of the Retirement
Plan.  To the extent permitted by Code
section 409A, a Participant shall be deemed to have incurred a Termination of
Service when it is reasonably anticipated that a permanent reduction in the
level of services with respect to such Participant equals forty-nine percent
(49%) or less of the average level of services she or he provided in the
immediately preceding three (3) years.

 

Unforseeable Emergency — shall have
the meaning set forth in Section 9.2 hereof.

 

Valuation Date — shall have the meaning set
forth in Section 7.6 hereof.

 

ARTICLE III

PARTICIPATION

 

3.1                                 SALARY DEFERRALS.  A person who is an Eligible Employee on a
Salary Election Date (or on such Eligible Employee’s Initial Election Date, if
applicable) will be entitled to elect to defer amounts of Salary
hereunder.  Without limiting the
generality of the preceding sentence, if an Eligible Employee is removed as an
Executive, such Eligible Employee will, notwithstanding such removal, continue
to defer Salary through the end of the calendar year in which such removal
occurred.  An election shall become irrevocable
on the Salary Election Date (or the Initial Election Date, if applicable) with
respect to the calendar year to which it applies, except to the extent
permitted by Code section 409A if the Participant experiences an Unforeseeable
Emergency.

 

 

Page 7 of 16

 

3.2                                 INCENTIVE AWARD
DEFERRALS.  A person who is an Eligible
Employee on the Incentive Award Election Date will be entitled to elect to
defer amounts of Incentive Award hereunder.

 

3.3                                 EXCESS BENEFIT
ACCRUALS.   As of the various dates
provided in Section 5.1, each Eligible Employee shall be entitled to
receive an Excess Benefit Accrual if and to the extent earned in accordance
with the provisions of Section 5.1 hereof.

 

3.4                                 STATUS AS PARTICIPANT.  Once an Eligible Employee defers an amount hereunder,
or is allocated an amount under Section 5.1(a), such person will become a
Participant, and shall remain a Participant until all amounts credited to such
person hereunder are distributed to such person.

 

ARTICLE IV

DEFERRALS

 

4.1                                 AMOUNTS SUBJECT TO
DEFERRAL.  Subject to the provisions of
this Plan and the effect of any previously authorized or required deductions,
reductions, income or employment tax withholdings applicable to such
compensation, an Eligible Employee may elect to defer all or any portion of her
or his Salary or any Incentive Award.

 

4.2                                 TIMING AND
MECHANICS OF ELECTION.

 

(a)                                  Salary — In
order to be effective with respect to Salary paid during a Plan Year, an
Election Form must be filed with the Designated Filing Person by the
Salary Election Date for such Plan Year, or, where applicable, by the Initial
Deferral Election Date, and only the last Election Form filed on or before
that date will be considered a properly filed Election Form with respect
to such Plan Year (or portion of Plan Year). 
The Election Form must specify (i) the percentage of Salary to
be deferred for each pay period, (ii) the pay period on which such
deferrals will commence, (iii) date on which payment of such deferrals
will be made or commenced, and (iv) the form in which payments of such
deferrals will be made.  Only one
Election Form will be filed for each Plan Year and a new Election Form is
required to be filed for each Plan Year. 
Deferred amounts withheld from an Eligible Employee’s Salary shall be
credited to such Eligible Employee’s Deferred Salary Account as of the payroll
date in which such amounts are withheld.

 

(b)                                 Incentive
Awards — In order to be effective with respect to an Incentive Award, an
Election Form must be filed with the Designated Filing Person by the
Incentive Award Election Date with respect to such Incentive Award, and only
the last Election Form filed on or before such date will be considered a
properly filed Election Form with respect to such Incentive Award.  The Election Form must
specify (i) either the percentage of the Incentive Award, or a fixed
dollar amount, to be deferred, (ii) date on which payment of such deferral
will be made or commenced, and (iii) the form in which payments of such
deferrals will be made.  A new Election Form is
required to be filed with respect to each Incentive Award.  Deferred amounts withheld from an Eligible
Employee’s Incentive Award shall be credited to such Eligible Employee’s
Deferred Incentive Award Account as of the payroll date in which such amounts are
withheld.

 

 

Page 8 of 16

 

ARTICLE V

OTHER ACCRUALS

 

5.1                                 EXCESS BENEFIT
ACCRUALS.  Excess Benefit Accruals will
include the sum of:

 

(a)                                  As of each
payroll date, the Company shall credit the Excess Benefit Accrual Account of
each Eligible Employee with a pro-rata amount equal to the excess of the
Company Contribution Credit which would have been allocated to such Eligible
Employee’s account under the Retirement Plan for the calendar year but for the
limitations imposed by sections 401(a)(17) and 415 of the Code over the actual
Company Contribution Credit to the Eligible Employee’s account under the
Retirement Plan for the calendar year. 
Such amount shall be determined by the Committee using actuarial assumptions
selected by the Committee in its discretion.

 

(b)                                 On or before a
reasonable period of time following the earlier of (i) an Eligible
Employee’s Termination of Service, or (ii) the last business day of the
Plan Year, the Company shall credit the Excess Benefit Accrual Account of each
Eligible Employee with all of such Eligible Employee’s Deferral Matching
Contributions, if any, for such Plan Year. 
Nothing herein shall require, or prohibit, the Company from crediting
some of the Deferral Matching Contributions for a Plan Year at the end of any
month or payroll period during such Plan Year.

 

(c)                                  As of the last
business day of each calendar year, the Company shall credit the Excess Benefit
Accrual Account of each Eligible Employee with a pro-rata amount equal to the
excess of the amount of Company contributions which would have been allocated
to such Eligible Employee’s account as Performance Plan Contributions for the
calendar year but for the limitations imposed by sections 401(a)(17) and 415 of
the Code over the actual amount of Company contributions allocated to her or
his accounts under such plan for the calendar year.

 

5.2                                 COMPENSATING ACCRUALS.  Each Eligible Employee who elects to defer
all or a portion of her or his Salary pursuant to Section 4.2(a) hereof
will also be credited with additional accruals to her or his Deferred Salary
Account to compensate for reductions in Retirement Plan accruals, Savings Plan
contributions, and Performance Plan Contributions that result from such Salary
deferral.  Such accruals shall be
calculated as follows:

 

(a)                                  As of the end
of each month, there shall be credited to the Deferred Salary Account of each
Eligible Employee, an additional amount that is equal to the Company
Contributions Credit that would have been credited to the Eligible Employee’s
Company Contributions Account in the Retirement Plan for such month but for
Salary deferrals made under this Plan.

 

(b)                                 As of the last
business day of each calendar year, there shall be credited to the Deferred
Salary Account of each Eligible Employee, an additional amount that is equal to
the amount by which Company contributions to the Eligible Employee’s account as
Performance Plan Contributions were reduced by reason of Salary deferrals made
under this Plan.

 

Page 9 of 16

 

5.3                                  DEFERRAL MATCHING CONTRIBUTIONS.  Effective on January 1, 2008, for each
Plan Year, the Company shall credit an Eligible Employee with Deferral Matching
Contributions determined as follows:

 

(a)                                  An Eligible Employee’s Supplemental Nonqualified
Matching Contributions shall equal five percent (5%) of the Eligible Employee’s
Salary deferred (in accordance with Section 3.1 hereof) during each
payroll period ending on or before such Eligible Employee’s Statutory
Limitation Payroll Date.

 

(b)                                 An Eligible Employee’s Regular Nonqualified Matching
Contribution shall be made with respect to each payroll period occurring on or
after such Eligible Employee’s Statutory Limitation Payroll Date, and shall be
equal to the lesser of (i) the amount of Salary which such Eligible
Employee defers (in accordance with Section 3.1 hereof) with respect to
such payroll period, or (ii) five percent (5%) of such Eligible
Participant’s Salary paid with respect to such payroll period.

 

(c)                                  The Company may, but shall not be required, to
credit an Eligible Employee with a Discretionary Deferral Matching Contribution
based upon any criteria determined by the Company.  Such Discretionary Deferral Matching
Contribution may be credited as of the end of any payroll period or month, or
at the end of calendar year, as selected by the Company.

 

ARTICLE VI

MAINTENANCE OF ACCOUNTS

 

6.1                                          DEFERRAL
ACCOUNTS.  The Company shall maintain one
or more of the following Deferral Accounts, as applicable, for Eligible
Employees: (1) a Deferred Incentive Award Account to which shall be
credited all amounts of Incentive Awards which have been deferred by such
Eligible Employee pursuant to the provisions of Section 4.2(b) hereof;
and (2) a Deferred Salary Account to which shall be credited all amounts
of Salary deferred on and after the Effective Date and all amounts credited
such Eligible Employee pursuant to Sections 4.2(a) and 5.2 hereof.

 

6.2                                         EXCESS BENEFIT
ACCRUAL ACCOUNTS.  The Company shall
maintain an Excess Benefit Accrual Account for each Eligible Employee to which
shall be credited all amounts accruing for the benefit of such Eligible
Employee pursuant to Sections 5.1 and 5.3 hereof.

 

6.3                                         ADJUSTMENTS.  Each Account shall be adjusted daily (prior
to January 1, 2008, at least monthly) to reflect any gains and/or losses
thereon (deemed or actual) (the “Adjustment”) in accordance with the provisions
of Section 7.1 hereof.

 

ARTICLE VII

CREDITING OPTIONS

 

7.1                                         CREDITING
OPTIONS.  The Company has selected
certain crediting options for determining gains and/or losses to Participant
Accounts, any of which may be changed, modified or deleted, or additional
investment options may be added, by the Committee in its discretion (the
“Crediting Options”).  At the time that
an Eligible Employee first becomes a Participant, the Participant shall
allocate deferrals among the Crediting Options set forth in the Initial
Investment Election Form.  The Crediting
Options will be 

 

Page 10 of 16

 

used as a measure of the deemed investment performance of the balances
of each of her or his Accounts by the Committee.

 

Notwithstanding the preceding paragraph, all stock
units (or equivalents) that are deferred into a Participant Account shall not
be subject to adjustment under the provisions of this Section 7.1.  Any investment adjustment with respect to
stock units (or equivalents) shall instead be governed by the terms of the
Incentive Plan granting the stock units (or equivalents), and such stock units
(or equivalents) shall be deemed to have been granted under such Incentive
Plan.

 

7.2                                 INITIAL
DESIGNATIONS. In making the initial Crediting Options designation, the
Participant may specify that all or any percentage (expressed in 1% multiples)
of her or his Accounts be deemed to be invested in one or more of the Crediting
Options.

 

7.3                              SUBSEQUENT
DESIGNATIONS.  Each Participant will also
be able to reallocate the Crediting Options to be used in the future for each
of her or his Accounts, for current Account balances and future contributions,
on any business day (prior to January 1, 2008, once every month) on a form
provided by the Company (all elections to be expressed in 1% multiples).  Any reallocation among the Crediting Options
will be effective on the business day following the day on which the form is
received by the Company (prior to January 1, 2008, the first day of the
month following the month in which the form is received by the Company, unless
the form is received after the monthly deadline set by the Company for receipt
of reallocation forms for the month, in which case the reallocation will be
effective as of the first day of the next subsequent month).  Until a Participant delivers a new Crediting
Options form to the Company, her or his prior Crediting Options election shall
control.

 

7.4                                 MISSING OR
INVALID DESIGNATIONS.  If a Participant
fails to designate any Crediting Option for the Accounts, she or he shall be
deemed to have designated the Money Market Option (or its equivalent) until a
Crediting Options designation is received by the Company.   Similarly, if a Participant has designated a
Crediting Option which is removed or no longer available, the Participant will
be deemed to have designated the Money Market Option (or its equivalent) as its
replacement until such time a new Crediting Options designation is received by
the Company.

 

7.5                                 EFFECT OF
CHANGE IN DESIGNATION.  The Company shall
use the Participant’s Crediting Option designations as the basis for
calculating the Adjustment component of each Account.  If a Participant changes her or his Crediting
Option designations, then such change shall supersede the previous designation
effective the next business day after the change is received by the Company
(prior to January 1, 2008, the first business day of the month following
the month the change is received by the Company (unless received after the
deadline established by the Company)).

 

7.6                                 CALCULATION OF
ADJUSTMENT.  The Adjustment shall be
determined for every Account each day that the investment associated with the
particular Crediting Option is actively traded. 
The daily Adjustment for each Crediting Option shall be determined as
follows:

 

(a)                                  As of each
trading day of the associated investment of the Crediting Option in which a
Participant has a beginning balance for the day in any Account, the amount of
each Account deemed invested in a particular Crediting Option shall either be
credited or debited with an amount equal to that determined by multiplying the
amount of such Account (as measured by the beginning balance 

 

Page 11 of 16

 

number of shares) deemed invested in a particular
Crediting Option by the change in the Net Asset Value reported for that day for
the associated investment.

 

(b)                                 As to the any
amounts distributed, the Company shall cease crediting or debiting Adjustments
to the Accounts on the last day of the month (or such other date determined by
the Committee on a uniform and nondiscriminatory basis) prior to the applicable
distribution event set forth in Articles VIII and IX (the “Valuation Date”).

 

(c)                                  Distribution
amounts determined under Articles VIII and IX shall include the cumulative
Adjustments made to the Accounts of the Participant in accordance with this Article VII.

 

7.7                                 LIMITATIONS.  Allocation shall be made solely among the
Crediting Options selected by the Company. 
A Participant shall have absolutely no ownership interest in any
Crediting Option or any underlying investment. 
The Company shall be the sole owner of any funds invested in any such
investment, as well as all amounts accounted for in the Accounts, all of which
shall at all times be subject to the claims of the Company’s creditors.  A Participant shall have a contractual right
to payment of an amount equal to the balance in each of her or his Accounts in
accordance with this Article and Articles VIII and IX hereof.

 

ARTICLE VIII

ACCOUNT DISTRIBUTIONS

 

8.1                                 NO DEFERRAL PERIOD
SPECIFIED.  With respect to the Excess
Benefit Accrual Account and those portions of any Deferral Account (including,
any Adjustments related thereto) as to which no specific deferral period has
been selected by the Participant prior to the time of deferral:

 

(a)                                  The lump sum
payment or the first installment payment will be paid in the month following
Termination of Service.

 

(b)                                 In the case of
installment payments, the second installment will be paid in January following
the calendar year in which the first installment was paid and all remaining
installments will be paid annually in January.

 

(c)                                  Other
provisions notwithstanding, a Participant determined to be a Specified Employee
who is entitled to a distribution as a result of a Termination of Service shall
receive the applicable lump sum or initial payment six months after the
Termination of Service or, if earlier, upon death.

 

8.2                                 SPECIFIED DEFERRAL
PERIOD.  With respect to the Excess
Benefit Accrual Account and those portions of any Deferral Account (including
any Adjustments related thereto) as to which a specified deferral period has
been selected by a Participant at the time of deferral:

 

(a)                                  The lump sum
payment or the first installment will be paid in the month following the
earlier of the (i) Participant’s Termination of Service or (ii) upon
expiration of the specific deferral period.

 

Page 12 of 16

 

(b)                                 In the case of
installment payments, the second installment will be paid in January following
the year in which the first installment was paid and all remaining installments
will be paid annually in January.

 

(c)                                  Notwithstanding
any specified deferral period election by a Participant, if the Participant has
a Termination of Service before all distributions are made pursuant thereto,
such election shall no longer apply and the deferral election applicable to
distributions to be made in connection with the Participant’s Termination of
Service instead shall become effective.

 

(d)                                 Other
provisions notwithstanding, a Participant determined to be a Specified Employee
who is entitled to a distribution as a result of a Termination of Service shall
receive the initial payment six months after the Termination of Service or, if
earlier, upon death.

 

8.3                                 NO FORM OF DISTRIBUTION
IS SPECIFIED.  With respect to any
Account (including, any Adjustments thereto) as to which no specific form of
distribution has been selected by the Participant at the time of deferral, the
distribution will be in the form of a single lump sum payment.

 

8.4                                 FORM OF DISTRIBUTION IS
SPECIFIED.  All payments will be made in
a single lump sum unless the Participant designates at the time of deferral
that the deferred amount be paid in a specified number (not to exceed ten) of
annual installments.

 

8.5                                 ELECTION CHANGES.  A Participant may change the time and method
of payment by making a subsequent distribution election.  A subsequent distribution election will
become effective twelve (12) months after the election has been received by the
Company.  The subsequent distribution
election must defer payment to a date at least five (5) years later than
originally scheduled.

 

8.6                                 DEATH BENEFITS.  Unless otherwise elected in the time and
manner specified in Section 4.2, in the event of the death of a
Participant, the Participant’s benefits will be distributed to the
Participant’s Beneficiary in a single lump sum payment as soon as
administratively feasible following the Participant’s death, but no later than
the January following death.

 

8.7                                 RELEASE OF
CLAIM.  Acceptance of payment of the
distributions required hereunder by a Participant or her or his Beneficiary (as
applicable) shall constitute a release by such Participant or Beneficiary (as
applicable) of all claims against the Company by the Participant or Beneficiary
(as applicable).

 

ARTICLE IX

OTHER DISTRIBUTION EVENTS

 

9.1                                 CHANGE OF
CONTROL.

 

Notwithstanding any other Section hereof, if a Participant’s
employment with the Company has a Termination of Service for any reason other
than death, within the two-year period beginning on the date that a Change of
Control occurs, then the Company shall pay to the Participant by the end of the
month following the month of termination (six months (6) after the date of
the Termination of Service if the Participant is a Specified Employee) a lump
sum distribution of all of her or his Accounts (including any
Adjustments).  If a Participant dies
after Termination of Service, but before payment of 

 

Page 13 of 16

 

any amount payable under this Section, then such amount shall be paid
to the Participant’s Beneficiary within the first fifteen (15) days of the
month following the month of the Participant’s death.

 

 9.2          UNFORESEEABLE EMERGENCY.

 

(a)                                  A distribution
of a portion of a Participant’s Accounts because of an Unforeseeable Emergency
will be permitted only to the extent required by the Participant to satisfy the
emergency.  Whether an Unforeseeable
Emergency has occurred will be determined solely by the Committee in its
reasonable discretion.  Distributions in
the event of an Unforeseeable Emergency may be made by and with the approval of
the Committee upon written request by a Participant.

 

(b)                                 An
“Unforeseeable Emergency” is defined as a severe financial hardship to the
Participant caused by sudden and unexpected illness or accident of the
Participant, the Participant’s spouse, the Participant’s Beneficiary, or of a
dependent of the Participant (as defined in Code section 152, without regard to
Code section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant’s
property due to casualty, or other extraordinary and unforeseeable
circumstances caused by a result of events beyond the Participant’s
control.  The circumstances that will
constitute an Unforeseeable Emergency will depend upon the specific facts of
each case, but, in any event, any distribution under this Section shall
not exceed the amount required by the Participant to resolve the hardship after
(i) reimbursement or compensation through insurance or otherwise, (ii) obtaining
liquidation of the Participant’s assets, to the extent such liquidation would
not itself cause a severe financial hardship, or (iii) suspension of
deferrals under the Plan.  In all events,
a distribution shall be made in connection with an Unforeseeable Emergency only
to the extent permitted by Code section 409A.

 

9.3                                 DISTRIBUTION IN THE EVENT OF
DIVORCE.  In the event of the divorce or
legal separation of a Participant, and the awarding of all or a portion of the
Accounts to the spouse of the Participant by court order, such spouse may
elect, by filing with the Committee a form specified by the Committee and by
providing such other information as the Committee may in its discretion
reasonably request in order to confirm that the applicable facts and
circumstances are present, to receive a distribution of her or his
court-awarded portion of the Participant’s Accounts pursuant and subject to the
terms of Section 8.1.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

10.1                           PARTICIPANT RIGHTS IN THE
UNFUNDED PLAN.  Any liability of the
Company to any Participant with respect to any benefit shall be based solely
upon the contractual obligations created by the Plan; no such obligation shall
be deemed to be secured by any pledge or any encumbrance on any property of the
Company.  The Company’s obligations under
this agreement shall be an unfunded and unsecured promise to pay.  No Participant or her or his Beneficiaries
shall have any rights under the Plan other than those of an unsecured creditor
of the Company.  Assets segregated or
identified by the Company for the purpose of paying benefits pursuant to the
Plan remain general corporate assets subject to the claims of the Company’s
creditors.

 

Page 14 of 16

 

10.2                           NON-ASSIGNABILITY.  Subject to the provisions of Section 10.3,
neither the Participant nor her or his Beneficiary shall have any power or
rights to transfer, assign, anticipate, hypothecate or otherwise encumber any
part or all of the amounts payable hereunder, which are expressly declared to
be un-assignable and non-transferable. 
Any such attempted assignment or transfer shall be void and the Company
shall thereupon have no further liability to such Participant or such
Beneficiary hereunder.  No amount payable
hereunder shall, prior to actual payment thereof, be subject to seizure by any
creditor of any Participant or Beneficiary for the payment of debt, judgment or
other obligation, by a proceeding at law or in equity, nor transferable by
operation of law in the event of the bankruptcy, insolvency or death of the
Participant, her or his designated Beneficiary or any other beneficiary
hereunder.

 

10.3                           TERMINATION OR AMENDMENT OF
PLAN.  The Company retains the right, at
any time and in its sole discretion, to amend or terminate the Plan, in whole
or in part.   Any amendment of the Plan
shall be approved by the Board, shall be in writing, and shall be communicated
to the Participants.  Notwithstanding the
above, the Committee shall have the discretionary authority to change the
requirements of eligibility or to modify the Crediting Options hereunder
without Board approval.  No amendment of
the Plan shall materially impair or curtail the Company’s contractual
obligations arising from deferral elections previously made or for benefits
accrued prior to such amendment without Participant consent.  In the event of Plan termination, payment of
Deferral and Accrual Accounts shall occur in accordance with existing
Participant distribution elections.

 

10.4                           CONTINUATION OF
EMPLOYMENT.  This Plan shall not be
deemed to constitute a contract of employment between the Company and a Participant.  Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any Participant any right to
continue in the employ of the Company or affect the right of the Company to
terminate the employment of any Participant at any time with or without
cause.  Nothing in the Plan will
otherwise affect any Participant’s employment relationship with the Company.

 

10.5                           RESPONSIBILITY FOR LEGAL
EFFECT.  Neither the Committee nor the
Company make any representations or warranties, express or implied, or assumes
any responsibility concerning the legal, tax or other implications or effects
of this Plan.

 

10.6                           WITHHOLDING.  The Company shall
withhold from or offset against any payment or accrual made under the Plan any
taxes the Company determines it is required to withhold by applicable federal,
state, local or foreign laws.

 

10.7                           OTHER COMPENSATION
PLANS.  The adoption of the Plan shall
not affect any other incentive or other compensation plans in effect for the
Company or any subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
of the Company or any subsidiary.

 

10.8                           PLAN BINDING ON
SUCCESSORS.  The Plan shall be binding
upon the successors and assigns of the Company.

 

10.9                           SINGULAR, PLURAL.  Wherever appropriate in this Plan, nouns in
the singular shall include the plural.

 

10.10                     CONTROLLING LAW.  The Plan shall be governed by and construed
in accordance with the internal law, without regard to conflict of law principles,
of the State of Delaware to the extent not pre-empted by the laws of the United
States of America.

 

Page 15 of 16

 

10.11                     NO DUPLICATION.  In no event shall the benefit provided under
the Plan duplicate any benefits accrued and/or payable under the Fluor
Corporation Deferred Compensation Program (frozen effective December 31,
2004).

 

 

 

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