-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qdo3gNhcXqu9K5/QjbXi0R9lpw022lzglKlBKt4ENmGfNIIFYi/ur/w6LZXFQgN5 JR21/qHRWwxb0/Wx5OT2Ng== 0000037748-94-000020.txt : 19940617 0000037748-94-000020.hdr.sgml : 19940617 ACCESSION NUMBER: 0000037748-94-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLUOR CORP/DE/ CENTRAL INDEX KEY: 0000037748 STANDARD INDUSTRIAL CLASSIFICATION: 1600 IRS NUMBER: 950740960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07775 FILM NUMBER: 94534193 BUSINESS ADDRESS: STREET 1: 3333 MICHELSON DR CITY: IRVINE STATE: CA ZIP: 92730 BUSINESS PHONE: 7149752000 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP LTD DATE OF NAME CHANGE: 19710624 10-Q 1 10Q 2ND QUARTER 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from to Commission File No. 1-7775 FLUOR CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-0740960 (State or other jurisdiction of (I.R.S Employer I.D. No.) incorporation or organization) 3333 Michelson Drive, Irvine, CA 92730 (Address of principal executive offices) Registrant's telephone number including area code: (714)975-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes ( X ) No ( ) As of May 31, 1994 there were 82,468,524 shares of common stock outstanding. FLUOR CORPORATION FORM 10-Q April 30, 1994 TABLE OF CONTENTS PAGE Part I: Financial Information Condensed Consolidated Statement of Earnings for the Three Months Ended April 30, 1994 and 1993.... 2 Condensed Consolidated Statement of Earnings for the Six Months Ended April 30, 1994 and 1993...... 3 Condensed Consolidated Balance Sheet at April 30, 1994 and October 31, 1993......................... 4 Condensed Consolidated Statement of Cash Flows for the Six Months Ended April 30, 1994 and 1993...... 6 Notes to Condensed Consolidated Financial Statements........................................ 7 Management's Discussion and Analysis of Financial Condition and Results of Operations............... 10 Condensed Consolidated Changes in Backlog.......... 14 Part II: Other Information........................ 15 Signatures........................................... 16 Part I: Financial Information FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS Three Months Ended April 30, 1994 and 1993 (In Thousands Except Per Share Amounts) UNAUDITED 1994 1993 REVENUES.............................. $2,079,593 $2,006,054 COSTS AND EXPENSES Cost of revenues.................... 1,991,323 1,947,647 Corporate administrative and general expenses................... 13,332 11,576 Interest expense.................... 4,409 5,179 Interest income..................... (4,610) (4,901) Total Costs and Expenses.............. 2,004,454 1,959,501 EARNINGS BEFORE INCOME TAXES.......... 75,139 46,553 INCOME TAX EXPENSE.................... 27,400 4,600 NET EARNINGS.......................... $ 47,739 $ 41,953 NET EARNINGS PER SHARE................ $ 0.58 $ 0.51 DIVIDENDS PER COMMON SHARE............ $ 0.13 $ 0.12 SHARES USED TO CALCULATE EARNINGS PER SHARE............................... 82,815 82,292 See Accompanying Notes. -2- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS Six Months Ended April 30, 1994 and 1993 (In Thousands Except Per Share Amounts) UNAUDITED 1994 1993 REVENUES.............................. $4,137,258 $3,812,993 COSTS AND EXPENSES Cost of revenues.................... 3,967,949 3,688,515 Corporate administrative and general expenses................... 24,012 21,256 Interest expense.................... 8,639 9,782 Interest income..................... (9,479) (9,994) Total Costs and Expenses.............. 3,991,121 3,709,559 EARNINGS BEFORE INCOME TAXES.......... 146,137 103,434 INCOME TAX EXPENSE.................... 54,400 25,800 NET EARNINGS.......................... $ 91,737 $ 77,634 NET EARNINGS PER SHARE................ $ 1.11 $ 0.94 DIVIDENDS PER COMMON SHARE............ $ 0.26 $ 0.24 SHARES USED TO CALCULATE EARNINGS PER SHARE........................... 82,615 82,251 See Accompanying Notes. -3- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET April 30, 1994 and October 31, 1993 (Dollars in Thousands) ASSETS April 30, October 31, 1994 1993 * (Unaudited) Current Assets Cash and cash equivalents........... $ 391,052 $ 214,844 Marketable securities............... 110,924 97,335 Accounts and notes receivable....... 380,913 392,577 Contract work in progress........... 291,903 306,251 Net assets of discontinued operations......................... -- 172,822 Deferred taxes...................... 52,110 76,364 Inventory and other current assets.. 63,371 48,831 Total Current Assets............... 1,290,273 1,309,024 Property, plant and equipment (net of accumulated depreciation, depletion and amortization of $474,186 and $441,676, respectively) 1,145,699 1,100,909 Investments and goodwill, net......... 53,674 52,383 Other................................. 200,717 126,568 $2,690,363 $2,588,884 (Continued On Next Page) * Amounts at October 31, 1993 have been derived from audited financial statements. -4- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET April 30, 1994 and October 31, 1993 (Dollars in Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY April 30, October 31, 1994 1993 * (Unaudited) Current Liabilities Accounts and notes payable.......... $ 292,346 $ 289,721 Note payable to affiliate........... 30,650 30,000 Commercial paper.................... 14,961 30,053 Advance billings on contracts....... 236,467 194,695 Accrued salaries, wages and benefit plans...................... 205,117 194,270 Other accrued liabilities........... 192,691 190,447 Current portion of long-term debt... 2,335 1,687 Total Current Liabilities.......... 974,567 930,873 Long-term debt due after one year..... 58,673 59,637 Deferred taxes........................ 48,893 51,642 Other noncurrent liabilities.......... 482,612 502,610 Commitments and contingencies Shareholders' Equity Capital stock Preferred - authorized 20,000,000 shares without par value; none issued Common - authorized 150,000,000 shares of $0.625 par value; issued and outstanding - 82,413,758 shares and 82,093,207 shares, respectively............. 51,509 51,308 Additional capital.................. 487,125 478,204 Retained earnings (since October 31, 1987).............................. 605,034 534,678 Unamortized executive stock plan expense............................ (13,976) (16,828) Cumulative translation adjustments.. (4,074) (3,240) Total Shareholders' Equity......... 1,125,618 1,044,122 $2,690,363 $2,588,884 See Accompanying Notes. * Amounts at October 31, 1993 have been derived from audited financial statements. -5- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended April 30, 1994 and 1993 (Dollars in Thousands) UNAUDITED 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings........................ $ 91,737 $ 77,634 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization................... 55,656 57,481 Discontinued operations.......... -- (27,410) Deferred taxes................... (5,393) (31,501) Change in operating assets and liabilities.................... 99,511 (97,179) Other, net....................... 20,639 35,303 Cash provided by operating activities. 262,150 14,328 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures................ (108,072) (93,759) Sale (purchase) of marketable securities......................... (13,589) 42,358 Initial cash proceeds from sale of discontinued operations, excluding tax benefits....................... 51,869 -- Proceeds from sale of property, plant and equipment................ 7,952 6,805 Other, net.......................... 3,284 (3,066) Cash utilized by investing activities. (58,556) (47,662) CASH FLOWS FROM FINANCING ACTIVITIES Stock options exercised............. 10,653 6,884 Cash dividends paid................. (21,381) (19,656) Payments on short-term borrowings... (15,092) -- Payments on long-term debt.......... (490) (16,132) Other, net.......................... (1,076) (363) Cash utilized by financing activities. (27,386) (29,267) Increase (decrease) in cash and cash equivalents......................... 176,208 (62,601) Cash and cash equivalents at beginning of period................. 214,844 195,346 Cash and cash equivalents at end of period.............................. $ 391,052 $ 132,745 See Accompanying Notes. -6- FLUOR CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (1) The condensed consolidated financial statements do not include footnotes and certain financial information normally presented annually under generally accepted accounting principles and, therefore, should be read in conjunction with the company's October 31, 1993 annual report on Form 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended April 30, 1994 are not necessarily indicative of results that can be expected for the full year. The condensed consolidated financial statements included herein are unaudited; however, they contain all adjustments (consisting of normal recurring accruals) which, in the opinion of the company, are necessary to present fairly its consolidated financial position at April 30, 1994 and the consolidated results of operations for the three and six months ended April 30, 1994 and 1993 and cash flows for the six months ended April 30, 1994 and 1993. (2) Earnings per share is based on the weighted average number of common and, when appropriate, common equivalent shares outstanding in each period. Common equivalent shares are included when the effect of the potential exercise of stock options is dilutive. (3) Inventories comprise the following: April 30, October 31, 1994 1993 ($ in thousands) Coal........................... $ 13,285 $ 15,375 Supplies and other............. 22,005 17,459 $ 35,290 $ 32,834 (4) Cash paid for interest was $6.2 million and $10.3 million for the six month periods ended April 30, 1994 and 1993, respectively. Income tax payments, net of refunds, were $30.8 million and $52.3 million in the six month periods ended April 30, 1994 and 1993, respectively. -7- (5) Net earnings for the three and six months ended April 30, 1993 included $12.6 million related to the favorable completion of a federal income tax audit for the tax years 1984 through 1986. As a result of the conclusion of that audit, $12.6 million in income tax liabilities were no longer deemed necessary and were reversed. (6) In November 1992, the company announced its decision to exit its Lead business. As a consequence, the company's Lead business segment was classified as a discontinued operation as of October 31, 1992 and adjusted to net realizable value. On April 7, 1994 the company completed the sale of its Lead business to an affiliate of a private investment company based in New York for consideration consisting of both cash and deferred payments. The aggregate of the amounts realized from the sale and operating results from November 1992 until the date of the sale were within previously established estimates used to determine discontinued operations reserves. As a consequence, the closing of the sale had no impact on the company's earnings beyond what was originally recognized in fiscal 1992. (7) During the second quarter of 1993, A.T. Massey, the company's coal investment, recorded an after-tax charge to earnings of $9.2 million to provide for the settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. (8) In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No. 112). The statement requires accrual of the estimated cost of benefits provided by the employer to former or inactive employees after employment but before retirement. Adoption of SFAS No. 112 is not required by the company until fiscal 1995. Although the precise method and impact of implementation is not known at this time, management believes the effect, based on the company's current benefit programs, will not be material. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS No. 115). The statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Adoption of SFAS No. 115 is not required by the company -8- until fiscal 1995. Based on the nature and composition of the company's current investment portfolios, management believes the impact of implementation will not be material. -9- FLUOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the condensed consolidated financial statements and accompanying notes. RESULTS OF OPERATIONS Revenues increased 4 percent and 9 percent, respectively, for the three and six month periods ended April 30, 1994, compared with the same periods of 1993. Net earnings for the three and six months ended April 30, 1994 were $47.7 million and $91.7 million, respectively, compared with net earnings of $42.0 million and $77.6 million, respectively, for the same periods of 1993. Net earnings for the three and six months ended April 30, 1993 included an after-tax charge of $9.2 million established by A.T. Massey, the company's coal investment, related to settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. Also included in 1993 net earnings was $12.6 million related to the favorable conclusion in the second quarter of 1993 of a federal income tax audit for the tax years 1984 through 1986. Excluding these two nonrecurring items, net earnings for both the three and six months ended April 30, 1994 increased 24 percent compared with the same periods of 1993. ENGINEERING AND CONSTRUCTION Revenues for the Engineering and Construction segment increased 2 percent and 8 percent, respectively, for the three and six month periods ended April 30, 1994 compared with the same periods of 1993, primarily due to an increase in work performed. Engineering and Construction operating profits increased 20 percent and 19 percent, for the three and six month periods ended April 30, 1994, respectively, compared with the same periods of 1993 due primarily to increased margins, as well as the increased volume of work performed. New awards for the three and six months ended April 30, 1994 were essentially level with new awards for the same periods of 1993. New awards within the Hydrocarbon sector represented approximately 48 percent and 59 percent of total new awards for the first six months of 1994 and 1993, respectively. Over 60 percent of new awards for the first six months of 1994 were from the European, Asia Pacific and Latin America regions. -10- The following table sets forth backlog for each of the company's business sectors: April 30, October 31, April 30, ($ in millions) 1994 1993 1993 Hydrocarbon $ 7,088 $ 6,198 $ 5,475 Government 2,117 2,520 2,715 Process 1,847 2,441 3,247 Industrial 2,870 2,706 2,898 Power 928 889 1,006 Total $ 14,850 $ 14,754 $ 15,341 The ratio of international to total backlog was 45 percent, 39 percent, and 37 percent at April 30, 1994, October 31, 1993, and April 30, 1993, respectively. COAL Revenues for the Coal segment increased 24 percent and 16 percent, respectively, for the three and six month periods ended April 30, 1994 compared with the same periods of 1993, primarily due to increased sales volume of produced coal. Gross margin also increased in the three and six month periods of 1994 compared with 1993 primarily due to increased sales volume of produced coal primarily offset by increased costs including start-up at certain new mines. During the second quarter of 1993, a nonrecurring charge was recorded to provide for settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. Excluding the nonrecurring charge, operating profit increased 13 percent and 18 percent, respectively, for the three and six month periods of 1994 compared with the same periods of 1993. OTHER Corporate administrative and general expenses increased approximately $1.8 million and $2.8 million, respectively, for the three and six months ended April 30, 1994 compared with the same periods in 1993 primarily due to higher stock price driven compensation plan expense partially offset by lower corporate overhead costs. -11- Net interest income for the three and six month periods ended April 30, 1994 increased compared with the same periods of 1993 due to a decrease in total interest expense more than offsetting a decrease in total interest income. This was due primarily to the pay down of certain interest bearing debt together with a decline in the effective interest rates on interest bearing liabilities. Net earnings for the three and six months ended April 30, 1993 benefited from the reversal of $12.6 million of income tax liabilities. That reversal was made in connection with the completion of a Federal income tax audit in the second quarter of 1993 for the years 1984 through 1986. The reduction in liabilities did not affect the company's cash flow. The effective tax rate for the six month period ended April 30, 1994 was essentially unchanged compared with the same period of 1993, after excluding the favorable tax adjustment. In November 1992, the Financial Accounting Standards Board issued Statement of Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No. 112). The statement requires accrual of the estimated cost of benefits provided by the employer to former or inactive employees after employment but before retirement. Adoption of SFAS No. 112 is not required by the company until fiscal 1995. Although the precise method and impact of implementation is not known at this time, management believes the effect, based on the company's current benefit programs, will not be material. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS No. 115). The statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Adoption of SFAS No. 115 is not required by the company until fiscal 1995. Based on the nature and composition of the company's current investment portfolios, management believes the impact of implementation will not be material. FINANCIAL POSITION AND LIQUIDITY The company expects to have adequate resources available from cash and short-term investments currently on hand, plus available revolving credit facilities, capital market sources, and its commercial paper program to provide for its financing needs in the foreseeable future. -12- On April 7, 1994 the company completed the sale of its Lead business to an affiliate of a private investment company based in New York for consideration consisting of both cash and deferred payments. For the six months ended April 30, 1994, capital expenditures were $108.1 million including $77.1 million related primarily to mine development. Dividends paid in the six months ended April 30, 1994 were $21.4 million ($.26 per share) compared with $19.7 million ($.24 per share) for the same period of 1993. The long-term debt to total capital ratio decreased to 5.0 percent at April 30, 1994 compared with 5.4 percent at October 31, 1993, due primarily to the increase in shareholders' equity from net earnings, net of dividends. -13- FLUOR CORPORATION CONDENSED CONSOLIDATED CHANGES IN BACKLOG (Dollars in Millions) UNAUDITED For the Three Months Ended April 30, 1994 1993 Backlog - beginning of period....... $ 14,814.9 $ 14,935.5 New awards.......................... 2,172.3 2,296.7 Adjustments and cancellations, net.. (277.6) (60.3) Work performed...................... (1,859.5) (1,831.3) Backlog - end of period............. $ 14,850.1 $ 15,340.6 For the Six Months Ended April 30, 1994 1993 Backlog - beginning of period....... $ 14,753.5 $ 14,706.0 New awards.......................... 4,506.5 4,353.3 Adjustments and cancellations, net.. (684.9) (255.2) Work performed...................... (3,725.0) (3,463.5) Backlog - end of period............. $ 14,850.1 $ 15,340.6 -14- FLUOR CORPORATION PART II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.15 1988 Fluor Executive Stock Plan (as amended and restated effective October 1, 1993) 10.17 Fluor Special Executive Incentive Plan (as amended and restated effective October 1, 1993) (b) Reports on Form 8-K. The company filed a Form 8-K to report the April 7, 1994 sale of its wholly-owned subsidiary St. Joe Minerals Corporation ("St. Joe") which conducted lead mining, smelting and recycling operations. -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. FLUOR CORPORATION (Registrant) Date: June 14, 1994 /s/ J. Michal Conaway J. Michal Conaway, Vice President and Chief Financial Officer (Principal Accounting Officer) EX-10 2 EX-10.17 FLUOR SPECIAL EXECUTIVE INCENTIVE PLAN Exhibit 10.17 FLUOR SPECIAL EXECUTIVE INCENTIVE PLAN As Amended and Restated Effective October 1, 1993 ARTICLE I DEFINITIONS Sec. 1. I DEFINITIONS As used herein, the following terms shall have the meanings hereinafter set forth unless the context clearly, indicates to the contrary, (a) "Awards" shall mean both Long-Term Incentive Awards and Restricted Unit Awards as provided herein. (b) "Board" shall mean the Board of Directors of the Company. (c) "Committee" shall mean the Organization and Compensation Committee of the Board. (d) "Company" shall mean Fluor Corporation. (e) "Eligible Employee" shall mean an employee who is an officer of the Company or any Subsidiary or who is a member of the Management Control Group of the Company and its Subsidiaries. (f) "Fair Market Value" shall mean the average of the highest price and the lowest price per share at which the Stock is sold in the regular way on the New York Stock Exchange on the day such value is to be determined hereunder or, in the absence of any reported sales on such day, the first preceding day on which there were such sales. (g) "Grantee" shall mean an Eligible Employee to whom Awards have been granted hereunder. (h) "Long-Term Incentive Award" shall mean amounts awarded pursuant to Section 5 hereof. (i) "Management Control Group" shall mean those employees who have been determined to be eligible to participate in the Fluor Corporation and Subsidiaries Executive Incentive Compensation Program or in other similar management incentive compensation programs of the Company or a Subsidiary. (j) "Plan" shall mean the Fluor Special Executive Incentive Plan, the terms of which are set forth herein. (k) "Restricted Unit Award" shall mean amounts awarded pursuant to Section 6 hereof. (l) "Return on Average Shareholders' Equity" shall mean, for any fiscal year, the percentage amount reported as "Return on Average Shareholders Equity" in the "Highlights" section of the Company's Annual Report to Stockholders for such fiscal year. (m) "Stock" shall mean the common stock of the Company or,in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different stock or securities of the Company or some other corporation, such other stock or securities. (n) "Subsidiary" shall mean any corporation, the majority of the outstanding capital stock of which is owned, directly or indirectly, by the Company. (o) "Ten Year Treasury Yield" shall mean, for any fiscal period, the daily average percent per annum yield for U. S. Government Securities - 10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication. ARTICLE 11 THE PLAN Sec. 2.1 NAME This plan shall be known as the "Fluor Special Executive Incentive Plan." Sec. 2.2 PURPOSE The purpose of the Plan is to advance the interests of the Company and its shareholders by providing Eligible Employees who can directly and significantly influence the profits of the Company and therefore the market value of its Stock with a form of cash incentive compensation ("Long-Term Incentive Awards") which becomes payable upon the attainment of specified performance objectives and with another form of cash compensation ("Restricted Unit Awards") which is designed to compensate for the income and employment tax withholding arising from the lapse of restrictions on shares of restricted stock granted to such Eligible Employees. Restricted Unit Awards are intended to encourage executive stock ownership by eliminating the need to dispose of a portion of any newly vested restricted shares to pay the withholding amounts. Sec. 2.3 EFFECTIVE DATE AND DURATION The Plan shall become effective as of April 27, 1987. The Awards granted hereunder must be awarded on or before October 31, 1999. ARTICLE III PARTICIPANTS Sec. 3.1 ELIGIBILITY Any Eligible Employee of the Company or its Subsidiaries shall be eligible to participate in the Plan; provided, however, that no member of the Committee shall be eligible to participate. ARTICLE IV ADMINISTRATION Sec. 4.1 DUTIES AND POWERS OF COMMITTEE The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have sole discretion and authority to determine from among Eligible Employees those to whom and the time or times at which Awards may be granted, the amount of such Awards and the terms and conditions upon which such Awards shall become earned and payable. Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable in the administration of the Plan. Sec. 4.2 MAJORITY RULE A majority of the members of the Committee shall constitute a quorum, and any action taken by a majority present at a meeting at which a quorum is present or any action taken without a meeting evidenced by a writing executed by a majority of the whole Committee shall constitute the action of the Committee. Sec. 4.3 COMPANY ASSISTANCE The Company shall supply full and timely information to the Committee on all matters relating to eligible employees, their employment, death, retirement, disability or other termination of employment, and such other pertinent facts as the Committee may require. The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. ARTICLE V LONG-TERM INCENTIVE AWARDS Sec. 5.1 LONG-TERM INCENTIVE AWARD GRANT AND AGREEMENT Each Long-Term Incentive Award made hereunder shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Agreement dated as of the date of grant and executed by the Company and the Grantee which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. Sec. 5.2 DETERMINATION OF LONG-TERM INCENTIVE AWARDS In advance of the granting each Long-Term Incentive Award hereunder the Committee shall: (a) Establish the specific threshold, target and maximum earnings level (which may be characterized either in terms of net earnings or earnings excluding certain items such as interest, taxes, depreciation or amortization) which must be attained over a three fiscal year period in order for such Award (or portion thereof) to become earned by the Grantee and payable by the Company; and (b) Establish a graded series of Award levels which shall designate the amount to be paid to Grantees at each such level if either the threshold, target or maximum earnings level is achieved, and assign an Award grade level for each Grantee. If the threshold target is not achieved, no Award will be payable to the Grantee. If the maximum target or more is achieved, then the Award shall be the maximum Award amount for the Grantee's grade level. If an earnings amount between the threshold and target earnings level is achieved, then the amount of the Award shall be corresponding prorata amount between the threshold Award amount and the target Award amount. If an earnings amount between the target level and maximum earnings level is achieved, then the amount of the Award shall be the corresponding prorata amount between the target Award amount and the maximum Award amount. The maximum amount of any Award shall be $600,000.00. Sec. 5.3 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT If, prior to the date on which any Long-Term Incentive Award becomes earned and payable, the Grantee's employment with the Company or its Subsidiaries shall be terminated by the Company or Subsidiary with or without cause, or by the act of the Grantee, then the Grantee's rights with respect to that portion of the Long-Term Incentive Award which has not been earned as of the date of such termination shall immediately terminate and all fights thereunder shall cease; provided, however, that if such termination of employment shall occur as a result of the Grantee's death or permanent and total disability, as determined in accordance with applicable Company personnel policies, or if the Grantee's employment with the Company or its Subsidiaries shall be terminated within two years after a Change of Control of the Company and such termination occurs prior to a date on which a Long-Term incentive Award would have become earned and payable, such Award shall become earned and payable in accordance with its original terms and conditions notwithstanding such termination. ARTICLE VI RESTRICTED UNIT AWARDS Sec. 6.1 RESTRICTED UNIT AWARD GRANT AND AGREEMENT Each Restricted Unit Award granted hereunder shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Agreement dated as of the date of grant and executed by the Company and the Grantee, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. A Restricted Unit Award of Restricted Units may only be made in connection with an Award of Restricted Stock pursuant to the 1988 Fluor Executive Stock Plan. No Awards of Restricted Units may be made during any fiscal year unless, for the preceding fiscal year, Return on Average Shareholders' Equity exceeded the Ten Year Treasury Yield by more than three percentage points. Sec. 6.2 DETERMINATION OF AWARD AMOUNT In advance of the granting of each Restricted Unit Award hereunder the Committee shall: (a) Establish various Award grade levels (which levels shall be the same as those established by the Committee for concurrent Awards of Restricted Stock made pursuant to the 1988 Fluor Executive Stock Plan) that shall designate the maximum number of Restricted Units which may be awarded annually to a Grantee in each Award grade level. The number of Restricted Units for each Award grade level shall be calculated by reference to the applicable federal and state income and employment withholding tax rates; and (b) Assign an Award grade level for each Grantee which shall correspond to the Award grade level assigned to such Grantee in connection with the concurrent granting to him of Restricted Stock pursuant to the 1988 Fluor Executive Stock Plan. The Committee shall have the sole discretion and authority to make an Award of less than the maximum number of Units for a Grantee's assigned grade level or to make no Award at all to such Eligible Employee. In no event shall the total number of Restricted Units granted to any Eligible Employee in any fiscal year exceed I 0,000. Sec. 6.3 AWARD TERMS AND CONDITIONS Each Restricted Unit shall have a value equal to the Fair Market Value on the date that such Award, or portion thereof, becomes earned and payable. Each award shall become earned and payable in ten equal increments on each of the ten succeeding anniversary dates following the date of the Award, or upon such other terms and conditions as may be determined by the Committee. The proceeds of each Award shall be applied in payment of applicable federal and state income and employment withholding taxes arising from the lapse of restrictions on the related restricted stock and from such Award (or portion thereof) becoming earned and payable, with the balance, if any, to be remitted to the Grantee. If the outstanding shares of Stock of the Company are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Stock or other securities, through merger, consolidation, sale of all or substantially all of the property of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of Stock or other securities, an appropriate and proportionate adjustment may be made in the number of Restricted Units subject to outstanding Awards. Such adjustments will be made by the Committee, whose determination as to what adjustments will be made and the extent thereof will be final, binding, and conclusive. Sec. 6.4 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT If, prior to the date on which the Restricted Units, or any portion thereof becomes earned and payable, the Grantee's employment with the Company or its Subsidiaries shall be terminated by the Company or Subsidiary with or without cause, or by the act of the Grantee, then the Grantee's rights with respect to that portion of the Award which has not been earned as of the date of such termination shall immediately terminate and all rights thereunder shall cease; provided, however, that if the Grantee's death or permanent and total disability, as determined in accordance with applicable Company personnel policies, or if the Grantee's employment with the Company or its Subsidiaries shall be terminated within two years after a Change of Control of the Company and such termination occurs prior to a date on which an Award would have become earned and payable, such Award shall immediately become earned and payable on the date of such termination. ARTICLE VII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN Sec. 7.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN The Board may at any time, upon recommendation of the Committee, terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no termination, amendment or modification of the Plan shall in any manner affect any Awards theretofore granted under the Plan without the consent of the Grantee. ARTICLE VII MISCELLANEOUS Sec. 8.1 NONTRANSFERABILITY OF AWARDS No Awards granted hereunder shall be transferred by a Grantee otherwise than by will or the laws of descent and distribution. During the lifetime of a Grantee, such Awards shall be payable only to the Grantee. Sec. 8.2 EMPLOYMENT Nothing in the Plan or in any Awards granted hereunder shall confer upon any employee the right to continue in the employ of the Company or any Subsidiary. Sec. 8.3 OTHER COMPENSATION PLANS The adoption of the Plan shall not affect any stock option or 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. Sec. 8.4 PLAN BINDING ON SUCCESSORS The Plan shall be binding upon the successors and assigns of the Company. Sec. 8.5 SINGULAR, PLURAL GENDER Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Sec. 8.6 HEADINGS, ETC., NOT PART OF PLAN Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan. EX-10 3 EX-10.15 1988 FLUOR EXECUTIVE STOCK PLAN EXHIBIT 10.15 FLUOR CORPORATION 1988 FLUOR EXECUTIVE STOCK PLAN AS AMENDED AND RESTATED Effective October 1, 1993 ARTICLE I DEFINITIONS Sec. 1.1 DEFINITIONS As used herein, the following terms shall have the meanings hereinafter set forth unless the context clearly indicates to the contrary: (a) "Award" shall mean an award of Restricted Stock pursuant to the provisions of Article VI hereof. (b) "Awardee" shall mean an Eligible Employee to whom Restricted Stock has been awarded hereunder. (c) "Board" shall mean the Board of Directors of the Company. (d) "Change of Control" of the Company shall be deemed to have occurred if, (i) a third person, including a group' as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires shares of the Company having twenty-five percent or more of the total number of votes that may be cast for the election of directors of the Company; or (ii) as the result of any cash tender or exchange offer, merger or other business combination, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of the Company or any successor to the Company. (e) "Code" shall mean the Internal Revenue Code of 1986, as amended. (f) "Committee" shall mean the Organization and Compensation Committee of the Board. (g) "Company" shall mean Fluor Corporation. (h) "Eligible Employee" shall mean an employee who is an officer of the Company or any Subsidiary or who is a member of the Management Control Group of the Company and its Subsidiaries. (i) "Fair Market Value" shall mean the average of the highest price and the lowest price per share at which the Stock is sold in the regular way on the New York Stock Exchange on the day an Option is granted hereunder or, in the absence of any reported sales on such day, the first preceding day on which there were such sales. (j) "Grantee" shall mean an Eligible Employee to whom Rights have been granted hereunder. (k) "Incentive Stock Option" shall mean an incentive stock option, as defined under Section 422A of the Code and the regulations thereunder to purchase Stock. (l) "Management Control Group" shall mean those employees who have been determined to be eligible to participate in the Fluor Corporation and Subsidiaries Executive Incentive Compensation Program or in other similar management incentive compensation programs of any Subsidiary. (m) "Nonqualified Stock Option" shall mean a stock option other than an Incentive Stock Option to purchase Stock. (n) "Option" shall mean an option to purchase Stock granted pursuant to the provisions of Article V hereof and refers to both Incentive Stock Options and Nonqualified Stock Options. (o) "Optionee" shall mean an Eligible Employee to whom an Option has been granted hereunder. (p) "Plan" shall mean the 1988 Fluor Executive Stock Plan, the current terms of which are set forth herein. (q) "Prior Plans" shall mean the 1971 Fluor Stock Option Plan, the 1977 Fluor Executive Stock Plan, the 1981 Fluor Executive Stock Plan and the 1982 Fluor Executive Stock Option Plan. (r) "Restricted Stock" shall mean Stock that may be awarded to an Eligible Employee by the Committee pursuant to Article VI hereof, which is nontransferable and subject to a substantial risk of forfeiture until specific conditions are met. Conditions may be based on continuing employment or achievement of preestablished performance objectives. (s) "Return on Average Shareholders' Equity" shall mean, for any fiscal year, the percentage amount reported as "Return on Average Shareholders Equity" in the "Highlights" section of the Company's Annual Report to Stockholders for such fiscal year. (t) "Restricted Stock Agreement" shall mean the agreement between the Company and the Awardee with respect to Restricted Stock awarded hereunder. (u) "Rights" shall mean Stock Appreciation Rights granted as provided herein. (v) "Stock" shall mean the Common Stock of the Company or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different stock or securities of the Company or some other corporation, such other stock or securities. (w) "Stock Appreciation Right" or "Right" shall mean a right granted pursuant to Article VIII hereof to receive a number of shares of Stock or, in the discretion of the Committee, an amount of cash or a combination of shares and cash, based on the increase in the Fair Market Value of the shares subject to the Right. (x) "Stock Appreciation Rights Agreement" shall mean the agreement between the Company and the Grantee evidencing the grant of Rights as provided herein. (y) "Stock Option Agreement" shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Stock hereunder. (z) "Stock Payment" shall mean a payment in shares of Stock to replace all or any portion of the compensation (other than base salary) that would otherwise become payable to any Eligible Employee of the Company. (aa) "Subsidiary" shall mean any corporation, the majority of the outstanding capital stock of which is owned, directly or indirectly, by the Company or any partnership or joint venture in which either the Company or such a corporation is at least a twenty percent (20%) equity participant. (bb) "Ten Year Treasury Yield" shall mean, for any fiscal period, the daily average percent per annum yield for U. S. Government Securities - 10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication. ARTICLE 11 GENERAL Sec. 2.1 NAME This Plan shall be known as the "1988 Fluor Executive Stock Plan." Sec. 2.2 PURPOSE The purpose of the Plan is to advance the interests of the Company and its stockholders by affording to Eligible Employees of the Company and its Subsidiaries an opportunity to acquire or increase their proprietary interest in the Company by the grant to such employees of Options, Awards or Rights under the terms set forth herein. By thus encouraging such employees to become owners of Company shares and by granting such employees with a form of cash incentive compensation which is measured by the increase in market value of Company shares, the Company seeks to motivate, retain and attract those highly competent individuals upon whose judgment, initiative, leadership and continued efforts the success of the Company in large measure depends. Sec. 2.3 EFFECTIVE DATE The Plan shall become effective upon its approval by the holders of a majority of the shares of Stock of the Company represented at an annual or special meeting of the stockholders of the Company. Sec. 2.4 LIMITATIONS Subject to adjustment pursuant to the provisions of Section I 1. I hereof, the aggregate number of shares of Stock which may either be issued as Awards, subject to Options or issued pursuant to the exercise of Options, or reflected in grants of Stock Appreciation Rights shall not exceed the sum of (a) 5,500,000 plus (b) that number of shares represented by options, awards or rights under Prior Plans which expire or are otherwise terminated at any time after the original effective date of this Plan. Any such shares may be either authorized and unissued shares or shares issued and thereafter acquired by the Company. No Eligible Employee may receive more than fifteen percent (15%) of the aggregate number of shares of Stock which may be issued as Awards, subject to Options or issued pursuant to the exercise of Options or reflected in grants of Stock Appreciation Rights. Sec. 2.5 OPTIONS, AWARDS AND RIGHTS GRANTED UNDER PLAN Shares of Stock with respect to which an Option granted hereunder shall have been exercised, and shares of Stock received pursuant to a Restricted Stock Agreement executed hereunder with respect to which the restrictions provided for in Section 6.3 hereof shall have lapsed and shares of Stock reflected in a Stock Appreciation Right, to the extent that such Right has become exercisable, shall not again be available for Option, Award or Rights grant hereunder. If Options or Rights granted hereunder shall expire or terminate for any reason without being wholly exercised, or if Restricted Stock is acquired by the Company pursuant to the provisions of paragraph (c) of Section 6.3 hereof, new Options, Awards or Fights may be granted hereunder covering the number of shares to which such Option or Rights expiration or termination or Restricted Stock acquisition relates. ARTICLE III PARTICIPANTS Sec. 3.1 ELIGIBILITY Any Eligible Employee shall be eligible to participate in the Plan; provided, however, that no member of the Committee shall be eligible to participate. The Committee may grant Options, Awards or Rights to any Eligible Employee in accordance with such determinations as the Committee from time to time in its sole discretion shall make. ARTICLE IV ADMINISTRATION Sec. 4.1 DUTIES AND POWERS OF COMMITTEE The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have sole discretion and authority to determine from among Eligible Employees those to whom and the time or times at which Options, Rights or Awards may be granted, the number of shares of Stock to be subject to each Option or Award, the number of Rights to be awarded and the period for the exercise of such Option or Rights which need not be the same for each grant hereunder. Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the details and provisions of each Stock Option Agreement, Stock Appreciation Rights Agreement and Restricted Stock Agreement, and to make all other determinations necessary or advisable in the administration of the Plan. Sec. 4.2 MAJORITY RULE A majority of the members of the Committee shall constitute a quorum, and any action taken by a majority present at a meeting at which a quorum is present or any action taken without a meeting evidenced by a writing executed by a majority of the whole Committee shall constitute the action of the Committee. Sec. 4.3 COMPANY ASSISTANCE The Company shall supply full and timely information to the Committee on all matters relating to eligible employees, their employment, death, retirement, disability or other termination of employment, and such other pertinent facts as the Committee may require. The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. ARTICLE V OPTIONS Sec. 5.1 OPTION GRANT AND AGREEMENT Each Option granted hereunder shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Stock Option Agreement dated as of the date of grant and executed by the Company and the Optionee, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. Sec. 5.2 PARTICIPATION LIMITATION The Committee shall not grant an Incentive Stock Option to any employee for such number of shares of Stock that, immediately after the grant, the total number of shares of Stock owned or subject to Options exercisable by and/or Awards outstanding in the hands of such employee (or by such persons whose shares such employee is considered as owning pursuant to the provisions of the second succeeding sentence) exceed ten percent of the total combined voting power of all classes of stock of the Company. This restriction does not apply if, at the time such Incentive Stock Option is granted, the Incentive Stock Option purchase price is at least 110% of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. For purposes of this Section 5.2, an employee shall be considered as owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and the stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. Sec. 5.3 OPTION PRICE The purchase price of Stock under each Option will be determined by the Committee but may not be less than the Fair Market Value on the date of grant. Sec. 5.4 OPTION PERIOD Each Option granted hereunder must be granted within ten years from the effective date of the Plan. The period for the exercise of each Option shall be determined by the Committee, but in no instance shall such period exceed ten years from the date of grant of the Option. Sec. 5.5 OPTION EXERCISE (a) Options granted hereunder may not be exercised unless and until the Optionee shall have been or remained in the employ of the Company or its Subsidiaries for one year from and after the date such Option was granted, except as otherwise provided in Section 5.7 hereof. (b) Options may be exercised with respect to whole shares only, for such shares of Stock and within the period permitted for the exercise thereof as determined by the Committee, and shall be exercised by written notice of intent to exercise the Option with respect to a specified number of shares delivered to the Company at its principal office in the State of California, and payment in full to the Company at said office of the amount of the Option price for the number of shares of Stock with respect to which the Option is then being exercised. The purchase price may be paid by the assignment and delivery to the Company of shares of Stock or a combination of cash and shares of Stock equal in value to the exercise price. Any shares assigned and delivered to the Company in payment or partial payment of the purchase price will be valued at their Fair Market Value on the exercise date. (c) The Fair Market Value of the Stock at the date of grant for which any employee may exercise Incentive Stock Options in any calendar year under the Plan (or any other stock option plan of the Company adopted after December 31, 1986) may not exceed $100,000. Sec. 5.6 NONTRANSFERABILITY OF OPTION No Option shall be transferred by an Optionee otherwise than by a will or the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him. Sec. 5.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT (a) If, prior to a date one year from the date on which an Option shall have been granted, the Optionee's employment with the Company or its Subsidiaries shall be terminated by the Company or Subsidiary with or without cause, or by the act of the Optionee, the Optionee's right to exercise such Option shall terminate and all rights thereunder shall cease; provided, however, that if the Optionee shall die, retire or become permanently and totally disabled, as determined in accordance with applicable Company personnel policies, or if the Optionee's employment with the Company or its Subsidiaries shall be terminated within two years after a Change of Control of the Company and such termination occurs prior to a date one year from the date on which an Option shall have been granted, such Option shall become exercisable in full on the date of such death, retirement, disability or termination of employment. (b) If, on or after one year from the date on which an Option shall have been granted, an Optionee's employment with the Company or its Subsidiaries shall be terminated for any reason other than death, retirement or permanent total disability, or within two years following a Change of Control of the Company, the Optionee shall have the right, during the period ending three months after such termination, to exercise such Option to the extent that it was exercisable at the date of such termination and shall not have been exercised, subject, however, to the provisions of Section 5.4 hereof. (c) Upon termination of an Optionee's employment with the Company or its Subsidiaries by reason of retirement or permanent total disability, as determined in accordance with applicable Company personnel policies, or within two years following a Change of Control of the Company, such Optionee shall have the right, during the period ending three years after such termination, to exercise his Option in full, without regard to any installment exercise provisions, to the extent that it shall not have been exercised, subject, however, to the provisions of Section 5.4 hereof. (d) If an Optionee shall die (1) while in the employ of the Company or its Subsidiaries,or (ii) within three months after termination of employment where such termination did not occur either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (iii) within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, the executor or administrator of the estate of the decedent or the person or persons to whom an Option granted hereunder shall have been validly transferred by the executor or the administrator pursuant to a will or the laws of descent and distribution shall have the right, during the period ending three years after the date of the Optionee's death, to exercise the Optionee's Option (A) in full, without regard to any installment exercise provisions, to the extent that it shall not have been exercised, if the Optionee shall have died while in the employ of the Company or its Subsidiaries or within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (B), to the extent that it was exercisable at the date of the Optionee's death and shall not have been exercised, of the Optionee shall have died within three months after termination of employment where such termination did not occur by reason of either retirement or permanent total disability or within two years following a Change of Control of the Company, subject, however, to the provisions of Section 5.4 hereof. (e) No transfer of an Option by the Optionee by a will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option. Sec. 5.8 RIGHTS AS STOCKHOLDER An Optionee or a transferee of an Option shall have no rights as a stockholder with respect to any shares subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein. ARTICLE VI AWARDS Sec. 6.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT The Committee may grant Awards of Restricted Stock to Awardees. No Awards may be made during any fiscal year unless, for the preceding fiscal year, Return on Average Shareholders' Equity exceeded the Ten Year Treasury Yield by more than three percentage points. Each Award granted hereunder must be granted within ten years from the effective date of the Plan and shall be evidenced by minutes of a meeting or the written consent of the Committee. The Committee shall from time to time establish various Award grade levels which shall set forth the maximum number of shares which may be awarded annually to each Eligible Employee in each grade level. The Committee shall have the sole discretion and authority to make an Award to an Eligible Employee of less than the maximum number of shares applicable to his assigned grade level or to make no Award at all to any such Eligible Employee. In no event shall the total number of shares of Restricted Stock awarded to an Eligible Employee in any fiscal year exceed 15,000. The Awardee shall be entitled to receive the Stock subject to such Award only if the Company and the Awardee, within 30 days after the date of the Award, enter into a written Restricted Stock Agreement dated as of the date of the Award, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. Sec. 6.2 CONSIDERATION FOR ISSUANCE No shares of Restricted Stock shall be issued to an Awardee hereunder unless and until the Committee shall have determined that consideration has been received by the Company, in the form of labor performed for or services actually rendered to the Company by the Awardee, having a fair value of not less than the then fair market value of a like number of shares of Stock subject to all of the herein provided conditions and restrictions applicable to Restricted Stock, but in no event less than the par value of such shares. Sec. 6.3 RESTRICTIONS ON SALE OR OTHER TRANSFER Each share of Stock received pursuant to each Restricted Stock Agreement shall be subject to acquisition by Fluor Corporation, and may not be sold or otherwise transferred except pursuant to the following provisions: (a) The shares of Stock represented by the Restricted Stock Agreement shall be held in book entry form with the Company's transfer agent until the restrictions lapse in accordance with the conditions established by the Committee pursuant to Section 6.4 hereof, or until the shares of stock are forfeited pursuant to paragraph (c) of this Section 6.3. Notwithstanding the foregoing, the Awardee may request that, prior to the lapse of the restrictions or forfeiture of the shares, certificates evidencing such shares be issued in his name and delivered to him, and each such certificate shall bear the following legend: "The shares of Fluor Corporation common stock evidenced by this certificate are subject to acquisition by Fluor Corporation, and such shares may not be sold or otherwise transferred except pursuant to the provisions of the Restricted Stock Agreement by and between Fluor Corporation and the registered owner of such shares." (b) No such shares may be sold, transferred or otherwise alienated or hypothecated so long as such shares are subject to the restriction provided for in this Section 6.3. (c) Unless the Committee in its discretion determines otherwise, upon an Awardee's termination of employment for any reason, all of the Awardee's Restricted Stock remaining subject to restriction shall be acquired by the Company effective as of the date of such termination of employment. Sec. 6.4 LAPSE OF RESTRICTIONS The restrictions imposed upon Restricted Stock under Section 6.3 above will lapse in accordance with such conditions as are determined by the Committee and set forth in the Restricted Stock Agreement. Sec. 6.5 RIGHTS AS STOCKHOLDER Subject to the provisions of Section 6.3 hereof, upon the issuance to the Awardee of Restricted Stock hereunder, the Awardee shall have all the rights of a stockholder with respect to such Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. ARTICLE VII STOCK CERTIFICATES Sec. 7.1 STOCK CERTIFICATES The Company shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or any portion thereof, or received as Restricted Stock pursuant to a Restricted Stock Agreement executed hereunder, prior to fulfillment of all of the following conditions: (a) the admission of such shares to listing on all stock exchanges on which the Stock is then listed; (b) the completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall in its sole discretion deem necessary or advisable; (c) the obtaining of any approval or other clearance from any federal or state governmental agency which the Committee shall in its sole discretion determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the exercise of the Option or the execution of the Restricted Stock Agreement as the Committee from time to time may establish for reasons of administrative convenience. ARTICLE VIII GRANT AND EXERCISE OF RIGHTS Sec. 8.1 RIGHTS GRANTS AND AGREEMENTS The Committee may approve the grant of Rights related or unrelated to Options, subject to the following terms and conditions: (a) A Stock Appreciation Right may be granted: (i) at any time if unrelated to an Option; (ii) only at the time of grant if related to an Option. (b) A Stock Appreciation Right grant in connection with an Option will entitle the holder of the related Option, upon exercise of the Stock Appreciation Right, to surrender such Option, or any portion thereof to the extent unexercised, with respect to the number of shares as to which such Stock Appreciation Right is exercised, and to receive payment of an amount computed pursuant to Sec. 8. 1 (d). Such Option will, to the extent surrendered, then cease to be exercisable, (c) Subject to Section 8.1(g), a Stock Appreciation Right granted in connection with an Option hereunder will be exercisable at such time or times, and only to the extent that a related Option is exercisable, and will not be transferable except to the extent that such related Option may be transferable. (d) Upon the exercise of a Stock Appreciation Right related to an Option, the holder will be entitled to receive payment of an amount determined by multiplying: (i) The difference obtained by subtracting the purchase price of a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise of such Stock Appreciation Right, by (ii) The number of shares as to which such Stock Appreciation Right has been exercised. (e) The Committee may grant Stock Appreciation Rights unrelated to Options. Section 8.1(d) shall be used to determine the amount payable at exercise under such Stock Appreciation Right except that, in lieu of the price specified in the related option, the initial share value specified in the award, which may not be less than the Fair Market Value on the date of the award, shall be used. (f) Payment of the amount determined under Section 8. 1 (d) or (e) may be made solely in whole shares of Stock in a number determined at their Fair Market Value on the date of exercise of the Stock Appreciation Right or, alternatively, at the sole discretion of the Committee, solely in cash or in a combination of cash and shares as the Committee deems advisable. If the Committee decides to make full payment in shares of Stock, and the amount payable results in a fractional share, payment for the fractional share will be made in cash. Notwithstanding the foregoing, payment of the amount determined under Section 8. I (d) or (e) shall be made solely in cash if the Awardee is an "officer" of the Company for purposes of Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). (g) The Committee may, at the time a Stock Appreciation Right is granted, impose such conditions on the exercise of the Stock Appreciation Right as may be required to satisfy the requirements of Rule 16b-3 of the Exchange Act (or any other comparable provisions in effect at the time or times in question). Without limiting the generality of the foregoing, the Committee may determine that a Stock Appreciation Right may be exercised only during the period beginning on the third business day and ending on the twelfth business day following the publication of the Company's quarterly and annual summarized financial data. (h) The date of the grant shall be the date of such Committee action. Each grant shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Stock Appreciation Rights Agreement dated as of the date of the grant and executed by the Grantee and the Company, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. Sec. 8.2 RIGHTS PERIOD The period for the exercise of each Right granted hereunder shall be determined by the Committee, but in no instance shall such period exceed ten years from the date of grant. Sec. 8.3 RIGHTS EXERCISE (a) Rights granted hereunder may not be exercised unless and until the Grantee shall have been or remained in the employ of the Company or its Subsidiaries for one year from and after the date of grant of such Rights, except as otherwise provided in Section 8.5 hereof. (b) Rights granted hereunder may be exercised with respect to whole Rights only, in such number as determined by the Committee, and shall be exercised by written notice of intent to exercise with respect to a specified number of Rights delivered to the Company at its principal office in the State of California. Sec. 8.4 NONTRANSFERABILITY OF RIGHTS No Rights granted hereunder shall be transferred by a Grantee otherwise than by a will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended or Title I of the Employee Retirement Income Security Act, or the rules thereunder. During the lifetime of a Grantee, such Rights shall be exercisable only by him. Sec. 8. 5 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT (a) If, prior to a date one year from the date on which Rights shall have been granted, the Grantee's employment with the Company or its Subsidiaries shall be terminated by the Company or Subsidiary with or without cause, or by the act of the Grantee, the Grantee's right to exercise such Rights shall terminate and all rights thereunder shall cease; provided, however, that if the Grantee shall die, retire, or become permanently and totally disabled, as determined in accordance with applicable Company personnel policies, or if the Grantee's employment with the Company or its Subsidiaries shall be terminated within two years after a Change of Control of the Company and such termination occurs prior to a date one year from the date on which such Rights shall have been granted, such Rights shall become exercisable in full on the date of such death or disability. (b) If, on or after one year from the date on which Rights shall have been granted, a Grantee's employment with the Company or its Subsidiaries shall be terminated for any reason other than death, retirement or permanent total disability, or within two years following a Change of Control of the Company, the Grantee shall have the right, during the period ending three months after such termination, to exercise such Rights to the extent that they were exercisable at the date of such termination and shall not have been exercised, subject, however, to the provisions of Section 8.2 hereof. (c) Upon termination of a Grantee's employment with the Company or its Subsidiaries by reason of retirement or permanent total disability, as determined in accordance with applicable Company personnel policies, or within two years following a Change of Control of the Company, such Grantee shall have the right, during the period ending three years after such termination, to exercise his Rights in full, without regard to any installment exercise provisions, to the extent that they shall not have been exercised, subject, however, to the provisions of Section 8.2 hereof. (d) If a Grantee shall die (i) while in the employ of the Company or its Subsidiaries, or (ii) within three months after termination of employment where such termination did not occur either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (iii) within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, the executor or administrator of the estate of the decedent or the person or persons to whom Rights granted hereunder shall have been validly transferred by the executor or the administrator pursuant to a will or the laws of descent and distribution shall have the right, during the period ending three years after the date of the Grantee's death, to exercise the Grantee's Rights (A) in full, without regard to any installment exercise provisions, to the extent that they shall not have been exercised, if the Grantee shall have died while in the employ of the Company or its Subsidiaries or within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (B) to the extent that they were exercisable at the date of the Grantee's death and shall not have been exercised, if the Grantee shall have died within three months after termination of employment where such termination did not occur by reason of either retirement or permanent total disability or within two years following a Change of Control of the Company, subject, however, to the provisions of Section 8.2 hereof. (e) No transfer of Rights by a Grantee by a will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Rights. Sec. 8.6 NO RIGHTS AS STOCKHOLDER Nothing herein contained shall be deemed to give any Grantee any rights as a stockholder of the Company. ARTICLE IX STOCK PAYMENT Sec. 9.1 STOCK PAYMENT The Committee may approve payments of Stock to any Eligible Employee for all or any portion of the compensation (other than base salary) that would otherwise become payable to such Eligible Employee in cash. ARTICLE X TERMINATION, AMENDMENT AND MODIFICATION OF PLAN Sec. 10.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN The Board may at any time, upon recommendation of the Committee, terminate, and may at any time and from time to time and in any respect amend or modify, the Plan, provided, however, that no such action of the Board without approval of the stockholders of the Company may: (a) icrease the total number of shares of Stock subject to the Plan except as contemplated in Section I 1. I hereof, (b) materially increase the benefits accruing to participants under the Plan; (c) withdraw the administration of the Plan from the Committee; or (d) permit any person while a member of the Committee to be eligible to receive an Option, Right or Restricted Stock under the Plan; and provided further, that no termination, amendment or modification of the Plan shall in any manner affect any Stock Option Agreement, Restricted Stock Agreement or Stock Appreciation Rights Agreement theretofore executed pursuant to the Plan without the consent of such Optionee, Awardee or Grantee. ARTICLE XI MISCELLANEOUS Sec. II.1 ADJUSTMENT PROVISIONS (a) Subject to Section ll.l(b) below, if the outstanding shares of Stock of the Company are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Stock or other securities, through merger, consolidation, sale of all or substantially all of the property of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of Stock or other securities, an appropriate and proportionate adjustment may be made in (i) the maximum number and kind of shares provided in Section 2.4, (ii) the number and kind of shares or other securities subject to the outstanding Options, Awards and Grants, and (iii) the price for each share or other unit of any other securities subject to outstanding Options or Grants without change in the aggregate purchase price or value as to which such Options or Grants remain exercisable. (b) Adjustments under Section ll.l(a) will be made by the Committee, whose determination as to what adjustments will be made and the extent thereof will be final, binding, and conclusive. No fractional interests will be issued under the Plan resulting from any such adjustments. Sec. 11.2 CONTINUATION OF EMPLOYMENT Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Eligible Employee any right to continue in the employ of the Company or any Subsidiary or affect the right of the Company or any Subsidiary to terminate the employment of any Eligible Employee at any time with or without cause. Sec. 11.3 COMPLIANCE WITH GOVERNMENT REGULATIONS No shares of Stock will be issued hereunder unless and until all applicable requirements imposed by federal and state securities and other laws, rules, and regulations and by any regulatory agencies having jurisdiction and by any stock exchanges upon which the Stock may be listed have been fully met. As a condition precedent to the issuance of shares of Stock pursuant hereto, the Company may require the employee to take any reasonable action to comply with such requirements. Sec. 11.4 PRIVILEGES OF STOCK OWNERSHIP No employee and no beneficiary or other person claiming under or through such employee will have any right, title, or interest in or to any shares of Stock allocated or reserved under the Plan or subject to any Option, Right or Award except as to such shares of Stock, if any, that have been issued to such employee. Sec. 11.5 WITHHOLDING The Company may make such provisions as it deems appropriate to withhold any taxes the Company determines it is required to withhold in connection with any Option, Award or Right. The Company may require the employee to satisfy any relevant tax requirements before authorizing any issuance of Stock to the employee. Such settlement may be made in cash or Stock. Sec. 11.6 NONTRANSFERABILITY An Option, Award or Right may be exercised during the life of the employee solely by the employee or the employee's duly appointed guardian or personal representative. No Option, Award or Right and no other right under the Plan, contingent or otherwise, will be assignable or subject to any encumbrance, pledge, or charge of any nature. Sec. 11.7 OTHER COMPENSATION PLANS The adoption of the Plan shall not affect any other stock option or 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. Sec. 11.8 PLAN BINDING ON SUCCESSORS The Plan shall be binding upon the successors and assigns of the Company. Sec. 11.9 SINGULAR, PLURAL, GENDER Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Sec. 1 1.10 HEADINGS, ETC., NO PART OF PLAN Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan. -----END PRIVACY-ENHANCED MESSAGE-----